Exhibit 10.22
PLEDGE AGREEMENT
PLEDGE AGREEMENT (this "Agreement") dated July 31, 1997, made by Xxxxx F
Xxxxxxxx (the "Pledgor") to Princeton Video Image, Inc., a New Jersey
corporation ("PVI" or the "Pledgee").
PRELIMINARY STATEMENTS
A. Pursuant to the exercise of a warrant dated July 31, 1992 (the
"Warrant"), the Pledgor has, as of the date hereof, purchased 95,000 shares
of common stock of PVI, all of which shares (the "Pledged Shares") are
pledged pursuant to this Agreement.
B. In connection with the exercise of the Warrant, the Pledgor has
executed a Promissory Note of even date herewith (the "Note," all defined
terms utilized herein and not otherwise defined herein having the meaning
ascribed thereto in the Note) in the principal amount of $475,000.00 payable
to the Pledgee. Under the terms of the Note and to induce the Pledgee to
extend credit to the Pledgor, the Pledgor shall have made the pledge
contemplated by this Agreement.
NOW THEREFORE, in consideration of the premises and in order to induce
the Pledgee to extend credit under the Note, the Pledgor hereby agrees with
the Pledgee as follows:
SECTION 1. Pledge. The Pledgor hereby pledges, hypothecates, assigns,
transfers and conveys to the Pledgee and grants to the Pledgee a security
interest in and to, the following (the "Pledged Collateral"):
(i) all right, title and interest in and to the Pledged Shares and
the certificates representing the Pledged Shares, and all dividends, 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 the
Pledged Shares; and
(ii) all right, title and interest in and to all additional shares
of stock of PVI arising out of a recapitalization or stock split relating to
the Pledged Shares and the certificates representing such additional shares,
and all dividends, 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 such stock.
SECTION 2. Security for Obligations. This Agreement secures the due
and punctual payment or performance, whether at stated maturity, by
acceleration or otherwise, of all obligations of the Pledgor now or hereafter
existing under the Note and this Agreement (all such obligations of the
Pledgor or any other obligor being the "Pledge Obligations").
SECTION 3. Delivery of Pledged Collateral. All certificates or
instruments representing or evidencing the Pledged
Collateral of the Pledgor have been delivered to the Pledgee and shall be 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 to the Pledgee. The Pledgee shall have the right, at
any time in its discretion and without notice to the Pledgor, to transfer to
or to register in the name of the Pledgee or any of its nominees any or all
of the Pledged Collateral of the Pledgor. In addition, the Pledgee shall
have the right at any time to exchange certificates representing or
evidencing Pledged Collateral of the Pledgor for certificates of smaller or
larger denominations.
SECTION 4. Representations and Warranties. The Pledgor represents
and warrants as follows:
(a) The Pledgor is the legal and beneficial owner of the Pledged
Shares free and clear of any lien, security interest, option or other charge
or encumbrance except for the security interest created by this Agreement and
the agreements contemplated hereby.
(b) The Pledgor has full power and authority to make the pledge of
the Pledged Shares.
(c) This Agreement has been executed and delivered by the Pledgor
and constitutes a valid and binding agreement of the Pledgor.
(d) The pledge of the Pledged Shares pursuant to this Agreement
creates an enforceable, valid and perfected security interest in the Pledged
Collateral, securing the payment and performance of the Pledge Obligations.
(e) No authorization, approval, or other action by, and no notice
to or filing with, any governmental authority or regulatory body is required
either (i) for the pledge by the Pledgor of the Pledged Collateral pursuant
to this Agreement or for the execution, delivery or performance of this
Agreement by the Pledgor, or (ii) for the exercise by the Pledgee of the
voting or other rights provided for in this Agreement or the remedies in
respect of the Pledged Collateral pursuant to this Agreement (except as may
be required in connection with such disposition by laws affecting the
offering and sale of securities generally).
SECTION 5. Further Assurances. The Pledgor agrees that at any time
and from time to time, at the expense of the Pledgee, the Pledgor will
promptly execute and deliver all further instruments and documents, and take
all further action, that may be necessary or desirable, or that the Pledgee
may reasonably request, in order to perfect and protect any security interest
granted or purported to be granted hereby or to enable the Pledgee to
exercise and
2
enforce its rights and remedies hereunder with respect to any Pledged
Collateral.
SECTION 6. Voting Rights; Distributions; Etc.
(a) So long as no Event of Default (as defined in the Note) in any
of the Pledge Obligations shall have occurred and be continuing, the Pledgor
shall be entitled to exercise any and all voting and other consensual rights
pertaining to the Pledged Collateral or any part thereof for any purpose not
inconsistent with the terms of this Agreement or the Note or any other
document or instrument relating to the transactions contemplated hereby and
thereby, and the Pledgee shall execute and deliver (or cause to be executed
and delivered) to the Pledgor all such proxies and other instruments as such
Pledgor may reasonably request for the purpose of enabling such Pledgor to
exercise the voting and other rights which he is entitled to exercise
pursuant to this Section 6(a); provided, however, that the Pledgor shall not
exercise or refrain from exercising any such right if, in the judgment of the
Pledgee, such action could have a material adverse effect on the value of the
Pledged Collateral or any part thereof; and provided, further, that the
Pledgor shall give the Pledgee at least five (5) days' written notice of the
manner in which he intends to exercise, or the reasons for refraining from
exercising, any such right.
(b) Upon the occurrence and during the continuance of any Event of
Default, all rights of the Pledgor to exercise the voting and other
consensual rights which he would otherwise be entitled to exercise pursuant
to Section 6(a) shall cease, and all such rights shall thereupon become
vested in the Pledgee, who shall thereupon have the right to exercise such
voting and other consensual rights, except to the extent the exercise of such
rights is prohibited by applicable law.
SECTION 7. Transfer and Other Liens; Additional Shares.
(a) The Pledgor agrees that he will not (i) sell or otherwise
dispose of, or grant any option with respect to, any of the Pledged
Collateral, or (ii) create or permit to exist any lien, security interest, or
other charge or encumbrance upon or with respect to any of the Pledged
Collateral, except for the security interest under this Agreement.
(b) The Pledgor agrees that he will (i) cause the issuer of the
Pledged Collateral not to issue any stock or other securities in substitution
for the Pledged Collateral issued by the issuer, except to the Pledgor and
(ii) pledge hereunder, immediately upon his acquisition (directly or
indirectly) thereof, any and all of such shares of stock or other securities.
SECTION 8. Pledgee Appointed Attorney-in-Fact. The Pledgor hereby
appoints the Pledgee the Pledgor's attorney-in-fact,
3
with full authority in the place and stead of the Pledgor and in the name of
the Pledgor or otherwise, from time to time in the Pledgee's discretion to
take any action and to execute any instrument which the Pledgee may deem
necessary or advisable to accomplish the purposes of this Agreement,
including, without limitation, to receive, endorse and collect all
instruments made payable to the Pledgor representing any dividend or other
distribution in respect of the Pledged Collateral or any part thereof and to
give full discharge for the same.
SECTION 9. Pledgee May Perform. If the Pledgor fails to perform any
agreement contained herein, the Pledgee may itself perform, or cause
performance of, such agreement.
SECTION 10. Reasonable Care. The Pledgee shall be deemed to have
exercised reasonable care in the custody and preservation of the Pledged
Collateral in its possession, if any, if such Pledged Collateral is accorded
treatment substantially equal to that which the Pledgee accords its own
property, it being understood that the Pledgee shall not have responsibility
for (i) ascertaining or taking action with respect to shareholder or other
rights, including without limitation, voting rights, calls, conversions,
exchanges, tenders or other matters relative to any Pledged Collateral of the
Pledgor, whether or not the Pledgee 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 of the Pledgor.
SECTION 11. Remedy Upon Default.
(a) If any Event of Default shall have occurred and be continuing,
the Pledgee's sole remedy shall be to (i) sell, without notice except as
specified below, the Pledged Collateral or any part thereof in one or more
parcels at public or private sale, at any exchange, broker's board or
elsewhere, for cash, on credit or for future delivery, and upon such other
terms as the Pledgee, in its sole discretion, may deem commercially
reasonable, and (ii) apply the proceeds from such sale to the payment of the
unpaid principal of the Note and the interest accrued thereon. In order to
enable the Pledgee to exercise the remedy set forth in this Section 11, the
Pledgor has executed and delivered the Common Stock Power attached hereto
which the Pledgee will hold as additional Pledged Collateral. The Pledgor
agrees that, to the extent notice of sale shall be required by law, at least
twenty (20) days' notice to the Pledgor of 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 Pledgee shall not be obligated to make any sale
of Pledged Collateral of the Pledgor regardless of notice of sale having been
given. The Pledgee 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.
4
(b) The Pledgor's liability to pay the Note is limited to the
value of the Pledged Collateral. In no event shall the Pledgor be personally
liable for any deficiency resulting from the sale of the Pledged Collateral,
nor shall any action or proceeding in any event be brought by the Pledgee
against the Pledgor to recover a personal judgment against him upon this
Agreement or upon the Note. Any surplus proceeds from the sale of the
Pledged Collateral remaining after payment in full of the Note shall be paid
over to the Pledgor.
SECTION 12. Security Interest Absolute. All rights of the Pledgee and
security interests hereunder, and all obligations of the Pledgor hereunder
shall be absolute and unconditional irrespective of:
(i) any lack of validity or enforceability of the Note or
any other agreement or instrument relating thereto;
(ii) any change in the time, manner or place of payment
of, or in any other term of, all or any of the Pledge Obligations, or any
other amendment or waiver or any consent to any departure from the Note or
any other agreement or document relating thereto; or
(iii) any exchange, release or non-perfection of any other
collateral, for all or any of the Pledge Obligations.
SECTION 13. Amendments, Etc. No amendment or waiver of any provision
of this Agreement nor consent to any departure by the Pledgor herefrom, shall
in any event be effective unless the same shall be in writing and signed by
the Pledgee, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
SECTION 14. Notices, Etc. All notices and other communications
provided for hereunder shall be in writing (including facsimile transmission
and telegraphic communication) and, if to the Pledgor, mailed, transmitted,
telegraphed or delivered to him at 000 Xxxxxxxxxx Xxxxx, Xxxxxxxxx, Xxx
Xxxxxx 00000, and if to the Pledgee, mailed, transmitted, telegraphed or
delivered to it at 00 Xxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxxxx, Xxx Xxxxxx 00000,
with a copy to Xxxxxxx X. Xxxxx, Esquire, Smith, Stratton, Wise, Xxxxx &
Xxxxxxx, 000 Xxxxxxx Xxxx Xxxx, Xxxxxxxxx, Xxx Xxxxxx 00000, or as to any
party at such other address as shall be designated by such party in a written
notice to each other party complying as to delivery with the terms of this
Section 14. All such notices and other communications shall, when mailed,
transmitted or telegraphed, be effective when deposited in the mails,
confirmed by return facsimile transmission or delivered to the telegraph
company, respectively, addressed as aforesaid.
5
SECTION 15. Continuing Security Interest; Transfer of Note; Release of
Security Interest.
(a) This Agreement shall create a continuing security interest in
the Pledged Collateral of the Pledgor and shall (i) remain in full force and
effect until payment in full of the Pledge Obligations, (ii) be binding upon
the Pledgor, his successors and assigns, and (iii) inure, together with the
rights and remedies of the Pledgee, to the benefit of the Pledgee and its
respective successors, transferees and assigns. Without limiting the
generality of the foregoing clause (iii), the Pledgee may assign or otherwise
transfer the Note (or other instrument of indebtedness of the Pledgor) held
by it or any interest therein, or grant any participation in its rights or
obligations under the Note, subject to the provisions of the Note, to any
other person, and such other person shall thereupon become vested with all
the rights in respect thereof granted to the Pledgee herein or otherwise.
(b) Upon the payment in full of the Pledge Obligations, the Pledgor
shall be entitled to the return of such of the Pledged Collateral of the
Pledgor as shall not have been sold or otherwise applied pursuant to the
terms of this Agreement and the Pledgee agrees promptly to return to the
Pledgor such Pledged Collateral.
SECTION 16. Severability. If any term or provision of this Agreement
is held to be illegal, invalid or unenforceable by any court of competent
jurisdiction, then such illegal, invalid or unenforceable term or provision
shall be severed from this Agreement, and the remainder of this Agreement
shall continue in full force and effect as if such illegal, invalid or
unenforceable term or provision had never been a part hereof.
SECTION 17. Governing Law; Terms. This Agreement shall be governed
by, construed and interpreted in accordance with the laws of the State of New
Jersey, without regard to the law of conflicts.
6
IN WITNESS WHEREOF, the Pledgor has duly executed and delivered this
Pledge Agreement as of the date first written above.
/s/ Xxxxx F Xxxxxxxx
------------------------------
Xxxxx F Xxxxxxxx
ACCEPTED AND AGREED TO
AS OF THE DATE HEREOF
PRINCETON VIDEO IMAGE, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
---------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Chief Executive Officer
and President
7
COMMON STOCK POWER
Xxxxx F Xxxxxxxx (the "Transferor") does hereby assign and transfer
unto the following persons the number set forth opposite each person's name
of his shares of the Common Capital Stock of Princeton Video Image, Inc.,
standing in his own name on the books of said Corporation represented by
Certificate No. _____ herewith:
Assign and transfer to Number of Shares
---------------------- ----------------
Princeton Video Image, Inc. 95,000
The Transferor does hereby irrevocably constitute and appoint Smith,
Stratton, Wise, Xxxxx & Xxxxxxx his attorney to transfer said stock on the
books of the Corporation with full power of substitution in the premises.
Dated: July 31, 1997
/s/ Xxxxx F Xxxxxxxx
------------------------------
Xxxxx F Xxxxxxxx
8
