Exhibit 10.28(a)
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT, entered into as of November 8, 1999, between
PROGRAPH SYSTEMS, INC., a Pennsylvania corporation (the "Company"), and XXXXXXX
XXXXXXX (the "Purchaser").
WITNESSETH:
WHEREAS, the Purchaser has purchased from the Company 1,654,702 shares
of the Company's Common Stock (the "Shares"); and
WHEREAS, the Company has loaned to the Purchaser the sum of $380,581.16
which the Purchaser has used to pay the purchase price of the Shares; and
WHEREAS, the Purchaser has executed and delivered to the Company a
secured promissory note evidencing such loan (the "Note") and has agreed to
pledge the Shares (the "Pledged Shares") to the Company as security for the
payment of the Note:
NOW, THEREFORE, it is agreed as follows:
1. The Purchaser hereby delivers to the Company one or more
certificates representing the Shares, together with two Assignments Separate
From Certificate signed by the Purchaser. The Purchaser hereby pledges and
grants a security interest in the Pledged Shares, including any shares into
which the Pledged Shares may be converted and all proceeds of the Pledged
Shares, as security for the timely payment of all of the Purchaser's obligations
under the Note and for the Purchaser's performance of all of its obligations
under this Agreement. In the event of a default in payment of the Note, the
Purchaser hereby appoints the Company as his true and lawful attorney to take
such action as may be necessary or appropriate to cause the Pledged Shares to be
transferred into the name of the Company or any assignee of the Company and to
take any other action on behalf of the Purchaser permitted hereunder or under
applicable law.
2. The Company agrees to hold the Pledged Shares as security for the
timely payment of all of the Purchaser's obligations under the Note and for the
Purchaser's performance of all of its obligations under this Agreement, as
provided herein. At no time shall the Company dispose of or encumber the Pledged
Shares, except as otherwise provided in this Agreement or the Stock Purchase
Agreement dated as of the date hereof between the Company and the Purchaser (the
"Stock Purchase Agreement").
3. At all times while the Company is holding the Pledged Shares as
security under this Agreement, the Company shall:
(a) Collect any dividends that may be declared on the Pledged
Shares and credit such dividends against any accrued interest or unpaid
principal under the Note, as part payment;
(b) Collect and hold any shares that may be issued upon
conversion of the Pledged Shares; and
(c) Collect and hold any other securities or other property
that may be distributed with respect to the Pledged Shares.
Such shares and other securities or property shall be subject to the security
interest granted in Section 1 of this Agreement and shall be held by the Company
under this Agreement.
4. While the Company holds the Pledged Shares as security under this
Agreement, the Purchaser shall have the right to vote the Pledged Shares at all
meetings of the Company's stockholders; provided that the Purchaser is not in
default in the performance of any term of this Agreement, the Stock Purchase
Agreement or Employment Agreement or in any payment due under the Note. In the
event of such a default, the Company shall have the right to the extent
permitted by law to vote and to give consents, ratifications and waivers and
take any other action with respect to the Pledged Shares with the same force and
effect as if the Company were the absolute and sole owner of the Pledged Shares.
5. Upon payment in full of the outstanding principal balance of the
Note and all interest and other charges due under the Note, subject to the terms
of the Stock Purchase Agreement, the Company shall release from pledge and
redeliver to the Purchaser the certificate(s) representing the Pledged Shares
and the Assignment Separate From Certificate forms.
6. In the event that the Purchaser fails to perform any term of this
Agreement or fails to make any payment when due under the Note and such failure
continues for 10 days after notice thereof (an "Event of Default"), the Company
shall have all of the rights and remedies of a creditor and secured party at law
and in equity, including (without limitation) the rights and remedies provided
under the Uniform Commercial Code.
Without limiting the foregoing, after an Event of Default, the Company
may, after giving ten (10) days' prior written notice to the Purchaser by
certified mail at his residence or business address, sell any or all of the
Pledged Shares in such manner and for such price as the Company may determine,
including (without limitation) through a public or private sale or at any
broker's board or on any securities exchange, for cash, upon credit or for
future delivery. The Company is authorized at any such sale, if it deems it
advisable to do so, to restrict the prospective bidders or purchasers of any
of the Pledged Shares to persons who will represent and agree that they are
purchasing for their own account for investment, and not with a view to the
distribution or sale of any of the Pledged Shares, to restrict the prospective
bidders or purchasers and the use any purchaser may make of the Pledged Shares
and impose any other restriction or condition that the Company deems necessary
or advisable under the federal and state securities laws.
Upon any such sale the Company shall have the right to deliver, assign
and transfer to the purchaser thereof the Pledged Shares so sold. Each purchaser
at any such sale shall hold the Pledged Shares so sold absolute, free from any
claim or right of any kind. In case of any sale of any or all of the Pledged
Shares on credit or for future delivery, the Pledged Shares so sold may be
retained by the Company until the selling price is paid by the purchaser
thereof, but the Company shall not incur any liability in case of the failure of
such purchaser to take up
and pay for the Shares so sold and, in case of any such failure, such Shares may
again be sold under the terms of this section.
The Purchaser hereby agrees that any disposition of any or all of the
Pledged Shares by way of a private placement or other method which in the
opinion of the Company is required or advisable under Federal and state
securities laws is commercially reasonable. At any public sale, the Company may
(if it is the highest bidder) purchase all or any part of the Pledged Shares at
such price as the Company deems proper. Out of the proceeds of any sale, the
Company may retain an amount sufficient to pay all amounts then due under the
Note, together with the expenses of the sale and reasonable attorneys' fees. The
Company shall pay the balance of such proceeds, if any, to the Purchaser. The
Purchaser shall be liable for any deficiency that remains after the Company has
exercised its rights under this Agreement.
7. This Agreement shall be governed by and construed in accordance with
the laws of the Commonwealth of Pennsylvania, without regard to Pennsylvania
choice of law provisions.
8. This Agreement shall inure to the benefit of, and be binding upon,
the Company and its successors and assigns and be binding upon the purchaser and
the Purchaser's legal representative, heirs, legatees, distributees, assigns and
transferees by operation of law.
9. This Agreement contains the entire pledge agreement between the
Company and the Purchaser.
10. The Purchaser will execute any additional agreements, assignments
or documents or take any other actions reasonably required by the Company to
preserve and perfect the security interest in the Pledged Shares granted to the
Company herein and otherwise to effectuate this Agreement.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed on its behalf by its duly authorized officer, and the Purchaser has
personally executed this Agreement.
PROGRAPH SYSTEMS, INC.
By /s/ Xxxx Xxxx
-------------------------------
Xxxx Xxxx, President
XXXXXXX XXXXXXX
/s/ Xxxxxxx Xxxxxxx
-------------------------------
