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Exhibit II
STOCK PLEDGE AGREEMENT
This STOCK PLEDGE AGREEMENT (this "Agreement"), dated as of June 8,
1999, is by and between XXXXXX XXXXXXX, having an address at X.X. Xxx 00, Xxx
Xxxxxx, Xxx Xxxxxx 00000 ("Pledgor"), and XXXX XXXXXXXXX, residing at 00000
Xxxxxxx Xxxx Xxxx, Xxxxxx Xxxxx, Xxxxxxx 00000 ("Secured Party").
WITNESSETH:
WHEREAS, Secured Party and Pledgor have entered into that certain
Option Agreement (the "Option") of even date, whereby Pledgor has granted to
Secured Party an option to purchase 1,000,000 shares (the "Shares") of Pledgor's
common stock, par value $.01 per share ("Common Stock"), of Party City
Corporation, a Delaware corporation (the "Company") at an exercise price of
$3.00 per share (as more fully described in the Option); and
WHEREAS, as security for performance of the Option and under any other
instrument, document, or agreement executed and delivered by Pledgor pursuant to
the Option (if any, the "Other Documents"), Pledgor has agreed to pledge and
xxxxx x xxxx and security interest to Secured Party in the Shares and Pledgor
has agreed to execute and deliver this Agreement to Secured Party.
NOW, THEREFORE, in consideration of the foregoing premises and for
other good and valuable consideration, the receipt of which is hereby
acknowledged, each party intending to be legally bound hereby, the Pledgor and
the Secured Party hereby agree as follows:
1. Definitions. Unless the context otherwise requires, all terms used
but not expressly defined herein shall have the meanings, if any, given to them
in the Option or, if they are not defined in the Option but are defined in the
Uniform Commercial Code, as enacted in New York (the "Code"), they shall have
the same meaning herein as in the Code.
2. Pledge of the Pledged Collateral and Adjustments.
(a) As security for the performance of the Pledgor's obligations under
the Option (collectively, the "Obligations"), Pledgor hereby pledges, delivers
and sets over unto Secured Party, and grants a lien and security interest to
Secured Party, in the following (collectively, the "Pledged Collateral"):
(i) the Shares;
(ii) Pledgor's rights in any stock dividend, reclassification,
readjustment or other change declared or made by the Company with
respect to or affecting the Shares;
(iii) Pledgor's rights in any subscription warrants or any
other rights or options issued by the Company in connection with the
Shares; and
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(iv) all proceeds of any of the foregoing upon sale, exchange
or other disposition of any of the foregoing (but excluding cash payments or
distributions made by the Company with respect to any of the foregoing as a
result of owning, rather than disposing of, any of the foregoing-which payments
or distributions are referred to herein as "Distributions").
(b) All new, substituted and additional shares (such shares to be
included within the definition ofthe Shares hereunder), warrants, rights,
options or other securities, issued by reason of any of the foregoing, in
respect of the Pledged Collateral, shall be immediately delivered to and held by
(or otherwise retained by) the Secured Party under the terms of this Pledge
Agreement and shall constitute Pledged Collateral hereunder.
(c) Simultaneously with the execution of this Pledge Agreement, Pledgor
hereby delivers to the Secured Party the original stock certificate(s)
evidencing the Shares, as described in more detail on Schedule A hereto,
accompanied by stock powers in the form of Exhibit A attached hereto and made a
part hereof, duly executed in blank for all of the Shares.
(d) In addition, the Pledgor shall, upon request of the Secured Party,
deliver to the Secured Party such financing statements as may be necessary or
desirable, in the reasonable opinion of the Secured Party to perfect the
security interest created herein. Pledgor hereby authorizes Secured Party to
file, and appoints Secured Party his attorney-in-fact for the purpose of
executing and filing financing statements or continuation statements to the
extent permitted by applicable law.
3. Power of Attorney.
(a) The Secured Party shall have no obligation with respect to the
Pledged Collateral or any other property held or received by it hereunder except
to use reasonable care in the custody thereof to the extent required by law. The
Secured Party may hold the Pledged Collateral in the form in which it is
received by it.
(b) The Pledgor, to the full extent permitted by law, hereby
constitutes and irrevocably appoints the Secured Party (and any officer or agent
of the Secured Party, with full power of substitution and revocation) as the
Pledgor's true and lawful attorney-in-fact, in the Pledgor's stead and in the
name of the Pledgor, to transfer, upon the occurrence of an Event of Default,
the Pledged Collateral on the books of the Company, in whole or in part, to the
name of the Secured Party or such other Person or Persons as the Secured Party
may designate in accordance with the terms of the Option and, upon the
occurrence of an Event of Default, to take all such other and further actions as
the Pledgor could have taken with respect to the Pledged Collateral and as the
Secured Party in its reasonable discretion determines to be necessary or
appropriate to accomplish the purposes of this Agreement and the Option.
(c) The limited powers of attorney granted pursuant to this Agreement
and all authority hereby conferred are granted and conferred solely to protect
the Secured Party's interests in the Pledged Collateral and shall not impose any
duty upon the attorney-in-fact to exercise such powers. Such powers of attorney
shall be irrevocable prior to the performance in full of the Obligations or
expiration of the Option, and shall
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not be terminated prior thereto or affected by any act of the Pledgor or other
Persons or by operation of law.
4. Voting Rights, Dividends, Etc. During the term of this Pledge
Agreement, and except as otherwise provided in this Section 4, (a) Pledgor shall
have the right to vote the Shares on all corporate questions in a manner not
inconsistent with the terms of this Pledge Agreement and any other agreement,
instrument or document executed pursuant thereto or in connection therewith and
(b) all Distributions, if any, in respect of the Pledged Collateral, shall be
the property of the Pledgor. Any Distributions received by Secured Party prior
to either the exercise of the Option with respect to any Shares or prior to the
occurrence of an Event of Default shall be promptly forwarded to Pledgor. After
the Option has been duly exercised, including payment of the exercise price, (x)
the Secured Party may, at the Secured Party's option and following written
notice from the Secured Party to Pledgor, exercise all voting powers pertaining
to the Pledged Collateral, and Pledgor hereby grants Secured Party an
irrevocable proxy, coupled with an interest, therefor, and (y) all
Distributions, if any, in respect of the Pledged Collateral, shall be the
property of the Secured Party. Any Distributions received by Pledgor after
either the exercise of the Option with respect to any Shares, including payment
of the exercise price therefor, or after the occurrence of an Event of Default
shall be promptly forwarded to Secured Party.
5. Pledgor's Covenants, Representations and Warranties.
(a) Pledgor reaffirms his representations, warranties and
covenants set forth in the Option Agreement; and
(b) Pledgor agrees to defend the Pledged Collateral from all
claims, liens, suits, or asserted rights of all other parties to the Pledged
Collateral arising out of an action or omission of Pledgor.
6. Return of the Pledged Collateral Upon Termination; Termination of
Financing Statement. The Pledged Collateral shall be released, in whole or in
part, from the lien created by this Agreement to the extent that the Secured
Party exercises its Option. Upon expiration of the Option, Secured Party shall
cause to be transferred to Pledgor all of the Pledged Collateral then in its
possession, to the extent Secured Party has not exercised its option under the
terms of the Option or taken, sold or otherwise realized upon the same pursuant
to its rights hereunder. Immediately following the termination of the lien
created by this Agreement, Secured Party shall execute and deliver to Pledgor,
at Secured Party's expense, such documents as Pledgor may reasonably request to
release the Pledged Collateral from the lien of this Agreement and shall cause
any Pledged Collateral remaining in its possession to be transferred to Pledgor
or his nominee in accordance with Pledgor's instructions.
7. Event of Default. The following event shall constitute an Event of
Default hereunder: a failure by Pledgor to perform his obligations under the
Option if such failure is coupled with an exercise of the Option including
payment of the exercise price by Secured Party or his permitted transferee
pursuant to the provisions of the Option.
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8. Remedies Upon Default. Upon the occurrence of an Event of Default
Secured Party shall have (a) the right to recover from Seller all actual damages
arising as a result of such Event of Default, and (b) all of the rights of a
secured party under the Code, including without limitation, seizure of,
foreclosure upon and/or sale of the Pledged Collateral. The proceeds of any such
sale shall be the property of Secured Party. Notwithstanding the foregoing,
Pledgor irrevocably agrees that Secured Party may, in lieu of foreclosure upon
and sale of the Pledged Collateral, seize and retain the Pledged Collateral upon
the occurrence of an Event of Default.
9. Transfer and Assignment. Pledgor may not transfer its rights or
liabilities under this Pledge Agreement to any other person without the express
written consent of the Secured Party. Secured Party may transfer its rights and
obligations solely to the permitted transferees as set forth in the Option, on
written notice to Pledgor.
10. Further Assurances. Pledgor agrees that it will cooperate with the
Secured Party and will execute and deliver, or cause to be executed and
delivered, all such other stock powers, proxies, instruments and documents, and
will take all such other action, including, without limitation, the execution of
financing statements, as the Secured Party may reasonably request from time to
time in order to carry out the provisions and purposes of this Pledge Agreement.
11. Miscellaneous.
(a) No Waivers. No action, failure to act, or knowledge of Secured
Party shall be deemed to constitute a waiver of any power, right, or remedy
hereunder, nor shall any single or partial exercise thereof preclude any further
exercise thereof or the exercise of any other power, right, or remedy. The
failure, or delay of Secured Party at any time or times to require performance
of, or to exercise its rights with respect to, any representation, warranty,
covenant, or other term or provision of this Pledge Agreement in no manner shall
affect its right at a later time to enforce any such provision. No notice to or
demand on a party in any case shall entitle such party to any other or further
notice or demand in the same, similar, or other circumstances.
(b) Amendment. This Pledge Agreement shall not be amended nor shall any
right hereunder be deemed waived except by a written agreement expressly setting
forth the amendment or waiver and signed by the party against whom or which such
amendment or waiver is sought to be charged.
(c) Counterparts. This Pledge Agreement may be executed by the parties
on any number of separate counterparts, and by each party on separate
counterparts; each counterpart shall be deemed an original instrument; and all
of the counterparts taken together shall be deemed to constitute one and the
same instrument.
(d) Choice of Law. This Pledge Agreement and any document or instrument
executed in connection herewith shall be governed by, and construed and
interpreted in accordance with, the internal laws of the State of New York.
(e) No Strict Construction. The language used in this Pledge Agreement
shall be deemed to be the language chosen by the parties hereto to express their
mutual intent, and no rule of strict construction will be applied against any
person.
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IN WITNESS WHEREOF, Pledgor and Secured Party have executed this Pledge
Agreement as of the day and year first above written.
SECURED PARTY: PLEDGOR:
/s/ Xxxx Xxxxxxxxx /s/ Xxxxxx Xxxxxxx
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XXXX XXXXXXXXX XXXXXX XXXXXXX
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STOCK POWER
FOR VALUE RECEIVED, the undersigned does hereby sell, assign and transfer to
__________________________, [_________] shares of common stock, $.01 par value
per share, of Party City Corporation, a Delaware corporation, represented by
Certificate No. [___] (the "Stock"), standing in the name of the undersigned on
the books of said corporation and does hereby irrevocably constitute and appoint
_________________________ as the undersigned's true and lawful attorney, for him
and in his name and xxxxx, to sell, assign and transfer all or any of the Stock,
and for that purpose to make and execute all necessary acts of assignment and
transfer thereof; and to substitute one or more persons with like full power,
hereby ratifying and confirming all that said attorney or substitute or
substitutes shall lawfully do by virtue hereof.
Dated: ______________________
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Name: XXXXXX XXXXXXX
Its: Sole General Partner
