PLEDGE AGREEMENT dated March 19, 1998 ("Pledge Agreement"),
made by Xxxxxxx X. Xxxxxx ("Pledgor"), to Trustees of General Electric Pension
Trust (the "Pledgee").
WHEREAS, Pledgor is a stockholder of CyberShop
International, Inc., a Delaware corporation (the "Company");
WHEREAS, by Secured Promissory Note (a copy of which is
attached hereto and incorporated herein as Exhibit A) dated of even date
herewith, the Company has agreed to repay to the Pledgee the amount of
$500,000.00, together with interest, in the manner set forth therein (the
"Note").
WHEREAS, it is a requirement of the Note that the Pledgor
shall have granted the security interests contemplated by this Pledge
Agreement.
NOW, THEREFORE, in consideration of the premises and in
order to induce the Pledgee to provide the loan the subject of the Note,
the Pledgor and the Company hereby agree as follows:
SECTION 1. Pledge. Pledgor hereby pledges and grants a
security interest to the Pledgee in the following (the "Pledged Collateral"):
(i) 172,500 shares of the issued and outstanding
shares of common stock of the Company as set forth in Schedule I
annexed hereto and made a part hereof (the "Pledged Shares") and
the certificate representing the Pledged Shares, and all
dividends, cash, instruments and other property from time to time
received, receivable or otherwise distributed in respect of or in
exchange for any or all of the Pledged Shares;
(ii) all additional shares of stock of the
Company, from time to time acquired by Pledgor in any manner, and
the certificates representing such additional shares, and all
dividends, cash, instruments and other property from time to time
received, receivable or otherwise distributed in respect of or in
exchange for any or all of such shares; and
(iii) all proceeds of any and all of the
foregoing.
SECTION 2. Security for Obligations. The Pledged Collateral
secures the prompt and complete payment and performance when due of all of the
obligations of the Company under the Note and the Company and the Pledgor under
this Pledge Agreement (the "Secured Obligations").
SECTION 3. Delivery of Pledged Collateral. All certificates or
instruments representing or evidencing the Pledged Collateral shall be delivered
to and held by the Pledgee pursuant hereto and shall be in suitable form for
transfer by delivery, or shall be accompanied by duly executed instruments of
transfer or assignment in blank, all in form and substance
satisfactory to the Pledgee. The Pledgee shall have the right, at any time in
its discretion and without notice to Pledgor, to transfer to or to register in
the name of the Pledgee or any of its nominees any or all of the Pledged
Collateral, subject only to the revocable rights specified in Section 6(a). In
addition, the Pledgee shall have the right at any time to exchange certificates
or instruments representing or evidencing Pledged Collateral for certificates or
instruments of smaller or larger denominations.
SECTION 4. Representations and Warranties. Each of the Pledgor
and the Company, jointly and severally, represents and warrants to the Pledgee
as follows:
(i) The Pledged Shares have been duly authorized
and validly issued and are fully paid and non-assessable.
(ii) The Pledgor is the sole legal and beneficial
owner of the Pledged Collateral, which Pledgor has not previously
sold, assigned or transferred and which is free and clear of any
lien, option, right, right of preemption or other charge or
encumbrance, except for the security interest created by this
Pledge Agreement.
(iii) The pledge of the Pledged Shares pursuant to
this Pledge Agreement, upon delivery of the stock certificate as
provided in Section 3 hereof, creates a valid and perfected first
priority security interest in the Pledged Collateral securing the
payment of the Secured Obligations.
(iv) No authorization, approval or other action
by, and no notice to or filing with, any governmental or
regulator authority or any person is required either (i) for the
pledge by the Pledgor of the Pledged Collateral pursuant to this
Pledge Agreement or for the execution, delivery or performance of
the Pledge Agreement by the Pledgor or the Company, or (ii) for
the exercise by the Pledgee of the voting or other rights
provided for in this Pledge Agreement or the remedies in respect
of the Pledged Collateral pursuant to this Pledge Agreement.
(v) This Pledge Agreement and the pledge created
hereby is in full compliance with the terms of all documents,
instruments and agreements relating to the Company or among the
Company's shareholders, including, without limitation, the
Company's certificate of incorporation, by-laws, shareholders'
agreements and registration rights agreements.
(vi) The Pledged Shares constitute the percentage
of all issued and outstanding shares of stock of the Company as
set forth on Schedule I.
(vii) The Company is a corporation duly incorporated,
validly existing and in good standing under the laws of Delaware,
has the corporate power and authority to own its assets and to
transact its business and is duly qualified under the laws of
each jurisdiction in which such qualification is required.
(viii) The Note and this Pledge Agreement is a legal,
valid and binding obligation of the Company and the Pledgor (with
respect to the Pledge Agreement), enforceable against the Company
and the Pledgor in accordance with its respective terms.
(ix) The execution, delivery and performance of the Note
and this Pledge Agreement by the Company have been duly
authorized by all necessary corporate action and do not and will
not contravene its articles of incorporation or bylaws.
(x) The execution, delivery and performance of the Note
and this Pledge Agreement do not and will not (1) require any
consent which has not been obtained; (2) violate any provision of
law or require filing or registration with any governmental
authority; (3) result in a breach or constitute a default under
or require any consent under any indenture or loan or credit
agreement, any other agreement, lease or instrument to which the
Company or the Pledgor is a party or by which any of its property
is bound; (4) result in, or require, the creation or imposition
on any lien, security interest or other encumbrance upon or with
respect to any of its properties now owned or hereafter acquired;
or (5) cause the Company or the Pledgor to be in default under
any law, order, writ, judgment, injunction, decree, agreement,
lease or instrument.
SECTION 5. Further Assurances. The Pledgor and the Company
agree that at any time and from time to time, at the expense of the Pledgor and
the Company, as the case may be, it will promptly execute and deliver all
reasonable further instruments and documents, and take all reasonable further
action, that may be necessary or desirable, or that the Pledgee may request, in
order to perfect and protect any security interest granted or purported to be
granted hereby or to enable the Pledgee to exercise and enforce its rights and
remedies hereunder with respect to any Pledged Collateral.
SECTION 6. Voting Rights; Dividends; Etc. (a) So long as no
Event of Default (as defined below) shall have occurred:
(i) The Pledgor shall be entitled to exercise
any and all voting and other consensual rights pertaining to the
Pledged Collateral or any part thereof for any purpose not
inconsistent with the terms of this Pledge Agreement; provided,
however, that the Pledgor shall not exercise or refrain from
exercising any such right if, in the Pledgee's sole judgment,
such action would modify or in any way adversely change Pledgor's
or Pledgee's rights under the Pledged Collateral or any part
thereof.
(ii) Notwithstanding the foregoing, any and all
(A) dividends paid or payable and
instruments and other property received, receivable or otherwise distributed in
respect of, or in exchange for, any Pledged Collateral,
(B) dividends and other distributions paid
or payable in cash in respect of any Pledged Collateral in connection with a
total liquidation or dissolution, and
(C) cash paid, payable or otherwise
distributed in respect of principal of, or in redemption of, or in exchange for,
any Pledged Collateral,
shall be, and shall be forthwith delivered to the Pledgee to hold as, Pledged
Collateral and shall, if received by Pledgor, be received in trust for the
benefit of the Pledgee, be segregated from the other property or funds of
Pledgor, and be forthwith delivered to the Pledgee as Pledged Collateral in the
same form as so received (with any necessary endorsement).
(b) Upon the occurrence of an "Event of Default" which
shall mean any one of the following events:
(1) Any representation or warranty made by the
Company or the Pledgor in the Note or this Pledge Agreement shall
prove to be incorrect in any material respect as of the time when
made;
(2) The Company or the Pledgor shall be in
material breach of any covenant or agreement set forth in the
Note or this Pledge Agreement;
(3) The Pledged Collateral or any interest therein
shall be sold, assigned, transferred or otherwise disposed of, or
any option or right shall be granted with respect to the Pledged
Collateral or any interest therein, or the Pledged Collateral or
any interest therein shall be pledged, mortgaged or otherwise
encumbered in any manner other than in favor of the Pledgee as
contemplated in this Pledge Agreement;
(4) The Company shall fail to make payment when
due of any principal or interest with respect to the Note; or
(5) The Company or the Pledgor shall become
insolvent or bankrupt, make an assignment for the benefit of its
creditors or admit in writing its inability to, or be generally
unable to, pay its debts as they become due, or the Company or
the Pledgor shall have a trustee, receiver or custodian appointed
in respect of it or all or a substantial portion of its property
or to take advantage of any law relating to bankruptcy,
insolvency, reorganization, liquidation or winding up with
respect to it.
(i) Upon the request of the Pledgee, all rights
of Pledgor to exercise the voting and other consensual rights
which it would otherwise be entitled to exercise pursuant to
Section 6(a)(i) and to receive the dividends, principal or
interest payments which it would otherwise be authorized to
receive and retain pursuant to Section 6(a)(ii) shall cease, and
all such rights shall thereupon become vested in the Pledgee, and
the Pledgee shall thereupon have the sole right to exercise such
voting and other consensual rights and to receive and hold as
Pledged Collateral such dividends, principal or interest
payments.
(ii) All dividends, principal or interest
payments which are received by Pledgor contrary to the provisions
of paragraph (i) of this Section 6(b) shall be received in trust
for the benefit of the Pledgee, shall be segregated from other
funds of Pledgor and shall be forthwith paid over to the Pledgee
as Pledged Collateral in the same form as so
received (with any necessary endorsement).
SECTION 7. Transfers and Other Liens; Additional Shares. (a)
Pledgor agrees that it will neither (i) sell or otherwise dispose of, or grant
any option with respect to, any of the Pledged Collateral, nor (ii) create or
permit to exist any security interest, or other charge or encumbrance upon or
with respect to any of the Pledged Collateral, except for the security interest
under this Pledge Agreement.
(b) Pledgor agrees that it will cause the Company, and the
Company agrees, not to issue any stock or other securities in addition to
or in substitution for the Pledged Shares.
SECTION 8. Pledgee Appointed Attorney-in-Fact. Pledgor hereby
appoints the Pledgee, Pledgor's attorney-in-fact, with full authority in the
place and stead of Pledgor and in the name of Pledgor or otherwise, to take any
action and to execute any instrument which the Pledgee may deem necessary or
advisable to accomplish the purposes of this Pledge Agreement, including,
without limitation, to receive, endorse and collect all instruments made payable
to Pledgor representing any dividend, interest payment or other distribution or
payment in respect of the Pledged Collateral or any part thereof and to give
full discharge for the same.
SECTION 9. Pledgee May Perform. If Pledgor fails to perform
any agreement contained herein, the Pledgee may itself perform or cause
performance of, such agreement, and the expenses of the Pledgee incurred in
connection therewith shall be payable by Pledgor under Section 12.
SECTION 10. The Pledgee's Duties and Reasonable Care. The
powers conferred on the Pledgee hereunder are solely to protect its interests in
the Pledged Collateral and shall not impose any duty upon it to exercise any
such powers. The Pledgee shall be deemed to have exercised reasonable care in
the custody and preservation of the Pledged Collateral in its possession if the
Pledged Collateral is accorded treatment substantially equal to that which the
Pledgee accords its own property, it being understood that the Pledgee shall
have no responsibility for (a) ascertaining or taking action with respect to
calls, conversions, exchanges, maturities, tenders or other matters relative to
any Pledged Collateral, whether or not the Pledgee has or is deemed to have
knowledge of such matters, or (b) taking any necessary steps to preserve rights
against any parties with respect to any Pledged Collateral.
SECTION 11. Remedies. If any Event of Default shall have
occurred:
(a) The Pledgee may exercise in respect of the Pledged
Collateral, in addition to other rights and remedies provided for herein
or otherwise available to it, all the rights and remedies of a secured
party on default under the Uniform Commercial Code (the "Code") in effect
in the State of New York at that time, and the Pledgee may also, without
notice, except as specified below, sell the Pledged Collateral or any part
thereof in one or more parcels at public or private sale, at any exchange,
broker's board or at any of the Pledgee's offices or elsewhere, for cash,
on credit or for future delivery, and upon such other terms as the Pledgee
may deem commercially reasonable. Pledgor agrees that, to the extent
notice of sale shall be
required by law, at least five (5) calendar days' notice to the Pledgor of
the time and place of any public sale or the time after which any private
sale is to be made shall constitute reasonable notification. The Pledgee
shall not be obligated to make any sale of Pledged Collateral regardless
of notice of sale having been given. The Pledgee may adjourn any public or
private sale from time to time by announcement at the time and place fixed
therefor, and such sale may, without further notice, be made at the time
and place to which it was so adjourned.
(b) Any cash held by the Pledgee as Pledged Collateral and
all cash proceeds received by the Pledgee in respect of any sale of,
collection from, or other realization upon all or any part of the Pledged
Collateral may, in the discretion of the Pledgee, be held by the Pledgee
as collateral for, and/or then or at any time thereafter applied (after
payment of any amounts payable to the Pledgee pursuant to Section 12) in
whole or in part by the Pledgee against, all or any part of the Secured
Obligations in such order as the Pledgee shall elect. Any surplus of such
cash or cash proceeds held by the Pledgee and remaining after payment in
full of all the Secured Obligations shall be paid over to the Pledgor or
to whosoever may be lawfully entitled to receive such surplus. If the
proceeds of the sale of the Pledged Collateral are insufficient to pay all
the Secured Obligations, Pledgor agrees to pay upon demand any deficiency
to the Pledgee.
SECTION 12. Indemnity and Expenses. (a) Pledgor and the
Company, jointly and severally, hereby indemnify the Pledgee from and against
any and all claims, losses, damages and liabilities growing out of or resulting
from this Pledge Agreement or the Note (including, without limitation,
enforcement of this Pledge Agreement or the Note).
(b) Pledgor and the Company, jointly and severally, will
upon demand pay to the Pledgee the amount of any and all expenses,
including the reasonable fees and expenses of its counsel (including,
without limitation, Xxxxx Xxxxxxxxxx LLP) and of any experts and agents,
which the Pledgee may incur in connection with (i) the preparation and
negotiation of this Pledge Agreement and the Note and other documents and
agreements executed and delivered in connection with the transactions
contemplated hereby and thereby (which amount shall be paid on or prior to
the funding of the loan by the Pledgee to the Company); (ii) any amendment
to this Pledge Agreement or the Note; (iii) the administration of this
Pledge Agreement or the Note; (iv) the custody or preservation of, or the
sale of, collection from, or other realization upon, any of the Pledged
Collateral; (iv) the exercise or enforcement of any of the rights of the
Pledgee hereunder or under the Note; or (v) the failure by the Pledgor or
the Company to perform or observe any of the provisions hereof or Note.
SECTION 13. Amendments, Etc. No amendment or waiver of any
provision of this Pledge Agreement or the Note, nor consent to any departure by
the Company or the Pledgor herefrom or therefrom, shall in any event be
effective unless the same shall be in writing and signed by the Company, the
Pledgor and the Pledgee, and then such amendment, waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.
SECTION 14. Addresses for Notices. All notices and other
communications provided for hereunder or under the Note shall be in writing and
mailed or delivered by messenger or sent by facsimile, addressed to it at the
following address:
if to the Pledgor: Xxxxxxx X. Xxxxxx, Cybershop International, Inc., 000
Xxxxxxx Xxxxxx, Xxx Xxxx, XX 00000; facsimile _____________.
if to the Pledgee: Trustees of the General Electric Pension Trust, 0000
Xxxxxx Xxxxxx, X.X. Xxx 0000, Xxxxxxxx, XX 00000-0000; facsimile
(000)000-0000; attention Xxxxxxx X. Xxxxxxx.
if to the Company: Cybershop International, Inc., 000 Xxxxxxx Xxxxxx, Xxx
Xxxx, XX 00000; facsimile ________________; attention: Xxxxxxx X. Xxxxxx.
or at such other address as shall be designated by such party in a written
notice to each other party complying as to delivery with the terms of this
Section. All such notices and other communications shall, when mailed or
delivered by messenger or sent by facsimile, respectively, be effective
when received in the mails or delivered to the messenger or sent by
facsimile, respectively, addressed as aforesaid.
SECTION 15. Continuing Security Interest; Transfer of Notes.
This Pledge Agreement shall create a continuing security interest in the Pledged
Collateral and shall (i) remain in full force and effect until performance and
payment in full of the Secured Obligations, (ii) be binding upon the Pledgor,
its successors and assigns, and (iii) inure to the Pledgee and its respective
successors, transferees and assigns. Without limiting the generality of the
foregoing clause (iii), the Pledgee may assign or otherwise transfer all or a
portion of its rights or obligations under this Pledge Agreement or the Note,
upon notice to the Company and the Pledgor, to any transferee (each an
"Assignee"), and such other Assignee shall thereupon become vested with all the
benefits in respect of this Pledge Agreement and the Note granted to the Pledgee
herein, therein or otherwise. Upon the payment and performance in full of the
Secured Obligations, Pledgor shall be entitled to the return, upon its request
and at its expense, of such of the Pledged Collateral as shall not have been
sold or otherwise applied pursuant to the terms hereof.
SECTION 16. Governing Law; Terms. This Pledge Agreement and
the Note shall be governed by and construed in accordance with the laws of the
State of New York.
SECTION 17. Miscellaneous. This Pledge Agreement is in
addition to and not in limitation of any other rights and remedies the Pledgee
may have by virtue of any other instrument or agreement heretofore,
contemporaneously herewith or hereafter executed by the Pledgor or any other
person or Assignee or by law or otherwise. If any provision of this Pledge
Agreement or the Note is contrary to applicable law, such provision shall be
deemed ineffective without invalidating the remaining provisions hereof. The
Pledgee shall not, by any act, delay, omission or otherwise, be deemed to have
waived any of its rights or remedies hereunder.
SECTION 18. Company Consent. The Company hereby consents to
the creation of the pledge in the Pledged Collateral evidenced by this Pledge
Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Pledge
Agreement to be duly executed and delivered as of the date first set forth
above.
PLEDGOR:
/s/ Xxxxxxx Xxxxxx
---------------------------------------
XXXXXXX X. XXXXXX
PLEDGEE:
TRUSTEES OF GENERAL ELECTRIC
PENSION TRUST
By:__________________________
Name:
Title:
THE COMPANY:
CYBERSHOP INTERNATIONAL, INC.
By: /s/ Xxxxxxx Xxxxxx
-----------------------------------
Name: Xxxxxxx Xxxxxx
Title: Chairman
SCHEDULE I
Attached to and forming a part of that certain Pledge Agreement dated March 19,
1998, by Pledgor to the Pledgee.
Percentage
Class Certificate of Total Par Value Number of
Stock Issuer of Stock Number Stock of Issuer of Shares Shares
------------ -------- ------ --------------- --------- ------
CyberShop Common 1 4.3% $.001 172,500
International,
Inc.
