Exhibit (a)(6)
PLEDGE AGREEMENT
THIS AGREEMENT is made and entered into as of the ___ day of April, 1998,
by and between Xxxxxx X. Xxxxxxx ("Pledgor") and Xxxxxx Xxxxx ("Pledgee").
WITNESSETH
WHEREAS, Pledgor has executed and issued to Chemung Canal Bank (the
"Bank") a promissory note, of even date herewith, in the principal amount of
Five Hundred Thousand and 00/100 Dollars ($500,000) (the "Note") guaranteed by
Pledgee (the "Guaranty"), to evidence Pledgor's liability, indebtedness and
obligation to Bank to pay Five Hundred Thousand and 00/100 Dollars ($500,000)
which was incurred in connection with Pledgor's purchase of eighty per cent
(80%) of the shares of common stock of Artistic Direct Incorporated ("ADI")
pursuant to a stock purchase agreement of even date herewith among Pledgor, Xxx
Xxxxx Xx. and ADI (the "Stock Purchase Agreement");
WHEREAS, the parties are mutually desirous of securing the payment and
performance of the Obligations (as hereinafter defined) now and hereafter
arising, all as more particularly provided hereinafter; and
NOW, THEREFORE, the parties mutually agree as follows:
1. Creation of Security Interest.
Pledgor hereby pledges and delivers to Pledgee the collateral more
particularly described in Section 2 of this Agreement to secure payment and
performance of all liabilities, obligations and indebtedness of Pledgor to
Pledgee under, arising out of, or relating to the Guaranty (the "Obligations").
2. The Collateral.
The collateral which is the subject of this Agreement consists of a
number of shares of stock of ADI which constitute 20% of the authorized and
outstanding shares of common stock as of the date hereof (hereinafter referred
to as the "Pledged Shares"), subject to adjustment as hereinafter provided. (All
references to "Collateral" in this Agreement shall be deemed to include any
additions or accretions to the Pledged Shares and any additional collateral
deposited pursuant to this Agreement.)
3. Representations and Warranties.
Pledgor hereby represents and warrants to Pledgee as follows:
(a) Pledgor has exclusive, sole, fill and complete right, title and
interest, beneficially and of record, in and to all of the Pledged Shares free
and clear of any and all liens, charges, encumbrances, or claims of every nature
and sort.
(b) Pledgor has the full and unencumbered right and authority to
enter into and perform this Agreement and to consummate the transactions
contemplated hereby, and thereby will not breach any contract, obligation or
understanding by which Pledgor is bound or which may affect the Pledged Shares.
4. Delivery and Pledge of Collateral
Simultaneously with the execution and delivery of this Agreement,
Pledgor shall deliver to and deposit with Pledgee certificates evidencing all of
the Pledged Shares, accompanied by stock powers duly executed in blank or to
Pledgee, with signature by the Pledgor, in all respect in good and sufficient
form under applicable law for delivery and transfer. Pledgor consents to
retention by Pledgee of the Collateral until such time as the Note shall have
been paid in full. Pledgee shall hold the Collateral in a safe manner and
indemnify against any costs or damages with respect to any loss, damage to or
destruction of the Collateral. Upon full payment of the Note, Pledgee shall
immediately return the Collateral to Pledgor.
5. Covenants of Pledgor.
(a) Pledgor shall, at its sole cost and expense, defend its right,
title and interest in and to the Pledged Shares and shall defend the right of
Pledgee to the Pledged Shares under the terms of this Agreement against any
claims or demands of every nature and sort.
(b) The Collateral, or any part thereof, will not be sold, assigned,
transferred, disposed of or subjected to any subsequent interest of any party
created or suffered by Pledgor voluntarily or involuntarily without the written
consent of Pledgee (a "Lien").
(c) Pledgor, at its sole cost and expense, shall duly execute and
deliver or cause to be duly executed and delivered any and all instruments and
documents and do and cause to be done any and all other acts and things as
Pledgee may at any time reasonably request to enforce, perfect, and protect the
rights of Pledgee in and to the Collateral, as herein provided.
6. Right with Respect to the Collateral.
During the term of this Agreement and prior to the occurrence of any
Event of Default as hereinafter defined, Pledgor shall be entitled to receive
and retain all cash dividends and other distributions of property with respect
to the Pledged Shares on account of record ownership by Pledgor of the Pledged
Shares, except that an appropriate percentage of any
distribution of new, substituted, and additional shares of ADI, or of any other
securities pursuant to a dividend, stock split, reclassification,
reorganization, readjustment, change in capital structure, merger, combination
or exchange of securities, on account of record ownership of Pledgor of the
Pledged Shares shall be additional Pledged Shares and additional Collateral
under this Agreement and shall be promptly delivered by Pledgor and deposited
with Pledgee, in good form for delivery and transfer, upon the same terms and
conditions applicable to the Pledged Shares. During the term of this Agreement
and prior to the occurrence of any Event of Default (as hereinafter defined),
Pledgor may vote the Pledged Shares on all matters submitted to a vote of
shareholders of ADI.
7. Events of Default.
Occurrence of any of the following events shall constitute an event
of default ("Event of Default") by Pledgor under this Agreement:
(a) the material breach of any representation, promise, warranty or
covenant by Pledgor contained in this Agreement or failure of Pledgor to perform
any material obligation or material undertaking in this Agreement; which such
default or failure to perform has not been cured within thirty (30) days after
written notice to Pledgor of such default or failure to perform; or
(b) the occurrence of any Event of Default under the Note in
accordance with its terms which results in a payment to the Bank by Pledgee
pursuant to the Guaranty.
8. Rights and Remedies of Pledgee Upon Default.
Upon occurrence of an Event of Default, Pledgee shall have and may
exercise any and all of the rights and remedies provided for and in effect in
the State of New York at the date of execution of this Agreement with respect to
the sale, assignment and delivery of the Pledged Shares or other Collateral at
public sale with notice and advertisement as provided by law. In addition
thereto, in conjunction therewith and/or in substitution therefor, in its
discretion, Pledgee shall have and may exercise the following rights and
remedies:
(a) Pledgee may, in its sole discretion, sell, assign or deliver all or
any part of the Pledged Shares or other Collateral at public or private sale,
for cash or for credit, with ten (10) days prior written notice to Pledgor and
Pledgee may bid and become a purchaser at any such sale.
(b) Pledgee may apply the proceeds of any disposition of the Collateral
available for reimbursement of its payments under the Guaranty in the order,
amounts and manner which Pledgee may determine in its sole discretion.
9. Waiver.
Pledgee may waive or remedy any default in any reasonable manner
without waiving such default and without waiving any other prior or subsequent
default and Pledgee may waive or delay the exercise of any right or remedy under
this Agreement without waiving that right or remedy or any right or remedy
hereunder.
10. Assignment.
This Agreement shall be binding upon and shall inure to the benefit
of the Pledgor, Pledgee and their respective successors and assigns. Neither
party to this Agreement shall delegate or assign the performance of any
obligation hereunder to any third party without the written consent of the other
party hereto.
11. Waiver Regarding Additional Security.
Pledgor hereby waives, releases and discharges any right which it
has or may have at law, in equity or by statute to require Pledgee to pursue or
otherwise avail itself of any rights or remedies which Pledgee has or may have
against any other entity with respect to any other security at any time held by
Pledgee for or as security for payment of any of the Obligations secured hereby.
12. Survival of Representations.
Each of the agreements, covenants, warranties and representations by
Pledgor shall be deemed and construed to be given and made on a continuing basis
and shall survive execution and delivery of this Agreement until the full
repayment of the Note.
13. Notices.
(a) If to Pledgor, to:
Xxxxxx X. Xxxxxxx
111 Drive A
Strathmont Park
Elmira, N.Y. 14905
With a copy to:
Xxxxxxxx Xxxxx & Deutsch, LLP
000 Xxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Deutsch
Facsimile Number: (000) 000-0000
(b) If to Pledgee, to:
Xxxxxx Xxxxx
000 Xxxxxx Xxxxxx
Xxxxxx, X.X. 00000
With a copy to:
Sayles, Evans, Xxxxxxx, Xxxxxx & Xxxxx
Xxx Xxxx Xxxxxx Xxxxxx
Xxxxxx, X.X. 00000
Attention: Xxxx X. Xxxxxxxxx
Facsimile Number: (000) 000-0000
or to such other address as may have been designated in a prior notice. Notices
may be sent by (a) overnight courier, (b) facsimile transmission (with immediate
telephonic confirmation thereafter), or (c) registered or certified mail,
postage prepaid, return receipt requested; and shall be deemed given (i) in the
case of overnight courier, the next business day after the day sent, (ii) in the
case of facsimile transmissions, on the date transmission is confirmed, and
(iii) in the case of mailing, three business days after being mailed, and
otherwise notices shall be deemed to have been given when received. If sent by
registered or certified mail, such notice shall be effective when mailed,
otherwise it shall be effective upon delivery to said address.
14. Entire Agreement.
This Agreement constitutes the entire understanding of the parties
with respect to the subject matter hereof, supersedes any and all oral
communications, discussions, and negotiations between the parties and may not be
altered, amended, modified or terminated except be a writing executed by all
parties hereto expressly referring to this Agreement.
15. Damages and Fees.
If any action is commenced by any party hereto against any other
party hereto to enforce or rescind any term of this Agreement or to secure
damages for breach of this Agreement, the prevailing party shall be entitled to
recover any and all damages, costs and reasonable attorneys' fees incurred in
any such action.
16. Binding Effect.
All of the rights of the parties hereunder shall inure to the
benefit of their successors and permitted assigns and all obligations of the
parties shall bind its successors and permitted assigns.
17. Third Party Beneficiaries
Nothing in this Agreement is intended or shall be construed to
confer on any entity other than the parties any rights or benefits hereunder.
18. Counterparts.
This Agreement may be executed in multiple counterparts, each of
which shall be deemed an original, and all of which together shall constitute
one and the same document.
19. Governing Law.
The construction, validity, enforceability and interpretation of
this Agreement shall be governed by and construed in accordance with the laws of
the State of New York, without giving effect to the conflict of laws provisions
thereof.
20. Term of Agreement.
This Agreement shall take effect upon execution and shall remain in
effect until all of the Collateral on deposit pursuant to this Agreement has
been returned to Pledgor in accordance with this Agreement.
21. Severability.
If any portion of this Agreement is declared to be null an void or
for any other reason is unenforceable, all other portions of this Agreement
shall nevertheless remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first above written.
PLEDGOR:
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Xxxxxx X. Xxxxxxx
PLEDGEE:
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Xxxxxx Xxxxx
