Contract

EXHIBIT 10.4 ------------ COLLATERAL PLEDGE AGREEMENT --------------------------- This Collateral Pledge Agreement ("Agreement") dated as of December 31, 2004 is made by Global Matrechs, Inc., a Delaware corporation ("Pledgor") in favor of Mark Allen ("Secured Party"). BACKGROUND ---------- A. Secured Party has extended credit to True To Form, Limited ("Debtor") as evidenced by that certain Secured Note dated as of December 31, 2004 (as amended, restated, modified, or replaced from time to time, the "Note"), in connection with the merger of in connection with the merger of True to Form, Limited , a Massachusetts corporation and TTF Acquisition Corp., a wholly owned subsidiary of Pledgor. To induce Secured Party to extend credit to Debtor, Pledgor has guaranteed the Note and executes and delivers this Agreement to Secured Party. All capitalized terms used herein and not otherwise defined shall have the same meanings assigned to such terms in the Note or the Security Agreement, as hereinafter defined. B. This Agreement is given and is intended to provide additional security for the Obligations as defined in the Security Agreement of even date herewith among Debtor and Secured Party (the "Security Agreement"). NOW THEREFORE, for other good and sufficient consideration, the receipt of which is hereby acknowledged, Pledgor, intending to be legally bound hereby, covenants and agrees as follows: 1. Pledgor, for the purpose of granting a continuing lien and security interest to secure the Obligations, does hereby assign, pledge, hypothecate, deliver and set over to Secured Party, its successors and assigns, 100% of its interest in all of the shares of capital stock of Debtor , as more specified in Schedule I, whether now owned or hereafter acquired by Pledgor or in which Pledgor now or hereafter has any rights, options or warrants, together with all certificates representing such shares and all rights (but none of the obligations) under or arising out of the applicable organizational documents of such corporations, together with any additions, exchanges, replacements and substitutions therefor, dividends and distributions with respect thereto, and the proceeds thereof (collectively, the "Pledged Collateral"). 2. The pledge and security interest described herein shall continue in effect to secure all Obligations from time to time incurred or arising unless and until all Obligations have been indefeasibly paid and satisfied in full. 3. Pledgor, severally hereby represents and warrants that: (a) Except as pledged herein, Pledgor has not sold, assigned, transferred, pledged or granted any option or security interest in or otherwise hypothecated the Pledged Collateral in any manner whatsoever and the Pledged Collateral is pledged herewith free and clear of any and all liens, security interests, encumbrances, claims, pledges, restrictions, legends, and options, except for Permitted Liens, as defined in the Security Agreement. (b) Pledgor has the full power and authority to execute, deliver, and perform under this Agreement and to pledge the Pledged Collateral hereunder. (c) This Agreement constitutes the valid and binding obligation of Pledgor, enforceable in accordance with its terms, and the pledge of the Pledged Collateral referred to herein is not in violation of and shall not create any default under any agreement, undertaking or obligation of Pledgor. (d) Pledgor is pledging hereunder all of the Pledgor's interest and ownership in Debtor. (e) Contemporaneously with the execution hereof, Pledgor is delivering to Secured Party all certificates representing or evidencing the Pledged Collateral, accompanied by duly executed instruments of transfer or assignments in blank, to be held by Secured Party in accordance with the terms hereof. (f) The Secured Party is authorized to file such UCC financing statements as it may deem necessary to perfect the pledge anticipated hereby. 4. If an Event of Default (as defined in the Note) occurs, then Secured Party may, at its sole option, exercise from time to time with respect to the Pledged Collateral any and/or all rights and remedies available to it hereunder, under the Uniform Commercial Code as adopted in the State of Delaware ("UCC"), or otherwise available to it, at law or in equity, including, without limitation, the right to dispose of the Pledged Collateral at public or private sale(s) or other proceedings, and Pledgor agrees that, if permitted by law, Secured Party or its nominee may become the purchaser at any such sale(s). 5. (a) In addition to all other rights granted to Secured Party herein or otherwise available at law or in equity, Secured Party shall have the following rights, each of which may be exercised at Secured Party's sole discretion (but without any obligation to do so), at any time following the occurrence of an Event of Default under the Note, without further consent of Pledgor: (i) transfer the whole or any part of the Pledged Collateral into the name of itself or its nominee for the purpose of selling the same, or to conduct a sale of the Pledged Collateral pursuant to the UCC or pursuant to any other applicable law; (ii) vote the Pledged Collateral; (iii) notify the persons obligated on any of the Pledged Collateral to make payment to Secured Party of any amounts due or to become due thereon; and (iv) release, surrender or exchange any of the Pledged Collateral at any time, or to compromise any dispute with respect to the same. Secured Party may proceed against the Pledged Collateral, or any other collateral securing the Obligations, in any order, and against Pledgor and any other obligor, jointly and/or severally, in any order to satisfy the Obligations. Each Pledgor waives and releases any right to require Secured Party to first collect any of the Obligations secured hereby from any other collateral of Pledgor, any other Pledgor or any other party securing the Obligations under any theory of marshalling of assets, or otherwise. All rights and remedies of Secured Party are cumulative, not alternative. (b) Pledgor hereby irrevocably appoints Secured Party its attorney-in-fact, subject to the terms hereof, following the occurrence of an Event of Default under the Note, at Secured Party's option, (i) to effectuate the transfer of the Pledged Collateral on the books of the issuer thereof to the name of Secured Party or to the name of Secured Party's nominee, designee or 2 assignee; (ii) to endorse and collect checks payable to such Pledgor representing distributions or other payments on the Pledged Collateral; and (iii) to carry out the terms and provisions hereof. 6. The proceeds of any Pledged Collateral received by Secured Party at any time, whether from the sale of Pledged Collateral or otherwise, may be applied to or on account of the Obligations and in such order as Secured Party may elect. In addition, Secured Party may, in its discretion, apply any such proceeds to or on account of the payment of all costs, fees and expenses (including, without limitation, attorneys' fees) which may be incurred by Secured Party. 7. Pledgor recognizes that Secured Party may be unable to effect, or may effect only after such delay which would adversely affect the value that might be realized from the Pledged Collateral, a public sale of all or part of the Pledged Collateral by reason of certain prohibitions contained in the Securities Act of 1933, as amended ("Securities Act"), and may be compelled to resort to one or more private sales to a restricted group of purchasers who will be obliged 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 agrees that any such private sale may be at prices and on terms less favorable to Secured Party or the seller than if sold at public sales, and therefore recognizes and confirms that such private sales shall not be deemed to have been made in a commercially unreasonable manner solely because they were made privately. Pledgor agrees that Secured Party has no obligation to delay the 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. 8. In the event that any stock dividend, reclassification, readjustment or other change is made or declared in the capital structure of Debtor or any option included within the Pledged Collateral is exercised, any and all new, substituted or additional shares, or other securities, issued by reason of any such change or exercise, shall be delivered to and held by Secured Party under the terms hereof in the same manner as the Pledged Collateral originally pledged hereunder. No distribution may be paid to or retained by Pledgor unless expressly permitted in writing by the Note. 9. So long as no Event of Default has occurred under the Note, and, until Secured Party notifies Pledgor in writing of the exercise of its rights hereunder, Pledgor shall retain the sole right to vote the Pledged Collateral and exercise all rights of ownership with respect to all corporate questions for all purposes not inconsistent with the terms hereof. 10. Secured Party shall have no obligation to take any steps to preserve, protect or defend the rights of Pledgor or Secured Party in the Pledged Collateral against other parties. Secured Party shall have no obligation to sell or otherwise deal with the Pledged Collateral at any time for any reason, whether or not upon request of any Pledgor, and whether or not the value of the Pledged Collateral, in the opinion of Secured Party or Pledgor, is more or less than the aggregate amount of the Obligations secured hereby, and any such refusal or inaction by Secured Party shall not be deemed a breach of any duty which Secured Party may have under law to preserve the Pledged Collateral. Except as provided by applicable law, no duty, obligation or responsibility of any kind is intended to be delegated to or assumed by Secured Party at any time with respect to the Pledged Collateral. 3 11. To the extent Secured Party is required by law to give Pledgor prior notice of any public or private sale, or other disposition of the Pledged Collateral, Pledgor agrees that ten (10) days prior written notice to Pledgor shall be a commercially reasonable and sufficient notice of such sale or other intended disposition. 12. Pledgor shall indemnify, defend and hold harmless Secured Party from and against any and all claims, losses and liabilities resulting from any breach by Pledgor of Pledgor's, or any of their, representations and covenants under this Agreement. 13. Pledgor, in its capacity as a pledgor hereunder, hereby waives notice of (a) acceptance of this Agreement and (b) demand and default hereunder. 14. This Agreement shall remain in full force and effect and shall not be limited, impaired or otherwise affected in any way by reason of (a) any delay in making demand on Pledgor for, or delay in enforcing or failure to enforce, performance or payment of Pledgor's Obligations, (b) any failure, neglect or omission on Secured Party's part to perfect any lien upon, protect, exercise rights against, or realize on, any property of Pledgor or any other party securing the Obligations, (c) any failure to obtain, retain or preserve, or the lack of prior enforcement of, any rights against any person or persons (including Pledgor) or in any property, (d) the invalidity or unenforceability of any Obligations or rights in any collateral, (e) the existence of nonexistence of any defenses which may be available to Pledgor with respect to the Obligations, or (f) the commencement of any bankruptcy, reorganization, liquidation, dissolution or receivership proceeding or case filed by or against Pledgor. 15. Pledgor covenants and agrees that Pledgor shall not, without the prior written consent of Secured Party, sell, encumber or grant any lien, security interest or option on or with respect to any of the Pledged Collateral. 16. Pledgor hereby authorizes and instructs each issuer of the Pledged Collateral to comply with any instruction received by it from Secured Party in writing that (a) states that an Event of Default has occurred and (b) is otherwise in accordance with the terms of this Agreement, without any other or further instructions from Pledgor, and Pledgor agrees that each such issuer shall be fully protected in so complying. 17. Any failure of or delay by Secured Party to exercise any right or remedy hereunder shall not be construed as a waiver of the right to exercise the same or any other right or remedy at any other time. 18. This Agreement constitutes the entire agreement between the parties hereto regarding the subject matter hereof and may be modified only by a written instrument signed by Pledgor and Secured Party. 19. This Agreement is made in and shall be governed by and construed in accordance with the laws of the State of New York, and the provisions hereof shall be deemed severable in the event of the invalidity of any provision. Pledgor irrevocably consents to the exclusive jurisdiction of the federal courts or the state courts of the State of New York sitting in the Borough of Manhattan 4 in connection with any and all actions and proceedings whether arising hereunder or under any other agreement or undertaking and irrevocably agrees to service of process to the address of Debtor set forth herein by certified mail, return receipt requested. 20. All notices and other communications hereunder shall be in writing and shall be deemed given if delivered by hand, sent by facsimile transmission with confirmation of receipt, sent via a reputable overnight courier service with confirmation of receipt requested, or mailed by registered or certified mail (postage prepaid and return receipt requested) to the parties at the following addresses (or at such other address for a party as shall be specified by like notice), and shall be deemed given on the date on which delivered by hand or otherwise on the date of receipt as confirmed: To the Pledgor: Global Matrechs, Inc. 90 Grove Street, Suite 201 Ridgefield, Connecticut 06877 Attn: Michael Sheppard Facsimile: (203) 431-8304 With a copy to: Foley Hoag LLP 155 Seaport Boulevard Boston, Massachusetts 02210 Attn: David A Broadwin, Esq. Facsimile: (617) 832-7000 To the Secured Party: Mark Allen 91 French Avenue Braintree, MA 02184 PH: 781.848.1174 FX: 781.848.1175 With a copy to: Samuel Krieger Krieger & Prager LLP 39 Broadway New York, NY 10006 Facsimile: (212 ) 363-2999 21. This Agreement shall be binding upon and inure to the benefit of the parties hereto, and their respective successors and assigns. 5 22. PLEDGOR HEREBY WAIVES THE RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT, PROCEEDING, OR COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE NOTE, THE OBLIGATIONS OR THE PLEDGED COLLATERAL. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 6 Dated as of the date and year first set forth above. GLOBAL MATRECHS, INC. By: /s/ Michael Sheppard ------------------------ Name: Michael Sheppard Title: President Acknowledged and Accepted: /s/ Mark J. Allen - ----------------------- Mark Allen SCHEDULE I Security Number of Shares Certificate Number True To Form, Limited 100 1 Common Stock 7