EXHIBIT 10.3
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PLEDGE AGREEMENT
PLEDGE AGREEMENT (this "Agreement"), dated as of May 11, 2004, by and
between POLYSTICK U.S. CORPORATION, a New York corporation with its address c/o
GSV, Inc., 000 Xxxx Xxxx Xxxx, Xxxxxxxx, Xxxxxxxxxxx 00000 ("Pledgor"), and D.
EMERALD INVESTMENTS LTD., an Israeli corporation with its address at 00 Xxxxxxx
Xx-Xxxxxxx, Xxxxxxxxx, Xxxxxx ("Pledgee").
1. Guaranty. Pledgor has executed a Guaranty of even date herewith (the
"Guaranty") in favor of Pledgee, guaranteeing the timely payment and performance
of all of the liabilities, indebtedness, duties and obligations of GSV, Inc., a
Delaware corporation ("GSV"), under the Convertible Promissory Note of even date
herewith given by GSV in favor of Pledgee (the "Convertible Note").
2. Pledge. As collateral security for the timely fulfillment and
performance of each and every covenant and obligation of Pledgor under the
Guaranty as well as all of the liabilities, indebtedness, duties and obligations
of GSV under the Convertible Note (the "Guaranteed Obligations"), Pledgor hereby
pledges, mortgages, sets over and assigns to Pledgee, and grants to Pledgee a
security interest in, (a) 200,000 shares of Series B Convertible Preferred
Stock, par value $.001 per share ("Series B Preferred Stock"), of GSV (the
"Pledged Shares"), held by Pledgor on the date hereof, being 13.33 percent
(13.33%) of the issued and outstanding Series B Convertible Preferred Stock, par
value $.001 per share, of GSV and all certificates or instruments representing
or evidencing the Pledged Shares, (b) all substitutions for the Pledged Shares
and replacements of the Pledged Shares, and all rights related thereto,
including, without limitation, all warrants, options, appreciation rights and
other rights, contractual or otherwise, in respect thereof and any and all
dividends, cash dividends, cash, instruments, chattel paper and other rights,
property, products or proceeds from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of the Pledged
Shares, and (c) any and all proceeds of any of the foregoing (collectively, the
"Pledged Collateral").
3. Events of Default. An event of default under this Agreement shall be
deemed to exist upon the occurrence of any of the following event (each such
event being herein called an "Event of Default"): (i) an Event of Default under
the Convertible Note or the Guarantee; (ii) failure of Pledgor punctually and
fully to perform, observe, discharge or comply with any of the other covenants
set forth in this Agreement; or (iii) Pledgor makes an assignment for the
benefit of creditors, or if any action is brought by or against Pledgor seeking
its dissolution or liquidation of its assets or seeking the appointment of a
trustee, interim trustee, receiver, conservator or other custodian for any of
its property, or if Pledgor becomes the subject of a voluntary or involuntary
case under the U.S. Bankruptcy Code, or if any reorganization or arrangement
proceeding is instituted by or against Pledgor for the settlement, readjustment,
composition or extension of any of its debts upon any terms, or if any action or
petition is otherwise brought by Pledgor seeking similar relief or alleging that
it is insolvent or unable to pay its debts as they mature.
4. Delivery of Pledged Collateral. Upon occurrence of an Event of Default,
upon notice of such default by Pledgee to Pledgor, all certificates or
instruments representing or evidencing the Pledged Collateral shall be delivered
by Pledgor to Pledgee and shall be in suitable form for transfer by delivery, or
shall be accompanied by duly executed undated instruments of transfer or
assignment in blank, all in form and substance satisfactory to Pledgee. In
addition, in the event that during the term of this Agreement Pledgor shall have
become entitled to receive with
respect to the Pledged Collateral any certificate, option or rights (including,
without limitation, in connection with a dividend, distribution of capital,
reclassification, reorganization, merger or other exchange of units), or any
liquidating distributions, upon notice of any such default, Pledgor also agrees
to immediately deliver the same to Pledgee, together with any appropriate
endorsement or transfer instruments.
5. Additional Remedies on Default. Upon occurrence of an Event of Default,
upon receipt of the Pledged Collateral as provided in paragraph 4 above,
Pledgee, (i) without demand of performance or other demand or notice of any kind
may forthwith declare any or all of the Guaranteed Obligations to be immediately
due and payable and foreclose or otherwise enforce the Pledgee's security
interest in the Pledged Collateral in any manner permitted by law or provided
for in this Agreement, including, without limitation, to register the Pledged
Collateral in its own name or its nominee and, subject to compliance with
applicable state and U.S. Federal securities laws and rules, sell, assign, give
options to purchase, or otherwise dispose of and deliver the Pledged Collateral,
in whole or part, at public or private sale or sales, which sale or sales shall
be held in a commercially reasonable manner within the meaning of the Uniform
Commercial Code in effect under the laws of the State of New York, upon such
terms and conditions as Pledgee may deem advisable and at such prices at it may
deem best, with the right of Pledgee upon any such sale or sales to purchase the
whole or any part of the Pledged Collateral, free of any right or equity of
redemption in Pledgor, which right or equity is expressly waived or released,
(ii) may recover from Pledgor all costs and expenses, including, without
limitation, reasonable attorney's fees, incurred or paid by Pledgee in
exercising or enforcing any right, power, or remedy with respect to any or all
of the Collateral provided to it by this Agreement or by applicable law; and
(iii) shall be entitled to immediately exercise all voting rights and other
consensual rights pertaining to the Pledged Shares.
All monies and other proceeds received by Pledgee upon any collection, sale
or other disposition of any Collateral, together with all other monies and other
proceeds received by Pledgee hereunder, shall be applied in the following order:
(i) to the payment of the reasonable costs and expenses of such sale, collection
or other disposition which may have been incurred by Pledgee, including without
limitation attorney's fees as provided in clause (b) above and all other
reasonable expenses, liabilities and advances made or incurred by Pledgee in
connection therewith; (ii) to the payment of all other Guaranteed Obligations
then due in such order as Pledgee may elect; and (iii) after payment in full of
all Guaranteed Obligations then due, any surplus then remaining from such
proceeds shall be paid to Pledgor. Pledgor shall remain liable to Pledgee for
any deficiency owing on the Guaranteed Obligations after the application of the
proceeds of the Pledged Collateral as provided above.
The remedies provided herein in favor of Pledgee shall not be deemed
exclusive, but shall be cumulative, and shall be in addition to all other
remedies in favor of Pledgee existing at law or in equity.
6. Representations and Covenants of Pledgor. Until the fulfillment of the
Guaranteed Obligations, Pledgor represents, warrants and agrees as follows:
Pledgor has the legal right and all requisite corporate power and authority and
approvals required to execute and deliver this Agreement and to perform fully
its obligations hereunder. This Agreement and the other documents and agreements
being delivered in connection herewith to which Pledgor is a party have been
duly authorized by all necessary corporate action and have been duly executed
and delivered by Pledgor and (assuming the due authorization, execution and
delivery hereof by Pledgee) are valid and binding obligations of Pledgor, as the
case may be, enforceable against it in accordance with its terms. The execution,
delivery and performance by Pledgor of this Agreement in
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accordance with its terms (i) are not and will not be inconsistent with
Pledgor's Certificate of Incorporation (as amended) or Pledgor's By laws, (ii)
do not and will not require the approval or consent of any governmental body or
any other person; (iii) do not and will not conflict with or result in any
breach or violation of any of the terms and conditions of, or constitute (or
with notice or lapse of time or both would constitute) a default under any law
or order of any governmental body applicable to Pledgor, or any contract to
which Pledgor is a party or by or to which Pledgor or any of its properties is
bound or subject; or (iv) will not result in the creation of any lien on any of
the properties of Pledgor. Promptly after the execution of this Agreement and
the closing of the transactions contemplated by the Purchase Agreement (as
defined in the Guaranty), the Pledgor shall take or cause to be taken all
actions, and bear all costs, necessary to file any and all financing statements
and other similar documents as may be required under applicable law in order to
perfect or maintain the perfection of the Pledgee's security interest in the
Pledged Collateral. The Pledged Collateral owned by Pledgor shall at all times
be free and clear of all claims, mortgages, pledges, liens, encumbrances and
security interests of every nature whatsoever created by or arising through it,
except for the security interest granted to Pledgee hereunder.
7. Further Assurances. Pledgor hereby represents and warrants that it is
the owner and holder of the Pledged Collateral, free and clear of any claims,
mortgages, pledges, liens, encumbrances and security interests of every nature
whatsoever. The Pledged Shares are duly authorized, validly issued, fully paid
and non-assessable shares of Series B Preferred Stock of GSV. Pledgor will, from
time to time, at Pledgor's expense, and upon Pledgee's request, promptly execute
and deliver all further instruments and documents and take all further action
that may be necessary or desirable, or that Pledgee may reasonably request, in
order to perfect and protect any security interest granted or purported to be
granted hereby, to enable Pledgee to exercise and enforce the rights and
remedies of Pledgee hereunder with respect to any of the Pledged Collateral or
to carry out the provisions and purposes hereof. Pledgor shall permit Pledgee
(or any person designated by it) from time to time to inspect the Collateral and
to inspect, audit and make copies of or extracts from all books and records
maintained by or on behalf of Pledgor pertaining to the Pledged Collateral. So
long as any of the Guaranteed Obligations shall be outstanding, the Pledgor
shall not, without the express prior written consent of Pledgee, sell, assign,
exchange, pledge or otherwise transfer, encumber, or grant any option, warrant
or other right to purchase any Pledged Collateral which is pledged hereunder. In
case of any adverse claims in respect to the Pledged Collateral or any portions
thereof, arising out of any act done or suffered by Pledgor, the Pledgor
promises and agrees to hold harmless and to indemnify Pledgee from and against
any losses, liabilities, damages, expenses, costs, and reasonable attorneys'
fees incurred in or about defending, protecting, or prosecuting the security
interests hereby created.
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8. Voting Rights Prior to Default. Prior to the occurrence of an Event of
Default in the performance of the Guaranteed Obligations, Pledgor shall be
entitled to exercise all voting rights and other consensual rights pertaining to
the Pledged Shares.
9. Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors, assigns
and transferees. All obligations of the Pledgor hereunder shall be binding upon
its legal representatives, successors, and assigns. This Agreement and all
security interests and other liens granted or conveyed hereunder shall remain in
full force and effect and shall be irrevocable until such time as no Guaranteed
Obligations are outstanding. At such time, any certificates or instruments
representing the Pledged Collateral which are in Pledgee's possession shall be
delivered by Pledgee to Pledgor.
10. Amendments. This Agreement may not be modified, amended, altered or
supplemented, and no waiver or consent may be granted hereunder, except upon the
execution and delivery of a written agreement executed by the parties hereto.
11. Notices. All notices, consents, requests, demands and other
communications herein shall be in writing and shall be deemed duly given to any
party or parties (a) upon delivery to the address of the party or parties as
specified below if delivered in person or any courier or if sent by certified or
registered mail (return receipt requested); or (b) upon dispatch if transmitted
by confirmed telecopy or other means of confirmed facsimile transmissions, in
each case as addressed as follows:
If to the Pledgor:
Polystick U.S. Corporation
c/o GSV, Inc.
000 Xxxx Xxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attn.: Xx. Xxxx Xxxxx
Fax: (000) 000-0000
With a copy to:
Xxxxx & Xxxxxxx LLP
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx X. Xxxxxx, Esq.
Fax: (000) 000-0000
If to the Pledgee:
D. Emerald Investments Ltd.
00 Xxxxxxx Xx-Xxxxxxx
Xxxxxxxxx, Xxxxxx
Attn.: Xx. Xxx Xxxxx
Fax: (000)-0-0000000
With a copy to:
Kantor, Elhanani, Tal & Co.
Xxxxx Xxxxx
00-00 Xxxxxxxxxx Xxxx.
Xxx-Xxxx Xxxxxx 00000
Attention: Adv. Xxxx Xxxxx
Fax: (000)-0-0000000
The parties hereto may designate such other address or facsimile number by
written notice in the aforesaid manner.
12. Governing Law. This Agreement shall be governed by, and interpreted,
construed and enforced in accordance with, the internal laws of the State of New
York.
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13. Counterparts; Severability. This Agreement may be executed with
counterpart signature pages or in several counterparts, each of which shall be
an original, but all of which together shall constitute one and the same
agreement. In the event that any provision of this Agreement shall prove to be
invalid or unenforceable in any jurisdiction, such provision shall be deemed to
be severable from the other provisions of this Agreement, which shall remain
binding on all parties hereto in such jurisdiction and such provision shall, in
any other jurisdiction, remain binding on all parties hereto.
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Signature Page Follows
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the day and year first above written.
POLYSTICK U.S. CORPORATION
By:
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Name: Xxxx Xxxxx
Title: President
D. EMERALD INVESTMENTS LTD.
By:
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Name: Xxx Xxxxx
Title: Manager
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