Exhibit 10.7 Pledge Agreement
EXHIBIT A
SECURITY INTEREST AND PLEDGE AGREEMENT
SECURITY INTEREST AND PLEDGE AGREEMENT ("Pledge Agreement"), dated as of
May 19, 2004, by and among the persons set forth on Schedule 1 (each a "Secured
Party" and collectively, the "Secured Parties"), SATELLITE ENTERPRISES CORP., a
Nevada corporation having its principal executive offices at 000 Xxxxxx Xxxxxx,
Xxxxx 000, Xxx Xxxxx, Xxxxxxxxxxx 00000 (the "Company" or the "Debtor"), MEDIA
FINANCE EN SUISSE HOLDINGS GMBH (the "Pledgor") and XXXXXXX & XXXXXX, LLP, as
agent for the Secured. Parties (the "Agent").
RECITALS
A. Reference is made to (i) that certain Securities Purchase Agreement of
even date herewith (the "Securities Purchase Agreement") to which the Company
and the Secured Parties are parties, and (ii) the Transaction Agreements (as
that term is defined in the Securities Purchase Agreement), including, without
limitation, (x) the Joint Escrow Instructions and (y) Annex V to the Securities
Purchase Agreement ("Annex V"). Capitalized terms not otherwise defined herein
shall have the meanings ascribed to them in the relevant Transaction Agreements.
B. Pursuant to the Transaction Agreements, the Debtor has certain
obligations to the Secured Parties (all such obligations, the "Obligations"),
including, but not limited to, (x) obligations to pay Periodic Amounts if the
Registration Statement is not filed by the Required Filing Date (the "Periodic
Amount Obligation") and (y) to deliver the Purchased Shares (with related
supporting documentation as provided in the Transaction Agreements) no later
than the Final Issue Date (the "Purchased Share Delivery Obligation").
C. To secure the Obligations, (i) the Debtor has agreed to secure certain
the Periodic Amount Obligations due as of the filing of the Registration
Statement by granting the Secured Parties a security interest in the Reserved
Escrow Funds, and (ii) the Pledgor has agreed to pledge certain shares of Common
Stock of the Company held by the Pledgor to the Secured Parties as security for
the performance of the Company's Purchased Share Delivery Obligation and the
performance by the Pledgor under the terms of Annex V executed by the Pledgor
(the "Guarantee").
D. The Pledgor is a principal shareholder of the Debtor and has determined
that it is in the Pledgor's best interests, including to the benefit the other
interests of the Pledgor in the Company, to provide the pledge referred to
herein.
E. The Secured Parties are willing to enter into the Securities Purchase
Agreement and the other Transaction Agreements only upon receiving (i) the
Debtor's execution of this Pledge Agreement and (ii) Pledgor's guarantee under
the Guarantee and pledge of certain stock of the Company, as set forth in this
Pledge Agreement.
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NOW, THEREFORE, in consideration of the premises, the mutual covenants and
conditions contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
1. Grant of Security Interest.
(a) To secure the Debtor's Obligations as of the date the
Registration Statement, in form contemplated by the Transaction
Agreements, is actually filed with the SEC (the "Actual Filing
Date"), Debtor hereby grants to Secured Parties (and to each of
them based on the Buyer's Allocable Share of such Secured Party)
a security interest in the Reserved Escrow Fund. Each Secured
Party and the Pledgor acknowledges that upon delivery of the
Stock Certificates for the Purchased Shares and the Issue Date
Opinion (collectively, the "Purchased Stock Delivery"), a portion
of the Reserved Escrow Fund may be released to the Company in the
manner contemplated by the terms of Section 1(b) of the Joint
Escrow Instructions. In furtherance of the foregoing, each
Secured Party hereby releases any security interest it may have
in the amount contemplated to be released to the Company upon.
the Purchased Stock Delivery. If there is any such release, the
term "Reserved Escrow Fund" shall thereafter refer to the
original Reserved Escrow Fund less the amount so released in
connection with the Purchased Stock Delivery. Such Reserved
Escrow Fund, together with any substitutes therefor (if permitted
with the consent of a Majority in Interest of the Holders) or
proceeds thereof, are hereinafter referred to as the "Fund
Collateral."
(b) To secure the Purchased Share Delivery Obligation and the other
Obligations of Debtor and the Pledgor's obligations under the
Guarantee, the Pledgor hereby pledges to the Secured Parties (and
to each of them based on the Buyer's Allocable Share of such
Secured Party), all of the shares of Common Stock set forth on
the attached Schedule 2 of this Agreement (the "Pledged Shares").
Unless otherwise set forth on Schedule 2 of this Agreement, the
Pledgor is the beneficial and record owner of the Pledged Shares
set forth opposite such Pledgor's name on such Schedule. Such
Pledged Shares, together with any substitutes therefor, or
proceeds thereof, are hereinafter referred to collectively as the
"Share Collateral."
(c) The Fund Collateral and the Share Collateral are referred to
collectively as the "Collateral."
(d) The Company represents and warrants to the Secured Parties that
the Pledged Shares are duly authorized, validly issued, fully
paid and non-assessable and that it will not permit the transfer
of the Pledged Shares except in accordance with this Pledge
Agreement while the same is in effect.
(e) (i) The Company has given written notice to the Transfer Agent
regarding the creation of the security interest of the Secured
Parties in the Share Collateral. The Company has instructed the
Transfer Agent (A) to record on its books the existence of such
security interest with respect to the Pledged Shares, (B) to
transfer Pledged Shares in accordance with the instructions of
the Agent without further action of the Company, and (C) except
upon such instructions of the Agent or until written notice is
given by the Agent that such security interest has been released
to the Pledgor in whole or in part, to not allow a transfer of
the shares representing any part of the Share Collateral or to
replace the certificates representing the Share Collateral.
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(ii) The Pledgor hereby consents to the provisions of the
preceding subparagraph (i) and authorize the Company to
provide such notice and instructions to the Transfer Agent.
(iii)The Transfer Agent has confirmed to the Agent that (i) the
Transfer Agent has received such notice and instructions and
(ii) without the prior written consent of the Agent, the
Transfer Agent will not take any action inconsistent with
such notice or instructions.
1. Obligations Secured. During the term hereof, the Collateral shall
secure the following:
a. The performance by the Company of its obligations, covenants, and
agreements under the Transaction Agreements; and
b. The performance by the Pledgor of its obligations, covenants, and
agreements under the Guarantee.
The obligations, covenants and agreements described in clauses (a) and (b) are
the "Obligations."
3. Perfection of Security Interests. Upon execution of this Pledge
Agreement by the Debtor and the Pledgor,
(a) the Agent, acting as agent for the Secured Parties, shall be
deemed to hold the Reserve Escrow Fund for the purpose of
perfecting the security interest therein; and
(b) the Pledgor shall deliver and transfer possession of the stock
certificates identified opposite such Pledgor's name on Schedule
2 of this Agreement (the "Pledged Certificates"), together with
stock transfer powers duly executed in blank by the registered
owner of the shares represented by such Certificates, with
appropriate Medallion signature guaranty1 ("Stock Powers"), to
the Secured Parties to be held by the Agent, as agent for the
Secured Parties.
(c) The Collateral will be held by the Agent, to perfect the security
interest of the Secured Parties, until the earlier of
(i) the termination of this Agreement, or
(ii) foreclosure of Secured Party's security interests as
provided herein.
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1 The Medallion signature guaranty requirement will be satisfied by any other
format for confirmation of the Pledgor's signature which the Transfer Agent is
willing to accept in connection with the transfer of the Pledged Shares to the
Secured Parties, provided the Transfer Agent has confirmed such willingness to
the Agent in writing.
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(d) The Debtor and the Pledgor, and each of them, hereby appoint
Xxxxxx X. Xxxxxxx or Xxxxxx Xxxxxxxx (each one of whom may act
independently), as attorney-in-fact with powers of substitution,
to execute all documents and perform all acts as Secured Party,
may reasonably request in order to perfect and maintain a valid
security interest for Secured Party in the Collateral.
4. Assignment. Only in connection with the transfer of the rights under
the Transaction Agreement in accordance with their terms, a Secured
Party may assign or transfer the whole or any part of its security
interest granted hereunder, and may transfer as collateral security
the whole or any part of Secured Party's security interest in the
Collateral. Any transferee of the Collateral shall be vested with all
of the rights and powers of the assigning Secured Party hereunder with
respect to the Collateral.
5. Pledgor's Warranty. The Pledgor represents and warrants hereby to the
Secured Parties as follows with respect to the Pledged Shares set
forth opposite such Pledgor's name on Schedule 2 to this Agreement:
A. With respect to title to the Transferred Shares
(i) that upon transfer by Pledgor of such Pledgor's Certificates
and Stock Powers to Secured Parties pursuant to this
Agreement at such time, if any, as the occurrence of the
events contemplated by Annex V which provide for the
transfer of the Transferred Shares to the Secured Party,
each Secured Party (to extent of the Buyer's Allocable Share
of such Secured Party) will have good title (both record and
beneficial) to the Pledged Shares;
(ii) that there are no restrictions upon transfer and pledge of
the Pledged Shares pursuant to the provisions of this
Agreement except the restrictions imposed by Rule 144 under
the Securities Act of 1933;
(iii)that the Pledged Shares are free and clear of any
encumbrances of every nature whatsoever, such Pledgor is the
sole owner of the Pledged Shares, and such shares are duly
authorized, validly issued, fully paid and non-assessable,
(iv) that such Pledgor has owned the Pledged Shares since the
date specified on Schedule 2 to this Agreement,
(v) that such Pledgor agrees not to grant or create, any
security interest, claim, lien, pledge or other encumbrance
with respect to such Pledgor's Pledged Shares or attempt to
sell, transfer or otherwise dispose of any of such shares
until the Obligations have been paid in full or this
Agreement has terminated; and
B. With respect to certain other matters:
(i) that such Pledgor has made necessary inquiries of the
Company and believes that the Company fully intends to
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fulfill and has the capability of fulfilling the Obligations
to be performed by the Company in accordance with the terms
of the Transaction Agreements,
(ii) that the Pledgor is not acting, and has not agreed to act,
in any plan to sell or dispose of the Pledged Shares in a
manner intended to circumvent the registration requirements
of the Securities Act of 1933, as amended, or any applicable
state law,
(iii)that Pledgor has been advised by counsel of the elements of
a bona-fide pledge for purposes of Rule 144(d)(3)(iv) under
the Securities Act of 1933, as amended, including the
relevant SEC interpretations and affirms the pledge of
shares by such Pledgor pursuant to this Pledge Agreement
will constitute a bona-fide pledge of such shares for
purposes of such Rule, and
(iv) that this Pledge Agreement constitutes a legal, valid and
binding obligation of such Pledgor enforceable in accordance
with its terms (except as the enforcement thereof may be
limited by bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium, and similar laws, now or
hereafter in effect).
6. Collection of Dividends and Interest. During the term of this Pledge
Agreement and so long as the Debtor is not default under the
Obligations and the Pledgor is not in default under the Guarantee,
Pledgor is authorized to collect all dividends, distributions,
interest payments, and other amounts that may be, or may become, due
on the Share Collateral.
7. Voting Rights. During the term of this Pledge Agreement and until such
time as this Pledge Agreement has terminated or Secured Party has
exercised its rights under this Pledge Agreement to foreclose its
security interest in the Share Collateral, Pledgor shall have the
right to exercise any voting rights evidenced by, or relating to, the
Share Collateral.
8. Warrants and Options. In the event that, during the term of this
Pledge Agreement, subscription, warrants, dividends, or any other
rights or option shall be issued in connection with the Share
Collateral, such warrants, dividends, rights and options shall be
immediately delivered to Secured Party to be held under the terms
hereof in the same manner as the Share Collateral.
9. Preservation of the Value of the Share Collateral and Reimbursement of
Secured Party. Pledgor shall pay all taxes, charges, and assessments
against the Share Collateral and do all acts necessary to preserve and
maintain the value thereof. On failure of Pledgor so to do, Secured
Party may make such payments on account thereof as (in Secured Party's
discretion) is deemed desirable, and Pledgor shall reimburse Secured
Party immediately on demand for any and all such payments expended by
Secured Party in enforcing, collecting, and exercising its remedies
hereunder.
10. Default and Remedies.
(a) For purposes of this Agreement, "Event of Default" shall mean
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(i) the occurrence of any one or more events contemplated by the
Transaction Agreements which provides for the application of
the Fund Collateral (or any part thereof) to be paid to the
Secured Parties and/or the transfer of the Transferred
Shares to the Secured Parties;
(ii) any default in the performance by the Company or the Pledgor
of any of the Obligations or the Guarantee, as the case may
be, after the expiration, without cure, of the cure period
(but only if any such period is specifically provided in the
Transaction Agreements); and
(ii) a breach by a Pledgor of any of such Pledgor's
representations, warranties, covenants or agreements in this
Pledge Agreement.
(b) During the term of this Pledge Agreement, the Secured Party shall
have the following rights after any Event of Default and for so
long as the Secured Obligations are not satisfied in full:
(i) the rights and remedies provided by the Uniform Commercial
Code as adopted by the State of New York (as said law may at
any time be amended), except that the Secured Party waives
any right to a deficiency pursuant to Section 9-608 thereof
or otherwise;
(ii) the right to receive and retain all dividends, payments and
other distributions of any kind upon any or all of the
Pledged Shares as additional Collateral;
(iii)to the extent of the Buyer's Allocable Share of the Secured
Party, the right to cause any or all of the Pledged Shares
and all additional Collateral to be transferred to its own
name and have such transfer recorded in any place or places
deemed appropriate by Secured Party; and
(iv) the right to sell, at a public or private sale, to the
extent of the Buyer's Allocable Share of the Secured Party,
the Collateral or any part thereof for cash, upon credit or
for future delivery, and at such price or prices in
accordance with the Uniform Commercial Code (as such law may
be amended from time to time); it being understood that one
or more of the Secured Parties may, but shall not be
required to, take such actions jointly. Upon any such sale,
Secured Party shall have the right to deliver, assign and
transfer to the purchaser thereof the Collateral so sold.
Secured Party shall give the Pledgor not less than ten (10)
days written notice of its intention to make any such sale.
Any such sale shall be held at such time or times during
ordinary business hours and at such place or places as
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Secured Party may fix in the notice of such sale. Secured
Party may adjourn or cancel any sale or cause the same to be
adjourned from time to time by announcement at the time and
place fixed for the sale, and such sale may be made at any
time or place to which the same may be so adjourned. In case
of any sale of all or any part of the Collateral upon terms
calling for payments in the future, any Collateral so sold
may be retained by Secured Party until the selling price is
paid by the purchaser thereof, but Secured Party shall incur
no liability in the case of the failure of such purchaser to
take up and pay for the Collateral so sold and, in the case
of such failure, such Collateral may again be sold upon like
notice. Secured Party, however, instead of exercising the
power of sale herein conferred upon it, may proceed by a
suit or suits at law or in equity to foreclose the security
interest and sell the Collateral, or any portion thereof,
under a judgment or decree of a court or courts of competent
jurisdiction, the Pledgor having been given due notice of
all such action. Secured Party shall incur no liability as a
result of a sale of the Collateral or any part thereof.
(c) Notwithstanding anything in this Agreement to the contrary, the
Secured Party may only exercise the rights and remedies set forth
in this Section 10 with respect to up to the aggregate number of
shares of Common Stock equal to the Transferred Shares, and,
simultaneously with such exercise (provided, however, that such
exercise shall be deemed complete only when the Transferred
Shares have been issued and delivered to the Escrow Agent
together with the other document contemplated by Annex V; the
"Completed Delivery"), the Purchase Price Balance shall be
reduced accordingly, as provided in Annex V.
(d) Should the Secured Parties (or any of them) exercise the rights
set forth in clauses (b)(ii) or (b)(iii) of this Section 10, upon
the Completed Delivery, the Secured Party(ies) so acting shall be
deemed to assign to the Pledgor, without recourse, all of the
rights and benefits of such Secured Party(ies) to payment of the
Purchase Price Balance.
11. Waiver. Each of the Debtor and the Pledgor waives any right that it
may have to require Secured Party to proceed against any other person,
or proceed against or exhaust any other security, or pursue any other
remedy Secured Party may have.
12. Term of Agreement. This Pledge Agreement shall continue in full force
and effect until (a) with respect to the Fund Collateral, the filing
of the Registration Statement in the form and manner contemplated by
the Transaction Agreements (and the application of the Fund Collateral
to satisfaction of any cash Obligations accrued and outstanding as of
such date), and (b) with respect to the Share Collateral, until the
earlier of the delivery to the Escrow Agent of the Stock Certificates,
together with supporting documentation, as contemplated by the
Transaction Agreements, or the Completed Delivery with respect to all
Secured Parties. At the relevant time, the security interests in the
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relevant Collateral shall be deemed released, and (x) any portion of
the Fund Collateral remaining at such time shall be applied as
contemplated by the Joint Escrow and (y) any portion of the Share
Collateral not transferred to any one or more Secured Parties shall be
returned to the Pledgor (and for such purpose, delivery to Xxxxx
Xxxxxxxxx, Esq. of New Haven, Connecticut shall deemed to comply with
such return requirement). Upon termination of this Pledge Agreement,
the relevant Collateral shall be returned within five (5) Trading Days
to Debtor or to the Pledgor, as contemplated above.
13. Provisions Affecting the Agent.
(a) The Agent is acting as agent for the Secured Parties solely for
the administrative convenience of the Debtor, the Pledgor and the
Secured Parties.
(b) The Agent is authorized to execute and file any and all financing
statements desired to be filed by the Secured Parties to reflect
the security interest in the Collateral in any and all
jurisdictions. For such purposes, each of the Debtor and the
Pledgor irrevocably appoints the Agent (acting by Xxxxxx X.
Xxxxxxx or Xxxxxx Xxxxxxxx, or either one of them), with full
power of substitution to execute and file such financing
statements naming the Debtor and the Pledgor as debtors thereon.
(c) Reference is made to the provisions of Sections 2 through 12,
inclusive of the Joint Escrow Instructions. All such provisions
are incorporated herein by reference as if set forth herein in
full, except that, for such purposes, the references therein to
(i) the "Escrow Agent" shall be deemed to be references to the
"Agent" under this Pledge Agreement, (ii) the "Company" shall be
deemed to be references to the Debtor and to the Pledgor under
this Pledge Agreement, and (iii) each "Buyer" shall be deemed to
be references to each Secured Party under this Pledge Agreement.
14. General Provisions:
14.1 Binding Agreement; No Modification of Transaction Agreements.
This Pledge Agreement shall be binding upon and shall inure to
the benefit of the successors and assigns of the respective
parties hereto. Except to the extent specifically provided
herein, nothing in this Pledge Agreement shall limit or modify
any provision of any of the Transaction Agreements
14.2 Captions. The headings used in this Pledge Agreement are inserted
for reference purposes only and shall not be deemed to define,
limit, extend, describe, or affect in any way the meaning, scope
or interpretation of any of the terms or provisions of this
Pledge Agreement or the intent hereof.
14.3 Counterparts. This Pledge Agreement may be signed in any number
of counterparts with the same effect as if the signatures upon
any counterpart were upon the same instrument. All signed
counterparts shall be deemed to be one original. A facsimile
transmission of this signed Pledge Agreement shall be legal and
binding on all parties hereto.
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14.4 Further Assurances. The parties hereto agree that, from time to
time upon the written request of any party hereto, they will
execute and deliver such further documents and do such other acts
and things as such party may reasonably request in order fully to
effect the purposes of this Pledge Agreement. The Transfer Agent
Instructions annexed hereto are deemed an integral part of this
Pledge Agreement.
14.5 Waiver of Breach. Any waiver by either party of any breach of any
kind or character whatsoever by the other, whether such be direct
or implied, shall not be construed as a continuing waiver of or
consent to any subsequent breach of this Pledge Agreement.
14.6 Cumulative Remedies. The rights and remedies of the parties
hereto shall be construed cumulatively, and none of such rights
and remedies shall be exclusive of, or in lieu or limitation of
any other right, remedy, or priority allowed by applicable law.
14.7 Amendment. This Pledge Agreement may be modified only in a
written document that refers to this Pledge Agreement and is
executed by Secured Party, the Pledgor and the Debtor.
14.8 Interpretation. This Pledge Agreement shall be interpreted,
construed, and enforced according to the substantive laws of the
State of New York.
14.9 Governing Law. This Pledge Agreement shall be governed by and
construed in accordance with the laws of the State of New York.
Each of the parties consents to the jurisdiction of the federal
courts whose districts encompass any part of the County of New
York or the state courts of the State of New York sitting in the
County of New York in connection with any dispute arising under
this Pledge Agreement and hereby waives, to the maximum extent
permitted by law, any objection, including any objection based on
forum non coveniens, to the bringing of any such proceeding in
such jurisdictions.
14.10WAIVER OF JURY TRIAL. The parties to this Pledge Agreement hereby
waive a trial by jury in any action, proceeding or counterclaim
brought by any of them against any other in respect of any matter
arising out or in connection with this Pledge Agreement.
14.11Notice. Any notice or other communication required or permitted
to be given hereunder shall be effective upon receipt. Such
notices may be sent (i) in the United States mail, postage
prepaid and certified, (ii) by express courier with receipt,
(iii) by facsimile transmission, with a copy subsequently
delivered as in (i) or (ii) above. Any such notice shall be
addressed or transmitted as follows:
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If to Pledgor, to:
Media Finance En Suisse Holdings GMBH
x/x Xxxxx Xxxxxxxxx, Xxx.
XXX Xxxxxxxxx, LLC
000 Xxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
If to the Debtor, any Secured Party, or the Agent, to the addresses of the
Company, the relevant Buyer and the Escrow Agent, respectively, as provided by
the Securities Purchase Agreement.
Any party may change its address by notice similarly given to the other
parties (except that a Secured Party need not give notice to other Secured
Parties).
14.12Acknowledgement by Debtor and Pledgor. In the event that any
provision of the Transaction Agreements, the Guarantee or this
Pledge Agreement as applied to any party or circumstances shall
be adjudged by a court to be invalid or unenforceable, each of
the Debtor or the Pledgor, as the case may be, acknowledges and
agrees that this Pledge Agreement shall remain valid and
enforceable in all respects against the Debtor and the Pledgor.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY BLANK.
THE SIGNATURES OF THE PARTIES ARE ON THE NEXT PAGE.]
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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the day,
month and year first above written.
SECURED PARTIES (named in Schedule 1):
By: Xxxxxxx & Xxxxxx LLP, as their agent
By:
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DEBTOR:
SATELLITE ENTERPRISES CORP.
By:
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President
PLEDGOR:
MEDIA FINANCE EN SUISSE HOLDINGS GMBH
By:
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Name and Title:
---------------------------
AGENT:
XXXXXXX & PRAGER, LLP
By:
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SCHEDULE 1
The Secured Parties are:
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Name Address
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SSN#
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SSN#
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SSN#
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SSN#
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SSN#
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The "Buyer's Allocable Share" of each Secured Party is determined as provided in
the Securities Purchase Agreement.
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SCHEDULE 2
The following shares are pledged hereunder as the Pledged Shares, each
certificate in the name of:
Holders Name Certificate No. No. of Shares Date of Acquisition
Media Finance En
Suisse GMBH 2462 20,000,000 February 12, 2004
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Total: 20,000,000 shares
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