FORM OF PLEDGE AND ESCROW AGREEMENT
FORM
OF PLEDGE AND ESCROW AGREEMENT
THIS
PLEDGE AND ESCROW AGREEMENT (as amended or otherwise modified from time to
time,
this “Agreement”)
is
dated as of [·],
2007
by and between [PLEDGOR] (herein, the “Pledgor”),
[LENDER] (the “Lender”)
and
___________, as escrow agent (the “Escrow
Agent”)..
WITNESSETH
WHEREAS,
pursuant to that certain promissory note, dated [·],
2007
(the “Promissory
Note”)
among
the Lender and Pledgor, the Lender has agreed, subject to the satisfaction
of
certain conditions precedent, to make a loan (the “Loan”)
to the
Pledgor; and
WHEREAS,
it is a condition precedent to the availability of such Loan under the
Promissory Note that the Pledgor shall have made the pledges and granted the
security interests contemplated by this Agreement in order to secure the payment
by the Pledgor of principal with respect to the Loan made pursuant to the
Promissory Note (the “Obligations”);
NOW,
THEREFORE, in consideration of the foregoing, and in order to induce Lender
to
make the Loan, the Pledgor hereby agrees with the Lender, for its benefit and
the benefit of Lender, as follows:
1. Definitions.
Capitalized terms defined in the Promissory Note and not otherwise defined
herein shall have the respective meanings provided for in the Promissory Note.
2. Pledge.
To
secure the Pledgor’s Obligations, the Pledgor hereby pledges to and assigns to
the Lender, and grants to the Lender a first priority continuing security
interest in, any and all right, title and interest in and to the following
(the
“Pledged
Collateral”):
(a) ___________
founder warrants (as defined in the Registration Statement) purchased by Pledgor
in connection with the Registration Statement; and
(b) any
proceeds from the above.
Simultaneously
with the execution of the Promissory Note, the Pledgor shall deliver to the
Escrow Agent the certificates representing the Pledged Collateral, together
with
duly executed stock powers or other appropriate transfer documents and executed
in blank by the Pledgor (the “Transfer
Documents”),
and
such certificates and Transfer Documents shall be held by the Escrow Agent
until
the full payment of all Obligations due to the Lender.
3. UCC
Financing Statements.
The
Pledgor hereby authorizes the Lender to file one or more UCC financing or
continuation statements, and amendments thereto (or similar documents required
by any laws of any applicable jurisdiction), relating to all or any part of
the
Pledged Collateral without the signature of the Pledgor (to the extent such
signature is required under the laws of any applicable
jurisdiction).
4. Representations
and Warranties.
The
Pledgor represents and warrants as follows:
(a) The
delivery of this Pledge Agreement, together with the filing in the appropriate
filing office of a UCC financing statement describing the same as collateral,
is
effective to create a valid and perfected first priority security interest
in
the Pledged Collateral, free of any adverse claim, securing the payment of
the
Obligations.
(b) This
Agreement constitutes a valid and binding obligation of the Pledgor, enforceable
against the Pledgor in accordance with its terms, except as enforcement may
be
limited by bankruptcy, insolvency, or similar laws relating to the enforcement
of creditors’ rights generally and by general equitable principles.
(c) Pledgor
is, and at the time when pledged hereunder will be, the legal, beneficial and
record owner of, and has (and will have) good and valid title to, all Pledged
Collateral pledged hereunder, subject to no pledge, lien, mortgage,
hypothecation, security interest, charge, option or other encumbrance
whatsoever.
(d) Pledgor
has full power, authority and legal right to pledge all the Pledged Collateral
pledged pursuant to this Agreement.
(e) all
the
Pledged Collateral have been duly and validly issued and are fully paid and
are
not subject to options to purchase or similar rights.
(f)
All
representations and warranties of the Pledgor contained in this Agreement shall
survive the execution and delivery of this Agreement.
5. Covenants;
Further Assurances.
(a) The
Pledgor shall, from time to time promptly execute and deliver all further
instruments, documents and notices and take all further action that may be
necessary or desirable, or that the Lender, jointly or severally, may request,
in order to create, perfect and protect any security interest granted or
purported to be granted by this Agreement or to enable the Lender, jointly
or
severally, to exercise and enforce their rights and remedies
hereunder.
(b) Except
as
otherwise permitted herein or by the Promissory Note, the Pledgor shall not
(i) sell, assign (by operation of law or otherwise) or otherwise dispose
of, or grant any option or similar right with respect to, any of the Pledged
Collateral; or (ii) create or suffer to exist any Lien upon or with respect
to any of the Pledged Collateral except for the Lien in favor of the Lender
securing the Obligations. In addition, the Pledgor shall not use or permit
the
use of any Pledged Collateral in violation of any provision of applicable law
and shall not do anything to impair the rights of the Lender in any of the
Pledged Collateral.
6. Remedial
Provisions.
Upon
the occurrence and during the continuance of any breach by Pledgor of the
Promissory Note, the Lender and its attorneys may exercise in respect of the
Pledged Collateral, in addition to other rights and remedies provided for herein
or otherwise available to it, all the rights and remedies of a secured party
under the UCC (whether or not the UCC applies to the affected Pledged
Collateral), and the Lender may also, without demand, advertisement or notice
of
any kind (other than the notice specified below relating to a public or private
sale), sell the Pledged Collateral or any part thereof in one or more portions
at one or more public or private sales or dispositions, at any exchange,
broker’s board or at any of the Lender’ offices (or those of the Lender’
attorneys) or elsewhere, for cash, on credit, or for future delivery, at such
price or prices and upon such other terms as the Lender deems advisable.
Notwithstanding, such
pledged founder warrants, if transferred to Lender to fulfill the
Obligations, may not be sold, transferred, assigned, pledged or hypothecated,
or
be the subject of any hedging, short sale, derivative, put or call transaction
that would result in the effective economic disposition of the securities by
any
person, for a period of 18 months following the effective date of the
Registration Statement, except to any underwriter and selected dealer
participating in the offering and their bona fide officers or partners.
The Lender shall provide Pledgor reasonable notification of such sale;
provided,
that in
no event shall the notification given to the Pledgor be less than ten (10)
Business Days.
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7. Application
of Proceeds.
Upon
the occurrence and during the continuance of any failure to comply with the
Promissory Note and for so long as such non-compliance is then continuing,
the
proceeds of any sale or disposition of, or other realization upon, all or any
part of the Pledged Collateral shall be applied in a manner consistent with
the
provisions of the Promissory Note. Any excess balance remaining shall be
delivered to the Pledgor. The Lender will have no other recourse against the
Pledgor for any deficiency remaining unpaid after the foregoing
application.
8. Termination
of Lien; Release of Pledged Collateral.
The
Lender agrees that upon payment in full of all Obligations or the waiver and
release by Lender of all Obligations, the parties hereto shall notify the Escrow
Agent to such effect in writing and the Lien provided for hereunder shall
terminate and all rights to the Pledged Collateral shall revert to the Pledgor.
Promptly upon receipt of such written notice, the Escrow Agent shall return
to
the Pledgor the Transfer Documents and the certificates representing the Pledged
Collateral, whereupon any and all rights of Lender in the Pledged Collateral
shall be terminated. The Lender further agrees that upon such termination,
the
Lender shall execute and deliver to the Pledgor such documents as the Pledgor
shall reasonably request to evidence such termination.
9. Concerning
the Escrow Agent.
(a) The
Escrow Agent undertakes to perform only such duties as are expressly set forth
herein and no implied duties or obligations shall be read into this Agreement
against the Escrow Agent.
(b) The
Escrow Agent may act in reliance upon any writing or instrument or signature
which it, in good faith, believes to be genuine, may assume the validity and
accuracy of any statement or assertion contained in such a writing or
instrument, and may assume that any person purporting to give any writing,
notice, advice or instructions in connection with the provisions hereof has
been
duly authorized to do so. The Escrow Agent shall not be liable in any manner
for
the sufficiency or correctness as to form, manner, and execution, or validity
of
any instrument deposited in this escrow, nor as to the identity, authority,
or
right of any person executing the same; and its duties hereunder shall be
limited to the safekeeping of such certificates, monies, instruments, or other
document received by it as such escrow holder, and for the disposition of the
same in accordance with the written instruments accepted by it in the
escrow.
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(c) Lender
and the Pledgor hereby agree, to defend and indemnify the Escrow Agent and
hold
it harmless from any and all claims, liabilities, losses, actions, suits, or
proceedings at law or in equity, or any other expenses, fees, or charges of
any
character or nature which it may incur or with which it may be threatened by
reason of its acting as Escrow Agent under this Agreement; and in connection
therewith, to indemnify the Escrow Agent against any and all expenses, including
attorneys’ fees and costs of defending any action, suit, or proceeding or
resisting any claim (and any costs incurred by the Escrow Agent pursuant to
Section 9(e) hereof). The Escrow Agent shall be vested with a lien on all
property deposited hereunder, for indemnification of attorneys’ fees and court
costs regarding any suit, proceeding or otherwise, or any other expenses, fees,
or charges of any character or nature, which may be incurred by the Escrow
Agent
by reason of disputes arising between the makers of this escrow as to the
correct interpretation of this Agreement and instructions given to the Escrow
Agent hereunder, or otherwise, with the right of the Escrow Agent, regardless
of
the instructions aforesaid, to hold said property until and unless said
additional expenses, fees, and charges shall be fully paid. Any fees and costs
charged by the Escrow Agent for serving hereunder shall be shared by the Pledgor
and the Lender.
(d) The
Escrow Agent may consult with counsel of its own choice (and the costs of such
counsel shall be paid by the Pledgor and Lender) and shall have full and
complete authorization and protection for any action taken or suffered by it
hereunder in good faith and in accordance with the opinion of such counsel.
The
Escrow Agent shall not be liable for any mistakes of fact or error of judgment,
or for any actions or omissions of any kind, unless caused by its willful
misconduct or gross negligence.
(e) The
Escrow Agent may resign upon ten (10) days’ written notice to the parties in
this Agreement. If a successor Escrow Agent is not appointed within this ten
(10) day period, the Escrow Agent may petition a court of competent jurisdiction
to name a successor.
10. Changes
in Writing.
No
amendment, modification, termination or waiver of any provision of this
Agreement shall be effective unless the same shall be in writing and signed
by
the Lender.
11. Notices.
All
notices, approvals, requests, demands and other communications hereunder shall
be given in accordance with the notice provision of the Promissory
Note.
12. GOVERNING
LAW; SUBMISSION TO JURISDICTION.
THIS
AGREEMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS
OF LAWS PRINCIPLES. EACH OF THE PLEDGOR AND THE LENDER HEREBY CONSENT TO THE
JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN THE CITY AND STATE
OF
NEW YORK AND IRREVOCABLY AGREES THAT ALL ACTIONS OR PROCEEDINGS ARISING OUT
OF
OR RELATING TO THIS AGREEMENT SHALL BE LITIGATED IN SUCH COURTS. EACH OF THE
PLEDGOR AND THE LENDER HEREBY EXPRESSLY SUBMITS AND CONSENTS TO THE JURISDICTION
OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS. EACH
OF
THE PLEDGOR AND THE LENDER HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS
AND AGREES THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE UPON THE OTHER PARTY
BY
CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, ADDRESSED TO THE OTHER
PARTY IN ACCORDANCE WITH THE PROVISIONS OF THE PROMISSORY NOTE AND SERVICE
SO
MADE SHALL BE DEEMED TO BE COMPLETE TEN (10) DAYS AFTER THE SAME HAS BEEN
POSTED.
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13. Counterparts;
Integration.
This
Agreement may be signed in any number of counterparts, each of which shall
be an
original, with the same effect as if the signatures thereto and hereto were
upon
the same instrument. This Agreement constitutes the entire agreement and
understanding among the parties hereto and supersedes any and all prior
agreements and understandings, oral or written, relating to the subject matter
hereof.
14. Headings.
Headings and captions used in this Agreement are included for convenience of
reference and shall not be given any substantive effect.
[Remainder
of Page Intentionally Left Blank; Signature Page Follows]
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Witness
the due execution hereof by the respective duly authorized officer of the
undersigned as of the day first above written.
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| [ESCROW AGENT] | ||
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