EXHIBIT 3
PLEDGE AND SECURITY AGREEMENT
This PLEDGE AND SECURITY AGREEMENT (this "AGREEMENT"), dated as of July
1, 2005, is entered into between KINGSVILLE CAPITAL LIMITED, a company
incorporated under the laws of the British Virgin Islands, ("DEBTOR") Tramore
Finance Limited and the sole holder of all of the Outstanding Capital Stock of
Debtor (THE "EQUITY PLEDGOR) and MELLON HBV ALTERNATIVE STRATEGIES LLC, on
behalf of MELLON HBV MASTER GLOBAL EVENT DRIVEN FUND LP and MELLON HBV MASTER
LEVERAGED GLOBAL EVENT DRIVEN FUND LP ("SECURED PARTY"). Subject to Section 1.3
hereof, capitalized terms used herein and not defined herein shall have the
respective meanings assigned to them in the Loan Agreement (as defined below).
RECITALS
A. This Agreement is entered into in connection with Secured Party's
loan to Debtor of $18,000,000 pursuant to a secured promissory note issued by
Debtor in favor of Secured Party dated the Effective Date (the "NOTE") and a
Bridge Financing Agreement dated the Effective Date (the "LOAN AGREEMENT").
B. Debtor has used the proceeds of Secured Party's loan to Debtor to
complete the purchase of 3,829,373 shares of Pacific Internet Limited, a
Singapore corporation ("PACIFIC INTERNET") along with all commensurate rights
associated therewith (the "PACIFIC INTERNET SHARES") from SembCorp Ventures Pte
Ltd., a wholly-owned subsidiary of SembCorp Industries ("SEMBCORP") pursuant to
that certain Sales and Loan Agreement (the "PACIFIC INTERNET STOCK LOAN
AGREEMENT") between Debtor and SembCorp, dated as of March 18, 2005, as amended,
modified or restated from time to time (the "PACIFIC INTERNET STOCK PURCHASE").
C. In order to induce Secured Party to enter into the Loan Agreement,
Debtor and Equity Pledgor have agreed to enter into this Agreement in order to
grant to Secured Party a first priority security interest in the Collateral (as
defined below) to secure prompt payment and performance of the Obligations (as
defined below).
D. Equity Pledgor will receive substantial benefit from the
consummation of the transactions contemplated by the Loan Agreement.
AGREEMENT
Secured Party and Debtor agree as follows:
SECTION 1. DEFINITIONS.
1.1 "COLLATERAL". The Collateral shall consist of the following
personal property of Debtor, wherever located, and now owned or hereafter
acquired, including:
(a) the Initial Cash Collateral (as defined in the Loan
Agreement) and the account designated by the Secured Party in which
such Initial Cash Collateral has been deposited by Debtor on or prior
to the Effective Date;
(b) the Additional Cash Collateral (as defined in the Loan
Agreement) and the account designated by the Secured Party in which
such Additional Cash Collateral has been deposited by Debtor on or
prior to the Effective Date;
(c) the Pacific Internet Shares, whether or not certificated
and
(d) all of Debtor's interest in all profits and distributions
to which Debtor shall at any time be entitled in respect of the Pacific
Internet Shares; (ii) all other payments, if any, due or to become due
to Debtor in respect of the Pacific Internet Shares, whether as
contractual obligations, damages, insurance proceeds or otherwise;
(iii) all of Debtor's rights, powers and remedies, as a stockholder of
Pacific Internet or arising from its ownership of the Pacific Internet
Shares; and (iv) all of Debtor's rights as a stockholder of Pacific
Internet to manage the affairs, to make determinations, to exercise any
election or option or to give or receive any notice, consent,
amendment, waiver or approval; together with full power and authority
to demand, receive, enforce, execute, endorse or cash any checks or
other payments, or other instruments or orders, to file any claims and
to take any action that in the opinion of the Secured Party may be
necessary or advisable in connection with any of the foregoing; and
(e) all of issued and outstanding equity securities or other
securities of Debtor whether or not certificated (the "Pledged
Interests");
(f) (i) all of Debtor's and Equity Pledgor's interest in all
profits and distributions to which Buyer shall at any time be entitled
in respect of the Pledged Interests; (ii) all other payments, if any,
due or to become due to Buyer in respect of the Pledged Interests,
whether as contractual obligations, damages, insurance proceeds or
otherwise; (iii) all of Debtor or Equity Pledgor rights, powers and
remedies, as a member or stockholder, as applicable, of Debtor or
arising from its ownership of the Pledged Interests; and (iv) all of
Debtor or Equity Pledgor rights as a member or stockholder, as
applicable, of Debtor, to manage the affairs, to make determinations,
to exercise any election (including, but not limited to, election of
remedies, the filing of any petition for reorganization or dissolution
of Debtor and the exercise of Debtor's rights as a debtor-in-possession
in the event a Reorganization Proceeding is filed) or option or to give
or receive any notice, consent, amendment, waiver or approval; together
with full power and authority to demand, receive, enforce, execute,
endorse or cash any checks or other payments, or other instruments or
orders, to file any claims and to take any action that in the opinion
of Secured Party may be necessary or advisable in connection with any
of the foregoing; and
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(g) additions to, accessions to, substitutions of, products or
proceeds of any or all of the Pledged Interests.
(h) To the extent not listed above as original collateral,
proceeds and products of the foregoing.
1.2 "OBLIGATIONS". This Agreement secures the following:
(a) Debtor's obligations under the Note and the Loan
Agreement;
(b) all of Debtor's other present and future obligations to
Secured Party;
(c) the repayment of (a) any amounts that Secured Party may
advance or spend for the maintenance or preservation of the Collateral,
and (b) any other expenditures that Secured Party may make under the
provisions of this Agreement or for the benefit of Debtor;
(d) all amounts owed under any modifications, renewals or
extensions of any of the foregoing obligations; and
(e) any of the foregoing that arises after the filing of a
petition by or against Debtor under the Bankruptcy Code, even if the
obligations do not accrue because of the automatic stay under
Bankruptcy Code Section 362 or otherwise.
1.3 "UCC". Any term used in the Uniform Commercial UCC ("UCC") and not
defined in this Agreement has the meaning given to the term in the UCC.
SECTION 2. GRANT OF SECURITY INTEREST.
2.1 Debtor grants a security interest in the Collateral to Secured
Party to secure the payment or performance of the Obligations. Debtor and Equity
Pledgor hereby pledge and assign, as a continuing first priority lien on and
security interest in, the Pacific Internet Shares and the Pledged Interests and
herewith delivers all of the Collateral to the Secured Party, who shall hold
said Collateral subject to the terms and conditions of this Agreement. The
Collateral (together with an executed blank stock assignment for use in
transferring all or a portion of the Pacific Internet Shares to the Secured
Party if, as and when required pursuant to this Agreement) shall be held by the
Secured Party as security for the repayment of the Obligations and the Secured
Party shall not encumber or dispose of such Collateral except in accordance with
the provisions of this Agreement.
2.2 Debtor and Equity Pledgor each authorize Secured Party to file one
or more financing statements (each, a "FINANCING STATEMENT") describing the
Collateral, in such jurisdictions as Secured Party shall determine, and Debtor
shall cooperate with all such filings.
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2.3 Where Collateral is in the possession of a third party, Debtor will
join with Secured Party in notifying the third party of Secured Party's security
interest and obtaining an acknowledgment from the third party that it is holding
the Collateral for the benefit of Secured Party.
2.4 CONTROL. Debtor and Equity Pledgor will cooperate with Secured
Party in obtaining and maintaining Secured Party's control with respect to
Collateral consisting of:
(a) the Initial Cash Collateral account and the Additional
Cash Collateral account;
(b) the Pacific Internet Shares; and
(c) the Pledged Interests.
SECTION 3. RIGHTS OF SECURED PARTY.
3.1 The security created by this Agreement shall be held by the Secured
Party as continuing security for the payment and performance of the Obligations.
This Agreement, all of the rights, remedies, powers and privileges of the
Secured Party hereunder and the security created hereby shall be in addition to,
and shall not in any way be prejudiced or affected by, any other collateral or
any other security now or at any time or times hereafter held by the Secured
Party for all or any part of the Obligations. Without limiting the foregoing,
the Secured Party may at any time and from time to time, without the consent of
or notice to Debtor or the Equity Pledgor, and without incurring responsibility
to Debtor or the Equity Pledgor, and without impairing or releasing the
obligations of Debtor or the Equity Pledgor, under the Note or the Loan
Agreement or otherwise, and without impairing or releasing the obligations of
Debtor hereunder or the rights and interests of the Secured Party in the
Collateral:
(a) exercise or refrain from exercising any rights or remedies
against Debtor or any other Person or otherwise act or refrain from
acting (or consent to any such action or inaction);
(b) direct any obligor in respect of the Collateral to make
all payments in respect of the Collateral to the Secured Party
directly;
(c) apply to the Obligations any sums paid to the Secured
Party by Debtor, any obligor in respect of the Collateral, or otherwise
realized with respect to any liability or liabilities of Debtor; and
(d) grant releases, compromises and indulgences with respect
to, or consent to or waive any breach of, or any act, omission or
default under, this Agreement, the Note or the Loan Agreement.
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SECTION 4. DISTRIBUTIONS.
During the term of this Agreement, Debtor and Equity Pledgor, as
applicable shall hold no right to receive any distribution or other payments
which it would otherwise be authorized to receive and retain as holder of the
Pacific Internet Shares and all such rights shall be vested in the Secured Party
which shall have the sole right to receive and hold as Collateral such
distributions and other payments. All distributions and other payments which are
received by Debtor or the Equity Pledgor contrary to the provisions this Section
4 shall be received in trust for the benefit of the Secured Party, shall be
segregated from other funds of Debtor and the Equity Pledgor and shall be
forthwith paid over to the Secured Party as Collateral in the same form as so
received (with any necessary endorsement).
SECTION 5. MATTERS RELATING TO THE PACIFIC INTERNET SHARES.
5.1 DELIVERIES. Delivery of the Pacific Internet Shares and the Pledged
Interests shall be accompanied by duly executed instruments of transfer or
assignment in blank and such other documentation as the Secured Party may
reasonably request.
5.2 DISSOLUTION OF ISSUER. Upon the dissolution or liquidation (in
whole or in part) of Pacific Internet or the Debtor, any sums distributed on
account of the Pacific Internet Shares or the Pledged Interests shall be paid to
and held by Secured Party as part of the Collateral.
5.3 DIVIDENDS AND REORGANIZATIONS. Should any stock dividend, stock
split, distribution of capital, or other distribution be declared on the Pacific
Internet Shares or the Pledged Interests pursuant to a recapitalization or
reclassification of the capital of Pacific Internet or the Debtor, or pursuant
to the dissolution, liquidation (in whole or in part), bankruptcy or
reorganization of Pacific Internet; or pursuant to the merger or consolidation
of Pacific Internet or the Debtor with or into another corporation or other
entity, the securities, shares, obligations or other properties distributed
shall be delivered to Secured Party to be held by it as part of the Collateral
and all of the distributions shall constitute a part of the Collateral for all
purposes hereunder.
5.4 RIGHTS OF DEBTOR AND THE SECURED PARTY. So long as no Event of
Default (as defined in Section 9) has occurred and is continuing, Debtor and
Equity Pledgor, as applicable shall, subject to the limitations set forth in
Section 7 below, be entitled to vote or consent with respect to the Pacific
Internet Shares and the Pledged Interests, as applicable in any manner not
inconsistent with this Agreement. Upon the occurrence and during the continuance
of an Event of Default, the Secured Party shall have the exclusive right to vote
or give consents with respect to the Pacific Internet Shares and the Pledged
Interests. Debtor hereby grants to the Secured Party an irrevocable proxy to
vote the Pacific Internet Shares and the Pledged Interests, as applicable, which
proxy shall be effective immediately upon the occurrence of and during the
continuance of an Event of Default, and upon request of the Secured Party,
Debtor and Equity Pledgor, as applicable agrees to deliver to the Secured Party
such further evidence of such irrevocable proxy or such further irrevocable
proxy to vote Pacific Internet Shares and the Pledged Interests, as applicable
as the Secured Party may request.
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SECTION 6. FURTHER ASSURANCES.
Debtor authorizes the Secured Party to file all financing statements,
continuation financing statements and all other documents Secured Party may
reasonably request, and Debtor and Equity Pledgor shall execute and deliver to
the Secured Party all other documents that Secured Party may reasonably request,
in form satisfactory to the Secured Party, to perfect and maintain perfected the
security interests of the Secured Party in the Collateral and in order to
consummate fully all of the transactions contemplated by this Agreement, the
Note and the Loan Agreement. Debtor and Equity Pledgor hereby irrevocably make,
constitute, and appoint the Secured Party as Debtor's and Equity Pledgor's true
and lawful attorney with power to sign the name of Debtor and Equity Pledgor, as
applicable on any of the above-described documents or on any other similar
documents which need to be executed, recorded, or filed, and to do any and all
things necessary in the name and on behalf of Debtor and Equity Pledgor, as
applicable in order to perfect, or continue the perfection of, the security
interests of the Secured Party in the Collateral. Debtor and Equity Pledgor
agrees that neither the Secured Party, nor any of its designees or
attorneys-in-fact, will be liable for any act of commission or omission, or for
any error of judgment or mistake of fact or law with respect to the exercise of
the power of attorney granted under this Section 6, other than as a result of
its or their gross negligence or willful misconduct. THE POWER OF ATTORNEY
GRANTED UNDER THIS SECTION 6 IS COUPLED WITH AN INTEREST AND SHALL BE
IRREVOCABLE UNTIL ALL OF THE SECURED OBLIGATIONS HAVE BEEN INDEFEASIBLY PAID IN
FULL, AND ALL DEBTOR'S AND EQUITY PLEDGOR'S, AS APPLICABLE, DUTIES HEREUNDER AND
UNDER THE NOTE HAVE BEEN DISCHARGED IN FULL.
SECTION 7. REPRESENTATIONS, WARRANTIES AND COVENANTS.
In order to induce Secured Party to enter into the Loan Agreement, in
addition to the representations, warranties and covenants of Debtor set forth in
the Loan Agreement which are incorporated herein by this reference, Debtor and
Equity Pledgor represent, warrant and covenant to the Secured Party that on the
Closing (as defined in the Loan Agreement) until the indefeasible payment,
performance and satisfaction in full of the Obligations and all of Debtor's
obligations under the Note:
7.1 Each of Debtor and Equity Pledgor has the power and authority
and the legal right to execute, deliver and perform this Agreement and to grant
the lien on the Collateral contemplated hereby in favor of the Secured Party.
7.2 The execution, delivery and performance of this Agreement by
Debtor and Equity Pledgor and the granting of the lien on the Collateral
contemplated hereby has been duly authorized by all necessary action and does
not and will not (i) violate any applicable law, rule or regulation or any
provision relating to Debtor and Equity Pledgor, (ii) conflict with, result in a
breach of, or constitute a default under any provision of Debtor's
organizational documents, indenture, mortgage or other agreement or instrument
to which Debtor or Equity Pledgor is a party or by which it or any of their
respective properties or assets are bound or subject or any license, judgment,
order or decree of any governmental authority having jurisdiction over Debtor
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or Equity Pledgor or their respective activities, properties or assets or
(iii) result in or require the creation or imposition of any lien upon or with
respect to any properties or assets now or hereafter owned by Debtor or Equity
Pledgor (other than the liens created hereunder).
7.3 This Agreement has been duly executed and delivered by each of
Debtor and Equity Pledgor and constitutes a legal, valid and binding obligation
of each of Debtor and Equity Pledgor enforceable against Debtor in accordance
with its terms.
7.4 No consent or authorization of, filing with, or other act by or in
respect of, any arbitrator or governmental authority and no consent of any other
Person is required (i) for the execution, delivery and performance of this
Agreement by Debtor and Equity Pledgor, (ii) for the pledge by each of Debtor
and Equity Pledgor of the Collateral to the Secured Party pursuant to this
Agreement, or (iii) for the exercise by the Secured Party of the rights provided
for in this Agreement or the remedies in respect of the Collateral pursuant to
this Agreement, except such as (A) have been obtained, made or taken and are in
full force and effect or (B) may be required under federal or state securities
laws in connection with any sale of the Pacific Internet Shares or the Pledged
Interests.
7.5 There are no actions, suits, proceedings or investigations pending
or, to the best knowledge of each of Debtor and Equity Pledgor, threatened,
against or affecting Debtor and Equity Pledgor or the Collateral that are likely
to have a material adverse effect on the validity or enforceability of this
Agreement, or on the validity or priority of the liens and security interests
granted by Debtor and Equity Pledgor as provided for herein, before or by any
court, arbitrator or governmental authority.
7.6 Except as provided by this Agreement, until the fulfillment by
Debtor of all Obligations to the satisfaction of the Secured Party, in its sole
and absolute discretion, each of Debtor and Equity Pledgor is and shall continue
to be the sole and complete, legal and beneficial, owner of the Pacific Internet
Shares and the Pledged Interests, as applicable, free from any security
interests, liens or encumbrances. Neither Debtor nor Equity Pledgor shall
surrender or loose possession of (other than to the Secured Party), sell or
otherwise dispose of or transfer any of the Collateral or the Certificates
evidencing such Collateral, if any, or any right or interest therein.
7.7 This Agreement creates a first priority security interest which is
enforceable against the Collateral and the Secured Party has a first priority
perfected security interest (to the fullest extent perfection can be obtained by
filing, notification to third parties, possession or control), securing the
payment and performance of the Obligations. Each of Debtor and Equity Pledgor
shall, at its own expense, do and perform all acts that may be necessary and
appropriate to maintain, preserve and protect the Collateral and the first
priority security interest of the Secured Party in such Collateral.
7.8 Other than financing statements in favor of the Secured Party, no
effective financing statement naming Debtor or Equity Pledgor as debtor,
assignor, grantor, mortgagor, pledgor or the like and covering all or any part
of the Collateral, or which will or may cover all or
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any part of the Collateral, is or is expected to be on file in any filing or
recording office in any jurisdiction.
7.9 Debtor is in default of any of its obligations arising out of the
Pacific Internet Shares. No Person has any right to terminate, or any right to
foreclose upon, any or all of the Collateral, other than the Secured Party under
this Agreement.
7.10 Neither Debtor nor Equity Pledgor has conducted or engaged in any
business at any time under any name other than that first set forth above.
7.11 Neither Debtor nor Equity Pledgor (if Equity Pledgor is an entity)
will change its jurisdiction of organization without giving the Secured Party 30
days prior written notice thereof.
7.12 Each of Debtor and Equity Pledgor shall, at its own expense,
appear in and fully defend any action, suit or proceeding which may affect its
title to or right or interest in, or the right or interest of the Secured Party
in, any of the Collateral pledged by them hereunder.
7.13 Neither Debtor nor Equity Pledgor (if Equity Pledgor is an entity)
will perform, authorize, enter into or allow any change in its capital
structure.
7.14 In the event that, during the term of this Agreement, subscription
warrants or other rights or options shall be issued in connection with the
Pacific Internet Shares or he Pledged Interests, such rights, warrants and
options shall be the property of Debtor and the Equity Pledgor, as applicable
and, if exercised by Debtor or Equity Pledgor, as applicable, all new stock or
other securities so acquired by Debtor and the Equity Pledgor, as applicable
shall be delivered directly by the applicable issuer to the Secured Party, to be
held under the terms of this Agreement in the same manner as the Pacific
Internet Shares or the Pledged Interests, as applicable and references to
Pacific Internet Shares or the Pledged Interests, as applicable in this
Agreement shall include such new stock or other securities.
7.15 Neither Debtor nor Equity Pledgor (if Equity Pledgor is an entity)
shall perform, authorize or enter into any transaction for its termination,
dissolution or winding up, any act or failure to act constituting its
termination, dissolution or winding up of, or its merger or consolidation with
any entity or entities any sale or group of sales of substantially all of its
without the prior written consent of the Secured Party.
SECTION 8. ADDITIONAL RIGHTS OF THE SECURED PARTY.
8.1 If Debtor (or Equity Pledgor) fails to perform under any covenant,
term, provision or agreement contained herein, the Secured Party may (but shall
not be obligated or required to) perform, or cause the performance, of such
covenant, term, provision or agreement.
8.2 At any time upon and during the continuance of an Event of Default,
the Secured Party may (but shall not be obligated or required to):
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(a) cause the Collateral to be transferred to its name or to the name
of its nominee or nominees and thereafter exercise as to such Collateral all of
the rights, powers and remedies of an owner;
(b) ask for, demand, collect, xxx for, recover, compromise, receive and
give receipts for monies due or to become due under or in respect of any of the
Collateral and hold the same as part of the Collateral, or apply the same to any
of the Obligations in such manner as the Secured Party may direct in its sole
discretion;
(c) receive, endorse and collect any drafts or other instruments,
documents and chattel paper, in connection with clause (b) above (including all
instruments representing dividends, interest payments or other distributions in
respect of the Collateral or any part thereof and give full discharge for the
same);
(d) file any claims or take any actions or institute any proceedings
that the Secured Party may deem necessary or desirable for the collection of any
of the Collateral or otherwise to enforce compliance with the rights of the
Secured Party with respect to any of the Collateral;
(e) enter into any extension, subordination, reorganization, deposit,
merger, or consolidation agreement, or any other agreement relating to or
affecting the Collateral, and in connection therewith deposit or surrender
control of such Collateral thereunder, and accept other property in exchange
therefore and hold and apply such property or money so received in accordance
with the provisions hereof; and
(f) discharge any taxes or liens levied on the Collateral or pay for
the maintenance and preservation of the Collateral.
All amounts advanced by, or on behalf of, the Secured Party in exercising its
rights under Section 8, 6 or applicable law (including reasonable legal expenses
and disbursements incurred in connection therewith), together with interest
thereon from the date of each such advance at a rate of 2% accrued daily, or, if
lower, the maximum amount allowed by law, shall be deemed made pursuant to
contract, shall be payable by each of Debtor and Equity Pledgor to the Secured
Party on demand and shall be secured by the Collateral.
SECTION 9. EVENTS OF DEFAULT.
Debtor shall be deemed to be in default of the Note the Loan Agreement and this
Agreement (an "EVENT OF DEFAULT") in the event of:
9.1 the failure to make payment of the Obligations in full on the
Maturity Date (as defined in the Loan Agreement);
9.2 the entry of a decree or order by a court having jurisdiction
adjudging Debtor or Equity Pledgor bankrupt or insolvent, or approving as
properly filed a petition seeking reorganization arrangement, adjustment, or
composition of or in respect of Debtor or Equity
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Pledgor under the federal Bankruptcy Act or any other applicable federal, state
or foreign law, or appointing a receiver, liquidator, assignee, or trustee of
Debtor or Equity Pledgor, or any substantial part of their property or assets,
or ordering the winding up or liquidation of its affairs, and the continuance of
any such decree or order unstayed and in effect for a period of sixty (60)
consecutive days;
9.3 the institution by Debtor or Equity Pledgor of proceedings to be
adjudicated a bankrupt or insolvent, or the consent by any of them to the
institution of bankruptcy or insolvency proceedings against them, or the filing
by any of them of a petition or answer or consent seeking reorganization or
relief under the federal Bankruptcy Act or any other applicable federal or state
law, or the consent by any of them to the filing of any such petition or to the
appointment of a receiver, liquidator, assignee, or trustee of Debtor or Equity
Pledgor, or of any substantial part of their property or assets, or the making
by any of them of an assignment for the benefit of creditors, or the admission
by any of them in writing of their inability to pay their debts generally as
they become due, or the taking of corporate action by Debtor or Equity Pledgor
in furtherance of any such action;
9.4 the failure of Debtor or Equity Pledgor to perform or observe any
material covenant, term, provision or agreement or the existence of an event of
default as set forth in this Agreement, the Loan Agreement, the Note or any
other agreement, note or obligation between Debtor and the Secured Party between
Equity Pledgor and the Secured Party;
9.5 the failure of Debtor or Equity Pledgor to comply with all
applicable laws.
9.6 Either of Xxxxx X. Xxxxx or Shanghai Capital Limited shall fail to
perform or observe any term covenant or agreement contained in Section 5.01(h)
of the Loan Agreement, the Intercreditor Agreement (as defined in the Loan
Agreement) or the Unconditional Guaranty (as defined in the Loan Agreement).
9.7 The exercise of any remedy by any creditor of the Debtor other than
the Secured Party, including, but not limited to, foreclosure on collateral,
acceleration of debt, exercise of rights to cause a transfer of any Capital
Stock of the Debtor or commencement of a suit at law or in equity.
SECTION 10. REMEDIES.
Upon and during the continuance of an Event of Default:
10.1 The Secured Party shall have all the rights and remedies of a
secured party under the UCC. In addition, the Secured Party shall have the
right, without demand of performance or other demand, advertisement or notice of
any kind, except as specified below, to or upon Debtor or Equity Pledgor or any
other Person (all and each of which demands, advertisements and/or notices are
hereby expressly waived to the extent permitted by law), to proceed forthwith to
collect, receive, appropriate and realize upon the Collateral, or any part
thereof and to proceed forthwith to sell, assign, give an option or options to
purchase, contract to sell, or otherwise
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dispose of and deliver the Pacific Internet Shares or the Pledged Interests or
any part thereof in one or more parcels at public or private sale or sales at
any stock exchange, broker's board or at any of the offices the Secured Party or
elsewhere at such prices and on such terms and restrictions (including a
requirement that any purchaser of all the Pacific Internet Shares or the Pledged
Interests shall be required to purchase any securities constituting the Pacific
Internet Shares or the Pledged Interests solely for investment and without any
intention to make a distribution thereof) as the Secured Party may deem
appropriate without any liability for any loss due to decrease in the market
value of the Collateral during the period held. If any notification to Debtor or
Equity Pledgor of the intended disposition of the Collateral is required by law,
such notification shall be deemed reasonable and properly given if hand
delivered or made by facsimile at least three (3) days prior to such
disposition. Any disposition of the Collateral or any part thereof may be for
cash or on credit or for future delivery without assumption of any credit risk,
with the right to the Secured Party to purchase all or any part of the
Collateral so sold at any such sale or sales, free of any equity or right of
redemption, which right or equity is, to the extent permitted by applicable law,
hereby expressly waived and released by Debtor or Equity Pledgor, as applicable.
10.2 The Secured Party shall have the right to apply to a court of
competent jurisdiction for and obtain appointment of a receiver over the
Collateral and the Debtor as a matter of strict right and without regard to the
adequacy of the security for repayment of the Obligations, the existence of a
declaration that the Obligations are immediately dye and payable, or the filing
of a notice of default. Debtor hereby acknowledges that the Secured Party has an
interest in the uninterrupted operation of the business of the Debtor so as not
to impact the value of such business and therefore agrees to and consent to such
appointment.
10.3 All of the rights and remedies of the Secured Party under this
Agreement and under applicable law, including but not limited to the foregoing,
shall be cumulative and not exclusive and shall be enforceable alternatively,
successively or concurrently as the Secured Party may deem expedient.
10.4 The Secured Party may elect to obtain the advice of any
independent banking, financial or consulting firm with respect to the method and
manner of sale or other disposition of any of the Collateral, the best price
reasonably obtainable therefore, the consideration of cash or credit terms, or
any other details concerning such sale or disposition.
10.5 Debtor and Equity Pledgor each recognize that the Secured Party
may or may not be able to effect a public sale of all or a part of the
Collateral by reason of certain prohibitions contained in the Securities Act of
1933, as amended (the "SECURITIES ACT"), or other relevant securities laws in
any jurisdiction, but may be compelled to resort to one or more private sales to
a restricted group of purchasers who will be obligated to agree, among other
things, to acquire the Collateral for their own account, for investment and not
with a view to the distribution or resale thereof. Each of Debtor and Equity
Pledgor agrees that private sales so made may be at prices and on other terms
less favorable to the seller than if the Collateral were sold at public sale,
and that the Secured Party has no obligation to delay the sale of any Collateral
for the period of time necessary to permit the registration of the Collateral
for public sale under the Securities
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Act or other relevant securities laws in any jurisdictions. Each of Debtor and
Equity Pledgor agrees that a private sale or sales made under the foregoing
circumstances shall not be deemed to be commercially unreasonable by virtue of
such circumstances.
10.6 If any consent, approval or authorization of, or filing with, any
governmental authority or any other Person shall be necessary to effectuate any
sale or other disposition of the Collateral, or any partial disposition of the
Collateral, including under any federal or state securities laws, Each of Debtor
and Equity Pledgor agrees to execute all such applications, registrations and
other documents and instruments as may be required in connection with securing
any such consent, approval or authorization, and will otherwise use commercially
reasonable efforts to secure the same. Each of Debtor and Equity Pledgor further
agrees to use its best efforts to effectuate such sale or other disposition of
the Collateral as the Secured Party may deem necessary or desirable pursuant to
the terms of this Agreement.
10.7 Upon any sale or other disposition, the Secured Party shall have
the right to deliver, endorse, assign and transfer to the purchaser thereof the
Collateral so sold or disposed of. Each purchaser at any such sale or other
disposition, including the Secured Party or a Seller, shall hold the Collateral
free from any claim or right of whatever kind, including any equity or right of
redemption. Each of Debtor and Equity Pledgor specifically waives, to the extent
permitted by applicable law, all rights of stay or appraisal which Debtor or
Equity Pledgor had or may have under any rule of law or statute now existing or
hereafter adopted.
10.8 The Secured Party shall not be obligated to make any sale or other
disposition unless the terms thereof shall be satisfactory to it. The Secured
Party may, without notice or publication, adjourn any private or public sale,
and, upon five Business Days' prior notice to Debtor or Equity Pledgor, as
applicable, hold such sale at any time or place to which the same may be so
adjourned. In case of any sale of all or any part of the Collateral on credit or
future delivery, the Collateral so sold may be retained by the Secured Party
until the selling price is paid by the purchaser thereof, but the Secured Party
shall incur no liability in case of the failure of such purchaser to take up and
pay for the property so sold and, in case of any such failure, such property may
again be sold as herein provided.
10.9 Each of Debtor and Equity Pledgor agrees and acknowledges that
none of the Obligations shall be or deemed to be paid, discharged or satisfied
by reason of the exercise of any rights or remedies under this Agreement or the
UCC by the Secured Party, except to the extent of cash proceeds actually
received by the Secured Party on account of its exercise of any of its rights or
remedies under this Agreement.
SECTION 11. DISPOSITION OF PROCEEDS.
The proceeds of any sale or disposition of all or any part of the
Collateral shall be applied by the Secured Party to the payment of the
Obligations in such order as the Secured Party may elect. Any surplus thereafter
remaining shall be paid to Debtor upon the termination of this Agreement,
subject to the rights of any holder of a lien on the Collateral of which the
Secured Party has actual notice.
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SECTION 12. TERMINATION.
This Agreement shall continue in full force and effect until the
Obligations are indefeasibly paid in accordance with Section 14 below at which
time the Collateral shall promptly be delivered to Debtor and this Agreement
shall terminate.
SECTION 13. SALE OF SECURITIES.
13.1 To the extent Debtor uses the Loan to purchase Collateral,
Debtor's repayment of the Loan shall apply on a "first-in-first-out" basis so
that the portion of the Loan used to purchase a particular item of Collateral
shall be paid in the chronological order the Debtor purchased the Collateral.
13.2 Secured Party may sell the Collateral without giving any
warranties as to the Collateral. Secured Party may specifically disclaim any
warranties of title or the like. This procedure will not be considered adversely
to affect the commercial reasonableness of any sale of the Collateral.
13.3 If the Secured Party sells any of the Collateral upon credit,
Debtor will be credited only with payments actually made by the purchaser,
received by Secured Party and applied to the indebtedness of the Purchaser. In
the event the purchaser fails to pay for the Collateral, Secured Party may
resell the Collateral and Debtor shall be credited with the proceeds of the
sale.
13.4 In the event Secured Party purchases any of the Collateral being
sold, Secured Party may pay for the Collateral by crediting some or all of the
Obligations of the Debtor.
SECTION 14. INDEFEASIBLE PAYMENT.
The Obligations shall not be considered indefeasibly paid for purposes
of this Agreement unless and until all payments to the Secured Party are no
longer subject to any right on the part of any Person, including Debtor, Debtor
as a debtor in possession, or any trustee (whether appointed under bankruptcy
laws or otherwise) of Debtor or the Collateral to invalidate or set aside such
payments or to seek to recoup the amount of such payments or any portion
thereof, or to declare same to be fraudulent or preferential. In the event that,
for any reason, any portion of such payments to the Secured Party is set aside
or restored, whether voluntarily or involuntarily, after the making thereof,
then the obligation intended to be satisfied thereby shall be revived and
continued in full force and effect as if said payment or payments had not been
made.
SECTION 15. EXPENSES OF THE SECURED PARTY.
All expenses (including reasonable attorneys' fees and disbursements
and specifically including reasonable legal expenses and disbursements in the
event of any reorganization proceeding filed by or against Debtor or Equity
Pledgor, which legal expenses shall be allowed to the Secured Party in addition
to any claim of the Secured Party arising out of the Obligations, pursuant to 11
U.S.C. Section 506(b) or any analogous provision applicable in any other
Reorganization Proceeding or otherwise, actually incurred by the Secured Party
in connection with the failure by
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Debtor or Equity Pledgor to perform or observe any provision of this Agreement,
the exercise or enforcement of any rights of the Secured Party under this
Agreement and the custody or preservation of any of the Collateral and any
actual or attempted sale or exchange of, or any enforcement, collection,
compromise or settlement respecting, the Collateral, or any other action taken
by the Secured Party hereunder whether directly or as attorney-in-fact pursuant
to a power of attorney or other authorization herein conferred, shall be deemed
an obligation of Debtor and Equity Pledgor and shall be deemed a Secured
Obligation for all purposes of this Agreement and the Secured Party may apply
the Collateral to payment of or reimbursement of itself for such liability.
SECTION 16. LACK OF DUTY OF THE SECURED PARTY.
The Secured Party shall not be required to take any action hereunder in
respect of an Event of Default. The Secured Party shall not be liable for any
acts, omissions, errors of judgment or mistakes of fact or law including acts,
omissions, errors or mistakes with respect to the Collateral, except for those
arising out of or in connection with the gross negligence or willful misconduct
of the Secured Party. The Secured Party shall be under no obligation to take any
steps necessary to preserve rights in the Collateral against any prior parties
but may do so at its option, and all expenses incurred in connection therewith
shall be for the account of Debtor.
SECTION 17. SURVIVAL AND CONTINUATION OF OBLIGATIONS.
17.1 No failure on the part of the Secured Party to exercise, and no
delay in exercising, any right, power or remedy hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise by the Secured Party of
any right, power or remedy hereunder preclude any other or future exercise
thereof, or the exercise of any other right, power or remedy. The
representations, covenants and agreements of Debtor and Equity Pledgor herein
contained shall survive the date hereof.
17.2 No amendment or waiver of any provision of this Agreement nor
consent to any departure by Debtor or Equity Pledgor herefrom nor release of all
or any part of the Collateral shall in any event be effective unless the same
shall be in writing, signed by the Secured Party and Debtor or the Secured Party
and the Equity Pledgor, as applicable. Any such waiver or consent or release
shall be effective only in the specific instance and for the specific purpose
for which it is given.
17.3 The obligations of Debtor under this Agreement shall remain in
full force and effect without regard to, and shall not be impaired or affected
by any of the following, whether or not Debtor or Equity Pledgor shall have
notice or knowledge of any of the foregoing:
(a) any amendment or modification or addition or supplement to
the Loan Agreement, the Note, any document or instrument delivered in
connection therewith or any assignment or transfer thereof;
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(b) any exercise, non-exercise or waiver by the Secured Party
of any right, remedy, power or privilege under or in respect of, or any
release of any guaranty or collateral provided pursuant to the Note or
the Loan Agreement;
(c) any waiver, consent, extension, indulgence or other action
or inaction in respect of the Note or the Loan Agreement or any
assignment or transfer of any thereof; or
(d) any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation or the like, of Debtor or Equity
Pledgor or any other Person.
SECTION 18. LIMITATION OF LIABILITY OF THE SECURED PARTY.
Except upon the acquisition by the Secured Party of any Pacific
Internet Shares or Pledged Interest, pursuant to Section 10, nothing herein
shall be construed to make the Secured Party liable as a stockholder of Pacific
Internet or of Debtor. Neither this Agreement nor the acquisition by the Secured
Party, or any other Person purchasing all or any portion of the Collateral
pursuant to the exercise by the Secured Party of its rights and remedies after
the occurrence of an Event of Default, shall render the Secured Party or such
Person personally liable for any debt, obligation or liability of any kind of
Debtor or Equity Pledgor. Further, the Secured Party, by virtue of this
Agreement or otherwise (except as expressly set forth in Section 10) shall not
have any of the duties, obligations or liabilities of a stockholder of Pacific
Internet or of Debtor.
SECTION 19. NOTICES.
All notices or demands by any party hereto to the other party and
relating to this Agreement shall be made in the manner and to the addresses set
forth in the Loan Agreement and all notices or demands made to Equity Pledgor
shall be sent to:
Tramore Finance Limited
[Address]
Attn:
-----------------------------------
Fax: .
-----------------------------------
SECTION 20. GENERAL PROVISIONS.
20.1 SUCCESSORS AND ASSIGNS. This Agreement shall bind and inure to the
benefit of the respective successors and assigns of Debtor, Equity Pledgor and
the Secured Party; provided, however, that neither Debtor nor Equity Pledgor may
assign this Agreement nor delegate any of its duties hereunder without the prior
written consent of the Secured Party and any prohibited assignment or delegation
shall be absolutely void. No consent by the Secured Party to an assignment by
Debtor or Equity Pledgor shall release Debtor from the Obligations.
20.2 NO PRESUMPTION AGAINST ANY PARTY. Neither this Agreement nor any
uncertainty or ambiguity herein shall be construed or resolved against the
Secured Party or
15
Debtor or Equity Pledgor, whether under any rule of construction or otherwise.
On the contrary, this Agreement has been reviewed by each of the parties and
their counsel and shall be construed and interpreted according to the ordinary
meaning of the words used so as to accomplish fairly the purposes and intentions
of all parties hereto.
20.3 COUNTERPARTS; INTEGRATION; EFFECTIVENESS. This Agreement may be
signed in any number of counterparts, each of which shall be an original, with
the same effect as if the signatures thereto and hereto were upon the same
instrument. Any counterpart or other signature delivered by facsimile shall be
deemed for all purposes as being good and valid execution and delivery of this
Agreement by that party. This Agreement together with the Note, the Loan
Agreement and the documents referenced therein constitutes the entire agreement
and understanding among the parties hereto and supersedes any and all prior
agreements and understandings, oral or written, relating to the subject matter
hereof. This Agreement shall become effective when executed by each of the
parties hereto and delivered to the Secured Party.
20.4 SEVERABILITY. All rights, powers and remedies provided herein may
be exercised only to the extent that the exercise thereof does not violate any
applicable law, and are intended to be limited to the extent necessary so that
they will not render this Agreement invalid or unenforceable. If any one or more
of the provisions contained in this Agreement shall for any reason be held to be
invalid, illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provisions hereof. If any provision
of this Agreement is determined by a court of competent jurisdiction to be
invalid, illegal or unenforceable, such provision shall be automatically
reformed and construed so as to be valid, operative and enforceable to the
maximum extent permitted by the law while most nearly preserving its original
intent.
20.5 GOVERNING LAW. This Agreement and the Note shall be governed by,
and construed in accordance with, the laws of the State of New York, without
regard to principles of conflicts of laws.
20.6 CONSENT TO JURISDICTION.
20.6.1 Each of the Debtor and the Equity Pledgor hereby irrevocably
submits to the jurisdiction of any New York State or federal court sitting in
the City of New York, New York, in any action or proceeding arising out of or
relating to this Agreement or any other Loan Document or the documents
referenced therein, and each of the Debtor and the Equity Pledgor hereby
irrevocably agrees that all claims in respect of such action or proceeding may
be heard and determined in such New York, New York state court or such federal
court. Each of the Debtor and Equity Pledgor hereby irrevocably waives, to the
fullest extent it may effectively do so, the defense of an inconvenient forum to
the maintenance of such action or proceeding. Each of the Debtor and Equity
Pledgor hereby irrevocably consents to the service of copies of any summons and
complaint and any other process which may be served in any such action or
proceeding by certified mail, return receipt requested, or by delivering a copy
of such process to the Debtor, at its address specified in the Loan Agreement or
by any other method permitted by law. Each of the Debtor and Equity Pledgor
agrees that a final judgment in any such action or
16
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or by any other manner provided by law.
(a) Nothing in this Section 20.6.1 shall affect the right of
the Secured Party to serve legal process in any other manner permitted
by law or affect the right of the Secured Party to bring any action or
proceeding against the Debtor or Equity Pledgor or their respective
property in the courts of other jurisdictions.
(b) Waiver Of Jury Trial. EACH OF THE DEBTOR, THE EQUITY
PLEDGOR AND THE LENDER HEREBY IRREVOCABLY WAIVE ALL RIGHT TO TRIAL BY
JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON
CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO ANY OF THE
LOAN DOCUMENTS, ANY DOCUMENT DELIVERED UNDER THE LOAN DOCUMENTS, THE
LOAN OR THE ACTIONS OF THE DEBTOR, THE EQUITY PLEDGOR AND THE LENDER IN
THE NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT THEREOF.
20.7 INDEMNIFICATION.
Each of the Debtor and the Equity Pledgor shall indemnify and hold the
Secured Party harmless from and against any and all losses, expenses,
liabilities and claims arising from any breach by Debtor or Equity Pledgor of
its obligations hereunder. Each of the Debtor and the Equity Pledgor shall also
reimburse the Secured Party for all costs and expenses (including reasonable
counsel fees) incurred by or on behalf of the Secured Party in enforcing the
obligations of Debtor or Equity Pledgor hereunder (other than any such costs or
expenses arising from the gross negligence or willful misconduct of the Secured
Party).
20.8 POST-CLOSING COVENANTS AND RIGHTS CONCERNING THE COLLATERAL.
20.8.1 Secured Party shall have the right at any time to
enforce Debtor's or Equity Pledgor's rights against the account debtors
and obligors.
20.9 Secured Party has no duty to collect any income accruing on the
Collateral or to preserve any rights relating to the Collateral.
20.10 Secured Party does not authorize, and both Debtor and Equity
Pledgor agree not to:
20.10.1 make any sales or transfer of any of the Collateral;
or
20.10.2 grant any other security interest in any of the
Collateral.
20.11 Secured Party has no obligation to marshal any assets in favor of
Debtor or Equity Pledgor, or against or in payment of:
17
20.11.1 the Note,
20.11.2 any of the other Obligations, or
20.11.3 any other obligation owed to Secured Party by Debtor
or any other person.
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IN WITNESS WHEREOF, THE PARTIES HAVE EXECUTED THIS AGREEMENT AS OF THE DATE
FIRST SET FORTH ABOVE.
KINGSVILLE CAPITAL LIMITED
BY: /s/Xxxxx Xxxxx
------------------------------------------
NAME: Xxxxx Xxxxx
TITLE: Director
MELLON HBV ALTERNATIVE STRATEGIES LLC,
on behalf of : Mellon HBV Master Global Event Driven Fund LP
and Mellon HBV Master Leveraged Global Event Driven Fund LP
BY: /s/Xx Xxxxxxx
------------------------------------------
NAME: Xx Xxxxxxx
TITLE: Chief Operating Officer
TRAMORE FINANCE LIMITED, the Equity Pledgor
BY: /s/Myat Thandar
------------------------------------------
NAME: Myat Thandar
TITLE: Director
EXHIBIT A
Jurisdiction Where Collateral Is Located
New York
British Virgin Islands
