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EXHIBIT 10.2
FOR INCLUSION IN NEW VALLEY CORPORATION'S
CURRENT REPORT ON FORM 8-K DATED JANUARY 31, 1997
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PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT, dated as of January 31, 1997, is entered into by and
between BROOKE (OVERSEAS) LTD., a corporation duly organized and validly
existing under the laws of Delaware ("Brooke"), and NEW VALLEY CORPORATION, a
corporation duly organized and validly existing under the laws of Delaware
("NVC").
WITNESSETH
WHEREAS, on the date hereof (i) NVC has purchased from Brooke 10,483 shares
of Common Stock (the "Shares") of BrookeMil Ltd., a Cayman Islands company (the
"Company"), and (ii) NVC has issued to Brooke a note (the "Note") to evidence
its obligation to pay a portion of the purchase price for the Shares, all
pursuant to a Stock Purchase Agreement, dated as of January 31, 1997, among the
Company, Brooke, BGLS, Inc., and NVC;
WHEREAS, to secure the payment obligations of NVC under the Note, Brooke
has requested that NVC pledge to it the Shares owned by NVC;
NOW, THEREFORE, in consideration of the mutual agreements set forth herein
and for other good and valuable consideration, the parties hereto hereby agree
as follows:
1. SECURITY AGREEMENT
1.1 Security Interest in the Collateral
(a) In order to secure the due and punctual payment (whether at maturity or
by acceleration) of any amount that NVC is obligated to pay under the Note, NVC
hereby pledges, assigns, transfers, sets over and delivers to Brooke and grants
for the benefit of Brooke a security interest in and to all of the following in
which NVC may now or hereafter have any right, title or interest:
(i) the Shares;
(ii) all certificates and instruments representing the Shares; and
(iii) all cash, securities, distributions and other property at any
time and from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of the
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foregoing except dividends and distributions paid upon the
Shares prior to the occurrence and continuance of an Event of
Default (as defined below), as provided in Section 1.2(a)(ii) hereof
(all of the property described in the foregoing clauses (i)-(iii) is
hereinafter referred to as the "Collateral").
(b) The Shares and all certificates and instruments representing such
Shares shall be deposited on the date hereof with Xxxxx X. Xxxxxx, III, of
Coudert Brothers, 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, as
representative of the parties hereunder (the "Representative"). All securities
and other certificated property at any time and from time to time received,
receivable or otherwise distributed in respect of or in exchange for the Shares
(collectively with the Shares, the "Property"), shall also be deposited with the
Representative when received. In the event of any ambiguity or uncertainty
hereunder or in any notice, instruction or other communications received by the
Representative, or any dispute or conflicting claims among the parties hereto
with respect to the Property held by the Representative hereunder, the
Representative may, in his sole discretion, refrain from taking any action other
than to retain possession of such Property, unless the Representative receives
written instructions signed by all parties hereto, which eliminate such
ambiguity or uncertainty or resolve such dispute or conflicting claim. All costs
and expenses incurred by the Representative in connection with his activities
hereunder shall be the joint and several obligation of the parties hereto.
(c) The parties hereto agree that, on the date on which NVC makes payment
of any and all amounts due and payable under the Note to Brooke, the Collateral
shall be released from the pledge of this Agreement and returned to the
possession of NVC and no longer constitute Collateral under this Agreement.
1.2 Voting Rights; Distributions; Etc.
(a) So long as no Event of Default (as defined below) shall have occurred
and be continuing:
(i) Except as set forth in paragraph (b) below, NVC shall be solely
and exclusively entitled to exercise any and all voting,
consensual and other rights and powers relating or pertaining
to the Collateral or any part thereof that NVC may now or
hereafter have as the owner of the Shares for any purpose not
inconsistent with the terms of this Agreement; and
(ii) NVC shall be solely and exclusively entitled to receive and
retain dividends and other distributions payable upon the
Shares.
(b) Upon the occurrence and during the continuance of an Event of Default,
all rights of NVC to exercise the voting, consensual and other rights and powers
which
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NVC is entitled to exercise pursuant to subparagraph (i) of paragraph (a) above
and to receive the dividends and other distributions which NVC is authorized to
receive and retain pursuant to subparagraph (ii) of paragraph (a) above shall
cease and Brooke shall have the sole and exclusive right and authority to
exercise such voting, consensual and other rights and powers and to receive such
dividends and other distributions, and any such dividends and other
distributions received by NVC shall immediately be paid over to Brooke. Any and
all money and other property paid over to or received by Brooke pursuant to the
provisions of this paragraph (b) shall be retained by Brooke as part of the
Collateral and be applied in accordance with the provisions hereof.
2. REPRESENTATIONS, WARRANTIES AND COVENANTS
2.1 Title to Shares
NVC hereby represents and warrants that it owns good and marketable title
to the Shares, free and clear of any liens, charges, encumbrances or security
interests of any kind whatsoever, and that the Shares are not subject to any
restriction on alienation or transfer, in each case, other than this Agreement.
NVC covenants to defend the right, title and interest of NVC in and to the
Shares against the claims and demands of all persons whatsoever. NVC hereby
represents, warrants and covenants that NVC is currently, or shall be, the only
owner of the Shares and that NVC does not, and will not have, outstanding
rights, options, warrants, conversion rights or other commitments or agreements
for the purchase or acquisition of the Shares.
2.2 No Transfer
NVC covenants not to sell, assign, transfer or otherwise dispose of, or
grant any option with respect to, or pledge or otherwise encumber (other than
the lien created hereby), any of the Shares, other Collateral or any interest
therein, unless (i) it obtains the prior written consent of Brooke, or (ii) all
obligations of NVC under the Note have been paid in full.
2.3 Corporate Organization and Authority
NVC represents and warrants that:
(a) it is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware, has full corporate power and
authority to own its assets and to transact its business as now conducted, and
is in good standing under the laws of those jurisdictions in which the business
conducted or the assets owned or leased by it makes qualification to do business
as a foreign corporation necessary;
(b) this Agreement has been duly executed and delivered by NVC and
constitutes a legal, valid and binding obligation of NVC, enforceable in
accordance
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with its terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally and by general principles of equity;
(c) the execution, delivery and performance by NVC of this Agreement (i)
will not violate any provision of any law applicable to NVC or to any of its
assets, (ii) will not violate any provisions of the Restated Certificate of
Incorporation or By-laws of NVC, and (iii) will not violate any provisions of,
or constitute a default under, or result in the creation or imposition of any
lien (other than the lien created hereby) on any of the properties, revenues or
assets of NVC pursuant to the provisions of any applicable law, contract,
agreement or other undertaking to which NVC is a party or which purports to be
binding upon NVC or upon any of its assets; and
(d) no consent or authorization of, or other act by or in respect of, any
governmental authority, and no consent of any person is required in connection
with the execution, delivery, performance, validity or enforceability of this
Agreement.
3. EVENT OF DEFAULT
For purposes of this Agreement an "Event of Default" shall exist hereunder
upon the occurrence of a payment default under Section 2.1(a) of the Note
(whether any such event shall be voluntary or involuntary or come about or be
effected by operation of law or pursuant to or in compliance with any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body or otherwise).
4. REMEDIES UPON DEFAULT
4.1 Rights under the Uniform Commercial Code
If any Event of Default shall have occurred and be continuing, Brooke shall
have the right to exercise any and all rights and remedies of a secured party
upon default under the Uniform Commercial Code then in effect in the State of
New York, United States of America.
4.2 Sale of the Collateral
(a) In addition to the aforesaid rights and remedies under the Uniform
Commercial Code, upon the occurrence and during the continuance of an Event of
Default, Brooke may, to the extent permitted by law, sell the Collateral, or any
part thereof, at any public or private sale or at any broker's board or on any
securities exchange, for cash, upon credit or for future delivery, as Brooke
shall deem appropriate. Brooke shall be authorized at any such sale (to the
extent it deems it
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advisable to do so, in its sole discretion) to restrict the prospective bidders
or purchasers to persons who will represent and agree that they are purchasing
the Collateral then being sold for their own account for investment and not with
a view to the distribution or resale thereof, and upon consummation of any such
sale Brooke shall have the right to assign, transfer and deliver to the
purchaser or purchasers thereof the Collateral so sold. Each such purchaser at
any such sale shall hold the property sold absolutely and free from any claim or
right on the part of NVC. At any such sale Brooke may bid for or purchase, free
from any right of redemption on the part of NVC (all said rights being also
hereby waived and released), all or any part of the Collateral offered for sale,
and Brooke may, upon compliance with the terms of the sale, hold, retain and
dispose of such property without further accountability therefor.
(b) Brooke shall give NVC at least ten (10) days' written notice of the
intention of Brooke to make any such public or private sale or sale at any
broker's board or on any securities exchange. Such notice, in case of public
sale, shall state the time and place fixed for such sale and, in the case of
sale at a 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 Collateral,
or portion thereof, will first be offered for sale at such board or exchange.
(c) Any such public sale shall be held at such time or times within
ordinary business hours and at such place or places as Brooke may fix in the
notice of such sale.
(d) At any such public or private sale, the Collateral or part thereof to
be sold may be sold in one lot as an entirety or in separate parcels, as Brooke
may in its sole discretion determine.
(e) Brooke shall not be obligated to make any sale of Collateral if it
shall determine not to do so, regardless of the fact that notice of sale of
Collateral may have been given. Brooke 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 sale, and such sale may
without further notice be made at the time and place to which the same shall
have been so adjourned.
(f) As an alternative to exercising its rights under the Uniform Commercial
Code or the power of sale herein conferred upon it, Brooke may proceed by a suit
or suits at law or in equity to foreclose on and to sell the Collateral or any
portion thereof pursuant to a judgment decree of a court or courts of competent
jurisdiction.
4.3 Application of Proceeds of Sale and Other Cash Received
The proceeds of sale of Collateral sold pursuant to Section 4.2 and cash
constituting Collateral received under Section 1.2(b) shall be applied by Brooke
as follows:
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FIRST: to the payment of the costs and expenses of such sale, including the
out-of-pocket expenses of Brooke and the fees and out-of-pocket expenses of
legal advisers employed by Brooke in connection therewith, and to the payment of
all advances made by Brooke hereunder and the payment of all reasonable costs
and expenses incurred by Brooke in connection with the administration and
enforcement of this Agreement;
SECOND: to the payment in full of the Note;
THIRD: the balance (if any) of such proceeds to NVC, the successors or
assigns of NVC, or as a court of competent jurisdiction may direct.
5. OTHER PROVISIONS
5.1 Termination
The security interest created by this Agreement shall terminate on or after
the date when any and all amounts due and payable by NVC under the Note shall be
paid in full, at which time Brooke shall reassign and redeliver, or cause to be
reassigned or redelivered, without recourse to or warranty by Brooke and at the
expense of NVC and together with appropriate instruments of reassignment and
release, to NVC, against receipt, such of the Collateral (if any) as shall not
have been sold or otherwise applied by Brooke pursuant to the terms hereof and
not theretofore reassigned and redelivered to NVC or such person or persons as
NVC may have designated, which Collateral (if any) shall not have been
encumbered by Brooke.
5.2 Further Assurances
NVC agrees to do such further acts and things, and to execute and deliver
such additional conveyances, assignments, agreements and instruments as Brooke
may at any time reasonably request in connection with the administration or
enforcement of this Agreement or related to the Collateral or any part thereof
or in order better to assure and confirm onto Brooke its rights, powers and
remedies hereunder.
5.3 Certain Waivers, etc.
(a) No delay on the part of Brooke in exercising any power of sale, lien,
option or other right hereunder, and no notice or demand which may be given to
or made upon NVC with respect to any power of sale, lien, option or other right
hereunder, shall constitute a waiver thereof, or limit or impair the right of
Brooke to take any action or to exercise any power of sale, lien, option or any
other right under this Agreement or otherwise, nor shall any single or partial
exercise thereof, or the exercise of any power, lien, option or any other right
under this Agreement, or
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otherwise, preclude any other or further exercise thereof all without notice or
demand, nor shall any of the same prejudice Brooke's rights against NVC in any
respect.
(b) Each and every remedy of Brooke shall, to the extent permitted by law,
be cumulative and shall be in addition to any other remedy given hereunder or
now or hereafter existing at law or in equity or by statute.
(c) Brooke shall have no duty or obligation to satisfy the indebtedness
secured hereby out of any other property, or pursuant to any other pledge,
undertaking or security relating to such indebtedness and may realize on the
Collateral and/or any other security available to it in such order or
concurrently as it may see fit and Brooke will not be required to take any
recourse against NVC or any other person or persons before realizing on the
Collateral.
5.4 Expenses
NVC shall pay Brooke on a full indemnity basis all reasonable costs and
expenses (a) incurred by Brooke in realizing upon any of the Collateral and (b)
paid or incurred by Brooke in enforcing or attempting to enforce its rights
hereunder, which costs and expenses shall include the fees and expenses of legal
advisers and counsel to Brooke. The obligation of NVC hereunder to make such
payments to Brooke shall constitute obligations secured by the Collateral.
5.5 Entire Agreement; Amendment
This Agreement, the Note, the Stock Purchase Agreement and the documents
referred to herein and therein constitute the entire agreement of the parties
with respect to the subject matter hereof and shall supersede any prior
expressions of intent or understanding with respect to this transaction. In the
event of any conflict or inconsistency between this Agreement and any other
agreement governing or otherwise relating to the Shares, the terms of this
Agreement shall control. This Agreement may be amended but only by an instrument
in writing signed by the party or parties to be bound or burdened by such
amendment.
5.6 Assignment, Successors and Assigns
No assignment of this Agreement or any right or obligation hereunder
whatsoever shall be made by Brooke or NVC.
5.7 Applicable Law
The provisions of this Agreement and all rights and obligations hereunder
shall be governed by and construed in accordance with the laws of the State of
New York, United States of America, without reference to its conflict of laws
rules.
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5.8 Jurisdiction
Brooke and NVC agree that any legal action or proceedings arising out of or
in connection with this Agreement may be brought in any court of the State of
New York located in New York County or the United States District Court for the
Southern District of New York, and, by execution and delivery of this Agreement,
Brooke and NVC hereby submit to and accept with regard to any such action or
proceeding, each for itself and in respect of its property, generally and
unconditionally, the jurisdiction of the aforesaid courts and waive any
objection which such party may now or hereafter have to any such court as the
venue for any such proceeding on the ground that it may constitute any forum
non-conveniens. The agreement set forth in this Section 5.8 is given solely for
the benefit of the parties hereto and such agreement is not intended to and
shall not inure to the benefit of any other person.
5.9 Notices
Any notice, communication or demand to be given or made by or to NVC or
Brooke pursuant to this Agreement shall be in writing and shall be deemed to
have been duly given or made as of the date of receipt and shall be delivered
personally or mailed by registered or certified mail (postage prepaid, return
receipt requested), sent by overnight courier or sent by telecopy, to NVC or
Brooke at the following addresses or telecopy numbers (or at such other address
or telecopy number for NVC or Brooke as shall be specified by like notice):
(a) if to Brooke:
Brooke (Overseas) Ltd.
000 X.X. Xxxxxx Xxxxxx
Xxxxx, Xxxxxxx 00000
Telecopy: 305/579-8037
Attention: Xxxxxx X. Xxxxxxxxx
President
(b) if to NVC:
New Valley Corporation
000 X.X. Xxxxxx Xxxxxx
Xxxxx, Xxxxxxx 00000
Telecopy: 305/579-8009
Attention: Xxxxxx Xxxxxxxx
Vice President and
Chief Financial Officer
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5.10 Invalidity
Any provision hereof prohibited by or unlawful or unenforceable under any
applicable law of any jurisdiction shall as to such jurisdiction be ineffective
without affecting or impairing the remaining provisions of this Agreement which
shall remain in full force and effect. In the event that any provision of this
Agreement or of any document executed pursuant hereto shall be deemed to be
invalid or become invalid, the parties hereto shall substitute for such invalid
provision a new provision which serves the purpose of the invalid provision to
the best possible extent.
5.11 Headings and Counterparts
The headings of this Agreement are for the purpose of reference only, and
shall not limit or otherwise affect any of the terms hereof. This Agreement may
be executed in counterparts and any single counterpart or set of counterparts
signed, in either case, by all the parties thereto shall be deemed to be an
original, and all such counterparts when taken together shall constitute one and
the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first written above.
BROOKE (OVERSEAS) LTD. NEW VALLEY CORPORATION
By: /s/ Xxxxxx X. Xxxxxxxxx By: /s/ Xxxxxx X. Xxxxxxxx
---------------------------- ----------------------------------
Name: Xxxxxx X. Xxxxxxxxx Name: Xxxxxx X. Xxxxxxxx
Title: President Title: Vice President and Chief
Financial Officer
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