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UNITED STATES response....14.90
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 10)*
- -------------------------------------------------------------------------------
Name of Issuer: PARTECH HOLDINGS CORPORATION
Title of Class of Securities: COMMON STOCK
CUSIP Number: 702114208
Person Authorized to Receive John E. Rayl
Notices and Communications: Partech Holdings Corporation
3366 Riverside Drive, Suite 200
Columbus, Ohio 43221
Date of Event which Requires
Filing of This Statement: June 15, 1994
- -------------------------------------------------------------------------------
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ] .
Check the following box if a fee is being paid with the statement [ ]. (A fee
is not required only if the reporting person: (1) has a previous statement on
file reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7.)
Note: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are to
be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities,
and for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
SEC 1746 (12-91)
<PAGE> 2
SCHEDULE 13D
CUSIP NO. 702114208 Page 2 of 5 Pages
------------------- --- ---
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
John E. Rayl ###-##-####
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS
N/A
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(d) or 2(E) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
7 SOLE VOTING POWER
1,216,798 Shares
NUMBER OF
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY None
EACH
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON
WITH 516,493
10 SHARED DISPOSITIVE POWER
700,305
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,216,798 $.05 par value common shares
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
20.2%
14 TYPE OF REPORTING PERSON
IN
SEC 1746 (12-91)
<PAGE> 3
SCHEDULE 13D
CUSIP NO. 702114208 Page 3 of 5 Pages
------------------------ --- ---
ITEM 1. SECURITY AND ISSUER
-------------------
$.05 Par Value Common Stock
Principal Executive Officer of Issuer: John E. Rayl, Director,
Chief Executive Officer &
President
3366 Riverside Drive
Suite 200
Columbus, Ohio 43221
ITEM 2. IDENTITY AND BACKGROUND
-----------------------
Form 13D dated February 2, 1990:
(a) John E. Rayl
Form 13D dated June 15, 1994:
(b) 3366 Riverside Drive, Suite 200, Columbus, Ohio 43221
(c) Director, Chief Executive Officer and President, Partech Holdings
Corporation, 3366 Riverside Drive, Suite 200, Columbus, Ohio 43221
Form 13D dated February 2, 1990:
(d) No criminal convictions, excluding traffic violations, in last five
years
(e) Not a party to a civil or administrative proceeding relating to state
or federal securities violations within last five years
(f) United States citizen
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
-------------------------------------------------
Amendment Date Narrative
- --------- ---- ---------
N/A 2/2/90 Personal funds: $46,500.00 was used to
purchase 75,000 shares of stock on 2/2/90.
500,000 shares are beneficially owned pursuant
to stock options. 635,357 shares are
beneficially owned pursuant to convertible
notes of Issuer. 1,880,465 shares were
acquired at various times prior to 2/2/90 as
previously disclosed on Forms 3 and 4 filed
with the Securities & Exchange Commission.
No. 1 7/17/90 Personal funds: 500,000 shares are
beneficially owned pursuant to stock options.
871,641 shares are beneficially owned pursuant
to convertible notes of Issuer. 1,898,540
shares were acquired at various times prior to
4/30/90 as previously disclosed on Forms 3 and
4 filed with the Securities & Exchange
Commission.
No. 2 11/19/90 402,593 shares were purchased from Laurence J.
Mily on November 19, 1990 with personal funds
of $15,000. An additional 13,025 shares are
to be delivered by Mr. Mily upon certificates
being received from brokers.
CONTINUED ON NEXT PAGE.
-----------------------
SEC 1746 (12-91)
- 4 -
<PAGE> 4
SCHEDULE 13D
CUSIP NO. 702114208 PAGE 3a of 5 Pages
-------------------- ---- ----
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION - CONTINUED
---------------------------------------------------------------
AMENDMENT
- -----------
No. 4 9/29/90 4,510,316 shares were beneficially owned pursuant to
warrants of the Issuer distributed pursuant to SEC
Registration Statement Form S-1 which became effective
on September 12, 1991. No funds or other consideration
was given for these warrants (4,510,316) distributed by
the Issuer. On the date of the receipt of the warrants
2,253,058 of these warrants were gifted to another
party; therefore, 2,257,258 of these warrants are
remaining.
No. 5 5/29/92 The shares were purchased by a reduction of compensation
owed to Mr. Rayl by the Company. The shares were
purchased pursuant to the exercise of the Company's
Redeemable Class A Warrants.
No. 6 11/6/92 The shares were purchased by a reduction of $81,056.33
of debt owed to Mr. Rayl. The debt hereof was
purchased by Mr. Rayl from a non-affiliated company.
Also, Mr. Rayl was granted a stock option for 100,000
shares at $0.69 per share. Mr. Rayl waived his right
to a 100,000 share option at $2.50 per share which had
previously been granted.
No. 7 4/28/93 Mr. Rayl has gifted 415,000 shares beneficially owned
to an unaffiliated third party.
No. 8 6/30/93 Mr. Rayl has gifted 835,000 shares beneficially owned
to an unaffiliated third party.
No. 9 7/15/93 Mr. Rayl was granted 340,000 stock options by the
Company, pursuant to the Company's Stock Option Plans
(no funds were expended).
ITEM 4. PURPOSE OF TRANSACTION
----------------------
AMENDMENT
- -----------
N/A 2/2/90 (a) I may acquire or dispose of securities of the Issuer as
oppotunities arise.
(b) I am considering various proposals which may result in an
extraordinary transaction of the Issuer such as a merger
or acquisition.
(c) I have no plans which would result in a sale of a
material amount of assets of the Issuer or any of its
subsidiaries except in the ordinary course of business.
(d) I have no plans to change the Board of Directors or
management of the Issuer.
(e) I may consider plans to change the capitalization of the
Issuer.
(f) Other material changes may be considered from time to
time.
(g) I may consider changes in the Issuer's charter, bylaws or
instruments which may impede the acquisition of control
of the Issuer are contemplated.
(h) I have no plans to cause a class of securities of the
Issuer to be delisted from a national exchange or to
cease to be authorized to be quoted in an interdealer
quotation system of a registered national securities
association.
(i) I have no plans to cause a class of equity securities
becoming eligible for termination pursuant to Section
12(g)(4) of the Act.
(j) No other action similar to any of those enumerated above.
CONTINUED ON NEXT PAGE.
-----------------------
SEC 1746 (12-91)
<PAGE> 5
SCHEDULE 13D
CUSIP NO. 702114208 Page 3b of 5 Pages
--------------------- --- ---
ITEM 4. PURPOSE OF TRANSACTION - CONTINUED
------------------------------------
AMENDMENT
- ---------
No. 4 9/29/91 The warrants were acquired pursuant to pro-rata
distribution to shareholders where distribution and
exercise are exempt from registration.
No. 5 5/29/92 The purpose of the transaction was to acquire an
additional amount of the Company's $0.05 par value
stock.
No. 6 11/6/92 The purpose of the transaction was to acquire an
additional amount of the Company's $0.05 par value
stock. The stock options were granted under the
Company's 1989 Stock Option and Stock Appreciation
Rights Plan.
No. 7 4/28/93 The purpose of the transaction was to transfer warrants
(which were distributed by the Company pro rata in
September, 1991) to facilitate the exercise of the
warrants by other parties.
No. 8 6/30/93 The purpose of the transaction was to transfer warrants
(which were distributed by the Company pro rata in
September, 1991) to facilitate the exercise of the
warrants by other parties. Mr. Rayl acquired
additional shares of the Company to increase his
investment thereof.
No. 9 7/15/93 Mr. Rayl was granted 340,000 stock options by the
Company, pursuant to the Company's Stock Option Plans.
SEC 1746 (12-91)
<PAGE> 6
w
SCHEDULE 13D
CUSIP NO. 702114208 Page 4 of 5 Pages
-------------------- --- ---
ITEM 5. INTEREST IN SECURITIES OF ISSUER
--------------------------------
(a) Aggregate number of securities beneficially owned: 1,216,798
The percentage beneficially owned: 20.2%
Shares where there is a right to acquire 440,000
(b) Number of shares with sole power to vote or to
direct the vote: 1,216,798
Number of shares with shared power to vote or to
direct the vote: 0
Number of shares with sole power to dispose or
to direct to dispose: 516,493
Number of shares with shared power to dispose or
to direct to dispose: 700,305
The litigation with Star Bank Central Ohio which involved 91,787
shares was settled and the restriction is no longer applicable.
There is shared investment power on 700,305 shares which are
pledged as collateral to a short-term loan to Partech Holdings
Corporation. See Exhibit 1 and 2 filed herewith.
(c) Transactions in securities in last 60 days [date, amount of shares,
purchased or sold, price per share, where and how transaction was
effected, e.g., sold through broker, bought from issuer]:
<TABLE>
<CAPTION>
Amount of Shares
---------------- Price Per
Date Purchased Sold Share Where/How Transaction Effected Amendment
---- --------- ---- ----- ------------------------------ ---------
<S> <C> <C> <C> <C> <C>
1/22/90 39,900 $1.30 Through Broker: N/A 2/2/90
Prescott, Ball & Turben, Inc.
1331 Euclid Avenue
Cleveland, Ohio 44115
1/31/90 75,000 $0.62 From Issuer
3/28/91 25,000 $0.50 Through Broker: Omni Capital NO. 3 3/28/91
Markets, Inc.
5077 Olentangy River Road
Columbus, Ohio 43214
4/1/91 25,000 $0.50 Through Broker: Omni Capital Markets, Inc.
4/3/91 9,000 $1.10 Through Broker: Omni Capital Markets, Inc.
5/29/92 100,000 $1.00 Exercise of Class A Warrants NO. 5 5/29/92
11/6/92 217,704 $0.3723 Bought from Issuer NO. 6 11/6/92
4/28/93 415,000 N/A Gifted to unaffiliated third party NO. 7 4/28/93
6/11/93 10,000 $1.4375 Through Broker: NO. 8 6/30/93
M.S. Farrell & Co., Inc.
67 Wall Street
New York, New York 10005
6/30/93 835,000 N/A Gifted to unaffiliated third party
7/15/93 (1)1,1003,058 N/A Gifted to unaffiliated third party NO. 9 7/15/93
7/15/93 (2)340,000 N/A Stock options granted
<FN>
(1) 1,003,058 redeemable Class B Warrants.
(2) Mr. Rayl was granted 340,000 stock options by the Company, pursuant to the Company's
Stock Option Plans (no funds were expended).
</TABLE>
CONTINUED ON NEXT PAGE.
-----------------------
SEC 1746 (12-91)
<PAGE> 7
SCHEDULE 13D
CUSIP NO. 702114208 Page 4a of 5 Pages
------------------------- ---- ----
ITEM 5. INTEREST IN SECURITIES OF ISSUER - CONTINUED
----------------------------------------------
(d) No other person is known to have the right to receive or the power
to direct the receipt of dividends or the proceeds of the sale from
such securities except various investors to whom the 700,305 shares
are pledged. The only investor hereof that can direct the receipt of
the proceeds from the sale of shares which is over 5% of the class of
stock hereof is Generation Capital Associates. See Exhibits 1 and 2
filed herewith.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR
RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER
------------------------------------------------------
Amendment No. 9 dated July 15, 1993:
I have been granted an option to buy an additional 340,000 shares
($0.05 par value common stock at a price of $1.09 per share) in
accordance with the terms and provisions of the Issuer's 1989 Stock
Option and Stock Appreciation Rights Plan.
Amendment No. 10 dated June 15, 1994:
I have been granted an option to buy 100,000 shares ($0.05 par value
common stock at a price of $0.69 per share) in accordance with the
terms and provisions of the Issuer's 1989 Stock Option and Stock
Appreciation Rights Plan.
SEC 1746 (12-91)
<PAGE> 8
SCHEDULE 13D
CUSIP NO. 702114208 Page 5 of 5 Pages
--------------------- --- ---
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
--------------------------------
Exhibit 1 Form of Pledge Agreement between John E. Rayl and the
Investor and Kelly Drye & Warren, the Investor's
Representative, filed herewith as Exhibit 1.
Exhibit 2 Agreement between John E. Rayl, Partech Holdings Corporation
and Partech Communications Group, Inc. as to the replacement of
pledged shares that may be foreclosed upon in accordance with
Unit Note pursuant to the $600,000 Convertible Securities
Offering, filed herewith as Exhibit 2.
SIGNATURE
After reasonable inquiry, and to the best of my knowledge and belief,
I certify that the information set forth in this statement is true, complete
and correct.
May 24, 1994 /s/ JOHN E. RAYL
- --------------------- -------------------------------
Date Signature
SEC 1746 (12-91)
<PAGE> 1
Exhibit 1
RAYL PLEDGE AGREEMENT
---------------------
PLEDGE AGREEMENT dated as of June 15, 1994 by and among PARTECH HOLDINGS
CORPORATION, a Delaware corporation, with principal offices at 3366 Riverside
Drive, Suite 200, Columbus, Ohio 43221 (the "Company"); JOHN E. RAYL (the
"Pledgor"); the purchasers of the Company's 6% Secured Notes (the "Notes")
listed on Schedule A hereto (each, a "Pledgee"; collectively, the "Pledgees");
and KELLEY DRYE & WARREN ("KDW") as representative of the Pledgees, solely for
the limited purpose of holding the Pledged Securities as further described
herein.
THE TERMS AND CONDITIONS of this Agreement are as follows:
1. THE PLEDGED SECURITIES. The property subject to this Agreement
(referred to collectively hereinafter as either the "Pledged Securities" or the
"collateral") is:
(a)The securities identified in Schedule B hereto; and
(b)All proceeds of any of the foregoing.
2. DELIVERY AND PLEDGE.
(a)The Pledgor has previously delivered or is delivering herewith to
KDW the Pledged Securities identified in Schedule B hereto, together with stock
powers duly endorsed in blank (Pledgor shall deliver one (1) or more executed
stock powers duly endorsed in blank, with signature guaranteed for each
certificate). All Pledged Securities shall be held in pledge in accordance
with the terms of this Agreement as security for the payment and performance of
all of (i) the Company's obligations and agreements now existing or hereafter
arising under the Subscription Agreement (in the form attached hereto as
Exhibit Y) between the Company and each of the parties listed on Schedule A
hereto and (ii) the Notes issued by the Company. The obligations and
agreements referred to herein are hereinafter collectively
<PAGE> 2
referred to as the "Obligations." Each purchaser of a Note from the Company
shall execute a counterpart of the signature page to this Agreement and by such
signature shall become a party hereto, as a Pledgee, and shall be entitled to
the rights and preferences afforded a Pledgee hereunder. The rights and
preferences of each Pledgee shall be equal and ratable based upon the principal
amount of such Pledgee's Note as compared to all Notes outstanding.
(b)Pledgor hereby grants to the Pledgees a possessory lien and a
security interest in the Pledged Securities pursuant to the Uniform Commercial
Code as in effect in the State of New York from time to time (the "UCC") for
the security purposes hereinabove stated. The Pledgor covenants and agrees
that he will maintain and preserve the lien of the pledge hereunder as a first
lien on the Pledged Securities, and the interest of the Pledgees therein,
against the claims and demands of all persons who may claim the same.
(c)Subject to the actual exercise by Pledgor of his right in respect
of the Pledged Securities as permitted by the terms of this Agreement, Pledgee
shall have and may exercise all rights of a pledgee with respect to the Pledged
Securities, provided, however, that the Pledgees may not register the Pledged
Securities in their name or in the name of their nominee or nominees, as
pledgees, unless a default occurs in accordance with Section 6 hereof.
3. VOTING RIGHTS. Pledgor shall have the right to vote the Pledged
Securities until a foreclosure on the Pledged Securities pursuant to Section 7
of this Agreement.
4. REPRESENTATION AND WARRANTIES. The Pledgor hereby makes the following
representations and warranties with respect to the Pledged Securities, all of
which shall survive so long as the Company has any obligation under the Notes.
## NY29/SALTD/24565.25 - 2 -
<PAGE> 3
(a)The Pledgor has good and marketable title to all of the Pledged
Securities as sole owner thereof, free and clear of all liens, charges and
encumbrances whatsoever, and full power and lawful authority to pledge the same
hereunder, free and clear of any other pledge, assignment, lien, charge or
encumbrance.
(b)None of the Pledged Securities is subject to any prohibition
against encumbering, pledging, hypothecating or assigning the same or requires
notice or consent in connection therewith.
(c)The Pledgor has fully paid for the Pledged Securities and has held:
(i) 382,601 of the Pledged Securities for more than three years, (ii) 100,000
of the Pledged Securities for more than two years, and such 100,000 of the
Pledged Securities have been registered pursuant to the Securities Act of 1933,
as amended (the "Act") and are freely tradeable, and (iii) since July 1, 1991,
217,704 of the Pledged Securities, in each such case, for purposes of future
sales pursuant to Securities and Exchange Commission ("SEC") Rule 144, and the
pledge hereunder is intended to be a bona fide pledge for purposes of such
rule.
(d)The Pledgor has full power and authority to execute, deliver and
perform his obligations under this Pledge Agreement and to pledge the
collateral in accordance with the terms hereof. This Pledge Agreement has been
duly executed and delivered by Pledgor and constitutes the legal, valid and
binding agreement of Pledgor.
(e)This Pledge Agreement creates a valid first lien and perfected
security interest in the collateral.
## NY29/SALTD/24565.25 - 3 -
<PAGE> 4
(f)Neither the Pledgor nor any other parties whose sales of securities
are aggregated with Pledgor's sales pursuant to SEC Rule 144 has sold,
assigned, transferred or otherwise disposed of any securities of the Company
within ninety (90) days prior to the date hereof.
5. COVENANTS OF PLEDGOR AND THE COMPANY.
(a)The Pledgor hereby covenants and agrees that for so long as this
Pledge Agreement shall remain in force and effect, he will not sell, convey or
dispose of any of the collateral or any interest therein, or create, incur or
permit to exist any pledge, mortgage, lien, charge, encumbrance or other
security interest whatsoever with respect to any of the collateral.
(b)The Pledgor hereby covenants and agrees to defend each of the
Pledgees' respective right, title and security interest in and to the
collateral against the claims of any person, firm, corporation or other entity.
(c)The Pledgor hereby covenants and agrees to immediately take all
action necessary, at the direction of the Pledgees, or their counsel
(including, without limitation, using its best efforts to ensure that the
Company's transfer agent effects a registered transfer to each of the
respective Pledgees of all securities which constitute a part of the
collateral), to transfer such securities to the respective Pledgee's name after
the occurrence of an event of default described in Section 6 hereof.
(d)The Pledgor hereby covenants and agrees to indemnify and hold the
Pledgees harmless if the securities which constitute part of the collateral are
not promptly
## NY29/SALTD/24565.25 - 4 -
<PAGE> 5
re-registered in the name of the requesting Pledgee upon such Pledgee's request
after the occurrence of any event of default described in Section 6 hereof.
(e)The Pledgor hereby covenants and agrees that he shall not sell,
assign, transfer or otherwise dispose of securities issued by the Company which
would be aggregated under SEC Rule 144 with any sales by any Pledgee.
(f)The Pledgor hereby covenants and agrees that he will use his best
efforts to ensure that all parties whose sales of securities would be
aggregated with such Pledgor's sales pursuant to SEC Rule 144 shall comply with
the covenant contained in Section (e) hereof.
(g)The Pledgor hereby covenants and agrees to cause the Company, and
the Company hereby covenants and agrees, to keep available adequate current
public information with respect to the Company in accordance with SEC Rule
144(c) at all times until the termination of this Agreement pursuant to Section
9 hereof.
6. EVENTS OF DEFAULT. Any of the following shall constitute an Event of
Default under this Agreement:
(a)A default under any of the Notes;
(b)If the Pledgor fails to perform or observe any term, covenant or
agreement on his part to be performed or observed contained in this Agreement;
(c)If the Pledgor attempts to sell or otherwise transfer any of the
Pledged Securities or permit any of the Pledged Securities to become subject to
any pledge, assignment, lien, charge or encumbrance other than the pledge under
this Agreement.
## NY29/SALTD/24565.25 - 5 -
<PAGE> 6
7. REMEDIES ON DEFAULT. In the event that an Event of Default, as
defined above, shall have occurred, each Pledgee shall have the right to
foreclose upon such Pledgee's pro rata share or any part thereof of the Pledged
Securities and shall become the owner of such number of shares of the Company's
Common Stock as shall equal the total amount of shares due the Pledgee
hereunder in accord with the terms of this Section 7. Pledgee shall promptly
notify the Pledgor and the Company of its election to foreclose. Each Pledgee
may exercise its rights hereunder in whole or in part at such Pledgee's
discretion. Further, in addition to the foregoing and in no way limiting the
foregoing, with respect to the Pledged Securities, each Pledgee shall also have
the rights and remedies of a secured party under the Uniform Commercial Code as
in effect in the State of New York as of the date thereof; provided that, prior
to such time all voting rights associated with the Collateral shall remain with
the Pledgor. The Company shall instruct its transfer agent to rely on an
opinion of Horowitz, Cutler & Beam with respect to Rule 144 as legal counsel in
connection with the transfer of any part of the Pledged Securities under SEC
Rule 144 pursuant hereto.
Each Pledgee's right to foreclose on Pledged Securities shall be limited to
the pro rata portion of the Pledged Securities which are allocated to such
Pledgee in accordance with the following sentence. Pledged Securities shall be
allocated based upon the percentage of Notes held
## NY29/SALTD/24565.25 - 6 -
<PAGE> 7
by such Pledgee as compared to the total Notes outstanding. Upon the payment
of a Note, or portion thereof, the remaining Pledged Securities allocated with
respect to the Pledgee of such Note shall remain allocated to the Pledgee of
such Note, with respect to any remaining Notes, or portions thereof, still
held by such Pledgee. Upon the satisfaction in full of all Notes held by such
Pledgee, any Pledged Securities which remain allocated to such Pledgee shall be
redistributed among the remaining Pledgees on a pro rata basis of the amount of
Notes held by each of such remaining Pledgees as compared to the remaining
Notes outstanding at the time of such redistribution. For purposes of
calculations hereunder, Notes held by the Company or the Pledgor shall not be
considered outstanding, nor shall such Notes be entitled to the benefits of the
pledge hereunder. In the event a Pledgee takes possession of any of the
Pledged Securities, the Company's obligations under the Notes held by such
Pledgee, with respect to such Pledgee, shall be reduced in an amount equal to
the greater of (i) the actual amount received by such Pledgee upon any sale or
sales of such Pledged Securities made within 90 days of foreclosure thereon or
(ii) one-half of the closing bid price of the Company's Common Stock on the
date of the notice of default (unless such date is not a business day, in which
case the date shall be the next following business day) giving rise to such
action, multiplied by the number of Pledged Securities for which Pledgee has
elected to take possession; provided, however, the amount of the Company's
obligation under such Notes, with respect to such Notes, shall be increased by
an amount equal to the costs, if any, incurred by such Pledgee (including,
without limitation, the fees and expenses of counsel) in taking possession of
the Pledged Securities and of selling the Pledged Securities pursuant to SEC
Rule 144.
Neither the Pledgor nor anyone claiming through or under him, including his
successors and assigns, shall or will set up, claim or seek to take advantage
of any appraisement, valuation, stay, extension, redemption or other law now or
hereafter in force, in order to prevent, delay or otherwise hinder the
enforcement of the lien and pledge hereunder, or the
## NY29/SALTD/24565.25 - 7 -
<PAGE> 8
absolute sale or other disposition of the Pledged Securities or the final and
absolute delivery into possession thereof of the purchaser or purchasers or
other transferees thereof. The Pledgor, for himself and all who may claim
through or under him, including his heirs, legal representatives, successors
and assigns, hereby waives the benefit of all such laws and hereby waives all
right of appraisement and redemption to which he or any of them may be entitled
under any state or federal law and any and all right to have the Pledged
Securities or any part thereof marshalled upon any foreclosure, sale or other
enforcement thereof.
All rights, remedies and powers conferred upon the Pledgees by this
Agreement shall, to the extent not prohibited by law, be deemed cumulative and
not exclusive of any thereof or of any other rights, remedies and powers
available to the Pledgees under the UCC or otherwise at law or in equity for
enforcement of this Agreement, the Notes or any of the other Obligations,
except as such may be limited by this Section 7 with respect to the value
attributable to the Pledged Securities.
To the extent this Agreement modifies certain remedies or provides remedies
which conflict with remedies provided by the UCC, this Agreement shall control
to the maximum extent permitted by law. The Pledgor hereby expressly waives
any rights under the UCC which would limit the provisions of any part of this
Agreement. The Pledgor hereby agrees and acknowledges that the rights and
remedies provided herein or hereby to the Pledgees are fair, reasonable and
equitable in all respects. No delay or omission of a Pledgee to exercise any
right, remedy or power accruing upon any default shall impair any such right,
remedy or power, or shall be construed to be a waiver of any such default or
acquiescence therein. Every
## NY29/SALTD/24565.25 - 8 -
<PAGE> 9
right, remedy and power conferred hereby may be exercised from time to time and
as often as a Pledgee shall deem expedient. No waiver of any default shall
extend to or affect any subsequent default or impair any right, remedy or power
available to such Pledgee or any other Pledgee. No single or partial exercise
of any right, remedy or power by any Pledgee shall preclude other or further
exercises thereof by such Pledgee or any other Pledgee.
The Pledgor agrees that, in connection with any action or proceeding
arising out of or relating to the Notes, this Agreement or the Pledged
Securities:
(a)The Pledgor waives the right to trial by jury and all defenses and
right to interpose any setoff or counterclaim of any nature, except and only to
the extent such defense pertains to the existence of an Event of Default;
(b)The Pledgor consents to the jurisdiction of any court of the State
of New York and of any federal court located in New York;
(c)The Pledgor waives personal service of any summons, complaint or
other process in connection with any such action or proceeding and agrees that
service thereof may be made, as Pledgee may elect, by certified mail directed
to Pledgor at his address for notice provided for in Section 19 hereof or, in
the alternative, in any other form or manner permitted by law; and
(d)The Pledgor agrees that all of the Pledged Securities constitute
equal security for all of the Notes, and agree that the Pledgees shall be
entitled to sell or otherwise deal with any or all of the Pledged Securities,
in any order or simultaneously as Pledgee shall determine in its sole
discretion, as provided in this Section 7, free of any
## NY29/SALTD/24565.25 - 9 -
<PAGE> 10
requirement for the marshalling of assets or other restrictions upon such
Pledgee in dealing with the Pledged Securities except as otherwise expressly
provided in this Section 7.
Notwithstanding any other provision of this Agreement (including, without
limitation, all Exhibits hereto), no Pledgee shall be permitted to exercise any
of the conversion rights to receive securities of the Company or the
foreclosure rights to obtain Pledged Securities and Additional Warrants (as
defined in the Notes), if such action by such Pledgees would result in such
Pledgee converting into and or foreclosing upon and becoming the beneficial
owner of an aggregate of more than 5% of shares of the then outstanding shares
of any class of voting equity of the Company, as calculated pursuant to Section
13 of the Securities and Exchange Act of 1934, as amended. The foregoing shall
not prohibit the Pledgee from receiving any remaining amount due such Pledgee
under the Notes.
8. KDW AS REPRESENTATIVE. Upon the election by one or more Pledgees to
foreclose upon Pledged Securities hereunder, such Pledgee(s) shall notify KDW
of such election simultaneously with its notice to the Company and the Pledgor
in accordance with the provisions of Section 7 hereof. As soon as practicable
after receipt of such notice, KDW will deliver to the Company's transfer agent
at the address provided on Schedule B sufficient share certificates and stock
powers executed by the Pledgor, previously delivered to KDW hereunder, with
respect to the shares to be foreclosed upon hereunder, subject to the
limitations provided in Section 7 hereof, with a notice that such documents are
being delivered by KDW merely as an agent for one or more Pledgees under this
Pledge Agreement, with instructions to cause certificates evidencing the shares
not foreclosed upon to be issued in the name of the Pledgor and returned
## NY29/SALTD/24565.25 - 10 -
<PAGE> 11
to KDW. KDW shall continue to hold the certificates returned to it in
accordance with the terms of this Agreement.
All additional instructions to the transfer agent, with respect to
foreclosed shares, shall come from either the Company or the respective
Pledgee(s). KDW is acting as a depositary of the Pledged Securities for the
benefit of the Pledgees. Neither KDW nor any Pledgee shall have the power to
act for or give instructions on behalf of any Pledgee hereunder other than
itself. Neither KDW nor any Pledgee shall assume any duty on behalf of any
Pledgee nor shall they be deemed to have any such duty absent a written
agreement signed by KDW and/or such Pledgee agreeing to accept such duty. KDW
shall not be responsible for any act or failure to act by any party other than
KDW. KDW shall not be responsible for any act or failure to act on its part or
on the part of its agents or employees except in the case of its own willful
malfeasance or gross negligence. Without limiting the foregoing, KDW shall be
under no duty to investigate a claim by any Pledgee, the Company or the
Company's transfer agent and shall incur no liability for distributing shares
to the Company's transfer agent, the Pledgor, the Company or a Pledgee upon a
request to do so. KDW may act or refrain from acting hereunder with respect to
any matter referred to herein upon the advice of counsel.
9. DURATION OF THE PLEDGE AND REASSIGNMENT TO PLEDGOR. This Agreement
and the pledge hereunder shall remain in full force and effect until the date
on which all of the Pledgor's Obligations are satisfied. Upon such
satisfaction, all remaining Pledged Securities shall be returned to the Company
for distribution to the Pledgor and this Agreement shall terminate.
## NY29/SALTD/24565.25 - 11 -
<PAGE> 12
10. TRANSFER OF PLEDGE AGREEMENT. The parties hereto hereby agree that
each of the respective Pledgees may transfer in whole or in part their
respective rights, title and interest under and pursuant to this Pledge
Agreement to any other individuals or entities without notice to the Pledgor;
upon any such transfer, all of the terms, conditions and covenants herein shall
enure to the benefit of and be binding upon such transferees. Upon any such
transfer, all of the rights to the collateral of such Pledgee shall be
transferred to such transferees.
11. AUTHORIZATION. All corporate action on the part of the Company and its
officers, directors and stockholders necessary for the authorization, execution
and delivery of this Agreement and the performance by the Company of its
obligations hereunder has been duly taken. This Agreement, when executed and
delivered by the Company, shall constitute a valid and legally binding
obligation of the Company, enforceable in accordance with its terms.
12. COMPLIANCE WITH OTHER INSTRUMENTS. The Company is not in violation of
any provision of (a) its Certificate of Incorporation or By-Laws, as presently
in effect, (b) any material agreement, or (c) any federal or state judgment,
writ, decree, order, statute, rule or governmental regulation applicable to the
Company, the violation of which would have a material and adverse effect on the
Company or the transactions contemplated hereby. The Company's execution and
delivery of this Agreement and its consummation of the transactions
contemplated hereby will not result in any such violation or conflict with,
constitute a default or require any consent under (a), (b) or (c) above, or
result in the creation of any lien, charge or encumbrance on any of its
properties or assets as contemplated herein.
## NY29/SALTD/24565.25 - 12 -
<PAGE> 13
13. ADDITIONAL COVENANTS OF THE COMPANY. The Company hereby covenants and
agrees to immediately take all action necessary, at the direction of any of the
Pledgees, to transfer the Pledged Securities, subject to the limitation of the
number of shares allocated to such Pledgee(s) under Section 7 hereof, to or
upon the order of such Pledgee(s) after the occurrence of a default hereunder
(including, without limitation, using its best efforts to ensure that (i) the
Company's transfer agent effects a registered transfer to or upon the order of
each such Pledgee that number of shares of the Company's Common Stock
calculated in accordance with Section 7 hereof which each such Pledgee is
entitled to receive upon an Event of Default hereunder and (ii) the Company and
its counsel promptly, upon the request of any such Pledgee, shall furnish the
Company's transfer agent with any and all documentation necessary to allow the
Pledgee to sell such shares pursuant to SEC Rule 144).
14. INDEMNIFICATION.
(a)The Company hereby agrees to indemnify and hold harmless each
Pledgee and each of the Pledgee's stockholders, directors, officers, partners
and agents and each of their respective heirs, executors, administrators,
successors and assigns, from any loss, claim, damage, cost, lawsuit, attorney's
and accountant's fees, deficiency, assessment, administrative order, fine,
penalty, action, proceeding, judgment or expense, including in all cases the
reasonable fees and expenses of counsel, resulting from or by reason of (a) any
inaccuracy in any of the representations, or breach of the warranties made by
the Company in this Agreement or in connection with this Agreement in any
document executed and/or delivered by or on behalf
## NY29/SALTD/24565.25 - 13 -
<PAGE> 14
of the Company and (b) any failure of the Company to perform any covenant or
agreement set forth in this Agreement.
(b)The Pledgor hereby agrees to indemnify and hold harmless each of
the Pledgees and each of the Pledgees' stockholders, directors, officers,
partners and agents and each of their respective heirs, executors,
administrators, successors and assigns, from any loss, claim, damage, cost,
lawsuit, attorney's and accountant's fees, deficiency, assessment,
administrative order, fine, penalty, action, proceeding, judgment or expense,
including in all cases, the reasonable fees and expenses of counsel, resulting
from or by reason of (a) any inaccuracy in any of the representations, or
breach of the warranties made by the Pledgor in this Agreement or in connection
with this Agreement in any document executed and or delivered by or on behalf
of the Pledgor and (b) any failure of the Pledgor to perform any covenant or
agreement set forth in this Agreement.
(c)Each Pledgee hereby agrees to indemnify and hold harmless the
Company and its stockholders, directors, officers, partners and agents and each
of their respective heirs, executors, administrators, successors and assigns,
from any loss, claim, damage, cost, lawsuit, attorney's and accountant's fees,
deficiency, assessment, administrative order, fine, penalty, action,
proceeding, judgment or expense, including in all cases the reasonable fees and
expenses of counsel, resulting from or by reason of (a) any inaccuracy in any
of the representations, or breach of the warranties made by such Pledgee in
this Agreement or in connection with this Agreement in any document executed
and or delivered by such
## NY29/SALTD/24565.25 - 14 -
<PAGE> 15
Pledgee and (b) any failure of such Pledgee to perform any covenant or
agreement set forth in this Agreement.
(d)The Company, the Pledgor and each of the Pledgees hereby agree to
indemnify and hold harmless KDW and its partners and agents and each of their
respective heirs, executors, administrators, successors and assigns, from any
loss, claim, damage, cost, lawsuit, attorney's and accountant's fees,
deficiency, assessment, administrative order, fine, penalty, action,
proceeding, judgment or expense, including in all cases the reasonable fees
and expenses of counsel, resulting from or by reason of KDW's holding of
the Pledged Securities other than claims resulting from KDW's willful
malfeasance or gross negligence.
15. EXPENSES OF THE INVESTOR. All reasonable expenses incurred by any
Pledgee in connection with the exercise by such Pledgee of any of its
respective rights hereunder, including, without limitation, any attorney fee,
brokerage fees, and commissions in connection with any sale of the collateral
hereunder shall be promptly paid by the Company upon demand made by such
Pledgee.
16. REMEDIES. Each right, power and remedy provided for herein or now or
hereafter existing at law, in equity, by statute or otherwise, shall be
cumulative, and the exercise or forbearance of exercise by any party of any one
or more of such rights, powers or remedies shall not preclude the simultaneous
or later exercise by such party of any or all of such other rights, powers or
remedies, nor shall any failure to enforce any of such rights, powers or
remedies be deemed to constitute a waiver thereof.
## NY29/SALTD/24565.25 - 15 -
<PAGE> 16
17. FURTHER ASSURANCES. The Company and the Pledgor shall at any time and
from time to time upon the written request of any Pledgee, execute and deliver
such further documents, including without limitation, representation letters,
and do such further acts and things as such Pledgee(s) may reasonably request
in order to effectuate the purposes of this Agreement and in order to create,
preserve and perfect the interest granted pursuant hereto or to enable such
Pledgee(s) to enforce its/their rights hereunder.
The Pledgor hereby agrees to give, execute, deliver, file and/or record any
financing statement, notice, instrument, document, agreement or other papers
that may be necessary or reasonably desirable (in the judgment of any Pledgee
or its counsel) to create, preserve, perfect or validate any security interest
granted pursuant hereto or to enable the Pledgees or any one of them to
exercise and enforce their rights hereunder with respect to such security
interest.
18. AMENDMENTS; WAIVER; CONSENT. No amendment or waiver of any provision
of this Agreement, nor consent to any departure by the Pledgor therefrom, shall
in any event be effective unless the same shall be in writing and signed by
each Pledgee, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
19. NOTICES. All notices provided for in this Agreement shall be in
writing signed by the party giving such notice, and delivered personally (with
delivery confirmed by receipt signed by recipient) or sent by overnight courier
or messenger or sent by registered or certified mail (air mail if overseas),
return receipt requested, or by telex, facsimile
## NY29/SALTD/24565.25 - 16 -
<PAGE> 17
transmission, telegram or similar means of communication with delivery
confirmed. Notices shall be deemed to have been received on the date of
personal delivery, telex, facsimile transmission, telegram or similar means of
communication, or if sent by overnight courier or messenger, shall be deemed to
have been received on the next delivery day after deposit with the courier or
messenger, or if sent by certified or registered mail, return receipt
requested, shall be deemed to have been received on the third business day
after the date of mailing. Notices shall be sent to the addresses set forth on
Schedule C.
20. GOVERNING LAW. THIS AGREEMENT AND ALL DOCUMENTS DELIVERED IN
CONNECTION THEREWITH SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE RULES OF
CONFLICTS OF LAW.
21. BINDING EFFECT. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective heirs, legal
representatives, successors and assigns, except that the Pledgor shall not have
the right to assign any rights hereunder without the prior written consent of
all Pledgees.
22. EXECUTION IN COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute but one and the same
agreement.
23. SEVERABILITY OF PROVISIONS. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions of
## NY29/SALTD/24565.25 - 17 -
<PAGE> 18
this Agreement or affecting the validity or enforceability of such provisions
in any other jurisdiction.
24. HEADINGS. The headings preceding the text of this Agreement are
inserted solely for convenience of reference and shall not constitute a part of
this Agreement nor affect its meaning, construction or effect.
## NY29/SALTD/24565.25 - 18 -
<PAGE> 19
IN WITNESS WHEREOF, and in consideration of the agreements contained herein
and intending to be legally bound hereby, Pledgees and Pledgor hereby execute
this Agreement, and the Company and KDW as Representative have caused this
Agreement to be executed by their respective officers or partners thereunto
duly authorized, as of the date first above written.
PARTECH HOLDINGS CORPORATION
By:
______________________________
Name: John E. Rayl
Title: President and Chief
Executive Officer
Pledgor:______________________
Name: John E. Rayl
KELLEY DRYE & WARREN,
as Representatives of the
Pledgees
By:
______________________________
Name: Lawrence B. Fisher
Title: Partner
Pledgees:
GENERATION CAPITAL ASSOCIATES
By:
______________________________
Name: Frank Hart
Title: General Partner
## NY29/SALTD/24565.25 - 19 -
<PAGE> 20
_______________________________
Name: Peter Prescott
JULES and AMOS SWIMMER, Joint
Tenants
By:
______________________________
Name: Jules Swimmer
______________________________
Name: Jules Swimmer
RSH PARTNERS
By:
______________________________
Name: Horace Hertz
Title: General Partner
TGR VENTURES, INC.
By:
______________________________
Name:
Title:
## NY29/SALTD/24565.25 - 20 -
<PAGE> 21
________________________________
By:
______________________________
Name:
Title:
________________________________
By:
______________________________
Name:
Title:
_______________________________
By:
_______________________________
Name:
Title:
_______________________________
By:
_______________________________
Name:
Title:
________________________________
By:
________________________________
Name:
Title:
## NY29/SALTD/24565.25 - 21 -
<PAGE> 22
Schedule A
----------
Partech Holdings Corporation - Investor List
--------------------------------------------
Note
------
1. Generation Capital Associates $300,000
Attn: Mr. Frank Hart
617 West End Avenue
New York, NY 10024
Tel: (212) 787-5541
Fax: (212) 496-6292
2. Peter Prescott $25,000
27341 Vista Azul
Capistrano Beach, CA 92624
Tel:
Fax:
3. Jules and Amos Swimmer $20,000
Joint Tenants
901 Dove Street, Suite 230
Newport Beach, CA 92660
Tel:
Fax:
4. Jules Swimmer $15,000
901 Dove Street, Suite 230
Newport Beach, CA 92660
Tel:
Fax:
5. RSH Partners $10,000
Attn: Mr. Horace Hertz
Park Place Tower
3333 Michaelson Drive, Suite 550
Irvine, CA 92715
Tel:
Fax:
## NY29/SALTD/24565.25 - 22 -
<PAGE> 23
6. TGR Ventures, Inc. $10,000
7. $
8. $
9. $
10. $
## NY29/SALTD/24565.25 - 23 -
<PAGE> 24
Schedule B
----------
John E. Rayl 700,305 Shares
All shares are shares of Common Stock of Partech Holdings Corporation,
$.05 par value per share.
## NY29/SALTD/24565.25 - 24 -
<PAGE> 25
Schedule C
----------
ADDRESSES FOR NOTICES
---------------------
To the Company:
Partech Holdings Corporation
3366 Riverside Drive
Suite 200
Columbus, Ohio 43221
Attn: Mr. John E. Rayl
Telephone: (614) 538-0660
Facsimile: (614) 538-0670
To the Pledgor:
John E. Rayl
c/o Partech Holdings Corporation
3366 Riverside Drive
Suite 200
Columbus, Ohio 43221
Telephone: (614) 538-0660
Facsimile: (614) 538-0670
To the Investors:
To each Investor
at the address
provided in
Schedule A hereto
## NY29/SALTD/24565.25 - 25 -
<PAGE> 26
With a copy to:
Kelley Drye & Warren
101 Park Avenue
New York, NY 10178
Attn: Lawrence B. Fisher
Telephone: (212) 808-7800
Facsimile: (212) 808-7898
and
Horowitz, Cutler & Beam
2 Venture Plaza, Suite 380
Irvine, CA 92718
Attn: M. Richard Cutler
Telephone: (714) 453-0300
Facsimile: (714) 453-9416
To KDW:
Kelley Drye & Warren
101 Park Avenue
New York, NY 10178
Attn: Deborah Saltzman
Telephone: (212) 808-7507
Facsimile: (212) 808-7897
To Horowitz, Cutler & Beam:
2 Venture Plaza, Suite 380
Irvine, CA 92718
Attn: M. Richard Cutler
Telephone: (714) 453-0300
Facsimile: (714) 453-9416
## NY29/SALTD/24565.25 - 26 -
<PAGE> 27
To the Company's transfer agent:
Continental Stock Transfer & Trust Company
2 Broadway
New York, NY 10004
Attn: William Seegraver
Telephone: (212) 509-4000
Fascimile: (212) 349-1360
## NY29/SALTD/24565.25 - 27 -
<PAGE> 1
EXHIBIT 2
AGREEMENT
_____________
THIS AGREEMENT (the "Agreement") is entered into as of this 31st day of May,
1994 by and between PARTECH HOLDINGS CORPORATION, a Delaware corporation
("Partech") having its principal place of business at 3366 Riverside Drive,
Suite 200, Columbus, Ohio 43221 and PARTECH COMMUNICATIONS GROUP, INC., a
Nevada corporation ("PCG" and together with Partech as "GUARANTORS") a
wholly-owned subsidiary of Partech having its principal place of business at
3366 Riverside Drive, Suite 200, Columbus, Ohio 43221 on the one hand and JOHN
E. RAYL, ("PLEDGOR") an individual, having his principal business address at
3366 Riverside Drive, Suite 200, Columbus, Ohio 43221.
W I T N E S S E T H
WHEREAS, Partech and PCG are parties to a certain borrowing undertaking
(the "Loan") which is more fully described in the form of Subscription
Agreement, a copy of which is attached attached hereto as Exhibit A;
WHEREAS, Pledgor has undertaken to provide additional collateral (the
"Pledged Shares") to the Loan under the terms and conditions which are more
fully set forth in the Rayl Pledge Agreement, a copy of which is attached
hereto as Exhibit B; and
WHEREAS, the Pledgor and the Guarantors desire to provide for
replacement of the Pledgor's collateral in the event such collateral is
converted by the lender(s) of the Loan and used as full or partial
satisfaction of Partech's obligation under the Loan.
NOW THEREFORE, WITNESSETH that in consideration of the mutual promises
and covenants hereinafter stipulated, the parties hereto agree as follows:
1. PLEDGOR'S PLEDGE OF COLLATERAL. The Pledgor shall pledge up to 700,305
shares of Partech Holdings Corporation $.05 par value common stock (the
"Pledged Shares") as additional security for the Loan under those terms and
conditions as more fully set forth in the Rayl Pledge Agreement.
2. PLEDGOR'S RIGHT OF CONTRIBUTION.
a. Upon the event of conversion of Pledged Shares pursuant to the
terms of the Rayl Pledge Agreement, in whole or in part, by any one or all of
the Pledgees, Partech shall replace such securities with securities of a
like kind (the "Like Kind Shares"). The number of Like Kind Shares to be
delivered to the Pledgor shall be an amount equal to the number of Pledged
Shares converted by the Pledgee multiplied by two (2); by way of example, if
a Pledgee converts 10,000 Pledged Shares then Partech shall deliver to the
Pledgor 20,000 shares of like kind.
b. Partech covenants that it will at all times reserve and have
available from its authorized Common Stock such number of shares as shall
then be issuable on its obligation to replace the Pledged Shares. Partech
covenants that all Like Kind Shares which shall be so issuable shall be duly
and validly issued, fully paid and nonassessable and free from all taxes,
liens and charges with respect to such issue. Partech shall pay all
documentary, stamp or similar taxes and other governmental charges that may
be imposed with respect to the issuance of the Like Kind Shares.
c. Each Like Kind Share Certificate shall bear a legend as follows
unless such Like Kind Shares have been registered under the Act and the
issuance complies with applicable state securities laws:
<PAGE> 2
"The securities represented by this certificate have been acquired
for investment and have not been registered under the Securities
Act of 1933, as amended (the "Act"). The securities may not be
sold, assigned, pledged, hypothecated or otherwise transferred
except pursuant to an effective registration statement under the
Act and in compliance with applicable state securities laws, or
the Company receives an opinion of counsel, satisfactory to the
Company and Company counsel, that such registration is not
required and that the sale, assignment, pledge, hypothecation or
transfer is in compliance with applicable state securities laws."
d. The Pledgor acknowledges that the Guarantors own directly and/or
indirectly interests in radio station licenses which are governed by the
provisions of the Communications Act and the rules promulgated thereunder.
Accordingly, the Pledgor: (a) covenants to the Guarantors that he is not an
Alien (as hereinafter defined), and (b) that he shall not transfer, assign
or in any way make available an interest in this Agreement, to an Alien.
The term "Alien" means any person who is a citizen of a country other than
the United States; or any state, territory, or possession thereof; any entity
organized under the laws of a government other than the government of the
United States or any state, territory, or possession thereof; a government
other than the government of the United States or any state, territory or
possession thereof, or an individual or entity controlled by any of the
foregoing.
3. REGISTRATION. Partech, upon the one time written demand (the
"Demand Notice") of the Pledgor (as defined herein), agrees to use its best
efforts to register, on one occasion, all or any portion of the Pledgor's
Pledged Shares or Like Kind Shares (the "Registrable Securities"), as
requested by the Pldegor. On such occasion, Partech will use its best
efforts to file an appropriate registration statement covering the
Registrable Securities within one-hundred twenty (120) days after receipt of
the Demand Notice and to use its best efforts to have such registration
statement declared effective promptly thereafter. In the event of
registration Partech and the Pledgor shall execute such documents as may be
reasonably required by Partech and Partech's counsel to carry out such
registration.
a. TERMS OF REGISTRATION. Partech shall bear all fees and
expenses attendant to registering the Registrable Securities, but the Pledgor
shall pay any and all underwriting and broker-dealer discounts, commissions
and non-accountable expenses of any underwriter or broker-dealer selected to
sell the Registrable Securities, together with the expenses of any legal
counsel selected by the Pledgor to represent him in connection with the sale
of the Registrable Securities. Partech shall cause any registration
statement filed pursuant to the demand rights granted hereto to remain
effective for a period of sixteen months from the date of the latest balance
sheet of the audited financial statements contained therein on the initial
effective date of such registration statement.
b. RIGHT TO REDEEM IN LIEU OF REGISTRATION. Partech may in
its sole discretion, and in lieu of registration of the Registrable
Securities, purchase the Registrable Securities from the Pledgor for amount
equal to the amount which would be realized by the Pledgor upon his sale of
the Registrable Securities less the expenses, fees and broker/dealer
commissions which would normally be paid by the Pledgor in the event of
registration and sale of the Registrable Securities. Partech may elect to
make such payment upon notice to the Pledgor within 30 days of receipt of a
notice of Demand Registration.
Page 2
<PAGE> 3
4. Guarantors' Indemnity.
----------------------
a. The Guarantors, jointly and severally, hereby agree to indemnify
and hold harmless the Pledgor and each of his heirs, executors,
administrators, successors and assigns, from any loss, claim, damage, cost,
lawsuit, attorney's and accountant's fees, deficiency, assessment,
administrative order, fine, penalty, action, proceeding, judgment or
expense, including in all cases the reasonable fees and expenses of counsel,
resulting from or by reason of any act or failure to act on the part of the
Guarantors, the Loan or the transactions contemplated therein or herein.
b. The parties hereto intend that the replacement of converted
Pledged Shares with Like Kind Shares shall qualify for like kind treatment
for federal income tax purposes in accordance with Internal Revenue Code
Section 1031. The Guarantors and the Pledgor agree that each shall file
their income tax returns consistent with the requirements of such section and
shall provide each other with such information as may be required to file
accordingly. Further, the Guarantors, jointly and severally, agree hereby
to indemnify and hold harmless the Pledgor and each of his heirs, executors,
administrators, successors and assigns, from any loss, claim, damage, cost,
lawsuit, attorney's and accountant's fees, deficiency, assessment,
administrative order, interest, fine, penalty, action, proceeding, judgment
or expense which may be assessed against or determined to be owing by the
Pledgor in respective of any federal, state or local tax including but not
limited to income taxes, capital gains taxes, surtaxes, transaction taxes,
intangible taxes, transfer taxes, estate taxes, or any other tax and any
interest and penalties thereon which Pledgor may have become due and owing
as result of or by reason of the Loan or the transactions contemplated
therein or herein. In the event such taxes, interest and/or penalties may
be assessed, the Pledgor may, at his sole option, elect to challenge such
assessment or pay such assessment. In the event Pledgor elects to pay such
assessment, Guarantors shall, within 5 days of notice, pay to Pledgor the
sum owing in good funds. In the event Pledgor elects to challenge such
assessment, Guarantors shall cooperate with Pledgor in such challenge or
defense. Guarantors shall regularly reimburse Pledgor for the costs of such
challenge and defense by payment in good funds within 5 days of Pledgors
request for reimbursement. In the event Pledgor's challenge and/or defense
is unsuccessful and Pledgor is assessed, Guarantors shall, within 5 days of
notice, pay to Pledgor the sum owing in good funds.
5. DURATION OF THIS AGREEMENT. This Agreement and the guarantee hereunder
shall remain in full force and effect until the date on which all of the
Guarantors' obligations under the Loan are satisfied. Upon such
satisfaction, all remaining Pledged Securities shall be returned to Pledgor
together with all Like Kind Shares and this Agreement shall terminate.
6. Miscellaneous.
--------------
a. TRANSFER OF THIS AGREEMENT. The parties hereto hereby agree
that the Pledgor may transfer in whole or in part his rights, title and
interest under and pursuant to this Agreement to any other individuals or
entities without notice to the Guarantors; upon any such transfer, all of the
terms, conditions and covenants herein shall enure to the benefit of and be
binding upon such transferees.
b. AUTHORIZATION. All corporate action on the part of the
Guarantors and their respective officers, directors and stockholders
necessary for the authorization, execution and delivery of this Agreement and
the performance by the Guarantors of their respective obligations hereunder
has been duly taken. This Agreement, when executed and delivered by the
Guarantors, shall constitute a valid and legally binding obligation of the
Guarantors, enforceable in accordance with its terms.
Page 3
<PAGE> 4
c. COMPLIANCE WITH OTHER INSTRUMENTS. Neither of the Guarantors is
in violation of any provision of (a) their respective Certificates of
Incorporation or By-Laws, as presently in effect, (b) any material agreement,
or (c) any federal or state judgment, writ decree, order, statute, rule or
governmental regulation applicable to the Guarantors, as the case may be, the
violation of which would have a material and adverse effect on the Guarantors
or the transactions contemplated as to the Loan or hereby. The Guarantors
respective execution and delivery of this Agreement and their consummation of
the transactions contemplated hereby will not result in any such violation or
conflict with, constitute a default or require any consent under (a), (b) or
(c) above, or result in the creation of any lien, charge or encumbrance on
any of their respective properties or assets as contemplated herein.
d. NOTICES. All notices, demands, elections options or requests
(however characterized or described) required or authorized hereunder shall
be deemed sufficient if made in writing and sent by registered or certified
mail, return receipt requested and postage prepaid, or by tested telex,
telegram or cable to the principal office of the addressee, and if to the
Registered Holder or Transferee Holder of an Option Certificate, at the
address of such holder as set forth on the books maintained by the Company.
e. BINDING AGREEMENT. This Agreement shall be binding upon and
inure to the benefit of the Company, the Registered Holder, each Transferee
Holder and their respective successors and assigns. Nothing in this Agreement
is intended or shall be construed to confer upon any other person any right,
remedy or claim or to impose on any other person any duty, liability or
obligation.
f. FURTHER INSTRUMENTS. The parties hereto shall execute and
deliver any and all such other instruments and shall take any and all other
actions as may be reasonably necessary to carry out the intention of this
Agreement.
g. SEVERABILITY. If any provision of this Agreement shall be held,
declared or pronounced void, voidable, invalid, unenforceable or inoperative
for any reason by any court of competent jurisdiction, government authority
or otherwise, such holding, declaration or pronouncement shall not affect
adversely any other provision of this Agreement, which shall otherwise remain
in full force and effect and be enforced in accordance with its terms, and
the effect of such holding, declaration or pronouncement shall be limited to
the territory or jurisdiction in which made.
h. WAIVER. All the rights and remedies of either party to this
Agreement are cumulative and not exclusive of any other rights and remedies
as provided by law. No delay or failure on the part of either party in the
exercise of any right or remedy arising from the breach of this Agreement
will constitute a waiver of any other right or remedy. The consent of any
party where required hereunder to act or occurrence shall not be deemed to be
a consent to any other action or occurrence.
i. GENERAL PROVISIONS. This Agreement shall be construed and
enforced in accordance with, and governed by, the laws of the State of Ohio.
This Agreement embodies the entire agreement and understanding between the
parties and supersedes all prior agreements and understandings relating to
the subject matter hereof, and this Agreement may not be modified or amended
or any term or provisions hereof waived or discharged except in writing,
signed by the party against whom such amendment, modification, waiver or
discharge is sought to be enforced. The headings of this Agreement are for
convenience and references only and shall not limit or otherwise affect the
meaning hereof.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
PARTECH HOLDINGS CORPORATION PARTECH COMMUNICATIONS GROUP, INC.
By: /s/ Thomas E. Reynolds, V.P. By: /s/ Thomas E. Reynolds, V.P.
------------------------------ ------------------------------
Title Title
JOHN E. RAYL
/s/ John E. Rayl
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