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EXHIBIT 2
PLEDGE AND SECURITY AGREEMENT
THIS PLEDGE AND SECURITY AGREEMENT ("Agreement"), dated August 14,
1999, by and between XXXXXXX X. XXXXXXX ("Pledgor") and XXXXX X. XXXXXXXXX.,
a Tennessee resident ("Lender");
WITNESSETH:
WHEREAS, Pledgor desires now and hereafter to obtain credit from
Lender; and
WHEREAS, Lender is willing to extend credit to Pledgor to such extent,
and only to such extent, as Lender may from time to time deem advisable upon
Pledgor executing this Agreement for the purpose of securing all present and
future obligations of Pledgor to Lender;
NOW THEREFORE, in consideration of the foregoing, and to enable Pledgor
to obtain an extension of credit from Lender and to induce Lender to have
transactions with Pledgor, Pledgor agrees as follows:
1. Pledge. As collateral security for the payment and performance in
full of the Obligations (as hereinafter defined), Pledgor hereby pledges,
hypothecates, assigns, transfers, sets over and delivers unto Lender, and hereby
grants to Lender a security interest in, the collateral described in Schedule A
hereto, together with the proceeds thereof and all cash, additional securities
or other property at any time and from time to time receivable or otherwise
distributable in respect of, in exchange for, or in substitution for any and all
such pledged securities (all such pledged securities, the proceeds thereof,
cash, dividends, additional securities and other property now or hereafter
pledged hereunder are hereinafter collectively called the "Pledged Securities");
provided, however, that the proceeds thereof described above shall be limited to
the after-tax proceeds received with respect to the Pledged Securities and
Pledgor shall be entitled to receipt of the amount of proceeds necessary to fund
Pledgor's tax obligations with respect to any proceeds received with respect to
the Pledged Securities;
TO HAVE AND TO HOLD the Pledged Securities, together with all rights,
titles, interests, powers, privileges and preferences pertaining or incidental
thereto, unto Lender, its successors and assigns; subject, however, to the
terms, covenants and conditions herein set forth.
Upon delivery to Lender, the Pledged Securities shall be accompanied by
executed stock powers in blank and by such other instruments or documents as
Lender or its counsel may reasonably request. Each delivery of certificates for
such Pledged Securities shall be
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accompanied by a schedule showing the number of shares and the numbers of the
certificates theretofore and then pledged hereunder, which schedule shall be
attached hereto as Schedule A and made a part hereof. Each schedule so delivered
shall supersede any prior schedule so delivered.
2. Obligations Secured. This Agreement is made, and the security
interest created hereby is granted to Lender, to secure full payment and
performance of any and all indebtedness and other obligations of Pledgor to
Lender, direct or contingent, however evidenced or denominated, and however or
whenever incurred, including without limitation indebtedness incurred pursuant
to that certain Secured Promissory Note (the "Note") by and between Pledgor and
Lender, dated of even date herewith, and any past, present or future commitment
of Lender to Pledgor (collectively the "Obligations").
3. Representations and Warranties. Pledgor hereby represents and
warrants to Lender (a) that Pledgor is the legal and equitable owner of the
Pledged Securities, that Pledgor has the complete and unconditional authority to
pledge the Pledged Securities being pledged by it, and holds the same free and
clear of all liens, charges, encumbrances and security interests of every kind
and nature; and (b) that no consent or approval of any governmental body or
regulatory authority, or of any other party, which was or is necessary to the
validity of this pledge, has not been obtained.
4. Voting Rights.
(a) Provided that no default or event of default shall have occurred
and be continuing hereunder:
(i) Pledgor shall be entitled to exercise or refrain from
exercising the voting rights attributable to the Pledged Securities
or any part thereof for any purpose not inconsistent with the terms
and conditions of this Agreement, and
(ii) Lender will execute and deliver any proxies or other
instruments reasonably requested by Pledgor for the purpose of
enabling Pledgor to exercise the voting rights that it is entitled
to exercise pursuant to subparagraph 4(a)(i) hereof.
(b) Upon the occurrence and during the continuance of a
default or event of default hereunder, all rights of Pledgor to
exercise or refrain from exercising the voting rights attributable to
the Pledged Securities or any part thereof pursuant to subparagraph
4(a)(i) hereof or otherwise shall cease, and Lender and its successors
and assigns shall have the sole right to exercise or refrain from
exercising such rights. In furtherance of the foregoing, Pledgor hereby
makes, constitutes and appoints Lender as
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the proxy and attorney-in-fact of and for Pledgor, with full power to
exercise or to refrain from exercising any and all voting rights
attributable to the Pledged Securities upon the occurrence and during
the continuance of any such default or event of default. The foregoing
appointment and power, being coupled with an interest, are irrevocable
until the Obligations have been fully and irreversibly satisfied.
5. Remedies Upon Default.
(a) Upon the occurrence of a default in the payment or
performance of any of the Obligations, or upon the occurrence of a
default or event of default under any other instrument or document now
or hereafter further evidencing, securing or otherwise related to any
of the Obligations, or in the event that any representation or warranty
herein shall prove to have been untrue when made, or in the event that
Pledgor shall default in the performance of any of its obligations
hereunder, or in the event that any bankruptcy or other insolvency
proceedings are instituted by or against Pledgor; then, and in any such
event, Lender shall have all of the rights, powers, privileges, options
and remedies of a secured party under the Uniform Commercial Code as in
effect in the State of Tennessee, and without limiting the foregoing,
Lender may (i) collect any and all amounts payable in respect of the
Pledged Securities and exercise any and all rights, powers, privileges,
options and remedies of the holder and owner thereof, and (ii) sell,
transfer and/or negotiate the Pledged Securities, or any part thereof,
at public or private sale, for cash, upon credit or for future delivery
as Lender shall deem appropriate, including without limitation, at
Lender's option, the purchase of all or any part of the Pledged
Securities at any public sale by Lender. Upon consummation of any sale,
Lender shall have the right to assign, transfer and deliver to the
purchaser or purchasers thereof the Pledged Securities so sold. Each
such purchaser at any such sale shall hold the property sold
absolutely, free from any claim or right on the part of Pledgor, and
Pledgor hereby waives (to the extent permitted by law) all rights of
redemption, stay or appraisal that Pledgor now has or may at any time
in the future have under any rule of law or statute now existing or
hereinafter enacted. Pledgor hereby expressly waives notice to redeem
and notice of the time, place and manner of such sale.
(b) 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, Lender may be compelled,
with respect to any sale of all or any part of the Pledged Securities,
to limit purchasers to those who agree, among other things, to acquire
such Pledged Securities for their own account, for investment and not
with a view to the distribution or resale thereof. Pledgor acknowledges
that any such private sales may be at prices and on terms less
favorable than those obtainable through a public sale without such
restrictions (including, without limitation, a public offering made
pursuant to a registration statement under the Securities Act), and,
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notwithstanding such circumstances, Pledgor agrees that any such
private sale shall be deemed to have been made in a commercially
reasonable manner and that Lender shall have no obligation to engage in
public sales and no obligation to delay the sale of any of the Pledged
Securities for the period of time necessary to permit the issuer
thereof to register such sale under the Securities Act or under
applicable state securities laws, even if Pledgor would agree to do so.
(c) If Lender determines to exercise its right to sell any or
all of the Pledged Securities, upon written request, Pledgor from time
to time shall, and shall cause each issuer of the Pledged Securities to
be sold hereunder to, furnish to Lender all such information as Lender
may request in order to determine the number of shares and other
instruments included in the Pledged Securities that may be sold by
Lender as exempt transactions under the Securities Act and the rules of
the Securities and Exchange Commission thereunder, as the same are from
time to time in effect.
6. Sale of Pledged Securities by Pledgor. Pledgor may sell or otherwise
transfer the Pledged Securities without the consent of the Lender during the
term hereof; provided, however, that upon the consummation of such sale or other
transfer, Pledgor will utilize the after-tax proceeds of such sale or other
transfer to satisfy the Obligations.
7. Application of Proceeds. The proceeds of the sale of Pledged
Securities sold pursuant to Section 5 hereof, and the proceeds of the exercise
of any of Lender's other remedies hereunder, shall be applied by Lender as
follows:
First: To the payment of all costs and expenses incurred by Lender in
connection with any such sale, including, but not limited to, all court costs
and the reasonable fees and expenses of counsel for Lender in connection
therewith, and
Second: To the payment in full of the Obligations, in such order of
priority as Lender shall determine, in its sole discretion, and
Third: The excess, if any, shall be paid to Pledgor or any other
person lawfully thereunto entitled.
8. Reimbursement of Lender. Pledgor agrees to reimburse Lender, upon
demand, for all expenses, including without limitation reasonable attorney's
fees, incurred by it in connection with the administration and enforcement of
this Agreement, and agrees to indemnify Lender and hold it harmless from and
against any and all liability incurred by it hereunder or in connection
herewith, unless such liability shall be due to willful misconduct or gross
negligence on the part of Lender.
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9. No Waiver. No failure on the part of Lender to exercise, and no
delay in exercising, any right, power or remedy hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right,
power or remedy by Lender preclude any other or further exercise thereof or the
exercise of any other right, power or remedy. All remedies are cumulative and
are not exclusive of any other remedies provided by law.
10. Limitation of Liability. The powers conferred on Lender hereunder
are solely to protect its interests in the Pledged Securities, and shall not
impose any duty upon Lender to exercise any such powers. Except for the exercise
of reasonable care in the custody and preservation of the certificates or other
instruments representing Pledged Securities in its possession and the accounting
for monies actually received by it hereunder, Lender shall have no duty as to
any Pledged Securities. Without limiting the generality of the foregoing, Lender
shall have no responsibility for (a) ascertaining or taking action with respect
to calls, conversions, exchanges, maturities, tenders or other matters relating
to any Pledged Securities, regardless of whether Lender has or is deemed to have
knowledge of such matters, (b) taking any necessary steps (other than steps in
accordance with the standard of care set forth above to maintain possession of
the certificates or other instruments representing Pledged Securities in its
possession) to preserve rights against any parties with respect to the Pledged
Securities, (c) taking any necessary steps to collect or realize upon any of the
Obligations or any of the Pledged Securities, or (d) initiating any action to
protect the Pledged Securities against the possibility of a decline in market
value. Lender shall be deemed to have exercised reasonable care in the custody
and preservation of the certificates or other instruments representing Pledged
Securities in its possession if such items are accorded treatment substantially
equal to that which Lender accords its own property consisting of negotiable
securities.
11. Binding Agreement. This Agreement and the terms, covenants and
conditions hereof shall be binding upon and inure to the benefit of the parties
hereto and to all holders of indebtedness secured hereby and their respective
successors and assigns.
12. Governing Law; Amendments. This Agreement shall in all respects be
construed in accordance with and governed by the laws of the State of Tennessee.
This Agreement may not be amended or modified, nor may any of the Pledged
Securities be released except in a writing signed by the party to be charged
therewith. Time is of the essence with respect to the obligations of Pledgor
pursuant to this Agreement.
13. Further Assurances. Pledgor agrees to do such further acts and
things, and to execute and deliver such additional conveyances, assignments,
agreements and instruments (including but not limited to the execution and
delivery and filing of UCC financing statements with respect to the security
interests of this Agreement), as Lender at any time may request in connection
with the administration and enforcement of this Agreement or relative to the
Pledged Securities or any part thereof or in order to assure and confirm unto
Lender its rights and remedies hereunder.
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14. Severability. If any provision of this Agreement or the application
thereof to any person or circumstance shall be invalid or unenforceable to any
extent, the remainder of this Agreement and/or the application of such provision
to other persons or circumstances shall not be affected thereby and shall be
enforceable to the greatest extent permitted by law.
15. Miscellaneous. Section numbers and headings used herein are for
convenience only and are not to affect the construction of or to be taken into
consideration in interpreting this Agreement. When used herein, the singular
shall include the plural, and vice versa, and the use of the masculine, feminine
or neuter gender shall include all other genders, as the context may require.
IN WITNESS WHEREOF, Pledgor and Lender have executed this Agreement, or
have caused this Agreement to be duly executed by a duly authorized officer, all
as of the day first above written.
PLEDGOR:
/s/ Xxxxxxx X. Xxxxxxx
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Xxxxxxx X. Xxxxxxx
LENDER:
/s/ Xxxxx X. Xxxxxxxxx
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Xxxxx X. Xxxxxxxxx
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SCHEDULE A
PLEDGED SECURITIES
No. of Certificate
Issuer Shares Class No.
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Landair Corporation 300,000 Common
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