EXHIBIT 10.22
PLEDGE AGREEMENT
This Pledge Agreement is made by and between INDUSTRIAL DATA SYSTEMS,
CORP., a Nevada corporation ("Corporation"); and XXXX X. "XXXX" XXXXXX,
("Shareholder") this 25th day of March, 1998.
RECITALS
WHEREAS the parties hereto have executed and consummated that certain
Stock Acquisition Agreement dated March 25th, 1998 whereby the Corporation
acquired from Shareholder 1,000 shares of Common stock in exchange for 300,000
shares of INDUSTRIAL DATA SYSTEMS, CORP. common stock, $.01 par value, and
WHEREAS pursuant to the terms of the Stock Acquisition Agreement,
Shareholder has agreed to pledge his stock in Industrial Data Systems, Corp. to
secure his indemnification obligations contained in Article 11 therein;
NOW THEREFORE the parties hereto have agreed as follows:
1. ITEMS OF PLEDGE. The following items are delivered to Corporation
subject to the terms of this agreement:
(i) Stock Certificate No. _____ issued to XXXX X. XXXXXX representing
150,000 shares of common stock of INDUSTRIAL DATA SYSTMS, CORP.
accompanied by a stock power endorsed to INDUSTRIAL DATA SYSTEMS,
CORP. for such shares executed by XXXX X. XXXXXX.
(ii) Stock Certificate No. _____ issued to XXXX X. XXXXXX representing
90,000 shares of common stock of INDUSTRIAL DATA SYSTMS, CORP.
accompanied by a stock power endorsed to INDUSTRIAL DATA SYSTEMS,
CORP. for such shares executed by XXXX X. XXXXXX.
(iii) Stock Certificate No. _____ issued to XXXX X. XXXXXX representing
60,000 shares of common stock _____________ of INDUSTRIAL DATA
SYSTEMS, CORP. accompanied by a stock power endorsed to INDUSTRIAL
DATA SYSTEMS, CORP. for such shares executed by XXXX X. XXXXXX.
2. CREATION OF SECURITY INTEREST. Shareholder pledges and assigns to
corporation escrow items (i), (ii) and (iii) above as security for
performance of his indemnity obligations contained in the above referenced
Stock Acquisition Agreement.
1
Corporation obligates itself to hold the shares pledged to it as security
for the payment of any Shareholder indemnified claims under the Stock
Acquisition Agreement.
Corporation will have, as to the shares, the rights and obligations of a
secured party under Chapter 9 of the Texas Business and Commerce Code.
3. DELIVERY UPON EXPIRATION OF INDEMNITY PERIODS TO SHAREHOLDER. Provided
Corporation has not notified Shareholder of claim for damages in accordance with
Article 11.3 of the Stock Acquisition Agreement, Corporation shall deliver to
Shareholder free of this Pledge Agreement Pledge items (i) on April 1, 1999,
Pledge item (ii) on April 1, 2000 and Pledge item (iii) on June 24th, 2002. In
the event Shareholder has exercised his option requiring repurchase all 300,000
shares of stock, escrow item (i) shall be deemed to be the sum of $150,000.00
and escrow item (ii) shall be deemed to be the sum of $90,000.00 and Pledge item
(iii) shall be deemed to be the sum of $60,000. If Shareholder has exercised his
option requiring repurchase for less than 300,000 shares, then the cash received
shall be equally allocated between Pledge items (i), (ii) and (iii).
4. REMEDIES IN EVENT OF CLAIM. In the event Shareholder has been notified
by Corporation of a claim for indemnification, Corporation shall hold all
remaining Pledge items until such time as the validity of such indemnification
claim is finally resolved by settlement, arbitration or litigation. Upon final
resolution the Pledge items will be delivered in accordance with the settlement
agreement, arbitration award or Judgment. IT IS EXPRESSLY AGREED THAT NEITHER
CORPORATION OR SHAREHOLDER SHALL HAVE ANY LIABILITY WHATSOEVER FOR ANY
DIMINUTION IN THE VALUE OF THE PLEDGE ITEMS DURING THE TERM OF THIS AGREEMENT.
IN THE EVENT A CLAIM FOR INDEMNITY IS SUSTAINED, SHAREHOLDER SHALL HAVE NO
LIABILITY TO CORPORATION EXCEEDING THE VALUE OF THE REMAINING PLEDGE ITEMS.
Corporation may transfer the shares of stock to its own name or to the
name of its nominee in full satisfaction of Shareholder's obligations or may
sell, assign, or deliver as much of the shares of stock as may be necessary to
satisfy the unpaid obligations of Shareholder, together with the expenses
Corporation incurs in connection with the sale, assignment or delivery. At any
sale of the shares of stock, whether private or public, corporation may purchase
and pay for any of the shares by canceling so much of Shareholder,s obligation
as is equal to the purchase price. Corporation
2
agrees to notify Shareholder at least ten days before the date of any proposed
sale of the shares. Shareholder waives any right of redemption under the Texas
Business Corporations Act as to the shares of stock sold.
Any proceeds from the sale of the shares, on default, will be applied by
the Corporation as follows:
First, to the costs and expenses of collection incurred by Corporation,
including, but not limited to, costs of any public or private sale, stock broker
fees, attorney fees, and all other reasonable expenses; and
Second, to payment of the entire amount of the principle and interest due
under the settlement agreement, arbitration award or judgment.
Any remaining proceeds from the sale will be delivered to Shareholder.
5. COLLECTION OF DIVIDENDS AND DISTRIBUTIONS
During the term of this agreement, provided no notification of claim
has been given to Shareholder, Shareholder will receive and collect all cash
dividends and distributions in respect of the pledged shares. If notification
of claim has been given to Shareholder, Corporation may retain any such
dividends or distributions and may apply the same toward satisfying
Shareholder's obligations.
6. NOTICES
All notices or other communications by either party to this agreement
must be in writing and either mailed by registered or certified mail, postage
prepaid, or hand delivered to the addresses setforth below during regular
business hours:
7. AMENDMENT OR MODIFICATION
This agreement cannot be amended or modified except in a writing,
executed and signed by the parties.
8. ADDITIONAL DOCUMENTS
Pledgor agrees to execute and deliver to Pledgee any and all additional
documents which may be necessary to perfect the security interest given to
Pledgee under this agreement.
3
9. BINDING EFFECT
This agreement will be binding on the parties and their representatives,
heirs, successors, and assigns.
EXECUTED this __25__ day of March, 1998.
SHAREHOLDER INDUSTRIAL DATA SYSTEMS,
CORP.
/s/ XXXX X. XXXXXX By: /s/ XXXXXXX Xxxxxx
XXXX X."XXXX" XXXXXX XXXXXXX XXXXXX, President
------------------------------- -------------------------------
------------------------------- -------------------------------
4
