EXHIBIT 10.35
-------------
PLEDGE AGREEMENT
----------------
This Pledge Agreement dated as of May 15, 2000, is made by ENTRADE
INC., a Pennsylvania corporation (the "Pledgor"), in favor of XXXXXX
CAPITAL MANAGEMENT, INC., A DIVISION OF XXXXX, LEWITTES & XXXXXXX (together
with its successors and assigns, the "Pledgee"), for the benefit of The
Xxxxxx Family Trust, The Xxxx Family Trust, First Fruit, Inc., Genesee
Mutual Investments, LLC, For His Adopted Children, Inc., Xxxxxx Xxxxx,
Xxxxx Xxxxxxxxxxx, and Xxxxx X. Xxxxxx (collectively, the "Payees").
WITNESSETH:
----------
WHEREAS, the Pledgor is the maker of each of those certain Secured
Promissory Notes dated of even date herewith (as the same may be amended or
modified from time to time, collectively, the "Notes"), payable to the
order of certain Payees identified therein, pursuant to which the Payees
are making certain term loans to the Pledgor (collectively, the "Loans");
and
WHEREAS, in connection with the making of the Loans, and as a
condition precedent thereto, the Payees are requiring that Pledgor shall
have executed and delivered this Pledge Agreement and made the pledge
provided for herein.
NOW, THEREFORE, in consideration of the premises hereinabove and the
covenants hereinafter contained, and to induce the Payees to provide the
Loans pursuant to the Notes, and for other good and valuable consideration,
the receipt, adequacy and sufficiency of which are hereby acknowledged, it
is hereby agreed as follows:
ARTICLE I: DEFINITIONS
SECTION 1.1 AFFILIATE means, as to any Person, any other Person
that, directly or indirectly, controls, is controlled by or is under common
control with such Person or is a director or officer of such Person. For
purposes of this definition, the term "control" (including the terms
"controlling," "controlled by" and "under common control with") of a Person
means the possession, direct or indirect, of the power to vote 50% or more
of the securities having ordinary voting power for the election of
directors of such Person or to direct or cause the direction of the
management and policies of such Person, whether through the ownership of
voting securities, by contract or otherwise.
SECTION 1.2 CAPITAL EXPENDITURES means, for any Person for any
period without duplication, the sum of all expenditures made, directly or
indirectly, by such Person or any of its Subsidiaries during such period
for equipment, fixed assets, real property or improvements, or for
replacements or substitutions therefor or additions thereto, that have been
or should be, in accordance with GAAP, reflected as additions to property,
plant or equipment on a consolidated balance sheet of such Person.
SECTION 1.3 CURRENT ASSETS OF ANY PERSON means all assets of such
Person that would, in accordance with GAAP, be classified as current assets
of such Person, after deducting adequate reserves in each case in which a
reserve is proper in accordance with GAAP.
SECTION 1.4 CURRENT LIABILITIES OF ANY PERSON means all items that
in accordance with GAAP would be classified as current liabilities of such
Person, excluding, however, the current portion of long-term debt and
capitalized leases of such Person.
SECTION 1.5 DEBT OF ANY PERSON means, without duplication, (a) all
indebtedness of such Person for borrowed money, (b) all obligations of such
Person for the deferred purchase price of property or services (excluding
normal trade payables not overdue that are incurred in the ordinary course
of such Person's business), (c) all obligations of such Person evidenced by
notes, bonds, debentures or other similar instruments, (d) all indebtedness
created or arising under any conditional sale or other title retention
agreement with respect to property acquired by such Person (even though the
rights and remedies of the seller or lender under such agreement in the
event of default are limited to repossession or sale of such property), (e)
all obligations of such Person as lessee under leases that have been or
should be, in accordance with GAAP, recorded as capital leases
("Capitalized Leases"), (f) all obligations, contingent or otherwise, of
such Person under acceptance, letter of credit or similar facilities, (g)
all obligations of such Person to purchase, redeem, retire, defease or
otherwise acquire for value any capital stock of such Person or any
warrants, rights or options to acquire such capital stock, valued, in the
case of redeemable preferred stock, at the greater of its voluntary or
involuntary liquidation preference plus accrued and unpaid dividends, (h)
all obligations of such Person in respect of hedge or swap agreements
(provided that the obligations under such agreements shall be recorded on a
net basis and marked to market on a current basis), (i) all Debt referred
to in any of clauses (a) through (h) above that is guaranteed directly or
indirectly by such Person, or in effect guaranteed directly or indirectly
by such Person through an agreement (A) to pay or purchase such Debt or to
advance or supply funds for the payment or purchase of such Debt, (B) to
purchase, sell or lease (as lessee or lessor) property, or to purchase or
sell services, primarily for the purpose of enabling the debtor to make
payment of such Debt or to assure the holder of such Debt against loss, (C)
to advance or supply funds to maintain working capital or equity capital of
another Person or otherwise to maintain the net worth or solvency of such
Person (including any agreement in the nature of a support arrangement to
pay for property or services irrespective of whether such property is
received or such services are rendered) or (D) otherwise to assure a
creditor against loss, and (j) all Debt referred to in any of clauses (a)
through (h) above that is secured by (or for which the holder of such Debt
has an existing right, contingent or otherwise, to be secured by) any Lien
on property (including accounts and contract rights) owned by such Person,
even though such Person has not assumed or become liable for the payment of
such Debt.
SECTION 1.6 EBITDA means, for any Person for any fiscal period, net
income (or net loss) plus the sum of (a) interest expense, (b) income-tax
expense, (c) depreciation expense, (d) amortization expense, (e)
extraordinary losses included in net income, (f) losses on the sale of
assets other than inventory sold in the ordinary course of business and (g)
noncash charges, less the sum of (a) extraordinary gains included in net
income, (b) gains on the sale of assets other than inventory sold in the
ordinary course of business and (c) noncash gains, in each case determined
in accordance with GAAP for such period.
SECTION 1.7 GAAP means generally accepted accounting principles in
the United States of America as in effect as of the date of, and used in,
the preparation of the financial statements of ALG (as defined herein) and
PLS (as defined herein) for the period ending March 31, 2000 attached
hereto as Exhibit A.
SECTION 1.8 GOVERNMENTAL RULE means any treaty, law, rule,
regulation, ordinance, order, code, interpretation, judgment, writ,
injunction, decree, determination, award, directive, guideline, request,
policy or similar form of decision of any governmental Person or
arbitrator.
SECTION 1.9 LIABILITIES. References in this Pledge Agreement to
"Liabilities" shall mean any and all indebtedness and liabilities or
obligations of the Pledgor to Payees, due or to become due, now existing or
hereafter arising, pursuant to and evidenced by or arising out of the
Notes, that certain Note and Warrant Purchase Agreement of even date
herewith (the "Note and Warrant Purchase Agreement"), that certain
Creditors Agreement of even date herewith (the "Creditors Agreement"), and
this Pledge Agreement (whether for principal, interest, costs, expenses, or
fees).
SECTION 1.10 LIEN means any lien, security interest or other charge
or encumbrance of any kind, or any other type of preferential arrangement,
including the lien or retained security title of a conditional vendor and
any easement, right of way or other encumbrance on title to real property.
SECTION 1.11 LOAN DOCUMENTS. References in this Pledge Agreement to
"Loan Documents" shall mean the Notes, the Note and Warrant Purchase
Agreement, the Creditors Agreement, this Pledge Agreement and each and
every instrument, document, or agreement delivered to Pledgee or Payees by
the Pledgor in connection with the Loans and the Notes, as any of the same
may be amended or modified from time to time.
SECTION 1.12 MATERIAL CONTRACT means, as to ALG or PLS, each
contract to which such Person is a party that is either (a) a contract for
the purchase or sale of goods or services (i) that, if lost, would not be
replaceable promptly by commercially reasonable substitutes and (ii) the
loss of which, if not so replaced, could reasonably be expected to have a
material adverse effect on the business, condition (financial or
otherwise), operations, performance, properties or prospects of ALG and PLS
or any of their subsidiaries, or (b) any other contract (i) involving
aggregate consideration payable to or by such Person of $500,000 or more or
(ii) the loss of which could reasonably be expected to have a material
adverse effect on the business, condition (financial or otherwise),
operations, performance, properties or prospects of the such Person.
SECTION 1.13 NET FIXED ASSETS means all assets of such Person that
would, in accordance with GAAP, be classified as fixed assets of such
Person, after deducting depreciation and amortization and net of any
reductions proper in accordance with GAAP.
SECTION 1.14 NET WORTH means, for any Person at any time of
determination, the excess of total assets, including goodwill, at such time
over total liabilities at such time, in each case as determined in
accordance with GAAP.
SECTION 1.15 OBLIGATION means, with respect to any Person, any
obligation of such Person of any kind, including any obligation to make any
payment for any reason, whether or not such obligation is reduced to
judgment, liquidated, unliquidated, fixed, contingent, matured, disputed,
undisputed, legal, equitable, secured or unsecured, and whether or not such
obligation is discharged, stayed or otherwise affected by any bankruptcy,
insolvency or other similar proceeding.
SECTION 1.16 PERMITTED INVESTMENTS means investments having a
maturity of not greater than twelve (12) months from the date of
acquisition thereof in (a) obligations issued or unconditionally guaranteed
by the United States or any agency thereof, (b) certificates of deposit of
any commercial bank organized under the laws of any country that is a
member of the Organization for Economic Cooperation and Development and
having combined capital and surplus of at least $1 billion, (c) commercial
paper with a rating of at least "Prime" by Xxxxx'x Investors Services, Inc.
or "Al" by Standard & Poor's Ratings Group and (d) other investments agreed
to from time to time between ALG and PLS and the Pledgee Representative.
SECTION 1.17 PERMITTED LIENS means such of the following as to which
no enforcement, collection, execution, levy or foreclosure proceeding has
been commenced: (a) Liens for taxes, assessments and governmental charges
or levies to the extent not required to be paid under Section 4.1(b); (b)
Liens imposed by law, such as materialmen's, mechanics', carriers',
workmen's and repairmen's Liens and other similar Liens arising in the
ordinary course of business securing obligations that are not overdue or
that are being contested in good faith and by proper proceedings and as to
which appropriate reserves are being maintained; (c) pledges or deposits to
secure obligations under workers' compensation laws or similar legislation
or to secure public or statutory obligations; (d) easements, rights of way
and other encumbrances on title to real property that do not render title
to the property encumbered thereby unmarketable or materially and adversely
affect the use of such property for its present purposes; (e) deposits to
secure the performance of bids, trade contracts (other than for borrowed
money), leases, statutory obligations, surety and appeal bonds, performance
bonds and other obligations of like nature incurred in the ordinary course
of business; and (f) attachment, judgment or other similar Liens arising in
connection with court or arbitration proceedings, provided that the same
have been discharged, or that execution or enforcement thereof has been
stayed pending appeal.
SECTION 1.18 PERSON means an individual, a partnership, a
corporation (including a business trust), a joint stock company, a
limited-liability company, a trust, an unincorporated association, a joint
venture or any other entity, including any governmental agency or
instrumentality.
SECTION 1.19 PLEDGE AGREEMENT. References to this "Pledge
Agreement" shall mean this Pledge Agreement, including all amendments,
modifications and supplements, and any exhibits or schedules to any of the
foregoing, and shall refer to the Pledge Agreement as the same may be in
effect at the time such reference becomes operative.
SECTION 1.20 PLEDGED COLLATERAL. References in this Pledge
Agreement to "Pledged Collateral" shall mean all of the issued and
outstanding capital stock of Asset Liquidation Group, Inc., a Nevada
corporation ("ALG"), and Public Liquidation Systems, Inc., a Nevada
corporation ("PLS"), (consisting of 2,500 shares and 100 shares,
respectively) which are owned by Pledgor, together with any and all
dividends and distributions on, and proceeds of, of the foregoing, together
with all certificates, rights or other distributions issued as an addition
to, in exchange for, or on account of, any such securities, in each case
whether now or hereafter owned or acquired by the Pledgor.
SECTION 1.21 REAL PROPERTY means all of the right, title and
interest of any Person in or to any land, improvement or fixture or in, to
or under any lease, license or other agreement granting a right to enter,
occupy or use any land, improvement or fixture (to the extent interests
therein arise under the real property law of the jurisdiction where
located).
SECTION 1.22 SUBSIDIARY OF ANY PERSON means any corporation,
partnership, joint venture, trust or estate of which (or in which) more
than 50% of (a) the outstanding capital stock having voting power to elect
a majority of the board of directors of such corporation (irrespective of
whether at the time capital stock of any other class or classes of such
corporation would or might have voting power upon the occurrence of any
contingency), (b)_the interest in the capital or profits of such
partnership or joint venture, or (c) the beneficial interest of such trust
or estate, is at the time directly or indirectly owned by such Person, by
such Person and one or more of its other Subsidiaries or by one or more of
such Person's other Subsidiaries.
SECTION 1.23 VOTING STOCK means capital stock issued by a
corporation, or equivalent interests in any other Person, the holders of
which are ordinarily, in the absence of contingencies, entitled to vote for
the election of directors (or persons performing similar functions) of such
Person, even if the right so to vote has been suspended by the happening of
such a contingency.
SECTION 1.24 ERISA means the Employee Retirement Income Security Act
of 1974 (or any successor legislation thereto), as amended from time to
time, and any regulations promulgated thereunder.
SECTION 1.25 ERISA AFFILIATE means, with respect to ALG (as defined
herein) and PLS (as defined herein), any trade or business (whether or not
incorporated) under common control with ALG or PLS and which, together with
ALG or PLS, are treated as a single employer within the meaning of Sections
414(b), (c), (m) or (o) of the IRC.
SECTION 1.26 ERISA EVENT means, with respect to ALG and PLS or any
ERISA Affiliate, (i) a reportable event with respect to a Title IV Plan or
a Multiemployer Plan; (ii) the withdrawal of ALG or PLS or any ERISA
Affiliate from a Title IV Plan subject to Section 4063 of ERISA during a
plan year in which it was a substantial employer, as defined in Section
4001(a)(2) or a cessation of operations which is treated as such a
withdrawal under Section 4062(e) of ERISA; (iii) the complete or partial
withdrawal of ALG or PLS or any ERISA Affiliate from any Multiemployer Plan
or notification that a Multiemployer Plan is in reorganization; (iv) the
filing of a notice of intent to terminate a Title IV Plan or the treatment
of a plan amendment as a termination under Section 4041 or Section 4041A of
ERISA; (v) the institution of proceedings to terminate a Title IV Plan or
Multiemployer Plan by the PBGC; (vi) the failure to make required
contributions to a qualified plan; or (vii) any other event or condition
which might reasonably be expected to constitute grounds under Section 4042
of ERISA for the termination of, or the appointment of a trustee to
administer, any Title IV Plan or Multiemployer Plan or the imposition of
any liability under Title IV of ERISA, other than PBGC premiums due but not
delinquent under Section 4007 of ERISA.
SECTION 1.27 PBGC means the Pension Benefit Guaranty Corporation or
any successor thereto.
SECTION 1.28 LOAN DOCUMENT TERMS. Capitalized terms used herein
shall have the meanings assigned to them in the Notes, unless the context
otherwise requires or unless otherwise defined herein.
SECTION 1.29 EVENT OF DEFAULT. References in this Pledge Agreement
to an "Event of Default" shall mean not only the Pledgor's failure to be in
compliance with any provision requiring payment of monies or in compliance
with any material respects with all of the terms, provisions and agreements
set forth herein on the Pledgor's part to be observed or performed in the
Loan Documents, but also any "event of default" occurring as provided in
the Notes.
ARTICLE II: THE PLEDGE
SECTION 2.1 PLEDGE OF PLEDGED COLLATERAL. As security for the
prompt and complete satisfaction of the Liabilities, the Pledgor hereby
pledges and conveys and transfers as collateral to the Pledgee for the
benefit of the Payees the Pledged Collateral and hereby grants the Pledgee,
as agent for the benefit of the Payees, a lien on the Pledged Collateral
and a security interest therein.
SECTION 2.2 REMEDY UPON EVENT OF DEFAULT. Upon delivery of written
notice to the Pledgee from the Secured Creditors' Representative (as
defined in the Note and Warrant Purchase Agreement) of the occurrence of
any Event of Default, the Pledgee, as agent for the benefit of the Payees,
may, without demand of performance or other demand, advertisement, or
notice of any kind (except the notice specified below of time and place of
public or private sale or otherwise specifically provided in any of the
Loan Documents) to or upon the Pledgor or any other person or entity,
forthwith realize upon the Pledged Collateral or any part thereof, and may
forthwith, or agree to, sell, assign or otherwise dispose of and deliver
the Pledged Collateral or any part thereof or interest therein, in one or
more public or private sale or sales, at any exchange, broker's board or at
any of the Pledgee's offices or elsewhere, at such prices and on such terms
as it may deem best in its sole discretion, for cash or on credit or for
other property, or for future delivery without assumption of any credit
risk, with the right to the Pledgee or Payees or any purchaser to purchase
upon any such sale the whole or any part of the Pledged Collateral free of
any right or equity of redemption in the Pledgor, which right or equity is
hereby expressly waived and released to the fullest extent permitted by
applicable law. The Pledgee shall not be liable for failure to collect or
realize upon any or all of the Pledged Collateral or for any delay in so
doing nor shall the Pledgee be under any obligation to take any action
whatsoever with regard thereto. In addition, upon any Event of Default,
the Pledgee shall be permitted to take any and all such other action and
actions as the Pledgee in its sole discretion may determine as necessary,
advisable, incidental or conducive to any of the matters, rights or powers
mentioned in the foregoing provisions of this Section and which the Pledgee
may or can do lawfully and to use the name of the Pledgor for the purposes
aforesaid and in any proceedings arising therefrom. The Pledgor agrees
that, to the extent notice of sale shall be required by applicable law, at
least ten (10) calendar days= notice to the Pledgor of the time and place
of any such sale shall constitute reasonable notification. Any such public
sale shall be held at such time or times within ordinary business hours and
at such place or places as the Pledgee may fix and shall state in the
notice or publication (if any) of such sale. At any such sale, the Pledged
Collateral, or portion thereof to be sold, may be sold in one lot as an
entirety or in separate portions, as the Pledgee may (in its sole and
absolute discretion) determine. The Pledgee shall not be obligated to make
any sale of the Pledged Collateral if it shall determine not to do so,
regardless of the fact that notice of sale of the Pledged Collateral may
have been given. The Pledgee may, without notice or publication, adjourn
any public or private sale or cause the same to be adjourned from time to
time by announcement at the time and place fixed for sale, and such sale
may, without further notice, be made at the time and place to which the
same was so adjourned. In case sale of all or any part of the Pledged
Collateral is made on credit or for future delivery, the Pledged Collateral
so sold may be retained by the Pledgee until the sale price is paid by the
purchaser or purchasers thereof, but the Pledgee shall not incur any
liability in case any such purchaser or purchasers thereof, but the Pledgee
shall not incur any liability in case any such purchaser or purchasers
shall fail to take up and pay for the Pledged Collateral so sold and, in
case of any such failure, such Pledged Collateral may be sold again upon
like notice. At any sale made pursuant to this Pledge Agreement, the
Pledgee or any Pledgee may bid for or purchase, free (to the extent
permitted by law) from any right of redemption, stay and/or appraisal which
the Pledgor now has or may at any time in the future have under any rule of
law or statute now existing or hereafter enacted (and any such rights are
hereby waived and released to the extent permitted by law), any part of or
all the Pledged Collateral offered for sale and may make payment on account
thereof by using any claim then due and payable to the Pledgee by the
Pledgor, as a credit against the purchase price, and the Pledgee may, upon
compliance with the terms of sale, hold, retain and dispose of such
property without further accountability to the Pledgor therefor. For
purposes hereof, a written agreement to purchase all or any part of the
Pledged Collateral shall be treated as a sale thereof; the Pledgee shall be
free to carry out such sale pursuant to such agreement and the Pledgor
shall not be entitled to the return of any Pledged Collateral subject
thereto, notwithstanding the fact that after the Pledgee shall have entered
into such an agreement all Events of Default may have been remedied or the
Liabilities may have been paid in full as herein provided. As an
alternative to exercising the power of sale herein conferred upon it, the
Pledgee may proceed by suit or suits at law or in equity to foreclose this
Pledge Agreement and sell the Pledged Collateral or any portion thereof,
pursuant to judgment or decree of a court or courts having competent
jurisdiction. The Pledgor understands that compliance with federal
securities law (including the Securities Act of 1933) may very strictly
limit the course of conduct of the Pledgee if the Pledgee were to attempt
to dispose of all or any part of the Pledge Collateral and may also limit
the extent to which or the manner in which any subsequent transferee of any
Pledged Collateral may dispose of the same. Similarly, there may be other
legal restrictions or limitations affecting the Pledgee in any attempt to
dispose of all or any part of the Pledge Collateral under the applicable
Blue Sky or other state securities laws or similar laws analogous in
purpose or effect. As a consequence, the Pledgee may be compelled to
resort to one or more private sales to a restricted group of purchasers who
will be obligated to agree, among other things, to acquire the Pledged
Collateral for their own account for investment and not with a view to
distribution or resale thereof. The Pledgor acknowledges that such sales
may be a prices and on terms less favorable than on a public sale. The
Pledgee shall not incur any liability to the Pledgor as a result of the
sale of any part of the Pledge Collateral, at any private sale conducted
pursuant hereto or in any other manner which is commercially reasonable
(within the meaning of the UCC). Without limiting the generality of the
foregoing, the provisions of this paragraph would apply if, for example,
the Pledgee were to place all or any part of the Pledged Collateral for
private placement by an investment banking firm, if the Pledgee were to
purchase all or any part of the Pledged Collateral for its own account, or
if the Pledgee placed all or any part of the Pledged Collateral privately
with a purchaser or purchasers.
SECTION 2.3 PROCEEDS OF SALE. The proceeds of any such disposition
or other action by the Pledgee shall be applied as follows: (a) First, to
the costs and expenses incurred in connection herewith or to the care or
safekeeping of any of the Pledged Collateral or in any way relating to the
rights of the Pledgee hereunder, including, without limitation, reasonable
attorneys= fees; (b) Second, to the satisfaction of the Liabilities; (c)
Third, to the payment of any other amounts required by applicable law; and
(d) Fourth, to the Pledgor to the extent of any surplus proceeds.
SECTION 2.4 POWER OF ATTORNEY. The Pledgor hereby absolutely and
irrevocably constitutes and appoints the Pledgee, for the benefit of the
Payees, as the Pledgor's true and lawful agent and attorney-in-fact, with
full power of substitution, in the name of the Pledgor upon the occurrence
and continuance of any Event of Default: (a) to execute, perform and take
all such assurances, acts and things which the Pledgor is required to do
but has failed to do expressly under the terms, covenants and provisions
contained in this Pledge Agreement; (b) to take any and all such action as
the Pledgee or any of its agents, nominees or attorneys may, in good faith,
reasonably determine as necessary or advisable for the purpose of
maintaining, preserving or protecting the security constituted by this
Pledge Agreement or any of the rights, remedies, powers or privileges of
the Pledgee under this Pledge Agreement; and (c) generally, in the name of
the Pledgor, exercise all or any of the powers, authorities, and
discretions conferred on or reserved to the Pledgee by or pursuant to this
Pledge Agreement, and (without prejudice to the generality of any of the
foregoing) to deliver or otherwise perfect any deed, assurance, agreement,
instrument or act as the Pledgee may deem proper in or for the purpose of
exercising any of such powers, authorities or discretions. The Pledgor
hereby ratifies and confirms, and hereby agrees to ratify and confirm,
whatever lawful acts the Pledgee or any of the Pledgee's agents or
attorneys shall do in the exercise of the power of attorney granted to the
Pledgee pursuant to this Section, which power of attorney, being given for
security and coupled with an interest, is irrevocable.
SECTION 2.5 DIVIDENDS ON THE PLEDGED COLLATERAL. Unless and until
an Event of Default occurs and is continuing, any dividends or
distributions permitted hereunder payable on account of the Pledged
Collateral shall be paid to the Pledgor and all voting rights with respect
to the Pledged Collateral shall be retained by Pledgor. Upon the
occurrence and during the continuation of any Event of Default, the
provisions set forth below shall apply.
(i) All rights of the Pledgor to exercise the voting
and other consensual rights that it would otherwise be entitled to exercise
and to receive the dividends and other distributions that it would
otherwise be authorized to receive and retain shall cease, and all such
rights shall thereupon become vested in the Pledgee, which shall thereupon
have the sole right to exercise such voting and other consensual rights and
to receive and hold as Pledge Collateral such dividends and other
distributions; and
(ii) All dividends and other distributions that are
received by the Pledgor shall be received in trust for the benefit of the
Pledgee, shall be segregated from other funds of the Pledgor and shall be
forthwith paid over to the Pledgee as Pledged Collateral in the same form
as so received (with any necessary endorsement).
ARTICLE III: REPRESENTATIONS AND WARRANTIES
SECTION 3.1 INDUCEMENT. To induce the Payees to make the Loans, the
Pledgor hereby represents and warrants to the Pledgee, for the benefit of
the Payees (which representations and warranties shall survive the
execution and delivery of this Pledge Agreement) that:
SECTION 3.2 CAPACITY. Pledgor has capacity to enter into and
perform Pledgor's obligations hereunder.
SECTION 3.3 BINDING OBLIGATION. All acts, conditions and things
required to be done and performed and to have happened precedent to the
creation and issuance of this Pledge Agreement and to constitute it and the
pledge hereunder the valid and legally binding obligation of the Pledgor
enforceable in accordance with the terms hereof, including, without
limitation, if applicable, the delivery of stock powers and/or
endorsements, except as such enforceability may be limited by bankruptcy,
insolvency reorganization, moratorium and other laws affecting creditors=
rights generally and by general principles of equity (whether enforcement
is sought in equity or at law), have been done and performed.
SECTION 3.4 WARRANTIES CONCERNING PLEDGED COLLATERAL.
(a) Pledgor is the legal and beneficial owner of all of the Pledged
Collateral;
(b) All of the Pledged Collateral is owned by the Pledgor free of
any pledge, mortgage, hypothecation, lien, charge, encumbrance or security
interest in such Pledged Collateral or the proceeds thereof, except for
liens in favor of the Pledgee for the benefit of the Payees hereunder;
(c) Upon the Pledgor's execution and delivery of this Pledge
Agreement and the physical delivery of the Pledged Collateral to the
Pledgee, this Pledge Agreement shall create a valid lien upon and perfected
security interest in the Pledged Collateral and the proceeds thereof,
subject to no prior security interest, lien, charge or encumbrance, or
agreement purporting to grant to any third party a prior security interest
in the Pledged Collateral; and
(d) No authorization, approval or other action by, or notice to or
filing with, any governmental authority or regulatory body is required (i)
for the pledge by the Pledgor of the Pledged Collateral pursuant to this
Agreement or for the execution, delivery or performance of this Pledge
Agreement by the Pledgor or (ii) for the perfection of or exercise by the
Pledgee of the voting or other rights provided for in this Pledge Agreement
or the remedies in respect of the Pledged Collateral pursuant to this
Pledge Agreement (except as may be required in connection with any
disposition of the Pledged Collateral by laws affecting the offering and
sale of securities generally), and Pledgee acknowledges that the assets of
ALG and PLS are subject to a lien in favor of Imperial Bank, a California
banking corporation.
ARTICLE IV: COVENANTS
SECTION 4.1 AFFIRMATIVE COVENANTS. The Company will cause each of
ALG and PLS to observe the affirmative covenants set forth below, except as
may be waived in writing (with no such waiver to be deemed a continuing
waiver) by the Secured Creditors' Representative (as defined in the
Creditors' Agreement):
(a) COMPLIANCE WITH LAWS, ETC. ALG and PLS will comply with, and
maintain, use and operate all their assets and operate their business in
accordance with, in all material respects, all applicable Governmental
Rules.
(b) PAYMENT OF TAXES, ETC. ALG and PLS will pay and discharge
before the same become delinquent (i) all taxes, assessments and
governmental charges or levies imposed upon it or upon its property and
(ii) all lawful claims that, if unpaid, might by law become a Lien upon its
property; provided, however, that neither such Person shall be required to
pay or discharge any such tax, assessment, charge, levy or claim that is
being contested in good faith and by proper proceedings and as to which
appropriate reserves are being maintained, unless and until any Lien
resulting therefrom attaches to its property and becomes enforceable.
(c) MAINTENANCE OF INSURANCE. ALG and PLS will maintain insurance
with responsible and reputable insurance companies or associations in such
amounts and covering such risks as is usually carried by companies engaged
in similar businesses and owning similar properties in the same general
areas in which such entities operates; and
(d) PRESERVATION OF CORPORATE EXISTENCE, ETC. ALG and PLS will:
(i) preserve and maintain its existence, legal structure and legal name and
(ii) preserve and maintain its rights (charter and statutory) and all
material permits, licenses, approvals, privileges, franchises, trade names,
patents and other intellectual property.
(e) VISITATION RIGHTS. At any reasonable time and from time to
time, upon reasonable prior notice, ALG and PLS will permit the Pledgee
Representatives or any agents or representatives thereof, to examine and
make copies of and abstracts from the records and books of account of, and
visit the properties of, ALG and PLS, and to discuss the affairs, finances
and accounts of ALG and PLS with any of their officers or directors and
with their independent certified public accountants.
(f) KEEPING OF BOOKS. ALG and PLS will maintain and preserve all
of its properties that are used or useful in the conduct of its business in
good working order and condition, ordinary wear and tear excepted.
(g) PERFORMANCE OF MATERIAL CONTRACTS, ETC. ALG and PLS will
perform and observe, in all material respects, all of the terms and
provisions of each Material Contract to be performed or observed by it,
maintain each such Material Contract in full force and effect, enforce each
such Material Contract in accordance with its terms and, upon the
reasonable request of the Pledgee Representative, make to each other party
to each such Material Contract such demands and requests for information
and reports or for action as ALG or PLS is entitled to make under such
Material Contract.
(h) TRANSACTIONS WITH AFFILIATES. ALG and PLS will conduct all
transactions otherwise permitted hereunder with any of its Affiliates on
terms that are fair and reasonable and no less favorable to ALG and PLS
than it would obtain in a comparable arms'-length transaction with a Person
not an Affiliate. Except as provided in this Section 4.1(h), ALG and PLS
shall not pay, or agree to pay, any amount to the Company or any Affiliates
or their respective officers or directors (except for compensation of
officers of ALG and PLS in amounts currently budgeted for the year ending
December 31, 2000, and at the same rate for any succeeding period),
directly or indirectly, whether for services rendered, license fees,
corporate overhead (including corporate tax liability except to the extent
actually paid), or otherwise, including without limitation, to any vendors
for services delivered to any Affiliate. Notwithstanding the foregoing,
unless and until (i) an Event of Default occurs and is continuing or (ii)
an event of default which could reasonably be expected to have a materially
adverse effect upon the Pledgor occurs under any other agreement, ALG and
PLS may, on a quarterly basis, collectively pay to the Company and/or any
Affiliate an aggregate of fifty percent (50%) of the combined EBITDA of ALG
and PLS for the prior quarter, up to a maximum of $500,000 during any
quarter, based on and in consideration for supported good faith invoices
from the Company for services rendered by or through the Company to ALG
and PLS for web development, corporate overhead and intellectual property
licensing agreements, subject to the requirement that no payments shall be
made hereunder unless, after making such payment, ALG and PLS have least as
much cash remaining as the amount of such payment.
SECTION 4.2 FINANCIAL COVENANTS. The Company will cause each of ALG
and PLS to observe the financial covenants set forth below, except as may
be waived in writing (with no such waiver to be deemed a continuing waiver)
by the Secured Creditors' Representative:
(a) EBITDA. ALG and PLS will achieve cumulative combined EBITDA,
calculated from April 1, 2000, through the end of each quarter commencing
with the quarter ending June 30, 2000, of the amount set forth opposite the
quarter end on Exhibit B attached hereto and made a part hereof.
(b) MAINTENANCE OF NET WORTH. ALG and PLS will maintain combined
Net Worth, determined as of the end of each quarter commencing with the
quarter ending June 30, 2000, of the amount set forth on Exhibit B.
(c) MAINTENANCE OF RATIO. ALG and PLS will maintain a ratio, on a
combined basis, determined as of the end of each quarter commencing with
the quarter ending June 30, 2000, of (i) Current Assets, plus Net Fixed
Assets to (ii) Current Liabilities, plus long-term Debt, of not less than
the amount shown on Exhibit B.
SECTION 4.3 REPORTING REQUIREMENTS. The Company will cause each of
ALG and PLS to furnish to the Secured Creditors' Representative:
(a) as soon as possible and in any event within 2 days after
ALG or PLS becomes aware of the occurrence of any breach of any covenant
under this Article 4, a statement of the chief financial officer of said
Person setting forth the details of such breach and any action that said
Person proposes to take with respect thereto;
(b) as soon as available and in any event within 30 days
after the end of each of the first three quarters of each fiscal year of
ALG and PLS , an unaudited balance sheet of such Person as of the end of
such quarter and unaudited statements of income, retained earnings and cash
flows of such Person, and a combined balance sheet and statement of income,
retained earnings and cash flows for ALG and PLS, for the period commencing
at the end of the preceding fiscal year and ending with the end of such
quarter, setting forth in each case in comparative form the corresponding
figures for the corresponding period of the preceding fiscal year, all in
reasonable detail and duly certified (subject to normal year-end audit
adjustments) by the chief financial officer of such Person as having been
prepared in accordance with GAAP, together with a certificate of said
officer stating that no breach of any of the covenants set forth in this
Article 4 has occurred and is continuing or, if such a breach has occurred
and is continuing, stating the nature thereof and the action that the such
Person proposes to take with respect thereto;
(c) as soon as available and in any event within 90 days
after the end of each fiscal year of such Person (with unaudited internal
financial statements delivered within 45 days), the balance sheet of such
Person as of the end of such fiscal year and the statements of income,
retained earnings and cash flows of such Person for such fiscal year, in
each case certified without qualification or otherwise in a manner
reasonably acceptable to the Pledgee Representative by
PricewaterhouseCoopers LLP or other independent public accountants of
recognized standing acceptable to the Pledgee Representative, together a
combined balance sheet and statement of income, retained earnings and cash
flow of ALG and PLS reviewed by PricewaterhouseCoopers LLP or other
independent public accountants of recognized standing acceptable to the
Pledgee Representative, and (i) a certificate of such accounting firm
stating that in the course of the regular review of the business of ALG and
PLS, which review was conducted by such accounting firm in accordance with
generally accepted auditing standards, such accounting firm has obtained no
knowledge that a breach of any of the covenants of this Section 4.2 has
occurred and is continuing or, if in the opinion of such accounting firm
such a breach has occurred and is continuing, a statement as to the nature
thereof, (ii) a certificate of the chief financial officer of ALG and PLS
stating that no a breach of any of the covenants of this Article 4 has
occurred and is continuing has occurred and is continuing or, if such a
breach has occurred and is continuing, stating the nature thereof and the
action that ALG or PLS proposes to take with respect thereto, (iii) a
schedule in reasonable detail of the computations used by such officer in
determining, as of the end of such fiscal year, compliance with the
covenants contained in Section 4.2 and (iv) copies of any letters of any
accounting firm received by management in connection with such accounting
firm's findings during its audit of the Company or its review of the
financial records of ALG and PLS during, or in respect of, such fiscal
year;
(d) at the time of delivery of the financial information
described in Section 4.3(c), a statement of the chief financial officer of
ALG and PLS describing each sale, lease, transfer or other disposition of
any asset(s) of the ALG and PLS during the preceding fiscal year (other
than any such sale, lease, transfer or other disposition for total
consideration of less than $75,000), in form and detail reasonably
satisfactory to the Pledgee Representative;
(e) in the event of any change in GAAP from March 31, 2000,
and upon delivery of any financial statement required to be furnished under
Section 4.3(b) or (c), a statement of reconciliation conforming any
information contained in such financial statement with GAAP as so changed.;
(f) promptly and in any event within 5 days after ALG or PLS
or any ERISA Affiliate knows or has reason to know that any ERISA Event has
occurred with respect to any Plan, a statement of the chief financial
officer of ALG or PLS describing such ERISA Event and the action, if any,
that ALG or PLS or such ERISA Affiliate proposes to take with respect
thereto;
(g) promptly and in any event within 2 days after receipt
thereof by ALG or PLS or any ERISA Affiliate, copies of each notice from
the PBGC stating its intention to terminate any Plan or to have a trustee
appointed to administer any Plan;
(h) promptly upon receipt thereof by ALG or PLS or any ERISA
Affiliate , a copy of the annual actuarial valuation report for each Plan
the funded current liability percentage (as defined in Section 302(d)(8) of
ERISA) of which is less than 90% or the unfunded current liability of which
exceeds $50,000;
(i) promptly and in any event within 5 days after receipt
thereof by ALG or PLS or any ERISA Affiliate from the sponsor of a
Multiemployer Plan, a copy of each notice received by ALG or PLS or any
ERISA Affiliate concerning (i) the imposition of Withdrawal Liability by
any Multiemployer Plan,(ii) the reorganization or termination, within the
meaning of Title IV of ERISA, of any Multiemployer Plan or (iii) the amount
of liability incurred, or that may be incurred, by ALG or PLS or any ERISA
Affiliate in connection with any event described in clause (i) or (ii)
above;
(j) promptly after the commencement thereof, notice of all
actions, suits, investigations and proceedings before any governmental
Person or arbitrator, affecting the ALG or PLS;
(k) promptly after the furnishing thereof, copies of any
statement or report furnished to any other holder of securities or Debt of
ALG or PLS pursuant to the terms of any indenture, loan or credit agreement
or similar agreement and not otherwise required to be furnished to the
Pledgees pursuant to any other provision of this Section 4.3; and
(l) promptly upon request, such other information respecting
the business, condition (financial or otherwise), operations, performance,
properties or prospects of ALG or PLS as any Pledgee, through the Pledgee
Representative, may from time to time reasonably request.
(m) for purposes of the Section 4.3, capitalized terms not
otherwise defined herein shall have the meaning set forth in ERISA.
SECTION 4.4 NEGATIVE COVENANTS. The Company will cause each of ALG
and PLS will each observe the negative covenants set forth below, except as
may be waived in writing (with no such waiver to be deemed a continuing
waiver) by the Secured Creditors' Representative:
(a) LIENS, ETC. ALG and PLS will not create, incur, assume or
suffer to exist any Lien on or with respect to any of its properties of any
character (including accounts receivable), whether now owned or hereafter
acquired, sign or file, under the Uniform Commercial Code of any
jurisdiction, a financing statement naming ALG or PLS as debtor (except in
connection with true leases), sign any security agreement authorizing any
secured party thereunder to file such a financing statement (except in
connection with true leases) or assign any accounts or other rights to
receive income, excluding, however, from the operation of the foregoing
restrictions the following:
(i) Permitted Liens; and
(ii) Liens existing on March 31, 2000.
(b) DEBT. ALG and PLS will not create, incur, assume or suffer to
exist any Debt other than Debt existing on March 31, 2000, and any
extensions or renewals of such Debt or conversions of such Debt from
short-term to long term.
(c) MERGERS, ETC. Neither ALG nor PLS will merge or consolidate
with or into any Person, permit any Person to merge into it, convey,
transfer, lease or otherwise dispose of (whether in one transaction or in a
series of transactions) all or substantially all of its assets (whether now
owned or hereafter acquired) to any Person or acquire all or substantially
all of the assets of any Person; provided that, ALG and PLS may proceed
with the acquisition of Xxxxx X. Xxxxxx, Inc. currently underway, providing
that all funding for such transaction is paid by the Company.
(d) SALES, ETC. OF ASSETS. ALG and PLS will not sell, lease,
transfer or otherwise dispose of any of its assets, or grant any option or
other right to purchase, lease or otherwise acquire any of its assets,
except for the following:
(i) sales of inventory in the ordinary course of its
business; and
(ii) sales of assets with a value of less than $500 in
the ordinary course of business.
(e) INVESTMENTS IN OTHER PERSONS. ALG and PLS will not make any
loan or advance to any Person, purchase or otherwise acquire any capital
stock, warrants, rights, options, obligations or other securities of any
Person, make any capital contribution to any Person or otherwise invest in
any Person (including the delivery of cash to Affiliates); provided,
however, that nothing in this Section 4.4(e) shall prevent ALG and PLS from
doing any of the following:
(i) maintaining the loans, advances and other
investments existing on March 31, 2000;
(ii) acquiring and holding Permitted Investments;
(iii) generating and holding accounts receivable from the
sale of inventory and other assets in the ordinary course of business;
(iv) making advances to customers in the ordinary course
of business not exceeding an aggregate for the ALG and PLS of $50,000 at
any one time outstanding;
(v) making salary advances, travel advances, relocation
loans, advances for tools and education advances to employees in the
ordinary course of business;
(f) DIVIDENDS, ETC. ALG and PLS will not declare or pay any
dividends, purchase, redeem, retire, defease or otherwise acquire for value
any of its capital stock or any warrants, rights or options to acquire such
capital stock, now or hereafter outstanding, return any capital to its
stockholders as such, or make any distribution of assets, capital stock,
warrants, rights, options, obligations or securities to its stockholders or
Affiliates, except as permitted in Section 4.1(h) above, as such or
purchase, redeem, retire, defease or otherwise acquire for value any
capital stock or Debt of any Affiliate or any warrants, rights or options
to acquire such capital stock.
(g) CAPITAL EXPENDITURES. ALG and PLS will not make any Capital
Expenditures that would cause the aggregate of all Capital Expenditures
made by ALG and PLS during the year ending December 31, 2000, to exceed
$250,000, or to exceed such amount plus 10% for any year thereafter.
(h) CHANGE IN NATURE OF BUSINESS. ALG and PLS will not make any
material change in the nature of its business as carried on as of March 31,
2000.
(i) COMPLIANCE WITH ERISA. ALG and PLS will not (i) terminate, or
permit any ERISA Affiliate to terminate, any Plan so as to result in any
material (in the opinion of the Pledgee Representative) liability of ALG
and PLS to the Pension Benefit Guaranty Corporation or (ii) permit to
exist any occurrence of any Reportable Event, or any other event or
condition, that presents a material (in the opinion of the Pledgee
Representative) risk of such a termination by the PBGC of any Plan.
(j) CHARTER AMENDMENTS. ALG and PLS will not amend its charter
documents or bylaws in any material respect.
(k) ACCOUNTING CHANGES. ALG and PLS will not make or permit any
change in its fiscal year, in its accounting policies affecting the
presentation of financial statements or its reporting practices, except as
required by GAAP.
(l) AMENDMENT, ETC. OF MATERIAL CONTRACTS, ETC. ALG and PLS not
cancel or terminate any Material Contract or consent to or accept any
cancellation or termination thereof except in accordance with its terms,
amend or otherwise modify any Material Contract or give any consent, waiver
or approval thereunder, waive any default under or breach of any Material
Contract, agree in any manner to any other amendment, modification or
change of any term or condition of any Material Contract or take any other
action in connection with any Material Contract, in each of the foregoing
cases to the extent such action would impair the value of the interest or
rights of ALG and PLS thereunder in any material respect or that would
impair the interest or rights of any Pledgee or the Agent.
(m) SPECULATIVE CONTRACTS. ALG and PLS will not engage in any
transaction involving commodity options or futures contracts or any similar
speculative transactions (including take-or-pay contracts or output or
requirements contracts).
(n) LEASE OBLIGATIONS. ALG and PLS will not create, incur, assume
or suffer to exist any obligations as lessee (i) for the rental or hire of
real or personal property in connection with any sale and leaseback
transaction or (ii) for the rental or hire of other real or personal
property of any kind under leases or agreements to lease, including
Capitalized Leases, having an original term of one year or more that would
cause the direct or contingent liabilities of ALG and PLS, on a combined
basis, in respect of all such obligations to exceed the amount budgeted
therefor in its budget for the year ending December 31, 2000.
SECTION 4.5 COVENANTS DURING LOAN TERM. The Pledgor hereby
covenants that, until all of the Liabilities have been satisfied in full
and the Notes are repaid or canceled in accordance with their terms, the
Pledgor shall comply with the following covenants:
(a) DISPOSITION OF PLEDGED COLLATERAL. Pledgor shall not, sell,
convey or otherwise dispose of any of the Pledged Collateral or any
interest therein, or create, incur or permit to exist any pledge, mortgage,
lien, charge, encumbrance or any security interest whatsoever in or with
respect to any of the Pledged Collateral or the proceeds thereof, other
than in favor of the Pledgee. During the term of this Agreement, all of
the Pledged Collateral shall be maintained at, with and under the control
of the Pledgee for the benefit of the Payees.
(b) DEFENSE OF TITLE. Pledgor shall, at Pledgor's own expense,
reasonably defend the Pledgee's right, title, and security interest in and
to the Pledged Collateral against the claims of any person or entity.
(c) FURTHER ASSURANCES. The Pledgor shall at any time, and from
time to time, upon the written request of the Pledgee, execute and deliver
such further documents and do such further acts and things, at the
Pledgor's cost and expense, as the Pledgee may reasonably request to effect
the purposes and more fully carry out the intent of this Pledge Agreement.
(d) TAXES. The Pledgor will pay promptly when due all taxes,
assessments and governmental charges imposed upon the Pledged Collateral or
in respect of any income or profits therefrom.
ARTICLE V: OBLIGATIONS OF PLEDGEE
SECTION 5.1 REASONABLE CARE. Beyond the exercise of reasonable care
to assure the safe custody of the Pledged Collateral while held hereunder,
the Pledgee shall have no duty or liability to preserve rights pertaining
thereto and shall be relieved of all responsibility for the Pledged
Collateral upon surrendering it or tendering surrender of it to the
Pledgor.
SECTION 5.2 TERMINATION OF PLEDGE. Upon the payment and
satisfaction in full of all Liabilities and the payment and satisfaction of
any and all additional costs and expenses of the Pledgee as provided herein
and the cancellation of the Notes, this Pledge Agreement shall terminate,
and the Pledgee shall take, at the Pledgor's expense, any appropriate
action necessary to evidence such termination.
ARTICLE VI: MISCELLANEOUS
SECTION 6.1 NO WAIVER. No course of dealing between the Pledgor and
the Pledgee, nor any failure to exercise, nor any delay in exercising, any
right, power or privilege of the Pledgee hereunder or under the Notes shall
operate as a waiver thereof; nor shall any single or partial exercise of
any right, power or privilege hereunder or thereunder preclude any other or
further exercise thereof or the exercise of any other right, power or
privilege.
SECTION 6.2 REMEDIES CUMULATIVE. The rights and remedies provided
herein and in the Notes and in all other agreements, instruments, and
documents delivered pursuant to or in connection with the Notes, are
cumulative and are in addition to and not exclusive of any rights or
remedies provided by the Notes, the other Loan Documents, or in equity or
by law, including, without limitation, the rights and remedies of a secured
party under the Uniform Commercial Code as adopted in the State of
Illinois.
SECTION 6.3 SEVERABILITY. Whenever possible, each provision of this
Pledge Agreement shall be interpreted in such manner as to be effective and
valid under applicable law. The provisions of this Pledge Agreement are
severable, and if any clause or provision shall be held invalid or
unenforceable in whole or in part in any jurisdiction, then such invalidity
or unenforceability shall affect only such clause or provision or part
thereof in such jurisdiction, without invalidating the remainder of such
clauses and provisions of this Pledge Agreement, and shall not in any
manner affect such clause or provision in this Pledge Agreement in any
other jurisdiction.
SECTION 6.4 NOTICES. Whenever it is provided herein that any
notice, demand, request, consent, approval, declaration or other
communication shall or may be given to or served upon any of the parties by
another, or whenever any of the parties desires to give or serve upon
another any such communication with respect to this Pledge Agreement, each
such notice, demand, request, consent, approval, declaration or other
communication shall be in writing, addressed as follows:
(a) If to Pledgor, to:
Entrade Inc.
000 Xxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxxxx, General Counsel
Telecopy No.: (000) 000-0000
(b) If to Pledgee, to:
Xxxxxx Capital Management, Inc.
A Division of Xxxxx, Xxxxxxxx & Xxxxxxx
The Chicago Mercantile Exchange
00 Xxxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx
Telecopy No.: (312) 906
with a copy to:
Secured Creditors' Representative
X.X. Xxx 0000
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxx Xxxx
Telecopy No.:
or at such other address as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in
writing by the party entitled to receive such notice. Every notice,
demand, request, consent, approval, declaration or other communication
hereunder shall be deemed to have been duly given or served (i) on the date
on which personally delivered, in person, by hand delivery, or by
commercial courier service, with receipt acknowledged, (ii) on the date of
telecopy transmission and deposit of written confirmation thereof in the
United States mail, postage prepaid, registered or certified, return
receipt requested, or (iii) three (3) business days after the same shall
have been deposited with the United States mail, postage prepaid,
registered or certified, return receipt requested.
SECTION 6.5 PLEDGOR'S OBLIGATIONS ABSOLUTE. The obligations of the
Pledgor under this Pledge Agreement are and shall be absolute and
unconditional in accordance with the terms hereof and shall remain in full
force and effect without regard to, and shall not be released, suspended,
discharged, terminated or otherwise affected by, any circumstance or
occurrence whatsoever. The Pledgor shall cooperate in the execution of
additional documents, including UCC-1 Financing Statements, as necessary to
consummate the transactions contemplated by this Pledge Agreement.
SECTION 6.6 REVIEW OF PLEDGE AGREEMENT BY PLEDGOR. The Pledgor
acknowledges that the Pledgor has thoroughly read and reviewed the terms
and provisions of this Pledge Agreement, and that such terms and provisions
are clearly understood by the Pledgor, and have been fully and
unconditionally consented to by the Pledgor with the full benefit and
advice of counsel chosen by the Pledgor, and that the Pledgor has freely
and voluntarily executed this Pledge Agreement without duress.
SECTION 6.7 AMENDMENTS. None of the terms or provisions of this
Pledge Agreement may be waived, amended, supplemented or otherwise modified
except by a written instrument executed by the Pledgor and the Pledgee and
consented to by the Secured Creditors' Representative.
SECTION 6.8 SUCCESSORS AND ASSIGNS. This Pledge Agreement shall
inure to the benefit of and shall be binding upon the successors and
assigns and heirs and legal beneficiaries, as applicable, of the parties
hereto, including any successor to the Pledgee as designated under the
Collateral Agency Agreement..
SECTION 6.9 SINGULAR AND PLURAL; GENDER. Unless the context
requires otherwise, wherever used herein the singular shall include the
plural and vice versa, and the use of one gender shall also denote the
others where appropriate.
SECTION 6.10 GOVERNING LAW; FORUM SELECTION.
(a) This Pledge Agreement shall be governed by and shall be
construed and enforced in accordance with the internal laws of the State of
Illinois, without regard to conflicts of law principles.
(b) PLEDGOR HEREBY CONSENTS TO THE JURISDICTION OF ANY STATE OR
FEDERAL COURT LOCATED OR HAVING JURISDICTION WITHIN XXXX COUNTY, CHICAGO,
ILLINOIS, AND WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON PLEDGOR,
AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS BE MADE BY REGISTERED MAIL
DIRECTED TO PLEDGOR AT THE ADDRESSES PROVIDED IN SECTION 6.4 ABOVE AND
SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED FIVE (5) BUSINESS DAYS
AFTER THE SAME SHALL HAVE BEEN DEPOSITED IN THE UNITED STATES MAILS,
POSTAGE PREPAID. PLEDGOR WAIVES ANY OBJECTION TO JURISDICTION OR VENUE OF
ANY ACTION INSTITUTED HEREUNDER AND CONSENTS TO THE GRANTING OF SUCH LEGAL
OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY THE COURT.
SECTION 6.11 JURY TRIAL WAIVER. TO THE FURTHEST EXTENT PERMITTED BY
LAW, PLEDGOR AND PLEDGEE HEREBY KNOWINGLY, VOLUNTARILY, IRREVOCABLY AND
INTENTIONALLY WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING
OR COUNTERCLAIM RELATING TO THIS PLEDGE AGREEMENT OR TO ENFORCE OR DEFEND
ANY RIGHTS OR REMEDIES HEREUNDER, UNDER THE NOTE OR UNDER THE OTHER LOAN
DOCUMENTS OR RELATING TO EACH OF THE FOREGOING. THIS PROVISION IS A
MATERIAL INDUCEMENT FOR THE PAYEES TO MAKE THE LOANS EVIDENCED BY THE
NOTES.
SECTION 6.12 ATTORNEY'S FEES. If an arbitration or other legal
proceeding is brought to enforce or interpret the provisions of this Pledge
Agreement or any other agreement or instrument provided for herein or as to
the rights or obligations of any part to this Pledge Agreement or such
other agreement or instrument, the prevailing party in such action shall be
entitled to recover as an element of such party's costs of suit, and not as
damages, a reasonable attorney's fee to be fixed by the court or the
arbitrator. The prevailing party shall be the party who is entitled to
recover its costs of suit as ordered by the arbitrator, the court or by
applicable law or court rules. A party not entitled to recover its costs
shall not recover attorney's fee.
SECTION 6.13 INDEMNITY AND EXPENSES. The Pledgor agrees to
indemnify the Pledgee from and against any and all claims, losses and
liabilities growing out of or resulting from this Pledge Agreement
(including, without limitation, enforcement of this Pledge Agreement),
except claims, losses or liabilities resulting from the Pledgee's willful
misconduct. The Pledgor will upon demand pay to the Pledgee the amount any
and all reasonable expenses, including, without limitation, the reasonable
fees and expenses of its counsel and of any experts and agents that the
Pledgee may incur in connection with (i) the administration of this Pledge
Agreement, (ii) the custody, preservation, use, operation or sale of, the
collection from, or any other realization upon, any of the Pledged
Collateral, (iii) the exercise or enforcement of any of the rights of the
Pledgee hereunder and (iv) the failure by the Pledgor to perform or observe
any of the provisions hereof.
[Signature Page Follows]
IN WITNESS WHEREOF, the parties hereto have executed this Pledge
Agreement as of the date and year first above written.
PLEDGOR
ENTRADE INC.
By:________________________
Name:
Its:
ACCEPTED AND ACKNOWLEDGED:
PLEDGEE
By: ____________________________
Name:
Its:
ACKNOWLEDGMENT
--------------
The undersigned hereby acknowledges that it has received a copy of
the foregoing Pledge Agreement by and between Entrade, Inc. and Xxxxxx
Capital Management (the Pledge Agreement"), and each of the undersigned
consents thereto and agrees to abide by the provisions of Sections 4.1 -
4.4 of the Pledge Agreement and the undersigned will not do any act or
perform any obligation which is not in accordance with said provisions.
Dated: May 15, 2000
ASSET LIQUIDATION GROUP, INC.,
a Nevada corporation
By:
------------------------------
Its:
------------------------------
PUBLIC LIQUIDATION SYSTEMS, INC.,
a Nevada corporation
By:
------------------------------
Its:
------------------------------
EXHIBIT A
FINANCIAL STATEMENTS OF
ASSET LIQUIDATION GROUP, INC. AND PUBLIC LIQUIDATION SYSTEMS, INC.
EXHIBIT B
FINANCIAL BENCHMARKS
QUARTER ENDING NET WORTH RATIO EBITDA
06/30/00 $46.075 million 1.155-1.00 $.375 million
09/30/00 $47.16 million 1.213-1.00 $1.4625 million
12/31/00 $50.15 million 1.46-1.00 $4.45 million
03/31/01 $51.15 million 1.509-1.00 $5.45 million
06/31/01 $52.65 million 1.608-1.00 $6.95 million
