EXHIBIT 2
STOCK PLEDGE AGREEMENT
THIS STOCK PLEDGE AGREEMENT (this "Agreement") is made and entered as of
this 1St day of January, 2001, by and among Pinnacle Business Management Inc., a
Nevada corporation (the "Pledgor"), Xxxxxxx and Xxx Xx Xxxxxx, individuals
residing in the State of Florida (each of the foregoing individuals, a "Lender"
and collectively, the "Lenders"), and Xxxx Xxxxxxx, an individual residing in
the Commonwealth of Pennsylvania, in his capacity as pledge agent ("Pledge
Agent").
PREAMBLE
A. The Lenders owned beneficially and of record substantially all
the outstanding shares of capital stock (the "Shares") of Lo Xxxxxx &
Associates, Inc., a Pennsylvania corporation (the "Corporation");
B. Pursuant to the terms of that certain Stock Purchase Agreement
dated as of December 27, 2000 (the "Stock Purchase Agreement"), the
Pledgor purchased the Shares in consideration, among other things, of
a promissory note given to the Lenders (the "Note");
C. In order to induce the Lenders to enter into the Stock Purchase
Agreement and consummate the transactions contemplated therein, the
Pledgor has agreed to pledge the Shares as security for the payment of
the interest and principal due under the terms of the Note;
D. The Pledgor and each of the Lenders desire to appoint Pledge
Agent to act as Pledge Agent pursuant to and in accordance with this
Agreement; and
E. The execution of this Agreement by the Pledgor is a condition
precedent to the consummation of the transactions contemplated by the
Stock Purchase Agreement.
NOW, THEREFORE, the parties hereto, in consideration of the promises
and agreements herein contained, and intending to be legally bound, do covenant
and agree as follows:
Section 1. Definitions. For the purposes of this Agreement, the
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following terms shall have the following meanings:
(a) The term "Obligations" shall include (i) any and all indebtedness,
obligations and liabilities of any type or nature, now existing or
hereafter created, of Pledgor and his personal representatives, heirs,
successors or assigns, to the Lenders, and their respective personal
representatives, heirs, successors, or assigns arising under the Note; (ii)
all liabilities and obligations of Pledgor hereunder; and (iii) all costs,
expenses and liabilities which may be incurred or advances which may be
made by Lenders, including reasonable attorneys fees and expenses, in
connection with any of the Obligations or any collateral security therefor.
(b) The term "Collateral" shall mean the Shares beneficially owned or
held by Pledgor, together with any cash, other stock or property received
in exchange or in substitution for such stock (the securities referred to
above and any cash, stock or property received in exchange or in
substitution therefor is hereinafter collectively referred to as the
"Stock"), distributions which may be made on, or distributed in consequence
of the ownership of, the Stock, any securities, instruments or
distributions of any kind issuable, issued or received upon conversion of,
in respect of, or in exchange for any of the Stock, including, without
limitation, those arising from a stock dividend, stock split,
reclassification, reorganization, merger, consolidation, sale of assets. or
other exchange of securities or any dividends or other distributions of any
kind upon or with respect to the Stock. In the event subscriptions,
warrants, options or other rights are issued in connection with any of the
Collateral, such subscriptions, warrants, options and rights shall be
deemed to be part of the Collateral and shall be delivered to the Pledge
Agent, together with assignments separate from certificate, duly endorsed
in blank for transfer.
Notwithstanding the provisions of this Section 1(b), in the event that
there is no outstanding Event of Default (as herein defined), the Pledgor
shall be entitled to cash dividends paid on account of the Stock, so long
as such dividends are not being paid in exchange for or replacement of the
Stock and if such dividends are utilized by Pledgor to make payments under
the Note.
(c) The term "Event of Default" shall include any of the following:
(i) A failure to make any principal payment when due under the
terms of the Note;
(ii) If any representation or warranty made by the Pledgor in the
Stock Purchase Agreement, this Agreement or any document, certificate
or statement furnished pursuant to this Agreement or in connection
herewith, shall be false or misleading in any material respect; or
(iii) An occurrence of a default in the due performance or
observance of any term, covenant or agreement required to be performed
or observed under the Stock Purchase Agreement or this Agreement which
is not cured within thirty (30) days of written notice to Pledgor of
such default.
Section 2. Creation of Security Interest. As security for the full,
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prompt and complete performance by Pledgor of all of the Obligations, Pledgor
hereby pledges and grants a security interest to the Lenders in and to all of
the Collateral under the Uniform Commercial Code of Pennsylvania, as amended,
and any other applicable law. Concurrently with the execution and delivery of
this Agreement, Pledgor has delivered to the Pledge Agent the certificates
constituting the Collateral, together with assignments separate from
certificate, duly endorsed in blank for transfer in form satisfactory to the
Lenders, which shall be held and delivered by the Pledge Agent in accordance
with the terms of this Agreement. Pledgor hereby further agrees to do any and
all further things and to execute any and all further documents as the Lenders
shall require to perfect the Lenders ' security interest in the Collateral or to
effectuate the delivery to the Lenders of such certificates and assignments. In
the event of the occurrence of an Event of Default, the Pledge Agent shall
deliver the Collateral to the Lenders. By execution of this Agreement, the
Lenders hereby direct that the Pledgor deliver its payments due with respect to
the Note to the Pledge Agent with a notice of any such payment delivered
concurrently to the Lenders.
Section 3. Representations and Warranties. Pledgor hereby makes the
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following representations and warranties, which representations and warranties
shall survive the execution and delivery of this Agreement and shall continue
until the security interest of the Lenders terminates:
(a) All of the Collateral is owned by Pledgor, free and clear of any
and all options, claims, security interests, liens, pledges and
encumbrances, except those created hereby.
(b) Pledgor is a duly organized, validly existing corporation in good
standing under the laws of Florida. Pledgor has the full power and legal
authority to enter into this Agreement and to consummate the transactions
contemplated hereby, and this Agreement constitutes the authorized, valid
and legally binding obligation of the Pledgor enforceable in accordance
with its terms.
(c) The execution and delivery of this Agreement, the consummation of
the transactions provided for herein, and the fulfillment of the terms
hereof, will not result in the breach of any of the terms, conditions or
provisions of, or constitute a default under, or conflict with, or cause
any acceleration of any obligation under, any agreement or other instrument
to which Pledgor is a party or by which he is bound, or any judgment,
decree, order or award of any court, governmental body or arbitrator or any
applicable law, rule or regulation.
(d) No approvals of any nature are required by any governmental or
regulatory body in connection with the pledge of the Collateral provided
for herein.
(e) The Shares included in the Collateral are not subject to any
charter, by-law, statutory, contractual or other restrictions governing
their transfer, ownership or control, which restrictions would limit the
effectiveness or enforceability of the pledge and security interest created
under this Agreement.
Section 4. Voting. Prior to the occurrence of an Event of Default
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hereunder, Pledgor shall have the right to vote the securities constituting the
Collateral owned by it; provided, however, that Pledgor shall not in any event
vote such securities in a manner which would cause or constitute an Event of
Default under this Agreement or would otherwise be inconsistent with any of the
terms, conditions or provisions of this Agreement or the Note. Upon the
occurrence of an Event of Default, the Lenders or their successors and assigns
shall have the right to vote the stock and securities included in the Collateral
irrespective of whether the Lenders, or their successors and assigns, exercise
any of their other rights and remedies hereunder or under law, and for such
purpose the Lenders and their successors and assigns are hereby designated as
Pledgor's proxy, which designation shall be deemed to be coupled with an
interest and to be irrevocable and valid until the termination of the security
interest herein granted, any limitation under law as to the length of validity
of a proxy to the contrary notwithstanding. Pledgor shall execute all such
further documents and do all such further things as may be requested by the
Lenders to effect the Lenders' right to vote the stock and securities included
in the Collateral.
Section 5. Registration of Collateral. Upon an Event of Default, any
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or all stock and securities included in the Collateral shall, at the option of
the Lenders, be registered in the name of the Lenders, or their successors and
assigns, or their nominee(s). Pledgor irrevocably authorizes the issuers of all
such stock or securities and their officers and agents, to effect such transfer
upon written request of the Lenders. The rights of the Lenders hereunder in no
way affects any of the other rights of the Lenders upon any Event of Default.
Section 6. Covenants of Pledgor. Until the security interest of the
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Lenders terminates, Pledgor shall comply with the following covenants and
agreements:
(a) Pledgor shall execute and deliver, upon request of the Lender,
from time to time, such financing statements, continuation statements,
assignments, security agreements and such other instruments or documents as
the Lender may reasonably request to perfect, and to keep and continue
perfected at all times, the Lender's security interest in the Collateral;
and
(b) Pledgor shall not transfer, sell, encumber or otherwise dispose of
any of the Collateral, and shall not create, assume or suffer to exist any
security interest, lien, charge or other encumbrance in favor of any
individual or entity in, on or to any of the Collateral, except as created
hereunder.
(c) Pledgor shall comply with all laws applicable to the Collateral
unless such noncompliance would not individually or in the aggregate
materially impair the use or value of the Collateral or the Lenders' rights
hereunder.
(d) Pledgor shall pay any and all taxes, duties, fees or imposts of
any nature imposed by any state, federal or local authority on any of the
Collateral, except to the extent contested in good faith by appropriate
proceedings.
(e) Pledgor shall permit the Lenders and their representatives at
reasonable times to inspect all books and records related to the
Collateral.
Section 7. Event of Default. Upon the occurrence of an Event of
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Default:
(a) The Lenders shall be entitled to receive any cash dividends or
payments on the Collateral which shall be applied to the Obligations in any
manner in which the Lenders deem appropriate (in their sole discretion) and
to exercise in the Lenders' discretion all voting rights pertaining thereto
as provided in Section 4 hereof.
(b) The Lenders shall have the right to exercise all rights with
respect to the Collateral as if they were the sole and absolute owners
thereof, including, without limitation, to vote and/or to exchange, at
their sole discretion, any or all of the Collateral in connection with a
merger, reorganization, consolidation, recapitalization or other
readjustment concerning or involving the Collateral.
(c) Pledgor shall take any action necessary or required or requested
by the Lenders in order to allow the Lenders fully to enforce their
security interest in the Collateral hereunder and to realize thereon to the
fullest extent possible, including, but not limited to, the filing of any
claims with any court, liquidator, trustee, guardian, receiver or other
like person or party.
(d) The Lenders shall have all (i) of the rights of a secured party
under the Uniform Commercial Code of Pennsylvania, as amended, and any
other applicable law, (ii) any rights or remedies upon any judgment entered
upon the Note and/or (iii) the right to sell any or all of the Collateral
at one or more public or private sales upon and to bid thereat or purchase
any part or all thereof in its own or a nominee's name, free and clear of
any equity of redemption; written notice mailed to Pledgor at the address
designated herein ten (10) days or more prior to the date of such public or
private sale shall constitute reasonable notice; and to apply the net
proceeds of the sale, after deduction for any expenses of sale, including
Lenders' attorneys' fees, to the payment of the Obligations in any manner
or order which the Lender, in her 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. Pledgor hereby
acknowledges and agrees that the Lenders are not required to exercise all
remedies and rights available to it equally with respect to all of the
Collateral and the Lenders may select less than all of the Collateral with
respect to which the remedies as determined by the Lenders may be
exercised.
Section 8. Securities Law Provision. Pledgor hereby recognizes that
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the Lenders may be unable to effect a sale to the public of all or part of the
Collateral by reason of certain prohibitions in the Securities Act of 1933, as
amended (the "Act"), or other federal or state securities laws, but may be
compelled to resort to one or more sales to a restricted group of purchasers who
may be required to agree to acquire the Collateral for their own account, for
investment and not with a view to the distribution or resale thereof. Pledgor
agrees that sales so made by reason of such prohibitions may be at prices and on
other terms less favorable than if the Collateral were sold to the public, and
that the Lenders have no obligation to delay the sale of any Collateral for the
period of time necessary to permit Pledgor to register the Collateral for sale
to the public under the Act. Pledgor agrees that the form of such negotiated
sales made under the foregoing circumstances, whether on cash or credit terms,
shall be deemed to have been made in a commercially reasonable manner. Pledgor
shall cooperate with the Lenders and shall satisfy any requirements under the
Act and any other federal or state securities or other laws and regulations
applicable to the sale of the Collateral by the Lenders.
Section 9. Termination of the Security Interest. At such time as (a)
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all of the Obligations have been paid and/or performed in full and (b) such
satisfaction of the Obligations is not then subject to any filed or threatened
claim, contest, voidance or offset of any type whatsoever, the security interest
provided herein shall terminate and the Lenders or the Pledge Agent, as the case
may be, shall return to Pledgor all Collateral then held by the Lenders or the
Pledge Agent, if any, and upon written request of Pledgor. shall execute, in
form for filing, termination statements of the security interest herein granted
and, thereafter, no party hereto shall have any further rights or obligations
hereunder.
Section 10. Arbitration. In the event that the Lenders and the Pledgor
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are unable to agree on the resolution of any dispute arising under this
Agreement within sixty (60) days after a notice thereof has been sent, such
dispute shall be submitted to arbitration by the Pledgor and the Lenders in
Pittsburgh, Pennsylvania under the auspices and the then-prevailing rules of the
American Arbitration Association. The determination of the arbitration panel
convened in accordance with the foregoing shall be conclusive and binding on the
parties in all respects.
Section 11. Concerning the Pledge Agent.
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(a) Pledge Agent shall be entitled to fees in accordance with the fee
schedule attached hereto as Exhibit A. In addition, Pledge Agent shall be
entitled to reimbursement for all reasonable expenses, disbursements and
advances incurred or made by it in the performance of its duties hereunder,
including reasonable fees, expenses and disbursements of counsel. All such
fees and disbursements shall be paid one-half by the Lenders and one-half
by Pledgor.
(b) Pledge Agent shall not be liable for any damages or have any
obligations other than the duties prescribed herein in carrying out or
executing the purposes and intent of this Agreement; provided, however,
that nothing herein contained shall relieve Pledge Agent from liability
arising out of its willful misconduct, gross negligence or bad faith.
Pledge Agent shall have no liability under, or duty to inquire into the
terms of, the Stock Purchase Agreement. Each party hereto (other than
Pledge Agent) covenants with each other party (including Pledge Agent) that
all instructions, directions and notices given by such party hereunder will
be in accordance with the provisions of the Promissory Note. Pledge Agent's
duties and obligations under this Agreement shall be entirely
administrative and not discretionary. Pledge Agent shall not be liable to
any party hereto or to any third party as a result of any action or
omission taken or made by Pledge Agent in good faith. The Lenders and the
Pledgor covenant and agree to indemnify and hold harmless Pledge Agent, and
to reimburse Pledge Agent from, against and for, any and all liabilities,
costs fees and expenses (including reasonable attorney's fees) Pledge Agent
may suffer or incur by reason of its execution and performance of this
Agreement, except in the case of willful misconduct or gross negligence. In
the event any legal questions arise concerning Pledge Agent's duties and
obligations hereunder, Pledge Agent may consult its counsel and rely
without liability upon written opinions given to it by such counsel. Said
costs of indemnity shall be paid one-half by the Lenders and one-half by
the Pledgor. Pledge Agent shall be protected in acting upon any written
notice, request, waiver, consent, authorization or other paper or document
which Pledge Agent in good faith believes to be genuine and what it
purports to be.
(c) In the event that there shall be any disagreement among any of the
parties to this Agreement resulting in adverse claims or demands being made
in connection with this Agreement, or in the event that Pledge Agent, in
good faith, shall be in doubt as to what action it should take hereunder,
Pledge Agent may, at its option, (i) refuse to comply with any claims or
demands on it or refuse to take any other action hereunder, so long as such
disagreement continues or such doubt exists; and in any such event, Pledge
Agent shall not be or become liable in any way or to any person for its
failure or refusal to act, and Pledge Agent shall be entitled to continue
to so refrain from acting until the dispute is resolved by the parties
involved; or (ii) deposit the Collateral with any court of the Commonwealth
of Pennsylvania or the United States District Court for the Western
District of Pennsylvania for further disposition of such court, and after
making any such deposit, it shall have no further responsibility to any
party with respect to the disposition of such disputed amounts; or (iii)
hold such part of the Collateral that is subject to dispute until Pledge
Agent has received a final binding order of a court of competent
jurisdiction, from which order no appeal has been taken and with respect to
which order the time for filing any appeal has expired; or (iv) hold the
Collateral until it has received a further agreement satisfactory to Pledge
Agent and signed by all persons whom Pledge Agent reasonably deems
necessary for the disposition of such Collateral.
(d) Pledge Agent at any time may resign hereunder by giving written
notice of its resignation to the other parties hereto at least sixty (60)
days prior to the date specified for such resignation to take effect, and
upon the effective date of such resignation the Collateral held hereunder
shall be delivered by Pledge Agent to such person as may be designated in
writing by the other parties executing this Agreement, whereupon all of
Pledge Agent's obligations hereunder shall cease and terminate. If no such
person shall have been designated by such date, all obligations of Pledge
Agent hereunder shall, nevertheless, cease and terminate. Pledge Agent's
sole responsibility thereafter shall be to keep safely all Collateral then
held by it hereunder and to deliver the same to a person designated by all
the other parties executing this Agreement or by the judgment of a court of
competent jurisdiction.
Section 12. Notice. In any case where any notice or other
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communication is to be given or made pursuant to any provision of this
Agreement, such notice or communication shall be sent by certified or registered
mail, postage prepaid, or by overnight delivery service, and will be deemed to
have been delivered when actually received on the date specified in the return
or delivery receipt, if addressed as follows:
If to the Lenders, to the Lender Representative:
Xxxxxxx Xx Xxxxxx
0000 Xxxxxxxxxx Xxxx
XxXxxxxx, XX 00000
with a copy to:
Xxxxxxxx Xxxxxxxxx Professional Corporation
One Oxford Centre, 20th Floor
000 Xxxxx Xx.
Xxxxxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxxxxxx, Esq.
If to the Pledgor:
Pinnacle Business Management Inc.
2963 Gulf to Xxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxx Xxxxxx
If to Pledge Agent:
Xxxx Xxxxxxx
0000 Xxxxxxxxxx Xxxx
XxXxxxxx, XX 00000
or to such other address as a party may have furnished to the other parties in
writing pursuant to this Section.
Section 13. No Waiver. No failure or delay on the part of the Lenders
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in exercising any right, power or privilege hereunder and no course of dealing
between the Pledgor and the Lenders shall operate as a waiver thereof, nor shall
any single or partial exercise of any right, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. The rights and remedies herein expressly provided are
cumulative and not exclusive of any rights or remedies which the Lenders or any
subsequent holders of the Note would otherwise have. No notice to or demand on
the Pledgor in any case shall entitle the Pledgor to any other or further notice
or demand in similar or other circumstances or shall constitute a waiver of the
right of the Lenders to take any other or further action in any circumstances
without notice or demand.
Section 14. Binding Effect; Assignment. This Agreement shall be
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binding upon, and shall inure to the benefit of, the parties hereto and their
respective successors and assigns and all subsequent holders of the Note or any
portion thereof The Lenders may assign all of their rights and obligations
hereunder at any time during the term of this Agreement to the assignee of the
Note. Without the prior written consent of the Lenders, the Pledgor may not
assign any of its rights or delegate any of its duties or obligations hereunder.
Section 15. Entire Agreement; Amendment. This Agreement represents the
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entire Agreement between the parties hereto with respect to the transactions
contemplated hereunder and, except as expressly provided herein, shall not be
affected by reference to any other documents. Neither this Agreement nor any
provision hereof may be amended, modified, waived, discharged or terminated
orally, but such may be accomplished only by an instrument in writing signed by
the party against whom enforcement of the amendment, modification, waiver,
discharge or termination is sought.
Section 16. Counterparts. This Agreement may be executed in two or
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more counterparts, each of which shall be deemed an original and all of which,
taken together, shall constitute one and the same instrument.
Section 17. Governing Law. This Agreement shall be governed by and
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construed in accordance with the laws of the Commonwealth of Pennsylvania.
Section 18. Severability. Every provision of this Agreement is
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intended to be severable, and if any term or provision hereof or thereof shall
be invalid, illegal or unenforceable for any reason, the validity, legality and
enforceability of the remaining provisions hereof or thereof shall not be
affected or impaired thereby, and any invalidity, illegality or unenforceability
in any jurisdiction shall not affect the validity, legality or enforceability of
any such term or provision in any other jurisdiction.
IN WITNESS WHEREOF, each of the parties hereto has duly executed and
delivered this Agreement as of the day and year first above written.
THE LENDERS:
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Xxxxxxx Xx Xxxxxx
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Xxx Xx Xxxxxx
PLEDGOR
PINNACLE BUSINESS MANAGEMENT,
INC.
By:________________________________
President
PLEDGE AGENT:
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Xxxx Xxxxxxx, in such capacity
