EXHIBIT 10.1
PLEDGE AGREEMENT
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December ___, 1998
Xxxxxxx & Xxxxxx, As Agent
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx Xxxxxxx
Gentlemen:
1. Pledge. The undersigned (the "Pledgor"), as an inducement for one or
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more of your clients for whom you are acting as Agent (the "Pledgees"), to make
loam, advances and extensions of credit to SHOPPING-COM, a California
corporation (the "Debtor"), hereby pledges, grants a security interest in,
mortgage, assign, transfer, deliver, set over and confirm unto you as Agent for
the Pledgees, their successors and assigns, the shares of capital stock of the
Debtor described in Exhibit A annexed hereto and made a part hereof, with
attached stock powers duly endorsed to Pledgees, as collateral security for the
payment in full when due of (i) all indebtedness of the Debtor under certain
Notes or Debentures of the Debtor of even date herewith in the principal amount
of $2,500,000 (the "Notes"), and (ii) all other obligations of the Debtor to the
Pledgees, whether presently existing or hereafter arising (collectively, the
"Obligations"). Pledgor warrants and represents that, except as set forth in
Section 19 or as noted on the reverse side of the certificate(s) or
instrument(s) evidencing the foregoing securities, there are no restrictions
upon the transfer of any of the foregoing securities and that Pledgor has the
right to transfer said securities free of any encumbrance.
Pledgor hereby agrees promptly to pledge and deposit hereunder with
the Pledgees any stock or other securities declared as a dividend with respect
to or issued as a split of any securities now or hereafter held in pledge
hereunder and any additional property hereto pledged to the Pledgees by Pledgor,
whether taken in substitution for or in addition to the above-described
property. Such stock other securities and property shall stand pledged and
assigned for the Obligations in the same manner as the property described in the
first paragraph hereof. (All of the property described in this paragraph and in
the first paragraph hereof is hereinafter called the "Pledged Stock").
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2. Representations, Warranties and Covenants of the Pledgor.
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Pledgor hereby represents, warrants and covenants to the Pledgees as
follows:
(a) Except for the security interest and pledge hereunder, upon delivery
of the Pledged Stock to the Pledgees, the Pledgor is, or to the extent that
certain of the Pledged Stock is to be acquired after the date hereof, will be
the sole owner of the Pledged Stock free from any adverse lion, security
interest or encumbrance, and the Pledgor will defend the Pledged Stock against
all claims and demands of all persons at any time claiming any interest therein.
(b) The Pledgor will promptly pay any and all taxes, assessments and
governmental charges upon the Pledged Stock prior to the date penalties are
attached thereto, except to the extent that such taxes, assessments and charges
shall be contested in good faith by the Pledgor.
(c) The Pledgor will not sell or otherwise assign, transfer or dispose of
the Pledged Stock or any interest therein without the prior written consent of
the Pledgees.
(d) Except for the security Interest and pledge hereunder, the Pledgor
will keep the Pledged Stock free from any adverse lien, security interest or
encumbrance.
(e) The Pledged Stock is duly and validly issued, fully paid and
nonassesssable, and each certificate evidencing Pledged Stock is issued in the
name of Pledgor.
(f) The Debtor will not issue any shares of its capital stock or any
securities or rights to acquire such shares or securities to Pledgor, and any
such issuance shall not be effective, unless, the same shall be pledged to the
Pledgees as additional security under this Pledge Agreement pursuant to
documents in form and substance satisfactory to the Pledgees.
3. Voting Power, Dividends, Etc.
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(a) Unless and until an Event of Default (as defined below) has occurred,
the Pledgor shall have the right to exercise all voting, consensual and other
powers of ownership pertaining to the Pledged Stock, and the Pledgor shall be
entitled to receive and retain any dividends or distributions on the Pledged
Stock except:
(i) stock dividends;
(ii) dividends payable in securities or other property (except cash
dividends);
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(iii) dividends or distributions on dissolution or on partial or total
liquidation or in connection with a reduction of capital, capital surplus or
paid-in surplus; and
(iv) other securities issued with respect to or in lieu of the
Pledged Stock (whether upon conversion of the convertible securities included
therein or through stock split, spin-off, split-off, reclassification, merger,
consolidation, sale of assets, combination of shares or otherwise).
The Pledgees shall have the right to receive and retain all dividends, interest
and other payments and distributions made upon of with respect to the Pledged
Stock, except those which the Pledgor is specifically authorized to receive as
provided above, and the Pledgor shall take an such action as may be necessary or
appropriate to give effect to such right. From time to time, upon receiving a
written request from the Pledgor accompanied by a certificate signed by the
Pledgor stating that no Event of Default has occurred and/or is continuing, the
Pledgees shall deliver to the Pledgor suitable assignments and orders for the
payment to the Pledgor (or upon its order) of all dividends, interest and other
payments and distributions to which the Pledgor is entitled as aforesaid, upon
or with respect to any Pledged Stock which is registered in the Pledgees' name.
(b) Any provisions herein to the contrary notwithstanding, if any Event of
Default (or, as to subsection (ii) below, an event which, with the passage of
time and/or the giving of notice, or both, would constitute an Event of Default)
shall have occurred, then and whether or not any holder of the Note or the
Obligations exercise any available option to declare the Note or the Obligations
due and payable or seeks or pursues any other relief or remedy available to such
holder under this Pledge Agreement, the Note or any agreement evidencing or
securing any of the Obligations:
(i) The Pledgees, or their respective nominee or nominees, shall
forthwith, without further act on the part of any person, have the sole and
exclusive right to exercise all voting, consensual and other powers of ownership
pertaining to the Pledged Stock and shall exercise such powers in such manner as
the Pledgees, in their sole discretion, shall determine to be necessary,
appropriate or advisable, and if the Pledgees shall so request in writing, the
Pledgor agrees to execute and deliver to the Pledgees such other and additional
powers, authorizations, proxies, dividends and such other documents as the
Pledgees may request to secure to the Pledgees' the rights, powers and
authorities intended to be conferred upon the Pledgees by this subsection (b);
and
(ii) All dividends and other distributions on the Pledged Stock shall
be paid directly to the Pledgees and retained by it as part of its Pledged
Stock, subject to the terms of this Pledge Agreement, and if the Pledgees shall
so request in writing, the Pledgor agrees to execute and deliver to the Pledgees
appropriate additional dividend, distribution and other orders and documents to
that end.
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4. Sale of Pledged Stock After an Event of Default.
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If any Event of Default shall have occurred, and the principal amount
of the Note or any of the Obligations shall have been declared forthwith due and
payable, then unless the Note and the Obligations shall have been paid in full,
the Pledgees may, in their sole discretion, without further demand,
advertisement or notice, except as expressly provided for in subsection (a) of
this Section 4, (i) apply the cash, if any, then held by it as collateral
hereunder, for the purposes and in the manner provided in Section 5 hereof, and
(ii) if there shall be no such cash or the cash so applied shall be insufficient
to make in full all payments provided in subsections (a) and (b) of Section 5
hereof.
(a) Sell the Pledged Stock, or any part thereof, in one or more Sales, at
public or private sale, conducted by any officer or agent of, or auctioneer or
attorney for, the Pledgees, at the Pledgees' place of business or elsewhere, for
cash, upon credit or future delivery, and at such price or prices as the
Pledgees shall, in their sole discretion, determine, and the Pledgees may be the
purchaser of any or all of the Pledged Stock so sold. Upon any such sale the
Pledgees shall have the right to deliver, assign and transfer to the purchaser
thereof the Pledged Stock so sold. Each purchaser (including, without
limitation, the Pledgees) at any such sale shall hold the Pledged Stock so sold
absolutely free from any claim or right of whatsoever kind, including, without
limitation, any equity or right of redemption of the Pledgor, which the Pledgor
hereby specifically waives, to the extent it may lawfully do so, and all rights
of redemption, stay or appraisal which Pledgor has or may have under any rule of
law or statute now existing or hereafter adopted. The Pledgees shall give the
Pledgor at least ten (10) days prior written notice of any such public or
private sale. Any such public sale shall be held at such time or times within
ordinary business hours as the Pledgees shall fix in the notice of such sale.
At any such public or private sale the Pledged Stock may be sold in one lot as
an entirety or in separate parcels. The Pledgees shall not be obligated to make
any sale pursuant to any such notice. The Pledgees may, without notice or
publication, adjourn any public or private sale from time to time by
announcement at the time and place fixed for such sale, or any adjournment
thereof, and any such sale may be made at any time or place to which the same
may be so adjourned without further notice or publication. In case of any sale
of all or any part of the Pledged Stock for credit or for future delivery, the
Pledged Stock so sold may be retained by the Pledgees until the selling price is
paid by the purchaser thereof, but the Pledgees shall not incur any liability in
case of the failure of such purchaser to take up and pay for the Pledged Stock
so sold, and in case of any such failure, such Pledged Stock may again be sold
under and pursuant to the provisions hereof; or
(b) Proceed by a suit or suits at law or in equity to foreclose upon this
Pledge Agreement and sell the Pledged Stock, or any portion thereof, under a
judgment or decree of a court or courts of competent jurisdiction.
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If at any time when the Pledgees shall determine to exercise their right to sell
all or any part of the Pledged Stock pursuant to Section 4(a) hereof, such
Pledged Stock or the part thereof to be sold shall not, for any reason
whatsoever, be effectively registered under the Securities. Act of 1933, as
from time to time in effect (the "Securities Act"), the Pledgees, in their sole
and absolute discretion, are hereby expressly authorized to sell such Pledged
Stock or such part thereof by private sale in such manner and under such
circumstances as the Pledgees may deem necessary or advisable in order that such
sale may legally be effected without such registration. Without limiting the
generality of the foregoing, in any such event the Pledgees, in their sole and
absolute discretion, (x) may proceed to make such private sale notwithstanding
that a registration statement for the purpose of registering such Pledged Stock
or such part thereof shall have been filed under such Securities Act; (y) may
approach and negotiate with a restricted number of potential purchasers to
effect such sale; and (z) may restrict such sale to purchasers as to their
number, nature of business and investment intention, including, without
limitation, to purchasers each of whom will represent and agree to the
satisfaction of the Pledgees that such purchaser is purchasing for its own
account, for investment, and not with a view to the distribution or sale of such
Pledged Stock or part thereof, it being understood that the Pledgees may require
the Pledgor, and the Pledgor hereby agrees upon the written request of the
Pledgees, to cause: (i) a legend or legends to be placed on the certificates to
be delivered to such purchasers to the effect that the Pledged Stock represented
thereby has not been registered under the Securities Act and setting forth or
referring to restrictions on the transferability of such securities, or (ii) the
issuance of stop transfer instructions to the transfer agent of any issuer (each
an "Issuer") of such securities, if any, with respect to the Pledged Stock, or
if the Issuer transfers its own securities, a notation in the appropriate
records of such Issuer, and that the Pledgees may require to be obtained, and
the Pledgor will cooperate with the Pledgees in obtaining from the purchasers a
signed written agreement that the Pledged Stock will not be sold without
registration or other compliance with the requirements of the Securities Act.
In the event of any such sale, the Pledgor does hereby consent and agree that
the Pledgees shall incur no responsibility or liability for selling all or any
part of the Pledged Stock at a price which the Pledgees, in their sole and
absolute discretion, may deem reasonable under the circumstances,
notwithstanding the possibility that a substantially higher price might be
realized if the sale were public and deferred until after registration under the
Securities Act.
The Pledgees as attorney-in-fact pursuant to Section 6 hereof may, in the
name and stead of the Pledgor, make and execute all conveyances, assignments and
transfers of the Pledged Stock sold pursuant to this Section 4. The Pledgor
shall, if so requested by the Pledgees, ratify and confirm any sale or sales by
executing and delivering to the Pledgees, or to such purchaser or purchasers,
all such instruments as may, in the judgment of the Pledgees, be advisable for
the purpose.
The receipt of the Pledgees for the purchase money paid at any such sale
made by it shall be a sufficient discharge therefor to any purchaser of the
Pledged Stock, or any
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portion thereof, sold as aforesaid; and no such purchaser (or his or its
representatives or assigns), after paying such purchase money and receiving such
receipt, shall be bound to see to the application of such purchase money or any
part thereof or in any manner whatsoever be answerable for any loss,
misapplication, necessity, expediency or regularity of any such sale.
Except as otherwise provided herein, the Pledgor shall have such rights of
redemption as are afforded by the Uniform Commercial Code as then in effect in
the State of Now York.
5. Application of Proceeds.
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The proceeds of any sale, or of collection, of all or any part of the
Pledged Stock shall be applied by the Pledgees, without any marshaling of
assets, in the following order:
(a) first, to the payment of all of the reasonable com and expenses of
such sale, including, without limitation, reasonable attorneys' fees, and all
other expenses, liabilities and advances reasonably made or incurred by the
Pledgees in connection therewith; and
(b) second, to the payment of the Obligations in such order as the
Pledgees shall determine, until payment in full thereof, and
(c) finally, to the payment to the Pledgees, their respective successors
or assigns, or their respective heirs, executors or administrators, or to
whomsoever may be lawfully entitled to receive the same, or as a court of
competent jurisdiction way direct, of any surplus remaining from such proceeds
after payments of the character referred to in subsections (a) and (b) of this
Section 5 shall have been made.
6. Pledgees Appointed Attorney-In-Fact.
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Effective upon the occurrence of an Event of Default, the Pledgees, their
successors and assigns, are hereby appointed the attorney-in-fact, with full
power of substitution, of the Pledgor for the purpose of carrying out the
provisions of this Pledge Agreement and taking any action and executing any
instruments which such attorney-in-fact may deem necessary or advisable to
accomplish the purposes hereof, which appointment as attorney-in-fact is
irrevocable and coupled with an interest, including, without limitation, the
power:
(a) to demand, xxx for, collect, receive and give acquittance for any and
all monies due or to be owed due upon or by virtue thereof,
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(b) to receive, take, endorse, assign and deliver any and all checks,
notes, draft documents and other negotiable and non-negotiable instruments and
chattel paper taken of received by the Pledgees in connection therewith;
(c) to settle, compromise, prosecute or defend any action or proceeding
with respect thereto; and
(d) to discharge any taxes, liens, security interests or other
encumbrances at any time placed thereon.
7. No Waiver.
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No failure on the part of the Pledgees to exercise, and no delay on the
part of the Pledgees in exercising, any right, power or remedy hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise by the
Pledgees of any right, power or remedy hereunder preclude the single or partial
exercise by the Pledgees of any other or further right, power or remedy. no
remedies herein provided are cumulative and are not exclusive of any remedies
provided by law.
8. Termination of Pledge.
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When all of the Obligations, including, without limitation, the Note, shall
have been paid in full, this Pledge Agreement shall terminate. The Pledgees
shall forthwith assign, transfer and deliver to the Pledgor or its respective
successors or assigns without representation, warranty or recourse, against
appropriate receipts, all the Pledged Stock, ir any, then held by the Pledgees
in pledge hereunder, free and clear of all liens and encumbrances created by the
Pledgees or its representatives. This provision shall survive the termination
of this Pledge Agreement.
9. Governing Law; Consent to Jurisdiction
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(a) This Pledge Agreement shall in all respects be construed and
interpreted in accordance with and governed by the laws of the State of New
York.
(b) The Pledgor to the extent that Pledgor may lawfully do so, hereby
submits to the jurisdiction of any courts, federal or state, sitting in the
State of New York, as well as to the Jurisdiction of all courts from which an
appeal may be taken from the aforesaid courts, for the purpose of any suit,
action or other proceeding arising out of any of the Pledgor's obligations under
or with respect to this Pledge Agreement, and Pledgor expressly waives any and
all objections Pledgor may now or hereafter have as to the venue in any of such
courts. The Pledgor also waives trial by jury in any such action or proceeding.
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10. Successors and Assigns.
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This Pledge Agreement shall be binding upon and inure to the benefit of the
respective successors, assigns, legal representatives, executors and
administrators of the Pledgor and the Pledgees, and any subsequent holder of the
Note or the Obligations.
11. Additional Instruments and Assurance.
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Pledgor hereby agrees, at Pledgor's own expense, to execute and deliver,
from time to time, any and all further, or other, instruments, and to perform
such acts, as the Pledgees may reasonably request to effect the purposes of this
Pledge Agreement and to secure to the Pledgees, and to all persons who may from
time to time be, the holder of the Note or the Obligations, the benefits of all
right, authorities and remedies conferred upon the Pledgees by the terms of this
Pledge Agreement.
12. Future Holders of Note.
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This Pledge Agreement is for the benefit of any and all future holders of
the Note or the Obligations in addition to the Pledgees, each of whom shall,
without further act, become a party hereto by becoming a holder of the Note of
the Obligations.
13. Obligations of Each Pledgor
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Any and all references to the "Pledgor" herein shall be deemed to refer to
the Pledgor executing this Pledge Agreement and all obligations of the Pledgor
hereunder shall apply to the Pledgor.
14. Notices.
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All notices, requests, demands, consents or other communications given
hereunder or in connection herewith shall be in writing and sent by certified
mail, return receipt requested, postage prepaid, addressed to the Pledgor at the
address set forth below, and if to the Pledgees, addressed to the Pledgees at
their principal offices set forth above. The Pledgor or the Pledgees may, by
notice given as aforesaid, change their address for all subsequent notices.
Notice shall be deemed given on the earlier to occur of: (i) the third day
following deposit thereof in the mail as aforesaid, or (ii) receipt by the party
to whom such notice is directed.
15. Separability.
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In case any one or more of the provisions of this Pledge 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
provision hereof, but this Pledge
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Agreement shall be construed as if such invalid, illegal or unenforceable
provision had not been included.
16. Events of Default.
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The Pledgor shall be in default under this Pledge Agreement upon the
occurrence of any of the following events (an "Event of Default"):
(a) if any representation or warranty made by the Pledgor in this Pledge
Agreement shall be false or misleading in any material respect;
(b) if the Pledgor fails to duly observe or perform any covenant,
condition or agreement contained in this Agreement and on Pledgor's part to be
observed or performed, which default continues unremedied for five (5) days
after the earlier to occur of (i) the discovery by the Pledgor, or any of them,
of such default, or (ii) written notice thereof from the Pledgees to the
Pledgor;
(c) the occurrence of an Event of Default as defined in the Note; or
(d) the occurrence of an Event of Default as defined in any of the other
documents reflecting the Obligations.
17. Cumulative Remedies; Indemnification.
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The rights, powers and remedies provides herein in favor of Pledgees shall
not be deemed exclusive, but shall be cumulative, and shall be in addition to
all other rights and remedies in favor of the Pledgees existing at law or in
equity, including (without limitation) all of the rights powers and remedies
available to a secured party under any law or regulation. The Pledgor shall
pay, indemnify and hold harmless the Pledgees from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind whatsoever which may be imposed on,
incurred by or asserted against the Pledgor in any way relating to or arising
out of any misrepresentation by the Pledgor hereunder or any failure of the
Pledgor to perform and observe its obligations hereunder. The obligation of the
Pledgor under this Section 17 shall survive the payment in full of the
Obligations and the termination of this Pledge Agreement.
18. Readings.
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The headings of the Sections of this Pledge Agreement have been inserted
for convenience of reference only and shall in no way affect the construction or
interpretation or this Pledge Agreement.
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19. Governmental.
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Anything to the contrary contained herein notwithstanding, the Pledgees
will not take any action pursuant to this Pledge Agreement which would
constitute or result in any assignment of a governmentally issued license or any
transfer of control of any entity owned or controlled by the Debtor if such
assignment of license or transfer of control would require under then existing
law the prior approval of a government agency (the "Agency"), without first
obtaining such approval of the Agency. The Pledgor agrees to take any action
which the Pledgees may request in order that the Pledgees obtain and enjoy the
full rights and benefits granted to the Pledgees; by this Agreement, including,
specifically, at the Pledgor's own cost and expense, the use of Pledgor's best
efforts to assist and cooperate in obtaining approval of the Agency for any
action or transaction contemplated by this Agreement which is then required by
law, and specifically, without limitation, upon request, to prepare, sign (or
cause to be signed) and file with the Agency any portion of any application or
applications for consent to the assignment of license or transfer of control
required to be signed by the Pledgor, the Debtor, its officers and/or directors,
and necessary or appropriate under the Agency's rules and regulations for
approval of (a) any sale or sales of the Pledged Stock by or on behalf of the
Pledgees or the holder of the Note and the Obligations or (b) any assumption by
the Pledgees of Voting rights or management rights in the Pledged Stock.
20. Additional Terms.
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(a) Pledgor acknowledges that Xxxxxxx & Xxxxxx is acting as agent for the
Pledgees. The Agent has acted as legal counsel for the Pledgees and the
Placement Agent in the transaction between the Debtor and the Pledgees, and may
continue to act as legal counsel for such parties, from time to time,
notwithstanding its duties as the Agent hereunder. Pledgor consents to the
Agent acting in such capacity as legal counsel for the Pledgees and the
Placement Agent and waives any claim that such representation represents a
conflict of interest on the part of the Agent. Pledgor understands that the
Pledgees and the Agent are relying explicitly on the foregoing provisions in
entering into these transactions wit the Debtor and accepting this Pledge
Agreement, as the case may be.
(b) With respect to the terms of this Pledge Agreement or any matter
arising thereunder, Xxxxxxx & Prager shall use the same degree of care and skill
in their exercise as reasonable men use in the conduct of their own affairs;
provided, however, that notwithstanding the foregoing, on the event that Xxxxxxx
& Xxxxxx shall have received written notice from the holders in excess of
66-2/3% or more of the Notes, to act or refrain from acting under the terms of
the Pledge Agreement, Xxxxxxx & Prager shall be bound by such written direction,
notwithstanding the foregoing provisions of this Pledge Agreement.
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Please indicate you receipt of the property described in the first
paragraph hereof and you agreement to the terms and provisions hereof by
executing this Pledge Agreement in the space provided below.
/s/ Xxxxxx X. XxXxxxx
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Name: Xxxxxx XxXxxxx
Accepted and agreed to as of
the date first above written
XXXXXXX & XXXXXX
By: /s/ Illegible
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Name:
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EXHIBIT A
PLEDGED STOCK
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T/B/S
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