EX-10.39
ANNEX VI
BRIDGE LOAN AGREEMENT
SECURITY INTEREST AND PLEDGE AGREEMENT
SECURITY INTEREST AND PLEDGE AGREEMENT ("Pledge Agreement") dated as of
September 28, 2006, by and among Harborview Master Fund, Lp ("Secured Party"),
Sonoma College, Inc., a California corporation having its principal executive
offices at 0000 Xxxxx Xxxxx Xxxxxxxxx, Xxxxx 000, Xxxxxxxx, Xxxxxxxxxx 00000
(the "Company" or the "Debtor"), Xxxxxxx X. Xxxxxx and Xxxxx X. Xxxxxx
("Pledgors").
RECITALS
A. Reference is made to (i) that certain Bridge Loan Agreement of
even date herewith (the "Loan Agreement") to which the Company and the Secured
Party are parties, and (ii) the Transaction Agreements (as that term is defined
in the Loan Agreement), including, without limitation, the Note. Capitalized
terms not otherwise defined herein shall have the meanings ascribed to them in
the relevant Transaction Agreements.
B. Pursuant to the Transaction Agreements, the Debtor has certain
obligations to the Secured Party (all such obligations, the "Obligations"),
including, but not limited to, obligations to pay principal and interest of the
Note, which was issued in the original aggregate principal amount of $275,000,
on the Maturity Date. The Note Obligations are secured by a mortgage on certain
real estate that is held in the names of the Pledgors and is more fully
described below. The obligations of the Company and of the Pledgors, if any,
under the Note are referred to collectively as the "Note Obligations".
C. To secure the Note Obligations, the Pledgors have agreed to pledge
certain real estate; specifically, Condominium Unit 7BC located at 000 Xxxx 00xx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (the "Real Estate").
D. The Pledgors are shareholders of the Debtor and have determined
that it is in the Pledgors' best interests, including to the benefit of the
other interests of the Pledgors in the Company, to provide the pledge referred
to herein.
E. The Secured Party is willing to enter into the Loan Agreement and
the other Transaction Agreements only upon receiving the Pledgors' mortgage for
the Real Estate, as set forth in this Pledge Agreement.
NOW, THEREFORE, in consideration of the premises, the mutual covenants
and conditions contained herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
1. GRANT OF SECURITY INTEREST.
To secure the Note Obligations of Debtor, the Pledgors hereby
pledge to the Secured Party all of their interest in the Real Estate. Said
pledge shall be evidenced by a mortgage in the form attached hereto as Exhibit A
(the "Mortgage").
2. OBLIGATIONS SECURED. During the term hereof, the Collateral shall
secure the following:
(a) The performance by the Company of the Note Obligations; and
(b) The performance by the Pledgors of their obligations, covenants,
and agreements under this Agreement.
The obligations, covenants and agreements described in clauses (a) and (b) are
the "Obligations."
3. PERFECTION OF SECURITY INTERESTS. Upon execution of this Pledge
Agreement by the Debtor and the Pledgors,
(a) the Pledgors shall deliver and transfer possession of the
Mortgage, to the Secured Party.
(b) The Mortgage shall be recorded in the New York County
Clerk's Office, to perfect the security interest of the Secured Party, until the
earlier of
(i) the payment in full of all amounts due under the Note, or
(ii) foreclosure of Secured Party's security interests as provided
herein.
(c) The Debtor and the Pledgors hereby appoint the Secured
Party, as attorney-in-fact with powers of substitution, to execute all documents
and perform all acts in order to perfect and maintain a valid security interest
for Secured Party in the Real Estate.
4. RESERVED.
5. PLEDGORS' WARRANTY. The Pledgors represent and warrant hereby to
the Secured Party as follows with respect to the Real Estate:
A. WITH RESPECT TO TITLE TO THE REAL ESTATE
(i) that the Real Estate is free and clear of any encumbrances
of every nature whatsoever, aside from any existing mortgages which have already
been disclosed to the Secured Party, and the Pledgors are the sole owners of the
Real Estate;
(ii) that the Pledgors agree not to grant or create, any
security interest, claim, lien, pledge or other encumbrance with respect to the
Real Estate or attempt to sell, transfer or otherwise dispose of any of the Real
Estate until (a) the Obligations have been paid in full, or (b) this Agreement
has terminated, or (iii) the Pledgors receive express written permission from
the Secured Party.
B. WITH RESPECT TO CERTAIN OTHER MATTERS:
(i) that the Pledgors have made necessary inquiries of the
Company and believe that the Company fully intends to fulfill and has the
capability of fulfilling the Obligations to be performed by the Company in
accordance with the terms of the Transaction Agreements; and
(ii) that this Pledge Agreement constitutes a legal, valid and
binding obligation of the Pledgors enforceable in accordance with its terms
(except as the enforcement thereof may be limited by bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium, and similar laws, now or
hereafter in effect).
6. PRESERVATION OF THE VALUE OF THE COLLATERAL AND REIMBURSEMENT OF
SECURED PARTY. Pledgors shall pay all taxes, charges, and assessments against
the Real Estate and do all acts necessary to preserve and maintain the value
thereof. On failure of Pledgors so to do, Secured Party may make such payments
on account thereof as (in Secured Party's discretion) is deemed desirable, and
Pledgors shall reimburse Secured Party immediately on demand for any and all
such payments expended by Secured Party in enforcing, collecting, and exercising
its remedies hereunder.
7. DEFAULT AND REMEDIES.
For purposes of this Agreement, "Event of Default" shall mean any
one or more of the following events:
(i) any default in the performance by the Company or any
Pledgor of any of the Note Obligations, after the expiration, without cure, of
the cure period (but only if any such cure period is specifically provided in
the Transaction Agreements and without any regard to any cure period if no such
cure period is provided; it being specifically acknowledged by the Company and
the Pledgors that all payment obligations are time of the essence obligations,
with no cure periods provided), or
(ii) a breach by the Company or Pledgor of any of the its
respective representations, warranties, covenants or agreements in this Pledge
Agreement, subject to applicable cure periods.
8. WAIVER. Each of the Debtor and the Pledgors waives any right that
it may have to require Secured Party to proceed against any other person, or
proceed against or exhaust any other security, or pursue any other remedy
Secured Party may have.
9. TERM OF AGREEMENT. This Pledge Agreement shall continue in full
force and effect until the earlier of the payment in full of the Note. If the
Note is paid in full, the security interests in the Real Estate shall be deemed
released, and the Mortgage shall be returned to the Pledgors.
10. GENERAL PROVISIONS:
10.1 BINDING AGREEMENT; NO MODIFICATION OF TRANSACTION AGREEMENTS. This
Pledge Agreement shall be binding upon and shall inure to the benefit of the
successors and assigns of the respective parties hereto. Except to the extent
specifically provided herein, nothing in this Pledge Agreement shall limit or
modify any provision of any of the Transaction Agreements
10.2 CAPTIONS. The headings used in this Pledge Agreement are inserted
for reference purposes only and shall not be deemed to define, limit, extend,
describe, or affect in any way the meaning, scope or interpretation of any of
the terms or provisions of this Pledge Agreement or the intent hereof.
10.3 COUNTERPARTS. This Pledge Agreement may be signed in any number of
counterparts with the same effect as if the signatures upon any counterpart were
upon the same instrument. All signed counterparts shall be deemed to be one
original. A facsimile transmission of this signed Pledge Agreement shall be
legal and binding on all parties hereto.
10.4 FURTHER ASSURANCES. The parties hereto agree that, from time to
time upon the written request of any party hereto, they will execute and deliver
such further documents and do such other acts and things as such party may
reasonably request in order fully to effect the purposes of this Pledge
Agreement.
10.5 WAIVER OF BREACH. Any waiver by either party of any breach of any
kind or character whatsoever by the other, whether such be direct or implied,
shall not be construed as a continuing waiver of or consent to any subsequent
breach of this Pledge Agreement.
10.6 CUMULATIVE REMEDIES. The rights and remedies of the parties hereto
shall be construed cumulatively, and none of such rights and remedies shall be
exclusive of, or in lieu or limitation of any other right, remedy, or priority
allowed by applicable law.
10.7 AMENDMENT. This Pledge Agreement may be modified only in a written
document that refers to this Pledge Agreement and is executed by Secured Party,
the Pledgors and the Debtor.
10.8 INTERPRETATION. This Pledge Agreement shall be interpreted,
construed, and enforced according to the substantive laws of the State of New
York.
10.9 GOVERNING LAW. This Pledge Agreement shall be governed by and
construed in accordance with the laws of the State of New York. Each of the
parties consents to the jurisdiction of the federal courts whose districts
encompass any part of the County of New York or the state courts of the State of
New York sitting in the County of New York in connection with any dispute
arising under this Pledge Agreement and hereby waives, to the maximum extent
permitted by law,
any objection, including any objection based on FORUM NON COVENIENS, to the
bringing of any such proceeding in such jurisdictions.
10.10 WAIVER OF JURY TRIAL. The parties to this Pledge Agreement hereby
waive a trial by jury in any action, proceeding or counterclaim brought by any
of them against any other in respect of any matter arising out or in connection
with this Pledge Agreement.
10.11 NOTICE. Any notice or other communication required or permitted to
be given hereunder shall be effective upon receipt. Such notices may be sent (i)
in the United States mail, postage prepaid and certified, (ii) by express
courier with receipt, (iii) by facsimile transmission, with a copy subsequently
delivered as in (i) or (ii) above. Any such notice shall be addressed or
transmitted as follows:
If to Pledgor, to:
If to the Secured Party, to:
Harborview Master Fund, Lp
c/o Navigator Management Ltd.
Harbour House, Second Floor
Waterfront Drive, Road Town
Tortola, British Virgin Islands
Tel:
Fax:
If to Sonoma College, Inc., to:
0000 Xxxxx Xxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxx, Xxxxxxxxxx 00000
Tel:
Fax:
If to Xxxxxxx X. Xxxxxx and/or Xxxxx X. Xxxxxx, to:
000 Xxxx 00xx Xxxxxx
Xxxx 0XX
Xxx Xxxx, Xxx Xxxx 00000
Tel:
Fax:
Any party may change its address by notice similarly given to the other parties
(except that a Secured Party need not give notice to other Secured Party).
10.12 ACKNOWLEDGEMENT BY DEBTOR AND PLEDGORS. In the event that any
provision of the Transaction Agreements, the Guarantee or this Pledge Agreement
as applied to any party or circumstances shall be adjudged by a court to be
invalid or unenforceable, each of the Debtor or the
Pledgors, as the case may be, acknowledges and agrees that this Pledge Agreement
shall remain valid and enforceable in all respects against the Debtor and the
Pledgors.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
day, month and year first above written.
HARBORVIEW MASTER FUND, LP
By:
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Name:
Title:
SONOMA COLLEGE, INC.:
By:
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Its:
XXXXXXX X. XXXXXX
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XXXXX X. XXXXXX
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