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Exhibit 1
PLEDGE AGREEMENT
PLEDGE AGREEMENT dated this 12th day of November, 1997 between APPLIED
TECHNOLOGIES, L.P., a Delaware limited partnership (the "PLEDGOR") and
BANKBOSTON, N.A. (the "BANK").
W I T N E S S E T H:
WHEREAS, the Bank may make loans to the Pledgor pursuant to a Line Letter
Agreement dated of even date herewith (as amended from time to time, the "LINE
AGREEMENT") between the Pledgor and the Bank; and
WHEREAS, the willingness of the Bank to enter into the Line Agreement and
to make loans thereunder is subject to the condition, among others, that the
Pledgor execute and deliver to the Bank this Pledge Agreement;
NOW THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged by each party hereto, the Pledgor and the Bank agree as follows:
Section 1. PLEDGE AND SECURITY INTEREST GRANT. As collateral security for
the payment and performance in full of the obligations owing by the Pledgor to
the Bank arising hereunder, under the Line Agreement or the Commercial
Promissory Note of even date herewith made by Pledgor to the order of the Bank
(as amended from time to time, the "NOTE"), of every kind and description,
direct or indirect, absolute or contingent, primary or secondary, due or to
become due, now existing or hereafter arising thereunder, (collectively, the
"OBLIGATIONS"), the Pledgor hereby pledges and grants a security interest in
favor of the Bank in 1,500,000 shares of its common voting stock in Applied
Graphics Technologies, Inc., a Delaware corporation (the "COMPANY"), as
described on Schedule A attached hereto, as amended from time to time, together
with any and all profits, interest, dividends, income, distributions, cash and
non-cash proceeds thereof, options and warrants and other rights appurtenant
thereto, and substitutions therefor, and all rights of the Pledgor with respect
to the Pledged Collateral under the Registration Rights Agreement dated as of
April 16, 1996 by and between the Pledgor and the Company (as amended from time
to time, the "REGISTRATION AGREEMENT"") (all of the foregoing being collectively
referred to herein as the "PLEDGED COLLATERAL"). The Pledgor grants the Bank a
continuing first lien and security interest in the Pledged Collateral, and
assigns to the Bank any and all of its rights under the Pledged Collateral.
Section 2. REGISTRATION, ETC. OF PLEDGED COLLATERAL. Any stock or
securities held by the Bank as Pledged Collateral hereunder may, at the option
of the Bank upon the occurrence and during the continuance off a "Nonpayment"
(as defined in the Note), be registered in the name of the Bank or its nominee.
At any time after Nonpayment and registration of the Pledged Collateral in the
name of the Bank, the Bank may, without notice and as applicable, exercise all
voting and corporate rights at any meeting of the shareholders of the issuer of
the Pledged Collateral, and exercise any and all rights of registration,
conversion, exchange, subscription or any other rights, privileges or options
pertaining to the Pledged Collateral as if it were the absolute owner thereof
including,
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without limitation, the right to exchange, at its discretion, any and all of the
Pledged Collateral upon the merger, consolidation, reorganization,
recapitalization or other readjustment of the issuer thereof, all without
liability except to account for property actually received, but the Bank 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 so doing.
Section 3. PAYMENTS IN RESPECT OF COLLATERAL.
If the Pledgor shall at any time be entitled to receive or shall receive
any cash, stock, stock certificate or other property, option or right, in
respect of, as an addition to, in substitution or exchange for any of the
Pledged Collateral, the Pledgor agrees that the same shall be deemed to be
Pledged Collateral and shall be delivered directly to the Bank, to be held by
the Bank subject to the terms hereof, as further security for the Obligations,
and to take all steps necessary to arrange for such delivery. If the Pledgor
receives any of the foregoing directly, it hereby agrees to hold such cash or
other property in trust for the benefit of the Bank, and to turn over such cash
or other property to the Bank immediately. The Bank shall have all of the rights
set forth herein with respect thereto.
Section 4. REPRESENTATIONS, WARRANTIES AND COVENANTS. The Pledgor hereby
represents and warrants to and covenants with the Bank that:
Section 4.1 Title to Pledged Collateral. The Pledgor is the sole legal and
equitable owner of the Pledged Collateral, and holds good title to the same free
and clear of all liens, charges, encumbrances and security interests or rights
of others of every kind and nature whatsoever, except for the security interest
granted hereunder to the Bank. The Pledgor has owned the Pledged Collateral
continuously since April 22, 1996.
Section 4.2 Intentionally Deleted.
Section 4.3 Authorization. The Pledgor has good right and legal authority
to assign, deliver, and/or create a security interest in the Pledged Collateral
in the manner hereby provided or contemplated and will defend its title and the
right, title and security interest of the Bank thereto against all claims of all
persons or entities; the Pledged Collateral is genuine and is what it purports
to be, and the execution, delivery and performance of this Agreement have been
duly authorized. This Agreement constitutes a legal, valid and binding
obligation of the Pledgor, enforceable against the Pledgor in accordance with
its terms, except as such enforcement may be limited by the effects of
insolvency, bankruptcy, fraudulent conveyance, reorganization, moratorium and
similar laws affecting creditors' rights generally, and general equitable
principles, whether or not considered in a proceeding in equity.
Section 4.4 Unrestricted Collateral. Other than any requirement in
connection with registration of the Pledged Collateral under the Securities Act
of 1933 (as amended, the "SECURITIES ACT"), the Pledged Collateral is not
subject to any restriction on transfer contained in any agreement, law,
regulation, rule or policy to which the Pledgor is a party or by which the
Pledgor is bound, which would prohibit or restrict the pledge or assignment of
the Pledged Collateral hereunder.
Section 4.5 Further Assurance. The Pledgor shall at all times do, make,
execute and deliver all such additional and further acts and instruments as the
Bank may at any time
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request in connection with the administration and enforcement of this Agreement
or relative to the Pledged Collateral or any part thereof, or in order more
completely to vest in and assure to the Bank or make available to it the
property and rights herewith or hereafter granted, assigned or transferred to
the Bank in the Pledged Collateral and to carry into effect the provisions and
intent of this Agreement, including, without limitation, execution and delivery
by the Pledgor of appropriate stock transfer powers, and instruction to the
transfer agent with respect to the Pledged Collateral in connection with a
pledge of additional Pledged Collateral under Section 4.7.
Section 4.6 Disposition; Negative Pledge. The Pledgor hereby covenants
that it will not sell, convey or otherwise dispose of any of the Pledged
Collateral, nor will it create, incur or permit to exist any pledge, option,
assignment, lien, charge, encumbrance or any security interest whatsoever with
respect to any of the Pledged Collateral or the proceeds thereof.
Section 4.7 Minimum Market Value; Additional Collateral. The Pledged
Collateral shall at all times have a market value of not less than an amount
equal to the product of (a) 2.22, multiplied by (b) the outstanding principal
balance of the borrowings under the Line Agreement (the "MINIMUM VALUE"). In the
event the market value of the Pledged Collateral is less than the Minimum Value,
the Pledgor shall, within two "Business Days" (as defined in the Line Agreement)
either immediately (a) repay a portion of the outstanding principal amount
outstanding under the Line Agreement, or (b) pledge and deliver to the Bank any
additional shares of the common voting stock of the Company, in addition to the
Pledged Collateral, then owned by the Pledgor, together with any and all
profits, interest, dividends, income, distributions, cash and non-cash proceeds
thereof and substitutions therefor, or both, with aggregate fair market value at
least equal to the amount by which the outstanding principal amount of the
borrowings under the Line Agreement exceeds the Minimum Value.
Section 4.8 Registration Agreement. Except with the prior written consent
of the Bank, the Pledgor shall not amend, modify, or waive any term or condition
contained in the Registration Agreement in a manner that is adverse to the
interests of the Bank. The Pledgor shall promptly deliver to the Bank a copy of
all notices given or received by the Pledgor under or in connection with the
Registration Agreement.
Section 5. DISTRIBUTIONS, ETC. In case, upon the, winding up, liquidation
or reorganization of the Pledgor, whether in bankruptcy, insolvency or
receivership proceedings or upon an assignment for the benefit of creditors or
any other marshalling of the assets and liabilities of the Pledgor, any sum
shall be paid or any property shall be distributed upon or with respect to any
of the Pledged Collateral, such sum shall be paid over or such property shall be
distributed to the Bank, to be held as collateral security for the Obligations.
In case any stock dividend shall be declared on any of the Pledged Collateral,
or any share of stock or fraction thereof shall be issued pursuant to any stock
split involving any of the Pledged Collateral, or any distribution of capital
shall be made on any of the Pledged Collateral, or any property shall be
distributed on or with respect to the Pledged Collateral pursuant to
recapitalization or reclassification of the capital of the Pledgor, the shares
or other property so distributed shall be delivered to the Bank to be held as
collateral security for the Obligations.
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Section 6. DEFAULT.
Section 6.1 Rights of the Bank. Upon the occurrence and during the
continuance of any Nonpayment as defined in the Line Agreement or the Note, the
Bank shall have all of the rights and remedies of a secured party under the
Uniform Commercial Code or other applicable law and shall have the right,
subject to any necessary prior consent of any governmental authority, at any
time or times thereafter to sell, resell, assign and deliver all or any of the
Pledged Collateral at public or private sale. Unless the Pledged Collateral is
of a type customarily sold on a recognized market, the Bank will give the
Pledgor at least 10 days' prior written notice of the time and place of any
public sale thereof or of the time after which any private sale or any other
intended disposition thereof is to be made, which notice the Pledgor agrees is
reasonable. All such sales shall be at such commercially reasonable price or
prices as the Bank shall deem best and either for cash or on credit or for
future delivery. At any such sale or sales the Bank may purchase any or all of
the Pledged Collateral to be sold thereat upon such terms as the Bank may deem
best. Upon any such sale or sales the Pledged Collateral so purchased shall be
held by the purchaser absolutely free from any claims or rights of whatsoever
kind or nature, including any equity of redemption and any similar rights, all
such equity of redemption and any similar rights being hereby expressly waived
and released by the Pledgor. In the event any consent, approval or authorization
of any governmental agency will be necessary to effectuate any such sale or
sales, the Pledgor shall execute all such applications or other instruments as
may be required. The proceeds of any such sale or sales, together with any other
additional collateral security at the time received and held hereunder, shall be
received and applied: first, to the payment of all costs and expenses of such
sale, including reasonable attorneys' fees; second, to the payment of the
Obligations in such order of priority as the Bank shall determine; and any
surplus thereafter remaining shall be paid to the Pledgor or to whoever may be
legally entitled thereto; provided that in no event shall the Pledgor be
credited with any part of the proceeds of the sale of the Pledged Collateral
until cash payment thereon has actually been received by the Bank.
Section 6.2 Securities Restrictions. The Pledgor recognizes that the Bank
may be unable to effect a public sale of all or a part of the Pledged Collateral
by reason of certain prohibitions contained in the Securities Act or the
securities laws of various states (the "BLUE SKY LAWS"), 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 the Pledged Collateral for
their own account, for investment and not with a view to the distribution or
resale thereof. The Pledgor agrees that private sales so made may be at prices
and upon other terms less favorable to the seller than if the Pledged Collateral
were sold at public sales, and that the Bank has no obligation to delay sale of
any the Pledged Collateral for the period of time necessary to permit the
Pledged Collateral to be registered for public sale under the Securities Act or
the Blue Sky Laws. The Pledgor agrees that private sales made under the
foregoing circumstances shall be deemed to have been made in a commercially
reasonable manner.
Section 7. RIGHTS OF BANK. Beyond the exercise of reasonable care to
assure the safe custody of the Pledged Collateral while any of it is held by the
Bank hereunder, the Bank shall have no duty or liability to anyone to collect
any sums due or other property due in respect thereof or to protect or preserve
any rights of any such party pertaining thereto, and shall be relieved of all
responsibility for the Pledged Collateral upon the surrender of the same to the
Pledgor. No course of dealing between the Pledgor and the Bank, nor any failure
by the Bank to exercise or delay in exercising any right, power or privilege
hereunder
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or under any of the Obligations, shall operate as a waiver 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. The rights and remedies herein provided and
provided under any of the Obligations are cumulative and are in addition to, and
not exclusive of, any rights or remedies provided by law, including, without
limitation, the rights and remedies of a secured party under the Uniform
Commercial Code.
Section 8. BANK AS ATTORNEY-IN-FACT. Upon the occurrence and during the
continuance of any Nonpayment as defined in the Note, the Bank may, but without
obligation to do so, as attorney-in-fact for the Pledgor, demand, xxx for and/or
collect any money or property at any time due, payable or receivable to which it
may be entitled hereunder, on account of or in exchange for any of the Pledged
Collateral. Upon the occurrence and during the continuance of any such
Nonpayment, or in connection with any sale or other disposition of Pledged
Collateral pursuant to this Agreement, the Bank shall have the right, for and in
the name, place and stead of the Pledgor, as attorney-in-fact for the Pledgor,
to execute endorsements, assignments, or other instruments of conveyance or
transfer with respect to all or any of the Pledged Collateral. The Pledgor shall
indemnify and hold harmless the Bank from and against any liability or damage
which the Bank may incur in the exercise and performance, in good faith, of any
of the Bank's powers and duties set forth herein.
Section 9. ASSIGNMENTS, ETC. In the event of a sale or assignment by the
Bank of all or any of the Obligations held by it in accordance with Section 13
of the Line Agreement, the Bank may assign or transfer its rights and interest
under this Agreement in whole or in part to the purchaser or purchasers of such
Obligations, whereupon such purchaser or purchasers shall become vested with all
of the powers and rights given to the Bank hereunder, and the Bank shall
thereafter be forever released and fully discharged from any liability or
responsibility hereunder with respect to the rights and interests so assigned.
Section 10. NOTICE. All notices hereunder shall be in writing and shall be
deemed to have been duly made or given when delivered by hand, when properly
deposited in the mail postage prepaid, return receipt requested, when sent by
facsimile, receipt confirmed, or when delivered by reputable overnight courier
addressed as follows:
If to the Pledgor:
Applied Printing Technologies, L.P.
00 Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
Attention: Chief Financial Officer
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If to the Bank:
BankBoston, N.A.
000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Media & Communications, Xxxxxx Xxxxxxx
or such other address as either party directs the other in writing.
Section 11. WAIVERS. Except as otherwise expressly provided herein, in the
Note and in the Line Agreement, the Pledgor waives presentment, notice protest,
notice or acceptance of this Agreement, notice of any loans made, extensions
granted, collateral received or delivered or any other action taken in reliance
thereon, all demands and notices in connection with the delivery, acceptance,
performance, default or enforcement of any of the Obligations or other evidence
of indebtedness for which any of the Pledged Collateral is pledged and all other
demands and notices of any description, and assents to any extension or
postponement of the time of payment or any other indulgence, to any
substitution, exchange or release of Pledged Collateral and to the addition or
release of any party or person primarily or secondarily liable.
Section 12. REINSTATEMENT. This Agreement shall continue to be effective,
or be reinstated, as the case may be, if at any time any amount received by the
Bank in respect of the Pledged Collateral is rescinded or must otherwise be
restored or returned by the Bank upon the insolvency, bankruptcy, dissolution,
liquidation or reorganization of the Pledgor or upon the appointment of any
intervenor or conservator of, or trustee or similar official for, the Pledgor or
any substantial part of its respective properties, or otherwise, all as though
such payments had not been made.
Section 13. MISCELLANEOUS. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their legal representatives, successors
and permitted assigns, and the term "Bank" shall be deemed to include any other
permitted holder or holders of any of the Obligations. This Agreement may be
executed in any number of counterparts and by the different parties hereto on
separate counterparts, each of which when so executed and delivered shall be an
original, and all of which together shall constitute one instrument. This
Agreement, including the validity hereof and the rights and obligations of the
parties hereunder, shall be construed in accordance with and governed by the
laws of The Commonwealth of Massachusetts.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as a
sealed instrument by their duly authorized representatives as of the date first
above written.
APPLIED PRINTING TECHNOLOGIES, L.P.
By: APPLIED PRINTING TECHNOLOGIES, INC.,
its General Partner
By: /s/ Xxxxxx X. Xxxx
--------------------------
Name: Xxxxxx X. Xxxx
--------------------------
Its: Chief Financial Officer
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BANKBOSTON, N.A.
By: /s/ Xxxxxx X. Xxxxxxx
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Xxxxxx X. Xxxxxxx
Vice President
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SCHEDULE A
PLEDGED COLLATERAL
Issuer Class Certificate Number Number of Shares
------ ----- ------------------ ----------------
Applied Graphics Common 1,500,000
Technologies, Inc.
