EXHIBIT 10.8
STOCK PLEDGE AGREEMENT
AGREEMENT made as of this 18th day of June, 1997 by and between Sebring Systems,
Inc., a New York corporation (the "Company"), and Jack Regula (the "Pledgor").
RECITALS
A. The Pledgor has this day purchased shares of Common Stock of the
Company pursuant to the Restricted Common Stock Purchase Agreement
executed this date by and between the Company and the Pledgor. Payment of
the purchase price for the shares was effected by Pledgor's delivery to
the Company of a Promissory Note executed this date by the Pledgor payable
to the Company's order in the principal amount of fifty thousand dollars
($50,000).
B. The Promissory Note is being secured by a pledge of five million
(5,000,000) shares of Common Stock of the Company (the "Pledged Shares")
purchased under the Restricted Common Stock Purchase Agreement pursuant to
the terms set forth in this Agreement.
NOW, THEREFORE, it is hereby agreed as follows:
1. Grant of Security Interest. Pledgor hereby grants the Company a
security interest in, and assigns, transfers to and pledges with the
Company, the following securities and other property (collectively,
the "Collateral"):
(i) the Pledged Shares hereby delivered to and deposited with
Brobeck, Phleger & Harrison LLP as escrow agent for the
Company as collateral for the Promissory Note, a copy of the
certificate representing the Pledged Shares to be delivered to
the Pledgor;
(ii) any and all new, additional or different securities or other
property subsequently distributed with respect to the Pledged
Shares which are to be delivered to and deposited with the
Company pursuant to the requirements of Paragraph 3 of this
Agreement;
(iii) any and all other property and money which is delivered to or
comes into the possession of the Company pursuant to the terms
of this Agreement; and
(iv) the proceeds of any sale, exchange or disposition of the
property and securities described in subparagraphs (i), (ii)
or (iii) above.
(v) The Company hereby appoints Brobeck, Phleger & Harrison LLP as
"Escrow Agent" to hold any of the above Collateral. All
securities so assigned, transferred to and pledged with the
Company shall be accompanied by one or more stock power
assignments properly endorsed by the Pledgor.
2. Warranties. The Pledgor hereby warrants that the Pledgor its the
owner of the Collateral and has the right to pledge the Collateral
and that the Collateral is free from all liens, adverse claims and
other security interests (other than those created hereby).
3. Duty to Deliver. Any new, additional or different securities or
other property (other than regular cash, dividends) which may now or
hereafter become distributable with respect to the Collateral by
reason of any stock split, stock dividend, recapitalization,
combination of shares, exchange of shares or other change affecting
the Company's capital stock and any shares of the stock of the
Company's successor issuable or issued upon conversion of the
Collateral into the capital stock of the Company's successor upon
(i) the sale, conveyance, liquidation, dissolution, or other
disposition of all or substantially all of the Company's property,
business or assets or (ii) the Company's merger into or
consolidation with any other corporation or (iii) the effectuation
of any transaction or series of related transactions in which the
capital stock of the Company is affected shall, upon receipt by the
Pledgor be promptly delivered to and deposited with the Company as
part of the Collateral hereunder. Any such securities shall be
accompanied by one or more properly endorsed stock power
assignments.
4. Payment of Taxes and Other Charges. The Pledgor shall pay, prior to
the delinquency date, all taxes, liens, assessments and other
charges against the Collateral, and in the event of the Pledgor's
failure to do so, the Company may at his election pay any or all of
such taxes and other charges without contesting the validity or
legality thereof. The payments so made shall become part of the
indebtedness secured hereunder and until paid shall bear interest at
the minimum per annum rate, compounded semi-annually, required to
avoid the imputation of interest income to the Company and
compensation income to the Pledgor under the Federal tax laws.
5. Shareholder Rights. So long as there exists no event of default
under Paragraph 10 of this Agreement, the Pledgor may exercise all
shareholder voting rights and be entitled to receive any and all
regular cash dividends paid on the Collateral and all proxy
statements and other shareholder materials pertaining to the
Collateral.
6. Rights and Powers of Company. The Company may, without obligation to
do so, exercise at any time and from time to time one or more of the
following rights and powers with respect to any or all of the
Collateral:
(i) subject to the applicable limitations of Paragraph 9, accept
in its discretion other property of the Pledgor in exchange
for all or part of the Collateral and release Collateral to
the Pledgor to the extent necessary to effect such exchange,
and in such event the other property received in the exchange
shall become part of the Collateral hereunder;
(ii) perform such acts as are necessary to preserve and protect the
Collateral and the rights, powers and remedies granted with
respect to such Collateral by this Agreement; and
(iii) transfer record ownership of the Collateral to the Company or
his nominee and receive, endorse and give receipt for, or
collect by legal proceedings or otherwise, dividends or other
distributions made or paid with respect to the Collateral,
provided and only if there exists at the time an outstanding
event of default under Paragraph 10 of this Agreement. Any
cash sums which the Company may so receive shall be applied to
the payment of the Note and any other indebtedness secured
hereunder, in such order of application as the Company deems
appropriate. Any remaining cash shall be paid over to the
Pledgor.
Any action by the Company pursuant to the provisions of this
Paragraph 6 may be taken without notice to the Pledgor. Expenses
reasonably incurred in connection with such action shall be payable
by the Pledgor and form part of the indebtedness secured hereunder
as provided in Paragraph 12.
7. Care of Collateral. The Company and the Escrow Agent shall exercise
reasonable care in the custody and preservation of the Collateral.
However, neither the Company nor the Escrow Agent shall have any
obligation to (i) initiate any action with respect to, or otherwise
inform the Pledgor of, any conversion, call,
exchange right, preemptive right, subscription right, purchase offer
or other right or privilege relating to or affecting the Collateral,
(ii) preserve the rights of the Pledgor against adverse claims or
protect the Collateral against the possibility of a decline in
market value or (iii) take any action with respect to the Collateral
requested by the Pledgor unless the request is made in writing to
the Company and copied to the Escrow Agent and the Company
determines that the requested action will not unreasonably
jeopardize the value of the Collateral as security for the Note and
any other indebtedness secured hereunder.
Subject to the limitations of Paragraph 9, the Company may at any
time release and deliver all or part of the Collateral to the
Pledgor, and the receipt thereof by the Pledgor shall constitute a
complete and full acquittance for the Collateral so released and
delivered. The Company and the Escrow Agent shall accordingly each
be discharged from any further liability or responsibility for the
Collateral, and the released Collateral shall no longer be subject
to the provisions of this Agreement.
8. Transfer of Collateral. In connection with the transfer or
assignment of the Note (whether by negotiation, discount or
otherwise), the Company may transfer all or any part of the
Collateral, and the transferee shall thereupon succeed to all the
rights, powers and remedies granted the Company hereunder with
respect to the Collateral so transferred. Upon such transfer, the
Company shall be fully discharged from all liability and
responsibility for the transferred Collateral. If Brobeck, Phleger &
Harrison LLP is relieved by the Company of its duties as Escrow
Agent for the Collateral, Brobeck, Phleger & Harrison LLP shall also
be fully discharged from all liability and responsibility for the
transferred Collateral.
9. Release of Collateral. Provided there does not exist any event of
default under Paragraph 10, the Pledged Shares, together with any
additional Collateral which may hereafter be pledged and deposited
hereunder, shall be released from pledge and returned to the Pledgor
in accordance with the following provisions:
(i) Upon payment or prepayment of principal under the Note,
together with payment of all accrued interest to date, one or
more of the Purchased Shares held as Collateral hereunder
shall (subject to the applicable limitations of this Paragraph
9) be released to the Pledgor within three (3) business days
after such payment or prepayment. The number of the shares to
be so released shall be determined by multiplying (i) the
total number of Pledged Shares held under this Agreement at
the time of the payment or prepayment by (ii) a fraction, the
numerator of which shall be the amount of the principal paid
or prepaid and the denominator of which shall be the unpaid
principal balance of the Note immediately prior to such
payment or prepayment. In no event, however, shall any
fractional shares be released.
(ii) Any additional Collateral which may hereafter be pledged and
deposited with the Company (pursuant to the requirements of
Paragraph 3) with respect to the Pledged Shares shall be
released at the same time the particular shares of the
Company's Common Stock to which the additional Collateral
relates are to be released in accordance with the applicable
provisions of Paragraph 9(i).
(iii) Under no circumstances, however, shall any Pledged Shares or
any other Collateral be released if previously applied to the
payment of any indebtedness secured hereunder.
(iv) No Pledged Shares or other Collateral shall be released
pursuant to the provisions of Paragraph 9(i) or 9(ii) if, and
to the extent that, the fair market value of the Company's
Common Stock and all other Collateral which would otherwise
remain in pledge hereunder after such release were effected
would be less than the unpaid principal and accrued interest
under the Note.
(v) For all valuation purposes under this Agreement, the fair
market value per share of the Company's Common Stock on any
relevant date shall be determined in accordance with the
following provisions:
- If the Common Stock is at the time traded on the Nasdaq
National Market, the fair market value shall be the
closing selling price per share of Common Stock on the
date in question, as
such prices are reported by the National Association of
Securities Dealers on the Nasdaq National Market or any
successor system. If there is no reported closing
selling price for the Common Stock on the date in
question, then the closing selling price on the last
preceding date for which such quotation exists shall be
determinative of fair market value.
- If the Common Stock is at the time neither listed on any
securities exchange nor traded on the Nasdaq National
Market, the fair market value shall be determined by the
Company's Board of Directors on the basis of such
factors as the Board shall deem appropriate.
10. Events of Default. The occurrence of one or more of the following
events shall constitute an event of default under this Agreement:
(i) the failure of the Pledgor to pay, when due under the Note and
after written notice of such failure to the Pledgor, any
installment of principal or accrued interest; or
(ii) the occurrence of any other acceleration event specified in
the Note; or
(iii) the failure of the Pledgor to perform any obligation imposed
upon the Pledgor by reason of this Agreement; or
(iv) the breach of any representation or warranty of the Pledgor
contained in this Agreement.
Upon the occurrence of any such event of default, the Company may,
at its election, declare the Note and all other indebtedness secured
hereunder to become immediately due and payable and may exercise any
or all of the rights and remedies granted to a secured party under
the provisions of the California Uniform Commercial Code or other
applicable law (as now or hereafter in effect), including (without
limitation) the power to dispose of the Collateral by public or
private sale or to accept the Collateral in full payment of the Note
and all other indebtedness secured hereunder.
Any proceeds realized from the disposition of the Collateral
pursuant to the foregoing power of sale shall be applied first to
the payment of expenses incurred by the
Company in connection with the disposition, then to the payment of
the Note and finally to any other indebtedness secured hereunder.
Any surplus proceeds shall be paid over to the Pledgor. In the event
such proceeds prove insufficient to satisfy all obligations of the
Pledgor under the Note, the Pledgor shall not be personally liable
for the resulting deficiency.
11. Other Remedies. The rights, powers and remedies granted to the
Company pursuant to the provisions of this Agreement shall be in
addition to all rights, powers and remedies granted to the Company
under, any statute or rule of law. Any forbearance, failure or delay
by the Company in exercising any right, power or remedy under this
Agreement shall not be deemed to be a waiver of such right, power or
remedy. Any single or partial exercise of any right, power or remedy
under this Agreement shall not preclude the further exercise
thereof, and every right, power and remedy of the Company under this
Agreement shall continue in full force and effect unless such right,
power or remedy is specifically waived by an instrument executed by
the Company.
12. Costs and Expenses. All costs and expenses (including reasonable
attorneys fees) incurred by the Company in the exercise or
enforcement of any right, power or remedy granted it under this
Agreement shall become part of the indebtedness secured hereunder
and shall constitute personal liability of the Pledgor payable
immediately upon demand and bearing interest until paid at the
minimum per annum rate, compounded semi-annually, required to avoid
the imputation of interest income to the Company and compensation
income to the Pledgor under the Federal tax laws.
13. Applicable Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California without resort
to California's conflict-of-laws rules.
14. Successors. This Agreement shall be binding upon the Company and his
successors and assigns and upon the Pledgor and the executors, heirs
and legatees of the Pledgor's estate.
15. Severability. If any provision of this Agreement is held to be
invalid under applicable law, then such provision shall be
ineffective only to the extent of such invalidity, and neither the
remainder of such provision nor any other provisions of this
Agreement shall be affected thereby.
16. Transfers to Trust. Notwithstanding any provision of this Agreement,
the Pledgor may sell or otherwise assign, with or without
consideration, the Collateral to any spouse or member of his
immediate family, or to a custodian, trustee (including a trustee of
a voting trust), executor or other fiduciary for the account of his
spouse or members of his immediate family, or to a trust for
himself, or a charitable remainder trust, provided that each such
transferee or assignee, prior to the completion of the sale,
transfer or assignment shall have executed documents assuming the
obligations of the Pledgor under this Agreement with respect to the
transferred securities.
17. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, this Stock Pledge Agreement has been executed by the Pledgor
and the Company as of the date first written above.
SEBRING SYSTEMS, INC. PLEDGOR
By: /s/ Tom Nelson By: /s/ Jack Regula
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Name: Tom Nelson Jack Regula
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Address: 916 Foothill Drive Address:
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San Jose, CA 95123
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