Exhibit 10.26
PLEDGE AGREEMENT
PLEDGE AGREEMENT ("Pledge Agreement") made as of the 22nd day of October,
1998, between Xxxxxx X. Xxxxxxxx ("Pledgor"), and CompuCom Systems, Inc., a
Delaware corporation ("Secured Party").
1. Definitions. In addition to the terms defined elsewhere in this Pledge
Agreement, the following terms shall have the following meanings for
purposes of this Pledge Agreement:
(a) The term "Event of Default" shall have the meaning ascribed thereto
in Section 9 of this Pledge Agreement.
(b) The term "Note" means and includes that certain Note, dated of even
date herewith, in the original principal amount of $2,021,875, which
Pledgor has executed, or is in the process of executing payable to
the order of Secured Party, together with any and all concurrent or
subsequent extensions, amendments, or modifications thereto.
(c) The term "Obligations" means and includes all obligations of Pledgor
to Secured Party pursuant to the terms of the Note and this Pledge
Agreement.
(d) The term "Option Shares" means 647,000 shares of capital stock of
Secured Party being purchased by Pledgor with the proceeds of the
Note pursuant to the exercise of certain Non Qualified Stock Options
and Incentive Stock Options granted to Pledgor by Secured Party.
2. Pledge. Upon the terms hereof, Pledgor hereby pledges and grants to
Secured Party a lien on and security interest (the "Security Interest") in
and to all of the following instruments and property of Pledgor (all of
the following being herein sometimes called the "Collateral"):
(a) Six hundred forty-seven thousand shares of capital stock of Secured
Party as described on Exhibit A attached hereto and incorporated
herein for all purposes representing the Option Shares being
purchased by Pledgor with the proceeds of the Note, together with
all certificates, options, rights or other distributions issued as
an addition to, in substitution or in exchange for, or on account
of, any such shares (collectively, the "Stock");
(b) All securities and other property, rights or interests of any
description at any time issued or issuable as an addition to, in
substitution or exchange for, with respect to, incident to or in
lieu of such shares described in Section 2(a) hereof or with respect
to, incident to or in lieu of the Collateral (i) due to any
dividend, stock-split, stock dividend or distribution on
dissolution, on partial or total liquidation, or other corporate
reorganization or for any other reason; (ii) in connection with a
reduction of capital, capital surplus or paid-in surplus; or (iii)
in connection with any spin-off, split-off, reclassification,
readjustment, merger, consolidation, sale of assets, combination of
shares or any other plan of distribution affecting the companies
which have issued the shares described in Section 2(a) hereof;
(c) Any and all proceeds, monies, income and benefits arising from or by
virtue of, and all dividends and distributions (cash or otherwise)
payable and/or distributable with respect to, all or any of the
shares or other securities and rights and interests described in
clauses (a) through (c) of this Section 2.
3. Obligations Secured. This Pledge Agreement and the Security Interest
granted hereby secure the prompt satisfaction of the Obligations.
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4. Warranties. Pledgor represents and warrants that each of the following
statements is true and correct: (a) Pledgor is the legal and beneficial
owner of the Stock; (b) the Collateral is owned by Pledgor free of any
pledge, mortgage, hypothecation, lien, charge, encumbrance or security
interest or purchase right or option on the part of any third person in
such Collateral, except the Security Interest; (c) Pledgor has the full
power, authority and legal right to transfer and pledge the Collateral
free of any encumbrances and without obtaining the consent of any other
person or entity; and (d) upon delivery of the Collateral to Secured
Party, this Pledge Agreement will create a valid and perfected first
priority lien upon, and security interest in, the Collateral and the
proceeds thereof, securing the payment of the Obligations. The delivery at
any time by Pledgor to Secured Party of Collateral shall constitute a
representation and warranty by Pledgor under this Pledge Agreement that,
with respect to the Collateral and each item thereof, Pledgor is the owner
of the Collateral and the matters heretofore warranted in clauses (a)
through (d) of this Section 4 are true and correct.
5. Covenants. Pledgor covenants to do or not to do, as the case may be, each
of the following; provided, however, in the case of a negative covenant,
Pledgor will not undertake any of the proscribed activities without the
prior written consent of Secured Party: (a) from time to time to do all
other acts or things as Secured Party may reasonably request in order more
fully to evidence and perfect the Security Interest; (b) after the
occurrence of an Event of Default, to promptly pay to Secured Party the
amount of all court costs and reasonable attorneys' fees incurred by
Secured Party hereunder; and (c) except as otherwise provided herein, to
promptly deliver to Secured Party, in the exact form received, all
securities and other property described in Section 2(b) and Section 2(c)
hereof which come into the possession, custody or control of Pledgor.
Pledgor further covenants and agrees that, without the prior written
consent of Secured Party, Pledgor shall not assign or transfer Pledgor's
rights in the Collateral, or create any other lien or security interest in
or otherwise encumber any of the Collateral, or permit any of the
Collateral to ever be or become subject to any lien, attachment,
execution, sequestration, other legal or equitable process, or any lien or
encumbrance of any kind. Notwithstanding anything contained in the
preceding sentence to the contrary, Pledgor shall be free to sell the
Stock provided that Pledgor complies with all applicable laws in effecting
such sale and in the event of any such sale the shares of Stock will be
released from the Security Interest created pursuant to this Pledge
Agreement upon payment to Secured Party of $3.125 for each share of Stock
sold. All assignments and endorsements by Pledgor shall be in such form
and substance as may be satisfactory to Secured Party. Should any
covenant, duty or agreement of Pledgor fail to be performed in accordance
with its terms hereunder, Secured Party may, but shall never be obligated
to, perform or attempt to perform such covenant, duty or agreement on
behalf of Pledgor, and any amount expended by Secured Party in such
performance or attempted performance shall become part of the Obligations,
except to the extent prohibited by applicable law, and Pledgor agrees to
pay such amount promptly to Secured Party.
6. Adjustments and Distributions Concerning Collateral. Should the
Collateral, or any part thereof, ever be converted in any manner by its
issuer into another type of property or any money or other proceeds ever
be paid or delivered to Pledgor as a result of Pledgor's rights in the
Collateral, then in any such event (except as provided in Section 7
hereof), all such property, money and other proceeds shall immediately be
and become part of the Collateral, and Pledgor covenants to forthwith pay
and deliver all such property, money or other proceeds so received to
Secured Party; and, if Secured Party deems it necessary and so requests,
to endorse properly or assign any and all such other proceeds to Secured
Party and to deliver to Secured Party any and all such other proceeds
which require perfection by possession under the Uniform Commercial Code
of the State of Texas or other appropriate jurisdiction (the "UCC"). With
respect to any of such property of a kind requiring an additional security
agreement, financing statement or other writing to perfect a security
interest therein in favor of Secured Party, Pledgor will forthwith execute
and deliver to Secured Party whatever Secured Party shall deem necessary
or proper for such purpose.
Page 2
7. Cash Dividends and Voting Rights. Unless an Event of Default has occurred
and shall not have been waived by Secured Party, Pledgor is entitled, (a)
to exercise all voting rights with respect to the Collateral and (b) to
receive for his own use cash dividends on the Collateral. Upon the
occurrence of an Event of Default, Secured Party may exercise all voting
rights with respect to the Collateral subject to all applicable rules and
regulations and may require any such cash dividends to be delivered to
Secured Party as additional Collateral hereunder or applied toward the
satisfaction of the Obligations.
8. Registration of Collateral in Name of Secured Party. Upon the occurrence
of an Event of Default, Secured Party, at its option, may have any or all
of the Collateral registered in its name or that of its nominee.
Immediately and without further notice, upon the occurrence of an Event of
Default, whether or not the Collateral has been registered in the name of
Secured Party or its nominee, Secured Party or its nominee shall have,
with respect to the Collateral, the right to exercise all voting rights
and all conversion, exchange, subscription or other rights, privileges or
options pertaining thereto including, without limitation, the right to
exchange any or all of the Collateral upon the merger, consolidation,
reorganization, recapitalization or other readjustment of the issuer
thereof, or upon the exercise by such issuer of any right, privilege, or
option pertaining to any of the Collateral, and, in connection therewith,
to deliver any of the Collateral to any committee, depositary, 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 it; but Secured Party shall have no duty to exercise
any of the aforesaid rights, privileges or options and shall not be
responsible for any failure to do so, delay in doing so, or depreciation
in the value of the Collateral by reason of doing so. Thereafter, at such
time as (a) all Events of Defaults have been cured, and (b) there exists
no condition, event or act which, with the giving of notice or lapse of
time, or both, would constitute an Event of Default, then the right to
exercise all voting rights with respect to the Collateral shall revert to
Pledgor.
9. Events of Default. The occurrence of any one or more of the following
shall constitute an Event of Default: (a) the failure of Pledgor to make
timely payment of any portion of the principal or interest of the Note or
any portion of the Obligations when due subject to any applicable cure
periods; (b) the failure of Pledgor to perform fully, faithfully and
promptly any material agreements, covenants and conditions contained in
this Pledge Agreement; (c) the levy against the Collateral, or any
substantial part thereof, or any execution, attachment, sequestration,
distraint warrant or other like or similar writ or the attachment to the
Collateral of any lien other than the Security Interest; (d) the entry of
a decree or order for relief by a court having jurisdiction in the
premises in respect of Pledgor in an involuntary case under the United
States bankruptcy laws, as now or hereafter constituted, or any other
applicable federal or state bankruptcy, insolvency or other similar law,
or appointing a receiver, liquidator, assignee, custodian, trustee,
sequestrator (or similar official) of Pledgor or of any substantial part
of Pledgor's property, or ordering the winding-up or liquidation of the
affairs of Pledgor and the continuance of any such decree or order
unstayed and in effect for a period of thirty (30) consecutive days; or
(e) the commencement by Pledgor of a voluntary case under the United
States bankruptcy laws, as now constituted or hereafter amended, or any
other applicable federal or state bankruptcy, insolvency or other similar
law, or the consent by Pledgor to the appointment of or taking possession
by a receiver, liquidator, assignee, trustee, custodian, sequestrator (or
other similar official) of Pledgor for any substantial part of Pledgor's
property, or the making by Pledgor of any assignment for the benefit of
creditors, or the inability of Pledgor generally to pay his debts as such
debts become due, or the taking of any action by Pledgor in furtherance of
any of the foregoing.
10. Remedies. Upon the occurrence of an Event of Default, Secured Party may
then exercise any and all rights to which it is entitled under the UCC or
otherwise. Pledgor hereby grants to Secured Party an irrevocable proxy
coupled with an interest to exercise as to such Collateral, upon the
occurrence of an Event of Default, all rights, powers and remedies of an
owner and all of the rights, powers and remedies hereinabove set forth,
the proxy herein granted to exist until all of the Obligations have been
paid and performed in full.
Page 3
11. Application of Proceeds. The proceeds of any disposition of the Collateral
or other action by Secured Party shall be applied (a) first, to the cost
and expenses incurred in connection therewith or incidental thereto or to
the care or safekeeping of any of the Collateral or in any way relating to
the rights of Secured Party hereunder, including reasonable attorneys'
fees and legal expenses; (b) then, to the satisfaction of the Obligations
in such order and to such portions as Secured Party may elect; (c) then,
to the payment of any other amounts required by applicable law; and (d)
then, to Pledgor to the extent of any surplus proceeds. Secured Party
shall be under no duty to exercise or to withhold the exercise of any of
the rights, powers, privileges and options expressly or implicitly granted
to Secured Party in this Pledge Agreement, and shall not be responsible
for any failure to do so or delay in so doing.
12. Notification of Sale. Reasonable notification of the time and place of any
public sale of the Collateral, or reasonable notification of the time
after which any private sale or other intended disposition of the
Collateral is to be made, shall be sent to Pledgor and to any other person
entitled under the UCC to notice; provided that if any of the Collateral
threatens to decline speedily in value or is of the type customarily sold
on a recognized market, Secured Party may sell or otherwise dispose of the
Collateral without notification, advertisement, or other notice of any
kind. It is agreed that notice sent or given not less than five (5)
calendar days prior to the taking of the action to which the notice
relates is reasonable notification and notice for the purposes of this
paragraph.
13. Satisfaction of Obligations and Release of Collateral. Upon the
satisfaction in full of the Obligations, and the satisfaction of all
additional costs and expenses of Secured Party as provided herein, this
Pledge Agreement shall terminate, and Secured Party shall deliver to
Pledgor, at Pledgor's expense, such of the Collateral as shall not have
been sold or otherwise applied pursuant to this Pledge Agreement which
Secured Party shall have in its possession. In addition and
notwithstanding any provision contained in this Pledge Agreement to the
contrary, Pledgor shall be entitled to obtain the release of shares of
Stock from the Security Interest created hereby by paying to Secured Party
the sum of $3.125 for each share of Stock which Pledgor desires be
released from the terms hereof and upon receipt of such payment, Secured
Party will promptly release the applicable number of shares of Stock to
Pledgor.
14. Notices. Any notice required or permitted by this Pledge Agreement shall
be deemed to have been given or made when deposited in the United States
Mail, postage prepaid, certified mail, return receipt requested, addressed
to the parties at the addresses set forth opposite their respective
signatures below, or, if hand delivered, upon actual receipt.
15. Duties of Secured Party. Secured Party's duty with respect to any
Collateral now or hereafter in the possession of Secured Party is solely
to use reasonable care in the custody and preservation of the Collateral.
Secured Party shall be deemed to have exercised reasonable care in the
custody and preservation of the Collateral if the Collateral is accorded
treatment substantially equal to that which Secured Party accords its own
property, its being understood that Secured Party shall not have any
responsibility for ascertaining or taking action with respect to calls,
conversions, exchanges, maturities, tenders or other matters relative to
any Collateral or for informing Pledgor of such matters whether or not
Secured Party has or is deemed to have any knowledge of such matters.
Secured Party shall not be required to take any steps necessary to
preserve any rights in the Collateral against prior parties or to protect,
perfect, preserve or maintain any security interest given to secure the
Collateral, nor to invest any cash constituting Collateral in any account
or security or otherwise.
16. Indemnification. Pledgor hereby agrees to indemnify and to hold Secured
Party harmless from and against any loss (excluding any loss attributable
to a diminution in the value of the Stock), claim, demand or expense
(including attorneys' fees) by reason, or in any manner related to, the
Collateral, including any such claim as may arise by reason of any alleged
breach of warranty concerning the
Page 4
Collateral, by reason of the failure of Pledgor to comply with any
applicable state, federal or foreign statute, rule, regulation, order or
decree, or by reason of Secured Party's efforts to enforce payment of the
Obligations, including expenses incurred in satisfying any applicable
securities laws.
17. Expenses. Pledgor will upon demand pay to Secured Party the amount of any
and all reasonable expenses, including the reasonable fees and expenses of
its counsel and of any experts and agents, which Secured Party may incur
in connection with the custody or preservation of, or the sale of,
collection from, or other realization upon, any of the Collateral, the
exercise or enforcement of any of the rights of Secured Party hereunder,
or the failure by Pledgor to perform or observe any of the provisions
hereof.
18. Security Interest Absolute. All rights of Secured Party and the pledge and
Security Interest hereunder, and all obligations of Pledgor hereunder,
shall be absolute and unconditional in all respects and shall not be
released, diminished, impaired, or affected for any reason, including
without limitation the occurrence of any one or more of the following
events: (a) the taking or accepting of any other security or assurance for
any or all of the Obligations; (b) any change in the time, manner or place
of payment of, or in any other term of, all or any of the Obligations; (c)
any exchange, release, subordination, surrender, loss or nonperfection of
any other collateral at any time existing in connection with any or all of
the Obligations, or any release or amendment or waiver of or consent to
departure from any guaranty, or other security, for all or any of the
Obligations; (d) any neglect, delay, omission, failure, or refusal of
Secured Party to take or prosecute any action in connection with this
Pledge Agreement; (e) the insolvency or bankruptcy of Pledgor; or (f) any
other circumstance which might otherwise constitute a defense available to
a discharge of Pledgor in respect of the Obligations of Pledgor in respect
of this Pledge Agreement.
19. Waivers. Except as otherwise required by the terms hereof or by applicable
law, Pledgor hereby waives all notices, including but not limited to
demand, presentment for payment, notice of nonpayment, protest, notice of
protest, notice of intent to accelerate, notice of acceleration and all
other notices.
20. Remedies Cumulative. The rights and remedies provided herein are
cumulative and are in addition to and not exclusive of any rights or
remedies provided by law, including, but without limitation, the rights
and remedies of a secured party under the UCC.
21. Amendment. This Pledge Agreement may be amended only by written instrument
signed by all parties.
22. Invalidity of Any Provision. The invalidity of any one or more phrases,
sentences, clauses, paragraphs or sections hereof shall not affect the
remaining portions of this Pledge Agreement, all of which are being
inserted conditionally on its being held legally valid. In the event that
any one or more of the phrases, sentences, clauses, paragraphs or sections
contained herein should be invalid, or should operate to render this
Pledge Agreement invalid, then this Pledge Agreement shall be construed as
if such invalid phrase or phrases, sentence or sentences, clause or
clauses, paragraph or paragraphs, or section or sections had not been
inserted.
23. Assignment. This Pledge Agreement shall apply to, inure to the benefit of
and be binding upon and enforceable against the parties hereto and their
respective legal representatives, successors and assigns, except that the
rights and obligations of Pledgor contained herein shall not be
assignable.
24. Governing Law. The substantive laws of the State of Texas shall govern the
validity, construction, enforcement and interpretation of this Pledge
Agreement, unless the laws of another state or jurisdiction require the
application of the laws of such state or jurisdiction. This Pledge
Agreement is performable in Dallas County, Texas.
Page 5
IN WITNESS WHEREOF, the parties have executed this Pledge Agreement as of
the date and year first above written.
PLEDGOR:
Address: /s/ Xxxxxx X. Xxxxxxxx
----------------------
Xxxxxx X. Xxxxxxxx
0000 Xxxxxx Xxxx
Xxxxxx, Xxxxx 00000
SECURED PARTY:
Address: COMPUCOM SYSTEMS, INC.
0000 Xxxxxx Xxxx
Xxxxxx, Xxxxx 00000 By: /s/ X. Xxxxxx Xxxxx
-------------------
Its: SVP/CFO
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EXHIBIT A
STOCK NUMBER OF
CERTIFICATE NO. SHARES
--------------- ---------
#0405 10/22/98 615,000
#0404 10/22/98 32,000
