PLEDGE AND SECURITY AGREEMENT
EXECUTION
COPY
THIS
PLEDGE AND SECURITY AGREEMENT,
made as
of this 19th day of October, 2007 (this “Agreement”),
is
between MRU
HOLDINGS, INC.,
a
Delaware corporation (“Pledgor”),
and
VIKING
ASSET MANAGEMENT, LLC,
a
California limited liability company, in its capacity as collateral agent for
the Buyers identified below (in such capacity, together with its successors
and
assigns, the “Pledgee”).
WHEREAS:
A. The
Pledgor has executed and delivered to each of the Buyers those certain secured
senior notes each made by Pledgor and dated as of the date hereof in an original
aggregate principal amount of $11,200,000 (such
notes, together with any promissory notes or other securities issued in exchange
or substitution therefor or replacement thereof, and as any of the same may
be
amended, supplemented, restated or modified and in effect from time to time,
the
“Notes”).
The
Notes were issued pursuant to a certain Securities Purchase Agreement dated
as
of October 19, 2007 (as the same may be amended, restated, supplemented or
otherwise modified, the “Purchase
Agreement”),
among
the Pledgor and the entities listed on the Schedule of Buyers thereto (together
with their respective successors and assigns, the “Buyers”),
and
pursuant to which the Buyers have made certain loans (“Loans”)
to
Pledgor.
B. The
Pledgor legally and beneficially owns one hundred percent (100%) of the issued
and outstanding equity interests of MRU ABS LLC, a Delaware limited liability
company (“Pledge
Entity”).
C. To
induce
the Buyers to make the Loans, and in order to secure the payment and performance
by Pledgor of the Liabilities, Pledgor has agreed to pledge to Pledgee all
of
the capital stock and other equity interests and securities of Pledge Entity
now
or hereafter owned or acquired by Pledgor.
NOW,
THEREFORE,
in
consideration of the premises and in order to induce the Buyers to purchase
the
Notes under the Purchase Agreement and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Pledgor hereby agrees with Pledgee as follows:
1. Defined
Terms.
Unless
otherwise defined herein, all capitalized terms used herein shall have the
meanings given them in the Purchase
Agreement. In addition, as used herein:
“Account Collateral”
shall
have the meaning ascribed thereto in Section
3
hereof.
“Blocked
Account”
shall
mean that certain deposit account established in the name of the Pledgor at
the
Depository Bank with account number 217560, together with any substitute or
replacement account thereof.
“Depository
Bank”
shall
mean The Bank of New York Trust Company, N.A.
“Event
of Default”
shall
have the meaning set forth in the Notes.
“Governmental
Authority”
shall
mean the government of the United States of America or any other nation, or
any
political subdivision thereof, whether state or local, or any agency, authority,
instrumentality, regulatory body, court, central bank or other entity exercising
executive, legislative, judicial, taxing, regulatory or administration powers
or
functions of or pertaining to government over Pledgor or any of its
Subsidiaries, or any of their respective properties, assets or
undertakings.
“Liabilities”
shall
mean all obligations, liabilities and indebtedness of every nature of Pledgor
from time to time owed or owing under or in respect of this Agreement, the
Purchase Agreement, the Notes, any of the other Security Documents and any
of
the other Transaction Documents, as the case may be, including, without
limitation, the principal amount of all debts, claims and indebtedness, accrued
and unpaid interest and all fees, costs and expenses, whether primary,
secondary, direct, contingent, fixed or otherwise, heretofore, now and/or from
time to time hereafter owing, due or payable whether before or after the filing
of a bankruptcy, insolvency or similar proceeding under applicable federal,
state, foreign or other law and whether or not an allowed claim in any such
proceeding.
“Lien”
shall
have the meaning set forth in the Purchase Agreement.
“Permitted
Lien”
shall
have the meaning set forth in the Purchase Agreement.
“Proceeds”
means
“proceeds,” as such term is defined in the UCC.
2. Pledge.
Pledgor
hereby pledges, assigns, hypothecates, transfers, delivers and grants to
Pledgee, for the benefit of itself and the Buyers, a first Lien on and first
priority perfected security interest in (i) all of the capital stock or other
equity interests of Pledge Entity now owned or hereafter acquired by Pledgor
(collectively, the “Pledged
Shares”),
(ii)
all other property hereafter delivered to, or in the possession or in the
custody of, Pledgee, in substitution for or in addition to the Pledged Shares,
(iii) the properties of Pledgor which is described in Section
6
below,
whether now or hereafter delivered to, or in the possession or custody of
Pledgor, and (iv) all proceeds of the collateral described in the preceding
clauses
(i),
(ii)
and
(iii)
(the
collateral described in clauses
(i)
through
(iv)
of this
Section
2
being
collectively referred to as the “Pledged
Collateral”),
as
collateral security for the prompt and complete payment and performance when
due
(whether at the stated maturity, by acceleration or otherwise) of the
Liabilities. All of the Pledged Shares now owned by Pledgor, if any, which
are
presently represented by certificates are listed on Exhibit A
hereto,
which certificates, with undated assignments separate from certificates or
stock
powers duly executed in blank by Pledgor and irrevocable proxies, are being
delivered to Pledgee simultaneously herewith. Pledgee shall maintain possession
and custody of the certificates, if any, representing the Pledged Shares and
any
additional Pledged Collateral.
2
3. Account
Collateral.
As
collateral security for the prompt payment in full when due (whether at stated
maturity, by acceleration or otherwise) of the Liabilities, Pledgor hereby
pledges and grants to the Pledgee, for the benefit of itself and the Buyers,
a
Lien on and security interest in and to all of Pledgor’s right, title and
interest in the following assets of Pledgor, whether now owned by Pledgor or
hereafter acquired and whether now existing or hereafter coming into existence
and wherever located (all being collectively referred to herein as “Account Collateral”):
(a) the
Blocked Account, including, without limitation, the balance from time to time
in
the Blocked Account maintained by Pledgor; and
(b) all
Proceeds, products, accessions, profits, income, benefits, substitutions,
additions and replacements of the Blocked Account and other rights to payments
from the Blocked Account not otherwise included in the foregoing.
4. Representations
and Warranties of Pledgor. Pledgor
represents and warrants to Pledgee, and covenants with Pledgee,
that:
(a) Exhibit
A
sets
forth (i) the authorized capital stock or other equity interests of Pledge
Entity, (ii) the number of shares of capital stock or other equity interests
of
Pledge Entity that are issued and outstanding as of the date hereof, and (iii)
the percentage of the issued and outstanding shares of capital stock or other
equity interests of Pledge Entity held by Pledgor. Pledgor has the power to
transfer the Pledged Collateral and is the record and beneficial owner of,
and
has good and marketable title to, the Pledged Shares, and such shares are and
will remain free and clear of all Liens except the Liens and security interests
in favor of Pledgee created by this Agreement;
(b) Pledgor
has rights in and the power to transfer the Account Collateral in which it
purports to grant a security interest pursuant to Section
3
hereof
(subject, with respect to after acquired Account Collateral, to Pledgor
acquiring the same) and no Lien other than Permitted Liens exists or will exist
upon such Collateral at any time;
(c) this
Agreement is effective to create in favor of Pledgee a valid security interest
in and Lien upon all of Pledgor’s right, title and interest in and to the
Account Collateral, and upon the Blocked Account being subject to an account
control agreement (the “Blocked
Account Agreement”)
in the
form attached hereto as Exhibit
B
among
the Pledgor, the depository institution and the Pledgee on behalf of the Buyers,
such security interest will be a duly perfected first priority security interest
in all of the Account Collateral;
(d) pursuant
to the Blocked Account Agreement, Pledgor shall grant to Pledgee a continuing
lien upon, and security interest in, the Account Collateral, and the depository
institution shall act as Pledgee’s agent in connection therewith;
(e) Pledgor
hereby authorizes the financial institution at which the Blocked Account is
maintained to provide Pledgee with such information with respect to the Blocked
Account as Pledgee from time to time reasonably may request, and Pledgor hereby
consents to such information being provided to Pledgee;
3
(f) except
as
set forth on Exhibit
A,
there
are no outstanding options, warrants or other similar agreements with respect
to
the Pledged Shares or any of the other Pledged Collateral;
(g) this
Agreement is the legal, valid and binding obligation of Pledgor, enforceable
against Pledgor in accordance with its terms;
(h) the
Pledged Shares have been duly and validly authorized and issued, are fully
paid
and non-assessable (as applicable), and the Pledged Shares listed on
Exhibit
A
constitute all of the issued and outstanding capital stock or other equity
interests of Pledge Entity;
(i) no
consent, approval or authorization of or designation or filing with any
governmental or regulatory authority on the part of Pledgor is required in
connection with the pledge and security interest granted under this
Agreement;
(j) the
execution, delivery and performance of this Agreement will not violate any
provision of any applicable law or regulation or of any order, judgment, writ,
award or decree of any court, arbitrator or governmental authority, domestic
or
foreign, or of the articles or certificate of incorporation, bylaws or
any
other similar organizational documents of
Pledgor or Pledge Entity or of any securities issued by Pledgor or Pledge Entity
or of any mortgage, indenture, lease, contract, or other agreement, instrument
or undertaking to which Pledgor or Pledge Entity is a party or which purports
to
be binding upon Pledgor or Pledge Entity or upon any of the assets of Pledgor
or
Pledge Entity, and will not result in the creation or imposition of any Lien
in
any of the assets of Pledgor or Pledge Entity, except as otherwise contemplated
by this Agreement;
(k) the
pledge, assignment and delivery of the Pledged Shares and the other Pledged
Collateral pursuant to this Agreement and the filing in the appropriate filing
office of a UCC financing statement describing the Pledged Collateral consisting
of uncertificated membership interests as collateral create a valid first Lien
on and perfected first priority security interest in such Pledged Shares and
Pledged Collateral and the proceeds thereof in favor of Pledgee, subject to
no
prior Lien or to any agreement purporting to grant to any third party a security
interest in the property or assets of Pledgor which would include the Pledged
Shares or any other Pledged Collateral. Pledgor covenants and agrees that it
will defend, for the benefit of Pledgee, Pledgee’s right, title and security
interest in and to the Pledged Shares, the other Pledged Collateral and the
proceeds thereof against the claims and demands of all other persons or
entities;
(l) Pledgor
hereby represents and warrants that the Pledged Collateral is
uncertificated;
4
(m) Pledgor
(i) will not become a person whose property or interests in property are blocked
or subject to blocking pursuant to Section 1 of Executive Order 13224 of
September 23, 2001 Blocking Property and Prohibiting Transactions with Persons
Who Commit, Threaten to Commit or Support Terrorism (66 Fed. Reg. 49079(2001),
(ii) will not engage in any dealings or transactions prohibited by Section
2 of
such executive order, or (iii) will not otherwise become a person on the list
of
Specially Designated Nationals and Blocked Persons or subject to the limitations
or prohibitions under any other Office of Foreign Asset Control regulation
or
executive order.
5. Perfection;
Maintenance, etc.
(a) Pledgor
shall give, execute, deliver, file and/or record any notice, instrument,
document, agreement, or other papers that may be necessary or desirable (in
the
reasonable judgment of the Pledgee) to create, preserve, perfect or validate
the
security interest granted pursuant hereto or to enable the Pledgee to exercise
and enforce the rights of the Pledgee hereunder with respect to such pledge
and
security interest.
(b) Pledgor
will, when and as often as requested by Pledgee, furnish to Pledgee statements
and schedules further identifying and describing the Account Collateral and
such
other reports in connection with the Account Collateral as Pledgee may
reasonably request, all in reasonable detail.
(c) Pledgor
will not create, permit or suffer to exist, and will defend the Account
Collateral against and take such other action as is necessary to remove, any
Lien on the Account Collateral except Permitted Liens, and will defend the
right, title and interest of Pledgee in and to the Account Collateral and in
and
to all Proceeds thereof against the claims and demands of all Persons
whatsoever.
(d) Whether
or not any Event of Default has occurred or is continuing, Pledgee may, but
shall not be required to, take any steps Pledgee deems necessary or appropriate
to preserve any Account Collateral or any rights against third parties to any
of
the Account Collateral. Funds held in the Blocked Account shall be held by
Pledgee as additional Account Collateral and subject to the sole control of
Pledgee. Pledgor shall not withdraw or otherwise direct the disposition of
such
funds. Upon the occurrence and during the continuance of an Event of Default,
Pledgee may apply the funds held in the Blocked Account in the manner set forth
in the Notes (or, if not so set forth, in a manner acceptable to, and at the
election of, Pledgee). Unless an Event of Default has occurred and is
continuing, upon Pledgor’s delivery of a Company Early Redemption Notice (as
defined in the Note) pursuant to Section 3(c) of the Note providing that Pledgee
shall apply all or a portion of the funds held in the Blocked Account as a
prepayment of the Principal (as defined in the Note), Pledgee shall promptly
direct the Depository Bank to wire transfer the amount of the Principal to
be
redeemed to Pledgee to be applied in the manner set forth in the Notes (or,
if
not so set forth, in a manner acceptable to, and at the election of,
Pledgee).
5
6. Dividends,
Distributions, Etc. If,
while
this Agreement is in effect, Pledgor shall become entitled to receive or shall
receive any certificate (including, without limitation, any certificate
representing a dividend or a distribution in connection with any
reclassification, increase or reduction of capital, or issued in connection
with
any reorganization, merger or consolidation), or any options or rights, whether
as an addition to, in substitution for, or in exchange for any of the Pledged
Shares or otherwise, Pledgor agrees, in each case, to accept the same as
Pledgee’s agent and to hold the same in trust for Pledgee, and to deliver the
same promptly (but in any event within three days) to Pledgee in the exact
form
received, with the endorsement of Pledgor when necessary and/or with appropriate
undated assignments separate from certificates or stock powers duly executed
in
blank, to be held by Pledgee subject to the terms hereof, as additional Pledged
Collateral. Pledgor shall promptly deliver to Pledgee (i) a Pledge Addendum
with
respect to such additional certificates, and (ii) any financing statements
or
amendments to financing statements as requested by Pledgee. Pledgor hereby
authorizes Pledgee to attach each Pledge Addendum to this Agreement. In case
any
distribution of capital shall be made on or in respect of the Pledged Shares
or
any property shall be distributed upon or with respect to the Pledged Shares
pursuant to the recapitalization or reclassification of the capital of the
issuer thereof or pursuant to the reorganization thereof, the property so
distributed shall be delivered to Pledgee to be held by it as additional Pledged
Collateral. All sums of money and property so paid or distributed in respect
of
the Pledged Shares which are received by Pledgor shall, until paid or delivered
to Pledgee, be held by Pledgor in trust as additional Pledged
Collateral.
7. Voting
Rights; Dividends; Certificates.
(a) So
long
as no Event of Default has occurred and is continuing, Pledgor shall be entitled
(subject to the other provisions hereof, including, without limitation,
Section
10
below)
to exercise its voting and other consensual rights with respect to the Pledged
Shares and otherwise exercise the incidents of ownership thereof in any manner
not inconsistent with this Agreement or the Purchase Agreement and the other
Transaction Documents. Pledgor hereby grants to Pledgee or its nominee, an
irrevocable proxy to exercise all voting and corporate rights relating to the
Pledged Shares in any instance, which proxy shall be effective, at the
discretion of Pledgee, upon the occurrence and during the continuance of an
Event of Default. Upon
the
request of Pledgee at any time, Pledgor agrees to deliver to Pledgee such
further evidence of such irrevocable proxy or such further irrevocable proxies
to vote the Pledged Shares as Pledgee may request.
(b) Subject
to any sale or other disposition by Pledgee of the Pledged Shares, any other
Pledged Collateral or other property pursuant to this Agreement, upon the
indefeasible full payment in cash, satisfaction and termination of all of the
Liabilities and the termination of this Agreement pursuant to Section
13
hereof
and of the Liens and security interests hereby granted, the Pledged Shares,
the
other Pledged Collateral, the Account Collateral and any other property then
held as part of the Pledged Collateral in accordance with the provisions of
this
Agreement shall be promptly returned to Pledgor or to such other persons or
entities as shall be legally entitled thereto.
(c) The
Pledged Collateral shall not at any time be represented by a certificate unless
(i) Pledgor has promptly (but, in any event, within three (3) Business Days
thereof) delivered to the Collateral Agent all certificates representing the
Pledged Collateral with appropriate undated assignments separate from
certificates or stock powers duly executed in blank and (ii) the limited
liability company operating agreement of the Pledge Entity expressly provides
that such interests shall be a “security” within the meaning of Article 8 of the
UCC of the applicable jurisdiction.
6
8. Rights
of Pledgee. Pledgee
shall not be liable for failure to collect or realize upon the Liabilities
or
any collateral security or guaranty therefor, or any part thereof, or for any
delay in so doing, nor shall Pledgee be under any obligation to take any action
whatsoever with regard thereto. Any or all of the Pledged Shares held by Pledgee
hereunder may, if an Event of Default has occurred and is continuing, without
notice, be registered in the name of Pledgee or its nominee, and Pledgee or
its
nominee may thereafter without notice exercise all voting and corporate rights
at any meeting with respect to Pledge Entity and exercise any and all rights
of
conversion, exchange, subscription or any other rights, privileges or options
pertaining to any of the Pledged Shares as if it were the absolute owner
thereof, including, without limitation, the right to vote in favor of, and
to
exchange at its discretion any and all of the Pledged Shares upon, the merger,
consolidation, reorganization, recapitalization or other readjustment with
respect to Pledge Entity or upon the exercise by Pledge Entity, Pledgor or
Pledgee of any right, privilege or option pertaining to any of the Pledged
Shares, and in connection therewith, to deposit and deliver any and all of
the
Pledged Shares with any committee, depository, transfer agent, registrar or
other designated agency upon such terms and conditions as Pledgee may reasonably
determine, all without liability except to account for property actually
received by Pledgee, but Pledgee shall have no duty to exercise any of the
aforesaid rights, privileges or options and shall not be responsible for any
failure to do so or delay in so doing.
9. Remedies. Upon
the
occurrence and during the continuance of an Event of Default, Pledgee may
exercise in respect of the Pledged Collateral or the Account Collateral, in
addition to other rights and remedies provided for herein, in the Blocked
Account Agreement, or otherwise available to it, all the rights and remedies
of
a secured party under the Uniform Commercial Code (“UCC”)
in
effect in the State of New York from time to time, whether or not the UCC
applies to the affected Pledged Collateral or the Account Collateral (or the
Uniform Commercial Code as in effect in any other relevant jurisdiction).
Pledgee also, 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) to or upon Pledgor or any other person or entity (all
and each of which demands, advertisements and/or notices are hereby expressly
waived), may forthwith collect, receive, appropriate and realize upon the
Pledged Collateral or the Account Collateral, or any part thereof, and/or may
forthwith date and otherwise fill in the blanks on any assignments separate
from
certificates or stock power or otherwise sell, assign, give an option or options
to purchase, contract to sell or otherwise dispose of and deliver said Pledged
Collateral, or any part thereof, in one or more portions at one or more public
or private sales or dispositions, at any exchange or broker’s board or at any of
Pledgee’s offices or elsewhere upon such terms and conditions as Pledgee may
deem advisable and at such prices as it may deem best, for any combination
of
cash and/or securities or other property or on credit or for future delivery
without assumption of any credit risk, with the right to Pledgee upon any such
sale, public or private, to purchase the whole or any part of said Pledged
Collateral so sold, free of any right or equity of redemption in Pledgor, which
right or equity is hereby expressly waived or released. Pledgee shall apply
the
net proceeds of any such collection, recovery, receipt, appropriation,
realization, sale or disposition, after deducting all costs and expenses of
every kind incurred therein or incidental to the safekeeping of any and all
of
the Pledged Collateral or in any way relating to the rights of Pledgee
hereunder, including attorneys’ fees and legal expenses, to the payment, in
whole or in part, of the Liabilities, in such order as Pledgee may elect.
Pledgor shall remain liable for any deficiency remaining unpaid after such
application. Only after so paying over such net proceeds and after the payment
by Pledgee of any other amount required by any provision of law, including,
without limitation, Section 9-608 of the UCC, need Pledgee account for the
surplus, if any, to Pledgor. Pledgor agrees that Pledgee will give reasonable
notice (such reasonable notice to be determined by Pledgee in its sole and
absolute discretion) of the time and place of any public sale or of the time
after which a private sale or other intended disposition is to take place.
No
notification need be given to Pledgor if it has signed after default a statement
renouncing or modifying any right to notification of sale or other intended
disposition. The rights, remedies and powers conferred by this Section
9
are in
addition to, and not in substitution for, any other rights, remedies or powers
that Pledgee may have under any Transaction Document, at law, in equity or
by or
under the UCC or any other statute or agreement. Pledgee may proceed by way
of
any action, suit or other proceeding at law or in equity and no right, remedy
or
power of Pledgee will be exclusive of or dependent on any other. Pledgee may
exercise any of its rights, remedies or powers separately or in combination
and
at any time.
7
10. No
Disposition, Etc. Pledgor
agrees that it will not sell, assign, transfer, exchange, or otherwise dispose
of, or grant any option with respect to, the Pledged Shares or any other Pledged
Collateral, nor will Pledgor create, incur or permit to exist any Lien with
respect to any of the Pledged Shares or any other Pledged Collateral, or any
interest therein, or any proceeds thereof, except for the Lien and security
interest of Pledgee provided for by this Agreement.
11. Sale
of Pledged Shares.
(a) Pledgor
recognizes that Pledgee may be unable to effect a public sale or disposition
(including, without limitation, any disposition in connection with a merger
of
Pledge Entity) of any or all the Pledged Shares by reason of certain
prohibitions contained in the Securities Act of 1933, as amended (the
“1933
Act”),
and
applicable state securities laws, but may be compelled to resort to one or
more
private sales or dispositions thereof to a restricted group of purchasers who
will be obliged to agree, among other things, to acquire such securities for
their own account, for investment and not with a view to the distribution or
resale thereof. Pledgor acknowledges and agrees that any such private sale
or
disposition may result in prices and other terms (including the terms of any
securities or other property received in connection therewith) less favorable
to
the seller than if such sale or disposition were a public sale or disposition
and, notwithstanding such circumstances, agrees that any such private sale
or
disposition shall be deemed to be reasonable and affected in a commercially
reasonable manner. Pledgee shall be under no obligation to delay a sale or
disposition of any of the Pledged Shares in order to permit Pledgor or Pledge
Entity to register such securities for public sale under the 1933 Act, or under
applicable state securities laws, even if Pledgor or Pledge Entity would agree
to do so.
8
(b) Pledgor
further agrees to do or cause to be done all such other acts and things as
may
be reasonably necessary to make such sales or dispositions of the Pledged Shares
valid and binding and in compliance with any and all applicable laws,
regulations, orders, writs, injunctions, decrees or awards of any and all
courts, arbitrators or governmental instrumentalities, domestic or foreign,
having jurisdiction over any such sales or dispositions, all at Pledgor's
expense. Pledgor further agrees that a breach of any of the covenants contained
in Sections
6,
7(a),
10,
11
and
26
will
cause irreparable injury to Pledgee and that Pledgee has no adequate remedy
at
law in respect of such breach and, as a consequence, agrees, without limiting
the right of Pledgee to seek and obtain specific performance of other
obligations of Pledgor contained in this Agreement, that each and every covenant
referenced above shall be specifically enforceable against Pledgor, and Pledgor
hereby waives and agrees not to assert any defenses against an action for
specific performance of such covenants.
(c) Pledgor
further agrees to indemnify and hold harmless the Buyers, Pledgee and their
respective successors and assigns, their respective officers, directors,
employees, attorneys and agents, and any person or entity in control of any
thereof, from and against any loss, liability, claim, damage and expense,
including, without limitation, legal fees and expenses (in this paragraph
collectively called the “Indemnified
Liabilities”),
under
federal and state securities laws or otherwise insofar as such Indemnified
Liability (i) arises out of or is based upon any untrue statement or alleged
untrue statement of a material fact contained in any registration statement,
prospectus or offering memorandum or in any preliminary prospectus or
preliminary offering memorandum or in any amendment or supplement to any thereof
or in any other writing prepared in connection with the offer, sale or resale
of
all or any portion of the Pledged Collateral unless such untrue statement of
material fact was provided by Pledgee, in writing, specifically for inclusion
therein, or (ii) arises out of or is based upon any omission or alleged omission
to state therein a material fact required to be stated or necessary to make
the
statements therein not misleading, such indemnification to remain operative
regardless of any investigation made by or on behalf of Pledgee or any successor
thereof, or any person or entity in control of any thereof. In connection with
a
public sale or other distribution, Pledgor will provide customary
indemnification to any underwriters, their successors and assigns, officers
and
directors and each person or entity who controls any such underwriter (within
the meaning of the 1933 Act). If and to the extent that the foregoing
undertakings in this paragraph may be unenforceable for any reason, Pledgor
agrees to make the maximum contribution to the payment and satisfaction of
each
of the Indemnified Liabilities which is permissible under applicable law. The
obligations of Pledgor under this paragraph
(c)
shall
survive any termination of this Agreement.
(d) Pledgor
further agrees to waive any and all rights of subrogation it may have against
Pledge Entity upon the sale or disposition of all or any portion of the Pledged
Collateral by Pledgee pursuant to the terms of this Agreement until the
termination of this Agreement in accordance with Section
13
below.
9
12. No
Waiver; Cumulative Remedies.
Pledgee
shall not by any act, delay, omission or otherwise be deemed to have waived
any
of its remedies hereunder, and no waiver by Pledgee shall be valid unless in
writing and signed by Pledgee, and then only to the extent therein set forth.
A
waiver by Pledgee of any right or remedy hereunder on any one occasion shall
not
be construed as a bar to any right or remedy which Pledgee would otherwise
have
on any further occasion. No course of dealing between Pledgor and Pledgee and
no
failure to exercise, nor any delay in exercising on the part of Pledgee or
the
Buyers of, any right, power or privilege hereunder or under the other
Transaction Documents shall impair such right or remedy or operate as a waiver
thereof; nor shall any single or partial exercise of any right, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided are cumulative and may be exercised singly or concurrently, and are
not
exclusive of any rights or remedies provided by law or in the Purchase
Agreement.
13. Termination. (a) This
Agreement, the Blocked Account Agreement and the Liens and security interests
granted hereunder shall terminate, (b) Pledgee shall promptly return any Pledged
Collateral then held by Pledgee in accordance with the provisions of this
Agreement to Pledgor and promptly release its control of the Account Collateral,
including, without limitation, the Blocked Account, and (c) Pledgee shall,
at
the expense of Pledgor, promptly after Pledgee’s receipt of Pledgor’s written
request, execute and deliver to Pledgor such documents as Pledgor shall
reasonably request in writing, to evidence such termination described in clause
(a) herein, the return of such Pledged Collateral to Pledgor and the release
of
control of the Account Collateral, including, without limitation, the
termination or modification of the terms of the Direction Letter, upon the
termination of the Notes and the full and complete performance and indefeasible
satisfaction of all of the Liabilities (i) in respect of the Notes (including,
without limitation, the indefeasible payment in full in cash of all such
Liabilities) and (ii) with respect to which claims have been asserted by Pledgee
and/or Buyers.
14. Possession
of Pledged Collateral. Beyond
the exercise of reasonable care to assure the safe custody of the Pledged Shares
in the physical possession of Pledgee pursuant hereto, neither Pledgee, nor
any
nominee of Pledgee, shall have any duty or liability to collect any sums due
in
respect thereof or to protect, preserve or exercise any rights pertaining
thereto (including any duty to ascertain or take action with respect to calls,
conversions, exchanges, maturities, tenders or other matters relating to the
Pledged Collateral and any duty to take any necessary steps to preserve rights
against any parties with respect to the Pledged Collateral), and shall be
relieved of all responsibility for the Pledged Collateral upon surrendering
them
to Pledgor. Pledgor assumes the responsibility for being and keeping itself
informed of the financial condition of Pledge Entity and of all other
circumstances bearing upon the risk of non-payment of the Liabilities, and
Pledgee shall have no duty to advise Pledgor of information known to Pledgee
regarding such condition or any such circumstance. Pledgee shall have no duty
to
inquire into the powers of Pledge Entity or its officers, directors, managers,
members, partners or agents thereof acting or purporting to act on its behalf.
10
15. Taxes
and Expenses.
Pledgor
will upon demand pay to Pledgee, (a) any taxes (excluding income taxes,
franchise taxes or other taxes levied on gross earnings, profits or the like
of
Pledgee) payable or ruled payable by any Governmental Authority in respect
of
this Agreement, together with interest and penalties, if any, and (b) all
expenses, including the fees and expenses of counsel for Pledgee and of any
experts and agents that Pledgee may incur in connection with (i) the
administration, modification or amendment of this Agreement, (ii) the custody
or
preservation of, or the sale of, collection from, or other realization upon,
any
of the Pledged Collateral, (iii) the exercise or enforcement of any of the
rights of Pledgee hereunder, or (iv) the failure of Pledgor to perform or
observe any of the provisions hereof.
16. Pledgee
Appointed Attorney-In-Fact.
Pledgor
hereby irrevocably appoints Pledgee as Pledgor’s attorney-in-fact, with full
authority in the place and stead of Pledgor and in the name of Pledgor or
otherwise, from time to time in Pledgee’s discretion, to take any action and to
execute any instrument that Pledgee deems reasonably necessary or advisable
to
accomplish the purposes of this Agreement, including, without limitation, (i)
to
receive, endorse and collect all instruments made payable to Pledgor
representing any dividend, interest payment or other distribution in respect
of
the Pledged Collateral or any part thereof and to give full discharge for the
same, when and to the extent permitted by this Agreement and (ii) to complete
any assignment separate from certificate delivered hereunder; provided that
the
power of attorney granted hereunder shall only be exercised by Pledgee after
the
occurrence and during the continuance of an Event of Default. The power of
attorney granted hereunder is a power coupled with an interest and shall be
irrevocable until the Liabilities are indefeasibly paid in full in cash and
this
Agreement is terminated in accordance with Section
13
hereof
17. Governing
Law; Jurisdiction; Jury Trial.
All
questions concerning the construction, validity, enforcement and interpretation
of this Agreement shall be governed by the internal laws of the State of New
York, without giving effect to any choice of law or conflict of law provision
or
rule (whether of the State of New York or any other jurisdiction) that would
cause the application of the laws of any jurisdiction other than the State
of
New York. Each party hereby irrevocably submits to the non-exclusive
jurisdiction of the state and federal courts sitting in the City of New York,
borough of Manhattan, for the adjudication of any dispute hereunder or in
connection herewith or with any transaction contemplated hereby or discussed
herein, and hereby irrevocably waives, and agrees not to assert in any suit,
action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding is brought
in an inconvenient forum or that the venue of such suit, action or proceeding
is
improper. Each party hereby irrevocably waives personal service of process
and
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address for such notices to it
under
this Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by law.
Notwithstanding the foregoing, the Pledgee may enforce its rights and remedies
in any other jurisdiction applicable to the Pledged Collateral. EACH PARTY
HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST,
A
JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION
HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED
HEREBY.
11
18. Counterparts.
This
Agreement may be executed in two or more identical counterparts, all of which
shall be considered one and the same agreement and shall become effective when
counterparts have been signed by each party and delivered to the other party;
provided that a facsimile, .pdf or similar electronically transmitted signature
shall be considered due execution and shall be binding upon the signatory
thereto with the same force and effect as if the signature were an original
signature.
19. Headings.
The
headings of this Agreement are for convenience of reference and shall not form
part of, or affect the interpretation of, this Agreement.
20. Severability.
If any
provision of this Agreement shall be invalid or unenforceable in any
jurisdiction, such invalidity or unenforceability shall not affect the validity
or enforceability of the remainder of this Agreement in that jurisdiction or
the
validity or enforceability of any provision of this Agreement in any other
jurisdiction.
21. Entire
Agreement; Amendments.
This
Agreement supersedes all other prior oral or written agreements between each
Pledgor, Pledgee, the Buyers and their affiliates and persons acting on their
behalf with respect to the matters discussed herein, and this Agreement and
the
Transaction Documents and instruments referenced herein and therein contain
the
entire understanding of the parties with respect to the matters covered herein
and therein.
22. Notices.
All
notices, approvals, requests, demands and other communications hereunder shall
be delivered or made in the manner set forth in, and shall be effective in
accordance with the terms of, the Purchase Agreement, in the case of
communications to the Collateral Agent, directed to the notice address set
forth
below Collateral Agent’s signature hereto.
23. Successors
and Assigns.
This
Agreement shall be binding upon and inure to the benefit of the parties and
their respective successors and assigns, including any purchasers of the Notes.
Pledgor shall not assign this Agreement or any rights or obligations hereunder
without the prior written consent of Pledgee. Pledgee may assign its rights
hereunder without the consent of Pledgor, in which event such assignee shall
be
deemed to be Pledgee hereunder with respect to such assigned
rights.
24. No
Third Party Beneficiaries.
This
Agreement is intended for the benefit of the parties hereto and their respective
successors and permitted assigns, and is not for the benefit of, nor may any
provision hereof be enforced by, any other person or entity.
25. Survival.
All
representations, warranties, covenants and agreements of Pledgor and Pledgee
shall survive the execution and delivery of this Agreement.
12
26. Further
Assurances.
Pledgor
agrees that at any time and from time to time upon the written request of
Pledgee, Pledgor will execute and deliver all assignments separate from
certificates or stock powers, financing statements and such further documents
and do such further acts and things as Pledgee may reasonably request consistent
with the provisions hereof in order to carry out the intent and accomplish
the
purpose of this Agreement and the consummation of the transactions contemplated
hereby.
27. No
Strict Construction.
The
language used in this Agreement will be deemed to be the language chosen by
the
parties to express their mutual intent, and no rules of strict construction
will
be applied against any party.
28. Pledgee
Authorized.
Pledgor
hereby authorizes Pledgee to file one or more financing or continuation
statements and amendments thereto (or similar documents required by any laws
of
any applicable jurisdiction) relating to all or any part of the Pledged Shares
or other Pledged Collateral without the signature of Pledgor.
29. Pledgee
Acknowledgement.
Pledgor
acknowledges receipt of an executed copy of this Agreement. The Pledgor waives
the right to receive any amount that it may now or hereafter be entitled to
receive (whether by way of damages, fine, penalty, or otherwise) by reason
of
the failure of the Pledgee to deliver to the Pledgor a copy of any financing
statement or any statement issued by any registry that confirms registration
of
a financing statement relating to this Agreement.
30. Collateral
Agent and Buyer Indemnification.
(a) Each
Buyer hereby irrevocably appoints and authorizes the Pledgee to act as
collateral agent (the “Collateral
Agent”)
on its
behalf under this Agreement and to enter into each of the instruments, documents
and agreements (the “Financing
Documents”)
to
which Pledgee is a party (including in its capacity as Collateral Agent) on
such
Buyer’s behalf and to take such actions as Collateral Agent on such Buyer’s
behalf and to exercise such powers under the Financing Documents as are
delegated to Collateral Agent or Pledgee (as applicable) by the terms thereof,
together with all such powers as are reasonably incidental thereto. The
Collateral Agent shall take such action under this Agreement and/or any other
Transaction Documents as the Collateral Agent shall reasonably be directed
by
the Requisite Buyers in accordance with the terms of the Transaction Documents.
Pledgee is authorized and empowered to amend, modify, or waive any provisions
of
this Agreement or the other Financing Documents only with the consent of the
Requisite Buyers.
13
(b) Whether
or not the transactions contemplated hereby shall be consummated, upon demand
therefor the Buyers shall indemnify the Collateral Agent (to the extent not
reimbursed by or on behalf of the Company and without limiting the obligation
of
the Company to do so), ratably from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses and disbursements of any kind whatsoever, including, for purposes
of
clarification, all Taxes, which may at any time (including at any time following
the payment in full of the Notes and the termination or resignation of the
Collateral Agent) be imposed on, incurred by or asserted against the Collateral
Agent in any way relating to or arising out of this Agreement, any other
Financing Document or any document contemplated hereby or referred to herein
or
the transactions contemplated hereby or thereby or any action taken or omitted
by the Collateral Agent under or in connection with any of the foregoing;
provided, however, that no Buyer shall be liable for the payment to the
Collateral Agent of any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting solely from the Collateral Agent’s gross negligence or willful
misconduct. In addition, each Buyer shall reimburse the Collateral Agent upon
demand for its ratable share of any costs or out of pocket expenses (including
attorney costs) incurred by the Collateral Agent in connection with the
preparation, execution, delivery, administration, modification, amendment or
enforcement (whether through negotiations, legal proceedings or otherwise)
of,
or legal advice in respect of rights or responsibilities under, this Agreement,
any other Transaction Document, or any document contemplated hereby or referred
to herein to the extent that the Collateral Agent is not reimbursed for such
expenses by or on behalf of the Company. Without limiting the generality of
the
foregoing, if any Governmental Authority of any jurisdiction asserts a claim
that the Collateral Agent did not properly withhold tax from amounts paid to
or
for the account of any Buyer (because the appropriate form was not delivered,
was not properly executed, or because such Buyer failed to notify the Collateral
Agent of a change in circumstances which rendered the exemption from, or
reduction of, withholding tax ineffective, or for any other reason) such Buyer
shall indemnify the Collateral Agent fully for all amounts paid, directly or
indirectly, by the Collateral Agent as tax or otherwise, including penalties
and
interest, and including any taxes imposed by any jurisdiction on the amounts
payable to the Collateral Agent under this Section
30(b),
together with all related costs and expenses (including attorney costs). The
obligation of the Buyers in this Section
30(b)
shall
survive the payment of all Liabilities hereunder.
(c) The
Collateral Agent shall not be deemed to have knowledge or notice of the
occurrence of any Event of Default or any event that with the giving of notice
or passage of time would constitute an Event of Default unless the Collateral
Agent shall have received written notice from a Buyer describing such Event
of
Default or event that with the giving of notice or passage of time would
constitute an Event of Default and stating that such notice is a “notice of
default”. Upon the occurrence and continuance of an Event of Default, or an
event that with the giving of notice or passage of time would constitute an
Event of Default, the Collateral Agent shall take such action under this
Agreement and/or any other Transaction Documents with respect to such Event
of
Default or event that with the giving of notice or passage of time would
constitute an Event of Default as Collateral Agent shall reasonably be directed
by the Requisite Buyers in accordance with the terms of the Transaction
Documents, provided that unless and until the Collateral Agent shall have
received such directions, the Collateral Agent may (but shall not be obligated
to) take such action, or refrain from taking such action, with respect of such
Event of Default or event that with the giving of notice or passage of time
would constitute an Event of Default or as the Collateral Agent shall deem
advisable in the best interests of the Buyers. In taking such action or
refraining from taking such action without specific direction from the Requisite
Buyers, the Collateral Agent shall use the same degree of care and skill as
a
prudent person would exercise or use under the circumstances in the conduct
of
such person’s own affairs.
14
(d) Nothing
in this Section
30
shall be
deemed to limit or otherwise affect the rights of Pledgee or Buyers to exercise
any remedy provided in this Agreement or any other Transaction
Document.
(e) The
Collateral Agent may resign from the performance of all of its functions and
duties hereunder and/or under the other Financing Documents at any time by
giving thirty (30) Business Days prior written notice to the Buyers and Pledgor.
Such resignation shall take effect upon the appointment of a successor
Collateral Agent pursuant to clause (f) below or as otherwise provided below.
(f) Upon
(i)
the Buyers’ receipt of a notice of resignation by the Collateral Agent in
accordance with clause (e) above, or (ii) written notice by the Requisite Buyers
to Collateral Agent of the Requisite Buyers’ election to remove the existing
Collateral Agent and appoint a successor Collateral Agent, the Requisite Buyers
shall have the right to appoint a successor Collateral Agent. Upon the
acceptance of a successor's appointment as Collateral Agent hereunder and notice
of such acceptance to the retiring Collateral Agent, such successor shall
succeed to and become vested with all of the rights, powers, privileges and
duties of the retiring (or retired) Collateral Agent, the retiring Collateral
Agent's resignation shall become immediately effective and the retiring
Collateral Agent shall be discharged from all of its duties and obligations
hereunder and under the other Financing Documents (if such resignation was
not
already effective and such duties and obligations not already discharged, as
provided below in this paragraph). If no such successor shall have been so
appointed by Requisite Buyers and shall have accepted such appointment within
thirty (30) days after the retiring Collateral Agent gives notice of its
resignation or the Requisite Buyers give notice of their election to replace
the
retiring Collateral Agent, then the retiring Collateral Agent may, on behalf
of
the Buyers (but without any obligation) appoint a successor Collateral Agent
without the consent of any Buyer. From and following the expiration of such
thirty (30) day period, Collateral Agent shall have the exclusive right without
any Person's consent, upon one (1) Business Days' notice to the Buyers, to
make
its resignation or removal effective immediately. From and following the
effectiveness of such notice, (i) the retiring Collateral Agent shall be
discharged from its duties and obligations hereunder and under the other
Financing Documents and (ii) all actions, payments, communications and
determinations provided to be made by, to or through Collateral Agent shall
instead be made by or to each Buyer directly, until such time as Requisite
Buyers appoint a Collateral Agent as provided for above in this paragraph.
The
provisions of this Agreement shall continue in effect for the benefit of any
retiring Collateral Agent and its sub-agents after the effectiveness of its
resignation or removal hereunder and under the other Financing Documents in
respect of any actions taken or omitted to be taken by any of them while the
retiring Collateral Agent was acting or was continuing to act as Collateral
Agent.
[Signature
Page Follows]
15
IN
WITNESS WHEREOF, the parties hereto have caused this Pledge and Security
Agreement to be duly executed and delivered by their duly authorized officers
on
the date first above written.
|
PLEDGOR:
|
|||
|
MRU
HOLDINGS, INC.,
a
Delaware corporation
|
|||
|
By:
|
/s/
Xxxxxx Xxxx
|
||
|
Name:
|
Xxxxxx Xxxx | ||
|
Title:
|
Chief Financial Officer | ||
|
PLEDGEE:
|
|||
|
VIKING
ASSET MANAGEMENT L.L.C.,
a
California limited liability company, in its capacity as collateral
agent
for the Buyers
|
|||
|
By:
|
/s/
S. Xxxxxxx Xxxxxxx
|
||
|
Name:
|
S.
Xxxxxxx Xxxxxxx
|
||
|
Title:
|
Chief
Financial Officer
|
||
|
Notice
Address:
|
|||
|
Viking
Asset Management, LLC
|
|||
|
000
Xxxxxxxxxx Xxxxxx, 00xx
Xxxxx
|
|||
|
Xxx
Xxxxxxxxx, Xxxxxxxxxx 00000
|
|||
|
Attention:
Xxxxxxx Xxxxxxx
|
|||
|
Telecopy:
(000) 000-0000
|
|||
|
-
and -
|
|||
|
Viking
Asset Management, LLC
|
|||
|
00
Xxxxxxxxx Xxxxxx, 0xx
Xxxxx
|
|||
|
Xxxxxxxxx,
Xxxxxxxxxxx 00000
|
|||
|
Attention:
Xxxxxx X. Xxxxxxxx
|
|||
|
Telecopy:
(000) 000-0000
|
|||
IN
WITNESS WHEREOF, the parties hereto have caused this Pledge and Security
Agreement to be duly executed and delivered as of the day and year first above
written.
|
BUYERS:
|
|||
|
Solely
for the purposes of Section
30
|
|||
|
THE
LONGVIEW FUND, L.P.,
a
California limited partnership, as a Buyer
|
|||
|
By:
|
Viking
Asset Management, LLC
|
||
|
Its:
|
Investment
Advisor
|
||
|
By:
|
/s/
S. Xxxxxxx Xxxxxxx
|
||
|
Name:
|
S.
Xxxxxxx Xxxxxxx
|
||
|
Title:
|
Chief
Financial Officer
|
||
|
LONGVIEW
MARQUIS MASTER FUND, L.P.,
a
British Virgin Islands limited partnership, as a Buyer
|
|||
|
By:
|
Viking
Asset Management, LLC
|
||
|
Its:
|
Investment
Advisor
|
||
|
By:
|
/s/
S. Xxxxxxx Xxxxxxx
|
||
|
Name:
|
S.
Xxxxxxx Xxxxxxx
|
||
|
Title:
|
Chief
Financial Officer
|
||
ACKNOWLEDGEMENT
Each
of
the undersigned hereby (i) acknowledges receipt of a copy of the foregoing
Pledge and Security Agreement, (ii) waives any rights or requirement at any
time
hereafter to receive a copy of such Pledge and Security Agreement in connection
with the registration of any Pledged Shares (as defined therein) in the name
of
Pledgee or its nominee or the exercise of voting rights by Pledgee and (iii)
agrees promptly to note on its books and records the grant of the security
interest in the stock or other equity interests of the undersigned as provided
in such Pledge and Security Agreement.
Dated:
October 19, 2007
|
MRU
ABS LLC,
a
Delaware limited liability company
|
|||
|
By:
|
/s/
Xxxxxx Xxxx
|
||
|
Name:
|
Xxxxxx Xxxx | ||
|
Title:
|
Director | ||
EXHIBIT
A
DESCRIPTION
OF CAPITAL STOCK OR EQUITY INTERESTS OF PLEDGE ENTITY
|
Name
of
Pledge
Entity
|
Class
of Stock or
Other Equity Interests |
Authorized
No. of
Shares
or Units
|
Issued
and Outstanding
Shares or Units |
Percentage
of Shares or Units
Held
by Pledgor
|
|
MRU
ABS LLC
|
Limited
Liability Company Membership Interests
|
N/A
|
100%
|
100%
|
2
EXHIBIT
B
Blocked
Account Agreement
[See
attached]
3
