EXHIBIT 10.27
STOCK PLEDGE AGREEMENT
THIS STOCK PLEDGE AGREEMENT (the "Pledge Agreement") is entered into as
of this tenth day of December, 1997, by and between Nu Skin Asia Pacific, Inc.,
a Delaware corporation, and any of its successors, assigns, transferees,
conveyees or purchasers (the "Secured Party"), and Xxxxx X. Xxxxx (the
"Pledgor").
RECITALS
WHEREAS, the Secured Party has agreed to make a loan to the Pledgor of
Five Million and No/100 Dollars ($5,000,000.00) (the "Loan"), and the Pledgor
has agreed to deliver to the Secured Party a promissory note, substantially in
the form attached hereto as Exhibit "A", in the amount of Five Million and
No/100 Dollars ($5,000,000.00) (the "Promissory Note");
WHEREAS, the Secured Party is willing to make the Loan only upon
receiving adequate security therefor, including, but not limited to, a pledge of
shares of the Secured Party's Class B common stock, par value $.001 per share
(the "Class B Common Stock"), by the Pledgor to the Secured Party as collateral
to secure the Pledgor's obligations under the Promissory Note; and
WHEREAS, in consideration of the Loan, the Pledgor desires to pledge
shares of Class B Common Stock owned by her as security for her obligations
under the Promissory Note.
NOW, THEREFORE, in consideration of the premises set forth above, the
mutual covenants and agreements set forth hereinbelow, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. GRANT OF SECURITY INTEREST. The Pledgor hereby pledges to the Secured
Party and hereby grants to the Secured Party a security interest (the "Security
Interest") in all of the Pledgor's right, title and interest in and to the
following collateral (collectively, the "Collateral"):
(a) the Three Hundred Forty-Nine Thousand Four Hundred and Six
(349,406) shares of Class B Common Stock that are evidenced by or included in
the stock certificates described on Exhibit "B" attached hereto, together with
any substitutes therefor (the "Pledged Shares");
(b) all dividends, cash, options, warrants, rights, instruments and
other property, or proceeds from time to time received, receivable or otherwise
distributed in respect of or in exchange for any and all of the Pledged Shares;
and
(c) all proceeds, products, rents and profits of or from any and
all of the foregoing.
2. SECURITY FOR PROMISSORY NOTE. This Pledge Agreement secures, and the
Collateral is collateral security for, the prompt payment of the Promissory Note
when due or otherwise payable and the performance in full of all obligations of
the Pledgor as set forth in such Promissory Note (collectively, the "Pledgor's
Obligations").
3. DELIVERY OF PLEDGED SHARES. Upon execution of this Pledge Agreement,
the Pledgor shall promptly deliver and transfer possession of the original
certificate(s) representing the Pledged Shares (the
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"Certificates") to the Secured Party to be held by the Secured Party, or its
appointed agent for and on behalf of the Secured Party, until termination of
this Pledge Agreement or disposition of the Collateral as provided herein. The
Certificates shall be accompanied by duly executed assignments on stock powers
in blank, substantially in the form attached hereto as Exhibit "C". The Pledgor
shall perform all acts as the Secured Party may reasonably request so as to
perfect and maintain a valid security interest for the Secured Party in the
Collateral.
4. NO ASSUMPTION. Notwithstanding any of the foregoing provisions, this
Pledge Agreement shall not in any way be deemed to obligate the Secured Party,
any purchaser at any foreclosure sale under this Pledge Agreement, or any other
person or entity to assume any of the Pledgor's Obligations or any other
liability or obligation under this Pledge Agreement or the Promissory Note
unless the Secured Party, such purchaser or such other person or entity
otherwise expressly agrees in writing to assume any or all of the Pledgor's
Obligations or any such other liability or obligation. In the event of
foreclosure by the Secured Party, the Pledgor shall remain bound and obligated
to perform the Pledgor's Obligations and all other obligations of the Pledgor
under this Pledge Agreement and the Promissory Note, and neither the Secured
Party nor any other person or entity shall be deemed to have assumed any of the
Pledgor's Obligations or any such other obligation, except as provided in this
Section 4.
5. VOTING OF PLEDGED SHARES. Unless an Event of Default (as that term is
defined in Section 11 below) has occurred and is continuing:
(a) The Pledgor shall be entitled to exercise any and all voting
and other rights pertaining to all or any part of the Pledged Shares for any
purpose not inconsistent with the terms of this Pledge Agreement.
(b) The Secured Party or any agent of the Secured Party shall
execute and deliver, or cause to be executed and delivered, to the Pledgor all
proxies and other instruments reasonably requested by the Pledgor in writing for
the purpose of enabling the Pledgor to exercise the voting and other rights that
she is entitled to exercise pursuant to this Section 5.
6. REPRESENTATIONS AND WARRANTIES. The Pledgor represents and warrants
that:
(a) The Pledgor is the owner of the Pledged Shares and, with
respect to any Collateral to be acquired by the Pledgor on the Pledged Shares,
will be the owner of such Collateral, in each case free and clear of any liens
or encumbrances, except for the liens created by this Pledge Agreement. No
effective financing statement or other document or instrument similar in effect
covering all or any part of the Collateral is on file in any recording or filing
office, except such as may have been recorded or filed in favor of the Secured
Party relating to this Pledge Agreement.
(b) The execution and delivery of this Pledge Agreement and the
delivery of the Certificates to the Secured Party create a valid and perfected
first priority lien on and security interest in the Collateral, enforceable
against all third parties and securing the performance of the Pledgor's
Obligations, and all filings and other actions necessary or desirable to perfect
and protect such liens and security interests have been duly made or taken by
the Pledgor.
(c) All of the Certificates, instruments and other documents
constituting, evidencing or representing Collateral shall be promptly delivered
to the Secured Party upon execution of this Pledge Agreement.
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(d) The Pledged Shares are duly authorized, validly issued, fully
paid and non-assessable.
(e) Other than the Stockholders Agreement, dated as of November 20,
1996 and as amended as of May 29, 1997 and further amended and restated as of
November __, 1997, by and among the Initial Stockholders, as defined therein,
and Nu Skin Asia Pacific, Inc., there is no agreement or arrangement restricting
the transfer of the Pledged Shares or the transfer of any other Collateral,
except as provided in this Pledge Agreement.
(f) There is no suit, proceeding or other legal action or
proceeding against the Pledgor or the Certificates that involves or affects, or
that may involve or affect, any of the Collateral.
7. COVENANTS OF PLEDGOR.
(a) Affirmative Covenants. So long as any of the Pledgor's
Obligations shall remain unpaid or unperformed, the Pledgor shall do the
following at the Pledgor's own cost and expense:
(i) xxxx conspicuously each Certificate evidencing or
representing any of the Pledged Shares, and at the request of the Secured Party,
each of the Pledgor's records pertaining to the Pledged Shares or the
Certificates, with a legend, in form and substance satisfactory to the Secured
Party, indicating that the Certificate is subject to the Security Interest
granted to the Secured Party by this Pledge Agreement;
(ii) deliver to the Secured Party promptly upon receipt all
notes, certificates, instruments and other documents constituting, evidencing or
representing any of the Collateral, duly endorsed or accompanied by instruments
of transfer or assignment on stock powers duly executed in blank, in each case
with signatures guaranteed and otherwise in form and substance satisfactory to
the Secured Party;
(iii) execute and file such financing or continuation
statements, and such amendments to those statements, and such other documents,
instruments or notices, as may be necessary or desirable, or as the Secured
Party may request, in order to perfect and preserve the pledges, liens and the
Security Interest granted or purported to be granted to the Secured Party by
this Pledge Agreement;
(iv) promptly notify the Secured Party in writing of any lien
or claim made or asserted against any of the Collateral and take all steps
necessary or proper, or, in the judgment of the Secured Party, advisable, to
preserve all of the Secured Party's rights in the Collateral;
(v) furnish to the Secured Party from time to time written
statements and schedules further identifying and describing the Collateral and
other reports in connection with the Collateral requested by the Secured Party,
all in reasonable detail;
(vi) advise the Secured Party promptly, in sufficient written
detail, of any substantial change in the Collateral, and of the occurrence of
any event that could materially and adversely affect the value of the Collateral
or the validity or priority of the liens and the Security Interest granted to
the Secured Party by this Pledge Agreement;
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(vii) comply with all rules and regulations of each
governmental body or agency and all decisions, rulings, orders and awards of
each arbitrator applicable to the Collateral or any part of the Collateral or to
the Pledgor;
(viii)promptly pay and discharge before they become
delinquent, all taxes assessed, levied or imposed upon or relating to, and all
claims against the Collateral (or any part of the Collateral) or the Pledgor, if
the failure to so pay could adversely affect the value of the Collateral or the
validity or priority of the liens or the Security Interest granted to the
Secured Party by this Pledge Agreement, except those contested in good faith and
for which adequate reserves are maintained;
(ix) permit representatives of the Secured Party at any time
during normal business hours to inspect and make abstracts from the Pledgor's
records relating to the Collateral;
(x) perform and observe all of the terms and provisions of the
Collateral to be performed or observed by the Pledgor, except as otherwise
provided by applicable law;
(xi) subject to Section 10 below, collect all amounts due or
to become due to the Pledgor under the Collateral and otherwise enforce her
rights under and in respect of the Collateral;
(xii) furnish to the Secured Party promptly upon receipt
copies of all notices, requests and other documents or instruments received by
the Pledgor under or in respect of the Collateral (or any part of the
Collateral) and from time to time (A) furnish to the Secured Party the
information and reports regarding those obligations requested by the Secured
Party and (B) at the request of the Secured Party, make the demands and requests
for information or action that the Pledgor is entitled to make under the
Collateral;
(xiii)notify the Secured Party of any change in the Pledgor's
name within ten (10) days of such change; and
(xiv) give the Secured Party fifteen (15) days prior written
notice of any change in the Pledgor's chief place of business, chief executive
office or residence, or the office where the Pledgor keeps her records regarding
the Collateral.
(xv) Pledgor agrees that in the event any amounts are paid by
Pledgor to the Secured Party pursuant to this Pledge Agreement or the Promissory
Note, Pledgor's liability hereunder and thereunder shall continue in full force
and effect in the event that all or any part of any such payment is thereafter
recovered as a preference or fraudulent transfer under any applicable bankruptcy
or insolvency law.
(b) Negative Covenants. So long as any of the Pledgor's Obligations
shall remain unpaid or unperformed, the Pledgor shall not do any of the
following without the prior written approval of the Secured Party:
(i) transfer any of the Collateral, whether by operation of
law or otherwise;
(ii) create, incur, assume or suffer to exist any lien on or
in respect of any of the Collateral, except pursuant to this Pledge Agreement or
the Promissory Note;
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(iii) use, store or keep any of the Collateral or records
relating to the Collateral in any location other than those expressly permitted
by this Pledge Agreement; or
(iv) take any action in connection with any of the Collateral
that could materially and adversely affect the value of the Collateral (or any
part thereof) or the validity or priority of the liens or the Security Interest
granted to the Secured Party by this Pledge Agreement.
(v) Pledgor shall not challenge or institute any proceedings,
or allow the institution of any proceedings, to challenge the validity, binding
effect or enforceability of this Pledge Agreement.
8. GRANT OF POWER OF ATTORNEY. The Pledgor and her respective successors
and assigns hereby irrevocably constitute and appoint each of M. Xxxxxx Xxxx and
Xxxxx X. Halls, and their respective successors, as the Pledgor's true and
lawful attorney-in-fact, to act in the name, place and stead of the Pledgor,
with full power of substitution, after the occurrence and during the
continuation of an Event of Default, to take any action and to make, execute,
convert to, swear to, acknowledge, record and file any financing statements,
certificates, documents or instruments of any character or nature that the
Secured Party may deem necessary or desirable fully to carry out the provisions
of this Pledge Agreement, including, without limitation:
(a) to ask, demand, collect, xxx for, recover, compound, receive
and give acquittance and receipts for monies due and to become due under or in
respect of the Collateral;
(b) to receive, endorse and collect all documents or instruments
made payable to the Pledgor representing any payment of profits, dividends or
any other distribution in respect of the Collateral;
(c) to file any claims or take any action or institute any
proceedings that the Secured Party may deem necessary or desirable for the
collection of any of the Collateral or otherwise to enforce the rights of the
Secured Party with respect to any of the Collateral;
(d) to do, at the Secured Party's option and the Pledgor's sole
cost and expense, at any time or from time to time, all acts and things that the
Secured Party deems reasonably necessary or convenient to protect, preserve or
realize upon the Collateral (or any part thereof) and the Secured Party's liens
or security interest therein in order to effect the intent of this Pledge
Agreement, all as fully and effectively as Pledgor might do; and
(e) to transfer the Collateral and related stock certificates to
the Secured Party and transfer the Collateral on the stock records of the
Secured Party to the Secured Party.
The power of attorney granted herein is coupled with an interest and is
irrevocable.
9. SECURED PARTY MAY PERFORM. If the Pledgor fails to perform any
agreement contained herein, the Secured Party may itself perform, or cause the
performance of, such agreement, and all costs and expenses of the Secured Party
incurred in connection therewith shall promptly be payable to the Secured Party
by the Pledgor under Section 12 below.
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10. STANDARD OF CARE.
(a) The powers conferred on the Secured Party hereunder are solely
to protect its interests in the Collateral and shall not impose any duty upon it
to exercise any such powers. Except for the exercise of reasonable care in the
custody of the Collateral in its possession and the accounting for any monies
actually received by it hereunder, the Secured Party shall have no duty as to
the Collateral or as to the taking of any necessary steps to preserve rights
against prior parties or any other rights pertaining to the Collateral. The
Secured Party shall be deemed to have exercised reasonable care in the custody
and preservation of the Collateral in its possession if such Collateral is
accorded treatment substantially equal to that accorded by the Secured Party to
its own property of a similar nature.
(b) Whenever this Pledge Agreement or any other document,
instrument or agreement contemplated hereby provides that the Secured Party is
permitted or required to make a decision in the "discretion" or the "sole
discretion" (or other similar terms) of the Secured Party, the Secured Party
shall be entitled to consider only such interests and factors as it desires, and
the Secured Party shall have no duty or obligation to give any consideration to
any interest of or factors affecting the Pledgor or any other person or entity.
11. REMEDIES.
(a) In the event of a default in the payment or performance of any
of the Pledgor's Obligations or upon the occurrence of any event of default
under or breach of any representation, warranty or covenant in this Pledge
Agreement or any event of default under the Promissory Note (each an "Event of
Default"), in the sole discretion of the Secured Party, without demand or
notice, all or any part of any indebtedness evidenced by the Promissory Note
shall become immediately due and payable. Upon the occurrence of an Event of
Default, the Secured Party may exercise all rights to which it is entitled under
this Pledge Agreement or which are otherwise available to it and exercise all
the rights and remedies of a secured party upon default under the Uniform
Commercial Code as in effect in any relevant jurisdiction (the "UCC") (whether
or not the UCC applies to the affected Collateral). Without limiting the
generality of the foregoing, the Secured Party may immediately transfer into or
register in its name instruments, certificates or documents evidencing or
constituting all or part of the Collateral without notice to the Pledgor and
immediately apply the Collateral against the Pledgor's Obligations and the
Secured Party's costs of collection using a value of $14.31 per share until the
Xxxxxxx'x Obligations and the Secured Party's costs of collection are satisfied
in full, notwithstanding any rights Pledgor may have under the UCC. Without
limiting any of the foregoing, the Secured Party may in its sole discretion,
without notice, demand for performance or other demand, or advertisement (all of
each such notices, demands or advertisement are hereby expressly waived)
collect, receive, appropriate and realize upon the Collateral and/or sell,
assign, grant an option or options to purchase or otherwise dispose of the
Collateral or any part thereof in one or more parcels at public or private sale,
at or on any exchange or broker's board or at any of the Secured Party's offices
or elsewhere, for cash, on credit or for future delivery without assumption of
credit risk, free of any claims or rights, at such time or times and at such
price or prices and upon such other terms and conditions as the Secured Party
may deem commercially reasonable, irrespective of the impact of any such sales
on the market price of the Collateral. The Secured Party may be the purchaser of
any or all of the Collateral at any such sale at a value of $14.31 per share and
the Secured Party, for itself or on behalf of any other person or entity, shall
be entitled, for the purpose of bidding and making settlement or payment of the
purchase price for all or any part of the Collateral sold at any such sale, to
use and apply any of the Pledgor's Obligations at a price of $14.31 per share as
a credit on account of the purchase price for any Collateral payable by the
Secured Party at such sale. Each purchaser
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at any such sale shall hold the property sold absolutely free from any claim or
right on the part of the Pledgor, and the Pledgor hereby waives all rights of
redemption, stay and appraisal that the Pledgor now has or may at any time in
the future have under any rule of equity, law or statute now existing or
hereafter enacted. The Pledgor agrees that, to the extent notice of sale shall
be required by applicable law, at least ten (10) days notice to the Pledgor of
the time and place of any public sale or the time after which any private sale
is to be made shall constitute reasonable notification. The Secured Party shall
not be obligated to make any sale of the Collateral regardless of whether notice
of sale has been given. The Secured Party may adjourn any public or private sale
from time to time by announcement at the time and place fixed therefor in the
notice thereof, and such sale may, without further notice, be made at the time
and place to which it was so adjourned. The Pledgor hereby waives any and all
rights and claims against the Secured Party arising because of the $14.31 per
share value to be used by the Secured Party in applying the Collateral against
the Pledgor's Obligations and related costs of collection or because the price
at which any of the Collateral may have been sold at a private sale was less
than the price that might have been obtained at a public sale, even if the
Secured Party accepts the first offer received and does not offer such
Collateral to more than one offeree. Without limiting the generality of the
foregoing, the Secured Party may at any time appropriate and apply (directly or
by way of set-off) to the payment of the Pledgor's Obligations all amounts
representing dividends or distributions then or thereafter in the possession of
the Secured Party.
(b) The Pledgor recognizes that, by reason of certain prohibitions
contained in the Securities Act of 1933, as amended (the "Securities Act"), and
applicable state securities laws, rules and regulations, the Secured Party may
be compelled, with respect to any sale of all or any part of the Collateral
conducted without prior registration or qualification of such Collateral under
the Securities Act and such state securities laws, rules and regulations, to
limit purchases to those persons or entities who will agree, among other things,
to acquire the Collateral for their own account, for investment and not with a
view to the distribution or resale thereof. The Pledgor acknowledges that any
such private sales may be at prices and on terms and conditions less favorable
than those obtainable through a public sale without such restrictions
(including, without limitation, a public offering made pursuant to a
registration statement filed under the Securities Act) and, notwithstanding such
circumstances, the Pledgor agrees that any such private sale shall be deemed to
have been made in a commercially reasonable manner and that the Secured Party
shall have no obligation to engage in public sales and shall have no obligation
to delay the sale of any of the Collateral for the period of time necessary to
permit the Pledgor to register any of the Pledged Shares that constitute a
portion of the Collateral or any other item of Collateral for a form of public
sale requiring registration under the Securities Act or under applicable state
securities laws, rules and regulations, even if the Pledgor would, or should,
agree to so register those Pledged Shares or other items of Collateral.
12. APPLICATION OF PROCEEDS. Except as expressly provided elsewhere in
this Pledge Agreement, all proceeds received by the Secured Party in respect of
any sale of, collection from, or other realization upon all or any part of the
Collateral may, in the sole discretion of the Secured Party, be held by the
Secured Party as Collateral for, or then, or at any other time thereafter, be
applied in full or in part by the Secured Party against, the Pledgor's
Obligations in the following order of priority:
(a) to pay or reimburse in full the costs and expenses of such
sale, collection or other realization, including, without limitation, reasonable
compensation to the Secured Party and its agents and counsel, and all other
costs, expenses, obligations and other liabilities incurred or paid by the
Secured Party in connection therewith, and all amounts for which the Secured
Party is entitled to indemnification hereunder and all advances made by the
Secured Party hereunder for the account of the Pledgor, and to the payment of
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all costs and expenses paid or incurred by the Secured Party in connection with
the exercise of any right or remedy hereunder, all in accordance with this
Section 12;
(b) to pay all other obligations and thereafter in such order as
the Secured Party shall elect; and
(c) to pay to or upon the order of the Pledgor, or to whomsoever
may be lawfully entitled to receive the same or as a court of competent
jurisdiction may direct, the balance of the proceeds.
13. INDEMNITY AND EXPENSES.
(a) The Pledgor shall indemnify the Secured Party and its Related
Persons (as that term is defined below) (individually, an "Indemnified Person"
and, collectively, the "Indemnified Persons") against all losses, costs,
expenses (including attorneys' fees and expenses), judgments, fines, amounts
paid in settlement and other liabilities incurred, suffered or paid by the
Indemnified Persons (collectively, "Indemnified Expenses") in connection with
any threatened, pending or completed claim, action, suit, complaint,
investigation, inquiry or other proceeding, whether civil, criminal,
administrative or investigative, that is or was brought or threatened against
any Indemnified Person by reason of or in connection with actions taken or
omitted to be taken by one or more Indemnified Persons in the performance of the
exercise of the rights and powers or performance of the obligations of the
Secured Party under this Pledge Agreement or otherwise in connection with this
Pledge Agreement, except that the Pledgor shall have no liability under this
Section 13 with respect to any Indemnified Expenses to the extent the liability
results from the fraud or willful misconduct of the Indemnified Person, as
determined by a final judgment or final adjudication. For purposes of this
Pledge Agreement, the term "Related Persons" means, with respect to any person,
any other person that directly or indirectly controls or is controlled by or is
under common control with the specified person and the direct or indirect
controlling persons, principals, partners, trustees, stockholders, officers,
directors, employees, independent contractors and agents for or of any of the
foregoing and the attorneys-in-fact referenced in Section 8 hereof.
(b) To the fullest extent permitted by applicable law, the Pledgor
shall, from time to time, advance Indemnified Expenses to an Indemnified Person
prior to the final disposition of the action upon receipt by the Pledgor of an
undertaking by or on behalf of the Indemnified Person to repay such amount if it
shall be determined that the Indemnified Person is not entitled to be
indemnified as authorized in this Section 13.
(c) The Pledgor shall pay to the Secured Party upon demand the
amount of any and all costs and expenses, including, without limitation, the
reasonable fees and expenses of its counsel and of any experts and agents, that
the Secured Party may incur in connection with (i) the administration of this
Pledge Agreement or the Promissory Note, (ii) the custody or preservation of, or
the sale of, collection from, or other realization upon, any of the Collateral,
(iii) the exercise or enforcement of any of the rights of the Secured Party
hereunder or under the Promissory Note, or (iv) the failure by the Pledgor to
perform or observe any of the provisions hereof or of the Promissory Note.
14. WAIVERS BY PLEDGOR, ETC.
(a) The Pledgor agrees that the Pledgor's Obligations hereunder are
irrevocable, absolute, independent and unconditional and shall not be affected
by any circumstance that constitutes a legal or equitable
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discharge of a guarantor or surety other than indefeasible payment in full of
the Pledgor's Obligations. In furtherance of the foregoing and without limiting
the generality thereof, the Pledgor agrees as follows:
(i) The Secured Party, for itself or on behalf of any other
person or entity, may from time to time, without notice or demand and without
affecting the validity or enforceability of this Pledge Agreement and without
giving rise to any limitation, impairment or discharge of the Pledgor's
liability or obligations hereunder, (A) create, increase, renew, extend,
accelerate or otherwise change the time, place, manner or terms of payment of
the Pledgor's Obligations, (B) settle, compromise, release or discharge, or
accept or refuse any offer of performance with respect to, or substitutions for,
the Pledgor's Obligations or any agreement relating thereto and/or subordinate
the payment of the same to the payment of any other obligation, (C) request and
accept guaranties of any of the Pledgor's Obligations and take and hold other
security for the payment of the Pledgor's Obligations, (D) release, exchange,
compromise, subordinate or modify, with or without consideration, any other
security for payment of the Pledgor's Obligations, any guaranties of the
Pledgor's Obligations, or any other obligation of any person or entity with
respect to the Pledgor's Obligations, (E) enforce and apply any other security
now or hereafter held by or for the benefit of the Secured Party or any other
person or entity in respect of the Pledgor's Obligations and direct the order or
manner of sale thereof, or the exercise of any other right or remedy that the
Secured Party or any other person or entity, may have against any such security,
as the Secured Party in its sole discretion may determine consistent with the
terms of any applicable security agreement, including, without limitation,
application of the Collateral against and in satisfaction the Pledgor's
Obligations valuing the Collateral at $14.00 per share, foreclosure on any such
security pursuant to one or more judicial or nonjudicial sales, whether or not
every aspect of any such sale is commercially reasonable, and even though such
action operates to impair or extinguish any right of reimbursement or
subrogation or other right or remedy of the Pledgor against another party or any
other security for the Pledgor's Obligations (and the Pledgor expressly
acknowledges that such exercise of a right or remedy that impairs or
extinguishes the Pledgor's right of reimbursement or subrogation would create a
possible defense by the Pledgor against any liability hereunder, but the Pledgor
expressly and knowingly waives any such defense), and (F) exercise any other
rights available to the Secured Party or any other person or entity under the
Promissory Note, at law or in equity; and
(ii) this Pledge Agreement and the obligations of the Pledgor
hereunder shall be valid and enforceable and shall not be subject to any
limitation, impairment or discharge for any reason (other than indefeasible
payment and performance in full of the Pledgor's Obligations), including,
without limitation, the occurrence of any of the following, whether or not the
Pledgor shall have had notice or knowledge of any of them: (A) any failure to
assert or enforce or any agreement not to assert or enforce, or the stay or
enjoining, by order of court, by operation of law or otherwise, of the exercise
or enforcement of, any claim or demand or any right, power or remedy with
respect to the Pledgor's Obligations or any agreement relating thereto, or with
respect to any guaranty of or other security for the payment of the Pledgor's
Obligations, (B) any waiver, amendment or modification of, or any consent to
departure from, any of the terms or provisions (including, without limitation,
provisions relating to events of default) of the Promissory Note, this Pledge
Agreement or any agreement, document or instrument executed pursuant hereto or
thereto, or of any guaranty or other security for the Pledgor's Obligations, (C)
the Pledgor's Obligations, or any agreement relating thereto, at any time being
found to be illegal, invalid or unenforceable in any respect, (D) the
application of payments received from any source to the payment of indebtedness
other than the Pledgor's Obligations, even though the Secured Party or any other
person or entity might have elected to apply such payment to any part or all of
the Pledgor's Obligations, (E) any failure to perfect or continue perfection of
a security interest in any other collateral that secures any of the Pledgor's
Obligations, (F) any defenses, set-offs or counterclaims that the related
obligor may allege or assert against the Secured Party in respect of the
Pledgor's Obligations,
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including, without limitation, failure of consideration, breach of warranty,
payment, statute of frauds, statute of limitations, accord and satisfaction, and
usury, and (G) any other act, thing or omission, or delay to do any other act or
thing, that may or might in any manner or to any extent vary the risk of the
Pledgor obligors in respect of the Pledgor's Obligations.
(b) The Pledgor hereby waives for the benefit of the Secured Party:
(i) any right to require the Secured Party, as a condition of
payment or performance by the Pledgor, to (A) proceed against any guarantor of
the Pledgor or any other person or entity, (B) proceed against or exhaust any
other security held from any guarantor of the Pledgor's Obligations or any other
person or entity, (C) proceed against or have resort to any balance of any
deposit account or credit on the books of the Secured Party or any other person
or entity, or (D) pursue any other remedy in the power of the Secured Party or
any other person or entity whatsoever;
(ii) any defense arising by reason of the incapacity, lack of
authority or any disability or other defense, including, without limitation, any
defense based on or arising out of the lack of validity or the unenforceability
of the Pledgor's Obligations or any agreement or instrument relating thereto or
by reason of the cessation of the liability;
(iii) any defense based upon any statute or rule of law that
provides that the obligation of a surety must be neither larger in amount nor in
other respects more burdensome than that of the principal;
(iv) any defense based upon the errors or omissions of the
Secured Party or any other person or entity in the administration of the
Pledgor's Obligations, except behavior that amounts to fraud or wilful
misconduct;
(v) (A) any principles or provisions of law, statutory or
otherwise, that are or might be in conflict with the terms of this Pledge
Agreement and any legal or equitable discharge of the Pledgor's Obligations
hereunder, (B) the benefit of any statute of limitations affecting the Pledgor's
liability hereunder or the enforcement hereof, (C) any rights to set-offs,
recoupments and counterclaims, and (D) promptness, diligence and any requirement
that the Secured Party or any other person or entity protect, secure, perfect or
insure any other lien or security interest or any property subject thereto;
(vi) notices, demands, presentments, protests, notices of
protest, notices of dishonor and notices of any action or inaction, notices of
default under the Promissory Note or any agreement or instrument related
thereto, notices of any renewal, extension or modification of the Pledgor's
Obligations or any agreement related thereto, notices of any extension of credit
to the Pledgor and notices of any of the matters referred to in Section 14(b)(v)
above and any right to consent to any thereof; and
(vii) to the fullest extent permitted by applicable law, any
defenses or benefits that may be derived from or afforded by law that limit the
liability of or exonerate guarantors or sureties in general, or that may
conflict with the terms of this Pledge Agreement.
15. CONTINUING SECURITY INTEREST; TRANSFER OF OBLIGATIONS.
(a) This Pledge Agreement shall create a continuing security
interest in the Collateral and shall (i) remain in full force and effect until
the indefeasible payment and performance in full of the Pledgor's
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Obligations, (ii) be binding upon the Pledgor and her successors and assigns,
and (iii) inure, together with the rights and remedies of the Secured Party
hereunder, to the benefit of the Secured Party and its successors, assigns,
transferees, conveyees and purchasers. Without limiting the generality of the
foregoing clause (iii), the Secured Party may assign or otherwise transfer
totally to another person or entity all or any part of the Secured Party's
right, title and interest in the Pledgor's Obligations, and such other person or
entity shall thereupon become vested with all the benefits in respect thereof
granted to the Secured Party herein or otherwise.
(b) Upon the indefeasible payment and performance in full of the
Pledgor's Obligations, the liens and the Security Interest granted hereby shall
terminate and all rights to the Collateral shall revert to the Pledgor. Upon any
such termination, the Secured Party shall, at the Pledgor's expense, execute and
deliver to the Pledgor such documents and instruments as the Pledgor shall
reasonably request to evidence such termination.
16. FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE. No failure or
delay on the part of the Secured Party in the exercise of any power, right or
privilege hereunder shall impair such power, right or privilege or be construed
to be a waiver of any default or acquiescence therein, nor shall any single or
partial exercise of any such power, right or privilege preclude any other or
further exercise thereof or of any other power, right or privilege. All rights
and remedies existing under this Pledge Agreement are cumulative to, and not
exclusive of, any rights or remedies otherwise available.
17. COSTS AND EXPENSES. Pledgor shall on the date hereof pay all costs
and expenses of the Secured Party in connection with the preparation and
negotiation of this Pledge Agreement and the Promissory Note. The Pledgor shall
pay all costs and expenses, including, without limitation, reasonable attorneys'
fees and expenses, incurred by or on behalf of the Secured Party in the
enforcement of this Pledge Agreement and the Promissory Note.
18. NOTICES. All notices, requests, demands, claims and other
communications hereunder shall be in writing. Any notice, request, demand, claim
or other communication hereunder shall be deemed duly given two (2) business
days after being sent by registered or certified mail, return receipt requested,
postage prepaid, and addressed to the intended recipient as set forth below:
o If to the Pledgor:
Xxxxx X. Xxxxx
000 Xxxx Xxxx Xxxx
Xxxxxx, Xxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
o If to the Secured Party:
Nu Skin Asia Pacific, Inc.
00 Xxxx Xxxxxx Xxxxxx
Xxxxx, Xxxx 00000
Attention: M. Xxxxxx Xxxx
Telephone: (000) 000-0000
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Facsimile: (000) 000-0000
Any party may send any notice, request, demand, claim or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, ordinary mail or electronic mail). Any party may change the address to
which notices, requests, demands, claims and other communications hereunder are
to be delivered by giving the other party notice in the manner herein set forth.
19. NO WAIVERS; REMEDIES; SPECIFIC PERFORMANCE.
(a) No failure or delay by any party in exercising any right, power
or privilege under this Pledge Agreement shall operate as a waiver of the right,
power or privilege. A single or partial exercise of any right, power or
privilege shall not preclude any other or further exercise of the right, power
or privilege or the exercise of any other right, power or privilege hereunder.
The rights and remedies provided in this Pledge Agreement shall be cumulative
and not exclusive of any rights or remedies provided by applicable law.
(b) In view of the uniqueness of the transactions contemplated
hereby, the parties agree that the Secured Party would not have an adequate
remedy at law for money damages in the event that this Pledge Agreement is not
performed by the Pledgor in accordance with its terms, and therefore the parties
agree that the Secured Party shall be entitled to specific enforcement of the
terms of this Pledge Agreement in addition to any other remedy to which it may
be entitled, at law or in equity.
20. AMENDMENTS, ETC. No amendment, modification, termination or waiver
of any provision of this Pledge Agreement, and no consent to any departure by a
party to this Pledge Agreement from any provision hereof, shall be effective
unless it shall be in writing and signed and delivered by the other parties to
this Pledge Agreement, and then it shall be effective only in the specific
instance and for the specific purpose for which it is given.
21. SUCCESSORS AND ASSIGNS.
(a) As further provided in Section 15, the Secured Party may assign
or transfer its rights and delegate its obligations under this Pledge Agreement;
such assignee or transferee shall accept those rights and assume those
obligations for the benefit of the Secured Party in writing in form reasonably
satisfactory to the Pledgor. Thereafter, without any further action by any
person or entity, all references in this Pledge Agreement to "Secured Party",
and all comparable references, shall be deemed to be references to the assignee
or transferee, but the Pledgor shall not be released from any obligation or
liability under this Pledge Agreement.
(b) Except as provided in Section 21(a) above, no party may assign
or transfer its rights under this Pledge Agreement. Any delegation in
contravention of this Section 21(b) shall be void ab initio and shall not
relieve the delegating party of any duty or obligation under this Pledge
Agreement.
(c) The provisions of this Pledge Agreement shall be binding upon
and inure to the benefit of the parties to this Pledge Agreement and their
respective successors and permitted assigns, transferees, conveyees and
purchasers.
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22. GOVERNING LAW. This Pledge Agreement shall be governed by and
construed in accordance with the internal laws of the State of Utah. All rights
and obligations of the parties hereto shall be in addition to and not in
limitation of those provided by applicable law.
23. COUNTERPARTS; EFFECTIVENESS. This Pledge Agreement may be signed in
any number of counterparts, each of which shall be deemed to be an original,
with the same effect as if all signatures were on the same instrument.
24. SEVERABILITY OF PROVISIONS. Any provision of this Pledge Agreement
that is prohibited or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of the prohibition or
unenforceability without invalidating the remaining provisions of this Pledge
Agreement or affecting the validity or enforceability of the prohibited or
unenforceable provision in any other jurisdiction.
25. HEADINGS AND REFERENCES. Section headings in this Pledge Agreement
are included herein for convenience of reference only and do not constitute a
part of this Pledge Agreement for any other purpose. References to parties and
Sections in this Pledge Agreement are references to the parties to or the
Sections of this Pledge Agreement, as the case may be, unless the context shall
require otherwise.
26. ENTIRE AGREEMENT. Except as otherwise specifically provided in this
Section 26, this Pledge Agreement and the documents and instruments referenced
herein embody the entire agreement and understanding of the respective parties
and supersedes all prior agreements and understandings with respect to the
subject matter of those documents. The Pledgor and the Secured Party shall
remain subject to the Promissory Note in accordance with the terms thereof.
27. SURVIVAL. Except as otherwise specifically provided in this Pledge
Agreement, each representation, warranty or covenant contained herein or made
pursuant to this Pledge Agreement shall survive the execution of this Pledge
Agreement and shall remain in full force and effect, notwithstanding any
investigation or notice to the contrary or any waiver by any other party of a
related condition precedent to the performance by such other party of an
obligation under this Pledge Agreement.
28. EXCLUSIVE JURISDICTION. Each of the Pledgor and the Secured Party
(a) agrees that any legal action with respect to this Pledge Agreement shall be
brought exclusively in the courts of the State of Utah or in the United States
District Court for the District of Utah, (b) accepts for itself and in respect
of its property, generally and unconditionally, the jurisdiction of those
courts, and (c) irrevocably waives any objection, including, without limitation,
any objection to the laying of venue or based on the grounds of forum non
conveniens, that it may now or hereafter have to the bringing of any legal
action in those jurisdictions; provided, however, that each of the Pledgor and
the Secured Party may assert in a legal action in any other jurisdiction or
venue each mandatory defense, third party claim or similar claim that, if not so
asserted in such action, may not be asserted in an original legal action in the
courts referred to in clause (a) of this Section 28.
29. WAIVER OF JURY TRIAL. Each party waives any right to a trial by jury
in any action to enforce or defend any right under this Pledge Agreement or any
amendment, instrument, document or agreement delivered, or that in the future
may be delivered, in connection with this Pledge Agreement, and agrees that any
action shall be tried before a court and not before a jury.
30. NON RECOURSE AGAINST SECURED PARTY CONTROLLING PERSONS. No recourse
under this Pledge Agreement shall be had against any "controlling person"
(within the meaning of
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Section 20 of the Exchange Act) of the Secured Party or the shareholders,
directors, officers, employees, agents and affiliates of the Secured Party or
such controlling persons, whether by the enforcement of any assessment or by any
legal or equitable proceeding, or by virtue of any rule or regulation, it being
expressly agreed and acknowledged that no personal liability whatsoever shall
attach to, be imposed on or otherwise be incurred by such controlling person,
shareholder, director, officer, employee, agent or affiliate, as such, for any
obligations of the Secured Party under this Pledge Agreement or the Promissory
Note or for any claim based on, in respect of or by reason of, such obligations
or their creation.
31. SPOUSAL CONSENT. The Pledgor's spouse shall execute and deliver the
Spousal Consent form substantially in the form attached hereto as Exhibit "D".
Such executed form shall be delivered to the Secured Party on the date hereof.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the undersigned have executed this Pledge Agreement
as of the date first above written.
THE PLEDGOR: THE SECURED PARTY:
XXXXX X. XXXXX NU SKIN ASIA PACIFIC, INC.
______________________________ By: ____________________________
Its: ____________________________
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EXHIBIT "A"
[Insert form of Promissory Note]
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EXHIBIT "B"
DESCRIPTION OF PLEDGED SHARES OF CLASS B COMMON STOCK OF NU SKIN
ASIA PACIFIC, INC.
Name of Stockholder Certificate No. No. of Shares Subject to Certificate
Xxxxx X. Xxxxx NSB 0137 13,913,895.30
----------------
Total Pledged Shares included in Certificate No. NSB 0137: 349,406
================
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EXHIBIT "C"
STOCK POWER AND ASSIGNMENT
FOR VALUE RECEIVED and pursuant to that certain Stock Pledge Agreement
dated as of December __, 1997 by and between Xxxxx X. Xxxxx and Nu Skin Asia
Pacific, Inc., the undersigned, effective immediately upon default by the
undersigned under said Stock Pledge Agreement and the Demand Promissory Note
secured thereby, and without the necessity of any notice to the undersigned or
any further action on the part of the undersigned or Nu Skin Asia Pacific, Inc.,
hereby sells, assigns and transfers unto Nu Skin Asia Pacific, Inc., a Delaware
corporation, 349,406 shares of Class B common stock, $.001 par value per share,
of Nu Skin Asia Pacific, Inc. standing in the undersigned's name on the books of
said corporation, represented by Certificate No. NSB 0137 delivered herewith,
and does hereby irrevocably constitute the Secretary of said corporation as
attorney-in-fact, with full power of substitution, to transfer said stock on the
books of said corporation.
Dated: December 5, 1997
XXXXX X. XXXXX
---------------------------
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