Exhibit 10.31
SECURITY AGREEMENT
For good and valuable consideration and intending to be legally bound,
Xxxxxx X. Xxxxx ("Pledgor") hereby assigns, pledges and grants to Safeguard
Scientifics, Inc., a Pennsylvania corporation ("Lender"), a security interest in
the interests of Pledgor in the Long Term Incentive Plan ("LTIP") of the Lender,
now or hereafter owned by or standing in the name of Pledgor or in which Pledgor
has a legal or beneficial interest, which present interests are described on
Schedule A attached hereto and made a part hereof (collectively, the
"Securities"), together with all (a) additional property relating to or in
respect of the Securities issued by the Lender and from time to time acquired by
Pledgor in any manner, and the certificates or instruments representing such
additional property, and all dividends, interest, cash, instruments, and other
property from time to time received, receivable, or otherwise distributed or
distributable in respect of or in exchange for any or all of such additional
property; and (b) cash and non-cash proceeds, distributions, additions,
substitutions, exchanges, redemptions and replacements of, on or by reason of
any of the foregoing (collectively, the "Collateral"), as security for the
payment and performance of all indebtedness, liabilities and obligations of the
Pledgor (primary, secondary, direct, contingent, related, unrelated, sole, joint
or several) to Lender, whether for principal, interest, fees, expenses or
otherwise, (the "Obligations"), arising under that certain promissory note,
dated of even date herewith, issued by the Pledgor in the principal amount of
$806,078.13 (the "Note"), all on the following terms and conditions.
A. Representations and Warranties. Pledgor represents and warrants that:
1. Pledgor has good title to the Securities free and clear of all
liens and encumbrances except the security interest created hereby and except
for vesting and those general restrictions applicable to all participants in the
said LTIP.
2. No authorization, approval, consent, or other action by, and no
notice to or filing with, any governmental authority, regulatory body or other
person or entity is required either (i) for the pledge by Pledgor of the
Collateral pursuant to this Pledge Agreement or for the execution, delivery or
performance of this Pledge Agreement by Pledgor, or (ii) for the exercise by
Lender of the other rights provided for in this Pledge Agreement or the remedies
in respect of the Collateral pursuant to this Pledge Agreement (except as may be
required in connection with such disposition by laws affecting the offering and
sale of securities generally).
B. Negative Pledge as to Collateral and Certain Property. Pledgor agrees
not to (i) sell or otherwise dispose of, or grant any option with respect to,
any of the Collateral, or (ii) create or permit to exist any lien, security
interest or other charge or encumbrance upon or with respect to any of the
Collateral, except the security interest under this Pledge Agreement. In
addition, without the prior consent of Lender, Pledgor will not sell his
interest in the property located at 0000 Xxxxxxx Xxxx, Xxxxxx XX.
C. Further Assurances. Pledgor shall from time to time promptly take all
actions (and execute, deliver and record all instruments and documents)
necessary or appropriate or requested by Lender, to continue the validity,
enforceability and perfected status of the pledge of the Collateral hereunder or
to enable Lender to exercise and enforce the rights and remedies hereunder with
respect to any of the Collateral.
D. Lender's Duties Toward Collateral. Lender shall be under no obligation
to take any actions and shall have no liability (except for gross negligence or
willful misconduct) with respect to the preservation or protection of the
Collateral or any underlying interests represented thereby as against any prior
or other parties. In the event Pledgor requests that Lender take or omit to take
action(s) with respect to the Collateral, Lender may refuse so to do with
impunity if Pledgor does not, upon request of Lender, post sufficient,
creditworthy indemnities with Lender which, in Lender's sole discretion, are
sufficient to hold it harmless from any possible liability of any kind in
connection therewith.
E. Waivers by Pledgor. Pledgor agrees that Lender, at any time and without
affecting its rights in the Collateral and without notice to Pledgor, may grant
any extensions, releases or other modifications of any kind respecting the Note,
the Obligations and any Collateral. Pledgor, except as otherwise provided herein
or in the Note, waives all notices of any kind in connection with the
Obligations, the Note and any changes therein or defaults or enforcements
proceedings thereunder, whether against Pledgor or any other party. Pledgor
hereby waives any rights it has at equity or in law to require Lender to apply
any rights of marshalling or other equitable doctrines in such circumstances.
F. Remedies Upon Default. After the occurrence of any Event of Default (as
defined in the Note) or if any representation, warranty or agreement of Pledgor
hereunder is breached or proves to be false, erroneous or misleading in any
material respect:
1. Lender may transfer or cause to be transferred any of the
Collateral into its own or a nominee's or nominees' names.
2. Lender shall be entitled to receive and apply in payment of the
Obligations any cash dividends, interest or other payment on the Collateral.
3. Lender shall be entitled to exercise in Lender's discretion all
voting rights, if any, pertaining to the Collateral, and in connection therewith
and at the written request of Lender, Pledgor shall promptly execute any
appropriate dividend, payment or brokerage orders or proxies.
4. Pledgor shall promptly take any action necessary or required or
requested by Lender, in order to allow Lender fully to enforce the pledge of the
Collateral hereunder and realize thereon to the fullest possible extent
including, but not limited to, the filing of any claims with any court,
liquidator or trustee, custodian, receiver or other like person or party.
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5. Lender shall have all the rights and remedies granted or
available to it hereunder, under the Uniform Commercial Code as in effect from
time to time in Delaware, under any other statute or the common law, or under
any of the Loan Documents, including without limitation the right to sell the
Collateral or any portion thereof at one or more public or private sales upon
ten (10) days' written notice and to bid thereat or purchase any part or all
thereof in its own or a nominee's or nominees' names, free and clear of any
equity of redemption; and to apply the net proceeds of the sale, after deduction
for any expenses of sale, including without limitation the payment of all
Lender's reasonable attorneys' fees in connection with the Obligations and the
sale, to the payment of the Obligations in any manner or order which Lender in
its sole discretion may elect, without further notice to or consent of Pledgor
and without regard to any equitable principles of marshalling or other like
equitable doctrines.
6. Lender may increase, in its sole discretion, but shall not be
required to do so, the Obligations by making additional advances or incurring
expenses for the account of Pledgor deemed appropriate or desirable by Lender in
order to protect, enhance, preserve or otherwise further the sale or disposition
of the Collateral or any other property it holds as security for the
Obligations.
G. Dispositions of Collateral. Pledgor recognizes that Lender may be
unable to effect a sale to the public of all or part of the Collateral by reason
of certain prohibitions or restrictions in the federal or state securities laws
and regulations (collectively, the "Securities Laws"), or the provisions of
other federal and state laws, regulations or rulings, but may be compelled to
resort to one or more private sales to a restricted group of purchasers who will
be required to agree to acquire the Collateral for their own account, for
investment and not with a view to the further distribution or resale thereof
without restriction. Pledgor agrees that any sales(s) so made may be at prices
and on other terms less favorable to Pledgor than if the Collateral was sold to
the public, and that Lender has no obligation to delay sale of the Collateral
for period(s) of time necessary to permit the issuer thereof to register the
Collateral for sale to the public under any of the Securities Laws. Pledgor
agrees that negotiated sales whether for cash or credit made under the foregoing
circumstances shall not be deemed for that reason not to have been made in a
commercially reasonable manner. Pledgor shall cooperate with Lender and shall
satisfy any requirements under the Securities Laws applicable to the sale or
transfer of the Collateral by Lender.
In connection with any sale or disposition of the Collateral, Lender
is authorized to comply with any limitation or restriction as it may be advised
by its counsel is necessary or desirable in order to avoid any violation of
applicable law or to obtain any required approval of the purchaser(s) by any
governmental regulatory body or officer and it is agreed that such compliance
shall not result in such sale being considered not to have been made in a
commercially reasonable manner nor shall Lender be liable or accountable by
reason of the fact that the proceeds obtained at such sale(s) are less than
might otherwise have been obtained.
Lender may elect to obtain the advice of any independent
nationally-known investment banking firm, which is a member firm of the New York
Stock Exchange, with respect
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to the method and manner of sale or other disposition of any of the Collateral,
the best price reasonably obtainable therefor, the consideration of cash and/or
credit terms, or any other details concerning such sale or disposition. Lender,
in its sole discretion, may elect to sell on such credit terms which it deems
reasonable.
H. Lender's Expenses. Pledgor shall pay Lender on demand all costs and
expenses incurred by Lender (including, without limitation, counsel fees and
expenses) in connection with (i) the preparation, negotiation, and closing of
this Pledge Agreement, and any modifications hereto, (ii) the custody,
preservation, sale or collection or realization of the Collateral, and (iii) the
exercise or enforcement of Lender's rights hereunder.
I. Successors and Assigns. This Pledge Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective heirs,
personal representatives, successors and assigns and shall be governed as to its
validity, interpretation and effect by the laws of the State of Delaware; and
any terms used herein which are defined in the Uniform Commercial Code as
enacted in Delaware shall have the meanings therein set forth.
J. Amendments and Waivers. No amendment or waiver of any provision of this
Agreement nor consent to any departure by Pledgor herefrom shall in any event be
effective unless the same shall be in writing and signed by Lender, and then
such amendment, waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given. No failure or delay on
the part of Lender in the exercise of any right, power, or remedy under this
Pledge Agreement or any of the Note shall under any circumstances constitute or
be deemed to be a waiver thereof, or prevent the exercise thereof in that or any
other instance.
K. Attorney-in-Fact. Pledgor hereby irrevocably appoints Lender as its
attorney-in-fact, in the name of Pledgor or otherwise, from time to time in
Lender's discretion and at Pledgor's expense, to take any action and to execute,
deliver and record any instruments or documents in connection with the
Collateral which Lender may deem necessary or advisable to accomplish the
purposes of this Pledge Agreement including, without limitation, to receive,
endorse, and collect all instruments made payable to Pledgor representing any
dividend, interest, or other distribution in respect of the Pledged Collateral
or any part thereof and to give full discharge for the same. Lender shall not,
in its capacity as such attorney-in-fact, be liable for any acts or omissions,
nor for any error of judgment or mistake of fact or law, but only for gross
negligence or willful misconduct.
L. Entire Agreement. This Pledge Agreement, and all agreements and
instruments to be delivered by the parties pursuant hereto or in connection
herewith, represent the entire understanding of the parties with respect to the
subject matter hereof. Except as otherwise indicated, all agreements defined
herein refer to the same as from time to time amended or supplemented or the
terms thereof waived or modified in accordance herewith and therewith. Any
provision hereof found to be illegal, invalid or unenforceable for any reason
whatsoever shall not affect the legality, validity or enforceability of the
remainder hereof.
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M. Joint and Several Obligations. If more than one Pledgor signs this
Pledge Agreement, all references herein to Pledgor shall include all such
Pledgors and each shall be jointly and severally bound by the terms and
provisions hereof.
N. Notices. All notices, demands or other communications required or
permitted hereunder shall be in writing and shall be given as provided in the
Note, using Pledgor's address as indicated below.
O. Partial Releases; Termination. Any of the Collateral may be released
from this Pledge Agreement without altering, varying, or diminishing in any way
this Pledge Agreement or the security interest granted hereby as to the
Collateral not expressly released, and this Pledge Agreement and such security
interest shall continue in full force and effect as to all of the Collateral not
expressly released. This Pledge Agreement and Lender's rights in the Collateral
shall cease, terminate and be void upon the repayment in full of the
Obligations. Upon such repayment and termination, Lender shall execute such
documents as may reasonably be required by Pledgor to release Lender's security
interest in the Collateral.
IN WITNESS WHEREOF, Pledgor has executed this Pledge Agreement as of the
23rd day of December, 1998.
WITNESS OR ATTEST: PLEDGOR:
/s/ X. Xxxxxx Xxxxx /s/ Xxxxxx X. Xxxxx
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Name: Xxxxxx X. Xxxxx
Address: 0000 Xxxxxxx Xxxx
Xxxxxx, XX 00000
Fax No.: 000-000-0000
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