AMENDED AND RESTATED PLEDGE AND ESCROW AGREEMENT
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THIS AMENDED AND RESTATED PLEDGE AND ESCROW AGREEMENT (the "Agreement") is
made and entered into as of January 31, 2006 (the "Effective Date") by and among
CONNECTED MEDIA TECHNOLOGIES, INC., a corporation organized and existing under
the laws of the State of Delaware (the "Pledgor"), XXXXXXXXXX EQUITY PARTNERS,
LTD., (the "Pledgee"), and XXXXX XXXXXXXX, ESQ., as escrow agent ("Escrow
Agent").
RECITALS:
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WHEREAS, in order to secure the full and prompt payment when due (whether
at the stated maturity, by acceleration or otherwise) of all of the Company's
obligations (the "Obligations") to the Pledgee or any successor to the Pledgee
under this Agreement, the Securities Purchase Agreement of even date herewith
between the Pledgor and the Pledgee (the "Securities Purchase Agreement"), the
Convertible Debentures (the "Convertible Debentures") issued or to be issued by
the Company to the Pledgee, either now or in the future, up to a total of One
Million Six Hundred Thousand Dollars ($1,600,000) of principal, plus any
interest, costs, fees, and other amounts owed to the Pledgee thereunder, the
Security Agreement of even date herewith between the Pledgor and the Pledgee
(the "Security Agreement"), and all other contracts entered into between the
parties hereto (collectively, the "Transaction Documents"), the Pledgor has
agreed to irrevocably pledge to the Pledgee 60,000,000 shares (the "Pledged
Shares") of the Pledgor's common stock, which have previously been delivered to
the Pledgee.
WHEREAS, this Agreement shall amend and restate the Pledge and Escrow
Agreement dated April 14, 2005.
NOW, THEREFORE, in consideration of the mutual covenants, agreements,
warranties, and representations herein contained, and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
TERMS AND CONDITIONS
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1. Pledge and Transfer of Pledged Shares.
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1.1. The Pledgor hereby grants to Pledgee a security interest in all
Pledged Shares as security for Pledgor's obligations under the Convertible
Debentures. Simultaneously with the execution of the Transaction Documents,
the Pledgor shall deliver to the Escrow Agent stock certificates
representing the Pledged Shares, together with duly executed stock powers
or other appropriate transfer documents executed in blank by the Pledgor
(the "Transfer Documents"), and such stock certificates and Transfer
Documents shall be held by the Escrow Agent until the full payment of all
amounts due to the Pledgee under the Convertible Debentures and through
repayment in accordance with the terms of the Convertible Debentures, or
the termination or expiration of this Agreement.
2. Rights Relating to Pledged Shares. Upon the occurrence of an Event of
Default (as defined herein), the Pledgee shall be entitled to vote the Pledged
Shares, to receive dividends and other distributions thereon, and to enjoy all
other rights and privileges incident to the ownership of the Pledged Shares.
3. Release of Pledged Shares from Pledge. Upon the payment of all amounts
due to the Pledgee under the Convertible Debentures by repayment in accordance
with the terms of the Note, the parties hereto shall notify the Escrow Agent to
such effect in writing. Upon receipt of such written notice for payment of the
amounts due to the Pledgee under the Convertible Debentures, the Escrow Agent
shall return to the Pledgor the Transfer Documents and the certificates
representing the Pledged Shares, (collectively the "Pledged Materials"),
whereupon any and all rights of Pledgee in the Pledged Materials shall be
terminated. Notwithstanding anything to the contrary contained herein, upon full
payment of all amounts due to the Pledgee under the Convertible Debentures, by
repayment in accordance with the terms of the Note, this Agreement and Pledgee's
security interest and rights in and to the Pledged Shares shall terminate.
4. Event of Default. An "Event of Default" shall be deemed to have occurred
under this Agreement upon an Event of Default under the Transaction Documents.
5. Remedies. Upon and anytime after the occurrence of an Event of Default,
the Pledgee shall have the right to provide written notice of such Event of
Default (the "Default Notice") to the Escrow Agent, with a copy to the Pledgor.
As soon as practicable after receipt of the Default Notice, the Escrow Agent
shall deliver to Pledgee the Pledged Materials held by the Escrow Agent
hereunder. Upon receipt of the Pledged Materials, the Pledgee shall have the
right to (i) sell the Pledged Shares and to apply the proceeds of such sales,
net of any selling commissions, to the Obligations owed to the Pledgee by the
Pledgor under the Transaction Documents, including, without limitation,
outstanding principal, interest, legal fees, and any other amounts owed to the
Pledgee, and exercise all other rights and (ii) any and all remedies of a
secured party with respect to such property as may be available under the
Uniform Commercial Code as in effect in the State of New Jersey. To the extent
that the net proceeds received by the Pledgee are insufficient to satisfy the
Obligations in full, the Pledgee shall be entitled to a deficiency judgment
against the Pledgor for such amount. The Pledgee shall have the absolute right
to sell or dispose of the Pledged Shares in any manner it sees fit and shall
have no liability to the Pledgor or any other party for selling or disposing of
such Pledged Shares even if other methods of sales or dispositions would or
allegedly would result in greater proceeds than the method actually used. The
Escrow Agent shall have the absolute right to disburse the Pledged Shares to the
Pledgee in batches not to exceed 9.9% of the outstanding capital of the Pledgor
(which limit may be waived by the Pledgee providing not less than 65 days' prior
written notice to the Escrow Agent). The Pledgee shall return any Pledged Shares
released to it and remaining after the Pledgee has applied the net proceeds to
all amounts owed to the Pledgee.
5.1. Each right, power and remedy of the Pledgee provided for in this
Agreement or any other Transaction Document shall be cumulative and
concurrent and shall be in addition to every other such right, power or
remedy. The exercise or beginning of the exercise by the Pledgee of any one
or more of the rights, powers or remedies provided for in this Agreement or
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any other Transaction Document or now or hereafter existing at law or in
equity or by statute or otherwise shall not preclude the simultaneous or
later exercise by the Pledgee of all such other rights, powers or remedies,
and no failure or delay on the part of the Pledgee to exercise any such
right, power or remedy shall operate as a waiver thereof. No notice to or
demand on the Pledgor in any case shall entitle it to any other or further
notice or demand in similar or other circumstances or constitute a waiver
of any of the rights of the Pledgee to any other further action in any
circumstances without demand or notice. The Pledgee shall have the full
power to enforce or to assign or contract is rights under this Agreement to
a third party.
5.2. Demand Registration Rights. In addition to all other remedies
available to the Pledgee, upon an Event of Default, the Pledgor shall
promptly, but in no event more than thirty (30) days after the date of the
Default Notice, file a registration statement to register with the
Securities and Exchange Commission the Pledged Shares for the resale by the
Pledgee. The Pledgor shall cause the registration statement to remain in
effect until all of the Pledged Shares have been sold by the Pledgee.
6. Concerning the Escrow Agent.
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6.1. The Escrow Agent undertakes to perform only such duties as are
expressly set forth herein and no implied duties or obligations shall be
read into this Agreement against the Escrow Agent.
6.2. The Escrow Agent may act in reliance upon any writing or
instrument or signature which it, in good faith, believes to be genuine,
may assume the validity and accuracy of any statement or assertion
contained in such a writing or instrument, and may assume that any person
purporting to give any writing, notice, advice or instructions in
connection with the provisions hereof has been duly authorized to do so.
The Escrow Agent shall not be liable in any manner for the sufficiency or
correctness as to form, manner, and execution, or validity of any
instrument deposited in this escrow, nor as to the identity, authority, or
right of any person executing the same; and its duties hereunder shall be
limited to the safekeeping of such certificates, monies, instruments, or
other document received by it as such escrow holder, and for the
disposition of the same in accordance with the written instruments accepted
by it in the escrow.
6.3. Pledgee and the Pledgor hereby agree, to defend and indemnify the
Escrow Agent and hold it harmless from any and all claims, liabilities,
losses, actions, suits, or proceedings at law or in equity, or any other
expenses, fees, or charges of any character or nature which it may incur or
with which it may be threatened by reason of its acting as Escrow Agent
under this Agreement; and in connection therewith, to indemnify the Escrow
Agent against any and all expenses, including attorneys' fees and costs of
defending any action, suit, or proceeding or resisting any claim (and any
costs incurred by the Escrow Agent pursuant to Sections 6.4 or 6.5 hereof).
The Escrow Agent shall be vested with a lien on all property deposited
hereunder, for indemnification of attorneys' fees and court costs regarding
any suit, proceeding or otherwise, or any other expenses, fees, or charges
of any character or nature, which may be incurred by the Escrow Agent by
reason of disputes arising between the makers of this escrow as to the
correct interpretation of this Agreement and instructions given to the
Escrow Agent hereunder, or otherwise, with the right of the Escrow Agent,
regardless of the instructions aforesaid, to hold said property until and
unless said additional expenses, fees, and charges shall be fully paid. Any
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fees and costs charged by the Escrow Agent for serving hereunder shall be
paid by the Pledgor.
6.4. If any of the parties shall be in disagreement about the
interpretation of this Agreement, or about the rights and obligations, or
the propriety of any action contemplated by the Escrow Agent hereunder, the
Escrow Agent may, at its sole discretion deposit the Pledged Materials with
the Clerk of the United States District Court of New Jersey, sitting in
Newark, New Jersey, and, upon notifying all parties concerned of such
action, all liability on the part of the Escrow Agent shall fully cease and
terminate. The Escrow Agent shall be indemnified by the Pledgor, the
Company and Pledgee for all costs, including reasonable attorneys' fees in
connection with the aforesaid proceeding, and shall be fully protected in
suspending all or a part of its activities under this Agreement until a
final decision or other settlement in the proceeding is received.
6.5. The Escrow Agent may consult with counsel of its own choice (and
the costs of such counsel shall be paid by the Pledgor and Pledgee) and
shall have full and complete authorization and protection for any action
taken or suffered by it hereunder in good faith and in accordance with the
opinion of such counsel. The Escrow Agent shall not be liable for any
mistakes of fact or error of judgment, or for any actions or omissions of
any kind, unless caused by its willful misconduct or gross negligence.
6.6. The Escrow Agent may resign upon ten (10) days' written notice to
the parties in this Agreement. If a successor Escrow Agent is not appointed
within this ten (10) day period, the Escrow Agent may petition a court of
competent jurisdiction to name a successor.
6.7 Conflict Waiver. The Pledgor hereby acknowledges that the Escrow
Agent is general counsel to the Pledgee, a partner in the general partner
of the Pledgee, and counsel to the Pledgee in connection with the
transactions contemplated and referred herein. The Pledgor agrees that in
the event of any dispute arising in connection with this Agreement or
otherwise in connection with any transaction or agreement contemplated and
referred herein, the Escrow Agent shall be permitted to continue to
represent the Pledgee and the Pledgor will not seek to disqualify such
counsel and waives any objection Pledgor might have with respect to the
Escrow Agent acting as the Escrow Agent pursuant to this Agreement.
6.8 Notices. Unless otherwise provided herein, all demands, notices,
consents, service of process, requests and other communications hereunder
shall be in writing and shall be delivered in person or by overnight
courier service, or mailed by certified mail, return receipt requested,
addressed:
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If to the Pledgor, to: Connected Media Technologies, Inc.
000 Xxxxx Xxxx Xxxxxx Xxxx, Xxxxx X000-0000
Xxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxxxxx Xxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy to: Xxxxxx & Jaclin, LLP
000 Xxxxx 0 Xxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to the Pledgee: Xxxxxxxxxx Equity Partners, Ltd.
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx Xxxx, XX 00000
Attention: Xxxx X. Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With copy to: Xxxxx Xxxxxxxx, Esq.
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx Xxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Any such notice shall be effective (a) when delivered, if delivered by hand
delivery or overnight courier service, or (b) five (5) days after deposit in the
United States mail, as applicable.
7. Binding Effect. All of the covenants and obligations contained herein
shall be binding upon and shall inure to the benefit of the respective parties,
their successors and assigns.
8. Governing Law; Venue; Service of Process. The validity, interpretation
and performance of this Agreement shall be determined in accordance with the
laws of the State of New Jersey applicable to contracts made and to be performed
wholly within that state except to the extent that Federal law applies. The
parties hereto agree that any disputes, claims, disagreements, lawsuits, actions
or controversies of any type or nature whatsoever that, directly or indirectly,
arise from or relate to this Agreement, including, without limitation, claims
relating to the inducement, construction, performance or termination of this
Agreement, shall be brought in the state superior courts located in Xxxxxx
County, New Jersey or Federal district courts located in Newark, New Jersey, and
the parties hereto agree not to challenge the selection of that venue in any
such proceeding for any reason, including, without limitation, on the grounds
that such venue is an inconvenient forum. The parties hereto specifically agree
that service of process may be made, and such service of process shall be
effective if made, pursuant to Section 8 hereto.
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9. Enforcement Costs. If any legal action or other proceeding is brought
for the enforcement of this Agreement, or because of an alleged dispute, breach,
default or misrepresentation in connection with any provisions of this
Agreement, the successful or prevailing party or parties shall be entitled to
recover reasonable attorneys' fees, court costs and all expenses even if not
taxable as court costs (including, without limitation, all such fees, costs and
expenses incident to appeals), incurred in that action or proceeding, in
addition to any other relief to which such party or parties may be entitled.
10. Remedies Cumulative. No remedy herein conferred upon any party is
intended to be exclusive of any other remedy, and each and every such remedy
shall be cumulative and shall be in addition to every other remedy given
hereunder or now or hereafter existing at law, in equity, by statute, or
otherwise. No single or partial exercise by any party of any right, power or
remedy hereunder shall preclude any other or further exercise thereof.
11. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute the same instrument.
12. No Penalties. No provision of this Agreement is to be interpreted as a
penalty upon any party to this Agreement.
13. JURY TRIAL. EACH OF THE PLEDGEE AND THE PLEDGOR HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVES THE RIGHT WHICH IT MAY HAVE TO A TRIAL BY
JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION BASED HEREON, OR ARISING
OUT OF, UNDER OR IN ANY WAY CONNECTED WITH THE DEALINGS BETWEEN PLEDGEE AND
PLEDGOR, THIS PLEDGE AND ESCROW AGREEMENT OR ANY DOCUMENT EXECUTED IN CONNECTION
HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL
OR WRITTEN) OR ACTIONS OF ANY PARTY HERETO OR THERETO IN EACH CASE WHETHER NOW
EXISTING OR HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR
OTHERWISE.
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IN WITNESS WHEREOF, the parties hereto have duly executed this Pledge and
Escrow Agreement as of the date first above written.
XXXXXXXXXX EQUITY PARTNERS, LTD.
By: Yorkville Advisors, LLC
Its: General Partner
By: /s/ Xxxx Xxxxxx
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Name: Xxxx Xxxxxx
Title: Portfolio Manager
CONNECTED MEDIA TECHNOLOGIES, INC.
By: /s/ Xxxxxxx X. Xxxx
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Name: Xxxxxxx X. Xxxx
Title: CEO
ESCROW AGENT
By: /s/ Xxxxx Xxxxxxxx
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Name: Xxxxx Xxxxxxxx, Esq.
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