PLEDGE AGREEMENT
----------------
THIS PLEDGE AGREEMENT ("Agreement") is made as of the 23rd
day of October, 2000, by GLOBAL TECHNOLOGY VALUE PARTNERS LIMITED
(hereinafter called "Pledgor," whether one or more), in favor of
INFINITY INVESTORS LIMITED ("Pledgee"). Pledgor hereby agrees
with Pledgee as follows:
1. Definitions. As used in this Agreement, the following terms
shall have the meanings indicated below:
(a) The term "Borrower" shall mean Pledgor.
(b) The term "Code" shall mean the Uniform Commercial Code as in
effect in the State of Texas on the date of this Agreement or as
it may hereafter be amended from time to time.
(c) The term "Collateral" shall mean all property specifically
described on Schedule A attached hereto and made a part hereof.
The term Collateral, as used herein, shall also include (i) all
certificates, instruments and/or other documents evidencing the
foregoing, (ii) all renewals, replacements and substitutions of
all of the foregoing, (iii) all Additional Property (as
hereinafter defined), and (iv) all PROCEEDS of all of the
foregoing. The designation of proceeds does not authorize
Pledgor to sell, transfer or otherwise convey any of the
foregoing property. The delivery at any time by Pledgor to
Secured Party of any property as a pledge to secure payment or
performance of any indebtedness or obligation whatsoever shall
also constitute a pledge of such property as Collateral
hereunder.
(d) The term "Indebtedness" shall mean (i) all indebtedness,
obligations and liabilities of Borrower to Secured Party (as
hereinafter defined) of any kind or character, now existing or
hereafter arising, whether direct, indirect, related, unrelated,
fixed, contingent, liquidated, unliquidated, joint, several or
joint and several arising under, pursuant to or otherwise in
connection with the Letter Agreement dated the date hereof among
Pledgor and Pledgee (as the same may hereafter be amended or
modified, the "Letter Agreement") and this Agreement, (ii) all
obligations of Borrower to Secured Party under any documents
evidencing, securing, governing and/or pertaining to all or any
part of the indebtedness described in (i) above, (iii) all costs
and expenses incurred by Secured Party in connection with the
collection and administration of all or any part of the
indebtedness and obligations described in (i) and (ii) above or
the protection or preservation of, or realization upon, the
collateral securing all or any part of such indebtedness and
obligations, including without limitation all reasonable
attorneys' fees, and (iv) all renewals, extensions, modifications
and rearrangements of the indebtedness and obligations described
in (i), (ii) and (iii) above.
(e) The term "Loan Documents" shall mean the Letter Agreement
and all other instruments and documents evidencing, securing,
governing, guaranteeing and/or pertaining to the Indebtedness.
(f) The term "Obligated Party" shall mean any party other than
Borrower who secures, guarantees and/or is otherwise obligated to
pay all or any portion of the Indebtedness.
(g) The term "Secured Party" shall mean Pledgee, its successors
and assigns, including without limitation, any party to whom
Pledgee, or its successors or assigns, may assign its rights and
interests under this Agreement.
All words and phrases used herein which are expressly
defined in Section 1.201, Chapter 8 or Chapter 9 of the Code
shall have the meaning provided for therein. Other words and
phrases defined elsewhere in the Code shall have the meaning
specified therein except to the extent such meaning is
inconsistent with a definition in Section 1.201, Chapter 8 or
Chapter 9 of the Code.
2. Security Interest. As security for the Indebtedness,
Pledgor, for value received, hereby grants to Secured Party a
continuing security interest in the Collateral.
3. Additional Property. Collateral shall also include the
following property (collectively, the "Additional Property")
which Pledgor becomes entitled to receive or shall receive in
connection with the Collateral: (a) any stock certificate,
including without limitation, any certificate representing a
stock dividend or any certificate in connection with any
recapitalization, reclassification, merger, consolidation,
conversion, sale of assets, combination of shares, stock split or
spin-off associated with the Collateral; (b) any option, warrant,
subscription or right related to or arising out of the
Collateral; and (c) any dividends or distributions of any kind
whatsoever, whether distributable in cash, stock or other
property associated with the Collateral. All Additional Property
received by Pledgor shall be received in trust for the benefit of
Secured Party. All Additional Property and all certificates or
other written instruments or documents evidencing and/or
representing the Additional Property that is received by Pledgor,
together with such instruments of transfer as Secured Party may
request, shall immediately be delivered to or deposited with
Secured Party and held by Secured Party as Collateral under the
terms of this Agreement. If the Additional Property received by
Pledgor shall be shares of stock or other securities, such shares
of stock or other securities shall be duly endorsed in blank or
accompanied by proper instruments of transfer and assignment duly
executed in blank with, if requested by Secured Party, signatures
guaranteed by a member or member organization in good standing of
an authorized Securities Transfer Agents Medallion Program, all
in form and substance satisfactory to Secured Party. Secured
Party shall be deemed to have possession of any Collateral in
transit to Secured Party or its agent.
4. Voting Rights. As long as no Event of Default shall have
occurred hereunder, any voting rights incident to any stock or
other securities pledged as Collateral may be exercised by
Pledgor; provided, however, that Pledgor will not exercise, or
cause to be exercised, any such voting rights, without the prior
written consent of Secured Party, if the direct or indirect
effect of such vote will result in an Event of Default hereunder.
5. Maintenance of Collateral. Other than the exercise of
reasonable care to assure the safe custody of any Collateral in
Secured Party's possession from time to time, Secured Party does
not have any obligation, duty or responsibility with respect to
the Collateral. Without limiting the generality of the
foregoing, Secured Party shall not have any obligation, duty or
responsibility to do any of the following: (a) ascertain any
maturities, calls, conversions, exchanges, offers, tenders or
similar matters relating to the Collateral or informing Pledgor
with respect to any such matters; (b) fix, preserve or exercise
any right, privilege or option (whether conversion, redemption or
otherwise) with respect to the Collateral unless (i) Pledgor
makes written demand to Secured Party to do so, (ii) such written
demand is received by Secured Party in sufficient time to permit
Secured Party to take the action demanded in the ordinary course
of its business, and (iii) Pledgor provides additional
collateral, acceptable to Secured Party in its sole discretion;
(c) collect any amounts payable in respect of the Collateral
(Secured Party being liable to account to Pledgor only for what
Secured Party may actually receive or collect thereon); (d) sell
all or any portion of the Collateral to avoid market loss; (e)
sell all or any portion of the Collateral unless and until (i)
Pledgor makes written demand upon Secured Party to sell the
Collateral, and (ii) Pledgor provides additional collateral,
acceptable to Secured Party in its sole discretion; or (f) hold
the Collateral for or on behalf of any party other than Pledgor.
6. Representations and Warranties. Pledgor hereby represents
and warrants the following to Secured Party:
(a) Due Authorization. The execution, delivery and performance
of this Agreement and all of the other Loan Documents by Pledgor
have been duly authorized by all necessary corporate action of
Pledgor.
(b) Enforceability. This Agreement and the other Loan Documents
constitute legal, valid and binding obligations of Pledgor,
enforceable in accordance with their respective terms, except as
limited by bankruptcy, insolvency or similar laws of general
application relating to the enforcement of creditors' rights and
except to the extent specific remedies may generally be limited
by equitable principles.
(c) Ownership and Liens. Pledgor has good and marketable title
to the Collateral free and clear of all liens, security
interests, encumbrances or adverse claims, except for the
security interest created by this Agreement. No dispute, right
of setoff, counterclaim or defense exists with respect to all or
any part of the Collateral. Pledgor has not executed any other
security agreement currently affecting the Collateral and no
financing statement or other instrument similar in effect
covering all or any part of
-2-
the Collateral is on file in any recording office except as may
have been executed or filed in favor of Secured Party.
(c) No Conflicts or Consents. Neither the ownership, the
intended use of the Collateral by Pledgor, the grant of the
security interest by Pledgor to Secured Party herein nor the
exercise by Secured Party of its rights or remedies hereunder,
will (i) conflict with any provision of (A) any domestic or
foreign law, statute, rule or regulation, (B) the articles or
certificate of incorporation, charter or bylaws, as the case may
be, of Pledgor, or (C) any agreement, judgment, license, order or
permit applicable to or binding upon Pledgor or otherwise
affecting the Collateral, or (ii) result in or require the
creation of any lien, charge or encumbrance upon any assets or
properties of Pledgor or of any person except as may be expressly
contemplated in the Loan Documents. Except as expressly
contemplated in the Loan Documents, no consent, approval,
authorization or order of, and no notice to or filing with, any
court, governmental authority or third party is required in
connection with the grant by Pledgor of the security interest
herein or the exercise by Secured Party of its rights and
remedies hereunder.
(e) Security Interest. Pledgor has and will have at all times
full right, power and authority to grant a security interest in
the Collateral to Secured Party in the manner provided herein,
free and clear of any lien, security interest or other charge or
encumbrance. This Agreement creates a legal, valid and binding
security interest in favor of Secured Party in the Collateral.
(f) Location. Pledgor's residence or chief executive office, as
the case may be, and the office where the records concerning the
Collateral are kept is located at its address set forth on the
signature page hereof.
(g) Solvency of Pledgor. As of the date hereof, and after
giving effect to this Agreement and the completion of all other
transactions contemplated by Pledgor at the time of the execution
of this Agreement, (i) Pledgor is and will be solvent, (ii) the
fair saleable value of Pledgor's assets exceeds and will continue
to exceed Pledgor's liabilities (both fixed and contingent),
(iii) Pledgor is paying and will continue to be able to pay its
debts as they mature, and (iv) Pledgor has and will have
sufficient capital to carry on Pledgor's businesses and all
businesses in which Pledgor is about to engage.
(h) Securities. Any certificates evidencing securities pledged
as Collateral are valid and genuine and have not been altered.
All securities pledged as Collateral have been duly authorized
and validly issued, are fully paid and non-assessable, and were
not issued in violation of the preemptive rights of any party or
of any agreement by which Pledgor or the issuer thereof is bound.
No restrictions or conditions exist with respect to the transfer
or voting of any securities pledged as Collateral, except as has
been disclosed to Secured Party in writing. To the best of
Pledgor's knowledge, no issuer of such securities (other than
securities of a class which are publicly traded) has any
outstanding stock rights, rights to subscribe, options, warrants
or convertible securities outstanding or any other rights
outstanding entitling any party to have issued to such party
capital stock of such issuer, except as has been disclosed to
Secured Party in writing.
7. Affirmative Covenants. Pledgor will comply with the
covenants contained in this Section at all times during the
period of time this Agreement is effective unless Secured Party
shall otherwise consent in writing.
(a) Ownership and Liens. Pledgor will maintain good and
marketable title to all Collateral free and clear of all liens,
security interests, encumbrances or adverse claims, except for
the security interest created by this Agreement and the security
interests and other encumbrances expressly permitted by the other
Loan Documents. Pledgor will not permit any dispute, right of
setoff, counterclaim or defense to exist with respect to all or
any part of the Collateral. Pledgor will cause any financing
statement or other security instrument with respect to the
Collateral to be terminated, except as may exist or as may have
been filed in favor of Secured Party. Pledgor will defend at its
expense Secured Party's right, title and security interest in and
to the Collateral against the claims of any third party.
(b) Inspection of Books and Records. Pledgor will keep adequate
records concerning the Collateral and will permit Secured Party
and all representatives and agents appointed by Secured Party to
-3-
inspect Pledgor's books and records of or relating to the
Collateral at any time during normal business hours, to make and
take away photocopies, photographs and printouts thereof and to
write down and record any such information.
(c) Adverse Claim. Pledgor covenants and agrees to promptly
notify Secured Party of any claim, action or proceeding affecting
title to the Collateral, or any part thereof, or the security
interest created hereunder and, at Pledgor's expense, defend
Secured Party's security interest in the Collateral against the
claims of any third party. Pledgor also covenants and agrees to
promptly deliver to Secured Party a copy of all written notices
received by Pledgor with respect to the Collateral, including
without limitation, notices received from the issuer of any
securities pledged hereunder as Collateral.
(d) Delivery of Instruments and/or Certificates.
Contemporaneously herewith, Pledgor covenants and agrees to
deliver to Secured Party any certificates, documents or
instruments representing or evidencing the Collateral, with
Pledgor's endorsement thereon and/or accompanied by proper
instruments of transfer and assignment duly executed in blank
with, if requested by Secured Party, signatures guaranteed by a
member or member organization in good standing of an authorized
Securities Transfer Agents Medallion Program, all in form and
substance satisfactory to Secured Party.
(e) Further Assurances. Pledgor will contemporaneously with the
execution hereof and from time to time thereafter at its expense
promptly execute and deliver all further instruments and
documents and take all further action necessary or appropriate or
that Secured Party may request in order (i) to perfect and
protect the security interest created or purported to be created
hereby and the first priority of such security interest, (ii) to
enable Secured Party to exercise and enforce its rights and
remedies hereunder in respect of the Collateral, and (iii) to
otherwise effect the purposes of this Agreement, including
without limitation: (A) executing and filing any financing or
continuation statements, or any amendments thereto; (B) obtaining
written confirmation from the issuer of any securities pledged as
Collateral of the pledge of such securities, in form and
substance satisfactory to Secured Party; (C) cooperating with
Secured Party in registering the pledge of any securities pledged
as Collateral with the issuer of such securities; (D) delivering
notice of Secured Party's security interest in any securities
pledged as Collateral to any securities or financial
intermediary, clearing corporation or other party required by
Secured Party, in form and substance satisfactory to Secured
Party; and (E) obtaining written confirmation of the pledge of
any securities constituting Collateral from any securities or
financial intermediary, clearing corporation or other party
required by Secured Party, in form and substance satisfactory to
Secured Party. If all or any part of the Collateral is
securities issued by an agency or department of the United
States, Pledgor covenants and agrees, at Secured Party's request,
to cooperate in registering such securities in Secured Party's
name or with Secured Party's account maintained with a Federal
Reserve Bank. When applicable law provides more than one method
of perfection of Secured Party's security interest in the
Collateral, Secured Party may choose the method(s) to be used.
8. Negative Covenants. Pledgor will comply with the covenants
contained in this Section at all times during the period of time
this Agreement is effective, unless Secured Party shall otherwise
consent in writing.
(a) Transfer or Encumbrance. Pledgor will not (i) sell, assign
(by operation of law or otherwise) or transfer Pledgor's rights
in any of the Collateral, (ii) ▇▇▇▇▇ ▇ ▇▇▇▇ or security interest
in or execute, file or record any financing statement or other
security instrument with respect to the Collateral to any party
other than Secured Party, or (iii) deliver actual or constructive
possession of any certificate, instrument or document evidencing
and/or representing any of the Collateral to any party other than
Secured Party. Any attempted transfer in contravention of this
provision shall be null and void.
(b) Impairment of Security Interest. Pledgor will not take or
fail to take any action which would in any manner impair the
value or enforceability of Secured Party's security interest in
any Collateral.
(c) Dilution of Ownership. As to any securities pledged as
Collateral (other than securities of a class which are publicly
traded), Pledgor will not consent to or approve of the issuance
of (i) any additional shares of any class of securities of such
issuer (unless immediately upon issuance additional
-4-
securities are pledged and delivered to Secured Party pursuant to
the terms hereof to the extent necessary to give Secured Party a
security interest after such issuance in at least the same
percentage of such issuer's outstanding securities as Secured
Party had before such issuance), (ii) any instrument convertible
voluntarily by the holder thereof or automatically upon the
occurrence or non-occurrence of any event or condition into, or
exchangeable for, any such securities, or (iii) any warrants,
options, contracts or other commitments entitling any third party
to purchase or otherwise acquire any such securities.
(d) Restrictions on Securities. Pledgor will not enter into any
agreement creating, or otherwise permit to exist, any restriction
or condition upon the transfer, voting or control of any
securities pledged as Collateral, except as consented to in
writing by Secured Party.
9. Rights of Secured Party. Secured Party shall have the
rights contained in this Section at all times during the period
of time this Agreement is effective.
(a) Power of Attorney. Pledgor hereby irrevocably appoints
Secured Party as Pledgor's attorney-in-fact, such power of
attorney being coupled with an interest, with full authority in
the place and stead of Pledgor and in the name of Pledgor or
otherwise, to take any action and to execute any instrument which
Secured Party may from time to time in Secured Party's discretion
deem necessary or appropriate to accomplish the purposes of this
Agreement, including without limitation, the following action:
(i) transfer any securities, instruments, documents or
certificates pledged as Collateral in the name of Secured Party
or its nominee; (ii) use any interest, premium or principal
payments, conversion or redemption proceeds or other cash
proceeds received in connection with any Collateral to reduce any
of the Indebtedness; (iii) exchange any of the securities pledged
as Collateral for any other property upon any merger,
consolidation, reorganization, recapitalization or other
readjustment of the issuer thereof, and, in connection therewith,
to deposit and deliver any and all of such securities with any
committee, depository, transfer agent, registrar or other
designated agent upon such terms and conditions as Secured Party
may deem necessary or appropriate; (iv) exercise or comply with
any conversion, exchange, redemption, subscription or any other
right, privilege or option pertaining to any securities pledged
as Collateral; provided, however, except as provided herein,
Secured Party shall not have a duty to exercise or comply with
any such right, privilege or option (whether conversion,
redemption or otherwise) and shall not be responsible for any
delay or failure to do so; and (v) file any claims or take any
action or institute any proceedings which Secured Party may deem
necessary or appropriate for the collection and/or preservation
of the Collateral or otherwise to enforce the rights of Secured
Party with respect to the Collateral.
(b) Performance by Secured Party. If Pledgor fails to perform
any agreement or obligation provided herein, Secured Party may
itself perform, or cause performance of, such agreement or
obligation, and the expenses of Secured Party incurred in
connection therewith shall be a part of the Indebtedness, secured
by the Collateral and payable by Pledgor on demand.
Notwithstanding any other provision herein to the
contrary, Secured Party does not have any duty to exercise
or continue to exercise any of the foregoing rights and
shall not be responsible for any failure to do so or for any
delay in doing so.
10. Events of Default. Each of the following constitutes an
"Event of Default" under this Agreement:
(a) Failure to Pay Indebtedness. The failure, refusal or
neglect of Borrower to make any payment of principal on the
Indebtedness, or any portion thereof, as the same shall become
due and payable; or
(b) Non-Performance of Covenants. The failure of Borrower or
any Obligated Party to timely and properly observe, keep or
perform any covenant, agreement, warranty or condition required
herein or in any of the other Loan Documents; or
(c) Default Under other Loan Documents. The occurrence of an
event of default under any of the other Loan Documents; or
-5-
(d) False Representation. Any representation contained herein
or in any of the other Loan Documents made by Borrower or any
Obligated Party is false or misleading in any material respect;
or
(e) Bankruptcy or Insolvency. If Borrower or any Obligated
Party: (i) becomes insolvent, or makes a transfer in fraud of
creditors, or makes an assignment for the benefit of creditors,
or admits in writing its inability to pay its debts as they
become due; (ii) generally is not paying its debts as such debts
become due; (iii) has a receiver, trustee or custodian appointed
for, or take possession of, all or substantially all of the
assets of such party or any of the Collateral, either in a
proceeding brought by such party or in a proceeding brought
against such party and such appointment is not discharged or such
possession is not terminated within sixty (60) days after the
effective date thereof or such party consents to or acquiesces in
such appointment or possession; (iv) files a petition for relief
under the United States Bankruptcy Code or any other present or
future federal or state insolvency, bankruptcy or similar laws
(all of the foregoing hereinafter collectively called "Applicable
Bankruptcy Law") or an involuntary petition for relief is filed
against such party under any Applicable Bankruptcy Law and such
involuntary petition is not dismissed within sixty (60) days
after the filing thereof, or an order for relief naming such
party is entered under any Applicable Bankruptcy Law, or any
composition, rearrangement, extension, reorganization or other
relief of debtors now or hereafter existing is requested or
consented to by such party; (v) fails to have discharged within a
period of sixty (60) days any attachment, sequestration or
similar writ levied upon any property of such party; or (vi)
fails to pay within thirty (30) days any final money judgment
against such party; or
(f) Execution on Collateral. The Collateral or any portion
thereof is taken on execution or other process of law in any
action against Pledgor; or
(g) Liquidation, Death and Related Events. The liquidation,
dissolution, merger or consolidation of Borrower or any other
Obligated Party.
11. Remedies and Related Rights. If an Event of Default shall
have occurred, and without limiting any other rights and remedies
provided herein, under any of the other Loan Documents or
otherwise available to Secured Party, Secured Party may exercise
one or more of the rights and remedies provided in this Section.
(a) Remedies. Secured Party may from time to time at its
discretion, without limitation and without notice except as
expressly provided in any of the Loan Documents:
(i) exercise in respect of the Collateral all the rights and
remedies of a secured party under the Code (whether or not the
Code applies to the affected Collateral);
(ii) reduce its claim to judgment or foreclose or otherwise
enforce, in whole or in part, the security interest granted
hereunder by any available judicial procedure;
(iii) sell or otherwise dispose of, at its office, on the
premises of Pledgor or elsewhere, the Collateral, as a unit or in
parcels, by public or private proceedings, and by way of one or
more contracts (it being agreed that the sale or other disposition
of any part of the Collateral shall not exhaust Secured Party's
power of sale, but sales or other dispositions may be made from
time to time until all of the Collateral has been sold or
disposed of or until the Indebtedness has been paid and performed
in full), and at any such sale or other disposition it shall not
be necessary to exhibit any of the Collateral;
(iv) buy the Collateral, or any portion thereof, at any public
sale;
(v) buy the Collateral, or any portion thereof, at any private
sale if the Collateral is of a type customarily sold in a
recognized market or is of a type which is the subject of widely
distributed standard price quotations;
(vi) apply for the appointment of a receiver for the Collateral,
and Pledgor hereby consents to any such appointment; and
-6-
(vii) at its option, retain the Collateral in satisfaction of
the Indebtedness whenever the circumstances are such that Secured
Party is entitled to do so under the Code or otherwise.
Pledgor agrees that in the event Pledgor is
entitled to receive any notice under the Uniform
Commercial Code, as it exists in the state governing
any such notice, of the sale or other disposition of
any Collateral, reasonable notice shall be deemed given
when such notice is deposited in a depository
receptacle under the care and custody of the United
States Postal Service, postage prepaid, at Pledgor's
address set forth on the signature page hereof, five
(5) days prior to the date of any public sale, or after
which a private sale, of any of such Collateral is to
be held. Secured Party shall not be obligated to make
any sale of Collateral regardless of notice of sale
having been given. Secured Party may adjourn any
public or private sale from time to time by
announcement at the time and place fixed therefor, and
such sale may, without further notice, be made at the
time and place to which it was so adjourned. Pledgor
further acknowledges and agrees that the redemption by
Secured Party of any certificate of deposit pledged as
Collateral shall be deemed to be a commercially
reasonable disposition under Section 9.504(c) of the
Code.
(b) Private Sale of Securities. Pledgor recognizes that Secured
Party may be unable to effect a public sale of all or any part of
the securities pledged as Collateral because of restrictions in
applicable federal and state securities laws and that Secured
Party 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 their own account, for investment and not with a
view to the distribution or resale thereof. Pledgor acknowledges
that each any such private sale may be at prices and other terms
less favorable then what might have been obtained at a public
sale and, notwithstanding the foregoing, agrees that each such
private sale shall be deemed to have been made in a commercially
reasonable manner and that Secured Party shall have no obligation
to delay the sale of any such securities for the period of time
necessary to permit the issuer to register such securities for
public sale under any federal or state securities laws. Pledgor
further acknowledges and agrees that any offer to sell such
securities which has been made privately in the manner described
above to not less than five (5) bona fide offerees shall be
deemed to involve a "public sale" for the purposes of Section
9.504(c) of the Code, notwithstanding that such sale may not
constitute a "public offering" under any federal or state
securities laws and that Secured Party may, in such event, bid
for the purchase of such securities.
(c) Application of Proceeds. If any Event of Default shall have
occurred, Secured Party may at its discretion apply or use any
cash held by Secured Party as Collateral, and any cash proceeds
received by Secured Party in respect of any sale or other
disposition of, collection from, or other realization upon, all
or any part of the Collateral as follows in such order and manner
as Secured Party may elect:
(i) to the repayment or reimbursement of the reasonable costs
and expenses (including, without limitation, reasonable
attorneys' fees and expenses) incurred by Secured Party in
connection with (A) the administration of the Loan Documents, (B)
the custody, preservation, use or operation of, or the sale of,
collection from, or other realization upon, the Collateral, and
(C) the exercise or enforcement of any of the rights and remedies
of Secured Party hereunder;
(ii) to the payment or other satisfaction of any liens and other
encumbrances upon the Collateral;
(iii) to the satisfaction of the Indebtedness;
(vi) by holding such cash and proceeds as Collateral;
(v) to the payment of any other amounts required by applicable
law (including without limitation, Section 9.504(a)(3) of the
Code or any other applicable statutory provision); and
(vi) by delivery to Pledgor or any other party lawfully entitled
to receive such cash or proceeds whether by direction of a court
of competent jurisdiction or otherwise.
-7-
(d) Deficiency. In the event that the proceeds of any sale of,
collection from, or other realization upon, all or any part of
the Collateral by Secured Party are insufficient to pay all
amounts to which Secured Party is legally entitled, Borrower and
any party who guaranteed or is otherwise obligated to pay all or
any portion of the Indebtedness shall be liable for the
deficiency, together with interest thereon as provided in the
Loan Documents.
(e) Non-Judicial Remedies. In granting to Secured Party the
power to enforce its rights hereunder without prior judicial
process or judicial hearing, Pledgor expressly waives, renounces
and knowingly relinquishes any legal right which might otherwise
require Secured Party to enforce its rights by judicial process.
Pledgor recognizes and concedes that non-judicial remedies are
consistent with the usage of trade, are responsive to commercial
necessity and are the result of a bargain at arm's length.
Nothing herein is intended to prevent Secured Party or Pledgor
from resorting to judicial process at either party's option.
(f) Other Recourse. Pledgor waives any right to require Secured
Party to proceed against any third party, exhaust any Collateral
or other security for the Indebtedness, or to have any third
party joined with Pledgor in any suit arising out of the
Indebtedness or any of the Loan Documents, or pursue any other
remedy available to Secured Party. Pledgor further waives any
and all notice of acceptance of this Agreement and of the
creation, modification, rearrangement, renewal or extension of
the Indebtedness. Pledgor further waives any defense arising by
reason of any disability or other defense of any third party or
by reason of the cessation from any cause whatsoever of the
liability of any third party. Until all of the Indebtedness
shall have been paid in full, Pledgor shall have no right of
subrogation and Pledgor waives the right to enforce any remedy
which Secured Party has or may hereafter have against any third
party, and waives any benefit of and any right to participate in
any other security whatsoever now or hereafter held by Secured
Party. Pledgor authorizes Secured Party, and without notice or
demand and without any reservation of rights against Pledgor and
without affecting Pledgor's liability hereunder or on the
Indebtedness, to (i) take or hold any other property of any type
from any third party as security for the Indebtedness, and
exchange, enforce, waive and release any or all of such other
property, (ii) apply such other property and direct the order or
manner of sale thereof as Secured Party may in its discretion
determine, (iii) renew, extend, accelerate, modify, compromise,
settle or release any of the Indebtedness or other security for
the Indebtedness, (iv) waive, enforce or modify any of the
provisions of any of the Loan Documents executed by any third
party, and (v) release or substitute any third party.
(g) Voting Rights. Upon the occurrence of an Event of Default,
Pledgor will not exercise any voting rights with respect to
securities pledged as Collateral. Pledgor hereby irrevocably
appoints Secured Party as Pledgor's attorney-in-fact (such power
of attorney being coupled with an interest) and proxy to exercise
any voting rights with respect to Pledgor's securities pledged as
Collateral upon the occurrence of an Event of Default.
(h) Dividend Rights. Upon the occurrence of an Event of
Default:
(i) all rights of Pledgor to receive and retain the dividends it
would otherwise be authorized to receive and retain pursuant to
Section 3 shall automatically cease, and all such rights shall
thereupon become vested with Secured Party which shall thereafter
have the sole right to receive, hold and apply as Collateral such
dividends and interest payments; and
(ii) all dividend payments which are received by Pledgor
contrary to the provisions of clause (i) of this Subsection
shall be received in trust for the benefit of Secured Party,
shall be segregated from other funds of Pledgor, and shall be
forthwith paid over to Secured Party in the exact form received
(properly endorsed or assigned if requested by Secured Party),
to be held by Secured Party as Collateral.
12. Indemnity. Pledgor hereby indemnifies and agrees to hold
harmless Secured Party, and its officers, directors, employees,
agents and representatives (each an "Indemnified Person") from
and against any and all liabilities, obligations, claims, losses,
damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature (collectively, the "Claims")
which may be imposed on, incurred by, or asserted
-8-
against, any Indemnified Person arising in connection with the
Loan Documents, the Indebtedness or the Collateral (including
without limitation, the enforcement of the Loan Documents and the
defense of any Indemnified Person's actions and/or inactions in
connection with the Loan Documents). WITHOUT LIMITATION, THE
FOREGOING INDEMNITIES SHALL APPLY TO EACH INDEMNIFIED PERSON WITH
RESPECT TO ANY CLAIMS WHICH IN WHOLE OR IN PART ARE CAUSED BY OR
ARISE OUT OF THE NEGLIGENCE OF SUCH AND/OR ANY OTHER INDEMNIFIED
PERSON, except to the limited extent the Claims against an
Indemnified Person are proximately caused by such Indemnified
Person's gross negligence or willful misconduct. If Pledgor or
any third party ever alleges such gross negligence or willful
misconduct by any Indemnified Person, the indemnification
provided for in this Section shall nonetheless be paid upon
demand, subject to later adjustment or reimbursement, until such
time as a court of competent jurisdiction enters a final judgment
as to the extent and effect of the alleged gross negligence or
willful misconduct. The indemnification provided for in this
Section shall survive the termination of this Agreement and shall
extend and continue to benefit each individual or entity who is
or has at any time been an Indemnified Person hereunder.
13. Miscellaneous.
(a) Entire Agreement. This Agreement contains the entire
agreement of Secured Party and Pledgor with respect to the
Collateral. If the parties hereto are parties to any prior
agreement, either written or oral, relating to the Collateral,
the terms of this Agreement shall amend and supersede the terms
of such prior agreements as to transactions on or after the
effective date of this Agreement, but all security agreements,
financing statements, guaranties, other contracts and notices for
the benefit of Secured Party shall continue in full force and
effect to secure the Indebtedness unless Secured Party
specifically releases its rights thereunder by separate release.
(b) Amendment. No modification, consent or amendment of any
provision of this Agreement or any of the other Loan Documents
shall be valid or effective unless the same is in writing and
signed by the party against whom it is sought to be enforced.
(c) Actions by Secured Party. The lien, security interest and
other security rights of Secured Party hereunder shall not be
impaired by (i) any renewal, extension, increase or modification
with respect to the Indebtedness, (ii) any surrender, compromise,
release, renewal, extension, exchange or substitution which
Secured Party may grant with respect to the Collateral, or (iii)
any release or indulgence granted to any endorser, guarantor or
surety of the Indebtedness. The taking of additional security by
Secured Party shall not release or impair the lien, security
interest or other security rights of Secured Party hereunder or
affect the obligations of Pledgor hereunder.
(d) Waiver by Secured Party. Secured Party may waive any Event
of Default without waiving any other prior or subsequent Event of
Default. Secured Party may remedy any default without waiving
the Event of Default remedied. Neither the failure by Secured
Party to exercise, nor the delay by Secured Party in exercising,
any right or remedy upon any Event of Default shall be construed
as a waiver of such Event of Default or as a waiver of the right
to exercise any such right or remedy at a later date. No single
or partial exercise by Secured Party of any right or remedy
hereunder shall exhaust the same or shall preclude any other or
further exercise thereof, and every such right or remedy
hereunder may be exercised at any time. No waiver of any
provision hereof or consent to any departure by Pledgor therefrom
shall be effective unless the same shall be in writing and signed
by Secured Party and then such waiver or consent shall be
effective only in the specific instances, for the purpose for
which given and to the extent therein specified. No notice to or
demand on Pledgor in any case shall of itself entitle Pledgor to
any other or further notice or demand in similar or other
circumstances.
(e) Costs and Expenses. Pledgor will upon demand pay to Secured
Party the amount of any and all costs and expenses (including
without limitation, attorneys' fees and expenses), which Secured
Party may incur in connection with (i) the transactions which
give rise to the Loan Documents, (ii) the preparation of this
Agreement and the perfection and preservation of the security
interests granted under the Loan Documents, (iii) the
administration of the Loan Documents, (iv) the custody,
preservation, use or operation of, or the sale of, collection
from, or other realization upon, the Collateral, (v) the exercise
-9-
or enforcement of any of the rights of Secured Party under the
Loan Documents, or (vi) the failure by Pledgor to perform or
observe any of the provisions hereof.
(f) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS AND
APPLICABLE FEDERAL LAWS, EXCEPT TO THE EXTENT PERFECTION AND THE
EFFECT OF PERFECTION OR NON-PERFECTION OF THE SECURITY INTEREST
GRANTED HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL, ARE
GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF
TEXAS.
(g) Venue. This Agreement has been entered into in the county
in Texas where Pledgee's address for notice purposes is located,
and it shall be performable for all purposes in such county.
Courts within the State of Texas shall have jurisdiction over any
and all disputes arising under or pertaining to this Agreement
and venue for any such disputes shall be in the county or
judicial district where this Agreement has been executed and
delivered.
(h) Severability. If any provision of this Agreement is held by
a court of competent jurisdiction to be illegal, invalid or
unenforceable under present or future laws, such provision shall
be fully severable, shall not impair or invalidate the remainder
of this Agreement and the effect thereof shall be confined to the
provision held to be illegal, invalid or unenforceable.
(i) No Obligation. Nothing contained herein shall be construed
as an obligation on the part of Secured Party to extend or
continue to extend credit to Borrower.
(j) Notices. All notices, requests, demands or other
communications required or permitted to be given pursuant to this
Agreement shall be in writing and given by (i) personal delivery,
(ii) expedited delivery service with proof of delivery, or (iii)
United States mail, postage prepaid, registered or certified
mail, return receipt requested, sent to the intended addressee at
the address set forth on the signature page hereof or to such
different address as the addressee shall have designated by
written notice sent pursuant to the terms hereof and shall be
deemed to have been received either, in the case of personal
delivery, at the time of personal delivery, in the case of
expedited delivery service, as of the date of first attempted
delivery at the address and in the manner provided herein, or in
the case of mail, upon deposit in a depository receptacle under
the care and custody of the United States Postal Service. Either
party shall have the right to change its address for notice
hereunder to any other location within the continental United
States by notice to the other party of such new address at least
thirty (30) days prior to the effective date of such new address.
(k) Binding Effect and Assignment. This Agreement (i) creates a
continuing security interest in the Collateral, (ii) shall be
binding on Pledgor and the heirs, executors, administrators,
personal representatives, successors and assigns of Pledgor, and
(iii) shall inure to the benefit of Secured Party and its
successors and assigns. Without limiting the generality of the
foregoing, Secured Party may pledge, assign or otherwise transfer
the Indebtedness and its rights under this Agreement and any of
the other Loan Documents to any other party. Pledgor's rights
and obligations hereunder may not be assigned or otherwise
transferred without the prior written consent of Secured Party.
(l) Termination. Upon (i) the satisfaction in full of the
Indebtedness, (ii) written request for the termination hereof
delivered by Pledgor to Secured Party, and (iii) written release
delivered by Secured Party to Pledgor, this Agreement and the
security interests created hereby shall terminate. Upon
termination of this Agreement and Pledgor's written request,
Secured Party will, at Pledgor's sole cost and expense, return to
Pledgor such of the Collateral as shall not have been sold or
otherwise disposed of or applied pursuant to the terms hereof and
execute and deliver to Pledgor such documents as Pledgor shall
reasonably request to evidence such termination.
(m) Cumulative Rights. All rights and remedies of Secured Party
hereunder are cumulative of each other and of every other right
or
-10-
remedy which Secured Party may otherwise have at law or in equity
or under any of the other Loan Documents, and the exercise of one
or more of such rights or remedies shall not prejudice or impair
the concurrent or subsequent exercise of any other rights or
remedies.
(n) Gender and Number. Within this Agreement, words of any
gender shall be held and construed to include the other gender,
and words in the singular number shall be held and construed to
include the plural and words in the plural number shall be held
and construed to include the singular, unless in each instance
the context requires otherwise.
(o) Descriptive Headings. The headings in this Agreement are
for convenience only and shall in no way enlarge, limit or define
the scope or meaning of the various and several provisions
hereof.
-11-
EXECUTED as of the date first written above.
Pledgor's Address: PLEDGOR:
Lister House Global Technology Value
▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇. ▇▇▇▇▇▇
--------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇. ▇▇▇▇▇▇
-------------------------
Title: Director
-------------------------
Secured Party's Address: SECURED PARTY:
c/o H.W. Partners, L.P. Infinity Investors Limited
For the Benefit of Infinity
Investors Limited
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------
Attention: ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Title: Director
-------------------------
SCHEDULE A
TO
PLEDGE AGREEMENT
DATED OCTOBER 23, 2000
BY AND BETWEEN
INFINITY INVESTORS LIMITED
AND
GLOBAL TECHNOLOGY VALUE PARTNERS LIMITED
The following property is a part of the Collateral as defined in
Subsection 1(c):
6,869,854 shares of common stock of EDGE TECHNOLOGY GROUP,
INC. (formerly known as Visual Edge Systems Inc.) a Delaware
corporation, issued in the name of Pledgor.
