STOCK PLEDGE AGREEMENT
EXECUTIVE
COPY
This
Stock Pledge Agreement ("Agreement") is entered into as of the 27th day of
December, 2006, by and between STOMPSOFT,
INC.,
a
California corporation (“Pledgor”) and MIGO
SOFTWARE, INC.,
a
Delaware corporation (the
“Company”).
RECITALS
A. Simultaneously
herewith, the parties hereto are entering into an Asset Purchase Agreement
(the
“APA”) under which the Company is purchasing substantially all of the assets and
business of Pledgor.
B. Pledgor
has agreed to indemnify the Company against claims for breaches by Pledgor
of
its representations, warranties and covenants under the APA, to the extent
provided for in Article 8 of the APA (“Claims”) and to secure such
indemnification provisions by pledging a portion of the shares of stock in
the
Company received by Pledgor under the APA.
C. The
pledged shares shall be 5,000,000 shares of the common stock, $.0001 par value
per share, of the Company (the “Subject Shares”).
D. The
Subject Shares are to be subject to the terms of this Agreement until such
time
as they have been released in accordance with the terms hereof.
E. Upon
the
terms and subject to the conditions set forth in this Agreement, Pledgor hereby
pledges the Subject Shares to the Company by depositing them with the
Company.
F.
This
Agreement is effective upon the closing of the sale contemplated by the
APA.
AGREEMENT
1. Pledge.
Pledgor
hereby assigns and delivers to the Pledgeholder certificate numbers ___, which
represent a total of 5,000,000 shares of the common stock of the Company. Such
stock constitutes the Subject Shares. Together with such stock, Pledgor hereby
delivers to the Pledgeholder stock powers separate from the stock certificate
duly endorsed by Pledgor as transferor and authorizing the transfer of such
stock on the records of the Company.
2. Stock.
2.1 The
Subject
Shares shall be and are hereby held by the Pledgeholder as security for Claims
the Company may have under the APA. The Subject Shares shall not be disposed
of
by Pledgor, nor shall they be encumbered except as provided in Section 2.3
below; provided, however, that such Subject Shares shall be and may be
encumbered in favor of Camel Financial, Inc., Xxxxxx Xxxxxxx and Xxxxxx X.
Xxxxxx, existing secured creditors of the Company (together with their
successors and assigns, collectively the “Junior Creditors”); provided that such
Junior Creditors shall at all times be junior in lien priority to the Company.
2.2 On
September 30, 2007, there shall be released from the pledge under this Agreement
2,500,000 shares of the common stock of the Company except to the extent the
aggregate amount of Claims by the Company that have not otherwise been satisfied
by Pledgor exceed the value (at the Market Average Price per share determined
on
September 30, 2007) of the remaining Subject Shares. On June 30, 2008, the
remaining Subject Shares shall be released to Pledgor except to the extent
of
outstanding Claims as of that date that have not yet been resolved by the
parties or by way of litigation. Upon the resolution of all outstanding Claims,
the Subject Shares not remitted to the Company for cancellation as provided
herein shall be released to the Pledgor.
2.3 If
Pledgor shall have sold all of the other shares of common stock received by
it
under the APA, Pledgor shall have the right to sell Subject Shares for cash
to a
third party in a bona fide transaction at such time, for such price and upon
such terms as Pledgor may determine in good faith. In such event, the proceeds
of such sale shall be held by the Pledgeholder in lieu of the Subject Shares
in
accordance with the terms hereof. The parties agree to make reasonable
modifications to this Agreement in the event cash proceeds are substituted
for
Subject Shares hereunder, including, without limitation, the following: upon
receipt of direction from the Pledgor, Pledgeholder shall invest the cash
proceeds in an interest bearing account or accounts with FDIC insured banks
naming the Pledgor as the owner of the account subject to this Pledge Agreement,
with such investment to be as reasonably directed by the Pledgor from time
to
time and which investment shall be for the benefit of Pledgor and the Pledgor
shall provide its taxpayer identification number to Pledgeholder in connection
with opening such bank account or accounts.
2.4 For
all
purposes of this Agreement, the "Market Average Price" of the Company’s common
stock means, as of any date, the volume weighted average closing sales price
per
share of common stock as reported in the Nasdaq System or on the
over-the-counter market during the last 10 consecutive trading days on which
there were sales of the Company’s common stock immediately preceding, but not
including, such determination date.
3. Voting
Rights.
Pledgor
shall have the right to vote the Subject Shares so long as there is no event
of
default in existence hereunder.
4. Default.
4.1 Events
of Default.
The
failure of Pledgor to satisfy any Claims made by the Company under the APA
shall
constitute an event of default hereunder if such default continues for more
than
the cure period set forth in Section 5.1 below.
4.2 Notice
of Default.
Upon
the occurrence of any default, the Company shall give Pledgor written notice
thereof.
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5. Remedies
Upon Default.
5.1 Right
to Cure.
Pledgor
shall have the right to cure any default for a period of ten (10) days from
the
date Pledgor receives written notice of default pursuant to the provisions
of
Section 4.2. During this cure period, the Company shall not have the right
to
exercise any of its remedies hereunder.
5.2 Additional
Remedies.
In
addition to all other rights and remedies which the Company may have under
law,
the Company shall have all rights and remedies of a secured party under the
Uniform Commercial Code in any jurisdiction where enforcement of this Agreement
is sought. In addition thereto, the Company shall have the right, upon an event
of default, to either:
5.2.1. To
have
transferred into the Company’s name the Subject Shares, in satisfaction of
Claims based on a valuation of the Market Average Price per share of common
stock of the Company determined as of the date of the event of default (and
after any applicable cure period as provided for under this Agreement),
or
5.2.2. Sell
or
otherwise dispose of the Subject Shares or any part thereof, in one or more
sales, at a public or private sale, for cash, on credit or otherwise with or
without representations or warranties, and upon such terms as shall be
acceptable to the Company, subject to any restrictions imposed by applicable
state or federal securities laws.
Notwithstanding
the foregoing, in no event shall the Company transfer or sell any of the Subject
Shares unless (i) the Claim shall have been settled by the agreement of the
Pledgor and the Company or by litigation, or (ii) the Company shall have
provided Pledgor with written notice of a Claim, including the amount thereof,
and Pledgor shall not have objected thereto in writing within twenty (20) days
after receipt of notice of such Claim.
Notwithstanding
anything herein to the contrary, the rights of the Company hereunder may be
exercised in the discretion of , and for the exclusive benefit of, the Secured
Party and without any requirement to provide notice to or protect the rights
of
the Junior Creditors.
5.3. Sale.
5.3.1 Provided
an uncured event of default has occurred, subject to the other provisions of
this Agreement, the Company shall give Pledgor at least ten (10) days prior
written notice of the sale of all or any part of the Subject Shares or of any
proposal by the Company to retain the Subject Shares or any part thereof in
satisfaction of any Claims. Within such ten (10) day period, Pledgor may cure
the default prior to the date on which the sale is scheduled. If Pledgor does
not do so, Pledgor may bid at any such sale.
5.3.2 Any
sale of
the Subject Shares shall be held at such time or times and at such place or
places as the Company may determine in the exercise of its reasonable
discretion. To the extent permitted by applicable law, a private sale shall
be
held on or after the date designated in the notice of sale at the place so
designated.
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5.3.3 The
Company
may bid at any sale hereunder and shall also have the rights provided in the
Uniform Commercial Code of the State of California. The Subject Shares pledged
hereunder may, upon the completion of any sale or transfer, be endorsed by
the
Company as required to transfer the Subject Shares on the books of the Company
and Pledgor hereby constitutes and appoints the Company as his attorney in
fact
to do so.
5.3.4 The
proceeds of any sale shall be applied by the Company, after payment of expenses
of sale (including, without limitation, reasonable attorneys' fees and court
costs), first to the Claims, and any surplus shall be paid to the order of
Pledgor. In the event the proceeds of any such sale are insufficient to fully
discharge the Claims, Pledgor shall be liable to the Company for the
deficiency.
6. Reclassification
and Dividends.
If,
during the life of this Agreement, any stock dividend, reclassification,
readjustment or other change is declared or made in the capital structure of
the
Company, all new, substituted and additional shares, or other securities issued
in connection with any such change, may and shall be held by the Company under
the terms of this Agreement. All dividends, current or liquidating, on any
Subject Shares held in pledge hereunder, whether in money or in Subject Shares
or in kind, shall be paid to the Company during the pendency of an Event of
Default, and such dividends shall be applied by the Company to any Claims
hereunder, but otherwise shall be paid to Pledgor.
7. Pledgeholder.
To
facilitate the pledge created herein, the parties agree that Xxxxx Xxxx, P.C.
located at 0000 Xxxxxxxx Xxxx, Xxxxx 000, Xxxxxxx, Xxxxxxx 00000, shall act
as
Pledgeholder; provided, however, that Pledgor may elect at any time to appoint
an independent third party as pledgeholder (the “Assignee”) such as U.S. Bank
effective upon the execution of an amendment to this Agreement by Assignee
and
the parties hereto. The parties hereto agree to execute such amendment and
cooperate to cause such appointment of Assignee subject to the following: (i)
Pledgor shall pay for Assignee’s costs and fees to act as pledgeholder; and (ii)
the Company and Pledgeholder shall agree to execute such escrow instructions
and
an amendment to this Agreement as reasonably requested by Assignee including
an
agreement by Pledgor and the Company to indemnify Assignee for all acts arising
out of this Agreement other than gross negligence or intentional misconduct
by
Assignee..
8. Duties
of Pledgeholder. Pledgeholder
shall have
no
duties with respect to the Pledged Stock hereunder except for the following:
(i)
to retain the same in safekeeping until
time for distribution as provided in this Agreement, (ii) the duty to cooperate
with the Pledgor to sell the Subject Shares if and as requested by Pledgor
from
time to time; and (iii) to invest the proceeds from the sales of any Subject
Shares as provided for in this Agreement. All selling expenses will be paid
for
by Pledgor or by the Company as provided for in the Registration Rights
Agreement entered into concurrently herewith by the Company and
Pledgor.
9. Rights
of
Pledgeholder. Pledgeholder
shall have no duty hereunder to determine the occurrence or non-occurrence
of
any event or the existence of any condition or fact. The Company and Pledgor
expressly agree that Pledgeholder shall act solely upon the notices or demands
presented
to Pledgeholder hereunder and in so doing shall not be liable in any manner
to
any party
hereto; provided, however, that Pledgeholder shall have given all notices
required to be given by Pledgeholder under this Agreement.
If conflicting demands are made upon the Pledgeholder, or if the Pledgeholder
is
unable to determine from the information available to Pledgeholder the manner
in
which Pledgeholder
should
proceed under this Agreement, Pledgeholder may file an action for interpleader,
or any
other
appropriate legal or equitable action, to have the dispute or uncertainty
determined by an appropriate
court. The costs of such action incurred by Pledgeholder shall be borne 50%
by
the Company and 50% by Pledgor. Pledgeholder may resign at any time in the
sole
discretion of Pledgeholder, provided
Pledgeholder shall appoint a successor and such successor executes a copy of
this Agreement
and agrees to act as Pledgeholder under this Agreement in place and instead
of
the initial Pledgeholder,
and further provided that such successor is an independent third party that
is
reasonably acceptable to Pledgor and the Company.
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10. Further
Assurances.
Pledgor
shall execute, acknowledge and deliver all such instruments and take all such
action as the Company may reasonably request in order to effectuate the purposes
of this Agreement and to carry out the terms hereof.
11. Miscellaneous
Provisions.
11.1 Entire
Agreement: Amendment: Waiver.
This
Agreement supersedes all prior agreements or understandings, written or oral,
between the parties hereto, related to the subject matter hereof, and
incorporates the entire understanding of the parties with respect thereto.
Any
modifications concerning this Agreement shall be of no force or effect unless
contained in a subsequent written modification signed by the party to be
charged. This Agreement may only be amended by a written instrument signed
by
the party or parties against whom it is sought to be enforced. The party
benefited by any condition or obligation contained herein may waive the same,
but such waiver shall not be enforceable by another party or parties unless
made
by written instrument, signed by the waiving party. No waiver of any default
shall constitute a waiver of any other default or of any subsequent similar
default.
11.2 Notices.
Any
notice to be given under this Agreement shall be delivered in person or may
be
deposited in the United States mail, duly registered or certified, postage
prepaid, return receipt requested, and addressed as follows:
| If to Pledgor: |
StompSoft, Inc.
0000
XxXxx, Xxxxx X
Xxxxxx,
XX 00000
Attention:
Xxxxxxx Xxxxxxx
|
||
| If to the Company: |
000
Xxxx Xxxxxxx Xxxxx
Xxxxx
000
Xxxxxxx
Xxxx, XX 00000
Attention:
Chief Financial Officer
|
5
| If to the Pledgeholder: |
0000
Xxxxxxxx Xxxx
Xxxxx
000
Xxxxxxx,
XX 00000
Attention:
Xxxxxx X. Xxxxxxxx
|
or
to
such other address as may be designated in writing.
11.3 Governing Law.
This
Agreement shall be governed by and construed in accordance with the laws of
the
State of California.
11.4 Successors
and Assigns.
This
Agreement shall be binding on and inure to the benefit of the respective heirs,
successors, assigns and personal representatives of the parties, except to
the
extent of any contrary provisions in this Agreement.
11.5 Headings.
The
Article and Paragraph headings throughout this Agreement are provided for
convenience only and the words contained therein shall in no way be held to
expand, amplify, modify or aid in the interpretation or construction
thereof.
11.6 Incorporation
of Recitals.
The
recitals hereto are incorporated into and made a part of this Agreement for
all
purposes.
11.7 Gender
and Number.
Any
reference which is singular shall include the plural, the neuter shall include
the feminine and masculine, the masculine shall include the feminine and neuter,
the feminine shall include neuter, and each shall include a corporation wherever
necessary to construe this Agreement.
11.8 Severability.
If a
court of competent jurisdiction should find any term or provision of this
Agreement to be unenforceable or invalid, then such term or provision shall
be
severed from this Agreement and the remainder of this Agreement shall continue
in full force and effect.
11.9 Interpretive
Matters.
No
provision of this Agreement shall be interpreted in favor of, or against, any
of
the parties hereto by reason of the extent to which any such party or its
counsel participated in the drafting thereof or by reason of the extent to
which
any such provision is inconsistent with any prior draft hereof or
thereof.
11.10 Counterparts.
This
Agreement may be executed in any number of counterparts and by the different
parties on separate counterparts, and each such counterpart is deemed to be
an
original, but all such counterparts together constitute but one and the same
Agreement. The Pledgor, Pledgeholder and the Company agree to accept facsimile
counterparts of this Agreement.
[Signatures
on following page]
6
[signature
page to Stock Pledge Agreement]
IN
WITNESS WHEREOF, the parties hereto have affixed their signatures as of the
date
herein first written above.
| STOMPSOFT, INC. | ||
| |
|
|
| By: | ||
|
|
||
| Title: | ||
|
|
||
Pledgeholder:
Xxxxx
Xxxx, P.C.
| By: | ||
| Name: | ||
| Title: | ||
| Date: |
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