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PLEDGE AGREEMENT
This Pledge Agreement is made as of August 4, 1994 by Xxx X. Xxxxx, an
individual residing at _______________________ ("Pledgor") in favor of XXXXX &
XXXXXXX, INC., a New York corporation with its principal office at 00 Xxxxxxxxx
Xxxxxx, Xxxxxxx, Xxx Xxxx ("Secured Party").
Pledgor agrees as follows:
i. SECURITY INTEREST.
In consideration of the extension of credit evidenced by the Note
(as defined below), Pledgor hereby pledges, transfers and assigns to Secured
Party and grants to Secured Party a security interest ("Security Interest") in
and to all of the capital stock of Secured Party owned by Pledgor, whether such
stock is now existing or hereafter created or acquired and in all increases or
profits received therefrom, in all substitutions therefor, in all distributions
received in respect thereof and in all Proceeds thereof in any form
("Collateral").
Immediately upon the execution of this Security Agreement, Pledgor
will deliver to Secured Party certificates for all capital stock of Secured
Party now held by Pledgor, together with stock powers attached and endorsed in
blank. Upon Pledgor's acquisition of any additional capital stock of Secured
Party, Pledgor will immediately deliver to Secured Party certificates
representing the same together with stock powers attached and endorsed in blank.
ii. INDEBTEDNESS SECURED.
The Security Interest secures payment of all indebtedness
evidenced by: (a) that certain promissory note of even date herewith in the
principal amount of $159,783 executed and delivered by Pledgor to Secured Party
(the "Note"); and (b) any extensions, amendments, renewals, replacements or
modifications of the Note, (collectively, the "Indebtedness").
iii. REPRESENTATIONS AND WARRANTIES OF PLEDGOR.
Pledgor represents and warrants and, so long as this Security
Agreement is in effect, shall be deemed continuously to represent and warrant
that: (a) Pledgor is the owner of the Collateral free of all security interests
or other encumbrances, except the Security Interest; and (b) Pledgor is
authorized to enter into this Security Agreement.
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iv. CERTAIN COVENANTS OF PLEDGOR.
So long as this Security Agreement is in effect, Pledgor: (a) will
defend the Collateral against the claims and demands of all other parties; will
keep the Collateral free from all security interests or other encumbrances,
except the Security Interest; and will not sell, transfer, assign, deliver or
otherwise dispose of any Collateral or any interest therein without the prior
written consent of Secured Party, provided, however, that, subject to the
provisions of the Shareholder Agreement dated February 25, 1994 to which Pledgor
and Secured Party are parties, Pledgor may sell capital stock of Secured Party
included in the Collateral provided that all proceeds of any such sale, less all
federal and state income taxes resulting from such sale, are immediately paid to
Secured Party in respect of the Note; (b) will notify Secured Party promptly in
writing of any change in Pledgor's address, specified above; (c) in connection
herewith, will execute and deliver to Secured Party such financing statements,
assignments and other documents and do such other things relating to the
Collateral and the Security Interest as Secured Party may reasonably request;
and (d) will pay all taxes, assessments and other charges of every nature which
may be imposed, levied or assessed against the Collateral.
v. REGISTERED HOLDER OF COLLATERAL.
Upon the occurrence of an Event of Default (as hereinafter
defined), Pledgor authorizes Secured Party to transfer the Collateral or any
part thereof into its own name or that of its nominee so that Secured Party or
its nominee may appear on record as the sole owner thereof. After the occurrence
of any Event of Default, Pledgor waives all rights to be advised of or to
receive any notices, statements or communications received by Secured Party or
its nominee as such record owner.
vi. INCREASES, PAYMENTS, DIVIDENDS OR DISTRIBUTIONS.
(i) Except as specifically provided in paragraph vi(ii), whether
or not an Event of Default has occurred, Pledgor authorizes Secured Party: (i)
to receive any increases in the Collateral (including, without limitation, any
stock issued as a result of any stock split or dividend, any capital
distributions and the like), and to hold the same as part of the Collateral; and
(ii) to receive any other payment, distribution or dividend in respect of the
Collateral or any part thereof and hold the same as part of the Collateral. If
Pledgor receives any such increase, payment, dividend or distribution, Pledgor
will receive and hold the same in trust for the benefit of Secured Party and
deliver the same promptly to Secured Party to be held by Secured Party as part
of the Collateral.
(ii) Notwithstanding the foregoing, if there is then no existing
Event of Default, Pledgor shall be entitled to receive all cash dividends paid
with respect to any stock included in the Collateral; provided, however, that
upon and after the occurrence of an Event of Default, Secured Party shall be
entitled to receive and hold any such cash dividends as part
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of the Collateral. If, after the occurrence of an Event of Default, Pledgor
receives any such cash dividend, Pledgor will receive and hold the same in trust
for the benefit of Secured Party and deliver the same promptly to Secured Party
to be held by Secured Party as part of the Collateral.
vii. EVENTS OF DEFAULT.
(i) Any of the following events or conditions shall constitute an
event of default hereunder (each, an "Event of Default"): (i) nonpayment within
five (5) days of the due date of any principal or interest due under the Note or
any extension, amendment, renewal, replacement or modification of the Note; (ii)
default by Pledgor in the performance of any obligation, term, or condition of,
or breach of representation under, this Pledge Agreement; (iii) the filing by or
against Pledgor of a request or petition for liquidation, reorganization,
arrangement, adjustment of debts, adjudication as a bankrupt, relief as a debtor
or relief under the bankruptcy, insolvency or similar laws of the United States
or any state or territory thereof or any foreign jurisdiction, now or
hereinafter in effect; or (iv) Pledgor's death.
(ii) Secured Party, at its sole election, may declare all or any
part of any Indebtedness to be immediately due and payable without demand or
notice of any kind upon the happening of any Event of Default.
(iii) Secured Party's rights and remedies with respect to the
Collateral shall be those of a Secured Party under the Uniform Commercial Code
and under any other applicable law, as the same may from time to time be in
effect, in addition to those rights granted herein and in any other agreement
now or hereafter in effect between Pledgor and Secured Party.
(iv) Without in any way requiring notice to be given in the
following time and manner, Pledgor agrees that any notice by Secured Party of
sale, disposition or other intended action hereunder or in connection herewith,
whether required by the Uniform Commercial Code or otherwise, shall constitute
reasonable notice to Pledgor if such notice is mailed by regular or certified
mail, postage prepaid, at least ten (10) days prior to such action, to Pledgor's
address specified above or to any other address which Pledgor has specified in
writing to Secured Party as the address to which notices hereunder shall be
given to Pledgor.
(v) Pledgor agrees to pay on demand all reasonable costs and
expenses incurred by Secured Party in enforcing this Pledge Agreement, in
realizing upon or protecting any Collateral and in enforcing and collecting any
Indebtedness, including, without limitation, if Secured Party retains counsel
for advice, suit, appeal, insolvency or other proceedings under the federal
Bankruptcy Code or otherwise, or for any of the above purposes, the actual
attorneys' fees incurred by Secured Party. Payment of all moneys hereunder is
secured by the Collateral.
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viii. MISCELLANEOUS.
(i) Pledgor authorizes Secured Party, without notice or demand and
without affecting Pledgor's obligations hereunder, from time to time: (i) to
take from any party and hold collateral (other than the Collateral) for the
payment of the Indebtedness or any part thereof, and to exchange, enforce or
release such collateral or any part thereof; (ii) to accept and hold any
indorsement or guaranty of payment of the Indebtedness or any part thereof and
to release, substitute or modify any such obligation of any such indorser or
guarantor, or any party who has given any security interest in any other
collateral as security for the payment of the Indebtedness or any part thereof,
or any other party in any way obligated to pay the Indebtedness or any part
thereof; (iii) upon the occurrence of any Event of Default as hereinabove
provided, to direct the order or the manner of the disposition of the Collateral
and any and all other collateral and the enforcement of any and all indorsements
and guaranties relating to the Indebtedness or any part thereof as Secured
Party, in its sole discretion, may determine; and (iv) to determine, in its sole
discretion, how, when and what application of payments and credits, if any,
shall be made on the Indebtedness or any part thereof.
(ii) Pledgor hereby appoints Secured Party as Pledgor's
attorney-in-fact (without requiring Secured Party to so act) to perform all acts
which Secured Party deems appropriate to perfect and continue the Security
Interest and to protect, preserve and realize upon the Collateral. This power of
attorney shall not be affected by the subsequent disability or incompetence of
Pledgor.
(iii) No course of dealing between Pledgor and Secured Party and
no delay or omission by Secured Party in exercising any right or remedy
hereunder or with respect to any Indebtedness shall operate as a waiver thereof
or of any other right or remedy, and no single or partial exercise thereof shall
preclude any other or further exercise thereof or the exercise of any other
right or remedy. Secured Party may remedy any default by Pledgor hereunder or
with respect to any Indebtedness in any reasonable manner without waiving the
default remedied and without waiving any other prior or subsequent default by
Pledgor. All rights and remedies of Secured Party hereunder are cumulative.
(iv) Secured Party shall have no obligation to take, and Pledgor
shall have the sole responsibility for taking, any and all steps to preserve
rights against any and all prior parties to any Instrument constituting
Collateral, whether or not in Secured Party's possession. Secured Party shall
not be responsible to Pledgor for loss or damage resulting from Secured Party's
failure to enforce or collect any such Collateral or to collect any moneys due
or to become due thereunder. Pledgor waives protest of any Instrument
constituting Collateral at any time held by Secured Party on which Pledgor is in
any way liable and waives notice of any other action taken by Secured Party.
(v) The rights and benefits of Secured Party hereunder shall, if
Secured Party so directs, inure to any party acquiring any interest in the
Indebtedness or any part thereof.
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(vi) Secured Party and Pledgor as used herein shall include the
heirs, executors or administrators, or successors or assigns, of those parties.
(vii) No modification, rescission, waiver, release or amendment of
any provision of this Pledge Agreement shall be made except by a written
agreement subscribed by Pledgor and Secured Party.
(viii) This Pledge Agreement and the transactions evidenced hereby
shall be governed, construed and enforced under the laws of New York State, as
the same may from time to time be in effect, without regard to principles of
conflicts of law.
(ix) All terms, unless otherwise defined in this Pledge Agreement,
shall have the definitions set forth in the Uniform Commercial Code adopted in
New York State, as the same may from time to time be in effect.
(x) This Pledge Agreement shall remain in full force and effect
until all of the indebtedness evidenced by the Note, and any extensions,
amendments, renewals, replacements or modifications thereof, shall be finally
and irrevocably paid in full. If, after receipt of any payment of all or any
part of the indebtedness evidenced by the Note, Secured Party is for any reason
compelled to surrender such payment to any person or entity, because such
payment is determined to be void or voidable as a preference, impermissible set
off, or a diversion of trust funds, or for any other reason, this Pledge
Agreement shall continue in full force notwithstanding any contrary action which
may have been taken by Secured Party in reliance upon such payment, and any such
contrary action so taken shall be without prejudice to Secured Party's rights
under this Pledge Agreement and shall be deemed to have been conditioned upon
such payment having become final and irrevocable.
/s/ XXX X. XXXXX
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Pledgor: Xxx X. Xxxxx
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