PLEDGE AND SECURITY AGREEMENT
Exhibit
10.2
PLEDGE
AND SECURITY AGREEMENT
(this
“Agreement”),
dated
April 17, 2007, made by and among Gigabeam Corporation (the “Company”)
and
the holders of Company’s common stock signatory hereto (collectively, the
“Pledgors”)
in
favor of Xxxxxxx Xxxxxxxxx & Xxxxx LLP (the “Agent”)
and
each of the holders of the Company’s 14% Secured Promissory Notes due, unless
demanded earlier pursuant to the terms therein, December 31, 2007 (collectively,
the “Pledgees”).
W
I T N E S S E T H:
WHEREAS,
Pledgees have agreed, severally and not jointly, to lend to the Company, and
the
Company has agreed to borrow from the Pledgees, up to an aggregate of $500,000
pursuant to the terms and conditions set forth in 14% Secured Promissory Notes
of the Company (the “Notes”);
WHEREAS,
pursuant to the provisions of the Notes, and as a condition to the obligation
of
the Pledgees to lend thereunder, the Pledgors, as principals, employees and
shareholders of the Company, have agreed to make the pledge contemplated by
this
Agreement in order to induce Pledgees to perform their obligations under the
Notes;
WHEREAS,
as a
condition to the obligation of the Pledgees to lend pursuant to the Notes,
the
Company agrees to undertake such action contemplated by this Agreement in order
to induce Pledgees to perform their obligations under the Notes;
WHEREAS,
Pledgors
own the shares of common stock, $0.001 par value per share, of the Company
(the
“Common
Stock”),
set
forth opposite the Pledgors’ names on Schedule
A
attached
hereto;
WHEREAS,
terms
used but not otherwise defined in this Agreement that are defined in Article
9
of the Uniform Commercial Code in effect in the State of New York at that time
(whether or not the UCC applies to the affected Pledged Collateral) (the
"UCC")
shall
have the meanings ascribed to them in the UCC; and
NOW,
THEREFORE,
in
consideration of the premises, covenants and promises contained herein and
for
other good and valuable consideration, the receipt and sufficiency of which
are
hereby acknowledged, the parties hereto hereby agree as follows:
SECTION
1. Pledge
and Security Interest.
Each
Pledgor hereby unconditionally and irrevocably pledges, grants and hypothecates
to the Pledgees, and grants to the Pledgees a continuing first priority security
interest in, a first lien upon and a right of set-off against, all of its
respective rights, titles and interests of whatsoever kind and nature in (the
“Security
Interest”),
and
to secure the complete and timely payment, performance and discharge in full,
as
the case may be, of all of the obligations pursuant to the Notes, the following
(collectively, the “Pledged
Collateral”):
(a) the
shares of Common Stock owned by such Pledgor and set forth on Schedule
A
attached
hereto (the “Pledged
Shares”),
and
all dividends, cash, instruments and other property from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or
all
of the Pledged Shares; and
(b) all
proceeds of any and all of the foregoing Pledged Collateral, in whatever form
(including, without limitation, proceeds that constitute property of the types
described above).
SECTION
2. Security
for Obligations.
This
Agreement secures the payment and performance of the following obligations
(collectively, the "Obligations"):
all
present and future indebtedness, obligations, covenants, duties and liabilities
of any kind or nature of the Company to the Pledgees now existing or hereafter
arising under or in connection with this Agreement or the Notes (collectively,
the “Transaction
Documents”).
SECTION
3. Delivery
of Pledged Collateral.
Within
3 business days of the date hereof, all certificates representing or evidencing
the Pledged Shares, in suitable form for transfer by delivery, or accompanied
by
instruments of transfer or assignment duly executed in blank, are being
deposited with and delivered to the Agent, as collateral agent for the Pledgees.
The Agent shall have the right, at any time after the occurrence of an Event
of
Default (as hereinafter defined)(unless waived in writing by the Pledgees),
without notice to the Pledgor, to transfer to or to register in the name of
the
Pledgees or their nominees any or all of the Pledged Collateral. In addition,
the Agent shall have the right at any time after the occurrence of an Event
of
Default (unless waived in writing by the Pledgees), to exchange certificates
or
instruments representing or evidencing Pledged Collateral for certificates
or
instruments of smaller or larger denominations.
SECTION
4. Representations
and Warranties.
Each
Pledgor, severally and not jointly with the other Pledgors, represents and
warrants as follows:
(a) Except
as
set forth on Schedule
4(a)
hereto,
such Pledgor is the legal, record and beneficial owner of the Pledged Collateral
owned by such Pledgor, free and clear of any lien, security interest,
restriction, option or other charge or encumbrance (collectively, "Liens").
(b) The
pledge of the Pledged Collateral and the grant of the Security Interest pursuant
to this Agreement creates a valid and perfected first priority security interest
in the Pledged Collateral, securing payment and performance of the
Obligations.
(c) Except
for the filing of financing statements pursuant to the UCC with the proper
filing and recording agencies in the jurisdictions indicated on Schedule
B,
attached hereto, no consent of any other person or entity and no authorization,
approval, or other action by, and no notice to or filing with, any governmental
authority or regulatory body is required (i) for the pledge by the Pledgor
of
the Pledged Collateral pursuant to this Agreement or for the execution, delivery
or performance of this Agreement by the Pledgor, (ii) for the perfection or
maintenance of the security interest created hereby, or (iii) for the exercise
by the Agent of the voting or other rights provided for in this Agreement or
the
remedies in respect of the Pledged Collateral pursuant to this Agreement (except
as may be required in connection with any disposition of any portion of the
Pledged Collateral by laws affecting the offering and sale of securities
generally).
2
(d) There
are
no conditions precedent to the effectiveness of this Agreement that have not
been satisfied or waived.
(e) Effective
on the date of execution of this Agreement, such Pledgor hereby authorizes
the
Agent to file one or more financing statements under the UCC with respect to
the
Security Interest with the proper filing and recording agencies in the
jurisdictions indicated on Schedule
B
attached
hereto, and in such other jurisdictions as may be requested by the
Pledgees.
(f) Such
Pledgor will not transfer, pledge, hypothecate, sell or otherwise dispose of
any
of the Pledged Collateral without the prior written consent of the
Pledgees.
(g) Such
Pledgor shall promptly execute and deliver to the Pledgees such further
assignments, security agreements, financing statements or other instruments,
documents, certificates and assurances and take such further action as the
Pledgees may from time to time request and may in its sole discretion deem
necessary to perfect, protect or enforce its security interest in the Pledged
Collateral.
(h) All
information heretofore, herein or hereafter supplied to the Pledgees by or
on
behalf of such Pledgor with respect to the Pledged Collateral is accurate and
complete in all material respects as of the date furnished.
SECTION
5. Further
Assurances.
Each
Pledgor, severally and not jointly with the other Pledgors, agrees that at
any
time and from time to time, at the expense of such Pledgor, the Pledgor shall
promptly execute and deliver all further instruments and documents, and take
all
further action, that may be necessary or desirable, or that the Agent and/or
the
Pledgees may reasonably request, in order to perfect and protect any security
interest granted or purported to be granted hereby or to enable the Agent and/or
Pledgees to exercise and enforce their rights and remedies hereunder with
respect to any Pledged Collateral. The Company agrees that at any time and
from
time to time, at the expense of the Company, the Company shall promptly execute
and deliver all further instruments and documents, and take all further action,
that may be necessary or desirable, or that the Pledgees may reasonably
request.
SECTION
6. Voting
Rights; Dividends; Etc.
(a) So
long
as no Event of Default shall have occurred (unless such Event of Default is
waived in writing by the Pledgees):
(i) Each
Pledgor shall be entitled to exercise or refrain from exercising any and all
voting and other consensual rights pertaining to the Pledged Collateral or
any
part thereof for any purpose not inconsistent with the terms of this Agreement;
provided,
however,
that
such Pledgor shall not exercise or refrain from exercising any such right if,
in
the reasonable judgment of such Pledgees, such action would have a material
adverse effect on the Security Interest or the rights and remedies of the
Pledgees hereunder; provided,
further,
that
such Pledgor shall give the Pledgees at least ten (10) days' prior written
notice of the manner in which it intends to exercise, or the reasons for
refraining from exercising, any such right.
3
(ii) Each
Pledgor shall be entitled to receive and retain any and all cash dividends
and
interest paid in respect of such Pledgor’s Pledged Collateral.
(b) Upon
and
after the occurrence of any Event of Default (unless such Event of Default
is
waived in writing by the Pledgees):
(i) All
rights of each Pledgor to exercise or refrain from exercising the voting and
other consensual rights which it would otherwise be entitled to exercise
pursuant to Section 6(a)(i) and to receive the dividends and interest payments
which it would otherwise be authorized to receive and retain pursuant to Section
6(a)(ii) shall cease, and all such rights shall thereupon become vested in
the
Agent who shall thereupon have the sole right to exercise or refrain from
exercising such voting and other consensual rights and to receive and hold
as
Pledged Collateral such dividends and interest payments.
(ii) All
dividends and interest payments which are received by the Pledgors contrary
to
the provisions of paragraph (i) of this Section 6(b) shall be received in trust
for the benefit of the Pledgees, shall be segregated from other funds of the
applicable Pledgor and shall be forthwith paid over to the Agent as Pledged
Collateral in the same form as so received (with any necessary
endorsement).
SECTION
7. Transfers
and Other Liens; Additional Shares.
During
the term of this Agreement, the Pledgor agrees that it shall not (i) sell,
assign (by operation of law or otherwise) or otherwise dispose of, or grant
any
option with respect to, any of the Pledged Collateral, or (ii) create or permit
to exist any Lien upon or with respect to any of the Pledged Collateral, except
for the security interest granted pursuant to this Agreement.
SECTION
8. Agent
Appointed Attorney-in-Fact.
(a) Effective
only upon an Event of Default (unless such
Event
of
Default is waived in writing by the Pledgees), the Pledgors hereby appoints
the
Agent as the Pledgors’ attorney-in-fact, with full authority in the place and
stead of, and in the name of, the Pledgors or otherwise, from time to time
in
the Agent's discretion to take any action and to execute any instrument which
the Agent may deem necessary or desirable to accomplish the purposes of this
Agreement, including, without limitation, to receive, endorse and collect all
instruments made payable to the Pledgors representing any dividend, interest
payment or other distribution in respect of the Pledged Collateral or any part
thereof and to give full discharge for the same.
4
(b) Each
Pledgor, severally and not jointly, authorizes the Agent, and do hereby make,
constitute and appoint the Agent and its respective officers, agents, successors
or assigns with full power of substitution, as the Pledgors’ true and lawful
attorney-in-fact, with power, in the name of the Pledgees or the Pledgors,
to,
after the occurrence and during the continuance of an Event of Default, (i)
endorse any checks, drafts, money orders or other instruments of payment
(including payments payable under or in respect of any policy of insurance)
in
respect of the Pledged Collateral that may come into possession of the Pledgees;
(ii) to sign and endorse any financing statement pursuant to the UCC or any
invoice, freight or express xxxx, xxxx of lading, storage or warehouse receipts,
drafts against Pledgors, assignments, verifications and notices in connection
with accounts, and other documents relating to the Pledged Collateral; (iii)
to
pay or discharge taxes, liens, security interests or other encumbrances at
any
time levied or placed on or threatened against the Pledged Collateral; (iv)
to
demand, collect, receipt for, compromise, settle and xxx for monies due in
respect of the Pledged Collateral; (v) generally, to do, at the option of the
Pledgees, and at the expense of the Pledgors, severally and jointly, at any
time, or from time to time, all acts and things which the Pledgees deem
necessary to protect, preserve and realize upon the Pledged Collateral and
the
Security Interest granted herein in order to effect the intent of this Agreement
all as fully and effectually as the Pledgors might or could do; and (vi) in
the
event of the bankruptcy of such Pledgor, to appoint a receiver or equivalent
person to xxxxxxxx such Pledgor’s assets, and such Pledgor hereby ratifies all
that said attorney shall lawfully do or cause to be done by virtue hereof.
This
power of attorney is coupled with an interest and shall be irrevocable for
the
term of this Agreement and thereafter as long as any of the Obligations shall
be
outstanding.
(c)
Each
Pledgor hereby irrevocably appoints the Agent as such Pledgor’s
attorney-in-fact, with full authority in the place and stead of such Pledgor
and
in the name of such Pledgor, from time to time in the Agent’s discretion, to
file in its sole discretion, of one or more financing or continuation statements
and amendments thereto, relative to any of the Collateral without the signature
of such Pledgor where permitted by law.
SECTION
9. Pledgee
May Perform.
If any
Pledgor fails to perform any agreement contained herein, the Agent and/or
Pledgees may itself perform, or cause performance of, such agreement, and the
expenses of the Agent and/or Pledgees incurred in connection therewith shall
be
payable by such Pledgor under Section 14 hereof.
SECTION
10. The
Agent's Duties.
The
duties and rights of the Agent are as set forth on Annex
A
attached
hereto and incorporated herein by reference. Any fees of the Agent for its
services hereunder shall be paid by the Company. The powers conferred on the
Agent hereunder are solely to protect the interests of the Pledgee in the
Pledged Collateral and shall not impose any duty upon the Agent to exercise
any
such powers. Except for the safe custody of any Pledged Collateral in its
possession and the accounting for moneys actually received it hereunder, neither
the Agent nor Pledgee shall have any duty as to any Pledged Collateral, as
to
ascertaining or taking action with respect to calls, conversions, exchanges,
maturities, tenders or other matters relative to any Pledged Collateral, whether
or not such party has or is to have knowledge of such matters, or as to the
taking of any necessary steps to preserve rights against any parties or any
other rights pertaining to any Pledged Collateral. The Agent and Pledgee shall
be deemed to have exercised reasonable care in the custody and preservation
of
any Pledged Collateral in its possession if such Pledged Collateral is accorded
treatment substantially equal to that which such party accords its own
property.
5
SECTION
11. Event
of Default.
The
occurrence of any of the following events shall constitute an event of default
under this Agreement (each, an “Event
of Default”):
(a) The
failure of any Pledgor to observe, perform or comply with any act, duty,
covenant, agreement or obligation under this Agreement, which is not cured
within ten business days following written notice by Agent to such
Pledgor;
(b) If
any of
the representation or warranty of any Pledgor set forth in this Agreement shall
be breached or shall be untrue or incorrect in any material respect, and is
not
cured within ten business days following written notice by Agent to such
Pledgor;
(c) The
filing of any financing statement with regard to any of the Pledged Collateral
other than pursuant to this Agreement, or the attachment of any additional
Lien
to any portion of the Pledged Collateral in favor of any Person other than
the
Pledgees; or
(d) If
any
event of default (and expiration of any cure period) shall occur (unless such
event of default is waived in writing by the Pledgees) under any of the other
Transaction Documents.
SECTION
12. Cross-Default;
Cross-Collateralization.
The
Pledgors acknowledges and agrees that any default under the terms of this
Agreement shall constitute a default by the Company under the Notes, and that
any event of default (following expiration of any applicable cure period) under
the Notes shall constitute a default under this Agreement.
SECTION
13. Remedies
upon Event of Default.
Upon
and after the occurrence of any Event of Default:
(a) The
Agent
may exercise in respect of the Pledged Collateral, in addition to other rights
and remedies provided for herein or otherwise available to the Agent (including,
without limitation, the vesting in the Agent pursuant to Section 6(b)(i) of
the
sole right to exercise voting rights pertaining to the Pledged Collateral,
including, without limitation, voting rights with respect to the sale of assets
of the issuer of such Pledged Collateral), all the rights and remedies of a
secured party on default under the UCC, and may also, without notice except
as
specified below and subject to the applicable securities laws, sell the Pledged
Collateral or any part thereof at public or private sale, at any exchange,
broker's board or at any of the Agent's offices or elsewhere, for cash, on
credit or for future delivery, and upon such other terms as the Agent may deem
commercially reasonable. Each Pledgor agrees that, to the extent notice of
sale
shall be required by law, at least ten (10) days’ notice to such Pledgor of the
time and place of any public sale or the time after which any private sale
is to
be made shall constitute reasonable notification. The Agent shall not be
obligated to make any sale of Pledged Collateral regardless of notice of sale
having been given. The Agent may adjourn any public or private sale from time
to
time by announcement at the time and place fixed therefor, and such sale may,
without further notice, be made at the time and place to which it was so
adjourned. Each Pledgor acknowledges and agrees that the Pledged Collateral
consisting of the Pledged Shares, and/or any other shares of common stock of
the
Company, is of a type customarily sold on a recognized market, and accordingly
that no notice of the sale thereof need be given. In addition, Agent may
transfer all of the Pledged Collateral to Pledgees, who may hold all of such
Pledged Collateral as payment in full of the Obligations
6
(b) Any
cash
held by the Agent or the Pledgees as Pledged Collateral and all cash proceeds
received by the Agent or the Pledgees in respect of any sale of, collection
from, or other realization upon all or any part of the Pledged Collateral may,
in the discretion of the Agent or the Pledgees, be held as collateral for,
and/or then or at any time thereafter be applied (after payment of any amounts
payable pursuant to Section 14) in whole or in part against, all or any part
of
the Obligations. Any surplus of such cash or cash proceeds held by the Agent
or
the Pledgees and remaining after payment in full of all the Obligations shall
be
paid over to the Pledgors, pro-rata, or to whomsoever may be lawfully entitled
to receive such surplus.
SECTION
14. Expenses.
The
Pledgors and the Company, severally and jointly, shall upon demand pay to the
Agent and/or the Pledgees the amount of any and all reasonable expenses,
including reasonable attorneys’ fees and expenses and the reasonable fees and
expenses of any experts and agents, which the Agent and/or Pledgees may incur
in
connection with (a) the administration of this Agreement, (b) the custody or
preservation of, or the sale of, collection from, or other realization upon,
any
of the Pledged Collateral, (c) the exercise or enforcement of any of the rights
of the Agent and/or Pledgees hereunder or (d) the failure by any Pledgor to
perform or observe any of the provisions hereof.
SECTION
15. Continuing
Security Interest; Termination.
This
Agreement shall create a continuing security interest in the Pledged Collateral
and shall remain in full force and effect until the indefeasible payment in
full
of the Obligations. Upon the indefeasible payment in full of the Obligations,
the security interest granted hereby shall terminate and all rights to the
Pledged Collateral shall revert to the Pledgors. Upon any such termination,
the
Agent shall, at such Pledgors’ expense, return, pro-rata, to the Pledgors such
of the Pledged Collateral as shall not have been sold or otherwise applied
pursuant to the terms hereof and execute and deliver to such Pledgors such
documents as such Pledgors shall reasonably request to evidence such
termination.
SECTION
16. Governing
Law; Terms.
For the
convenience of the Agent, this Agreement shall be governed by, and construed
in
accordance with, the laws of the State of New York, without regard to principles
of conflict of laws. Each Pledgor agrees to submit to the in personam
jurisdiction of the state and federal courts situated within the City of New
York, State of New York with regard to any controversy arising out of or
relating to this Agreement. Unless otherwise defined herein, terms defined
in
Article 9 of the UCC are used herein as therein defined.
7
SECTION
17. Notice.
All
notices and other communications hereunder shall be in writing and shall be
deemed to have been received when delivered personally (which shall include,
without limitation, via express overnight courier) or if mailed, three (3)
business days after having been mailed by registered or certified mail, return
receipt requested, postage prepaid, to the addresses of the parties as set
forth
herein.
SECTION
18. Waivers.
(a) Waivers.
Each
Pledgor waives any right to require the Pledgees to (i) proceed against any
person, (ii) proceed against any other collateral under any other agreement,
(iii) pursue any other remedy, or (iv) make presentment, demand, dishonor,
notice of dishonor, acceleration and/or notice of non-payment.
(b) Waiver
of Defense.
No
course of dealing between the Pledgors and the Pledgees, nor any failure to
exercise nor any delay in exercising on the part of the Agent or Pledgees,
any
right, power, or privilege under this Agreement or under any of the other
Transaction Documents shall operate as a waiver. No single or partial exercise
of any right, power, or privilege under this Agreement or under any of the
other
Transaction Documents shall preclude any other or further exercise of such
right, power, or privilege or the exercise of any other right, power, or
privilege.
SECTION
19. Rights
Are Cumulative.
All
rights and remedies of the Agent and the Pledgees with respect to the Pledged
Collateral, whether established by this Agreement, the other Transaction
Documents or by law, shall be cumulative and may be exercised concurrently
or in
any order.
SECTION
20. Indemnity.
Each
Pledgor, jointly and severally, agrees to indemnify and hold harmless the Agent,
the Pledgees and their respective heirs, successors and assigns against and
from
all liabilities, losses and costs (including, without limitation, reasonable
attorneys' fees) arising out of or relating to the taking or the failure to
take
action in respect of any transaction effected under this Agreement or in
connection with the lien provided for herein, including, without limitation,
any
and all excise, sales or other taxes which may be payable or determined to
be
payable with respect to any of the Pledged Collateral, except to the extent
resulting from their gross negligence or intentional misconduct. The liabilities
of the Pledgors under this Section 20 shall survive the termination of this
Agreement.
SECTION
21. Severability.
The
provisions of this Agreement are severable. If any provision of this Agreement
is held invalid or unenforceable in whole or in part in any jurisdiction, then
such invalidity or unenforceability shall affect only such provision, or part
thereof, in such jurisdiction, and shall not in any manner affect such provision
or part thereof in any other jurisdiction, or any other provision of this
Agreement in any jurisdiction.
SECTION
22. Counterparts.
This
Agreement may be executed in several counterparts, each of which shall be
considered an original, but all of which together shall constitute one and
the
same instrument.
SECTION
23. Amendments;
Entire Agreement.
This
Agreement is subject to modification only by a writing signed by the parties.
To
the extent any provision of this Agreement conflicts with any provision of
the
Notes, the provision giving Pledgees greater rights or remedies shall govern,
it
being understood that the purpose of this Agreement is to add to, and not
detract from, the rights granted to Pledgees under the Notes. This Agreement
and
the other Transaction Documents constitute the entire agreement of the parties
with respect to the subject matter of this Agreement.
8
SECTION
24. Successors
and Assigns.
This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective heirs, executors, legal representatives, successors and
assigns; provided,
however,
that no
Pledgor may, without the prior written consent of the Pledgees, assign or
delegate any rights, powers, duties or obligations hereunder, and any such
purported assignment or delegation without such consent shall be null and
void.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
9
IN
WITNESS WHEREOF,
the
parties hereto have duly executed and delivered this Agreement as of the date
first above written.
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PLEDGORS:
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|
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/s/
Xxxxx
Xxxxxxxxx
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|
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Xxxxx
Xxxxxxxxx
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|
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/s/
Xxxxxxx X.
Xxxxxx
|
|
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Xxxxxxx
Xxxxxx
|
|
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THE
COMPANY:
|
|
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GIGABEAM
CORPORATION
|
|
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By:
/s/ Xxxxx X.
Xxxxxxxxx
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Name:
Xxxxx X. Xxxxxxxxx
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|
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Title:
CEO
|
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AGENT:
|
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XXXXXXX
XXXXXXXXX & XXXXX LLP
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By:
/s/Xxxxxx
Xxxxxxx
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Name:
Xxxxxx Xxxxxxx
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Title:
Partner
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[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE
PAGE FOR PLEDGEES FOLLOWS]
10
[PLEDGEE
SIGNATURE PAGES TO GGBM PLEDGE AND SECURITY AGREEMENT]
Name
of
Pledgee: Midsummer Investment,
Ltd.
Signature
of Authorized Signatory of Pledgee: /s/
Xxxxxxx
Xxxxxxx
Name
of
Authorized Signatory: Xxxxxxx
Xxxxxxx
Title
of
Authorized Signatory: Director
E-mail
Address of Authorized Signatory: xx@xxxxxxxxxxxxxxxx.xxx
11
SCHEDULE
A
Pledged
Shares
800,000
shares of Gigabeam Corporation certificated as follows:
|
Pledgor:
|
Number
of Shares:
|
Certificate
Number:
|
|
Xxxxx
Xxxxxxxxx
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400,000
|
|
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Xxxxxxx
Xxxxxx
|
400,000
|
12
SCHEDULE
B
13
