09 June 2000
XXXXXXXX
CHANCE
PUNDER
FIBERCORE, INC.
AS PLEDGOR
AND
CRESCENT INTERNATIONAL LTD.
AS PLEDGEE
----------------------------------------------------
SHARE PLEDGE AGREEMENT
relating to the shares in FiberCore Jena GmbH
----------------------------------------------------
NOTARIAL DEED
ROLL OF DEED NO. _______
Recorded
at Basel/Switzerland this 9 day of June 2000
Before me, the undersigned
Xxxxxxxxxx Xxxxxxxxxx Xxxxxxxx
notary
with official offices in Basel/Switzerland appeared today:
[name of representative], born [ ] [profession] [Swiss] citizen, with private
domicile at [ ], personally known to the notary.
Hereinafter not acting in [his] [her] own name but, excluding any personal
liability and without having power of attorney (Vertreter ohne
Vertretungsmacht), for and on behalf of
(a) CRESCENT INTERNATIONAL LTD. an entity organized and existing
under the laws of Bermuda,
(b) FIBERCORE, INC., an entity organized under the laws of Nevada.
The Notary convinced himself that the person appearing is in adequate command of
the English language and declared that he is in command of the English language
as well.
The person appearing stated that the parties represented by them requested that
this instrument be recorded in the English language.
[On being asked whether there had been any prior involvement by the notary in
terms of paragraph 3 sub-paragraph 1 No. 7 of the German Notarisation Act
(Beurkundungsgesetz) the provisions of which had been explained by the Notary,
the persons appearing said that there had been no such prior involvement.]
I. Requesting its notarisation, the persons appearing then declared the
following:
SHARE PLEDGE AGREEMENT
BETWEEN:
1. FIBERCORE, INC., an entity organized and existing under the laws of
Nevada, having its business address at 000 Xxxxxxxxx Xx., X.X. Xxx 000,
Xxxxxxxx, XX 00000 (the "PLEDGOR");
2. CRESCENT INTERNATIONAL LTD., an entitiy organized and existing under
the laws of Bermuda, having its offices at Xxxxxxxxx Xxxxx, 0 Xxxxxx
Xxxxxx, Xxxxxxxx X00, Xxxxxxx. (the "PLEDGEE").
WHEREAS:
(A) The Pledgee and the Pledgor have entered into a certain securities
purchase agreement dated on or about the date of this Agreement (the
"SECURITIES PURCHASE AGREEMENT") covering, inter alia, convertible notes
in the nominal aggregate amount of up to $7.5 million US dollars, issued
by the Pledgor in favor of the Pledgee (the "CONVERTIBLE Notes").
(B) The Pledgor has agreed to grant a pledge over its Shares in the Company
(as defined below) as security for the Pledgee's respective claims (as
defined below) against the Pledgor under the Convertible Notes.
NOW, IT IS AGREED as follows:
1. DEFINITIONS AND LANGUAGE
1.1 In this Agreement:
"BOOK VALUE" of the Collateral means the aggregate book value of the
Collateral as set forth on Attachment A to this Agreement; provided,
however, that the Book Value of the Collateral shall decrease by an
aggregate amount of $150,000 per month on the first calendar day of each
month, on and after January 1, 2000.
"COLLATERAL" means the collateral to be granted under the Security
Agreement.
"COMPANY" means FiberCore Jena GmbH, a limited liability company
(Gesellschaft mit beschrankter Haftung) organised under the laws of the
Federal Republic of Germany having its business address at Xxxxxxxxxxx
Xxxxxxx 00, 00000 Xxxx/Xxxxxxx, which is registered in the commercial
register (Handelsregister) of the local court (Amtsgericht) of Xxxx under
HRB 4819.
"EFFECTIVE COLLATERAL" means the lesser of (A) the Book Value or (B) the
Distributable Collateral which shall mean: total assets (Aktiva), less
total reserves (Ruckstellungen), less total liabilities
(Verbindlichkeiten), less additional items for investment subsidies for
fixed assets (Sonderposten fur Investitionszuschusse zum Anlagevermogen),
less additional items for investment grants for fixed assets (Sonderposten
fur Investitionszulage zum Anlagevermogen) less registered capital
(Stammkapital/gezeichnetes Kapital), of the Company, as shown on the
balance sheet of the Company on the date such calculation is made.
"SECURITY AGREEMENT" means the security agreement between the Company and
the Pledgee dated on or about the date of this Agreement.
1.2 This Agreement is made in the English language. For the avoidance of
doubt, the English language version of this Agreement shall prevail over
any translation of this Agreement. However, where a German translation of
a word or phrase appears in the text of this Agreement, the German
translation of such word or phrase shall prevail.
2. PLEDGED SHARES
2.1 The Company has a nominal share capital (Stammkapital) of DM 4,250,000
(in words: Deutsche Xxxx four million two hundred fifty thousand) which
is divided into
2.2 two shares which shares have a nominal amount of DM 50,000 (in words:
Deutsche Xxxx fifty thousand, and DM 4,200,000 (in words: Deutsche Xxxx
four million two hundred thousand) (the "EXISTING SHARES").
2.3 The Pledgor is the owner of the Existing Shares.
3. SECURED OBLIGATIONS
The pledges hereunder are constituted in order to secure the prompt and
complete satisfaction of any and all obligations (present and future,
actual and contingent) which are (or are expressed to be) owed or become
owing by the Pledgor to the Pledgee under the Convertible Notes (the
"SECURED OBLIGATIONS").
4. PLEDGE
4.1 The Pledgor hereby pledges to the Pledgee the Existing Shares as well as
any other shares the Pledgor holds in the Company and all additional
shares in the capital of the Company (irrespective of their nominal value)
which the Pledgor may acquire in the future in the event of a share
transfer, an increase of the capital of the Company or otherwise (the
"FUTURE SHARES" and, together with the Existing Shares the "Shares")
together with all ancillary rights and claims associated with the Shares
as more particularly specified in Clause 5 hereof (the "PLEDGES").
4.2 The Pledgee hereby accepts the Pledges for itself.
4.3 The Pledges are in addition, and without prejudice, to any other security
the Pledgee may now or hereafter hold in respect of the Secured
Obligations.
4.4 The Pledgor hereby waives any and all rights of pre-emption it may have
under the articles of association of the Company or otherwise.
5. SCOPE OF THE PLEDGES
5.1 The Pledges constituted by this Agreement includes:
(a) the present and future rights to receive:
(i) dividends payable in relation to the Shares, if any; and
(ii) liquidation proceeds, redemption proceeds
(Einziehungsentgelt), repaid capital in case of a capital
decrease, any compensation in case of termination (Kundigung)
and/or withdrawal (Austritt) of a shareholder of the Company,
the surplus in case of surrender (Preisgabe) and all other
pecuniary claims associated with the Shares;
(b) the right to subscribe for newly issued shares; and
(c) all other rights and benefits attributable to the Shares.
5.2 Notwithstanding that the dividends are pledged hereunder, the Pledgor
shall be entitled to receive and retain all dividend payments whether in
cash, non-cash, by the issue of any loan note or debt instrument in
respect of the Shares until such time as the Pledgee is entitled to
enforce the Pledges constituted hereunder.
6. EXERCISE OF MEMBERSHIP RIGHTS
The membership rights, including the voting rights, attached to the Shares
remain with the Pledgor. The Pledgor, however, shall at all times until
the full satisfaction of all Secured Obligations or the release of the
Pledges exercise its membership rights, including its voting rights, in
good faith to ensure that the validity and enforceability of the Pledges
and the existence or value of all or part of the Shares are not in any way
adversely affected, other than through dividend payments pursuant to
Clause 5.2 above. The Pledgor undertakes that no resolutions are passed
which constitute a breach of its obligations under Clause 8 hereof.
7. ENFORCEMENT OF THE PLEDGES
7.1 If the requirements set forth in Section 1204 et seq. of the German Civil
Code (Burgerliches Gesetzbuch) with regard to the enforcement of the
Pledges are met (Pfandreife), in particular, if any of the Secured
Obligations has become due and payable, then in order to enforce the
Pledges, the Pledgee may at any time thereafter avail itself of all rights
and remedies that a pledgee has upon default of a pledgor under the laws
of the Federal Republic of Germany.
7.2 Notwithstanding Section 1277 of the German Civil Code, the Pledgee is
entitled to exercise their rights without obtaining enforceable judgment
or other instrument (vollstreckbarer Titel) by the way of public auction.
7.3 The Pledgor hereby expressly agrees that five (5) business days' prior
written notice to the Pledgor of the place and time of any such public
auction shall be sufficient. The public auction may take place at any
place in the Federal Republic of Germany designated by the Pledgee.
7.4 If the Pledgee should seek to enforce the Pledges under Clause 7.1 hereof,
the Pledgor shall, at its own expense, render forthwith all necessary
assistance in order to facilitate the prompt sale of the Shares or any
part thereof and/or the exercise by the Pledgee of any other right it may
have as Pledgee.
7.5 The proceeds of the realisation shall be applied by the Pledgee in
discharge of the Secured Obligations. The balance, if any, of any of such
proceeds shall be paid to the Pledgor.
7.6 Following satisfaction of the requirements for enforcement under Clause
7.1 hereof, all subsequent dividend payments and all payments based on
similar ancillary rights attributed to the Shares may be applied by the
Pledgee in satisfaction in whole or in part of the Secured Obligations or
treated as additional collateral.
7.7 Even if the requirements for enforcement referred to under Clause 7.1
above are met, the Pledgee shall not, whether as proxy or otherwise, be
entitled to exercise the voting rights attached to the Shares. However,
the Pledgor shall, upon occurrence of an event which allows the Pledgee to
enforce the Pledges, have the obligations and the Pledgee shall have the
rights set forth in Clauses 8.5 below regardless of which resolutions are
intended to be adopted.
7.8 The Pledgee may, in its sole discretion, determine which of several
security interests, if applicable, shall be used to satisfy the Secured
Obligations.
7.9 The Pledgor hereby expressly waives all defences of revocation (Einrede
der Anfechtbarkeit) and set-off (Einrede der Aufrechenbarkeit) pursuant to
Sections 770, 1211 of the German Civil Code. In the case of enforcement,
Section 1225 of the German Civil Code (legal subrogation of claims to a
pledgor - Forderungsubergang auf den Verpfander) shall not apply.
8. UNDERTAKINGS OF THE PLEDGOR
During the term of this Agreement, the Pledgor undertakes to the Pledgee:
8.1 not to take, or participate in, any action which results or might result
in the Plegor's loss of ownership of all or part of the Shares, and any
other transaction which would have the same result as a sale, transfer,
encumbrance or other disposal of the Shares or which would for any other
reason be inconsistent with the security interest of the Pledgee or the
security purpose (as described in Clause 3 hereof) or defeat, impair or
circumvent the rights of the Pledgee except as permitted by the Pledgee;
8.2 not to encumber, permit to subsist, create or agree to create any other
security interest or third party right in or over the Shares except as set
out in this Agreement;
8.3 to promptly effect any payments to be made in respect of the Shares;
8.4 to promptly notify the Pledgee of any change in the shareholding in or
capital of the Company or any encumbrance over the Shares (or part of
them);
8.5 to promptly inform the Pledgee of all matters concerning the Company of
which the Pledgor is aware which might adversely affect the security
interest of the Pledgee. In particular, the Pledgor shall notify the
Pledgee forthwith of any shareholders' meeting at which a shareholders'
resolution is intended to be adopted which could have an adverse effect
upon any of the Pledges. The Pledgor shall allow, following the occurrence
of any of the circumstances which permit the Pledgee to enforce the
Pledges constituted hereunder in accordance with Clause 7 hereof, the
Pledgee or, as the case may be, its proxy or any other person designated
by the Pledgee, to participate in all such shareholders' meetings of the
Company as attendants without power to vote. Subject to the provision
contained in Clause 11.1 hereof, the Pledgee's right to attend the
shareholders' meeting shall lapse immediately upon complete satisfaction
and discharge and discharge of the Secured Obligations. In any event, as
long as the Pledges remain in effect, the Pledgee shall receive, by the
Pledgor a protocol of any ordinary or extraordinary shareholders' meeting;
8.6 in the event of any increase in the capital of the Company, not to allow,
without the prior written consent of the Pledgee, any other party to
subscribe for any Future Shares if such subscription were to result in a
decrease of the Pledgor's shareholding below the proportion currently held
by the Pledgor, and not to defeat, impair or circumvent in any way the
rights of the Pledgee created hereunder;
8.7 to refrain from any acts or omissions, the purpose or effect of which is
or would be the dilution of the value of the Shares, the Shares ceasing to
exist or being encumbered;
8.8 to change the Articles of Association of the Company to the effect that
any transfer of Shares shall only be possible with the consent of the
shareholders;
8.9 not to amend the articles of association of the Company to the extent that
such amendment would or would be likely to adversely affect the security
interest of the Pledgee created hereunder without the prior written
consent of the Pledgee
8.10 insofar as additional declarations or actions are necessary for the
creation of the Pledges in favour of the Pledgee, the Pledgor shall at the
Pledgee's request make such declarations and undertake such actions at the
Pledgor's costs and expenses.
9. REPRESENTATIONS AND WARRANTIES
The Pledgor represents and warrants to the Pledgee by way of an
independent guarantee (unabhangiges Garantieversprechen) that:
9.1 at the date hereof the Company is validly existing and neither
insolvent nor subject to any composition or insolvency proceedings;
9.2 the statements made in Clause 2 above are true and correct;
9.3 it is and will be the sole legal and beneficial owner, free from
encumbrances (other than the Pledges created hereunder), of all Existing
Shares and has the corporate power and authority to enter into this
Agreement;
9.4 this Agreement constitutes its legal valid and binding obligations and the
Pledges constituted hereunder creates valid pledges which are enforceable
without enforceable judgment or other instrument (vollstreckbarer Titel);
9.5 all necessary authorisations to enable or entitle the Pledgor to enter
into this Agreement have been obtained and are in full force and effect
and will remain in full force and effect at all times during the
subsistence of the security hereby construed and pursuant to the articles
of association of the Company, and the Pledges over the Shares is not
subject to the approval of the Company's shareholders or the Company;
9.6 the Existing Shares are and the Future Shares will be fully paid in and
there is no nor will there be any obligation for a shareholder to make
additional contributions;
9.7 the share capital has not been repaid in any way; all facts capable of
being entered into the commercial register of the Company have been
entered into the commercial register, and, in particular, no shareholders'
resolutions regarding changes in the articles of association of the
Company have been passed which are not entered into the commercial
register of the Company; and
9.8 there are no silent partnership agreements or similar arrangements by
which a third party is entitled to a participation in the profits or
revenue of the Company.
10. INDEMNITY
10.1 The Pledgee shall not be liable for any loss or damage suffered by the
Pledgor save in respect of such loss or damage which is suffered as a
result of the wilful misconduct or gross negligence of the Pledgee.
10.2 The Pledgor will indemnify the Pledgee and keep the Pledgee indemnified
against any and all damages, losses, actions, claims, expenses, demands
and liabilities which may be incurred by or made against the Pledgee for
anything done or omitted in the exercise or purported exercise of the
powers contained herein and occasioned by any breach of the Pledgor of any
of its obligations or undertakings herein contained other than to the
extent that such damages, losses, actions, claims, expenses, demands and
liabilities are incurred or made against the Pledgee as a result of the
gross negligence or wilful misconduct of the Pledgee.
11. DURATION AND INDEPENDENCE
11.1 This Agreement shall remain in full force and effect until complete
satisfaction of the Secured Obligations. The Pledges shall not cease to
exist, if the Pledgor under the Convertible Notes has only temporarily
discharged the Secured Obligations.
11.2 This Agreement shall create a continuing security and no change,
amendment, or supplement whatsoever in the Convertible Notes or in any
document or agreement related to any of the Convertible Notes shall affect
the validity or the scope of this Agreement nor the obligations which are
imposed on the Pledgor pursuant to it.
11.3 This Agreement is independent from any other security or guarantee which
may have been or will be given to the Pledgee. None of such other security
shall prejudice, or shall be prejudiced by, or shall be merged in any way
with this Agreement.
12. RELEASE (PFANDFREIGABE)
12.1 Upon complete and irrevocable satisfaction of the Secured Obligations, the
Pledgee will, as soon as reasonably practical, declare the release of the
Pledges (Pfandfreigabe) to the Pledgor as a matter of record. For the
avoidance of doubt, the parties are aware that upon full and complete
satisfaction of the Secured Obligations the Pledges due to their accessory
nature (Akzessorietat) cease to exist by operation of German mandatory
law.
12.2 Notwithstanding anything herein to the contrary, upon written request of
the Pledgor, the Pledgee agrees to release the Pledges if the Effective
Collateral exceeds 120% of the outstanding principal amount of the
Convertible Notes. Such written request shall be accompanied by a
certificate of an accountant confirming the value of the Distributable
Collateral which can be distributed in accordance with sections 30 and 31
of the German Limited Liability Companies Act ("GmbHG") of as of the date
of the request. After the release of the Pledges pursuant to the prior
sentence and upon the Pledgee's request, the Pledgor shall be required to
provide the Pledgee with monthly certificates from a certified accountant
setting forth the current details of the value of the Distributable
Collateral. If at any time after the Pledges have been released, the
outstanding principal amount of the Convertible Notes exceeds the
Effective Collateral by more than Euros 100,000, the Pledgor agrees to
enter into a new pledge agreement on the same terms and conditions of this
Agreement, with all costs and expenses relating to such pledge agreement
to be borne by the Pledgor.
13. COSTS AND EXPENSES
All costs, charges, fees and expenses triggered by this Agreement or
reasonably incurred in connection with its preparation, execution,
amendments and enforcement (in each case including fees for legal
advisers) shall be borne by the Pledgor.
14. PARTIAL INVALIDITY; WAIVER
14.1 If at any time, any one or more of the provisions hereof is or becomes
invalid, illegal or unenforceable in any respect under the law of any
jurisdiction, such provision shall as to such jurisdiction, be ineffective
to the extent necessary without affecting or impairing the validity,
legality and enforceability of the remaining provisions hereof or of such
provisions in any other jurisdiction. The invalid or unenforceable
provision shall be deemed replaced by such valid, legal or enforceable
provision which comes as close as possible to the original intent of the
parties and the invalid, illegal or unenforceable provision.
14.2 No failure to exercise, nor any delay in exercising, on the part of the
Pledgee, any right or remedy hereunder shall operate as a waiver thereof,
nor shall any single or partial exercise of any right or remedy prevent
any further or other exercise thereof or the exercise of any other right
or remedy. The rights and remedies provided hereunder are cumulative and
not exclusive of any rights or remedies provided by law.
14.3 In particular, the Pledges shall not be affected and shall in any event
extend to any and all Shares in the Company even if the number or nominal
value of the Existing Shares or the aggregate share capital of the Company
as stated in Clause 2 are inaccurate or deviate from the actual facts.
15. AMENDMENTS
Changes and amendments to this Agreement including this subsection shall
be made in writing, unless notarial form by operation of law is required.
This also applies to this Clause 15.
16. NOTICES AND THEIR LANGUAGE
16.1 Any notice or other communication under or in connection with this
Agreement shall be in writing and shall be delivered personally, or sent
by post or fax to the following addresses:
For the Pledgor: FIBERCORE, INC.
Address: 000 Xxxxxxxxx Xx.
X.X. Xxx 000
Xxxxxxxx, XX 00000
Tel.: (000) 000-0000
Fax: (000) 000-0000
Attention: Xx. Xxxx X Xxxxxx/
Xxxxxxx Xxxxxxx
with a copy (which shall not constitute notice) to:
CADWALADER XXXXXXXXXX & XXXX
Address 000 Xxxxxx Xxxx
Xxx Xxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attention: Xxxxxxx Xxxxxxx, Esq.
For the Pledgee : CRESCENT INTERNATIONAL LTD.
Address: c/o GreenLight
(Switzerland) S.A.
00, xx Xxxxx-Xxxxx
0000 Xxxxxx,
Xxxxxxxx, Xxxxxxxxxxx
Tel.: x00 00 000 00 00
Fax: x00 00 000 00 00
Attention: Xxx Xxxx/Maxi Brezzi
with a copy (which shall not constitute notice) to:
XXXXXXXX CHANCE XXXXXX & XXXXX LLP
Address: 000 Xxxx Xxxxxx,
00xx Xxxxx
Xxx Xxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attention: Xxxx X. Xxxxx, Esq./
Xxxx X. Xxxxxxxxx, Esq
or to such other address as the recipient may notify or may have notified
to the other party in writing.
16.2 Save for the notice pursuant to Section 16 of the German Limited Liability
Companies Act (Gesetz betreffend die Gesellschaften mit beschrankter
Haftung) any notice or other communication under or in connection with
this Agreement shall be in the English language or, if in any other
language, accompanied by a translation into English. In the event of any
conflict between the English text and the text in any other language, the
English text shall prevail.
17. APPLICABLE LAW, JURISDICTION
17.1 This Agreement shall be governed by and construed in accordance with the
laws of the Federal Republic of Germany.
17.2 The place of jurisdiction for any and all disputes arising under or in
connection with this agreement shall be the district court (Landgericht)
in Frankfurt am Main. The Pledgee however, shall also be entitled to take
action against the Pledgor in any other court of competent jurisdiction.
Further, the taking of proceedings against the Pledgor in any one or more
jurisdictions shall not preclude the taking of proceedings in any other
jurisdiction (whether concurrently or not) if and to the extent permitted
by applicable law.
The Notary advised the persons appearing
- that a pledge is a security instrument of strictly accessory nature
(which means that it comes into legal existence only if, to the extent
that, and as long as, the underlying secured claims do in fact exist,
and that the owners of the secured claims and the pledgees must be
identical);
- that there is no bona fide creation, acquisition nor ranking of a
pledge of shares (which means that the pledgees are not protected if
the shares purported to be pledged do not exist, have been previously
transferred to a third party, or have been previously encumbered for
the benefit of a third party); and
- that the English original version of this Agreement will not be
acceptable for enforcement but will have to be translated, by a
certified translator, into German for such purposes.
The Notary is hereby instructed to give notice of this Agreement and the Pledges
of the rights pursuant to Clause 4 (Pledge) and Clause 5 (Scope of the Pledges)
to the Company by means of forwarding to the Company a certified copy of this
Agreement.
The above Agreement was read aloud by the Notary to the persons appearing,
approved by them and signed in their own hand as follows:
ATTACHMENT A
BOOK VALUE
