▇▇▇▇▇▇▇▇▇ PLEDGE AND SECURITY AGREEMENT
December 4, 1997
PLEDGE AND SECURITY AGREEMENT between AMERICAN INTERACTIVE MEDIA, INC., a
Nevada corporation having an address at ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
(the "Corporation"), and ▇▇▇▇▇▇▇▇▇ DIGITAL, INC., a Delaware corporation having
an address at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (the "Secured
Party").
WHEREAS, the Corporation has issued and sold to the Secured Party the
Floating Rate Convertible Secured Debenture Note dated as of the date hereof
(the "Note");
WHEREAS, it is the intention of the parties hereto that the granting of the
security interest pursuant to this Pledge and Security Agreement will secure all
of the obligations of the Corporation under the Note (such obligations being
referred to herein as the "Secured Obligations").
NOW, THEREFORE, in consideration of the foregoing and the mutual agreements
and covenants herein contained, and intending to be legally bound hereby, the
parties hereto HEREBY AGREE AS FOLLOWS:
1. Subject to Section 9 below, the Corporation hereby grants to the Secured
Party a first priority security interest in the Collateral (as defined in
paragraph 2 below) to secure the Secured Obligations.
2. The collateral shall be all assets of the Corporation whether now owned
or hereafter acquired and all proceeds therefrom (including, but not limited to,
any machinery, equipment, furniture, fixtures, inventory, work-in-process, cash,
accounts receivable, contracts,
leases, software, source and operating codes, designs, marketing and other
plans, intellectual property, trade names and trade marks (collectively, the
"Collateral")).
3. The occurrence of any one or more of the following events shall
constitute an event of default ("Default") by the Corporation under this
Security Agreement if not cured within fifteen (15) days after written notice
thereof from the Secured Party: (a) an Event of Default under the Note; (b) in
the event of substantial loss, theft or destruction of, or substantial damage
to, the Collateral not adequately covered by insurance, or the making or filing
of any lien, levy, or execution on, or seizure, attachment or garnishment of, a
substantial portion of the Collateral not discharged, bonded, paid or removed
within sixty (60) days; (c) if the Corporation shall be liquidated, dissolved,
or shall fail to maintain its corporate existence in good standing; (d) if there
shall be filed by or against the Corporation any petition for any relief under
the bankruptcy laws of the United States now or hereafter in effect or under any
insolvency, readjustment of debt, dissolution or liquidation law or statute of
any jurisdiction now or hereafter in effect (in the case of any filing against
the Corporation, which is not discharged, vacated or dismissed within sixty (60)
days); or (e) if the usual business of the Corporation shall be terminated or
suspended for more than sixty (60) days.
4. Upon the occurrence of any Event of Default under the Note and the
expiration of all applicable cure periods or of any Default hereunder not cured
by the Corporation or its affiliates within fifteen (15) days after written
notice thereof from the Secured Party, the Secured Party shall have all rights
and remedies of a secured party under the laws of the State of New York,
including the Uniform Commercial Code of the State of New York (the "UCC").
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5. It is expressly agreed by all parties hereto that the Secured
Obligations of the Corporation under, and with respect to, the Note shall not be
subject to any set-offs, defenses or counterclaims which the Corporation or its
affiliates may have against the Secured Party under, or arising out of, the Note
or any other document required to be executed by the Securities Purchase
Agreement referred to in the Note.
6. The Corporation shall deliver UCC-1 financing statements evidencing the
Secured Party's security interest hereunder. Upon payment in full of the Secured
Obligations by the Corporation or conversion in full of the Note, the Secured
Party shall forthwith deliver to the Corporation UCC-3 termination statements,
terminating the Secured Party's security interest hereunder and the security
interest granted by this Security Agreement shall become null and void and of no
further force and effect.
7. Any notices or demands to be effective under this Security Agreement
shall be given pursuant to the notice provisions of the Securities Purchase
Agreement.
8. The proceeds of the sale of any of the Collateral by the Secured Party
pursuant to the terms hereof after a Default shall be applied as follows:
FIRST: To the payment of the costs and expenses of such sale,
including the out-of-pocket expenses of the Secured Party and the
reasonable fees and out-of-pocket expenses of counsel employed by the
Secured Party in connection therewith;
SECOND: To the payment of all amounts then owing to the Secured Party
under the Secured Obligations;
THIRD: The balance (if any) of the proceeds shall be paid to the
Corporation or its successors or assigns.
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9. Notwithstanding any other provision of this Security Agreement, with
respect to additional property acquired after the Closing Date, the Corporation
or any of its affiliates may grant purchase money security interests therein to
finance the purchase thereof and may also permit the filing of liens to evidence
such property which is leased by the Corporation or any of its affiliates.
10. Any Collateral which may be obtained by the Secured Party pursuant to
this Security Agreement or otherwise, or the right to so obtain Collateral, may
be pledged by the Secured Party or an affiliate to the lenders of any such
affiliate or may be assigned to any affiliate of the Secured Party.
11. (a) All terms used herein shall have the meanings as defined in the
UCC, unless the context otherwise requires.
(b) No provision hereof shall be modified, altered or limited except by a
written instrument expressly referring to this Security Agreement and to such
provision, and executed by the party to be charged.
(c) The execution and delivery of this Security Agreement has been
authorized by the Board of Directors and shareholders of the Corporation.
(d) This Security Agreement shall be binding upon and inure to the benefit
of the successors or assigns of the Secured Party and the Corporation.
(e) In the event of any conflict between the responsibilities of the
parties under this Security Agreement and the Securities Purchase Agreement, the
provisions of the Securities Purchase Agreement shall govern, and nothing in
this Security Agreement is intended to or shall modify or reduce any
representation, warranty, covenant, or indemnification by the Secured Party in
the Securities Purchase Agreement.
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(f) This Security Agreement shall be governed by the laws of the State of
New York applicable to contracts made and performed entirely within the State of
New York without regard to conflict of laws rules applied in the State of New
York.
(g) This Agreement may be executed in one or more counterparts, and by the
different parties hereto in separate counterparts, each of which when executed
shall be deemed to be an original but all of which taken together shall
constitute one and the same agreement.
IN WITNESS WHEREOF, the undersigned have executed or caused this Security
Agreement to be executed on the date first set forth above.
AMERICAN INTERACTIVE MEDIA, INC.
By ______________________________________
Name:
Title:
▇▇▇▇▇▇▇▇▇ DIGITAL, INC.
By ______________________________________
Name:
Title:
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