EXHIBIT 10.5
PLEDGE AGREEMENT
PLEDGE AGREEMENT, dated as of December 22, 1998 between Xxxxxx
X. Xxxxxx (herein called the "Pledgor") and JLM COUTURE, INC.
(herein called the "Lender").
W I T N E S S E T H:
WHEREAS, on the date hereof, Pledgor is purchasing 200,000
shares of Common Stock of Lender for $450,000, which amount is
being paid to lender by Pledgor's delivery of his promissory note
to Lender (the "Loan").
WHEREAS, Pledgor has agreed to pledge 200,000 shares of Common
Stock of Lender (the "Common Stock") owned by him as security for
the Loan; and
WHEREAS, the Lender will hold the Common Stock pursuant to the
terms of this Agreement.
NOW THEREFORE, in consideration of the terms hereof, it is
agreed as follows:
1. As collateral security for the full and timely payment,
performance and observance of the Loan, the Pledgor herewith
deposits and pledges with the Lender, in form transferable for
delivery, and grants to the Lender a security interest in, the
Common Stock more particularly described in Schedule A annexed
hereto, and such additional property at any time and from time to
time receivable by the Lender hereunder or otherwise distributed in
respect of or in exchange for any or all such shares and/or
obligations (herein collectively called the "Pledged Securities").
2. The Pledgor represents and warrants the Pledged Securities
are, and will be on deposit hereunder, duly and validly issued and
duly and validly pledged with the Lender in accordance with law,
and agrees to defend the Lender's right, title, lien and security
interest in and to the Pledged Securities against the claims and
demands of all persons whomsoever. The Pledgor also represents and
warrants to the Lender that he has, and will have on deposit
hereunder, good title to all of the Pledged Securities, free and
clear of all claims, mortgages, pledges, liens, encumbrances and
security interests of every nature whatsoever.
3. So long as there shall exist no condition, event or act
which constitutes, or with notice or lapse of time, or both, would
constitute, a default or an event of default under the Loan, the
Pledgor shall be entitled:
(a) To exercise, as he shall think fit, but in a manner
in the judgment to the Lender not inconsistent with the terms
hereof or of the Loan, the voting power with respect to the Pledged
Securities, and for that purpose the Lender shall execute or cause
to be executed from time to time, at the expense of the Pledgor,
such proxies or other instruments in favor of the Pledgor or his
nominee, in such form and for such purposes as shall be reasonably
required by the Pledgor and shall be specified in a written request
therefor, to enable him to exercise such voting power with respect
to the Pledged Securities; and
(b) To receive and retain for his own account any and
all dividends (other than stock or liquidating dividends) and
interest at any time and from time to time declared or paid upon
any of the Pledged Securities.
4. In case, upon the dissolution or liquidation (in whole or
in part) of the issuer of any of the Pledged Securities, any sum
shall be paid as a liquidating dividend or otherwise upon or with
respect to any of the Pledged Securities, and in case any sum shall
be paid on account of the principal of any of the Pledged
Securities which shall be an obligation, such sum shall be paid
over to the Lender, to be held by it as additional collateral
hereunder. In case any stock dividend shall be declared on any of
the Pledged Securities, or any shares of stock or fractions thereof
shall be issued pursuant to any stock split involving any of the
Pledged Securities, or any distribution of capital shall be made on
any of the Pledged Securities, or any shares, obligations or other
property shall be distributed upon or with respect to the Pledged
Securities pursuant to a recapitalization or reclassification of
the capital of the issuer thereof, or pursuant to the dissolution,
liquidation (in whole or in part), bankruptcy or reorganization of
such issuer, or to the merger or consolidation of such issuer with
or into another corporation, the shares, obligations or other
property so distributed shall be delivered to the Lender, to be
held by it as additional collateral hereunder, and all of the same
(other than cash) shall constitute Pledged Securities for all
purposes hereof.
5. So long as there shall exist a condition, event or act
which constitutes, or with notice or lapse of time, or both, would
constitute, a default or an event of default under the Loan, the
Lender shall be entitled to exercise all voting power with respect
to the Pledged Securities and to receive and retain, as additional
collateral hereunder, any and all dividends and interest at any
time and from time to time declared or paid upon any of the Pledged
Securities.
6. Any cash received and retained by the Lender as collateral
hereunder pursuant to the foregoing provisions may at any time and
from time to time be applied (in whole or in part) by the Lender,
at its option, to the payment of interest on and/or principal of
the Loan (in such order of maturity as the Lender shall in its sole
discretion determine).
7. If a default or an event of default shall occur under the
Loan or if the Loan shall not be paid when due, whether at the
stated maturity thereof or by acceleration or otherwise, the
Lender, without obligation to resort to other security, shall have
the right at any time and from time to time to sell, resell, assign
and deliver, in its discretion, all or any of the Pledged
Securities, in one or more parcels at the same or different times,
and all right, title and interest, claim and demand therein and
right of redemption thereof, on any securities exchange on which
the Pledged Securities or any of them may be listed, or at public
or private sale, for cash, upon credit or for future delivery, and
in connection therewith the Lender may grant options, the Pledgor
hereby waiving and releasing any and all equity or right of
redemption. If any of the Pledged Securities are sold by the
Lender upon credit or for future delivery, the Lender shall not be
liable for the failure of the purchaser to purchase or pay for the
same and, in the event of any such failure, the Lender may resell
such Pledged Securities. In no event shall the Pledgor be credited
with any part of the proceeds of sale of any Pledged Securities
until cash payment thereof has actually been received by the
Lender.
8. No demand, advertisement or notice, all of which are
hereby expressly waived, shall be required in connection with any
sale or other disposition of any part of the Pledged Securities
which threatens to decline speedily in value or which is of a type
customarily sold on a recognized market; otherwise the Lender shall
give the Pledgor five days' prior notice of the time and place of
any public sale and of the time after which any private sale or
other disposition is to be made, which notice the Pledgor agrees is
reasonable, all other demands, advertisements and notices being
hereby waived. The Lender shall not be obligated to make any sale
of Pledged Securities if he shall determine not to do so,
regardless of the fact that notice of sale may have been given.
The Lender may, without notice or publication, adjourn any public
or private sale or cause the same to be adjourned from time to time
by announcement at the time and place fixed for sale, and such sale
may, without further notice, be made at the time and place to which
the same was so adjourned. Upon each private sale of Pledged
Securities or a type customarily sold in a recognized market and
upon each public sale, the Lender or any holder of the Loan may
purchase all or any of the Pledged Securities being sold, free from
any equity or right of redemption, which is hereby waived and
released, and may make payment therefor (by endorsement without
recourse) to the amount then due which the Pledgor hereby agrees to
accept. In the case of all sales of Pledged Securities, public or
private, the Pledgor shall pay all costs and expenses of every kind
for sale and delivery, including brokers' and attorneys' fees, and
after deducting such costs and expenses from the proceeds of sale,
the Lender shall apply any residue to the payment of the Loan, and
the Pledgor shall continue liable for any deficiency. The balance,
if any, remaining after payment in full of all of the Loan, shall
be paid to the Pledgor, subject to any duty of the Lender imposed
by law to the holder of any subordinate security interest in the
Pledged Securities known to the Lender.
9. The remedies provided herein in favor of the Lender shall
not be deemed exclusive, but shall be cumulative, and shall be in
addition to all other remedies in favor of the Lender existing at
law of in equity.
10. The Lender shall have the right, for and in the name,
place and stead of the Pledgor, to execute endorsements,
assignments or other instruments of conveyance or transfer with
respect to all or any of the Pledged Securities.
11. The Lender shall have no duty as to the collection or
protection of the Pledged Securities or any income thereon or as to
the preservation of any rights pertaining thereto, beyond the safe
custody of any thereof actually in his possession. With respect to
any maturities, calls, conversions, exchanges, redemptions, offers,
tenders or similar matters relating to any of the Pledged
Securities (herein called "events"), the Lender's duty shall be
fully satisfied if (i) the Lender exercises reasonable care to
ascertain the occurrence and to give reasonable notice to the
Pledgor of any events applicable to any Pledged Securities which
are registered and held in the name of the Lender or its nominee,
(ii) the Lender gives the Pledgor reasonable notice of the
occurrence of any events, of which the Lender has received actual
knowledge, as to any securities which are in bearer form or are not
registered and held in the name of the Lender or its nominee (the
Pledgor agreeing to give the Lender reasonable notice of the
occurrence of any events applicable to any securities in the
possession of the Lender of which the Pledgor has received
knowledge), and (iii) in the exercise of its sole discretion (a)
the Lender endeavors to take such action with respect to any of the
events as the Pledgor may reasonably and specifically request in
writing in sufficient time for such action to be evaluated and
taken or (b) if the Lender determines that the action requested
might adversely affect the value of the Pledged Securities as
collateral, the collection of the Loan, or otherwise prejudice the
interests of the Lender, the Lender gives reasonable notice to the
Pledgor that any such requested action will not be taken and if the
Lender makes such determination or if the Pledgor fails to make
such timely request, the Lender takes such other action as it deems
advisable in the circumstances. Except as hereinafter specifically
set forth, the Lender shall have no further obligation to ascertain
the occurrence of, or to notify the Pledgor with respect to, any
events and shall not be deemed to assume any such further
obligation as a result of the establishment by the Lender of any
internal procedures with respect to any securities in its
possession. The Pledgor releases the Lender from any claims,
causes of action and demands at any time arising out of or with
respect to this Agreement, the Pledged Securities and/or any
actions, taken or omitted to be taken by the Lender with respect
thereto, and the Pledgor hereby agrees to hold the Lender harmless
from and with respect to any and all such claims, causes of action
and demands.
12. The Pledgor hereby appoints the Lender as the Pledgor's
attorney-in-fact for the purpose of carrying out the provisions of
this Agreement and taking any action and executing any instrument
which either may deem necessary or advisable to accomplish the
purposes hereof. Without limiting the generality of the foregoing,
the Lender shall have the right and power to receive, endorse and
collect all checks and other orders for the payment of money made
payable to the Pledgor representing any interest or dividend or
other distribution payable in respect of the Pledged Securities or
any part thereof and to give full discharge for the same.
13. No delay on the part of the Lender or of any holder of
the Note in exercising any of its options, powers or rights, or
partial or single exercise thereof, shall constitute a waiver
thereof.
14. Upon full payment in full of the Loan, the Pledgor shall
be entitled to the return of all of the Pledged Securities and of
all other property and cash which have not been used or applied
toward the payment of the Loan. The assignment by the Lender to
the Pledgor of such Pledged Securities and other property shall be
without representation or warranty of any nature whatsoever and
wholly without recourse.
15. Pledgor shall have the right (with written consent of
Lender) to substitute collateral for the Pledged Securities, at any
time, upon reasonable notice to the Lender. Lender agrees to allow
for said substitution of collateral if the substituted collateral
is of equal value to the Pledged Securities, and is otherwise
commercially reasonable, and Lender shall not unreasonably withhold
his approval.
16. Any notice or demand upon the parties shall be deemed to
have been sufficiently given for all purposes thereof if mailed,
postage prepaid, by registered or certified mail, return receipt
requested, or if delivered, to the party at the following address:
(a) If to Pledgor, to:
Xxxxxx X. Xxxxxx
c/o JLM Couture, Inc.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
(b) If to Lender, to:
Xxxxxx X. Xxxxxx
c/o JLM Couture, Inc.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
(c) with a copy to:
Xxxxxxx X. Xxxxx, Esq.
Xxxxx & Associates, P.C.
Xxx Xxxx Xxxxx, Xxxxx 0000
Xxx Xxxx, XX 00000
The foregoing addresses may be changed by the aforesaid
parties by notifying the other parties in the manner hereinabove
specified.
17. This Agreement and the rights and obligations of the
parties hereunder shall be construed in accordance with and
governed by the law of the State of New York, cannot be changed
orally and shall bind and inure to the benefit of the Pledgor and
the Lender and their respective successors and assigns, and all
subsequent holders of the Note.
18. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original and all of
which taken together shall constitute but one and the same
instrument.
IN WITNESS WHEREOF, the parties have caused this Agreement to
be duly executed by their respective officers duly authorized as of
the day and year first above written.
JLM Couture, Inc., Lender
By: s/Xxxxxx X. X'Xxxxx
Authorized Officer
s/Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx, Pledgor
N:\RSKLAW\HJELM\PLED-AGR.F99
