STOCK PLEDGE AND SECURITY AGREEMENT
Stock Pledge and Security Agreement (this "Pledge Agreement"), dated as of
the 30th day of April, 1998, by TII CORPORATION, having its principal place of
business at 0000 Xxxxx Xxxxxx, Xxxxxxxx, Xxx Xxxx 00000 ("Pledgor"), to and in
favor of BNY FINANCIAL CORPORATION, having an office at 0000 Xxxxxx xx xxx
Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000 ("Pledgee").
W I T N E S S E T H:
WHEREAS, Pledgee and Pledgor are contemporaneously herewith entering into
financing arrangements pursuant to which Pledgee may make loans and advances and
provide other financial accommodations to Pledgee as set forth in the Revolving
Credit, Term Loan and Security Agreement, dated of the date herewith, by and
among Pledgee, Pledgor and TII Corporation (the "Credit Agreement") together
with various other agreements, documents and instruments referred to therein or
at any time executed and/or delivered in connection therewith or related
thereto, including but not limited to, this Agreement (all of the foregoing, as
the same now exist or may hereafter be amended, modified, supplemented, renewed,
restated or replaced, being collectively referred to herein as the "Financing
Agreements");
WHEREAS, in order to induce Pledgee to enter into the Financing Agreements
and to make loans and advances and provide other financial accommodations
pursuant thereto, Pledgor has agreed to grant to Pledgee certain collateral
security as set forth herein;
WHEREAS, Pledgor is now the direct and beneficial owner of all of the
shares of capital stock described on SCHEDULE A hereto (the "Pledged
Securities"); and
WHEREAS, Pledgor has agreed to secure the payment and performance of its
obligations under the Financing Agreements, by (i) executing and delivering to
Pledgee this Pledge Agreement, (ii) delivering to Pledgee the Pledged Securities
which are registered in the name of Pledgor, together with appropriate powers
duly executed in blank by Pledgor, and (iii) delivering to Pledgee any and all
other documents which Pledgee deems necessary to protect Pledgee's interests
hereunder;
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, receipt of which is hereby acknowledged, Pledgor hereby
agrees
as follows:
1. CERTAIN DEFINITIONS
As used above and elsewhere in this Pledge Agreement the following
terms shall have the following meanings (all terms defined in the Uniform
Commercial Code which are not otherwise defined herein or in the Credit
Agreement, shall have the meanings set forth therein):
(a) "ISSUERS" shall mean and include each and every issuer of the
Pledged Securities.
(b) "PLEDGED PROPERTY" shall mean and include the (i) Pledged
Securities, together with all cash dividends, stock dividends, redemptions,
stock, securities options, substitutions, exchanges and other distributions now
or hereafter distributed by any of the Issuers with respect to the Pledged
Securities hereinafter be delivered into the possession of Pledgee, (ii)
Pledgor's records with respect to the foregoing, and (iii) the proceeds of all
of the foregoing.
(c) CREDIT AGREEMENT TERMS. Terms used herein which are defined in
the Credit Agreement and are not otherwise defined herein shall have the
meanings set forth in the Credit Agreement.
2. PLEDGE AND GRANT OF SECURITY INTEREST
As security for the prompt and unconditional payment and performance
when due of its Obligations to Pledgee, Pledgor hereby pledges, hypothecates,
assigns, transfers and sets over to Pledgee, the Pledged Property, and grants to
Pledgee a continuing security interest in the Pledged Property and the proceeds
thereof.
3. REPRESENTATIONS, COVENANTS AND WARRANTIES
Pledgor hereby covenants, represents and warrants, that:
(a) The Pledged Securities are authorized, validly issued, fully
paid and non-assessable capital stock of the respective Issuers, constitute
Pledgor's entire interest in the Issuers and constitute all of the issued and
outstanding shares of capital stock of Issuers;
(b) The Pledged Property is directly, legally and beneficially
owned by
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Pledgor free and clear of all claims, liens, pledges and encumbrances of any
kind, nature or description, except in favor of Pledgee;
(c) The Pledged Property is not subject to any restrictions
relative to the transfer thereof, except as required by applicable law, and
Pledgor has the right to transfer and hypothecate the Pledged Property free and
clear of any liens, encumbrances or restrictions, except as otherwise provided
herein;
(d) The Pledged Property is duly and validly pledged to Pledgee
and no consent or approval of any governmental or regulatory authority or of any
securities exchange or the like, nor any consent or approval of any other third
party is necessary to the validity of this Pledge Agreement which has not been
obtained and a copy of which has not been furnished to Pledgee;
(e) During the term of this Pledge Agreement, if Pledgor shall
receive, have registered in its name or become entitled to receive or acquire,
or have registered in its name any stock certificate, option, or right with
respect to the securities of any Issuer (including without limitation, any
certificate representing a dividend or a distribution or exchange of or in
connection with any reclassification of the Pledged Securities) whether as an
addition to, in substitution of, or in exchange for any of the Pledged Property,
Pledgor agrees to accept same as Pledgee's agent, to hold same in trust for
Pledgee and to deliver same forthwith to Pledgee or Pledgee's agent or bailee in
the form received, with the endorsement(s) of Pledgor where necessary and/or
appropriate powers and/or assignments duly executed to be held by Pledgee or
Pledgee's agent or bailee subject to the terms hereof, or if any of the
foregoing is uncertificated, register same with the Pledgee's security interest
noted therein as further security for Pledgor's Obligations to Pledgee;
(f) During the term of this Pledge Agreement, Pledgor shall not
directly or indirectly sell, assign, transfer, or otherwise dispose of, or grant
any option with respect to the Pledged Property, nor shall Pledgor create, incur
or permit any further pledge, hypothecation, encumbrance, lien, mortgage or
security interest with respect to the Pledged Property;
(g) So long as no default has occurred and is continuing, Pledgor
shall have the right to vote and exercise all corporate rights and to receive
cash dividends or real or personal property distributed by any Issuer with
respect to the Pledged Securities, provided that any stock of any Issuer, or any
options with respect to stock of any Issuer, so distributed shall be subject to
the security interest therein of Pledgee, as provided in subparagraph (e) above;
and
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(h) During the term of this Pledge Agreement, Pledgor shall not
permit any Issuer, directly or indirectly, to issue, sell, grant, assign,
transfer or otherwise dispose of, any additional shares of capital stock of the
Issuer or any option or warrant with respect to, or other right or security
convertible into, any additional shares of capital stock of such Issuer, now or
hereafter authorized, unless all such additional shares, options, warrants,
rights or other such securities are made and shall remain part of the Pledged
Property subject to the first priority security interest granted herein.
4. EVENTS OF DEFAULT
The occurrence of an Event of Default under the Credit Agreement
shall constitute a default under this Pledge Agreement.
5. REMEDIES AFTER DEFAULT
Immediately upon the occurrence of a default, and during the
continuance thereof, in addition to all other rights and remedies of Pledgee,
whether provided under law, the Financing Agreements or otherwise, Pledgee shall
have the following rights and remedies which may be exercised without notice to,
or consent by, the Pledgor, except as such notice or consent is expressly
provided for hereunder:
(a) Pledgee, at its option, shall be empowered to exercise its
continuing right to instruct the Issuers (or the appropriate transfer agent of
the Pledged Securities) to register any or all of the Pledged Property in the
name of Pledgee or in the name of Pledgee's nominee and Pledgee may complete, in
any manner Pledgee may deem expedient, any and all stock powers, assignments or
other documents heretofore or hereafter executed in blank by Pledgor and
delivered to Pledgee and, in furtherance of the foregoing, Pledgor shall execute
and deliver to Pledgee together herewith a Special Power of Attorney in the form
of EXHIBIT 1 hereto. After said instruction, and without further notice, Pledgee
may exercise all voting and corporate rights with respect to the Pledged
Securities and may exercise any and all rights of conversion, redemption,
exchange, subscription or any other rights, privileges, or options pertaining to
any shares of the Pledged Securities as if Pledgee were the absolute owner
thereof, including without limitation, the right to exchange, at its discretion,
any and all of the Pledged Securities upon any merger, consolidation,
reorganization, recapitalization or other readjustment with respect thereto.
Upon the exercise of any such rights, privileges or options by Pledgee, Pledgee
shall have the right to deposit and deliver any and all of the Pledged
Securities to any committee, depository, transfer agent, registrar or other
designated agency upon such terms and conditions as Pledgee may determine, all
without liability. However, Pledgee 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 or delay in doing so.
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(b) In addition to all of the rights and remedies of a secured
party under the Uniform Commercial Code or other applicable law, Pledgee shall
have the right, at any time and without demand of performance or other demand,
advertisement or notice of any kind (except the notice specified below of time
and place of public or private sale) to or upon Pledgor, or any other Person
(all and each of which demands, advertisements and/or notices are hereby
expressly waived to the extent permitted by law), to proceed forthwith to
collect, redeem, receive, appropriate, sell, or otherwise dispose of and deliver
the Pledged Property or any part thereof in one or more lots at public or
private sale or sales at any exchange, brokers board or at any of Pledgee's
offices or elsewhere at such prices and on such terms as Pledgee may deem best.
The foregoing disposition(s) may be for cash or on credit or for future delivery
without assumption of any credit risk by Pledgee, with Pledgee having the right
to purchase all or any part of said Pledged Property so sold at any such sale or
sales, public or private, free of any right or equity of redemption in Pledgor,
which right or equity is hereby expressly waived or released by Pledgor. The
proceeds of any such collection, redemption, recovery, receipt, appropriation,
realization or sale, after deducting all costs and expenses of every kind
incurred relative thereto or incidental to the care, safekeeping or otherwise of
any and all Pledged Property or in any way relating to the rights of Pledgee
hereunder (including, without limitation, appraisal, accountants, and attorneys'
fees and legal expenses whether or not due) shall be applied in such order and
manner as Pledgee may determine in its sole discretion. Pledgor agrees that five
(5) business days prior notice by Pledgee, sent by certified mail, postage
prepaid, designating the date after which a private sale may take place or a
public auction may be held, is reasonable notification of such matters.
(c) Pledgor recognizes that Pledgee may be unable to effect a
public sale of all or part of the Pledged Property by reason of certain
prohibitions contained in the Securities Act of 1933, as amended, as now or
hereafter in effect or in applicable Blue Sky or other state securities law, as
now or hereafter in effect, but may be compelled to resort to one or more
private sales to a restricted group of purchasers who will be obliged to agree,
among other things, to acquire such Pledged Property for their own account for
investment and not with a view to the distribution or resale thereof. If at the
time of any sale of the Pledged Property or any part thereof, the same shall
not, be effectively registered (if required) under the Securities Act of 1933
(or other applicable state securities law), as then in effect, Pledgee in its
sole and absolute discretion is authorized to sell the Pledged Property, or such
part thereof, by private sale in such manner and under such circumstances as
Pledgee or its counsel may deem necessary or advisable in order that such sale
may legally be effected without registration. Pledgor acknowledges and agrees
that private sales so made may be at prices and other terms less favorable to
the seller than if the Pledged Property were sold at public sale, and that
Pledgee has no obligation to delay the sale of any Pledged Property for the
period of time necessary to
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permit the Issuer of the Pledged Property, even if such Issuer would agree, to
register the Pledged Property for public sale under such applicable securities
laws. Pledgor acknowledges and agrees that any private sales made under the
foregoing circumstances shall be deemed to have been in a commercially
reasonable manner.
(d) All of the Pledgee's rights and remedies, including but not
limited to the foregoing and those otherwise arising under this Pledge
Agreement, the Financing Agreements, the instruments and securities comprising
the Pledged Property, applicable law or otherwise, shall be cumulative and not
exclusive and shall be enforceable alternatively, successively or concurrently
as Pledgee may deem expedient. No failure or delay on the part of Pledgee in
exercising any of its options, powers or rights or partial or single exercise
thereof, shall constitute a waiver of such option, power or right.
6. FURTHER ASSURANCES
Pledgor agrees that at any time, and from time to time, upon the
request of Pledgee, Pledgor will execute and deliver such further documents,
including but not limited to stock powers, or other appropriate instruments of
transfer in form reasonably satisfactory to counsel for Pledgee, and will take
or cause to be taken such further acts as Pledgee may reasonably request in
order to effect the purposes of this Pledge Agreement and perfect or continue
the perfection of the security interest in the Pledged Property granted to
Pledgee hereunder, in conformity with applicable law.
7. MISCELLANEOUS
(a) Pledgee or Pledgee's agent or bailee shall have no duty or
liability to protect or preserve any rights pertaining thereto and shall be
relieved of all responsibility for the Pledged Property upon surrendering it to
Pledgor. Upon the termination of the Financing Agreements and the indefeasible
payment in full of Pledgor's Obligations to Pledgee this Agreement shall
terminate and Pledgee shall execute and deliver all instruments as may be
necessary or proper to return or release its security interest in the Pledged
Property.
(b) No course of dealing between Pledgor and Pledgee, nor any
failure or delay by Pledgee to exercise any right, power or privilege under this
Pledge Agreement, the Financing Agreements or under any of the other documents
or agreements between Pledgor and Pledgee, shall operate as a waiver hereof or
thereof; nor shall any single or partial exercise of any right, power or
privilege hereunder or thereunder preclude any other or further exercise thereof
or the exercise of any other right, power or privilege. No waiver of any
provision of this Pledge Agreement shall be effective unless the same shall be
in writing and signed by Pledgee, and then such waiver shall be effective only
in the specific
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instance and for the purpose for which given.
(c) This Pledge Agreement may not be changed, modified or amended,
in whole or in part, except by a writing signed by Pledgor and Pledgee.
(d) The provisions of this Pledge Agreement are severable, and if
any clause or provision hereof shall be held invalid or unenforceable in whole
or in part in any jurisdiction, then such invalidity or unenforceability shall
attach only to such clause or provision in any such jurisdiction or part
thereof, and shall not in any manner affect such clause or provision in any
other jurisdiction or any other clause or provision in this Pledge Agreement in
any jurisdiction.
(e) THE PARTIES HERETO WAIVE TRIAL BY JURY IN ANY ACTION OR
PROCEEDING OF ANY KIND OR NATURE IN ANY COURT WHETHER ARISING OUT OF, UNDER OR
BY REASON OF THIS PLEDGE AGREEMENT OR THE PLEDGED PROPERTY.
(f) This Pledge Agreement shall inure to the benefit of Pledgor
and Pledgee and their respective successors and assigns permitted under the
Financing Agreements, and shall be binding upon Pledgor and its successors and
assigns permitted under the Financing Agreements until all of the Pledgor's
Obligations to Pledgee have been indefeasibly paid in full.
(g) In the event any term or provision of this Pledge Agreement
conflicts with any term or provision of the Financing Agreements, such term or
provision of the Financing Agreements shall control.
8. GOVERNING LAW
THIS PLEDGE AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO ITS
CONFLICT OF LAWS RULES). ANY JUDICIAL PROCEEDING BROUGHT BY OR AGAINST THE
PLEDGOR WITH RESPECT TO ANY OF THE OBLIGATIONS, THIS PLEDGE AGREEMENT OR ANY
RELATED AGREEMENT MAY BE BROUGHT IN ANY COURT OF COMPETENT JURISDICTION IN THE
STATE OF NEW YORK, UNITED STATES OF AMERICA, AND, BY EXECUTION AND DELIVERY OF
THIS PLEDGE AGREEMENT, THE PLEDGOR ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS
PROPERTIES, GENERALLY AND UNCONDITIONALLY THE NON-EXCLUSIVE JURISDICTION OF THE
AFORESAID COURTS, AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED
THEREBY IN CONNECTION WITH THIS PLEDGE AGREEMENT. NOTHING HEREIN SHALL AFFECT
THE RIGHT
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TO SERVE PROCESS IN ANY MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT OF THE
PLEDGEE TO BRING PROCEEDINGS AGAINST THE PLEDGOR IN THE COURTS OF ANY OTHER
JURISDICTION. THE PLEDGOR WAIVES ANY OBJECTION TO JURISDICTION AND VENUE OF ANY
ACTION INSTITUTED HEREUNDER AND SHALL NOT ASSERT ANY DEFENSE BASED ON LACK OF
JURISDICTION OR VENUE OR BASED UPON FORUM NON CONVENIENS. ANY JUDICIAL
PROCEEDINGS BY THE PLEDGOR AGAINST THE PLEDGEE INVOLVING, DIRECTLY OR
INDIRECTLY, ANY MATTER OR CLAIM IN ANY WAY ARISING OUT OF, RELATED TO OR
CONNECTED WITH THIS PLEDGE AGREEMENT OR ANY RELATED AGREEMENT, SHALL BE BROUGHT
ONLY IN A FEDERAL OR STATE COURT LOCATED IN XXX XXXX XX XXX XXXX, XXXXX XX XXX
XXXX.
IN WITNESS WHEREOF, the undersigned has caused these presents to be
duly executed and delivered on the day and year first above written.
PLEDGOR:
TII CORPORATION
By: /S/ XXXX XXXXXXX
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Title: VICE PRESIDENT
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SCHEDULE A
PLEDGED SECURITIES
Class Certificate Number
Issuer of Stock Number of Shares
Telecommunications Common 2 100
Industries, Inc.
EXHIBIT 1
SPECIAL POWER OF ATTORNEY
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
KNOW ALL MEN BY THESE PRESENTS, that TII CORPORATION having an
office at 0000 Xxxxx Xxxxxx, Xxxxxxxx, Xxx Xxxx 00000 (hereinafter "Pledgor"),
hereby appoints and constitutes BNY FINANCIAL CORPORATION, (hereinafter
"Pledgee") and each officer thereof, its true and lawful attorney, with full
power of substitution and with full power and authority to perform the following
acts on behalf of Pledgor at any time after the occurrence and during the
continuance of a default under the Pledge Agreement (as hereinafter defined):
1. Execution and delivery of any and all agreements, documents,
instruments of assignment, or other papers which Pledgee in its reasonable
discretion, deems necessary or advisable for the purpose of assigning, selling,
or otherwise disposing of all of the right, title, and interest of Pledgor in
and to the Pledged Securities, as defined in the Pledge Agreement, together with
all cash dividends, stock dividends, redemptions, securities or substitutions,
exchanges or other distributions now or hereafter pledged, assigned or otherwise
transferred to Pledgee by Pledgor in respect of the Pledged Securities and all
registrations, recordings, reissues, extensions, and renewals thereof, or for
the purpose of recording, registering and filing of, or accomplishing any other
formality with respect to the foregoing.
2. Execution and delivery of any and all documents, statements,
certificates or other papers which Pledgee in its sole discretion, deems
necessary or advisable to further the purposes described in paragraph 1 hereof.
This Power of Attorney, being a power coupled with an interest, is
made pursuant to a Stock Pledge and Security Agreement between Pledgor and
Pledgee dated of even date herewith (the "Pledge Agreement") and may not be
revoked until indefeasible payment in full of all Pledgor's "Obligations", as
such term is defined in the Pledge Agreement.
Dated as of April ___, 1998
PLEDGOR:
TII CORPORATION
By: ________________________
Title: _____________________
