EXHIBIT 10.4
Assignment and Pledge Agreement to be dated at closing pledging to Xxxxxxx Xxxx
and Xxxxxxx Xxxxx as agents for the Network 60 Share Owners a first priority
security interest in the assets effectively conveyed to Dtomi, Inc. via the
Share Exchange Agreement (Exhibit 10.1).
ASSIGNMENT AND PLEDGE AGREEMENT
(Limited Liability Company, Limited or General Partnership Interest)
THIS ASSIGNMENT AND PLEDGE AGREEMENT (this "Agreement") dated as of October
____, 2002, made by DTOMI, Inc., with an office at
_____________________________, (the "Pledgor") is in favor of Xxxxxxx Xxxx and
Xxxxxxx Xxxxx, as Agents for the Network 60 Share Owners (the "Secured Party")
with an address at _________________________________________________.
W I T N E S S E T H:
WHEREAS, Pledgor is the legal and beneficial owner of a limited liability
company membership interest, general partnership interest and/or limited
partnership interest as more particularly set forth on Exhibit "A" annexed
hereto (as such interest may vary from time to time, collectively the "Pledged
Partnership Interest"), including without limitation the capital accounts
(collectively the "Pledged Account") as defined in those certain operating and
or partnership agreements (collectively the "Partnership Agreement") set forth
on Exhibit "A" (collectively the "Partnership").
WHEREAS, it is a condition precedent to the extension of credit or other
financial accommodations (the "Loan") to Pledgor that Pledgor shall have made
the pledge contained in this Agreement;
NOW, THEREFORE, in consideration of the premises and in order to induce
Secured Party to make the Loan, Pledgor hereby agrees with Secured Party as
follows:
SECTION 1. Pledge and Assignment. Pledgor hereby pledges to Secured Party,
grants to Secured Party a first priority security interest in and assigns all of
Pledgor's right, title and interest in and to the following (the "Pledged
Collateral"):
1.1. all of Pledgor's economic interest in the Pledged Partnership
Interest;
1.2. all of the Pledged Account;
1.3. any and all payments or distributions, a) received, receivable or
from time to time distributed in respect of or in exchange for, or b) acquired
by the Partnership which become a part of, or c) are otherwise allocated to, the
Pledged Account or Pledged Partnership Interest;
1.4. any other increase in the Pledged Account or Pledged Partnership
Interest; and
1.5. all income and proceeds of any of the foregoing.
SECTION 2. Security for Obligations.
2.1 Secured Party is hereby granted and assigned by Pledgor the right
to receive all income and proceeds of the Pledged Collateral for the purpose of
enforcing its interest in the Pledged Partnership Interest, this Assignment and
Agreement constituting a present, absolute Assignment of the Pledged Partnership
Interest. The assignment made hereunder is for security purposes only. This
Agreement secures and the Pledged Collateral is security for the indefeasible
payment in full when due, of all obligations and debts of Pledgor now or
hereafter existing whether for principal, interest, fees, expenses or otherwise,
including without limitation obligations under this Agreement under the
promissory note of even date (the "Note") by Pledgor as Maker, and Xxxxxxx Xxxx
and Xxxxxxx Xxxxx, as Secured Party (all such obligations being the
"Obligations"). Secured Party shall have no duty or obligation whatsoever, to
demand, xxx or make collection of any sum or benefit at any time owing or
existing for the benefit of Pledgor. Notwithstanding the assignment set forth
herein, this Agreement shall not constitute Secured Party a partner of the
Partnership under any circumstance whatsoever, or render Secured Party liable in
any way to any of the members or creditors of the Partnership for any reason
whatsoever. Secured Party shall not be liable to Pledgor or any person claiming
under or through Pledgor by reason of any good faith act or omission of Secured
Party.
SECTION 3. Representations and Warranties.
Pledgor represents and warrants as follows:
3.1. The Partnership Agreement and the Pledged Account are each in
full force and effect.
3.2. The pledge of and granting of a security interest in the Pledged
Account pursuant to this Agreement creates a valid and perfected first priority
security interest in the Pledged Collateral, securing the payment of the
Obligations.
3.3. No authorization, approval, or other action by, and no notice to
or filing with, any governmental authority or regulatory body (other than UCC-l
Financing Statements) is required either (i) for the pledge by Pledgor of the
Pledged Collateral pursuant to this Agreement or for the execution, delivery or
performance of this Agreement by Pledgor, or (ii) for the exercise by Secured
Party of the rights provided for in this Agreement or the remedies in respect of
the Pledged Collateral pursuant to this Agreement.
3.4. No certificate evidencing a Pledged Partnership Interest has been
issued to the Pledgor.
The representations and warranties set forth in this Section 3 shall
survive the execution and delivery of this Agreement.
SECTION 4. Covenants.
4.1. Pledgor agrees that at any time and from time to time, at the
expense of Pledgor, Pledgor will promptly execute and deliver all further
instruments and documents, and take all further action, that may be necessary or
desirable, or that Secured Party may reasonably request, in order to perfect and
protect any security interest granted or purported to be granted hereby or to
enable Secured Party to exercise and enforce its rights and remedies hereunder
with respect to any Pledged Collateral.
4.2. Pledgor will defend the title to the Pledged Collateral and the
priority of the security interest of Secured Party thereon against the claim of
any Person and will maintain and preserve such security interest.
4.3. Pledgor agrees acquisition (directly or indirectly) of any
assets, in respect of the Pledged Account shall be received in trust for the
benefit of Secured Party, shall be maintained in the Pledged Account, and
automatically shall become subject to the security interests created by this
Agreement.
4.4. Pledgor shall not without the prior written consent of Secured
Party, which consent may be withheld for any reason in the sole and absolute
discretion of Secured Party, request or make any withdrawal from the Pledged
Account.
4.5. So long as any Obligations or potential Obligations of Pledgor to
Secured Party remain outstanding, Pledgor shall not withdraw all or any part of
the Pledged Collateral or redeem any percentage of Pledgor's Partnership
interest in the Partnership without the prior written consent of Secured Party.
4.6. Pledgor shall promptly notify Secured Party in writing of any
default (of which Pledgor has actual knowledge) by any member in the Partnership
in the performance of any of the terms, conditions or obligations required to be
performed by such member pursuant to the Partnership Agreement.
4.7. Pledgor shall promptly notify Secured Party in writing of the
initiation of any court, administrative or similar proceedings by or against
Pledgor or the Partnership to enforce the terms of the Partnership Agreement.
4.8. Pledgor shall immediately notify Secured Party of any material
adverse change in the Pledged Collateral or any occurrence which could
materially and adversely affect the interests of Secured Party, and of any
adverse claim or other encumbrance arising out of or with respect to the Pledged
Collateral.
SECTION 5. Rights of Pledgor; Secured Party.
5.1. As long as no event referred to in Section 5.4 shall have
occurred, Secured Party grants to Pledgor a license to exercise any and all
economic rights pertaining to the Pledged Collateral or any part thereof for any
purpose not inconsistent with the terms of this Agreement; provided, however,
that Pledgor shall not exercise or refrain from exercising any such right if
and when, in Secured Party's judgment, such action would have any reasonable
likelihood of having a material adverse effect on the value of the Pledged
Collateral or any part thereof.
5.2. Upon the occurrence of any of the events referred to in Section
5.3, the license granted to Pledgor herein to exercise any rights pursuant to
Section 5.1 above shall be revoked upon notice by Secured Party to Pledgor, and
all such rights as well as the right to give notice to the Partnership for a
withdrawal from the Pledged Account to cause a redemption of the Pledged
Partnership Interest and to receive the proceeds of such withdrawal, shall
thereupon become vested exclusively in Secured Party.
5.3 Secured Party may exercise the rights referred to in Section 5.2
if:
5.3.1. Failure to Pay. If Pledgor fails to make when due, any payment
required by this Agreement, or any other agreement or document between Pledgor
and Secured Party;
5.3.2. Failure to Perform. If Pledgor fails to perform or observe any
covenant, term or condition of this Agreement, or any other agreement with
Secured Party to be performed or observed by Pledgor;
5.3.3. any Obligation owed to Secured Party now or in the future is not
paid when it becomes due; or
5.3.4. the cash value of the Pledged Account declines to a level which
in the reasonable discretion of Secured Party is below that which provides
adequate security for the Obligations; or
5.3.5. any provision of this Agreement or any other agreement between
Pledgor and Secured Party is violated; or
5.3.6. the occurrence of the termination, dissolution, insolvency or the
institution of any proceeding for the bankruptcy, reorganization or receivership
of Pledgor or the Partnership or any material portion of its or their respective
assets; or
5.3.7. Pledgor has made or makes any false or misleading statements
herein or in any agreement or certificate delivered to Secured Party or about
Pledgor's financial affairs or about any other important matter regarding this
Agreement or the Pledged Collateral or any loan or any application or any
agreement with Secured Party; or
5.3.8. anything has happened or happens which Secured Party reasonably
believes might adversely affect its interest in or the value of the Pledged
Collateral or any other property securing any of the Obligations or the ability
or intention of Pledgor or any other person liable for any of the Obligations,
now or in the future, to pay the Obligations as they become due; or
5.3.9. Secured Party or Pledgor receives any notice of default by
Pledgor, or the occurrence of a default by Pledgor, under the terms of the
Partnership Agreement and the expiration of any applicable grace period with
respect thereto;
5.3.10. there occurs the sale, assignment or transfer of Pledgor's
interest in the Partnership or any portion thereof, by instrument, conveyance,
operation of law or otherwise;
5.3.11. Felony Conviction. If Pledgor shall be convicted of a felony.
SECTION 6. Transfers and Other Liens. Pledgor agrees that it will not (i)
sell, assign or transfer or otherwise dispose of, or grant any option with
respect to, any of the Pledged Partnership Interest, Pledged Collateral or
Pledgor's economic or other interest in the Partnership, or (ii) create or
permit to exist any lien, upon or with respect to any of Pledged Partnership
Interest, the Pledged Collateral, or Pledgor's economic or other interest in the
Partnership except for the lien in favor of Secured Party under this Agreement.
SECTION 7. Financing Statements.
Secured Party is authorized to file and Pledgor hereby ratifies the filing
of any financing statements or amendments thereto in any jurisdiction Secured
Party deems appropriate with respect to any of the Pledged Collateral for the
purpose of perfecting its rights as a Secured Party; and Pledgor agrees to
reimburse Secured Party for the reasonable expense of any such filing, including
reasonable attorneys fees.
SECTION 8. Remedies. If any event specified in Section 5.3 shall have
occurred:
Secured Party may exercise in respect of the Pledged Collateral, in
addition to other rights and remedies provided for herein or otherwise available
to it, all the rights and remedies of a secured party in default under the
Uniform Commercial Code (the "Code") in effect in the State of New York at that
time.
SECTION 9. Expenses. Pledgor will upon demand pay to Secured Party the
amount of any and all reasonable expenses, including the reasonable fees and
expenses of its counsel and of any experts and agents, which Secured Party may
incur in connection with (i) the administration of this Agreement; (ii) the
exercise or enforcement of any of the rights of Secured Party hereunder; or
(iii) the failure by Pledgor to perform or observe any of the provisions hereof.
SECTION 10. Release. No act or omission of any kind on Secured Party's part
shall in any event affect or impair this Agreement.
SECTION 11. Indemnification. Pledgor agrees to indemnify and hold Secured
Party harmless from and against any taxes, liabilities, claims and damages,
including reasonable attorney's fees and disbursements, and other expenses
incurred or arising by reason of the taking or the failure to take action by
Secured Party, in good faith, in respect of any transaction effected under this
Agreement or in connection with the Lien provided for herein, including without
limitation, any taxes payable in connection with the delivery or registration of
any, of the Pledged Collateral as provided herein. The obligations of Pledgor
under this Section shall survive the termination of this Agreement.
SECTION 12. Waiver. No delay on Secured Party's part in exercising any
right hereunder, shall constitute a waiver thereof, or limit or impair Secured
Party's right to take any action or to exercise any right hereunder, without
notice or demand, or prejudice Secured Party's rights as against Pledgor in any
respect.
SECTION 13. Amendments. No amendment or waiver of any provision of this
Agreement nor consent to any departure by Pledgor here from, shall in any event
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 instance
and for the specific purpose for which given.
SECTION 14. Continuing Security Interest. This Agreement shall create a
continuing first priority security interest in the Pledged Collateral and shall
(i) remain in full force and effect until indefeasible payment in full of the
Obligations; (ii) continue to be effective or be reinstated, as the case may be,
if at any time payment and performance of the Obligations, or any part thereof,
is, pursuant to applicable law, rescinded or reduced in amount, or must
otherwise be restored or returned by the obligee of the Obligations, whether as
a "voidable preference", "fraudulent conveyance", or otherwise, all as though
such payment or performance had not been made; (iii) be binding upon Pledgor,
its successors and assigns; and (iv) inure, together with the rights and
remedies of Secured Party to the benefit of Secured Party and its respective
successors, transferees and assigns. Without limiting the generality of the
foregoing clause (iv), Secured Party may assign or otherwise transfer any note
or instrument held by it to any other Obligations, Pledgor shall be entitled to
the return, upon its request and at its expense, of such of the Pledged
Collateral as shall not have been sold or otherwise applied pursuant to the
terms hereof.
SECTION 15. Severability. If for any reason any provision or provisions
hereof are determined to be invalid and contrary to any existing or future law,
such invalidity shall not impair the operation of or effect those portions of
this Agreement which are valid.
SECTION 16. Governing Law; Terms. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE INTERNAL LAWS ( AS OPPOSED TO
CONFLICTS OF LAW PROVISIONS) OF THE STATE OF NEW YORK. REFERENCES TO THE UNIFORM
COMMERCIAL CODE SHALL MEAN THE UNIFORM COMMERCIAL CODE AS IN EFFECT IN THE STATE
OF NEW YORK.
SECTION 17. Waiver of Jury Trial, Submission to Jurisdiction.
17.1. ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR
ANY DOCUMENT RELATED HERETO MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW
YORK OR OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK,
AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, PLEDGOR HEREBY ACCEPTS FOR
ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE
NON-
EXCLUSIVE JURISDICTION OF THE AFORESAID COURTS. PLEDGOR HEREBY IRREVOCABLY
WAIVES ANY OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING
OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING IN SUCH
RESPECTIVE JURISDICTIONS.
17.2. Pledgor irrevocably consents to the service of process of any of
the aforementioned courts in any such action or proceeding by the mailing of
copies thereof by registered or certified mail, postage prepaid, to Pledgor at
its said address set forth on the first page hereof, such service to become
effective 30 days after such mailing. Nothing contained in this Section 17 shall
affect the right of Secured Party to serve process in any other manner permitted
by law or commence legal proceedings or otherwise proceed against Pledgor in any
other jurisdiction.
17.3. PLEDGOR HEREBY AGREES TO WAIVE ANY RIGHT IT MAY HAVE TO A JURY
TRIAL IN CONNECTION WITH ANY ACTION, SUIT OR PROCEEDING ARISING OUT OF OR
RELATED IN ANY WAY TO THIS AGREEMENT.
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SECTION 18. Capitalized Terms. Capitalized Terms used herein shall have the
meanings ascribed to them in that certain Share Exchange Agreement executed
____________, 2002 by and between DTOMI, Inc., Network60, LLC, the members of
Network60, LLC, and Ubiquity Partners, LLC.
IN WITNESS WHEREOF, Pledgor has duly executed and delivered this Agreement
as of the date first above written.
DTOMI, Inc.
By:____________________________________
Name:
Title:
