AMENDED AND RESTATED
PLEDGE AGREEMENT
Between
GOLD & XXXXX TRANSFER, S.A.,
REVISION LLC,
FOUNDATION FOR THE INTERNATIONAL
NON-GOVERNMENTAL DEVELOPMENT OF SPACE,
ENTREE INTERNATIONAL LIMITED, and
XXXXXX X. XXXXXXXX,
as Pledgors,
and
XXXXXX X. XXXXX,
as Pledgee
Dated as of November 1, 2001
SECTION 1. CERTAIN DEFINITIONS. 2
SECTION 2. SECURITY FOR OBLIGATIONS. 5
SECTION 3. PLEDGE OF SHARES, ETC. 6
SECTION 4. REPRESENTATIONS AND WARRANTIES. 6
SECTION 5. VOTING RIGHTS, DIVIDENDS AND OTHER DISTRIBUTIONS, ETC. 8
5.1 Prior to Default or Event of Default 8
5.2 After Default or Event of Default 8
SECTION 6. COVENANTS OF THE PLEDGORS. 9
6.1 Sale of Collateral, Etc 9
6.2 Delivery of Stock Certificates, Etc 9
6.3 Other Distributions 10
6.4 Records; Inspection 10
6.5 Costs, Expenses and Certain Taxes 10
6.6 Priority of Security Interest; Further Assurances 11
6.7 Registration of Covista Pledged Stock 12
6.8 Shareholder Demand Relating to Epoch Shares 13
6.9 Post-Closing Conditions 14
SECTION 7. RIGHTS OF THE PLEDGEE. 14
7.1 No Obligations or Liability to Pledgors 14
7.2 Right of Pledgee to Perform Pledgor's Covenants, Etc 15
7.3 Right of Pledgee to Demand Additional Pledged Shares 15
7.4 Release of the Pledge and Security Interest
Created Hereby 15
7.5 Partial Release of Pledged Shares Under
Certain Circumstances 15
SECTION 8. REMEDIES AND ENFORCEMENT. 16
8.1 Remedies in Case of an Event of Default 16
8.2 Application of Proceeds Following an Event of Default 18
8.3 Purchase of Collateral by Pledgee 19
8.4 Purchaser to Acquire Good Title 19
8.5 Sale of Pledged Stock or LLC Interest
Without Registration; Private Sale of
Pledged Stock at a Discount to Market Price 19
8.6 Appointment as Attorney-in-Fact 20
8.7 No Waiver; Cumulative Remedies 20
8.8 Restoration of Rights and Remedies 21
SECTION 9. PLEDGOR'S OBLIGATIONS NOT AFFECTED. 21
SECTION 10. MISCELLANEOUS. 21
10.1 Amendments, Etc 21
10.2 Survival of Agreements, Representations and Warranties 21
10.3 Successors and Assigns 21
10.4 Entire Agreement 22
10.5 Severability 22
10.6 WAIVER OF JURY TRIAL 22
10.7 Agreement May Constitute Financing Statement 22
10.8 Miscellaneous 22
10.9 GOVERNING LAW 22
10.10 Notices, Etc 22
10.11 Submission to Jurisdiction; Waiver of Immunity;
Agent for Service of Process 23
AMENDED AND RESTATED PLEDGE AGREEMENT, dated as of November 1, 2001, by
and among Gold & Xxxxx Transfer, S.A., a corporation organized and existing
under the laws of the British Virgin Islands ("Gold & Xxxxx"), Revision LLC, a
limited liability company organized and existing under the laws of the State
of Delaware ("Revision"), Foundation for the International Non-governmental
Development of Space, a corporation organized and existing under the laws of
the State of Delaware ("FINDS"), Entree International Limited, a corporation
organized and existing under the laws of the State of Delaware ("Entree"), and
Xxxxxx X. Xxxxxxxx, an individual ("Xxxxxxxx") (each of Gold & Xxxxx,
Revision, FINDS, Entree and Xxxxxxxx, individually, a "Pledgor," and
collectively, the "Pledgors"), and Xxxxxx X. Xxxxx, an individual (the
"Pledgee").
R E C I T A L S
A. Pursuant to the Note (as defined herein), on August 7, 2001, the
Pledgee loaned to Gold & Xxxxx, Revision and Xxxxxxxx (the "Borrowers") the
aggregate principal amount of $13,000,000.00, which principal amount was
increased to $14,310,000.00 on March 1, 2001, and which principal amount was
decreased to $13,895,488.20 on the date hereof.
B. As a condition to the obligation of the Pledgee to make such loan,
certain of the Pledgors pledged certain shares of capital stock of Covista (as
defined herein) to the Pledgee as security for the performance of the
obligations of the Borrowers under the Note, pursuant to that certain Stock
Pledge Agreement, dated as of August 7, 2000, by and among Gold & Xxxxx,
Revision, FINDS and Xxxxxxxx, as pledgors, and the Pledgee, as pledgee. On
October 20, 2000, as a result of a decrease in the Market Price (as defined
herein) of Covista shares, such agreement was amended and restated to reflect
certain amendments, including the pledge by Gold & Xxxxx of certain shares of
capital stock of Capsule (as defined herein) to the Pledgee as additional
security for the performance of the obligations of the Borrowers under the
Note. On March 1, 2001, as a result of a subsequent decrease in the Market
Prices of Covista and Capsule shares, such agreement was further amended and
restated to reflect certain additional amendments, including the pledge by
Gold & Xxxxx of certain shares of capital stock of Epoch (as defined herein)
to the Pledgee as additional security for the performance of the obligations
of the Borrowers under the Note and the agreement by Entree to become a party
to the agreement and to pledge its entire limited liability company interest
(the "LLC Interest", which term includes all of Entree's (or, if applicable,
any other Pledgor's) rights in, to and under the Red Tulip Operating
Agreement, as hereinafter defined) in Red Tulip, LLC, a Delaware limited
liability company ("Red Tulip"), to the Pledgee as additional security for the
performance of the obligations of the Borrowers under the Note (as so amended
and restated, the "Existing Pledge Agreement").
C. The parties hereto wish to effect certain additional amendments to
the Existing Pledge Agreement.
NOW, THEREFORE, to induce the Pledgee to refrain from exercising any
rights it may have resulting from a Default or Event of Default under the
Existing Pledge Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, Pledgors hereby agree
with the Pledgee, and amend and restate the Existing Pledge Agreement in its
entirety, as follows:
SECTION 1. CERTAIN DEFINITIONS.
The following capitalized terms are used herein with the respective
meanings set forth below.
Bankruptcy Event: shall occur when, with respect to any party, (i) such
party shall commence any case, proceeding or other action (a) under any
existing or future law of any jurisdiction, domestic or foreign, relating to
bankruptcy, insolvency, reorganization or relief of debtors, seeking to have
an order for relief entered with respect to it, or seeking to adjudicate it a
bankrupt or insolvent, or seeking reorganization, arrangement, adjustment,
winding-up, liquidation, dissolution, composition or other relief with respect
to it or its debts, or (b) seeking appointment of a receiver, trustee,
custodian, conservator or other similar official for it or for all or any
substantial part of its assets, or such party shall make a general assignment
for the benefit of its creditors; or (ii) there shall be commenced against
such party any case, proceeding or other action of a nature referred to in
clause (i) above which (a) results in the entry of an order for relief or any
such adjudication or appointment or (b) remains undismissed, undischarged or
unbonded for a period of 60 days; or (iii) there shall be commenced against
such party any case, proceeding or other action seeking issuance of a warrant
of attachment, execution, distraint or similar process against all or any
substantial part of its assets which results in the entry of an order for any
such relief which shall not have been vacated, discharged, or stayed or bonded
pending appeal within 60 days from the entry thereof; or (iv) such party shall
take any action in furtherance of, or indicating its consent to, approval of,
or acquiescence in, any of the acts set forth in clause (i), (ii), or (iii)
above; or (v) such party shall generally not, or shall be unable to, or shall
admit in writing its inability to, pay its debts as they become due.
Borrowers: the meaning given in the recitals to this Agreement.
Capsule: Capsule Communications Inc., a Delaware corporation.
Combined Market Value: at any point in time, the sum of the Pledged
Share Market Values for each type (as identified by the issuer and class
thereof) of stock (other than the shares of any entity not publicly traded on
a market or exchange) and previously pledged to the Pledgee by any Pledgor and
held at such time by the Pledgee pursuant to such pledge.
Collateral: the meaning given in the first paragraph of Section 3.
Covista: Covista Communications, Inc., a New Jersey corporation
(formerly known as Total-Tel USA Communication, Inc.).
Covista Pledged Stock: the shares of common stock of Covista
constituting a portion of the Pledged Stock.
Default: shall have the meaning ascribed to such term in the Note.
Demanded Shares: the meaning given in Section 7.3.
Epoch: Epoch Networks, Inc., a California corporation.
Epoch Shares: a total of (i) 5,889,032 shares of Series A preferred
stock of Epoch owned of record and beneficially by Gold & Xxxxx and
represented in certificated form by stock certificate numbers 12 (884,955
shares), 18 (305,157 shares), 19 (4,424,779 shares) and 37 (274,141 shares) of
Epoch, (ii) 882,353 shares of Series B preferred stock of Epoch owned of
record and beneficially by Gold & Xxxxx and represented in certificated form
by stock certificate number PB-15 of Epoch, and (iii) 1,741,041 shares of
common stock of Epoch, owned of record and beneficially by Gold & Xxxxx and
represented in certificated form by stock certificate numbers C-339 (313,102
shares), C-612 (700,000 shares) and C-613 (727,939 shares) of Epoch.
Event of Default: shall have the meaning ascribed to such term in the Note.
Existing Pledge Agreement: the meaning given in the recitals to this
Agreement.
Existing Pledged Shares: a total of 1,883,261 Shares of Covista, owned
of record and beneficially by one or more of the Pledgors, as more
specifically set forth on Exhibit A attached hereto.
Existing Secured Obligations: all of the Secured Obligations except for
(i) the amount of $2,387,281.53, which amount constitutes additional principal
under the Note resulting from a cancellation of certain existing notes and
certain other transactions effected by the parties on the date hereof, and
(ii) interest under the Note on the portion of principal set forth in the
immediately preceding clause (i).
FINDS Shares: a total of 703,529 Shares of Covista, owned of record and
beneficially by FINDS, as more specifically set forth on Exhibit A attached
hereto.
Lien: shall have the meaning ascribed to such term in the Note.
LLC Interest: the meaning given in the recitals to this Agreement.
LLC Interest Value: $4,400,000, until such time as the Pledgee no longer
has a valid perfected first priority security interest in the LLC Interest, at
which time the LLC Interest Value shall immediately, without any further
action by any of the parties hereto, be deemed zero.
Market Price: at any point in time, the last reported sale price of the
shares of common stock of Covista or another entity, as applicable, on The
Nasdaq Stock Market (or other market or exchange on which such securities are
traded) on the preceding business day or, if there were no reported sales of
such shares on The Nasdaq Stock Market (or such other market or exchange) on
the immediately preceding business day, on the most recent business day on
which there were such sales.
Note: the Promissory Note, dated August 7, 2000, entered into by Gold &
Xxxxx, Revision and Xxxxxxxx, jointly and severally, in favor of Pledgee, as
amended and restated as of March 1, 2001, as further amended as of November 1,
2001 pursuant to Note Amendment No. 1, and as the same may be hereafter from
time to time amended, modified or supplemented.
Note Amendment No. 1: the Amendment No. 1 to the Note, dated as of
November 1, 2001, by and among Gold & Xxxxx, Revision, Xxxxxxxx and Xxxxx.
Permitted Sale: the meaning given in Section 7.5(c).
Person: natural persons, corporations, limited partnerships, general
partnerships, joint stock companies, joint ventures, associations, companies,
trusts, banks, trust companies, land trusts, business trusts or other
organizations, whether or not legal entities, and governments and agencies and
political subdivisions thereof.
Pledged Share Market Value: at any point in time, with respect to a
particular type (as identified by the issuer and class thereof) of stock
previously pledged to the Pledgee, the product of (i) the total number of
shares of such stock previously pledged to the Pledgee pursuant to this
Agreement and held at such time by the Pledgee pursuant to such pledge and
(ii) the Market Price of such stock, provided that, with respect to any shares
of stock pledged pursuant to Section 7.3 of this Agreement that are not
publicly traded on a market or exchange, the Pledged Share Market Value shall
be the value agreed upon in writing by the Pledgee, the relevant Pledgor and
(if other than the Pledgor) Xxxxxxxx.
Pledged Stock: the Shares and all other securities constituting part of
the Collateral; any securities issued or issuable with respect to the Pledged
Stock by way of dividend, stock split, conversion, exchange, in a merger,
recapitalization, consolidation, contribution or otherwise; and any other
securities delivered to the Pledgee by any Pledgor in substitution for any
existing Pledged Stock (if permitted pursuant to this Agreement or otherwise
consented to in writing by the Pledgee).
Private Company Stock Value: the sum of the values, as agreed in writing
between the Pledgee, the relevant Pledgor and (if other than the Pledgor)
Xxxxxxxx, of any shares of stock of an entity not publicly traded on a market
or exchange, which shares have been pledged after the date hereof by one or
more of the Pledgors to Pledgee in accordance with Section 7.3 hereof, if any.
Red Tulip: the meaning given in the recitals to this Agreement.
Red Tulip Operating Agreement: the Operating Agreement of Red Tulip,
dated as of June 20, 1999, between Entree and Xxxxx Xxxxx Neiva, an
individual.
Release Notice: the meaning given in Section 7.5(a).
Secured Obligations: the meaning given in Section 2.
SEC: the meaning given in Section 6.7.
Securities Act: the meaning given in Section 6.7.
Shares: 1,883,261 shares of common stock of Covista, par value $0.05 per
share, owned of record and beneficially by one or more of the Pledgors, as
more specifically identified on Exhibit A attached hereto. In addition, the
term "Shares" shall include any Demanded Shares; any securities issued or
issuable with respect to the Shares or Demanded Shares by way of dividend,
stock split, conversion, exchange, in a merger, recapitalization,
consolidation, contribution or otherwise; and any other securities delivered
to the Pledgee by any Pledgor in substitution for any existing Shares or
Demanded Shares (if permitted pursuant to the terms of this Agreement or
otherwise consented to in writing by the Pledgee).
Specified Release Shares: the meaning given in Section 7.5(a).
UCC: the Uniform Commercial Code as in effect in the State of New York
or in any other appropriate jurisdiction.
SECTION 2. SECURITY FOR OBLIGATIONS.
This Agreement is entered into:
(a) to secure the full and timely payment by Pledgors of (i) all
amounts the payment of which is required by Pledgors under the
Note, including, without limitation, the principal of and
interest on the Note (including, without limitation, interest
accruing after the date of any filing by any Pledgor of any
petition in bankruptcy or the commencement of any bankruptcy,
insolvency or similar proceeding with respect to any Pledgor) as
and when the same become due and payable in accordance with the
terms thereof, whether at maturity or by prepayment,
acceleration, declaration of default or otherwise, and (ii) all
other indebtedness and other amounts payable by the Pledgors
hereunder or under the Note, and
(b) to secure the due and punctual performance by Pledgors of
(i) all obligations of the Pledgors under the Note and (ii) all other
obligations of Pledgors hereunder. (all of the payment and performance
obligations referred to in this Section 2 being referred to collectively
as the "Secured Obligations").
SECTION 3. PLEDGE OF SHARES, ETC.
As security for the prompt payment and performance of the Secured
Obligations when due (whether at stated maturity, by acceleration or
otherwise), each of the Pledgors hereby conveys, assigns, grants,
hypothecates, mortgages, pledges, transfers and delivers to the Pledgee a lien
and charge upon, and a security interest in, all the following property,
whether now owned by such Pledgor or hereafter acquired by such Pledgor and
whether now or in the future existing and wherever located (collectively, the
"Collateral"):
(a) the Shares;
(b) all right, title and interest in the LLC Interest;
(c) all dividends, instruments, cash and other property or
rights of any kind at any time received, receivable or otherwise
distributed or distributable with respect to any of the foregoing;
(d) all certificates or other writings representing or
evidencing any of the foregoing;
(e) all proceeds of any of the property described in clauses (a)
through (d) above; and
(f) all books, correspondence, credit files, electronic data,
records, invoices and other papers and documents relating to any of the
foregoing; provided, however, that the FINDS Shares, and all items
described in paragraphs (c) through (f) above that relate exclusively to
or arise exclusively out of the FINDS Shares, shall serve as security
for the prompt payment and performance of only the Existing Secured
Obligations.
SECTION 4. REPRESENTATIONS AND WARRANTIES.
Each Pledgor represents and warrants to the Pledgee, as of the date of
this Agreement and at the time of each subsequent pledge of Demanded Shares or
any other additional Shares delivered to the Pledgee pursuant hereto, as
follows:
(a) With respect to each of the Shares, including, without
limitation, each of the Existing Pledged Shares and any other Demanded
Shares (but excluding any Specified Release Shares that, as of the date
of such representation and warranty, have been released from the pledge
of this Agreement), Gold & Xxxxx or Revision or FINDS is the record and
beneficial owner of such Shares, free and clear of any Lien except for
the Lien created by this Agreement (or by the Existing Pledge
Agreement). Entree has good and marketable title to the LLC Interest,
free and clear of any Lien except for the Lien created by this Agreement
(or by the Existing Pledge Agreement). No effective financing statement
or other instrument of similar effect covering all or any part of the
Collateral is on file in any recording office, except such as may have
been filed in favor of the Pledgee relating to this Agreement (or the
Existing Pledge Agreement).
(b) The Shares have been duly and validly issued and are fully
paid and nonassessable.
(c) The security interest granted pursuant to this Agreement
constitutes a valid perfected first priority security interest in the
Existing Pledged Shares (excluding any Specified Release Shares that, as
of the date of such representation and warranty, have been released from
the pledge of this Agreement) and the LLC Interest, enforceable as such
against all creditors of each Pledgor and any Persons purporting to
purchase any of such Shares or LLC Interest from any Pledgor. Upon
delivery to the Pledgee, if applicable, of the certificates evidencing
Demanded Shares or any other additional Shares delivered to the Pledgee
pursuant hereto, the security interest granted pursuant to this
Agreement will constitute a valid perfected first priority security
interest in such Shares, enforceable as such against all creditors of
each Pledgor and any Persons purporting to purchase any of such Shares
from any Pledgor.
(d) Gold & Xxxxx is a corporation duly organized, validly
existing and in good standing under the laws of the British Virgin
Islands and has all requisite corporate power and authority to enter
into and carry out the terms of this Agreement and the Note (including
Note Amendment No. 1). Revision is a limited liability company duly
organized, validly existing and in good standing under the laws of the
State of Delaware and has all requisite limited liability company power
and authority to enter into and carry out the terms of this Agreement
and the Note (including Note Amendment No. 1). FINDS is a
not-for-profit corporation duly organized, validly existing and in good
standing under the laws of Delaware and has all requisite corporate
power and authority to enter into and carry out the terms of this
Agreement. Entree is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware and has all
requisite corporate power and authority to enter into and carry out the
terms of this Agreement.
(e) The execution, delivery and performance of this Agreement
and the Note (including Note Amendment No. 1) will not result in any
violation of or be in conflict with or constitute a default under any
term of any Pledgor's certificate of incorporation or by-laws (or
similar constitutive documents) or any agreement or instrument to which
any Pledgor is a party or by which any Pledgor is bound or any term of
any applicable law, ordinance, rule or regulation of any governmental
authority or any term of any applicable order, judgment or decree of any
court, arbitrator or governmental authority.
(f) No consent, approval or authorization of, or declaration or
filing with, any governmental authority or regulatory body is required
for the valid execution, delivery and performance of this Agreement and
the Note (including Note Amendment No. 1).
(g) This Agreement and the Note (including Note Amendment no.
1) have been duly authorized, executed and delivered by each Pledgor and
constitute each Pledgor's legal, valid and binding obligation,
enforceable against such Pledgor in accordance with its terms, except to
the extent that such enforcement may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium and similar laws of
general application relating to or affecting the rights and remedies of
creditors, and by general equitable principles.
SECTION 5. VOTING RIGHTS, DIVIDENDS AND OTHER DISTRIBUTIONS, ETC.
5.1 Prior to Default or Event of Default. So long as no Default or
Event of Default has occurred and is continuing, Pledgors will remain entitled
to exercise any and all voting and other consensual rights pertaining to the
Pledged Stock and the LLC Interest, as the case may be, and to receive and use
cash dividends or distributions, in either case for any purpose not
inconsistent with the terms of this Agreement or the Note.
5.2 After Default or Event of Default. For so long as a Default or
an Event of Default is continuing, (i) no Pledgor may exercise any voting or
other consensual rights pertaining to the Pledged Stock or the LLC Interest
without the prior written consent of the Pledgee, (ii) the right, if any, of
any Pledgor to receive cash dividends in respect of the Pledged Stock or
distributions in respect of the LLC Interest will cease and all such dividends
or distributions must be paid directly to the Pledgee (or if received by any
Pledgor will be deemed held in trust by such Pledgor for the benefit of, and
must be turned over immediately by such Pledgor to, the Pledgee) and
thereafter will be held and disposed of by the Pledgee as part of the
Collateral, and (iii) if the Pledgee has notified the Pledgors that it elects
to exercise the Pledgee's right to exercise voting and other consensual rights
hereunder, all rights of each Pledgor to exercise the voting and other
consensual rights which such Pledgor would otherwise be entitled to exercise
pursuant to Section 5.1 will cease, all such rights will thereupon become
vested in the Pledgee, who during the continuance of such Default or Event of
Default will have (directly or through its nominee) the sole right to exercise
such voting and other consensual rights, including, without limitation, (A)
all voting, corporate, limited liability company and other rights pertaining
to any of the Pledged Stock or the LLC Interest, (B) all rights to give
consents, waivers and ratifications in respect thereof and (C) any and all
rights of conversion, exchange, registration, subscription and any other
rights, privileges or options pertaining to any of the Pledged Stock or the
LLC Interest as if it were the absolute owner thereof, and in connection
therewith, the right to deposit and deliver any and all of the Pledged Stock
with any committee, depositary, transfer agent, 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 (each Pledgor
hereby irrevocably constituting and appointing the Pledgee the proxy and
attorney-in-fact of such Pledgor, with full power of substitution, to do or
take any of the above actions described in the preceding clauses (A), (B) and
(C). The Pledgee will have no duty to Pledgors to exercise any such right,
privilege or option and will not be responsible for any failure to do so or
delay in so doing. In order to permit the Pledgee to exercise the voting and
other consensual rights which it may be entitled to exercise pursuant to this
Section 5.2, and to receive all dividends and distributions which it may be
entitled to receive under this Section 5.2, each Pledgor will, upon written
notice from the Pledgee, from time to time execute and deliver to the Pledgee
or other third party appropriate notices, assignments, proxies, dividend
payment orders and other documents and instruments as the Pledgee may
reasonably request.
SECTION 6. COVENANTS OF THE PLEDGORS.
6.1 Sale of Collateral, Etc. (a) No Pledgor will (i) sell, assign,
transfer, convey, or otherwise dispose of, or grant any option with respect
to, any of the Collateral, or (ii) create or permit to exist any Lien upon or
with respect to any of the Collateral, except for the lien and security
interest created by this Agreement.
(b) Without the prior written consent of the Pledgee, Entree will
not, and Xxxxxxxx will insure that Entree does not, do any of the following:
amend, cancel, terminate or otherwise modify the Red Tulip Operating
Agreement; give any consent, waiver or other approval thereunder; waive any
default under or breach of the Red Tulip Operating Agreement; designate
Managers (as such term is defined in the Red Tulip Operating Agreement) of Red
Tulip other than Entree and Xxxxxxxx; or take any other action in connection
with such agreement or the LLC Interest that would materially impair the value
of the interests or rights of any Pledgor thereunder or with respect thereto.
(c) Notwithstanding the foregoing clause (b), Entree may, without the
prior written consent of the Pledgee, cause Red Tulip to incur indebtedness
and in connection with such indebtedness to cause to be executed and delivered
by Red Tulip a mortgage on the real estate property owned by Red Tulip, known
as 419- 000 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, securing such loan, provided
that the proceeds from such loan are used by Red Tulip exclusively for the
purpose of making improvements to such property.
6.2 Delivery of Stock Certificates, Etc. (a) Each of the Pledgors
will immediately deliver to the Pledgee all certificates or other writings
representing or evidencing any other "securities" or "instruments" (as such
terms are defined in the UCC) included in the Collateral at any time acquired
or received by any Pledgor, directly or indirectly, either in suitable form
for transfer by delivery, or issued in the name of a Pledgor and accompanied
by stock powers or other appropriate instruments of transfer or assignment,
duly executed by the relevant Pledgor in blank and undated, and in either case
having attached thereto all requisite federal or state stock transfer tax
stamps, all in form and substance satisfactory to the Pledgee.
(b) Each Pledgor authorizes the Pledgee to file, in the Pledgee's
discretion and at such Pledgor's expense, in jurisdictions where this
authorization will be given effect, financing statements and continuation
statements covering the Collateral signed only by the Pledgee, and hereby
appoints the Pledgee as such Pledgor's attorney-in-fact to sign and file any
such financing statements, continuation statements and any other filings or
recordations covering the Collateral of such Pledgor. Such Pledgor shall, at
its expense, execute, deliver, file and record any such documents,
assignments, agreements, or statements (including, without limitation,
financing and continuation statements under the UCC) and take any other action
that from time to time may be necessary or desirable, or that the Pledgee may
request, in order to create, preserve, perfect, confirm or validate the
security interests granted hereunder or to enable the Pledgee to obtain the
full benefits of, or to enforce its rights, powers and remedies under, this
Agreement.
(c) Within 10 business days after the date of a demand by the Pledgee
for Demanded Shares, the Pledgors will deliver to the Pledgee all certificates
or other writings representing or evidencing such Demanded Shares, either in
suitable form for transfer by delivery, or issued in the name of a Pledgor and
accompanied by stock powers or other appropriate instruments of transfer or
assignment, duly executed by the relevant Pledgor in blank and undated, and in
either case having attached thereto all requisite federal or state stock
transfer tax stamps, all in form and substance satisfactory to the Pledgee.
6.3 Other Distributions. Except for cash dividends or distributions,
as the case may be, permitted to be paid to Pledgors pursuant to Section 5.1,
Pledgors will cause all dividends and distributions of any kind on the Pledged
Stock or the LLC Interest (including any sums paid upon or in respect of the
Pledged Stock or the LLC Interest upon the liquidation or dissolution of
Covista or Red Tulip, as the case may be, or upon the recapitalization or
reclassification of the capital of Covista or Red Tulip, as the case may be,
or upon the reorganization of Covista or Red Tulip, as the case may be) to be
paid directly to the Pledgee (and if any such dividends or distributions are
received by any Pledgor, such Pledgor will hold them in trust for the benefit
of, and will immediately turn them over to, the Pledgee) and the Pledgee will
hold and dispose of all such dividends and distributions as part of the
Collateral.
6.4 Records; Inspection. Each Pledgor will keep full and accurate
books and records relating to the Collateral, and stamp or otherwise xxxx such
books and records in such manner as is required in order to reflect the pledge
and security interest granted pursuant hereto. Each Pledgor will permit
representatives of the Pledgee at any time upon reasonable advance notice to
inspect and make abstracts from its books and records pertaining to the
Collateral and to discuss matters relating to the Collateral with officers of
each Pledgor that is a corporation or other entity and with each Pledgor that
is an individual.
6.5 Costs, Expenses and Certain Taxes. Pledgors (a) will pay to the
Pledgee from time to time on demand any and all costs and expenses, including
reasonable attorneys' fees and expenses, paid or incurred by or on behalf of
the Pledgee in connection with this Agreement, the Existing Pledge Agreement
or the Note or in connection with any modification, amendment, alteration or
enforcement of this Agreement, the Existing Pledge Agreement or the Note or
the collection of any amount payable by any Pledgor hereunder or under the
Existing Pledge Agreement or the Note, whether or not any legal proceeding is
commenced hereunder or thereunder and whether or not any Default or Event of
Default has occurred and is continuing, and (b) will jointly and severally
indemnify the Pledgee on demand against any loss, liability or expense
incurred by the Pledgee (other than any such loss, liability or expense
directly attributable to gross negligence or willful misconduct of the
Pledgee) arising out of or in connection with any action or omission of the
Pledgee hereunder or under the Existing Pledge Agreement or the Note,
including the costs and expenses of defending itself against any claim or
liability (including any claim by any Pledgor) in connection with the exercise
or performance of any of its powers or duties hereunder or thereunder. All
amounts payable to the Pledgee under this Section accrue interest until paid
in full at the rate of 18% per annum, from the date of demand therefor. All
such amounts shall constitute additional indebtedness of the Pledgors secured
hereunder and shall be payable on demand. Pledgors will also pay, and will
hold the Pledgee harmless from, any and all liabilities with respect to, or
resulting from any delay in paying, any and all stamps, excise, sales or other
taxes or assessments 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 Agreement or the Existing Pledge Agreement or the Note.
All expenses incident to the Pledgors' and Covista's performance of or
compliance with Section 6.7, including, without limitation, all registration
and filing fees, all fees and expenses of complying with securities or blue
sky laws, National Association of Securities Dealers' fees, all printing
expenses, the fees and disbursements of counsel for Covista and of its
independent public accountants, and the expenses of any special audits made by
such accountants required by or incident to such performance and compliance,
shall be paid by the Pledgors; provided, however, that Covista agrees that it
will complete the registrations, qualifications and compliance required
pursuant to Section 6.7 even if it does not receive payment or reimbursement
of such expenses from the Pledgors.
6.6 Priority of Security Interest; Further Assurances. (a) Each
Pledgor will at all times cause the security interest granted pursuant to this
Agreement to constitute a valid perfected first priority security interest in
the Collateral, enforceable as such against all creditors of such Pledgor and
any Persons purporting to purchase any Collateral from such Pledgor.
(b) Each Pledgor will at any time and from time to time, at its own
expense, promptly execute and deliver all further instruments and documents,
and take all further actions, as may be necessary or desirable, or that the
Pledgee may reasonably request, in order to (i) grant more effectively a
security interest in favor of the Pledgee in all or any portion of the
Collateral, (ii) maintain, preserve, or perfect the security interest and lien
created or purported to be created by this Agreement and the first priority
status of such security interest and lien, (iii) preserve and defend against
any Person such Pledgor's title to the Collateral and the rights purported to
be granted therein by this Agreement, (iv) enable the Pledgee to exercise and
enforce its rights and remedies hereunder, or (v) carry out more effectively
the purposes of this Agreement. If the issuer of Pledged Stock is
incorporated in a jurisdiction which does not permit the use of certificates
to evidence equity ownership of such Pledged Stock or permit a lien in favor
of the Pledgee to be perfected by the possession by the Pledgee of the
certificates representing such Pledged Stock, then the Pledgors will to the
extent permitted by applicable law, record such lien on the stock register of
such issuer, execute any customary stock pledge forms or other documents
necessary to create, evidence or provide for the perfection of such lien and
give the Pledgee the right to transfer such Pledged Stock under the terms
hereof and provide to the Pledgee an opinion of counsel of such jurisdiction,
in form and substance satisfactory to it, confirming the effectiveness,
perfection and priority of such lien.
6.7 Registration of Covista Pledged Stock. The Pledgors and Covista
acknowledge and agree that a currently effective registration statement on
Form S-3 (No. 333-46954) has been filed with the Securities and Exchange
Commission pursuant to the U.S. Securities Act of 1933, as amended (the
"Securities Act") and that such registration statement permits the sale and
distribution of the Covista Pledged Stock by the Pledgee under Federal and
state securities laws. Pledgors, at their sole cost and expense, will procure
(and Covista agrees) that such registration and qualification of the Covista
Pledged Stock shall be kept continuously effective in compliance with such
laws for up to one year after the Maturity Date as set forth in the Note so as
to continue to permit or facilitate the sale and distribution of such
securities. Pledgors, at their sole cost and expense, will further procure
(and Covista further agrees) that any further registration and other
qualification of the Covista Pledged Stock under Federal and state securities
laws that may be necessary or desirable so as to permit or facilitate the sale
and distribution of such securities, including, without limitation,
appropriate qualifications under applicable "blue sky" or other state
securities laws and appropriate compliance with any other governmental
requirements, shall be effected by Covista (and kept continuously effective in
compliance with such laws for up to one year after the Maturity Date as set
forth in the Note). The Pledgors (and Covista) shall ensure that any such
further registration is declared effective under the Securities Act and all
other such qualifications and compliance are completed prior to the Maturity
Date as set forth in the Note. To the extent necessary to allow the Covista
Pledged Stock to be traded on the Nasdaq Stock Market, Pledgors shall cause
Covista to agree (and Covista agrees) to list the Covista Pledged Stock on the
Nasdaq Stock Market. Pledgors will cause the Pledgee to be kept advised in
writing as to the progress of each such registration, qualification or
compliance and as to the completion thereof, will give the Pledgee, any
underwriter and their counsel reasonable opportunity to review and comment on
the registration statement and other documents incident thereto, to conduct
due diligence on Covista and to participate in the process, will furnish to
the Pledgee such number of prospectuses, preliminary prospectuses, prospectus
supplements or amendments or other documents incident thereto as the Pledgee
from time to time may reasonably request, and will indemnify the Pledgee and
all others participating in the distribution of such securities against all
claims, losses, damages and liabilities (or actions in respect thereof)
arising out of or based on any untrue statement (or alleged untrue statement)
of a material fact contained in any prospectus, offering circular or other
document (including any related registration statement, notification or the
like) incident to such registration or by any omission (or alleged omission)
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, except (as to the Pledgee) insofar
as the same may have been caused by an untrue statement or omission based upon
information furnished in writing to Pledgor by the Pledgee expressly for use
therein. The registration statement filed with respect to the Covista Pledged
Stock and the prospectus contained therein shall cover only the Covista
Pledged Stock and no other securities. The Pledgors will cause Covista (and
Covista agrees) to comply with all applicable rules and regulations of the
Securities and Exchange Commission (hereinafter called "SEC") or similar
federal commission, and of the Nasdaq Stock Market or any other national
securities exchange on which any of the Covista Pledged Stock is listed, if
any, for so long as the registration is effective, to make available to its
security holders, as soon as practicable, an earnings statement covering a
period of at least 12 months, but not more than 18 months, beginning with the
first month after the effective date of the registration statement, which
earnings statement will satisfy the provisions of Section 11(a) of and Rule
158 under the Securities Act, and to make timely filing of all reports with
the SEC to enable the holders of the Covista Pledged Stock, if they so elect,
to utilize Rule 144 of the Securities Act in disposing of said securities.
Pledgors (and Covista) agree that, at Pledgee's request, Covista shall enter
into an underwriting agreement, which shall include, without limitation,
indemnification and contribution provisions and a "hold-back" or "lock-up"
provision covering at least 90 days and shall otherwise be in form and
substance reasonably satisfactory to Pledgee, with an underwriter for the
Covista Pledged Stock chosen by Pledgee in its sole discretion, and furnish or
cause to be furnished to such underwriter and Pledgee a customary opinion of
counsel and accountant's comfort letter.
6.8 Shareholder Demand Relating to Epoch Shares. The parties acknowledge
that on September 19, 2001, Gold & Xxxxx demanded payment in cash for all of
the Epoch Shares by letter addressed to Epoch in response to a Notice of
Approval of Agreement and Plan of Merger and Dissenters Rights dated October
24, 2001 and transmitted to Gold & Xxxxx by Epoch. The Pledgors agree and
acknowledge that (i) Gold & Xxxxx has instructed Epoch to pay directly to the
Pledgee the amount of any and all cash (including interest) paid by Epoch in
consideration of the Epoch Shares and (ii) in the event that Epoch makes such
payment(s) directly to Gold & Xxxxx rather than to the Pledgee, Gold & Xxxxx
shall promptly pay over to the Pledgee any and all such amounts. Amounts paid
to the Pledgee pursuant to clause (i) or (ii) above shall be deemed prepayment
by Gold & Xxxxx or principal due under the Note. The Pledgors further agree
and acknowledge that, in the event that the Epoch Shares are not purchased by
Epoch for cash and shares of Epoch Holdings, Inc. are issued (or any other
consideration is issued) to Gold & Xxxxx in consideration of the Epoch Shares,
the certificates representing such shares (either in suitable form for
transfer by delivery, or issued in the name of Gold & Xxxxx and accompanied by
stock powers or other appropriate instruments of transfer or assignment, duly
executed by Gold & Xxxxx in blank and undated, and in either case having
attached thereto all requisite federal or state stock transfer tax stamps, all
in form and substance satisfactory to the Pledgee) or such other consideration
shall be delivered to a custodian of the Pledgee in accordance with the
Pledgee's instructions and held by such custodian in connection with this
Agreement. Any such shares delivered to the Pledgee shall be deemed to be
Shares and Pledged Stock for the purposes of this Agreement.
6.9 Post-Closing Conditions. The Pledgors hereby agree to take the
following actions, or to cause Covista or other relevant Persons to take the
following actions, as applicable, by no later than the earlier of (i) the date
that is 10 business days after the date on which any additional Collateral is
delivered or otherwise pledged, whether by execution of a security agreement
or otherwise, to Pledgee and (ii) the date that is 10 business days before the
Maturity Date (as defined in the Note):
(a) Corporate Proceedings of Pledgors and Covista. With respect to
each Pledgor that is a corporation, limited liability company or similar
entity, the Pledgee shall be provided with a copy of the resolutions (or
comparable authorizing document), in form and substance satisfactory to the
Pledgee, of the Board of Directors (or comparable governing body) of each such
Pledgor authorizing and ratifying (i) the execution, delivery and performance
of the Note (if such Pledgor is a Borrower) and this Agreement and (ii) the
granting by it of the Liens created pursuant to this Agreement, certified by
the Secretary or an Assistant Secretary (or comparable officer) of such
Pledgor, which certificate shall be in form and substance reasonably
satisfactory to the Pledgee and shall state that the resolutions thereby
certified have not been amended, modified, revoked or rescinded and were in
effect as of the date of this Agreement.
(b) Signature Guaranties. To the extent that any stock power provided
to the Pledgee on or after the date of this Agreement does not contain a
signature guaranty at the time that it is delivered to the Pledgee, the
Pledgee shall be provided with replacement stock powers containing a signature
guaranteed by a participant of the Securities Transfer Agents Medallion
Program or another approved signature guaranty program acceptable to the
Securities and Exchange Commission, the Securities Transfer Association and
the transfer agent of Covista or any other issuer, as and if applicable.
SECTION 7. RIGHTS OF THE PLEDGEE.
7.1 No Obligations or Liability to Pledgors. The rights and powers
of the Pledgee hereunder are not contingent upon the pursuit by the Pledgee of
any right or remedy against any Pledgor or against any other Person which may
be or become liable in respect of any of the Secured Obligations or against
any other collateral security or guarantee therefor or right of offset with
respect thereto, but are solely to protect its interest in the Collateral.
The Pledgee will not be liable for any failure to demand, collect or realize
upon all or any part of the Collateral or for any delay in doing so, nor is
the Pledgee under any obligation to sell or otherwise dispose of any
Collateral upon the request of any Pledgor or any other Person or to take any
other action whatsoever with regard to the Collateral or any part thereof. No
action or inaction on the part of the Pledgee hereunder or under the Note will
release any Pledgor from any of its obligations hereunder or under the Note,
or constitute an assumption of any such obligations on the part of the
Pledgee, or cause the Pledgee to become subject to any obligation or liability
to any Pledgor. The Pledgee has no obligation to perform any of the
obligations or duties of any Pledgor as a shareholder of Covista or Epoch.
7.2 Right of Pledgee to Perform Pledgor's Covenants, Etc. If any
Pledgor fails to make any payment or to perform any agreement required to be
made or performed hereunder, the Pledgee may (but need not) at any time
thereafter make such payment or perform such act, or otherwise cause such
payment or performance. No such action will create any liability to any
Pledgor on the part of the Pledgee. All amounts so paid by the Pledgee and
all costs and expenses (including, without limitation, attorneys' fees and
expenses) incurred by the Pledgee in any such performance shall accrue
interest from the date paid or disbursed until reimbursed to the Pledgee in
full by or on behalf of the Pledgors at the rate established in Section 6.5.
All such amounts shall constitute additional indebtedness of the Pledgors
secured hereunder and shall be payable on demand.
7.3 Right of Pledgee to Demand Additional Pledged Shares. The
Pledgee shall have the right at any time, at its sole discretion, to demand by
written notice to the Pledgors that the Pledgors pledge to the Pledgee
additional shares of common stock of Covista (or, subject to the approval of
the Pledgee in its sole discretion, shares of stock of one or more other
entities) owned of record and beneficially by one or more of the Pledgors if,
at such time, the sum of (i) the Combined Market Value plus (ii) the Private
Company Stock Value plus (iii) the LLC Interest Value is less than
$13,000,000. The number of shares that may be demanded pursuant to the
preceding sentence shall, at the time of any such demand, be a number of
shares such that the sum of the preceding clauses (i), (ii) and (iii), after
accounting for such additional shares, is equal to $13,000,000. All shares at
any time demanded pursuant to the provisions of this Section 7.3 shall be
"Demanded Shares." Unless otherwise agreed in writing by the Pledgee, all
Demanded Shares, to the extent that they would not be freely transferable by
the Pledgee if sold by the Pledgee in a manner consistent with the provisions
of this Agreement, shall be subject to registration requirements equivalent to
those set forth in Section 6.7 of this Agreement with respect to Covista
Pledged Stock. The Pledgee and the Pledgors agree that, except as otherwise
expressly set forth in this Agreement, Pledgee shall at no time be required to
release from the pledge or return to the Pledgors any Collateral.
7.4 Release of the Pledge and Security Interest Created Hereby. Upon
payment in full of the outstanding principal amount of and accrued interest on
the Note in accordance with its terms and payment or satisfaction of all other
Secured Obligations, the Pledgee will, upon the written request of all
Pledgors, return to the Pledgors all Collateral held by the Pledgee. Upon
such payment or satisfaction, Pledgee will execute and deliver to the Pledgors
such documents as the Pledgors may reasonably request to evidence the payment
or satisfaction of the Secured Obligations or the release of the Collateral,
as the case may be.
7.5 Partial Release of Pledged Shares Under Certain Circumstances.
(a) So long as no Default or Event of Default is continuing at such time, the
Pledgors, by a written request executed by each Pledgor and delivered to the
Pledgee, shall have the right to request, from time to time prior to the
Maturity Date (as set forth in the Note), that the Pledgee release from the
pledge and permit a sale (in accordance with the provisions of this Section
7.5) of, specified shares of Covista Pledged Stock previously pledged to the
Pledgee and held at such time by the Pledgee ("Specified Release Shares").
Such notice (a "Release Notice") shall specify the number of Specified Release
Shares proposed to be sold, the price (net of sales commissions) at which such
Specified Release Shares are to be sold, and the proposed acquiror of such
Specified Release Shares. The Release Notice shall also certify that the
proposed sale of Specified Release Shares will constitute a Permitted Sale (as
defined below) and that the proposed sale will not result in any violation of
or be in conflict with or constitute a default under any term of any Pledgor's
certificate of incorporation or by-laws (or similar constitutive documents) or
any agreement or instrument to which any Pledgor is a party or by which any
Pledgor is bound or any term of any applicable law, ordinance, rule or
regulation of any governmental authority or any term of any applicable order,
judgment or decree of any court, arbitrator or governmental authority.
(b) Upon receipt of a valid Release Notice (as determined in the sole
discretion of the Pledgee), the Pledgee will use its good faith efforts to
release promptly from the pledge the Specified Release Shares identified in
such Release Notice and to cooperate with the Pledgors in facilitating, at the
sole cost and expense of the Pledgors, a sale of such Specified Release Shares
in accordance with the terms specified in such Release Notice; provided that
under no circumstances shall the Pledgee be liable to any Pledgor or any other
Person for any loss, liability or expense resulting from any delay in
consummating a Permitted Sale (whether as a result of actions required to
prepare the Specified Release Shares for sale by a Pledgor or otherwise). The
Pledgors shall have the right to receive and retain the net proceeds of each
Permitted Sale.
(c) For the purposes of this Section 7.5, a "Permitted Sale" is a sale
of Specified Release Shares that: (i) is effected at a price per share (net
of commissions) equal to or exceeding $8.00 and (ii) results in net proceeds
(individually for such sale and aggregated with all prior Permitted Sales) of
$500,000 or less.
SECTION 8. REMEDIES AND ENFORCEMENT.
8.1 Remedies in Case of an Event of Default. If an Event of Default
has occurred and is continuing, then in addition to the actions referred to in
Section 5.2 the Pledgee may take any or all of the following actions, without
demand of performance or other demand, advertisement or notice of any kind to
or upon Pledgors or any other Person (except as specified in Section 8.1(b))
all and each of which are hereby expressly waived by Pledgors:
(a) The Pledgee may, in its own name or at its sole option in
the name of any Pledgor, exercise any or all of the rights, powers and
privileges of, and pursue any or all of the remedies accorded to, any
Pledgor under the Collateral and may exclude such Pledgor and all
Persons claiming by, through or under such Pledgor wholly or partly
therefrom, including in such rights, privileges and remedies, but
without limitation, all rights of such Pledgor to demand, receive, xxx
for, compromise and settle all payments in respect of the Collateral,
and in connection therewith to exercise all rights and remedies
thereunder which such Pledgor could enforce if this Agreement had not
been made.
(b) The Pledgee may forthwith collect, recover, receive,
appropriate and realize upon the Collateral, or any part thereof, and/or
may forthwith sell, assign, give an option or options to purchase,
contract to sell or otherwise dispose of and deliver the Collateral, or
any part thereof, in one or more parcels at public or private sale or
sales, at any exchange, broker's board or at any of the Pledgee's
offices or elsewhere upon such terms and conditions as it may deem
advisable and at such prices as it may deem best, for cash or on credit
or for future delivery without assumption of any credit risk. The
Pledgee need not make any sale of Collateral even if notice thereof has
been given, may reject any and all bids that in its commercially
reasonable discretion it shall deem inadequate, and may adjourn any
public or private sale. Pledgors hereby acknowledge that the Collateral
(other than the LLC Interest) is of a type that could decline speedily in
value and is also of a type customarily sold on a recognized market, in
each case within the meaning of Section 9-504 of the UCC as in effect in
any applicable jurisdiction, and that the Pledgee need not give any
notice to Pledgors prior to any sale of the Collateral at any exchange,
broker's board or in any other recognized market. Without limiting the
foregoing, each Pledgor agrees that, with respect to any of the
Collateral, the Pledgee need not give more than five days notice 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 and that such notice
is reasonable notification of such matters, and waives all other demands
or notices of any kind.
(c) In addition to the rights described in the foregoing
clauses (a) and (b), with respect to the LLC Interest, the Pledgee may
(i) use, operate, store, control or manage the LLC Interest, including
without limitation carrying on the business of Red Tulip and exercising
all rights and powers of Entree relating to the LLC Interest, and (ii)
transfer all rights in and under the Red Tulip Operating Agreement,
including without limitation (but subject to the terms of the Red Tulip
Operating Agreement) the right to become a substitute Member (as such
term is defined in the Red Tulip Operating Agreement) of Red Tulip. At
the request of the Pledgee, Entree and Xxxxxxxx shall promptly execute
and deliver all instruments of title and other documents as the Pledgee
may deem necessary or advisable to permit the Pledgee to fully exercise
its rights hereunder.
(d) The Pledgee may, as a matter of right and without notice to
any Pledgor or any Person claiming by, through or under any Pledgor,
cause the appointment of a receiver for all or any part of the
Collateral.
(e) In addition to all other rights and remedies granted to it
in this Agreement and in any other instrument or agreement securing,
evidencing or relating to any of the Secured Obligations, the Pledgee
will have and may exercise with respect to any or all of the Collateral
all of the rights and remedies of a secured party under the UCC and all
other legal and equitable remedies allowed under applicable law. Each
Pledgor consents to and ratifies any action which the Pledgee may take
to enforce its rights under this Section 8.1. Each Pledgor waives to
the full extent permitted by law the benefit of all appraisement,
valuation, stay, extension, moratorium and redemption laws now or
hereafter in force and all rights of marshaling in the event of the sale
of the Collateral or any part thereof or any interest therein. Each
Pledgor will execute and deliver such documents as the Pledgee deems
advisable or necessary in order that any such sale or disposition be
made in compliance with applicable law. Any sale or other disposition of
the Collateral or any part thereof or interest therein in the exercise
of any remedy hereunder will constitute a perpetual bar against each
Pledgor and any Persons claiming by, through or under any Pledgor. Upon
any such sale or other disposition, the receipt of the officer or agent
making the sale or other disposition or of the Pledgee is a sufficient
discharge to the purchaser for the purchase money, and such purchaser
will have no duty to see to the application thereof.
8.2 Application of Proceeds Following an Event of Default. All
amounts held or collected by the Pledgee as part of the Collateral (including,
without limitation, all amounts realized as a result of the exercise of any
rights and remedies hereunder) following the occurrence of any Event of
Default will be applied forthwith by the Pledgee as follows:
FIRST: to the payment of all costs and expenses of such exercise
(including, without limitation, the cost of evidence of title and the
costs and expenses, if any, of taking possession of, retaining custody
over and preserving the Collateral or any part thereof, or any interest
therein prior to such exercise), all costs and expenses of any receiver
of the Collateral or any part thereof, or any interest therein, any
taxes, assessments or charges with respect to any of the Collateral,
whether or not prior to the lien of this Agreement, which the Pledgee
may consider it necessary or desirable to pay and all amounts due and
payable to the Pledgee under Section 6.5 and unpaid;
SECOND: to the payment of the accrued and unpaid interest
(including interest on unpaid principal and, to the extent permitted by
applicable law, unpaid interest) of the Note in accordance with the
provisions of the Note;
THIRD: if the Note has not become due and payable in full, to the
payment of all outstanding principal then due and payable on the Note;
FOURTH: if the Note has become due and payable in full whether at
maturity, by prepayment, acceleration, declaration of default or
otherwise, to the payment of the outstanding principal of the Note in
accordance with the provisions of the Note;
FIFTH: to the ratable payment to the Persons entitled thereto of
all other obligations secured hereunder for which moneys have not
theretofore been applied; and
SIXTH: at such time as all of the obligations of the Pledgors under
the Note have been paid in full in cash or in stock in accordance with
the terms of the Note and all other Secured Obligations have been paid
or performed to the satisfaction of the Pledgee, the remainder, if any,
will be paid over to Pledgors, their successors or assigns, or to
whomsoever may be lawfully entitled to receive the same, as determined
by a court of competent jurisdiction. Notwithstanding anything to the
contrary set forth above, the Pledgee and the Pledgors agree and
acknowledge that amounts held or collected by the Pledgee with respect
to the FINDS Shares will not be applied to the payment of principal of
and interest on the Note to the extent that all of the Existing Secured
Obligations have already been satisfied. Nothing herein shall require
the Pledgee to exercise rights against any portion of the Collateral
before exercising rights against any other portion of the Collateral or
to apply amounts held or collected by the Pledgee with respect to the
Collateral other than the FINDS Shares in satisfaction of any part of
the Secured Obligations before satisfaction of any other part of the
Secured Obligations.
8.3 Purchase of Collateral by Pledgee. The Pledgee may be a
purchaser of the Collateral or any part thereof or any interest therein at any
sale or other disposition hereunder and may apply against the purchase price
the indebtedness secured hereby.
8.4 Purchaser to Acquire Good Title. Any purchaser of the Collateral
at any sale or other disposition thereof pursuant to this Section 8 will, upon
any such purchase, acquire good title to the Collateral so purchased free of
the lien and security interest created by this Agreement and free of all
rights of equity or redemption in any Pledgor, which rights each Pledgor
hereby expressly waives and releases to the full extent permitted by law, and
each Pledgor will warrant and defend the title of such purchaser against all
claims arising by, through or under the Pledgors. Nevertheless, if so
requested by the Pledgee or any such purchaser, each Pledgor will ratify and
confirm any exercise of remedies by the Pledgee hereunder by executing and
delivering to the Pledgee or such purchaser all bills of sale, assignments,
releases and other proper instruments to effect such ratification and
confirmation as may be designated in any such request. In addition, each
Pledgor will do or cause to be done all such other acts and things as may be
reasonably necessary to make such exercise of remedies 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 exercise, all at such Pledgor's expense.
8.5 Sale of Pledged Stock or LLC Interest Without Registration;
Private Sale of Pledged Stock at a Discount to Market Price. Pledgor
recognizes that, under certain circumstances, (i) the Pledgee may be unable to
effect a public sale of any or all of the Pledged Stock and/or the LLC
Interest by reason of the Securities Act and applicable state or foreign
securities laws or otherwise, but may be compelled to resort to one or more
private sales thereof to a restricted group of purchasers who will be obliged
to agree, among other things, to acquire such property for their own account
for investment and not with a view to the distribution or resale thereof and
who otherwise satisfy the requirements of any such applicable law, and (ii)
any such private sale may result in prices and other terms less favorable to
the seller than if such sale were a public sale. No such sale will be deemed
to have been made in a commercially unreasonable manner for the reason that it
was made as a private sale rather than a public sale, and the Pledgee will be
under no obligation to delay a sale of any of the Pledged Stock and/or the LLC
Interest for the period of time necessary to permit the registration of any
securities for public sale under the Securities Act, or under applicable state
securities laws, or otherwise comply with applicable law, even if the issuer
thereof would agree or has agreed to do so and would be able to do so. Pledgor
further recognizes that the market for the Pledged Stock is illiquid and that
a public sale of the Pledged Stock in a significant quantity could have an
adverse effect on the market price for the Pledged Stock. Therefore, Pledgor
acknowledges and agrees that, to the fullest extent permitted by applicable
law, no private sale of the Pledged Stock (whether such sale is to the Pledgee
or to a third party) will be deemed to have been made in a commercially
unreasonable manner for the reason that it was made at a price that reflects a
discount from the then current market price of such Pledged Stock. Pledgor
further acknowledges and agrees that, to the fullest extent permitted by
applicable law, any such discount that is calculated in accordance with an
appraisal of the Pledged Stock by an independent appraiser, investment bank,
accounting firm or other qualified consultant shall be deemed to be
commercially reasonable.
8.6 Appointment as Attorney-in-Fact. Each Pledgor hereby irrevocably
constitutes and appoints the Pledgee, with full power of substitution, as such
Pledgor's attorney-in-fact, with full irrevocable power and authority in the
place and stead of such Pledgor and in the name of such Pledgor or otherwise,
from time to time in the Pledgee's discretion, to execute and deliver any and
all bills of sale, assignments, instruments of title or other instruments
which the Pledgee may deem necessary or advisable in its exercise of any of
the remedies hereunder, and to take any other action to accomplish the
purposes of this Agreement, including, without limitation, to ask, demand,
collect, xxx for, recover, compound, receive and give acquittance and receipt
for moneys due and to become due under or in connection with the Collateral,
to receive, endorse, and collect any drafts or other instruments, documents
and chattel paper in connection therewith, and to file any claims or take any
action or institute any proceedings which the Pledgee may deem to be necessary
or desirable for the collection thereof, such Pledgor hereby ratifying and
confirming all that such attorney or any substitute may lawfully do by virtue
hereof. This power of attorney is a power coupled with an interest and is
irrevocable.
8.7 No Waiver; Cumulative Remedies. No action or inaction of the
Pledgee will be deemed to waive any of the rights, powers or remedies of the
Pledgee hereunder except pursuant to a writing, signed by the Pledgee, and
then only to the extent expressly set forth therein. A waiver by the Pledgee
of any right, power or remedy on any one occasion will not bar the exercise of
any right, power or remedy hereunder on any future occasion. No failure of
the Pledgee to exercise nor delay of the Pledgee in exercising any right,
power or remedy will preclude the exercise of any other right, power or
remedy. If the Pledgee accepts payment of any amount secured hereby after its
due date, it will not thereby be deemed to have waived its right to require
prompt payment when due of all other amounts payable hereunder. Each right,
power and remedy of the Pledgee provided for in this Agreement or now or
hereafter existing at law or equity or by statute or otherwise is cumulative
and concurrent and is in addition to every other such right, power or remedy
of the Pledgee, and the exercise of any one or more of any such rights, powers
or remedies with respect to any of the Collateral will not preclude the
simultaneous or later exercise by the Pledgee of any other right, power or
remedy with respect to any other Collateral.
8.8 Restoration of Rights and Remedies. If the Pledgee has
instituted any proceeding to enforce any right, power or remedy under this
Agreement and such proceeding has been discontinued or abandoned for any
reason, with or without notice to Pledgors, or has been determined adversely
to the Pledgee, then and in every such case Pledgors and the Pledgee will
be restored to their former positions hereunder, and thereafter all rights,
powers and remedies of the Pledgee will continue as though no such proceeding
had been instituted.
SECTION 9. PLEDGOR'S OBLIGATIONS NOT AFFECTED.
The covenants and agreements of each Pledgor set forth herein are primary
obligations of such Pledgor. All such obligations are absolute and
unconditional, are not subject to any counterclaim, set-off, deduction,
diminution, abatement, recoupment, suspension, deferment, reduction or defense
(other than full and strict compliance by such Pledgor with its obligations
hereunder) based upon any claim any Pledgor, Covista, Red Tulip or any other
Person may have against the Pledgee or any other Person. All such obligations
will remain in full force and effect without regard to, and will not be
released, discharged or in any way affected by, any unenforceability,
invalidity or other infirmity with respect to the Note, or any other
circumstance, condition or occurrence whatsoever, whether foreseeable or
unforeseeable and without regard to whether the Pledgee, any Pledgor, Covista,
Red Tulip or any other entity the capital stock of which (or an equivalent
equity interest in which) has been pledged to Pledgee to secure the Borrowers'
obligations under the Note shall have any knowledge or notice thereof.
SECTION 10. MISCELLANEOUS.
10.1 Amendments, Etc. Any amendment, modification or waiver of any
term or provision of this Agreement must be in writing and signed by the
Pledgee. Any such waiver will be effective only in the specific instance and
for the specific purpose for which it is given.
10.2 Survival of Agreements, Representations and Warranties. All
agreements, representations and warranties contained in this Agreement or the
Note or made in writing by or on behalf of any Pledgor in connection with the
transactions contemplated by this Agreement or the Note will survive the
execution and delivery of this Agreement, any investigation at any time made
by or on behalf of the Pledgee, the purchase of any Note or any payment of any
Note or any disposition of any Note.
10.3 Successors and Assigns. This Agreement is binding upon and will
inure to the benefit of and be enforceable by the respective successors and
assigns of the parties hereto, whether so expressed or not.
10.4 Entire Agreement. This Agreement and the Note embody the entire
agreement and understanding between Pledgors and the Pledgee with respect to
the transaction referred to herein and therein and supersede all prior
agreements and understandings, written or oral, relating to the pledge of
collateral to the Pledgee to secure the obligations of the Pledgors under the
Note.
10.5 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction is, as to such jurisdiction,
ineffective only to the extent made necessary by such prohibition or
unenforceability. Any such prohibition or unenforceability in any
jurisdiction will not invalidate or render unenforceable (i) the remaining
provisions hereof or (ii) such provision in any other jurisdiction. There
shall be substituted for any such provision so rendered ineffective a
provision which, as far as legally possible, most nearly reflects the intent
of the parties hereto.
10.6 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO IRREVOCABLY
AND UNCONDITIONALLY WAIVES THE RIGHT TO TRIAL BY JURY IN ANY LEGAL OR
EQUITABLE ACTION, SUIT OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE NOTE OR ANY TRANSACTION CONTEMPLATED HEREBY OR THEREBY OR THE
SUBJECT MATTER OF ANY OF THE FOREGOING.
10.7 Agreement May Constitute Financing Statement. Each Pledgor
consents to the filing of this Agreement or a photocopy thereof as a financing
statement under the Uniform Commercial Code as in effect in any jurisdiction
in which the Pledgee may determine such filing to be necessary or desirable.
10.8 Miscellaneous. This Agreement may be executed in any number of
counterparts, each of which is an original, but all of which together
constitute but one instrument. Except as otherwise indicated, references
herein to any "Section" means a "Section" of this Agreement. The table of
contents and the section headings in this Agreement are for purposes of
reference only and shall not limit or define the meaning hereof.
10.9 GOVERNING LAW. THIS AGREEMENT AND (UNLESS OTHERWISE
EXPRESSLY PROVIDED) ALL AMENDMENTS AND SUPPLEMENTS TO, AND ALL
CONSENTS AND WAIVERS PURSUANT TO, THIS AGREEMENT WILL IN ALL
RESPECTS BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE
WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE
TO PRINCIPLES OF CONFLICTS OF LAW, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE.
10.10 Notices, Etc. All notices and other communications provided
for hereunder must be in writing (including telegraphic, telex, telecopy or
cable communication) and must be sent (a) if to any Pledgor, at its address
listed on Exhibit B attached hereto, (b) if to Pledgee, at 000 Xxxxx Xxxx Xxx,
Xxxxx 000, Xxxx Xxxxx, XX 00000, Telephone: 000-000-0000, Facsimile: 561-655-
9692, or (c) as to each party, at such other address as shall be designated by
such party in a written notice to the other parties. All such notices and
communications are effective when received.
10.11 Submission to Jurisdiction; Waiver of Immunity; Agent for
Service of Process. For the purpose of assuring that the Pledgee may enforce
its rights under this Agreement, each Pledgor, for itself and its successors
and assigns, hereby irrevocably (a) agrees that any legal or equitable action,
suit or proceeding against any Pledgor arising out of or relating to this
Agreement or any transaction contemplated hereby or the subject matter of any
of the foregoing may be instituted, at the election of the Pledgee, in any
state or federal court in the Commonwealth of Virginia (including, without
limitation, the U.S. Federal District Court for the Eastern District of
Virginia) or in any state or federal court in the State of Florida, (b) waives
any objection which it may now or hereafter have to the venue of any action,
suit or proceeding, (c) irrevocably submits itself to the nonexclusive
jurisdiction of any state or federal court of competent jurisdiction in the
Commonwealth of Virginia or the State of Florida, and (d) irrevocably waives
any immunity from jurisdiction to which it might otherwise be entitled in any
such action, suit or proceeding which may be instituted in any state or
federal court of the Commonwealth of Virginia or the State of Florida, and any
immunity from the maintaining of an action against it to enforce any judgment
for money obtained in any such action, suit or proceeding and, to the extent
permitted by applicable law, any immunity from execution. Each Pledgor
acknowledges that it has irrevocably designated and appointed CT Corporation
System (or any successor corporation), at its office in Virginia and its
office in Florida, as its authorized agent to accept and acknowledge on its
behalf service of any and all process which may be served in any such action,
suit or proceeding with respect to any matter as to which it has submitted to
jurisdiction as set forth in this Section 10.11 and agrees that service upon
such authorized agent shall be deemed in every respect service of process upon
such Pledgor or its successors or assigns, and, to the extent permitted by
applicable law, shall be taken and held to be valid personal service upon it.
Each Pledgor will take all action necessary to ensure that such Pledgor shall
at all times have an agent for service of process for the above purposes in
the Commonwealth of Virginia and the State of Florida. This Section 10.11
does not affect the right of the Pledgee to serve process in any other manner
permitted by law or to commence legal proceedings or otherwise proceed against
any Pledgor in any jurisdiction.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered personally or by their representative officers or
agents duly authorized as of the date first above written.
Pledgors:
GOLD & XXXXX TRANSFER, S.A.
By: /s/ Xxxxxx X. Xxxxxxxx
---------------------------
Xxxxxx X. Xxxxxxxx,
Attorney-in-Fact
REVISION, LLC
By: /s/ Xxxxxx X. Xxxxxxxx
---------------------------
Xxxxxx X. Xxxxxxxx,
Manager
FOUNDATION FOR THE INTERNATIONAL
NON-GOVERNMENTAL DEVELOPMENT
OF SPACE
By: /s/ Xxxxxx X. Xxxxxxxx
---------------------------------
Xxxxxx X. Xxxxxxxx,
President
XXXXXX X. XXXXXXXX
/s/ Xxxxxx X. Xxxxxxxx
---------------------------------
Xxxxxx X. Xxxxxxxx
ENTREE INTERNATIONAL LIMITED
By: /s/ Xxxxxx X. Xxxxxxxx
---------------------------------
Xxxxxx X. Xxxxxxxx,
President
Pledgee:
XXXXXX X. XXXXX
/s/ Xxxxxx X. Xxxxx
---------------------------
Xxxxxx X. Xxxxx
AGREED AND ACCEPTED (as to Sections 6.5 and 6.7 of the Agreement):
COVISTA COMMUNICATIONS, INC.
(formerly known as TOTAL-TEL USA COMMUNICATIONS, INC.)
By:
------------------------------
Name:
Title:
Exhibit A
Shares:
The Shares consist of:
1,179,732 shares of common stock of Covista owned of record and beneficially
by Revision, and represented in certificated form by stock certificate number
CU0008823 of Covista (the "Revision Shares");
703,529 shares of common stock of Covista owned of record and beneficially by
FINDS, and represented in certificated form by stock certificate number
CU0008825 of Covista (the "FINDS Shares"); and
Any and all Demanded Shares pledged pursuant to Section 7.3.
Existing Pledged Shares
The Existing Pledged Shares consist of the Revision Shares and the FINDS
Shares.
Exhibit B
NOTICE ADDRESSES FOR PLEDGORS
The notice addresses for the respective Pledgors are as follows:
(a) If to Gold & Xxxxx:
Xxxx Xxxxx Building
Wickams Cay
Road Town, Tortolla
British Virgin Islands
with copies to:
Xxxx X. XxXxxxxxxx
Xxxxxxx Berlin Shereff Xxxxxxxx, LLP
0000 X Xxxxxx XX
Xxxxxxxxxx, X.X. 00000-0000
Facsimile: 000-000-0000
and
Xxxxxx X. Xxxxxxxx
Revision LLC
0000 00xx Xxxxxx, XX
Xxxxx 000
Xxxxxxxxxx, X.X. 00000
Facsimile: 000-000-0000
(b) If to Revision:
Revision LLC
0000 00xx Xxxxxx, XX
Xxxxx 000
Xxxxxxxxxx, X.X. 00000
Attention: Xxxxxx X. Xxxxxxxx
Facsimile: 000-000-0000
with a copy to:
Xxxx X. XxXxxxxxxx
Xxxxxxx Berlin Shereff Xxxxxxxx, LLP
0000 X Xxxxxx XX
Xxxxxxxxxx, X.X. 00000-0000
Facsimile: 000-000-0000
(c) If to FINDS:
0000 X Xxxxxx XX
Xxxxx 000
Xxxxxxxxxx, X.X. 00000
with copies to:
Xxxx X. XxXxxxxxxx
Xxxxxxx Berlin Shereff Xxxxxxxx, LLP
0000 X Xxxxxx XX
Xxxxxxxxxx, X.X. 00000-0000
Facsimile: 000-000-0000
and
Xxxxxx X. Xxxxxxxx
Revision LLC
0000 00xx Xxxxxx, XX
Xxxxx 000
Xxxxxxxxxx, X.X. 00000
Facsimile: 000-000-0000
(d) If to Xxxxxxxx:
c/o Revision LLC
0000 00xx Xxxxxx, XX
Xxxxx 000
Xxxxxxxxxx, X.X. 00000
Attention: Xxxxxx X. Xxxxxxxx
Facsimile: 000-000-0000
with a copy to:
Xxxx X. XxXxxxxxxx
Xxxxxxx Berlin Shereff Xxxxxxxx, LLP
0000 X Xxxxxx XX
Xxxxxxxxxx, X.X. 00000-0000
Facsimile: 000-000-0000
(e) if to Entree International:
0000 00xx Xxxxxx, XX
Xxxxx 000
Xxxxxxxxxx, X.X. 00000
Attention: Xxxxxx X. Xxxxxxxx
Facsimile: 000-000-0000
with a copy to:
Xxxx X. XxXxxxxxxx
Xxxxxxx Berlin Shereff Xxxxxxxx, LLP
0000 X Xxxxxx XX
Xxxxxxxxxx, X.X. 00000-0000
Facsimile: 000-000-0000
