Exhibit 10.28
STOCK PLEDGE AGREEMENT
THIS STOCK PLEDGE AGREEMENT ("Pledge Agreement"), entered into as of July
20, 2001, is between XXXXXXX.XXX, INC., a Delaware corporation (the "Company"),
and XXXX XXXXXXX (the "Pledgor").
WITNESSETH:
WHEREAS, on February 15, 2000 the Pledgor exercised stock options
("Options") to purchase from the Company 4,000,000 shares of the Company's
Common Stock, par value $.01 per share (the "Common Stock") in accordance with
the terms and conditions, and subject to the limitations, including the vesting
limitations, of the Company's Amended and Restated 1999 Stock Incentive Plan
(together with the Stock Option Agreement entered between the Company and
Pledgor relating thereto, the "Option Plan");
WHEREAS, as of the date hereof 2,000,000 shares of the Common Stock held
by Pledgor are vested ("Vested Shares");
WHEREAS, as of February 15, 2001 the Company loaned to the Pledgor the
principal sum of $1,200,000.00 (the "Loan") which the Pledgor used to pay the
exercise price of the Options;
WHEREAS, Pledgor has executed and delivered to the Company a recourse
promissory note evidencing its obligations to repay such Loan (the "Original
Note");
WHEREAS, on the date hereof, the Company has agreed to purchase, and
Pledgor has agreed to sell, (the "Sale") the 2,000,000 Vested Shares of Common
Stock;
WHEREAS, the Pledgor desires to apply a portion of the proceeds from the
Sale to repay to the Company fifty percent (50%) of the outstanding principal
balance of the Loan pursuant to the Original Note plus all accrued interest
thereunder in the aggregate amount of $706,200.64;
WHEREAS, the Pledgor has on the date hereof executed and delivered to the
Company, a Nonrecourse Promissory Note ("New Note") evidencing his obligation to
repay the remaining principal balance of the Loan; and
WHEREAS, the Pledgor has agreed to pledge all of his remaining 2,000,000
shares of unvested Common Stock to the Company as security for the repayment of
all obligations under the New Note pursuant to the terms and conditions hereof.
NOW, THEREFORE, in consideration of the premises and other covenants and
conditions contained herein, it is agreed as follows:
1. The Pledgor hereby delivers to the Company one or more certificates
representing 2,000,000 unvested shares of the Company's Common Stock ("Pledge
Shares"), together with two stock powers duly executed in blank by the Pledgor.
The Pledgor hereby pledges and grants
a first priority 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 Pledgor's obligations
under the New Note and for the Pledgor's performance of all of its obligations
under this Pledge Agreement. Upon the occurrence of any Event of Default (which
shall herein have the meaning set forth in the New Note), the Pledgor 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 Pledgor 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 Pledgor's obligations under the New Note and for
the Pledgor's performance of all of its obligations under this Pledge Agreement,
as provided herein. At no time shall the Company dispose of or encumber the
Pledged Shares, except as otherwise provided in this Pledge Agreement or the
Employment Agreement dated as of July 19, 1999 between the Company and the
Pledgor (the "Employment 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 New Note, as part payment;
(b) Collect and hold any shares of stock 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 Pledge Agreement and shall be held by the
Company under this Pledge Agreement.
4. While the Company holds the Pledged Shares as security under this
Pledge Agreement, the Pledgor shall have the right to vote the Pledged Shares at
all meetings of the Company's stockholders to the same extent as if such Pledged
Shares were held by Pledgor; provided that no Event of Default has occurred and
is continuing and that the Pledgor is not in default in the performance of any
term of this Pledge Agreement or the Employment Agreement. In the event of any
such a default or Event of 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 New
Note and all accrued interest and other charges due under the New Note, subject
to the terms of the Employment Agreement, the Company shall release from pledge
and redeliver to the Pledgor the certificate(s) representing the Pledged Shares
and the accompanying stock powers. Upon partial
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prepayment of amounts due under the New Note, the Company shall release from
pledge and redeliver to Pledgor such number of Pledged Shares as shall have a
value equal to 80% of the amount prepaid, provided that such number of Pledged
Shares shall be calculated by the Company in good faith.
6. A. Representations and Warranties of Pledgor. The Pledgor represents,
warrants and covenants as follows:
(a) This Pledge Agreement is the legal, valid and binding
obligation of the Pledgor enforceable against the Pledgor in
accordance with its terms;
(b) Subject in all cases to the terms of the Option Plan the
Pledgor is the legal and beneficial owner of the Pledged
Shares, which have been issued free and clear of any lien,
security interest, option or other charge or encumbrance
except for the security interest created by this Pledge
Agreement;
(c) Subject in all cases to the terms of the Option Plan upon
delivery of the Pledged Shares pursuant to Section 1 hereof,
the pledge of the Pledged Shares pursuant to this Pledge
Agreement creates a valid and perfected first priority
security interest in the Pledged Shares, securing the
obligations of Pledgor under the New Note; and
(d) Subject in all cases to the terms of the Option Plan no
consent or approval of and no notice to or filing with, any
governmental body, agency, authority or any other person
(other than the Company) is required either (i) for the pledge
pursuant to this Pledge Agreement or for the execution,
delivery or performance of this Pledge Agreement by the
Pledgor or (ii) for the exercise by the Company of rights or
remedies in respect of the Pledged Shares pursuant to this
Pledge Agreement (except as may be required in connection with
their disposition by laws affecting the offering and sale of
securities generally).
B. Representations and Warranties of the Company. The Company
hereby represents, warrants and covenants as follows:
(a) This Pledge Agreement has been duly authorized and executed by
the Company, and is the legal, valid and binding obligation of
the Company, enforceable against the Company in accordance
with its terms.
(b) The Company waives any provisions in the Option Plan that are
inconsistent with the terms hereof or that otherwise prohibit
or limit the transactions contemplated hereby. In the event of
any ambiguity or inconsistency between the Option Plan or the
Employment Agreement and the terms hereof and the New Note,
this Pledge Agreement and the New Note shall control.
7. The Pledgor agrees that it will not (i) sell or otherwise dispose of
any of the Pledged Shares, or (ii) grant any option with respect to any of the
Pledged Shares, or (iii) create or permit to exist any lien, security interest,
or other charge or encumbrance upon any of the
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Pledged Shares, except for the security interest created by this Pledge
Agreement until the New Note is paid for in full and the pledge created hereby
is released.
8. Upon the occurrence of 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. The Company's rights and remedies under this Pledge
Agreement shall be cumulative and nonexclusive of any other rights and remedies
which the Company may have by operation of law or otherwise. No delay or failure
on the part of the Company in exercising any right, privilege, remedy or option
hereunder shall operate as a waiver of such or any other right, privilege,
remedy or option; no waiver whatsoever shall be valid, unless in writing and
signed by the Company, and then only to the extent therein set forth.
Without limiting the foregoing, after an Event of Default, the Company may
take possession of the Pledged Shares to satisfy the Pledgor's obligations under
the New Note. The Company shall have the right to deliver, assign and transfer
such Pledged Shares to itself. Upon the occurrence of the foregoing, to the
extent the value of the Pledged Shares exceeds the amount of obligations
outstanding under the New Note (the amount of such excess value, the "Excess"),
then the Company shall, subject to the Option Plan, redeliver to Pledgor that
number of Pledged Shares with a value equal to the Excess; provided, that such
number of Pledged Shares shall be calculated by the Company in good faith;
provided further, that the Company shall in no case be required to deliver cash
or any other property to Pledgor equal to the value of any Excess. The New Note
is nonrecourse to the Pledgor. The Company agrees that the Pledgor shall not be
liable for any deficiency that remains after the Company has exercised its
rights under this Agreement.
9. All rights and security interests of the Company and all obligations of
the Pledgor under this Pledge Agreement, shall be absolute and unconditional
irrespective of:
(a) any lack of validity or enforceability of the obligations
secured hereunder or under the New Note, or any other
agreement or instrument relating thereto;
(b) any change in the time, manner or place of payment, or in any
other term of any of the obligations under the New Note, or
any amendment or waiver of the New Note;
(c) any exchange, release or nonperfection of any other
collateral, or any release or amendment or waiver of any
guaranty, securing payment of the obligations under the New
Note; or
(d) any other circumstances which might otherwise constitute a
defense available to, or a discharge of, the Pledgor in
respect of the obligations under the New Note.
10. This Pledge Agreement shall be governed by and construed in accordance
with the laws of the State of New York without regard to any conflict of laws
provisions. Each of Pledgor and Company irrevocably consents and submits to the
non-exclusive jurisdiction of the
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Courts of the State of New York and the United States District Court for the
Southern District of New York and waives any objection based on venue or forum
non conveniens with respect to any action instituted therein arising under this
Pledge Agreement or the transactions related hereto, in each case whether now
existing or hereafter arising, and whether in contract, tort, equity or
otherwise, and agrees that any dispute arising out of the relationship between
Pledgor and Company or the conduct of such persons in connection with this
Pledge Agreement or otherwise shall be heard only in the courts described above.
Each of Pledgor and Company confirms that the foregoing waivers are informed and
freely made.
11. This Pledge Agreement shall inure to the benefit of, and be binding
upon, the Company and its successors and assigns and be binding upon the Pledgor
and the Pledgor's legal representative, heirs, legatees, distributees, assigns
and transferees by operation of law.
12. This Pledge Agreement contains the entire pledge agreement between the
Company and the Pledgor. No amendment or waiver of any provision of this Pledge
Agreement shall be effective unless the same shall be in writing, signed by the
party to be charged.
13. Each Party 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.
14. Any notices relating to this Pledge Agreement, the New Note or the
transactions contemplated herein or therein shall be given in writing and
delivered in person or by courier or mailed (by certified mail, postage prepaid,
return receipt requested), to the addresses set forth below each party's
signature or to such other place as the parties may designate in writing. All
such notices, requests, instructions, documents and other communications will
(i) if delivered personally to the address as provided in this Section 14, be
deemed given upon delivery, (ii) if delivered by mail in the manner described
above to the address as provided be deemed given upon receipt.
[SIGNATURE PAGE TO FOLLOW]
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[SIGNATURE PAGE OF STOCK PLEDGE AGREEMENT]
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
on its behalf by its duly authorized officer, and the Pledgor has personally
executed this Agreement.
XXXXXXX.XXX, INC.
/s/ Xxxxxxx X. Xxxxxx
By:-----------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Xxxxxxxxx--Xxxxxxx.xxx
Address: Xxxxxx Plaza
000 Xxxxx Xxxxxx
Xxxx Xxx, XX 00000
XXXX XXXXXXX
/s/ Xxxx Xxxxxxx
--------------------------------------
Address: 0 Xxxxxxxxxx Xxxxx
Xxx, Xxx Xxxx 00000
Sworn and subscribed before me
this 20th day of July, 2001
/s/ Xxxxxxxx Xxxxxxx
--------------------------------------
Notary Public
My Commission Expires: March 29, 2006
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