PLEDGE AND ASSIGNMENT AGREEMENT
Exhibit
10.3
THIS PLEDGE AND ASSIGNMENT AGREEMENT
("Agreement"), dated
April 7, 2009, is executed by and among (A) ▇▇▇▇.▇▇▇ INC., a Delaware
corporation (“Fund”); (B) GLOBAL ASSET FUND LTD., a
company organized under the laws of the Cayman Islands (“GAF”), and (C)
▇▇▇▇▇▇▇ ▇▇▇▇ LLP, a law firm with an address at ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇ (the “Collateral Agent”).
Fund is sometimes referred to herein as the “Pledgor,” GAF or its
assigns and designees is hereinafter sometimes referred to individually or
collectively, as the “Secured Party,” and
the Pledgor and the Secured Party are hereinafter sometimes collectively
referred to as the “Business
Parties.”
W I T N E S S E T
H:
WHEREAS,
GAF has made a loan to Fund of $500,000 (the “Loan”), to be
evidenced by that certain demand promissory note of Fund dated of even date
herewith (the “Note”);
and
WHEREAS,
all of the proceeds to be received in respect of the aforesaid Loan are to be
used by Fund to make a $500,000 bridge loan to NATIONAL HOLDINGS CORPORATION,
a Delaware corporation (the “Company”), pursuant
to the terms of a separate securities purchase agreement, dated April 7, 2009
between Fund and the Company (the “NHC Purchase
Agreement”); which $500,000 bridge loan is evidenced by that certain
Limited Recourse Note dated April 7, 2009 and payable on April 30, 2009 (the
“Limited Recourse
Note”);
WHEREAS,
as collateral to secure the payment of the Loan and Fund’s obligations under the
Note (the “Obligations”), Fund
has agreed to (i) pledge to the Secured Party all of the Fund’s rights under the
Limited Recourse Note, and (ii) assign to the Secured Party all of Fund’s right,
title and interest in the NHC Purchase Agreement and all other transaction
documents related thereto, all pursuant to the terms and conditions of this
Agreement;
NOW, THEREFORE, in
consideration of the premises and of the mutual covenants set forth 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. Pledge and Assignment of the
Collateral.
(a) The
Pledgor does hereby
pledge to the Secured Party, and grants to the Secured Party a first priority
lien on and security interest in and to, all of Fund’s right, title and interest
in and to the Limited Recourse Note of the Company, issued to the Pledgor
pursuant to the NHC Purchase Agreement (the “Pledged Securities”),
including, but not limited to, all shares of Company Common Stock issuable upon
conversion of the Limited Recourse Note (the “Conversion Shares”),
together with all proceeds from the sale of the Pledged Securities and
Conversion Shares, all dividends paid in respect of the Pledged Securities and
any property or securities delivered to the holder of the Pledged Securities in
respect thereof in the event of a merger or takeover of the Company by a third
party (collectively, together with the Pledged Securities and Conversion Shares,
the "Pledged Securities
Collateral”).
(b) The
Pledgor does hereby
transfer and assign to the Secured Party, and grants to the Secured Party a
first priority lien on and security interest in and to, all of Fund’s right,
title and interest in and to the NHC Purchase Agreement and all of the other
Transaction Documents executed by the Company in favor of the Pledgor pursuant
to the NHC Purchase Agreement or otherwise, including all rights, benefits and
privileges thereunder, including, without limitation, the right to enforce all
of Pledgor’s rights under such Transaction Documents in any action at law or in
equity (collectively, the “Collateral
Assignment”).
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(c) The
Pledged Securities Collateral and the Collateral Assignment are hereinafter
sometimes collectively referred to as the “Pledged
Collateral.”
(d) The
Pledgor does hereby agree to execute and deliver to the Collateral
Agent:
(i) assignments
separate from the Pledged Securities substantially in the form of Exhibit
A hereto, undated and appropriately endorsed in blank, with respect to
the Pledged Securities,
(ii) if
legally required, such financing statements as the Collateral Agent may
reasonably request with respect to the Pledged Collateral (or, if execution by
Pledgor is not required pursuant to the applicable Uniform Commercial Code, the
Pledgor hereby authorizes the Collateral Agent to file all financing statements
deemed necessary by the Secured Party to perfect the security interests granted
hereunder),
In
addition, the Pledgor does hereby authorize the Collateral Agent to take such
other steps as the Secured Party may from time to time reasonably request to
perfect the Secured Party's security interest in the Pledged Collateral or any
part thereof under applicable law, and upon the occurrence and during the
continuance of an Event of Default, to execute and deliver on behalf of the
Pledgor such other documents of transfer as the Secured Party or the Collateral
Agent may from time to time reasonably require to enable the Secured Party to
transfer the Pledged Collateral into the name of the Secured Party or the name
of its nominee (all of the foregoing are hereinafter collectively referred to as
the "Assignments").
2. Definition; Security for
Secured Obligations.
(a) Unless
otherwise defined in this Agreement, when used herein all capitalized terms
shall have the same meaning as such terms are defined in the NHC Purchase
Agreement.
(b) The
Pledged Collateral secures the prompt and complete payment, performance and
observance of the Limited Recourse Note and the Obligations.
3. Pledged
Collateral Adjustments. If during
the term of this Agreement:
(a) any
non-cash dividend or distribution, reclassification, readjustment or other
change is declared or made in the capital structure of Company, or any option,
warrant or similar instrument included within the Pledged Collateral is
exercised, or both, or
(b) any
subscription, warrants, options shall be issued in connection with the Pledged
Collateral,
then the
Pledgor shall (i) promptly deliver new, substituted and additional shares,
warrants, options, or other equity securities, issued by reason of any of the
foregoing, and all certificates and other instruments evidencing the same to the
Secured Party to be held under the terms of this Agreement and shall constitute
Pledged Collateral hereunder, and (ii) promptly deliver to the Secured Party or
the Collateral Agent such additional Pledged Collateral.
4. Remedies Following an Event
of Default.
(a) Upon the occurrence of an Event of
Default, as defined in the Note, upon not less than ten (10) days prior
written notice to the Pledgor and the Collateral Agent, the Secured Party, may,
at its or their option, request that the Collateral Agent transfer or register
the Pledged Collateral or any part thereof into its or their nominee's name with
or without any indication that such Pledged Collateral is subject to the lien
created hereunder. In addition, upon the occurrence and during the continuance
of an Event of Default, the Secured Party may at any time exchange certificates
or other instruments representing or evidencing Pledged Collateral for
certificates or other instruments of smaller or larger
denominations.
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(b) Upon
the occurrence of an Event of Default pursuant to Section 4(a) the Note, in
addition to having the right to exercise any right or remedy of a secured party
upon default under the New York State Uniform Commercial Code or applicable law
or at equity, the Secured Party may, to the extent permitted by law, subject to
giving notice as set forth below, to Pledgor but without being required to take
or do any action (except as provided below):
(i) apply any
cash held by it hereunder to the payment of Obligations; and
(ii) if there
shall be no such cash or if the cash so applied shall be insufficient to pay in
full the Obligations, collect, receive, appropriate and realize upon the Pledged
Collateral or any part thereof, and/or sell, assign, transfer, contract to sell
or otherwise dispose of and deliver the Pledged Collateral or any part thereof,
in its entirety or in portions, at public or private sale or at any broker's
board, on any securities exchange or at any of Secured Party places of business
or elsewhere, for cash, upon credit or for future delivery, and at such price or
prices as Secured Party may deem best, and Secured Party may (except as
otherwise provided by law) be the purchaser of any or all of the Pledged
Collateral so sold and thereafter may hold the same, absolutely, free from any
right or claim of whatsoever kind.
(1) In the
event of a sale as set forth in section 4(b)(ii) above, Secured Party may, at
any such sale, restrict the number of prospective bidders or purchasers and/or
further restrict such prospective bidders or purchasers to Persons who will
represent and agree that they are purchasing for their own account, for
investment and not with a view to the distribution or resale of the Pledged
Collateral, and may otherwise require that such sale be conducted subject to
restrictions as to such other matters as Secured Party may deem necessary in
order that such sale may be effected in such manner as to comply with all
applicable state and federal securities and other laws. Upon any such
sale, Secured Party shall have the right to deliver, assign and transfer the
Pledged Collateral so sold to the purchaser thereof.
(2) Pledgor
hereby acknowledges that, notwithstanding that a higher price might be obtained
for the Pledged Collateral at a public sale than at a private sale or sales, the
making of a public sale of the Pledged Collateral may be subject to registration
requirements under applicable securities laws and other legal restrictions,
compliance with which would make a public sale of the Pledged Collateral
impractical. Accordingly, Pledgor hereby agrees that private sales
made by the Secured Party in good faith in accordance with the provisions of
this Section 4
may be at prices and on other terms less favorable to the seller than if the
Pledged Collateral were sold at a public sale, and that the Secured Party shall
not have any obligation to take any steps in order to permit the Pledged
Collateral to be sold at a public sale.
(3) Each
purchaser at any such sale shall hold the property sold, absolutely free from
any claim or right whatsoever, including any equity or right of redemption of
Pledgor, and Pledgor hereby specifically waives all rights of redemption, stay
or appraisal and other rights that Pledgor has or may have under any law,
regulation or statute now existing or hereafter adopted or
otherwise. Secured Party shall give Pledgor not less than twenty (20)
days written notice of its intention to make any such public or private
sale. Such notice, in case of a public sale, shall state the time and
place fixed for such sale, and, in case of a sale at broker's board, on a
securities exchange, at one or more of Secured Party’s places of business or
elsewhere, shall state the board, exchange or other location at which such sale
is to be made and the day on which the Pledged Collateral, or that portion
thereof so being sold, will first be offered for sale at such
location. Such notice, in case of a private sale, shall state only
the date on or after which such sale may be made. Any such notice
given as aforesaid shall be deemed to be reasonable notification.
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(4) Any such
public sale shall be held at such time or times within ordinary business hours
and at such place or places as Secured Party may fix in the notice of such
sale. At any sale the Pledged Collateral may be sold in one lot as an
entirety or in parts, as Secured Party may determine. Secured Party
shall not be obligated to make any sale pursuant to any such
notice. Secured Party may, without notice or publication, adjourn 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 Pledged Collateral on credit or for future delivery, the
Pledged Collateral so sold may be retained by Secured Party until the selling
price is paid by the purchaser thereof, but Secured Party shall not incur any
liability in case of the failure of such purchaser to take up and pay for the
Pledged Collateral so sold and, in case of any such failure, such Pledged
Collateral may again be sold upon like notice.
(g) On
any sale of any part of the Pledged Collateral, Secured Party is hereby
authorized to comply with any limitation or restriction in connection with such
sale that may be necessary in order to avoid any violation of applicable law or
in order to obtain any required approval of the purchaser(s) by any governmental
authority or officer or court.
(h) Pledgor
hereby acknowledges, understands and agrees that compliance with the foregoing
procedures shall satisfy any applicable requirements that such sale or
disposition be made in a commercially reasonable manner.
5. Representations and
Warranties.
(a) The
Pledgor does hereby represent and warrant to the Secured Party as
follows:
(1) The Pledgor is, and upon delivery thereof and payment therefore will
be, the legal and beneficial owner of the Pledged Collateral owned by the
Pledgor, free and clear of any lien, except for the lien created by this
Agreement;
(2) The
Pledgor has full power and authority to enter into this Agreement, assign,
deposit, pledge and ▇▇▇▇▇ ▇ ▇▇▇▇ on or otherwise transfer all of its rights in
the Pledged Collateral free and clear of any liens; and,
(3) The
execution, delivery and performance of this Agreement and the Loan and the
consummation of the transactions contemplated hereby and thereby will not (i)
conflict with or result in a violation of any provision of the certificate of
incorporation, or articles of association as amended (the “Articles”) or the Bylaws (the
“By-laws”), as amended
of the Pledgor or (ii) violate or conflict with, or result in a breach of any
provision of, or constitute a default (or an event which with notice or lapse of
time or both could become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, any agreement or
instrument to which the Pledgor is a Party or is otherwise bound or is a
beneficiary, or (iii) result in a violation of any law, rule, regulation, order,
judgment or decree (including federal, state and foreign securities laws and
regulations and regulations of any self-regulatory organizations to which the
Pledgor is subject) applicable to the Pledgor or by which any property or asset
of the Pledgor is bound or affected (except for such conflicts, defaults,
terminations, amendments, accelerations, cancellations and violations as would
not, individually or in the aggregate, have a Material Adverse
Effect). The Pledgor is not in violation of its Articles, By-laws or
other organizational documents and is not in default (and no event
has occurred which with notice or lapse of time or both could put the Pledgor in
default) under, and the Pledgor has not taken any action or failed to take any
action that would give to others any rights of termination, amendment,
acceleration or cancellation of, any agreement, indenture or instrument to which
the Pledgor is a Party or by which any property or assets of the Pledgor is
bound or affected, except for possible defaults as would not, individually or in
the aggregate, have a Material Adverse Effect.
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The
business of the Pledgor is not being conducted in violation of any law,
ordinance or regulation of any governmental entity material to the business of
the Pledgor. Except as specifically contemplated by this Agreement
and as required under the Securities Act and any applicable laws of the State of
Delaware, the Pledgor is not required to obtain any consent, authorization or
order of, or make any filing or registration with, any court, governmental
agency, regulatory agency, self regulatory organization or stock market or any
third Party, in order for the execution, delivery or performance of any of its
obligations under this Agreement in accordance with the terms hereof or thereof,
or to issue the Loan in accordance with the terms hereof and the terms of the
Note. Any and all consents, authorizations, orders, filings and
registrations which the Pledgor is required to obtain pursuant to the preceding
sentence have been obtained or effected on or prior to the date
hereof.
(b) The
Secured Party does hereby represent and warrant to Pledgor as
follows:
(1) The
Secured Party is a corporation or other entity duly organized, validly existing
and in good standing under the laws of the jurisdiction in which it is
incorporated or organized, with full power and authority (corporate and other)
to own, lease, use and operate its properties and to carry on its business as
and where now owned, leased, used, operated and conducted. The
Secured Party is duly qualified as a foreign corporation to do business and is
in good standing in every jurisdiction in which its ownership or use of property
or the nature of the business conducted by it makes such qualification necessary
except where the failure to be so qualified or in good standing would not have a
Material Adverse Effect. “Material Adverse Effect” means any material
adverse effect on the business, operations, assets, financial condition or
prospects of the Secured Party, or on the transactions contemplated hereby or by
the agreements or instruments to be entered into in connection
herewith.
(2) The
Secured Party has full power and authority to enter into this Agreement, and
issue the Loan.
(3) The
execution, delivery and performance of this Agreement and the Loan and the
consummation of the transactions contemplated hereby and thereby will not (i)
conflict with or result in a violation of any provision of the certificate of
incorporation, or articles of association as amended (the “Articles”) or the Bylaws (the
“By-laws”), as amended
of the Secured Party or (ii) violate or conflict with, or result in a breach of
any provision of, or constitute a default (or an event which with notice or
lapse of time or both could become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation of, any agreement
or instrument to which the Secured Party is a Party or is otherwise bound or is
a beneficiary, or (iii) result in a violation of any law, rule, regulation,
order, judgment or decree (including federal, state and foreign securities laws
and regulations and regulations of any self-regulatory organizations to which
the Secured Party is subject) applicable to the Secured Party or by which any
property or asset of the Secured Party is bound or affected (except for such
conflicts, defaults, terminations, amendments, accelerations, cancellations and
violations as would not, individually or in the aggregate, have a Material
Adverse Effect). The Secured Party is not in violation of its
Articles, By-laws or other organizational documents and is not in
default (and no event has occurred which with notice or lapse of time or both
could put the Secured Party in default) under, and the Secured Party has not
taken any action or failed to take any action that would give to others any
rights of termination, amendment, acceleration or cancellation of, any
agreement, indenture or instrument to which the Secured Party is a Party or by
which any property or assets of the Secured Party is bound or affected, except
for possible defaults as would not, individually or in the aggregate, have a
Material Adverse Effect. The business of the Secured Party is not
being conducted in violation of any law, ordinance or regulation of any
governmental entity material to the business of the Secured
Party.
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Except as
specifically contemplated by this Agreement and as required under the Securities
Act and any applicable laws of the British Virgin Islands, the Secured Party is
not required to obtain any consent, authorization or order of, or make any
filing or registration with, any court, governmental agency, regulatory agency,
self regulatory organization or stock market or any third Party, in order for
the execution, delivery or performance of any of its obligations under this
Agreement in accordance with the terms hereof or thereof, or to issue the Loan
in accordance with the terms hereof and the terms of the Note. Any
and all consents, authorizations, orders, filings and registrations which the
Secured Party is required to obtain pursuant to the preceding sentence have been
obtained or effected on or prior to the date hereof.
6. Voting
Rights.
(a)
Subject at all times to its compliance with the covenants contained in the NHC
Purchase Agreement, including the provisions of Section 7.8 thereof,
and except as otherwise provided in Section 6(b) below,
during the term of this Agreement the Pledgor shall have the right to vote any
Pledged Securities which from all or a portion of the Pledged Collateral, to the
extent such Pledged Securities may be voted, on all questions presented to the
holders of Company Common Stock, and the Collateral Agent will deliver all
necessary documents to allow the Pledgor to take such action upon the Pledgor's
request.
(b) Notwithstanding
the provisions of Section 6(a) above,
upon the occurrence and during the continuance of default in payment of the
Obligations (an “Event
of Default”), the Secured Party may immediately, at the Secured Party's
option, exercise all voting and other consensual rights and powers pertaining to
the Pledged Collateral (to the extent it may vote). In such connection, the
Business Parties hereby agree that upon written notice to the Collateral Agent
by the Business Parties that an Event of Default has occurred and is continuing,
the Collateral Agent shall deliver all Proxies in its possession to the Secured
Party and any other instruments, documents or agreements deemed reasonably
necessary by the Secured Party to evidence the right to vote the Pledged
Collateral as provided hereunder, and the Pledgor agrees that they shall not be
entitled to rescind, revoke or otherwise modify the Secured Party's vote
executed in accordance with this Section 6(b). Any and
all Proxies executed by the Pledgor pursuant to this Section 6 shall be
deemed for all purposes to be a proxy coupled with an interest and shall be
irrevocable until the payment in full, in cash, of all amounts due under the
Obligations and performance of the other Obligations.
7. Dividends
and Other Distributions. The Collateral Agent shall be entitled to
receive any and all dividends and other distributions paid in respect of the
Pledged Collateral which dividends and/or distributions shall be deemed to be
held in escrow if received by the Secured Party and shall become part of the
Pledged Collateral upon receipt thereof.
8. Transfers
and Other Liens. The Pledgor
agrees that, except as otherwise provided in Section 4 above,
until all of the Obligations are paid in full, it will not (i)
sell or otherwise dispose of, or grant any option or other rights with
respect to, any of the Pledged Collateral without the prior written consent of
the Secured Party, or (ii) create or permit to exist any lien upon or with
respect to any of the Pledged Collateral, except for the lien created by this
Agreement.
9. Private
Placement Sale of Pledged Collateral. Subject at all times to the provisions
of Section
10 below, in view of the fact that federal
and state securities laws may impose certain restrictions on the method by which
a sale of the Pledged Collateral may be effected after an Event of Default, the
Pledgor agrees that after the occurrence and during the continuance of an Event
of Default, the Secured Party may, from time to time, attempt to sell all or any
part of the Pledged Collateral by means of a private placement restricting the
bidders and prospective purchasers to those who are qualified and will represent
and agree that they are purchasing for investment only and not for distribution.
In so doing, the Secured Party may solicit offers to buy the Pledged Collateral,
or any part of it, from one or more investors deemed by the Secured Party, in
its reasonable judgment, to be financially responsible parties who might be
interested in purchasing the Pledged Collateral. The acceptance by the Secured
Party of the highest and best offer obtained therefrom shall be deemed to be a
commercially reasonable method of disposing of such Pledged
Collateral.
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10. Alternative
Remedy. Notwithstanding the provisions of this
Agreement, on and after the occurrence of an Event of Default, the Secured Party
may (but shall not be obligated to) elect, in lieu of the remedies specified in
Section 4 to
retain all of the Pledged Collateral as full and complete liquidated damages for
any amounts then due and owing by the Pledgor to the Secured Party under the
Obligations and other Obligations.
11. Termination. This
Agreement shall remain in full force and effect until the Note
shall have been indefeasibly paid in full. Upon the termination of this
Agreement as provided above (other than as a result of the sale of the Pledged
Collateral), this Agreement shall automatically terminate and all liens and
security interests created hereunder shall terminate and be
released. Upon confirmation of payment in full of the Note, the
Collateral Agent shall (a) if any UCC-1 Financing Statements were previously
filed, file any UCC-3 Termination Statements releasing the lien and security
interest created by the Assignments, and (b) to the extent it then has
possession of any of the remaining Pledged Collateral, will deliver such Pledged
Collateral and the Assignments to the Pledgor.
12. Agreements
with and Duties of the Collateral Agent.
(a) The
Collateral Agent shall be under no duty to give the Pledged Collateral held by
it hereunder any greater degree of care than it gives its own similar
property.
(b) If
the Collateral Agent is permitted or required to deliver any of the Pledged
Collateral or pay money back to any Business Party or Business Parties, such
payment shall be made by check or by wire transfer, at the Collateral Agent's
sole discretion, unless the Collateral Agent shall have received written notice
from such Business Party or Business Parties of a new and/or different postal
address or unless this Agreement shall have provided otherwise. If
payment is made by check or Pledged Collateral is to be delivered, the same
shall be mailed to the address specified by the Business Party(s) in this
Agreement (or to a new or different address subsequently specified to Collateral
Agent by writing from such Business Party(s)).
(c) Whenever
authorization shall be provided by the terms of this Agreement for the payment
or delivery of Pledged Collateral by the Collateral Agent to one or more
Business Parties and there is no express requirement hereunder for written
instructions from the applicable Business Party(s) before such delivery is made,
the Collateral Agent shall notify all Business Parties and, in its sole
discretion, may defer payment or defer return or delivery of Pledged Collateral
until such written requirement or consent is received from all of the Business
Parties (or, depending on the Collateral Agent’s requirements, from less than
all of them). Where Collateral Agent determines to so defer payment
or delivery, the Collateral Agent shall give written notice to the Business
Parties of such determination.
(e) It
is expressly understood and agreed that under no circumstances shall the
Collateral Agent be required to pay or have paid to any Business Party(s) any
sum not representing proceeds from the sale of any Pledged Collateral that may
be delivered to the Collateral Agent.
(f) It
is intended that the duties and responsibilities of the Collateral Agent shall
be limited to ministerial duties and responsibilities to the maximum extent
permitted by law. In keeping with that intent, it is agreed that the
receipt by Collateral Agent of Exhibit
C, or an alternative written instrument containing the substantive
information or content that is in Exhibit
C (whether or not also including other information and content not
inconsistent with the request and approval of delivery or disbursement action
proposed to be taken by the Collateral Agent) shall, in the absence of actual
knowledge by the Collateral Agent of falsehood, fraud or other intentional or
gross misconduct on the part of any of the Business Parties that would render
the proposed action under the written instrument to be inappropriate, be full
and sufficient justification and authorization for the proposed payment or
disbursement action by the Collateral Agent. Notwithstanding anything to the
contrary, express or implied, contained in this Agreement, if the Collateral
Agent shall receive written instructions from the Secured Party in accordance
with Alternative Instructions 2 of Exhibit
C (or words of similar
import), the Collateral Agent shall: (i) furnish a copy of such instructions to
the Pledgor at the address designated on Exhibit
C (or any alternative
address requested by the Pledgor in writing), and (ii) take no action with
respect to such written request until a date which shall be not less than ten
(10) Business Days following receipt of such written instructions from the
Secured Party.
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(g) The
ministerial reliance by Collateral Agent on the written instrument referred to
in Section
12(f) shall be full and sufficient justification and authorization, as
stated in such Section, notwithstanding a determination that Collateral Agent
had certain specified discretionary inquiry powers and opportunities that
Collateral Agent did not pursue or that, absent the provisions of Section 12(f) above,
Collateral Agent had (or might have had) fiduciary responsibilities to
investigate before making any such payment or disbursement and did not do
so.
(h) The
Collateral Agent shall have no duty or responsibility to enforce collection of
any check delivered to it and subsequently dishonored, nor shall Collateral
Agent have any duty or responsibility to give notice to any Business Party of
such attempted payment and the subsequent dishonor thereof.
(i) The
Collateral Agent shall be entitled to rely upon the accuracy, act in reliance
upon the contents, and assume the genuineness of any notice, instruction,
certificate, signature (including copies of signature pages), instrument or
other document (in each case, whether a copy, facsimile or original) which is
given to the Collateral Agent pursuant to this Agreement, without the Collateral
Agent being obligated to undertake any action or investigation to verify the
truth or accuracy thereof -- unless the Collateral Agent has
actual knowledge that the document or other document, instruction, certificate
or signature is not accurate, truthful, authorized or
genuine. For purposes of this Section 12(i),
“Actual knowledge, or any other instance where “knowledge” would be required
(and, therefore, “actual knowledge” would be required as a standard of
“knowledge”) shall consist of actual and conscious apprehension and
understanding, presently in the mind or consciousness of the person acting for
Collateral Agent (as opposed to knowledge previously known but not currently
remembered or consciously being thought about) and shall be limited to such
“actual knowledge” by an attorney in Collateral Agent’s firm who is currently
actively engaged in the management of the Collateral Agent and who is made aware
of the document, etc. that is the subject of this Section
12(i). For purposes of this Agreement “knowledge” (being
required to be “actual knowledge”) shall not included knowledge of any other
attorney or person in Collateral Agent who is not directly involved in making
decisions regarding, or managing, the activities as Collateral
Agent. Knowledge by others within Collateral Agent shall not be
imputed to the persons described above for purposes of determining whether
“knowledge” or “actual knowledge” existed.
(j) The Collateral
Agent may consult with and act relative hereto upon advice of counsel of its own
selection in reference to any matter connected herewith, and shall not be liable
to any of the parties hereto, or their respective legal representatives, heirs,
successors and assigns, for any action taken in good faith on the advice of
counsel or for any mistake of fact or error of judgment, or for any acts or
omissions of any kind taken or made in good faith unless caused by its willful
misconduct or gross negligence.
(k) The
Collateral Agent shall not be responsible for, or have any duty to inquire into,
or be required to enforce any of the terms and provisions of any document or
agreement other than this Agreement.
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(l) Without
limiting the foregoing, the Collateral Agent shall not be responsible for, or
have any duty to inquire into, monitor or enforce obligations between any of the
Business Parties as to (i) whether there was support or justification for any
such Business Party to act in accordance with written instructions of such
Business Party or any other Business Party in attached Exhibit
C or any
written alternative acceptable to Collateral Agent that included (with anything
else) the material or content of Exhibit
C or (ii) whether any Business Party properly uses and applies funds
received by it, whether from the Collateral Agent or third parties, in
accordance with the provisions of this Agreement or other applicable
documents. Notwithstanding anything to the
contrary, express or implied, contained in this Agreement, if the Collateral
Agent shall receive written instructions from the Secured Party in accordance
with Alternative Instructions 2 of Exhibit
C (or words of similar
import), the Collateral Agent shall: (i) furnish a copy of such instructions to
the Pledgor at the address designated on Exhibit
C (or any alternative
address requested by the Pledgor in writing) within one (1) business day
following receipt of such instructions, and (ii) take no action with respect to
such written request until a date which shall be not less than ten (10) Business
Days following receipt of such written instructions from the Secured
Party.
(m) This
Agreement sets forth exclusively the duties of the Collateral Agent with respect
to any and all matters pertinent hereto and no implied duties or obligations
shall be read into this Agreement against the Collateral Agent.
(n) If
the Collateral Agent shall be uncertain as to its duties or rights hereunder or
if it receives instructions with respect to the Pledged Collateral or any funds
that may be derived from the sale or transfer of any Pledged Collateral, which,
in the Collateral Agent’s sole discretion, it determines to be in actual or
potential conflict with this Agreement or other instructions that it has
received, the Collateral Agent shall be excused from taking action that it might
otherwise be required to take, and its sole obligation shall be to keep safely
all property held in escrow until the uncertainty is resolved. Such
uncertainty can be resolved by written and signed agreement among all affected
Business Parties or by order or judgment of a court of competent jurisdiction,
naming the involved Business Parties as participants in the action or proceeding
brought to obtain judicial determination of the involved uncertain duties and
obligations.
Alternatively,
the Collateral Agent may, in its discretion, seek judicial determination of any
dispute or uncertainty and/or deposit all of the Pledged Collateral and any
funds that may be derived from the sale or transfer of any Pledged Collateral,
in Court pursuant to proceedings under New York law.
(p) The
Collateral Agent makes no representation as to the validity, value, genuineness
or collectability of any portion or all of the Pledged Collateral held by or
delivered to it.
(q) In
the event that:
(i) the
Collateral Agent shall receive any conflicting or inconsistent notices or
instructions from any one or more of the Business Parties, or
(ii) there
shall be any disagreement between or among any of the Business Parties,
resulting in adverse claims or demands being made in connection with the subject
matter of this Agreement, or
(iii) there
shall be any disagreement between or among any of the Business Parties and any
other person, resulting in adverse claims or demands being made in connection
with the subject matter of this Agreement, or
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(iv) the
Collateral Agent, in good faith, shall be in doubt as to what action it should
take hereunder, then, and
in any such event, Collateral Agent may, at its option, refuse to comply with
any notices, instructions, claims or demands on it, or refuse to take any other
action hereunder, so long as such disagreement continues or such doubt exists,
and in any such event, the Collateral Agent shall not become liable in any way
or to any person for its failure or refusal to act. The Collateral
Agent shall be entitled to continue so to refrain from acting until (A) the
rights of all Business Parties or other third person(s) shall have been fully
and finally adjudicated by a court of competent jurisdiction or (B) all
differences shall have been adjusted and all doubt resolved by agreement among
all of the interested persons, and the Collateral Agent shall have been notified
thereof in writing signed by all such persons. The Collateral Agent
shall have the option, after thirty (30) days’ notice to the Business Parties of
its intention to do so, to file an action in interpleader requiring the parties
to answer and litigate any claims and rights among themselves.
The
rights of the Collateral Agent under this Section 12(q) are
cumulative of all other rights which it may have by law or
otherwise.
(r) The
Collateral Agent does not have and will not have any interest in the Pledged
Collateral or any funds that may be derived from the sale or transfer of any
Pledged Collateral, but is serving only as escrow holder and has only possession
thereof.
(s) The
Collateral Agent’s duties and responsibilities shall be determined only with
reference to this Agreement. The Collateral Agent is not charged with
any duties or responsibilities in connection with any other document or
agreement.
(t) The
Collateral Agent may execute any of its powers or responsibilities hereunder
either directly or by or through its agents or attorneys and the Collateral
Agent shall not be responsible for any misconduct or negligence on the part of
any agent or attorney appointed with due care by it hereunder.
(u) Each
of Business Parties do hereby release the Collateral Agent from any act done or
omitted to be done by the Collateral Agent in good faith in the performance of
its duties hereunder, and each of Business Parties do hereby jointly and
severally agree to fully indemnify the Collateral Agent and its directors,
officers, employees and agents (the “Collateral Agent Indemnified
Parties”) for, and to hold each of them harmless from and against, any
loss, liability, claim, damage or expense (including reasonable attorneys’ fees
and expenses) incurred by the Collateral Agent Indemnified Parties, arising out
of or in connection with the Collateral Agent entering into this Agreement and
carrying out its duties hereunder, including the reasonable costs and expenses
of defending itself from any claim or liability; provided,
however, that the Collateral Agent Indemnified Parties shall not be
entitled to indemnification hereunder for losses, liabilities and expenses
caused by the willful misconduct, fraud or gross negligence of any of the
Collateral Agent Indemnified Parties. The agreements contained in
this Section
12(u) shall survive despite any termination of this Agreement or the
resignation or removal of the Collateral Agent.
(v) The
Collateral Agent shall not incur any liability for not performing any act or
fulfilling any duty, obligation or responsibility hereunder by reason of any
occurrence beyond the control of the Collateral Agent (including but not limited
to any act or provision of any present or future law or regulation or
governmental authority, any act of God or war, or the unavailability of the
Federal Reserve Bank wire or telex or other wire or communication
facility).
(w) Anything
in this Agreement to the contrary notwithstanding, in no event shall the
Collateral Agent be liable for consequential loss or damage of any kind
whatsoever (including but not limited to lost profits), regardless of the form
of action.
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(x) The
Collateral Agent may resign at any time or be removed by the written mutual
consent of the Business Parties. No resignation or removal of the
Collateral Agent and no appointment of a successor Collateral Agent, however,
shall be effective until the acceptance or removal of the Collateral Agent in
the manner herein provided. In the event of the resignation or
removal of the Collateral Agent, the Business Parties shall in good faith agree
upon a successor Collateral Agent. If the Business Parties are unable
to agree upon a successor Collateral Agent within fourteen (14) calendar days
after receipt of a notice of resignation or removal is given, the Collateral
Agent may deposit the Pledged Collateral and any funds delivered to the
Collateral Agent from the sale or transfer of any Pledged Collateral with a
court of competent jurisdiction and may petition, at the sole expense of the
Business Parties, a court of competent jurisdiction for the appointment of a
successor Collateral Agent. Any successor Collateral Agent shall
execute and deliver to the predecessor Collateral Agent and the Business Parties
an instrument accepting such appointment and the transfer of the Pledged
Collateral and any funds delivered to the Collateral Agent from the sale or
transfer of any Pledged Collateral and agreeing to the terms of this Agreement,
and thereupon such successor Collateral Agent shall, without further act, become
vested with all the estates, properties, rights, powers and duties of the
predecessor Collateral Agent as if originally named herein.
(y) Any
law firm with which the Collateral Agent may merge or consolidate shall be the
successor Collateral Agent without further act.
(z) At
any time either the Pledgor or the Secured Party can request the Collateral
Agent to resign, and if the Collateral Agent agrees to resign, another
Collateral Agent acceptable to the Secured Party shall be appointed as
Collateral Agent.
13. Definitions. The
singular shall include the plural and vice versa and any gender shall include
any other gender as the context may require.
14. Successors
and Assigns. This
Agreement shall be binding upon and inure to the benefit of the Pledgor, the
Secured Party and their respective successors and assigns. The Pledgor's
successors and assigns shall include, without limitation, a receiver, trustee or
debtor-in-possession of or for the Pledgor.
15. GOVERNING
LAW. THIS AGREEMENT SHALL
BE A CONTRACT MADE UNDER
AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW
YORK WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES THAT WOULD REQUIRE THE
APPLICATION OF THE LAWS OF ANY STATE OTHER THAN THE STATE OF NEW
YORK.
16. Severability. Whenever possible, each
provision of this Agreement shall be interpreted in such manner as to be
effective and valid under applicable law, but, if any provision of this
Agreement shall be held to be prohibited or invalid under applicable law, such
provision shall be ineffective only to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement.
17. Further
Assurances. The Pledgor agrees that they
will cooperate with the Secured Party and the Collateral Agent and will execute
and deliver, or cause to be executed and delivered, all such other assignments
separate from certificate, proxies, instruments and documents, and will take all
such other actions, including, without limitation, the execution and filing of
financing statements, as the Secured Party or the Collateral Agent may
reasonably request from time to time m order to carry out the provisions and
purposes of this Agreement.
-11-
18. Notices. Except as otherwise provided
herein, whenever it is provided herein that any notice, demand, request,
consent, approval, declaration or other communications shall or may be given to
or served upon any of the parties by any other party, or whenever any of the
parties desires to give or serve upon any other communication with respect to
this Agreement, each such notice, demand, request, consent, approval,
declaration or other communication shall be in writing and shall be given (and
deemed to have been given) to the address on record with the sending party and
otherwise in accordance with and subject to the terms of the Note. Any notices
required or permitted to be given hereunder shall be sent by certified or
registered mail (return receipt requested) or delivered personally or by courier
(including a recognized overnight delivery service) or by facsimile and shall be
effective five days after being placed in the mail, if mailed by regular United
States mail, or upon receipt, if delivered personally or by courier (including a
recognized overnight delivery service) or by facsimile, in each case addressed
to a Business Party.
19. Amendments,
Waivers and Consents. No
amendment to, modification or waiver of, or consent with respect to, any
provision of this Agreement shall in any event be effective unless the same
shall be in writing and signed and delivered by the Secured Party and the
Pledgor, and then any such amendment, modification, waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.
20. Section
Headings. The section
headings in this Agreement are inserted for convenience of reference and shall
not be considered a part of this Agreement or used in its
interpretation.
21. Execution
in Counterparts. This
Agreement may be executed in any number of counterparts, each of which shall be
an original, but all of which shall together constitute one and the same
agreement. Any such counterpart which may be delivered by facsimile transmission
shall be deemed the equivalent of an originally signed counterpart and shall be
fully admissible in any enforcement proceedings regarding this
Agreement.
22. Merger. This
Agreement represents the final agreement of the Pledgor and the Secured Party
with respect to the matters contained herein and may not be contradicted by
evidence of prior or contemporaneous agreements, or subsequent oral agreements,
between the Pledgor and the Secured Party.
[Remainder
of Page Intentionally Left Blank; Signature Page Follows]
-12-
IN WITNESS WHEREOF,
the Pledgor and the Secured Party have each caused this Agreement to be
executed and delivered by its duly authorized officer as of the date first set
forth above.
PLEDGOR:
▇▇▇▇.▇▇▇
INC.
(a
Delaware corporation)
By:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, CEO
SECURED
PARTY:
GLOBAL
ASSET FUND LTD.
By:
▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇, authorized signatory
COLLATERAL
AGENT:
▇▇▇▇▇▇▇
▇▇▇▇ LLP
By:
▇▇▇▇▇▇▇
▇. ▇▇▇▇▇, Partner
-13-
EXHIBIT
A
FORM OF ASSIGNMENT SEPARATE
FROM CERTIFICATE
FOR VALUE RECEIVED,
the undersigned, ▇▇▇▇.▇▇▇ INC.,, does hereby
sell,assign and transfer unto, the $500,000 Limited Recourse Note of NATIONAL
HOLDINGS CORPORATION (the “Pledged Securities”),
standing in the name of the undersigned on the books of said corporation and
does hereby irrevocably constitute and appoint ▇▇▇▇▇▇▇ ▇▇▇▇ LLP as Agent, as the
undersigned's true and lawful attorney, for it and in its name and stead, to
sell, assign and transfer all or any of the Pledged Securities, and for that
purpose to make and execute all necessary acts of assignment and transfer
thereof; and to substitute one or more persons with like full power, hereby
ratifying and confirming all that said attorney or substitute or substitutes
shall lawfully do by virtue hereof.
Dated:
▇▇▇▇.▇▇▇
INC.
By:
Name:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Its: CEO
-14-
Exhibit
B
PROXY
-15-
EXHIBIT
C
LETTER OF
INSTRUCTION
▇▇▇▇▇▇▇
▇▇▇▇ LLP
As
Collateral Agent
▇▇▇▇
▇▇▇▇▇▇▇▇ - ▇▇▇▇
▇▇▇▇▇
▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Re: Pledge
Agreement, dated April __, 2009 among ▇▇▇▇.▇▇▇ Inc. (the Pledgor”), Global
Asset Fund Ltd. (“the Secured Party”), and ▇▇▇▇▇▇▇ ▇▇▇▇ LLP (“Collateral
Agent”).
Gentlemen:
Reference
is made to the above captioned Pledge Agreement. Unless otherwise
defined herein, all capitalized terms shall have the same meaning as is defined
in the Pledge Agreement.
Alternative
Instructions 1
Please be
advised that all of the Obligations have been performed and/or paid in full and
you are hereby instructed to release all of the Pledged Collateral in your
possession to the Pledgor or as otherwise designated by Pledgor.
Alternative
Instructions 2
Please be
advised that an Event of Default under the Note and the Pledge Agreement has
occurred and is continuing, as a result of which you are hereby instructed to
release all of the Pledged Collateral in your possession to the Secured Party or
as otherwise designed by the Secured Party.
Very
truly yours,
GLOBAL
ASSET FUND LTD.
By:
▇▇▇▇ ▇. ▇▇▇▇▇, Authorized
Signatory
▇▇▇▇.▇▇▇
INC.
(a
Delaware corporation)
By:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, CEO
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EXHIBIT
C
Names,
Emails and signature(s) for:
Person(s) Designated to give
Instructions to the Collateral Agent
|
If
from the Pledgor:
|
||
|
Name
|
Email
|
Signature
|
|
▇▇▇▇▇▇
▇▇▇▇▇ or
▇▇▇▇▇▇▇
▇▇▇▇▇▇▇
|
▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
▇▇▇▇▇▇▇▇@▇▇▇▇.▇▇▇
|
___________________________
___________________________
|
|
If
from the Secured Party
|
|
Name
|
Email
|
Signature
|
|
▇▇▇▇
▇. ▇▇▇▇▇
|
__________________________
___________________________
|
All
instructions must include the signature of the person(s) authorizing said
instructions.
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