PLEDGE AND SECURITY AGREEMENT
Exhibit 4.1
PLEDGE AND SECURITY
AGREEMENT
1. Identification.
This
Pledge and Security Agreement (the "Agreement"), dated as of April 9, 2009, is
entered into by and between Advance Nanotech, Inc., a Delaware corporation
(“Company” or “Debtor”), and Axiom Capital Management, Inc., as collateral agent
acting in the manner and to the extent described in the Collateral Agent
Agreement defined below (the "Collateral Agent"), for the benefit of the parties
identified on Schedule A
hereto (collectively, the "Lenders").
2. Recitals.
2.1 The
Lenders have made, are making and will be making loans to Company (the
"Loans"). It is beneficial to Debtor that the Loans were made and are
being made.
2.2 The Loans
are and will be evidenced by a certain Senior Secured Note (the “Note”) issued
by Company on or about the date of and after the date of this Agreement pursuant
to one or more subscription agreements (each, a “Subscription Agreement”) to
which Company and Lenders are parties. The Note is further identified
on Schedule
A hereto and was or will be executed by Company as “Borrower”
or “Debtor” for the benefit of each Lender as the “Holder” or “Lender”
thereof.
2.3 In
consideration of the Loans made and to be made by Lenders to Company and for
other good and valuable consideration, and as security for the performance by
Company of its obligations under the Note and as security for the repayment of
the Loans and all other sums due from Debtor to Lenders arising under this
Agreement, the Note, the Subscription Agreement and other agreements referred to
therein (collectively, the “Transaction Documents”), and any other agreement
between or among them (collectively, the "Obligations"), Debtor, for good and
valuable consideration, receipt of which is acknowledged, has agreed to grant to
the Collateral Agent, for the benefit of the Lenders, a security interest in the
Collateral (as such term is hereinafter defined), on the terms and conditions
hereinafter set forth. Obligations include all future advances by
Lenders to Debtor made pursuant to the Subscription Agreement.
2.4 The
Lenders have appointed the Collateral Agent pursuant to that certain Collateral
Agent Agreement dated at or about the date of this Agreement (“Collateral Agent
Agreement”), among the Lenders and Collateral Agent.
2.5 The
following defined terms which are defined in the Uniform Commercial Code in
effect in the State of New York on the date hereof are used herein as so
defined: Accounts, Chattel Paper, Documents, Equipment, General
Intangibles, Instruments, Inventory and Proceeds.
3. Grant of General Security
Interest in Collateral.
3.1 As
security for the Obligations of Debtor, the Debtor hereby grants the Collateral
Agent, for the benefit of the Lenders, a security interest in the Collateral,
which security interest shall be a first priority security interest except as
set forth in Schedule 3.1 hereto.
3.2 “Collateral”
shall mean all of the following property of Debtor:
All now
owned and hereafter acquired right, title and interest of Debtor in, to and in
respect of the following:
(i) Intellectual
Property: All now owned and hereafter acquired right, title
and interest of Debtor in, to and in respect of all: registered and unregistered
patents (including but not limited to the patents, patents pending and
applications set forth on Schedule B hereto),
trademarks, service marks, intellectual property certificates, copyrights,
domain names, trade names, applications for the foregoing, trade secrets,
goodwill, processes, drawings, blueprints, customer lists and licenses with
respect to any of the foregoing, whether as licensor or licensee (all of the
foregoing being sometimes hereinafter referred to as “Intellectual
Property”);
(ii) Books and
Records: All present and future books and records relating to
any of the above including, without limitation, all computer programs, printed
output and computer readable data in the possession or control of the Debtor,
any computer service bureau or other third party; and
(iii) Products and
Proceeds: All Proceeds of the foregoing in whatever form and
wherever located, including, without limitation, all insurance proceeds and all
claims against third parties for loss or destruction of or damage to any of the
foregoing.
(iv) Pledged
Securities: As additional security for the Obligations, the
Debtor hereby assigns and pledges to Lenders all of the Debtor’s equity
interests now owned or hereafter acquired (collectively, the “Pledged
Securities”) in each of Debtor’s subsidiaries set forth on Schedule 3.2 (each a
“Subsidiary” and collectively the “Subsidiaries”) together with all of Debtor’s
rights and privileges, and all income, dividends and profits, with respect
thereto, and all proceeds of the foregoing. If any Pledged Security
is certificated, the Debtor shall promptly deliver to the Collateral Agent’s
account at Xxxxxxx Xxxxx (account number: 877-07279) such certificates together
with stock powers endorsed in blank.
3.3 The
Collateral Agent is hereby specifically authorized, after the Maturity Date
(defined in the Note) is accelerated if the Note is not repaid when such
repayment is due (after all applicable cure periods), or after the occurrence of
an Event of Default (as defined herein) and the expiration of any applicable
cure period, to transfer any Collateral into the name of the Collateral Agent
and to take any and all action deemed advisable to the Collateral Agent to
remove any transfer restrictions affecting the Collateral.
4. Perfection of Security
Interest.
4.1 Debtor
shall prepare, execute and deliver to the Collateral Agent UCC-1 Financing
Statements (the “Financing Statements”). The Collateral Agent is
instructed to prepare and file at each Debtor’s cost and expense, financing
statements in such jurisdictions deemed advisable to the Collateral Agent,
including but not limited to the State of Delaware and the U.S. Patent and
Trademark Office. The Financing Statements are deemed to have been
filed for the benefit of the Collateral Agent and Lenders identified on Schedule A
hereto.
4.2 All
other certificates and instruments constituting Collateral from time to time
required to be pledged to Collateral Agent pursuant to the terms hereof (the
"Additional Collateral") shall be delivered to Collateral Agent promptly upon
receipt thereof by or on behalf of the Debtor. All such certificates
and instruments shall be held by or on behalf of Collateral Agent pursuant
hereto and shall be delivered in suitable form for transfer by delivery, or
shall be accompanied by duly executed instruments of transfer or assignment or
undated stock powers executed in blank, all in form and substance satisfactory
to Collateral Agent. If any Collateral consists of uncertificated
securities, unless the immediately following sentence is applicable thereto,
Debtor shall cause Collateral Agent (or its custodian, nominee or other
designee) to become the registered holder thereof, or cause each issuer of such
securities to agree that it will comply with instructions originated by
Collateral Agent with respect to such securities without further consent by
Debtor. If any Collateral consists of security entitlements, Debtor shall
transfer such security entitlements to Collateral Agent (or its custodian,
nominee or other designee) or cause the applicable securities intermediary to
agree that it will comply with entitlement orders by Collateral Agent without
further consent by Debtor.
4.3 Within
five (5) days after the receipt by Debtor of any Additional Collateral, a Pledge
Amendment, duly executed by such Debtor, in substantially the form of Annex I
hereto (a "Pledge Amendment"), shall be delivered to Collateral Agent in respect
of the Additional Collateral to be pledged pursuant to this Agreement. Debtor
hereby authorizes Collateral Agent to attach each Pledge Amendment to this
Agreement and agrees that all certificates or instruments listed on any Pledge
Amendment delivered to Collateral Agent shall for all purposes hereunder
constitute Collateral.
4.4 If
Debtor shall receive, by virtue of Debtor being or having been an owner of any
Collateral, any (i) stock certificate (including, without limitation, any
certificate representing a stock dividend or distribution in connection with any
increase or reduction of capital, reclassification, merger, consolidation, sale
of assets, combination of shares, stock split, spin-off or split-off),
promissory note or other instrument, (ii) option or right, whether as an
addition to, substitution for, or in exchange for, any Collateral, or otherwise,
(iii) dividends payable in cash (except such dividends permitted to be retained
by Debtor pursuant to Section 5.2 hereof) or in securities or other property or
(iv) dividends or other distributions in connection with a partial or total
liquidation or dissolution or in connection with a reduction of capital, capital
surplus or paid-in surplus, Debtor shall receive such stock certificate,
promissory note, instrument, option, right, payment or distribution in trust for
the benefit of Collateral Agent, shall segregate it from Debtor's other property
and shall deliver it forthwith to Collateral Agent, in the exact form received,
with any necessary endorsement and/or appropriate stock powers duly executed in
blank, to be held by Collateral Agent as Collateral and as further collateral
security for the Obligations.
5. Distribution.
5.1 So
long as an Event of Default does not exist, Debtor shall be entitled to exercise
all voting power pertaining to any of the Collateral and exercise all of
Debtor’s rights and privileges with regard to all proceeds of any of the
Collateral and all income, dividends and profits, with respect thereto, as well
as Debtor’s rights and privileges with regard to Collateral pursuant to Section
6.2 of this Agreement
5.2. At
any time an Event of Default exists or has occurred and is continuing, all
rights of Debtor, upon notice given by Collateral Agent, to exercise the voting
power and receive payments, which it would otherwise be entitled to pursuant to
Section 5.1, shall cease and all such rights shall thereupon become vested in
Collateral Agent, which shall thereupon have the sole right to exercise such
voting power and receive such payments.
5.3 All
dividends, distributions, interest and other payments which are received by
Debtor contrary to the provisions of Section 5.2 shall be received in trust for
the benefit of Collateral Agent as security and Collateral for payment of the
Obligations and shall be segregated from other funds of Debtor, and shall be
forthwith paid over to Collateral Agent as Collateral in the exact form received
with any necessary endorsement and/or appropriate stock powers duly executed in
blank, to be held by Collateral Agent as Collateral and as further collateral
security for the Obligations.
6. Further Action By Debtor;
Covenants and Warranties.
6.1 Collateral
Agent at all times shall have a perfected security interest in the
Collateral. Each Debtor represents that it has and will continue to
have full title to the Collateral free from any liens, leases, encumbrances,
judgments or other claims. The Collateral Agent's security interest
in the Collateral constitutes and will continue to constitute a first, prior and
indefeasible security interest in favor of Collateral Agent, subject only to any
security interest described on Schedule
6.1. Debtor will do all acts and things, and will execute and
file all instruments (including, but not limited to, security agreements,
financing statements, continuation statements, etc.) reasonably requested by
Collateral Agent to establish, maintain and continue the perfected security
interest of Collateral Agent in the perfected Collateral, and will promptly on
demand, pay all costs and expenses of filing and recording, including the costs
of any searches reasonably deemed necessary by Collateral Agent from time to
time to establish and determine the validity and the continuing priority of the
security interest of Collateral Agent, and also pay all other claims and charges
that, in the opinion of Collateral Agent, exercised in good faith, are
reasonably likely to materially prejudice, imperil or otherwise affect the
Collateral or Collateral Agent’s or Lenders’ security interests
therein.
6.2 Except
(a) as provided in the second succeeding sentence and (b) in connection with
sales of Collateral, in the ordinary course of business, for fair value and in
cash, and except for Collateral which is substituted by assets of identical or
greater value (with the consent of the Collateral Agent) or which is
inconsequential in value, Debtor will not sell, transfer, assign or pledge items
of Collateral (or allow any such items to be sold, transferred, assigned or
pledged), without the prior written consent of Collateral Agent. Although
Proceeds of Collateral are covered by this Agreement, this shall not be
construed to mean that Collateral Agent expressly consents to any sale of the
Collateral, except as provided herein or as exempted from the requirement that
such consent be obtained. Notwithstanding the foregoing, transfers or other
dispositions of Collateral as follows shall be free of the security interest of
Lenders and Collateral Agent and Lenders and Collateral Agent shall promptly
execute such documents (including without limitation releases and termination
statements) as may be required by Debtor to evidence or effectuate the
same: (i) any sale, transfer or other disposition of Collateral in
the ordinary course of business; provided, that any Proceeds of such sale,
transfer, or other disposition shall remain subject to the security interests
herein described; (ii) dispositions of Collateral or interests therein directly
or indirectly through licensing out or entry into co-development, marketing or
other commercialization arrangements with regard to Collateral; or (iii) a
transfer of the Collateral to a United States formed and located
subsidiary on prior notice to Collateral Agent; provided, that the
Collateral remains subject to the security interests herein described. In this
connection, the Collateral Agent and the Lenders acknowledge and agree that it
is in the ordinary course of the Debtor’s business to develop and
commercialize the Collateral and products and services utilizing the same
through licensing out, co-development, marketing or other commercialization
arrangements with regard to the Collateral.
6.3 Debtor
will, at all reasonable times during regular business hours and upon reasonable
notice, allow Collateral Agent or its representatives reasonable access to the
Collateral and Debtor's records which relate to the Collateral, for such
inspection and examination as Collateral Agent reasonably deems
necessary.
6.4 Debtor,
at its sole cost and expense, will protect and defend this Agreement, all of the
rights of Collateral Agent and Lenders hereunder, and the Collateral against the
claims and demands of all other persons.
6.5 Debtor
will promptly notify Collateral Agent of any levy, distraint or other seizure by
legal process or otherwise of any part of the Collateral, and of any threatened
or filed claims or proceedings that are reasonably likely to affect or impair
any of the rights of Collateral Agent under this Agreement in any material
respect.
6.6 Debtor,
at its own expense, will obtain and maintain in force insurance policies
covering losses or damage to those items of Collateral, if any, which constitute
physical personal property, which insurance shall be of the types customarily
insured against by companies in the same or similar business, similarly
situated, in such amounts (with such deductible amounts) as is customary for
such companies under the same or similar circumstances, similarly
situated. Debtor shall make the Collateral Agent a loss payee thereon
to the extent of its interest in the Collateral. Collateral Agent is hereby
irrevocably (until the Obligations are paid in full) appointed Debtor’s
attorney-in-fact to endorse any check or draft that may be payable to such
Debtor so that Collateral Agent may collect the proceeds payable for any loss
under such insurance. The proceeds of such insurance, less any costs
and expenses incurred or paid by Collateral Agent in the collection thereof,
shall be applied either toward the cost of the repair or replacement of the
items damaged or destroyed, or on account of any sums secured hereby, whether or
not then due or payable.
6.7 Collateral
Agent may, at its option, and without any obligation to do so, pay, perform and
discharge any and all amounts, costs, expenses and liabilities herein agreed to
be paid or performed by Debtor upon Debtor’s failure to do so. All amounts
expended by Collateral Agent in so doing shall become part of the Obligations
secured hereby, and shall be immediately due and payable by Debtor to Collateral
Agent upon demand and shall bear interest at the lesser of 15% per annum or the
highest legal amount from the dates of such expenditures until
paid.
6.8 Upon
the request of Collateral Agent, Debtor will furnish to Collateral Agent within
five (5) business days thereafter, or to any proposed assignee of this
Agreement, a written statement in form reasonably satisfactory to Collateral
Agent, duly acknowledged, certifying the amount of the principal and interest
and any other sum then owing under the Obligations, whether to its knowledge any
claims, offsets or defenses exist against the Obligations or against this
Agreement, or any of the terms and provisions of any other agreement of Debtor
securing the Obligations. In connection with any assignment by
Collateral Agent of this Agreement, Debtor hereby agrees to cause the insurance
policies required hereby to be carried by such Debtor, if any, to be endorsed in
form satisfactory to Collateral Agent or to such assignee, with loss payable
clauses in favor of such assignee, and to cause such endorsements to be
delivered to Collateral Agent within ten (10) calendar days after request
therefor by Collateral Agent.
6.9 Debtor
will, at its own expense, make, execute, endorse, acknowledge, file and/or
deliver to the Collateral Agent from time to time such vouchers, invoices,
schedules, confirmatory assignments, conveyances, financing statements, transfer
endorsements, powers of attorney, certificates, reports and other reasonable
assurances or instruments and take further steps relating to the Collateral and
other property or rights covered by the security interest hereby granted, as the
Collateral Agent may reasonably require to perfect its security interest
hereunder.
6.10 Debtor
represents and warrants that Debtor is the true and lawful exclusive owner of
the Collateral, free and clear of any liens and encumbrances.
6.11 Debtor
(a) will cause each of the Subsidiaries to promptly pay any and all taxes,
assessments and governmental charges upon the Intellectual Property owned or
licensed by its Subsidiaries (the “Subsidiary IP”) prior to the date penalties
are attached thereto, except to the extent that such taxes, assessments and
charges are being contested in good faith by Debtor or a Subsidiary; (b) will
immediately notify the Collateral Agent of any event causing a substantial loss
or diminution in the value of all or any material part of the Subsidiary IP and
the amount or an estimate of the amount of such loss or diminution; (c) will not
permit any of Subsidiaries to sell or offer to sell or otherwise assign,
transfer or dispose of, such Subsidiary IP or any interest therein, without the
prior written consent of the Collateral Agent, except in the ordinary course of
business; (d) will cause each of the Subsidiaries to keep the Subsidiary IP free
from any adverse lien, security interest or encumbrance; and (e) will not permit
any Subsidiary to use the Subsidiary IP in material violation of any
statute or ordinance the violation of which would have a Material Adverse
Effect. For purposes of this Agreement, a “Material Adverse Effect”
shall mean a material adverse effect on the financial condition, results of
operations, properties or business of the Company and its Subsidiaries taken as
a whole. For purposes of this Agreement, “Subsidiary” means, with
respect to any entity at any date, any corporation, limited or general
partnership, limited liability company, trust, estate, association, joint
venture or other business entity of which more than 50% of (i) the outstanding
capital stock having (in the absence of contingencies) ordinary voting power to
elect a majority of the board of directors or other managing body of such
entity, (ii) in the case of a partnership or limited liability company, the
interest in the capital or profits of such partnership or limited liability
company or (iii) in the case of a trust, estate, association, joint venture or
other entity, the beneficial interest in such trust, estate, association or
other entity business is, at the time of determination, owned or controlled
directly or indirectly through one or more intermediaries, by such
entity.
7. Power of
Attorney.
At any
time an Event of Default has occurred and is continuing, Debtor hereby
irrevocably constitutes and appoints the Collateral Agent as the true and lawful
attorney of such Debtor, with full power of substitution, in the place and stead
of such Debtor and in the name of such Debtor or otherwise, at any time or
times, in the discretion of the Collateral Agent, to take any action and to
execute any instrument or document which the Collateral Agent may deem necessary
or advisable to accomplish the purposes of this Agreement. This power
of attorney is coupled with an interest and is irrevocable until the Obligations
are satisfied.
8. Performance By The
Collateral Agent.
If Debtor
fails to perform any material covenant, agreement, duty or obligation of such
Debtor under this Agreement, the Collateral Agent may, after any applicable cure
period, at any time or times in its discretion, take action to effect
performance of such obligation. All reasonable expenses of the
Collateral Agent incurred in connection with the foregoing authorization shall
be payable by Debtor as provided in Paragraph 12.1 hereof. No
discretionary right, remedy or power granted to the Collateral Agent under any
part of this Agreement shall be deemed to impose any obligation whatsoever on
the Collateral Agent with respect thereto, such rights, remedies and powers
being solely for the protection of the Collateral Agent.
9. Event of
Default.
An event
of default ("Event of Default") shall be deemed to have occurred hereunder upon
the occurrence of any event of default as defined and described in this
Agreement, in the Note, the Subscription Agreement, and any other agreement to
which Debtor and a Lender are parties relating to the offering of the
Note. Upon and after any Event of Default, after the applicable
cure period, if any, any or all of the Obligations shall become immediately due
and payable at the option of the Collateral Agent, for the benefit of the
Lenders, and the Collateral Agent may dispose of Collateral as provided
below. A default by Debtor of any of its material obligations
pursuant to this Agreement and any of the Transaction Documents (as defined in
the Subscription Agreement) shall be an Event of Default hereunder and an “Event
of Default” as defined in the Note and the Subscription Agreement.
10. Disposition of
Collateral.
Upon and
after any Event of Default which is then continuing,
10.1 The
Collateral Agent may exercise its rights with respect to each and every
component of the Collateral, without regard to the existence of any other
security or source of payment for the Obligations. In addition to
other rights and remedies provided for herein or otherwise available to it, the
Collateral Agent shall have all of the rights and remedies of a lender on
default under the Uniform Commercial Code then in effect in the State of New
York.
10.2 If
any notice to the Debtor of the sale or other disposition of Collateral is
required by then applicable law, seven business (7) days prior written notice
(which Debtor agrees is reasonable notice within the meaning of Section 9.612(a)
of the Uniform Commercial Code) shall be given to the Debtor of the time and
place of any sale of Collateral which Debtor hereby agrees may be by private
sale. The rights granted in this Section are in addition to any and
all rights available to Collateral Agent under the Uniform Commercial
Code.
10.3 The
Collateral Agent is authorized, at any such sale, if the Collateral Agent
reasonably deems it advisable to do so in order to comply with any applicable
securities laws, to restrict the prospective bidders or purchasers to persons
who will represent and agree, among other things, that they are purchasing the
Collateral for their own account for investment, and not with a view to the
distribution or resale thereof, or otherwise to restrict such sale in such other
manner as the Collateral Agent deems advisable to ensure such
compliance. Sales made subject to such restrictions shall be deemed
to have been made in a commercially reasonable manner.
10.4 All
proceeds received by the Collateral Agent for the benefit of the Lenders in
respect of any sale, collection or other enforcement or disposition of
Collateral, shall be applied (after deduction of any amounts payable to the
Collateral Agent pursuant to Paragraph 12.1 hereof) against the Obligations pro
rata among the Lenders in proportion to their interests in the
Obligations. Upon payment in full of all Obligations, the
Debtor shall be entitled to the return of all Collateral, including cash, which
has not been used or applied toward the payment of Obligations or used or
applied to any and all costs or expenses of the Collateral Agent incurred in
connection with the liquidation of the Collateral (unless another person is
legally entitled thereto). Any assignment of Collateral by the
Collateral Agent to the Debtor shall be without representation or warranty of
any nature whatsoever and wholly without recourse. To the extent
allowed by law, each Lender may purchase the Collateral and pay for such
purchase by offsetting up to such Lender’s pro rata portion of the purchase
price with sums owed to such Lender by Debtor arising under the Obligations or
any other source.
11. Entire
Agreement. This Agreement contains the entire agreement of the
parties and supersedes all other agreements and understandings, oral or written,
with respect to the matters contained herein.
12. Miscellaneous.
12.1 Expenses. Debtor
shall pay to the Collateral Agent, on demand, the amount of any and all
reasonable expenses, including, without limitation, reasonable attorneys' fees,
reasonable legal expenses and reasonable brokers' fees, which the Collateral
Agent may incur in connection with (a) sale, collection or other enforcement or
disposition of Collateral; (b) exercise or enforcement of any the rights,
remedies or powers of the Collateral Agent hereunder or with respect to any or
all of the Obligations upon breach or threatened breach; or (c) failure by
Debtor to perform and observe any agreements of Debtor contained herein which
are performed by the Collateral Agent.
12.2 Waivers, Amendment and
Remedies. No course of dealing by the Collateral Agent and no
failure by the Collateral Agent to exercise, or delay by the Collateral Agent in
exercising, any right, remedy or power hereunder shall operate as a waiver
thereof, and no single or partial exercise thereof shall preclude any other or
further exercise thereof or the exercise of any other right, remedy or power of
the Collateral Agent. No amendment, modification or waiver of any
provision of this Agreement and no consent to any departure by Debtor therefrom,
shall, in any event, be effective unless contained in a writing signed by the
Collateral Agent, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given. The
rights, remedies and powers of the Collateral Agent, not only hereunder, but
also under any instruments and agreements evidencing or securing the Obligations
and under applicable law are cumulative, and may be exercised by the Collateral
Agent from time to time in such order as the Collateral Agent may
elect.
12.3 Notices. All
notices, demands, requests, consents, approvals, and other communications
required or permitted hereunder shall be in writing and, unless otherwise
specified herein, shall be (i) personally served, (ii) deposited in the mail,
registered or certified, return receipt requested, postage prepaid, (iii)
delivered by reputable air courier service with charges prepaid, or (iv)
transmitted by hand delivery, telegram, or facsimile, addressed as set
forth below or to such other address as such party shall have specified most
recently by written notice. Any notice or other communication
required or permitted to be given hereunder shall be deemed effective (a) upon
hand delivery or delivery by facsimile, with accurate confirmation generated by
the transmitting facsimile machine, at the address or number designated below
(if delivered on a business day during normal business hours where such notice
is to be received), or the first business day following such delivery (if
delivered other than on a business day during normal business hours where such
notice is to be received) or (b) on the second business day following the date
of mailing by express courier service, fully prepaid, addressed to such
address, or upon actual receipt of any mailing as set forth in the preceding
sentence, whichever shall first occur. The addresses for such
communications to any party hereto shall be the same at its address set forth
below or to such other address as either party shall hereafter give to the other
by notice duly made under this Section:
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To
Debtor:
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000
Xxxxx Xxxx., Xxxxx 000
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Xxxxxxxxxx,
XX 00000
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Attn:
Xxxxxx Xxxx, CFO
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Fax:
000-000-0000
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To
Lenders:
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To
the addresses and telecopier numbers set forth
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on
Schedule A
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To
the Collateral Agent:
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Axiom
Capital Management, Inc.
000
Xxxxx Xxxxxx, 00xx
xxxxx
Xxx
Xxxx, XX 00000
Attention:
Xxxx Xxxxxxx, President
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With
copies to:
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Reitler
Xxxxx & Xxxxxxxxxx LLC
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000
Xxxxx Xxxxxx, 00xx
Xxxxx
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Xxx
Xxxx, XX 00000
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Fax:
(000) 000-0000
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Attention: Xxxxxx
Xxxxxx Xxxxx
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12.4 Term; Binding
Effect. This Agreement shall (a) remain in full force and
effect until payment and satisfaction in full of all of the Obligations; (b) be
binding upon Debtor, and its successors and permitted assigns; and (c) inure to
the benefit of the Collateral Agent, for the benefit of the Lenders and their
respective successors and assigns.
12.5 Captions. The
captions of Paragraphs, Articles and Sections in this Agreement have been
included for convenience of reference only, and shall not define or limit the
provisions hereof and have no legal or other significance
whatsoever.
12.6 Governing Law; Venue;
Severability. This Agreement 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. Any action brought by either party
against the other concerning the transactions contemplated by this Agreement
shall be brought only in the state courts of New York in the County of New York
or in the federal courts located in the State and County of New
York. Subject to the foregoing, the parties to this Agreement hereby
irrevocably waive any objection to jurisdiction and venue of any action
instituted hereunder and shall not assert any defense based on lack of
jurisdiction or venue or based upon forum non
conveniens. Company and Lenders waive trial by jury. The
prevailing party shall be entitled to recover from the other party its
reasonable attorney's fees and costs. In the event that any provision
of this Agreement or any other agreement delivered in connection herewith is
invalid or unenforceable under any applicable statute or rule of law, then such
provision shall be deemed inoperative to the extent that it may conflict
therewith and shall be deemed modified to conform with such statute or rule of
law. Any such provision which may prove invalid or unenforceable
under any law shall not affect the validity or enforceability of any other
provision of any agreement.
12.7 Counterparts/Execution. This
Agreement may be executed in any number of counterparts and by the different
signatories hereto on separate counterparts, each of which, when so executed,
shall be deemed an original, but all such counterparts shall constitute but one
and the same instrument. This Agreement may be executed by facsimile
signature and delivered by facsimile transmission.
13. Intercreditor
Terms. As
between the Lenders, any distribution under paragraph 10.4 shall be made
proportionately based upon the remaining principal amount (plus accrued and
unpaid interest) to each as to the total amount then owed to the Lenders as a
whole. The rights of each Lender hereunder are pari passu to the
rights of the other Lenders hereunder. Any recovery hereunder shall
be shared ratably among the Lenders according to the then remaining principal
amount owed to each (plus accrued and unpaid interest) as to the total amount
then owed to the Lenders as a whole.
14. Termination;
Release. When the Obligations have been indefeasibly paid and
performed in full, this Agreement shall terminate, and the Collateral Agent, at
the request and sole expense of Debtor, will execute and deliver to the Debtor
the proper instruments (including without limitation UCC termination statements)
acknowledging the termination of the Agreement and any security interest, lien
or assignment created hereby, and duly assign, transfer and deliver to the
Debtor, without recourse, representation or warranty of any kind whatsoever,
such of the Collateral, including, without limitation, the Note, Warrants and
any Additional Collateral, as may be in the possession of the Collateral
Agent.
15. Collateral
Agent.
15.1 Collateral Agent
Powers. The powers conferred on the Collateral Agent hereunder
are solely to protect its interest (on behalf of the Lenders) in the Collateral
and shall not impose any duty on it to exercise any such powers.
15.2 Reasonable
Care. The Collateral Agent is required to exercise reasonable
care in the custody and preservation of any Collateral in its possession;
provided, however, that the Collateral Agent shall be deemed to have exercised
reasonable care in the custody and preservation of any of the Collateral if it
takes such action for that purposes as any owner thereof reasonably requests in
writing at times other than upon the occurrence and during the continuance of
any Event of Default, but failure of the Collateral Agent, to comply with any
such request at any time shall not in itself be deemed a failure to exercise
reasonable care.
[THIS
SPACE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the
undersigned have executed and delivered this Pledge and Security Agreement, as
of the date first written above.
|
"DEBTOR"
|
"COLLATERAL
AGENT"
|
|
|
AXIOM
CAPITAL MANAGEMENT, INC.,
|
||
|
a
Delaware corporation
|
a
Delaware corporation
|
|
|
By:
|
By:
|
|
|
Name:
Xxxxxx Xxxx
|
Name: Xxxx
Xxxxxxx
|
|
|
Title:
Chief Financial Officer
|
Title: President
|
This
Pledge and Security Agreement may be signed by facsimile signature
and
delivered
by confirmed facsimile transmission.
SCHEDULE A TO SECURITY
AGREEMENT
|
LENDER
|
PRINCIPAL
AMOUNT OF NOTE TO BE ISSUED
|
SCHEDULE B TO SECURITY
AGREEMENT
PATENTS, PATENTS PENDING,
APPLICATIONS
|
1.
|
None
|
ANNEX
I
TO
SECURITY
AGREEMENT
PLEDGE
AMENDMENT
This
Pledge Amendment, dated April __ 2009, is delivered pursuant to Section 4.3 of
the Security Agreement referred to below. The undersigned hereby
agrees that this Pledge Amendment may be attached to the Security Agreement,
dated April __, 2009, as it may heretofore have been or hereafter may be
amended, restated, supplemented or otherwise modified from time to time and that
the shares or other Collateral listed on this Pledge Amendment shall be hereby
pledged and assigned to Collateral Agent and become part of the Collateral
referred to in such Security Agreement and shall secure all of the Obligations
referred to in such Security Agreement.
|
Name of Issuer
|
Number
of Shares
|
Class
|
Certificate
Number(s)
|
|
Owlstone
Nanotech, Inc.
|
93,522
|
Common
Stock
|
ZQ00000005
|
|
Owlstone
Nanotech, Inc.
|
138,353
|
Common
Stock
|
ZQ00000004
|
|
Owlstone
Nanotech, Inc.
|
1,315,800
|
Common
Stock
|
ZQ00000003
|
|
Owlstone
Nanotech, Inc.
|
1,221,814
|
Common
Stock
|
ZQ00000002
|
|
Owlstone
Nanotech, Inc.
|
1,221,814
|
Common
Stock
|
ZQ00000001
|
|
Other Additional
Collateral
|
By: _________________________________________
Name:_________________________________________
Title:
__________________________________________
Security
Agreement: Schedule 3.1
As
security for the Obligations of Debtor, the Debtor hereby grants the Collateral
Agent, for the benefit of the Lenders, a security interest in the Collateral,
which security interest shall be a first priority security
interest.
Security
Agreement – Schedule 3.2 Pledged Securities
As of
April 9, 2009, Advance Nanotech, Inc. possessed controlling interests in one
company, as outlined below. Owlstone Nanotech, Inc. is incorporated
in the State of Delaware. The pledged securities are:
Subsidiary
Structure (ownership % is based on the direct level above)
|
o
|
Owlstone
Nanotech
Inc. (84.03%
owned)1
|
1
Certificates to be delivered to Axiom Capital Management, Inc. on Closing
(copies of certificates attached).
SECURITY
AGREEMENT - SCHEDULE 6.1
None
