Exhibit 10.7
STOCK PLEDGE AGREEMENT
THIS STOCK PLEDGE AGREEMENT (this "Agreement") is made and entered into
as of August 31, 2001, by and among METHOD PRODUCTS CORP., a Florida corporation
("Pledgor"), DANKA HOLDING COMPANY, a Delaware corporation ("Pledgee"), and
XXXXXXXX, LOOP & XXXXXXXX, LLP, a Florida limited liability partnership acting
as escrow agent ("Escrow Agent").
WHEREAS, Pledgor owns One Thousand (1,000) shares of common stock (the
"Pledged Shares") of Ameritrend Corporation, a Florida corporation
("Ameritrend"), representing one hundred percent (100%) of the capital stock of
Ameritrend;
WHEREAS, Pledgor is indebted to Pledgee in the amount of One Million
Dollars ($1,000,000) as evidenced by that certain promissory note from Pledgor
to Pledgee of even date herewith, a copy of which is attached hereto as Exhibit
A (the "Note") issued in connection with Pledgor's purchase of the Pledged
Shares pursuant to that certain Stock Purchase Agreement dated as of the date
hereof (the "Stock Purchase Agreement"); and
WHEREAS, as security for Pledgor's full and prompt payment of the Note,
Pledgor has agreed to pledge the Pledged Shares to Pledgee to be held by Escrow
Agent.
NOW, THEREFORE, in consideration of the foregoing, the terms and
conditions set forth herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
1. Recitals. The above recitals to this Agreement are hereby
incorporated into this Agreement as though fully restated herein.
2. Pledge. Pledgor hereby grants to Pledgee a security interest in the
Pledged Shares, represented by certificate number 6, which is duly endorsed in
blank and herewith delivered to Escrow Agent. Pledgor hereby appoints Escrow
Agent as its attorney to arrange for the transfer of the Pledged Shares on the
books of the issuing corporation to the name of Pledgee. Escrow Agent shall hold
the Pledged Shares on behalf of Pledgee as security for the repayment of the
indebtedness described above and shall not encumber or dispose of such shares,
except in accordance with the provisions of Section 7 of this Agreement.
3. Term. The shares pledged hereunder shall remain so pledged to
Pledgee until the indebtedness described above is repaid in full in accordance
with the terms of the Note.
4. Representations of Pledgor. Pledgor warrants and represents the
following:
(a) Pledgor owns the Pledged Shares free and clear of all
encumbrances.
(b) During the term of this pledge, Pledgor shall not dispose
of or further encumber the Pledged Shares without the written consent
of Pledgee.
5. Stock Adjustments, Warrants and Rights. In the event that Ameritrend
declares a stock dividend, reclassifies its stock or otherwise adjusts or
changes its capital structure during the term of this pledge, all new,
substituted and additional shares or other securities issued with respect to the
Pledged Shares shall be delivered by Pledgor to Escrow Agent, to be held by
Escrow Agent in the same manner as the shares originally pledged hereunder.
Further, if during the term of this pledge, subscription warrants or any other
rights or options shall be issued in connection with the Pledged Shares, such
warrants, rights and options shall be immediately assigned by Pledgor to Escrow
Agent, to be likewise held hereunder.
6. Return of Stock. Upon payment in full of the indebtedness in
accordance with the terms of the Note, Pledgor shall give written notice to the
Escrow Agent, who thereafter shall then give written notice to Pledgee.
Thereafter, Pledgee shall have fifteen (15) days in which to file with the
Escrow Agent any written objection to the release of the Pledged Shares to
Pledgor. If an objection is filed, then the Escrow Agent shall continue to hold
the Pledged Shares, subject to the agreement of Pledgor and Pledgee or to the
order of any court of competent jurisdiction. At the time an objection is filed,
the Escrow Agent may at its option interplead the Pledged Shares in any Florida
or federal court. The non-prevailing party in any such interpleader action shall
pay all reasonable attorneys' fees and costs of Escrow Agent in connection with
such action.
7. Default. If prior to Pledgor's full payment of all principal and
interest, if any, due on the Note, Pledgor defaults in the performance of any of
the terms of this Agreement, the Stock Purchase Agreement or the Note or
Ameritrend defaults in the performance of any of the terms of the Security
Agreement dated the date hereof by and between Ameritrend and Pledgee, Pledgee
may declare the unpaid balance of the Note immediately due and payable by giving
written notice of default to the Escrow Agent, who thereafter shall give written
notice to the Pledgor. Pledgor shall have thirty (30) days after receipt of such
notice from the Escrow Agent in which to either cure such default or to serve a
written objection upon the Escrow Agent. If the default is not cured to the
satisfaction of Pledgee and no written notice is served within such period, then
the Escrow Agent shall turn the Pledged Shares over to Pledgee, who shall
thereafter have the following options:
(a) Pledgee may sell the Pledged Shares. The shares may be
sold in public or private proceedings; no public advertisement of such
sale shall be necessary, but Pledgor shall be given ten (10) days'
notice of the time and place of a public sale or of the time after
which any private sale is to be made. Pledgee may sell the Pledged
Shares as a unit or individually, at one or more sales, and Pledgee may
continue a sale from day to day without furnishing further notice to
Pledgor. Pledgee may be a bidder at any sale and may purchase all or
part of the Pledged Shares to the extent permitted by law. The proceeds
of any sale shall be applied in the following manner:
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(1) first to any costs of collecting the indebtedness
(including reasonable attorneys' fees) and to any expenses
associated with selling the Pledged Shares; and
(2) second to the satisfaction of the indebtedness;
and
(3) third to the satisfaction of any subordinate
security interests, as required by law.
Pledgee shall thereafter account to Pledgor for any surplus proceeds,
which shall be paid over to Pledgor. Pledgor shall remain liable to
Pledgee for any deficiency.
(b) Pledgee may retain the Pledged Shares in full satisfaction
of Pledgor's obligations under the Note and under this Agreement. It is
provided, however, that Pledgee shall give Pledgor written notice of
such election; if Pledgor serves a written objection to such election
on Pledgee within thirty (30) days following the sending of such
notice, then Pledgee shall dispose of the Pledged Shares as provided in
subparagraph (a) above.
(c) Pledgee may exercise all rights and remedies afforded a
secured party under the provisions of the Uniform Commercial Code in
force in Florida as of the date of this Agreement.
If Pledgor files a timely objection, then the Escrow Agent shall continue to
hold the Pledged Shares, subject to the agreement of Pledgor and Pledgee or the
order of any court of competent jurisdiction. At any time that an objection is
filed, the Escrow Agent at its option may interplead the Pledged Shares in any
Florida or federal court. The non-prevailing party in any such interpleader
action shall pay all attorneys' fees and costs of Escrow Agent in connection
with such action.
8. Dividends and Voting Rights. So long as Pledgor is not in default
under the terms of this Agreement, Pledgor shall be entitled to exercise all
voting rights granted with respect to the Pledged Shares. Pledgor shall not
receive, and shall not permit Ameritrend to pay, any corporate dividends with
respect to the Pledged Shares unless and until the Note is paid in full;
provided, however, that Ameritrend may make corporate dividends to Pledgor if
and to the extent necessary to make payments on the Note.
9. Escrow Agent's Limited Duties. The Escrow Agent shall have only such
responsibility with respect to the Pledged Shares as is expressly provided for
in this Agreement. In the absence of gross negligence, bad faith or fraud with
respect to the performance of its obligations hereunder, the Escrow Agent shall
not incur liability because of any substantive insufficiency in the form or
manner of the execution by Pledgor or Pledgee of any notice or other instrument
required, permitted or contemplated by this Agreement, nor as a result of
relying on the validity of any such
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notice or written instrument. The powers conferred upon the Escrow Agent shall
not impose any duty upon the Escrow Agent to exercise any such powers, and the
Escrow Agent shall not be responsible to the Pledgor for any act or failure to
act hereunder, except for Escrow Agent's own gross negligence or willful
misconduct. The Escrow Agent's sole duty with respect to the custody and
safekeeping of the Pledged Shares shall be to deal with them in the same manner
as the Escrow Agent deals with similar property for its own account.
10. Compensation of Escrow Agent; Waiver of Conflict. The Escrow
Agent's fee shall be Ten and No/100 Dollars ($10.00), receipt of which is hereby
acknowledged. In the event of a conflict between Pledgor and Pledgee, the Escrow
Agent's additional fees incurred in connection with such conflict shall be borne
by the Pledgee, and Pledgor agrees and consents to the legal representation of
Pledgee by the Escrow Agent in any such dispute. Pledgor hereby waives any claim
of conflict of interest by the Escrow Agent in any dispute between the parties
relating to this Agreement.
11. Resignation of Escrow Agent. The Escrow Agent may resign upon ten
(10) days written notice to the other parties. If a successor Escrow Agent shall
not have been designated herein or appointed by Pledgor and Pledgee before the
effective date of such resignation, the Escrow Agent may petition any state or
federal court to appoint a successor.
12. Indemnification of Escrow Agent. Pledgee agrees to indemnify the
Escrow Agent from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind whatsoever which may at any time be imposed on, incurred by or
asserted against the Escrow Agent in any way relating to this Agreement, or the
transactions contemplated hereby or any action taken or omitted by the Escrow
Agent under or in connection with the foregoing (hereinafter, "claims") provided
that the Pledgee shall not be liable for the payment of any portion of any
claims resulting solely from the Escrow Agent's gross negligence or willful
misconduct.
13. Miscellaneous.
(a) This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective heirs, personal
representatives, successors and assigns.
(b) No failure or delay on the part of the Pledgee in
exercising any right or remedy shall constitute a waiver thereof, and
no single or partial waiver by Pledgee of any default shall operate to
waive any other default.
(c) All notices, demands, requests, and other communications
hereunder shall be in writing and shall be deemed to have been duly
given and shall be effective upon receipt
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if delivered by hand, or sent by certified or registered United States
mail, postage prepaid and return receipt requested, or by prepaid
overnight express service or via telephone facsimile (upon receipt by
the sender of a printed confirmation of such transmission). Notices
shall be sent to the parties at the following addresses (or at such
other address for a party as shall be specified by like notice;
provided that such notice shall be effective only upon receipt
thereof):
If to Pledgee:
Danka Holding Company
00000 Xxxxx Xxxxxx Xxxxx
Xx. Xxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxxx Xxxxxx, Esq.
Fax No. (000)000-0000
If to Pledgor:
Method Products Corp.
0000 XX 00xx Xxxxxx, Xxxxx 000X
Xxxxxxx Xxxxx, Xxxxxxx 00000
Attention: Xxxx Xxxxxxxxx, Chief Executive Officer
Fax No. (000) 000-0000
If to the Escrow Agent:
Xxxxxx X. Xxxxx, Esquire
Xxxxxxxx, Loop & Xxxxxxxx, LLP
000 X. Xxxxxxx Xxxx., Xxxxx 0000
Xxxxx, Xxxxxxx 00000
Fax No. (000)000-0000
or at any other address designated by a party in the manner
set forth in this section.
(d) This Agreement is made in Florida and shall be construed
according to and governed by the laws of that state.
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IN WITNESS WHEREOF, the parties hereto have executed or caused this
Agreement to be executed by and through their duly authorized representatives as
of the day and year first above written.
"PLEDGOR"
METHOD PRODUCTS CORP.
By: /s/ Xxxx Xxxxxxxxx
-----------------------------------------------
Xxxx Xxxxxxxxx, Its CEO
"PLEDGEE"
DANKA HOLDING COMPANY
By: /s/ Xxxx Xxxxx
----------------------------------------------
Xxxx Xxxxx, Its Authorized Representative
"ESCROW AGENT"
XXXXXXXX, LOOP & XXXXXXXX, LLP
By: /s/ Xxxxxx X. Xxxxx
----------------------------------------------
Xxxxxx X. Xxxxx, Its Partner
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