STOCK PLEDGE AGREEMENT
(Aviation Holdings Group, Inc. Common Stock)
This Stock Pledge Agreement (the "Agreement") is made this 15th day of
October, 1998, by APP Investments, Inc., a Pennsylvania corporation having
offices at Xxx Xxxx Xxxxxx Xxxxx, Xxxxx 000, Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
("Pledgor"), in favor of the Xxxx X. Xxxxxx Trust, Xxxx X. Xxxxxx Trustee, a
trust having a mailing address at c/x Xxxxxxx, Xxxxxx & Xxxxxxxx, Ltd., 000
Xxxxx Xxxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxxx 00000 ("Pledgee").
B A C K G R O U N D
Pledgee has agreed to provide or has provided Aviation Holdings Group,
Inc., a Delaware corporation ("Borrower"), loans and/or advances of credit in an
aggregate amount of up to Fifty Thousand ($50,000.00) Dollars (collectively, the
"Loan") as evidenced by a promissory note of even date herewith executed by
Borrower in favor of Pledgee (the "Note"). As an inducement to Pledgee to make
the loan to Borrower, Pledgor granted Pledgee a Stock Purchase Warrant (the
"Warrant") on October 15, 1998, pursuant to which Pledgor agreed to sell fifteen
thousand (15,000) shares of Borrower's common stock owned by Pledgor to Pledgee
at an exercise price of $4.00 per share, and Pledgor, pursuant to a Securities
Transfer Agreement between Borrower, Pledgor and Xxxxxxx of even date herewith
(the "Transfer Agreement"), agreed to transfer up to nine thousand (9,000)
shares of Borrower's common stock to Pledgee upon the occurrence of certain
events set forth in the Transfer Agreement. Pledgor's undertakings set forth in
the Transfer Agreement are hereinafter collectively referred to as the
"Obligations."
As collateral security for the Obligations, Pledgor is required to
pledge to Pledgee all of Pledgor's right, title and interest in and to the
Pledged Securities (as hereinafter defined).
NOW, THEREFORE, in consideration of the foregoing, and intending to be
legally bound hereby, and for good, valuable and sufficient consideration, the
receipt of which is hereby acknowledged, Pledgor agrees as follows:
1. Certain Definitions.
(a) The term "Pledged Securities" shall mean shares of common
stock of Borrower, owned legally or beneficially by Pledgor, which are evidenced
by stock certificates in the name of Pledgor in the amounts of 7,000, 2,000 and
15,000 shares of Borrower's common stock.
(b) The term "Event of Default" shall mean a default or an
event of default under this Agreement, the Transfer Agreement, or any other
instrument, document or agreement, which evidences or secures the Obligations.
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2. Pledge.
(a) As security for the prompt satisfaction of the
Obligations, Pledgor hereby agrees to pledge, hypothecate, deliver and set over
to Pledgee within twenty (20) days of the date hereof, the Pledged Securities
and grants to Pledgee a lien on and security interest in and to the Pledged
Securities.
(b) Prior to the occurrence of an Event of Default, Pledgor
shall be entitled to all voting rights with respect to the Pledged Securities
and, for that purpose, Pledgee shall execute and deliver to Pledgor all
necessary proxies. Immediately and without further notice, upon the occurrence
of an Event of Default, whether or not the Pledged Securities shall have been
registered in the name of Pledgee or its nominee, Pledgee or its nominee shall
have the right to exercise all voting rights as to all of the Pledged Securities
and all other corporate rights and all conversion, exchange, subscription or
other rights, privileges or options pertaining thereto as if Pledgee or its
nominee were the absolute owner thereof including, without limitation, the right
to exchange any or all of the Pledged Securities upon the merger, consolidation,
reorganization, recapitalization or other readjustment of Pledgee thereof, or
upon the exercise by Pledgee of any right, privilege, or option pertaining to
any of the Pledged Securities and, in connection therewith, to deliver any of
the Pledged Securities to any committee, depository, transfer agent, registrar
or other designated agency upon such terms and conditions as it may determine,
all without liability except to account for property actually received by
Pledgee; but Pledgee shall have no duty to exercise any of the aforesaid rights
or privileges, or may delay in so doing.
(c) Prior to the occurrence of an Event of Default, Pledgor
shall be entitled to any and all regular cash dividends declared by the Pledgee
to be paid on account of the Pledged Securities; provided, however, that
immediately and without further notice, upon the occurrence of an Event of
Default, whether or not the Pledged Securities shall have been registered in the
name of Pledgee or its nominees, Pledgee or its nominee shall have the right to
any and all regular cash dividends paid on account of the Pledged Securities
which shall be delivered to Pledgee and may, at Pledgee's option, be applied on
account of the Obligations in such order and manner as Pledgee may elect.
(d) At any time following execution of this Agreement, if
Pledgor shall become entitled to receive or shall receive, in connection with
any of the Pledged Securities, any: (i) stock certificate, including, without
limitation, any certificate representing a stock dividend or in connection with
any increase or reduction of capital, reclassification, merger, consolidation,
sale of assets, combina tion of shares, stock split, spin-off or split-off; (ii)
option, warrant or right, whether as an addition to or in substitution or in
exchange for any of the Pledged Securities, or otherwise; or (iii) dividends or
distributions payable in property, including securities issued by an issuer
other than Pledgee; then, Pledgor shall accept the same as Pledgee's agent, in
express trust for Pledgee, and shall deliver the same forthwith to the Pledgee
in the exact form received with, as applicable, Pledgor's endorsement, or
appropriate stock powers duly executed in blank, (with signatures "bank
guaranteed") which the Pledgor hereby unconditionally agrees to make and/or
furnish, to be held by Pledgee, subject to the terms hereof, as part of the
Pledged Securities.
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3. Remedies Upon an Event of Default.
Upon the occurrence of an Event of Default, Pledgee may
without demand of performance or other demand, advertisement, or notice of any
kind to or upon the Pledgor or any other person (all of which are, to the extent
permitted by law, hereby expressly waived), forthwith realize upon the Pledged
Securities or any part thereof which Pledgee is entitled to receive pursuant to
the terms of the Transfer Agreement or the Warrant Agreement and APP hereby
agrees to take all actions necessary to transfer the certificates representing
the Pledged Securities to the name of Pledgee.
4. Pledgor's Representations and Warranties. Pledgor represents
and warrants that:
(a) Pledgor has all requisite capacity and power to enter into
this Pledge, to pledge the Pledged Securities for the purposes described in
Paragraph 2(a) above, and to carry out the transactions contemplated by this
Pledge;
(b) Pledgor is the legal and beneficial owner of the Pledged
Securities;
(c) The execution and delivery of this Pledge, and the
performance of its terms, will not violate or constitute a default under the
terms of any agreement, indenture or other instrument, license, judgment,
decree, order or regulation, applicable to Pledgor or any of its property; and
(d) Upon the execution of this Pledge and the delivery to
Pledgee of the shares of Pledged Securities now held of record by Pledgor, this
Pledge shall create a valid first lien upon and perfected security interest in
the Pledged Securities and the cash and noncash proceeds thereof, subject to no
prior lien or subordinate lien, or agreement purporting to grant to any third
party a security interest in the property or assets of Pledgor which would
include the Pledged Securities.
5. Pledgor's Covenants. Pledgor hereby covenants that, until all
of the Obligations have been satisfied in full:
(a) Pledgor will not sell, convey, or otherwise dispose of any
of the Pledged Securities or any interest therein, or create, incur, or permit
to exist any pledge, mortgage, lien, charge, encumbrance or any security
interest whatsoever in or with respect to any of the Pledged Securities or the
proceeds thereof, other than that created hereby; and
(b) Pledgor will, at Pledgor's own expense, defend (engaging
counsel acceptable to Pledgee) Pledgee's right, title, special property and
security interest in and to the Pledged Securities against the claims of any
person, firm, corporation or other entity.
6. Release of Pledged Securities to Pledgor. Pledgee agrees to
release this Pledge and to deliver the Pledged Securities to Pledgor in the
following manner:
(a) If Borrower has satisfied the terms of the Note, including
the payment of all principal and accrued interest thereunder, on or before March
15, 1999, then Pledgee shall release 9,000 shares of the Pledged Securities to
Pledgor within five days of Borrower's satisfaction of the Note.
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(b) If Borrower has satisfied the terms of the Note, including
the payment of all principal and interest thereunder, subsequent to March 15,
1999 but on or before April 15, 1999, then Pledgee shall release 2,000 shares of
the Pledged Securities to Pledgor within five days of Borrower's satisfaction of
the Note.
(c) If Pledgee does not exercise (and pay the exercise price
of) any portion of the Warrant granted on or before October 15, 2003, then
Pledgee shall release the remaining Pledged Securities to Pledgor by October 20,
2003.
7. Further Assurances. Pledgor shall at any time, and from time
to time, upon written request of Pledgee, execute and deliver such further
documents and do such further acts and things as Pledgee may reasonably request
to effect the purposes of this Pledge including, without limitation, delivering
to Pledgee, upon the occurrence of an Event of Default, irrevocable proxies with
respect to the Pledged Securities in form satisfactory to Pledgee. Until receipt
thereof, this Pledge shall constitute Pledgor's proxy to Pledgee or his nominee
to vote all shares of Pledged Securities then registered in Pledgor's name.
8. Termination of Pledge. Upon the satisfaction in full of all
Obligations and the satisfaction of all additional costs and expenses of Pledgee
as provided herein, this Pledge shall terminate and Pledgee shall deliver to
Pledgor, the Pledged Securities or so much thereof as shall not have been sold
or otherwise applied pursuant to this Pledge.
9. Miscellaneous.
(a) Beyond the exercise of reasonable care to assure the safe
custody of the Pledged Securities while held hereunder, Pledgee shall have no
duty or liability to preserve rights pertaining thereto and shall be relieved of
all responsibility for the Pledged Securities upon surrendering the Pledged
Securities or tendering surrender of it to Pledgor.
(b) The rights and remedies provided herein and in the
Transfer Agreement and any related instruments, agreements and documents are
cumulative and are in addition to and not exclusive of any rights or remedies
provided by law, including, without limitation, the rights and remedies of a
secured party under the Uniform Commercial Code, as enacted in any jurisdiction
where the Pledged Securities are deemed held.
(c) The provisions of this Pledge are severable, and if any
clause or provision shall be held invalid or unenforceable in whole or in part
in any jurisdiction and shall not in any manner affect such clause or provision
in any other jurisdiction or any other clause or provision in this Pledge in any
jurisdiction.
10. Notices. All notices and other communications hereunder shall
be in writing and shall be deemed to have been validly given, as of the date
delivered, if delivered personally, three days after being sent by registered or
certified mail (postage prepaid, return receipt requested) and one day
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after dispatch by recognized overnight courier (provided delivery is confirmed
by the courier) to the parties at the following addresses (or at such other
address for a party as shall be specified by like change of address):
(a) If to Pledgee:
Xxxx X. Xxxxxx, Trustee of the Xxxx X. Xxxxxx Trust
c/x Xxxxxxx, Xxxxxx & Xxxxxxxx, Ltd.
000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, XX 00000
(b) If to Pledgor:
APP Investments, Inc.
Xxx Xxxx Xxxxxx Xxxxx
Xxxxx 000
Xxxxxxxxxxxx, XX 00000
11. Governing Law. This Pledge shall be construed in accordance
with the substantive laws of the State of Delaware without regard to principles
of conflicts of laws and is intended to take effect as an instrument under seal.
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12. Jurisdiction. The parties agree to the exclusive jurisdiction
of the Federal and State courts located in the Commonwealth of Pennsylvania in
connection with any matter arising hereunder, including the collection and
enforcement hereof.
IN WITNESS WHEREOF, Pledgor has executed this Stock Pledge Agreement as
of the day and year first above written.
APP INVESTMENTS, INC.
By: /s/ Xxxxxx X. Xxxxx
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Xxxxxx X. Xxxxx, President
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