EXHIBIT 10.7
SECURITY AND PLEDGE AGREEMENT
AGREEMENT, dated as of April 20, 1998 by and between Xxxxxxx X. Xxxxxxxxx
("Xxxxxxxxx") and Professional Detailing, Inc., a New Jersey corporation
("PDI").
WHEREAS, Saldarini has on the date hereof delivered to PDI a promissory
note in the principal amount of $1,427,993.77, a copy of which is annexed hereto
as Exhibit A (the "Note"), evidencing a loan in the principal amount of
$1,427,993.77 from PDI to Saldarini in connection with Saldarini's taxes payable
in connection with Saldarini's acquisition of PDI Common Stock; and
WHEREAS, Saldarini has agreed to pledge 1,119,684 shares (the "Shares") of
common stock, par value $.01 per share, of PDI which he owns as security for the
repayment of the debt evidenced by the Note.
NOW, THEREFORE, the parties hereto agree as follows:
1. Security Interest in Pledged Shares.
(a) Saldarini hereby grants to PDI, as collateral security for the
performance of his obligations under the Note, a security interest in the Shares
and all profits, dividends and other distributions with respect to or other
rights in connection with the Shares (collectively, the "Collateral").
(b) Saldarini hereby delivers transfers, conveys and assigns to, and
pledges and hypothecates with PDI the shares and certificate(s) representing the
Shares, accompanied by signature guaranteed stock power(s) duly executed in
blank in proper form for transfer.
2. Sale of Security in Satisfaction of Note.
In the event Saldarini desires to sell all or a portion of the Shares, the
proceeds of such sale shall be used to satisfy the indebtedness evidenced by the
Note. Upon such event, the Shares shall be delivered to Morse, Zelnick, Rose &
Lander, as escrow agent ("MZRL"). MZRL shall deliver the Shares to such selling
broker as Saldarini shall designate, upon receipt
in writing from such broker of an undertaking that the net proceeds of the sale
of the Shares will be delivered to MZRL, as escrow agent. Upon receipt of such
proceeds, MZRL shall deliver to PDI by wire transfer the amount of any unpaid
principal and accrued interest on the Note then due and payable plus any other
amount then due and owing from Saldarini to PDI under the Note. The balance of
such sales proceeds, if any, shall be paid by wire transfer to Saldarini.
3. Rights and Remedies of PDI.
If at any time hereafter, an Event of Default (as defined in the Note)
shall have occurred, then:
3.1 Voting Dividends, etc.
PDI shall have all voting and consensual powers pertaining to the Shares.
In order to permit PDI to exercise such voting or other powers, Saldarini shall,
upon the written request of PDI, from time to time execute and deliver to PDI
appropriate proxies.
3.2 Registration in Name of PDI.
PDI shall have the right at any time and from time to time thereafter to
transfer any of the Shares into its name or the name of a nominee or nominees.
Nothing contained in this Section 3.2 shall deprive Saldarini of any rights of
redemption provided by law.
3.3 Sale of Collateral.
In addition to any other rights and remedies which PDI may have, it may
immediately and without demand exercise any and all rights and remedies granted
to a secured party upon the occurrence of an Event of Default under the Uniform
Commercial Code.
3.4 Duty with Respect to Collateral.
The duty of PDI and MZRL with respect to the Collateral shall be solely to
use reasonable care in the physical custody and preservation thereof, and PDI
and MZRL shall not be under any obligation to take any action in regard to the
Collateral or any part thereof, except as provided herein.
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3.5 Application of Proceeds.
PDI shall apply the purchase price or other moneys collected, received or
held by it in respect of the Collateral in the following order: (a) to the
payment of all costs, expenses, liabilities and advances, including reasonable
attorneys' fees and disbursements, incurred or made by PDI in the protection,
exercise, or enforcement of its interests, rights, powers, or remedies hereunder
upon the occurrence of any Event of Default; (b) to the payment of the unpaid
principal of and accrued interest on the Note then due and payable; (c) to the
payment of any other amounts due from Saldarini to PDI; and (d) the remainder,
if any, to Saldarini.
3.6 Return of Collateral.
PDI shall return to Saldarini all Collateral then held by it pursuant to
this Agreement and any transfer documents executed by Saldarini with respect
thereto, as soon as there shall be no amounts unpaid or otherwise owing to PDI
under the Note or this Agreement. The Collateral so returned shall not, as the
result of any transaction entered into or action taken by PDI, be subject to any
lien, encumbrance, attachment or other state of facts which result in any
diminution of the title of Saldarini therein, but shall otherwise be returned
without recourse upon or warranty by PDI.
4. Miscellaneous.
4.1 PDI Appointed Attorney-in-Fact.
Saldarini hereby constitutes and appoints, effective as of the occurrence
of an Event of Default and while the same is continuing, PDI as attorney-in-fact
for the purpose of carrying out the provisions of this Agreement and taking any
action and executing any instrument, including without limitation, financing
statements and instruments of assignment in the case of a sale of Collateral
upon default, which PDI may deem necessary or advisable to accomplish the
purposes hereof, which appointment is irrevocable and coupled with an interest.
If Saldarini shall fail to do any act or thing which it has covenanted to do
hereunder, PDI, as attorney-in-fact or in its own right, may (but shall not be
obligated to) do the same or cause it to be done.
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4.2 No Waiver, etc.
No action taken by PDI shall be deemed to constitute a waiver by PDI of
compliance by Saldarini with any representation, warranty, covenant, or
agreement contained in this Agreement. No course of dealing between the parties
hereto and no failure or delay on the part of PDI in exercising any right,
power, or privilege hereunder shall operate as a waiver thereof, and no single
or partial exercise of any such right, power or privilege. The rights and
remedies provided in this Agreement are cumulative and are in addition to, and
not exclusive of, any other rights or remedies provided by law, in equity, by
statute, or otherwise. No notice to or demand on Saldarini in any case shall
entitle Saldarini to any other or further notice or demand in similar or other
circumstances or constitute a waiver of the rights of PDI to take any other or
further action in any circumstances without notice or demand. The waiver of a
breach of any provision of this Agreement or of an Event of Default shall not
operate or be construed as a waiver of any subsequent breach or Event of
Default.
4.3 Notices.
All notices and other communications required or permitted to be given
under this Agreement shall be in writing and shall be deemed to have been duly
given if delivered personally or sent by certified mail, return receipt
requested, postage prepaid, to the parties hereto as follows: to Saldarini at 00
Xxxxxx Xxxxx, Xxxxxx, Xxx Xxxxxx 00000; to PDI at 000 XxxXxxxxx Xxxxxxxxx,
Xxxxxx, Xxx Xxxxxx 00000, Attn: Chief Financial Officer; with a copy to Morse,
Zelnick, Rose & Lander, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attn: Xxxxxxx
X. Xxxx, Esq.
4.4 Severability.
The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of the remainder of this
Agreement or the reminder of such provision. If any provision of this Agreement
is so broad as to be unenforceable, such provision shall be interpreted to be
only so broad as is enforceable.
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4.5 Section and Other Headings.
The section and other headings contained in this Agreement are for
reference purposes only and shall not be deemed to be a part of this Agreement
or to affect the meaning or interpretation of this Agreement.
4.6 Execution in Counterparts.
This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original and all of which together shall be
deemed to be one and the same instrument.
4.7 Choice of Law.
This agreement shall be governed by the laws of the State of New Jersey.
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands on
the date first above written.
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Xxxxxxx X. Xxxxxxxxx
PROFESSIONAL DETAILING, INC.
By: ________________________________
Xxxxx Xxxxx,
Chief Financial Officer
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EXHIBIT A
PROMISSORY NOTE
THIS NOTE IS NON-NEGOTIABLE
$1,427,993.77 Mahwah, New Jersey
April 20, 1998
XXXXXXX X. XXXXXXXXX ("Saldarini"), residing at 00 Xxxxxx Xxxxx, Xxxxxx,
Xxx Xxxxxx 00000, FOR VALUE RECEIVED, hereby promises to pay to PROFESSIONAL
DETAILING INC., a New Jersey corporation ("Noteholder"), at the offices of the
Noteholder at 000 XxxXxxxxx Xxxxxxxxx, Xxxxxx, Xxx Xxxxxx 00000 (or such other
address as is designated in writing by the Noteholder) on April 20, 2001 (or
such sooner time as provided below) the principal amount of One Million Four
Hundred Twenty Seven Thousand Nine Hundred Ninety Three and 77/100
($1,427,993.77) Dollars, together with all accrued but unpaid interest thereon,
in lawful money of the United States of America.
The unpaid principal balance of this Promissory Note shall bear interest
at the rate of 5.4% per annum, payable quarterly in arrears and shall be payable
on each July 20th, October 20th, January 20th and April 20th during the term of
this Promissory Note. The first payment shall be made on July 20, 1998. Interest
shall be payable at the offices of the Noteholder as set forth above by check or
money order payable directly to Noteholder. In the event of an Event of Default
(as defined below) the rate of interest from and after the date of such Event of
Default shall be 18% per annum until such Event of Default shall no longer be
continuing.
If this Promissory Note, or any payment hereunder, falls due on a
Saturday, Sunday or a State of New Jersey public holiday, this Promissory Note
shall fall due or such payment shall be made on the next succeeding business
day.
This Promissory Note may be prepaid in whole or in part at any time.
Saldarini waives presentment for payment, demand, notice of nonpayment,
notice of protest and protest of this Promissory Note, and all of the notices
not expressly provided for herein in connection with the delivery, acceptance,
performance, default or enforcement of the payment of this Promissory Note.
This Promissory Note is not subject to setoff.
Upon the occurrence of any of the following specified Events of Default
(each an "Event of Default"):
1. The failure to make any payment of interest or principal on the due
date therefor or within five (5) business days of receipt of written
notice of such nonpayment;
2. Saldarini, pursuant to or within the meaning of Title 11, U.S. Code
or any similar federal or state law for the relief of debtors (a
"Bankruptcy Law"):
A. commences a voluntary case or proceeding;
B. consents to the entry of an order for relief against it in an
involuntary case proceeding;
C. consents to the appointment of a custodian, receiver or other
similar official for it or for all or substantially all of its
property; or
D. makes a general assignment for the benefit of its creditors;
THEN, AND IN ANY SUCH EVENT, AND AT ANY TIME THEREAFTER IF ANY EVENT OF DEFAULT
SHALL THEN BE CONTINUING, THE NOTEHOLDER BY WRITTEN NOTICE TO SALDARINI MAY
DECLARE THE ENTIRE PRINCIPAL BALANCE OF THIS NOTE AND ALL ACCRUED BUT UNPAID
INTEREST THEREON TO BE DUE, WHEREUPON THE SAME SHALL FORTHWITH BECOME DUE AND
PAYABLE. If an Event of Default occurs, Saldarini shall pay all of the
Noteholder's costs and expenses relating to the enforcement of this Promissory
Note, including, but not limited to, reasonable attorneys' fees.
In the event that Saldarini's employment by Professional Detailing, Inc.
is terminated, voluntarily or involuntarily and with or without cause, the
entire unpaid principal amount of this Note may be declared due and payable by
the Noteholder upon one-hundred eighty (180) days notice to Saldarini.
The indebtedness evidenced by this Promissory Note shall be secured by a
pledge of 1,119,684 shares of common stock, par value $.01 per share, of
Professional Detailing, Inc.
All notices provided for herein shall be deemed given if sent by certified
mail, return receipt requested, to the address of the party set forth above, or
to such other address as designated in writing to the other party.
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Xxxxxxx X. Xxxxxxxxx
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