PLEDGE AGREEMENT
EXECUTION
COPY
THIS
PLEDGE AGREEMENT,
made as
of this 20th day of November, 2008 (this “Agreement”),
is
between GOTO
COLLEGE HOLDINGS, INC.,
a
Delaware corporation (“Pledgor”),
and
VIKING
ASSET MANAGEMENT, LLC,
a
California limited liability company, in its capacity as collateral agent for
the Buyers identified below (in such capacity, together with its successors
and
assigns, the “Pledgee”).
WHEREAS:
A. MRU
Holdings, Inc., a Delaware corporation (the “Company”)
has
executed and delivered to each of the Buyers (as defined below) those certain
secured senior notes each made by the Company and dated as of October 19, 2007
in an original aggregate principal amount of $11,200,000 (such
notes, together with any promissory notes or other securities issued in exchange
or substitution therefor or replacement thereof, and as any of the same may
be
amended, supplemented, restated or modified and in effect from time to time,
the
“Notes”).
The
Notes were issued pursuant to a certain Securities Purchase Agreement dated
as
of October 19, 2007 (as the same may be amended, restated, supplemented or
otherwise modified, the “Purchase
Agreement”),
among
the Company and Longview
Marquis Master Fund, L.P., a British Virgin Islands limited partnership
(including as successor to The Longview Fund, L.P., a California limited
partnership, under the Purchase Agreement (as defined below), “Marquis”;
Marquis, together with its successors and assigns and each other holder of
a
Note (as defined below) and their respective successors and assigns,
individually and collectively, the “Buyers”),
and
pursuant to which the Buyers have made certain loans (“Loans”)
to the
Company.
B. The
Pledgor legally and beneficially owns one hundred percent (100%) of the issued
and outstanding shares of capital stock or other equity interests of each of
EMBARK CORP., a Delaware corporation (“Embark”),
and
EMBARK ONLINE, INC., a Delaware corporation (“Embark
Online”)
(each
of Embark, Embark Online and each other corporation or other entity, the capital
stock or other equity interests of which are owned or acquired by Pledgor and
described on an addendum hereto from time to time executed by Pledgor in form
and substance satisfactory to Pledgee, is referred to herein as a “Pledged
Entity”
and
collectively as the “Pledged
Entities”).
C. Pursuant
to a Security Agreement of even date herewith by and among Pledgor, the other
entities party thereto as “Debtors” and Pledgee (as the same may be amended,
restated, modified or supplement and in effect from time to time, the
“Security
Agreement”),
Pledgor has granted Pledgee, for its benefit and the benefit of the Buyers,
a
first priority security interest in, lien upon and pledge of its rights in
the
Collateral (as defined in the Security Agreement).
D. Pursuant
to a Guaranty dated as of October 19, 2007 by and among Pledgor, the other
entities party thereto as “Guarantors” in favor of Pledgee (as the same may be
amended, restated, supplemented or otherwise modified and in effect from time
to
time, the “Guaranty”),
Pledgor has guaranteed the Obligations (as defined therein) in favor of Pledgee
(on its behalf and on behalf of the Buyers).
E. Pledgor
is a direct subsidiary of the Company and, as such, will derive substantial
benefit and advantage from the continued financial accommodations to the Company
set forth in the Purchase Agreement and the Notes, and it will be to Pledgor’s
direct interest and economic benefit to assist the Company in continuing to
procure said financial accommodations from Buyers.
F. The
Company, Pledgor, Embark, Embark Online, IEMPOWER, INC., a Delaware corporation
(“iempower”),
MRU
ORIGINATIONS, INC., a Delaware corporation (“MRU
Originations”),
MRU
UNIVERSAL GUARANTY AGENCY, INC., a Delaware corporation (“MRU
Universal”;
together with Pledgor, Embark, Embark Online, iempower, MRU Originations, is
hereinafter sometimes referred to individually as a “Debtor”
and,
collectively, as the “Debtors”),
Buyers and Pledgee have entered into that certain Third Amendment of even date
herewith (as the same may be amended, restated, supplemented or otherwise
modified and in effect from time to time, the “Third
Amendment”),
pursuant to which the Company and the Buyers have agreed to amend certain
provisions of the Purchase Agreement.
G. To
induce
the Buyers to continue to make financial accommodations to the Company under
the
Purchase Agreement and to enter into the Third Amendment, and in order to secure
the payment and performance by Pledgor of the Liabilities, Pledgor has agreed
to
pledge to Pledgee all of the capital stock and other equity interests and
securities of Pledged Entities now or hereafter owned or acquired by
Pledgor.
NOW,
THEREFORE,
in
consideration of the premises and in order to induce the Buyers to purchase
the
Notes under the Purchase Agreement and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Pledgor hereby agrees with Pledgee as follows:
1. Defined
Terms.
Unless
otherwise defined herein, all capitalized terms used herein shall have the
meanings given them in the Purchase
Agreement. In addition, as used herein:
“Event
of Default”
shall
have the meaning set forth in the Notes.
“Governmental
Authority”
shall
mean the government of the United States of America or any other nation, or
any
political subdivision thereof, whether state or local, or any agency, authority,
instrumentality, regulatory body, court, central bank or other entity exercising
executive, legislative, judicial, taxing, regulatory or administration powers
or
functions of or pertaining to government over Pledgor or any of its
Subsidiaries, or any of their respective properties, assets or
undertakings.
“Liabilities”
shall
mean all obligations, liabilities and indebtedness of every nature of Pledgor
from time to time owed or owing under or in respect of this Agreement, the
Guaranty and any of the other Security Documents, as the case may be, including,
without limitation, the principal amount of all debts, claims and indebtedness,
accrued and unpaid interest and all fees, costs and expenses, whether primary,
secondary, direct, contingent, fixed or otherwise, heretofore, now and/or from
time to time hereafter owing, due or payable whether before or after the filing
of a bankruptcy, insolvency or similar proceeding under applicable federal,
state, foreign or other law and whether or not an allowed claim in any such
proceeding.
2
“Lien”
shall
have the meaning set forth in the Purchase Agreement.
2. Pledge.
Pledgor
hereby pledges, assigns, hypothecates, transfers, delivers and grants to
Pledgee, for the benefit of itself and the Buyers, a first Lien on and first
priority perfected security interest in (i) all of the capital stock or other
equity interests of Pledged Entities now owned or hereafter acquired by Pledgor
(collectively, the “Pledged
Shares”),
(ii)
all other property hereafter delivered to, or in the possession or in the
custody of, Pledgee, in substitution for or in addition to the Pledged Shares,
(iii) the properties of Pledgor which is described in Section
6
below,
whether now or hereafter delivered to, or in the possession or custody of
Pledgor, and (iv) all proceeds of the collateral described in the preceding
clauses
(i),
(ii)
and
(iii)
(the
collateral described in clauses
(i)
through
(iv)
of this
Section
2
being
collectively referred to as the “Pledged
Collateral”),
as
collateral security for the prompt and complete payment and performance when
due
(whether at the stated maturity, by acceleration or otherwise) of the
Liabili-ties. All of the Pledged Shares now owned by Pledgor, if any, which
are
presently represented by certificates are listed on Exhibit A
hereto,
which certificates, with undated assignments separate from certificates or
stock
powers duly executed in blank (which assignments separate from certificates
or
stock powers may be filled in and completed at any time upon the occurrence
of
any Event of Default) by Pledgor and irrevocable proxies, are being delivered
to
Pledgee simultaneously herewith. Upon the creation or acquisition of any new
Pledged Shares, Pledgor shall execute an addendum in the form of Exhibit
B
attached
hereto (a “Pledge
Addendum”).
Any
Pledged Collateral described in a Pledge Addendum executed by Pledgor shall
thereafter be deemed to be listed on Exhibit
A
hereto.
Pledgee shall maintain possession and custody of the certificates representing
the Pledged Shares and any additional Pledged Collateral.
3. [Reserved].
4. Representations
and Warranties of Pledgor. Pledgor
represents and warrants to Pledgee, and covenants with Pledgee,
that:
(a) Exhibit
A
sets
forth (i) the authorized capital stock or other equity interests of each Pledged
Entity, (ii) the number of shares of capital stock or other equity interests
of
each Pledged Entity that are issued and outstanding as of the date hereof,
and
(iii) the percentage of the issued and outstanding shares of capital stock
or
other equity interests of each Pledged Entity held by Pledgor. Pledgor has
the
power to transfer the Pledged Collateral and is the record and beneficial owner
of, and has good and marketable title to, the Pledged Shares, and such shares
are and will remain free and clear of all Liens except the Liens and security
interests in favor of Pledgee created by this Agreement;
(b) except
as
set forth on Exhibit
A,
there
are no outstanding options, warrants or other similar agreements with respect
to
the Pledged Shares or any of the other Pledged Collateral;
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(c) this
Agreement is the legal, valid and binding obligation of Pledgor, enforceable
against Pledgor in accordance with its terms;
(d) the
Pledged Shares have been duly and validly authorized and issued, are fully
paid
and non-assessable (as applicable), and the Pledged Shares listed on
Exhibit
A
constitute all of the issued and outstanding capital stock or other equity
interests of Pledged Entities;
(e) no
consent, approval or authorization of or designation or filing with any
governmental or regulatory authority on the part of Pledgor is required in
connection with the pledge and security interest granted under this
Agreement;
(f) the
execution, delivery and performance of this Agreement will not violate any
provision of any applicable law or regulation or of any order, judgment, writ,
award or decree of any court, arbitrator or Governmental Authority, domestic
or
foreign, or of the articles or certificate of incorporation, bylaws or
any other similar organizational documents of
Pledgor or any Pledged Entity or of any securities issued by Pledgor or any
Pledged Entity or of any mortgage, indenture, lease, contract, or other
agreement, instrument or undertaking to which Pledgor or any Pledged Entity
is a
party or which purports to be binding upon Pledgor or any Pledged Entity or
upon
any of the assets of Pledgor or any Pledged Entity, and will not result in
the
creation or imposition of any Lien in any of the assets of Pledgor or any
Pledged Entity, except as otherwise contemplated by this Agreement;
(g) the
pledge, assignment and delivery of the Pledged Shares and the other Pledged
Collateral pursuant to this Agreement creates a valid first Lien on and
perfected first priority security interest in such Pledged Shares and Pledged
Collateral and the proceeds thereof in favor of Pledgee, subject to no prior
Lien or to any agreement purporting to grant to any third party a security
interest in the property or assets of Pledgor which would include the Pledged
Shares or any other Pledged Collateral. Pledgor covenants and agrees that it
will defend, for the benefit of Pledgee, Pledgee’s right, title and security
interest in and to the Pledged Shares, the other Pledged Collateral and the
proceeds thereof against the claims and demands of all other persons or
entities; and
(h) Pledgor
(i) will not become a person whose property or interests in property are blocked
or subject to blocking pursuant to Section 1 of Executive Order 13224 of
September 23, 2001 Blocking Property and Prohibiting Transactions with Persons
Who Commit, Threaten to Commit or Support Terrorism (66 Fed. Reg. 49079(2001),
(ii) will not engage in any dealings or transactions prohibited by Section
2 of
such executive order, or (iii) will not otherwise become a person on the list
of
Specially Designated Nationals and Blocked Persons or subject to the limitations
or prohibitions under any other Office of Foreign Asset Control regulation
or
executive order.
5. [Reserved].
6. Dividends,
Distributions, Etc. If,
while
this Agreement is in effect, Pledgor shall become entitled to receive or shall
receive any certificate (including, without limitation, any certificate
representing a dividend or a distribution in connection with any
reclassification, increase or reduction of capital, or issued in connection
with
any reorganization, merger or consolidation), or any options or rights, whether
as an addition to, in substitution for, or in exchange for any of the Pledged
Shares or otherwise, Pledgor agrees, in each case, to accept the same as
Pledgee’s agent and to hold the same in trust for Pledgee, and to deliver the
same promptly (but in any event within three days) to Pledgee in the exact
form
received, with the endorsement of Pledgor when necessary and/or with appropriate
undated assignments separate from certificates or stock powers duly executed
in
blank (which assignments separate from certificates or stock powers may be
filled in and completed at any time upon the occurrence of any Event of
Default), to be held by Pledgee subject to the terms hereof, as additional
Pledged Collateral. Pledgor shall promptly deliver to Pledgee (i) a Pledge
Addendum with respect to such additional certificates, and (ii) any financing
statements or amendments to financing statements as requested by Pledgee.
Pledgor hereby authorizes Pledgee to attach each Pledge Addendum to this
Agreement. In case any distribution of capital shall be made on or in respect
of
the Pledged Shares or any property shall be distributed upon or with respect
to
the Pledged Shares pursuant to the recapitalization or reclassification of
the
capital of the issuer thereof or pursuant to the reorganization thereof, the
property so distributed shall be delivered to Pledgee to be held by it as
additional Pledged Collateral. All sums of money and property so paid or
distributed in respect of the Pledged Shares which are received by Pledgor
shall, until paid or delivered to Pledgee, be held by Pledgor in trust as
additional Pledged Collateral.
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7. Voting
Rights; Dividends; Certificates.
(a) So
long
as no Event of Default has occurred and is continuing, Pledgor shall be entitled
(subject to the other provisions hereof, including, without limitation,
Section
10
below)
to exercise its voting and other consensual rights with respect to the Pledged
Shares and otherwise exercise the incidents of ownership thereof in any manner
not inconsistent with this Agreement or the Purchase Agreement and the other
Transaction Documents. Pledgor hereby grants to Pledgee or its nominee, an
irrevocable proxy to exercise all voting and corporate rights relating to the
Pledged Shares in any instance, which proxy shall be effective, at the
discretion of Pledgee, upon the occurrence and during the continuance of an
Event of Default. Upon
the
request of Pledgee at any time, Pledgor agrees to deliver to Pledgee such
further evidence of such irrevocable proxy or such further irrevocable proxies
to vote the Pledged Shares as Pledgee may request.
(b) Subject
to any sale or other disposition by Pledgee of the Pledged Shares, any other
Pledged Collateral or other property pursuant to this Agreement, upon the
indefeasible full payment in cash, satisfaction and termination of all of the
Liabilities and the termination of this Agreement pursuant to Section
13
hereof
and of the Liens and security interests hereby granted, the Pledged Shares,
the
other Pledged Collateral and any other property then held as part of the Pledged
Collateral in accordance with the provisions of this Agreement shall be promptly
returned to Pledgor or to such other persons or entities as shall be legally
entitled thereto.
8. Rights
of Pledgee. Pledgee
shall maintain the custody, safekeeping and physical preservation of the Pledged
Shares in the same manner as Pledgee deals with similar property for its own
account. Pledgee
shall not be liable for failure to collect or realize upon the Liabilities
or
any collateral security or guaranty therefor, or any part thereof, or for any
delay in so doing, nor shall Pledgee be under any obligation to take any action
whatsoever with regard thereto. Any or all of the Pledged Shares held by Pledgee
hereunder may, if an Event of Default has occurred and is continuing, without
notice, be registered in the name of Pledgee or its nominee, and Pledgee or
its
nominee may thereafter without notice exercise all voting and corporate rights
at any meeting with respect to any Pledged Entity and exercise any and all
rights of conversion, exchange, subscription or any other rights, privileges
or
options pertaining to any of the Pledged Shares as if it were the absolute
owner
thereof, including, without limitation, the right to vote in favor of, and
to
exchange at its discretion any and all of the Pledged Shares upon, the merger,
consolidation, reorganization, recapitalization or other readjustment with
respect to any Pledged Entity or upon the exercise by any Pledged Entity,
Pledgor or Pledgee of any right, privilege or option pertaining to any of the
Pledged Shares, and in connection therewith, to deposit and deliver any and
all
of the Pledged Shares with any committee, depository, transfer agent, registrar
or other designated agency upon such terms and conditions as Pledgee may
reasonably determine, all without liability except to account for property
actually received by Pledgee, but Pledgee shall have no duty to exercise any
of
the aforesaid rights, privileges or options and shall not be responsible for
any
failure to do so or delay in so doing.
5
9. Remedies. Upon
the
occurrence and during the continuance of an Event of Default, Pledgee may
exercise in respect of the Pledged Collateral, in addition to other rights
and
remedies provided for herein or otherwise available to it, all the rights and
remedies of a secured party under the Uniform Commercial Code (“UCC”)
in
effect in the State of New York from time to time, whether or not the UCC
applies to the affected Pledged Collateral (or the Uniform Commercial Code
as in
effect in any other relevant jurisdiction). Pledgee also, without demand of
performance or other demand, advertisement or notice of any kind (except the
notice specified below of time and place of public or private sale) to or upon
Pledgor or any other person or entity (all and each of which demands,
advertisements and/or notices are hereby expressly waived), may forthwith
collect, receive, appropriate and realize upon the Pledged Collateral, or any
part thereof, and/or may forthwith date and otherwise fill in the blanks on
any
assignments separate from certificates or stock power or otherwise sell, assign,
give an option or options to purchase, contract to sell or otherwise dispose
of
and deliver said Pledged Collateral, or any part thereof, in one or more
portions at one or more public or private sales or dispositions, at any exchange
or broker’s board or at any of Pledgee’s offices or elsewhere upon such terms
and conditions as Pledgee may deem advisable and at such prices as it may deem
best, for any combination of cash and/or securities or other property or on
credit or for future delivery without assumption of any credit risk, with the
right to Pledgee upon any such sale, public or private, to purchase the whole
or
any part of said Pledged Collateral so sold, free of any right or equity of
redemption in Pledgor, which right or equity is hereby expressly waived or
released. Pledgee shall apply the net proceeds of any such collection, recovery,
receipt, appropriation, realization, sale or disposition, after deducting all
costs and expenses of every kind incurred therein or incidental to the
safekeeping of any and all of the Pledged Collateral or in any way relating
to
the rights of Pledgee hereunder, including attorneys’ fees and legal expenses,
to the payment, in whole or in part, of the Liabilities, in such order as
Pledgee may elect. Pledgor shall remain liable for any deficiency remaining
unpaid after such application. Only after so paying over such net proceeds
and
after the payment by Pledgee of any other amount required by any provision
of
law, including, without limitation, Section 9-608 of the UCC, need Pledgee
account for the surplus, if any, to Pledgor. Pledgor agrees that Pledgee will
give reasonable notice (such reasonable notice to be determined by Pledgee
in
its sole and absolute discretion) of the time and place of any public sale
or of
the time after which a private sale or other intended disposition is to take
place. No notification need be given to Pledgor if it has signed after default
a
statement renouncing or modifying any right to notification of sale or other
intended disposition. The rights, remedies and powers conferred by this
Section
9
are in
addition to, and not in substitution for, any other rights, remedies or powers
that Pledgee may have under any Transaction Document, at law, in equity or
by or
under the UCC or any other statute or agreement. Pledgee may proceed by way
of
any action, suit or other proceeding at law or in equity and no right, remedy
or
power of Pledgee will be exclusive of or dependent on any other. Pledgee may
exercise any of its rights, remedies or powers separately or in combination
and
at any time.
6
10. No
Disposition, Etc. Pledgor
agrees that it will not sell, assign, transfer, exchange, or otherwise dispose
of, or grant any option with respect to, the Pledged Shares or any other Pledged
Collateral, nor will Pledgor create, incur or permit to exist any Lien with
respect to any of the Pledged Shares or any other Pledged Collateral, or any
interest therein, or any proceeds thereof, except for the Lien and security
interest of Pledgee provided for by this Agreement and the Security
Agreement.
11. Sale
of Pledged Shares.
(a) Pledgor
recognizes that Pledgee may be unable to effect a public sale or disposition
(including, without limitation, any disposition in connection with a merger
of a
Pledged Entity) of any or all the Pledged Shares by reason of certain
prohibitions contained in the Securities Act of 1933, as amended (the
“1933
Act”),
and
applicable state securities laws, but may be compelled to resort to one or
more
private sales or dispositions thereof to a restricted group of purchasers who
will be obliged to agree, among other things, to acquire such securities for
their own account, for investment and not with a view to the distribution or
resale thereof. Pledgor acknowledges and agrees that any such private sale
or
disposition may result in prices and other terms (including the terms of any
securities or other property received in connection therewith) less favorable
to
the seller than if such sale or disposition were a public sale or disposition
and, notwithstanding such circumstances, agrees that any such private sale
or
disposition shall be deemed to be reasonable and affected in a commercially
reasonable manner. Pledgee shall be under no obligation to delay a sale or
disposition of any of the Pledged Shares in order to permit Pledgor or a Pledged
Entity to register such securities for public sale under the 1933 Act, or under
applicable state securities laws, even if Pledgor or a Pledged Entity would
agree to do so.
(b) Pledgor
further agrees to do or cause to be done all such other acts and things as
may
be reasonably necessary to make such sales or dispositions of the Pledged Shares
valid and binding and in compliance with any and all applicable laws,
regulations, orders, writs, injunctions, decrees or awards of any and all
courts, arbitrators or governmental instrumentalities, domestic or foreign,
having jurisdiction over any such sales or dispositions, all at Pledgor's
expense. Pledgor further agrees that a breach of any of the covenants contained
in Sections
6,
7(a),
10,
11
and
26
will
cause irreparable injury to Pledgee and that Pledgee has no adequate remedy
at
law in respect of such breach and, as a consequence, agrees, without limiting
the right of Pledgee to seek and obtain specific performance of other
obligations of Pledgor contained in this Agreement, that each and every covenant
referenced above shall be specifically enforceable against Pledgor, and Pledgor
hereby waives and agrees not to assert any defenses against an action for
specific performance of such covenants.
7
(c) Pledgor
further agrees to indemnify and hold harmless the Buyers, Pledgee and their
respective successors and assigns, their respective officers, directors,
employees, attorneys and agents, and any person or entity in control of any
thereof, from and against any loss, liability, claim, damage and expense,
including, without limitation, legal fees and expenses (in this paragraph
collectively called the “Indemnified
Liabilities”),
under
federal and state securities laws or otherwise insofar as such Indemnified
Liability (i) arises out of or is based upon any untrue statement or alleged
untrue statement of a material fact contained in any registration statement,
prospectus or offering memorandum or in any preliminary prospectus or
preliminary offering memorandum or in any amendment or supplement to any thereof
or in any other writing prepared in connection with the offer, sale or resale
of
all or any portion of the Pledged Collateral unless such untrue statement of
material fact was provided by Pledgee, in writing, specifically for inclusion
therein, or (ii) arises out of or is based upon any omission or alleged omission
to state therein a material fact required to be stated or necessary to make
the
statements therein not misleading, such indemnification to remain operative
regardless of any investigation made by or on behalf of Pledgee or any successor
thereof, or any person or entity in control of any thereof. In connection with
a
public sale or other distribution, Pledgor will provide customary
indemnification to any underwriters, their successors and assigns, officers
and
directors and each person or entity who controls any such underwriter (within
the meaning of the 1933 Act). If and to the extent that the foregoing
undertakings in this paragraph may be unenforceable for any reason, Pledgor
agrees to make the maximum contribution to the payment and satisfaction of
each
of the Indemnified Liabilities which is permissible under applicable law. The
obligations of Pledgor under this paragraph
(c)
shall
survive any termination of this Agreement.
(d) Pledgor
further agrees to waive any and all rights of subrogation it may have against
a
Pledged Entity upon the sale or disposition of all or any portion of the Pledged
Collateral by Pledgee pursuant to the terms of this Agreement until the
termination of this Agreement in accordance with Section
13
below.
12. No
Waiver; Cumulative Remedies.
Pledgee
shall not by any act, delay, omission or otherwise be deemed to have waived
any
of its remedies hereunder, and no waiver by Pledgee shall be valid unless in
writing and signed by Pledgee, and then only to the extent therein set forth.
A
waiver by Pledgee of any right or remedy hereunder on any one occasion shall
not
be construed as a bar to any right or remedy which Pledgee would otherwise
have
on any further occasion. No course of dealing between Pledgor and Pledgee and
no
failure to exercise, nor any delay in exercising on the part of Pledgee or
the
Buyers of, any right, power or privilege hereunder or under the other
Transaction Documents shall impair such right or remedy or operate as a waiver
thereof; nor shall any single or partial exercise of any right, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided are cumulative and may be exercised singly or concurrently, and are
not
exclusive of any rights or remedies provided by law or in the Purchase
Agreement.
13. Termination. (a) This
Agreement and the Liens and security interests granted hereunder shall
terminate, (b) Pledgee shall promptly return any Pledged Collateral then held
by
Pledgee in accordance with the provisions of this Agreement to Pledgor, and
(c)
Pledgee shall, at the expense of Pledgor, promptly after Pledgee’s receipt of
Pledgor’s written request, execute and deliver to Pledgor such documents as
Pledgor shall reasonably request in writing, to evidence such termination
described in clause (a) herein and the return of such Pledged Collateral to
Pledgor, upon the termination of the Notes and the full and complete performance
and indefeasible satisfaction of all of the Liabilities (including, without
limitation, the indefeasible payment in full in cash of all such Liabilities)
and with respect to which claims have been asserted by Pledgee and/or
Buyers.
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14. Possession
of Pledged Collateral. Beyond
the exercise of reasonable care to assure the safe custody of the Pledged Shares
in the physical possession of Pledgee pursuant hereto, neither Pledgee, nor
any
nominee of Pledgee, shall have any duty or liability to collect any sums due
in
respect thereof or to protect, preserve or exercise any rights pertaining
thereto (including any duty to ascertain or take action with respect to calls,
conversions, exchanges, maturities, tenders or other matters relating to the
Pledged Collateral and any duty to take any necessary steps to preserve rights
against any parties with respect to the Pledged Collateral), and shall be
relieved of all responsibility for the Pledged Collateral upon surrendering
them
to Pledgor. Pledgor assumes the responsibility for being and keeping itself
informed of the financial condition of a Pledged Entity and of all other
circumstances bearing upon the risk of non-payment of the Liabilities, and
Pledgee shall have no duty to advise Pledgor of information known to Pledgee
regarding such condition or any such circumstance. Pledgee shall have no duty
to
inquire into the powers of a Pledged Entity or its officers, directors,
managers, members, partners or agents thereof acting or purporting to act on
its
behalf.
15. Taxes
and Expenses.
Pledgor
will upon demand pay to Pledgee, (a) any taxes (excluding income taxes,
franchise taxes or other taxes levied on gross earnings, profits or the like
of
Pledgee) payable or ruled payable by any Governmental Authority in respect
of
this Agreement, together with interest and penalties, if any, and (b) all
expenses, including the fees and expenses of counsel for Pledgee and of any
experts and agents that Pledgee may incur in connection with (i) the
administration, modification or amendment of this Agreement, (ii) the custody
or
preservation of, or the sale of, collection from, or other realization upon,
any
of the Pledged Collateral, (iii) the exercise or enforcement of any of the
rights of Pledgee hereunder, or (iv) the failure of Pledgor to perform or
observe any of the provisions hereof.
16. Pledgee
Appointed Attorney-In-Fact.
Pledgor
hereby irrevocably appoints Pledgee as Pledgor’s attorney-in-fact, with full
authority in the place and stead of Pledgor and in the name of Pledgor or
otherwise, from time to time in Pledgee’s discretion, to take any action and to
execute any instrument that Pledgee deems reasonably necessary or advisable
to
accomplish the purposes of this Agreement, including, without limitation, (i)
to
receive, endorse and collect all instruments made payable to Pledgor
representing any dividend, interest payment or other distribution in respect
of
the Pledged Collateral or any part thereof and to give full discharge for the
same, when and to the extent permitted by this Agreement and (ii) to complete
any assignment separate from certificate delivered hereunder; provided that
the
power of attorney granted hereunder shall only be exercised by Pledgee after
the
occurrence and during the continuance of an Event of Default. The power of
attorney granted hereunder is a power coupled with an interest and shall be
irrevocable until the Liabilities are indefeasibly paid in full in cash and
this
Agreement is terminated in accordance with Section
13
hereof
9
17. Governing
Law; Jurisdiction; Jury Trial.
All
questions concerning the construction, validity, enforcement and interpretation
of this Agreement shall be governed by the internal laws of the State of New
York, without giving effect to any choice of law or conflict of law provision
or
rule (whether of the State of New York or any other jurisdiction) that would
cause the application of the laws of any jurisdiction other than the State
of
New York. Each party hereby irrevocably submits to the non-exclusive
jurisdiction of the state and federal courts sitting in the City of New York,
borough of Manhattan, for the adjudication of any dispute hereunder or in
connection herewith or with any transaction contemplated hereby or discussed
herein, and hereby irrevocably waives, and agrees not to assert in any suit,
action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding is brought
in an inconvenient forum or that the venue of such suit, action or proceeding
is
improper. Each party hereby irrevocably waives personal service of process
and
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address for such notices to it
under
this Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by law.
Notwithstanding the foregoing, the Pledgee may enforce its rights and remedies
in any other jurisdiction applicable to the Pledged Collateral. EACH PARTY
HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST,
A
JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION
HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED
HEREBY.
18. Counterparts.
This
Agreement may be executed in two or more identical counterparts, all of which
shall be considered one and the same agreement and shall become effective when
counterparts have been signed by each party and delivered to the other party;
provided that a facsimile, .pdf or similar electronically transmitted signature
shall be considered due execution and shall be binding upon the signatory
thereto with the same force and effect as if the signature were an original
signature.
19. Headings.
The
headings of this Agreement are for convenience of reference and shall not form
part of, or affect the interpretation of, this Agreement.
20. Severability.
If any
provision of this Agreement shall be invalid or unenforceable in any
jurisdiction, such invalidity or unenforceability shall not affect the validity
or enforceability of the remainder of this Agreement in that jurisdiction or
the
validity or enforceability of any provision of this Agreement in any other
jurisdiction.
21. Entire
Agreement; Amendments.
This
Agreement supersedes all other prior oral or written agreements between Pledgor,
Pledgee, the Buyers and their affiliates and persons acting on their behalf
with
respect to the matters discussed herein, and this Agreement and the Transaction
Documents and instruments referenced herein and therein contain the entire
understanding of the parties with respect to the matters covered herein and
therein.
22. Notices.
All
notices, approvals, requests, demands and other communications hereunder shall
be delivered or made in the manner set forth in, and shall be effective in
accordance with the terms of, the Purchase Agreement, in the case of
communications to the Collateral Agent, directed to the notice address set
forth
below Collateral Agent’s signature hereto.
10
23. Successors
and Assigns.
This
Agreement shall be binding upon and inure to the benefit of the parties and
their respective successors and assigns, including any purchasers of the Notes.
Pledgor shall not assign this Agreement or any rights or obligations hereunder
without the prior written consent of Pledgee. Pledgee may assign its rights
hereunder without the consent of Pledgor, in which event such assignee shall
be
deemed to be Pledgee hereunder with respect to such assigned
rights.
24. No
Third Party Beneficiaries.
This
Agreement is intended for the benefit of the parties hereto and their respective
successors and permitted assigns, and is not for the benefit of, nor may any
provision hereof be enforced by, any other person or entity.
25. Survival.
All
representations, warranties, covenants and agreements of Pledgor and Pledgee
shall survive the execution and delivery of this Agreement.
26. Further
Assurances.
Pledgor
agrees that at any time and from time to time upon the written request of
Pledgee, Pledgor will execute and deliver all assignments separate from
certificates or stock powers, financing statements and such further documents
and do such further acts and things as Pledgee may reasonably request consistent
with the provisions hereof in order to carry out the intent and accomplish
the
purpose of this Agreement and the consummation of the transactions contemplated
hereby.
27. No
Strict Construction.
The
language used in this Agreement will be deemed to be the language chosen by
the
parties to express their mutual intent, and no rules of strict construction
will
be applied against any party.
28. Pledgee
Authorized.
Pledgor
hereby authorizes Pledgee to file one or more financing or continuation
statements and amendments thereto (or similar documents required by any laws
of
any applicable jurisdiction) relating to all or any part of the Pledged Shares
or other Pledged Collateral without the signature of Pledgor.
29. Pledgee
Acknowledgement.
Pledgor
acknowledges receipt of an executed copy of this Agreement. The Pledgor waives
the right to receive any amount that it may now or hereafter be entitled to
receive (whether by way of damages, fine, penalty, or otherwise) by reason
of
the failure of the Pledgee to deliver to the Pledgor a copy of any financing
statement or any statement issued by any registry that confirms registration
of
a financing statement relating to this Agreement.
30. Collateral
Agent.
The
terms and provisions of Section
5.11
of the
Security Agreement which set forth the appointment of the Collateral Agent
and
the indemnifications to which the Collateral Agent is entitled are hereby
incorporated by reference herein as if fully set forth herein.
[Signature
Page Follows]
11
IN
WITNESS WHEREOF, the parties hereto have caused this Pledge Agreement to be
duly
executed and delivered by their duly authorized officers on the date first
above
written.
PLEDGOR:
GOTO
COLLEGE HOLDINGS, INC.,
a
Delaware corporation
By:
/s/
Xxxxxx Xxxx
Name: Xxxxxx
Xxxx
Title: President
PLEDGEE:
VIKING
ASSET MANAGEMENT L.L.C.,
a
California
limited liability company, in its capacity
as
collateral agent for the Buyers
By:
/s/
S.
Xxxxxxx Xxxxxxx
Name: S.
Xxxxxxx Xxxxxxx
Title: Chief
Financial Officer
Notice
Address:
Viking
Asset Management, LLC
000
Xxxxxxxxxx Xxxxxx, 00xx
Xxxxx
Xxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Attention:
Xxxxxxx Xxxxxxx
Telecopy:
(000) 000-0000
-
and
-
Summerline
Asset Management, LLC
00
Xxxx
Xxx Xxx Xxxx, 0xx Xxxxx
Xxxxx
Xxxxxx, Xxx Xxxx 00000
Attention:
Xxxxxx X. Xxxxxxxx
Telecopy:
(000) 000-0000
ACKNOWLEDGEMENT
Each
of
the undersigned hereby (i) acknowledges receipt of a copy of the foregoing
Pledge Agreement, (ii) waives any rights or requirement at any time hereafter
to
receive a copy of such Pledge Agreement in connection with the registration
of
any Pledged Shares (as defined therein) in the name of Pledgee or its nominee
or
the exercise of voting rights by Pledgee and (iii) agrees promptly to note
on
its books and records the grant of the security interest in the stock or other
equity interests of the undersigned as provided in such Pledge Agreement.
Dated:
November 20, 2008
EMBARK
CORP.,
a
Delaware corporation
By:
/s/
Xxxxxx Xxxx
Name: Xxxxxx
Xxxx
Title: Chief
Executive Officer
EMBARK
ONLINE, INC.,
a
Delaware corporation
By:
/s/
Xxxxxx Xxxx
Name: Xxxxxx
Xxxx
Title: Chief
Executive Officer
EXHIBIT
A
DESCRIPTION
OF CAPITAL STOCK OR EQUITY INTERESTS OF PLEDGE ENTITIES
|
Name
of
Pledge
Entities
|
Class
of Stock
or
Other Equity
Interests
|
Authorized
No.
of
Shares
or
Units
|
Issued
and
Outstanding
Shares
or
Units
|
Percentage
of
Shares
or Units
Held
by Pledgor
|
|
Embark
Corp.
|
100%
|
|||
|
Embark
Online, Inc.
|
100%
|
DESCRIPTION
OF PLEDGED SHARES OR UNITS
|
Name
of
Pledge
Entity
|
Class
of Stock or Other
Equity
Interests
|
Stock
or Unit
Certificate
No.
|
No.
of Shares or Units
Represented
by
Certificate
|
|
Embark
Corp.
|
|||
|
Embark
Online, Inc.
|
2
EXHIBIT
B
Addendum
to Pledge Agreement
The
undersigned, being the Pledgor pursuant to that certain Pledge Agreement dated
as of November 20, 2008 (as amended, restated, supplemented or otherwise
modified from time to time, the “Pledge
Agreement”)
in
favor of Viking Asset Management, a California limited liability company, as
Collateral Agent (“Pledgee”),
by
executing this Addendum, hereby acknowledges that Pledgor has acquired and
legally and beneficially owns all of the issued and outstanding [
shares of capital stock ]
of
[__________________,
a _______ corporation ]
(“Company”)
described below (the “Shares”).
Pledgor hereby agrees and acknowledges that the Shares shall be deemed Pledged
Shares pursuant to the Pledge Agreement. Pledgor hereby represents and warrants
to Pledgee that (i) all of the [
capital stock ]
of the
Company now owned by Pledgor is presently represented by the certificates listed
below, which certificates, with undated assignments separate from certificate
or
stock powers duly executed in blank by Pledgor, are being delivered to Pledgee,
simultaneously herewith (or have been previously delivered to Pledgee), and
(ii)
after giving effect to this addendum, the representations and warranties set
forth in Section 4 of the Pledge Agreement are true, complete and correct as
of
the date hereof.
Pledged
Shares
|
Name
of
the
Pledged Entity
|
Class
of Equity Interest
|
Certificate
No.
|
No.
of Shares
|
IN
WITNESS WHEREOF, Pledgor has executed this Addendum this _____ day of
______.
PLEDGOR:
GOTO
COLLEGE HOLDINGS, INC.,
a
Delaware corporation
By:________________________________
Name: ____________________________
Title: ____________________________
3
