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EXHIBIT 4.5
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT (this "AGREEMENT"), dated as of May 14, 2001,
made by INTERNET PICTURES Corporation, a Delaware corporation (herein, together
with its successors and assigns, the "PLEDGOR"), to IMAGE INVESTOR PORTFOLIO, a
separate series of MEMPHIS ANGELS, LLC, a Delaware limited liability company
(herein, together with its successors and assigns, the "LENDER"):
PRELIMINARY STATEMENTS:
(1) The Lender and Pledgor have entered into a Securities Purchase
Agreement, dated as of May 14, 2001 (said Agreement, as it may hereafter be
amended or otherwise modified from time to time, being the "PURCHASE AGREEMENT",
the terms defined therein and not otherwise defined herein being used herein as
therein defined).
(2) The Pledgor is the owner of the shares (the "PLEDGED SHARES") of
stock or other equity securities described Schedule I hereto and issued by the
corporations named therein (whether one or more, the "CORPORATIONS").
(3) Pursuant to the Purchase Agreement, Pledgor is required and desires
to pledge the Pledged Shares to the Lender pursuant to the terms of this
Agreement.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged by Pledgor, the Pledgor hereby agrees as follows:
1. PLEDGE. The Pledgor hereby pledges to the Lender, and grants to the
Lender a first priority security interest in, the following (the "PLEDGED
COLLATERAL"):
(a) the Pledged Shares and the certificates representing the
Pledged Shares, and all dividends, cash, instruments and other property from
time to time received, receivable or otherwise distributed in respect of or in
exchange for any or all of the Pledged Shares;
(b) all additional shares of stock of any of the Corporations
from time to time acquired by the Pledgor, and the certificates representing
such additional shares, and all dividends, cash, instruments and other property
from time to time received, receivable or otherwise distributed in respect of or
in exchange for any or all of such shares; and
(c) all proceeds of any and all of the foregoing Pledged
Collateral (including, without limitation, proceeds that constitute property of
the types described above).
2. SECURITY FOR OBLIGATIONS. This Agreement secures the payment of all
obligations of the Pledgor now or hereafter existing under the Note, whether for
principal, interest, fees, expenses or otherwise, and all obligations of the
Pledgor now or hereafter existing under this Agreement and all of the other
Documents (all such obligations of the Pledgor being the "OBLIGATIONS").
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3. DELIVERY OF PLEDGED COLLATERAL. All certificates or instruments
representing or evidencing the Pledged Collateral shall be delivered to and held
by or on behalf of the Lender pursuant hereto and shall be in suitable form for
transfer by delivery, or shall be accompanied by duly executed instruments of
transfer or assignment in blank, all in form and substance reasonably
satisfactory to the Lender. The Lender shall have the right, at any time
following the occurrence and during the continuance of an Event of Default
(being used herein as defined in the Note) in its discretion and without notice
to the Pledgor, to transfer to or to register in the name of the Lender or any
of its nominees any or all of the Pledged Collateral, subject only to the
revocable rights specified in Section 6(a). For the better perfection of the
Lender's rights in and to the Pledged Collateral, the Pledgor shall upon written
demand of the Lender following the occurrence and during the continuance of an
Event of Default, cause such Pledged Collateral to be registered in the name of
such nominee or nominees of the Lender as the Lender shall direct, subject only
to the revocable rights specified in Section 6(a). In addition, the Lender shall
have the right at any time following the occurrence and during the continuance
of an Event of Default to exchange certificates or instruments representing or
evidencing Pledged Collateral for certificates or instruments of smaller or
larger denominations.
4. REPRESENTATIONS AND WARRANTIES. The Pledgor represents and warrants
as follows:
(a) The Pledged Shares have been duly authorized and validly
issued and are fully paid and non-assessable.
(b) The Pledgor is the legal and beneficial owner of the
Pledged Collateral free and clear of any lien, security interest, option or
other charge or encumbrance except for the security interest created by this
Agreement.
(c) The pledge of the Pledged Shares pursuant to this
Agreement creates a valid and perfected first priority security interest in the
Pledged Collateral, securing the payment of the Obligations.
(d) No consent of any other person or entity and no
authorization, approval, or other action by, and no notice to or filing with,
any governmental authority or regulatory body is required (i) for the pledge by
the Pledgor of the Pledged Collateral pursuant to this Agreement or for the
execution, delivery or performance of this Agreement by the Pledgor, (ii) for
the perfection or maintenance of the security interest created hereby (including
the first priority nature of such security interest) or (iii) for the exercise
by the Lender of the voting or other rights provided for in this Agreement or
the remedies in respect of the Pledged Collateral pursuant to this Agreement
(except as may be required in connection with any disposition of any portion of
the Pledged Collateral by laws affecting the offering and sale of securities
generally).
(e) There are no conditions precedent to the effectiveness of
this Agreement that have not been satisfied or waived.
5. FURTHER ASSURANCES. The Pledgor agrees that at any time and from
time to time, at the expense of the Pledgor, the Pledgor will promptly execute
and deliver all further instruments and documents, and take all further action,
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that may be necessary or desirable, or that the Lender may reasonably request,
in order to perfect and protect any security interest granted or purported to be
granted hereby or to enable the Lender to exercise and enforce its rights and
remedies hereunder with respect to any Pledged Collateral.
6. VOTING RIGHTS; DIVIDENDS; ETC.
(a) So long as no Event of Default or event which, with the
giving of notice or the lapse of time, or both, would become an Event of Default
shall have occurred and be continuing:
(i) The Pledgor shall be entitled to exercise or
refrain from exercising any and all voting and other consensual rights
pertaining to the Pledged Collateral or any part thereof for any purpose not
inconsistent with the terms of this Agreement or the Purchase Agreement.
(ii) The Pledgor shall be entitled to receive and
retain any and all dividends paid in respect of the Pledged Collateral,
provided, however, that any and all
(A) dividends paid or payable other than in
cash in respect of, and instruments and other property received, receivable or
otherwise distributed in respect of, or in exchange for, and Pledged Collateral,
(B) dividends and other distributions paid
or payable in cash in respect of any Pledged Collateral in connection with a
partial or total liquidation or dissolution or in connection with a reduction of
capital, capital surplus or paid-in-surplus, and
(C) cash paid, payable or otherwise
distributed in respect of principal of, or in redemption of, or in exchange for,
any Pledged Collateral, shall be, and shall be forthwith delivered to the Lender
to hold as, Pledged Collateral and shall, if received by the Pledgor, be
received in trust for the benefit of the Lender, be segregated from the other
property or funds of the Pledgor, and be forthwith delivered to the Lender as
Pledged Collateral in the same form as so received (with any necessary
endorsement or assignment).
(iii) The Lender shall execute and deliver (or cause
to be executed and delivered) to the Pledgor all such proxies and other
instruments as the Pledgor may reasonably request for the purpose of enabling
the Pledgor to exercise the voting and other rights which it is entitled to
exercise pursuant to paragraph (i) above and to receive the dividends which it
is authorized to receive and retain pursuant to paragraph (ii) above.
(b) Upon the occurrence and during the continuance of an Event
of Default or an event which, with the giving of notice or the lapse of time, or
both, would become an Event of Default and after expiration of any applicable
cure period:
(i) All rights of the Pledgor (A) to exercise or
refrain from exercising the voting and other consensual rights which it would
otherwise be entitled to exercise pursuant to Section 6(a)(i) shall, upon notice
to the Pledgor by the Lender, cease and (B) to receive the dividends payments
which it would otherwise be authorized to receive and retain pursuant to Section
6(a)(ii) shall automatically cease, and all such rights shall thereupon become
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vested in the Lender who shall thereupon have the sole right to exercise or
refrain from exercising such voting and other consensual rights and to receive
and hold as Pledged Collateral such dividends and to apply such dividends toward
payment of the Obligations.
(ii) All dividends which are received by the Pledgor
contrary to the provisions of paragraph (i) of this Section 6(b) shall be
received in trust for the benefit of the Lender, shall be segregated from other
funds of the Pledgor and shall be forthwith paid over to the Lender as Pledged
Collateral in the same form as so received (with any necessary endorsement).
7. TRANSFERS AND OTHER LIENS; ADDITIONAL SHARES.
(a) The Pledgor agrees that it will not (i) sell, assign (by
operation of law or otherwise) or otherwise dispose of, or grant any option with
respect to, any of the Pledged Collateral, or (ii) create or permit to exist any
lien, security interest, option or other charge or encumbrance upon or with
respect to any of the Pledged Collateral, except for the security interest under
this Agreement.
(b) The Pledgor agrees that it will (i) cause each issuer of
the Pledged Shares, when issuing any stock or other securities as a dividend or
distribution on or in respect of the Pledged Shares, or in substitution for the
Pledged Shares, to issue such stock or securities in the name of the Pledgor,
and (ii) pledge hereunder, immediately upon its acquisition (directly or
indirectly) thereof, any and all additional shares of stock or other securities
of each issuer of the Pledged Shares (subject to the limitation regarding
Pledged Shares of a Foreign Subsidiary).
8. LENDER APPOINTED ATTORNEY-IN-FACT. The Pledgor hereby appoints the
Lender the Pledgor's attorney-in-fact, with full authority in the place and
stead of the Pledgor and in the name of the Pledgor or otherwise, from time to
time following the occurrence and during the continuance of an Event of Default
in the Lender's discretion to take any action and to execute any instrument
which the Lender may deem necessary or advisable to accomplish the purposes of
this Agreement (subject to the rights of the Pledgor under section 6),
including, without limitation, to receive, indorse and collect all instruments
made payable to the Pledgor representing any dividend or other distribution in
respect of the Pledged Collateral or any part thereof and to give full discharge
for the same.
9. LENDER MAY PERFORM. If the Pledgor fails promptly to perform any
agreement contained herein, the Lender may itself perform, or cause performance
of, such agreement, and the expenses of the Lender incurred in connection
therewith shall be payable by the Pledgor under section 13.
10. THE LENDER'S DUTIES. The powers conferred on the Lender hereunder
are solely to protect its interest in the Pledged Collateral and shall not
impose any duty upon it to exercise any such powers. Except for the safe custody
of any Pledged Collateral in its possession and the accounting for moneys
actually received by it hereunder, the Lender shall have no duty as to any
Pledged Collateral, as to ascertaining or taking action with respect to calls,
conversions, exchanges, maturities, tenders or other matters relative to any
Pledged Collateral, whether or not the Lender has or is deemed to have knowledge
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of such matters, or as to the taking of any necessary steps to preserve rights
against any parties or any other rights pertaining to any Pledged Collateral.
The Lender shall be deemed to have exercised reasonable care in the custody and
preservation of any Pledged Collateral in its possession if such Pledged
Collateral is accorded treatment substantially equal to that which the Lender
accords its own property.
11. REMEDIES UPON DEFAULT. If any Event of Default shall have occurred
and be continuing and after the expiration of any applicable cure period:
(a) The Lender may exercise in respect of the Pledged
Collateral, in addition to other rights and remedies provided for herein or
otherwise available to it, all the rights and remedies of a secured party on
default under the Uniform Commercial Code in effect in the state of Delaware at
that time (the "CODE") (whether or not the Code applies to the affected
Collateral), and may also, without notice except as specified below, sell the
Pledged Collateral or any part thereof in one or more parcels at public or
private sale, at any exchange, broker's board or at any of the Lender's offices
or elsewhere, for cash, on credit or for future delivery, and upon such other
terms as the Lender may deem commercially reasonable. The Pledgor agrees that,
to the extent notice of sale shall be required by law, at least ten days' notice
to the Pledgor of the time and place of any public sale or the time after which
any private sale is to be made shall constitute reasonable notification. The
Lender shall not be obligated to make any sale of Pledged Collateral regardless
of notice of sale having been given. The Lender may adjourn any public or
private sale from time to time by announcement at the time and place fixed
therefor, and such sale may, without further notice, be made at the time and
place to which it was so adjourned.
(b) Any cash held by the Lender as Pledged Collateral and all
cash proceeds received by the Lender in respect of any sale of, collection from,
or other realization upon all or any part of the Pledged Collateral may, in the
discretion of the Lender, be held by the Lender as collateral for, and/or then
or at any time thereafter be applied (after payment of any amounts payable to
the Lender pursuant to Section 13) in whole or in part by the Lender against,
all or any part of the Obligations in such order as the Lender shall elect. Any
surplus of such cash or cash proceeds held by the Lender and remaining after
payment in full of all the Obligations shall be paid over to the Pledgor or to
whomsoever may be lawfully entitled to receive such surplus.
(c) As to any Pledged Collateral constituting certificated
securities or uncertificated securities, if, at any time when Lender shall
determine to exercise its right to sell the whole or any part of such Pledged
Collateral hereunder, such Pledged Collateral or the part thereof to be sold
shall not, for any reason whatsoever, be effectively registered under Securities
Act of 1933, as amended (as so amended the "ACT"), Lender may, in its discretion
(subject only to applicable requirements of law), sell such Pledged Collateral
or part thereof by private sale in such manner and under such circumstances as
Lender may deem necessary or advisable, but subject to the other requirements of
this Section 11(c), and shall not be required to effect such registration or
cause the same to be effected. Without limiting the generality of the foregoing,
in any such event Lender may, in its sole discretion, (i) in accordance with
applicable securities laws, proceed to make such private sale notwithstanding
that a registration statement for the purpose of registering such Pledged
Collateral or part thereof could be or shall have been filed under the Act; (ii)
approach and negotiate with a single possible purchaser to effect such sale; and
(iii) restrict such sale to a purchaser who will represent and agree that such
purchaser is purchasing for its own account, for investment, and not with a view
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to the distribution or sale of such Pledged Collateral or part thereof. In
addition to a private sale as provided above in this Section 11(c), if any of
such Pledged Collateral shall not be freely distributable to the public without
registration under the Act at the time of any proposed sale hereunder, then
Lender shall not be required to effect such registration or cause the same to be
effected but may, in its sole discretion (subject only to applicable
requirements of law), require that any sale hereunder (including a sale at
auction) be conducted subject to such restrictions as Lender may, in its sole
discretion, deem necessary or appropriate in order that such sale
(notwithstanding any failure so to register) may be effected in compliance with
the Bankruptcy Code and other laws affecting the enforcement of creditors'
rights and the Act and all applicable state securities laws.
(d) Pledgor agrees that in any sale of any of such Pledged
Collateral, whether at a foreclosure sale or otherwise, Lender is hereby
authorized to comply with any limitation or restriction in connection with such
sale as it may be advised by counsel is necessary in order to avoid any
violation of applicable law (including compliance with such procedures as may
restrict the number of prospective bidders and purchasers, require that such
prospective bidders and purchasers have certain qualifications and restrict such
prospective bidders and purchasers to persons who will represent and agree that
they are purchasing for their own account for investment and not with a view to
the distribution or resale of such Pledged Collateral), or in order to obtain
any required approval of the sale or of the purchaser by any governmental
authority, and Pledgor further agrees that such compliance shall not result in
such sale being considered or deemed not to have been made in a commercially
reasonable manner, nor shall Lender be liable nor accountable to Pledgor for any
discount allowed by the reason of the fact that such Pledged Collateral is sold
in compliance with any such limitation or restriction.
12. REGISTRATION RIGHTS. If the Lender shall determine to exercise its
right to sell all or any of the Pledged Collateral pursuant to Section 11, the
Pledgor agrees that, upon request of the Lender, the Pledgor will, at its own
expense and using its best efforts:
(a) execute and deliver, and cause each issuer of the Pledged
Collateral contemplated to be sold and the directors and officers thereof to
execute and deliver, all such instruments and documents, and do or cause to be
done all such other acts and things, as may be necessary or, in the opinion of
the Lender, advisable to register such Pledged Collateral under the provisions
of the Securities Act of 1933, as from time to time amended (the "SECURITIES
ACT"), and to cause the registration statement relating thereto to become
effective and to remain effective for such period as prospectuses are required
by law to be furnished, and to make all amendments and supplements thereto and
to the related prospectus which, in the opinion of the Lender, are necessary or
advisable, all in conformity with the requirements of the Securities Act and the
rules and regulations of the Securities and Exchange Commission applicable
thereto;
(b) use its best efforts to qualify the Pledged Collateral
under the state securities or "Blue Sky" laws and to obtain all necessary
governmental approvals for the sale of the Pledged Collateral, as requested by
the Lender;
(c) cause each such issuer to make available to its security
holders, as soon as practicable, an earning statement which will satisfy the
provisions of section 11(a) of the Securities Act; and
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(d) do or cause to be done all such other acts and things as
may be necessary to make such sale of the Pledged Collateral or any part thereof
valid and binding and in compliance with applicable law.
The Pledgor further acknowledges the impossibility of ascertaining the amount of
damages which would be suffered by the Lender by reason of the failure by the
Pledgor to perform any of the covenants contained in this section and,
consequently, agrees that, if the Pledgor shall fail to perform any of such
covenants, it shall pay, as liquidated damages and not as a penalty, an amount
equal to the value of its monetary Obligations to the Lender on the date the
Lender shall demand compliance with this section.
13. EXPENSES. The Pledgor will upon demand pay to the Lender the amount
of any and all reasonable expenses, including the reasonable fees and expenses
of its counsel and of any experts and agents, which the Lender may incur in
connection with (a) the administration of this Agreement, (b) the custody or
preservation of, or the sale of, collection from, or other realization upon, any
of the Pledged Collateral, (c) the exercise or enforcement of any of the rights
of the Lender hereunder or (d) the failure by the Pledgor to perform or observe
any of the provisions hereof.
14. AMENDMENTS, ETC. No amendment or waiver of any provision of this
Agreement, and no consent to any departure by the Pledgor herefrom, shall in any
event be effective unless the same shall be in writing and signed by the Lender,
and then such waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given.
15. ADDRESSES FOR NOTICES. All notices and other communications
provided for hereunder shall be in writing and shall be delivered in the manner
and to the persons and at the addresses specified in the Purchase Agreement.
16. CONTINUING SECURITY INTEREST. This Agreement shall create a
continuing security interest in the Pledged Collateral and shall (a) remain in
full force and effect until the later of (i) the payment in full of the
Obligations and all other amounts payable under this Agreement and (ii) the
expiration or termination of the Loans, (b) be binding upon the Pledgor, its
successors and assigns, and (c) inure to the benefit of, and be enforceable by,
the Lender and its successors, transferees and assigns. Upon the later of the
payment in full of the Obligations and all other amounts payable under this
Agreement and the expiration or termination of the Loans, the security interest
granted hereby shall terminate and all rights to the Pledged Collateral shall
revert to the Pledgor. Upon any such termination, the Lender will, at the
Pledgor's expense, return to the Pledgor such of the Pledged Collateral as shall
not have been sold or otherwise applied pursuant to the terms hereof and execute
and deliver to the Pledgor such documents as the Pledgor shall reasonably
request to evidence such termination.
17. GOVERNING LAW; TERMS. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware, except as
required by mandatory provisions of law and except to the extent that the
validity or perfection of the security interest hereunder, or remedies
hereunder, in respect of any particular Pledged Collateral are governed by the
laws of a jurisdiction other than the State of Delaware. Unless otherwise
defined herein or in the Purchase Agreement, terms defined in Article 9 of the
Code are used herein as therein defined.
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18. FOREIGN SUBSIDIARIES. If any of the Corporations is a Foreign
Subsidiary, Pledgor agrees that it shall at all times maintain and cause such
Foreign Subsidiary to maintain the stock pledged hereunder at not less than 65%
of such Foreign Subsidiary.
[SIGNATURE PAGE TO FOLLOW]
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IN WITNESS WHEREOF, the Pledgor has caused this Pledge Agreement to be
duly executed and delivered by its officer thereunto duly authorized as of the
date first above written.
INTERNET PICTURES CORPORATION
By:
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Print Name:
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Title:
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