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EXHIBIT 10
STOCK PLEDGE AGREEMENT
THIS STOCK PLEDGE AGREEMENT is made and entered into as of December 1,
1999, by and between XXXXXXX X. XXXXXX ("Xxxxxx") and TEKGRAF, INC. ("Tekgraf").
Xxxxxx has borrowed $1,775,000 (the "Loan") from Tekgraf to enable
Xxxxxx to purchase shares of Tekgraf's Class A Common Stock, $.001 par value
(the "Class A Stock") and Class B Common Stock, $.001 par value (the "Class B
Stock") from other Tekgraf shareholders, such shares having been identified as
the "Purchased Shares" on Exhibit A hereto. The Loan has been made under the
terms of a Loan Agreement of even date herewith between Xxxxxx and Tekgraf (the
"Loan Agreement"), and Xxxxxx has delivered a Promissory Note of even date
herewith to Tekgraf in the principal amount of the Loan (together with all
extensions, renewals, amendments and modifications thereof, the "Note"). To
secure the payment of all Obligations (as hereinafter defined), Xxxxxx has
agreed to pledge to Tekgraf, and to grant Tekgraf a security interest in,
certain shares of the Class A Stock and Class B Stock, and to grant Tekgraf a
security interest in Xxxxxx'x rights to purchase additional shares of Class B
Stock from certain of Tekgraf's shareholders.
Therefore, in consideration of the premises and the agreements and
covenants contained herein, the parties hereto agree as follows.
1. Security Interest.
(a) As security for payment of all liabilities and obligations of
Xxxxxx to Tekgraf of every kind and description, whether now
existing or hereafter arising, fixed or contingent, due or to
become due, under the Loan Agreement or the Note (the
"Obligations"), Xxxxxx hereby pledges, and grants a continuing
security interest in and security title to, the shares of Class A
Stock and Class B Stock identified as the "Pledged Shares" on
Exhibit A hereto. Such shares, together with all dividends,
income, cash, options, warrants, rights, instruments and other
property, interests or proceeds from time to time in effect,
received, receivable or otherwise distributed in respect of, or in
exchange, replacement, renewal or substitution for, any or all of
such shares, are referred to herein as the "Pledged Shares".
(b) Concurrently herewith, and except as noted in subsection 1(c)
below, Xxxxxx has delivered to Tekgraf a certificate or
certificates representing the Pledged Shares and stock powers in
the form attached hereto as Exhibit B endorsed in blank.
Beneficial ownership of the Pledged Shares, including, without
limitation, all voting, consensual and dividend rights, shall
remain in Xxxxxx until the occurrence of a Default under Section 6
hereof. At Tekgraf's option, the certificates representing the
Pledged Shares shall bear the following legend: "THESE SHARES ARE
SUBJECT TO A STOCK PLEDGE AGREEMENT DATED DECEMBER 1, 1999."
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(c) The shares of Class B Stock identified as the "Delayed Shares" on
Exhibit A hereto have been previously pledged under Pledge,
Security and Escrow Agreements dated June 2, 1997 between Tekgraf
and the holders of those shares. Xxxxxx has the right to acquire
the Delayed Shares if they are released from escrow (the "Purchase
Rights"). It is Xxxxxx'x intention hereunder to grant a security
interest to Tekgraf in all of his right, title and interest in all
Delayed Shares he acquires under the Purchase Rights. As to all
Delayed Shares so acquired, the certificates therefor shall be
delivered to Tekgraf, together with properly executed stock
transfer powers, to be held as Pledged Shares under the terms of
this Agreement as if they had been delivered to Tekgraf under
subsection 1(b) above.
2. Warranty. Xxxxxx hereby represents and warrants to Tekgraf that Xxxxxx
owns the Pledged Shares free and clear of all liens, claims and
encumbrances, except for the security interest created hereby and
except as noted in subsection 1(c) above.
3. Covenants. Xxxxxx shall not transfer, assign or otherwise dispose of
its beneficial interest in any of the Pledged Shares without the prior
written consent of Tekgraf, except as provided in Section 4 below, and
shall not transfer or assign any of his Purchase Rights. For so long as
Xxxxxx shall have the right to vote the Pledged Shares, Xxxxxx
covenants and agrees that it will not, without the prior written
consent of Tekgraf, vote or take any consensual action with respect to
the Pledged Shares which would constitute a default under this
Agreement.
4. Permitted Sale of Pledged Shares. Upon at least five (5) days advance
written request of Xxxxxx, Tekgraf agrees to permit the Pledged Shares
(or a portion thereof) to be sold provided that:
(a) no Pledged Shares may be sold for less than $2.50 per Pledged
Share without the prior consent of Tekgraf (such amount to be
appropriately adjusted in the event of any future stock split,
stock combination, stock dividend, or similar event);
(b) the proceeds of such sale shall be tendered directly and
immediately to Tekgraf, and such proceeds shall be applied to
outstanding interest and principal under the Note; and
(c) Xxxxxx shall execute and deliver, or cause to be executed and
delivered, any and all documents and agreements required by
Tekgraf in connection with such sale, including the agreement of
the selling agent, if any, to deliver all proceeds from the
sale(s) permitted hereunder directly and immediately to Tekgraf.
Notwithstanding any language herein to the contrary, Xxxxxx shall
remain liable to Tekgraf for any and all amounts owed under the Note should the
proceeds delivered to Tekgraf from the sale of the Pledged Shares be
insufficient to pay the Note in full; and nothing herein is intended to release
Xxxxxx from the requirements of federal and state securities laws applicable to
such sales.
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5. Tekgraf's Duty of Care. Tekgraf shall have no duty with respect to any
of the Pledged Shares other than the duty to use reasonable care in the
safe custody of the Pledged Shares in its possession. Without limiting
the generality of the foregoing, Tekgraf shall be under no obligation
to take any steps necessary to preserve the value of any of the Pledged
Shares or to preserve rights in the Pledged Shares 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 Xxxxxx and shall
be included in the Obligations secured hereby.
6. Default. Upon the occurrence of a default under the Loan Agreement or
the Note, or if Xxxxxx shall fail to perform or observe any provision
of this Agreement or any other document or instrument which evidences
or secures any of the Obligations (any of such occurrences being
hereinafter referred to as a "Default"), Tekgraf shall be entitled (but
not obligated) to exercise the following rights, which Xxxxxx hereby
agrees are commercially reasonable:
(a) to receive all amounts payable in respect of the Pledged Shares
otherwise payable to Xxxxxx, and to exercise all of the rights,
powers and remedies of Xxxxxx with respect to such payments;
(b) to transfer all or any part of the Pledged Shares into Tekgraf's
name or the name of its nominee or nominees;
(c) to vote all or any part of the Pledged Shares (whether or not
transferred into the name of Tekgraf) and give all consents,
waivers and ratifications in respect of the Pledged Shares and
otherwise act with respect thereto as though it were the outright
owner thereof;
(d) at any time or from time to time to sell, assign and deliver, or
grant options to purchase, all or any part of the Pledged Shares
in one or more blocks, or any interest therein, at any public or
private sale at any exchange or elsewhere, without demand of
performance, advertisement or notice of intention to sell or of
the time or place of sale or adjournment thereof (all of which are
hereby expressly and irrevocably waived by Xxxxxx to the fullest
extent permitted by law), for cash, on credit or for other
property, for immediate or future delivery without any assumption
of credit risk, and for such price or prices and on such terms as
Tekgraf in its sole discretion may determine; Xxxxxx agrees that
to the extent that notice of sale shall be required by law that at
least five (5) business days' notice to Xxxxxx of the time and
place of any public sale or the time after which any private sale
is to be made shall constitute reasonable notification; Tekgraf
shall not be obligated to make any sale of the Pledged Shares
regardless of notice of sale having been given; Tekgraf may
adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor, and any such
sale may, without further notice, be made at the time and place to
which it was so adjourned; Xxxxxx hereby waives and releases to
the fullest extent permitted by law any right or equity of
redemption with respect to the Pledged Shares, whether before or
after sale hereunder, and all rights, if any, of marshaling the
Pledged Shares; at any such sale, unless prohibited by applicable
law, Tekgraf may bid for and purchase all or any part of the
Pledged Shares so sold free from any
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such right or equity of redemption; and Tekgraf shall not be liable
for failure to collect or realize upon any or all of the Pledged
Shares or for any delay in so doing nor shall any of them be under
any obligation to take any action whatsoever with regard thereto;
(e) Accelerate and call due the unpaid balances of any or all of the
Obligations;
(f) Foreclose or enforce all or any security interests, mortgage
interests, liens, assignments, or pledges created by this
Agreement, the Loan Agreement, the Note, or any other document,
instrument or agreement which evidences or secures any Obligations
(collectively, the "Obligation Agreements");
(g) file suit against Xxxxxx on any Obligation Agreement;
(h) seek specific performance or injunctive relief to enforce
performance of the undertakings, duties, and agreements provided in
any Obligation Agreement whether or not a remedy at law exists or
is adequate; and
(i) generally, to take all such other action as Tekgraf in his sole
discretion may determine as incidental or conducive to any of the
matters or powers mentioned in the foregoing provisions of this
Section and which Tekgraf may or can do lawfully and to use the
name of Xxxxxx for the purposes aforesaid and in any proceedings
arising therefrom.
7. Application of Proceeds. The proceeds of the public or private sale or
other disposition under Section 6 above shall be applied first to the
costs incurred in connection with the sale, including, without
limitation, attorneys' fees actually incurred, then to any unpaid
interest which may have accrued on any Obligations secured hereby, and
then to any unpaid principal on any Obligations secured hereby; and any
remaining proceeds shall be paid over to Xxxxxx or others as provided
by law.
8. Additional Rights of Tekgraf. In addition to its rights and privileges
under this Agreement, Tekgraf shall have all the rights, powers and
privileges of a secured party under the Georgia Uniform Commercial Code
and other applicable law. The rights and remedies provided in the
Obligation Agreements or otherwise under applicable law shall be
cumulative, and the exercise of any particular right or remedy shall
not preclude the exercise of any other rights or remedies in addition
to, or as an alternative of, such right or remedy.
9. Return of Pledged Shares to Xxxxxx.
(a) The Pledged Shares identified as the "Current Xxxxxx Shares" on
Exhibit A hereto shall be released from the terms of this
Agreement, and the certificates representing these Pledged Shares
shall be returned to Xxxxxx if either (i) $887,500 of the principal
amount of the Loan
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(50%), together with all interest accrued thereon, has been repaid,
or (ii) the average market price of a share of Class A Stock (last
sale price or average of last bid and asked, as the case may be)
has been not less than $2.50 for ten consecutive trading days
during the 30 days ending immediately before the date requested by
Xxxxxx for the release of these Pledged Shares (such target price
to be appropriately adjusted in the event of any future stock
split, stock combination, stock dividend, or similar event).
(b) Upon payment in full of all principal and interest on the Note and
all other sums due in respect of all other Obligations, this
Agreement shall terminate and Tekgraf shall return to Xxxxxx all of
the Pledged Shares then held by Tekgraf under the terms of this
Agreement.
10. Tekgraf Appointed Attorney-In-Fact. Xxxxxx hereby constitutes and
appoints Tekgraf, with full power of substitution, Xxxxxx'x
attorney-in-fact and grants Tekgraf an IRREVOCABLE PROXY for the
purpose of carrying out the provisions of this Agreement and taking any
action and executing any instrument which Tekgraf may deem necessary or
advisable to accomplish the purposes hereof, including but not limited
to voting the Pledged Shares in any manner Tekgraf deems advisable,
which appointment is coupled with an interest and is irrevocable.
11. Indemnification. Xxxxxx agrees to indemnify and save Tekgraf harmless
from and against any liability or damage which Tekgraf may incur, in
good faith and without negligence, in the exercise or performance of
any of Tekgraf's powers and duties specifically set forth herein.
12. Waivers. XXXXXX HEREBY WAIVES: NOTICE OF ACCEPTANCE OF THIS AGREEMENT,
PRESENTMENT AND DEMAND FOR PAYMENT OF ANY OF THE OBLIGATIONS; PROTEST
AND NOTICE OF DISHONOR OR DEFAULT WITH RESPECT TO ANY OF THE
OBLIGATIONS; AND ALL OTHER NOTICES TO WHICH XXXXXX MIGHT OTHERWISE BE
ENTITLED EXCEPT AS HEREIN OTHERWISE EXPRESSLY PROVIDED.
13. Miscellaneous.
(a) Entire Agreement. This Agreement and the instruments, agreements,
and other documents contemplated hereby supersede all prior
discussions, understandings, and agreements between and among the
parties with respect to the matters contained herein, and this
Agreement and the instruments, agreements, and other documents
contemplated hereby contain the sole and entire agreement between
the parties hereto with respect to the matters contemplated herein.
(b) Amendments. This Agreement may not be amended or supplemented
except in writing by the parties hereto.
(c) Counterparts. This Agreement may be executed in several
counterparts, each of which shall be an original, but all of which
together shall constitute one and the same agreement.
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(d) Effect of Headings. The section headings herein are for convenience
only and shall not affect the construction or interpretation of this
Agreement.
(e) Binding Effect. This Agreement shall be binding upon and shall inure
to the benefit of the parties hereto and their respective principals,
heirs, legal representatives, assigns and successors.
(f) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the United States of America and the State
of Georgia. Tekgraf and Xxxxxx irrevocably consent to the exclusive
jurisdiction and venue of the courts of any county in the State of
Georgia and the United States District Court for the Northern District
of Georgia, in any judicial proceeding brought to enforce this
Agreement. The parties agree that any forum other than the State of
Georgia is an inconvenient forum and that a lawsuit (or non-compulsory
counterclaim) brought by one party against another party in a court of
any jurisdiction other than the State of Georgia should be forthwith
dismissed or transferred to a court located in the State of Georgia.
(g) Notices. All notices or other communications hereunder shall be in
writing and shall be deemed to have been validly served, given or
delivered (i) five (5) days after deposit in the United States mail,
prepaid, by certified mail, with return receipt requested; (ii) when
delivered personally; (iii) one (1) day after delivery to a
nationally-recognized overnight courier; or (iv) when transmitted by
fax with telephone confirmation of receipt if a copy is concurrently
transmitted by U.S. mail or overnight courier as stated above; in all
cases, if applicable, with delivery prepaid and addressed to the party
to be notified to the address set forth beneath such party's signature
below, or to such other address and fax number of which a party has
given notice to the other party as provided in this subsection.
(h) Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such a manner as to be effective and valid
under applicable law, but if any provision of this Agreement shall be
deemed prohibited or invalid under such applicable law, such provision
shall be ineffective to the extent of such prohibition or invalidity,
but such prohibition or invalidity shall not invalidate the remainder
of such provision or the other provisions of this Agreement.
The parties hereto have executed the Agreement as of the day and year
first written above.
TEKGRAF, INC.
/s/ Xxxxxxx X. Xxxxxx By: /s/ W. Xxxxxxx Xxxx
----------------------------- -----------------------------------
Xxxxxxx X. Xxxxxx 000 Xxxxxxx Xxxxxxx, Xxxxx X
000 Xxxxxxxxx Xxxxx Xxxxxxx Xxxxxxx, XX 00000
Xxxxxx Xxxxx, XX 00000 Fax: (000) 000-0000
Fax: (000) 000-0000
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EXHIBIT A
PURCHASED SHARES
Certificate Shares of Shares of
Seller Number Class A Stock Class B Stock
Xxxxxx X. Xxxxxx T0095 31,955
------ 10,000
TB0035 152,900
TB0098 23,645
TB0101 12,500
J. Xxxxxx Xxxxxxx T0094 60,445
------ 15,000
TB0032 105,733
TB0102 251,155
A. Xxxxxx Xxxxxxxxx XX0000 26,950
TB0048 9,800
Xxxxxxx Xxxxxxxxx TB0051 90,383
------- 3,767
Xxxx Xxxxxx XX0000 9,350
TB0056 3,400
CURRENT XXXXXX SHARES
Certificate Number Shares of Class A Stock Shares of Class B Stock
T0093 81,767
T0051 18,108
TB0040 81,800
TB0094 100,892
[Shares in Escrow] 102,250
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The Purchased Shares and the Current Xxxxxx Shares together constitute the
"Pledged Shares."
DELAYED SHARES
Certificate Shares of
Number Class B Stock
Xxxxxx X. Xxxxxx 55,600
------------
J. Xxxxxx Xxxxxxx 105,733
------------
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EXHIBIT B
IRREVOCABLE STOCK POWER AND ASSIGNMENT
FOR VALUE RECEIVED, the undersigned does hereby bargain, sell, assign
and transfer unto TEKGRAF, INC. ("Tekgraf") the shares of the Class A Common
Stock, $.001 par value and the shares of the Class B Common Stock, $.001 par
value standing in his name on the books of Tekgraf and represented by the
following Certificates representing the following number of shares, and does
hereby irrevocably constitute and appoint Tekgraf and its successors and assigns
as his true and lawful attorney, for him and in his name and xxxxx, to transfer
said shares on the books of Tekgraf with full power of substitution in the
premises. This power of attorney is coupled with an interest and shall be
irrevocable.
Number of Shares of Number of Shares of
Certificate Number Class A Common Stock Class B Common Stock
Date: [EXHIBIT B - DO NOT SIGN]
------------------------
Xxxxxxx X. Xxxxxx
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