FORM OF ESCROW AND PLEDGE AGREEMENT
THIS ESCROW AND PLEDGE AGREEMENT (as amended, modified or supplemented from
time to time, this "Agreement") is executed by and among AIRTECH International
Corporation ("AIRTECH"), a Texas corporation, Interactive Technologies Corp.,
Inc., a Wyoming corporation ("ITC"), and Interwest Transfer Company, Inc.
("Escrow Agent") for the benefit of the sellers (the "Selling Shareholders") of
certain shares (the "Tendered Shares") of the $0.0001 par value common stock
(the "AIRTECH Common Stock") of AIRTECH.
RECITALS:
A. In connection with the execution and delivery of this Agreement, ITC,
AIRTECH and the Selling Shareholders are entering into a Stock Purchase
Agreement, dated as of May 8, 1997 and a Restated and Amended Stock
Purchase Agreement, dated as of August 1, 1997 (as amended or modified
from time to time, the "Purchase Agreement"), pursuant to which, among
other things, ITC shall sell, issue and deliver to the Selling
Shareholders, and the Selling Shareholders shall purchase, accept and
acquire from ITC, among other securities, their pro rata share of ITC's
Senior Convertible Preferred 10% Debentures in the aggregate principal
amount of $9,000,000 (the "Debentures").
B. In connection with such tender offer, the Selling Shareholders will
tender the Tendered Shares to Escrow Agent to be held in trust pending
the closing of the proposed transaction, and thereafter pending
satisfaction in full of ITC's obligations under the Debentures.
C. To secure payment of the Debentures, ITC is, among other things,
pledging the Tendered Shares to the respective Selling Shareholder
tendering the same (each, together with its successors and assigns, the
"Secured Party") and granting to the Secured Party a security interest
in his Tendered Shares.
D. The execution and delivery of this Agreement is a condition precedent
to the proposed purchase of the Debentures and ITC's other Securities
by the Selling Shareholders.
AGREEMENT
Each of the parties agrees as follows:
SECTION 1. DELIVERY OF TENDERED SHARES.
(a) The certificates representing the Tendered Shares (the "Certificates")
shall be delivered to Escrow Agent by the Selling Shareholders at such time as
they deliver their receipt and review of an effective Registration Statement
(the "Prospectus") with respect to, and their acceptance of the offer of ITC to
purchase the AIRTECH Common Stock upon the terms and conditions set forth in the
Prospectus.
(b) The Certificates, when delivered by the Selling Shareholders with their
acceptances, 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 Escrow Agent and ITC.
(c) If less than 81% of the issued and outstanding shares (13,992,800
shares) of the AIRTECH Common Stock are tendered with an acceptance of ITC's
offer prior to the passage of 20 days (the "Acceptance Period") following
delivery of the Prospectus (as defined in the Prospectus), then, unless Escrow
Agent shall have received written notice from both ITC and AIRTECH extending the
Acceptance Period, Escrow Agent shall return the Certificates, together with all
related endorsements, to the respective Selling Shareholders tendering the same.
(d) If 81% or more of the issued and outstanding shares (_________ shares)
of the AIRTECH Common Stock are tendered with an acceptance of ITC's offer prior
to the passage of the Acceptance Period or any extension thereof, then the
Certificates shall be held by Escrow Agent for the benefit of each Secured
Party.
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SECTION 2. ESCROW AGENT.
(a) It is understood and agreed that the duties of Escrow Agent are
entirely ministerial, being limited to receiving, holding, and performing any
actions regarding Pledged Share Collateral in accordance with this Agreement.
(b) Escrow Agent is not a party to, and is not bound by, any other
agreement with respect to AIRTECH, ITC and the Selling Shareholders.
(c) Escrow Agent acts hereunder as a "depository" only and is not
responsible or liable, in any manner whatsoever, for the sufficiency,
correctness, genuineness, or validity of any instrument deposited with it, or
with the respect to the form or execution of the same, or the identity,
authority, or rights of any person executing or depositing the same.
(d) Escrow Agent shall not be required to take or be bound by any notice of
any default of by any person, or to take any action with respect to such default
involving any expense or liability, unless notice, in writing, is given to an
officer of Escrow Agent of such default by a party entitled to give said notice
and unless it is indemnified in the matter satisfactory to it against any
expense or liability arising therefrom.
(e) Escrow Agent shall not be liable for acting upon any notice, request,
waiver. consent, receipt, or other paper or document believed by Escrow Agent to
be genuine and to have been signed by the proper party or parties.
(f) Escrow Agent shall not be liable for any error of judgement for or any
act done or step taken or admitted by it, in good faith, or for any mistake of
fact or law, or for anything that t may do or refrain from doing in connection
therewith, except its own willful misconduct.
(g) Escrow Agent may consult with legal counsel in the event of any dispute
or question as to construction of the foregoing instructions or Escrow Agent's
duties hereunder, and Escrow Agent shall no incur no liability and shall be
fully protected in acting in accordance with the opinion and instructions of
such counsel.
(h) In the event of any disagreement, default or dispute between AIRTECH,
ITC and the Selling Shareholders, or any one of them, which might result in
adverse claims and/or demands being made in connection with the Pledged Share
Collateral involved herein or affected hereby, Escrow Agent's sole duties shall
be to act in good faith and a commercially reasonable manner as to all parties.
Specifically, Escrow Agent may file an interpleader action in the District
Courts of the State of Utah in which it indicates that there is a dispute
between the parties, it tenders the pledged collateral to the court, and asks
the court to determine the proper ownership or disposition of the Pledged Share
Collateral. Upon filing of said action and tendering of the Pledged Share
Collateral, all duties, responsibilities, and liabilities of Escrow Agent under
this Agreement shall be considered fully performed and cease to exist.
(i) Until such time as Escrow Agent has received an advance of its
estimated costs and attorney's fees to file any aforementioned interpleader
action from AIRTECH, ITC, Selling Shareholders, or any one or more thereof,
Escrow Agent, at its option, shall be entitled to refuse to comply with any
claim or demand so long as such disagreement shall continue and, in so refusing,
Escrow Agent shall not be or become liable to AIRTECH, ITC, Selling
Shareholders, or any one or more thereof for the failure or refusal to comply
with such conflicting or adverse demands ad Escrow Agent shall be entitled to
continue to so refrain and refuse to so act until:
(A) The rights of the adverse claimants have been fully adjudicated
in a court assuming and having jurisdiction of the parties and the
pledged security affected hereby. and/or
(B) All differences have adjusted by agreement and Escrow Agent having
been notified thereof in writing signed by all of the parties
interested.
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SECTION 3. GRANT OF SECURITY
(a) ITC hereby pledges to each Secured Party, and hereby grants to each
Secured Party a security interest in, all of ITC's right, title and interest in
and to the following (the "Pledged Share Collateral"):
(i) The Tendered Shares tendered by such Secured Party, as
contemplated by Section 1 hereof, and all rights and powers of a
shareholder arising in connection therewith, together with certificates
representing all of such shares or other interests, and any interest of
such ITC in the entries on the books of any financial intermediary
pertaining to the Tendered Shares and all dividends, cash, options,
warrants, rights, instruments and other property, or proceeds from time
to time received, receivable or otherwise distributed in respect of or in
exchange for any and all of the Tendered Shares;
(ii) all books, records, ledger cards, files, correspondence,
computer programs, tapes, disks and related data processing software that
at any time evidence or contain information relating to any of the
Pledged Share Collateral or are otherwise necessary or helpful in the
collection thereof or realization thereupon; and
(iii) all proceeds, products, rents and profits of or from any and
all of the foregoing Pledged Share Collateral and, to the extent not
otherwise included, all payments under insurance (whether or not Secured
Party is the loss payee thereof), or any indemnity, warranty or guaranty,
payable by reason of loss with respect to any of the foregoing Pledged
Share Collateral.
For purposes of this Agreement, the term "Proceeds" shall have the
meaning assigned that term under the Uniform Commercial Code of the State
of Texas ("Code") or under other relevant law and, in any event, shall
include, but not be limited to, any and all (i) proceeds of any
insurance, indemnity, warranty or guaranty payable to ITC from time to
time with respect to any of the Pledged Share Collateral, (ii) payments
(in any form whatsoever) made or due and payable to ITC from time to time
in connection with any requisition, confiscation, condemnation, seizure,
forfeiture or other disposition of all or any part of the Pledged Share
Collateral, whether voluntary or involuntary, and (iii) other amounts
from time to time paid or payable under or in connection with any of the
Pledged Share Collateral.
(b) At the expense of ITC, ITC shall promptly execute and deliver all
further instruments and documents, and take all further action, that the Secured
Party in its sole discretion may determine to be reasonably necessary or
convenient from time to time in order to perfect and protect any security
interest granted or purported to be granted hereby or to enable Secured Party to
exercise and enforce its rights and remedies hereunder with respect to any
Pledged Share Collateral. Without limiting the generality of the foregoing, at
the request of Secured Party, ITC shall:
(i) execute and file such financing or continuation statements, or
amendments thereto, and such other instruments or notices, as may be
necessary or desirable, or as Secured Party may request, in order to
perfect and preserve the security interests granted or purported to be
granted hereby; and
(ii) appear in and defend any action or proceeding that may affect
ITC's title to or Secured Party's security interest in all or any part of
the Pledged Share Collateral.
(c) ITC hereby authorizes Secured Party to file one or more financing or
continuation statements, and amendments thereto, relative to all or any part of
the Pledged Share Collateral without the signature of ITC. ITC agrees that a
carbon, photographic or other reproduction of this Agreement or of a financing
statement signed by ITC shall be sufficient as a financing statement and may be
filed as a financing statement in any and all jurisdictions.
(d) ITC shall furnish to Secured Party from time to time statements and
schedules further identifying and describing the Pledged Share Collateral and
such other reports in connection with the Pledged Share Collateral as Secured
Party may reasonably request, all in reasonable detail.
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SECTION 4. SECURITY FOR OBLIGATIONS.
This Agreement secures, and the Pledged Share Collateral is collateral
security for, the prompt payment or performance in full when due (including,
without limitation, the payment of amounts that would become due but for the
operation of the automatic stay under Section 362(a) of the Bankruptcy Code, 11
U.S.C. Section 362(a)), of all obligations of ITC arising out of or in
connection with the Debentures.
SECTION 5. NO ASSUMPTION.
Notwithstanding any of the foregoing, this Agreement shall not in any way
be deemed to obligate Secured Party, any purchaser at a foreclosure sale under
this Agreement or any other person to assume any of ITC's obligations or other
liabilities under the Debentures or the Purchase Agreement or under any and all
other agreements now existing or hereafter drafted or executed in connection
with the Debentures or the Purchase Agreement (collectively, the "ITC
Obligations") unless Secured Party, such purchaser or such other person
otherwise expressly agrees to assume any or all of said ITC Obligations in
writing. In the event of foreclosure by Secured Party, ITC shall remain bound
and obligated to perform the ITC Obligations and neither Secured Party nor any
other person shall be deemed to have assumed any of such ITC Obligations except
as provided in the preceding sentence.
SECTION 6. VOTING OF TENDERED SHARES.
Unless an Event of Default (as defined in Section 12) has occurred and is
continuing:
(a) ITC shall be entitled to exercise any and all voting and other
consensual rights pertaining to all or any part of the Tendered Shares
for any purpose not inconsistent with the terms of this Agreement; and
(b) The Secured Party shall execute and deliver, or cause to be
executed and delivered, to ITC all proxies and other instruments
reasonably requested by ITC for the purpose of enabling ITC to exercise
the voting and other rights that it is entitled to exercise pursuant to
this Section 5.
SECTION 7. REPRESENTATIONS AND WARRANTIES.
ITC represents and warrants that, upon delivery of the Tendered Shares
pursuant to Section 1(d) hereof, and upon completion of the transactions
contemplated by the Purchase Agreement:
(a) ITC is the legal, record and beneficial owner of the Tendered
Shares and, with respect to Pledged Share Collateral to be acquired, will
be the legal, record and beneficial owner of the Pledged Share
Collateral, in each case free and clear of any lien, except for the liens
created by this Agreement. No effective financing statement or other
instrument similar in effect covering all or any part of the Pledged
Share Collateral is on file in any recording office, except such as may
have been filed in favor of the Secured Party relating to this Agreement.
(b) This Agreement and the delivery of the Certificates under
Section 4 create a valid and perfected first priority lien on and
security interest in the Pledged Share Collateral, enforceable against
all third parties and securing the payment of the ITC Obligations, and
all filings and other actions necessary or desirable to perfect and
protect such liens and security interests have been duly made or taken.
(c) All of the Certificates, instruments and other documents
constituting, evidencing or representing Pledged Share Collateral have
been duly delivered to Escrow Agent.
(d) The Tendered Shares are, to the knowledge of ITC, duly
authorized, validly issued, fully paid and non assessable and are owned
beneficially and of record by ITC. AIRTECH does not have outstanding
shares of its capital stock or other securities convertible or
exchangeable into or exercisable for any shares of its capital stock,
rights to subscribe for or to purchase, options for the purchase of,
calls, commitments or claims of any character relating to, any shares of
its capital stock or any securities convertible into or exchangeable or
exercisable for any of the foregoing.
28.2 4
(e) There is no agreement or arrangement restricting the voting or
transfer of the Tendered Shares or the transfer of the other Pledged
Share Collateral except as provided in this Agreement. There is no
agreement or arrangements providing for the issuance of any shares of
capital stock or other securities of AIRTECH.
(f) There are no legal, contractual or other restrictions on the
payment of dividends on any shares of the capital stock or securities of
AIRTECH, except for restrictions imposed by statutory restrictions of
general application.
(g) No person is subject to any obligation or has any right,
contingent or otherwise, to purchase, repurchase, redeem or otherwise
acquire or retire any of the Tendered Shares.
(h) There is no action against ITC that involves or affects or may
involve or affect any of the Pledged Share Collateral.
(i) The chief place of business, the chief executive office and
the office where ITC keeps its records regarding the Pledged Share
Collateral is, and has been for the four month period preceding the date
hereof, located at the address specified therefor on the signature page
hereof. ITC has not in the past done, and does not now do, business under
any other name (including any trade name or fictitious business name).
(j) All information heretofore, herein or hereafter supplied to
Secured Party by or on behalf of ITC with respect to the Pledged Share
Collateral is accurate and complete in all material respects.
SECTION 8. COVENANTS OF ITC.
(a) AFFIRMATIVE COVENANTS. So long as any of the Debentures shall remain
unpaid or unperformed, ITC shall do the following at its own expense:
(i) Cause Escrow Agent to xxxx conspicuously each certificate
evidencing or representing any of the Pledged Share Collateral, and at
the request of the Secured Party, each of its records pertaining to the
Pledged Share Collateral with a legend, in form and substance
satisfactory to the Secured Party, indicating that the note, certificate,
instrument or other document is subject to the security interests granted
by this Agreement;
(ii) deliver to Escrow Agent promptly upon receipt all notes,
certificates, instruments and other documents constituting, evidencing or
representing any of the Pledged Share Collateral duly endorsed or
accompanied by instruments of transfer or assignment duly executed in
blank, in each case with signatures guaranteed and otherwise in form and
substance satisfactory to the Secured Party;
(iii) execute and file such financing or continuation statements,
and such amendments to those statements, and such other instruments or
notices, as may be necessary or desirable, or as the Secured Party may
request, in order to perfect and preserve the pledges, liens and security
interests granted or purported to be granted by this Agreement;
(iv) promptly notify the Secured Party and Escrow Agent of any
lien or claim made or asserted against any of the Pledged Share
Collateral and take all steps necessary or in the judgment of the Secured
Party advisable to preserve rights against prior parties with respect to
the Pledged Share Collateral;
(v) furnish to the Secured Party and Escrow Agent from time to
time statements and schedules further identifying and describing the
Pledged Share Collateral and other reports in connection with the Pledged
Share Collateral requested by the Secured Party, all in reasonable
detail;
(vi) advise the Secured Party and Escrow Agent promptly, in
sufficient detail, of any substantial change in the Pledged Share
Collateral, and of the occurrence of any event that could materially and
adversely affect the value of the Pledged Share Collateral or the
validity or priority of the security interest of the Secured Party in the
Pledged Share Collateral;
28.2 5
(vii) comply with all regulations of each governmental body and
all decisions, rulings, orders and awards of each arbitrator applicable
to the Pledged Share Collateral or any part of the Pledged Share
Collateral or to ITC;
(viii) promptly pay and discharge before they become delinquent,
all taxes assessed, levied or imposed upon or relating to, and all claims
against the Pledged Share Collateral or ITC if the failure to so pay
could adversely affect the value of the Pledged Share Collateral or the
validity or priority of the security interest of the Secured Party in the
Pledged Share Collateral except those contested in good faith and for
which adequate reserves are maintained;
(ix) permit representatives of the Secured Party and Escrow Agent,
at any time during the normal business hours to inspect and make
abstracts from ITC's records relating to the Pledged Share Collateral;
(x) perform and observe all of the terms and provisions of the
Pledged Share Collateral to be performed or observed by it, except as
otherwise provided by law and maintain the Pledged Share Collateral in
full force and effect;
(xi) subject to Section 11, collect all amounts due or to become
due to ITC under the Pledged Share Collateral and otherwise enforce its
rights under and in respect of the Pledged Share Collateral; and
(xii) furnish to the Secured Party promptly upon receipt copies of
all notices, requests and other documents received by ITC under or in
respect of the Pledged Share Collateral and from time to time (A) furnish
to the Secured Party and Escrow Agent the information and reports
regarding those obligations requested by the Secured Party and (B) at the
request of the Secured Party, make the demands and requests for
information or action that ITC is entitled to make under the Pledged
Share Collateral
(xiii) notify Secured Party and Escrow Agent of any change in
ITC's name, identity or organizational structure within 15 days of such
change;
(xiv) give Secured Party and Escrow Agent 30 days' prior written
notice of any change in ITC's chief place of business, chief executive
office or residence or the office where ITC keeps its records regarding
the Pledged Share Collateral; and
(b) NEGATIVE COVENANTS. So long as any of the Debentures shall remain
unpaid or unperformed, ITC shall not do any of the following without the prior
written approval of the Secured Party:
(i) transfer any of the Pledged Share Collateral, whether by
operation of law or otherwise;
(ii) create, incur, assume or suffer to exist any lien on or in
respect of any of the Pledged Share Collateral except pursuant to this
Agreement and the Debenture;
(iii) use, store or keep any Pledged Share Collateral or records
relating to Pledged Share Collateral in any location other than those
expressly permitted by this Agreement; or
(iv) take any action in connection with any Pledged Share
Collateral that could materially and adversely affect the value of the
Pledged Share Collateral or the validity or priority of the security
interest of the Secured Party in the Pledged Share Collateral.
SECTION 10. PAYMENTS HELD IN TRUST.
All payments, funds, instruments and other items received by ITC under or
in respect of any Pledged Share Collateral shall be received in trust for the
Secured Party, segregated from other funds of ITC and shall be promptly
delivered to the Secured Party in the form received, together with all necessary
endorsements.
28.2 6
SECTION 11. GRANT OF POWER OF AUTHORITY.
ITC, and its successors and assigns, hereby irrevocably constitutes and
appoints Secured Party as its true and beneficial attorney, in its name, place
and stead of ITC, with full power of substitution, after the occurrence and
during the continuation of an Event of Default, to take any action and to make,
execute, convert to, swear to, acknowledge, record and file any financing
statements, certificates, instruments or other documents of any character that
Secured Party may deem necessary or desirable fully to carry out the provisions
of this Agreement, including, without limitation:
(i) to ask, demand, collect, xxx for, recover, compound, receive
and give acquittance and receipts for moneys due and to become due under
or in respect of any of the Pledged Share Collateral;
(ii) to receive, endorse and collect all instruments made payable
to ITC representing any payment of profits, dividends or any other
distribution in respect of any of the Pledged Share Collateral;
(iii) to file any claims or take any action or institute any
proceedings that Secured Party may deem reasonably necessary or desirable
for the collection of any of the Pledged Share Collateral or otherwise to
enforce the rights of Secured Party with respect to any of the Pledged
Share Collateral; and
(iv) to do, at Secured Party's option and ITC's expense, at any
time or from time to time, all acts and things that Secured Party deems
reasonably necessary or convenient to protect, preserve or realize upon
the Pledged Share Collateral and Secured Party's security interest
therein in order to effect the intent of this Agreement, all as fully and
effectively as ITC might do.
SECTION 12. SECURED PARTY MAY PERFORM.
If ITC fails to perform any agreement contained herein, Secured Party may
itself perform, or cause performance of, such agreement, and the reasonable and
customary expenses of Secured Party incurred in connection therewith shall be
payable by ITC under Section 13.
SECTION 13. STANDARD OF CARE.
(a) The powers conferred on Secured Party hereunder are solely to protect
its interest in the Pledged Share Collateral and shall not impose any duty upon
it to exercise any such powers. Except for the exercise of reasonable care in
the custody of any Pledged Share Collateral in its possession and the accounting
for monies actually received by it hereunder, Secured Party shall have no duty
as to any Pledged Share Collateral or as to the taking of any necessary steps to
preserve rights against prior parties or any other rights pertaining to any
Pledged Share Collateral. Secured Party shall be deemed to have exercised
reasonable care in the custody and preservation of any Pledged Share Collateral
in its possession if such Pledged Share Collateral is accorded treatment
substantially equal to that which Secured Party accords its own property of a
similar nature.
(b) Whenever this Agreement or any other agreement contemplated hereby
provides that Secured Party is permitted or required to make a decision in the
"discretion" or the "sole discretion" of Secured Party, Secured Party shall be
entitled to consider only such interests and factors as it desires and Secured
Party shall have no duty or obligation to give any consideration to any interest
of or factors affecting the Purchaser, ITC or any other person.
SECTION 14. REMEDIES.
(a) In the event of default in the payment of any of the Debentures (each
an "EVENT OF DEFAULT"), Secured Party in its sole discretion may exercise in
respect of the Pledged Share Collateral, in addition to all other rights and
remedies provided for herein. or otherwise available to it, all the rights and
remedies of a secured party on default under the Code as in effect in any
relevant jurisdiction (the "UCC") (whether or not the UCC applies to the
affected Pledged Share Collateral), and Secured Party may also in its sole
discretion, without notice except as specified below or as required by
applicable law sell the Pledged Share Collateral or any part thereof in one or
more parcels at public or private sale, at any exchange or broker's board or at
any of Secured Party's offices or elsewhere, for cash, on credit or for future
28.2 7
delivery, at such time or times and at such price or prices and upon such other
terms as Secured Party may deem commercially reasonable, irrespective of the
impact of any such sales on the market price of the Pledged Share Collateral.
Secured Party or any other person may be the purchaser of any or all of the
Pledged Share Collateral at any such sale and Secured Party, for itself or on
behalf of any other person, shall be entitled, for the purpose of bidding and
making settlement or payment of the purchase price for all or any portion of the
Pledged Share Collateral sold at any such public sale, to use and apply any of
the Debentures as a credit on account of the purchase price for any Pledged
Share Collateral payable by Secured Party at such sale. Each purchaser at any
such sale shall hold the property sold absolutely free from any claim or right
on the part of ITC, and ITC hereby waives (to the extent permitted by applicable
law) all rights of redemption, stay and appraisal which it now has or may at any
time in the future have under any rule of law or statute now existing or
hereafter enacted. ITC agrees that, to the extent notice of sale shall be
required by law, at least ten days' notice to ITC 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. Secured Party shall not be obligated to make
any sale of Pledged Share Collateral regardless of whether notice of sale has
been given. Secured Party 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. ITC hereby waives any claims against Secured Party arising by reason
of the fact that the price at which any Pledged Share Collateral may have been
sold at such a private sale was less than the price which might have been
obtained at a public sale, even if Secured Party accepts the first offer
received and does not offer such Pledged Share Collateral to more than one
offeree.
(b) ITC recognizes that, by reason of certain prohibitions contained in the
Securities Act of 1933, as amended (the "Securities Act"), and applicable state
securities laws, Secured Party may be compelled, with respect to any sale of all
or any part of the Pledged Share Collateral conducted without prior registration
or qualification of such Pledged Share Collateral under the Securities Act and
such state securities laws, to limit purchasers to those who will agree, among
other things, to acquire the Pledged Share Collateral for their own account, for
investment and not with a view to the distribution or resale thereof. ITC
acknowledges that any such private sales may be at prices and on terms less
favorable than those obtainable through a public sale without such restrictions
(including, without limitation, a public offering made pursuant to a
registration statement under the Securities Act) and, notwithstanding such
circumstances, ITC agrees that any such private sale shall be deemed to have
been made in a commercially reasonable manner and that Secured Party shall have
no obligation to engage in public sales and no obligation to delay the sale of
any Pledged Share Collateral for the period of time necessary to permit the
Purchaser to register it for a form of public sale requiring registration under
the Securities Act or under applicable state securities laws, even if the
Purchaser would, or should, agree to so register it.
SECTION 15. APPLICATION OF PROCEEDS.
Except as expressly provided elsewhere in this Agreement, all proceeds
received by Secured Party in respect of any sale of, collection from, or other
realization upon all or any part of the Pledged Share Collateral may, in the
discretion of Secured Party, be held by Secured Party as Pledged Share
Collateral for, or then, or at any other time thereafter, applied in full or in
part by Secured Party against, the Debentures in the following order of
priority:
(i) to pay or reimburse in full the costs and expenses of such
sale, collection or other realization, including reasonable compensation
to Secured Party and its agents and counsel, and all other costs,
expenses, obligations and other liabilities incurred or paid by Secured
Party in connection therewith, and all amounts for which Secured Party is
entitled to indemnification hereunder and all advances made by Secured
Party hereunder for the account of ITC, and to the payment of all costs
and expenses paid or incurred by Secured Party in connection with the
exercise of any right or remedy hereunder, all in accordance with Section
13;
(ii) to pay all other Obligations (for the ratable benefit of the
holders thereof) and thereafter in such order as Secured Party shall
elect; and(iii) to pay to or upon the order of ITC, or to whomsoever may
be lawfully entitled to receive the same or as a court of competent
jurisdiction may direct, the balance of the proceeds.
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SECTION 16. INDEMNITY AND EXPENSES.
(a) ITC shall indemnify Secured Party and its Related Persons
(collectively, the "Indemnified Persons") against all losses, costs, expenses
(including attorneys' fees and expenses), judgments, fines, amounts paid in
settlement and other liabilities incurred, suffered or paid by the Indemnified
Person (collectively, "Indemnified Expenses") in connection with any threatened,
pending or completed claim, action, suit, complaint, investigation, inquiry or
other proceeding, whether civil, criminal, administrative or investigative,
which is or was brought or threatened against any Indemnified Person by reason
of or in connection with actions taken or omitted to be taken by one or more
Indemnified Persons in the performance of the exercise of the rights and powers
or performance of the obligations of Secured Party under this Agreement or
otherwise in connection with this Agreement, except that ITC shall have no
liability under this Section 14 with respect to any Indemnified Expense to the
extent the liability results from the fraud, gross negligence, willful
misconduct or bad faith of the Indemnified Person, as determined by a final
judgment or final adjudication. For purposes of this Agreement, the term
"Related Persons" means, with respect to any person, any other person that
directly or indirectly controls or is controlled by or is under common control
with the specified person and the direct or indirect controlling persons,
principals, partners, trustees, stockholders, officers, directors, employees,
independent contractors and agents for or of any of the foregoing.
(b) To the fullest extent permitted by law ITC shall, from time to time,
advance Indemnified Expenses to an Indemnified Person prior to the final
disposition of the Action upon receipt by ITC of an undertaking by or on behalf
of the Indemnified Person to repay such amount if it shall be determined that
the Indemnified Person is not entitled to be indemnified as authorized in this
Section 14.
(c) ITC shall pay to Secured Party upon demand the amount of any and all
costs and expenses, including the reasonable fees and expenses of its counsel
and of any experts and agents, that Secured Party may incur in connection with
(i) the administration of this Agreement, (ii) the custody or preservation of,
or the sale of, collection from, or other realization upon, any of the Pledged
Share Collateral, (iii) the exercise or enforcement of any of the rights of
Secured Party hereunder, or (iv) the failure by ITC to perform or observe any of
the provisions hereof.
SECTION 17. CONTINUING SECURITY INTEREST; TRANSFER OF OBLIGATIONS.
(a) ITC agrees that its obligations hereunder are irrevocable, absolute,
independent and unconditional and shall not be affected by any circumstance
which constitutes a legal or equitable discharge of a guarantor or surety other
than indefeasible payment in full of ITC Obligations. This Agreement shall
create a continuing security interest in the Pledged Share Collateral and shall
(i) remain in full force and effect until the indefeasible payment in full of
ITC Obligations, (ii) be binding upon ITC, its successors and assigns, and (iii)
inure, together with the rights and remedies of Secured Party hereunder, to the
benefit of Secured Party and its successors, transferees and assigns.
(b) Upon the indefeasible payment in full of all Debentures, the payment in
full of all ITC Obligations, including without limitation all obligations of ITC
to secured party hereunder, the security interest granted hereby shall terminate
and all rights to the Pledged Share Collateral shall revert to ITC. Upon any
such termination, Secured Party shall, at ITC's expense, execute and deliver to
ITC such documents as ITC shall reasonably request to evidence such termination.
SECTION 18. NOTICES.
All notices, requests and other communications to any party or under this
Agreement shall be in writing. Communications may be made by telecopy or similar
writing. Each communication shall be given to the party at its address stated on
the signature pages of this Agreement or at any other address as the party may
specify for this purpose by notice to the other party Each communication shall
be effective (1) if given by telecopy, when the telecopy is transmitted to the
proper address and the receipt of the transmission is confirmed, (2) if given by
mail, 72 hours after the communication is deposited in the mails properly
addressed with first class postage prepaid or (3) if given by any other means,
when delivered to the proper address and a written acknowledgment of delivery is
received
28.2 9
SECTION 19. NO WAIVERS; REMEDIES; SPECIFIC PERFORMANCE.
(a) No failure or delay by any party in exercising any right, power or
privilege under this Agreement shall operate as a waiver of the right, power or
privilege. A single or partial exercise of any right, power or privilege shall
not preclude any other or further exercise of the right, power or privilege or
the exercise of any other right, power or privilege. The rights and remedies
provided in this Agreement shall be cumulative and not exclusive of any rights
or remedies provided by law
(b) in view of the uniqueness of the transactions contemplated hereby,
neither of the parties would have an adequate remedy at law for money damages in
the event that this Agreement is not performed in accordance with its terms, and
therefore each of the parties agree that the other party shall be entitled to
specific enforcement of the terms of this Agreement in addition to any other
remedy to which it may be entitled, at law or in equity.
SECTION 20. AMENDMENTS, ETC.
No amendment, modification, termination, or waiver of any provision of this
Agreement, and no consent to any departure by a party to this Agreement from any
provision of this Agreement, shall be effective unless it shall be in writing
and signed and delivered by the other party to this Agreement, and then it shall
be effective only in the specific instance and for the specific purpose for
which it is given.
SECTION 21. SUCCESSORS AND ASSIGNS.
(a) Purchaser may assign its rights and delegate its obligations under this
Agreement; such assignee shall accept those rights and assume those obligations
for the benefit of the other party in writing in form reasonably satisfactory to
the other party. Thereafter, without any further action by any person, all
references in this Agreement to 'Purchaser", and all comparable references,
shall be deemed to be references to the transferee, but Purchaser shall not be
released from any obligation or liability under this Agreement.
(b) Except as provided in Section 23(a), no party may assign its rights
under this Agreement. Any delegation in contravention of this Section shall be
void AB INITIO and shall not relieve the delegating party of any obligation
under this Agreement.
(c) The provisions of this Agreement shall be binding upon and inure to the
benefit of the parties to this Agreement and their respective successors and
permitted assigns.
SECTION 22. GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with the
internal laws of the State of Utah. All rights and obligations of the parties
shall be in addition to and not in limitation of those provided by applicable
law.
SECTION 23. COUNTERPARTS; EFFECTIVENESS.
This Agreement may be signed in any number of counterparts, each of which
shall be an original, with the same effect as if all signatures were on the same
instrument.
SECTION 24. SEVERABILITY OF PROVISIONS.
Any provision of this Agreement, that is prohibited or unenforceable in any
jurisdiction shall, as to that jurisdiction, be ineffective to the extent of the
prohibition or unenforceability without invalidating the remaining provisions of
this Agreement or affecting the validity or enforceability of the provision in
any other jurisdiction.
SECTION 25. HEADINGS AND REFERENCES.
Section headings in this Agreement are included in this Agreement for the
convenience of reference only and do not constitute a part of this Agreement for
any other purpose. References to parties and sections in this Agreement are
references to the parties to or the sections of this Agreement, as the case may
be, unless the context shall require otherwise.
28.2 10
SECTION 26. ENTIRE AGREEMENT.
Except as otherwise specifically provided in this Section, this Agreement
embodies the entire agreement and understanding of the respective parties and
supersede all prior agreements or understandings with respect to the subject
matters of those documents. ITC and the Secured Party shall remain subject to
the other Transaction Documents and paragraphs (1) through (3), inclusive, of
the letter agreement between ITC and the Secured Party in accordance with the
terms thereof.
SECTION 27. SURVIVAL.
Except as otherwise specifically provided in this Agreement, each
representation, warranty or covenant of each party this Agreement contained in
or made pursuant to this Agreement shall survive each Closing and remain in full
force and effect, notwithstanding any investigation or notice to the contrary or
any waiver by any other party of a related condition precedent to the
performance by the other party of an obligation under this Agreement.
SECTION 28. EXCLUSIVE JURISDICTION.
Each of AIRTECH, ITC and Secured Party (1) agrees that any legal action
with respect to this Agreement shall be brought exclusively in the courts of
Utah, (2) accepts for itself and in respect of its property, generally and
unconditionally, the jurisdiction of those courts and (3) irrevocably waives any
objection, including, without limitation, any objection to the laying of venue
or based on the grounds of FORUM NON CONVENIENS, which it may now or hereafter
have to the bringing of any legal action in those jurisdictions; PROVIDED,
HOWEVER, that each of AIRTECH, ITC and Purchaser may assert in any other
jurisdiction or venue each mandatory defense, third party claim or similar claim
that, if not so asserted in such Action, may not be asserted in an original
legal action in the courts referred to in clause (1) above.
SECTION 29. WAIVER OF JURY TRIAL.
Each party waives any right to a trial by jury in any Action to enforce or
defend any right under this Agreement or any amendment, instrument, document or
agreement delivered, or which in the future may be delivered, in connection with
this Agreement and agrees that any Action shall be tried before a court and not
before a jury.
IN WITNESS WHEREOF, the undersigned have executed this Stock Pledge Agreement as
of the date first above written in _________________
ESCROW AGENT:
INTERWEST TRANSFER, INC.
By: ______________________________
Name:
Title:
Address: Interwest Transfer Company
1981 East 0000 Xxxxx
Xxx. 000
Xxxx Xxxx Xxxx, Xxxx 00000
INTERACTIVE TECHNOLOGIES
CORP., INC.
By:_____________________________
AIRTECH INTERNATIONAL CORPORATION
By:_____________________________
28.2 11
