▇▇▇▇▇▇▇▇ LIMITED LIABILITY PARTNERSHIP
CHANCE
EXECUTION COPY
GALAXIS TECHNOLOGY AG
AS PLEDGOR
AND
LLOYDS TSB BANK PLC
AS SECURED PARTY
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PLEDGE AGREEMENT
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CONTENTS
CLAUSE PAGE
1. Definitions...........................................................1
2. Pledge................................................................3
3. Representations and Warranties Of Pledgor.............................5
4. Covenants of Pledgor..................................................7
5. Voting Rights and Certain Payments Prior to Event of Default..........8
6. All Payments in Trust.................................................9
7. Expenses..............................................................9
8. Remedies.............................................................10
9. Suretyship Waivers by Pledgor; Obligations Absolute..................14
10. Marshalling..........................................................15
11. Proceeds Of Dispositions.............................................15
12. Reinstatement........................................................16
13. Miscellaneous........................................................16
SCHEDULE 1 To Pledge Agreement
PLEDGE AGREEMENT (this "PLEDGE AGREEMENT"), dated as of January 2004
BETWEEN
(1) GALAXIS TECHNOLOGY AG, a German stock corporation
(Aktiengesellschaft), having its business address at ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇
▇, ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, registered in the commercial register of
the local court of Lubeck under HE6 4762 ("PLEDGOR");
(2) LLOYDS TSB BANK PLC a company incorporated in England and Wales
(Company number: 00002065) acting though a branch at ▇▇▇▇▇▇▇▇▇▇▇▇▇
▇▇-▇▇, ▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ("SECURED PARTY");
(A) WHEREAS, Secured Party has made loans to Pledgor and Omniscience
Multimedia Lab GmbH; and
(B) WHEREAS, in order to secure all Secured Obligations (as defined
below), Pledgor has agreed to execute and deliver to Secured Party a
pledge agreement in substantially the form hereof over certain shares
in Distinctive Devices, Inc, a company incorporated under the laws of
the State of Delaware.
NOW, THEREFORE, in consideration of the premises and for other good and valuable
consideration the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. DEFINITIONS
1.1 DEFINITION OF TERMS USED HEREIN GENERALLY
All terms used herein and defined in the NYUCC (as defined below)
shall have the same definitions herein as specified therein; PROVIDED,
HOWEVER, THAT if a term is defined in Article 9 of the NYUCC
differently than in another Article of the NYUCC, the term has the
meaning specified in Article 9 of the NYUCC.
1.2 DEFINITION OF CERTAIN TERMS USED HEREIN
AB used herein, the following terms shall have the following meanings:
"ACQUISITION AGREEMENt" means the share purchase agreement dated of
the same date hereof for the purchase of stock of galaxis technology
ag from Media Hill Beratungsund Vertriebs GmbH, as seller, by
Distinctive Devices, Inc, as purchaser.
"EVENTS" shall have the meaning assigned to such term in sub-clause
8.3.1 of Clause 8.3 (Secured Party's Duties of Reasonable Care).
"EXTRAORDINARY PAYMENTS" shall have the meaning assigned to such term
in subclause 5.1.2 of Clause 5.1 (Voting Rights and Ordinary Payments
Prior to an Event of Default).
"FINANCE PARTIES" shall mean Pledgor and Omniscience Multimedia Lab
GmbH.
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"FINANCE DOCUMENTS" shall mean:
(a) a revolving facility letter dated 28 November 2001
between galaxis technology ag, as Borrower, Media Hill
Beratungs- und Vertriebs GmbH, as Guarantor and Lloyds
TSB Bank plc, as Lender, as subsequently amended from
time to time;
(b) a loan agreement dated 26 March 2003 between
OmniScience Multimedia Lab GmbH, as Borrower, galaxis
technology ag and Convergence GmbH, as. Guarantors and
Lloyds TSB Bank plc, as Lender as subsequently amended
from time to time; and
(c) the Acquisition Agreement.
"INDEMNIFIED PARTY" shall have the meaning assigned to such term in
Clause 8.4 (Indemnification).
"LIEN" shall mean any security interest, mortgage, lien, encumbrance
or adverse claim, and any financing statement or similar document
filed in respect of same.
"PLEDGED COLLATERAL" shall have the meaning assigned to such term in
Clause 2.1 (Grant of Security Interest).
"PLEDGED SECURITIES" shall have the meaning assigned to such term in
sub-clause 2.2.2 of Clause 2.2 (Description of Pledged Collateral).
"NYUCC" shall mean the UCC as in effect in the State of New York from
time to time.
"SECURED OBLIGATIONS" means (a) the due and punctual payment by the
Finance Parties of (i) the principal of and premium, if any, and
interest (including interest accruing under the terms of the Finance
Documents during the pendency of any bankruptcy, insolvency,
receivership or other similar proceeding, regardless of whether
allowed or allowable in such proceeding) on any amounts outstanding
under the Finance Documents, when and as due, whether at maturity, by
acceleration, upon one or more dates set for prepayment or otherwise,
(ii) all other monetary obligations, including fees, costs, expenses
and indemnities, whether primary, secondary, direct, contingent, fixed
or otherwise (including monetary obligations incurred during the
pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such
proceeding), of the Finance Parties to the Secured Party under the
Finance Documents, (b) the due and punctual performance of all
covenants, agreements, obligations and .liabilities of the Finance
Parties under or pursuant to the Finance Documents, (c) the due and
punctual payment and performance of all the covenants, agreements,
obligations and liabilities of each Finance Party under or pursuant to
this Pledge Agreement and the other Finance Documents and (d) all
damages (whether provided for in the Finance Documents or otherwise
permitted by law) in respect of a failure or refusal by Galaxis to
payor perform as required under the Finance Documents.
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"SECURITIES ACT" shall have the meaning assigned to such term in
sub-clause 8.1.4 of Clause 8.1 (Disposition upon Default and Related
Provisions).
"SECURITY INTEREST" means the security interest granted pursuant to
Clause 2.1 (Grant of Security Interest), as well as any other security
interests created or assigned as additional security for the Secured
Obligations pursuant to the provisions of this Pledge Agreement.
"UCC" means the Uniform Commercial Code as in effect in any
jurisdiction. References to particular sections of Article 9 of the
UCC shall be, unless otherwise indicated, references to Revised
Article 9 of the UCC adopted and effective in certain jurisdictions on
or after July 1,2001.
1.3 RULES OF INTERPRETATION
References to "CLAUSES", "EXHIBITS" and "SCHEDULES" shall be to
Clauses, Exhibits and Schedules, respectively, of this Pledge
Agreement unless otherwise specifically provided. Any of the terms
defined in this Pledge Agreement may, unless the context otherwise
requires, be used in the singular or the plural depending on the
reference. All references to statutes and related regulations shall
include (unless otherwise specifically provided herein) any amendments
of same and any successor statutes and regulations.
2. PLEDGE
2.1 GRANT OF SECURITY INTEREST
To secure the payment or performance, as the case may be, in full of
the Secured Obligations, whether at stated maturity, by acceleration
or otherwise Pledgor hereby pledges to Secured Party, and grants to
Secured Party a first priority Security Interest in, the collateral
described in Clause 2.2 (Description of Pledged Collateral)
(collectively, the "PLEDGED COLLATERAL").
2.2 DESCRIPTION OF PLEDGED COLLATERAL
2.2.1 The Pledged Collateral is described as follows and on any
separate schedules at any time furnished by Pledgor to
Secured Party (which schedules are hereby deemed part of
this Pledge Agreement):
(a) all right, title and interest of Pledgor as holder
(whether now or in the future) in (i) shares or other
equity interests in Distinctive Devices, Inc., or any
warrants to purchase or depositary shares or other
rights in respect of any such interests, and (ii) all
shares of stock, certificates, instruments or other
documents evidencing or representing the same;
(b) all right, title and interest of Pledgor in and to all
present and future payments, proceeds, dividends,
distributions, instruments, compensation, property,
assets, interests and rights in connection with or
related to the collateral listed in sub-clause 2.2.1(a)
above, and all monies due or to become due and payable
to Pledgor in connection with or related to such
collateral or otherwise paid, issued or distributed
from time to time in respect of or in exchange
therefor, and any certificate, instrument or other
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document evidencing or representing the same
(including, without limitation, all proceeds of
dissolution or liquidation); and
(c) all proceeds of all of the foregoing, of every kind,
and all proceeds of such proceeds.
2.2.2 The shares of stock, certificates, instruments or other
documents evidencing or representing the foregoing shall be
collectively referred to herein as the "PLEDGED SECURITIES".
2.2.3 Notwithstanding the foregoing, the terms "PLEDGED
COLLATERAL" and "PLEDGED SECURITIES" shall not include any
Margin Stock (as defined in Regulation U of the Board of
Governors of the Federal Reserve System of the United
States, as the same is from time to time in effect), and the
Security Interest granted hereunder shall not be effective
in respect of any collateral until such time as such
collateral no longer constitutes Margin Stock.
2.3 DELIVERY OF CERTIFICATES, INSTRUMENTS, ETC.
2.3.1 Pledgor shall deliver to Secured Party:
(a) all original shares of stock, certificates, instruments
and other documents evidencing or representing the
Pledged Collateral concurrently with the execution and
delivery of this Pledge Agreement; and
(b) the original shares of stock, certificates, instruments
or other documents evidencing or representing all
Pledged Collateral (other than Pledged Collateral that
this Pledge Agreement specifically permits Pledgor to
retain) within ten (10) days after Pledgor's receipt
thereof.
2.3.2 All Pledged Securities that are certificated securities
shall be in bearer form or, if in registered form, shall be
issued in the name of Secured Party or endorsed to Secured
Party or in blank.
2.4 REGISTRATION
At any time and from time to time, Secured Party may cause all or any
of the Pledged Securities to be transferred to or registered in its
name or the name of its nominee or nominees.
2.5 AUTHORIZATION TO FILE FINANCING STATEMENTS
Pledgor hereby irrevocably authorizes Secured Party at any time and
from time to time to file in any jurisdiction in which the UCC has
been adopted any initial financing statements and amendments thereto
that (a) describe the Pledged Collateral, and (b) contain any other
information required by part 5 of Article 9 of the UCC for the
sufficiency or filing office acceptance of any initial financing
statement or amendment, including (i) whether Pledgor is an
organization, the type of organization and any organization
identification number issued to Pledgor. Pledgor agrees to furnish any
such information to Secured Party promptly upon request. Pledgor also
ratifies its authorization for Secured Party to have filed in any UCC
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jurisdiction any like initial financing statements or amendments
thereto if filed prior to the date hereof.
2.6 RELEASE
The parties hereto acknowledge that the Pledged Collateral of Galaxis
will be released upon discharge of all Secured Obligations.
3. REPRESENTATIONS AND WARRANTIES OF PLEDGOR
Pledgor hereby represents and warrants to Secured Party that:
3.1 PLEDGOR'S LEGAL STATUS
3.1.1 Pledgor is an organization, as set forth in Schedule 1
hereto;
3.1.2 Pledgor's. organization is of the type, and is organized in
the jurisdiction, set forth in Schedule I hereto; and
3.1.3 Schedule 1 hereto sets forth Pledgor's organizational
identification number or states that Pledgor has none.
3.2 PLEDGOR'S LEGAL NAME
Pledgor's exact legal name is that set forth in Schedule I hereto and
on the signature page hereof.
3.3 PLEDGOR'S LOCATIONS
Pledgor's state of organization and Pledgor's place of business or (if
it has more than one place of business) its chief executive office, as
well as its mailing address if different.
3.4 AUTHORITY; BINDING OBLIGATION; NO CONFLICT
Pledgor has full power and authority to execute, deliver and perform
its obligations in accordance with the terms of this Pledge Agreement
and to grant to Secured Party the Security Interest in the Pledged
Collateral pursuant hereto, without the consent or approval of any
other person or entity other than any consent or approval which has
been obtained and is in full force and effect (and a written of which
has been delivered to Secured Party). This Pledge Agreement has been
duly authorized, executed and delivered by Pledgor and is the legally
valid and binding obligation of Pledgor, enforceable against Pledgor
in accordance with its terms, except as enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium, or similar laws or
equitable principles relating to or limiting creditor's rights
generally. The granting to Secured Party of the Security Interest in
the Pledged Collateral hereunder, the, execution by Pledgor of this
Pledge Agreement and the performance by Pledgor of its obligations
hereunder do not and will not (a) result in the existence or
imposition of any Lien nor obligate Pledgor to create any Lien (other
than such Security Interest) in favor of any person or entity over all
or any of its assets; (b) conflict with any agreement, mortgage, bond
or other instrument to which Pledgor is a party or which is binding
upon Pledgor or any of its assets; (c) conflict with Pledgor's
certificate of incorporation, by-laws, or other organizational or
charter documents; or (d) conflict with any law, regulation or
judicial order binding on Pledgor or any of the Pledged Collateral.
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3.5 TITLE TO PLEDGED COLLATERAL
The Pledged Collateral is owned by Pledgor (as set out in Schedule 1
hereto) free and clear of any Lien, except for Liens expressly
permitted by the Finance Documents. No Pledgor has filed or consented
to the filing of (a) any financing statement or analogous document
under the UCC or any other applicable laws covering any Pledged
Collaterals, (b) any assignment in which Pledgor assigns any Pledged
Collateral or any security agreement or similar instrument covering
any Pledged Collateral with any foreign governmental, municipal or
other office, which financing statement or analogous document,
assignment, security agreement or similar instrument is still in
effect, except, in each case, for Liens expressly permitted pursuant
to the Finance Documents.
3.6 PLEDGED COLLATERAL
Set forth on Schedule I hereto is a complete and accurate list and
description of all the Pledged Collateral.
3.7 PERCENTAGE OWNERSHIP
The Pledged Securities of each issuer specifically identified on
Schedule 1 hereto constitute, and until this Pledge Agreement
terminates shall continue to constitute, the percentage of the
outstanding equity of each such issuer as indicated on Schedule 1
hereto.
3.8 DUE AUTHORIZATION, ETC, OF STOCK; NOT MARGIN STOCK
The Pledged Securities listed on Schedule 1 hereto have been duly
authorized and validly issued and are fully paid and non-assessable
and are not subject to any options to purchase or similar rights of
any person, and none of the Pledged Securities constitutes Margin
Stock.
3.9 REQUIRED CONSENTS
Except as may be required in connection with any disposition of any
portion of the Pledged Securities by laws affecting the offering and
sale of securities generally, no consent of any person (including,
without limitation, partners, shareholders or creditors of either
Pledgor or of any subsidiary of Pledgor) and no license, permit,
approval or authorization of, exemption by, notice or report to, or
registration, filing or declaration with, any governmental
instrumentality is required in connection with (a) the execution,
delivery, performance, validity or enforceability of this Pledge
Agreement, (b) the perfection or maintenance of the Security Interest
created hereby (including the first priority nature of such Security
Interest), or ( c) the exercise by Secured Party of the . rights
provided for in this Pledge Agreement.
3.10 NATURE OF SECURITY INTEREST
Upon the delivery of the Pledged Securities to Secured Party, the
pledge of the Pledged Collateral pursuant to this Pledge Agreement
creates a valid and perfected first priority Security Interest in the
Pledged Collateral, securing the prompt and complete payment,
performance and observance of the Secured Obligations.
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4. COVENANTS OF PLEDGOR
4.1 PLEDGOR'S LEGAL STATUS
No Pledgor shall change its type of organization, jurisdiction of
organization or other legal structure (without the consent of the
Secured Party).
4.2 PLEDGOR'S NAME
Without providing at least 30 days prior written notice to Secured
Party, no Pledgor shall change its name.
4.3 PLEDGOR'S ORGANIZATIONAL NUMBER
Without providing at least 30 days prior written notice to Secured
Party, no Pledgor shall change its organizational identification
number if it has one. If Pledgor does not have an organizational
identification number and later obtains one, Pledgor shall forthwith
notify Secured Party of such organizational identification number.
4.4 LOCATIONS
Without providing at least 30 days prior written notice to Secured
Party, no Pledgor shall change its principal residence, its place of
business or (if it has more than one place of business) its chief
executive office or its mailing address.
4.5 TITLE TO PLEDGED COLLATERAL
4.5.1 Except for the Security Interest herein granted, Pledgor
shall be the owner of the Pledged Collateral free from any
Lien, and Pledgor, at its sole cost and expense, shall
defend the same against all claims and demands of all
persons at any time claiming the same or any interests
therein adverse to Secured Party; and
4.5.2 No Pledgor shall sell or otherwise dispose of, or pledge,
mortgage or create, or suffer to exist a Lien on, the
Pledged Collateral in favor of any person other than Secured
Party and the inclusion of "PROCEEDS" of the Pledged
Collateral under the Security Interest granted herein shall
not be deemed a consent by Secured Party to any sale or
other disposition of any Pledged Collateral.
4.6 TAXES
Pledgor shall pay promptly when due all taxes, assessments,
governmental charges and levies upon the Pledged Collateral or
incurred in connection with the Pledged Collateral or incurred in
connection with this Pledge Agreement.
4.7 FURTHER ASSURANCES
Pledgor will, from time to time, at its expense, promptly execute and
deliver all further instruments and documents and take all further
action that may be necessary, or that Secured Party may reasonably
request, in order to perfect and protect any Security Interest granted
or purported to be granted hereby or to enable Secured Party to
exercise and enforce its rights and remedies hereunder with respect to
any Pledged Collateral.
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5. VOTING RIGHTS AND CERTAIN PAYMENTS PRIOR TO EVENT OF DEFAULT
5.1 VOTING RIGHTS AND ORDINARY PAYMENTS PRIOR TO AN EVENT OF DEFAULT
So long as no Event of Default shall have occurred in any of the
Finance Documents, Pledgor shall be entitled:
5.1.1 to exercise, as it shall think fit, but in a manner not
inconsistent with the terms hereof, the voting power with
respect to the Pledged Collateral of Pledgor, and for that
purpose Secured Party shall (if any Pledged Securities shall
be registered in the name of Secured Party or its nominee)
execute or cause to be executed from time to time, at the
expense of Pledgor, such proxies or other instruments in
favor of Pledgor or its nominee, in such form and for such
purposes as shall be reasonably required by Pledgor and
shall be specified in a written request therefor, to enable
it to exercise such voting power with respect to the Pledged
Securities; and
5.1.2 except as otherwise provided in Clause 5.2 (Extraordinary
Payments and Distributions) and Clause 5.3 (Voting Rights
and Ordinary Payments after an Event of Default), to receive
and retain for its own account any and all payments,
proceeds, dividends, distributions, monies, compensation,
property, assets, instruments or rights to the extent such
are permitted pursuant to the terms of the Finance
Documents, other than (a) stock or liquidating dividends or
(b) extraordinary dividends and dividends or other amounts
payable under or in connection with any recapitalization,
restructuring, or other non-ordinary course event (the
dividends and amounts in this sub-clause (b) being
"EXTRAORDINARY PAYMENTS"), paid, issued or distributed from
time to time in respect of the Pledged Collateral.
5.2 EXTRAORDINARY PAYMENTS AND DISTRIBUTIONS
5.2.1 In case, upon the dissolution or liquidation (in whole or in
part) of any issuer of any Pledged Collateral, any sum shall
be paid or payable as a liquidating dividend or otherwise
upon or with respect to any of the Pledged Securities or, in
the event any other Extraordinary Payment is paid or
payable, then and in any such event, such sum shall be paid
by Pledgor to Secured Party promptly, and in any event
within ten (10) days after receipt thereof, to be held by
Secured Party as additional collateral hereunder and all of
the same shall constitute Pledged Collateral for all
purposes hereof.
5.2.2 In case any stock dividend shall be declared with respect to
any of the Pledged Collateral, or any shares of stock or
fractions thereof shall be issued pursuant to any stock
split involving any of the Pledged Collateral, or any
distribution of capital shall be made on any of the Pledged
Collateral, or any shares, obligations or other property
shall be distributed upon, or with respect to, the Pledged
Collateral, in each case pursuant to a recapitalization or
reclassification of the capital of the issuer thereof, or
pursuant to the dissolution, liquidation (in whole or in
part), bankruptcy or reorganization of such issuer, or to
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the merger or consolidation of such issuer with or into
another corporation, the shares, obligations or other
property so distributed shall be delivered by Pledgor to
Secured Party promptly, and in any event within ten (10)
days after receipt thereof, to be held by Secured Party as
additional collateral hereunder subject to the terms of this
Pledge Agreement, and all of the same shall constitute
Pledged Collateral for all purposes hereof.
5.3 VOTING RIGHTS AND ORDINARY PAYMENTS AFTER AN EVENT OF DEFAULT
Upon the occurrence and during the continuance of any Event of Default
in any of the Finance Documents, all rights of Pledgor to exercise or
refrain from exercising the voting and other consensual rights that it
would otherwise be entitled to exercise pursuant to sub-clause 5.1.1
of Clause 5.1 (Voting Rights and Ordinary Payments Prior to an Event
of Default) hereof and to receive the payments, proceeds, dividends,
distributions, monies, compensation, property, assets, instruments or
rights that Pledgor would otherwise be authorized to receive and
retain pursuant to sub-clause 5.1.2 of Clause 5.1 (Voting Rights and
Ordinary Payments Prior to an Event of Default) hereof shall cease,
and thereupon Secured Party shall be entitled to exercise all voting
power with respect to the Pledged Securities and to receive and
retain, as additional collateral hereunder, which shall constitute
Pledged Collateral for all purposes hereof, any and all payments,
proceeds, dividends, distributions, monies, compensation, property,
assets, instruments or rights at any time declared or paid upon any of
the Pledged Collateral during such an Event of Default and otherwise
to act with respect to the Pledged Collateral as outright owner
thereof.
6. ALL PAYMENTS IN TRUST
All payments, proceeds, dividends, distributions, monies,
compensation, property, assets, instruments or rights that are
received by Pledgor contrary to the provisions of Clause 5 (Voting
Rights and Certain Payments Prior to Event of Default), shall be
received and held in trust for the benefit of Secured Party, shall be
segregated by Pledgor from other funds of Pledgor and shall be
forthwith paid over to Secured Party as Pledged Collateral in the same
form as so received (with any necessary endorsement).
7. EXPENSES
Pledgor shall pay all reasonable expenses incurred by Secured Party in
connection with the negotiation, execution, delivery, amendment,
waiver, renegotiation, enforcement or collection of this Pledge
Agreement or the exercise of remedies hereunder, including, without
limitation, reasonable attorney's fees, advertising costs, fees and
expenses of advisors and investment bankers and other experts. If
either Pledgor fails promptly to pay any portion of the above expenses
when due or to perform any other obligation of Pledgor under this
Pledge Agreement, Secured Party may, at its option, but shall not be
required to, payor perform the same and charge Pledgor for all costs
and expenses incurred therefor, and Pledgor agrees to reimburse
Secured Party therefor on demand. All sums so paid or incurred by
Secured Party for any of the foregoing, any and all other sums for
which Pledgor may become liable hereunder and all such costs and
expenses incurred by Secured Party in enforcing or protecting the
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Security Interests or any of its rights or remedies under this Pledge
Agreement shall be payable by Pledgor on demand, shall constitute
Secured Obligations, shall bear interest until paid at a rate of 1 per
cent per annum.
8. REMEDIES
8.1 DISPOSITION UPON DEFAULT AND RELATED PROVISIONS
8.1.1 Upon the occurrence and during the continuance of any Event
of Default under any Finance Document, Secured Party may
exercise in respect of the Pledged Collateral, in addition
to other rights and remedies provided for herein or
otherwise available to it, all rights of voting, exercise
and conversion with respect to the Pledged Collateral and
all of the rights and remedies of a secured party on default
under the NYUCC at that time (whether or not applicable to
the affected Pledged Collateral) and may also, without
obligation to resort to other security, at any time and from
time to time sell, resell, assign and deliver, in its sole
discretion, all or any of the Pledged Collateral in one or
more parcels at the same or different times, and all right,
title and interest, claim and demand therein and right of
redemption thereof, on any securities exchange on which any
Pledged Collateral may be listed, or at public or private
sale, for cash, upon credit or for future delivery, and in
connection therewith Secured Party may grant options.
8.1.2 If any of the Pledged Collateral is sold by Secured Party
upon credit or for future delivery, Secured Party shall not
be liable for the failure of the purchaser to purchase or
pay for the same and, in the event of any such failure,
Secured Party may resell such Pledged Collateral. In no
event shall any Pledgor be credited with any part of the
proceeds of sale of any Pledged Collateral until cash
payment therefor has actually been received by Secured
Party.
8.1.3 Secured Party may purchase any Pledged Collateral at any
public sale and, if any Pledged Collateral is of a type
customarily sold in a recognized market or is of the type
that is the subject of widely distributed standard price
quotations, Secured Party may purchase such Pledged
Collateral at private sale, and in each case may make
payment therefor by any means, including, without
limitation, by release or discharge of Secured Obligations
in lieu of cash payment.
8.1.4 Pledgor recognizes that Secured Party may be unable to
effect a public sale of all or part of the Pledged
Collateral consisting of securities by reason of certain
prohibitions contained in the Securities Act of 1933, as
amended (the "SECURITIES ACT"), or in applicable Blue Sky or
other state securities laws, as now or hereafter in effect,
but may be compelled to resort to one or more private sales
to a restricted group of purchasers who will be obliged to
agree, among other things, to acquire such securities for
their own account, for investment and not with a view to the
distribution or resale thereof. Pledgor agrees that any such
Pledged Collateral sold at any such private sale may be sold
at a price and upon other terms less favorable to the seller
than if sold at public sale and that each such private sale
shall be deemed to have been made in a commercially
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reasonable manner. Secured Party shall have no obligation to
delay the sale of any such securities for the period of time
necessary to permit the issuer of such securities, even if
such issuer would agree, to register such securities for
public sale under the Securities Act. Pledgor agrees that
private sales made under the foregoing circumstances shall
be deemed to have been made in a commercially reasonable
manner.
8.1.5 No demand, advertisement or notice, all of which are hereby
expressly waived, shall be required in connection with any
sale or other disposition of any part of the Pledged
Collateral that threatens to decline speedily in value or
that is of a type customarily sold on a recognized market;
otherwise Secured Party shall give Pledgor at least ten
days' prior notice of the time and place of any public sale
and of the time after which any private sale or other
disposition is to be made, which notice Pledgor agrees is
commercially reasonable.
8.1.6 Secured Party shall not be obligated to make any sale of
Pledged Collateral if it shall determine not to do so,
regardless of the fact that notice of sale may have been
given. Secured Party may, without notice or publication,
adjourn any public or private sale or cause the same to be
adjourned from time to time by announcement at the time and
place fixed for sale, and such sale may, without further
notice, be made at the time and place to which the same was
so adjourned.
8.1.7 The remedies provided herein in favor of Secured Party shall
not be deemed exclusive, but shall be cumulative, and shall
be in addition to all other remedies in favor of Secured
Party existing at law or in equity.
8.1.8 To the extent that applicable law imposes duties on Secured
Party to exercise remedies in a commercially reasonable
manner, Pledgor acknowledges and agrees that it is not
commercially unreasonable for Secured Party (a) to advertise
dispositions of Pledged Collateral through publications or
media of general circulation; (b) to contact other persons,
whether or not in the same business as Pledgor, for
expressions of interest in acquiring all or any portion of
the Pledged Collateral; (c) to hire one or more professional
auctioneers to assist in the disposition of Pledged
Collateral; (d) to dispose of Pledged Collateral by
utilizing Internet sites that provide for the auction of
assets of the types included in the Pledged Collateral or
that have the reasonable capability of doing so, or that
match buyers and sellers of assets; (e) to disclaim
disposition warranties; or (f) to the extent deemed
appropriate by Secured Party, to obtain the services of
brokers, investment bankers, consultants and other
professionals to assist Secured Party in the disposition of
any of the Pledged Collateral. Pledgor acknowledges that the
purpose of this sub-clause 8.1.8 is to provide nonexhaustive
indications of what actions or omissions by Secured Party
would not be commercially unreasonable in Secured Party's
exercise of remedies against the Pledged Collateral and that
other actions or omissions by Secured Party shall not be
deemed commercially unreasonable solely on account of not
being indicated in this sub-clause 8.1.8. Without limiting
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the foregoing, nothing contained in this sub-clause 8.1.8
shall be construed to grant any rights to Pledgor or to
impose any duties on Secured Party that would not have been
granted or imposed by this Pledge Agreement or by applicable
law in the absence of this sub-clause 8.1.8.
8.2 SECURED PARTY APPOINTED ATTORNEY-IN-FACT
8.2.1 To effectuate the terms and provisions hereof, Pledgor
hereby appoints Secured Party as Pledgor's attorney-in-fact
for the purpose, from and after the occurrence and during
the continuance of an Event of Default under any Finance
Document, of carrying out the provisions of this Pledge
Agreement and taking any action and executing any instrument
that Secured Party from time to time, in Secured Party's
reasonable discretion, may deem necessary or advisable to
accomplish the purposes of this Pledge Agreement. Without
limiting the generality of the foregoing, Secured Party
shall, from and after the occurrence and during the
continuance of an Event of Default, have the right and power
to:
(a) receive, endorse and collect all checks and other
orders for the payment of money made payable to Pledgor
representing any interest or dividend or other
distribution or amount payable in respect of the
Pledged Collateral or any part thereof and to give full
discharge for the same;
(b) execute endorsements, assignments or other instruments
of conveyance or transfer with respect to all or any of
the Pledged Collateral;
(c) exercise all rights of Pledgor as owner of the Pledged
Collateral including, without limitation, the right to
sign any and all amendments, instruments, certificates,
proxies, and other writings necessary or advisable to
exercise all rights and privileges of (or on behalf of)
the owner of the Pledged Collateral, including, without
limitation, all voting rights with respect to the
Pledged Securities;
(d) ask, demand, collect, ▇▇▇ for, recover, compound,
receive and give acquittance and receipts for moneys
due and to become due under or in respect of any of the
Pledged Collateral;
(e) file any claims or take any action or institute any
proceedings that Secured Party may deem necessary or
desirable for the collection of any of the Pledged
Collateral or otherwise to enforce the rights of
Secured Party with respect to any of the Pledged
Collateral; and
(f) generally to sell, transfer, pledge, make any agreement
with respect to or otherwise deal with any of the
Pledged Collateral as fully and completely as though
Secured Party were the absolute owner thereof for all
purposes, and to do, at Secured Party's option and
Pledgor's expense, at any time or from time to time,
all acts and things that Secured Party deems reasonably
necessary to protect, preserve or realize upon the
Pledged Collateral.
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8.2.2 Pledgor hereby ratifies and approves all acts of Secured
Party made or taken pursuant to this Clause 8.2 (provided,
that Pledgor does not, by virtue of such ratification,
release any claim that Pledgor may otherwise have against
Secured Party for any such acts made or taken by Secured
Party through gross negligence or willful misconduct).
Neither Secured Party nor any person designated by Secured
Party shall be liable for any acts or omissions or for any
error of judgment or mistake of fact or law, except such as
may result from Secured Party's gross negligence or willful
misconduct. This power, being coupled with an interest, is
irrevocable so long as this Pledge Agreement shall remain in
force.
8.3 SECURED PARTY'S DUTIES OF REASONABLE CARE
8.3.1 Secured Party shall have the duty to exercise reasonable
care in the custody and preservation of any Pledged
Collateral in its possession, which duty shall be fully
satisfied if such Pledged Collateral is accorded treatment
substantially equal to that which Secured Party accords its
own property and, with respect to any calls, conversions,
exchanges, redemptions, offers, tenders or similar matters
relating to any such Pledged Collateral (herein called
"EVENTS"):
(a) Secured Party exercises reasonable care to ascertain
the occurrence and to give reasonable notice to Pledgor
of any events applicable to any Pledged Securities that
are registered and held in the name of Secured Party or
its nominee;
(b) Secured Party gives Pledgor reasonable notice of the
occurrence of any events of which Secured Party has
received actual knowledge, which events are applicable
to any securities that are in bearer form or are not
registered and held in the name of Secured Party or its
nominee (Pledgor agreeing to give Secured Party
reasonable notice of the occurrence of any events of
which Pledgor has knowledge, which events are
applicable to any securities in the possession of
Secured Party); and
(c) Secured Party endeavors to take such action with
respect to any of the events as Pledgor may reasonably
and specifically request in writing in sufficient time
for such action to be evaluated and taken or, if
Secured Party reasonably believes that the action
requested would adversely affect the value of the
Pledged Collateral as collateral or the collection of
the Secured Obligations, or would otherwise prejudice
the interests of Secured Party, Secured Party gives
reasonable notice to Pledgor that any such requested
action will not be taken and, if Secured Party makes
such determination or if Pledgor fails to make such
timely request, Secured Party takes such other action
as it deems advisable in the circumstances.
8.3.2 Except as hereinabove specifically set forth, Secured Party
shall have no further obligation to ascertain the occurrence
of, or to notify either Pledgor with respect to, any events
and shall not be deemed to assume any such further
obligation as a result of the establishment by Secured Party
of any internal procedures with respect to any securities in
13
its possession, nor shall Secured Party be deemed to assume
any other responsibility for, or obligation or duty with
respect to, any Pledged Collateral or its use of any nature
or kind, or any matter or proceedings arising out of or
relating thereto, including, without limitation, any
obligation or duty to take any action to collect, preserve
or protect its or Pledgor's rights in the Pledged Collateral
or against any prior parties thereto, but the same shall be
at Pledgor's sole risk and responsibility at all times.
8.3.3 Pledgor waives any restriction or obligation imposed on
Secured Party under Sections 9-207(c)(1) and 9-207(c)(2) of
the NYUCC.
8.4 INDEMNIFICATION
Pledgor hereby releases Secured Party and the respective officers,
shareholders, directors, employees and agents of the Secured Party
(each, an "INDEMNIFIED PARTY") from any claims, causes of action and
demands at any time arising out of or with respect to this Pledge
Agreement, the Secured Obligations, the Pledged Collateral and its use
and/or any actions taken or omitted to be taken by such Indemnified
Party with respect thereto (except such claims, causes of action and
demands arising from the bad faith, gross negligence or willful
misconduct of such Indemnified Party) and Pledgor hereby agrees to
hold each Indemnified Party harmless from and with respect to any and
all such claims, causes of action and demands (except such claims,
causes of action and demands arising from the gross negligence or
willful misconduct of such Indemnified Party).
8.5 PRIOR RECOURSE
Secured Party's prior recourse to any Pledged Collateral shall not
constitute a condition of any demand, suit or proceeding for payment
or collection of the Secured Obligations.
8.6 SECURED PARTY MAY PERFORM
If either Pledgor fails to perform any agreement contained herein,
Secured Party may itself perform or cause performance of such
agreement, and the expenses of Secured Party incurred in connection
therewith shall be treated as provided in Clause 7 (Expenses).
9. SURETYSHIP WAIVERS BY PLEDGOR; OBLIGATIONS ABSOLUTE
9.1.1 Pledgor waives demand, notice, protest, notice of acceptance
of this Pledge Agreement, notice of loans made, credit
extended, Pledged Collateral received or delivered or other
action taken in reliance hereon and all other demands and
notices of any description thereof, all in such manner and
at such time or times as Secured Party may deem advisable.
Secured Party shall have no duty as to the collection or
protection of the Pledged Collateral or any income thereon,
nor as to the preservation of rights against prior parties,
nor as to the preservation of any rights pertaining thereto
beyond the safe custody thereof as set forth in Clause 8.3
(Secured Party's Duties of Reasonable Care).
9.1.2 All rights of Secured Party hereunder, the Security
Interests and all obligations of either Pledgor hereunder
shall be absolute and unconditional irrespective of (a) any
14
lack of validity or enforceability of the Finance Documents,
any agreement with respect to any of the Secured Obligations
or any other agreement or instrument relating to any of the
foregoing, (b) any change in the time, manner or place of
payment of, or in any other term of, all or any of the
Secured Obligations, or any other amendment or waiver of, or
any consent to any departure from, the Finance Documents, or
any other agreement or instrument, (c) any exchange, release
or non-perfection of any Lien on other collateral, or any
release or amendment or waiver of, or consent under, or
departure from, or any acceptance of partial payment
thereon, or settlement, compromise or adjustment of any
Secured Obligation or of any guarantee, securing or
guaranteeing all or any of the Secured Obligations, or (d)
any other circumstance that might otherwise constitute a
defense available to, or a discharge of, Pledgor in respect
of the Secured Obligations or this Pledge Agreement.
10. MARSHALLING
Secured Party shall not be required to marshal any present or future
collateral security (including but not limited to this Pledge
Agreement and the Pledged Collateral) for, or other assurances of
payment of, the Secured Obligations or any of them or to resort to
such collateral security or other assurances of payment in any
particular order, and all of its rights hereunder and in respect of
such collateral security and other assurances of payment shall be
cumulative and in addition to all other rights, however existing or
arising. To the extent that it lawfully may, Pledgor hereby agrees
that it shall not invoke any law relating to the marshalling of
collateral which might cause delay in or impede the enforcement of
Secured Party's rights under this Pledge Agreement or under any other
instrument creating or evidencing any of the Secured Obligations or
under which any of the Secured Obligations is outstanding or by which
any of the Secured Obligations is secured or payment thereof is
otherwise assured, and, to the extent that it lawfully may, Pledgor
hereby irrevocably waives the benefits of all such laws.
11. PROCEEDS OF DISPOSITIONS
After deducting all expenses payable to Secured Party, including,
without limitation, pursuant to Clause 7 (Expenses), the residue of
any proceeds of collection or sale of the Secured Obligations or
Pledged Collateral shall, to the extent actually received in cash, be
applied to the payment of the remaining Secured Obligations in such
order or preference as Secured Party may elect, proper allowance and
provision being made for any Secured Obligations not then due or held
as additional Pledged Collateral. Upon the final payment and
satisfaction in full of all of the Secured Obligations and the
termination of all. commitments under Finance Documents and after
making any payments required by Sections 9-608(a)(l)(C) or 9-6l5(a)(3)
of the NYUCC, any excess shall be returned to Pledgor, and in any
event Pledgor shall remain liable for any deficiency in the payment of
the Secured Obligations.
15
12. REINSTATEMENT
The obligations of Pledgor pursuant to this Pledge Agreement shall
continue to be effective or automatically be reinstated, as the case
may be, if at any time payment of any of the Secured Obligations is
rescinded or otherwise must be restored or returned by Secured Party
upon the insolvency, bankruptcy, dissolution, liquidation or
reorganization of Pledgor or any other obligor or otherwise, all as
though such payment had not been made.
13. MISCELLANEOUS
13.1 NOTICES
Except as otherwise provided herein, all notices and other
communications provided for hereunder shall be in writing (including
telecopier) and, mailed, telecopied, couriered or delivered to either
Pledgor or to Secured Party, as the case may be, in each case
addressed to it at its address set forth below the name of such party
on the signature pages hereof, or, as to any party, at such other
address as shall be designated by such party in a written notice to
each other party complying as to delivery with the terms of this
Clause 13.1. All such notices and other communications shall, when
mailed, telecopied, or couriered, respectively, be effective when
deposited in the mails, telecopied, or delivered to the courier,
respectively, addressed as aforesaid; except that notices and other
communications to Secured Party shall not be effective until received
by Secured Party. Delivery by telecopier of an executed counterpart of
any amendment or waiver of any provision of this Pledge Agreement or
any Schedule shall be effective as delivery of an original executed
counterpart thereof.
13.2 GOVERNING LAW; CONSENT TO JURISDICTION.
THIS PLEDGE AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. Pledgor agrees
that any suit for the enforcement of this Pledge Agreement may be
brought in the courts of the State of New York or any federal court
sitting therein and consents to the non-exclusive jurisdiction of such
court and to service of process in any such suit being made upon
Pledgor by mail at the address specified set forth below its name on
the signature pages hereof. Pledgor hereby waives any objection that
it may now or hereafter have to the venue of any such suit or any such
court or that such suit is brought in an inconvenient court.
13.3 WAIVER OF JURY TRIAL, ETC.
PLEDGOR WAIVES ITS RIGHT TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR
CLAIM ARISING OUT OF ANY LITIGATION OR DISPUTE DIRECTLY OR INDIRECTLY
ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS PLEDGE AGREEMENT, ANY
RIGHTS OR OBLIGATIONS HEREUNDER OR THE PERFORMANCE OF ANY SUCH RIGHTS
OR OBLIGATIONS. EXCEPT AS PROHIBITED BY LAW, PLEDGOR WAIVES ANY RIGHT
WHICH IT MAY HAVE TO CLAIM OR RECOVER IN ANY LITIGATION OR DISPUTE
REFERRED TO IN THE PRECEDING SENTENCE ANY SPECIAL, EXEMPLARY, PUNITIVE
OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO,
16
ACTUAL DAMAGES. Pledgor certifies that neither Secured Party nor any
representative, agent or attorney of Secured Party has represented,
expressly or otherwise, that Secured Party would not, in the event of
litigation, seek to enforce the foregoing waivers and acknowledges
that, in entering into the Finance Documents to which Secured Party is
a party, Secured Party is relying upon, among other things, the
waivers and certifications contained in this Clause 13.3.
13.4 COUNTERPARTS
This Pledge Agreement may be executed in two or more separate
counterparts, each of which shall constitute an original and all of
which shall collectively and separately constitute one and the same
agreement.
13.5 HEADINGS
The headings of each clause of this Pledge Agreement are for
convenience only and shall not define or limit the provisions thereof.
13.6 NO STRICT CONSTRUCTION
The parties hereto have participated jointly in the negotiation and
drafting of this Pledge Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Pledge Agreement
shall be construed as if drafted jointly by the parties hereto and no
presumption or burden of proof shall arise favoring or disfavoring any
party by virtue of the authorship of any provisions of this Pledge
Agreement.
13.7 SEVERABILITY
In the event anyone or more of the provisions contained in this Pledge
Agreement should be held invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining
provisions contained herein shall not in any way be affected or
impaired thereby (it being understood that the invalidity of a
particular provision in a particular jurisdiction shall not in and of
itself affect the validity of such provision in any other
jurisdiction).
13.8 SURVIVAL OF AGREEMENT
All covenants, agreements, representations and warranties made by
Pledgor herein and in the certificates or other instruments prepared
or delivered in connection with or pursuant to this Pledge Agreement
shall be considered to have been relied upon by Secured Party and
shall survive the execution and delivery of the Finance Documents and
the advance of all extensions of credit contemplated thereby,
regardless of any investigation made by Secured Party, and shall
continue in full force and effect until this Pledge Agreement shall
terminate (or thereafter to the extent provided herein).
13.9 BINDING EFFECT; SEVERAL AGREEMENT
This Pledge Agreement is binding upon Pledgor and such Secured Party
and their respective successors and assigns, and shall inure to the
benefit of Pledgor, Secured Party and their respective successors and
assigns, except that Pledgor shall have no right to assign or transfer
its rights or obligations hereunder or any interest herein (and any
such assignment or transfer shall be void) except as expressly
contemplated by this Pledge Agreement.
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13.10 CONTINUING AGREEMENT
This Agreement shall create a continuing Security Interest,
independent from any other security or guarantee which may have been
or will be given to the Secured Party. None of such other security or
guarantee shall prejudice, or shall be prejudiced or affected by, or
shall be merged in any way with this Agreement and, for the avoidance
of doubt, none of such other security or guarantee shall in any way be
prejudiced or. affected in the case of any invalidity of this
Agreement or of the security created hereunder.
13.11 WAIVERS; AMENDMENT
13.11.1 No failure or delay of Secured Party in exercising any power
or right hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to
enforce such a right or power, preclude any other or further
exercise thereof or the exercise of any other right or
power. The rights and remedies of Secured Party hereunder
and of Secured Party under the Finance Documents are
cumulative and are not exclusive of any rights or remedies
that they would otherwise have. No waiver of any provisions
of this Pledge Agreement or consent to any departure by
either Pledgor therefrom shall in any event be effective
unless the same shall be permitted by sub-clause 13.11.2
below, and then such waiver or consent shall be effective
only in the specific instance and for the purpose for which
given. No notice to or demand on either Pledgor in any case
shall entitle Pledgor to any other or further notice or
demand in similar or other' circumstances.
13.11.2 Neither this Pledge Agreement nor any provision hereof may
be waived, amended or modified except pursuant to an
agreement or agreements in writing entered into by Secured
Party and Pledgor.
IN WITNESS WHEREOF, intending to be legally bound, Pledgor has caused this
Pledge Agreement to be duly executed as of the date first above written.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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GALAXIS TECHNOLOGY AG
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Chief Executive Officer
Address: ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇
▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇
Attention:
Facsimile No.:
ACCEPTED AND AGREED:
LLOYDS TSB BANK PLC
as Secured :Party
By: /s/ ▇▇. ▇▇ ▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------- --------------------
Name: ▇▇. ▇▇ ▇▇▇▇▇▇▇▇ Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Principal Manager Title: Senior Manager, Credit Risk
Address: ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇-▇▇
▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
Attention:
Facsimile No.:
19
SCHEDULE 1
TO PLEDGE AGREEMENT
Attached to and forming part of that certain
Pledge Agreement dated as of 14 January 2004 by
galaxis technology ag
To Lloyds TSB Bank Plc, as Secured Party
LIST AND DESCRIPTION OF PLEDGED SECURITIES
Description of Pledged Securities:
PLEDGOR ISSUER OF STOCK CLASS CERTIFICATE NUMBER OF PERCENTAGE
OF STOCK NUMBERS SHARES OF TOTAL
SHARES
-------------------------------------------------------------------------------------------------------------------
galaxis technology Distinctive Common D0274 3,000,000 17.3%
ag Devices, Inc
Exact Name of Pledgor:
Pledgor is (i) an individual ____ or (ii) an organization X (insert "x"
as appropriate)
If Pledgor is an organization: Pledgor is a limited liability company
(GmbH) (describe type of organization)
Pledgor is organized under the laws of
Germany
Pledgor's organizational identification
number: HRB 4762 Amtsgericht Lubeck
Mailing address of Pledgor: ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇, ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇
For a Pledgor that is an organization: If different from the mailing address,
Pledgor's place of business, or if it has more than one place of business,
Pledgor's chief executive office:
20