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Exhibit 10.138
PLEDGE AND SECURITY AGREEMENT
PLEDGE AND SECURITY AGREEMENT ("Pledge Agreement"), dated August 20,
1998, by ECOGEN INC., a Delaware corporation ("Pledgor"), with its chief
executive office at 0000 Xxxxx Xxxxxxxxx Xxxx, Xxxxxxxxx, Xxxxxxxxxxxx 00000, in
favor of CONGRESS FINANCIAL CORPORATION, a Delaware corporation ("Pledgee"),
having an office at 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx 00000.
W I T N E S S E T H:
WHEREAS, Pledgor is now the direct and beneficial owner of the shares
of common stock of its direct subsidiaries (each, an "Issuer"), as described on
Exhibit A hereto and made a part hereof (the "Pledged Securities); and
WHEREAS, Pledgee and Pledgor have entered into financing arrangements
pursuant to which Pledgee may make loans and advances and provide other
financial accommodations to Pledgor as set forth in the Loan and Security
Agreement, dated August 20, 1998, by and between Pledgee and Pledgor (as the
same now exists or may hereafter be amended, modified, supplemented, extended,
renewed, restated or replaced, the "Loan Agreement") and other agreements,
documents and instruments referred to therein or at any time executed and/or
delivered in connection therewith or related thereto, including, but not limited
to, this Pledge Agreement (all of the foregoing, together with the Loan
Agreement, as the same now exist or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced, being collectively
referred to herein as the "Financing Agreements"); and
WHEREAS, in order to induce Pledgee to make loans and advances
and provide other financial accommodations to Pledgor pursuant to the Financing
Agreements, Pledgor has agreed to secure the payment and performance of the
Obligations (as hereinafter defined) to Pledgee and to accomplish same by (i)
executing and delivering to Pledgee this Pledge Agreement, (ii) delivering to
Pledgee the Pledged Securities which are registered in the name of Pledgor,
together with appropriate powers duly executed in blank by Pledgor, and (iii)
delivering to Pledgee any and all other documents which Pledgee deems necessary
to protect Pledgee's interests hereunder;
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Pledgor hereby agrees as follows:
1. GRANT OF SECURITY INTEREST
As collateral security for the prompt performance, observance and
indefeasible payment in full of all of the Obligations (as hereinafter defined),
Pledgor hereby assigns, pledges, hypothecates, transfers and sets over to
Pledgee and grants to Pledgee a security interest in and
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lien upon (a) the Pledged Securities, together with all cash dividends, stock
dividends, interests, profits, redemptions, warrants, subscription rights,
stock, securities options, substitutions, exchanges and other distributions now
or hereafter distributed by any Issuer on or after the date hereof or which may
hereafter be delivered to the possession of Pledgor or Pledgee with respect
thereto, (b) Pledgor's records with respect to the foregoing, and (c) the
proceeds of all of the foregoing (all of the foregoing being collectively
referred to herein as the "Pledged Property"). Pledgor is delivering herewith
physical possession of the Pledged Securities to Pledgee, accompanied by
appropriate instruments of transfer executed in blank, and Pledgee herewith
acknowledges receipt of the Pledged Securities.
2. OBLIGATIONS SECURED
The security interest, lien and other interests granted to Pledgee
pursuant to this Pledge Agreement shall secure the prompt performance and
payment in full of any and all Obligations, as such term is defined in the Loan
Agreement.
3. REPRESENTATIONS, WARRANTIES AND COVENANTS
Pledgor hereby represents, warrants and covenants with and to Pledgee
the following (all of such representations, warranties and covenants being
continuing so long as any of the Obligations are outstanding):
(a) The Pledged Securities are duly authorized, validly issued, fully
paid and non-assessable capital stock of the applicable Issuer and constitute
Pledgor's entire interest in each Issuer and are not registered, nor has Pledgor
authorized the registration thereof, in the name of any person or entity other
than Pledgor or Pledgee.
(b) The Pledged Property is directly, legally and beneficially owned by
Pledgor, free and clear of all claims, liens, pledges and encumbrances of any
kind, nature or description, except for the pledge and security interest in
favor of Pledgee.
(c) The Pledged Property is not subject to any restrictions, other than
pursuant to the Securities Act of 1933, as amended (the "Act"), relative to the
transfer thereof and Pledgor has the right to transfer and hypothecate the
Pledged Property free and clear of any liens, encumbrances or restrictions.
(d) The Pledged Property is duly and validly pledged to Pledgee and no
consent or approval of any governmental or regulatory authority or of any
securities exchange or the like, nor any consent or approval of any other third
party, was or is necessary to the validity and enforceability of this Pledge
Agreement.
(e) Pledgor authorizes Pledgee to: (i) store, deposit and safeguard the
Pledged Property, (ii) perform any and all other acts which Pledgee in good
xxxxx xxxxx reasonable and/or necessary for the protection and preservation of
the Pledged Property or its value or Pledgee's security interest therein,
including, without limitation, so long as an Event of default is existence
transferring, registering or arranging for the transfer or registration of the
Pledged Property to or
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in Pledgee's own name and receiving the income therefrom as additional security
for the Obligations and (iii) pay any charges or expenses which Pledgee deems
necessary for the foregoing purpose, but without any obligation to do so. Any
obligation of Pledgee for reasonable care for the Pledged Property in Pledgee's
possession shall be limited to the same degree of care which Pledgee uses for
similar property pledged to Pledgee by other persons.
(f) If Pledgor shall become entitled to receive or acquire, or shall
receive any stock certificate, or option or right with respect to or in exchange
for the stock of any Issuer (including without limitation, any certificate
representing a dividend or a distribution or exchange of or in connection with
reclassification of the Pledged Securities) whether as an addition to, in
substitution of, or in exchange for any of the Pledged Property or otherwise,
Pledgor agrees to accept same as Pledgee's agent, to hold same in trust for
Pledgee and to deliver same forthwith to Pledgee or Pledgee's agent or bailee in
the form received, with the endorsement(s) of Pledgor where necessary and/or
appropriate powers and/or assignments duly executed to be held by Pledgee or
Pledgee's agent or bailee subject to the terms hereof, as further security for
the Obligations.
(g) Pledgor shall not, without the prior consent of Pledgee, directly
or indirectly, sell, assign, transfer, or otherwise dispose of, or grant any
option with respect to the Pledged Property, nor shall Pledgor create, incur or
permit any further pledge, hypothecation, encumbrance, lien, mortgage or
security interest with respect to the Pledged Property.
(h) So long as no Event of Default (as hereinafter defined) has
occurred and is continuing, Pledgor shall have the right to vote and exercise
all corporate rights with respect to the Pledged Securities, except as expressly
prohibited herein, and to receive any cash dividends payable in respect of the
Pledged Securities.
(i) Pledgor shall pay all charges and assessments of any nature against
the Pledged Property or with respect thereto prior to said charges and/or
assessments being delinquent.
(j) Pledgor shall promptly reimburse Pledgee on demand, together with
interest at the rate then applicable to the Obligations as set forth in the Loan
Agreement, for any charges, assessments or expenses paid or incurred by Pledgee
in its discretion for the protection, preservation and maintenance of the
Pledged Property and the enforcement of Pledgee's rights hereunder, including,
without limitation, attorneys' fees and legal expenses incurred by Pledgee in
seeking to protect, collect or enforce its rights in the Pledged Property or
otherwise hereunder.
(k) Pledgor shall furnish, or cause to be furnished, to Pledgee such
information concerning Issuers and the Pledged Property as Pledgee may from time
to time reasonably request in good faith, including, without limitation, current
financial statements.
(l) Pledgee may notify each Issuer or the appropriate transfer agent of
the Pledged Securities to register the security interest and pledge granted
herein and honor the rights of Pledgee with respect thereto.
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(m) Pledgor waives: (i) all rights to require Pledgee to proceed
against any other person, entity or collateral or to exercise any remedy, (ii)
the defense of the statute of limitations in any action upon any of the
Obligations, (iii) any right of subrogation or interest in the Obligations or
Pledged Property until all Obligations have been paid in full, (iv) any rights
to notice of any kind or nature whatsoever, unless specifically required in this
Pledge Agreement or non-waivable under any applicable law, and (v) to the extent
permissible, its rights under Section 9-112 and 9-207 of the New York Uniform
Commercial Code. Pledgor agrees that the Pledged Property, other collateral, or
any other guarantor or endorser may be released, substituted or added with
respect to the Obligations, in whole or in part, without releasing or otherwise
affecting the liability of Pledgor, the pledge and security interests granted
hereunder, or this Pledge Agreement. Pledgee is entitled to all of the benefits
of a secured party set forth in Section 9-207 of the New York Uniform Commercial
Code.
4. EVENTS OF DEFAULT
All Obligations shall become immediately due and payable, without
notice or demand, at the option of Pledgee, upon the occurrence of any Event of
Default, as such term is defined in the Loan Agreement (each an "Event of
Default" hereunder).
5. RIGHTS AND REMEDIES
At any time an Event of Default exists or has occurred and is
continuing, in addition to all other rights and remedies of Pledgee, whether
provided under this Pledge Agreement, the Loan Agreement, the other Financing
Agreements, applicable law or otherwise, Pledgee shall have the following rights
and remedies which, to the extent not prohibited by applicable law, may be
exercised without notice to, or consent by, Pledgor except as such notice or
consent is expressly provided for hereunder:
(a) Pledgee, at its option, shall be empowered to exercise its
continuing right to instruct the applicable Issuer or Issuers (or the
appropriate transfer agent of the Pledged Securities) to register any or all of
the Pledged Securities in the name of Pledgee or in the name of Pledgee's
nominee and Pledgee may complete, in any manner Pledgee may deem expedient, any
and all stock powers, assignments or other documents heretofore or hereafter
executed in blank by Pledgor and delivered to Pledgee. After said instruction,
and without further notice, Pledgee shall have the exclusive right to exercise
all voting and corporate rights with respect to the Pledged Securities and other
Pledged Property, and exercise any and all rights of conversion, redemption,
exchange, subscription or any other rights, privileges, or options pertaining to
any shares of the Pledged Securities or other Pledged Property as if Pledgee
were the absolute owner thereof, including, without limitation, the right to
exchange, in its discretion, any and all of the Pledged Securities and other
Pledged Property upon any merger, consolidation, reorganization,
recapitalization or other readjustment with respect thereto. Upon the exercise
of any such rights, privileges or options by Pledgee, Pledgee shall have the
right to deposit and deliver any and all of the Pledged Securities and other
Pledged Property to any committee, depository, transfer agent, registrar or
other designated agency upon such terms and conditions as Pledgee may determine,
all without liability, except to account for property actually received by
Pledgee. However, Pledgee shall have no duty to exercise any of the aforesaid
rights, privileges or options
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(all of which are exercisable in the sole discretion of Pledgee) and shall not
be responsible for any failure to do so or delay in doing so.
(b) In addition to all the rights and remedies of a secured party under
the Uniform Commercial Code or other applicable law, Pledgee shall have the
right, at any time and without demand of performance or other demand,
advertisement or notice of any kind (except the notice specified below of time
and place of public or private sale) to or upon Pledgor or any other person (all
and each of which demands, advertisements and/or notices are hereby expressly
waived to the extent permitted by applicable law), to proceed forthwith to
collect, redeem, recover, receive, appropriate, realize, sell, or otherwise
dispose of and deliver said Pledged Property or any part thereof in one or more
lots at public or private sale or sales at any exchange, broker's board or at
any of Pledgee's offices or elsewhere at such prices and on such terms as
Pledgee may deem best. The foregoing disposition(s) may be for cash or on credit
or for future delivery without assumption of any credit risk, with Pledgee
having the right to purchase all or any part of said Pledged Property so sold at
any such sale or sales, public or private, free of any right or equity of
redemption in Pledgor, which right or equity is hereby expressly waived or
released by Pledgor. The proceeds of any such collection, redemption, recovery,
receipt, appropriation, realization, sale or other disposition, after deducting
all costs and expenses of every kind incurred relative thereto or incidental to
the care, safekeeping or otherwise of any and all Pledged Property or in any way
relating to the rights of Pledgee hereunder, including attorneys' fees and legal
expenses, shall be applied first to the satisfaction of the Obligations (in such
order as Pledgee may elect and whether or not due) and then to the payment of
any other amounts required by applicable law, including Section 9-504(1)(c) of
the New York Uniform Commercial Code, with Pledgor to be and remain liable for
any deficiency. Pledgor shall be liable to Pledgee for the payment on demand of
all such costs and expenses, together with interest at the then applicable rate
set forth in the Loan Agreements, and any reasonable attorneys' fees and
reasonable legal expenses. Pledgor agrees that ten (10) days prior written
notice by Pledgee designating the place and time of any public sale or of the
time after which any private sale or other intended disposition of any or all of
the Pledged Property is to be made, is reasonable notification of such matters.
(c) Pledgor recognizes that Pledgee may be unable to effect a public
sale of all or part of the Pledged Property by reason of certain prohibitions
contained in the Act, as now or hereafter in effect or in applicable Blue Sky or
other state securities law, as now or hereafter in effect, but may be compelled
to resort to one or more private sales to a restricted group of purchasers who
will be obliged to agree, among other things, to acquire such Pledged Property
for their own account for investment and not with a view to the distribution or
resale thereof. If at the time of any sale of the Pledged Property or any part
thereof, the same shall not, for any reason whatsoever, be effectively
registered (if required) under the Act (or other applicable state securities
law), as then in effect, Pledgee in its sole and absolute discretion is
authorized to sell such Pledged Property or such part thereof by private sale in
such manner and under such circumstances as Pledgee or its counsel may deem
necessary or advisable in order that such sale may legally be effected without
registration. Pledgor agrees that private sales so made may be at prices and
other terms less favorable to the seller than if such Pledged Property were sold
at public sale, and that Pledgee has no obligation to delay the sale of any such
Pledged Property for the period of time necessary to permit an Issuer, even if
such Issuer would agree, to register such
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Pledged Property for public sale under such applicable securities laws. Pledgor
agrees that any private sales made under the foregoing circumstances shall be
deemed to have been in a commercially reasonable manner.
(d) All of the Pledgee's rights and remedies, including, but not
limited to, the foregoing and those otherwise arising under this Pledge
Agreement, the Loan Agreements and the other Financing Agreements, the
instruments comprising the Pledged Property, applicable law or otherwise, shall
be cumulative and not exclusive and shall be enforceable alternatively,
successively or concurrently as Pledgee may deem expedient. No failure or delay
on the part of Pledgee in exercising any of its options, powers or rights or
partial or single exercise thereof, shall constitute a waiver of such option,
power or right.
6. JURY TRIAL WAIVER; OTHER WAIVERS
AND CONSENTS; GOVERNING LAW
(a) The validity, interpretation and enforcement of this Pledge
Agreement and the other Financing Agreements and any dispute arising out of the
relationship between the parties hereto, whether in contract, tort, equity or
otherwise, shall be governed by the internal laws of the State of New York
(without giving effect to principles of conflicts of law).
(b) Pledgor irrevocably consents and submits to the non-exclusive
jurisdiction of the Supreme Court of the State of New York for New York County
and the United States District Court for the Southern District of New York and
waives any objection based on venue or forum non conveniens with respect to any
action instituted therein arising under this Pledge Agreement or any of the
other Financing Agreements or in any way connected with or related or incidental
to the dealings of the parties hereto in respect of this Pledge Agreement or any
of the other Financing Agreements or the transactions related hereto or thereto,
in each case whether now existing or hereafter arising, and whether in contract,
tort, equity or otherwise, and agrees that any dispute with respect to any such
matters shall be heard only in the courts described above (except that Pledgee
shall have the right to bring any action or proceeding against Pledgor or its
property in the courts of any other jurisdiction which Pledgee deems necessary
or appropriate in order to realize on the Pledged Property or to otherwise
enforce its rights against Pledgor or its property).
(c) Pledgor hereby waives personal service of any and all process upon
it and consents that all such service of process may be made by certified mail
(return receipt requested) directed to its address set forth herein and service
so made shall be deemed to be completed ten (10) days after the same shall have
been so deposited in the U.S. mails, or, at Pledgee's option, by service upon
Pledgor in any other manner provided under the rules of any such courts.
(d) PLEDGOR HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM,
DEMAND, ACTION OR CAUSE OF ACTION (i) ARISING UNDER THIS PLEDGE AGREEMENT OR ANY
OF THE OTHER FINANCING AGREEMENTS OR (ii) IN ANY WAY CONNECTED WITH OR RELATED
OR INCIDENTAL TO THE DEALINGS OF PLEDGOR AND PLEDGEE IN RESPECT OF THIS PLEDGE
AGREEMENT OR ANY OF
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THE OTHER FINANCING AGREEMENTS OR THE TRANSACTIONS RELATED HERETO OR THERETO IN
EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN CONTRACT,
TORT, EQUITY OR OTHERWISE. PLEDGOR HEREBY AGREES AND CONSENTS THAT ANY SUCH
CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT
A JURY AND THAT PLEDGOR OR PLEDGEE MAY FILE AN ORIGINAL COUNTERPART OF A COPY OF
THIS PLEDGE AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE
PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
(e) Pledgee shall not have any liability to Pledgor (whether in tort,
contract, equity or otherwise) for losses suffered by Pledgor in connection
with, arising out of, or in any way related to the transactions or relationships
contemplated by this Pledge Agreement, or any act, omission or event occurring
in connection herewith, unless it is determined by a final and non-appealable
judgment or court order binding on Pledgee, that the losses were the result of
acts or omissions constituting gross negligence or willful misconduct.
7. MISCELLANEOUS
(a) Pledgor agrees that at any time and from time to time upon the
written request of Pledgee, Pledgor shall execute and deliver such further
documents, including, but not limited to, irrevocable proxies or stock powers,
in form satisfactory to counsel for Pledgee, and will take or cause to be taken
such further acts as Pledgee may request in order to effect the purposes of this
Pledge Agreement and perfect or continue the perfection of the security interest
in the Pledged Property granted to Pledgee hereunder.
(b) Beyond the exercise of reasonable care to assure the safe custody
of the Pledged Property (whether such custody is exercised by Pledgee, or
Pledgee's nominee, agent or bailee) Pledgee or Pledgee's nominee agent or bailee
shall have no duty or liability to protect or preserve any rights pertaining
thereto and shall be relieved of all responsibility for the Pledged Property
upon surrendering it to Pledgor or foreclosure with respect thereto.
(c) All notices, requests and demands to or upon the respective parties
hereto shall be in writing and shall be deemed to have been duly given or made:
if delivered in person, immediately upon delivery; if by telex, telegram or
facsimile transmission, immediately upon sending and upon confirmation of
receipt; if by nationally recognized overnight courier service with instructions
to deliver the next business day, one (1) business day after sending; and if by
registered or certified mail, return receipt requested, five (5) days after
mailing. All notices, requests and demands upon the parties are to be given to
the following addresses (or to such other address as any party may designate by
notice in accordance with this Section):
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If to Pledgor: Ecogen Inc.
0000 Xxxxx Xxxxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: President
If to Pledgee: Congress Financial Corporation
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Mr. Xxxxxx Xxxxx
(d) This Pledge Agreement is and is intended to be a continuing Pledge
Agreement and shall remain in full force and effect until all of the Obligations
have been finally paid and the Loan Agreement has been terminated. Upon the
termination of this Pledge Agreement in accordance with the foregoing, the
Pledged Property shall be released from the security interest granted in favor
of Pledgee hereunder.
(e) All references to the plural herein shall also mean the singular
and to the singular shall also mean the plural. All references to Pledgor,
Pledgee and Issuer pursuant to the definitions set forth in the recitals hereto,
or to any other person herein, shall include their respective successors and
assigns. The words "hereof," "herein," "hereunder," "this Pledge Agreement" and
words of similar import when used in this Pledge Agreement shall refer to this
Pledge Agreement as a whole and not any particular provision of this Pledge
Agreement and as this Pledge Agreement now exists or may hereafter be amended,
modified, supplemented, extended, renewed, restated or replaced. An Event of
Default shall exist or continue or be continuing until such Event of Default is
waived in accordance with Section 7(h) hereof. All references to the term
"Person" or "Persons" herein shall mean any individual, sole proprietorship,
partnership, corporation (including, without limitation, any corporation which
elects subchapter S status under the Internal Revenue Code of 1986, as amended),
limited liability corporation, limited liability participation, business trust,
unincorporated association, joint stock company, trust, joint venture or other
entity or any government or any agency, instrumentality or political subdivision
thereof.
(f) This Pledge Agreement, the other Financing Agreements and any other
document referred to herein or therein shall be binding upon Pledgor and its
successors and assigns and inure to the benefit of and be enforceable by Pledgee
and its successors and assigns.
(g) If any provision of this Pledge Agreement is held to be invalid or
unenforceable, such invalidity or unenforceability shall not invalidate this
Pledge Agreement as a whole, but this Pledge Agreement shall be construed as
though it did not contain the particular provision held to be invalid or
unenforceable and the rights and obligations of the parties shall be construed
and enforced only to such extent as shall be permitted by applicable law.
(h) Neither this Pledge Agreement nor any provision hereof shall be
amended, modified, waived or discharged orally or by course of conduct, but only
by a written agreement signed by
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an authorized officer of Pledgee and the Pledgor. Pledgee shall not, by any act,
delay, omission or otherwise be deemed to have expressly or impliedly waived any
of its rights, powers and/or remedies unless such waiver shall be in writing and
signed by an authorized officer of Pledgee. Any such waiver shall be enforceable
only to the extent specifically set forth therein. A waiver by Pledgee of any
right, power and/or remedy on any one occasion shall not be construed as a bar
to or waiver of any such right, power and/or remedy which Pledgee would
otherwise have on any future occasion, whether similar in kind or otherwise.
(Signature Follows)
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IN WITNESS WHEREOF, Pledgor has executed this Pledge Agreement as of
the day and year first above written.
ECOGEN INC.
/s/ Xxxx X. Xxxxxxxx
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Name: Xxxx X. Xxxxxxxx
Title: Vice President and
Chief Financial Officer
[PLEDGE AND SECURITY AGREEMENT - ECOGEN]
