COLLATERAL PLEDGE AGREEMENT
(Aviation Holdings International, Inc. Common Stock)
This Collateral Pledge Agreement (the "Agreement") is made this 15th
day of October, 1998 by and between Aviation Holdings Group, Inc., a Delaware
Corporation with its principal executive office at 00000 Xxxxxxxxx 00xx Xxxxxx,
Xxxxx, Xxxxxxx 00000 ("Pledgor"), and Xxxxx Xxxxxxx, an individual and the Xxxx
X. Xxxxxx Trust, Xxxx X. Xxxxxx Trustee, both having a mailing address at c/x
Xxxxxxx, Xxxxxx & Xxxxxxxx, Ltd., 000 Xxxxx Xxxxxxxx Xxxxxx, Xxxxx 0000,
Xxxxxxx, XX 00000 (collectively, "Pledgee").
BACKGROUND
Pursuant to a certain Promissory Note dated October 15, 1998 executed
by Pledgor and in favor of Pledgee (the "Note"), Pledgee has loaned an aggregate
of $250,000 to Pledgor. Pledgor's obligations to Pledgee, as evidenced by the
Note are hereinafter referred to as the "Obligations".
As collateral security for the Obligations, Pledgor is required to
pledge to Pledgee all of Pledgor's right, title and interest in and to the
Pledged Securities (as hereinafter defined).
NOW, THEREFORE, in consideration of the foregoing, and intending to be
legally bound hereby, and for good, valuable and sufficient consideration, the
receipt of which is hereby acknowledged, Pledgor agrees as follows:
1. Certain Definitions.
(a) The term "Pledged Securities" shall mean 51% of the issued and
outstanding shares of Common Stock of Aviation Holdings International, Inc.
("AHI"), a Florida corporation, provided that, if AHI issues new shares of
Common Stock prior to satisfaction of the Obligations, then the number of shares
of Common Stock that are Pledged Securities shall be increased so that the
Pledged Securities equal 51% of the issued and outstanding shares of AHI Common
Stock.
(b) The term "Event of Default" shall mean a default or an event of
default under this Agreement or the Note.
2. Pledge.
(a) As security for the prompt satisfaction of the Obligations,
Pledgor hereby pledges, hypothecates, agrees to deliver and set over to Pledgee
within twenty (20) days of the date hereof, the Pledged Securities and grants to
Pledgee a lien on and security interest in and to the Pledged Securities.
(b) Prior to the occurrence of an Event of Default, Pledgor shall be
entitled to all voting rights with respect to the Pledged Securities and, for
that purpose, Pledgee shall execute and deliver to Pledgor all necessary
proxies. Immediately and without further notice, upon the occurrence of an Event
of Default, whether or not the Pledged Securities shall have been registered in
the name of Pledgee or its nominee, Pledgee or its nominee shall have the right
to exercise all voting rights as to all of the Pledged Securities and all other
corporate rights and all conversion, exchange, subscription or other rights,
privileges or options pertaining thereto as if Pledgee or its nominee were the
absolute owner thereof including, without limitation, the right to exchange any
or all of the Pledged Securities upon the merger, consolidation, reorganization,
recapitalization or other readjustment of Pledgee thereof, or upon the exercise
by Pledgee of any right, privilege, or option pertaining to any of the Pledged
Securities and, in connection therewith, to deliver any of the Pledged
Securities to any committee, depository, transfer agent, registrar or other
designated agency upon such terms and conditions as it may determine, all
without liability except to account for property actually received by Pledgee;
but Pledgee shall have no duty to exercise any of the aforesaid rights or
privileges, or may delay in so doing.
(c) Prior to the occurrence of an Event of Default, Pledgor shall be
entitled to any and all regular cash dividends declared by the Pledgee to be
paid on account of the Pledged Securities; provided, however, that immediately
and without further notice, upon the occurrence of an Event of Default, whether
or not the Pledged Securities shall have been registered in the name of Pledgee
or its nominees, Pledgee or its nominee shall have the right to any and all
regular cash dividends paid on account of the Pledged Securities which shall be
delivered to Pledgee and may, at Pledgee's option, be applied on account of the
Obligations in such order and manner as Pledgee may elect.
(d) At any time following execution of this Agreement, if Pledgor
shall become entitled to receive or shall receive, in connection with any of the
Pledged Securities, any: (i) stock certificate, including, without limitation,
any certificate representing a stock dividend or in connection with any increase
or reduction of capital, reclassification, merger, consolidation, sale of
assets, combination of shares, stock split, spin-off or split-off; (ii) option,
warrant or right, whether as an addition to or in substitution or in exchange
for any of the Pledged Securities, or otherwise; or (iii) dividends or
distributions payable in property, including securities issued by an issuer
other than Pledgee; then, Pledgor shall accept the same as Pledgee's agent, in
express trust for Pledgee, and shall deliver the same forthwith to the Pledgee
in the exact form received with, as applicable, Pledgor's endorsement, or
appropriate stock powers duly executed in blank, (with signatures "bank
guaranteed") which the Pledgor hereby unconditionally agrees to make and/or
furnish, to be held by Pledgee, subject to the terms hereof, as part of the
Pledged Securities.
3. Remedies Upon an Event of Default.
Upon the occurrence of an Event of Default, Pledgee may without demand
of performance or other demand, advertisement, or notice of any kind (except the
notice specified below of time and place of public or private sale or other
disposition) to or upon the Pledgor or any other person (all of which are, to
the extent permitted by law, hereby expressly waived), forthwith realize upon
the Pledged Securities or any part thereof, and may forthwith, or agree to take
possession and title to the Pledged Securities, subject to Pledgor's right or
equity of redemption, which right or equity is hereby expressly waived and
released. Pledgee agrees to give at least ten (10) days written notice prior to
taking possession and title to the Pledged Securities pursuant to this Section
3, which notice Pledgor hereby deems commercially reasonable. If Pledgee takes
possession of the Pledged Securities pursuant to this Section e, then the
Obligations shall be deemed to be satisfied.
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4. Pledgor's Representations and Warranties. Pledgor represents and
warrants that:
(a) Pledgor has all requisite power to enter into this Pledge, to
pledge the Pledged Securities for the purposes described in Paragraph 2(a)
above, and to carry out the transactions contemplated by this Pledge;
(b) Pledgor is the legal and beneficial owner of the Pledged
Securities;
(c) The execution and delivery of this Pledge, and the performance
of its terms, will not violate or constitute a default under the terms of any
agreement, indenture or other instrument, license, judgment, decree, order or
regulation, applicable to Pledgor or any of its property; and
(d) Upon the execution of this Pledge and the delivery to Pledgee of
the shares of Pledged Securities now held of record by Pledgor, this Pledge
shall create a valid first lien upon and perfected security interest in the
Pledged Securities and the cash and noncash proceeds thereof, subject to no
prior lien or subordinate lien, or agreement purporting to grant to any third
party a security interest in the property or assets of Pledgor which would
include the Pledged Securities.
5. Pledgor's Covenants. Pledgor hereby covenants that, until all of the
Obligations have been satisfied in full:
(a) Pledgor will not sell, convey, or otherwise dispose of any of
the Pledged Securities or any interest therein, or create, incur, or permit to
exist any pledge, mortgage, lien, charge, encumbrance or any security interest
whatsoever in or with respect to any of the Pledged Securities or the proceeds
thereof, other than that created hereby; and
(b) Pledgor will, at Pledgor's own expense, defend (engaging counsel
acceptable to Pledgee) Pledgee's right, title, special property and security
interest in and to the Pledged Securities against the claims of any person,
firm, corporation or other entity.
6. Further Assurances. Pledgor shall at any time, and from time to
time, upon written request of Pledgee, execute and deliver such further
documents and do such further acts and things as Pledgee may reasonably request
to effect the purposes of this Pledge including, without limitation, delivering
to Pledgee, upon the occurrence of an Event of Default, irrevocable proxies with
respect to the Pledged Securities in form satisfactory to Pledgee. Until receipt
thereof, this Pledge shall constitute Pledgor's proxy to Pledgee or his nominee
to vote all shares of Pledged Securities then registered in Pledgor's name.
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7. Termination of Pledge. Upon the satisfaction in full of all
Obligations and the satisfaction of all additional costs and expenses of Pledgee
as provided herein, this Pledge shall terminate and Pledgee shall deliver to
Pledgor, the Pledged Securities or so much thereof as shall not have been sold
or otherwise applied pursuant to this Pledge. Furthermore, in the event that AHI
is permitted to enter into a Guaranty Agreement, Pledgor shall be entitled to
substitute a Guaranty Agreement for the obligations set forth in this Agreement.
8. Miscellaneous.
(a) Beyond the exercise of reasonable care to assure the safe
custody of the Pledged Securities while held hereunder, Pledgee shall have no
duty or liability to preserve rights pertaining thereto and shall be relieved of
all responsibility for the Pledged Securities upon surrendering the Pledged
Securities or tendering surrender of it to Pledgor.
(b) The rights and remedies provided herein and in the Note and any
related instruments, agreements and documents are cumulative and are in addition
to and not exclusive of any rights or remedies provided by law, including,
without limitation, the rights and remedies of a secured party under the UCC.
(c) The provisions of this Pledge are severable, and if any clause
or provision shall be held invalid or unenforceable in whole or in part in any
jurisdiction and shall not in any manner affect such clause or provision in any
other jurisdiction or any other clause or provision in this Pledge in any
jurisdiction.
9. Notices. All notices and other communications hereunder shall be in
writing and shall be deemed to have been validly given, as of the date
delivered, if delivered personally, three days after being sent by registered or
certified mail (postage prepaid, return receipt requested), one day after
dispatch by recognized overnight courier (provided delivery is confirmed by the
courier) and upon transmission by telecopy, confirmed received, to the parties
at the following addresses (or at such other address for a party as shall be
specified by like change of address):
(a) If to Pledgee:
Xxxxx Xxxxxxx
c/x Xxxxxxx, Xxxxxx & Xxxxxxxx, Ltd.
000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, XX 00000
Xxxx X. Xxxxxx, Trustee of the Xxxx X. Xxxxxx Trust
c/x Xxxxxxx, Xxxxxx & Xxxxxxxx, Ltd.
000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, XX 00000
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(a) If to Pledgor:
Aviation Holdings Group, Inc.
00000 Xxxxxxxxx 00xx Xxxxxx
Xxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx, President
10. Governing Law. This Pledge shall be construed in accordance with
the substantive laws of the State of Delaware without regard to principles of
conflicts of laws and is intended to take effect as an instrument under seal.
11. Jurisdiction. The parties agree to the exclusive jurisdiction of
the Federal and State courts located in the State of Delaware in connection with
any matter arising hereunder, including the collection and enforcement hereof.
IN WITNESS WHEREOF, Pledgor has executed this Collateral Pledge
Agreement as of the day and year first above written.
PLEDGOR: AVIATION HOLDINGS GROUP, INC.
/s/ Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx, President
PLEDGEE:
/s/ Xxxxx Xxxxxxx
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Xxxxx Xxxxxxx
PLEDGEE:
/s/ Xxxx X. Xxxxxx
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Xxxx X. Xxxxxx, Trustee of the
Xxxx X. Xxxxxx Trust
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