Exh 10.1
SHARE PURCHASE AGREEMENT
To: The Seller(s) listed on the Counterpart
Signature Page hereof ("Seller")
From: The Buyer(s) listed on the Counterpart
Signature Page hereof ("Buyer")
Re: Purchase of shares that are common stock (the "Common Stock") of
Cove Apparel, Inc., a Nevada corporations ("Cove"), pursuant to this Share
Purchase Agreement (the "Agreement")
RECITALS:
WHEREAS, Buyer (as defined herein) wishes to purchase and Seller wishes
to sell Common Stock of Cove; and
WHEREAS, Cove is entering into a reorganization, merger or acquisition
with Euroseas Acquisition Corporation, a Delaware corporation, which is a wholly
owned subsidiary of Euroseas, Ltd., a Xxxxxxxx Island Corporations (the
"Acquirer":, which may or may not be beneficial to Cove and its stockholders
(the "Reorganization Transaction"); and
NOW, THEREFORE, the parties hereto do hereby agree as follows:
A. Seller represents and warrants that there are 10,480,500 total
shares of Commons Stock of Cove outstanding and Seller is the legal owner of
4,500,000 of these Common Stock shares of Cove. Seller agrees to sell 1,405,395
of these Common Stock shares as indicated on the Counterpart Signature Page.
Seller wishes to sell to Buyer at an aggregate purchase price as indicated on
the Counterpart Signature Page, and Buyer wishes to purchase from Seller at an
aggregate purchase price as indicated on the Counterpart Signature Page.
B. Seller represents and warrants that: (i) Cove is a publicly-held
company engaged in apparel sales, having previously and lawfully offered and
sold a portion of is securities in accordance with applicable federal and state
securities laws, rules and regulations and is in good standing the state of its
incorporation and in all other jurisdictions where it does business and (ii)
Cove files reports with the Securities and Exchange Commission under Section 13
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), is
current on all its reports and filings and Seller and Buyer have been provided
with access to all reports of Cove via the XXXXX system of the SEC that have
been filed by or with respect to Cove during the past 12 months and longer.
C. Seller represents and warrans that all material information
respecting the past, present and proposed business operations of Cove, its
management, financial position or otherwise in any such filings and reports is
comlete and correct and that Seller is not aware of any liability relating to
Cove's business or operations which has not been set forth in the financial
statement as reported in Cove's most recently filed 10QSB or other applicable
reporting document and that there is not any present or threatened or proposed
litigation by or against Cove.
D. Seller represents and warrants that this Agreement is valid and
enforceable by its terms and execution of the Agreement will not result in
violation of any other agreement and that consummation of this Agreement will
not result in a breach of any shareholder agreement of buy-sell agreement
executed amount the shareholders of Cove.
1
E. Seller and Buyer are aware that there is no current "established
trading market" for the Common Stock of Cove which Common Stock is quoted on the
OTC Bulletin Board of the National Association of Securities Dealers, Inc., (the
"NASD") under the symbol "CVAP.OB" and that it is uncertain at this time whether
there will be any future market for the Common Stock of Cove; and that the
purchase price being paid for the Cove Common Stock bears no relationship to
assets, book value or other established criteria of value. Seller and Buyer are
also aware of the imminent Reorganization Transaction.
F. If there is or have been any increases in the number of shares held
by Seller due to stock splits or similar events, the number of shares to be sold
to buyer will be adjusted upward accordingly with no increase in the purchase
price. Seller represents and warrants that there have been no such changes
before the date hereof.
G. Buyer represents and warrants the following as an additional
inducement for the offer outlined in this Agreement to purchase the Common Stock
of Seller covered by this Agreement, to-wit:
(i) Buyer is not relying on any representation of warranty of
Seller whatsoever, except those representations and warranties contained in this
Agreement;
(ii) Buyer has conducted Buyer's own investigation of the
risks and merits of an investment in Cove by reviewing its annual and quarterly
filings and registration statements contained in the Xxxxx achieves of the
Securities and Exchange Commission;
(iii) Buyer or its principals is an "accredited investor" as
that term is known or defined under applicable United States securities laws,
and/or is fully capable of evaluating the risks and merits associated with the
execution of this Agreement and the purchase of this Common Stock hereunder,
without qualification;
(iv) Buyer has full power and authority to execute and deliver
this Agreement, without qualification;
(v) Buyer is purchasing the Common Stock for Buyer's account
only;
(vi) Buyer will fully comply with all provisions of United
States and state securities laws, in the resale of any of the Common Stock
acquired hereunder, and will timely make all the required filings regarding
beneficial ownership of the Common Stock with the Securities and Exchange
Commission, as may be applicable; and
(vii) Buyer agrees and understands that the amount being paid
by Buyer for the shares may be more or less than other Cove shareholders may be
selling their stock in similar transactions.
H. Seller represents, warrants and agrees that Buyer has not made and
Seller is not relying on any representation of warranty of Buyer whatsoever,
except those representations and warranties contained in this Agreement; and
that Seller has conducted his own investigation of the proposed Reorganization
Transaction, including without limitation that Seller has received and reviewed
financial statements of the Eurobulk Group of Companies (predecessor of the
Acquiror) for the years ended December 31, 2004 and 2003, the Term Sheet between
Cove and Eurobulk Ltd. Dated April 20, 2005 and the draft copy of the Form 8-K
of Cove dated June 2005 and the draft of Agreement and Plan of Merger dated June
17, 2005 for the proposed Reorganization Transaction. Without limitation of the
above, Seller acknowledges that instead of raising $50 million or more as
mentioned in said Term Sheet, the actual amount raised might be only $25 million
or less.
2
Accordingly, the parties hereto (subject to both parties' signatures
below) agree as follows:
1. Buyer hereby offers to purchase from Seller the shares of Common
Stock of Cove as indicated on the Counterpart Signature Page, free and clear of
any liens, encumbrances and/or other restrictions whatsoever and Seller agrees
to sell to Buyer the shares of Common Stock of Cove owned by Seller as indicated
on the Counterpart Signature Page, free and clear of any such liens,
encumbrances and/or restrictions whatsoever.
2. The purchase price of the Common Stock shall be as indicated on the
Counterpart Signature Page, payable on delivery of the Common Stock by Seller to
Buyer for purchase and sale under this Agreement.
3. Certificates representing the Common Stock shall be delivered to
Buyer in exchange for payment by Buyer and Seller of the amounts required herein
from funds to be deposited by Buyer for the purchase and sale of the Common
Stock, which payment shall be subject to the transfer of the Common Stock into
Buyers's name and delivery of the stock certificate or certificates representing
the common Stock to Buyer, which stock certificate shall bear no restriction or
notation, except as may be required to comply with the Securities and Exchange
Act of 1933;
4. By acceptance of this offer, Seller hereby covenants and warrants:
(i) That Seller has the right to sell, transfer, convey and
assign the Common Stock, without qualification; subject to such restrictions as
may be required to comply with the Securities and Exchange Act of 1933;
(ii) That the shares being sold under this Agreement are fully
paid and non-assessable; and
(iii) That Seller has done no act to encumber, hypothecate or
cause liens on the Common Stock and the shares are free and clear of any liens,
encumbrances and restrictions.
5. A closing under the terms of this Agreement shall take place on or
about the closing date specified. At the closing Buyer shall tender to Seller
payment in the amount of the specified Purchase Price for the shares to be
purchased under this Agreement. Seller shall simultaneously tender to Buyer
certificates for the specified number of shares of the Common Stock of Cove with
stock powers attached. Said certificates shall be free and clear of any
restriction except such as may be imposed under the Securities Act of 1933.
6. This Agreement shall be construed under the laws of the State of
California.
7. All representations and warranties in this Agreement shall survive
the closing.
8. This Agreement constitutes the entire, complete and final expression
of the agreement of the parties relating to the subject matter hereof and
supersedes all previous communications and agreements thereon, oral or written.
3
COUNTERPART SIGNATURE PAGE
This Counterpart Signature Page for that certain Share Purchase Agreement ("the
Agreement") dated on August 29, 2005, among the undersigned, by which the
undersigned, through execution and delivery of this Counterpart Signature Page,
intend to be legally bound by the terms of the Agreement. This Agreement may be
executed in separate counterparts which together constitute one and the same
agreement.
BUYER:
Seaward Ave Partners, LLC.
------------------------------------
Dated 8/29/05 By: /s/ Xxxxxx Xxxxx
----------------------------
(Signature) Xxxxxx Xxxxx, Managing Member
SELLER:
Xxxxx Xxxxxxxx
------------------------------------
8/29/05 By: /s/ Xxxxx Xxxxxxxx
Number of Shares Sold: 1,405,395
Purchase Price ($13,509.05)
Closing Date: August 29, 2005
4
Exh 10.2
SHARE PURCHASE AGREEMENT
To: The Seller(s) listed on the Counterpart
Signature Page hereof ("Seller")
From: The Buyer(s) listed on the Counterpart
Signature Page hereof ("Buyer")
Re: Purchase of shares that are common stock (the "Common Stock") of
Cove Apparel, Inc., a Nevada corporations ("Cove"), pursuant to this Share
Purchase Agreement (the "Agreement")
RECITALS:
WHEREAS, Buyer (as defined herein) wishes to purchase and Seller wishes
to sell Common Stock of Cove; and
WHEREAS, Cove is entering into a reorganization, merger or acquisition
with Euroseas Acquisition Corporation, a Delaware corporation, which is a wholly
owned subsidiary of Euroseas, Ltd., a Xxxxxxxx Island Corporations (the
"Acquirer":, which may or may not be beneficial to Cove and its stockholders
(the "Reorganization Transaction"); and
NOW, THEREFORE, the parties hereto do hereby agree as follows:
A. Seller represents and warrants that there are 10,480,500 total
shares of Commons Stock of Cove outstanding and Seller is the legal owner of
4,500,000 of these Common Stock shares of Cove. Seller agrees to sell 1,385,396
of these Common Stock shares as indicated on the Counterpart Signature Page.
Seller wishes to sell to Buyer at an aggregate purchase price as indicated on
the Counterpart Signature Page, and Buyer wishes to purchase from Seller at an
aggregate purchase price as indicated on the Counterpart Signature Page.
B. Seller represents and warrants that: (i) Cove is a publicly-held
company engaged in apparel sales, having previously and lawfully offered and
sold a portion of is securities in accordance with applicable federal and state
securities laws, rules and regulations and is in good standing the state of its
incorporation and in all other jurisdictions where it does business and (ii)
Cove files reports with the Securities and Exchange Commission under Section 13
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), is
current on all its reports and filings and Seller and Buyer have been provided
with access to all reports of Cove via the XXXXX system of the SEC that have
been filed by or with respect to Cove during the past 12 months and longer.
C. Seller represents and warrans that all material information
respecting the past, present and proposed business operations of Cove, its
management, financial position or otherwise in any such filings and reports is
comlete and correct and that Seller is not aware of any liability relating to
Cove's business or operations which has not been set forth in the financial
statement as reported in Cove's most recently filed 10QSB or other applicable
reporting document and that there is not any present or threatened or proposed
litigation by or against Cove.
D. Seller represents and warrants that this Agreement is valid and
enforceable by its terms and execution of the Agreement will not result in
violation of any other agreement and that consummation of this Agreement will
not result in a breach of any shareholder agreement of buy-sell agreement
executed amount the shareholders of Cove.
5
E. Seller and Buyer are aware that there is no current "established
trading market" for the Common Stock of Cove which Common Stock is quoted on the
OTC Bulletin Board of the National Association of Securities Dealers, Inc., (the
"NASD") under the symbol "CVAP.OB" and that it is uncertain at this time whether
there will be any future market for the Common Stock of Cove; and that the
purchase price being paid for the Cove Common Stock bears no relationship to
assets, book value or other established criteria of value. Seller and Buyer are
also aware of the imminent Reorganization Transaction.
F. If there is or have been any increases in the number of shares held
by Seller due to stock splits or similar events, the number of shares to be sold
to buyer will be adjusted upward accordingly with no increase in the purchase
price. Seller represents and warrants that there have been no such changes
before the date hereof.
G. Buyer represents and warrants the following as an additional
inducement for the offer outlined in this Agreement to purchase the Common Stock
of Seller covered by this Agreement, to-wit:
(i) Buyer is not relying on any representation of warranty of
Seller whatsoever, except those representations and warranties contained in this
Agreement;
(ii) Buyer has conducted Buyer's own investigation of the
risks and merits of an investment in Cove by reviewing its annual and quarterly
filings and registration statements contained in the Xxxxx achieves of the
Securities and Exchange Commission;
(iii) Buyer or its principals is an "accredited investor" as
that term is known or defined under applicable United States securities laws,
and/or is fully capable of evaluating the risks and merits associated with the
execution of this Agreement and the purchase of this Common Stock hereunder,
without qualification;
(iv) Buyer has full power and authority to execute and deliver
this Agreement, without qualification;
(v) Buyer is purchasing the Common Stock for Buyer's account
only;
(vi) Buyer will fully comply with all provisions of United
States and state securities laws, in the resale of any of the Common Stock
acquired hereunder, and will timely make all the required filings regarding
beneficial ownership of the Common Stock with the Securities and Exchange
Commission, as may be applicable; and
(vii) Buyer agrees and understands that the amount being paid
by Buyer for the shares may be more or less than other Cove shareholders may be
selling their stock in similar transactions.
H. Seller represents, warrants and agrees that Buyer has not made and
Seller is not relying on any representation of warranty of Buyer whatsoever,
except those representations and warranties contained in this Agreement; and
that Seller has conducted his own investigation of the proposed Reorganization
Transaction, including without limitation that Seller has received and reviewed
financial statements of the Eurobulk Group of Companies (predecessor of the
Acquiror) for the years ended December 31, 2004 and 2003, the Term Sheet between
Cove and Eurobulk Ltd. Dated April 20, 2005 and the draft copy of the Form 8-K
of Cove dated June 2005 and the draft of Agreement and Plan of Merger dated June
17, 2005 for the proposed Reorganization Transaction. Without limitation of the
above, Seller acknowledges that instead of raising $50 million or more as
mentioned in said Term Sheet, the actual amount raised might be only $25 million
or less.
6
Accordingly, the parties hereto (subject to both parties' signatures
below) agree as follows:
1. Buyer hereby offers to purchase from Seller the shares of Common
Stock of Cove as indicated on the Counterpart Signature Page, free and clear of
any liens, encumbrances and/or other restrictions whatsoever and Seller agrees
to sell to Buyer the shares of Common Stock of Cove owned by Seller as indicated
on the Counterpart Signature Page, free and clear of any such liens,
encumbrances and/or restrictions whatsoever.
2. The purchase price of the Common Stock shall be as indicated on the
Counterpart Signature Page, payable on delivery of the Common Stock by Seller to
Buyer for purchase and sale under this Agreement.
3. Certificates representing the Common Stock shall be delivered to
Buyer in exchange for payment by Buyer and Seller of the amounts required herein
from funds to be deposited by Buyer for the purchase and sale of the Common
Stock, which payment shall be subject to the transfer of the Common Stock into
Buyers's name and delivery of the stock certificate or certificates representing
the common Stock to Buyer, which stock certificate shall bear no restriction or
notation, except as may be required to comply with the Securities and Exchange
Act of 1933;
4. By acceptance of this offer, Seller hereby covenants and warrants:
(i) That Seller has the right to sell, transfer, convey and
assign the Common Stock, without qualification; subject to such restrictions as
may be required to comply with the Securities and Exchange Act of 1933;
(ii) That the shares being sold under this Agreement are fully
paid and non-assessable; and
(iii) That Seller has done no act to encumber, hypothecate or
cause liens on the Common Stock and the shares are free and clear of any liens,
encumbrances and restrictions.
5. A closing under the terms of this Agreement shall take place on or
about the closing date specified. At the closing Buyer shall tender to Seller
payment in the amount of the specified Purchase Price for the shares to be
purchased under this Agreement. Seller shall simultaneously tender to Buyer
certificates for the specified number of shares of the Common Stock of Cove with
stock powers attached. Said certificates shall be free and clear of any
restriction except such as may be imposed under the Securities Act of 1933.
6. This Agreement shall be construed under the laws of the State of
California.
7. All representations and warranties in this Agreement shall survive
the closing.
8. This Agreement constitutes the entire, complete and final expression
of the agreement of the parties relating to the subject matter hereof and
supersedes all previous communications and agreements thereon, oral or written.
7
COUNTERPART SIGNATURE PAGE
This Counterpart Signature Page for that certain Share Purchase Agreement ("the
Agreement") dated on August 29, 2005, among the undersigned, by which the
undersigned, through execution and delivery of this Counterpart Signature Page,
intend to be legally bound by the terms of the Agreement. This Agreement may be
executed in separate counterparts which together constitute one and the same
agreement.
BUYER:
X.X. Xxxxxxx
------------------------------------
Dated 8/29/05 By: /s/ X.X. Xxxxxxx
----------------------------
(Signature) X.X. Xxxxxxx
SELLER:
Xxxxx Xxxxxxxx
------------------------------------
8/29/05 By: /s/ Xxxxx Xxxxxxxx
Number of Shares Sold: 1,385,396
Purchase Price ($13,424.13)
Closing Date: August 29, 2005
8
Exh 10.3
SHARE PURCHASE AGREEMENT
To: The Seller(s) listed on the Counterpart
Signature Page hereof ("Seller")
From: The Buyer(s) listed on the Counterpart
Signature Page hereof ("Buyer")
Re: Purchase of shares that are common stock (the "Common Stock") of
Cove Apparel, Inc., a Nevada corporations ("Cove"), pursuant to this Share
Purchase Agreement (the "Agreement")
RECITALS:
WHEREAS, Buyer (as defined herein) wishes to purchase and Seller wishes
to sell Common Stock of Cove; and
WHEREAS, Cove is entering into a reorganization, merger or acquisition
with Euroseas Acquisition Corporation, a Delaware corporation, which is a wholly
owned subsidiary of Euroseas, Ltd., a Xxxxxxxx Island Corporations (the
"Acquirer":, which may or may not be beneficial to Cove and its stockholders
(the "Reorganization Transaction"); and
NOW, THEREFORE, the parties hereto do hereby agree as follows:
A. Seller represents and warrants that there are 10,480,500 total
shares of Commons Stock of Cove outstanding and Seller is the legal owner of
4,500,000 of these Common Stock shares of Cove. Seller agrees to sell 1,609,209
of these Common Stock shares as indicated on the Counterpart Signature Page.
Seller wishes to sell to Buyer at an aggregate purchase price as indicated on
the Counterpart Signature Page, and Buyer wishes to purchase from Seller at an
aggregate purchase price as indicated on the Counterpart Signature Page.
B. Seller represents and warrants that: (i) Cove is a publicly-held
company engaged in apparel sales, having previously and lawfully offered and
sold a portion of is securities in accordance with applicable federal and state
securities laws, rules and regulations and is in good standing the state of its
incorporation and in all other jurisdictions where it does business and (ii)
Cove files reports with the Securities and Exchange Commission under Section 13
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), is
current on all its reports and filings and Seller and Buyer have been provided
with access to all reports of Cove via the XXXXX system of the SEC that have
been filed by or with respect to Cove during the past 12 months and longer.
C. Seller represents and warrans that all material information
respecting the past, present and proposed business operations of Cove, its
management, financial position or otherwise in any such filings and reports is
comlete and correct and that Seller is not aware of any liability relating to
Cove's business or operations which has not been set forth in the financial
statement as reported in Cove's most recently filed 10QSB or other applicable
reporting document and that there is not any present or threatened or proposed
litigation by or against Cove.
D. Seller represents and warrants that this Agreement is valid and
enforceable by its terms and execution of the Agreement will not result in
violation of any other agreement and that consummation of this Agreement will
not result in a breach of any shareholder agreement of buy-sell agreement
executed amount the shareholders of Cove.
9
E. Seller and Buyer are aware that there is no current "established
trading market" for the Common Stock of Cove which Common Stock is quoted on the
OTC Bulletin Board of the National Association of Securities Dealers, Inc., (the
"NASD") under the symbol "CVAP.OB" and that it is uncertain at this time whether
there will be any future market for the Common Stock of Cove; and that the
purchase price being paid for the Cove Common Stock bears no relationship to
assets, book value or other established criteria of value. Seller and Buyer are
also aware of the imminent Reorganization Transaction.
F. If there is or have been any increases in the number of shares held
by Seller due to stock splits or similar events, the number of shares to be sold
to buyer will be adjusted upward accordingly with no increase in the purchase
price. Seller represents and warrants that there have been no such changes
before the date hereof.
G. Buyer represents and warrants the following as an additional
inducement for the offer outlined in this Agreement to purchase the Common Stock
of Seller covered by this Agreement, to-wit:
(i) Buyer is not relying on any representation of warranty of
Seller whatsoever, except those representations and warranties contained in this
Agreement;
(ii) Buyer has conducted Buyer's own investigation of the
risks and merits of an investment in Cove by reviewing its annual and quarterly
filings and registration statements contained in the Xxxxx achieves of the
Securities and Exchange Commission;
(iii) Buyer or its principals is an "accredited investor" as
that term is known or defined under applicable United States securities laws,
and/or is fully capable of evaluating the risks and merits associated with the
execution of this Agreement and the purchase of this Common Stock hereunder,
without qualification;
(iv) Buyer has full power and authority to execute and deliver
this Agreement, without qualification;
(v) Buyer is purchasing the Common Stock for Buyer's account
only;
(vi) Buyer will fully comply with all provisions of United
States and state securities laws, in the resale of any of the Common Stock
acquired hereunder, and will timely make all the required filings regarding
beneficial ownership of the Common Stock with the Securities and Exchange
Commission, as may be applicable; and
(vii) Buyer agrees and understands that the amount being paid
by Buyer for the shares may be more or less than other Cove shareholders may be
selling their stock in similar transactions.
H. Seller represents, warrants and agrees that Buyer has not made and
Seller is not relying on any representation of warranty of Buyer whatsoever,
except those representations and warranties contained in this Agreement; and
that Seller has conducted his own investigation of the proposed Reorganization
Transaction, including without limitation that Seller has received and reviewed
financial statements of the Eurobulk Group of Companies (predecessor of the
Acquiror) for the years ended December 31, 2004 and 2003, the Term Sheet between
Cove and Eurobulk Ltd. Dated April 20, 2005 and the draft copy of the Form 8-K
of Cove dated June 2005 and the draft of Agreement and Plan of Merger dated June
17, 2005 for the proposed Reorganization Transaction. Without limitation of the
above, Seller acknowledges that instead of raising $50 million or more as
mentioned in said Term Sheet, the actual amount raised might be only $25 million
or less.
10
Accordingly, the parties hereto (subject to both parties' signatures
below) agree as follows:
1. Buyer hereby offers to purchase from Seller the shares of Common
Stock of Cove as indicated on the Counterpart Signature Page, free and clear of
any liens, encumbrances and/or other restrictions whatsoever and Seller agrees
to sell to Buyer the shares of Common Stock of Cove owned by Seller as indicated
on the Counterpart Signature Page, free and clear of any such liens,
encumbrances and/or restrictions whatsoever.
2. The purchase price of the Common Stock shall be as indicated on the
Counterpart Signature Page, payable on delivery of the Common Stock by Seller to
Buyer for purchase and sale under this Agreement.
3. Certificates representing the Common Stock shall be delivered to
Buyer in exchange for payment by Buyer and Seller of the amounts required herein
from funds to be deposited by Buyer for the purchase and sale of the Common
Stock, which payment shall be subject to the transfer of the Common Stock into
Buyers's name and delivery of the stock certificate or certificates representing
the common Stock to Buyer, which stock certificate shall bear no restriction or
notation, except as may be required to comply with the Securities and Exchange
Act of 1933;
4. By acceptance of this offer, Seller hereby covenants and warrants:
(i) That Seller has the right to sell, transfer, convey and
assign the Common Stock, without qualification; subject to such restrictions as
may be required to comply with the Securities and Exchange Act of 1933;
(ii) That the shares being sold under this Agreement are fully
paid and non-assessable; and
(iii) That Seller has done no act to encumber, hypothecate or
cause liens on the Common Stock and the shares are free and clear of any liens,
encumbrances and restrictions.
5. A closing under the terms of this Agreement shall take place on or
about the closing date specified. At the closing Buyer shall tender to Seller
payment in the amount of the specified Purchase Price for the shares to be
purchased under this Agreement. Seller shall simultaneously tender to Buyer
certificates for the specified number of shares of the Common Stock of Cove with
stock powers attached. Said certificates shall be free and clear of any
restriction except such as may be imposed under the Securities Act of 1933.
6. This Agreement shall be construed under the laws of the State of
California.
7. All representations and warranties in this Agreement shall survive
the closing.
8. This Agreement constitutes the entire, complete and final expression
of the agreement of the parties relating to the subject matter hereof and
supersedes all previous communications and agreements thereon, oral or written.
11
COUNTERPART SIGNATURE PAGE
This Counterpart Signature Page for that certain Share Purchase Agreement ("the
Agreement") dated on August 29, 2005, among the undersigned, by which the
undersigned, through execution and delivery of this Counterpart Signature Page,
intend to be legally bound by the terms of the Agreement. This Agreement may be
executed in separate counterparts which together constitute one and the same
agreement.
BUYER:
Olive Grove, LLC.
------------------------------------
Dated 8/29/05 By: /s/ Xxxxx Xxxxxx
----------------------------
(Signature) Xxxxx Xxxxxx, Managing Member
SELLER:
Xxxxx Xxxxxxxx
------------------------------------
8/29/05 By: /s/ Xxxxx Xxxxxxxx
Number of Shares Sold: 1,609,209
Purchase Price ($13,157.71)
Closing Date: August 29, 2005
12
10.4 Olive Grove, LLC
STOCK PLEDGE AGREEMENT
THIS STOCK PLEDGE AGREEMENT (this "Pledge Agreement") is made this 25th
day of August, 2005, by and among Olive Grove, LLC ("Pledgor"), EUROSEAS LTD., a
Xxxxxxxx Islands corporation ("Euroseas") and M&T TRUST COMPANY OF DELAWARE, a
Delaware limited purpose trust company, as collateral agent (the "Collateral
Agent").
R E C I T A L S
WHEREAS, reference is made to that certain Agreement and Plan of Merger
by and among Cove Apparel, Inc. ("Cove"), the Principals of Cove Apparel, Inc.
(the "Cove Principals"), Euroseas Ltd. and Euroseas Acquisition Company, Inc.,
dated August 25, 2005, hereinafter referred to as the "Merger Agreement;"
WHEREAS, Section 9.2(b) of the Merger Agreement provides for the
indemnification of Euroseas by the Cove Principals, as therein defined;
WHEREAS, in order to secure the obligations of the Cove Principals to
Euroseas under Section 9.2(b) of the Merger Agreement, Pledgor desires to
provide for the deposit of the collateral hereinafter described, and to pledge
such collateral to Euroseas as security for the obligations of Cove Principals
under Section 9.2(b) of the Merger Agreement; and
WHEREAS, capital terms used herein but not otherwise defined herein
shall have the meanings given to them in the Merger Agreement.
13
NOW, THEREFORE, the parties agree as follows:
1. As security for the obligations of the Cove Principals to Euroseas
under Section 9.2(b) of the Merger Agreement, Pledgor hereby pledges, assigns,
transfers, sets over and delivers to Euroseas, and grants to Euroseas a
continuing, first priority security interest in all of Pledgor's right, title
and interest in the number of shares of Euroseas Common Stock set forth on
Schedule A hereto whether now owned or hereafter acquired (the "Pledged Share
Amount") (whether such shares are received by Pledgor as the Per Share Merger
Consideration pursuant to the Merger Agreement, in private transactions, open
market transactions, or otherwise). In connection with the Merger, Pledgor
hereby agrees to promptly take all such actions as are required under the Merger
Agreement to exchange any and all of its shares of Cove Common Stock for the Per
Share Merger Consideration and hereby irrevocably instructs and authorizes
Euroseas, on Pledgor's behalf, to deliver directly to the Collateral Agent,
share certificates (with accompanying stock powers duly endorsed in blank) for
the applicable number of shares of Euroseas Common Stock issued as the Per Share
Merger Consideration and to be pledged hereunder to satisfy the Pledged Share
Amount. Notwithstanding anything to the contrary contained herein, if such
number of shares issued as the Per Share Merger Consideration are not sufficient
to satisfy the Pledged Share Amount, Pledgor hereby agrees to deliver directly
to the Collateral Agent share certificates (with accompanying stock powers duly
endorsed in blank) for such additional number of shares of Euroseas Common Stock
as are necessary to satisfy the Pledged Share Amount (whether such shares have
been or are required to be purchased in private transactions, open market
transactions or otherwise and all shares delivered hereunder to the Collateral
Agent, together with all adjustments to such shares resulting from any
reclassification, readjustment or other change in the capital structure of
Euroseas, are hereinafter referred to as the "Pledged Shares"); provided,
however, that in all events, there shall be delivered to the Collateral Agent
initially at least two certificates, one evidencing 40% of the Pledged Shares
and the other evidencing 60% of the Pledged Shares. The Collateral Agent shall
hold the Pledged Shares for the benefit of Euroseas in a separate trust or
custodial account containing only the Pledged Shares from Pledgor and no other
pledgor.
14
2. While the Collateral Agent is the holder of the Pledged Shares,
Pledgor shall have the right to vote the Pledged Shares at meetings of the
stockholders (or in action by consent) of Euroseas so long as (a) there is no
default in the terms of this Pledge Agreement (a "Default") and (b) no written
notice of a claim for indemnification under Section 9.2(b) of the Merger
Agreement (a "Claim Notice") has been sent by Euroseas to the Collateral Agent
and Pledgor. After any such Default, and prior to the cure, if any, thereof, or
after receipt of any Claim Notice, Pledgor shall not have the right to vote the
Pledged Shares at any such meeting (or action by consent) of the stockholders.
3. The Pledged Shares shall be subject to the following release
schedule. Except as provided below, without any instruction or consent from
Euroseas, on the first anniversary of the Effective Time, 40% of the Pledged
Shares shall be released to Pledgor and will no longer be subject to this Pledge
Agreement; provided, however, that if at any time prior to such first
anniversary, (i) there occurs a Default hereunder or (ii) Euroseas provides a
Claim Notice to the Cove Principals in accordance with Section 9.3 of the Merger
Agreement and to the Collateral Agent and Pledgor and, in the case of (i) and
(ii), subsequently files a lawsuit within 60 days thereafter (even if the filing
date is after such first anniversary), then no Pledged Shares shall be released
until (i) such Default is either cured or waived in writing, or (ii) all such
claims have been finally settled or brought to final non-appealable judgment (as
the case may be). Except as provided below, the balance of the Pledged Shares
shall be released to Pledgor and will no longer be subject to this Pledge
Agreement on the 18-month anniversary of the Effective Time; provided, however,
that if at any time prior to the 18-month anniversary, (i) there occurs a
Default hereunder, or (ii) Euroseas provides a Claim Notice to the Cove
Principals in accordance with Section 9.3 of the Merger Agreement and to the
15
Collateral Agent and Pledgor and, in the case of (i) and (ii), subsequently
files a lawsuit within 60 days thereafter (even if the filing date is after such
18-month anniversary), then no such Pledged Shares (other than those previously
released hereunder) shall be released until (i) such Default is either cured or
waived in writing or (ii) all such claims have been finally settled or brought
to final non-appealable judgment. Upon the later of (i) the 18-month anniversary
of the Effective Time, and (ii) the date Pledgor and Euroseas certifies in
writing to the Collateral Agent that either (x) all Defaults are either waived
or cured or (y) all indemnification claims are finally resolved with respect to
claims that were given pursuant to timely Claim Notices and timely filed as
lawsuits, all Pledged Shares then remaining that have not been used to satisfy
Pledgor's indemnification obligations hereunder, shall be released to Pledgor.
4. If at any time a Claim Notice is provided by Euroseas pursuant
hereto, and at any time Pledgor does not wish to contest the claim or no longer
wishes to contest the claim, then Pledgor shall have the right (but not the
obligation) to settle the claim by doing one of the following (and Euroseas
shall cooperate in the same and give a binding settlement agreement/instruction
to give effect to the same and to release Pledgor's obligations and any
remaining Pledged Shares shall not be subject to such claim): (a) cause the
Collateral Agent to distribute to Euroseas the number of Pledged Shares
necessary to pay off the claim, or (b) pay to Euroseas the claim in cash and
cause the Collateral Agent immediately release to Pledgor (and released from the
pledge hereunder) a portion of the Pledged Shares (with the number of shares to
be so released under (a) or (b) of this sentence to be based on the claim so
paid, using a then-current valuation of the shares, based on the following
valuation: (i) if the Euroseas Shares are listed for trading on a national
securities exchange or are quoted on the Nasdaq National Market or Nasdaq
16
SmallCap Market, then the fair market value shall be the closing price of a
share over the 30-day period immediately preceding the date the final amount of
the indemnification obligation is determined; (ii) if the Euroseas Shares are
quoted on the over the counter market, then the fair market value of a share
shall be the average of the closing bid price and asked price over the 30-day
period immediately preceding the date the final amount of the indemnification
obligation is determined; and (iii) otherwise the fair market value of a share
shall be as determined in good faith by the Board of Directors of Euroseas and
notice thereof given to the Collateral Agent. If and only if a claim is not so
settled with Pledgor in Pledgor's sole and absolute discretion under the
preceding sentence, then Euroseas may exercise the right to collect against the
Pledged Shares by causing the requisite number of shares to be sold by the
Collateral Agent at available market prices on the public securities market on
which the shares customarily are traded, and if not so traded, by causing the
Collateral Agent to engage an investment banking firm to find one or more buyers
for such shares, but only if (1) Euroseas actually delivered a timely Claim
Notice and timely filed a lawsuit, (2) Pledgor is given the right to defend the
claim with counsel of its choice, provided that Pledgor promptly acknowledges in
writing to Euroseas (with a copy to the Collateral Agent) that it is electing to
defend such claim and selects counsel reasonably acceptable to Euroseas, and (3)
after compliance with (1) and (2) of this sentence, Euroseas actually settles or
obtains a final non-appealable judgment on the claim, and, provided, further,
that if Pledgor has defended such claim, then any settlement by Euroseas must
have been with the consent of Pledgor, which consent shall not be unreasonably
withheld or delayed. In the event that the shares are not publicly traded and
the Collateral Agent retains an investment banking firm and such firm cannot
locate a suitable buyer within 30 days after being retained, then the value of
the Euroseas Shares shall be determined in accordance with clause (iii) above.
Upon written receipt from the Board of Directors of Euroseas of such valuation,
the Collateral Agent shall distribute to Euroseas the number of Pledged Shares
necessary to pay off the claim. At any time prior to a judgment being entered
for the benefit of Euroseas, Pledgor shall have the option to cause payment in
accordance with (a) or (b) of this paragraph 5. In the case of any such
settlement, Pledgor shall be given a release and that claim shall have no force
or effect against Pledgor or the remaining Pledged Shares.
Payment by Pledgor, acquiescence in the sale, or transfer of Pledged
Shares shall not constitute evidence of or an admission that the Euroseas claim
is valid or tenable. Before a lawsuit is filed, Euroseas shall give written
notice to Pledgor (with a copy to the Collateral Agent) that a claim is being
asserted, the amount involved and a description of the facts with related
documentation (such as copies of invoices) and shall in good faith attempt to
resolve the asserted claim.
17
5. Pledgor represents and warrants to Euroseas that: (a) it is the sole
legal and beneficial owner of, and has good title to, and has full right to
pledge and assign, the Pledged Shares in which it purports to grant a security
interest hereunder; (b) no lien, security interest or other encumbrance exists
or will exist upon any such Pledged Shares at any time except the pledge and
security interest in favor of Euroseas created or provided for herein, which
pledge and security interest constitutes a perfected pledge and security
interest in and to all of such Pledged Shares; (c) this Pledge Agreement
constitutes the legal, valid and binding obligation enforceable against Pledgor;
and (d) the execution, delivery and performance by Pledgor of this Pledge
Agreement does not and will not result in the breach of any agreement,
indenture, instrument to which Pledgor is a party, any law or statute, or any
judgment, degree or order entered into in a proceeding to which Pledgor is or
was a party. Pledgor further represents and warrants that (i) Pledgor's true
exact legal name is that set forth on the signature page hereof, (ii) the social
security number or taxpayer identification number of Pledgor is 00-0000000, and
(iii) Pledgor's primary residence or address of its chief executive office is
X.X. Xxx 0000, Xxxxxxx Xxxxx, Xxxxxxxxxx 00000.
6. Pledgor: (a) hereby consents to the filing of financing statements
and other documents in such offices as Euroseas requests to perfect the security
interest granted hereunder if in Euroseas' judgment any such filings are
necessary or desirable; (b) shall give, execute, deliver, file and/or record any
financing statement, notice, instrument, document, agreement or other papers
that may be necessary or desirable (in the judgment of Euroseas) to create,
preserve, perfect or validate any security interest granted pursuant hereto or
to enable Euroseas to exercise and enforce its rights hereunder with respect to
such security interest; and (c) shall warrant and defend at its own expense
Euroseas' right, title, special property and security interests in and to the
Pledged Shares against the claims of any person or entity.
7. Pledgor shall not, without the prior written consent of Euroseas:
(i) sell, convey or otherwise dispose of any of the Pledged Shares or any
interest therein; (ii) incur or permit to be incurred any pledge, lien, charge,
or encumbrance or any security interest whatsoever in or with respect to any of
the Pledged Shares, other than the security interest created hereby; or (iii)
file or suffer to be on file, or authorize or permit to be filed or to be on
file, in any jurisdiction, any financing statement, or file or authorize any
like instrument, with respect to the Pledged Shares in which Euroseas is not
named as the sole secured party.
18
8. Except for the Pledged Shares that are being pledged to satisfy the
indemnity obligations under the Merger Agreement and to satisfy any claims
against Pledgor under this Pledge Agreement, notwithstanding anything to the
contrary herein or elsewhere, Pledgor itself (and its direct and indirect
owners) shall have absolutely no obligation or liability to Euroseas or any
persons or entities affiliated with Euroseas relating to the transactions which
are the subject of the Merger Agreement. Pledgor's obligations under this Pledge
Agreement, including, but not limited to, any liability for attorney's fees and
expenses, investment banking fees, etc., shall be non-recourse and shall be
limited solely to the Pledged Shares and the proceeds thereof and Pledgor shall
have no personal liability under this Pledge Agreement.
9. Cash or stock dividends paid on the Pledged Shares shall be the sole
property of Pledgor and shall not be subject to the Pledge Agreement and shall
be promptly released to Pledgor upon receipt by the Collateral Agent
notwithstanding anything to the contrary herein or elsewhere, and
notwithstanding any claim asserted by Euroseas and/or any contrary instructions
by Euroseas. Notwithstanding the foregoing, if during the term of this Pledge
Agreement any stock split, reclassification, readjustment or other change is
declared or made in the capital structure of Euroseas, all new, substituted and
additional shares, or other securities, issued in respect of the Pledged Shares
by reason of any such change or exercise shall constitute Pledged Shares
hereunder and shall be delivered to and held by the Collateral Agent under the
terms of this Pledge Agreement in the same manner as the Pledged Shares
originally pledged hereunder.
10. After a Default or after a Claim Notice has been timely served,
Pledgor hereby irrevocably appoints Euroseas as Pledgor's attorney-in-fact, with
full authority in the place and stead of Pledgor and in the name of Pledgor,
from time to time in Euroseas' discretion, to take any action and to execute any
instrument which Euroseas may deem necessary or advisable to accomplish the
purposes of this Pledge Agreement, including, without limitation, to file any
claims or take any action or institute any proceedings which Euroseas may deem
necessary or desirable for the collection of any of the Pledged Shares or
otherwise to enforce the rights of Euroseas with respect to any of the Pledged
Shares. Pledgor hereby acknowledges, consents and agrees that the power of
attorney granted pursuant to this section is irrevocable and coupled with an
interest.
19
11. Notwithstanding anything to the contrary contained herein, Pledgor
hereby irrevocably appoints Xxxxx Xxxxxx ("Pledgor's Representative"), as
Pledgor's representative, attorney-in-fact and agent, with full power of
substitution (i) to act in the name, place and stead of such Pledgor with
respect to any lawsuit or other proceeding involving this Pledge Agreement, (ii)
to act for such Pledgor with regard to matters pertaining to indemnification
referred to in this Pledge Agreement, including the power to compromise any
claim on behalf of such Pledgor, to bring and transact matters of litigation;
and (iii) to give and receive all notices and communications to be given or
received under this Pledge Agreement and to receive service of process in
connection with any claims under this Pledge Agreement with respect to any of
the foregoing. If Xxxxx Xxxxxx dies or otherwise becomes incapacitated and
unable to serve as Pledgor's Representative, Pledgor and all other pledgors
executing similar pledge agreements in favor of Euroseas shall appoint a new
Pledgor's Representative and shall give notice thereof to Euroseas and the
Collateral Agent. The death or incapacity of Pledgor shall not terminate the
agency and power of attorney granted hereby to the Pledgor's Representative. The
appointment of Pledgor's Representative shall be deemed coupled with an interest
and shall be irrevocable and Euroseas and the Collateral Agent and any other
person may conclusively and absolutely rely, without inquiry, upon any action of
Pledgor's Representative, as the action of Pledgor in all maters referred to
herein. All actions, decisions and instructions of Pledgor's Representative
shall be conclusive and binding upon Pledgor and Pledgor shall not have any
cause of action against Pledgor's Representative for any action taken or not
taken by Pledgor's Representative in his role as such, except for any action or
omission taken or made fraudulently or in bad faith with respect to Pledgor. All
reasonable out-of-pocket fees and expenses (including fees payable to counsel
and other professional fees) incurred by Pledgor's Representative in connection
with performing such function shall be paid by Pledgor.
12. The parties hereto agree that the following provisions shall
control with respect to the rights, duties, liabilities, privileges and
immunities of the Collateral Agent:
a) The Collateral Agent shall neither be responsible for or under,
nor chargeable with knowledge of, the terms and conditions of any
other agreement, instrument or document executed between/among
the parties hereto. This Pledge Agreement sets forth all of the
obligations of the Collateral Agent, and no additional
obligations shall be implied from the terms of this Pledge
Agreement or any other agreement, instrument or document.
b) The Collateral Agent may act in reliance upon any instructions,
notice, certification, demand, consent, authorization, receipt,
power of attorney or other writing delivered to it by any other
party without being required to determine the authenticity or
validity thereof or the correctness of any fact stated therein,
the propriety or validity of the service thereof, or the
jurisdiction of the court issuing any judgement or order. The
Collateral Agent may act in reliance upon any signature believed
by it to be genuine, and may assume that such person has been
properly authorized to do so.
20
c) Each of the parties, jointly and severally, agrees to reimburse
the Collateral Agent on demand for, and to indemnify and hold the
Collateral Agent harmless against and with respect to, any and
all loss, liability, damage or expense (including, but without
limitation, attorneys' fees, investment banker fees, stock
transfer agent fees, costs and disbursements) that the Collateral
Agent may suffer or incur in connection with this Pledge
Agreement and its performance hereunder or in connection
herewith, except to the extent such loss, liability, damage or
expense arises from its willful misconduct or gross negligence as
adjudicated by a court of competent jurisdiction. The Collateral
Agent shall have the further right at any time and from time to
time hereunder to charge, and reimburse itself from, the property
held in trust hereunder.
d) The Collateral Agent may consult with legal counsel of its
selection in the event of any dispute or question as to the
meaning or construction of any of the provisions hereof or its
duties hereunder, and it shall incur no liability and shall be
fully protected in acting in accordance with the opinion and
instructions of such counsel. Each of the parties, jointly and
severally, agrees to reimburse the Collateral Agent on demand for
such legal fees, disbursements and expenses and in addition, the
Collateral Agent shall have the right hereunder to reimburse
itself for such fees, disbursements and expenses from the
property held in trust hereunder.
e) The Collateral Agent shall give the property held in trust by it
hereunder the same degree of care that it gives its own similar
property.
f) In the event of any disagreement between/among any of the parties
to this Pledge Agreement, or between/among them or either or any
of them and any other person, resulting in adverse claims or
demands being made in connection with the subject matter hereof,
or in the event that the Collateral Agent, in good faith, be in
doubt as to what action it should take hereunder, the Collateral
Agent may, at its option, refuse to comply with any claims or
demands on it, or refuse to take any other action hereunder, so
long as such disagreement continues or such doubt exists, and in
any such event, the Collateral Agent shall not become liable in
any way or to any person for its failure or refusal to act, and
the Collateral Agent shall be entitled to continue so to refrain
from acting until (i) the rights of all parties shall have been
21
fully and finally adjudicated by a court of competent
jurisdiction, or (ii) all differences shall have been adjusted
and all doubt resolved by agreement among all of the interested
persons, and the Collateral Agent shall have been notified
thereof in writing signed by all such persons. The Collateral
Agent shall have the option, after 30 calendar days' notice to
the other parties of its intention to do so, to file an action in
interpleader requiring the parties to answer and litigate any
claims and rights among themselves. The rights of the Collateral
Agent under this paragraph are cumulative of all other rights
which it may have by law or otherwise.
g) The Collateral Agent is authorized, for any securities at any
time held hereunder, to register such securities in the name
of its nominee(s) or the nominees of any securities
depository, and such nominee(s) may sign the name of any of
the parties hereto to whom or to which such securities belong
and guarantee such signature in order to transfer securities
or certify ownership thereof to tax or other governmental
authorities.
h) Notice to the parties shall be given as provided in Paragraph
14 alone.
i) The Collateral Agent shall make payments of dividends (cash or
stock) paid on the Pledged Shares to the Pledgor. The Pledgor
shall provide to the Collateral Agent an appropriate W-9 form
for tax identification number certification or a W8 form for
non-resident alien certification. The Collateral Agent shall
be responsible only for income reporting to the Internal
Revenue Service with respect to the dividends (cash or stock)
paid on the Pledged Shares.
j) The Collateral Agent may, in its sole discretion, resign and
terminate its position hereunder at any time following 30
calendar days' prior written notice to the other parties to this
Pledge Agreement. Any such resignation shall terminate all
obligations and duties of the Collateral Agent hereunder. On the
effective date of such resignation, the Collateral Agent shall
deliver this Pledge Agreement, together with the Pledged Shares
still in its possession and any and all other related instruments
or documents, to any successor Collateral Agent agreeable to the
parties, subject to this Pledge Agreement. If a successor
Collateral Agent has not been appointed prior to the expiration
of 30 calendar days following the date of the notice of such
resignation, the then acting Collateral Agent may petition any
court of competent jurisdiction for the appointment of a
successor Collateral Agent, or other appropriate relief. Any such
resulting appointment shall be binding upon all of the parties to
this Pledge Agreement.
k) The Collateral Agent shall receive the fees provided in Schedule
B annexed hereto upon the parties' execution of this Pledge
Agreement.
22
l) Any modification of this Pledge Agreement or any additional
obligations assumed by any party hereto shall be binding only if
evidenced by a writing signed by each of the parties hereto.
m) The Collateral Agent shall not incur any liability for not
performing any act or fulfilling any obligation hereunder by
reason of any occurrence beyond its control (including, but not
limited to, any provision of any present or future law or
regulation or any act of any governmental authority, any act of
God or war or terrorism, or the unavailability of the Federal
Reserve Bank wire services or any electronic communication
facility).
n) No printed or other material in any language, including
prospectuses, notices, reports, and promotional material which
mentions "M&T Trust Company of Delaware" or "M&T Bank" by name or
the rights, powers, or duties of the Collateral Agent under this
Pledge Agreement shall be issued by any other parties hereto, or
on such party's behalf, without the prior written consent of the
Collateral Agent.
13. Euroseas and Pledgor shall be jointly and severally responsible for
payment, upon demand, of all fees, charges and expenses (including, but not
limited to, attorneys fees, investment banker fees, stock transfer agent fees,
etc.) of the Collateral Agent. At the time of execution hereof, Euroseas and
Pledgor shall pay to or reimburse the Collateral Agent for the fees on Schedule
A and all legal fees and expenses incurred by the Collateral Agent in connection
with its agreement to act as Collateral Agent and its negotiation and execution
of this Pledge Agreement.
14. All notices delivered pursuant to this Pledge Agreement shall be in
writing and shall be deemed to have been duly given on the date of service if
served personally upon the person to whom notice is to be given, or on the third
calendar day after mailing, if mailed to the person to whom notice is to be
given, by first class mail, registered or certified, postage prepaid, and
properly addressed as follows:
If to Euroseas:
Euroseas Ltd.
Aethrion Xxxxxx
00 Xx Xxxxxxxxxxxx Xxxxxx
000 00 Xxxxxxxx
Xxxxxx
Attn: Xxxxxxxxx Xxxxxx
Telephone: 000 00 000 000 0000
Facsimile: 011 30 210 610 5111
with a copy to:
Xxxxxx & Xxxxxx LLP
Xxx Xxxxxxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxxx Xxxxxxxxx
Telephone: 000-000-0000
Facsimile: 000-000-0000
23
If to Pledgor:
Olive Grove, LLC
X.X. Xxx 0000
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Attn: Xxxxx Xxxxxx
Telephone: 000-000-0000
Facsimile: 000-000-0000
With a copy to:
Xxxxxxxxxxx & Xxxxxxxx Xxxxxxxxx Xxxxxx LLP
00000 Xxxxx Xxxxxx Xxxxxxxxx, Xxxxxxx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxx Xxxxxxxx
Telephone: 000-000-0000
Facsimile: 310-552-5001
If to Collateral Agent:
M&T Trust Company of Delaware
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxx X. Xxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to:
Xxxxxxx X. Xxxxxxx, Esquire
Ober, Kaler, Xxxxxx & Xxxxxxx
000 X. Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to Pledgor's Representative:
Xxxxx Xxxxxx
c/o Olive Grove, LLC
X.X. Xxx 0000 Xxxxxxx Xxxxx, Xxxxxxxxxx 00000 Attn: Xxxxx
Xxxxxx Telephone: 000-000-0000 Facsimile: 000-000-0000
24
Any party may change its address for purposes of this paragraph by
giving the other party written notice of the new address in the manner set forth
above.
15. No waiver of any of the provisions of this Pledge Agreement shall
be deemed, or shall constitute, a waiver of any other provision, whether or not
similar, nor shall any waiver constitute a continuing waiver. No waiver shall be
binding unless executed in writing by the party making the waiver.
16. In the event of a dispute between the parties hereto arising out of
the terms, conditions or obligations imposed by this Pledge Agreement or any
claim asserted hereunder, the prevailing party shall be entitled to recover
reasonable attorney's fees, costs and expenses incurred in connection therewith.
Any obligation Pledgor has under this paragraph will be limited solely to the
collateral under this Pledge Agreement and the proceeds thereof. Further if
Pledgor settles a claim, then Pledgor shall not be required to bear any
attorneys fees or costs or expenses incurred after such settlement relating to
such claim or incurred as a result of other pledgors (e.g., under similar pledge
agreements) or the Cove Principals relating to such claim.
17. Each party shall, at the request of the other, execute, acknowledge
and deliver whatever additional instruments and do such other acts, as may be
reasonably required or convenient in order to accomplish and carry forward the
intent and purposes of this Pledge Agreement, including, but not limited to,
arranging for the exchange of any and all of Pledgor's Cove Common Stock for the
Per Share Merger Consideration and causing such Euroseas Common Stock to be
pledged hereunder.
18. This Pledge Agreement shall be governed by and construed in
accordance with the laws of the State of New York without giving effect to
choice of law principles. Each party hereto irrevocably consents to the service
of process by registered mail, postage prepaid, or by personal service within or
without the State of New York.
19. THE PARTIES HERETO HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY
WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS PLEDGE
AGREEMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL
OR WRITTEN) OR ACTIONS ARISING OUT OF OR RELATED TO THE PLEDGED SHARES OR THIS
PLEDGE AGREEMENT. EACH PARTY ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL
AND SUFFICIENT CONSIDERATION FOR THIS PROVISION AND THAT THIS PROVISION IS A
MATERIAL INDUCEMENT FOR EACH OTHER PARTY ENTERING INTO THIS PLEDGE AGREEMENT.
EACH PARTY HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE
RIGHT TO SEEK PUNITIVE OR CONSEQUENTIAL DAMAGES AGAINST THE OTHER PARTIES
ARISING OUT OF THE TRANSACTIONS CONTEMPLATED BY THIS PLEDGE AGREEMENT.
20. This Pledge Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective heirs, representatives,
successors and assigns; provided, however, that neither Euroseas nor Pledgor may
assign or transfer its rights or obligations hereunder without the prior written
consent of the other.
21. This Pledge Agreement may be executed in counterparts, each of
which shall be deemed to be an original, but all of which shall constitute one
and the same agreement. Facsimile signatures on counterparts of this Agreement
shall be deemed original signatures with all rights accruing thereto.
22. In the event of any inconsistencies between the terms set forth in
this Pledge Agreement and the terms set forth in the Merger Agreement, the terms
set forth in this Pledge Agreement shall prevail.
25
IN WITNESS WHEREOF, the parties hereto have executed this Pledge
Agreement on the day and year first above written.
PLEDGOR
By: /s/ Xxxxx X. Xxxxxx, Managing Member
------------------------------------------
EUROSEAS LTD.
By: /s/ Xxxxxxxxx Xxxxxx
------------------------------
M&T TRUST COMPANY OF DELAWARE,
as Collateral Agent
By:
-------------------------------
Xxxxxx X. Xxxxx
Vice President
PLEDGOR'S REPRESENTATIVE, solely as to the provisions
of paragraph 11
By: /s/ Xxxxx X. Xxxxxx
------------------------------------
Xxxxx X. Xxxxxx
26
Schedule A to
Stock Pledge Agreement
----------------------
Number of Shares to be Pledged
------------------------------
82,850
27
Schedule B to
Stock Pledge Agreement
----------------------
Acceptance Fee $ 5,000
Collateral Agent Fee for 18 months
$ 7,500
=========
$ 12,500
28
Xxxxx X. Xxxxxx
X.X. Xxx 0000
Xxxxxxx Xxxxx, Xx 00000-0000
September 2, 2005
Tasos Aslides, CFO
Euroseas, Ltd.
0000 Xxx Xxxx Xx.
Xxxxxxxxxxxx, Xxx Xxxxxx 00000
Re. Pledge Agreement
Dear Mr. Aslides:
Please be advised I am no longer acting as the Pledgor's Representative.
Sincerely,
/s/ Xxxxx X. Xxxxxx
---------------------------
Xxxxx X. Xxxxxx
29
10.5 Xxxxxx Ave Partners, LLC
STOCK PLEDGE AGREEMENT
THIS STOCK PLEDGE AGREEMENT (this "Pledge Agreement") is made this 25th
day of August, 2005, by and among Xxxxxx Ave Partners LLC ("Pledgor"), EUROSEAS
LTD., a Xxxxxxxx Islands corporation ("Euroseas") and M&T TRUST COMPANY OF
DELAWARE, a Delaware limited purpose trust company, as collateral agent (the
"Collateral Agent").
R E C I T A L S
WHEREAS, reference is made to that certain Agreement and Plan of Merger
by and among Cove Apparel, Inc. ("Cove"), the Principals of Cove Apparel, Inc.
(the "Cove Principals"), Euroseas Ltd. and Euroseas Acquisition Company, Inc.,
dated August 25, 2005, hereinafter referred to as the "Merger Agreement;"
WHEREAS, Section 9.2(b) of the Merger Agreement provides for the
indemnification of Euroseas by the Cove Principals, as therein defined;
WHEREAS, in order to secure the obligations of the Cove Principals to
Euroseas under Section 9.2(b) of the Merger Agreement, Pledgor desires to
provide for the deposit of the collateral hereinafter described, and to pledge
such collateral to Euroseas as security for the obligations of Cove Principals
under Section 9.2(b) of the Merger Agreement; and
WHEREAS, capital terms used herein but not otherwise defined herein
shall have the meanings given to them in the Merger Agreement.
30
NOW, THEREFORE, the parties agree as follows:
1. As security for the obligations of the Cove Principals to Euroseas
under Section 9.2(b) of the Merger Agreement, Pledgor hereby pledges, assigns,
transfers, sets over and delivers to Euroseas, and grants to Euroseas a
continuing, first priority security interest in all of Pledgor's right, title
and interest in the number of shares of Euroseas Common Stock set forth on
Schedule A hereto whether now owned or hereafter acquired (the "Pledged Share
Amount") (whether such shares are received by Pledgor as the Per Share Merger
Consideration pursuant to the Merger Agreement, in private transactions, open
market transactions, or otherwise). In connection with the Merger, Pledgor
hereby agrees to promptly take all such actions as are required under the Merger
Agreement to exchange any and all of its shares of Cove Common Stock for the Per
Share Merger Consideration and hereby irrevocably instructs and authorizes
Euroseas, on Pledgor's behalf, to deliver directly to the Collateral Agent,
share certificates (with accompanying stock powers duly endorsed in blank) for
the applicable number of shares of Euroseas Common Stock issued as the Per Share
Merger Consideration and to be pledged hereunder to satisfy the Pledged Share
Amount. Notwithstanding anything to the contrary contained herein, if such
number of shares issued as the Per Share Merger Consideration are not sufficient
to satisfy the Pledged Share Amount, Pledgor hereby agrees to deliver directly
to the Collateral Agent share certificates (with accompanying stock powers duly
endorsed in blank) for such additional number of shares of Euroseas Common Stock
as are necessary to satisfy the Pledged Share Amount (whether such shares have
been or are required to be purchased in private transactions, open market
transactions or otherwise and all shares delivered hereunder to the Collateral
Agent, together with all adjustments to such shares resulting from any
reclassification, readjustment or other change in the capital structure of
Euroseas, are hereinafter referred to as the "Pledged Shares"); provided,
however, that in all events, there shall be delivered to the Collateral Agent
initially at least two certificates, one evidencing 40% of the Pledged Shares
and the other evidencing 60% of the Pledged Shares. The Collateral Agent shall
hold the Pledged Shares for the benefit of Euroseas in a separate trust or
custodial account containing only the Pledged Shares from Pledgor and no other
pledgor.
31
2. While the Collateral Agent is the holder of the Pledged Shares,
Pledgor shall have the right to vote the Pledged Shares at meetings of the
stockholders (or in action by consent) of Euroseas so long as (a) there is no
default in the terms of this Pledge Agreement (a "Default") and (b) no written
notice of a claim for indemnification under Section 9.2(b) of the Merger
Agreement (a "Claim Notice") has been sent by Euroseas to the Collateral Agent
and Pledgor. After any such Default, and prior to the cure, if any, thereof, or
after receipt of any Claim Notice, Pledgor shall not have the right to vote the
Pledged Shares at any such meeting (or action by consent) of the stockholders.
3. The Pledged Shares shall be subject to the following release
schedule. Except as provided below, without any instruction or consent from
Euroseas, on the first anniversary of the Effective Time, 40% of the Pledged
Shares shall be released to Pledgor and will no longer be subject to this Pledge
Agreement; provided, however, that if at any time prior to such first
anniversary, (i) there occurs a Default hereunder or (ii) Euroseas provides a
Claim Notice to the Cove Principals in accordance with Section 9.3 of the Merger
Agreement and to the Collateral Agent and Pledgor and, in the case of (i) and
(ii), subsequently files a lawsuit within 60 days thereafter (even if the filing
date is after such first anniversary), then no Pledged Shares shall be released
until (i) such Default is either cured or waived in writing, or (ii) all such
claims have been finally settled or brought to final non-appealable judgment (as
the case may be). Except as provided below, the balance of the Pledged Shares
shall be released to Pledgor and will no longer be subject to this Pledge
Agreement on the 18-month anniversary of the Effective Time; provided, however,
that if at any time prior to the 18-month anniversary, (i) there occurs a
Default hereunder, or (ii) Euroseas provides a Claim Notice to the Cove
Principals in accordance with Section 9.3 of the Merger Agreement and to the
32
Collateral Agent and Pledgor and, in the case of (i) and (ii), subsequently
files a lawsuit within 60 days thereafter (even if the filing date is after such
18-month anniversary), then no such Pledged Shares (other than those previously
released hereunder) shall be released until (i) such Default is either cured or
waived in writing or (ii) all such claims have been finally settled or brought
to final non-appealable judgment. Upon the later of (i) the 18-month anniversary
of the Effective Time, and (ii) the date Pledgor and Euroseas certifies in
writing to the Collateral Agent that either (x) all Defaults are either waived
or cured or (y) all indemnification claims are finally resolved with respect to
claims that were given pursuant to timely Claim Notices and timely filed as
lawsuits, all Pledged Shares then remaining that have not been used to satisfy
Pledgor's indemnification obligations hereunder, shall be released to Pledgor.
4. If at any time a Claim Notice is provided by Euroseas pursuant
hereto, and at any time Pledgor does not wish to contest the claim or no longer
wishes to contest the claim, then Pledgor shall have the right (but not the
obligation) to settle the claim by doing one of the following (and Euroseas
shall cooperate in the same and give a binding settlement agreement/instruction
to give effect to the same and to release Pledgor's obligations and any
remaining Pledged Shares shall not be subject to such claim): (a) cause the
Collateral Agent to distribute to Euroseas the number of Pledged Shares
necessary to pay off the claim, or (b) pay to Euroseas the claim in cash and
cause the Collateral Agent immediately release to Pledgor (and released from the
pledge hereunder) a portion of the Pledged Shares (with the number of shares to
be so released under (a) or (b) of this sentence to be based on the claim so
paid, using a then-current valuation of the shares, based on the following
valuation: (i) if the Euroseas Shares are listed for trading on a national
securities exchange or are quoted on the Nasdaq National Market or Nasdaq
33
SmallCap Market, then the fair market value shall be the closing price of a
share over the 30-day period immediately preceding the date the final amount of
the indemnification obligation is determined; (ii) if the Euroseas Shares are
quoted on the over the counter market, then the fair market value of a share
shall be the average of the closing bid price and asked price over the 30-day
period immediately preceding the date the final amount of the indemnification
obligation is determined; and (iii) otherwise the fair market value of a share
shall be as determined in good faith by the Board of Directors of Euroseas and
notice thereof given to the Collateral Agent. If and only if a claim is not so
settled with Pledgor in Pledgor's sole and absolute discretion under the
preceding sentence, then Euroseas may exercise the right to collect against the
Pledged Shares by causing the requisite number of shares to be sold by the
Collateral Agent at available market prices on the public securities market on
which the shares customarily are traded, and if not so traded, by causing the
Collateral Agent to engage an investment banking firm to find one or more buyers
for such shares, but only if (1) Euroseas actually delivered a timely Claim
Notice and timely filed a lawsuit, (2) Pledgor is given the right to defend the
claim with counsel of its choice, provided that Pledgor promptly acknowledges in
writing to Euroseas (with a copy to the Collateral Agent) that it is electing to
defend such claim and selects counsel reasonably acceptable to Euroseas, and (3)
after compliance with (1) and (2) of this sentence, Euroseas actually settles or
obtains a final non-appealable judgment on the claim, and, provided, further,
that if Pledgor has defended such claim, then any settlement by Euroseas must
have been with the consent of Pledgor, which consent shall not be unreasonably
withheld or delayed. In the event that the shares are not publicly traded and
the Collateral Agent retains an investment banking firm and such firm cannot
locate a suitable buyer within 30 days after being retained, then the value of
the Euroseas Shares shall be determined in accordance with clause (iii) above.
Upon written receipt from the Board of Directors of Euroseas of such valuation,
the Collateral Agent shall distribute to Euroseas the number of Pledged Shares
necessary to pay off the claim. At any time prior to a judgment being entered
for the benefit of Euroseas, Pledgor shall have the option to cause payment in
accordance with (a) or (b) of this paragraph 5. In the case of any such
settlement, Pledgor shall be given a release and that claim shall have no force
or effect against Pledgor or the remaining Pledged Shares.
Payment by Pledgor, acquiescence in the sale, or transfer of Pledged
Shares shall not constitute evidence of or an admission that the Euroseas claim
is valid or tenable. Before a lawsuit is filed, Euroseas shall give written
notice to Pledgor (with a copy to the Collateral Agent) that a claim is being
asserted, the amount involved and a description of the facts with related
documentation (such as copies of invoices) and shall in good faith attempt to
resolve the asserted claim.
34
5. Pledgor represents and warrants to Euroseas that: (a) it is the sole
legal and beneficial owner of, and has good title to, and has full right to
pledge and assign, the Pledged Shares in which it purports to grant a security
interest hereunder; (b) no lien, security interest or other encumbrance exists
or will exist upon any such Pledged Shares at any time except the pledge and
security interest in favor of Euroseas created or provided for herein, which
pledge and security interest constitutes a perfected pledge and security
interest in and to all of such Pledged Shares; (c) this Pledge Agreement
constitutes the legal, valid and binding obligation enforceable against Pledgor;
and (d) the execution, delivery and performance by Pledgor of this Pledge
Agreement does not and will not result in the breach of any agreement,
indenture, instrument to which Pledgor is a party, any law or statute, or any
judgment, degree or order entered into in a proceeding to which Pledgor is or
was a party. Pledgor further represents and warrants that (i) Pledgor's true
exact legal name is that set forth on the signature page hereof, (ii) the social
security number or taxpayer identification number of Pledgor is 00-0000000, and
(iii) Pledgor's primary residence or address of its chief executive office is
X.X. Xxx 0000, Xxxxxxx Xxxxx, Xxxxxxxxxx 00000.
6. Pledgor: (a) hereby consents to the filing of financing statements
and other documents in such offices as Euroseas requests to perfect the security
interest granted hereunder if in Euroseas' judgment any such filings are
necessary or desirable; (b) shall give, execute, deliver, file and/or record any
financing statement, notice, instrument, document, agreement or other papers
that may be necessary or desirable (in the judgment of Euroseas) to create,
preserve, perfect or validate any security interest granted pursuant hereto or
to enable Euroseas to exercise and enforce its rights hereunder with respect to
such security interest; and (c) shall warrant and defend at its own expense
Euroseas' right, title, special property and security interests in and to the
Pledged Shares against the claims of any person or entity.
7. Pledgor shall not, without the prior written consent of Euroseas:
(i) sell, convey or otherwise dispose of any of the Pledged Shares or any
interest therein; (ii) incur or permit to be incurred any pledge, lien, charge,
or encumbrance or any security interest whatsoever in or with respect to any of
the Pledged Shares, other than the security interest created hereby; or (iii)
file or suffer to be on file, or authorize or permit to be filed or to be on
file, in any jurisdiction, any financing statement, or file or authorize any
like instrument, with respect to the Pledged Shares in which Euroseas is not
named as the sole secured party.
35
8. Except for the Pledged Shares that are being pledged to satisfy the
indemnity obligations under the Merger Agreement and to satisfy any claims
against Pledgor under this Pledge Agreement, notwithstanding anything to the
contrary herein or elsewhere, Pledgor itself (and its direct and indirect
owners) shall have absolutely no obligation or liability to Euroseas or any
persons or entities affiliated with Euroseas relating to the transactions which
are the subject of the Merger Agreement. Pledgor's obligations under this Pledge
Agreement, including, but not limited to, any liability for attorney's fees and
expenses, investment banking fees, etc., shall be non-recourse and shall be
limited solely to the Pledged Shares and the proceeds thereof and Pledgor shall
have no personal liability under this Pledge Agreement.
9. Cash or stock dividends paid on the Pledged Shares shall be the sole
property of Pledgor and shall not be subject to the Pledge Agreement and shall
be promptly released to Pledgor upon receipt by the Collateral Agent
notwithstanding anything to the contrary herein or elsewhere, and
notwithstanding any claim asserted by Euroseas and/or any contrary instructions
by Euroseas. Notwithstanding the foregoing, if during the term of this Pledge
Agreement any stock split, reclassification, readjustment or other change is
declared or made in the capital structure of Euroseas, all new, substituted and
additional shares, or other securities, issued in respect of the Pledged Shares
by reason of any such change or exercise shall constitute Pledged Shares
hereunder and shall be delivered to and held by the Collateral Agent under the
terms of this Pledge Agreement in the same manner as the Pledged Shares
originally pledged hereunder.
10. After a Default or after a Claim Notice has been timely served,
Pledgor hereby irrevocably appoints Euroseas as Pledgor's attorney-in-fact, with
full authority in the place and stead of Pledgor and in the name of Pledgor,
from time to time in Euroseas' discretion, to take any action and to execute any
instrument which Euroseas may deem necessary or advisable to accomplish the
purposes of this Pledge Agreement, including, without limitation, to file any
claims or take any action or institute any proceedings which Euroseas may deem
necessary or desirable for the collection of any of the Pledged Shares or
otherwise to enforce the rights of Euroseas with respect to any of the Pledged
Shares. Pledgor hereby acknowledges, consents and agrees that the power of
attorney granted pursuant to this section is irrevocable and coupled with an
interest.
36
11. Notwithstanding anything to the contrary contained herein, Pledgor
hereby irrevocably appoints Xxxxx Xxxxxx ("Pledgor's Representative"), as
Pledgor's representative, attorney-in-fact and agent, with full power of
substitution (i) to act in the name, place and stead of such Pledgor with
respect to any lawsuit or other proceeding involving this Pledge Agreement, (ii)
to act for such Pledgor with regard to matters pertaining to indemnification
referred to in this Pledge Agreement, including the power to compromise any
claim on behalf of such Pledgor, to bring and transact matters of litigation;
and (iii) to give and receive all notices and communications to be given or
received under this Pledge Agreement and to receive service of process in
connection with any claims under this Pledge Agreement with respect to any of
the foregoing. If Xxxxx Xxxxxx dies or otherwise becomes incapacitated and
unable to serve as Pledgor's Representative, Pledgor and all other pledgors
executing similar pledge agreements in favor of Euroseas shall appoint a new
Pledgor's Representative and shall give notice thereof to Euroseas and the
Collateral Agent. The death or incapacity of Pledgor shall not terminate the
agency and power of attorney granted hereby to the Pledgor's Representative. The
appointment of Pledgor's Representative shall be deemed coupled with an interest
and shall be irrevocable and Euroseas and the Collateral Agent and any other
person may conclusively and absolutely rely, without inquiry, upon any action of
Pledgor's Representative, as the action of Pledgor in all maters referred to
herein. All actions, decisions and instructions of Pledgor's Representative
shall be conclusive and binding upon Pledgor and Pledgor shall not have any
cause of action against Pledgor's Representative for any action taken or not
taken by Pledgor's Representative in his role as such, except for any action or
omission taken or made fraudulently or in bad faith with respect to Pledgor. All
reasonable out-of-pocket fees and expenses (including fees payable to counsel
and other professional fees) incurred by Pledgor's Representative in connection
with performing such function shall be paid by Pledgor.
12. The parties hereto agree that the following provisions shall
control with respect to the rights, duties, liabilities, privileges and
immunities of the Collateral Agent:
a) The Collateral Agent shall neither be responsible for or under,
nor chargeable with knowledge of, the terms and conditions of any
other agreement, instrument or document executed between/among
the parties hereto. This Pledge Agreement sets forth all of the
obligations of the Collateral Agent, and no additional
obligations shall be implied from the terms of this Pledge
Agreement or any other agreement, instrument or document.
b) The Collateral Agent may act in reliance upon any instructions,
notice, certification, demand, consent, authorization, receipt,
power of attorney or other writing delivered to it by any other
party without being required to determine the authenticity or
validity thereof or the correctness of any fact stated therein,
the propriety or validity of the service thereof, or the
jurisdiction of the court issuing any judgement or order. The
Collateral Agent may act in reliance upon any signature believed
by it to be genuine, and may assume that such person has been
properly authorized to do so.
37
c) Each of the parties, jointly and severally, agrees to reimburse
the Collateral Agent on demand for, and to indemnify and hold the
Collateral Agent harmless against and with respect to, any and
all loss, liability, damage or expense (including, but without
limitation, attorneys' fees, investment banker fees, stock
transfer agent fees, costs and disbursements) that the Collateral
Agent may suffer or incur in connection with this Pledge
Agreement and its performance hereunder or in connection
herewith, except to the extent such loss, liability, damage or
expense arises from its willful misconduct or gross negligence as
adjudicated by a court of competent jurisdiction. The Collateral
Agent shall have the further right at any time and from time to
time hereunder to charge, and reimburse itself from, the property
held in trust hereunder.
d) The Collateral Agent may consult with legal counsel of its
selection in the event of any dispute or question as to the
meaning or construction of any of the provisions hereof or its
duties hereunder, and it shall incur no liability and shall be
fully protected in acting in accordance with the opinion and
instructions of such counsel. Each of the parties, jointly and
severally, agrees to reimburse the Collateral Agent on demand for
such legal fees, disbursements and expenses and in addition, the
Collateral Agent shall have the right hereunder to reimburse
itself for such fees, disbursements and expenses from the
property held in trust hereunder.
e) The Collateral Agent shall give the property held in trust by it
hereunder the same degree of care that it gives its own similar
property.
f) In the event of any disagreement between/among any of the parties
to this Pledge Agreement, or between/among them or either or any
of them and any other person, resulting in adverse claims or
demands being made in connection with the subject matter hereof,
or in the event that the Collateral Agent, in good faith, be in
doubt as to what action it should take hereunder, the Collateral
Agent may, at its option, refuse to comply with any claims or
demands on it, or refuse to take any other action hereunder, so
long as such disagreement continues or such doubt exists, and in
any such event, the Collateral Agent shall not become liable in
any way or to any person for its failure or refusal to act, and
the Collateral Agent shall be entitled to continue so to refrain
from acting until (i) the rights of all parties shall have been
38
fully and finally adjudicated by a court of competent
jurisdiction, or (ii) all differences shall have been adjusted
and all doubt resolved by agreement among all of the interested
persons, and the Collateral Agent shall have been notified
thereof in writing signed by all such persons. The Collateral
Agent shall have the option, after 30 calendar days' notice to
the other parties of its intention to do so, to file an action in
interpleader requiring the parties to answer and litigate any
claims and rights among themselves. The rights of the Collateral
Agent under this paragraph are cumulative of all other rights
which it may have by law or otherwise.
g) The Collateral Agent is authorized, for any securities at any
time held hereunder, to register such securities in the name of
its nominee(s) or the nominees of any securities depository, and
such nominee(s) may sign the name of any of the parties hereto to
whom or to which such securities belong and guarantee such
signature in order to transfer securities or certify ownership
thereof to tax or other governmental authorities.
h) Notice to the parties shall be given as provided in Paragraph 14
alone.
i) The Collateral Agent shall make payments of dividends (cash or
stock) paid on the Pledged Shares to the Pledgor. The Pledgor
shall provide to the Collateral Agent an appropriate W-9 form for
tax identification number certification or a W8 form for
non-resident alien certification. The Collateral Agent shall be
responsible only for income reporting to the Internal Revenue
Service with respect to the dividends (cash or stock) paid on the
Pledged Shares.
j) The Collateral Agent may, in its sole discretion, resign and
terminate its position hereunder at any time following 30
calendar days' prior written notice to the other parties to this
Pledge Agreement. Any such resignation shall terminate all
obligations and duties of the Collateral Agent hereunder. On the
effective date of such resignation, the Collateral Agent shall
deliver this Pledge Agreement, together with the Pledged Shares
still in its possession and any and all other related instruments
or documents, to any successor Collateral Agent agreeable to the
parties, subject to this Pledge Agreement. If a successor
Collateral Agent has not been appointed prior to the expiration
of 30 calendar days following the date of the notice of such
resignation, the then acting Collateral Agent may petition any
court of competent jurisdiction for the appointment of a
successor Collateral Agent, or other appropriate relief. Any such
resulting appointment shall be binding upon all of the parties to
this Pledge Agreement.
k) The Collateral Agent shall receive the fees provided in Schedule
B annexed hereto upon the parties' execution of this Pledge
Agreement.
39
l) Any modification of this Pledge Agreement or any additional
obligations assumed by any party hereto shall be binding only if
evidenced by a writing signed by each of the parties hereto.
m) The Collateral Agent shall not incur any liability for not
performing any act or fulfilling any obligation hereunder by
reason of any occurrence beyond its control (including, but not
limited to, any provision of any present or future law or
regulation or any act of any governmental authority, any act of
God or war or terrorism, or the unavailability of the Federal
Reserve Bank wire services or any electronic communication
facility).
n) No printed or other material in any language, including
prospectuses, notices, reports, and promotional material which
mentions "M&T Trust Company of Delaware" or "M&T Bank" by name or
the rights, powers, or duties of the Collateral Agent under this
Pledge Agreement shall be issued by any other parties hereto, or
on such party's behalf, without the prior written consent of the
Collateral Agent.
13. Euroseas and Pledgor shall be jointly and severally responsible for
payment, upon demand, of all fees, charges and expenses (including, but not
limited to, attorneys fees, investment banker fees, stock transfer agent fees,
etc.) of the Collateral Agent. At the time of execution hereof, Euroseas and
Pledgor shall pay to or reimburse the Collateral Agent for the fees on Schedule
A and all legal fees and expenses incurred by the Collateral Agent in connection
with its agreement to act as Collateral Agent and its negotiation and execution
of this Pledge Agreement.
14. All notices delivered pursuant to this Pledge Agreement shall be in
writing and shall be deemed to have been duly given on the date of service if
served personally upon the person to whom notice is to be given, or on the third
calendar day after mailing, if mailed to the person to whom notice is to be
given, by first class mail, registered or certified, postage prepaid, and
properly addressed as follows:
If to Euroseas:
Euroseas Ltd.
Aethrion Xxxxxx
00 Xx Xxxxxxxxxxxx Xxxxxx
000 00 Xxxxxxxx
Xxxxxx
Attn: Xxxxxxxxx Xxxxxx
Telephone: 000 00 000 000 0000
Facsimile: 011 30 210 610 5111
with a copy to:
Xxxxxx & Xxxxxx LLP
Xxx Xxxxxxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxxx Xxxxxxxxx
Telephone: 000-000-0000
Facsimile: 000-000-0000
40
If to Pledgor:
Xxxxxx Ave Partners LLC
c/o Xxxxxx Xxxxx
000 X. Xxxx Xxx., #000
Xxxx: Xxxxxx Xxxxx
Telephone: 000-000-0000
Facsimile: 000-000-0000
With a copy to:
Xxxxxxxxxxx & Xxxxxxxx Xxxxxxxxx Xxxxxx LLP
00000 Xxxxx Xxxxxx Xxxxxxxxx, Xxxxxxx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxx Xxxxxxxx
Telephone: 000-000-0000
Facsimile: 310-552-5001
If to Collateral Agent:
M&T Trust Company of Delaware
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxx X. Xxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to:
Xxxxxxx X. Xxxxxxx, Esquire
Ober, Kaler, Xxxxxx & Xxxxxxx
000 X. Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to Pledgor's Representative:
Xxxxx Xxxxxx
c/o Olive Grove, LLC
X.X. Xxx 0000 Xxxxxxx Xxxxx, Xxxxxxxxxx 00000 Attn: Xxxxx
Xxxxxx Telephone: 000-000-0000 Facsimile: 000-000-0000
42
Any party may change its address for purposes of this paragraph by
giving the other party written notice of the new address in the manner set forth
above.
15. No waiver of any of the provisions of this Pledge Agreement shall
be deemed, or shall constitute, a waiver of any other provision, whether or not
similar, nor shall any waiver constitute a continuing waiver. No waiver shall be
binding unless executed in writing by the party making the waiver.
16. In the event of a dispute between the parties hereto arising out of
the terms, conditions or obligations imposed by this Pledge Agreement or any
claim asserted hereunder, the prevailing party shall be entitled to recover
reasonable attorney's fees, costs and expenses incurred in connection therewith.
Any obligation Pledgor has under this paragraph will be limited solely to the
collateral under this Pledge Agreement and the proceeds thereof. Further if
Pledgor settles a claim, then Pledgor shall not be required to bear any
attorneys fees or costs or expenses incurred after such settlement relating to
such claim or incurred as a result of other pledgors (e.g., under similar pledge
agreements) or the Cove Principals relating to such claim.
17. Each party shall, at the request of the other, execute, acknowledge
and deliver whatever additional instruments and do such other acts, as may be
reasonably required or convenient in order to accomplish and carry forward the
intent and purposes of this Pledge Agreement, including, but not limited to,
arranging for the exchange of any and all of Pledgor's Cove Common Stock for the
Per Share Merger Consideration and causing such Euroseas Common Stock to be
pledged hereunder.
18. This Pledge Agreement shall be governed by and construed in
accordance with the laws of the State of New York without giving effect to
choice of law principles. Each party hereto irrevocably consents to the service
of process by registered mail, postage prepaid, or by personal service within or
without the State of New York.
43
19. THE PARTIES HERETO HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY
WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS PLEDGE
AGREEMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL
OR WRITTEN) OR ACTIONS ARISING OUT OF OR RELATED TO THE PLEDGED SHARES OR THIS
PLEDGE AGREEMENT. EACH PARTY ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL
AND SUFFICIENT CONSIDERATION FOR THIS PROVISION AND THAT THIS PROVISION IS A
MATERIAL INDUCEMENT FOR EACH OTHER PARTY ENTERING INTO THIS PLEDGE AGREEMENT.
EACH PARTY HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE
RIGHT TO SEEK PUNITIVE OR CONSEQUENTIAL DAMAGES AGAINST THE OTHER PARTIES
ARISING OUT OF THE TRANSACTIONS CONTEMPLATED BY THIS PLEDGE AGREEMENT.
20. This Pledge Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective heirs, representatives,
successors and assigns; provided, however, that neither Euroseas nor Pledgor may
assign or transfer its rights or obligations hereunder without the prior written
consent of the other.
21. This Pledge Agreement may be executed in counterparts, each of
which shall be deemed to be an original, but all of which shall constitute one
and the same agreement. Facsimile signatures on counterparts of this Agreement
shall be deemed original signatures with all rights accruing thereto.
22. In the event of any inconsistencies between the terms set forth in
this Pledge Agreement and the terms set forth in the Merger Agreement, the terms
set forth in this Pledge Agreement shall prevail.
44
IN WITNESS WHEREOF, the parties hereto have executed this Pledge
Agreement on the day and year first above written.
PLEDGOR
By: /s/ Xxxxxx Xxxxx, Managing Member
----------------------------------------
Xxxxxx Xxxxx
EUROSEAS LTD.
By: /s/ Xxxxxxxxx Xxxxxx
------------------------------------------
Xxxxxxxxx Xxxxxx
M&T TRUST COMPANY OF DELAWARE,
as Collateral Agent
By: __________________________
Xxxxxx X. Xxxxx
Vice President
PLEDGOR'S REPRESENTATIVE, solely as to the
provisions of paragraph 11
By: /s/ Xxxxx X. Xxxxxx
-----------------------------
Xxxxx X. Xxxxxx
45
Schedule A to
Stock Pledge Agreement
----------------------
Number of Shares to be Pledged
------------------------------
72,356
46
Schedule B to
Stock Pledge Agreement
----------------------
Acceptance Fee $ 5,000
Collateral Agent Fee for 18 months
$ 7,500
=========
$ 12,500
47
Xxxxx X. Xxxxxx
X.X. Xxx 0000
Xxxxxxx Xxxxx, Xx 00000-0000
September 2, 2005
Tasos Aslides, CFO
Euroseas, Ltd.
0000 Xxx Xxxx Xx.
Xxxxxxxxxxxx, Xxx Xxxxxx 00000
Re. Pledge Agreement
Dear Mr. Aslides:
Please be advised I am no longer acting as the Pledgor's Representative.
Sincerely,
/s/ Xxxxx X. Xxxxxx
---------------------------
Xxxxx X. Xxxxxx
48
10.6 Xxxxxxxx Xxxxxxx
STOCK PLEDGE AGREEMENT
THIS STOCK PLEDGE AGREEMENT (this "Pledge Agreement") is made this 25th
day of August, 2005, by and among Xxxxxxxx Xxxxxxx ("Pledgor"), EUROSEAS LTD., a
Xxxxxxxx Islands corporation ("Euroseas") and M&T TRUST COMPANY OF DELAWARE, a
Delaware limited purpose trust company, as collateral agent (the "Collateral
Agent").
R E C I T A L S
WHEREAS, reference is made to that certain Agreement and Plan of Merger
by and among Cove Apparel, Inc. ("Cove"), the Principals of Cove Apparel, Inc.
(the "Cove Principals"), Euroseas Ltd. and Euroseas Acquisition Company, Inc.,
dated August 25, 2005, hereinafter referred to as the "Merger Agreement;"
WHEREAS, Section 9.2(b) of the Merger Agreement provides for the
indemnification of Euroseas by the Cove Principals, as therein defined;
WHEREAS, in order to secure the obligations of the Cove Principals to
Euroseas under Section 9.2(b) of the Merger Agreement, Pledgor desires to
provide for the deposit of the collateral hereinafter described, and to pledge
such collateral to Euroseas as security for the obligations of Cove Principals
under Section 9.2(b) of the Merger Agreement; and
49
NOW, THEREFORE, the parties agree as follows:
1. As security for the obligations of the Cove Principals to Euroseas
under Section 9.2(b) of the Merger Agreement, Pledgor hereby pledges, assigns,
transfers, sets over and delivers to Euroseas, and grants to Euroseas a
continuing, first priority security interest in all of Pledgor's right, title
and interest in the number of shares of Euroseas Common Stock set forth on
Schedule A hereto whether now owned or hereafter acquired (the "Pledged Share
Amount") (whether such shares are received by Pledgor as the Per Share Merger
Consideration pursuant to the Merger Agreement, in private transactions, open
market transactions, or otherwise). In connection with the Merger, Pledgor
hereby agrees to promptly take all such actions as are required under the Merger
Agreement to exchange any and all of its shares of Cove Common Stock for the Per
Share Merger Consideration and hereby irrevocably instructs and authorizes
Euroseas, on Pledgor's behalf, to deliver directly to the Collateral Agent,
share certificates (with accompanying stock powers duly endorsed in blank) for
the applicable number of shares of Euroseas Common Stock issued as the Per Share
Merger Consideration and to be pledged hereunder to satisfy the Pledged Share
Amount. Notwithstanding anything to the contrary contained herein, if such
number of shares issued as the Per Share Merger Consideration are not sufficient
to satisfy the Pledged Share Amount, Pledgor hereby agrees to deliver directly
to the Collateral Agent share certificates (with accompanying stock powers duly
endorsed in blank) for such additional number of shares of Euroseas Common Stock
as are necessary to satisfy the Pledged Share Amount (whether such shares have
been or are required to be purchased in private transactions, open market
transactions or otherwise and all shares delivered hereunder to the Collateral
Agent, together with all adjustments to such shares resulting from any
reclassification, readjustment or other change in the capital structure of
Euroseas, are hereinafter referred to as the "Pledged Shares"); provided,
however, that in all events, there shall be delivered to the Collateral Agent
initially at least two certificates, one evidencing 40% of the Pledged Shares
and the other evidencing 60% of the Pledged Shares. The Collateral Agent shall
hold the Pledged Shares for the benefit of Euroseas in a separate trust or
custodial account containing only the Pledged Shares from Pledgor and no other
pledgor.
50
2. While the Collateral Agent is the holder of the Pledged Shares,
Pledgor shall have the right to vote the Pledged Shares at meetings of the
stockholders (or in action by consent) of Euroseas so long as (a) there is no
default in the terms of this Pledge Agreement (a "Default") and (b) no written
notice of a claim for indemnification under Section 9.2(b) of the Merger
Agreement (a "Claim Notice") has been sent by Euroseas to the Collateral Agent
and Pledgor. After any such Default, and prior to the cure, if any, thereof, or
after receipt of any Claim Notice, Pledgor shall not have the right to vote the
Pledged Shares at any such meeting (or action by consent) of the stockholders.
3. The Pledged Shares shall be subject to the following release
schedule. Except as provided below, without any instruction or consent from
Euroseas, on the first anniversary of the Effective Time, 40% of the Pledged
Shares shall be released to Pledgor and will no longer be subject to this Pledge
Agreement; provided, however, that if at any time prior to such first
anniversary, (i) there occurs a Default hereunder or (ii) Euroseas provides a
Claim Notice to the Cove Principals in accordance with Section 9.3 of the Merger
Agreement and to the Collateral Agent and Pledgor and, in the case of (i) and
(ii), subsequently files a lawsuit within 60 days thereafter (even if the filing
date is after such first anniversary), then no Pledged Shares shall be released
until (i) such Default is either cured or waived in writing, or (ii) all such
claims have been finally settled or brought to final non-appealable judgment (as
the case may be). Except as provided below, the balance of the Pledged Shares
shall be released to Pledgor and will no longer be subject to this Pledge
Agreement on the 18-month anniversary of the Effective Time; provided, however,
that if at any time prior to the 18-month anniversary, (i) there occurs a
Default hereunder, or (ii) Euroseas provides a Claim Notice to the Cove
Principals in accordance with Section 9.3 of the Merger Agreement and to the
51
Collateral Agent and Pledgor and, in the case of (i) and (ii), subsequently
files a lawsuit within 60 days thereafter (even if the filing date is after such
18-month anniversary), then no such Pledged Shares (other than those previously
released hereunder) shall be released until (i) such Default is either cured or
waived in writing or (ii) all such claims have been finally settled or brought
to final non-appealable judgment. Upon the later of (i) the 18-month anniversary
of the Effective Time, and (ii) the date Pledgor and Euroseas certifies in
writing to the Collateral Agent that either (x) all Defaults are either waived
or cured or (y) all indemnification claims are finally resolved with respect to
claims that were given pursuant to timely Claim Notices and timely filed as
lawsuits, all Pledged Shares then remaining that have not been used to satisfy
Pledgor's indemnification obligations hereunder, shall be released to Pledgor.
4. If at any time a Claim Notice is provided by Euroseas pursuant
hereto, and at any time Pledgor does not wish to contest the claim or no longer
wishes to contest the claim, then Pledgor shall have the right (but not the
obligation) to settle the claim by doing one of the following (and Euroseas
shall cooperate in the same and give a binding settlement agreement/instruction
to give effect to the same and to release Pledgor's obligations and any
remaining Pledged Shares shall not be subject to such claim): (a) cause the
Collateral Agent to distribute to Euroseas the number of Pledged Shares
necessary to pay off the claim, or (b) pay to Euroseas the claim in cash and
cause the Collateral Agent immediately release to Pledgor (and released from the
pledge hereunder) a portion of the Pledged Shares (with the number of shares to
be so released under (a) or (b) of this sentence to be based on the claim so
paid, using a then-current valuation of the shares, based on the following
valuation: (i) if the Euroseas Shares are listed for trading on a national
securities exchange or are quoted on the Nasdaq National Market or Nasdaq
52
SmallCap Market, then the fair market value shall be the closing price of a
share over the 30-day period immediately preceding the date the final amount of
the indemnification obligation is determined; (ii) if the Euroseas Shares are
quoted on the over the counter market, then the fair market value of a share
shall be the average of the closing bid price and asked price over the 30-day
period immediately preceding the date the final amount of the indemnification
obligation is determined; and (iii) otherwise the fair market value of a share
shall be as determined in good faith by the Board of Directors of Euroseas and
notice thereof given to the Collateral Agent. If and only if a claim is not so
settled with Pledgor in Pledgor's sole and absolute discretion under the
preceding sentence, then Euroseas may exercise the right to collect against the
Pledged Shares by causing the requisite number of shares to be sold by the
Collateral Agent at available market prices on the public securities market on
which the shares customarily are traded, and if not so traded, by causing the
Collateral Agent to engage an investment banking firm to find one or more buyers
for such shares, but only if (1) Euroseas actually delivered a timely Claim
Notice and timely filed a lawsuit, (2) Pledgor is given the right to defend the
claim with counsel of its choice, provided that Pledgor promptly acknowledges in
writing to Euroseas (with a copy to the Collateral Agent) that it is electing to
defend such claim and selects counsel reasonably acceptable to Euroseas, and (3)
after compliance with (1) and (2) of this sentence, Euroseas actually settles or
obtains a final non-appealable judgment on the claim, and, provided, further,
that if Pledgor has defended such claim, then any settlement by Euroseas must
have been with the consent of Pledgor, which consent shall not be unreasonably
withheld or delayed. In the event that the shares are not publicly traded and
the Collateral Agent retains an investment banking firm and such firm cannot
locate a suitable buyer within 30 days after being retained, then the value of
the Euroseas Shares shall be determined in accordance with clause (iii) above.
Upon written receipt from the Board of Directors of Euroseas of such valuation,
the Collateral Agent shall distribute to Euroseas the number of Pledged Shares
necessary to pay off the claim. At any time prior to a judgment being entered
for the benefit of Euroseas, Pledgor shall have the option to cause payment in
accordance with (a) or (b) of this paragraph 5. In the case of any such
settlement, Pledgor shall be given a release and that claim shall have no force
or effect against Pledgor or the remaining Pledged Shares.
Payment by Pledgor, acquiescence in the sale, or transfer of Pledged
Shares shall not constitute evidence of or an admission that the Euroseas claim
is valid or tenable. Before a lawsuit is filed, Euroseas shall give written
notice to Pledgor (with a copy to the Collateral Agent) that a claim is being
asserted, the amount involved and a description of the facts with related
documentation (such as copies of invoices) and shall in good faith attempt to
resolve the asserted claim.
53
5. Pledgor represents and warrants to Euroseas that: (a) it is the sole
legal and beneficial owner of, and has good title to, and has full right to
pledge and assign, the Pledged Shares in which it purports to grant a security
interest hereunder; (b) no lien, security interest or other encumbrance exists
or will exist upon any such Pledged Shares at any time except the pledge and
security interest in favor of Euroseas created or provided for herein, which
pledge and security interest constitutes a perfected pledge and security
interest in and to all of such Pledged Shares; (c) this Pledge Agreement
constitutes the legal, valid and binding obligation enforceable against Pledgor;
and (d) the execution, delivery and performance by Pledgor of this Pledge
Agreement does not and will not result in the breach of any agreement,
indenture, instrument to which Pledgor is a party, any law or statute, or any
judgment, degree or order entered into in a proceeding to which Pledgor is or
was a party. Pledgor further represents and warrants that (i) Pledgor's true
exact legal name is that set forth on the signature page hereof, (ii) the social
security number or taxpayer identification number of Pledgor is 00-0000000, and
(iii) Pledgor's primary residence or address of its chief executive office is
X.X. Xxx 0000, Xxxxxxx Xxxxx, Xxxxxxxxxx 00000.
6. Pledgor: (a) hereby consents to the filing of financing statements
and other documents in such offices as Euroseas requests to perfect the security
interest granted hereunder if in Euroseas' judgment any such filings are
necessary or desirable; (b) shall give, execute, deliver, file and/or record any
financing statement, notice, instrument, document, agreement or other papers
that may be necessary or desirable (in the judgment of Euroseas) to create,
preserve, perfect or validate any security interest granted pursuant hereto or
to enable Euroseas to exercise and enforce its rights hereunder with respect to
such security interest; and (c) shall warrant and defend at its own expense
Euroseas' right, title, special property and security interests in and to the
Pledged Shares against the claims of any person or entity.
7. Pledgor shall not, without the prior written consent of Euroseas:
(i) sell, convey or otherwise dispose of any of the Pledged Shares or any
interest therein; (ii) incur or permit to be incurred any pledge, lien, charge,
or encumbrance or any security interest whatsoever in or with respect to any of
the Pledged Shares, other than the security interest created hereby; or (iii)
file or suffer to be on file, or authorize or permit to be filed or to be on
file, in any jurisdiction, any financing statement, or file or authorize any
like instrument, with respect to the Pledged Shares in which Euroseas is not
named as the sole secured party.
54
8. Except for the Pledged Shares that are being pledged to satisfy the
indemnity obligations under the Merger Agreement and to satisfy any claims
against Pledgor under this Pledge Agreement, notwithstanding anything to the
contrary herein or elsewhere, Pledgor itself (and its direct and indirect
owners) shall have absolutely no obligation or liability to Euroseas or any
persons or entities affiliated with Euroseas relating to the transactions which
are the subject of the Merger Agreement. Pledgor's obligations under this Pledge
Agreement, including, but not limited to, any liability for attorney's fees and
expenses, investment banking fees, etc., shall be non-recourse and shall be
limited solely to the Pledged Shares and the proceeds thereof and Pledgor shall
have no personal liability under this Pledge Agreement.
9. Cash or stock dividends paid on the Pledged Shares shall be the sole
property of Pledgor and shall not be subject to the Pledge Agreement and shall
be promptly released to Pledgor upon receipt by the Collateral Agent
notwithstanding anything to the contrary herein or elsewhere, and
notwithstanding any claim asserted by Euroseas and/or any contrary instructions
by Euroseas. Notwithstanding the foregoing, if during the term of this Pledge
Agreement any stock split, reclassification, readjustment or other change is
declared or made in the capital structure of Euroseas, all new, substituted and
additional shares, or other securities, issued in respect of the Pledged Shares
by reason of any such change or exercise shall constitute Pledged Shares
hereunder and shall be delivered to and held by the Collateral Agent under the
terms of this Pledge Agreement in the same manner as the Pledged Shares
originally pledged hereunder.
10. After a Default or after a Claim Notice has been timely served,
Pledgor hereby irrevocably appoints Euroseas as Pledgor's attorney-in-fact, with
full authority in the place and stead of Pledgor and in the name of Pledgor,
from time to time in Euroseas' discretion, to take any action and to execute any
instrument which Euroseas may deem necessary or advisable to accomplish the
purposes of this Pledge Agreement, including, without limitation, to file any
claims or take any action or institute any proceedings which Euroseas may deem
necessary or desirable for the collection of any of the Pledged Shares or
otherwise to enforce the rights of Euroseas with respect to any of the Pledged
Shares. Pledgor hereby acknowledges, consents and agrees that the power of
attorney granted pursuant to this section is irrevocable and coupled with an
interest.
55
11. Notwithstanding anything to the contrary contained herein, Pledgor
hereby irrevocably appoints Xxxxx Xxxxxx ("Pledgor's Representative"), as
Pledgor's representative, attorney-in-fact and agent, with full power of
substitution (i) to act in the name, place and stead of such Pledgor with
respect to any lawsuit or other proceeding involving this Pledge Agreement, (ii)
to act for such Pledgor with regard to matters pertaining to indemnification
referred to in this Pledge Agreement, including the power to compromise any
claim on behalf of such Pledgor, to bring and transact matters of litigation;
and (iii) to give and receive all notices and communications to be given or
received under this Pledge Agreement and to receive service of process in
connection with any claims under this Pledge Agreement with respect to any of
the foregoing. If Xxxxx Xxxxxx dies or otherwise becomes incapacitated and
unable to serve as Pledgor's Representative, Pledgor and all other pledgors
executing similar pledge agreements in favor of Euroseas shall appoint a new
Pledgor's Representative and shall give notice thereof to Euroseas and the
Collateral Agent. The death or incapacity of Pledgor shall not terminate the
agency and power of attorney granted hereby to the Pledgor's Representative. The
appointment of Pledgor's Representative shall be deemed coupled with an interest
and shall be irrevocable and Euroseas and the Collateral Agent and any other
person may conclusively and absolutely rely, without inquiry, upon any action of
Pledgor's Representative, as the action of Pledgor in all maters referred to
herein. All actions, decisions and instructions of Pledgor's Representative
shall be conclusive and binding upon Pledgor and Pledgor shall not have any
cause of action against Pledgor's Representative for any action taken or not
taken by Pledgor's Representative in his role as such, except for any action or
omission taken or made fraudulently or in bad faith with respect to Pledgor. All
reasonable out-of-pocket fees and expenses (including fees payable to counsel
and other professional fees) incurred by Pledgor's Representative in connection
with performing such function shall be paid by Pledgor.
12. The parties hereto agree that the following provisions shall
control with respect to the rights, duties, liabilities, privileges and
immunities of the Collateral Agent:
a) The Collateral Agent shall neither be responsible for or under,
nor chargeable with knowledge of, the terms and conditions of any
other agreement, instrument or document executed between/among
the parties hereto. This Pledge Agreement sets forth all of the
obligations of the Collateral Agent, and no additional
obligations shall be implied from the terms of this Pledge
Agreement or any other agreement, instrument or document.
b) The Collateral Agent may act in reliance upon any instructions,
notice, certification, demand, consent, authorization, receipt,
power of attorney or other writing delivered to it by any other
party without being required to determine the authenticity or
validity thereof or the correctness of any fact stated therein,
the propriety or validity of the service thereof, or the
jurisdiction of the court issuing any judgement or order. The
Collateral Agent may act in reliance upon any signature believed
by it to be genuine, and may assume that such person has been
properly authorized to do so.
56
c) Each of the parties, jointly and severally, agrees to reimburse
the Collateral Agent on demand for, and to indemnify and hold the
Collateral Agent harmless against and with respect to, any and
all loss, liability, damage or expense (including, but without
limitation, attorneys' fees, investment banker fees, stock
transfer agent fees, costs and disbursements) that the Collateral
Agent may suffer or incur in connection with this Pledge
Agreement and its performance hereunder or in connection
herewith, except to the extent such loss, liability, damage or
expense arises from its willful misconduct or gross negligence as
adjudicated by a court of competent jurisdiction. The Collateral
Agent shall have the further right at any time and from time to
time hereunder to charge, and reimburse itself from, the property
held in trust hereunder.
d) The Collateral Agent may consult with legal counsel of its
selection in the event of any dispute or question as to the
meaning or construction of any of the provisions hereof or its
duties hereunder, and it shall incur no liability and shall be
fully protected in acting in accordance with the opinion and
instructions of such counsel. Each of the parties, jointly and
severally, agrees to reimburse the Collateral Agent on demand for
such legal fees, disbursements and expenses and in addition, the
Collateral Agent shall have the right hereunder to reimburse
itself for such fees, disbursements and expenses from the
property held in trust hereunder.
e) The Collateral Agent shall give the property held in trust by it
hereunder the same degree of care that it gives its own similar
property.
f) In the event of any disagreement between/among any of the parties
to this Pledge Agreement, or between/among them or either or any
of them and any other person, resulting in adverse claims or
demands being made in connection with the subject matter hereof,
or in the event that the Collateral Agent, in good faith, be in
doubt as to what action it should take hereunder, the Collateral
Agent may, at its option, refuse to comply with any claims or
demands on it, or refuse to take any other action hereunder, so
long as such disagreement continues or such doubt exists, and in
any such event, the Collateral Agent shall not become liable in
any way or to any person for its failure or refusal to act, and
the Collateral Agent shall be entitled to continue so to refrain
from acting until (i) the rights of all parties shall have been
57
fully and finally adjudicated by a court of competent
jurisdiction, or (ii) all differences shall have been adjusted
and all doubt resolved by agreement among all of the interested
persons, and the Collateral Agent shall have been notified
thereof in writing signed by all such persons. The Collateral
Agent shall have the option, after 30 calendar days' notice to
the other parties of its intention to do so, to file an action in
interpleader requiring the parties to answer and litigate any
claims and rights among themselves. The rights of the Collateral
Agent under this paragraph are cumulative of all other rights
which it may have by law or otherwise.
g) The Collateral Agent is authorized, for any securities at any
time held hereunder, to register such securities in the name of
its nominee(s) or the nominees of any securities depository, and
such nominee(s) may sign the name of any of the parties hereto to
whom or to which such securities belong and guarantee such
signature in order to transfer securities or certify ownership
thereof to tax or other governmental authorities.
h) Notice to the parties shall be given as provided in Paragraph 14
alone.
i) The Collateral Agent shall make payments of dividends (cash or
stock) paid on the Pledged Shares to the Pledgor. The Pledgor
shall provide to the Collateral Agent an appropriate W-9 form for
tax identification number certification or a W8 form for
non-resident alien certification. The Collateral Agent shall be
responsible only for income reporting to the Internal Revenue
Service with respect to the dividends (cash or stock) paid on the
Pledged Shares.
j) The Collateral Agent may, in its sole discretion, resign and
terminate its position hereunder at any time following 30
calendar days' prior written notice to the other parties to this
Pledge Agreement. Any such resignation shall terminate all
obligations and duties of the Collateral Agent hereunder. On the
effective date of such resignation, the Collateral Agent shall
deliver this Pledge Agreement, together with the Pledged Shares
still in its possession and any and all other related instruments
or documents, to any successor Collateral Agent agreeable to the
parties, subject to this Pledge Agreement. If a successor
Collateral Agent has not been appointed prior to the expiration
of 30 calendar days following the date of the notice of such
resignation, the then acting Collateral Agent may petition any
court of competent jurisdiction for the appointment of a
successor Collateral Agent, or other appropriate relief. Any such
resulting appointment shall be binding upon all of the parties to
this Pledge Agreement.
k) The Collateral Agent shall receive the fees provided in Schedule
B annexed hereto upon the parties' execution of this Pledge
Agreement.
58
l) Any modification of this Pledge Agreement or any additional
obligations assumed by any party hereto shall be binding only if
evidenced by a writing signed by each of the parties hereto.
m) The Collateral Agent shall not incur any liability for not
performing any act or fulfilling any obligation hereunder by
reason of any occurrence beyond its control (including, but not
limited to, any provision of any present or future law or
regulation or any act of any governmental authority, any act of
God or war or terrorism, or the unavailability of the Federal
Reserve Bank wire services or any electronic communication
facility).
n) No printed or other material in any language, including
prospectuses, notices, reports, and promotional material which
mentions "M&T Trust Company of Delaware" or "M&T Bank" by name or
the rights, powers, or duties of the Collateral Agent under this
Pledge Agreement shall be issued by any other parties hereto, or
on such party's behalf, without the prior written consent of the
Collateral Agent.
13. Euroseas and Pledgor shall be jointly and severally responsible for
payment, upon demand, of all fees, charges and expenses (including, but not
limited to, attorneys fees, investment banker fees, stock transfer agent fees,
etc.) of the Collateral Agent. At the time of execution hereof, Euroseas and
Pledgor shall pay to or reimburse the Collateral Agent for the fees on Schedule
A and all legal fees and expenses incurred by the Collateral Agent in connection
with its agreement to act as Collateral Agent and its negotiation and execution
of this Pledge Agreement.
14. All notices delivered pursuant to this Pledge Agreement shall be in
writing and shall be deemed to have been duly given on the date of service if
served personally upon the person to whom notice is to be given, or on the third
calendar day after mailing, if mailed to the person to whom notice is to be
given, by first class mail, registered or certified, postage prepaid, and
properly addressed as follows:
59
If to Euroseas:
Euroseas Ltd.
Aethrion Xxxxxx
00 Xx Xxxxxxxxxxxx Xxxxxx
000 00 Xxxxxxxx
Xxxxxx
Attn: Xxxxxxxxx Xxxxxx
Telephone: 000 00 000 000 0000
Facsimile: 011 30 210 610 5111
with a copy to:
Xxxxxx & Xxxxxx LLP
Xxx Xxxxxxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxxx Xxxxxxxxx
Telephone: 000-000-0000
Facsimile: 000-000-0000
If to Pledgor:
Xxxxxxxx Xxxxxxx
269 S. Beverly, #1162
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxxxx Xxxxxxx
Telephone: 000-000-0000
Facsimile: 000-000-0000
With a copy to:
Xxxxxxxxxxx & Xxxxxxxx Xxxxxxxxx Xxxxxx LLP
00000 Xxxxx Xxxxxx Xxxxxxxxx, Xxxxxxx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxx Xxxxxxxx
Telephone: 000-000-0000
Facsimile: 000-000-0000
60
If to Collateral Agent:
M&T Trust Company of Delaware
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxx X. Xxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to:
Xxxxxxx X. Xxxxxxx, Esquire
Ober, Kaler, Xxxxxx & Xxxxxxx
000 X. Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to Pledgor's Representative:
Xxxxx Xxxxxx
c/o Olive Grove, LLC
X.X. Xxx 0000 Xxxxxxx Xxxxx, Xxxxxxxxxx 00000 Attn: Xxxxx
Xxxxxx Telephone: 000-000-0000 Facsimile: 000-000-0000
Any party may change its address for purposes of this paragraph by
giving the other party written notice of the new address in the manner set forth
above.
15. No waiver of any of the provisions of this Pledge Agreement shall
be deemed, or shall constitute, a waiver of any other provision, whether or not
similar, nor shall any waiver constitute a continuing waiver. No waiver shall be
binding unless executed in writing by the party making the waiver.
16. In the event of a dispute between the parties hereto arising out of
the terms, conditions or obligations imposed by this Pledge Agreement or any
claim asserted hereunder, the prevailing party shall be entitled to recover
reasonable attorney's fees, costs and expenses incurred in connection therewith.
Any obligation Pledgor has under this paragraph will be limited solely to the
collateral under this Pledge Agreement and the proceeds thereof. Further if
Pledgor settles a claim, then Pledgor shall not be required to bear any
attorneys fees or costs or expenses incurred after such settlement relating to
such claim or incurred as a result of other pledgors (e.g., under similar pledge
agreements) or the Cove Principals relating to such claim.
61
17. Each party shall, at the request of the other, execute, acknowledge
and deliver whatever additional instruments and do such other acts, as may be
reasonably required or convenient in order to accomplish and carry forward the
intent and purposes of this Pledge Agreement, including, but not limited to,
arranging for the exchange of any and all of Pledgor's Cove Common Stock for the
Per Share Merger Consideration and causing such Euroseas Common Stock to be
pledged hereunder.
18. This Pledge Agreement shall be governed by and construed in
accordance with the laws of the State of New York without giving effect to
choice of law principles. Each party hereto irrevocably consents to the service
of process by registered mail, postage prepaid, or by personal service within or
without the State of New York.
19. THE PARTIES HERETO HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY
WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS PLEDGE
AGREEMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL
OR WRITTEN) OR ACTIONS ARISING OUT OF OR RELATED TO THE PLEDGED SHARES OR THIS
PLEDGE AGREEMENT. EACH PARTY ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL
AND SUFFICIENT CONSIDERATION FOR THIS PROVISION AND THAT THIS PROVISION IS A
MATERIAL INDUCEMENT FOR EACH OTHER PARTY ENTERING INTO THIS PLEDGE AGREEMENT.
EACH PARTY HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE
RIGHT TO SEEK PUNITIVE OR CONSEQUENTIAL DAMAGES AGAINST THE OTHER PARTIES
ARISING OUT OF THE TRANSACTIONS CONTEMPLATED BY THIS PLEDGE AGREEMENT.
20. This Pledge Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective heirs, representatives,
successors and assigns; provided, however, that neither Euroseas nor Pledgor may
assign or transfer its rights or obligations hereunder without the prior written
consent of the other.
21. This Pledge Agreement may be executed in counterparts, each of
which shall be deemed to be an original, but all of which shall constitute one
and the same agreement. Facsimile signatures on counterparts of this Agreement
shall be deemed original signatures with all rights accruing thereto.
22. In the event of any inconsistencies between the terms set forth in
this Pledge Agreement and the terms set forth in the Merger Agreement, the terms
set forth in this Pledge Agreement shall prevail.
62
IN WITNESS WHEREOF, the parties hereto have executed this Pledge
Agreement on the day and year first above written.
PLEDGOR
By: /s/ Xxxxxxxx Xxxxxxx
-------------------------
Xxxxxxxx Xxxxxxx
EUROSEAS LTD.
By: /s/ Xxxxxxxxx Xxxxxx
-------------------------
M&T TRUST COMPANY OF DELAWARE,
as Collateral Agent
By: __________________________
Xxxxxx X. Xxxxx
Vice President
PLEDGOR'S REPRESENTATIVE, solely as to the provisions of
paragraph 11
By: /s/ Xxxxx X. Xxxxxx
------------------------
Xxxxx X. Xxxxxx
63
Schedule A to
Stock Pledge Agreement
----------------------
Number of Shares to be Pledged
------------------------------
71,327
64
Schedule B to
Stock Pledge Agreement
----------------------
Acceptance Fee $ 5,000
Collateral Agent Fee for 18 months
$ 7,500
=========
$ 12,500
65
Xxxxx X. Xxxxxx
X.X. Xxx 0000
Xxxxxxx Xxxxx, Xx 00000-0000
September 2, 2005
Tasos Aslides, CFO
Euroseas, Ltd.
0000 Xxx Xxxx Xx.
Xxxxxxxxxxxx, Xxx Xxxxxx 00000
Re. Pledge Agreement
Dear Mr. Aslides:
Please be advised I am no longer acting as the Pledgor's Representative.
Sincerely,
/s/ Xxxxx X. Xxxxxx
---------------------------
Xxxxx X. Xxxxxx
66