1
EXHIBIT 10.40
STOCK PLEDGE AGREEMENT
This Stock Pledge Agreement ("Pledge Agreement") is made as of
December 2, 1998, between eSoft, Inc., a Delaware corporation ("eSoft"), and
Xxx Xxxxxxxxxxxxx (the "Pledgor"), a director, officer and shareholder of Apexx
Technology, Inc., an Idaho corporation (the "Company").
RECITALS
WHEREAS, eSoft and the Company are parties to a Letter of Intent,
dated November 20, 1998 (the "Letter of Intent"), pursuant to which the Company
and eSoft are discussing a transaction in which the Company will become a
wholly owned subsidiary of eSoft.
WHEREAS, eSoft and the Company are parties to a Loan Agreement, dated
December 2, 1998 (the "Loan Agreement"), pursuant to which the Company will
provide a working capital line of credit (the "Line of Credit") to be utilized
by the Company for working capital in the conduct of the Company's business.
WHEREAS, concurrently with the execution of the Loan Agreement, the
Company will issue a secured promissory note (the "Note") to eSoft to evidence
the debt created by the Line of Credit.
WHEREAS, the Pledgor has guaranteed the debt created by the Line of
Credit and certain of the Company's obligations under the Letter of Intent on a
non-recourse basis pursuant to a Guaranty Agreement, dated December 2, 1998
(the "Guaranty").
WHEREAS, the Pledgor has agreed to secure the Guaranty by a pledge to
eSoft of all of the shares of the Company's Common Stock, no par value ("Common
Stock"), beneficially owned by the Pledgor.
WHEREAS, eSoft and the Pledgor intend that this Pledge Agreement
provide the terms and conditions upon which the Guaranty is secured by a pledge
to eSoft of the shares of Common Stock beneficially owned by the Pledgor.
NOW, THEREFORE, in consideration of the promises contained herein and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and in order to induce eSoft to make advances to the
Company pursuant to the Loan Agreement, the Pledgor and eSoft hereby agree as
follows:
AGREEMENT
1. PLEDGE. Pledgor hereby pledges to eSoft, and grants to eSoft, a
security interest in all of the Common Stock identified on Schedule A hereto
(the "Pledged Interest"), which Common Stock constitutes all of the Common
Stock beneficially owned by Pledgor, as security for the prompt and complete
payment when due of the unpaid principal and interest on the Note.
2
2. DELIVERY OF PLEDGED INTEREST. Upon the execution of this Pledge
Agreement, Pledgor shall deliver to Xxxxx, Xxxxxx & Xxxxxx LLP ("DGS") the
certificate(s) representing the Pledged Interest, together with duly executed
forms of assignment sufficient to transfer title thereto to eSoft. DGS shall
hold the Pledged Interest until such time as eSoft declares an Event of Default
under the Loan Agreement and demands the delivery of the Pledged Interest, at
which time DGS shall deliver the Pledge Interest to eSoft.
3. VOTING RIGHTS; CASH DIVIDENDS. During the term of this Pledge
Agreement and until such time as there exists a default in the payment of
principal or interest on the Note or any other default under the Note, Pledgor
shall be entitled to all voting rights with respect to the Pledged Interest and
shall be entitled to receive all cash dividends paid in respect of the Pledged
Interest. Upon the occurrence of and during the continuance of any such
default, eSoft shall retain all such cash dividends payable on the Pledged
Interest as additional security hereunder.
4. STOCK DISTRIBUTIONS, ETC. If, while this Pledge Agreement is in
effect, Pledgor becomes entitled to receive or receives any securities or other
property in addition to, in substitution of, or in exchange for the Pledged
Interest (whether as a distribution in connection with any recapitalization,
reorganization, reclassification, stock dividend or otherwise), Pledgor shall
accept such securities or other property on behalf of and for the benefit of
eSoft as additional security for the obligations of the Company under the Note
and shall promptly deliver such additional security to eSoft together with duly
executed forms of assignment, and such additional security shall be deemed to
be part of the Pledged Interest hereunder.
5. DEFAULT. If the Company defaults in the payment of the principal or
interest under the Note as they become due (whether upon demand, acceleration
or otherwise) or defaults in its obligations set forth under the heading
"Cessation of Third Party Acquisition Activities" set forth in the Letter of
Intent, eSoft may exercise any and all rights, powers, and remedies of any
owner of the Pledged Interest (including the right to vote the shares and
receive distributions with respect to such shares) and shall have and may
exercise, without demand, any and all rights and remedies granted to a secured
party upon default under the Uniform Commercial Code of Colorado or otherwise
available to eSoft under applicable law.
6. COSTS AND ATTORNEYS' FEES. All costs and expenses, including
reasonable attorneys' fees, incurred in exercising any right, power, or remedy
conferred by this Pledge Agreement or in the enforcement thereof, shall become
part of the indebtedness secured hereunder and shall be paid by Pledgor from
the proceeds of the sale of the Pledged Interest hereunder.
7. PAYMENT OF INDEBTEDNESS AND RELEASE OF PLEDGED INTEREST. Upon
payment in full of the indebtedness evidenced by the Note and termination of
the Line of Credit, eSoft shall surrender the Pledged Interest together with
all forms of assignment.
8. FURTHER ASSURANCES. Each Pledgor agrees that at any time and from
time to time upon the written request of eSoft, Pledgor will execute and
deliver such further documents and do such further acts and things as eSoft may
reasonably request in order to effect the purposes of this Pledge Agreement.
2
3
9. SEVERABILITY. Any provision of this Pledge Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate nor render
unenforceable such provision in any other jurisdiction.
10. NO WAIVER; CUMULATIVE REMEDIES. eSoft shall not by any act, delay,
omission or otherwise be deemed to have waived any of its rights or remedies
hereunder, and no waiver shall be valid unless in writing, signed by eSoft, and
then only to the extent therein set forth. A waiver by eSoft of any right or
remedy hereunder on any one occasion shall not be construed as a bar to any
right or remedy which eSoft would otherwise have on any future occasion. No
failure to exercise nor any delay in exercising on the part of eSoft, any
right, power or privilege hereunder shall preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. The
rights and remedies herein provided are cumulative and may be exercised singly
or concurrently, and are not exclusive of any rights or remedies provided by
law.
11. WAIVERS, AMENDMENTS; APPLICABLE LAW. None of the terms or
provisions of this Pledge Agreement may be waived, altered, modified or amended
except by an instrument in writing, duly executed by the parties hereto. This
Agreement and all obligations of each Pledgor hereunder shall, together with
the rights and remedies of eSoft hereunder, inure to the benefit of eSoft and
its successors and assigns. This Pledge Agreement shall be governed by, and be
construed and interpreted in accordance with, the internal laws, not the laws
of conflicts, of the State of Colorado.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first written above.
PLEDGOR
/s/ Xxx Xxxxxxxxxxxxx
---------------------------------------------
Name: Xxx Xxxxxxxxxxxxx
ESOFT
ESOFT, INC.
By: /s/ Xxxxxxx Xxxx
------------------------------------------
Name: Xxxxxxx Xxxx
Title: President and Chief Executive Officer
3
4
SCHEDULE A
PLEDGED INTEREST
5
-----------------------------------------------------------------------------------------------------
CERTIFICATE REGISTERED HOLDER SECURITY NUMBER OF SHARES
NUMBER
-----------------------------------------------------------------------------------------------------
XXX XXXXXXXXXXXXX COMMON STOCK, NO
PAR VALUE
-----------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------
TOTAL: 344,635
-----------------------------------------------------------------------------------------------------
