PLEDGE AGREEMENT
This PLEDGE AGREEMENT dated as of December 8, 1998 (the "Agreement"), by
and between Xxxxxxx X. Xxxxx (the "Pledgor") and Xxxx Xxxxx, Inc. (the
"Pledgee");
PRELIMINARY STATEMENT:
The Pledgor and Pledgee propose to enter into an Executive Stock Purchase
and Loan Agreement dated as of the date hereof (the "Purchase and Loan
Agreement"), pursuant to which, among other things, the Pledgor will borrow
the sum of $3,378,750 from the Pledgee, which loan will be evidenced by a
note as described in the Purchase and Loan Agreement (the "Note"). The
Pledgor is contemporaneously purchasing from the Pledgee 120,000 shares of
Common Stock, par value $.10 per share, of the Pledgee (the "Securities").
To secure the Obligations (hereinafter defined) under the Purchase and Loan
Agreement and the Note, the Pledgor desires to pledge the Securities to the
Pledgee.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein and to induce the Pledgee to execute and deliver the
Purchase and Loan Agreement, it is agreed as follows:
1. The Pledgor hereby pledges and grants to the Pledgee a security
interest in the Securities and the certificates representing the Securities,
and all dividends, cash, instruments and other property from time to time
received, receivable or otherwise distributed in respect of or in exchange
for any or all of the Securities (the "Pledged Collateral") to secure the
payment of all obligations of the Pledgor to the Pledgee now or hereafter
existing under the Purchase and Loan Agreement and the Note (such
obligations being hereinafter referred to as the "Obligations").
2. All certificates or instruments representing or evidencing the
Pledged Collateral shall be delivered to and held by or on behalf of the
Pledgee pursuant hereto and shall be in suitable form for transfer by
delivery, or shall be accompanied by duly executed but undated stock powers
or other instruments of transfer or assignment, in blank, all in form and
substance reasonably satisfactory to the Pledgee. After an Event of Default
(as defined in paragraph 8 hereof) shall have occurred and be continuing,
the Pledgee shall have the right, at any time in its discretion and without
notice to the Pledgor, to transfer to or to register in the name of the
Pledgee or any of its nominees any or all of the Pledged Collateral.
3. The Pledgor agrees that at any time and from time to time, the
Pledgor will promptly execute and deliver all further instruments and
documents, and take all further action (other than the payment of money),
that may be reasonably necessary or desirable, or that the Pledgee may
reasonably request, in order to perfect and protect any security interest
granted hereby or to enable the Pledgee to exercise and enforce its rights
and remedies hereunder with respect to any Pledged Collateral.
4. (a) So long as no Event of Default shall have occurred and be
continuing and except as may be otherwise provided in the Purchase and Loan
Agreement:
(i) The Pledgor shall be entitled to exercise any and
all voting and other consensual rights and shall be entitled to all other
incidents of ownership pertaining to the Pledged Collateral or any part
thereof for any purpose not inconsistent with the terms of this Agreement,
the Purchase and Loan Agreement and the Note.
(ii) The Pledgor shall be entitled to receive and retain
any and all cash dividends paid in respect of the Pledged Collateral,
provided, however, that any and all
(A) dividends paid or payable other than in cash
in respect of, and instruments and other property received,
receivable or otherwise distributed in respect of, or in exchange
for, any Pledged Collateral,
(B) dividends and other distributions paid or
payable in cash in respect of any Pledged Collateral, after the
occurrence and during the continuation of an Event of Default, and
(C) cash paid, payable or otherwise distributed
in redemption of, or in exchange for, any Pledged Collateral, shall
be paid to the Pledgee to pay interest then payable under or
pursuant to the Note and, after all accrued interest is paid, to repay
principal outstanding under the Note, and otherwise shall be, and
shall forthwith be delivered to the Pledgee to hold as Pledged
Collateral and shall, if received by the Pledgor, be received in trust
for the benefit of the Pledgee, be segregated from the other
property or funds of the Pledgor, and be forthwith delivered to the
Pledgee as Pledged Collateral in the same form as so received
(with any necessary endorsement).
(b) Upon the occurrence and during the continuance of an Event of
Default, all rights of the Pledgor to exercise the voting and other
consensual rights which he would otherwise be entitled to exercise pursuant
to Section 4(a)(i) shall cease, and all such rights shall thereupon become
vested in the Pledgee who shall thereupon have the sole right to exercise
such voting and other consensual rights.
5. The Pledgor agrees not to (i) sell, transfer, or otherwise dispose of,
or grant any option with respect to, any of the Pledged Collateral, or
(ii) create or permit to exist any lien, security interest, or other charge
or encumbrance upon or with respect to any of the Pledged Collateral, in
each such case except for the security interest under this Agreement.
6. The Pledgor hereby appoints the Pledgee, and any officer or agent of
Pledgee, with full power of substitution, the Pledgor's attorney-in-fact,
with full authority in the place and stead of the Pledgor and in the name
of the Pledgor, upon the occurrence and during the continuance of an Event
of Default to ask for, demand, collect, receive and give acquittance for
any and all moneys due or to become due under and by virtue of any Pledged
Collateral, to
endorse checks, drafts, orders and other instruments for the
payment of money payable to the Pledgor representing any dividend or other
distribution payable in respect of the Pledged Collateral or any part
thereof or on account thereof and to give full discharge for the same, to
settle, compromise, prosecute or defend any action, claim or proceedings
with respect thereto, to sell, assign, endorse, pledge, transfer and make
any agreement respecting, or otherwise deal with, the same and to take any
other action and to execute any instrument which the Pledgee may deem
necessary or advisable to accomplish the purposes of this Agreement. The
appointment hereby is irrevocable and coupled with an interest.
7. This Agreement shall create a continuing security interest in the
Pledged Collateral and shall (a) remain in full force and effect until
payment in full of the Obligations, and (b) be binding upon the Pledgor and
his respective personal representatives, successors and assigns. Upon the
payment in full of the Obligations, the Pledgor shall be entitled to the
return of such of the Pledged Collateral as shall not have been sold or
otherwise applied pursuant to the terms hereof.
8. In the event of a default as defined in the Note (an "Event of
Default"), the Pledgee may sell (subject to any applicable securities laws)
the Pledged Collateral, or any part thereof, at public or private sale for
cash, upon credit or for future delivery as the Pledgee shall deem
appropriate.
At any sale made pursuant to this Section, Pledgee may bid for or purchase,
free (to the extent permitted by law) from any right of redemption, stay or
appraisal on the part of the Pledgor (all said rights being also hereby
waived and released to the extent permitted by law), the Pledged Collateral
or any part thereof offered for sale and may make payment on account thereof
by using any claim then due and payable to Pledgee from the Pledgor as a
credit against the purchase price, and Pledgee may, upon compliance with the
terms of sale, hold, retain and dispose of such property without further
accountability to the Pledgor therefor.
9. No amendment or waiver of any provision of this Agreement nor
consent to any departure by the Pledgor herefrom, shall in any event be
effective unless the same shall be in writing and signed by the Pledgee,
and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
10. All notices and other communications provided for hereunder shall
be in writing (including telegraphic communication) and, if to the Pledgor,
mailed or telegraphed or delivered to him, at the address last given, to
Pledgee by Pledgor in writing, and if to the Pledgee, mailed or delivered
to it, addressed Xxxx Xxxxx, Inc., Attn: General Counsel, 000 Xxxxx Xxxxxx,
Xxxxxxxxx, Xxxxxxxx 00000; or as to each party at such other address as
shall be designated by such party in a written notice to each other party
complying as to delivery with the terms of this Section. All such notices
and other communications shall, when mailed or telegraphed, respectively,
be effective when received.
11. This Agreement shall be governed by, and construed in accordance with,
the laws of the State of Maryland, other than the conflicts of laws
provisions thereof. Unless otherwise
defined herein or in the Note, terms
defined in Article 9 of the Uniform Commercial Code in the State of Maryland,
other than the conflicts of laws provisions thereof are used herein as
therein defined.
12. If any provision hereof is or shall at any time be invalid and
unenforceable in any jurisdiction then, to the fullest extent permitted by
law, (i) the other provisions hereof shall remain in full force and effect
in such jurisdiction and shall be liberally construed in favor of the
Pledgee in order to carry out the intentions of the parties hereto as nearly
as may be possible; and (ii) the invalidity or unenforceability of any
provision hereof in any jurisdiction shall not affect the validity or
enforceability of such provision in any other jurisdiction.
IN WITNESS WHEREOF, the Pledgor and Pledgee have caused this Agreement to
be duly executed, under seal, and delivered as of the date first above
written.
WITNESS: Xxxxxxx X. Xxxxx, Pledgor
/s/ Xxxxx Xxx /s/ Xxxxxxx X. Xxxxx
ATTEST: Xxxx Xxxxx, Inc., Pledgee
/s/ Xxxxxxx X. Xxxxxx By: /s/ Xxxxxx X. Xxxxx
Name: Xxxxxx X. Xxxxx
Title: Senior Vice
President and
General Counsel
