Exhibit 10.17
PLEDGE AGREEMENT
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This Pledge Agreement ("Agreement") is dated as of June 30, 1999,
between Xxxxxxxx Xxxxxxxxxx (the "Pledgor") and Lante Corporation, an Illinois
corporation (the "Secured Party").
RECITALS
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WHEREAS, Pledgor, has exercised options to purchase 500,000 shares of
Common Stock of the Secured Party and, in connection with the payment of
aggregate exercise price therefor and expected income taxes resulting therefrom,
has obtained a $276,000 loan from Secured Party (the "Loan"); and
WHEREAS, the Loan is evidenced by a Secured Promissory Note of even date
herewith in the aggregate principal amount of $276,000 (the "Note");and
WHEREAS, as a condition for making the Loan, Secured Party requires that
the Note be secured by a pledge of the shares of stock received by Pledgor.
NOW, THEREFORE, for and in consideration of the foregoing and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
1. Grant of Security Interest.
(a) The Pledgor hereby pledges to the Secured Party and grants to the
Secured Party, as security for the prompt and complete payment,
observance and performance of all of Pledgor's obligations under the
Note (the "Liabilities"), including the payment of principal, interest
and fees thereunder, a security interest in (i) 500,000 shares of
Common Stock of the Secured Party (such shares of stock are referred
to herein as the "Pledged Shares"), registered on the books and
records of said Secured Party in the name of Pledgor, (ii) the
"Powers" (as defined below), (iii) the property and interests in
property described in paragraphs 7 and 8 below, (iv) dividends and
distributions payable with respect to the Pledged Shares pursuant to
paragraph 4 below, and (v) any and all proceeds of the foregoing (the
items described in (i) through (v) above being hereinafter
collectively referred to as the "Collateral").
(b) The Pledgor agrees to execute and deliver to the Secured Party (i)
stock powers in the form of Exhibit A attached hereto and made a part
hereof, appropriately endorsed in blank, with respect to the Pledged
Shares constituting certificated securities and (ii) such other
documents of transfer as the Secured Party may from time to time
request to enable the Secured Party to transfer the Collateral into
its name (all of the foregoing are hereinafter collectively referred
to as the "Powers").
2. Perfection of Security Interest. The Pledgor agrees (a) immediately to
deliver to the Secured Party all certificates evidencing any of the
Collateral which may at any time come into the possession of the Pledgor,
(b) to execute and deliver to the Secured Party such financing statements
as the Secured Party may request from time to time hereafter with respect
to the Collateral, and (c) to take such other steps as the Secured Party
may from time to time reasonably request to perfect the Secured Party's
security interest in the Collateral under applicable law. The Pledgor
agrees that this Agreement or a photocopy of this Agreement shall be
sufficient as a financing statement.
3. Voting Rights. During the term of this Agreement, and so long as Pledgor
has not committed an "Event of Default" under the Note (such Event of
Default by Pledgor shall constitute an "Event of Default" herein), the
Pledgor shall have the right to vote the Pledged Shares and exercise any
voting
rights pertaining to the Collateral and to give consents, ratifications and
waivers with respect thereto. After the occurrence and during the
continuance of an Event of Default, the Secured Party shall be entitled, at
the Secured Party's option and following written notice from the Secured
Party to the Pledgor, to exercise all voting powers pertaining to the
Collateral and to give, exclusively, consents, ratifications and waivers
with respect thereto for all purposes.
4. Dividends and Other Distributions. During the term of this Agreement, and
so long as no Event of Default shall have occurred and is continuing, the
Pledgor shall have all rights with respect to dividends and other
distributions with respect to the Collateral. Upon the occurrence and
during the continuance of an Event of Default, and upon the giving of
written notice to the Pledgor by the Secured Party of its intention to
exercise its rights hereunder, all rights with respect to dividends and
distributions with respect to the Collateral shall become vested in the
Secured Party and the Secured Party shall be entitled to receive any and
all distributions paid in respect of the Collateral, including, without
limitation, any and all cash distributions paid in connection with a
partial or total liquidation or dissolution of the Company and cash paid,
payable or otherwise distributed in redemption of, in exchange for, or as a
return of the Pledgor's capital investment in the Company, and any such
amounts, if received by Pledgor, shall be held in trust for the benefit of
the Secured Party segregated from other property or funds of the Pledgor
and forthwith delivered to the Secured Party in the same form as so
received (with any necessary endorsements). All such amounts collected by
the Secured Party shall be applied to the Liabilities.
5. Representations. The Pledgor warrants and represents as follows:
(a) The Pledgor is the sole, legal and beneficial owner of the Collateral;
(b) The Pledgor has full power and authority to enter into this Agreement;
(c) The Pledgor has the right (i) to vote the Pledge Shares and (ii) to
pledge and grant a security interest in all or any part of the
Collateral, free of any lien or other charge, encumbrance or
restriction;
(d) The Powers are duly executed and give the Secured Party the authority
they purport to confer.
6. Transfers and Other Liens. The Pledgor agrees that he will not (i) sell or
otherwise dispose of, or grant any option with respect to, any of the
Collateral without the prior written consent of the Secured Party, 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 for the
security interest granted under this Agreement.
7. Pledged Shares Adjustments. In the event that, during the term of this
Agreement, any stock dividend, reclassification, readjustment or other
change is declared or made in the capital structure of the Company
(including, without limitation, the issuance of additional shares of
capital stock of the Company), then the Secured Party shall have a security
interest in (i) the number of additional shares of the capital stock of the
Company issued in respect of the Pledged Shares and/or all of the issued
and outstanding shares of each class of the capital stock of the Company
into which the Pledged Shares have been converted and (ii) all non-equity
securities issued to or acquired by the Pledgor by reason of any such
change or exercise; and all such shares or other securities shall become
part of the Collateral.
8. Options and Other Rights. In the event that, during the term of this
Agreement, rights or options shall be issued by the Company in connection
with the Collateral, then the Secured Party shall have a security interest
in such rights and options; and all such rights and options shall become
part of the Collateral.
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9. No Discharge. The Pledgor shall remain bound and his liabilities hereunder
shall be unconditional, irrespective of (i) the validity or enforceability,
avoidance or subordination of the Liabilities, (ii) the election of any
remedy by the Secured Party, (iii) the waiver, consent, extension,
forbearance or granting of any indulgence by the Secured Party with respect
to any provision of the Note, (iv) failure by the Secured Party to take any
steps to perfect and maintain its security interest in, or to preserve its
rights to, any of the Collateral, (v) any failure, neglect or omission on
the part of Secured Party to realize upon any other collateral or security
for performance of the Liabilities, (vi) the election by the Secured Party
in any proceeding instituted under Chapter 11 of the Bankruptcy Code of the
application of Section 1111(b)(2) of the Bankruptcy Code, (vii) the
disallowance under Section 502 of the Bankruptcy Code of all or any portion
of the claims of the Secured Party for repayment of the Liabilities, or
(viii) any other circumstance which might otherwise constitute a legal or
equitable discharge or defense of the Pledgor; all of the foregoing being
expressly waived by the Pledgor.
10. Waivers. The Pledgor hereby waives any requirement of diligence,
presentment, demand of payment, filing of claims with a court in the event
of receivership or bankruptcy of the Pledgor, protest or notice with
respect to the Liabilities, the benefit of any statutes of limitation, and
all demands whatsoever (and shall not require that the same be made on the
Pledgor as a condition precedent to the Pledgor's liabilities hereunder),
and covenants that this Agreement will not be discharged, except as
provided in paragraph 12 hereof.
11. Remedies Following an Event of Default. The Secured Party may, upon or at
any time after the occurrence and during the continuance of an Event of
Default, at its option, transfer or register the Collateral or any part
thereof into its name with or without any indication that such Collateral
is subject to the security interest hereunder. The Pledgor hereby appoints
the Secured Party as its attorney-in-fact to arrange at the Secured Party's
option for such transfer. The Secured Party shall have, in addition to the
foregoing and any other rights given under this Agreement or by law, all of
the rights and remedies with respect to the Collateral of a secured party
under the Uniform Commercial Code as in effect in the State of Illinois or
other applicable law. In addition, following the occurrence and during the
continuance of an Event of Default, the Secured Party shall have such
powers of sale and other powers as may be conferred by applicable law.
With respect to the Collateral or any part thereof which shall then be in
or shall thereafter come into the possession or custody of the Secured
Party or which the Secured Party shall otherwise have the ability to
transfer under applicable law, the Secured Party may, in its sole
discretion, without notice except as specified below, following the
occurrence and during the continuance of an Event of Default, sell or cause
the same to be sold at any broker's board or at public or private sale, in
one or more sales or lots, at such price as the Secured Party may deem
best, for cash or on credit or for future delivery, without assumption of
any credit risk on the part of the Secured Party and the purchaser of any
or all of the Collateral so sold shall thereafter own the same, absolutely
free from any claim, encumbrance or right of any kind whatsoever. Unless
any of the Collateral threatens to decline speedily in value or is or
becomes of a type sold on a recognized market, the Secured Party will give
the Pledgor reasonable notice of the time and place of any public sale
thereof, or of the time after which any private sale or other intended
disposition is to be made. Any sale of the Collateral conducted in
conformity with reasonable commercial practices shall be deemed to be
commercially reasonable. Notwithstanding any provision to the contrary
contained herein, any requirements of reasonable notice shall be met if ten
(10) Business Days' notice of such sale or disposition is provided to the
Pledgor. Any other requirement of notice, demand or advertisement for sale
is, to the extent permitted by law, waived. The Secured Party may, in its
own name or in the name of a designee or nominee, buy all or any part of
the Collateral at any public sale and, if permitted by applicable law, buy
all or any part of the Collateral at any private sale. The Pledgor will
pay to the Secured Party all expenses (including, without limitation, court
costs and attorneys' and paralegals' fees and expenses) of, or incident to,
(i) the administration of this Agreement, (ii) the custody or preservation
of, or the sale or collection of or
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other realization upon, any of the Collateral, (iii) the exercise or
enforcement of any of the rights of the Secured Party hereunder, or (iv)
the failure by the Pledgor to perform or observe any provision hereof. In
view of the fact that federal and state securities laws and securities laws
in foreign jurisdictions may impose certain restrictions on the method by
which a sale of the Collateral may be effected after the occurrence and
during the continuance of an Event of Default, the Pledgor agrees the
Secured Party may, from time to time, attempt to sell all or any part of
the Collateral by means of a private placement restricting the bidders and
prospective purchasers to those who are qualified and will represent and
agree that they are purchasing for investment only and not for
distribution. In so doing, the Secured Party may solicit offers to buy the
Collateral, or any part of it, from a limited number of investors deemed by
the Secured Party, in its reasonable judgment, to be financially
responsible parties who might be interested in purchasing the Collateral.
If the Secured Party solicits such offers, then the acceptance by the
Secured Party of the highest offer obtained therefrom shall be deemed to be
a commercially reasonable method of disposing of such Collateral.
12. Term. This Agreement shall remain in full force and effect until all of
the Liabilities shall have been completely paid and satisfied in full.
13. The Secured Party's Exercise of Rights and Remedies Upon the Occurrence and
During the Continuance of an Event of Default. Notwithstanding anything
set forth herein to the contrary, it is hereby expressly agreed that, upon
occurrence and during the continuance of an Event of Default, the Secured
Party may exercise any of the rights and remedies provided in this
Agreement or otherwise available to it by law or in equity.
14. Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of the Pledgor, the Secured Party and their respective
successors and assigns. The Pledgor's successors and assigns shall
include, without limitation, a receiver, trustee or estate of or for the
Pledgor.
15. Applicable Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Illinois, without regard to
conflicts of law principles. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement shall be held
to be prohibited or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of
this Agreement.
16. Further Assurances. The Pledgor agrees that he will cooperate with the
Secured Party and will execute and deliver, or cause to be executed and
delivered, all such other stock powers, proxies, instruments and documents,
and will take all such other action, including, without limitation, the
filing of financing statements, as the Secured Party may reasonably request
from time to time in order to carry out the provisions and purposes hereof.
17. The Secured Party Appointed Attorney-in-Fact. The Pledgor hereby appoints
the Secured Party as the Pledgor's attorney-in-fact, with full authority in
the place and stead of the Pledgor and in the name of the Pledgor or
otherwise, from time to time in the Secured Party's discretion to take any
action and to execute any instrument which the Secured Party may deem
necessary or advisable to accomplish the purposes of this Agreement,
including, without limitation, to receive, endorse and collect all
instruments made payable to the Pledgor representing any distribution,
interest payment or other dividend distribution in respect of the
Collateral or any part thereof and to give full discharge for the same.
This power of attorney created under this paragraph 17, being coupled with
an interest, shall be irrevocable for the term of this Agreement and
thereafter as long as this Agreement remains in effect, but shall not be
deemed to authorize the Secured Party to take any action which the Pledgor
could not be required to take hereunder.
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18. Secured Party's Duty. The Secured Party shall not be liable for any acts,
omissions, errors of judgment or mistakes of fact or law including, without
limitation, acts, omissions, errors or mistakes with respect to the
Collateral, except for those arising out of or in connection with the
Secured Party's (a) gross negligence or willful misconduct, or (b) failure
to use reasonable care with respect to the safe custody of any certificate
evidencing any of the Collateral which is in the physical possession of the
Secured Party. Without limiting the generality of the foregoing, the
Secured Party shall be under no obligation to take any steps necessary to
preserve rights in the Collateral against any other parties but may do so
at its option, and all expenses incurred in connection therewith shall be
for the sole account of the Pledgor, and shall be added to the Liabilities
secured hereby.
19. Notices. Any notice required or desired to be served, given or delivered
hereunder shall be in writing, and shall be deemed given: (a) upon personal
delivery (b) three business days after deposit in the U.S. Mail, return
receipt requested or (c) one business day after deposit with an overnight
air courier service; if to the Secured Party, addressed to its principal
place of business, attention: President; and if to Pledgor, to his address
as it appears on the books and records of the Company.
20. Counterparts. This Agreement may be executed in separate counterparts,
each of which shall be an original and all of which taken together shall
constitute one and the same instrument.
21. Section Headings. The section headings herein are for convenience of
reference only, and shall not affect in any way the interpretation of any
of the provisions hereof.
IN WITNESS WHEREOF, the Pledgor and the Secured Party have executed this
Agreement as of the day and year first above written.
LANTE CORPORATION
/s/ Xxxxxxxx X. Xxxxxxxxxx /s/ Xxxxx Smaller
_______________________________ By:_________________________________
Xxxxxxxx X. Xxxxxxxxxx
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EXHIBIT A
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to
PLEDGE AGREEMENT
Powers
(See attached)
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STOCK POWER
FOR VALUE RECEIVED, the undersigned does hereby sell, assign and
transfer to __________________, 500,000 shares of the common stock of Lante
Corporation, Inc., an Illinois corporation, represented by certificate No. ___,
standing in the name of the undersigned on the books of said corporation. The
undersigned does hereby irrevocably constitute and appoint Lante Corporation
attorney to transfer the shares of said corporation, with full power of
substitution in the premises.
/s/ Xxxxxxxx X. Xxxxxxxxxx
Dated: July 30, 1999 ________________________________
Xxxxxxxx X. Xxxxxxxxxx
This assignment is made for collateral purposes pursuant to, and subject to the
terms and conditions of, that certain Pledge Agreement dated July 30, 1999,
between Xxxxxxxx X. Xxxxxxxxxx and Lante Corporation.
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