PLEDGE AND SECURITY AGREEMENT
PLEDGE AND SECURITY AGREEMENT (this "Agreement"), dated November __, 2003,
made by Amnis Systems Inc. (the "Pledgor") in favor of SDS Capital Group SPC,
Ltd., Alpha Capital Aktiengesellschaft, Bristol Investment Fund, Ltd. and
▇▇▇▇▇▇▇▇▇▇▇ Limited Partnership (the "Pledgee").
W I T N E S S E T H:
WHEREAS, pursuant to the provisions of that certain Securities Purchase
Agreement of even date herewith between the Pledgor and the Pledgees (the
"Purchase Agreement"), the Pledgees have agreed to lend to the Company and the
Company has agreed to borrow from the Pledgee up to $1,100,000 under certain
terms and conditions set forth in the Purchase Agreement;
WHEREAS, pursuant to the provisions of the Purchase Agreement, and as a
condition to the obligation of the Pledgee to lend thereunder, the Pledgor has
agreed to make the pledge contemplated by this Agreement in order to induce the
Pledgee to perform its obligations under the Purchase Agreement;
WHEREAS, the Pledgor is the sole-shareholder of Optivision, Inc., a
California company, and based on the Pledgor's representations and warranties
contained in the Purchase Agreement, such entity is its only active Subsidiary
(the "Active Subsidiary"); and
WHEREAS, all capitalized terms used but not defined herein shall have the
meanings ascribed to them in the Purchase Agreement.
NOW, THEREFORE, in consideration of the premises, covenants and promises
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:
SECTION 1. (A) Grant of Security Interest.
(a) To secure the complete and timely payment, performance and
discharge in full, as the case may be, of all of the obligations, the
Pledgor hereby, unconditionally and irrevocably, pledges, grants and
hypothecates to the Pledgees, a continuing security interest, subject only
to the liens set forth on Schedule 1(a), in, a lien upon and a right of
set-off against all of their respective right, title and interest of
whatsoever kind and nature in the Collateral (as defined below) (the
"Security Interest").
(b) Terms used but not otherwise defined in this Agreement that are
defined in Article 9 of the UCC (such as "general intangibles" and
"proceeds") shall have the respective meanings given such terms in Article
9 of the UCC.
(c) As used herein, "Collateral" means the collateral in which the
Pledgees are granted a security interest by this Agreement and which shall
include the following,
whether presently owned or existing or hereafter acquired or coming into
existence, and all additions and accessions thereto and all substitutions and
replacements thereof, and all proceeds, products and accounts thereof,
including, without limitation, all proceeds from the sale or transfer of the
Collateral and of insurance covering the same and of any tort claims in
connection therewith:
(i) All Goods of the Pledgor, including, without limitations, all
machinery, equipment, computers, motor vehicles, trucks, tanks, boats,
ships, appliances, furniture, special and general tools, fixtures, test
and quality control devices and other equipment of every kind and nature
and wherever situated, together with all documents of title and documents
representing the same, all additions and accessions thereto, replacements
therefor, all parts therefor, and all substitutes for any of the foregoing
and all other items used and useful in connection with the Pledgor's
businesses and all improvements thereto (collectively, the "Equipment");
and
(ii) All Inventory of the Pledgor; and
(iii) All of the Pledgor's contract rights and general intangibles,
including, without limitation, all partnership interests, stock or other
securities, licenses, distribution and other agreements, computer software
development rights, leases, franchises, customer lists, quality control
procedures, grants and rights, goodwill, trademarks, service marks, trade
styles, trade names, patents, patent applications, copyrights, deposit
accounts, income tax refunds and the Pledged Collateral as defined below
(collectively, the "General Intangibles"); and
(iv) All Receivables of the Pledgor including all insurance
proceeds, and rights to refunds or indemnification whatsoever owing,
together with all instruments, all documents of title representing any of
the foregoing, all rights in any merchandising, goods, equipment, motor
vehicles and trucks which any of the same may represent, and all right,
title, security and guaranties with respect to each Receivable, including
any right of stoppage in transit; and
(v) All of the Pledgor's documents, instruments and chattel paper,
files, records, books of account, business papers, computer programs and
the products and proceeds of all of the foregoing Collateral set forth in
clauses (i)-(iv) above.
(B) Pledge. In order to perfect the Pledgees' security interest in certain
of the General Intangibles, the Pledgor hereby pledges to the Pledgee, and
grants to the Pledgee a continuing security interest in, the following
(collectively, the "Pledged Collateral"):
(a) All shares of common stock including a stock power executed in
blank
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(the "Pledged Shares") of the Active Subsidiary identified in Schedule
1(a) annexed hereto representing the Pledged Shares, and all dividends,
cash, instruments and other property from time to time received,
receivable or otherwise distributed in respect of or in exchange for any
or all of the Pledged Shares; and
(b) all proceeds of any and all of the foregoing Pledged Collateral,
in whatever form (including, without limitation, proceeds that constitute
property of the types described above).
SECTION 2. Security for Obligations. This Agreement secures the
payment and performance of the following obligations (collectively, the
"Obligations"): all present and future indebtedness, obligations, covenants,
duties and liabilities of any kind or nature of the Company to the Pledgees (or
any of them) now existing or hereafter arising under or in connection with the
Transaction Documents (as defined in Section 2(h) of the Securities Purchase
Agreement).
SECTION 3. Delivery of Pledged Collateral. Concurrently herewith,
all certificates representing or evidencing the Pledged Shares, in suitable form
for transfer by delivery, or accompanied by instruments of transfer or
assignment duly executed in blank, are being deposited with and delivered to ▇▇▇
▇▇▇▇ (the "Agent"), as collateral agent for the Pledgees. The Pledged Shares
shall be held by the Agent first on behalf of both Bristol Investment Fund, LTD
("Bristol") and Alpha Capital Aktiengesellschaft ("Alpha") as set forth in that
certain Pledge and Security Agreement between the Company and Alpha dated May 9,
2003 and that certain Second Restated Intercreditor Agreement between Bristol,
Alpha, SDS Capital Group SPC, Ltd. ("SDS") and ▇▇▇▇▇▇▇▇▇▇▇ Limited Partnership
("▇▇▇▇▇▇▇▇▇▇▇") and acknowledged by the Company dated November __, 2003 (the
"Second Restated Intercreditor Agreement"), then on behalf of Alpha, Bristol and
SDS as set forth in that certain Pledge and Security Agreement between the
Company and Alpha, Bristol and SDS dated May 9, 2003 and the Second Restated
Intercreditor Agreement, then on behalf of ▇▇▇▇▇▇▇▇▇▇▇ as set forth in that
certain Pledge and Security Agreement between the Company and ▇▇▇▇▇▇▇▇▇▇▇ dated
September 12, 2003 and the Second Restated Intercreditor Agreement and then on
behalf of the Pledgees. The Agent shall have the right, at any time after the
occurrence of an Event of Default (as hereinafter defined), without notice to
the Pledgor, to transfer to or to register in the name of the Agent or its
nominees any or all of the Pledged Collateral. In addition, the Agent shall have
the right at any time to exchange certificates or instruments representing or
evidencing Pledged Collateral for certificates or instruments of smaller or
larger denominations.
SECTION 4. Representations and Warranties. The Pledgor represents
and warrants as follows:
(a) Attached hereto as Schedule 4(a) is a listing, as of the date
hereof, of all creditors of Pledgor, including approximate amounts owed to
each such creditor.
(b) The Pledgor is the legal, record and beneficial owner of the
Pledged Collateral
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and the Collateral, free and clear of any lien, security interest,
restriction, option or other charge or encumbrance (collectively, "Liens")
except for the security interest created by this Agreement and the liens
disclosed on Schedule 1(a).
(c) The pledge of the Pledged Collateral and the grant of the
Security Interest pursuant to this Agreement creates a valid and perfected
security interest in the Pledged Collateral and the Collateral, securing
payment and performance of the Obligations subject only to a senior
security interest as set forth on Schedule 1(a).
(d) No consent of any other person or entity and no authorization,
approval, or other action by, and no notice to or filing with, any
governmental authority or regulatory body is required (i) for the pledge
by the Pledgor of the Pledged Collateral pursuant to this Agreement or for
the execution, delivery or performance of this Agreement by the Pledgor,
(ii) for the perfection or maintenance of the security interest created
hereby, or (iii) for the exercise by the Agent of the voting or other
rights provided for in this Agreement or the remedies in respect of the
Pledged Collateral pursuant to this Agreement (except as may be required
in connection with any disposition of any portion of the Pledged
Collateral by laws affecting the offering and sale of securities
generally).
(e) There are no conditions precedent to the effectiveness of this
Agreement that have not been satisfied or waived.
(f) The mailing address of the Pledgor is ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and the Pledgor will not change its address except
upon not less than thirty (30) days' prior written notice to the Agent and
the Pledgees. The Pledgor represents and warrants that they have no place
of business or offices where their respective books of account and records
are kept (other than temporarily at the offices of its attorneys or
accountants) or places where Collateral is stored or located, except as
set forth on Schedule A attached hereto.
(g) No part of the Collateral has been judged invalid or
unenforceable. No written claim has been received that any Collateral or
Pledgor's use of any Collateral violates the rights of any third party.
There has been no adverse decision to Pledgor's claim of ownership rights
in or exclusive rights to use the Collateral in any jurisdiction or to
Pledgor's right to keep and maintain such Collateral in full force and
effect, and there is no proceeding involving said rights pending or, to
the best knowledge of the Pledgor, threatened before any court, judicial
body, administrative or regulatory agency, arbitrator or other
governmental authority.
(h) The Pledgor shall at all times maintain their respective books
of account and records relating to the Collateral at their respective
principal place of business and their respective Collateral at the
locations set forth on Schedule A attached hereto and may not relocate
such books of account and records or tangible Collateral unless they
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deliver to the Pledgees at least 30 days prior to such relocation (i)
written notice of such relocation and the new location thereof (which must
be within the United States) and (ii) evidence that appropriate financing
statements under the UCC and other necessary documents have been filed and
recorded and other steps have been taken to perfect the Security Interest
to create in favor of the Pledgees a valid, perfected and continuing lien
in the Collateral.
(i) Except for the filing of financing statements pursuant to the
UCC with the proper filing and recording agencies in the jurisdictions
indicated on Schedule B, attached hereto, no authorization or approval of
or filing with or notice to any governmental authority or regulatory body
is required either (i) for the grant by the Pledgor of, or the
effectiveness of, the Security Interest granted hereby or for the
execution, delivery and performance of this Agreement by the Pledgor or
(ii) for the perfection of or exercise by the Pledgees of its rights and
remedies hereunder.
(j) Effective on the date of execution of this Agreement, the
Pledgor hereby authorizes the Agent to file one or more financing
statements under the UCC with respect to the Security Interest with the
proper filing and recording agencies in the jurisdictions indicated on
Schedule B, attached hereto and in such other jurisdictions as may be
requested by the Pledgees.
(k) The execution, delivery and performance of this Agreement by the
Pledgor does not conflict with, or constitute a default (or an event that
with notice or lapse of time or both would become a default) under, or
give to others any rights of termination, amendment, acceleration or
cancellation (with or without notice, lapse of time or both) of, any
agreement, credit facility, debt or other instrument (evidencing Pledgor's
debt or otherwise) or other understanding to which Pledgor is a party or
by which any property or asset of the Pledgor is bound or affected. No
consent (including, without limitation, from stock holders or creditors of
the Pledgor) is required for the Pledgor to enter into and perform its
obligations hereunder.
(l) The Pledgor shall at all times maintain the liens and Security
Interest provided for hereunder as valid and perfected liens and security
interests in the Collateral in favor of the Pledgees until this Agreement
and the Security Interest hereunder shall be terminated. The Pledgor
hereby agrees to defend the same against any and all persons. The Pledgor
shall safeguard and protect all Collateral for the account of the
Pledgees. At the request of the Pledgees, the Pledgor will sign and
deliver to the Pledgees at any time or from time to time one or more
financing statements pursuant to the UCC in form reasonably satisfactory
to the Pledgees and will pay the cost of filing the same in all public
offices wherever filing is, or is deemed by the Pledgees to be, necessary
or desirable to effect the rights and obligations provided for herein.
Without limiting the generality of the foregoing, the Pledgor shall pay
all fees, taxes and other amounts
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necessary to maintain the Collateral and the Security Interest hereunder,
and the Pledgor shall obtain and furnish to the Pledgees from time to
time, upon demand, such releases and/or subordinations of claims and liens
which may be required to maintain the priority of the Security Interest
hereunder.
(m) The Pledgor will not transfer, pledge, hypothecate, encumber,
license (except for non-exclusive licenses granted by a Pledgor in its
ordinary course of business and sales of inventory), sell or otherwise
dispose of any of the Collateral without the prior written consent of a
majority in interest of the Pledgees.
(n) The Pledgor shall keep and preserve its Equipment, Inventory and
other tangible Collateral in good condition, repair and order and shall
not operate or locate any such Collateral (or cause to be operated or
located) in any area excluded from insurance coverage.
(o) The Pledgor shall, within ten (10) days of obtaining knowledge
thereof, advise the Pledgees promptly, in sufficient detail, of any
substantial change in the Collateral, and of the occurrence of any event
which would have a material adverse effect on the value of the Collateral
or on the Pledgees' security interest therein.
(p) The Pledgor shall promptly execute and deliver to the Pledgees
such further deeds, mortgages, assignments, security agreements, financing
statements or other instruments, documents, certificates and assurances
and take such further action as the Pledgees may from time to time request
and may in its sole discretion deem necessary to perfect, protect or
enforce its security interest in the Collateral.
(q) The Pledgor shall permit the Pledgees and their representatives
and agents to inspect the Collateral at any time, and to make copies of
records pertaining to the Collateral as may be requested by a Secured
Party from time to time.
(r) The Pledgor shall take all steps reasonably necessary to
diligently pursue and seek to preserve, enforce and collect any rights,
claims, causes of action and accounts receivable in respect of the
Collateral.
(s) The Pledgor shall promptly notify the Pledgees in sufficient
detail upon becoming aware of any attachment, garnishment, execution or
other legal process levied against any Collateral and of any other
information received by the Pledgor that may materially affect the value
of the Collateral, the Security Interest or the rights and remedies of the
Pledgees hereunder.
(t) All information heretofore, herein or hereafter supplied to the
Pledgees by or on behalf of the Pledgor with respect to the Collateral is
accurate and complete in all
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material respects as of the date furnished.
(u) The Pledgor shall at all times preserve and keep in full force
and effect their respective valid existence and good standing and any
rights and franchises material to its business.
(v) The Pledgor will not change its name, corporate structure, or
identity, or add any new fictitious name unless it provides at least 30
days prior written notice to the Pledgees of such change and, at the time
of such written notification, such Pledgor provides any financing
statements or fixture filings necessary to perfect and continue perfected
the Security Interest granted and evidenced by this Agreement.
(w) The Pledgor may not consign any of its Inventory or sell any of
its Inventory on ▇▇▇▇ and hold, sale or return, sale on approval, or other
conditional terms of sale without the consent of a majority in interest of
the Pledgees which shall not be unreasonably withheld.
(x) The Pledgor may not relocate its chief executive office to a new
location without providing 30 days prior written notification thereof to
the Pledgees and so long as, at the time of such written notification, the
Pledgor provides any financing statements or fixture filings necessary to
perfect and continue perfected the Security Interest granted and evidenced
by this Agreement.
SECTION 5. Further Assurances. The Pledgor agrees that at any time
and from time to time, at the expense of the Pledgor, the Pledgor shall promptly
execute and deliver all further instruments and documents, and take all further
action, that may be necessary or desirable, or that the Agent and/or the
Pledgees may reasonably request, in order to perfect and protect any security
interest granted or purported to be granted hereby or to enable the Agent and/or
any Pledgee to exercise and enforce its rights and remedies hereunder with
respect to any Pledged Collateral.
SECTION 6. Voting Rights; Dividends; Etc.
(a) So long as no Event of Default shall have occurred:
(i) The Pledgor shall be entitled to exercise or refrain from
exercising any and all voting and other consensual rights pertaining
to the Pledged Collateral or any part thereof for any purpose not
inconsistent with the terms of this Agreement; provided, however,
that the Pledgor shall not exercise or refrain from exercising any
such right if, in the reasonable judgment of the Pledgees, such
action would have a material adverse effect on the value of the
Pledged Collateral or any material part thereof; provided, further,
that the Pledgor shall give the
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Pledgees at least ten (10) days' prior written notice of the manner
in which it intends to exercise, or the reasons for refraining from
exercising, any such right.
(ii) The Pledgor shall be entitled to receive and retain any
and all cash dividends and interest paid in respect of the Pledged
Collateral; provided, however, that any and all:
(A) dividends and interest paid or payable other than in
cash in respect of, and instruments and other property
received, receivable or otherwise distributed in respect of,
or in exchange for, any Pledged Collateral,
(B) dividends and other distributions paid or payable in
cash in respect of any Pledged Collateral in connection with a
partial or total liquidation or dissolution or in connection
with a reduction of capital, capital surplus or
paid-in-surplus, and
(C) cash paid, payable or otherwise distributed in
respect of principal of, or in redemption of, or in exchange
for, any Pledged Collateral,
shall be, and shall be forthwith delivered to the Agent to hold as,
Pledged Collateral, and shall, if received by the Pledgor, be
received in trust for the benefit of the Pledgees, be segregated
from the other property or funds of the Pledgor, and be forthwith
delivered to the Agent as Pledged Collateral in the same form as so
received (with any necessary endorsement or assignment).
(b) Upon and after the occurrence of any Event of Default:
(i) All rights of the Pledgor to exercise or refrain from
exercising the voting and other consensual rights which it would
otherwise be entitled to exercise pursuant to Section 6(a)(i) and to
receive the dividends and interest payments which it would otherwise
be authorized to receive and retain pursuant to Section 6(a)(ii)
shall cease, and all such rights shall thereupon become vested in
the Agent who shall thereupon have the sole right to exercise or
refrain from exercising such voting and other consensual rights and
to receive and hold as Pledged Collateral such dividends and
interest payments.
(ii) All dividends and interest payments which are received by
the Pledgor contrary to the provisions of paragraph (i) of this
Section 6(b) shall be
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received in trust for the benefit of the Pledgees, shall be
segregated from other funds of the Pledgor and shall be forthwith
paid over to the Agent as Pledged Collateral in the same form as so
received (with any necessary endorsement).
SECTION 7. Transfers and Other Liens; Additional Shares. The Pledgor
agrees that it shall not (i) sell, assign (by operation of law or otherwise) or
otherwise dispose of, or grant any option with respect to, any of the Pledged
Collateral, or (ii) create or permit to exist any Lien upon or with respect to
any of the Pledged Collateral, except for the security interest granted pursuant
to this Agreement.
SECTION 8. Agent Appointed Attorney-in-Fact.
(a) The Pledgor hereby appoints the Agent as the Pledgor's
attorney-in-fact, with full authority in the place and stead of the
Pledgor and in the name of the Pledgor or otherwise, from time to time in
the Agent's discretion to take any action and to execute any instrument
which the Agent may deem necessary or desirable to accomplish the purposes
of this Agreement, including, without limitation, to receive, endorse and
collect all instruments made payable to the Pledgor representing any
dividend, interest payment or other distribution in respect of the Pledged
Collateral or any part thereof and to give full discharge for the same.
(b) The Pledgor authorizes the Agent, and does hereby make,
constitute and appoint the Agent and its respective officers, agents,
successors or assigns with full power of substitution, as the Pledgor's
true and lawful attorney-in-fact, with power, in the name of the Pledgees
or the Pledgor, to, after the occurrence and during the continuance of an
Event of Default, (i) endorse any Debentures, checks, drafts, money
orders, or other instruments of payment (including payments payable under
or in respect of any policy of insurance) in respect of the Collateral
that may come into possession of the Pledgees; (ii) to sign and endorse
any financing statement pursuant to the UCC or any invoice, freight or
express ▇▇▇▇, ▇▇▇▇ of lading, storage or warehouse receipts, drafts
against Pledgors, assignments, verifications and notices in connection
with accounts, and other documents relating to the Collateral; (iii) to
pay or discharge taxes, liens, security interests or other encumbrances at
any time levied or placed on or threatened against the Collateral; (iv) to
demand, collect, receipt for, compromise, settle and ▇▇▇ for monies due in
respect of the Collateral; (v) generally, to do, at the option of the
Pledgees, and at the expense of the Pledgor, at any time, or from time to
time, all acts and things which the Pledgees deem necessary to protect,
preserve and realize upon the Collateral and the Security Interest granted
therein in order to effect the intent of this Agreement and the Debentures
all as fully and effectually as the Pledgor might or could do; and (vi) in
the event of the bankruptcy of the Pledgor, to appoint a receiver or
equivalent person to ▇▇▇▇▇▇▇▇ Pledgor's assets, and the Pledgor hereby
ratifies all that said attorney shall lawfully do or cause to be done by
virtue hereof. This power of attorney is coupled with an interest and
shall be irrevocable for the term of this Agreement and thereafter as long
as any of the
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Obligations shall be outstanding.
(c) On a continuing basis, the Pledgor will make, execute,
acknowledge, deliver, file and record, as the case may be, with the proper
filing and recording agencies in any jurisdiction, including, without
limitation, the jurisdictions indicated on Schedule B, attached hereto,
all such instruments, and take all such action as may reasonably be deemed
necessary or advisable, or as reasonably requested by the Pledgees, to
perfect the Security Interest granted hereunder and otherwise to carry out
the intent and purposes of this Agreement, or for assuring and confirming
to the Pledgees the grant or perfection of a security interest in all the
Collateral under the UCC.
(d) The Pledgor hereby irrevocably appoints the Agent as the
Pledgor's attorney-in-fact, with full authority in the place and stead of
the Pledgor and in the name of the Pledgor, from time to time in the
Agent's discretion, to take any action and to execute any instrument which
the Pledgees may deem necessary or advisable to accomplish the purposes of
this Agreement, including the filing, in its sole discretion, of one or
more financing or continuation statements and amendments thereto, relative
to any of the Collateral without the signature of the Pledgor where
permitted by law.
SECTION 9. Pledgees May Perform. If the Pledgor fails to perform any
agreement contained herein, the Agent and/or any Pledgee may itself perform, or
cause performance of, such agreement, and the expenses of the Agent and/or such
Pledgee incurred in connection therewith shall be payable by the Pledgor under
Section 14.
SECTION 10. The Agent's Duties. The duties and rights of the Agent
are as set forth on Annex A attached hereto and incorporated herein by
reference. Any fees of the Agent for its services hereunder shall be paid by the
Pledgees. The powers conferred on the Agent hereunder are solely to protect the
interests of the Pledgees in the Pledged Collateral and shall not impose any
duty upon the Agent to exercise any such powers. Except for the safe custody of
any Pledged Collateral in its possession and the accounting for moneys actually
received it hereunder, neither the Agent nor any Pledgee shall have any duty as
to any Pledged Collateral, as to ascertaining or taking action with respect to
calls, conversions, exchanges, maturities, tenders or other matters relative to
any Pledged Collateral, whether or not such party has or is to have knowledge of
such matters, or as to the taking of any necessary steps to preserve rights
against any parties or any other rights pertaining to any Pledged Collateral.
The Agent and each Pledgee shall be deemed to have exercised reasonable care in
the custody and preservation of any Pledged Collateral in its possession if such
Pledged Collateral is accorded treatment substantially equal to that which such
party accords its own property.
SECTION 11. Event of Default. The occurrence of any of the following
events shall constitute an event of default under this Agreement (each, an
"Event of Default"):
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(a) The failure of the Pledgor to observe, perform or comply with
any act, duty, covenant, agreement or obligation under this Agreement;
(b) If any of the representation or warranty of the Pledgor set
forth in this Agreement shall be breached or shall be untrue or incorrect
in any material respect;
(c) The filing of any financing statement with regard to any of the
Pledged Collateral other than pursuant to this Agreement, or the
attachment of any additional Lien to any portion of the Pledged Collateral
in favor of any Person other than the Pledgees; or
(d) If any default or event of default shall occur under any of the
Transaction Documents (as defined in Section 2(h) of the Securities
Purchase Agreement), including, without limitation, any "Event of Default"
as defined in the Convertible Debentures.
SECTION 12. Cross-Default; Cross-Collateralization. The Pledgor
acknowledges and agrees that any default under the terms of this Agreement shall
constitute a default by the Company under the Convertible Debentures and the
other Transaction Documents, and that any default under the Convertible
Debentures or any of the other Transaction Documents shall constitute a default
under this Agreement. The security interests, liens and other rights and
interests in and relative to any of the real or personal property of the Pledgor
now or hereafter granted to the Pledgees by the Pledgor pursuant to any
agreement, document or instrument, including, but not limited to, this
Agreement, the Purchase Agreement, the Warrants or the Convertible Debentures,
shall serve as security for any and all of the Obligations, and, for the
repayment thereof, Pledgees may resort to any such collateral in such order and
manner as they may elect.
SECTION 13. Remedies upon Event of Default. Upon and after the
occurrence of any Event of Default:
(a) The Agent may exercise in respect of the Collateral and the
Pledged Collateral, in addition to other rights and remedies provided for
herein or otherwise available to the Agent (including, without limitation,
the vesting in the Agent pursuant to Section 6(b)(i) of the sole right to
exercise voting rights pertaining to the Pledged Collateral, including,
without limitation, voting rights with respect to the sale of assets of
Issuer), all the rights and remedies of a secured party on default under
the Uniform Commercial Code in effect in the State of New York at that
time (the "UCC"), and may also, without notice except as specified below,
sell the Pledged Collateral or any part thereof in one or more parcels at
public or private sale, at any exchange, broker's board or at any of the
Agent's offices or elsewhere, for cash, on credit or for future delivery,
and upon such other terms as the Agent may deem commercially reasonable.
The Pledgor agrees that, to the extent notice of sale shall be required by
law, at least ten (10) days' notice to the Pledgor of the time and place
of any public sale or the time after which any
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private sale is to be made shall constitute reasonable notification. The
Agent shall not be obligated to make any sale of Pledged Collateral
regardless of notice of sale having been given. The Agent may adjourn any
public or private sale from time to time by announcement at the time and
place fixed therefor, and such sale may, without further notice, be made
at the time and place to which it was so adjourned. The Pledgor
acknowledges and agrees that the Pledged Collateral consisting of the
Pledged Shares, and/or any other shares of common stock of Issuer, is of a
type customarily sold on a recognized market, and accordingly that no
notice of the sale thereof need be given.
(b) Any cash held by the Agent or any Pledgee as Pledged Collateral
and all cash proceeds received by the Agent or any Pledgee in respect of
any sale of, collection from, or other realization upon all or any part of
the Pledged Collateral may, in the discretion of the Agent or such
Pledgee, be held as collateral for, and/or then or at any time thereafter
be applied (after payment of any amounts payable pursuant to Section 14)
in whole or in part against, all or any part of the Obligations, pro rata
to the respective Obligations of each Pledgee in proportion to their
respective principal amounts of Convertible Debentures. Any surplus of
such cash or cash proceeds held by the Agent or any Pledgee and remaining
after payment in full of all the Obligations shall be paid over to the
Pledgor or to whomsoever may be lawfully entitled to receive such surplus.
SECTION 14. Expenses. The Pledgor shall upon demand pay to the Agent
and/or the applicable Pledgee the amount of any and all reasonable expenses,
including reasonable attorneys' fees and expenses and the reasonable fees and
expenses of any experts and agents, which the Agent and/or such Pledgee may
incur in connection with (a) the administration of this Agreement, (b) the
custody or preservation of, or the sale of, collection from, or other
realization upon, any of the Pledged Collateral, (c) the exercise or enforcement
of any of the rights of the Agent and/or such Pledgee hereunder or (d) the
failure by the Pledgor to perform or observe any of the provisions hereof.
SECTION 15. Continuing Security Interest; Termination. This
Agreement shall create a continuing security interest in the Collateral and the
Pledged Collateral and shall remain in full force and effect until the
indefeasible payment in full of the Obligations. Upon the indefeasible payment
in full of the Obligations, the security interest granted hereby shall terminate
and all rights to the Collateral and the Pledged Collateral shall revert to the
Pledgor. Upon any such termination, the Agent shall, at the Pledgor's expense,
return to the Pledgor such of the Collateral and the Pledged Collateral as shall
not have been sold or otherwise applied pursuant to the terms hereof and execute
and deliver to the Pledgor such documents as the Pledgor shall reasonably
request to evidence such termination.
SECTION 16. Governing Law; Terms. THIS AGREEMENT SHALL BE ENFORCED,
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO THE PRINCIPLES OF
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CONFLICT OF LAWS. THE PARTIES HERETO HEREBY SUBMIT TO THE EXCLUSIVE JURISDICTION
OF THE STATE COURTS OR THE UNITED STATES FEDERAL COURTS LOCATED IN NEW YORK WITH
RESPECT TO ANY DISPUTE ARISING UNDER THIS AGREEMENT, THE AGREEMENTS ENTERED INTO
IN CONNECTION HEREWITH OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. BOTH
PARTIES IRREVOCABLY WAIVE THE DEFENSE OF AN INCONVENIENT FORUM TO THE
MAINTENANCE OF SUCH SUIT OR PROCEEDING. BOTH PARTIES FURTHER AGREE THAT SERVICE
OF PROCESS UPON A PARTY MAILED BY FIRST CLASS MAIL SHALL BE DEEMED IN EVERY
RESPECT EFFECTIVE SERVICE OF PROCESS UPON THE PARTY IN ANY SUCH SUIT OR
PROCEEDING. NOTHING HEREIN SHALL AFFECT EITHER PARTY'S RIGHT TO SERVE PROCESS IN
ANY OTHER MANNER PERMITTED BY LAW. BOTH PARTIES AGREE THAT A FINAL
NON-APPEALABLE JUDGMENT IN ANY SUCH SUIT OR PROCEEDING SHALL BE CONCLUSIVE AND
MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON SUCH JUDGMENT OR IN ANY OTHER
LAWFUL MANNER. THE PARTY WHICH DOES NOT PREVAIL IN ANY DISPUTE ARISING UNDER
THIS AGREEMENT SHALL BE RESPONSIBLE FOR ALL FEES AND EXPENSES, INCLUDING
ATTORNEYS' FEES, INCURRED BY THE PREVAILING PARTY IN CONNECTION WITH SUCH
DISPUTE.
SECTION 17. Notice. Any notices required or permitted to be given
under the terms hereof 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 party. The
addresses for such communications shall be:
If to the Pledgor:
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
13
With copies to:
Sichenzia ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ LLP
1065 Avenue of the ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Esq.
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: 212-930-9725
Email: ▇▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇.▇▇▇
If to any Pledgees: to the address and fax number set forth immediately below
such Investor's name on the signature pages to the Securities Purchase
Agreement.
If to the Agent:
▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
SECTION 18. Waivers.
(a) Waivers. The Pledgor waives any right to require the Pledgees to
(i) proceed against any person, (ii) proceed against any other collateral
under any other agreement, (iii) pursue any other remedy, or (iv) make
presentment, demand, dishonor, notice of dishonor, acceleration and/or
notice of non-payment.
(b) Waiver of Defense. No course of dealing between the Pledgor and
the Pledgees, nor any failure to exercise nor any delay in exercising on
the part of the Agent or any Pledgee, any right, power, or privilege under
this Agreement or under any of the other Transaction Documents shall
operate as a waiver. No single or partial exercise of any right, power, or
privilege under this Agreement or under any of the other Transaction
Documents shall preclude any other or further exercise of such right,
power, or privilege or the exercise of any other right, power, or
privilege.
SECTION 19. Rights Are Cumulative. All rights and remedies of the
Agent and the Pledgees with respect to the Pledged Collateral, whether
established by this Agreement, the other Transaction Documents or by law, shall
be cumulative and may be exercised concurrently or in any order.
SECTION 20. Indemnity. The Pledgor agrees to indemnify and hold
harmless the Agent, the Pledgees and their respective successors and assigns
against and from all liabilities, losses,
14
and costs (including, without limitation, reasonable attorneys' fees) arising
out of or relating to the taking or the failure to take action in respect of any
transaction effected under this Agreement or in connection with the lien
provided for herein, including, without limitation, any and all excise, sales or
other taxes which may be payable or determined to be payable with respect to any
of the Pledged Collateral. The liabilities of the Pledgor under this Section 20
shall survive the termination of this Agreement.
SECTION 21. Severability. The provisions of this Agreement are
severable. If any provision of this Agreement is held invalid or unenforceable
in whole or in part in any jurisdiction, then such invalidity or
unenforceability shall affect only such provision, or part thereof, in such
jurisdiction, and shall not in any manner affect such provision or part thereof
in any other jurisdiction, or any other provision of this Agreement in any
jurisdiction.
SECTION 22. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be considered an original, but all of which
together shall constitute one and the same instrument.
SECTION 23. Amendments; Entire Agreement. This Agreement is subject
to modification only by a writing signed by the parties. To the extent that any
provision of this Agreement conflicts with any provision of the Purchase
Agreement or the Convertible Debentures, the provision giving Pledgees greater
rights or remedies shall govern, it being understood that the purpose of this
Agreement is to add to, and not detract from, the rights granted to Pledgees
under the Purchase Agreement and the Convertible Debentures. This Agreement, the
Purchase Agreement, the Convertible Debentures and the other Transaction
Documents constitute the entire agreement of the parties with respect to the
subject matter of this Agreement.
SECTION 24. Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective heirs,
executors, legal representatives, successors and assigns; provided, however,
that the Pledgor may not, without the prior written consent of the Pledgees,
assign or delegate any rights, powers, duties or obligations hereunder, and any
such purported assignment or delegation without such consent shall be null and
void.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Agreement as of the date first above written.
PLEDGOR:
AMNIS SYSTEMS INC.
By:
-------------------------------------
Name:
Title:
PLEDGEE:
SDS CAPITAL GROUP SPC, LTD.
By:
-------------------------------------
Name:
Title:
ALPHA CAPITAL AKTIENGESELLSCHAFT
By:
-------------------------------------
Name:
Title:
BRISTOL INVESTMENT FUND, LTD.
By:
-------------------------------------
Name:
Title:
▇▇▇▇▇▇▇▇▇▇▇ LIMITED PARTNERSHIP
By:
-------------------------------------
Name:
Title:
AGENT:
----------------------------------------
▇▇▇ ▇▇▇▇, Esq.
