EXHIBIT 10.14
PLEDGE AND SECURITY AGREEMENT
This Pledge and Security Agreement (the "PLEDGE AND SECURITY
AGREEMENT") is made this 10th day of May, 1996, by and between D.P.E.C., Inc.,
an Ohio corporation ("PLEDGOR"), and Xxxx Xxxxxxxx ("PLEDGEE"). For valuable
consideration, the receipt of which is hereby acknowledged, Pledgor and Pledgee,
intending to be legally bound, hereby recite and agree as follows:
RECITALS
A. Pledgor is purchasing from Pledgee a total of 14,850 common
shares without par value (the "PURCHASED SHARES") of Pledgor, pursuant to a
Share Purchase and Sale Agreement dated as of even date herewith between Pledgor
and Pledgee (the "SHARE PURCHASE AND SALE AGREEMENT").
B. The purchase price for the Purchased Shares is $1,250,000,
of which $1,000,000 is being paid in cash and $250,000 is evidenced by a
promissory note of even date herewith from Pledgor to Pledgee (the "NOTE").
C. Pledgor also has obligations to Pledgee under a
Noncompetition Agreement as of even date herewith between Pledgor and Pledgee
(the "NONCOMPETITION AGREEMENT") for the payment of $330,000 with respect to the
first thirty (30) months of the term of the Noncompetition Agreement (the
"THIRTY MONTHS PAYMENT OBLIGATIONS").
D. Section 5.05 of the Share Purchase and Sale Agreement
requires Pledgor to pledge to Pledgee, and grant Pledgee a security interest in,
4,950 of the Purchased Shares (the "PLEDGED SHARES") as security for Pledgor's
payment and performance of the Note and payment of the Thirty Months Payment
Obligations.
E. The Pledged Shares (i) bear certificate number 11, and (ii)
when reissued to Pledgor shall bear certificate number 13.
AGREEMENT
l. DEFINITIONS. As used herein, "COLLATERAL" shall mean all of
Pledgor's right, title and interest in and to the Pledged Shares, together with
all other rights at any time received or receivable or otherwise distributed in
respect of or in exchange for the Pledged Shares; but subject in all respects to
the provisions of Section 7 hereof.
As used herein, "LIABILITIES" shall mean all of Pledgor's
liabilities, obligations and indebtedness to Pledgee pursuant to the Note and
with respect to the Thirty Months Payment Obligations.
2. SECURITY INTEREST. To secure the prompt payment of the
Liabilities, Pledgor hereby conveys, pledges, transfers and delivers to Pledgee,
and grants to Pledgee a continuing security interest in, the Collateral. For
this purpose, Pledgor is also hereby delivering to Pledgee executed
assignment(s) separate from certificate for the Pledged Shares.
3. REPRESENTATIONS AND WARRANTIES OF PLEDGOR. Pledgor
represents and warrants to Pledgee, which representations and warranties are
continuing so long as any Liabilities remain outstanding, that: (a) Pledgor has
and will continue to have title to the Collateral free and clear of all liens,
security interests, restrictions, setoffs, adverse claims, assessments,
defaults, prepayments, defenses and conditions precedent except for the lien and
security interest of Pledgee created by this Pledge and Security Agreement and
the restrictions contained in that certain Second Amended and Restated
Shareholders Agreement of even date herewith by and among the Pledgor, Pledgee
and Xxxxx Xxxxx; (b) the Collateral is enforceable in accordance with its terms,
is genuine and complies with all applicable laws concerning form, content and
manner of preparation and execution; (c) no financing statement covering any of
the Collateral is on file in any public office other than those, if any, which
reflect the security interest created by this Pledge and Security Agreement; (d)
the execution and delivery of this Pledge and Security Agreement will not
violate any law or any agreement to which Pledgor is a party; and (e) all
information contained in this Pledge and Security Agreement is true and correct
to the best of Pledgor's knowledge.
4. COVENANTS OF PLEDGOR. Unless and until Pledgee consents in
writing to another course of action, so long as any of the Liabilities remain
outstanding, Pledgor covenants and agrees that: (a) Pledgor will not sell or
assign any of the Collateral (except as provided in Section 6 hereof), will keep
the Collateral free of liens, security interests and adverse claims, will
promptly notify Pledgee of any Default (as defined in Section 8 hereof), will
defend the Collateral against the claims and demands of all persons, will pay
promptly all taxes and assessments with respect to the Collateral, and will not
permit or consent to any amendment, modification, termination or assignment of
the Collateral; and (b) Pledgor will from time to time perform such other acts
as Pledgee may reasonably request to perfect and maintain Pledgee's security
interest in the Collateral.
5. COVENANTS OF PLEDGEE. Pledgee covenants and agrees, so long
as this Pledge and Security Agreement remains in effect, that she shall (a) keep
the Pledged Shares and all other Collateral in a safe location and shall be
responsible for any theft, loss, damage or destruction of the Pledged Shares and
all other Collateral in Pledgee's possession, and (b) temporarily deliver to
Pledgor any of the Collateral for the purpose of any exchange or other
transaction permitted by Pledgee.
6. SUBSTITUTION OF COLLATERAL. From time to time hereafter,
Pledgor shall have the right to substitute for the Collateral other securities
acceptable to Pledgee (such securities being hereinafter referred to as
"SUBSTITUTED SECURITIES"). Upon substitution, all Substituted Securities shall
be part of the Collateral for all purposes under this Pledge and Security
Agreement. Notwithstanding anything in this Section 6 to the contrary, in no
event shall any substitution of Substituted Securities for Collateral pursuant
to this Section 6 be effected unless
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and until each of the Substituted Securities has been delivered into the
possession of Pledgee. Pledgor hereby agrees that promptly upon any and all
substitutions of Substituted Securities for Collateral pursuant to this Section
6, Pledgor shall deliver to Pledgee all documents and instruments with respect
to the perfection of the Substituted Securities as Pledgee shall require in her
reasonable discretion.
7. RELEASE OF PLEDGED SHARES. Notwithstanding any terms and
conditions hereof to the contrary, with each reduction (by payment or otherwise)
of an aggregate of $10,000 of principal on the Note and payments on the Thirty
Months Payment Obligations, upon the written request of Pledgor, Pledgee will
release 85 Pledged Shares from this Pledge and Security Agreement until all
Pledged Shares have been released. Any such Pledged Shares that are released
shall (a) thereafter be excluded from Collateral and (b) be accompanied by
appropriate assignment(s) separate from certificate executed by Pledgee.
8. DEFAULT. The occurrence or existence of any one or more of
the following shall constitute a default hereunder ("DEFAULT"):
(a) There occurs an Event of Default under the
provisions of the Note or with respect to the Thirty Months Payment Obligations
(after giving effect to any applicable cure periods); or
(b) Pledgor fails or neglects to perform, keep or
observe any of the covenants, conditions, promises or agreements of Pledgor
contained in this Pledge and Security Agreement; or
(c) All or any part of the Collateral is attached,
seized (unless such seizure is the result of Pledgee's negligence), or levied
upon, or comes within the possession (constructive or actual) of any receiver,
trustee, custodian or assignee for the benefit of creditors.
9. REMEDIES. Upon the occurrence of any Default and at any
time thereafter, Pledgee shall have, in addition to all other rights and
remedies, the remedies of a Pledgee under the applicable Uniform Commercial Code
(the "UCC"), regardless of whether the UCC applies to the security transactions
covered by this Pledge and Security Agreement. If notice is required, Pledgee
shall give to Pledgor at least ten days' prior written notice of the time and
place of any public sale of the Collateral or of the time after which a private
sale or any other intended disposition is to be made.
10. TERMINATION. When the Liabilities are paid in full,
Pledgee shall return the Collateral that has not previously been released
pursuant to Section 7 hereof, together with any necessary executed assignment(s)
separate from certificate, to Pledgor, and Pledgor's and Pledgee's obligations
under this Pledge and Security Agreement shall terminate.
11. TREASURY SHARES. Until such time following a Default that
Pledgee exercises its rights and remedies as a secured creditor to foreclose or
realize on the Pledged
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Shares, the Pledged Shares shall constitute treasury shares and, as such, shall
not be deemed to be outstanding for dividend or distribution, quorum, voting or
other purposes.
12. NOTICES. Any notice required to be given hereunder shall
be in writing and shall be deemed to have been validly served, given or
delivered (a) on the date of delivery thereof if hand-delivered or transmitted
by facsimile, or (b) five days after deposit in the United States mails with
registered or certified postage prepaid, addressed as follows:
If to Pledgor:
D.P.E.C., Inc.
0000 Xxx Xxxxxxxxx Xxxx
Xxxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attn: Xxxxx Xxxxx
If to Pledgee:
Xxxx Xxxxxxxx
0000 Xxxxxxxxxx Xxxx
Xxxxxxxx, XX 00000
Facsimile: (000) 000-0000
13. GOVERNING LAW. This Pledge and Security Agreement has been
executed by Pledgor and Pledgee in Columbus, Ohio. This Pledge and Security
Agreement shall be governed by and interpreted in accordance with the local laws
of the State of Ohio except to the extent precluded by other law of mandatory
application.
IN WITNESS WHEREOF, Pledgor and Pledgee have executed, or
caused a duly authorized representative to execute, this Pledge and Security
Agreement to be effective as of the day and year first above written.
PLEDGOR: PLEDGEE:
D.P.E.C., INC.
By: /s/ Xxxxx Xxxxx, Pres. /s/ Xxxx Xxxxxxxx
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Xxxxx Xxxxx, its President Xxxx Xxxxxxxx
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