EXHIBIT 10.40
PLEDGE AGREEMENT
This Pledge Agreement is made as of March 5, 2001 between IPG
Photonics Corporation, a Delaware corporation ("Pledgee"), and Xx. Xxxxxxxx X.
Xxxxxxxxx ("Pledgor").
Recitals
The Pledgee has agreed to make a loan to Pledgor in the amount of
$5,800,000 to discharge a tax payment obligation, which loan is evidenced by a
promissory note from Pledgee in favor of Pledgor, dated as of the date hereof
(the "Note").
As a condition of making such a loan, Pledgee requires that the
Pledgor pledges an aggregate of 696,000 shares of Common Stock of IPG Photonics
Corporation now owned by Pledgor.
NOW, THEREFORE, it is agreed as follows:
A. Creation and Description of Pledge Interest. In consideration of
the above loan by Pledgee to Pledgor, Pledgor, pursuant to the Massachusetts
Uniform Commercial Code, hereby pledges all of such Shares (herein sometimes
referred to as the "Collateral") represented by certificate number 76, duly
endorsed in blank or with executed stock powers, and herewith delivers said
certificate to Pledgee, who shall hold said certificate subject to the terms and
conditions of this Pledge Agreement.
The Collateral (together with an executed blank stock assignment for
use in transferring title to all or a portion of the Shares to Pledgee if, as
and when required pursuant to this Pledge Agreement) shall be held by the
Pledgee as security for the repayment of the Note, and any extensions or
renewals thereof, and neither the Pledgor nor Pledgee shall encumber or dispose
of such Collateral except in accordance with the provisions of this Pledge
Agreement.
B. Pledgor's Representations and Covenants. To induce Pledgee to enter
into this Pledge Agreement, Pledgor represents and covenants to Pledgee, its
successors and assigns, as follows:
1. Payment of Indebtedness. Pledgor will pay the principal sum of
the Note secured hereby, together with interest thereon, at the time and in the
manner provided in the Note.
2. Encumbrances. The Shares are free of all other encumbrances,
defenses and liens, and Pledgor will not further encumber the Shares without the
prior written consent of Pledgee.
3. Margin Regulations. In the event that Pledgee's Common Stock
is now or later becomes margin-listed by the Federal Reserve Board and Pledgee
is classified as a "lender" within the meaning of the regulations under Part 207
of Title 12 of the Code of Federal Regulations ("Regulation G"), Pledgor agrees
to cooperate with Pledgee in making any amendments to the Note or providing any
additional collateral as may be necessary to comply with such regulations.
C. Voting Rights. During the term of this pledge and so long as all
payments of principal and interest are made as they become due under the terms
of the Note, Pledgor shall have the right to vote all of the Shares pledged
hereunder.
D. Stock Adjustments. In the event that during the term of the pledge
any stock dividend, reclassification, readjustment or other changes are declared
or made in the capital structure of Pledgee, all new, substituted and additional
shares or other securities issued by reason of any such change shall be
delivered to and held by the Pledgee under the terms of this Pledge Agreement in
the same manner as the Shares originally pledged hereunder. In the event of
substitution of such securities, Pledgor and Pledgee shall cooperate and execute
such documents as are reasonable so as to provide for the substitution of such
Collateral and, upon such substitution, references to "Shares" in this Pledge
Agreement shall include the substituted shares of capital stock of Pledgor as a
result thereof.
E. Options and Rights. In the event that, during the term of this
pledge, subscription options or other rights or options shall be issued in
connection with the pledged Shares, such rights and options shall be the
property of Pledgor and, if exercised by Pledgor, all new stock or other
securities so acquired by Pledgor as it relates to the pledged Shares then held
by Pledgee shall be immediately delivered to Pledgee, to be held under the terms
of this Pledge Agreement in the same manner as the Shares pledged.
F. Default. Pledgor shall be deemed to be in default of the Note and
of this Pledge Agreement in the event:
1. Payment of principal or interest on the Note shall be delinquent
for a period of ten (10) days or more;
2. Pledgor fails to perform any of the covenants set forth in this
Pledge Agreement for a period of ten (10) days after written notice thereof
from Pledgee; or
3. Pledgor ceases to be an employee of Pledgee for the following
reasons:
a. The Pledgee reasonably determines in its discretion that
Pledgor has been materially negligent in the performance of, or
materially fails to perform, Pledgor's duties, or has failed to comply
with the reasonable and material directions of the Pledgee, provided
that the Pledgee has given Pledgor written notice of the deficiencies
in performance or failure to comply and Pledgor has failed within
thirty (30) days after service of such notice to cure such
deficiencies to the Pledgee's satisfaction; or
b. The determination by the Pledgee in the exercise of its
reasonable judgment that Pledgor has committed an act or acts
constituting material dishonesty or fraud with respect to the Pledgee,
or Pledgor has been convicted of, admits to, or enters a plea of nolo
contendere to a felony or any crime involving moral turpitude; or
4. In the event of Pledgor's termination of employment with the
Company for any reason other than the following:
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a. The assignment to Pledgor of any duties materially
inconsistent (except in the nature of a promotion) with Pledgor's
position in the Pledgee or a substantial adverse alteration in the
nature of Pledgor's position or responsibilities or in the conditions
of employment;
b. A reduction by the Pledgee in Pledgor's then-current salary or
a material reduction in benefits;
c. A termination of employment with the Company without cause.
5. The declaration of or filing for bankruptcy or insolvency by the
Maker.
In the case of an event of Default, as set forth above, Pledgee shall
have the right to accelerate payment of the Note upon notice to Pledgor, and
Pledgee shall thereafter be entitled to pursue its remedies under the
Massachusetts Uniform Commercial Code.
G. Release of Collateral. Subject to any applicable contrary rules
under Regulation G, there shall be released from this pledge a portion of the
pledged Shares held by Pledgeholder hereunder upon payments of the principal of
the Note. The number of the pledged Shares which shall be released shall be that
number of full Shares which bears the same proportion to the initial number of
Shares pledged hereunder as the payment of principal bears to the initial full
principal amount of the Note.
H. Withdrawal or Substitution of Collateral. Pledgor shall not sell,
withdraw, pledge, substitute or otherwise dispose of all or any part of the
Collateral without the prior written consent of Pledgee which shall make
specific reference to this Agreement.
I. Term. The within pledge of Shares shall continue until the payment
of all indebtedness secured hereby, at which time the remaining Collateral shall
be promptly delivered to Pledgor, subject to the provisions for prior release of
a portion of the Collateral as provided in paragraph G above.
J. Insolvency. Pledgor agrees that if a bankruptcy or insolvency
proceeding is instituted by or against him, or if a receiver is appointed for
the property of Pledgor, or if Pledgor makes an assignment for the benefit of
creditors, the entire amount unpaid on the Note shall become immediately due and
payable, and Pledgee may proceed as provided in the case of default.
K. Invalidity of Particular Provisions. Pledgor and Pledgee agree that
the enforceability or invalidity of any provision or provisions of this Pledge
Agreement shall not render any other provision or provisions herein contained
unenforceable or invalid.
L. Successors or Assigns. Pledgor and Pledgee agree that all of the
terms of this Pledge Agreement shall be binding on their respective successors
and assigns, and that the term "Pledgor" and the term "Pledgee" as used herein
shall be deemed to include, for all purposes, the respective designees,
successors, assigns, heirs, executors and administrators.
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M. Governing Law. This Pledge Agreement shall be interpreted and
governed under the laws of the State of Massachusetts, without giving effect to
choice of law principles thereof.
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IN WITNESS WHEREOF, the parties hereto have executed this Pledge
Agreement as of the day and year first above written.
"PLEDGOR" By: /s/ Xxxxxxxx X. Xxxxxxxxx
------------------------------------
Xx. Xxxxxxxx X. Xxxxxxxxx
Address: 00 Xxx Xxxxxxx Xxxx
Xxxxxx, XX 00000
"PLEDGEE" IPG PHOTONICS CORPORATION
By: /s/ Xxxxxx X. Xxxxxxxx
------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: VP and Secretary
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FIRST AMENDMENT TO PLEDGE AGREEMENT
This FIRST AMENDMENT TO PLEDGE AGREEMENT is made as of April 1, 2003
between IPG Photonics Corporation, a Delaware corporation ("Pledgee"), and Xx.
Xxxxxxxx X. Xxxxxxxxx ("Pledgor").
Recitals
Pledgee has made a loan to Pledgor in the amount of $5,800,000 to
discharge a tax payment obligation, which loan is evidenced by the Promissory
Note from Pledgor in favor of Pledgee, dated as of March 5, 2001, which
Promissory Note was amended and restated pursuant to the Amended and Restated
Promissory Note, effective March 5, 2001 and having a maturity date of December
31, 2004 (collectively, the "Note").
Pledgor and Pledgee have entered into a Pledge Agreement, dated as of
March 5, 2001 (the "Pledge Agreement"), under which Pledgor pledged to Pledgee
696,000 shares of Common Stock of IPG Photonics Corporation owned by Pledgor
(the "Original Shares").
As a condition of reissuing the Note at a non-recourse obligation
under the Non-Recourse Promissory Note dated the dated hereof from Pledgor in
favor of Pledgee and for other good and valuable consideration, Pledgee requires
that Pledgor pledge an additional 5,104,000 shares of Common Stock of IPG
Photonics Corporation now owned by Pledgor (the "Additional Shares") to secure
the Note.
NOW, THEREFORE, it is agreed as follows:
N. Except as expressly modified by this First Amendment to Pledge
Agreement, the Pledge Agreement shall remain in full force and effect. All
capitalized terms in this First Amendment to Pledge Agreement shall have the
meanings given to them in the Pledge Agreement, unless otherwise defined herein.
O. Section A of the Pledge Agreement shall be amended and restated in
its entirety as follows:
A. Creation and Description of Pledge Interest. In
consideration of the above loan by Pledgee to Pledgor,
Pledgor, pursuant to the Massachusetts Uniform Commercial
Code, hereby pledges all of the Original Shares and the
Additional Shares (the Original Shares and the Additional
Shares are herein sometimes referred to as the "Collateral")
represented by certificate numbers 1 and 76 (but only up to
5,800,000 shares of Common Stock), duly endorsed in blank or
with executed stock powers, and herewith delivers said
certificates to Pledgee, who shall hold said certificates
subject to the terms and conditions of this Pledge
Agreement.
The Collateral (together with executed blank stock
assignments for use in transferring title to all or a
portion of the Shares to Pledgee if, as and when required
pursuant to this Pledge Agreement) shall be held by Pledgee
as security for the repayment of the Note, and any
amendments, modifications, extensions or renewals thereof,
and neither Pledgor nor Pledgee shall encumber
or dispose of such Collateral except in accordance with the
provisions of this Pledge Agreement.
P. Section A.1 of the Pledge Agreement shall be amended and restated
in its entirety as follows:
B.1. Payment of Indebtedness. Pledgor will pay the principal
sum of the Note secured hereby, together with interest
thereon, at the time and in the manner provided in the Note.
Notwithstanding anything contained herein to the contrary,
the Note (including all interest and principal) is a
non-recourse obligation and such Note shall be enforced
against Pledgor only to the extent of Pledgor's interest in
the Collateral pledged under the Pledge Agreement, as
amended; provided that IP Fibre Devices (UK) Ltd. ("IPFD")
shall not have defaulted in its obligations under the Loan
and Security Agreement, dated as of August 23, 2002, between
the Pledgee and IPFD, as amended from time to time, and such
default shall have continued for a period of five business
days after receipt of written notice of the default. Upon
repayment of any indebtedness, Pledgee shall release from
the pledge and shall deliver to the Pledgee a number of
shares equal to the principal amount of the Note repaid
based upon the valuation of the pledged shares as of the
date of April 1, 2003.
Q. Pledgor and Pledgee agree that all of the terms of the Pledge
Agreement, as amended, shall be binding on their respective successors and
assigns, and that the term "Pledgor" and the term "Pledgee" as used herein shall
be deemed to include, for all purposes, the respective designees, successors,
assigns, heirs, executors and administrators.
R. This First Amendment to Pledge Agreement shall be interpreted and
governed under the laws of the State of Massachusetts, without giving effect to
choice of law principles thereof.
IN WITNESS WHEREOF, the parties hereto have executed this First
Amendment to Pledge Agreement as of the day and year first above written.
"PLEDGOR" By: /s/ Xxxxxxxx X. Xxxxxxxxx
------------------------------------
Xx. Xxxxxxxx X. Xxxxxxxxx
Address: 00 Xxx Xxxxxxx Xxxx
Xxxxxx, XX 00000
"PLEDGEE" IPG PHOTONICS CORPORATION
By: /s/ Xxxx X. Xxxxxx
------------------------------------
Xxxx X. Xxxxxx
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