Amendment to Registration of Securities of a Small-Business Issuer — Form 10-SB Filing Table of Contents
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1: 10SB12G/A Spiralfrog, Inc. Form 10SB12G/A HTML 1.14M
2: EX-3.5 Articles of Incorporation/Organization or By-Laws HTML 16K
7: EX-4.10 Instrument Defining the Rights of Security Holders HTML 15K
3: EX-4.6 Instrument Defining the Rights of Security Holders HTML 193K
4: EX-4.7 Instrument Defining the Rights of Security Holders HTML 138K
5: EX-4.8 Instrument Defining the Rights of Security Holders HTML 80K
6: EX-4.9 Instrument Defining the Rights of Security Holders HTML 88K
EX-4.9 — Instrument Defining the Rights of Security Holders
This
PLEDGE AGREEMENT (this “Agreement”), dated as of
________, 2007, made by Mohen, Inc. d/b/a Spiral Frog, a Delaware corporation
(the “Company”) and each entity listed as a pledgor on the
signature pages hereto (each a “Pledgor”), and in favor of
GOTTBETTER CAPITAL FINANCE, LLC, in its capacity as collateral agent (in such
capacity, the "Collateral Agent") for the "Buyers" (as defined
below) party to the Amended and Restated Purchase Agreement, dated August ____,
2007 (as amended, restated or otherwise modified from time to time, the
"Purchase Agreement").
WITNESSETH:
WHEREAS,
the Company and each party listed as a "Buyer" on the Schedule
of Buyers attached to the Purchase Agreement (collectively, the
"Buyers") are parties to that Purchase Agreement, pursuant to
which the Company shall be required to sell, and the Buyers shall purchase,
the
"Notes” and acquire the “Warrants” (each as defined therein) ;
WHEREAS,
it is a condition precedent to the Buyers purchasing the Notes and acquiring
the
Warrants that the Pledgors shall have executed and delivered to the Collateral
Agent for the benefit of itself and the Buyers this Agreement to secure all
of
the Company’s obligations under the Purchase Agreement, the Notes issued
pursuant thereto, as such Notes may be amended, restated, replaced or otherwise
modified from time to time in accordance with the terms thereof) and the other
“Transaction Documents” (as defined in the Purchase Agreement, the
“Transaction Documents”), on such terms and conditions as are
set forth herein; and
WHEREAS,
each Pledgor has determined that the execution, delivery and performance of
this
Agreement directly benefits, and is in the best interest of, such
Pledgor;
NOW,
THEREFORE, in consideration of the premises and the agreements herein and in
order to induce the Buyers to perform under the Purchase Agreement, each Pledgor
agrees with the Collateral Agent as follows:
SECTION
1.Definitions
and Rules of Interpretation.
(a)Definitions. Reference
is made to the Purchase Agreement and the Notes for a statement of terms
thereof. All terms used in this Agreement which are defined in the
Purchase Agreement or the Notes or in Article 8 or Article 9 of the Uniform
Commercial Code as in effect from time to time in the State of New
York (the “Code”), and which are not otherwise defined herein
shall have the same meanings herein as set forth therein; provided, that
terms used herein which are defined in the Code as in effect in the State of
New
York on the date hereof shall continue to have the same meaning notwithstanding
any replacement or amendment of such statute except as the Collateral Agent
may
otherwise determine. In the event that any such term is defined in
both the Purchase Agreement or the Notes and the Code, the definition of such
term in the Purchase Agreement or the Notes shall control.
1
(b)Rules
of Interpretation. Except as otherwise expressly provided in this
Agreement, the following rules of interpretation apply to this Agreement: (i)
the singular includes the plural and the plural includes the singular; (ii)
“or”
and “any” are not exclusive and “include” and “including” are not limiting;
(iii) a reference to any agreement or other contract includes permitted
supplements and amendments; (iv) a reference to a law includes any amendment
or
modification to such law and any rules or regulations issued thereunder; (v)
a
reference to a person includes its permitted successors and assigns; and (vi)
a
reference in this Agreement to an Article, Section, Annex, Exhibit or Schedule
is to the Article, Section, Annex, Exhibit or Schedule of this
Agreement.
SECTION
2.Pledge
and Grant of Security Interest.
(a) As
collateral security for all of the Obligations (as defined in Section 3 hereof),
each of the Pledgors hereby pledges and assigns and grants to the Collateral
Agent a continuing security interest in, and Lien on, all of such Pledgor’s
right, title and interest in and to the following (collectively, the
“Collateral”): the shares of capital stock described
in Schedule I, whether or not evidenced or represented by any stock
certificate, certificated security or other instrument, together with the
certificates representing such equity interests, (including, but not limited
to,
any stock dividend and any distribution in connection with a stock split) from
time to time received, receivable or otherwise distributed in respect of any
of
the foregoing and all cash and noncash proceeds thereof (collectively, the
“Pledged Shares”).
SECTION
3.Security
for Obligations. The security interest created hereby in the
Collateral constitutes continuing collateral security for all of the following
obligations, whether now existing or hereafter incurred (the
“Obligations”):
(a) the
payment by the Company, as and when due and payable (by scheduled maturity,
required prepayment, acceleration, demand or otherwise), of all amounts from
time to time owing by it in respect of the Purchase Agreement, the Notes and
the
other Transaction Documents, including, without limitation, (A) all principal
of
and interest on the Notes (including, without limitation, all interest that
accrues after the commencement of any bankruptcy proceeding of the Pledgors,
whether or not the payment of such interest is unenforceable or is not allowable
due to the existence of such bankruptcy proceeding), and (B) all fees,
commissions, expense reimbursements, indemnifications and all other amounts
due
or to become due under any of the Transaction Documents, above, for so long
as
the Notes are outstanding; and
(b) the
due
performance and observance by each Pledgor of all of its other obligations
from
time to time existing in respect of any of the Transaction Documents for so
long
as the Notes are outstanding.
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SECTION
4.Delivery
of the Collateral.
(a) All
certificates currently representing the Pledged Shares shall be delivered to
the
Collateral Agent on or prior to the execution and delivery of this
Agreement. All other promissory notes, certificates and instruments
constituting Collateral from time to time or required to be pledged to the
Collateral Agent pursuant to the terms of this Agreement (the
“Additional Collateral”) shall be delivered to the Collateral
Agent promptly upon receipt thereof by or on behalf of any of the
Pledgors. All such promissory notes, certificates and instruments
shall be held by the Collateral Agent pursuant hereto and shall be delivered
in
suitable form for transfer by delivery or shall be accompanied by duly executed
instruments of transfer or assignment or undated stock powers executed in blank
(“Transfer Materials”), all in form and substance reasonably
satisfactory to the Collateral Agent. If any Collateral consists of
uncertificated securities, unless the immediately following sentence is
applicable thereto, the Pledgors shall cause the Collateral Agent (or its
designated custodian, nominee or other designee) to become the registered holder
thereof, or cause each issuer of such securities to agree that it will comply
with instructions originated by the Collateral Agent (or its designated
custodian, nominee or other designee) with respect to such securities without
further consent by the Pledgors.
(b) If
any
Pledgor shall receive, by virtue of such Pledgor’s being or having been an owner
of any Collateral, any (i) stock certificate (including, without limitation,
any
certificate representing a stock dividend or distribution in connection with
any
increase or reduction of capital, reclassification, merger, consolidation,
sale
of assets, combination of shares, stock split, spin-off or split-off),
promissory note or other instrument, (ii) option or right, whether as an
addition to, substitution for, or in exchange for, any Collateral, or otherwise,
(iii) dividends payable in cash (except such dividends permitted to be
retained by such Pledgor pursuant to Section 7 hereof) or in securities
or other property or (iv) dividends, distributions, cash, instruments,
investment property and other property in connection with a partial or total
liquidation or dissolution or in connection with a reduction of capital, capital
surplus or paid-in surplus, such Pledgor shall receive such stock certificate,
promissory note, instrument, option, right, payment or distribution in trust
for
the benefit of the Collateral Agent, shall segregate it from such Pledgor’s
other property and shall deliver it forthwith to the Collateral Agent in the
exact form received, together with appropriate Transfer Materials, to be held
by
the Collateral Agent as Collateral and as further collateral security for the
Obligations.
(c) If,
from
time to time, the Company redeems at least 20% of the aggregate original
principal amount of the Notes, the Collateral Agent shall return to the holders
of Pledged Shares 20% of such shares on a pro rata basis.
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(d) If
the
Notes become exchangeable, the Company shall prepare, and, as soon as
practicable, but in no event later than the sixty (60) calendar days after
the
Notes become exchangeable into Common Stock, file with the SEC, a Registration
Statement on Form SB-2 (or such other form as may be available) covering the
resale of at least 2,593,847 shares of Common Stock in addition to the Exchange
Shares and Warrant Shares. The Company shall use its best efforts to
have the Registration Statement declared effective by the SEC as soon as
practicable, but in no event later than ninety (90) calendar days after the
date
the Registration Statement is filed with the SEC. By 9:30 a.m. on the Business
Day following such date, the Company shall file with the SEC in accordance
with
Rule 424 under the 1933 Act the final prospectus to be used in connection
with sales pursuant to such Registration Statement.
(e) Upon
the
earlier of the effectiveness of the registration statement described in Section
4(c) or full satisfaction of the Company's obligations under the Notes, the
Company shall notify the Collateral Agent in writing. Upon receipt of
such notice or if it becomes publicly known to Collateral Agent, the Collateral
Agent shall return the Pledged Shares, together with the relevant Transfer
Materials, to the respective Pledgors, and all rights of the Pledgee in the
Pledged Shares shall terminate. Notwithstanding anything herein to
the contrary, upon full satisfaction of the Company's obligations under the
Notes, Pledgee's interest in and to the Pledged Shares, if any, shall
terminate.
SECTION
5.Covenants
as to the Collateral. So long as any Obligations shall remain
outstanding and the Purchase Agreement and the other Transaction Documents
shall
not have been terminated, the Company will, unless the Collateral Agent shall
otherwise consent in writing:
(a) keep
adequate records concerning the Collateral owned or purported to be owned by
it,
and permit the Collateral Agent, or any designees or representatives thereof
at
any time or from time to time to examine and make copies of and abstracts from
such records;
(b) at
the
Company’s expense, promptly deliver to the Collateral Agent a copy of each
material notice or other material communication received by any Pledgor in
respect of the Collateral;
(c) at
the
Company’s expense, defend the Collateral Agent’s right, title and security
interest in and to the Collateral against the claims of any Person (other than
the holders of Permitted Liens);
4
(d) at
the
Company’s expense, at any time and from time to time, promptly execute and
deliver all further instruments and documents and take all further action that
may be necessary or that the Collateral Agent may reasonably request in order
to
(i) perfect and protect, or maintain the perfection of, the security
interest and Lien purported to be created hereby, (ii) enable the Collateral
Agent to exercise and enforce its rights and remedies hereunder in respect
of
the Collateral or (iii) otherwise effect the purposes of this Agreement,
including, without limitation, delivering to the Collateral Agent irrevocable
proxies in respect of the Collateral registered in the name of such Company,
except for Collateral which the Company is entitled to vote under the terms
of
Section 7 hererof;
(e) not
sell,
assign (by operation of law or otherwise), exchange or otherwise dispose of
any
Collateral or any interest therein except in the ordinary course of business
or
as expressly permitted by the Purchase Agreement or the Notes;
(f) not
create or suffer to exist any Lien, upon or with respect to any Collateral
except for Permitted Liens;
(g) not
make
or consent to any amendment or other modification or waiver with respect to
any
Collateral or enter into any agreement or permit to exist any restriction with
respect to any Collateral other than pursuant to the Transaction
Documents;
(h) not
issue
any stock certificate, certificated security or other instrument to evidence
or
represent any shares of capital stock, any partnership interest or membership
interest described in Schedule I hereto; and
(i) not
take
or fail to take any action which would in any manner impair the validity or
enforceability of the Collateral Agent’s security interest in and Lien on any
Collateral.
SECTION
6.Voting
Rights, Dividends, Etc. in Respect of the Collateral.
(a) So
long
as the Collateral Agent has not offered the Collateral for sale in accordance
with Section 9 hereof:
5
(i) each
Pledgor may exercise any and all voting and other consensual rights pertaining
to any Collateral;
(ii) the
Pledgors may receive and retain any and all dividends, interest or other
distributions paid in respect of the Collateral to the extent permitted by
the
Purchase Agreement; provided, however, that any and all (A)
dividends and interest paid or payable other than in cash in respect of, and
instruments (other than checks) and other property received, receivable or
otherwise distributed in respect of or in exchange for, any Collateral, (B)
dividends and other distributions paid or payable in cash in respect of any
Collateral in connection with a partial or total liquidation or dissolution
or
in connection with a reduction of capital, capital surplus or paid-in surplus,
and (C) cash paid, payable or otherwise distributed in redemption of, or in
exchange for, any Collateral, together with any dividend, distribution, interest
or other payment which at the time of such dividend, distribution, interest
or
other payment was not permitted by the Purchase Agreement, shall be, and shall
forthwith be delivered to the Collateral Agent to hold as, Collateral and shall,
if received by any of the Pledgors, be received in trust for the benefit of
the
Collateral Agent, shall be segregated from the other property or funds of the
Pledgors, and shall be forthwith delivered to the Collateral Agent in the exact
form received with any Transfer Materials, to be held by the Collateral Agent
as
Collateral and as further collateral security for the Obligations;
and
(iii) the
Collateral Agent will execute and deliver (or cause to be executed and
delivered) to a Pledgor all such proxies and other instruments as such Pledgor
may reasonably request for the purpose of enabling such Pledgor to exercise
the
voting and other rights which it is entitled to exercise pursuant to paragraph
(i) of this Section 6(a) and to receive the dividends, distributions,
interest and other payments which it is authorized to receive and retain
pursuant to paragraph (ii) of this Section 6(a), in each case, to the
extent that the Collateral Agent has possession of such Collateral.
(b) So
long
as the Collateral Agent has not offered the Collateral for sale in accordance
with Section 9 hereof:
(i) all
rights of each Pledgor to exercise the voting and other consensual rights which
it would otherwise be entitled to exercise pursuant to paragraph (i) of
subsection (a) of this Section 6, and to receive the dividends,
distributions, interest and other payments which it would otherwise be
authorized to receive and retain pursuant to paragraph (ii) of subsection
(a) of this Section 6, shall cease, and all such rights shall
thereupon become vested in the Collateral Agent which shall thereupon have
the
sole right to exercise such voting and other consensual rights and to receive
and hold as Collateral such dividends, distributions, interest and other
payments;
(ii) without
limiting the generality of the foregoing, the Collateral Agent may, at its
option, exercise any and all rights of conversion, exchange, subscription or
any
other rights, privileges or options pertaining to any of the Collateral as
if it
were the absolute owner thereof, including, without limitation, the right to
exchange, in its discretion, any and all of the Collateral upon the merger,
consolidation, reorganization, recapitalization or other adjustment of any
issuer of the Collateral or upon the exercise by any issuer of the Collateral
of
any right, privilege or option pertaining to any Collateral, and, in connection
therewith, to deposit and deliver any and all of the Collateral with any
committee, depository, transfer collateral agent, registrar or other designated
collateral agent upon such terms and conditions as it may determine;
and
6
(iii) all
dividends, distributions, interest and other payments which are received by
any
Pledgor contrary to the provisions of paragraph (i) of this Section 7(b)
shall be received in trust for the benefit of the Collateral Agent, shall be
segregated from other funds of such Pledgor, and shall be forthwith paid over
to
the Collateral Agent as Collateral in the exact form received with any necessary
indorsement and/or appropriate stock powers duly executed in blank, to be held
by the Collateral Agent as Collateral and as further collateral security for
the
Obligations.
SECTION
7.Additional
Provisions Concerning the Collateral.
(a) Each
Pledgor hereby (i) authorizes the Collateral Agent to file one or more financing
or continuation statements, and amendments thereto, relating to the Collateral,
without the signature of such Pledgor where permitted by law, (ii) ratifies
such
authorization to the extent that the Collateral Agent has filed any such
financing or continuation statements, or amendments thereto, without the
signature of such Pledgor prior to the date hereof and (iii) authorizes the
Collateral Agent to execute any agreements, instruments or other documents
in
such Pledgor’s name and to file such agreements, instruments or other documents
that perfect, protect or enforce the security interest and Lien of the
Collateral Agent in the Collateral or as provided under Article 8 or Article
9
of the UCC in any appropriate filing office.
(b) Each
Pledgor hereby irrevocably appoints the Collateral Agent as its attorney-in-fact
and proxy, with full authority in the place and stead and in its name or
otherwise, from time to time in the Collateral Agent’s discretion to take any
action and to execute any instrument which the Collateral Agent may deem
necessary or advisable to accomplish the purposes of this Agreement (subject
to
the rights of such Pledgor under Section 7(a) hereof), including, without
limitation, to receive, indorse and collect all instruments made payable to
such
Pledgor representing any dividend, interest payment or other distribution in
respect of any Collateral and to give full discharge for the
same. This power is coupled with an interest and is irrevocable until
the termination of this Agreement in accordance with Section 13(e)
hereof.
(c) If
any
Pledgor fails to perform any agreement or obligation contained herein, the
Collateral Agent itself may perform, or cause performance of, such agreement
or
obligation, and the expenses of the Collateral Agent incurred in connection
therewith shall be paid by the Company and shall be secured by the
Collateral.
7
(d) Other
than the exercise of reasonable care to assure the safe custody of the
Collateral while held hereunder, the Collateral Agent shall have no duty or
liability to preserve rights pertaining thereto and shall be relieved of all
responsibility for the Collateral upon surrendering it or tendering surrender
of
it to the respective Pledgors. The Collateral Agent shall be deemed
to have exercised reasonable care in the custody and preservation of the
Collateral in its possession if the Collateral is accorded treatment
substantially equal to that which the Collateral Agent accords its own property,
it being understood that the Collateral Agent shall not have responsibility
for
(i) ascertaining or taking action with respect to calls, conversions, exchanges,
maturities, tenders or other matters relating to any Collateral, whether or
not
the Collateral Agent has or is deemed to have knowledge of such matters, or
(ii)
taking any necessary steps to preserve rights against any parties with respect
to any Collateral.
(e) The
powers conferred on the Collateral Agent hereunder are solely to protect its
interest in the Collateral and shall not impose any duty upon it to exercise
any
such powers. Except for the safe custody of any Collateral in its
possession and the accounting for monies actually received by it hereunder,
the
Collateral Agent shall have no duty as to any Collateral or as to the taking
of
any necessary steps to preserve rights against prior parties or any other rights
pertaining to any Collateral.
(f) Upon
the
occurrence and during the continuation of any Default or Event of Default,
the
Collateral Agent may at any time in its discretion (i) without notice to the
Pledgors, transfer or register in the name of the Collateral Agent or any of
its
nominees any or all of the Collateral, subject only to the revocable rights
of
the Pledgors under Section 7(a) hereof, and (ii) exchange certificates or
instruments constituting Collateral for certificates or instruments of smaller
or larger denominations.
SECTION
8.Remedies
Upon Default. If any Event of Default shall have occurred and be
continuing:
(a) The
Collateral Agent may exercise in respect of the Collateral, in addition to
other
rights and remedies provided for herein or otherwise available to it, all of
the
rights and remedies of a secured party on default under the Code then in effect
in the State of New York; and, without limiting the generality of the foregoing,
and without notice except as specified below, sell the Collateral or any part
thereof in one or more parcels at public or private sale, at any exchange or
broker’s board or elsewhere, at such price or prices and on such other terms as
the Collateral Agent may deem commercially reasonable. The Pledgors
agree that, to the extent notice of sale shall be required by law, at least
ten
(10) days’ notice to any of the Pledgors of the time and place of any public
sale or the time after which any private sale is to be made shall constitute
reasonable notification. The Collateral Agent shall not be obligated
to make any sale of Collateral regardless of notice of sale having been
given. The Collateral Agent may adjourn any public or private sale
from time to time by announcement at the time and place fixed therefor, and
such
sale may, without further notice, be made at the time and place to which it
was
so adjourned.
8
(b) Each
Pledgor recognizes that it may be impracticable to effect a public sale of
all
or any part of the Pledged Shares or any other securities constituting
Collateral and that the Collateral Agent may, therefore, determine to make
one
or more private sales of any such securities to a restricted group of purchasers
who will be obligated to agree, among other things, to acquire such securities
for its own account, for investment and not with a view to the distribution
or
resale thereof. Each Pledgor acknowledges that any such private sale
may be at prices and on terms less favorable to the seller than the prices
and
other terms which might have been obtained at a public sale and, notwithstanding
the foregoing, agrees that such private sales shall be deemed to have been
made
in a commercially reasonable manner and that the Collateral Agent shall have
no
obligation to delay sale of any such securities for the period of time necessary
to permit the issuer of such securities to register such securities for public
sale under the Securities Act of 1933, as amended (the “Securities
Act”). Each Pledgor further acknowledges and agrees that any
offer to sell such securities which has been (i) publicly advertised on a bona
fide basis in a newspaper or other publication of general circulation in the
financial community of New York, New York (to the extent that such an offer
may
be so advertised without prior registration under the Securities Act) or (ii)
made privately in the manner described above to not less than fifteen (15)
bona
fide offerees shall be deemed to involve a “public disposition” for the purposes
of Section 9-610 of the Code (or any successor or similar, applicable statutory
provision) as then in effect in the State of New York, notwithstanding that
such
sale may not constitute a “public offering” under the Securities Act, and that
the Collateral Agent may, in such event, bid for the purchase of such
securities.
(c) Any
cash
held by the Collateral Agent as Collateral and all cash proceeds received by
the
Collateral Agent in respect of any sale of, collection from, or other
realization upon, all or any part of the Collateral shall be applied (after
payment of any amounts payable to the Collateral Agent pursuant to Section
10 hereof) by the Collateral Agent against, all or any part of the
Obligations in such order as the Collateral Agent shall elect consistent with
the provisions of the Purchase Agreement.
(d) In
the
event that the proceeds of any such sale, collection or realization are
insufficient to pay all amounts to which the Collateral Agent is legally
entitled, the Company shall be liable for the deficiency, together with interest
thereon at the highest rate specified in the Notes for interest on overdue
principal thereof or such other rate as shall be fixed by applicable law,
together with the costs of collection and the reasonable fees, costs and
expenses of any attorneys employed by the Collateral Agent to collect such
deficiency.
(e) In
the
event that the proceeds of any such sale, collection, or realization are more
than sufficient to pay all amounts to which the Collateral Agent is legally
entitled, the remainder of such proceeds together with any remaining Pledged
Shares and Subsequent Pledged Shares shall be returned to the Pledgors in
accordance with the terms hereof.
9
SECTION
9.Indemnity
and Expenses.
(a) The
Company hereby agrees to indemnify and hold the other Pledgors and the
Collateral Agent (and all of its officers, directors, employees, attorneys,
and
consultants) harmless from and against any and all claims, damages, losses,
liabilities, obligations, penalties, fees, costs and expenses (including,
without limitation, reasonable legal fees and disbursements of counsel) to
the
extent that they arise out of or otherwise result from this Agreement
(including, without limitation, enforcement of this Agreement), except such
claims, damages, losses, liabilities, obligations, penalties, fees, costs and
expenses resulting from such Person’s gross negligence or willful misconduct as
determined by a court of competent jurisdiction.
(b) The
Company shall be obligated for, and will upon demand pay to the other Pledgors
and the Collateral Agent the reasonable amount of any and all out-of-pocket
costs and expenses, including the reasonable fees and disbursements of the
Collateral Agent’s counsel and of any experts which the Collateral Agent may
incur in connection with (i) the preparation, negotiation, execution, delivery,
recordation, administration, amendment, waiver or other modification or
termination of this Agreement, (ii) the custody, preservation, use or operation
of, or the sale of, collection from, or other realization upon, any Collateral,
(iii) the exercise or enforcement of any of the rights of the Collateral Agent
hereunder, or (iv) the failure by any Pledgor to perform or observe any of
the
provisions hereof.
10
SECTION
10.Notices,
Etc. All notices and other communications provided for hereunder
shall be in writing and shall be mailed (by certified mail, postage prepaid
and
return receipt requested), sent by Federal Express or other recognized courier
service (return receipt requested), telecopied or delivered by hand, if to
any
Pledgor, to it at the address specified for the Company in the Purchase
Agreement or if to the Collateral Agent, to it at the address specified in
the
Purchase Agreement or, if not a party to the Purchase Agreement as
follows:
or
as to
either such Person at such other address as shall be designated by such Person
in a written notice to such other Person complying as to delivery with the
terms
of this Section 11. All such notices and other communications
shall be effective (i) if sent by certified mail, postage prepaid, return
receipt requested, when received or three (3) Business Days after mailing,
whichever first occurs, (ii) if telecopied, when transmitted and confirmation
is
received, provided same is on a Business Day and, if not, on the next
Business Day or (iii) if delivered by hand or sent by Federal Express or other
recognized courier service (return receipt requested), upon delivery,
provided same is on a Business Day and, if not, on the next Business
Day.
11
SECTION
11.Security
Interest Absolute. All rights of the Collateral Agent, all Liens
and all obligations of each of the Pledgors hereunder shall be absolute and
unconditional irrespective of: (i) any lack of validity or
enforceability of the Purchase Agreement or any other Transaction Document,
(ii)
any change in the time, manner or place of payment of, or in any other term
in
respect of, all or any of the Obligations, or any other amendment or waiver
of
or consent to any departure from the Purchase Agreement or any other Transaction
Document, (iii) any exchange or release of, or non-perfection of any Lien on
any
Collateral, or any release or amendment or waiver of or consent to departure
from any guaranty, for all or any of the Obligations, or (iv) any other
circumstance which might otherwise constitute a defense available to, or a
discharge of, any of the Pledgors in respect of the Obligations (other than
the
payment in full of the Obligations). All authorizations and agencies
contained herein with respect to any of the Collateral are irrevocable and
powers coupled with an interest.
SECTION
12.Miscellaneous.
(a) No
amendment of any provision of this Agreement shall be effective unless it is
in
writing and signed by each Pledgor and the Collateral Agent, and no waiver
of
any provision of this Agreement, and no consent to any departure by the Pledgors
therefrom, shall be effective unless it is in writing and signed by the
Collateral Agent, and then such waiver or consent shall be effective only in
the
specific instance and for the specific purpose for which given.
(b) No
failure on the part of the Collateral Agent to exercise, and no delay in
exercising, any right hereunder or under any other Transaction Document shall
operate as a waiver hereof or thereof; nor shall any single or partial exercise
of any such right preclude any other or further exercise hereof or thereof
or
the exercise of any other right. The rights and remedies of the
Collateral Agent provided herein and in the other Transaction Documents are
cumulative and are in addition to, and not exclusive of, any rights or remedies
provided by law. The rights of the Collateral Agent under any
Transaction Document against any party thereto are not conditional or contingent
on any attempt by the Collateral Agent to exercise any of its rights under
any
other Transaction Document against such party or against any other
Person.
(c) Any
provision of this Agreement which 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 portions
hereof or affecting the validity or enforceability of such provision in any
other jurisdiction.
12
(d) This
Agreement shall create a continuing security interest in and Lien on the
Collateral and shall (i) remain in full force and effect until the termination
of this Agreement in accordance with Section 13 (e) hereof and (ii) be
binding on the Pledgors and their respective successors and assigns and shall
inure, together with all rights and remedies of the Collateral Agent, to the
benefit of the Collateral Agent and its successors, transferees and
assigns. Without limiting the generality of clause (ii) of the
immediately preceding sentence, the Collateral Agent may assign or otherwise
transfer its rights and obligations under this Agreement and any other
Transaction Document to any other Person pursuant to the terms of the Purchase
Agreement, and such other Person shall thereupon become vested with all of
the
benefits in respect thereof granted to the Collateral Agent herein or
otherwise. Upon any such assignment or transfer, all references in
this Agreement to the Collateral Agent shall mean the assignee of the Collateral
Agent. None of the rights or obligations of any of the Pledgors
hereunder may be assigned or otherwise transferred without the prior written
consent of the Collateral Agent, and any such assignment or transfer shall
be
null and void.
(e) Notwithstanding
anything to the contrary in this Agreement, (i) this Agreement (along with
all
powers of attorney granted hereunder) and the security interests and Lien
created hereby shall terminate and all rights to the Collateral shall revert
to
the Pledgors upon the repayment in full and /or complete conversion to equity
securities of the Company of all indebtedness obligations owed by the Company
to
the Buyers under the Notes (including, without limitation, all principal,
interest and fees related to the Notes), and (ii) the Collateral Agent will,
upon each Pledgor’s request and at each such Pledgor’s expense, (A) return to
such Pledgor such of the Collateral (to the extent delivered to the Collateral
Agent) as shall not have been sold or otherwise disposed of or applied pursuant
to the terms hereof, and (B) execute and deliver to such Pledgor, without
recourse, representation or warranty, such documents as such Pledgor shall
reasonably request to evidence such termination.
(f) The
internal laws, and not the laws of conflicts, of New York shall govern the
enforceability and validity of this Agreement, the construction of its terms
and
the interpretation of the rights and duties of the parties, except as required
by mandatory provisions of law and except to the extent that the validity and
perfection or the perfection and the effect of perfection or non-perfection
of
the security interest and Lien created hereby, or remedies hereunder, in respect
of any particular Collateral are governed by the law of a jurisdiction other
than the State of New York.
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(g) Each
party to this Agreement hereby irrevocably and unconditionally submits, for
itself and its property, to the exclusive jurisdiction of the United States
District Court for the Southern District of New York sitting in Manhattan or
the
Commercial Division, Civil Branch of the Supreme Court of the State of New
York
sitting in New York County in connection with any suit, action or proceeding
directly or indirectly arising out of, under or in connection with this
Agreement or the other Transaction Documents or the transactions contemplated
hereby or thereby. No party to this Agreement may move to (i)
transfer any such suit, action or proceeding brought in such New York court
or
federal court to another jurisdiction, (ii) consolidate any such suit, action
or
proceeding brought in such New York court or federal court with a suit, action
or proceeding in another jurisdiction or (iii) dismiss any such suit, action
or
proceeding brought in such New York court or federal court for the purpose
of
bringing the same in another jurisdiction. Each party to this
Agreement agrees that a final judgment in any such suit, action or proceeding
shall be conclusive and may be enforced in any other jurisdiction by suit on
the
judgment or in any other manner provided by law. Each party to this
Agreement hereby irrevocably and unconditionally waives, to the fullest extent
it may legally and effectively do so, any objection which it may now or
hereafter have to the laying of venue of any suit, action or proceeding arising
out of or relating to this Agreement or the other Transaction Documents, in
any
New York court sitting in the County of New York or any federal court sitting
in
the Southern District of New York.
(h) Each
Pledgor irrevocably consents to the service of process of any of the aforesaid
courts in any such action, suit or proceeding by the mailing of copies thereof
by registered or certified mail (or any substantially similar form of mail),
postage prepaid, to such Pledgor at its address provided herein, such service
to
become effective when received or 10 days after such mailing, whichever first
occurs.
(i) Nothing
contained herein shall affect the right of the Collateral Agent to serve process
in any other manner permitted by law or commence legal proceedings or otherwise
proceed against any Pledgor or any property of any Pledgor in any other
jurisdiction.
(j) Each
Pledgor irrevocably and unconditionally waives any right it may have to claim
or
recover in any legal action, suit or proceeding referred to in this Section
any
special, exemplary, punitive or consequential damages.
(k) EACH
PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY SUIT, ACTION OR
PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH
THIS AGREEMENT OR OTHER TRANSACTION DOCUMENTS.
14
(l) The
headings herein are for convenience only, do not constitute a part of this
Agreement and shall not be deemed to limit or affect any of the provisions
hereof. The language used in this Agreement will be deemed to be the
language chosen by the parties to express their mutual intent, and no rules
of
strict construction will be applied against any party.
(m) This
Agreement may be executed in any number of counterparts and by different parties
hereto in separate counterparts, each of which shall be deemed to be an
original, but all of which taken together shall constitute one and the same
agreement.
(n) All
of
the obligations of the Pledgors hereunder are joint and several. The
Collateral Agent may, in its sole and absolute discretion, enforce the
provisions hereof against any of the Pledgors and shall not be required to
proceed against all Pledgors jointly or seek payment from the Pledgors
ratably. In addition, the Collateral Agent may, in its sole and
absolute discretion, select the Collateral of any one or more of the Pledgors
for sale or application to the Obligations, without regard to the ownership
of
such Collateral, and shall not be required to make such selection ratably from
the Collateral owned by all of the Pledgors. The release or discharge
of any Pledgor by the Collateral Agent shall not release or discharge any other
Pledgor from the obligations of such Person hereunder.
[Signature
Page Follows]
15
In
Witness Whereof, each Pledgor has caused this Agreement to be executed and
delivered by its officer thereunto duly authorized, as of the date first above
written.
