Exhibit 10.18
STOCK PLEDGE AGREEMENT
THIS STOCK PLEDGE AGREEMENT (this "Agreement") is entered into effective
the ____ day of _______________, 2001, by and among Schimatic Cash Transactions
Xxxxxxx.xxx, Inc., a corporation duly organized and existing under the laws of
the state of Florida ("Pledgor"), and [_______________________________________],
the holder of a Limited Recourse Convertible Promissory Note in the principal
amount of $[__________], (the "Secured Party"), issued as part of a series of up
to $1,500,000 in aggregate principal amount of Limited Recourse Convertible
Promissory Notes (the "Notes").
WITNESSETH:
WHEREAS, Pledgor has issued the Notes and wishes to secure the payment of
the indebtedness evidenced by the Notes and any promissory note taken in
renewal, exchange or substitution thereof or therefor, including interest on all
of the foregoing and all costs of collecting the same and Pledgor's obligations
and liabilities under this Agreement (together with the Notes and this
Agreement, the "Documents") however created, arising or evidenced, whether
direct or indirect, primary or secondary, absolute or contingent, joint or
several, or now or hereafter existing, or due or to become due (all of the
obligations and liabilities described in the preceding clauses being herein
collectively called the "Liabilities").
AGREEMENT
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained and of the direct and indirect benefits to be
received by Pledgor as a result of the foregoing, the parties hereto agree as
follows:
1. Grant of Security Interest.
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(a) As collateral security for the due and punctual performance
and payment of all the Liabilities, Pledgor hereby delivers to Secured
Party and grants to Secured Party a continuing security interest in
that number of shares of Pledgor's restricted common stock (the
"Collateral") equivalent to the principal amount of the Note set forth
above divided by $_____, or [__________] shares, evidenced by
certificate number _________ ___ representing such shares registered
in the name of Pledgor (the "Certificate"), accompanied by a separate
stock power and an irrevocable letter of instruction to the Pledgor's
stock transfer agent, instructing that upon Secured Party's tender of
the Certificate and related stock power accompanied by an affidavit of
Secured Party evidencing Pledgor's default, the stock transfer agent
shall issue a certificate in the name of Secured Party for the number
of shares of Pledgor's common stock determined in accordance with the
foregoing calculation. As interest accrues on the Note at a rate of
20% per month as provided therein, Pledgor shall be entitled to retain
that number of shares that is equal to such accrued interest divided
by the lesser of (i) the Market Price (as defined below) per share for
such common stock as of the last day on which the common stock is
traded during the month for which such interest is due or (ii) $____.
For purposes hereof, "Market Price" shall mean the closing sales price
for the common stock as quoted on a registered national securities
exchange or, if not listed on a national exchange, the Nasdaq Stock
Market, or, if not listed on such an exchange or included on the
Nasdaq Stock Market, the closing sales price on the over-the-counter
market, or, if not traded on any of the foregoing, as determined by
the board of directors through any other reliable means of
determination available. If, as a result of the foregoing, the number
of shares of common stock retained as Collateral is less than the
remaining unpaid principal balance of the Note, plus interest to
accrue for the next succeeding month divided by $0.10, upon the
written request of Secured Party, Pledgor shall promptly, but in any
event within five business days, deliver one or more certificates for
such number of additional shares of common stock as shall be required
in accordance with the foregoing calculation.
(b) The security interest granted to Secured Party hereunder is
given to secure payment of the Note, as may be hereafter amended,
supplemented, renewed, extended and/or modified, payable as to
principal and interest as therein provided.
(c) The pledge of the stock as security as described above shall
be subject to the following:
(i) During the term of this Agreement, and so long as there
shall not be an Event of Default (hereinafter defined) under this
Agreement or the Note, Secured Party shall not have the right to
vote the pledged shares on any matters submitted to a vote of
stockholders.
(ii) In the event that, during the term of this Agreement,
any reclassification, readjustment or other change is declared or
made in the capital structure of the corporation whose stock is
pledged, all such new, substituted and additional shares or other
securities issued by reason of any such change shall be issued in
the name of Pledgor and held by Secured Party under the terms of
this Agreement in the same manner as the shares of stock
originally pledged hereunder.
(iii) Upon the occurrence of an Event of Default, Secured
Party shall have the right to execute upon the security interest
granted hereunder and, in connection therewith, cause to have
that number of shares of common stock to which Secured Party is
entitled as determined in accordance with this Agreement issued
in the name of Secured Party. Pledgor shall provide Secured Party
an irrevocable letter of instruction to the stock transfer agent,
instructing that upon Secured Party's tender of the Certificate
and related stock power accompanied by an affidavit of Secured
Party evidencing Pledgor's default, the stock transfer agent
shall issue a certificate in the name of Secured Party for the
number of shares of Pledgor's common stock determined in
accordance with the foregoing calculation. Upon any such
execution on the Collateral pursuant to the terms of this
paragraph, Secured Party shall have all rights appurtenant to
ownership of common stock of Pledgor, including the right to vote
such stock.
(iv) At such time as Pledgor's obligations to Secured Party
under the Note are fully satisfied, Secured Party shall cause to
be delivered to Pledgor the Certificate and related stock powers
and shall execute all documents necessary to terminate the
pledge.
2. Representations and Warranties of Pledgor. As an inducement to Secured
Party to enter into this Agreement and to consummate the transactions
contemplated hereby, Pledgor represents, covenants and warrants to Secured Party
and agrees as follows:
(a) Pledgor is a corporation duly organized, validly existing, and in
good standing under the laws of Florida and has the power and is duly
authorized, qualified, franchised and licensed under all applicable laws,
regulations, ordinances and orders of public authorities to own all its
properties and assets and to carry on its business in all material respects
as it is now being conducted, including qualification to do business as a
foreign corporation in the states in which the character and location of
the assets owned by it or the nature of the business transacted by it
requires qualification, except to the extent the failure to so qualify
would not materially and adversely affect the business, operations,
properties, assets or condition of Pledgor.
(b) Pledgor has taken all action required by law, its articles of
incorporation, its bylaws, or otherwise to authorize the execution and
delivery of this Agreement and the consummation of the transactions herein
contemplated. Pledgor has full power and authority to execute, deliver and
perform the Note and this Agreement. This Agreement is the legal, valid and
binding agreement of Pledgor, enforceable between the parties in accordance
with its terms, except as such enforcement may be limited by bankruptcy,
insolvency or other laws affecting enforcement of creditors' rights
generally and by general principles of equity. The execution and delivery
of this Agreement does not, and the consummation of the transactions
contemplated by this Agreement in accordance with the terms hereof will
not, violate any provision of Pledgor's articles of incorporation or bylaws
or violate, conflict with or result in a breach of the terms, conditions or
provisions of, or constitute a default, an Event of Default, or an event
creating rights of acceleration, termination or cancellation or a loss of
rights under, or result in the creation or imposition of any encumbrance
upon any of the Collateral, under any other material note, instrument,
agreement, mortgage, lease, license, franchise, permit or other
authorization, right, restriction or obligation to which Pledgor or any of
the Collateral is subject or by which Pledgor is bound.
(c) Pledgor has made no other or prior pledges of the Collateral. No
Uniform Commercial Code financing statement covering any of the Collateral
is on file in any public office other than the security interest created by
this Agreement. All information with respect to the Collateral set forth in
any schedule, certificate or other writing at any time heretofore or
hereafter furnished by Pledgor to Secured Party, and all other written
information heretofore or hereafter furnished by Pledgor to Secured Party,
are and will be true and correct as of the date furnished.
(d) Until the Note is paid in full, Pledgor will neither issue stock
that has earnings, distribution or voting rights superior to the common
stock that is the Collateral, nor issue common stock for an amount of
consideration less than $1.25 per share.
3. Default.
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(a) An Event of Default shall be deemed to have occurred upon the
happening of any of the following events or conditions:
(i) the failure or refusal of Pledgor to pay principal of or
interest on the Notes when the same becomes due in accordance with the
terms thereof and such failure or refusal is not cured within 10
calendar days after Pledgor has notice thereof;
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(ii) the failure or refusal of Pledgor punctually and properly to
perform, observe and comply with any other covenant or agreement
contained in this Agreement or the Documents, and such failure or
refusal is not cured or remedied within 30 days after Pledgor has
written notice thereof;
(iii) Pledgor shall (1) become insolvent, (2) fail to pay its
debts generally as they become due, (3) voluntarily seek, consent to
or acquiesce in the benefit or benefits of any Debtor Relief Law
(defined hereinafter), or (4) become a party to (or be made the
subject of) any proceeding provided for by any Debtor Relief Law,
other than as a creditor or claimant, that could suspend or otherwise
adversely affect the Rights (defined hereinafter) of Secured Party
granted herein (unless, in the event such proceeding is involuntary,
the petition instituting same is dismissed within 60 days of the
filing of same). "Debtor Relief Law" means the Bankruptcy Code of the
United States of America and all other applicable liquidation,
conservatorship, bankruptcy, moratorium, rearrangement, receivership,
insolvency, reorganization, suspension of payments or similar Laws
from time to time in effect affecting the Rights of creditors
generally. "Rights" means rights, remedies, powers and privileges.
"Laws" means all applicable statutes, laws, ordinances, regulations,
orders, writs, injunctions or decrees of any state, commonwealth,
nation, territory, possession, county, parish, municipality or
Tribunal. "Tribunal" means any court or governmental department,
commission, board, bureau, agency or instrumentality of the United
States or of any state, commonwealth, nation, territory, possession,
county, parish or municipality, whether now or hereafter constituted
and/or existing;
(iv) the failure to have discharged within a period of 30 days
after the commencement thereof any attachment, sequestration or
similar proceeding against the Collateral or any of the assets of
Pledgor, or the loss, theft or destruction of or occurrence of
substantial damage to a material part of the assets of Pledgor, except
to the extent adequately covered by insurance; or
(v) the occurrence of an "event of default" under the Notes.
(b) If any one or more of the Events of Default specified above shall
have happened, the rights of the Secured Party shall be limited to
converting the principal of and accrued but unpaid interest on the Note to
shares of common stock of Pledgor or an equity interest in Smart Chip
Technologies, LLC, as provided in the Note, or to executing and foreclosing
on the collateral described in the separate Accommodation Pledge Agreement
entered into between Smart Chip Technologies, LLC and the Secured Party and
other holders of similar notes, and in the event that any sale of the
Collateral shall be insufficient to satisfy the Liabilities, the Secured
Party shall not seek and shall not be entitled to obtain a deficiency or
personal judgment against Pledgor.
4. Representations and Warrantees of Secured Party. In connection with the
possible acquisition by Secured Party of the Collateral upon execution of this
security interest, Secured Party represents that the common stock would be
acquired solely for investment purposes, without a view to or for resale in
connection with any distribution of such common stock or any interest therein
without registration or other compliance under the Securities Act of 1933, as
amended, and that Secured Party has no direct or indirect participation in any
such undertaking or in the underwriting of such an undertaking. Secured Party is
an "accredited investor" as that term is defined in Rule 501 of Regulation D
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promulgated under the Securities Act of 1933. Secured Party, either alone or
with its duly constituted representative, has sufficient knowledge and
experience investing in companies similar to Pledgor, so as to be able to
evaluate the risks and merits of its investment in Pledgor and is able
financially to bear the risk thereof, including a complete loss of its entire
investment.
5. Miscellaneous Provisions.
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(a) The parties shall execute and deliver all Documents or
instruments, provide all information, and take or forebear from all such
action as may be necessary or appropriate to achieve the purposes of this
Agreement.
(b) All notices, demands, requests or other communications required or
authorized hereunder shall be in writing and shall be deemed to have been
given on the date of service if personally served or by facsimile
transmission (if receipt is confirmed by the facsimile operator of the
recipient), or on the following day if delivered by overnight courier
service, or on the third day after mailing if mailed by certified mail,
return receipt requested, if sent to the addresses or facsimile numbers set
forth herein or other such addresses and facsimile numbers as shall be
furnished by any party in the manner for giving notices hereunder.
(c) No delay on the part of Secured Party in the exercise of any right
or remedy shall operate as a waiver thereof, and no single or partial
exercise by Secured Party of any right or remedy shall preclude other or
further exercise thereof or the exercise of any other right or remedy.
(d) This Agreement, together with the other Documents, constitutes the
entire agreement between the parties pertaining to the subject matter
hereof and supersedes all prior agreements and understandings pertaining
thereto. No amendment to, modification or waiver of, or consent with
respect to any provision of this Agreement shall in any event be effective
unless the same shall be in writing and signed and delivered by Secured
Party, and then any such amendment, modification, waiver or consent shall
be effective only in the specific instance and for the specific purpose for
which given.
(e) Section captions used in this Agreement are for convenience of
reference only and shall not affect the construction of this Agreement.
(f) This Agreement may be executed in any number of counterparts and
by the different parties on separate counterparts, and each such
counterpart shall be deemed to be an original, but all such counterparts
together shall constitute but one and the same Agreement and any signed
counterpart shall be deemed signed and delivered if it is delivered by the
party signing it to any other party hereto by electronic facsimile
transmission.
(g) This Agreement has been delivered at Salt Lake City, Utah, and
shall be construed in accordance with and governed by the laws of the state
of Utah, excluding principles of choice or conflicts of law. Whenever
possible, each provision of this Agreement shall be interpreted in such
manner as to be effective and valid under applicable law, but if any
provision of this Agreement shall be prohibited by or invalid under
applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such
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provision or the remaining provisions of this Agreement. Any action or
proceeding brought to enforce this Agreement shall be instituted in Salt
Lake County, Utah, if brought in a Utah state court, or in the District of
Utah, Central Division, if brought in a federal court.
(h) This Agreement shall be binding upon and inure to the benefit of
the parties and their respective successors and assigns; provided that this
provision shall not be construed as permitting assignment, substitution,
delegation or other transfer of rights or obligations, except strictly in
accordance with the provisions of this Agreement.
(i) The duties of a party under this Agreement may not be delegated by
either party, in whole or in part, without the prior written consent of the
other party.
IN WITNESS WHEREOF, this Agreement has been duly executed as of the date
first above written.
Pledgor:
Schimatic Cash Transactions Xxxxxxx.xxx, Inc.
By
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Its duly authorized officer
Secured Party:
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