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EXHIBIT 10.11
FORM OF
PLEDGE AGREEMENT
In consideration of MCK Communications, Inc., a Delaware corporation
(the "Company"), having made a loan to [_________________________________]
("Borrower"), under the Promissory Note dated [___________________], and any
renewals or extensions thereof made in the sole discretion of the Company
("Note"), Borrower agrees as follows:
Section 1. PLEDGE. Borrower hereby pledges, assigns and transfers to
the Company, and grants to the Company a security interest in, the following
property ("Collateral"), to be held by the Company:
(a) The shares of Common Stock of the Company, par value $0.15 per
share (each, a "Share"), obtained pursuant to a certain Restricted Stock
Agreement dated as of the date hereof between Borrower and the Company and held
by Borrower or any Permitted Transferee (as that term is defined in the
Restricted Stock Agreement dated as of the date hereof by and between Borrower
and the Company (the "Restricted Stock Agreement")), and any securities owned in
respect thereof or in exchange therefor.
(b) All other securities, instruments and other property issued or
accepted in substitution for or in addition to any of the foregoing.
(c) All proceeds of any and all of the Collateral.
Section 2. OBLIGATIONS. This Agreement and the security interest
granted hereby secure the payment of all obligations of Borrower to the Company
under the Note ("Obligations"), and the Obligations of Borrower under this
Agreement, and any and all renewals or extensions thereof. So long as any of the
Obligations are outstanding, unless and until Borrower shall be in default
hereunder or there shall be any default of any of the Obligations, Borrower
shall retain all rights to dividends and distributions and voting rights, if
any, with respect to the Collateral. In the event the Obligations shall be in
default or in the event that Borrower shall be in default under the terms
hereof, the Company may, in its discretion, vote and exercise all of the powers
of an owner with respect to any of the relevant Collateral. Without limiting the
generality of the other remedies provided herein and in addition thereto, in the
event any of the Obligations shall be in default or upon any default by Borrower
hereunder, the Company after the occurrence of an Event of Default may take all
steps necessary to cause the Collateral to be transferred into the name of the
Company, including but not limited to taking steps necessary to comply with
restrictions on sale or transfer of the shares constituting such Collateral, and
in connection therewith Borrower appoints the Company such Borrower's
attorney-in-fact to execute and deliver such offers, tender offers,
certificates, documents or instruments of every nature or description required
for the purpose of the transfer of such shares into the name of the Company, or
any other person.
If Borrower receives any cash distribution or dividend in respect of
any Collateral, Borrower may retain the such cash distribution or dividend as
his own property unless prior to
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such receipt an Event of Default has occurred, in which event Borrower shall
accept same in trust for the Company, and shall upon request deliver same
immediately to the Company in the form received, with Borrower's endorsement
and/or assignment when necessary, to be held by the Company as Collateral.
If Borrower receives any stock certificate or option or deferred
compensation right, whether as an addition to, in substitution of, or in
exchange for, any Collateral, or otherwise, Borrower shall accept same in trust
for the Company, and shall upon request deliver same immediately to the Company
in the form received, with Borrower's endorsement and/or assignment when
necessary, to be held by the Company as Collateral.
Borrower is herewith delivering to the Company all certificates or
instruments representing or evidencing Collateral in suitable form for transfer
or delivery, or accompanied by duly executed instruments of transfer or
assignment to be held subject to the preceding paragraph.
Section 3. RELEASE OF COLLATERAL. Upon the written request of Borrower,
the Company shall promptly release Collateral to Borrower or to any designee of
Borrower at any time and from time to time; provided, however, that the Company
shall retain an amount of Collateral with an Agreed Value (as defined below) at
least equal to the amount of the Obligations then outstanding.
(a) The "Agreed Value" of any Collateral consisting of Shares shall be
the original cost of such Shares as set forth in the Restricted Stock Agreement
($[_______] per Share), equitably adjusted for stock splits, stock dividends and
like transactions. The Agreed Value of any Collateral not consisting of Shares
shall be determined reasonably and in good faith by the mutual agreement of
Borrower and the Company.
(b) Borrower acknowledges that transfer of the Shares is subject to
certain restrictions under the Restricted Stock Agreement. The obligation of the
Company to release certificates representing Shares to Borrower or his designee
hereunder shall in any event be subject to the requirements of the Restricted
Stock Agreement. Subject to such requirements and the terms hereof, the Company
shall release Vested Shares or Restricted Shares (as those terms are defined in
the Restricted Stock Agreement) as designated by Borrower.
Section 4. REPRESENTATIONS AND WARRANTIES. Borrower represents and
warrants to the Company as follows:
(a) Borrower is, and (as to any substitute or additional Collateral)
shall be, the sole owner of the Collateral pledged by Borrower, free and clear
of any lien, security interest, option or other charge or encumbrance, except
for (i) the security interest created by this Agreement, (ii) certain
restrictions under the Restricted Stock Agreement and (iii) restrictions imposed
by applicable laws, and, subject to the same exceptions, Borrower has and shall
have the right to transfer such Collateral and to grant a security interest
therein to the Company as provided in this Agreement.
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(b) No effective financing statement or similar notice covering any
Collateral pledged by Borrower is or shall be on file in any recording office,
and no other pledge or assignment thereof has been made, or shall have been
made, other than in favor of the Company, except as the Company may approve.
Section 5. FURTHER ACTION BY BORROWER. Borrower shall, at the expense
of Borrower, promptly execute and deliver all further notices, instruments and
documents, including, without limitation, financing statements, and take all
such further action as may be reasonably necessary or reasonably advisable or as
the Company at any time may reasonably request, in order to perfect, preserve
and protect the security interest granted or purported to be granted hereby or
to enable the Company to exercise and enforce such rights, powers and remedies
with respect to Collateral.
Section 6. PRESERVATION OF COLLATERAL.
(a) The Company shall give to the Collateral the same degree of care
and protection which it gives to its own property, provided, however, that the
Company shall have no liability to Borrower for any losses, costs, expenses or
damages due to any acts or omissions of third parties, or due to any acts of God
or other causes beyond its control. The Company shall have no duty to preserve
any rights with respect to any Collateral, including, without limitation, rights
against prior parties, or to take, or to notify Borrower of the need to take,
any action respecting any rights, privileges or options relating to any
Collateral, To replace any certificates, however, Borrower shall not be required
to supply any bond or other indemnity.
(b) Borrower shall furnish to the Company, promptly upon receipt
thereof, copies of all material notices, requests and other documents received
by Borrower relating to Collateral unless the same were sent by the Company.
(c) Borrower shall not (i) sell, assign, transfer or otherwise dispose
of any Collateral, or create or suffer to exist any lien, security interest,
assignment by operation of law or other charge or encumbrance on, or with
respect to, any Collateral, except for the security interest created by this
Agreement and the rights, remedies and restrictions imposed by the Restricted
Stock Agreement; or (ii) attempt any action prohibited by paragraph (c)(i) of
this Section 6. Notwithstanding the foregoing, Borrower may transfer Shares to
Permitted Transferees pursuant to the Restricted Stock Agreement; provided,
however, that the Shares so transferred shall remain subject to the security
interest created by this Agreement and any such Permitted Transferee(s) shall,
as a condition to any transfer, agree to be subject to the provisions of this
Agreement.
Section 7. DEFAULTS. A default (an "Event of Default") shall be deemed
to have occurred hereunder if (a) Borrower fails in any material respect to
perform any material obligation hereunder, if any material representation or
warranty hereunder was untrue in any material respect when made, or if any
default or Event of Default by Borrower occurs under the Note or any agreement
evidencing, or constituting or granting security for, the Obligations, provided
the Company is current in its obligation to pay certain bonuses on each day
interest is
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due on the Note, and (b) the Company gives to Borrower written notice thereof
and such default shall not have been cured within fourteen (14) days or such
additional time as may be required to effect such cure if diligently pursued.
Section 8. REMEDIES. Upon and after the occurrence of any Event of
Default which is then continuing or which has not been cured within the time
period given for such cure:
(a) The Company may exercise its rights with respect to the Collateral,
without regard to the existence of any other security or source of payment for
Obligations, including without limitation the rights set forth in Section 2, and
may demand, xxx for collection or make any other compromise or settlement with
respect to other rights and remedies provided for herein or otherwise available
to it, and the Company shall have all of the rights and remedies of a secured
party in Massachusetts under the Uniform Commercial Code.
(b) Except as specifically reserved herein, Borrower waives all
suretyship defenses at law and in equity, including waste and impairment of
Collateral, and further waives the requirement of any demand and presentment.
Twenty-one (21) days' prior notice to Borrower at the address provided below or
at such other address as Borrower shall provide to the Company in writing for
such purpose, of the time and place of any public sale of Collateral, or of the
time after which any private sale or any other intended disposition is to be
made, shall constitute reasonable notification.
(c) The Company is authorized at any such sale (including without
limitation any sale to itself or any affiliate of the Company, the same being
expressly authorized and contemplated herein), if the Company deems it advisable
to do so, in order to comply with any applicable securities laws, to restrict
the prospective bidders or purchasers to persons who will represent and agree
that they are purchasing the Collateral for their own account for investment,
and not with a view to the distribution or resale thereof. Sales made subject to
such restriction shall not, solely by reason thereof, be deemed not to have been
made in a commercially reasonable manner.
(d) The Company is specifically authorized, with respect to any
Collateral that consists of Shares, to acquire such Collateral itself or to
transfer such Collateral to any affiliate of the Company at a price equal to the
Agreed Value of such Shares, as defined in Section 3(a). Borrower expressly
waives any requirement that the Company conduct a public or private sale with
respect to such Shares and agrees that such a disposition is commercially
reasonable.
(e) In case of any sale of all or part of the Collateral on credit for
future delivery, the Collateral so sold shall be retained by the Company until
the purchase price is paid. The Company shall incur no liability in case of the
failure of the purchaser to pay for the Collateral as so sold if the Collateral
is recovered, or of the failure of the Company to make any sale of Collateral
after giving notice thereof, and in case of any such failure, such Collateral
may again be sold.
(f) All cash proceeds received by the Company in respect of any sale,
collection or other enforcement or disposition of Collateral shall be applied
(after deduction of any amounts
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payable to the Company for reasonable expenses of the sale, collection or
disposition of Collateral) against Obligations-in such order as the Company
shall elect. Upon payment in full of all Obligations, Borrower shall be entitled
to the return of all Collateral pledged by him and all proceeds thereof, which
have not been used or applied toward the payment of Obligations as herein
authorized.
Section 9. WAIVERS AND REMEDIES. Except as otherwise provided herein or
by law, Borrower waives presentment, demand, notice and protest, notice of
acceptance of this' Agreement, and except as provided in Section 8(b) notice of
all action by the Company in reliance hereon. No failure by the Company to
exercise, no delay by the Company in exercising, and no single or partial
exercise of, any right, remedy or power hereunder or under any other agreement
relating to the Obligations or to Collateral shall operate as a waiver thereof,
or of any other right, remedy or power at any time. No amendment, modification
or waiver of any provision of this Agreement shall be effective unless contained
in a writing signed by the Company. Any such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given. The rights, remedies and powers of the Company and Borrower, not only
hereunder, but also under any promissory note or notes of Borrower held by the
Company, any other agreements of Borrower with the Company and applicable law,
are cumulative and may be exercised successively, concurrently or alternatively.
Section 10. TERM; BINDING EFFECT. This Agreement shall remain in full
force and effect until payment and satisfaction in full of all Obligations,
shall be binding upon Borrower and the heirs, legatees, legal representatives
and assigns of Borrower, including Permitted Transferees, and shall inure to the
benefit of the Company and its successors and assigns. Notwithstanding the
foregoing, the Company may terminate this Agreement and release the Collateral,
or may accept substitute Collateral, at any time in its sole discretion without
in any way affecting the nonrecourse nature of a portion of the Obligations as
provided in the Note.
Section 11. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Massachusetts,
except to the extent that the perfection of the security interest granted hereby
in respect of any item of Collateral may be governed by the law of another
jurisdiction. Unless otherwise defined herein, all words and terms used in this
Agreement shall have the meanings provided in the Massachusetts Uniform
Commercial Code. If any provision of this Agreement, or the application thereof
to any person or circumstance, is held invalid, such provision shall be deemed
to be modified to comply with applicable law or if not able to be so modified,
shall be deemed to be severed from the Agreement, the remaining provisions of
which to be valid and enforceable.
Section 12. SIGNATURES. This Agreement may be executed in counterparts.
Section 13. HEADINGS. The captions in this Agreement have been included
for reference only and shall not define or limit the provisions hereof.
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EXECUTED as of the date first set forth above.
BORROWER:
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[NAME]
PLEDGEE:
MCK COMMUNICATIONS, INC.
By:___________________________
Name:
Title:
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SCHEDULE OF COLLATERAL
TO
PLEDGE AGREEMENT
QUANTITY DESCRIPTION OF SECURITY
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[ ] Shares Common Stock of MCK Communications, Inc.,
par value $0.15 per share.
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