SUBORDINATED PLEDGE AGREEMENT
This SUBORDINATED PLEDGE AGREEMENT (this "Agreement") dated as of
January 16, 2001 is made by and among Xxxxxx Xxxx ("Pledgor") with an address
for notice purposes at 000 Xxxxxxxxxx Xx. Xxxxx Xxxxxx, XX 00000, in favor of
Interiors, Inc., a Delaware corporation ("Secured Party") with an address for
notice purposes at 000 Xxxxxxxxxx Xx., Xxxxx Xxxxxx, XX 00000.
R E C I T A L S
WHEREAS, Pledgor is the legal and beneficial owner of 1,000 shares
of Series E Preferred Stock, par value $.01 per share ("Series E Preferred
Stock"), of Secured Party (the "Pledged Shares");
WHEREAS, Pledgor has granted a security interest in the Pledged
Shares to Xxxxx Xxxxxxx to secure a $250,000 obligation of Pledgor (the "Xxxxxxx
Note").
WHEREAS, as of the date hereof, Pledgor has executed a Promissory
Note (the "Note"), in the aggregate principal amount of $500,000, in favor of
Secured Party, and Pledgor has directly benefited and received consideration for
the execution of the Note.
WHEREAS, Pledgor hereby grants a subordinated security interest in
the Pledged Shares to Secured Party in order to secure the Note.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and to formalize
the pledge of the Pledged Shares as security for the Notes, Pledgor hereby
agrees as follows:
SECTION 1. Pledge. Subject to the security interest granted in
connection with the Xxxxxxx Note, Pledgor hereby pledges to Secured Party, and
grants to Secured Party a security interest in, the following (the "Pledged
Collateral"): (a) the Pledged Shares and the certificate(s) representing the
Pledged Shares; (b) all dividends or other distributions on or in respect of the
Pledged Shares; (c) all proceeds of any and all of the Pledged Shares; and (d)
all shares of Class A Common Stock, par value $.001 per share, of Secured Party
("Class A Common Stock") into which the Pledged Shares are convertible.
SECTION 2. Security for Obligations. Subject to Section 13 hereof,
this Agreement secures the payment of all obligations of Pledgor now or
hereafter existing under the Note and all obligations of Pledgor now or
hereafter existing under this Agreement (collectively, the "Pledgor
Obligations").
SECTION 3. Delivery of Pledged Collateral. Upon satisfaction of the
Xxxxxxx Note, the Pledged Shares shall be delivered to and held by the Secretary
of Secured
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Party pursuant hereto and shall be in suitable form for transfer, either duly
endorsed in blank or accompanied by assignments or stock powers duly executed
authorizing transfer thereof pursuant to the terms of this Agreement reasonably
satisfactory to Secured Party. Upon satisfaction of the Xxxxxxx Note, all other
certificates or instruments representing or evidencing the Pledged Collateral
shall (in the case of the Pledged Shares delivered herewith, upon the execution
hereof) be delivered to and held by the Secretary of Secured Party pursuant
hereto and shall be in suitable form for transfer, either duly endorsed in blank
or accompanied by assignments or stock powers duly executed authorizing transfer
thereof pursuant to the terms of this Agreement reasonably satisfactory to
Secured Party. Secured Party shall have the right, at any time after Pledgor
shall have failed to fully perform or pay any of the Pledgor Obligations (a
"Default") and such Default shall be continuing, to transfer to or to register
in the name of Secured Party or any of its nominees any or all of the Pledged
Collateral.
SECTION 4. Representations and Warranties. Pledgor represents and
warrants to Secured Party as follows:
(a) Pledgor is the sole legal and beneficial owner of the Pledged
Collateral, free and clear of any lien, security interest, option, charge or
other encumbrance or claims except for the security interest created by this
Agreement and in connection with the Xxxxxxx Note.
(b) This Agreement has been duly executed and delivered by Pledgor
and constitutes a legal, valid and binding obligation of Pledgor, enforceable
against Pledgor in accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency, or other similar laws affecting the rights of
creditors generally or by the application of general principles of equity.
(c) No authorization, approval, or other action by, and no notice to
or filing with, any governmental authority or regulatory body is required either
(i) for the pledge by Pledgor of the Pledged Collateral pursuant to this
Agreement or for the execution, delivery or performance of this Agreement by
Pledgor, or (ii) for the exercise by Secured Party of the voting or other rights
provided for in this Agreement or the remedies in respect of the Pledged
Collateral pursuant to this Agreement (except as may be required in connection
with the disposition of the Pledged Collateral by laws affecting the offering
and sale of securities generally).
SECTION 5. Further Assurances. Pledgor agrees that, from time to
time, at its expense, it will promptly execute and deliver all further
instruments and documents and take all further action that may be necessary or
desirable, or that Secured Party may request, in order to perfect and protect
any security interest granted or purported to be granted hereby or to enable
Secured Party to exercise and enforce the rights and remedies of Secured Party
hereunder with respect to any Pledged Collateral or to carry out the provisions
and purposes hereof.
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SECTION 6. Voting Rights.
(a) So long as no Default shall have occurred and be
continuing, Pledgor shall be entitled to exercise any and all voting and other
consensual rights pertaining to the Pledged Collateral or any part thereof for
any purpose not inconsistent with the terms of this Agreement.
(b) Upon the occurrence and during the continuance of a
Default, all rights of Pledgor to exercise the voting and other consensual
rights which it would otherwise be entitled to exercise pursuant to Section 6(a)
shall cease, and all such rights shall thereupon become vested in Secured Party,
which shall thereupon have the sole right to exercise such voting and other
consensual rights.
(c) During the term of this Agreement, Pledgor shall have the
right to convert the Pledged Shares into shares of Class A Common Stock.
Pursuant to Section 1 hereof, any shares of Class A Common Stock issued upon
conversion of the Pledged Shares shall remain subject to this Agreement.
SECTION 7. Transfers and Other Liens. Pledgor agrees that it will
not (i) sell or otherwise dispose of, or grant any option with respect to, any
of the Pledged Collateral owned by it, or (ii) create or permit to exist any
lien or other encumbrance upon or with respect to any such Pledged Collateral.
SECTION 8. Secured Party Appointed Attorney-in-Fact. Pledgor hereby
appoints Secured Party as its attorney-in-fact, with full authority in the place
and stead of Pledgor and in the name of Pledgor or otherwise, at any time, upon
the occurrence and during the continuance of any Default, to take any action and
to execute any instrument which Secured Party may deem necessary or advisable to
accomplish the purposes of this Agreement.
SECTION 9. Secured Party May Perform. If Pledgor fails to perform
any agreement contained herein, Secured Party may itself perform, or cause
performance of, such agreement.
SECTION 10. Remedies upon Default. If any Default shall have
occurred and be continuing, Secured Party may exercise in respect of the Pledged
Collateral, in addition to other rights and remedies provided for herein or
otherwise available to it, all the rights of a secured party on default under
the Delaware Uniform Commercial Code in effect at that time, and Secured Party
may also sell the Pledged Collateral or any part thereof in accordance with the
provisions thereof.
SECTION 11. Amendments, Etc. No amendment or waiver of any provision
of this Agreement shall be effective unless the same shall be in writing and
signed by
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Pledgor and Secured Party, and then such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given.
SECTION 12. Notices. Any notice or other communication required or
which may be given hereunder shall be in writing and shall be delivered to the
address set forth in the first paragraph.
SECTION 13. Continuing Security Interest; Transfer of Notes. This
Agreement shall create a continuing security interest in the Pledged Collateral
and shall (i) remain in full force and effect until performance or payment in
full of the Pledgor Obligations, (ii) be binding upon Pledgor, its successors
and assigns, and (iii) inure, together with the rights and remedies of Secured
Party hereunder, to the benefit of Secured Party and its successors, transferees
and assigns (including assignees of the Notes or rights to payments thereunder).
SECTION 14. Reinstatement. This Agreement shall continue to be
effective or be reinstated, as the case may be, if at any time any amount
received by Secured Party in respect of the Pledgor Obligations is rescinded or
must otherwise be restored or returned by Secured Party upon the insolvency,
bankruptcy, dissolution, liquidation or reorganization of Pledgor or upon the
appointment of any intervenor or conservator of, or trustee, receiver, manager
or similar official for, Pledgor, all as though such payments had not been made.
SECTION 15. Governing Law; Terms. This Agreement shall be governed
by and construed in accordance with, the internal laws (and not the law of
conflicts) of the State of Delaware.
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IN WITNESS WHEREOF, Pledgor and Secured Party have executed, or
caused this Agreement to be duly executed and delivered on its behalf, as of the
date first above written.
PLEDGOR:
/s/ Xxxxxx Xxxx
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Xxxxxx Xxxx
SECURED PARTY:
INTERIORS, INC., a
Delaware corporation
By: /s/ Xxxxx Xxxxxxxx
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Name: Xxxxx Xxxxxxxx
Title: EVP
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