EXHIBIT 10.42
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PLEDGE AND SECURITY AGREEMENT
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THIS PLEDGE AND SECURITY AGREEMENT, dated as of February ___, 2001, by
and between EUROPEAN MICRO HOLDINGS, INC., a Nevada corporation ("PLEDGOR"),
XXXX X. XXXXXXXXX and XXXX X. XXXXXXXXX (collectively, the "PLEDGEES").
WHEREAS, each Pledgee is the holder of a Promissory Note (the "Note") of
even date herewith made by Pledgor in the original principal amount of $823,712,
subject to the adjustments set forth therein;
WHEREAS, each Pledgee desires to obtain a security interest in certain
property owned by Pledgor;
WHEREAS, each Pledgee acknowledges that Pledgor has previously pledged and
granted security interests in the Pledged Collateral as defined herein to
SouthTrust Bank, an Alabama banking corporation ("SOUTHTRUST BANK"); and
WHEREAS, as an inducement to Pledgees, Pledgor has agreed to grant to
Pledgees a security interest in and to the Pledged Collateral (as hereinafter
defined).
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, and for other good and valuable consideration, the adequacy
and receipt of which are hereby acknowledged, the parties hereto hereby agree as
follows:
ARTICLE 1.
DEFINITIONS AND INTERPRETATIONS
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Section 1.1. INTERPRETATIONS.
Nothing herein expressed or implied is intended or shall be construed to
confer upon any person other than Pledgees any right, remedy or claim under or
by reason hereof.
Section 1.2. OBLIGATIONS SECURED.
The obligations secured hereby are the obligations of Pledgor to Pledgees
under Notes issued by Pledgor to each Pledgee, in the maximum principal amount
thereof outstanding from time to time, and any additional amounts payable by or
chargeable to Pledgor thereunder or hereunder (collectively, the "OBLIGATIONS").
ARTICLE 2.
PLEDGE AND ADMINISTRATION OF PLEDGED COLLATERAL
Section 2.1. PLEDGED COLLATERAL.
(a) Pledgor hereby pledges to each Pledgee, and creates in each
Pledgee for its benefit, subject to the rights of SouthTrust Bank in the Pledged
Collateral (as defined herein), a security interest, for such time as the
Obligations shall remain outstanding, in and to all of Pledgor's right, title
and interest in and to (collectively, the "PLEDGED COLLATERAL"):
(i) the shares of common stock of American Micro Computer
Center, Inc., a Florida corporation, (the "PLEDGED SECURITIES"), as more
particularly described on Exhibit "1" hereto; and
(ii) all products and proceeds from the Pledged Property.
The security interest granted by Pledgor to each Pledgee in
and to the Pledged Collateral is subject to the rights of SouthTrust Bank in
the Pledged Collateral.
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(b) Simultaneously with the execution and delivery of this
Agreement, Pledgor shall make, execute, acknowledge and deliver to each Pledgee
such documents and instruments, including, without limitation, financing
statements, certificates, affidavits and forms as may, in each Pledgee's
reasonable judgment, be necessary to effectuate, complete or perfect, or to
continue and preserve, the security interest of each Pledgee in the Pledged
Collateral, and each Pledgee shall hold such documents and instruments as a
secured party, subject to the terms and conditions contained herein.
Section 2.2. RIGHTS; INTERESTS; ETC.
(a) So long as no Event of Default (as hereinafter
defined) shall have occurred and be continuing:
(i) Pledgor shall be entitled to exercise any and all rights
pertaining to the Pledged Collateral or any part thereof for any purpose not
inconsistent with the terms hereof; and
(ii) Pledgor shall be entitled to receive and retain any and
all payments paid or made in respect of the Pledged Collateral.
(b) Upon the occurrence and during the continuance of an Event
in Default:
(i) Subject to the rights of SouthTrust in the Pledged
Collateral and subject to Section 2.2(b)(iii) hereof, all rights of Pledgor to
exercise the rights which it would otherwise be entitled to exercise pursuant to
Section 2.2(a)(i) hereof and to receive payments which it would otherwise be
authorized to receive and retain pursuant to Section 2.2(a)(ii) hereof shall be
suspended, and all such rights shall thereupon become vested in each Pledgee who
shall thereupon have the sole right to exercise such rights and to receive and
hold as Pledged Collateral such payments; PROVIDED, HOWEVER, that if either
Pledgee shall become entitled and shall elect to exercise its right to realize
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on the Pledged Collateral pursuant to Article V hereof, then all cash sums
received by either Pledgee, or held by Pledgor for the benefit of Pledgees and
paid over pursuant to Section 2.2(b)(ii) hereof, shall be applied against any
outstanding Obligations.
(ii) Subject to the rights of SouthTrust Bank in the Pledged
Collateral, all interest, dividends, income and other payments and distributions
which are received by Pledgor contrary to the provisions of Section 2.3(b)(i)
hereof shall be received in trust for the benefit of Pledgees, shall be
segregated from other property of Pledgor and shall be forthwith paid over to
Pledgees;
(iii) notwithstanding anything contained hereto to the
contrary, Pledgor shall retain any voting rights it may have with respect to any
of the Pledged Securities until such time as Pledgees are entitled and elects to
exercise its rights to realize on the Pledged Securities pursuant to Article V
hereof.
(c) Each of the following events shall constitute a default under
this Agreement (each an "EVENT OF DEFAULT"):
(i) any default, whether in whole or in part, shall occur in
the payment to Pledgees of principal, interest or other item comprising the
Obligations as and when due, which default shall continue for a period of thirty
(30) days after the receipt of written notice thereof by Pledgor;
(ii) any default, whether in whole or in part, shall occur in
the due observance or performance of any other covenant, term or provision to be
performed under this Agreement by Pledgor, or the Note, and all exhibits thereto
which default is not described in any other subsection of this Section, and such
default shall continue for a period of thirty (30) days after the receipt of
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written notice thereof by Pledgor; PROVIDED, HOWEVER, that if Pledgor shall have
commenced to cure such default within such thirty (30) day period and shall
proceed continuously in good faith and with due diligence to cure such default,
then such period instead shall be sixty (60) days;
(iii) Pledgor shall: (1) make a general assignment for the
benefit of its creditors; (2) apply for or consent to the appointment of a
receiver, trustee, assignee, custodian, sequestrator, liquidator or similar
official for itself or any of its assets and properties; (3) commence a
voluntary case for relief as a debtor under the United States Bankruptcy Code;
(4) file with or otherwise submit to any governmental authority any petition,
answer or other document seeking: (A) reorganization, (B) an arrangement with
creditors or (C) to take advantage of any other present or future applicable law
respecting bankruptcy, reorganization, insolvency, readjustment of debts, relief
of debtors, dissolution or liquidation; (5) file or otherwise submit any answer
or other document admitting or failing to contest the material allegations of a
petition or other document filed or otherwise submitted against it in any
proceeding under any such applicable law, or (6) be adjudicated a bankrupt or
insolvent by a court of competent jurisdiction; or
(iv) any case, proceeding or other action shall be commenced
against Pledgor for the purpose of effecting, or an order, judgment or decree
shall be entered by any court of competent jurisdiction approving (in whole or
in part) anything specified in Section 2.2(c)(iii) hereof, or any receiver,
trustee, assignee, custodian, sequestrator, liquidator or other official shall
be appointed with respect to Pledgor, or shall be appointed to take or shall
otherwise acquire possession or control of all or a substantial part of the
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assets and properties of Pledgor, and any of the foregoing shall continue
unstayed and in effect for any period of ninety (90) days.
ARTICLE 3.
ATTORNEY-IN-FACT; PERFORMANCE
Section 3.1. PLEDGEES APPOINTED ATTORNEY-IN-FACT.
Upon the occurrence of an Event of Default and only as long as such
Event of Default shall be continuing, and subject to the rights of SouthTrust
Bank in the Pledged Collateral, Pledgor hereby appoints each Pledgee as
Pledgor's attorney-in-fact, with full authority in the place and stead of
Pledgor and in the name of Pledgor or otherwise, from time to time in either
Pledgee's discretion to take any action and to execute any instrument which
either Pledgee may reasonably deem necessary to accomplish the purposes of this
Agreement, including, without limitation, to receive and collect all instruments
made payable to Pledgor representing any payments in respect of the Pledged
Collateral or any part thereof and to give full discharge for the same. Each
Pledgee may demand, collect, receipt for, settle, compromise, adjust, xxx for,
foreclose, or realize on the Pledged Collateral as and when either Pledgee may
determine. To facilitate collection, and subject to the rights of SouthTrust
Bank in the Pledged Collateral, either Pledgee may notify account debtors and
obligors on any Pledged Collateral to make payments directly to Pledgees.
Section 3.2. PLEDGEES MAY PERFORM.
If Pledgor fails to perform any agreement contained herein, either
Pledgee, at its option, may itself perform, or cause performance of, such
agreement, and the reasonable expenses of Pledgees incurred in connection
therewith shall be payable by Pledgor under Section 8.3.
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ARTICLE 4.
REPRESENTATIONS AND WARRANTIES
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Section 4.1. AUTHORIZATION; ENFORCEABILITY.
Each of the parties hereto represents and warrants that it has taken all
action necessary to authorize the execution, delivery and performance of this
Agreement and the transactions contemplated hereby; and upon execution and
delivery, this Agreement shall constitute a valid and binding obligation of the
respective party, subject to applicable bankruptcy, insolvency, reorganization,
moratorium and similar laws affecting creditors' rights or by the principles
governing the availability of equitable remedies.
Section 4.2. OWNERSHIP OF PLEDGED COLLATERAL.
Pledgor warrants and represents that Pledgor is the legal and beneficial
owner of the Pledged Collateral.
Section 4.3. DUE ORGANIZATION.
Pledgor warrants and represents that it: (i) is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Nevada; (ii) has the corporate power and authority necessary to entitle it to
use its corporate name and to own, lease or otherwise hold its properties and
assets and to carry on its business as presently conducted or proposed to be
conducted; and (iii) is duly qualified and in good standing to do business as
presently conducted or proposed to be conducted.
ARTICLE 5.
DEFAULT; REMEDIES; SUBSTITUTE COLLATERAL
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Section 5.1. DEFAULT AND REMEDIES.
(a) If an Event of Default described in Section 2.2(c)(i) and (ii)
occurs and is continuing for the period set forth therein, then in each such
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case either Pledgee may declare the principal amount to be due and payable
immediately, by a notice in writing to Pledgor, and upon any such declaration,
such principal amount shall become immediately due and payable. If an Event of
Default described in Sections 2.2(c)(iii) or (iv) occurs and is continuing for
the period set forth therein, then the principal amount of the Note shall
automatically become immediately due and payable without declaration or other
act on the part of either Pledgee.
(b) Upon the occurrence of an Event of Default, either Pledgee
shall, subject to the rights of SouthTrust Bank in the Pledged Collateral, (i)
be entitled to receive all distributions with respect to the Pledged Collateral,
(ii) to cause the Pledged Collateral to be transferred into the name of either
Pledgee or its nominee, (iii) to dispose of the Pledged Collateral, and (iv) to
realize upon any and all rights in the Pledged Collateral then held by Pledgees.
Section 5.2. METHOD OF REALIZING UPON THE PLEDGED COLLATERAL: OTHER
REMEDIES.
Upon the occurrence of an Event of Default, in addition to any rights and
remedies available at law or in equity, and subject to the rights of SouthTrust
in the Pledged Collateral, the following provisions shall govern Pledgees' right
to realize upon the Pledged Collateral;
(a) Any item of the Pledged Collateral may be sold for cash or other
value in any number of lots at brokers board, public auction or private sale and
may be sold without demand, advertisement or notice (except that Pledgees shall
give Pledgor ten (10) business days' prior written notice of the time and place
or of the time after which a private sale may be made (the "SALE NOTICE")),
which notice shall in any event be commercially reasonable. At any sale or sales
of the Pledged Collateral, Pledgor may bid for and purchase the whole or any
part of the Pledged Collateral and, upon compliance with the terms of such sale,
may hold, exploit and dispose of the same without further accountability to
Pledgees. Pledgor will execute and deliver, or cause to be executed and
delivered, such instruments, documents, assignments, waivers, certificates, and
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affidavits and supply or cause to be supplied such further information and take
such further action as Pledgees reasonably shall require in connection with any
such sale.
(b) Subject to the rights of SouthTrust Bank in the Pledged
Collateral, any cash being held by either Pledgee as Pledged Collateral and all
cash proceeds received by either Pledgee in respect of, sale of, collection
from, or other realization upon all or any part of the Pledged Collateral shall
be applied as follows:
(i) to the payment of all amounts due Pledgees for the
expenses reimbursable to it or them hereunder or owed to it pursuant to
Section 8.3 hereof;
(ii) to the payment of the amounts then due and unpaid for
principal of and interest on the Note.
(iii) the balance, if any, to the person or persons entitled
thereto, including, without limitation, Pledgor.
(c) Subject to the rights of SouthTrust Bank in the Pledged
Collateral, in addition to all of the rights and remedies which Pledgor and
Pledgees may have pursuant to this Agreement, Pledgor and Pledgees shall have
all of the rights and remedies provided by law, including, without limitation,
those under the Uniform Commercial Code.
(d)
(i) Subject to the rights of SouthTrust Bank in the Pledged
Collateral, if Pledgor fails to pay such amounts due upon the occurrence of an
Event of Default which is continuing, then either Pledgee may institute a
judicial proceeding for the collection of the sums so due and unpaid, may
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prosecute such proceeding to judgment or final decree and may enforce the same
against Pledgor and collect the monies adjudged or decreed to be payable in the
manner provided by law out of the property of Pledgor, wherever situated.
(ii) Pledgor agrees that it shall be liable for any reasonable
expenses incurred by either Pledgee in connection with enforcement, collection
and preservation of the Note, including, without limitation, reasonable legal
fees and expenses, and such amounts shall be deemed included under Section 8.3
hereof.
Section 5.3. PROOFS OF CLAIM.
In case of the pendency of any receivership, insolvency,
liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or
other judicial proceeding relating to Pledgor or the property of Pledgor or of
such other obligor or their creditors, each Pledgee (irrespective of whether the
principal of the Note shall then be due and payable as therein expressed or by
declaration or otherwise and irrespective of whether either Pledgee shall have
made any demand on Pledgor for the payment of overdue principal, if any, or
interest) shall, subject to the rights of SouthTrust Bank in the Pledged
Collateral, be entitled and empowered, by intervention in such proceeding or
otherwise:
(i) to file and prove a claim for the whole amount of
principal of the Note and interest owing and unpaid in respect of the Note and
to file such other papers or documents as may be necessary or advisable in order
to have the claims of either Pledgee (including any claim for the reasonable
legal fees and expenses and other expenses paid or incurred by either Pledgee
permitted hereunder and of either Pledgee allowed in such judicial proceeding),
and
(ii) subject to the rights of SouthTrust Bank in the Pledged
Collateral, to collect and receive any monies or other property payable or
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deliverable on any such claims and to distribute the same; and any custodian,
receiver, assignee, trustee, liquidator, sequestrator or other similar official
in any such judicial proceeding is hereby authorized by either Pledgee to make
such payments to Pledgees and, in the event that Pledgees shall consent to the
making of such payments directed to Pledgees, to pay to Pledgees any amounts for
expenses due it hereunder.
Section 5.4. DUTIES REGARDING PLEDGED COLLATERAL.
Neither Pledgee shall have a duty as to the collection or protection of
the Pledged Collateral or any income thereon or as to the preservation of any
rights pertaining thereto, beyond the safe custody and reasonable care of any of
the Pledged Collateral actually in Pledgees' possession.
ARTICLE 6.
AFFIRMATIVE COVENANTS
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Pledgor covenants and agrees that, from the date hereof and until the
Obligations have been fully paid and satisfied, unless Pledgees shall consent
otherwise in writing (as provided in Section 8.4 hereof):
Section 6.1. EXISTENCE, PROPERTIES, ETC.
(a) Pledgor shall do, or cause to be done, all things, or proceed
with due diligence with any actions or courses of action, that may be reasonably
necessary (i) to maintain its due organization, valid existence and good
standing under the laws of its state of incorporation, and (ii) to preserve and
keep in full force and effect all qualifications, licenses and registrations in
those jurisdictions in which the failure to do so could have a material adverse
effect; and (b) Pledgor shall not do, or cause to be done, any act impairing its
corporate power or authority (i) to carry on its business as now conducted, and
(ii) to execute or deliver this Agreement or any other document delivered in
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connection herewith (which other loan instruments collectively shall be referred
to as the "LOAN INSTRUMENTS") to which it is or will be a party, or perform any
of its obligations hereunder or thereunder.
Section 6.2. DEFENSE OF COLLATERAL, ETC.
Pledgor shall defend and enforce its right, title and interest in and to
any part of the Pledged Collateral.
ARTICLE 7.
NEGATIVE COVENANTS
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Pledgor covenants and agrees that, from the date hereof until the Obligations
have been fully paid and satisfied, Pledgor shall not, unless Pledgees shall
consent otherwise in writing incur any liens incurred in respect of indebtedness
on the Pledged Collateral which are superior to the Obligations.
ARTICLE 8.
MISCELLANEOUS
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Section 8.1. NOTICES.
All notices or other communications required or permitted to be given
pursuant to this Agreement shall be in writing and shall be considered as duly
given on: (a) the date of delivery, if delivered in person, by nationally
recognized overnight delivery service or (b) five (5) days after mailing if
mailed from within the continental United States by certified mail, return
receipt requested to the party entitled to receive the same, if to Pledgor,
European Micro Holdings, Inc., 000 Xxxxx Xxxxxx Xxxxx, Xxxxxxxxx, Xxxxxxxxx
00000, Attention: Xxx Xxxx, Chief Financial Officer, with a copy to Xxxxxxx X.
Xxxxxx, Esq., Xxxxxxxxxxx & Xxxxxxxx LLP, 000 X. Xxxxxxxx Xxxxxxxxx, 00xx Xxxxx,
Xxxxx, Xxxxxxx 00000 and if to Pledgees, at the addresses shown on the books of
Pledgor. Any party may change its address by giving notice to the other party
stating its new address. Commencing on the tenth (10th) day after the giving of
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such notice, such newly designated address shall be such party's address for the
purpose of all notices or other communications required or permitted to be given
pursuant to this Agreement.
Section 8.2. SEVERABILITY.
If any provision of this Agreement shall be held invalid or unenforceable,
such invalidity or unenforceability shall attach only to such provision and
shall not in any manner affect or render invalid or unenforceable any other
severable provision of this Agreement, and this Agreement shall be carried out
as if any such invalid or unenforceable provision were not contained herein.
Section 8.3. EXPENSES.
In the event of an Event of Default, Pledgor will pay to Pledgees the
amount of any and all reasonable expenses, including the reasonable fees and
expenses of its counsel, which Pledgees or the Holder may incur in connection
with: (i) the custody or preservation of, or the sale, collection from, or other
realization upon, any of the Pledged Collateral; (ii) the exercise or
enforcement of any of the rights of Pledgees hereunder or (iii) the failure by
Pledgor to perform or observe any of the provisions hereof.
Section 8.4. WAIVERS, AMENDMENTS, ETC.
Pledgees' delay or failure at any time or times hereafter to require
strict performance by Pledgor of any undertakings, agreements or covenants shall
not waiver, affect, or diminish any right of either Pledgee under this Agreement
to demand strict compliance and performance herewith. Any waiver by either
Pledgee of any Event of Default shall not waive or affect any other Event of
Default, whether such Event of Default is prior or subsequent thereto and
whether of the same or a different type. None of the undertakings, agreements
and covenants of Pledgor contained in this Agreement, and no Event of Default,
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shall be deemed to have been waived by either Pledgee, nor may this Agreement be
amended, changed or modified, unless such waiver, amendment, change or
modification is evidenced by an instrument in writing specifying such waiver,
amendment, change or modification and signed by the Holder.
Section 8.5. CONTINUING SECURITY INTEREST.
This Agreement shall create a continuing security interest in the Pledged
Collateral and shall: (i) remain in full force and effect until payment in full
of the Obligations; and (ii) be binding upon Pledgor and its successors and
(iii) inure to the benefit of Pledgees and their successors and permitted
assigns. Upon the payment or satisfaction in full of the Obligations, Pledgor
shall be entitled to the return, at its expense, of such of the Pledged
Collateral as shall not have been sold in accordance with Section 5.2 hereof or
otherwise applied pursuant to the terms hereof.
Section 8.6. APPLICABLE LAW: JURISDICTION.
This Agreement and the rights of the parties hereunder shall be governed
by and construed in accordance with the laws of the State of Florida, without
regard to its conflicts of law principles. Pledgees and Pledgor hereto: (i)
agree that any legal suit, action or proceeding arising out of or relating to
this Agreement shall be instituted only in a federal or state court in
Miami-Dade County, Florida; (ii) waive any objection which they may now or
hereafter have to the laying of the venue of any such suit, action or
proceeding; and (iii) irrevocably submit to the jurisdiction of any federal or
state court in Miami-Dade County, Florida, in any such suit, action or
proceeding. Pledgees and Pledgor hereto agree that the mailing of any process in
any suit, action or proceeding in accordance with the notice provisions of this
Agreement shall constitute personal service thereof.
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Section 8.7. ENTIRE AGREEMENT.
This Agreement constitutes the entire agreement among the parties and
supersedes any prior agreement or understanding among them with respect to the
subject matter hereof.
[Signature page to follow]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
PLEDGOR:
EUROPEAN MICRO HOLDINGS, INC.
By:_______________________________________
Name:_____________________________________
Title:____________________________________
PLEDGEES:
____________________________________
Xxxx X. Xxxxxxxxx
____________________________________
Xxxx X. Xxxxxxxxx
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EXHIBIT "1"
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PLEDGED PROPERTY
One hundred (100) shares of common stock, par value $0.01 per share, of
American Micro Computer Center, Inc. held by European Micro Holdings, Inc.
