PLEDGE-ESCROW AGREEMENT
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PLEDGE-ESCROW AGREEMENT made this 10th day of August,
1995, by and between ANTHONY J. CATALDO, hereinafter referred to
as the "Pledgor" and MANAGEMENT TECHNOLOGIES, INC., hereinafter
referred to as the "Pledgee".
W I T N E S S E T H:
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WHEREAS, Pledgor is a Shareholder of a Company known as
MANAGEMENT TECHNOLOGIES, INC. ("MTI"); and
WHEREAS, Pledgee has entered into a Separation
Agreement and Release dated July 6, 1995 with Pledgor; and
WHEREAS, Pledgor, in consideration of Pledgee entering
into said Agreement, is desirous of pledging his stock ownership
in MTI to Pledgee, and
WHEREAS, the parties are further desirous of defining
their rights and responsibilities with respect to said Pledge-
Escrow Agreement.
NOW, THEREFORE, IN CONSIDERATION OF
THE PREMISES AND THE MUTUAL
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COVENANTS HEREIN CONTAINED AND
OTHER GOOD AND VALUABLE
CONSIDERATION, THE RECEIPT OF WHICH
EACH OF THE PARTIES HERETO
ACKNOWLEDGES, IT IS HEREBY AGREED
AS FOLLOWS:
SECTION 1. Pledge. Pledgor hereby grants to Pledgee
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a first priority security interest in and to the following (the
"Pledged Collateral"):
(i) 212,700 of the issued and outstanding restricted
shares owned by Pledgor in MTI;
(ii) all additional rights received by Pledgor
pursuant to any reclassification, reorganization, increase or
reduction of capital, or stock dividend, or in substitution of or
in exchange for any of the Pledged Shares;
(iii) all shares and rights related to the 212,700
shares owned directly or indirectly by Pledgor of any person who,
after the date of this Pledge-Escrow Agreement, becomes, as a
result of any occurrence, a Subsidiary or Pledgor;
(iv) all certificates representing the shares
referred to in clauses (i), (ii) and (iii) above; and
(v) all dividends, cash, instruments and other
property or proceeds, from time to time received, receivable or
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otherwise distributed in respect of or in exchange for any and
all of the shares referred to in clauses (I), (ii) and (iii)
above.
SECTION 2. Security for Obligations. The Agreement
secures and the Pledged Collateral is security for the
indefeasible payment in full when due, whether at maturity, by
acceleration or
otherwise the obligations of Pledgor to Pledgee.
SECTION 3. Delivery of Pledged Collateral. All of
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the certificates representing the Pledged Collateral shall be
delivered to Baratta & Goldstein, as Pledge-Escrow Agents,
pursuant to the within Agreement. The consent of Baratta &
Goldstein is endorsed upon the within Agreement. The
certificates shall be in suitable form for transfer and
accompanied by duly executed instruments undated and in blank and
in the appropriate form which will enable the transfer of said
stock certificates in the event of a default which remains
uncured. In the event of a default under the terms and
conditions of the Separation and Release Agreement
("Separation"), which default shall specifically and only refer
to payment by CATALDO of all sums due as per the Separation
Agreement, then and in that event, the Pledgee, upon receipt from
the Pledge-Escrow Agent of the Pledged Shares shall have the
right to exchange such stock certificates in the name of Pledgee
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and/or take the action it deems appropriate to sell, assign or
transfer all or any part of said stock in satisfaction of the
outstanding financial obligation of Pledgor to the Pledgee.
The Pledgee will have the discretion to sell by public
or private sale the shares of stock herein and as long as the
provisions of the Uniform Commercial Code concerning the sale of
collateral are adhered to, then and in that event, Pledgee shall
be permitted, at its discretion, to retain said shares of stock
or sell said shares of stock to a third party or entity subject
to the applicable rules and regulations of the Securities and
Exchange Act as made and promulgated.
At the written instruction of the Pledgor to the Pledge
Agent to deliver said pledged shares against payment to Pledgee,
the Escrow Agent shall notify the Pledgor. Payments received
will be paid to Pledgee against the $280,000 sum due Pledgee.
Upon payment in full, the balance of shares and/or funds will be
paid to Pledgor. Pledgee and Pledgor indemnify and hold harmless
the Pledge-Escrow Agents from any actions as per the request to
sell and deliver said shares as long as payment is made to
Pledgee or its successors in interest.
SECTION 4. Representations and Warranties . Pledgor
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makes the following representations and warranties, each and all
of which shall survive the execution and delivery of this
Agreement:
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(a) The Pledged Shares (i) have been duly authorized
and validly issued; (ii) are fully paid and non-assessable; and
(iii) constitute fully paid non-assessable issued and outstanding
shares of the capital stock of Pledgee. There are no existing
options, warrants, calls or commitments of any character
whatsoever relating to any of the Pledged Shares except as
provided for herein.
(b) Pledgor is, and at the time of the delivery of the
Pledged Collateral to the Pledge-Escrow Agents, will be the legal
and beneficial owner of the Pledged Collateral, free and clear of
any lien, security interest or other charge or encumbrance,
except for the lien created hereby.
(c) The pledge of the Pledged Shares pursuant hereto
creates a valid and perfected first priority security interest in
the Pledged Collateral, securing payment of the full sum due
Pledgee as per the Promissory Note and Separation Agreement. A
true copy of said Agreement is annexed hereto and made a part
hereof, and Pledgor and Pledgee recognize and agree that said
Agreement and the terms contained therein, with respect to the
212,700 shares of common stock of Pledgee, will be binding on all
parties to the within Agreement.
(d) No consent, authorization, approval, or other
action by, and no notice to or filing with, any person or
Governmental authority is required for (i) the pledge by Pledgor
of the Pledged Collateral pursuant hereto or the execution,
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delivery of performance hereof by Pledgor or (ii) the exercise by
the Pledgee of the voting or other rights provided for herein or
the remedies in respect of the Pledged Collateral pursuant
hereto, except as may be required in connection with the
disposition of the Pledged Collateral by laws affecting the
offering and sale of securities generally.
(e) Pledgor has full power, authority and legal right
to pledge all the Pledged Collateral pursuant hereto.
(f) Pledgor acknowledges that he was represented by
independent counsel.
(g) Pledgor warrants that he qualifies under the
exemption relied upon by Pledgee of the Securities Act and that
Pledgor is a qualified investor.
SECTION 5. Further Assurances; Supplements. Pledgor
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agrees that at any time and from time to time, at the reasonable
expense of Pledgor, Pledgor will promptly execute and deliver
such further instruments and documents, and take such further
action, as may be necessary or desirable, or that the Pledgee may
request, in order to perfect and protect any security interest
granted or purported to be granted hereby or to enable the
Pledgee to exercise and enforce their rights and remedies
pursuant hereto with respect to any of the Pledged Collateral.
Pledgor agrees to defend the title to the Pledged
Collateral and the lien thereon and security interest therein of
the Pledgee against the claim of any person and to maintain and
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preserve such lien and security interest until payment in full
of the obligations of Pledgor to Pledgee.
SECTION 6. Voting Rights; Dividends; etc.
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(a) As long as no default or event of default shall
have occurred and be continuing;
(i) As long as there is no prejudice to Pledgee's
rights with respect to the collateral pledged, Pledgor shall be
entitled to exercise any and all voting and other consensual
rights pertaining to the Pledged Collateral or any part thereof
for any purpose not inconsistent with the terms hereof. However,
no Pledgor shall exercise or refrain from exercising any such
right, if in the Pledgee's reasonable judgment, such action would
(A) have a material adverse effect on the value of the Pledged
Collateral or any part thereof or the Pledgee's interests
therein, or (B) authorize or effect (x) a dissolution,
liquidation, merger, or sale of all or substantially all of the
assets of MTI, (y) a material amendment of the Certificate of
Incorporation of MTI, or (z) an alteration of the voting rights
of the stock of MTI; and provided further, that Pledgor shall
give the Pledgee at least five (5) days written notice of the
manner in which it intends to exercise, or the reasons for
refraining from exercising. It is understood, however, that the
voting by Pledgor of any of the Pledged Shares for or Pledgor's
consent to the election of directors at a regularly scheduled
annual or other meeting of stockholders, shall not be deemed
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inconsistent with the terms of this Agreement, and no notice of
any such voting or consent need be given to Pledgee.
(ii) Pledgor shall be entitled to receive and retain
any and all dividends and other distributions paid in respect of
the Pledged Collateral, other than any and all
(A) dividends or other distributions paid or
payable other than in cash in respect of, and instruments and
other property received, receivable or otherwise distributed in
respect of, or in exchange for, any of the Pledged Collateral;
(B) dividends or other distributions paid or
payable in cash in respect of any of the Pledged Collateral in
connection with a partial or total liquidation or dissolution or
in connection with a reduction of capital, capital surplus or
paid-in surplus; and
(C) cash paid, payable or otherwise distributed
in redemption of, or in exchange for, any of the Pledged
Collateral, all of which shall be, and all of which shall be
forthwith delivered to Pledgee to hold as, part of the Pledged
Collateral and, if received by Pledgor, shall be received in
trust of the benefit of the Pledgee, segregated from the other
property or funds of Pledgor, and forthwith delivered to Pledgee
as part of the Pledged Collateral in the form received (with any
necessary endorsement).
(b) Upon the occurrence and during the continuance of
a default or event of default:
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(i) Upon notice to Pledgor by Pledgee, all rights
of Pledgor to exercise the voting and other consensual rights
which it would otherwise be entitled to exercise pursuant to
Section 6 (a) (i) hereof shall cease, and all such rights shall
thereupon become vested in the Pledgee, who shall thereupon have
the sole right to exercise such voting and other consensual
rights.
(ii) All rights of Pledgor to receive the
dividends.
SECTION 7. Transfers and Other Liens; Additional
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Shares.
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(A) Pledgor agrees that it will not:
(i) sell, assign, or otherwise dispose of, or
grant any option or warrant with respect to, any of the Pledged
Collateral, or
(ii) create or permit to exist any lien, security
interest, or other charge or encumbrance upon or with respect to
any of the Pledged Collateral, except for the lien in favor of
the Pledgee pursuant hereto.
(b) Pledgor agrees that it will:
(i) cause each issuer of the Pledged Shares not
to issue any stock or securities in addition to or in
substitution for the Pledged Shares except to Pledgor;
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(ii) pledge, immediately upon its acquisition
(directly or indirectly) thereof, any and all shares of stock of
any person who, after the date of this Agreement, becomes a
Subsidiary of Pledgee.
SECTION 8. Pledgee Appoints Attorney-in-Fact. Pledgor
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hereby irrevocably appoints Pledgee as Pledgor's attorney-in-
fact, with the full authority in the place and stead of Pledgor
and in the name of Pledgor or otherwise, from time to time in the
Pledgee's discretion to take any action and to execute any
instrument which Pledgee may deem necessary or advisable to
accomplish the purposes of this Agreement, including, without
limitation, to receive, endorse and collect all instruments made
payable to Pledgor representing any dividend, interest payment or
other distribution in respect of the Pledged Collateral or any
part thereof and to give full discharge for the same. This
power, being coupled with an interest, is irrevocable.
SECTION 9. Remedies upon Default. If any default or
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event of default shall have occurred and be continuing:
(a) (i) Pledgee may exercise in respect of the
pledged Collateral, in addition to other rights and remedies
provided for herein or otherwise available to it, all the rights
and remedies of a secured party in case of a default by a debtor
under the Uniform Commercial Code, and the Pledgee may also,
without notice except as specified below, sell the Pledged
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Collateral or any part thereof in one or more parcels at public
or private sale, at any exchange or broker's board, at any of the
Pledgee's offices or elsewhere, for cash, on credit or for future
delivery, and upon such other terms as the Pledgee may deem
commercially reasonable.
(ii) Pledgor agrees that, to the extent notice of
sale shall be required by law, at least ten (10) days notice to
Pledgor of the time and place of any public sale or the time
after which any private sale is to be made shall constitute
reasonable notification. The Pledgee shall not be obligated to
make any sale of Pledged Collateral regardless of notice of sale
having been given. The Pledgee may adjourn any public or private
sale from time to time by announcement at the time and place
fixed therefor, and such sale may, without further notice, be
made at the time and place to which it was so adjourned. Pledgor
hereby waives any claims against the Pledgee arising by reason of
the fact that the price at which any of the Pledged Collateral
may have been sold at such private sale was less than the price
which might have been obtained at a public sale, even if the
Pledgee accepts the first offer received and do not offer the
Pledged Collateral to more than one offeree.
(b) All proceeds received will be applied first to the
payment of the costs and expenses of such sale, including,
without limitation, reasonable compensation to the Pledgee and
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her agents and counsel, and all expenses, liabilities and
advances made or incurred by the Pledgee in connection therewith;
Next, to the Pledgee, for the payment in full of the
secured obligations; and
Finally, after payment in full of all the secured
obligations, to the payment to the Pledgee, or his successors or
assigns, or to whomsoever may be lawfully entitled to receive the
same or as a Court of competent jurisdiction may direct, of any
surplus then remaining from such proceeds.
SECTION 10. Expenses. Pledgor shall, upon demand, be
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jointly and severally responsible to pay to the Pledgee the
amount of any and all expenses, including the fees and expenses
of its counsel and of any experts and agents which the Pledgee
may reasonably incur in connection with (a) administration of
this Agreement; (b) the custody or preservation of, or the sale
of, collection from, or other realization upon, any of the
Pledged Collateral, (c) the exercise or enforcement of any of the
rights of the Pledgee pursuant hereto or (d) the failure by
Pledgor to perform or observe any of the provisions hereof.
SECTION 11. Security Interest Absolute. All rights of
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the Pledgee and security interests granted herein, and all
obligations of the Pledgor pursuant hereto.
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SECTION 12. Pledged Shares. The parties to the
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within Agreement understand and agree that the shares of stock
delivered to the Pledge-Escrow Agent will be released as follows:
Upon written certification by Pledgee that 100% of the
purchase price for the MTI stock is paid in full to Pledgee.
SECTION 13. Amendments, etc. No amendment or waiver
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of any provision of this Agreement, nor consent to any departure
by Pledgor herefrom, shall in any event be effective unless the
same shall be in writing and signed by the Pledgee, and then such
waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
SECTION 14. Addresses for Notices. All notices
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required or permitted to be given by the parties hereto shall be
in writing and mailed by certified mail, return receipt
requested, and by regular mail to the other parties as follows:
If to Pledgor, at
Mr. Anthony J. Cataldo
4 High Meadows Road
Mount Kisco, New York 10549
If to Pledgee, at
Management Technologies, Inc.
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630 Third Avenue
New York, New York 10017
With a copy to
BARATTA & GOLDSTEIN
597 Fifth Avenue
New York, New York 10017
SECTION 15. No Waiver . No failure on the part of
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the Pledgee to exercise, and no delay in exercising, any right
hereunder shall operate as a waiver thereof nor shall any single
or partial exercise of any right hereunder preclude any other or
further exercise thereof or the exercise of any other right.
SECTION 16. Severability. The illegality or
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unenforceability of any provision of this Agreement or any
instrument or document required pursuant thereto shall not in any
way affect or impair the legality or enforceability of the
remaining provisions of this Agreement or any instrument or
document required pursuant hereto.
SECTION 17. Governing Law; Terms. This Agreement
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shall be governed by, and construed in accordance with, the laws
of the State of New York.
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IN WITNESS WHEREOF, the parties have set their hands
and seals on the day, month and year first above written.
PLEDGOR
/s/ Anthony J. Cataldo
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ANTHONY J. CATALDO,
PLEDGEE
MANAGEMENT TECHNOLOGIES, INC.
By: /s/S.Keith Williams
The undersigned, BARATTA & GOLDSTEIN, agrees to act as
Pledge-Escrow Agents, with the understanding that it is only
responsible for the possession of the pledged shares and, in the
event of a dispute, that the shares or proceeds will be deposited
in a Court of competent jurisdiction for a judicial
determination. Pledgor and Pledgee agree to pay equally all
costs and expenses related to the deposit of said shares or
proceeds. The parties agree that Baratta & Goldstein has
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represented MTI (Pledgee), and that Cataldo (Pledgor) was
represented by Leon Braunstein, Esq. with respect to said
Agreement.
PLEDGOR
/s/ Anthony J.Cataldo
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ANTHONY J. CATALDO,
PLEDGEE
MANAGEMENT TECHNOLOGIES, INC.
By: /s/ Keith Williams
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KEITH WILLIAMS
President and Chief Operating
Officer
AGREED TO:
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BARATTA & GOLDSTEIN
By:/s/ Baratta & Goldstein
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