GLOBECOMM SYSTEMS INC.
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PROMISSORY NOTE SECURED BY STOCK PLEDGE AGREEMENT
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$300,000 September 4, 2001
Hauppauge, New York
FOR VALUE RECEIVED, David E. Hershberg ("Hershberg" and/or "Maker")
promises to pay to the order of Globecomm Systems Inc., a Delaware corporation
(the "Corporation"), at its corporate offices at 45 Oser Avenue, Hauppauge, New
York 11788, the principal sum of Three Hundred Thousand Dollars ($300,000),
together with all accrued interest thereon, upon the terms and conditions
specified below. All capitalized terms used in this Note shall have the meaning
assigned to them in this Note or in the attached Appendix.
1. INTEREST. Interest shall accrue on the unpaid balance outstanding
from time to time under this Note at the rate of Five Percent (5.0 %) per annum.
Accrued and unpaid interest shall become due and payable in a series of twelve
(12) successive quarterly installments payable on the last day of each December,
March, June and September commencing on December 31, 2001, with the final
payment of interest, together with the entire principal, in the aggregate amount
of Three Hundred and Forty-Five Thousand Dollars ($345,000) payable on September
30, 2004.
2. REPAYMENT. The principal balance, together with all accrued and
unpaid interest, shall become due and payable on September 30, 2004; provided,
however, that the Corporation will forgive the aggregate amount of any unpaid
principal plus accrued interest due under this Note upon a Change of Control or
in the event that the Corporation terminates Hershberg's employment without
"cause" (as defined in the Hershberg Employment Agreement).
3. PAYMENT. Payment shall be made in lawful tender of the United States
and shall be applied first to the payment of all accrued and unpaid interest and
then to the payment of principal. Prepayment of the principal balance of this
Note, together with all accrued and unpaid interest on the portion of principal
so prepaid, may be made in whole or in part at any time without penalty.
4. EVENTS OF ACCELERATION. The entire unpaid principal balance of this
Note, together with all accrued and unpaid interest, shall become immediately
due and payable prior to the specified due date of this Note upon the occurrence
of one or more of the following events:
A. the failure of the Maker to pay any installment of principal or
accrued interest under this Note when due and the continuation of such
default for more than thirty (30) days after written notice of such default
has been provided to Maker; or
B. the expiration of the thirty (30)-day period following the date
the Maker ceases for any reason to remain in the Service of the
Corporation; or
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C. the insolvency of the Maker, the appointment of a receiver or
trustee to take possession of any property or assets of the Maker or the
attachment of or execution against any property or assets of the Maker; or
D. the commencement by the Maker of any Insolvency Proceeding; or
E. the commencement against the Maker of any Insolvency Proceeding
and, in such case, (i) the Maker consents to the institution of such
Insolvency Proceeding against him, (ii) the petition commencing such
Insolvency Proceeding is not timely controverted, (iii) the petition
commencing such Insolvency Proceeding is not dismissed within 30 days of
the date of the filing thereof, (iv) an interim trustee is appointed to
take possession of any property or assets of the Maker, or (v) an order for
relief shall have been entered therein; or
F. the occurrence of any event of default under the Stock Pledge
Agreement or any obligation secured thereby.
5. SECURITY. Payment of this Note shall be secured by a pledge of the
Pledged Shares (and all other shares of Common Stock hereafter acquired by
Maker) to the Corporation pursuant to the Stock Pledge Agreement, attached
hereto as Exhibit A, to be executed this date by the Maker. The Maker, however,
shall remain personally liable for payment of this Note and assets of the Maker,
in addition to the collateral under the Stock Pledge Agreement, may be applied
to the satisfaction of the Maker's obligations hereunder.
6. COLLECTION. If action is instituted to collect this Note, the Maker
promises to pay all costs and expenses (including reasonable attorney fees)
incurred in connection with such action.
7. WAIVER. A waiver of any term of this Note, the Stock Pledge
Agreement or of any of the obligations secured thereby must be made in writing
and signed by a duly-authorized officer of the Corporation and any such waiver
shall be limited to its express terms.
No delay by the Corporation in acting with respect to the terms of this
Note or the Stock Pledge Agreement shall constitute a waiver of any breach,
default, or failure of a condition under this Note, the Stock Pledge Agreement
or the obligations secured thereby.
The Maker waives presentment, demand, notice of dishonor, notice of
default or delinquency, notice of acceleration, notice of protest and
nonpayment, notice of costs, expenses or losses and interest thereon, notice of
interest on interest and diligence in taking any action to collect any sums
owing under this Note or in proceeding against any of the rights or interests in
or to properties securing payment of this Note.
8. CONFLICTING AGREEMENTS. In the event of any inconsistencies between
the terms of this Note and the terms of any other document related to the loan
evidenced by the Note, the terms of this Note shall prevail.
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9. GOVERNING LAW. This Note shall be construed in accordance with the
laws of the State of New York without resort to that State's conflict-of-laws
rules.
/s/ David E. Hershberg
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David E. Hershberg
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APPENDIX
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A. BANKRUPTCY CODE shall mean Title 11 of the United States Code.
B. BOARD shall mean the Board of Directors of the Corporation.
C. CHANGE IN CONTROL shall mean a change in control of the Corporation of a
nature that would be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A (or in response to any similar item on any
similar schedule or form) promulgated under the Securities Exchange Act of
1934, as amended (the "1934 Act") whether or not the Corporation is then
subject to such reporting requirement; provided, however, that, without
limitation, such a Change in Control shall be deemed to have occurred if:
(i) any person or group (as such terms are used in connection with
Sections 13(d) and 14(d) of the 1934 Act) becomes the "beneficial
owner" (as defined in Rule 13d-3 and 13d-5 under the 1934 Act),
directly or indirectly, of securities of the Corporation representing
35% or more of the combined voting power of the Corporation's then
outstanding securities;
(ii) the Corporation is a party to a merger, consolidation, sale of
assets or other reorganization, or a proxy contest, as a consequence of
which members of the Board in office immediately prior to such
transaction or event constitute less than a majority of the Board
thereafter; or
(iii) during any period of twenty-four consecutive months,
individuals who at the beginning of such period constituted the Board
(including for this purpose any new director whose election or
nomination for election by the Corporation's stockholders was approved
by a vote of at least two-thirds of the directors then still in office
who were directors at the beginning of such period) cease for any
reason to constitute at least a majority of the Board.
D. COMMON STOCK shall mean the Corporation's common stock, par value $.001 per
share.
E. HERSHBERG EMPLOYMENT AGREEMENT shall mean the employment agreement, dated
as of September 4, 2001, by and between the Corporation and David E.
Hershberg.
F. INSOLVENCY PROCEEDING shall mean any proceeding commenced by or against any
person or entity under any provision of the Bankruptcy Code or under any
other state or federal bankruptcy or insolvency law, assignments for the
benefit of creditors, or any other proceedings seeking reorganization,
arrangement, or other similar relief.
G. NOTE shall mean this promissory note of Maker.
H. PLEDGED SHARES shall mean Fifty One Thousand, Seven Hundred and Twenty Four
(51,724) issued and outstanding shares of the Common Stock, whether
certificated or uncertificated, of the Corporation now owned by Maker.
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I. SERVICE shall mean Maker's performance of services for the Corporation (or
any Parent or Subsidiary) in the capacity of an Employee, a non-employee
member of the board of directors or a consultant or independent advisor.
J. STOCK PLEDGE AGREEMENT shall mean the Stock Pledge Agreement, dated as of
September 4, 2001, by and between the Corporation and Maker and attached
hereto as Exhibit A, securing payment of this Note.
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EXHIBIT A
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GLOBECOMM SYSTEMS INC.
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STOCK PLEDGE AGREEMENT
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AGREEMENT made as of this 4th day of September, 2001 by and between
Globecomm Systems Inc., a Delaware corporation (the "Corporation"), and David E.
Hershberg ("Pledgor").
RECITALS
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A. In connection with a loan from the Corporation to Pledgor, Pledgor
has issued that certain promissory note (the "Note") dated as of September 4,
2001 payable to the order of the Corporation in the principal amount of Three
Hundred Thousand Dollars ($300,000).
B. Such Note is secured by Fifty One Thousand, Seven Hundred and Twenty
Four (51,724) issued and outstanding shares of common stock, par value $.001 per
share, of the Corporation (the "Common Stock") owned by the Pledgor (the
"Pledged Shares") and other collateral upon the terms set forth in this
Agreement.
C. All capitalized terms used in this Agreement shall have the meaning
assigned to them in this Agreement.
NOW, THEREFORE, it is hereby agreed as follows:
1. GRANT OF SECURITY INTEREST. Pledgor hereby grants the Corporation a
security interest in, and assigns, transfers to and pledges to the Corporation,
the following securities and other property (collectively, the "Collateral"):
(a) the Pledged Shares, accompanied by one or more properly-endorsed
stock power assignments, delivered to and deposited with the Corporation as
collateral for the Note;
(b) any and all shares of Common Stock subsequently acquired by
Pledgor which are to be delivered to and deposited with the Corporation pursuant
to the requirements of Paragraph 3 of this Agreement;
(c) any and all new, additional or different securities or other
property (other than cash dividends) subsequently distributed with respect to
the Pledged Shares which are to be delivered to and deposited with the
Corporation pursuant to the requirements of Paragraph 3 of this Agreement;
(d) any and all other property and money which is delivered to or
comes into the possession of the Corporation pursuant to the terms of this
Agreement; and
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(e) the proceeds of any sale, exchange or disposition of the
property and securities described in subparagraphs (a) through (d) above.
2. WARRANTIES. Pledgor hereby warrants that Pledgor is the owner of the
Pledged Shares and has the right to pledge the Pledged Shares and that the
Pledged Shares are free from all liens, adverse claims and other security
interests. Pledgor further warrants that he shall not create or suffer to exist
any lien, security interest, or other charge or encumbrance or any other type of
preferential arrangement, upon or with respect to any of the Collateral, and
that he shall promptly execute and deliver all further instruments and
documents, and take all further action, reasonably requested by the Corporation
in order to perfect and protect any security interest granted or purported to be
granted by this Agreement.
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 (i) any stock
split, stock dividend, recapitalization, combination of shares, exchange of
shares or other change affecting the Common Stock as a class without the
Corporation's receipt of consideration or (ii) any merger, consolidation or
other reorganization affecting the capital structure of the Corporation shall,
upon receipt by Pledgor, be promptly delivered to and deposited with the
Corporation as part of the Collateral hereunder. In addition, any shares of
Common Stock acquired hereafter by Pledgor shall, upon receipt by Pledgor, be
promptly delivered to and deposited with the Corporation 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. Pledgor shall pay, prior to the
delinquency date, all taxes, liens, assessments and other charges against the
Collateral, and in the event of Pledgor's failure to do so, the Corporation may
at its 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 rate of Five Percent (5.0%) per annum .
5. SHAREHOLDER RIGHTS. So long as there exists no event of default
under Paragraph 10 of this Agreement, 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 CORPORATION. The Corporation 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:
(a) subject to the applicable limitations of Paragraph 9, accept in
its discretion other property of Pledgor in exchange for all or part of the
Collateral and release Collateral to 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;
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(b) 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
(c) transfer record ownership of the Collateral to the Corporation
or its 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 Corporation 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 Corporation deems appropriate. Any remaining cash shall be paid over to
Pledgor.
Any action by the Corporation pursuant to the provisions of this
Paragraph 6 may be taken without notice to Pledgor. Expenses reasonably incurred
in connection with such action shall be payable by Pledgor and form part of the
indebtedness secured hereunder as provided in Paragraph 12.
7. CARE OF COLLATERAL. The Corporation shall exercise reasonable care
in the custody and preservation of the Collateral. However, the Corporation
shall have no obligation to (i) initiate any action with respect to, or
otherwise inform 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 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 Pledgor unless the request is made in writing and the Corporation determines
that the requested action will not unreasonably jeopardize the value of the
Collateral as security for the Note and other indebtedness secured hereunder.
Subject to the limitations of Paragraph 9, the Corporation may at any
time release and deliver all or part of the Collateral to Pledgor, and the
receipt thereof by Pledgor shall constitute a complete and full acquittance for
the Collateral so released and delivered. The Corporation shall accordingly 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
Corporation may transfer all or any part of the Collateral, and the transferee
shall thereupon succeed to all the rights, powers and remedies granted the
Corporation hereunder with respect to the Collateral so transferred. Upon such
transfer, the Corporation shall be fully discharged from all liability and
responsibility for the transferred Collateral.
9. RELEASE OF COLLATERAL. Provided all indebtedness secured hereunder
(other than payments not yet due and payable under the Note) shall at the time
have been paid in full, or forgiven, and there does not otherwise 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 Pledgor in accordance with the
following provisions:
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(a) Upon payment, prepayment or forgiveness of principal under the
Note, together with payment or forgiveness of all accrued interest to date on
the principal amount so paid, prepaid or forgiven, one or more of the Pledged
Shares held as Collateral hereunder shall (subject to the applicable limitations
of Paragraphs 9(c) and 9(d) below) be released at the time of such payment,
prepayment or forgiveness. The number of Pledged Shares to be so released shall
be equal to the number obtained by multiplying (i) the total number of Pledged
Shares held under this Agreement at the time of the payment, prepayment or
forgiveness, by (ii) a fraction, the numerator of which shall be the amount of
the principal paid, prepaid or forgiven and the denominator of which shall be
the unpaid principal balance of the Note immediately prior to such payment,
prepayment or forgiveness. In no event, however, shall any fractional shares be
released.
(b) Any additional Collateral which may hereafter be pledged and
deposited with the Corporation (pursuant to the requirements of Paragraph 3)
with respect to the Pledged Shares shall be released at the same time the
particular Pledged Shares to which the additional Collateral relates are to be
released in accordance with the applicable provisions of Paragraph 9(a).
(c) 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. In addition, in no event shall any Pledged
Shares or other Collateral be released pursuant to the provisions of Paragraph
9(a) or 9(b) if, and to the extent, the fair market value of the Pledged Shares
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.
(d) In the event the Collateral becomes in whole or in part
comprised of "margin stock" within the meaning of Section 221.2 of Regulation U
of the Federal Reserve Board, then no Collateral shall thereafter be substituted
for any Collateral under the provisions of Paragraph 6(a) or be released under
Paragraph 9(a) or (b), unless there is compliance with each of the following
additional requirements:
A. The substitution or release must not increase the amount by which
the indebtedness secured hereunder at the time of such substitution or
release exceeds the maximum loan value (as defined below) of the Collateral
immediately prior to such substitution or release.
B. The substitution or release must not cause the amount of
indebtedness secured hereunder at the time of such substitution or release
to exceed the maximum loan value of the Collateral remaining after such
substitution or release is effected.
C. For purposes of this Paragraph 9(e), the maximum loan value of
each item of Collateral shall be determined on the day the substitution or
release is to be effected and shall, in the case of the Pledged Shares and
any additional Collateral (other than margin shares), equal the good faith
loan value thereof (as defined in Section 221.2 of Regulation U) and shall,
in the case of all
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other margin shares, equal fifty percent (50%) of the current market value
of such shares.
10. EVENTS OF DEFAULT. The occurrence of one or more of the following
events shall constitute an event of default under this Agreement:
(a) the failure of Pledgor to pay, when due under the Note, the
principal or any installment of accrued interest;
(b) the occurrence of any other acceleration event specified in the
Note; or
(c) the failure of Pledgor to perform any obligation imposed upon
Pledgor by reason of this Agreement or the Note; or
(d) the breach of any warranty of Pledgor contained in this
Agreement.
Upon the occurrence of any such event of default, the Corporation 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 New York
Uniform Commercial Code (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 Corporation 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 Pledgor. However, in the event such
proceeds prove insufficient to satisfy all obligations of Pledgor under the
Note, then Pledgor shall remain personally liable for the resulting deficiency.
11. OTHER REMEDIES. The rights, powers and remedies granted to the
Corporation pursuant to the provisions of this Agreement shall be in addition to
all rights, powers and remedies granted to the Corporation under any statute or
rule of law. Any forbearance, failure or delay by the Corporation 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 Corporation 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 Corporation.
12. COSTS AND EXPENSES. All costs and expenses (including reasonable
attorneys fees) incurred by the Corporation 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 a personal liability of
Pledgor payable immediately upon demand, bearing interest until paid at the
minimum per annum rate, compounded semi-annually, required to avoid the
imputation of interest income to the Corporation and compensation income to
Pledgor under the Federal tax laws.
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13. APPLICABLE LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York without resort to that
State's conflict-of-laws rules.
14. SUCCESSORS. This Agreement shall be binding upon the Corporation
and its successors and assigns and upon Pledgor and the executors, heirs and
legatees of Pledgor's estate.
15. SEVERABILITY. If any provision of this Agreement should, for any
reason, be held invalid or unenforceable in any respect by a court of competent
jurisdiction, then the remainder of this Agreement, and the application of such
provision in circumstances other than those as to which it is so declared
invalid or unenforceable, shall not be affected thereby, and each such provision
of this Agreement shall be valid and enforceable to the fullest extent permitted
by law. The parties hereby agree to use their best efforts to replace any
provision held to be invalid or unenforceable with a provision incorporating the
substance of said invalid or unenforceable provision to the maximum extent
possible consistent with enabling such new provision to be held enforceable
under applicable law.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, this Agreement has been executed by Pledgor and the
Corporation as of this 4th day of September, 2001.
/s/ David E. Hershberg
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David E. Hershberg
Address:
AGREED TO AND ACCEPTED BY:
GLOBECOMM SYSTEMS INC.
By: /s/ Andrew C. Melfi
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Andrew C. Melfi
Title: Vice President and Chief Financial Officer
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Dated: September 4, 2001
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