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EXHIBIT 10(l)
STOCK PLEDGE AGREEMENT
THIS STOCK PLEDGE AGREEMENT (this "Agreement") is made as of the
26th day of March, 1998 by and among (i) ENTERPRISE SYSTEMS GROUP LIMITED, a
company registered in the United Kingdom with principal offices at Thameside
Computer Centre, Ferry Works, Xxxxxx Xxxx, Xxxxxx Xxxxxx, Xxxxxx XX0 XXX,
Xxxxxxx (the "Company"); (ii) ALLIED CAPITAL CORPORATION, a Maryland corporation
with offices at 0000 X Xxxxxx X.X., Xxxxx 000, Xxxxxxxxxx, X.X. 00000
(collectively with successors and assigns, "Lenders and (iii) INDENET, INC., a
Delaware corporation with principal offices at 00000 Xxxxx Xxxx Xxxx, Xxxxxxx,
XX (collectively with successors and assigns, the "Pledgor").
RECITALS
A. The Company proposes to issue Lenders certain Subordinated Debentures in
aggregate principal amount up to Fifteen Million Dollars ($15,000,000)
(collectively with all modifications, renewals, extensions and replacements
thereof and therefor, the " Debentures") pursuant to a certain Investment and
Loan Agreement dated the date hereof, and other related loan documents
(collectively with all modifications, renewals, extensions and replacements
thereof and therefor, the " Loan Agreements").
B. Pledgor is the sole owner of all of the issued and outstanding capital
stock of the Company as set forth in Exhibit 5.09 of the above-referenced
Investment and Loan Agreement.
C. The parties hereto propose that sixty-five percent (65%) of the capital
stock of the Company (collectively with all replacements, divisions and
sub-divisions thereof and therefor, the "Shares") serve as collateral to assure
repayment of the Debentures and the other obligations under the Loan Agreements.
PROVISIONS
In consideration of the premises and the covenants herein, and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as set forth below.
1. Grant and Delivery. The Pledgor hereby grant Lenders a security interest in
the Shares to secure the Debentures and all other obligations under the Loan
Agreements the under the terms herein. Pledgor will promptly deliver to Lenders
all certificates now or hereafter evidencing the Shares. Any distribution rights
in respect to the Shares, and any additional
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interest of any kind or nature in any stock of the Company acquired by Pledgor
shall automatically become subject to the pledge and security interest herein at
the time the Pledgor obtain such interest, without any further action by any
person; nevertheless, each Pledgor shall deliver all documents evidencing such
rights and interests to Lenders promptly upon receipt by such Pledgor.
Regardless of any failure by any party to deliver any document to Lenders as
required hereby, the Shares shall at all times be subject to the security
interest herein.
2. Clear Title; No New Shares. Except for the security interest granted to the
holders of certain Senior Debt (as defined in the Loan Agreement) according to
the terms of the Loan Agreement, the Company and the Pledgor represent and
warrant that the Pledgor owns the Shares free from any adverse lien, security
interest, or encumbrance and will defend the Shares against all claims and
demands of all persons claiming any interest therein.
3. Payover of Dividends. If, prior to any Default (as defined below), any cash
dividends or other cash distributions shall be paid upon the Shares lawfully,
and without violation of any existing agreements to which the Company is
subject, such amount may properly be paid to the Pledgor; provided, however,
that from and after any Default all dividends and distributions shall be paid
over to the Lenders.
4. After Default. If Pledgor or the Company breaches this Agreement or an Event
of Default occurs, as defined in the Loan Agreements (a "Default"), then the
Pledgor shall have no rights with respect to the Shares from and after such
declaration, and the Lenders may at their option exercise all rights and
privileges arising under the Shares.
5. Specific Authority. For example only, and not by limitation, the authority of
the Lenders under the Shares from and after a Default shall include the
following: (a) the rights to call a special meeting or annual meeting of
shareholders; (b) the right to vote the Shares for directors, cumulatively or
otherwise; (c) the right to amend the Company's Certificate of Incorporation or
Bylaws (or similar documents) to increase or decrease the number of members of
the Company's Board of Directors; (d) the right to vote the Shares to recall
existing directors or officers; (e) the right to seek judicial remedies through
legal process in furtherance hereof; (f) the right to retain counsel in respect
to legal proceedings hereunder; (g) the right to enact shareholder measures by
written consent in lieu of a meeting; (h) the right to waive notice of meetings;
and (i) the right to cause the directors or officers of the Company to petition
on the Company's behalf for relief under bankruptcy laws or state court
receivership laws, or to withdraw or discharge such petitions.
6. Foreclosure by Lenders. The security interest granted hereunder shall entitle
the Lenders to all the rights and remedies provided a secured party under the
Uniform Commercial Code or any other applicable law. In the event of a Default,
the Lenders may
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take such actions, at their option, as provided in such Code as regards the
Shares. Lenders' rights and remedies shall include, without limitation, the
right to sell or to cause to be sold any or all of the Shares at public auction
or private sale upon ten (10) days' notice to Pledgor.
7. Lenders Held Harmless. From and after a Default, the Company and Pledgor
shall be jointly and severally obliged to reimburse the Lenders for any
expenses, losses or liabilities they may incur under this Agreement. The
Lenders shall not be liable to any party for any breach hereof or any fault
in performance hereunder, through negligent or reckless acts or omission,
but only through intentional misconduct.
8. Compliance with Securities Laws.
a) It is understood that Lenders must, in exercising their rights to
foreclose upon and sell the Shares, comply with the Securities Act of
1933, as amended, the Securities Exchange Act of 1934, as amended,
and state securities laws (collectively, the "Securities Laws").
Accordingly, Lenders may have difficulty, by reason of restrictions
and limitations imposed by the Securities Laws, in selling the Shares
at a price which approximates the fair market value of the Shares,
were it not for such restrictions. The Company and Pledgor
acknowledge and agree that (i) Lenders may seek to dispose of the
Shares without registration or qualification under the Securities
Laws, and in any such transaction may require the purchaser or
purchasers thereof to represent and warrant their intent not to
distribute the Shares in violation of the Securities Laws, and (ii)
any disposition so effected shall not thereby be deemed "commercially
unreasonable". Lenders need not approach such number and quality of
possible buyers so as to be in violation of the Securities Laws, and
Lenders need not approach the maximum number of possible buyers
permitted by the Securities Laws.
b) Lenders may disclose any information they have obtained concerning
the Company, even if obtained in confidence, if Lenders consider such
disclosure to potential purchasers at the foreclosure sale to be
useful or necessary to comply with Federal and applicable state
securities laws.
c) By way of example and not restriction, the form of advertising in a
foreclosure sale hereunder may include provisions as follows:
NOTICE OF SECURED PARTY'S
RESTRICTED PUBLIC AUCTION OF COLLATERAL
Notice is hereby given that the shares of stock listed below (the
"Shares") will be sold at public auction, with reserve, on ,
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19___ at _____________ a.m. at the offices of ______________________ ,
located at ________________________________________________________ . The
Shares represent shares of common stock of a corporation that is owned
(directly or indirectly) by ________________________________________ . All
interested and qualified prospective purchasers are invited to attend
and bid at the auction.
Lot No. Issuer Number of Shares Total Number of
Shares Issued &
Outstanding
[If applicable describe Issuer]
1) This information was provided to the Secured Party orally by
_______________________ and the Secured Party does not warrant and
does not indemnify for inaccuracies in, the truth of these
representations as of the date of this Notice or of the auction.
2) The Shares have not been registered, qualified, approved or
disapproved under the Securities Act of 1933, as amended (the
"Act") or under any other federal or state securities laws. The
Shares may be resold, transferred or otherwise disposed of by a
purchaser only if such Shares have been registered under the Act
and, where required, under state securities laws, or if the
proposed sale, transfer or disposition is exempt from such
registration. This notice does not constitute an offer or
solicitation to anyone in any jurisdiction in which such offer or
solicitation is not authorized by applicable law.
3) The Shares will be sold as an entirety and will not be divided into
parcels. The Shares will be offered and sold without recourse
against the Secured Party and without any representations,
warranties or covenants, express or implied, being made by the
Secured Party with respect to the Shares (including, without
limitation, warranties of title) or with respect to the business
prospects, financial condition or result of operations of (Issuer),
the issuer of the Shares.
4) The Secured Party reserves the right to reject any bid which it
deems to have been made by a bidder which is unable to satisfy the
requirements imposed by the Secured Party upon prospective
purchasers in connection with the auction or to whom in the
Secured Party's sole Judgment a sale may not lawfully be made.
5) The Secured Party reserves the right to bid and to become the
purchaser of the Shares and to credit against the purchase price
thereof any and all indebtedness due to the Secured Party under the
Agreement.
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6) (i) An investment letter from the purchaser of the Shares (in form
and substance satisfactory to the Secured Party and its counsel)
will be required, which letter shall include representation that
the Shares are being acquired for the account of the purchaser and
not with a view of resale or distribution, and that the purchaser
may not resell the same without compliance with the registration
requirements of the Act and applicable state securities laws or
pursuant to valid exemptions therefrom.
(ii) Certificates evidencing the Shares will be appropriately
legended, and stock transfer orders may be entered on any stock
transfer books of the issuer of the Shares.
(iii) The Secured Party may require the purchaser of the Shares to
establish that such purchaser has sufficient knowledge and
experience in business and financial matters to properly evaluate
the merits and risks of investment in the Shares, to satisfactorily
establish that such purchaser is able to bear the economic risks
involved in investment in the Shares, and to give a written
acknowledgment to the Secured Party that such purchaser has bad
such access to information concerning the Shares and the issuer
thereof as such purchaser deems necessary to make an informed
investment decision.
(iv) The Secured Party may require the purchaser of the Shares to
satisfactorily establish that the sale of the Shares does not
violate the Act or the securities laws of any jurisdiction, and to
indemnify the Secured Party against any liability arising out of
any violation of the Act or such laws in connection with the sale
of the Shares or any resale thereof by such purchaser.
9. Waiver. No delay on Lenders' part in exercising any power of sale, lien,
option or other right hereunder, and no notice or demand which may be given to
or made upon Pledgor by Lenders with respect to any power of sale, lien, option
or other right hereunder, shall constitute a waiver thereof, or limit or impair
Lenders' right to take any action or to exercise any power, remedy or any other
right hereunder without notice or demand, or prejudice Lenders' rights as
against Pledgor in any respect. In addition, no action taken by Lenders
hereunder shall in any way impair or limit Lenders' right to exercise any or all
rights or remedies Lenders may otherwise have against Pledgor with respect to
any sums payable under the Debentures or the Loan Agreements. This is an
absolute, unconditional and continuing pledge and will remain in full force and
effect until the sums payable under the Debentures and the Loan Agreements have
been fully paid to the Lenders. This Agreement will not be affected by any
surrender, exchange, acceptance or release by the Lenders of any other pledge or
any collateral held for the Debentures. Notice of acceptance of this pledge and
conveyance, notice of extensions of credit to the Company from time to time,
notice of default, diligence, presentment, protest, demand for payment, notice
of demand or protest, and any defense based upon a failure of Lenders to comply
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with the requirements of the applicable version of Uniform Commercial Code
Section 9-504 are hereby waived. Lenders, at any time and from time to time,
without the consent of Pledgor, may change the manner, place or terms of
payment of or interest rates on, or change or extend the time of payment of, or
renew or alter, any of the Debentures without impairing or releasing the
liabilities of any party hereunder. Lenders in their sole discretion may
determine the reasonableness of the period which may elapse prior to the making
of demand for any payment upon the Company or any guarantor and it need not
pursue any of their remedies against any other party before having recourse
against Pledgor under this Agreement.
10. Reconveyance Upon Satisfaction. If the Debentures are repaid in full prior
to any Default, Lenders will reconvey the Shares to the Pledgor, this Agreement
shall terminate and Lenders will redeliver the certificates to the Pledgor.
11. Miscellaneous. The Lenders may exercise their rights under the Shares in
person, through attorneys, nominees, proxies or in any other legal manner. The
captions herein are for convenience only and are not part of the text of this
Agreement. This Agreement may be signed in counterparts. None of the terms or
provisions of this Agreement may be waived, altered, modified or amended except
in writing duly signed for and on behalf of the Lenders and the Pledgor. If any
portion hereof shall be unenforceable by law it shall be severed herefrom and
the balance of this Agreement shall be enforced according to its terms.
12. Choice of Law; Venue and Jurisdiction. This Agreement shall be interpreted,
and the rights and liabilities of the parties hereto determined, in accordance
with the laws of the District of Columbia, without regard to its principles of
conflicts of law. Venue for any adjudication hereof shall be only in the courts
of the District of Columbia or the Federal courts in such District, to the
jurisdiction of which courts all undersigned parties hereby submit as the
agreement of such parties, as not inconvenient, and as not subject to review by
any court other than such courts in the District of Columbia. All parties
intend and agree that the courts of jurisdictions in which the Company or
Pledgor is resident shall afford full faith and credit to any judgment rendered
by a court of the District of Columbia against the Company or other parties
hereto, and that such District of Columbia and federal courts shall have in
personam jurisdiction to enter a valid judgment against the Company and such
other parties. Service of any summons and/or complaint and any other process
which may be served on the Company in any action in respect hereto, may be made
by mailing via registered mail, or delivering a copy of such process to the
Company at its address specified in the Loan Agreement. The parties hereto agree
that this submission to jurisdiction and consent to service of process are
reasonable and made for the express benefit of Lender.
13. WAIVER OF TRIAL BY JURY. EACH PARTY TO THIS AGREEMENT WAIVES ALL RIGHT TO
TRIAL BY JURY OF ALL CLAIMS, DEFENSES COUNTERCLAIMS
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AND SUITS OF ANY KIND DIRECTLY OR INDIRECTLY ARISING FROM OR RELATING TO THIS
AGREEMENT OR THE LOAN AGREEMENTS OR THE DEALINGS OF THE PARTIES IN RESPECT
THERETO. THE PARTIES HERETO ACKNOWLEDGE AND AGREE THAT THIS SECTION IS A
MATERIAL TERM OF THIS AGREEMENT AND THAT THE LENDER WOULD NOT EXTEND ANY FUNDS
UNDER THE LOAN AGREEMENTS IF THIS WAIVER OF JURY TRIAL WERE NOT A PART HEREOF.
EACH PARTY HERETO ACKNOWLEDGES THAT THIS IS A WAIVER OF A LEGAL RIGHT AND THAT
IT MAKES THIS WAIVER VOLUNTARILY AND KNOWINGLY AFTER CONSULTATION WITH, OR THE
OPPORTUNITY TO CONSULT WITH, COUNSEL OF ITS CHOICE. EACH PARTY HERETO AGREES
THAT ALL SUCH CLAIMS, DEFENSES, COUNTERCLAIMS AND SUITS SHALL BE TRIED BEFORE A
JUDGE OF COMPETENT JURISDICTION, WITHOUT A JURY.
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
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IN WITNESS WHEREOF, this Agreement has been duly executed as of
the date first above written.
PLEDGOR INDENET, INC.
[Seal]
Attest: /s/ Xxxxx X. Xxxxxx By: /s/ Xxxxxx Xxxx
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Xxxxx X. Xxxxxx Name: Xxxxxx Xxxx
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Title: Vice-President & Asst. Secretary
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LENDER. ALLIED CAPITAL CORPORATION
[Seal]
By: /s/ Xxxxx X. Xxxxxx
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Xxxxx X. Xxxxxx, Principal
COMPANY: ENTERPRISE SYSTEMS GROUP LIMITED
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[Seal]
Attest: By: /s/ Xxxxxx Xxxx
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Name: Name: Xxxxxx Xxxx
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Title: Title: Secretary
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