STOCK PLEDGE AGREEMENT
STOCK PLEDGE AGREEMENT, dated as of April 23, 1999, made by
The Translation Group, Ltd., a Delaware corporation with an address of 00
Xxxxxxxxxx Xxxxxx, Xxxxxxxxxxx, Xxx Xxxxxx 00000 (the "PLEDGOR"), in favor of
Planet Access Networks, Inc., a New Jersey corporation with an address of 0
Xxxxxxxx Xxxx, Xxxxx 000, Xxxxxxxx, Xxx Xxxxxx 00000 (the "PLEDGEE").
RECITALS
Pursuant to the Stock Purchase Agreement, dated as of April
23, 1999 (as amended, supplemented or otherwise modified from time to time, the
"STOCK PURCHASE AGREEMENT"), among Pledgor and the Pledgee of even date
herewith, Pledgor has made a commitment to provide, on or before September 15,
1999 (i) $900,000 in immediately available funds to Pledgee; and either (ii)
additional financing in the amount of $4,000,000, less transaction related
costs, through an initial public offering of Pledgee's common stock; or (iii)
additional financing in the amount of $4,000,000 directly from Pledgor
(collectively, the "Commitments"). It is a condition precedent to the obligation
of the Pledgee to enter into the Stock Purchase Agreement that the Pledgor shall
have executed and delivered this Pledge Agreement to the Pledgee.
NOW, THEREFORE, in consideration of the premises and to induce
the Pledgee to enter into the Stock Purchase Agreement, the Pledgor hereby
agrees with the Pledgee, as follows:
1. DEFINED TERMS. (a) Unless otherwise defined herein, terms
which are defined in the Stock Purchase Agreement and used herein shall have the
meanings given to them in the Stock Purchase Agreement.
(b) The following terms shall have the following meanings:
"ADDITIONAL PLEDGED STOCK" shall have the meaning provided in
any supplement to this Stock Pledge Agreement delivered pursuant to Section 5(e)
hereof.
"CODE" means the Uniform Commercial Code from time to time in
effect in the State of Missouri.
"COLLATERAL" means the Pledged Stock and all Proceeds.
"EVENT OF DEFAULT" means the failure of Pledgor to fulfill the
Commitments.
"ISSUER" means the issuer identified on Schedule I hereto.
"PLEDGE AGREEMENT" means this Stock Pledge Agreement, as
amended, supplemented or otherwise modified from time to time.
"PLEDGED STOCK" means the shares of capital stock listed on
Schedule I hereto, together with all stock certificates, options or rights of
any nature whatsoever which may be issued or granted the Pledgor in respect of
the Pledged Stock while this Pledge Agreement is in effect.
"PROCEEDS" means all "proceeds" as such term is defined in
Section 9-306(1) of the Uniform Commercial Code in effect in the State of New
Jersey on the date hereof and, in any event, shall include, without limitation,
all dividends or other income from the Pledged Stock, collections thereon or
distributions with respect thereto.
"SECURED OBLIGATIONS" is the collective reference to the
Obligations.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
(c) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Pledge Agreement shall refer to this Pledge
Agreement as a whole and not to any particular provision of this Pledge
Agreement, and Section, Schedule, Annex, and Exhibit references are to this
Pledge Agreement unless otherwise specified. The meanings given to terms defined
herein shall be equally applicable to both the singular and plural forms of such
terms.
2. PLEDGE; GRANT OF SECURITY INTEREST. The Pledgor hereby
delivers to the Pledgee all the Pledged Stock and hereby grants to the Pledgee,
a first security interest in the 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 Secured Obligations.
3. STOCK POWERS. Concurrently with the delivery to the
Administrative Agent of each certificate representing one or more shares of the
Pledged Stock, the Pledgor shall deliver an undated stock power covering such
certificate, duly executed in blank with, if the Pledgee so requests, signature
guaranteed.
2
4. REPRESENTATIONS AND WARRANTIES. The Pledgor represents and
warrants that:
(a) the Pledgor is the record and beneficial owner of, and has
title to, the Pledged Stock, free of any and all Liens or options in
favor of, or claims of, any other Person, except the Lien created by
this Pledge Agreement; and
(b) upon delivery to the Pledgee of the stock certificates
evidencing the Pledged Stock (and assuming the continuing possession by
Pledgee of such stock certificate in accordance with the requirements
of applicable law), the Lien granted pursuant to this Pledge Agreement
will constitute a valid, perfected first priority Lien on the
Collateral in favor of the Pledgee, enforceable as such against all
creditors of the Pledgor and any Persons purporting to purchase any
Collateral from the Pledgor.
5. COVENANTS. The Pledgor covenants and agrees with the
Pledgee that, from and after the date of this Pledge Agreement until the Secured
Obligations are paid in full and the Commitments have been terminated:
(a) If the Pledgor shall, as a result of its ownership of the
Pledged Stock, become entitled to receive or shall receive any stock
certificate (including, without limitation, any certificate
representing a stock dividend or a distribution in connection with any
reclassification, increase or reduction of capital or any certificate
issued in connection with any reorganization), option or rights,
whether in addition to, in substitution for, as a conversion of, or in
exchange for any shares of the Pledged Stock, or otherwise in respect
thereof, the Pledgor shall accept the same as the Pledgee's, hold the
same in trust for the Pledgee and deliver the same forthwith to the
Pledgee in the exact form received, duly endorsed by the Pledgor to the
Pledgee, if required, together with an undated stock power covering
such certificate duly executed in blank and with, if the Pledgee so
requests, signature guaranteed, to be held by the Pledgee, subject to
the terms hereof as additional collateral security for the Secured
Obligations. Any sums paid upon or in respect of the Pledged Stock upon
the liquidation or dissolution of the Issuer shall be paid over to the
Pledgee as additional collateral security for the Secured Obligations,
and in case any distribution of capital shall be made on or in respect
of the Pledged Stock or any property shall be distributed upon or with
respect to the Pledged Stock pursuant to the recapitalization or
reclassification of the capital of the Issuer or pursuant to the
reorganization thereof, the property so distributed shall be delivered
to the Pledgee to be held by it for the ratable benefit of the Pledgees
and the Pledgor, subject to the terms hereof, as additional collateral
security for the Secured Obligations. If any sums of money or property
so paid or distributed in respect of the Pledged Stock shall be
received by the Pledgor, the Pledgor shall, until such money or
property is paid or delivered to the Pledgee, hold such money or
property in trust for the Pledgee as additional collateral security for
the Secured Obligations.
3
(b) The Pledgor shall maintain the security interest created
by this Pledge Agreement as a first, perfected security interest and
shall defend such security interest against the claims and demands of
all Persons whomsoever. At any time and from time to time, upon the
written request of the Pledgee, and at the sole expense of the Pledgor,
the Pledgor will promptly and duly execute and deliver such further
instruments and documents and take such further actions as the Pledgee
may reasonably request for the purposes of obtaining or preserving the
full benefits of this Pledge Agreement and of the rights and powers
herein granted. If any amount payable under or in connection with any
of the Collateral shall be or become evidenced by any promissory note,
other instrument or chattel paper, such note, instrument or chattel
paper shall be immediately delivered to the Pledgee, duly endorsed in a
manner satisfactory to the Pledgee, to be held as Collateral pursuant
to this Pledge Agreement.
(c) The Pledgor agrees to pay, and to save the Pledgee
harmless from, any and all liabilities with respect to, or resulting
from any delay in paying, any and all stamp, excise, sales or other
taxes which may be payable or determined to be payable with respect to
any of the Collateral or in connection with any of the transactions
contemplated by this Pledge Agreement.
6. CASH DIVIDENDS; VOTING RIGHTS. Unless an Event of Default
shall have occurred and be continuing and the Pledgee shall have given notice to
the Pledgor of the Pledgee's intent to exercise its corresponding rights
pursuant to Section 7 below, the Pledgor shall be permitted to receive all cash
dividends paid in the normal course of business of the Issuer in respect of the
Pledged Stock and to exercise all voting and corporate rights with respect to
the Pledged Stock; PROVIDED, HOWEVER, that no vote shall be cast or corporate
right exercised or other action taken which would impair the Collateral or which
would be inconsistent with or result in any violation of any provision of the
Stock Purchase Agreement or this Pledge Agreement.
7. RIGHTS AND OBLIGATIONS OF THE PLEDGEE.
(a) If an Event of Default shall occur and be continuing and
the Pledgee shall give notice of its intent to exercise such rights to the
Pledgor and at the request of the Pledgee, all shares of the Pledged Stock shall
be registered in the name of the Pledgee or its nominee, and the Pledgee or its
nominee may thereafter exercise (A) all voting, corporate and other rights
pertaining to such shares of the Pledged Stock at any meeting of shareholders of
the Issuer or otherwise and (B) any and all rights of conversion, exchange,
subscription and any other rights, privileges or options pertaining to such
shares of the Pledged Stock as if it were the absolute owner thereof (including,
without limitation, the right to exchange at its discretion any and all of the
Pledged Stock upon the merger, consolidation, reorganization, recapitalization
or other fundamental change in the corporate structure of the Issuer or upon the
exercise by the Pledgor or the Pledgee of any right, privilege or option
pertaining to such shares of the Pledged Stock, and in connection therewith, the
right to deposit and deliver any and all of the Pledged Stock with any
committee, depository, registrar or other designated agency upon such terms and
conditions as it may determine), all without liability except to account for
property actually received by it, but the Pledgee shall have no duty to exercise
any such right, privilege or option and shall not be responsible for any failure
to do so or delay in so doing.
4
(b) In the event that the Pledgee elects to exercise the
rights described in Section 7(a), the Pledgee shall be obligated to return to
Pledgor all consideration received pursuant to the Stock Purchase Agreement less
a $250,000 working capital advance.
8. REMEDIES. If an Event of Default shall have occurred and be
continuing, at any time at the Pledgee's election, the Pledgee's sole remedy
shall be the rights described in Section 7.
9. PLEDGEE'S APPOINTMENT AS ATTORNEY-IN-FACT.
(a) The Pledgor hereby irrevocably constitutes and appoints
the Pledgee as its true and lawful attorney-in-fact with full irrevocable power
and authority in the place and stead of the Pledgor and in the name of the
Pledgor or in the Pledgee's own name, from time to time in the Pledgee's
discretion, for the purpose of carrying out the terms of this Agreement, to take
any and all appropriate action and to execute any and all documents and
instruments which may be necessary or desirable to accomplish the purposes of
this Pledge Agreement, including, without limitation, any financing statements,
endorsements, assignments or other instruments of transfer.
(b) The Pledgor hereby ratifies all that said attorneys
shall lawfully do or cause to be done pursuant to the power of attorney granted
in Section 9(a). All powers, authorizations and agencies contained in this
Pledge Agreement are coupled with an interest and are irrevocable until this
Pledge Agreement is terminated and the security interest created hereby are
released.
10. LIMITATION ON DUTIES REGARDING COLLATERAL. The Pledgee's
sole duty with respect to the custody, safekeeping and physical preservation of
the Collateral in its possession, under Section 9-207 of the Code or otherwise,
shall be to deal with it in the same manner as the Pledgee deals with similar
securities and property for its own account, except that the Pledgee shall have
no obligation to invest funds held by it and may hold the same as demand
deposits. The Pledgee shall not be liable for failure to demand, collect or
realize upon any of the Collateral or for any delay in doing so or shall be
under any obligation to sell or otherwise dispose of any Collateral upon the
request of the Pledgor or any other Person or to take any other action
whatsoever with regard to the Collateral or any part thereof.
11. EXECUTION OF FINANCING STATEMENTS. Pursuant to Section
9-402 of the Code, the Pledgor hereby authorizes the Pledgee to file financing
statements with respect to the Collateral without the signature of the Pledgor
in such form and in such filing offices as the Pledgee reasonably determines
appropriate to perfect the security interests of the Pledgee under this Pledge
Agreement. A carbon, photographic or other reproduction of this Pledge Agreement
shall be sufficient as a financing statement for filing in any jurisdiction.
12. POWERS COUPLED WITH AN INTEREST. All authorizations and
agencies herein contained with respect to the Collateral are irrevocable and
powers coupled with an interest.
5
13. NOTICES. Notices, requests and demands to or upon the
Pledgee or the Pledgor hereunder shall be effected in the manner set forth in
Section ____ of the Stock Purchase Agreement.
14. SEVERABILITY. Any provision of this Pledge Agreement which
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
15. PARAGRAPH HEADINGS. The paragraph headings used in this
Pledge Agreement are for convenience of reference only and are not to affect the
construction hereof or be taken into consideration in the interpretation hereof.
16. NO WAIVER. The Pledgee shall not by any act (except by a
written instrument pursuant to Section 18 hereof), delay, indulgence, omission
or otherwise be deemed to have waived any right or remedy hereunder or to have
acquiesced in any Default or Event of Default or in any breach of any of the
terms and conditions hereof. No failure to exercise, nor any delay in
exercising, on the part of the Pledgee, any right, power or privilege hereunder
shall operate as a waiver thereof. No single or partial exercise of any right,
power or privilege hereunder shall preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. A waiver by the
Pledgee of any right or remedy hereunder on any one occasion shall not be
construed as a bar to any right or remedy which the Pledgee would otherwise have
on any future occasion.
17. WAIVERS AND AMENDMENTS; SUCCESSORS AND ASSIGNS; GOVERNING
LAW. 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, PROVIDED that any provision of this
Pledge Agreement may be waived by the Pledgee in a letter or agreement executed
by the Pledgee or by telex or facsimile transmission from the Pledgee. This
Pledge Agreement shall be binding upon the successors and assigns of the Pledgor
and shall inure to the benefit of the Pledgee and its respective successors and
assigns. This Pledge Agreement shall be governed by, and construed and
interpreted in accordance with, the laws of the state of New Jersey.
[SIGNATURE PAGE FOLLOWS]
6
Stock Pledge Agreement
IN WITNESS WHEREOF, the undersigned has caused this Pledge
Agreement to be duly executed and delivered as of the date first above written.
THE TRANSLATION GROUP, LTD.
By:______________________________
Title:
Stock Pledge Agreement
SCHEDULE I TO STOCK PLEDGE AGREEMENT
DESCRIPTION OF PLEDGED STOCK
STOCK
NAME OF CLASS OF CERTIFICATE NO. OF
ISSUER STOCK NO. SHARES
Planet Access Networks, Inc. Common ________ _________
