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Exhibit 10.18
STOCK PLEDGE AGREEMENT
This Stock Pledge Agreement ("Agreement") is entered into as of October
13, 1999, by and between XXXXX X. XXXX ("Xxxx") and MGC COMMUNICATIONS, INC., a
Nevada corporation ("MGC").
RECITALS
A. Simultaneously herewith, Xxxx has purchased 150,000 shares of common
stock in MGC at $28.8125 per share (the "Subject Shares").
B. The purchase price for the Subject Shares is payable under that certain
non-recourse promissory note from Xxxx to MGC in the initial principal amount of
$4,321,875.00 (the "Obligations").
C. The Subject Shares are to be subject to the terms of this Agreement
until such time (the "Termination Date") as the Obligations have been paid in
full.
D. Upon the terms and subject to the conditions set forth in this
Agreement, Xxxx hereby pledges the Subject Shares to MGC by depositing them with
MGC.
AGREEMENT
1. Pledge. Xxxx hereby assigns and delivers to MGC certificate number
_____ which represents 150,000 shares of the common stock of MGC. Such stock
constitutes the Subject Shares. Together with such stock, Xxxx hereby delivers
to MGC a stock power separate from the stock certificate duly endorsed by Xxxx
as transferor and authorizing MGC to transfer such stock on the records of MGC.
2. Stock. The Subject Shares shall be and are hereby held by MGC as
security for Xxxx'x payment of the Obligations. The Subject Shares shall not be
disposed of by Xxxx, nor shall they be encumbered except as herein provided. At
such time as Xxxx shall have provided to MGC's satisfaction evidence that the
Termination Date has occurred as a result of the Obligations having been paid in
full, including, without limitation, by forgiveness thereof as provided in that
certain Employment/Stock Repurchase Agreement dated as of October 13, 1999, MGC
shall deliver the stock certificate and stock power described above to Xxxx.
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3. Voting Rights. Xxxx shall have the right to vote the Subject Shares so
long as there is no event of default in existence hereunder. During the
continuance of an event of default, the Subject Shares shall not have any voting
rights (as if the Subject Shares were treasury stock).
4. Default.
4.1 Events of Default. The failure of Xxxx to perform the
Obligations when due shall constitute an event of default hereunder if such
default continues for more than the cure period set forth in Section 5.1 below.
4.2 Notice of Default. Upon the occurrence of any default, MGC shall
give Xxxx written notice thereof.
5. Remedies Upon Default.
5.1 Right to Cure. Xxxx shall have the right to cure any default for
a period of ten (10) days from the date Xxxx receives written notice of default
pursuant to the provisions of Section 4.2. During this cure period, MGC shall
not have the right to exercise any of its remedies hereunder.
5.2 Additional Remedies. In addition to all other rights and
remedies which MGC may have under law, MGC shall have all rights and remedies of
a secured party under the Uniform Commercial Code in any jurisdiction where
enforcement of this Agreement is sought. In addition thereto, MGC shall have the
right, upon an event of default, to either:
A. If the aggregate fair market value of the Subject Shares
shall be less than the amount of the Obligations, to have transferred into MGC's
name the Subject Shares, in full satisfaction of the Obligations, or
B. Sell or otherwise dispose of the Subject Shares or any part
thereof, in one or more sales, at a public or private sale, for cash, on credit
or otherwise with or without representations or warranties, and upon such terms
as shall be acceptable to MGC, subject to any restrictions imposed by applicable
state or federal securities laws.
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5.3. Sale.
5.3.1 MGC shall give Xxxx at least ten (10) days prior written
notice of the sale of all or any part of the Subject Shares or of any proposal
by MGC to retain the Subject Shares or any part thereof in satisfaction of
Xxxx'x Obligations. Within such ten (10) day period, Xxxx may cure the default
prior to the date on which the sale is scheduled. If Xxxx does not do so, he may
bid at any such sale.
5.3.2 Any sale of the Subject Shares shall be held at such
time or times and at such place or places as MGC may determine in the exercise
of MGC's reasonable discretion; provided, however, that any public sale shall be
held in Las Vegas, Nevada. A private sale shall be held on or after the date
designated in the notice of sale at the place so designated.
5.3.3 MGC may bid at any sale hereunder and shall also have
the rights provided in the Uniform Commercial Code of the State of Nevada. The
Subject Shares pledged hereunder may, upon the completion of any sale or
transfer, be endorsed by MGC as required to transfer the Subject Shares on the
books of MGC and Xxxx hereby constitutes and appoints MGC as his attorney in
fact to do so.
5.3.4 The proceeds of any sale shall be applied by MGC, after
payment of expenses of sale (including, without limitation, attorneys' fees and
court costs), first to the Obligations, and any surplus shall be paid to the
order of Xxxx. In the event the proceeds of any such sale are insufficient to
fully discharge Xxxx'x Obligations, Xxxx shall not be liable to MGC for any
deficiency.
5.3.5 Attorney in Fact. Xxxx hereby irrevocably appoints MGC
as his attorney in fact for purposes of taking any actions and executing any
documents and instruments MGC reasonably deems necessary to exercise its
remedies and otherwise accomplish the purposes of this Agreement.
6. Reclassification and Dividends. If, during the life of this Agreement,
any stock dividend, reclassification, readjustment or other change is declared
or made in the capital structure of MGC, all new, substituted and additional
shares, or other securities issued in connection with any such change, may and
shall be held by MGC under the terms of this Agreement. All dividends, current
or liquidating, on any Subject Shares held in pledge hereunder, whether in money
or in Subject Shares or in kind, shall be paid to MGC during the pendency
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of an Event of Default, and such dividends shall be applied by MGC to the
Obligations hereunder, but otherwise shall be paid to Xxxx.
7. Pledgeholder. To facilitate the pledge created herein, the parties
agree that MGC shall act as Pledgeholder.
8. Further Assurances. Xxxx shall execute, acknowledge and deliver all
such instruments and take all such action as MGC may reasonably request in order
to effectuate the purposes of this Agreement and to carry out the terms hereof.
9. Transfer. MGC may at any time or from time to time sell, assign or
transfer to any person who shall be the transferee of the Obligations all or any
part of its rights hereunder. Upon any such sale, MGC shall be fully discharged
thereafter from all liability and responsibility with respect to the rights
transferred, and the transferee or transferees shall be vested with all the
rights, powers and remedies of the pledge hereunder with respect to the rights
transferred.
10. Miscellaneous Provisions.
10.1 Entire Agreement: Amendment: Waiver. This Agreement supersedes
all prior agreements or understandings, written or oral, between the parties
hereto, related to the subject matter hereof, and incorporates the entire
understanding of the parties with respect thereto. Any modifications concerning
this Agreement shall be of no force or effect unless contained in a subsequent
written modification signed by the party to be charged. This Agreement may only
be amended by a written instrument signed by the party or parties against whom
it is sought to be enforced. The party benefitted by any condition or obligation
contained herein may waive the same, but such waiver shall not be enforceable by
another party or parties unless made by written instrument, signed by the
waiving party. No waiver of any default shall constitute a waiver of any other
default or of any subsequent similar default.
10.2 Notices. Any notice to be given under this Agreement shall be
delivered in person or may be deposited in the United States mail, duly
registered or certified, postage prepaid, return receipt requested, and
addressed as follows:
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Pledgor: Xxxxx X. Xxxx
00 Xxxxxxx Xxxxx
Xxxxxx, Xxx Xxxx 00000
Pledgee: MGC Communications, Inc.
0000 Xxxxx Xxxxxxx Xxxxx
Xxx Xxxxx, Xxxxxx 00000
or to such other address as may be designated in writing.
10.3 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Nevada.
10.4 Successors and Assigns. This Agreement shall be binding on and
inure to the benefit of the respective successors, assigns and personal
representatives of the parties, except to the extent of any contrary provisions
in this Agreement.
10.5 Headings. The Article and Paragraph headings throughout this
Agreement are provided for convenience only and the words contained therein
shall in no way be held to expand, amplify, modify or aid in the interpretation
or construction thereof.
10.6 Incorporation of Recitals. The recitals hereto are incorporated
into and made a part of this Agreement for all purposes.
10.7 Resolution of Conflicts. Any controversy between the parties
hereto regarding the construction or application of any of the terms, provisions
or conditions of this Agreement or any obligation created pursuant hereto shall,
on the written request of any party served on the other, be submitted to
arbitration, and such arbitration shall comply with and be governed by the
provisions of the American Arbitration Association. The parties in conflict
shall jointly select one (1) neutral arbitrator to hear and determine the
dispute. If the parties are unable to agree upon a neutral arbitrator, then the
State Court sitting in Xxxxx County, Nevada, shall select such arbitrator. The
cost of arbitration, including attorneys' fees, shall be borne by the losing
party or shall be borne by the parties in such proportions as the arbitrator
shall decide.
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10.8 Gender and Number. Any reference which is singular shall
include the plural, the neuter shall include the feminine and masculine, the
masculine shall include the feminine and neuter, the feminine shall include
neuter, and each shall include a corporation wherever necessary to construe this
Agreement.
10.9 Severability. If a court of competent jurisdiction should find
any term or provision of this Agreement to be unenforceable or invalid, then
such term or provision shall be severed from this Agreement and the remainder of
this Agreement shall continue in full force and effect.
IN WITNESS WHEREOF, the parties hereto have affixed their signatures as of
the date herein first written above.
MGC COMMUNICATIONS, INC.,
Pledgee
By:_____________________________________
Title:__________________________________
(CORPORATE SEAL)
__________________________________(SEAL)
XXXXX X. XXXX, Pledgor
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