EXHIBIT 10.2
SECURITY AND PLEDGE AGREEMENT
(Trend)
1. Identification.
This Security and Pledge Agreement (the "Agreement"), dated as of January
27, 2005, is entered into by and between Trend Mining Company, a Delaware
corporation ("Trend" or "Debtor"), and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, as collateral agent
acting in the manner and to the extent described in the Collateral Agent
Agreement defined below (the "Collateral Agent"), for the benefit of the parties
identified on Schedule A hereto (collectively, the "Lenders").
2. Recitals.
2.1 The Lenders have made or are making loans and will make additional
loans to Trend (the "Loans"). It is beneficial to Trend that the Loans were
made, are being made and will be made.
2.2 The Loans are evidenced by certain variable interest rate convertible
promissory notes (each a "Convertible Note") issued by Trend on or about the
date of this Agreement and issuable after the date of this Agreement, pursuant
to subscription agreements (each a "Subscription Agreement") to which Trend and
Lenders are parties. The Notes are further identified on Schedule A hereto and
were and will be executed by Trend as "Borrower" or "Debtor" for the benefit of
each Lender as the "Holder" or "Lender" thereof.
2.3 In consideration of the Loans made by Lenders to Trend and for other
good and valuable consideration, and as security for the performance by Trend of
its obligations under the Notes and as security for the repayment of the Loans
and all other sums due from Debtor to Lenders arising under the Notes presently
outstanding or to be outstanding in the future, Subscription Agreements, and any
other agreement between or among them (collectively, the "Obligations"), Trend,
for good and valuable consideration, receipt of which is acknowledged, has
agreed to grant to the Collateral Agent, for the benefit of the Lenders, a
security interest in the Collateral (as such term is hereinafter defined), on
the terms and conditions hereinafter set forth. Obligations include all future
advances by Lenders to Trend advanced on a pro rata basis by all Lenders on
substantially the same terms.
2.4 The Lenders have appointed ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ as Collateral Agent pursuant
to that certain Collateral Agent Agreement dated at or about January 27, 2005
("Collateral Agent Agreement"), among the Lenders and Collateral Agent.
2.5 The following defined terms which are defined in the Uniform Commercial
Code in effect in the State of New York on the date hereof are used herein as so
defined: Accounts, Chattel Paper, Documents, Equipment, General Intangibles,
Instruments, Inventory and Proceeds.
3. Grant of General Security Interest in Collateral.
3.1 As security for the Obligations of Debtor, Trend hereby grants the
Collateral Agent, for the benefit of the Lenders, a security interest in the
Collateral.
3.2 "Collateral" shall mean all of the following property of Trend:
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(A) All now owned and hereafter acquired right, title and interest of
Trend in, to and in respect of all Accounts, Goods, real or personal property,
all present and future books and records relating to the foregoing and all
products and Proceeds of the foregoing, and as set forth below:
(i) Accounts: All now owned and hereafter acquired right, title
and interest of Trend in, to and in respect of all: Accounts, interests in goods
represented by Accounts, returned, reclaimed or repossessed goods with respect
thereto and rights as an unpaid vendor; contract rights; Chattel Paper;
investment property; General Intangibles (including but not limited to, tax and
duty claims and refunds, registered and unregistered patents, trademarks,
service marks, certificates, copyrights trade names, applications for the
foregoing, trade secrets, goodwill, processes, drawings, blueprints, customer
lists, licenses, whether as licensor or licensee, chooses in action and other
claims, and existing and future leasehold interests in equipment, real estate
and fixtures); Documents; Instruments; letters of credit, bankers' acceptances
or guaranties; cash moneys, deposits; securities, bank accounts, deposit
accounts, credits and other property now or hereafter owned or held in any
capacity by Trend, as well as its affiliates, agreements or property securing or
relating to any of the items referred to above;
(ii) Goods: All now owned and hereafter acquired right, title and
interest of Trend in, to and in respect of goods, including, but not limited to:
(a) All Inventory, wherever located, whether now owned or
hereafter acquired, of whatever kind, nature or description, including all raw
materials, work-in-process, finished goods, and materials to be used or consumed
in Trend' business; and all names or marks affixed to or to be affixed thereto
for purposes of selling same by the seller, manufacturer, lessor or licensor
thereof and all Inventory which may be returned to Trend by its customers or
repossessed by Trend and all of Trend' right, title and interest in and to the
foregoing (including all of Trend' rights as a seller of goods);
(b) All Equipment and fixtures, wherever located, whether
now owned or hereafter acquired, including, without limitation, all machinery,
motor vehicles, furniture and fixtures, and any and all additions,
substitutions, replacements (including spare parts), and accessions thereof and
thereto (including, but not limited to Trend' rights to acquire any of the
foregoing, whether by exercise of a purchase option or otherwise);
(iii) Property: All now owned and hereafter acquired right, title
and interests of Trend in, to and in respect of any real or other personal
property in or upon which Trend has or may hereafter have a security interest,
lien or right of setoff;
(iv) Books and Records: All present and future books and records
relating to any of the above including, without limitation, all computer
programs, printed output and computer readable data in the possession or control
of the Trend, any computer service bureau or other third party; and
(v) Products and Proceeds: All products and Proceeds of the
foregoing in whatever form and wherever located, including, without limitation,
all insurance proceeds and all claims against third parties for loss or
destruction of or damage to any of the foregoing.
(B) All now owned and hereafter acquired right, title and interest of
Trend in, to and in respect of the following:
(i) the shares of stock, partnership interests, member interests
or other equity interests at any time and from time to time acquired by Trend of
any and all entities now or hereafter
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existing, all or a portion of such stock or other equity interests which are
acquired by such entities at any time (such entities, together with the existing
issuers, being hereinafter referred to collectively as the "Pledged Issuers" and
individually as a "Pledged Issuer"), the certificates representing such shares,
partnership interests, member interests or other interests all options and other
rights, contractual or otherwise, in respect thereof and all dividends,
distributions, cash, instruments, investment property and other property from
time to time received, receivable or otherwise distributed in respect of or in
exchange for any or all of such shares, partnership interests, member interests
or other interests;
(ii) all additional shares of stock, partnership interests,
member interests or other equity interests from time to time acquired by Trend,
of any Pledged Issuer, the certificates representing such additional shares, all
options and other rights, contractual or otherwise, in respect thereof and all
dividends, distributions, cash, instruments, investment property and other
property from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of such additional shares, interests or
equity; and
(iii) all security entitlements of Trend in, and all Proceeds of
any and all of the foregoing in each case, whether now owned or hereafter
acquired by Trend and howsoever its interest therein may arise or appear
(whether by ownership, security interest, lien, claim or otherwise).
3.3 The Collateral Agent is hereby specifically authorized, after the
Maturity Date (defined in the Notes) accelerated or otherwise, or after an Event
of Default (as defined herein) and the expiration of any applicable cure period,
to transfer any Collateral into the name of the Collateral Agent and to take any
and all action deemed advisable to the Collateral Agent to remove any transfer
restrictions affecting the Collateral.
4. Perfection of Security Interest.
4.1 Trend shall prepare, execute and deliver to the Collateral Agent UCC-1
Financing Statements. The Collateral Agent is instructed to prepare and file at
Trend's cost and expense, financing statements in such jurisdictions deemed
advisable to the Collateral Agent, including but not limited to Delaware and
South Carolina. The Financing Statements are deemed to have been filed for the
benefit of the Collateral Agent and Lenders identified on Schedule A hereto.
4.2 All other certificates and instruments constituting Collateral from
time to time required to be pledged to Collateral Agent pursuant to the terms
hereof (the "Additional Collateral") shall be delivered to Collateral Agent
promptly upon receipt thereof by or on behalf of Trend. All such certificates
and instruments shall be held by or on behalf of Collateral Agent pursuant
hereto and shall be delivered in suitable form for transfer by delivery, or
shall be accompanied by duly executed instruments of transfer or assignment or
undated stock powers executed in blank, all in form and substance satisfactory
to Collateral Agent. If any Collateral consists of uncertificated securities,
unless the immediately following sentence is applicable thereto, Trend shall
cause Collateral Agent (or its custodian, nominee or other designee) to become
the registered holder thereof, or cause each issuer of such securities to agree
that it will comply with instructions originated by Collateral Agent with
respect to such securities without further consent by Trend. If any Collateral
consists of security entitlements, Trend shall transfer such security
entitlements to Collateral Agent (or its custodian, nominee or other designee)
or cause the applicable securities intermediary to agree that it will comply
with entitlement orders by Collateral Agent without further consent by Trend.
4.3 Within five (5) days after the receipt by Trend of any Additional
Collateral, a Pledge Amendment, duly executed by Trend, in substantially the
form of Annex I hereto (a "Pledge
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Amendment"), shall be delivered to Collateral Agent in respect of the Additional
Collateral to be pledged pursuant to this Agreement. Trend hereby authorizes
Collateral Agent to attach each Pledge Amendment to this Agreement and agrees
that all certificates or instruments listed on any Pledge Amendment delivered to
Collateral Agent shall for all purposes hereunder constitute Collateral.
4.4 If Trend shall receive, by virtue of Trend's being or having been an
owner of any Collateral, any (i) stock certificate (including, without
limitation, any certificate representing a stock dividend or distribution in
connection with any increase or reduction of capital, reclassification, merger,
consolidation, sale of assets, combination of shares, stock split, spin-off or
split-off), promissory note or other instrument, (ii) option or right, whether
as an addition to, substitution for, or in exchange for, any Collateral, or
otherwise, (iii) dividends payable in cash (except such dividends permitted to
be retained by Trend pursuant to Section 5.2 hereof) or in securities or other
property or (iv) dividends or other distributions in connection with a partial
or total liquidation or dissolution or in connection with a reduction of
capital, capital surplus or paid-in surplus, Trend shall receive such stock
certificate, promissory note, instrument, option, right, payment or distribution
in trust for the benefit of Collateral Agent, shall segregate it from Trend's
other property and shall deliver it forthwith to Collateral Agent, in the exact
form received, with any necessary endorsement and/or appropriate stock powers
duly executed in blank, to be held by Collateral Agent as Collateral and as
further collateral security for the Obligations.
5. Distribution on Liquidation.
5.1 If any sum is paid as a liquidating distribution on or with respect to
the Collateral, Trend shall deliver same to the Collateral Agent to be applied
to the Obligations, then due, in accordance with the terms of the Convertible
Notes.
5.2 So long as no Event of Default exists, Trend shall be entitled (i) to
exercise all voting power pertaining to any of the Collateral, provided such
exercise is not contrary to the interests of the Lenders and does not impair the
Collateral and (ii) may receive and retain any and all dividends, interest
payments or other distributions paid in respect of the Collateral.
5.3. Upon the occurrence and during the continuation of an Event of
Default, all rights of Trend, upon notice given by Collateral Agent, to exercise
the voting power and receive payments, which it would otherwise be entitled to
pursuant to Section 5.2, shall cease and all such rights shall thereupon become
vested in Collateral Agent, which shall thereupon have the sole right to
exercise such voting power and receive such payments.
5.4 All dividends, distributions, interest and other payments which are
received by Trend contrary to the provisions of Section 5.3 shall be received in
trust for the benefit of Collateral Agent, shall be segregated from other funds
of Trend, and shall be forthwith paid over to Collateral Agent as Collateral in
the exact form received with any necessary endorsement and/or appropriate stock
powers duly executed in blank, to be held by Collateral Agent as Collateral and
as further collateral security for the Obligations.
6. Further Action By Trend; Covenants and Warranties.
6.1 Collateral Agent at all times shall have a perfected security interest
in the Collateral. Subject to the security interests described herein, Trend has
and will continue to have full title to the Collateral free from any liens,
leases, encumbrances, judgments or other claims. Collateral Agent's security
interest in the Collateral constitutes and will continue to constitute a first,
prior and indefeasible security interest in favor of Collateral Agent. Trend
will do all acts and things, and will execute and file all instruments
(including, but not limited to, security agreements, financing statements,
continuation
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statements, etc.) reasonably requested by Collateral Agent to establish,
maintain and continue the perfected security interest of Collateral Agent in the
Collateral, and will promptly on demand, pay all costs and expenses of filing
and recording, including the costs of any searches reasonably deemed necessary
by Collateral Agent from time to time to establish and determine the validity
and the continuing priority of the security interest of Collateral Agent, and
also pay all other claims and charges that, in the opinion of Collateral Agent,
exercised in good faith, are reasonably likely to materially prejudice, imperil
or otherwise affect the Collateral or Collateral Agent's or Lenders' security
interests therein.
6.2 Other than in the ordinary course of business, and except for
Collateral which is substituted by assets of identical or greater value or which
has become obsolete or is of inconsequential in value, Trend will not sell,
transfer, assign or pledge those items of Collateral (or allow any such items to
be sold, transferred, assigned or pledged), without the prior written consent of
Collateral Agent other than a transfer of the Collateral to a wholly-owned
subsidiary on prior notice to Collateral Agent, and provided the Collateral
remains subject to the security interest herein described. Although Proceeds of
Collateral are covered by this Agreement, this shall not be construed to mean
that Collateral Agent consents to any sale of the Collateral, except as provided
herein. Sales of Collateral in the ordinary course of business shall be free of
the security interest of Lenders and Collateral Agent and Lenders and Collateral
Agent shall promptly execute such documents (including without limitation
releases and termination statements) as may be required by Debtor to evidence or
effectuate the same.
6.3 Trend will, at all reasonable times and upon reasonable notice, allow
Collateral Agent or its representatives free and complete access to the
Collateral and all of Trend's records which in any way relate to the Collateral,
for such inspection and examination as Collateral Agent reasonably deems
necessary.
6.4 Trend, at its sole cost and expense, will protect and defend this
Security Agreement, all of the rights of Collateral Agent and Lenders hereunder,
and the Collateral against the claims and demands of all other persons.
6.5 Trend will promptly notify Collateral Agent of any levy, distraint or
other seizure by legal process or otherwise of any part of the Collateral, and
of any threatened or filed claims or proceedings that are reasonably likely to
affect or impair any of the rights of Collateral Agent under this Security
Agreement in any material respect.
6.6 Trend, at its own expense, will obtain and maintain in force insurance
policies covering losses or damage to those items of Collateral which constitute
physical personal property. The insurance policies to be obtained by Trend shall
be in form and amounts reasonably acceptable to Collateral Agent. Trend shall
make the Collateral Agent first a loss payee thereon to the extent of its
interest in the Collateral. Collateral Agent is hereby irrevocably (until the
Obligations are paid in full) appointed Trend' attorney-in-fact to endorse any
check or draft that may be payable to Trend so that Collateral Agent may collect
the proceeds payable for any loss under such insurance. The proceeds of such
insurance (subject to the rights of senior secured parties), less any costs and
expenses incurred or paid by Collateral Agent in the collection thereof, shall
be applied either toward the cost of the repair or replacement of the items
damaged or destroyed, or on account of any sums secured hereby, whether or not
then due or payable.
6.7 Collateral Agent may, at its option, and without any obligation to do
so, pay, perform and discharge any and all amounts, costs, expenses and
liabilities herein agreed to be paid or performed by Trend. Upon Trend's failure
to do so, all amounts expended by Collateral Agent in so doing shall become part
of the Obligations secured hereby, and shall be immediately due and payable by
Trend to Collateral
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Agent upon demand and shall bear interest at the lesser of 15% per annum or the
highest legal amount from the dates of such expenditures until paid.
6.8 Upon the request of Collateral Agent, Trend will furnish to Collateral
Agent within five (5) business days thereafter, or to any proposed assignee of
this Security Agreement, a written statement in form reasonably satisfactory to
Collateral Agent, duly acknowledged, certifying the amount of the principal and
interest and any other sum then owing under the Obligations, whether to its
knowledge any claims, offsets or defenses exist against the Obligations or
against this Security Agreement, or any of the terms and provisions of any other
agreement of Trend securing the Obligations. In connection with any assignment
by Collateral Agent of this Security Agreement, Trend hereby agrees to cause the
insurance policies required hereby to be carried by Trend, if any, to be
endorsed in form satisfactory to Collateral Agent or to such assignee, with loss
payable clauses in favor of such assignee, and to cause such endorsements to be
delivered to Collateral Agent within ten (10) calendar days after request
therefor by Collateral Agent.
6.9 Trend will, at its own expense, make, execute, endorse, acknowledge,
file and/or deliver to the Collateral Agent from time to time such vouchers,
invoices, schedules, confirmatory assignments, conveyances, financing
statements, transfer endorsements, powers of attorney, certificates, reports and
other reasonable assurances or instruments and take further steps relating to
the Collateral and other property or rights covered by the security interest
hereby granted, as the Collateral Agent may reasonably require to perfect its
security interest hereunder.
6.10 Trend represents and warrants that it is the true and lawful exclusive
owner of the Collateral, free and clear of any liens and encumbrances.
6.11 Trend hereby agrees not to divest itself of any right under the
Collateral except as permitted herein absent prior written approval of the
Collateral Agent, except to a subsidiary organized and located in the United
States on prior notice to Collateral Agent provided the Collateral remains
subject to the security interest herein described.
6.12 Trend shall cause each Subsidiary of Trend not in existence on the
date hereof to execute and deliver to Collateral Agent promptly and in any event
within 10 days after the formation, acquisition or change in status thereof (A)
a guaranty guaranteeing the Obligations and (B) a security and pledge agreement
substantially in the form of this Agreement together with (x) certificates
evidencing all of the capital stock of any entity owned by such Subsidiary, (y)
undated stock powers executed in blank with signature guaranteed, and (z) such
opinion of counsel and such approving certificate of such Subsidiary as
Collateral Agent may reasonably request in respect of complying with any legend
on any such certificate or any other matter relating to such shares and (E) such
other agreements, instruments, approvals, legal opinions or other documents
reasonably requested by Collateral Agent in order to create, perfect, establish
the first priority of or otherwise protect any lien purported to be covered by
any such pledge and security agreement or otherwise to effect the intent that
all property and assets of such Subsidiary shall become Collateral for the
Obligations. For purposes of this Agreement, "Subsidiary" means, with respect to
any entity at any date, any corporation, limited or general partnership, limited
liability company, trust, estate, association, joint venture or other business
entity) of which more than 50% of (A) the outstanding capital stock having (in
the absence of contingencies) ordinary voting power to elect a majority of the
board of directors or other managing body of such entity, (B) in the case of a
partnership or limited liability company, the interest in the capital or profits
of such partnership or limited liability company or (C) in the case of a trust,
estate, association, joint venture or other entity, the beneficial interest in
such trust, estate, association or other entity business is, at the time of
determination, owned or controlled directly or indirectly through one or more
intermediaries, by such entity.
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7. Power of Attorney.
After the occurrence and during the uncured continuation of an Event of
Default as defined in Section 9 below, Trend hereby irrevocably constitutes and
appoints the Collateral Agent as the true and lawful attorney of Trend, with
full power of substitution, in the place and stead of Trend and in the name of
Trend or otherwise, at any time or times, in the discretion of the Collateral
Agent, to take any action and to execute any instrument or document which the
Collateral Agent may deem necessary or advisable to accomplish the purposes of
this Agreement. This power of attorney is coupled with an interest and is
irrevocable until the Obligations are satisfied.
8. Performance By The Collateral Agent.
If Trend fails to perform any material covenant, agreement, duty or
obligation of Trend under this Agreement, the Collateral Agent may, after any
applicable cure period, at any time or times in its discretion, take action to
effect performance of such obligation. All reasonable expenses of the Collateral
Agent incurred in connection with the foregoing authorization shall be payable
by Trend as provided in Paragraph 12.1 hereof. No discretionary right, remedy or
power granted to the Collateral Agent under any part of this Agreement shall be
deemed to impose any obligation whatsoever on the Collateral Agent with respect
thereto, such rights, remedies and powers being solely for the protection of the
Collateral Agent.
9. Event of Default.
An event of default ("Event of Default") shall be deemed to have occurred
hereunder upon the occurrence of any event of default as defined and described
in this Agreement, in the Notes, Subscription Agreement, and any other agreement
to which Trend and a Lender are parties. Upon and after any Event of Default,
after the applicable cure period, if any, any or all of the Obligations shall
become immediately due and payable at the option of the Collateral Agent, for
the benefit of the Lenders, and the Collateral Agent may dispose of Collateral
as provided below. A default by Trend of any of its material obligations
pursuant to this Agreement shall be an Event of Default hereunder and an event
of default as defined in the Notes, and Subscription Agreement.
10. Disposition of Collateral.
Upon and after any Event of Default which is then continuing,
10.1 The Collateral Agent may exercise its rights with respect to each and
every component of the Collateral, without regard to the existence of any other
security or source of payment for the Obligations. In addition to other rights
and remedies provided for herein or otherwise available to it, the Collateral
Agent shall have all of the rights and remedies of a lender on default under the
Uniform Commercial Code then in effect in the State of New York.
10.2 If any notice to Trend of the sale or other disposition of Collateral
is required by then applicable law, five business (5) days prior written notice
(which Trend agrees is reasonable notice within the meaning of Section 9.612(a)
of the Uniform Commercial Code) shall be given to Trend of the time and place of
any sale of Collateral which Trend hereby agrees may be by private sale. The
rights granted in this Section are in addition to any and all rights available
to Collateral Agent under the Uniform Commercial Code.
10.3 The Collateral Agent is authorized, at any such sale, if the
Collateral Agent deems it advisable to do so, in order to comply with any
applicable securities laws, to restrict the prospective
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bidders or purchasers to persons who will represent and agree, among other
things, that they are purchasing the Collateral for their own account for
investment, and not with a view to the distribution or resale thereof, or
otherwise to restrict such sale in such other manner as the Collateral Agent
deems advisable to ensure such compliance. Sales made subject to such
restrictions shall be deemed to have been made in a commercially reasonable
manner.
10.4 All proceeds received by the Collateral Agent for the benefit of the
Lenders in respect of any sale, collection or other enforcement or disposition
of Collateral, shall be applied (after deduction of any amounts payable to the
Collateral Agent pursuant to Paragraph 12.1 hereof) against the Obligations pro
rata among the Lenders in proportion to their interests in the Obligations. Upon
payment in full of all Obligations, Trend shall be entitled to the return of all
Collateral, including cash, which has not been used or applied toward the
payment of Obligations or used or applied to any and all costs or expenses of
the Collateral Agent incurred in connection with the liquidation of the
Collateral (unless another person is legally entitled thereto). Any assignment
of Collateral by the Collateral Agent to Trend shall be without representation
or warranty of any nature whatsoever and wholly without recourse. To the extent
allowed by law, each Lender may purchase the Collateral and pay for such
purchase by offsetting up to such Lender's pro rata portion of the proceeds with
sums owed to such Lender by Trend arising under the Obligations or any other
source.
11. Waiver of Automatic Stay. Trend acknowledges and agrees that should a
proceeding under any bankruptcy or insolvency law be commenced by or against
Trend, or if any of the Collateral should become the subject of any bankruptcy
or insolvency proceeding, then the Collateral Agent should be entitled to, among
other relief to which the Collateral Agent or Lenders may be entitled under the
Note, Subscription Agreement and any other agreement to which the Debtor,
Lenders or Collateral Agent are parties, (collectively "Loan Documents") and/or
applicable law, an order from the court granting immediate relief from the
automatic stay pursuant to 11 U.S.C. Section 362 to permit the Collateral Agent
to exercise all of its rights and remedies pursuant to the Loan Documents and/or
applicable law. Trend EXPRESSLY WAIVES THE BENEFIT OF THE AUTOMATIC STAY IMPOSED
BY 11 U.S.C. SECTION 362. FURTHERMORE, Trend EXPRESSLY ACKNOWLEDGES AND AGREES
THAT NEITHER 11 U.S.C. SECTION 362 NOR ANY OTHER SECTION OF THE BANKRUPTCY CODE
OR OTHER STATUTE OR RULE (INCLUDING, WITHOUT LIMITATION, 11 U.S.C. SECTION 105)
SHALL STAY, INTERDICT, CONDITION, REDUCE OR INHIBIT IN ANY WAY THE ABILITY OF
THE COLLATERAL AGENT TO ENFORCE ANY OF ITS RIGHTS AND REMEDIES UNDER THE LOAN
DOCUMENTS AND/OR APPLICABLE LAW. Trend hereby consents to any motion for relief
from stay which may be filed by the Collateral Agent in any bankruptcy or
insolvency proceeding initiated by or against Trend, and further agrees not to
file any opposition to any motion for relief from stay filed by the Collateral
Agent. Trend represents, acknowledges and agrees that this provision is a
specific and material aspect of this Agreement, and that the Collateral Agent
would not agree to the terms of this Agreement if this waiver were not a part of
this Agreement. Trend further represents, acknowledges and agrees that this
waiver is knowingly, intelligently and voluntarily made, that neither the
Collateral Agent nor any person acting on behalf of the Collateral Agent has
made any representations to induce this waiver, that Trend has been represented
(or has had the opportunity to be represented) in the signing of this Agreement
and in the making of this waiver by independent legal counsel selected by Trend
and that Trend has had the opportunity to discuss this waiver with counsel.
Trend further agrees that any bankruptcy or insolvency proceeding initiated by
Trend will only be brought in the Federal Court within the Southern District of
New York.
12. Miscellaneous.
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12.1 Expenses. Trend shall pay to the Collateral Agent, on demand, the
amount of any and all reasonable expenses, including, without limitation,
attorneys' fees, legal expenses and brokers' fees, which the Collateral Agent
may incur in connection with (a) sale, collection or other enforcement or
disposition of Collateral; (b) exercise or enforcement of any the rights,
remedies or powers of the Collateral Agent hereunder or with respect to any or
all of the Obligations upon breach or threatened breach; or (c) failure by Trend
to perform and observe any agreements of Trend contained herein which are
performed by the Collateral Agent.
12.2 Waivers, Amendment and Remedies. No course of dealing by the
Collateral Agent and no failure by the Collateral Agent to exercise, or delay by
the Collateral Agent in exercising, any right, remedy or power hereunder shall
operate as a waiver thereof, and no single or partial exercise thereof shall
preclude any other or further exercise thereof or the exercise of any other
right, remedy or power of the Collateral Agent. No amendment, modification or
waiver of any provision of this Agreement and no consent to any departure by
Trend therefrom, shall, in any event, be effective unless contained in a writing
signed by the Collateral Agent, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given. The rights, remedies and powers of the Collateral Agent, not only
hereunder, but also under any instruments and agreements evidencing or securing
the Obligations and under applicable law are cumulative, and may be exercised by
the Collateral Agent from time to time in such order as the Collateral Agent may
elect.
12.3 Notices. All notices or other communications given or made hereunder
shall be in writing and shall be personally delivered or deemed delivered the
first business day after being faxed (provided that a copy is delivered by first
class mail) to the party to receive the same at its address set forth below or
to such other address as either party shall hereafter give to the other by
notice duly made under this Section:
To Trend: Trend Mining Company
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇, President and CEO
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Jenkens & ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ LLP
The Chrysler Building
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▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
To Lenders: To the addresses and telecopier numbers set forth
on Schedule A
To the Collateral Agent: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Grushko & ▇▇▇▇▇▇▇, P.C.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
9
Any party may change its address by written notice in accordance with this
paragraph.
12.4 Term; Binding Effect. This Agreement shall (a) remain in full
force and effect until payment and satisfaction in full of all of the
Obligations; (b) be binding upon Trend, and its successors and permitted
assigns; and (c) inure to the benefit of the Collateral Agent, for the benefit
of the Lenders and their respective successors and assigns. All the rights and
benefits granted by Debtor to the Collateral Agent and Lenders in the Loan
Documents and other agreements and documents delivered in connection therewith
are deemed granted to both the Collateral Agent and Lenders.
12.5 Captions. The captions of Paragraphs, Articles and Sections in
this Agreement have been included for convenience of reference only, and shall
not define or limit the provisions hereof and have no legal or other
significance whatsoever.
12.6 Governing Law; Venue; Severability. This Agreement shall be
governed by and construed in accordance with the laws of the State of New York
without regard to conflicts of laws principles that would result in the
application of the substantive laws of another jurisdiction, except to the
extent that the perfection of the security interest granted hereby in respect of
any item of Collateral may be governed by the law of another jurisdiction. Any
legal action or proceeding against Trend with respect to this Agreement may be
brought in the courts in the State of New York or of the United States for the
Southern District of New York, and, by execution and delivery of this Agreement,
Trend hereby irrevocably accepts for itself and in respect of its property,
generally and unconditionally, the jurisdiction of the aforesaid courts. Trend
hereby irrevocably waives any objection which they may now or hereafter have to
the laying of venue of any of the aforesaid actions or proceedings arising out
of or in connection with this Agreement brought in the aforesaid courts and
hereby further irrevocably waives and agrees not to plead or claim in any such
court that any such action or proceeding brought in any such court has been
brought in an inconvenient forum. If any provision of this Agreement, or the
application thereof to any person or circumstance, is held invalid, such
invalidity shall not affect any other provisions which can be given effect
without the invalid provision or application, and to this end the provisions
hereof shall be severable and the remaining, valid provisions shall remain of
full force and effect.
12.7 Entire Agreement. This Agreement contains the entire agreement of
the parties and supersedes all other agreements and understandings, oral or
written, with respect to the matters contained herein.
12.8 Counterparts/Execution. This Agreement may be executed in any
number of counterparts and by the different signatories hereto on separate
counterparts, each of which, when so executed, shall be deemed an original, but
all such counterparts shall constitute but one and the same instrument. This
Agreement may be executed by facsimile signature and delivered by facsimile
transmission.
[THIS SPACE INTENTIONALLY LEFT BLANK]
10
IN WITNESS WHEREOF, the undersigned have executed and delivered this
Security Agreement, as of the date first written above.
"DEBTOR" "THE COLLATERAL AGENT"
TREND MINING COMPANY ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
a Delaware corporation
By: ______________________________________ ____________________________________
Its: _____________________________________
APPROVED BY "LENDERS":
______________________________________ ____________________________________
LONGVIEW FUND, LP LONGVIEW EQUITY FUND, LP
______________________________________ ____________________________________
LONGVIEW INTERNATIONAL EQUITY CAMDEN INTERNATIONAL, LTD.
FUND, LP
______________________________________
ALPHA CAPITAL AKTIENGESELLSCHAFT
This Security Agreement may be signed by facsimile signature and delivered by
confirmed facsimile transmission.
SCHEDULE A TO SECURITY AND PLEDGE AGREEMENT
------------------------------------------------------------ --------------------- ----------------- ------------------
LENDER PURCHASE PRICE CLASS A WARRANTS CLASS B WARRANTS
------------------------------------------------------------ --------------------- ----------------- ------------------
LONGVIEW FUND, LP $400,000.00 533,333 666,667
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
------------------------------------------------------------ --------------------- ----------------- ------------------
LONGVIEW EQUITY FUND, LP $250,000.00 333,333 416,667
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
------------------------------------------------------------ --------------------- ----------------- ------------------
LONGVIEW INTERNATIONAL EQUITY FUND, LP $150,000.00 200,000 250,000
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
------------------------------------------------------------ --------------------- ----------------- ------------------
CAMDEN INTERNATIONAL, LTD. $250,000.00 333,333 416,667
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
P.O. Box N 9204
Nassau, Bahamas
Fax: ▇▇▇-▇▇▇-▇▇▇▇
------------------------------------------------------------ --------------------- ----------------- ------------------
ALPHA CAPITAL AKTIENGESELLSCHAFT $250,000.00 333,333 416,667
▇▇▇▇▇▇▇▇▇ ▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇
Fax: ▇▇▇-▇▇-▇▇▇▇▇▇▇▇
------------------------------------------------------------ --------------------- ----------------- ------------------
TOTAL $1,300,000.00 1,733,332 2,166,668
------------------------------------------------------------ --------------------- ----------------- ------------------
ANNEX I
TO
SECURITY AND PLEDGE AGREEMENT
PLEDGE AMENDMENT
This Pledge Amendment, dated _________ __ 200_, is delivered pursuant
to Section 4.3 of the Security and Pledge Agreement referred to below. The
undersigned hereby agrees that this Pledge Amendment may be attached to the
Security and Pledge Agreement, dated January ___, 2005, as it may heretofore
have been or hereafter may be amended, restated, supplemented or otherwise
modified from time to time and that the shares listed on this Pledge Amendment
shall be hereby pledged and assigned to Collateral Agent and become part of the
Collateral referred to in such Security and Pledge Agreement and shall secure
all of the Obligations referred to in such Security and Pledge Agreement.
--------------------------------------------- ---------------------- --------------------------------- ----------------
Number Certificate
Name of Issuer of Shares Class Number(s)
-------------- --------- ----- ---------
--------------------------------------------- ---------------------- --------------------------------- ----------------
--------------------------------------------- ---------------------- --------------------------------- ----------------
--------------------------------------------- ---------------------- --------------------------------- ----------------
--------------------------------------------- ---------------------- --------------------------------- ----------------
--------------------------------------------- ---------------------- --------------------------------- ----------------
TREND MINING COMPANY
By: _____________________________
▇▇▇▇▇▇ ▇▇▇▇▇▇
President and CEO