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EXHIBIT 10.39
PLEDGE AGREEMENT
This Pledge Agreement (the "Agreement") is made as of January 28,
1997, by and between ▇▇▇▇▇ Systems Corporation, a Delaware corporation ("PSC"),
and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ("Pledgor").
WHEREAS, PSC has granted Pledgor the option to purchase 100,000 shares
of PSC's Class A common stock pursuant to a Restricted Stock Agreement dated as
of January 28, 1997 (the "Restricted Stock Agreement");
WHEREAS, PSC has extended credit to Pledgor and may extend additional
credit pursuant to the terms of a Promissory Note and a Bridge Note, each of
which is dated as of the date hereof and is in the amount of $187,500, for a
total of $375,000, to finance the acquisition of the Restricted Stock purchased
pursuant to the Restricted Stock Agreement (together the "Notes");
NOW, THEREFORE, to secure the Obligations (as defined below), Pledgor
and PSC hereby agree as follows:
1. Definitions. Capitalized terms that are not otherwise defined
in this Agreement have the meanings assigned to such terms in the Restricted
Stock Agreement or the Notes, as appropriate.
2. Pledge of Securities. Pledgor hereby pledges and grants to PSC
a security interest in the following:
(a) the Restricted Stock purchased by Pledgor pursuant to
the Restricted Stock Agreement, together with any other shares of
capital stock of PSC that may be distributed with respect to such
Restricted Stock (collectively, the "Securities"), and all rights and
privileges pertaining thereto;
(b) all proceeds, products, cash, securities, dividends,
increases, distributions and profits received from or on the
Securities (the "Proceeds"), including without limitation
distributions or payments in partial or complete liquidation or
redemption, or as a result of reclassifications, readjustments,
reorganizations or changes in the capital structure of the issuer of
the Securities; and
(c) all subscriptions, warrants, options, preemptive
rights and other rights issued or otherwise granted by the issuer of
the Securities or any other person on or in connection with the
Securities or any other item of the Collateral (as defined below);
(all of such property and rights described in items (a), (b) and (c)
above are herein collectively called the "Collateral");
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TO HAVE AND TO HOLD the Collateral, together with all rights, titles,
interests, privileges and preferences appertaining to or incidental thereto,
unto PSC, and its respective successors and assigns, forever, subject, however,
to the terms, covenants and conditions hereinafter set forth. The security
interest granted and the assignments made hereunder are made as security only
and shall not subject PSC to, or transfer or in any way affect or modify, any
obligation of Pledgor with respect to any of the Collateral or any transaction
involving or giving rise thereto.
3. Obligations Secured. The pledge and security interest in the
Collateral granted hereby secures payment and performance of the following
obligations of Pledgor to PSC, whether now outstanding or incurred after the
date hereof (the "Obligations"): (a) all principal, interest, fees, expenses,
obligations and liabilities of Pledgor arising pursuant to or represented by
the Notes; (b) all taxes, assessments, insurance premiums, brokerage fees,
reasonable attorneys' fees and other expenses of sale of the Collateral; (c)
Pledgor's performance of his obligations under the Notes, this Agreement and
the Restricted Stock Agreement; and (d) all renewals, extensions and
modifications of the indebtedness and obligations referred to in the foregoing
clauses, or any part thereof.
4. Pledgor's Warranties and Indemnity. Pledgor represents,
warrants and covenants to PSC (a) that Pledgor is and will be the lawful owner
of the Securities, (b) that the Securities are and will remain free and clear
of all liens, encumbrances and security interests other than the security
interest granted by Pledgor hereunder, and (c) that Pledgor has the right and
authority to pledge the Securities and otherwise to comply with the provisions
hereof. If any adverse claim is asserted in respect of the Securities or any
portion thereof, except such as may result from an act of PSC not authorized
hereunder, Pledgor shall indemnify PSC and hold PSC harmless from and against
any losses, liabilities and expenses (including reasonable counsel fees)
incurred by PSC in exercising any right, power or remedy of PSC hereunder or
defending, protecting or enforcing the security interests created hereunder.
Any such loss, liability or expense so incurred shall be paid by Pledgor upon
demand, and shall become part of the Obligations of Pledgor secured pursuant to
this Agreement. Pledgor agrees to execute a stock power in blank for each
certificate evidencing any of the Securities and to deliver all such Securities
certificates with stock powers to PSC. PSC hereby consents to the pledge of the
Securities to PSC hereunder, notwithstanding any restrictions on transfer of
the Securities set forth in the Restricted Stock Agreement.
5. Negative Covenants. Pledgor covenants and agrees that, unless
PSC otherwise consents in writing Pledgor will not: (a) sell, assign or
transfer any rights of Pledgor in the Collateral; or (b) create any lien in, or
security interest in, or otherwise encumber, the Collateral, or any part
thereof, or permit the same to be or become subject to any lien, attachment,
execution, sequestration, other legal or equitable process, or any encumbrance
of any kind or character, except the security interest herein created in favor
of PSC.
6. Dividends and Other Distributions.
(a) Pledgor shall cause all non-cash dividends and
distributions with respect to the Securities (including
without limitation any stock dividends and any distributions
made on or in respect of the Securities, whether resulting
from a subdivision,
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combination or reclassification of the Securities or received
in exchange for or in respect of the Securities or any part
thereof or as a result of any merger, consolidation,
acquisition or other transaction) to be distributed directly
to PSC, to be held by PSC as additional Collateral; and if any
such distribution is made to Pledgor, he shall receive such
distribution in trust for PSC and shall immediately transfer
it to PSC.
(b) So long as no Event of Default or Potential
Default has occurred and is continuing, Pledgor shall be
entitled to receive any cash dividends payable in respect of
the Securities; provided that, upon receipt of any such cash
dividend, Pledgor will promptly (and in any event within 30
days) pay to PSC in respect of the Obligations (to the extent
of the Obligations then outstanding) the full amount of such
cash dividend less any income taxes payable by Pledgor as a
result of such cash dividend, and, pending such payment, such
cash dividend will continue to constitute Collateral
hereunder.
7. Voting Rights. So long as no Event of Default or Potential
Default has occurred and is continuing, Pledgor shall be entitled to exercise
any and all voting rights pertaining to the Securities for any purpose not
inconsistent with the terms of the Notes or this Agreement.
8. Termination of Rights. During any period when an Event of
Default has occurred and is continuing, all rights of Pledgor to receive
dividends pursuant to Section 6(b) or to exercise voting rights pursuant to
Section 7 shall cease and all such rights shall thereupon become vested in PSC,
which shall have the sole and exclusive right and authority to dispose of the
Securities and to receive dividends and exercise voting rights in respect of
the Securities. Further, PSC shall have the right, during the continuance of
any Event of Default, to notify and direct the issuer of the Securities to make
all payments, distributions, dividends and any other distributions payable in
respect thereof directly to PSC. The issuer of the Securities making any
payment or distribution to PSC hereunder shall be fully protected in relying on
the written statement of PSC that it then holds a security interest that
entitles PSC to receive such payments and distributions. Any and all money and
other property paid over to or received by PSC pursuant to the provisions of
this Section 8 shall be retained by PSC as additional collateral hereunder and
may be applied in accordance with the provisions hereof.
9. Rights and Remedies of PSC Upon and After Default.
(a) Remedies. Upon the occurrence of an Event of
Default, and in addition to any and all other rights and
remedies which PSC may then have under this Agreement, the
Restricted Stock Agreement, the laws of the United States or
the Uniform Commercial Code, as then in effect in Texas (the
"Code"), or otherwise, PSC may: (i) declare the entire unpaid
balance of principal of and all accrued interest on the
Obligations immediately due and payable, without notice
(including notice of intention to accelerate and notice of
acceleration) except as required under the Notes, demand or
presentment, which are hereby waived; (ii) reduce its claim to
judgment, foreclose or otherwise enforce its security interest
in all or any part of the Obligations by any available
judicial procedure; (iii) after notification, if any,
expressly provided for herein, sell or otherwise dispose of,
at the office of PSC, or elsewhere as chosen by PSC, all or
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any part of the Collateral, and any such sale or other
disposition may be as a unit or in parcels, by public or
private proceedings, and by way of one or more contracts, (it
being agreed that the sale of any part of the Collateral shall
not exhaust the power of sale granted hereunder, but sales may
be made from time to time until all of the Collateral has been
sold or until the Obligations have been paid in full), and at
any such sale it shall not be necessary to exhibit the
Collateral; (iv) at PSCs discretion, retain the Collateral in
satisfaction of the Obligations whenever the circumstances are
such that PSC is entitled to do so under the Code; (v) apply
by appropriate judicial proceedings for appointment of a
receiver for the Collateral, or any part thereof, and Pledgor
hereby consents to any such appointment; (vi) purchase the
Collateral at any public sale; (vii) purchase the Collateral
at any private sale if permitted by the Code; and/or (viii)
exercise the rights set forth in Section 10 hereof.
(b) Sale of Securities. Pledgor recognizes that
PSC may be unable to effect a public sale of any or all of the
Securities by reason of certain prohibitions contained in the
federal securities laws and applicable state or foreign
securities laws, and thus may resort to one or more private
sales thereof to a restricted group of purchasers who will be
obliged 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. Pledgor
acknowledges and agrees that any such private sale may result
in prices and other terms less favorable to the seller than if
such sale were a public sale and, notwithstanding such
circumstances, agrees that any such private sale shall be
deemed to have been made in a commercially reasonable manner.
PSC shall be under no obligation to delay a sale of any of the
Securities for the period of time necessary to permit the
issuer of such securities to register such securities for
public sale under the federal securities laws, or under
applicable state securities laws, even if such issuer would
agree to do so. Upon the consummation of any private or public
sale, PSC shall have the right to deliver, assign, and
transfer to the purchaser thereof the Securities so sold. Each
purchaser at any such sale shall hold the property sold
absolutely free from any claim or right of whatsoever kind,
and Pledgor hereby waives (to the extent permitted by law) all
rights of redemption, stay and/or appraisal which it has or
may at any time in the future have under any rule of law or
statute now existing or hereafter enacted. PSC shall give
Pledgor notice of PSC's intention to make any such public or
private sale at broker's board or on a securities exchange to
the extent required hereunder or by the Code. Such notice, in
case of sale at broker's board or on a securities exchange,
shall state the board or exchange at which such sale is to be
made and the day on which the Securities, or that portion
thereof so being sold, will first be offered for sale at such
board or exchange. At any such sale the Securities may be sold
in one lot as an entirety or in separate parcels, as PSC may
determine. PSC shall not be obligated to make any such sale
pursuant to any such notice if PSC shall determine not to do
so, regardless of the fact that notice of sale of the
Securities may have been given. PSC may without notice or
publication, adjourn any public or private sale or cause the
same to be adjourned from time to time by announcement at the
time and place fixed for the sale, and such sale may be made
at any time or place to which the same may be so adjourned. In
case of any sale of all or any part of the Securities on
credit or for future delivery, the Securities so sold may be
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retained by PSC until the selling price is paid by the
purchaser thereof, but PSC shall not incur any liability in
case of the failure of such purchaser to take up and pay for
the Securities so sold and, in case of any such failure, such
Securities may again be sold upon like notice. PSC may also,
at its discretion, proceed by a suit or suits at law, or in
equity to foreclose its security interest and sell the
Securities, or any portion thereof, under a judgment or decree
of a court or courts of competent jurisdiction. If any
consent, approval or authorization of any state, municipal or
other governmental department, agency or authority should be
necessary to effectuate any sale or other disposition of the
Securities or any part thereof, Pledgor shall execute all such
applications and other instruments as may be required in
connection with securing any such consent, approval or
authorization, and will otherwise use Pledgor's best efforts
to secure the same.
(c) Notification. Reasonable notification of the
time and place of any public sale of the Collateral, or
reasonable notification of the time after which any private
sale or other intended disposition of the Collateral is to be
made, shall be sent to Pledgor and to any other person
entitled under the Code to notice; provided, that if the
Collateral threatens to decline quickly in value, or if
otherwise permitted by the Code, PSC may (but shall not be
obligated to) sell or otherwise dispose of the Collateral
without notification, advertisement or other notice of any
kind. It is agreed that notice sent or given not less than ten
calendar days prior to the taking of the action to which the
notice relates is reasonable notification and notice for the
purposes of this section.
(d) Application of Proceeds. Upon the maturity of
the Obligations or any part thereof, whether such maturity be
by such terms of such instruments or through the exercise of
any power of acceleration, PSC is authorized and empowered to
apply any and all funds realized from the sale of the
Collateral not previously credited against the Obligations
first toward the payment of the costs, charges and expenses,
if any, incurred in connection with the collection of such
funds hereunder, and then toward the payment of the
Obligations in such order as PSC, in its sole discretion,
shall deem appropriate, and shall pay the balance remaining
(if any) to Pledgor as prescribed by the Code or as a court of
competent jurisdiction may direct.
10. Attorney-in-Fact. Pledgor hereby appoints PSC as the
attorney-in-fact for Pledgor for the purpose of carrying out the provisions of
this Agreement and taking any action and executing any instrument which PSC may
deem necessary or advisable to accomplish the purposes hereof, which
appointment is irrevocable and coupled with an interest. Without limiting the
generality of the foregoing, PSC shall have the right and power to receive,
endorse and collect all checks and other orders for the payment of money made
payable to Pledgor and included within the Collateral and to give full
discharge for the same. Neither PSC nor any director or officer of the issuer
of the Securities shall have any liability for the distribution to and
collection of the Proceeds by PSC, but shall be fully protected in relying on
the written statement of PSC as to its authorization pursuant to this
paragraph. Any and all amounts collected by PSC pursuant hereto shall be
applied against the Obligations in the manner that PSC shall determine, in
PSC's sole and absolute discretion.
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11. Certain Other Rights of PSC.
(a) Duty of Care. PSC's only duty with respect to the
Collateral shall be to exercise reasonable care to secure the safe
custody thereof. PSC shall not have a duty to fix or preserve rights
against prior parties to the Collateral, and shall never be liable for
its failure to use diligence to collect any amount payable with
respect to the Collateral, but shall be liable only to the account of
Pledgor for what PSC may actually collect or receive thereon.
(b) Financing Statement. PSC shall have the right at any
time to execute and file this Agreement or a copy of this Agreement as
a financing statement, but the failure of PSC to do so shall not
impair the validity or enforceability of this Agreement.
(c) Payment of Expenses. At PSC's option, PSC may
discharge taxes, liens and interest, perform or cause to be performed,
for and on behalf of Pledgor, any actions and conditions, obligations
or covenants which Pledgor has failed or refused to perform and may
pay for the repair, maintenance or preservation of any of the
Collateral, and all sums so expended, including, but not limited to,
attorneys' fees, court costs, agents' fee or commissions, or any other
costs or expenses, shall bear interest from the date of payment at the
highest legal rate and shall be deemed to constitute part of the
Obligations secured by this Agreement.
12. Cumulative Rights and Remedies. All rights and remedies of PSC
hereunder are cumulative of each other and of every other right or remedy which
PSC may otherwise have at law or in equity or under any other contract or other
writing for the enforcement of the security interest herein or the collection
of the Obligations, and the exercise by PSC of one or more rights or remedies
shall not prejudice or impair the concurrent or subsequent exercise of other
rights or remedies. Should Pledgor have heretofore executed or hereafter
executed any other security agreement in favor of PSC in which a security
interest is created as security for the debts of another or others, in respect
of which Pledgor may not be personally liable, the security interest therein
created and all other rights, powers and privileges vested in PSC by the terms
thereof shall exist concurrently with the security interest created herein,
and, in addition, all property in which PSC holds a security interest under any
such other security agreement shall also be part of the Collateral hereunder,
and all or any part of the proceeds of the sale or other disposition of such
property may, in the discretion of PSC, be applied by PSC in accordance with
the terms hereof, and of such other security agreement, or agreements, or any
of them.
13. Termination. Upon payment in full by Pledgor of all
Obligations in accordance with their terms, this Agreement shall terminate and
PSC shall return to Pledgor all certificates evidencing the Securities (and any
related stock powers) then held under this Agreement.
14. Repurchase Option. If PSC exercises its right to cancel or
repurchase any of the Securities under the Restricted Stock Agreement, PSC
shall be entitled to release such Securities from the pledge under this
Agreement and cancel or repurchase such Securities in accordance with the terms
of the Restricted Stock Agreement.
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15. Further Assurances. Pledgor agrees to execute and deliver such
further instruments and take such further actions as PSC may reasonably request
from time to time to preserve or give effect to its rights under this
Agreement.
16. Action by PSC. Any election, consent, waiver or other action
that may be taken by PSC hereunder will be taken by the Chairman of the Board,
unless Pledgor is then serving in such capacity, in which case such action will
be taken by the Board.
17. Notices. Any notice to PSC that is required or permitted by
this Agreement must be addressed to PSC at its principal office to the
attention of the President, with a copy to the General Counsel. Any notice to
Pledgor that is required or permitted by this Agreement must be addressed to
Pledgor at the most recent address for Pledgor reflected in the appropriate
records of PSC. Either party may at any time change its address for
notification purposes by giving the other prior written notice of the new
address and the date upon which it will become effective. Whenever this
Agreement requires or permits any notice from one party to another, the notice
must be in writing and must be sent by courier, overnight delivery service,
facsimile or certified mail, return receipt requested, and such notice will be
deemed to be given (a) if sent by courier, on the date actually delivered, (b)
if sent by overnight delivery service, one day after being sent, (c) if sent by
telecopy, on the date that confirmation of transmission is received by the
sender, or (d) if sent by certified mail, on the third business day after being
mailed.
18. Enforcement. This Agreement will be governed by and construed
in accordance with the laws of the State of Texas, without regard to the choice
of law rules thereof. PSC will be entitled, in addition to any other remedies
it may have at law or in equity, to temporary and permanent injunctive and
other equitable relief to enforce the provisions of this Agreement. Any action
to enforce the provisions of, or otherwise relating to, this Agreement may be
brought in the appropriate courts in Dallas, Dallas County, Texas, and Pledgor
hereby consents to the personal jurisdiction of such courts in any such action;
provided that, at the request of PSC or Pledgor, any claim or dispute arising
out of or relating to this Agreement or Pledgor's employment by PSC or the
termination of such employment, including any federal or state statutory
claims, will be resolved without resort to the courts solely through mediation
and, if mediation is not successful, through binding arbitration pursuant to
the rules of the American Arbitration Association. Neither party will be liable
to the other for punitive damages for any such claim or dispute. If any action
at law or in equity is necessary to enforce or interpret the terms of this
Agreement, the prevailing party will be entitled to reasonable attorneys' fees,
costs and necessary disbursements in addition to any other relief to which that
party may be entitled; provided that, if Pledgor becomes liable for any such
fees, costs or other disbursements, such amounts will become Obligations under
the applicable Note secured by this Agreement.
19. Entire Agreement. This Agreement and the other documents and
instruments specifically referenced herein constitute the entire agreement
between the parties hereto with respect to the subject matter hereof and
thereof, and except as expressly set forth herein or therein, there are no
agreements or representations, written or oral, express or implied, with
respect to such subject matter. No provision of this Agreement may be modified,
waived or
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discharged unless such waiver, modification or discharge is agreed to in
writing signed by Pledgor and PSC. No waiver by either party hereto of any
condition or provision of this Agreement to be performed by the other party
will be deemed a waiver of any other provisions or conditions at the same or at
any prior or subsequent time.
20. Severability. If any provision of this Agreement is held to be
invalid or unenforceable for any reason, the validity and enforceability of all
other provisions of this Agreement will not be affected thereby.
21. Counterparts. This Agreement may be executed in any number of
multiple counterparts and by different parties on separate counterparts, all of
which when taken together will constitute one and the same agreement.
22. Assignment. Pledgor may not assign this Agreement or any
rights or obligations hereunder
IN WITNESS WHEREOF, and intending to be legally bound, Pledgor and a
duly authorized representative of PSC have executed this Agreement as of the
date first above written.
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Pledgor
▇▇▇▇▇ SYSTEMS CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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Title: Chairman
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