EXHIBIT 10.2
PLEDGE AND ESCROW AGREEMENT
THIS PLEDGE AND ESCROW AGREEMENT (this "Agreement") is made
and entered into and is effective for all purposes and in all respects as of the
31st day of October, 2002, by and between (i) ▇▇▇▇▇▇▇▇.▇▇▇, Inc., a Delaware
Corporation ("Pledgor"), (ii) BrandPartners Group, Inc., a Delaware corporation
(the "Pledgee"), and (iii) LandAmerica Financial Group, Inc., a Virginia
corporation (the "Escrow Agent").
WHEREAS, pursuant to that certain Stock Redemption Agreement, dated as
of even date herewith, between Pledgor and Pledgee (the "Stock Redemption
Agreement"), Pledgor redeemed from Pledgee 7,450,000 shares of the Common Stock
of the Company (the "Redeemed Stock");
WHEREAS, pursuant to the Stock Redemption Agreement, Pledgor issued a
Promissory Note, dated as of even date herewith, in the principal amount of
$1,550,000 (the "Note") to Pledgee as partial payment for the Redeemed Stock;
WHEREAS, pursuant to the Stock Redemption Agreement, Pledgor has agreed
to pledge 5,774,023 shares of the Redeemed Stock (the "Pledged Stock") to secure
payment of the Note; and
WHEREAS, Pledgor and Pledgee desire to have the Pledged Shares
delivered to the Escrow Agent to be held by Escrow Agent to secure repayment of
the Note, in accordance with the terms of this Agreement.
NOW, THEREFORE, in consideration of the foregoing, of the mutual
promises herein contained and of other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby covenant, warrant and represent as follows:
1. Recitals. The foregoing recitals are hereby incorporated herein and,
by this reference, made a part hereof.
2. Pledge; Creation of Escrow; Appointment of Escrow Agent. As
collateral security for the payment and performance of the obligations of
Pledgor under the Note, Pledgor hereby grants to Pledgee a security interest in
the Pledged Stock and a security interest in all other shares of stock or other
securities received or receivable in respect of such Pledged Stock and any
proceeds, substitutions or replacements for the Pledged Stock or additional
shares issued to Escrow Agent or Pledgee pursuant to Section 4 hereof
(collectively, the "Collateral"). The Pledgor and Pledgee hereby appoint Escrow
Agent as their agent to hold the Collateral and, in pursuance thereof, Pledgor
hereby delivers to the Escrow Agent the certificate representing the Pledged
Stock. The Escrow Agent hereby acknowledges receipt of the certificate
representing the Pledged Stock and agrees to comply with the provisions of this
Agreement.
-1-
3. Filing. Pledgor will, at its expense, execute, deliver, file and
record (in such manner and form as Pledgee may reasonably require), or permit
Pledgee to file and record, any financing statements, continuation statements,
specific assignment or other instruments that may be necessary or desirable in
order to create, preserve, perfect or validate Pledgee's security interest in
the Collateral or to enable Pledgee to exercise and enforce its rights
hereunder.
4. Events of Default. Pledgor shall be in default under this Agreement
upon the happening of any of the following events or conditions (being
hereinafter individually referred to as an "Event of Default"): (a) the
occurrence of any event of default under the Note; (b) any default by Pledgor in
the performance of any provision under this Agreement or the Stock Redemption
Agreement, and the continuation of such default for a period of ten (10) days
after Pledgee gives Pledgor written notice of such default; (c) the sale or
transfer of all or substantially all of the assets of the Pledgor prior to the
full satisfaction by the Pledgor of all amounts due under the Note; or (d) the
issuance of shares of capital stock of the Pledgor after the date hereof (and
prior to the satisfaction by the Pledgor of all amounts due under the Note);
provided, that the limitation in this Section 4(d) hereof shall not apply to the
issuance of additional shares of capital stock by the Pledgor to one or more
individuals or entities purchasing shares of capital stock from the Pledgor (the
"Additional Shares"), if as a part of such issuance, (i) the Pledgor reserves a
sufficient number of shares of capital stock of the Pledgor (and includes such
shares as part of the Pledged Shares) such that the aggregate percentage of
stock ownership in the Pledgor represented by the Pledged Shares after issuance
of the Additional Shares is equal to the aggregate percentage of stock ownership
in the Pledgor represented by the Pledged Shares prior to the issuance of the
Additional Shares and (ii) the proceeds received by the Pledgor from the
issuance of such Additional Shares are used to pay the Note within three (3)
business days of the issuance of such Additional Shares.
5. Remedies Upon Default. Upon the occurrence of an Event of Default,
Pledgee may, at its option, declare all of Pledgor's obligations under the Note
immediately due and payable and may exercise all of its rights and remedies
under this Agreement against Pledgor with respect to the Collateral and all of
the rights and remedies of a secured party under the Uniform Commercial Code in
force in the applicable jurisdiction as of the date of this Agreement and any
other remedies available at law or equity.
6. Expenses. Pledgor shall reimburse Pledgee for all reasonable
out-of-pocket expenses, including the reasonable fees and disbursements of its
counsel, which Pledgee incurs after an Event of Default in connection with (i)
the collection, sale or other disposition of any of the Collateral, (ii) the
exercise by Pledgee of any of the powers conferred upon it hereunder or (iii)
any default on Pledgor's part hereunder.
7. Terms of Escrow.
(a) The Escrow Agent shall release the Collateral as follows:
(i) Except if the Escrow Agent first receives a copy
of a "Default Notice" (as such term is defined in Section 7(a)(ii) hereof) from
Pledgee to Pledgor pursuant to Section 7(a)(ii) hereof, the Escrow Agent shall
deliver the Collateral to the Pledgor five (5) business days after Pledgor has
given written notice to Pledgee and Escrow Agent that the Note has been
satisfied in full; provided, however, that if on or before such fifth (5th)
business day, the Escrow Agent shall receive written notice from Pledgee to
withhold release of the Collateral
-2-
which notice shall state that Pledgor, after taking into account all amounts due
under the Note which have been offset upon the mutual agreement of the Pledgor
and Pledgee and/or paid into escrow by Pledgor pursuant to Section 12 of the
Note and Section 6.3 of the Stock Redemption Agreement, has not satisfied the
Note in full, the Escrow Agent shall not deliver the Collateral to Pledgor until
the controversy with respect to satisfaction of the Note shall have been settled
either by a written agreement between the Pledgor and the Pledgee or by a final
decision of an arbitrator pursuant to the arbitration procedure set forth in
Section 8.11 of the Stock Redemption Agreement.
(ii) In the event that the Escrow Agent shall have
received a written request from Pledgee for release of the Collateral, which
written request shall state that, after taking into account all amounts due
under the Note which have been offset upon the mutual agreement of the Pledgor
and Pledgee or paid into escrow by Pledgor pursuant to Section 12 of the Note
and Section 6.3 of the Stock Redemption Agreement, the Pledgor has failed to
satisfy the Note in full and such failure has continued for a period of five (5)
business days after Pledgee has sent written notice to Pledgor (with a copy to
Escrow Agent) of such failure to satisfy the Note (the "Default Notice"), then,
on the fifth (5th) business day after such written request from Pledgee, the
Escrow Agent shall deliver the Collateral to Pledgee; provided, however, if on
or before such fifth (5th) business day, the Escrow Agent shall receive written
notice from Pledgor to withhold release of the Collateral which notice shall
state that the Note has been satisfied in full, then the Escrow Agent shall not
deliver the Collateral to Pledgee until the controversy with respect thereto
shall have been settled either by a written agreement between the Pledgor and
Pledgee or by a final decision of an arbitrator pursuant to the arbitration
procedure set forth in Section 8.11 of the Stock Redemption Agreement.
(iii) Any written notice sent to the Escrow Agent by
the Pledgee under Section 7(a)(i) above or by the Pledgor under Section 7(a)(ii)
above which objects to release of the Collateral shall contain an affidavit,
signed by the party so objecting, which shall state, in the case of an objection
by the Pledgee, that after taking into account all amounts offset upon the
mutual agreement of the Pledgor and Pledgee under the Note by Pledgor or paid
into escrow by Pledgor pursuant to Section 12 of the Note and Section 6.3 of the
Stock Redemption Agreement, Pledgor has failed to satisfy the note in full, or
in the case of an objection by Pledgor, that, after taking into account all
amounts due under the Note which have been offset upon the mutual agreement of
the Pledgor and Pledgee or paid into escrow by Pledgor pursuant to Section 12 of
the Note and Section 6.3 of the Stock Redemption Agreement, the Note has been
satisfied in full.
(b) The Pledgor shall pay all reasonable fees and charges of
the Escrow Agent in connection with the administration of the provisions of this
Agreement.
(c) The acceptance by the Escrow Agent of its duties under
this Agreement is subject to the following terms and conditions, which the
parties to this Agreement hereby agree shall govern and control with respect to
the rights, duties and liabilities of the Escrow Agent:
(i) The Escrow Agent shall be protected in acting
upon any written notice, request, waiver, consent, receipt, or other document
furnished to it in accordance with the terms of this Agreement, not only as to
its due execution and the validity and effectiveness of its provisions, but also
as to the truth and acceptability of any information therein contained, which in
good faith it believes to be genuine.
-3-
(ii) The Escrow Agent shall not be liable for any
error of judgment, or for any act done or step taken or omitted by it in good
faith, or for any mistake of fact or law, or for anything which it may do or
refrain from doing in connection herewith, except for its own gross negligence
or willful misconduct.
(iii) The Escrow Agent shall have no duties except
those which are expressly set forth herein, and it shall not be bound by the
provisions of any other document or agreement.
(iv) The Escrow Agent may at any time resign
hereunder by giving written notice of its resignation to the Pledgor and
Pledgee, at least ten (10) days prior to the date specified for such resignation
to take effect and, upon such effective date, the Collateral shall be delivered
by it to such person as may be designated by the mutual agreement of the Pledgor
and Pledgee in writing as substitute Escrow Agent, whereupon all obligations
hereunder of the Escrow Agent who is being replaced shall cease and terminate.
If no such person shall have been designated by such date, all obligations of
the Escrow Agent hereunder shall, nevertheless, cease and terminate, except that
the Escrow Agent's sole responsibility thereafter shall be to deliver the
Collateral to a person jointly designated by the Pledgor and Pledgee, or in
accordance with the directions of a final order or judgment of a court of
competent jurisdiction and the Escrow Agent shall have been notified thereof in
writing signed by Pledgor and Pledgee. The rights of the Escrow Agent under this
Section are cumulative of all other rights which it may have by law or
otherwise.
8. Elimination of the Security Interest. This Agreement and the
security interest granted hereunder shall terminate with respect to all
Collateral when all amounts due and owing on account of, and all obligations and
liabilities of the Pledgor in respect of, the Note shall have been fully
performed and satisfied. Upon the termination of Pledgee's security interest in
any Collateral, Pledgee shall reassign and deliver to the Company, without
recourse or representation, against the Pledgor's receipt and at the Pledgor's
expense, any such Collateral in its possession, if any. Upon the request of the
Pledgee and at its expense, Pledgor shall execute and deliver to the Company
termination statements with respect to any financing statements filed hereunder.
9. Modification; Waiver and Termination. Except with respect to the
Note and the other documents or instruments expressly referred to herein or in
the Stock Redemption Agreement, this Agreement contains the entire agreement
between Pledgor and Pledgee with respect to the specific subject matter
described herein. No modification or waiver of any provision of this Agreement
or any such other documents shall be effective unless such modification or
waiver shall be in writing and signed by Pledgor and Pledgee, and the same shall
then be effective only for the period and on the conditions and for the specific
instances and purposes specified in writing; provided, that the duties or
responsibilities of the Escrow Agent may not be increased without the Escrow
Agent's consent. This Agreement shall terminate upon release by the Escrow Agent
of the Collateral pursuant to Section 7(a)(i) hereof.
10. Notices. Any and all notices, requests, demands or other
communications hereunder (including, without limitation, all notices under
Section 7 hereof to the Escrow Agent) shall be deemed to have been duly given if
in writing and if transmitted by (i) hand delivery, in which event effective
notice shall be deemed to have been given as of the date of delivery, (ii)
Federal Express, Express Mail or other nationally recognized overnight courier,
in which event
-4-
effective notice shall be deemed to have been given on the next business day
after being sent, or (iii) by registered or certified mail, postage prepaid,
return receipt requested, in which event effective notice shall be deemed to
have been given five (5) business days after being sent, as follows:
To Pledgor: ▇▇▇▇▇▇▇▇.▇▇▇, Inc.
▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attn: Chief Executive Officer
With copy to: Venable, Baetjer, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, LLP
▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esquire
To Pledgee: BrandPartners Group, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, CEO
With copy to: ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
To Escrow Agent: LandAmerica Financial Group, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Senior Vice President
or to such other address as any party may furnish to the others by notice in
accordance with this Paragraph 10.
11. Burden and Benefit. This Agreement shall inure to the benefit of,
and be binding upon, the parties hereto and their respective beneficiaries,
heirs, executors or administrators, personal or legal representatives,
successors and assigns.
12. Applicable Law. This Agreement shall be construed, enforced and
interpreted in accordance with the laws of the State of Delaware (without regard
to its laws relating to choice-of-law or conflicts-of-law).
13. Headings. The headings herein are for convenience of reference only
and shall not be used in construing or interpreting the provisions hereof.
14. Counterparts. This Agreement may be executed in two (2) or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute the same instrument.
-5-
[SIGNATURES ON FOLLOWING PAGE]
-6-
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
under seal as of the date set forth above.
PLEDGOR:
▇▇▇▇▇▇▇▇.▇▇▇, INC., a Delaware
corporation
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, III
---------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, III
Title: Chairman and Chief Executive Officer
PLEDGEE:
BRANDPARTNERS GROUP, INC., a Delaware corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Chairman and Chief Executive Officer
ESCROW AGENT:
LANDAMERICA FINANCIAL GROUP, INC., a Virginia
corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Senior Vice President
-7-