EXHIBIT 10.45
SECURITY AND PLEDGE AGREEMENT
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THIS SECURITY AND PLEDGE AGREEMENT (the "Agreement") is made as of
this 28th day of June, 1996, by Letronix Acquisition Corporation ("Pledgor"), in
favor of Polyphase Corporation ("Secured Party").
R E C I T A L S:
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A. Pledgor owns beneficially and of record 1,020,000 shares (the
"Stock") of the common stock of Letronix, Inc., a Nevada corporation (the
"Company");
B. The Secured Party has agreed to loan to the Company the aggregate
principal sum of $850,000 (the "Loan") pursuant to a Secured Promissory Note
(the "Loan Agreement"). The principal sum of the Loan is subject to adjustment
as provided for in the Stock Purchase Agreement (as defined herein). All
capitalized terms used but not defined herein shall have the meanings set forth
in the Loan Agreement.
C. It is a condition precedent to the extension of the Loan by the
Secured Party that the Pledgor shall have executed and delivered to the Secured
Party, inter alia, a pledge agreement providing for the pledge to the Secured
Party of all of the Stock of the Company now or hereafter owned by Pledgor.
AGREEMENT:
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NOW, THEREFORE, in consideration of the covenants and agreements
contained herein, and other good and valuable consideration, receipt and
sufficiency of which are hereby acknowledged, and in order to induce the Secured
Party to extend the Loan to the Company, and with the intent to be legally bound
hereby, the Pledgor hereby agrees with the Secured Party as follows:
SECTION 1. DEFINITIONS. All terms used in this Agreement that are defined
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in Article 9 of the Uniform Commercial Code currently in effect in the State of
Texas (the "Code") and are not otherwise defined herein shall have the same
meanings as set forth in the Code.
SECTION 2. PLEDGE AND GRANT OF SECURITY INTEREST. As collateral security
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for all of the obligations of the Company under the Loan Agreement
(collectively, the "Obligations"), the Pledgor hereby pledges and assigns to the
Secured Party, and grants to the Secured Party a continuing security interest
in, the following (the "Pledged Collateral"):
(a) All right, title and interest of Pledgor in and to all stock and
other securities of the Company, whether now owned or hereafter acquired,
including, without limitation, the Stock, all options and other rights,
contractual or otherwise, of Pledgor now existing or hereafter arising with
respect to the Stock or other securities of the Company and all
distributions, cash, instruments and other property from time to time
received, receivable
or otherwise distributed in respect of or in exchange for any or all of
Pledgor's interest in such stock or other securities of the Company; and
(b) All proceeds of any and all of the foregoing; in each case,
whether now owned or hereafter acquired by the Pledgor and howsoever its
interest therein may arise or appear (whether by ownership, security
interest, claim or otherwise ).
SECTION 3. SECURITY FOR OBLIGATIONS. The security interest created hereby
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in the Pledged Collateral constitutes continuing collateral security for all of
the Obligations, whether now existing or hereafter incurred.
SECTION 4. DELIVERY OF THE PLEDGED COLLATERAL.
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(a) All certificates and instruments, if any, representing the Pledged
Collateral shall be delivered to the Secured Party or to its designated
agent upon the execution and delivery of this Agreement. All other
certificates and instruments constituting Pledged Collateral from time to
time shall be delivered to the Secured Party or to its designated agent
promptly upon the receipt thereof by or on behalf of the Pledgor. All such
certificates and instruments shall be held by the Secured Party or its
designated agent pursuant hereto and shall be delivered in suitable form
for transfer by delivery or shall be accompanied by duly executed
instruments of transfer or assignment in blank, all in form and substance
satisfactory in the Secured Party.
(b) If the Pledgor shall receive, by virtue of its being or having
been an owner of any Pledged Collateral, any (i) stock certificate
(including, without limitation, any certificate representing a stock
dividend or distribution in connection with any increase or reduction of
capital, reclassification, merger, consolidation, sale of assets,
combination of shares, stock split, spinoff or split-off), promissory note
or other instrument; (ii) option or right, whether as an addition to,
substitution for, or in exchange for, any Pledged Collateral, or otherwise;
(iii) distributions payable in cash (except such distributions permitted to
be retained by the Pledgor pursuant to Section 7 hereof) or in securities
or other property; or (iv) distributions in connection with a partial or
total liquidation or dissolution, Pledgor shall receive such stock
certificate, promissory note, instrument, option, right, payment or
distribution in trust, for the benefit of the Secured Party, shall
segregate it from the Pledgor's other property and shall deliver it
forthwith to the Secured Party or to its designated agent in the exact form
received, with any necessary indorsement and/or appropriate stock powers
duly executed in blank, to be held by the Secured Party or its designated
agent as Pledged Collateral and as further collateral security for the
Obligations.
SECTION 5. REPRESENTATIONS AND WARRANTIES. The Pledgor represents and
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warrants as follows:
(a) The Pledgor is and will be at all times the legal and beneficial
owner of the Pledged Collateral free and clear of any lien, security
interest or other charge or
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encumbrance except for (i) the security interest created by this Agreement
and (ii) any restrictive legends contained on any certificates representing
the Pledged Collateral.
(b) Pledgor is a corporation duly organized, validly existing and in
good standing in Nevada and has taken all necessary corporate actions in
order to duly authorize the execution, delivery and performance of this
Agreement and the Loan Agreement. This Agreement and the Loan Agreement
constitute the legal, valid and binding obligations of Pledgor, enforceable
against Pledgor in accordance with their terms. The execution, delivery and
performance of this Agreement will not contravene any law or governmental
regulation or any contractual restriction binding on or affecting the
Pledgor or any of its properties and will not result in or require the
creation of any lien, security interest or other, charge or encumbrance
upon or with respect to any of Pledgor's properties.
(c) No authorization or approval or other action by, and no notice to
or filing with, any governmental authority or regulatory body is required
in connection with the pledge hereunder by the Pledgor of, or the grant by
the Pledgor of the security interest created hereby in, the Pledged
Collateral, except as may be required in respect of any such exercise by
laws affecting the offering and sale of securities generally.
(d) This Agreement creates a valid security interest in favor of the
Secured Party in the Pledged Collateral. The filing by Secured Party of a
UCC-1 financing statement in the office of the Secretary of State of Texas
and the taking of possession by Secured Party or its designated agent of
all certificates, instruments and cash constituting Pledged Collateral from
time to time will perfect, and establish the first priority of, the Secured
Party's security interest hereunder in the Pledged Collateral, securing the
Obligations. Except as set forth in this Section 5(d) and except for the
delivery of certain of the Pledged Collateral to Secured Party, no action
is necessary or desirable to perfect or otherwise protect such security
interest.
(e) The Pledgor's principal place of business is located at 0000 Xxxxx
Xxxxxxxx Xxxxxxx, Xxxxx 000, Xxx Xxxxx, Xxxxxx 00000.
SECTION 6. COVENANTS AS TO THE PLEDGED COLLATERAL. So long as any of the
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Obligations shall remain outstanding, the Pledgor will, unless the Secured Party
shall otherwise consent in writing:
(a) Provide the Secured Party with thirty (30) days' advance notice of
any change in the location of its primary residence from the address
specified for the Pledgor in Section 5(e) above; and
(b) Keep adequate records concerning the Pledged Collateral and permit
the Secured Party or any agents or representatives thereof at any
reasonable time and from time to time to examine and make copies of and
abstracts from such records; and
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(c) At its expense, promptly deliver to the Secured Party a copy of
each notice or other communication received by it in respect of the Pledged
Collateral; and
(d) At its expense, defend the Secured Party's right, title and
special property and security interest in and to the Pledged Collateral
against the claims of any person; and
(e) At its expense, at any time and from time to time, promptly
execute and deliver all further instruments and documents and take all
further action that may be necessary or desirable or that the Secured Party
may reasonably request in order (i) to perfect and protect the security
interest created or purported to be created hereby; (ii) to exercise and
enforce its rights and remedies hereunder in respect of the Pledged
Collateral; or (iii) to otherwise effect the purposes of this Agreement,
including, without limitation, delivering to the Secured Party irrevocable
proxies in respect of the Pledged Collateral; and
(f) Not sell, assign, exchange or otherwise dispose of any Pledged
Collateral or any interest therein; and
(g) Not create or suffer to exist any lien, security interest or other
charge or encumbrance upon or with respect to any Pledged Collateral except
for the pledge hereunder and the security interest created hereby; and
(h) Not make or consent to any amendment or other modification or
waiver with respect to any Pledged Collateral or enter into any agreement
or permit to exist any restriction with respect to any Pledged Collateral;
and
(i) Not (i) take any action that would, in any manner, impair the
enforceability of the Secured Party's security interest in any Pledged
Collateral or (ii) fail to take any action where such failure would result
in such impairment.
SECTION 7. VOTING RIGHTS, DISTRIBUTIONS, ETC. IN RESPECT OF THE PLEDGED
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COLLATERAL.
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(a) So long as no default shall have occurred hereunder, and so long
as neither the Company nor any other party thereto (other than Secured
Party) has failed to make any payment or perform any other covenant,
agreement or obligation under the Loan Agreement or the Note, subject to
any applicable cure periods contained therein (each, an "Event of Default")
then:
(i) The Pledgor may exercise any and all voting, managerial and
other rights pertaining to the Pledged Collateral or any part thereof
for any purpose not inconsistent with the terms of this Agreement, the
Loan Agreement or any shareholders' agreement to which Pledgor may be
bound; provided, however, that the Pledgor will not exercise or
refrain from exercising any such right, as the case may be, if such
action would have a material adverse effect on the value of any
Pledged Collateral;
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(ii) The Pledgor may receive and retain any and all distributions
or interest paid in respect of the Pledged Collateral; provided,
however, that any and all
(A) Distributions and interest paid or payable other than in
cash in respect of, and instruments and other property received,
receivable or otherwise distributed in respect of or in exchange
for, any Pledged Collateral,
(B) Distributions paid or payable in cash in respect of any
Pledged Collateral in connection with a partial or total
liquidation or dissolution, and
(C) Cash paid, payable or otherwise distributed in
redemption of, or in exchange for, any Pledged Collateral,
shall be, and shall forthwith be delivered to the Secured Party or its
designated agent to hold as Pledged Collateral and shall, if received by the
Pledgor, be received in trust for the benefit of the Secured Party, shall be
segregated from the other property or funds of the Pledgor, and shall be
forthwith delivered to the Secured Party or its designated agent in the exact
form received with any necessary endorsement and/or appropriate stock powers or
other instruments of assignment duly executed in blank, to be held by the
Secured Party or its designated agent as Pledged Collateral and as further
collateral security for the Obligations.
(b) Upon the occurrence and during the continuance of any Event of Default:
(i) All rights of the Pledgor to exercise the voting, managerial and
other rights that it would otherwise be entitled to exercise pursuant to
paragraph (i) of subsection (a) of this Section 7, and to receive the
distributions and interest payments that it would otherwise be authorized
to receive and retain pursuant to paragraph (ii) of subsection (a) of this
Section 7, shall cease, and all such rights shall thereupon become vested
in the Secured Party who shall thereupon have the sole right to exercise
such voting, managerial and other rights and to receive and hold as Pledged
Collateral such distributions and interest payments; and
(ii) Without limiting the generality of the foregoing, the Secured
Party may at its option exercise any and all rights of conversion,
exchange, subscription or any other rights, privileges or options
pertaining to any of the Pledged Collateral as if Secured Party were the
absolute owner thereof, including, without limitation the right to
exchange, in its discretion, any and all of the Pledged Collateral upon the
merger, consolidation, reorganization, recapitalization or other adjustment
of the Company, or upon the exercise by the Secured Party of any right,
privilege or option pertaining to any Pledged Collateral, and in connection
therewith, to deposit and deliver any and all of the Pledged Collateral
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with any committee, depository, transfer agent, registrar or other
designated agent upon such terms and conditions as such committee,
depository, transfer agent, registrar or other designated agent may
determine; and
(iii) All distributions and interest payments that are received by the
Pledgor contrary to the provisions of paragraph (i) of this Section 7(b)
shall be received in trust for the benefit of the Secured Party, shall be
segregated from other funds of the Pledgor, and shall be forthwith paid
over to the Secured Party or its designated agent as Pledged Collateral in
the exact form received, to be held by the Secured Party as Pledged
Collateral and as further collateral security for the Obligations.
SECTION 8. ADDITIONAL PROVISIONS CONCERNING THE PLEDGED COLLATERAL.
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(a) The Pledgor hereby authorizes the Secured Party to file, without
the signature of the Pledgor where permitted by law, one or more financing
or continuation statements, and amendments thereto, relating to the Pledged
Collateral.
(b) The Pledgor hereby irrevocably appoints the Secured Party as the
Pledgor's attorney-in-fact and proxy, with full authority in the place and
stead of the Pledgor and in the name, of the Pledgor or otherwise, from
time to time prior to the payment in full of the Obligations, at the
Secured Party's reasonable discretion, to take any action and to execute
any instrument that the Secured Party may deem necessary or advisable to
accomplish the purposes of this Agreement (subject to the rights of the
Pledgor under Section 7(a) hereof), including, without limitation, to
receive, indorse and collect all instruments made payable to the Pledgor
representing any distribution in respect of the Pledged Collateral or any
part thereof and to give full discharge for the same.
(c) If the Pledgor fails to perform any agreement or obligation
contained herein and such failure shall remain unremedied for a period of
twenty (20) days, the Secured Party may itself perform, or cause
performance of, such agreement or obligation, and the expenses of the
Secured Party incurred in connection therewith shall be payable by the
Pledgor pursuant to Section 10 hereof. The Secured Party agrees to notify
the Pledgor of any such action taken, but failure to so notify the Pledgor
shall not affect the rights of the Secured Party hereunder.
(d) Other than the exercise of reasonable care to assure the safe
custody of the Pledged Collateral while held hereunder, the Secured Party
shall have no duty or liability to preserve rights pertaining thereto and
shall be relieved of all responsibility for the Pledged Collateral upon
surrendering it or tendering surrender of it to the Pledgor. The Secured
Party shall be deemed to have exercised reasonable care in the custody and
preservation of the Pledged Collateral in its possession if the Pledged
Collateral is accorded treatment substantially equal to that which the
Secured Party accords its own property of a similar nature, it being
understood that the Secured Party shall not have responsibility for (i)
ascertaining or taking action with respect to calls, conversions,
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exchanges, maturities, tenders or other matters relating to any Pledged
Collateral, whether or not the Secured Party has or is deemed to have
knowledge of such matters, or (ii) taking any necessary steps to preserve
rights against any parties with respect to any Pledged Collateral.
(e) The Secured Party may at any time in its discretion (i) transfer
or register in the name of the Secured Party or any nominees of the Secured
Party any or all of the Pledged Collateral, subject only to the revocable
rights of the Pledgor under Section 7(a) hereof, and (ii) exchange
certificates or instruments constituting Pledged Collateral for
certificates or instruments of smaller or larger denominations. The Secured
Party will inform the Pledgor of any transfer or registration effected
pursuant to clause (i) of the preceding sentence.
SECTION 9. REMEDIES UPON DEFAULT. If any Event of Default shall have
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occurred and be continuing:
(a) The Secured Party may, by notice to the Pledgor, (i) exercise in
respect of the Pledged Collateral, in addition to other rights and remedies
provided for herein or otherwise available to it, all of the rights and
remedies of a secured party on default under the Code (whether or not the
Code applies to the affected Pledged Collateral) then in effect in the
State of Georgia or other applicable law; and (ii) without limiting the
generality of the foregoing and without notice except as specified below,
sell the Pledged Collateral or any part thereof in one or more, parcels at
public or private sale, at any exchange or broker's board or elsewhere, as
such price or prices and on such other terms as Secured Party may deem
commercially reasonable, for cash or on credit or for future delivery.
Pledgor agrees that, to the extent notice of sale shall be required by law,
notice to Pledgor at least ten (10) days prior to the time and place of any
public sale or the time after which any private sale is to be made shall
constitute reasonable notification. The Secured Party shall not be
obligated to make any sale of Pledged Collateral regardless of notice of
sale having been given. The Secured Party may adjourn any public or private
sale from time to time by announcement at the time and place fixed
therefor, and such sale may, without further notice, be made at the time
and place to which it was so adjourned.
(b) The Pledgor recognizes that the Secured Party may deem it
impracticable to effect a public sale of all or any part of the any
securities constituting Pledged Collateral and that the Secured Party may,
therefore, determine to make one or more private sales of any such
securities to a restricted group of purchasers who will be obligated to
agree, among other things, to acquire such securities for their own
account, for investment and not with a view to the distribution or resale
thereof. The Pledgor acknowledges that any such private sale may be at
prices and on terms less favorable to the seller than the prices and other
terms which might have been obtained at a public sale and, notwithstanding
the foregoing, agrees that such private sales shall be deemed to have been
made in a commercially reasonable manner and that the Secured Party shall
have no obligation to delay sale of any such securities for the period of
time necessary to permit the issuer of such securities to register such
securities for public sale under the Securities Act of 1933
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(the "Securities Act") or any applicable state securities laws. Pledgor
further acknowledges and agrees that any offer to sell such securities
which has been (i) publicly advertised on a bona fide basis in a newspaper
or other publication of general circulation in the financial community of
Atlanta, Georgia (to the extent that such an offer may be so advertised
without prior registration under the Securities Act or applicable state
securities laws), or (ii) made privately in the manner described above to
not less than five bona fide offerees shall be deemed to involve a "public
sale" for the purposes of Section 9-504(3) of the Code (or any successor or
similar applicable statutory provision) as then in effect in the State of
Georgia, notwithstanding that such sale may not constitute a "public
offering" under the Securities Act or applicable state securities laws and
that the Agent on behalf of Secured Party may, in such event, bid for and
purchase of such securities.
(c) Any cash held by the Secured Party as Pledged Collateral and all
cash proceeds received by the Secured Party in respect of any sale of,
collection from, or other realization upon, all or any part of the Pledged
Collateral shall be applied as follows:
(i) First, to the extent not otherwise paid or reimbursed by
Pledgor, to the repayment of the reasonable costs and expenses,
including reasonable attorneys fees and legal expenses, incurred by
the Secured Party in connection with (A) the administration of this
Agreement, (B) the custody, preservation, use or operation of, or the
sale of, collection from, or other realization upon, any Pledged
Collateral, (C) the exercise or enforcement of any of the rights of
the Secured Party hereunder, and/or (D) the failure of the Pledgor to
perform or observe any of the provisions hereof;
(ii) Second, at the option of the Secured Party, to the payment or
other satisfaction of any liens and other encumbrances upon any of the
Pledged Collateral;
(iii) Third, to the reimbursement of the Secured Party for the
amount of any obligations of the Pledgor and/or the Company paid or
discharged by the Secured Party pursuant to the provisions of this
Agreement, the Loan Agreement or any Other Agreement and of any
reasonable expense of the Secured Party payable by the Pledgor
hereunder or under the Loan Agreement or any Other Agreement;
(iv) Fourth, to the satisfaction of any other indebtedness of the
Pledgor and/or the Company to the Secured Party;
(v) Fifth, to the payment of any other amounts required by
applicable law (including, without limitation, Section 9-504(1)(c) of
the Code or any successor or similar, applicable statutory provision);
and
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(vi) Sixth, the surplus proceeds, if any, to the Pledgor or to
whomsoever shall be lawfully entitled to receive the same or as a
court of competent jurisdiction shall direct.
(d) In the event that the proceeds of any such sale, collection or
realization are insufficient to pay all amounts to which the Secured Party
is legally entitled, the Pledgor shall be liable for the deficiency,
together with interest thereon at the default rate provided in Section 1.1
of the Loan Agreement, together with the costs of collection and the
reasonable fees of any attorneys employed by the Secured Party to collect
such deficiency.
(e) The Secured Party agrees that it will not sell or transfer any
securities constituting all or part of the Pledged Collateral except in
compliance with all applicable securities laws.
SECTION 10. INDEMNITY AND EXPENSES.
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(a) [intentionally left blank]
(b) The Pledgor will upon demand pay to the Secured Party, the amount
of any and all costs and expenses, including, without limitation, court
costs and the reasonable fees and disbursements of the Secured Party's
counsel and of any experts and agents, that the Secured Party or such
Purchaser may incur in connection with (i) the administration of this
Agreement; (ii) the custody, preservation, use or operation of, or the sale
of, collection from, or other realization upon, any Pledged Collateral;
(iii) the exercise or enforcement of any of the rights of the Secured Party
hereunder; or (iv) the failure by the Pledgor to perform or observe any of
the provisions hereof; except for expenses resulting solely and directly
from the Secured Party's or a Purchaser's gross negligence, willful
misconduct or breach of this Agreement.
SECTION 11. NOTICES. Unless otherwise required herein, all notices and
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other communications provided for hereunder shall be given as set forth in the
Loan Agreement.
SECTION 12. MISCELLANEOUS.
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(a) No amendment of any provision of this Agreement shall be effective
unless it is in writing and signed by the Pledgor and the Secured Party,
and no waiver of any provision of this Agreement, and no consent to any
departure by the Pledgor therefrom, shall be effective unless it is in
writing and signed by the Secured Party and then such waiver or consent
shall be effective only in the specific instance and for the specific
purpose for which given.
(b) No failure on the part of the Secured Party to exercise, and no
delay in exercising, any right hereunder or under the Loan Agreement, any
Other Agreement or any related agreement, instrument or documents shall
operate as a waiver thereof; nor shall any single or partial exercise of
any such right preclude any other or further exercise
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thereof or the exercise of any other right. The rights and remedies of the
Secured Party provided herein and in the Loan Agreement, the Other
Agreements and all related agreements, instruments and documents are
cumulative and are in addition to, and not exclusive of, any rights or
remedies provided by law. The rights of the Secured Party under each of
this Agreement, the Loan Agreement, the Other Agreements and any related
agreements, instruments and documents against any party thereto are not
conditional or contingent on any attempt by the Secured Party to exercise
any of its rights hereunder or under the Loan Agreement, the Other
Agreements or any related agreement, instrument or document against such
party or against any other person or entity.
(c) Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall be ineffective, as to such
jurisdiction, to the extent of such prohibition or invalidity without
invalidating the remaining portions hereof or thereof or affecting the
validity or enforceability of such provision in any other jurisdiction.
(d) This Agreement shall create a present continuing security interest
in the Pledged Collateral and shall (i) remain in full force and effect
until the earlier of the payment and satisfaction in full or release of the
Obligations, (ii) be binding on the Pledgor and its successors and assigns
and shall inure, together with all rights and remedies of the Secured Party
hereunder, to the benefit of the Secured Party and its successors,
transferees and assigns. Without limiting the generality of the foregoing,
the Secured Party may assign or otherwise transfer the Note held by it as
provided in the Loan Agreement, and the Secured Party may assign or
otherwise transfer its rights under the Loan Agreement to any other person
or entity, and such other person or entity shall thereupon become vested
with all of the benefits in respect thereof granted to the Secured Party,
herein or otherwise. None of the rights or obligations of the Pledgor
hereunder may be assigned or otherwise transferred without the prior
written consent of the Secured Party.
(e) Upon the earlier of the final and irrevocable payment and
satisfaction in full or release of the Obligations, this Agreement and the
security interest created hereby shall terminate and all rights to the
Pledged Collateral shall revert to the Pledgor. The Secured Party shall
thereafter, upon the Pledgor's request and at the Pledgor's expense, (i)
return to the Pledgor such of the Pledged Collateral as shall not have been
sold or otherwise disposed of or applied pursuant to the terms hereof; and
(ii) execute and deliver to the Pledgor such documents as the Pledgor shall
reasonably request to evidence such termination.
(f) THIS AGREEMENT CONSTITUTES A SECURED COMMERCIAL LENDING
TRANSACTION GOVERNED BY THE UNIFORM COMMERCIAL CODE (TO THE EXTENT
APPLICABLE). THIS AGREEMENT SHALL BE DEEMED TO HAVE BEEN MADE AT DALLAS,
TEXAS AND SHALL BE INTERPRETED AND THE RIGHTS AND LIABILITIES OF THE
PARTIES HERETO DETERMINED IN ACCORDANCE WITH THE LAWS OF THE UNITED STATES
APPLICABLE THERETO AND THE INTERNAL LAWS OF THE STATE
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OF TEXAS, APPLICABLE TO AGREEMENTS EXECUTED, DELIVERED AND PERFORMED WITHIN
SUCH STATE, EXCEPT AS REQUIRED BY MANDATORY PROVISIONS OF LAW AND EXCEPT TO
THE EXTENT THAT THE VALIDITY OR PERFECTION OF THE SECURITY INTEREST CREATED
HEREBY, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR PLEDGED
COLLATERAL ARE GOVERNED BY THE LAW OF A JURISDICTION OTHER THAN THE STATE
OF TEXAS. PLEDGOR HEREBY CONSENTS THAT ALL SERVICE OF PROCESS BE MADE BY
REGISTERED MAIL DIRECTED TO SUCH PARTY AT ITS ADDRESS SET FORTH IN SECTION
5(E) HEREOF. PLEDGOR WAIVES TRIAL BY JURY (TO THE FULLEST EXTENT PERMITTED
BY APPLICABLE LAW), ANY OBJECTION BASED ON FORUM NON CONVENIENS, AND ANY
OBJECTION TO VENUE OF ANY ACTION INSTITUTED HEREUNDER AND CONSENTS TO THE
GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY THE
COURT. NOTHING IN THIS SECTION 12(F) SHALL AFFECT THE RIGHT OF SECURED
PARTY TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT
THE RIGHT OF SECURED PARTY TO BRING ANY ACTION OR PROCEEDING AGAINST
PLEDGOR AND/OR ITS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION WHERE
SUCH PARTY MAINTAINS OFFICES OR HAS PROPERTY.
(g) This Agreement may be executed in multiple counterparts, each of
which shall be deemed an original, and all counterparts hereof so executed
by the parties hereto, whether or not such counterpart shall bear the
execution of each of the parties hereto, shall be deemed to be, and shall
be construed as, one and the same Agreement. A photocopy, telecopy or
facsimile transmission of a signed counterpart of this Agreement shall be
sufficient to bind the party or parties whose signature(s) appear thereon.
(h) Secured Party hereby agrees to release a pro rata portion of the
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Stock securing the Obligations within ten (10) days following proper and
timely payment of all or a part of the principal amount paid in accordance
with the terms of the Loan Agreement. The number of shares of Stock to be
released shall be in the same proportion as the Stock bears to the original
principal amount of the Loan (as adjusted pursuant to the Stock Purchase
Agreement pursuant to which the stock was sold to Pledgor (the "Stock
Purchase Agreement"))on the date hereof. For example, if the Stock is equal
to 825 shares on the date hereof, then (assuming the $850,000 Loan remains
unadjusted under the Stock Purchase Agreement) .000970 shares of the Stock
shall be released for each dollar of principal paid off under the Loan
Agreement. Notwithstanding, no release shall be made of fractional shares.
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IN WITNESS WHEREOF, the Pledgor has executed this Agreement as of the
date first above written.
PLEDGOR:
LETRONIX ACQUISITION CORPORATION
By:
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Name:
---------------------------------
Title:
--------------------------------
SECURED PARTY:
POLYPHASE CORPORATION
By:
-----------------------------------
Name:
----------------------------------
Title:
---------------------------------
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