Pledge Agreement - On Ramp Inc., Adam Curry and THINK New Ideas Inc.
PLEDGE AGREEMENT THIS PLEDGE AGREEMENT (the "Pledge Agreement") is entered into as of this 31st day of March, 1996, by and among On Ramp, Inc., a New York corporation ("On Ramp"), Adam Curry (the "Pledgor") and Think New Ideas, Inc., a Delaware corporation having its executive office at 8522 National Boulevard, Suite 101, Culver City, California 90232 (the "Pledgee"). WITNESSETH: WHEREAS, the Pledgor is a stockholder of and owns 50 shares of common stock of On Ramp, which shares of common stock currently represent thirty three and one-third percent (33%) of the issued and outstanding capital stock of On Ramp (the "On Ramp Stock"); WHEREAS, On Ramp has borrowed One Million Dollars ($1,000,000) from Pledgee (the "Loan") evidenced by a promissory note, dated as of the date hereof, executed in favor of the Pledgee (the "Promissory Note"); and WHEREAS, the Pledgee has extended the Loan to On Ramp upon the condition that On Ramp use the proceeds of the Loan for the sole purpose of redeeming 100 shares of On Ramp Stock, representing all of the remaining sixty- six and two-thirds percent (66%) of the issued and outstanding shares of On Ramp Stock, from the two holders thereof (the "On Ramp Stockholders"); WHEREAS, upon redemption by On Ramp of the On Ramp Stock owned by the On Ramp Stockholders, the Pledgor will own one hundred percent (100%) of the issued and outstanding On Ramp Stock; WHEREAS, the Pledgee has agreed, pursuant to the terms of a loan agreement, to make available to On Ramp an additional $600,000 (the "Line of Credit") evidenced by a promissory note, dated as of the date hereof, executed in favor of the Pledgee providing for the advance of funds to On Ramp up to $600,000 (the "Line of Credit Note") and a loan agreement (the "Loan Agreement") (collectively, the Line of Credit Note, the Loan Agreement and any ancillary documents may be referred to hereinafter as the "Line of Credit Documents"); WHEREAS, in connection with extension of the Loan and the Line of Credit to On Ramp and execution of the Promissory Note and the Line of Credit Note by On Ramp, the Pledgor has agreed to pledge to the Pledgee twenty-six shares of On Ramp Stock, which shares represent fifty-two percent (52%) of the On Ramp Stock issued and outstanding after the redemption described above to secure repayment of the principal amount and interest under the Promissory Note and the Line of Credit Note. NOW THEREFORE, in consideration of the foregoing, and the premises and mutual covenants, conditions and agreements set forth herein, twenty dollars ($20) and other good and valuable consideration, receipt and sufficiency of which is hereby acknowledged, the Pledgor hereby agrees with the Pledgee, for the benefit of Pledgee, as follows: SECTION 1. Definition of Pledged Stock. The term "Pledged Stock" as --------------------------- used herein shall mean and include fifty-two percent (52%) of the issued and outstanding shares of capital stock of On Ramp, and also, any shares, stock, certificates, options or rights issued by On Ramp in substitution of or in exchange for any of such shares, and any and all proceeds thereof, now or hereafter owned or acquired <PAGE> by the Pledgor. Each of On Ramp and the Pledgor respectively agrees that after the date hereof, neither On Ramp or the Pledgor (as a stockholder, director or officer of On Ramp or otherwise) will authorize the issuance of or cause to be issued any equity securities or other instruments convertible into or exercisable to acquire any equity securities of On Ramp. Other capitalized terms used herein but not otherwise defined shall have the respective meanings attributed to them in the Promissory Note. SECTION 2. Pledge of Stock. As collateral security for the due --------------- payment and performance of On Ramp's obligations under the Promissory Note (the "Obligations"): 2.1 The Pledgor hereby pledges, assigns, hypothecates, delivers and sets over unto the Pledgee, for the benefit of the Pledgee all of the Pledged Stock, and the Pledgor hereby grants to the Pledgee, for the benefit of Pledgee, a first security interest in all of such Pledged Stock (including any and all proceeds thereof and substitutions therefor as set forth in Section 1 above). 2.2 In the event that the Pledgor shall become entitled to receive or shall receive any stock certificate (including, without limitation, any certificate representing a stock dividend or a distribution in connection with any issuance of additional shares of Pledged Stock, or any reclassification, increase or reduction of capital), option or rights, whether in substitution of or in exchange for any shares of Pledged Stock or otherwise, the Pledgor shall accept any such instruments as the Pledgee's agent, shall promptly notify the Pledgee of the Pledgor's receipt thereof, shall hold them in trust for the Pledgee, and (simultaneously with the return by the Pledgee to the Pledgor of any Pledged Stock being substituted or exchanged) shall deliver them forthwith to the Pledgee in the exact form received, with appropriate stock powers duly executed in blank, to be held by the Pledgee, subject to the terms hereof, as further collateral security for performance of the Obligations. 2.3 So long as no event of default (as set forth in the Promissory Note and the Line of Credit Note) shall have occurred and be continuing, the Pledgor shall be entitled to exercise any and all voting rights and powers relating or pertaining to the Pledged Stock or any part thereof for any purpose not inconsistent with the terms of the Promissory Note, the Line of Credit Note (and the loan agreement relating thereto) or this Pledge Agreement. 2.4 Subject to the provisions of applicable law, upon the occurrence and continuance of such an event of default (which remains uncured upon expiration of any cure period set forth in the Promissory Note or the Line of Credit Documents): (i) any and all dividends received by the Pledgor with respect to the Pledged Stock shall be held in trust for the Pledgee and shall be delivered forthwith to the Pledgee in the exact form received, together with any necessary endorsements, to be applied by the Pledgee, subject to the terms hereof, in reduction of the Obligations; and (ii) any or all shares of the Pledged Stock held by the Pledgee pursuant hereto may, at the option of the Pledgee or its nominee, be registered in the name of the Pledgee or its nominee, and the Pledgee or its nominee may thereafter, without further notice, exercise all voting and corporate rights at any meeting of any corporation issuing any of the shares included in the Pledged Stock and may exercise any and all rights of conversion exchange, subscription or any other rights, privileges or options pertaining to any shares of the Pledged Stock as if it were the absolute owner thereof, including 2 <PAGE> without limitation, the right to receive dividends payable thereon (which dividends, if cash, shall be applied in reduction of the Obligations), and the right to exchange, at its discretion, any and all of the Pledged Stock upon the merger, consolidation, reorganization, recapitalization or other readjustment of any corporation issuing any of such shares or upon the exercise by any such issuer of any right, privilege or option pertaining to any shares of the Pledged Stock, and in connection therewith, to deposit and deliver any and all of the Pledged Stock with any committee, depositary, transfer agent, registrar or other designated agency. 2.5 In the event of the occurrence and continuation of any event of default under the Promissory Note or the Line of Credit Documents (which event of default remains uncured upon expiration of any cure period set forth in the Promissory Note or the Line of Credit Documents), the Pledgee may, subject to the terms of the Uniform Commercial Code (the "UCC") and any other applicable law, as the same may from time to time be in effect, forthwith collect, receive, appropriate and realize upon the Pledged Stock, or any part thereof, and/or may forthwith sell, assign, grant an option or options to purchase, contract to sell or otherwise dispose of and deliver said Pledged Stock, or any part thereof, in one or more parcels at public or private sale or sales, at any exchange, broker's board or at any of the Pledgee's offices or elsewhere at such prices and on such terms as may be commercially reasonable. The Pledgor recognizes that by reason of certain prohibitions contained in the federal securities laws and applicable state or foreign securities laws, the Pledgee may resort to one or more private sales of the Pledge Stock or one or more public sales to a restricted group of purchasers who will be obliged to agree, among other things, to acquire such securities for its own account for investment and not with a view toward the distribution or resale thereof. The Pledgor acknowledges and agrees that any such sale may result in prices and terms less favorable to the seller than if such sale were a registered offering under applicable securities laws and, notwithstanding such circumstances, agrees that any such sale shall be deemed to have been made in a commercially reasonable manner. The Pledgee shall be under no obligation to delay a sale of any of the Pledged Stock for the period of time necessary to permit the issuer of such securities to register such securities for public sale under the federal securities laws or under applicable state securities laws, even if such issuer would agree to do so. Upon the consummation of any private or public sale, the Pledgee shall have the right to deliver, assign, and transfer to the purchaser thereof the Pledged Stock so sold. Each purchaser at any such sale shall hold such securities absolutely free from any claim or right of the Pledgor of any kind whatsoever, and the Pledgor hereby waives (to the extent permitted by law) all rights of redemption, stay and/or appraisal which he has or may at any time in the future have, under any rule of law or statute now existing or hereafter enacted. The Pledgee shall give the Pledgor notice of the Pledgee's intention to make any such sale to the extent required hereunder or by the UCC. Such notice, in case of sale at a broker's board or on a securities exchange, shall state the board or exchange on which such sale is to be made and the day on which the Pledged Stock, or that portion thereof being so sold, will first be offered for sale. At any such sale, the Pledged Stock may be sold in one lot as an entirety or in separate parcels, as the Pledgee may determine. The Pledgee shall not be obligated to make any such sale pursuant to any such notice if the Pledgee shall determine not to do so, notwithstanding the fact that notice of sale of the Pledged Stock may have been given. The Pledgee 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 the sale and such sale may be made at any time or place to which the same may be so adjourned. In the case of any sale of all or any part of the Pledged Stock on credit or for future delivery, the Pledged Stock so sold may be retained by the Pledgee until the selling price is paid by the purchaser thereof, but the Pledgee shall not incur any liability in the case 3 <PAGE> of the failure of such purchaser to take up and pay for the Pledged Stock so sold and, in case of any such failure, such Pledged Stock may again be sold upon like notice. The Pledgee may also, at its discretion, proceed by a suit or suits at law or in equity to foreclose upon its securing interest and sell the Pledged Stock, or any portion thereof, under a judgment or decree of a court or courts of competent jurisdiction. If any consent, approval or authorization of any state, municipal or other governmental department, agency or authority should be necessary to effectuate any sale or other disposition of the Pledged Stock or any part thereof, the Pledgor shall execute all such applications and other instruments as may be required in connection with securing any such consent, approval or authorization, and will otherwise use the Pledgor's best efforts to secure the same. 2.6 The proceeds of any collection, recovery, receipt, appropriation, realization or sale as aforesaid shall be applied as follows: (i) first, to the reasonable costs and expenses incurred in connection with or incidental to the sale or assignment of any and all of the Pledged Stock, (ii) second, to the satisfaction of the Obligations, and (iii) third, to the Pledgor to the extent there exists a surplus of proceeds. 2.7 The Pledgee shall give ten (10) days notice of the time and place of any public sale or of the time after which a private sale may take place and such notice shall be deemed to be reasonable notification. SECTION 3. Representations and Warranties of the Pledgor. The Pledgor --------------------------------------------- hereby represents and warrants that: 3.1 The Pledged Stock is owned directly, beneficially and of record by such Pledgor in the amount set forth in the recitals hereto. 3.2 On Ramp has obtained the unqualified and unconditional right to acquire all of the On Ramp Stock owned by the On Ramp Stockholders, subject only to payment therefor by On Ramp with the proceeds of the Loan. 3.3 The shares of the Pledged Stock owned by the Pledgor and the On Ramp Stockholders equal in the aggregate all of the issued and outstanding shares of capital stock of On Ramp. 3.4 All of the shares of the Pledged Stock owned by the Pledgor have been duly and validly issued, are fully paid and non-assessable and are owned by the Pledgor free of pre-emptive rights and free and clear of all adverse claims, liens, mortgages, charges, security interests, encumbrances and other restrictions whatsoever, except for the security interest granted to the Pledgee hereunder. 3.5 Upon delivery of the Pledged Stock to the Pledgee or an agent for the Pledgee, this Pledge Agreement creates and grants a valid first lien on and perfected security interest in all of the shares of Pledged Stock (including the proceeds thereof), subject to no prior claim, lien, mortgage, charge, security interest, encumbrance, other restriction or to any agreement purporting to grant to any third party a security interest in the property or assets of the Pledgor which would include the Pledged Stock. 4 <PAGE> 3.6 The pledge of the Pledged Stock is effective and rightful, the certificates representing the Pledged Stock are genuine and have not been materially altered, and the Pledgor knows of no fact which might impair the validity of the pledge of the Pledged Stock by him hereunder. SECTION 4. Covenants of Pledgor. The Pledgor hereby covenants that: -------------------- 4.1 So long as the Obligations shall be outstanding and unpaid, in whole or in part, the Pledgor will not sell, otherwise dispose of or convey any interest in any shares of the Pledged Stock or any interest therein, nor will the Pledgor create, incur or permit to exist any adverse claim, lien, mortgage, charge, security interest, encumbrance or restriction whatsoever, except for the security or other interest granted or conveyed to the Pledgee hereunder or pursuant to the express written agreement of the Pledgee. The previous sentence notwithstanding, this covenant by Pledgor shall not apply to the conveyance of the Pledgor's interest in the shares of Pledged Stock to the Pledgee or its designated affiliate in connection with the contemplated acquisition of On Ramp by the Pledgee or its designated affiliate, nor shall the proceeds from such conveyance be deemed proceeds for the purposes of the definition of Pledged Stock set forth in Section 1 above (the "Permitted Transfer"). This Pledge Agreement shall terminate contemporaneous with the Permitted Transfer. 4.2 The Pledgor will defend the Pledgee's right, title and security interest in and to the Pledged Stock against the claims of any person, firm, corporation or other entity. 4.3 The Pledgor shall at any time and from time to time upon the written request of the Pledgee, execute and deliver such further documents as the Pledgee may reasonably request in order to effectuate the purpose of and transactions contemplated by this Pledge Agreement, including without limitation, delivering to the Pledgee on the date hereof or at any time hereafter executed blank stock powers with respect of the Pledged Stock. 4.4 Any stockholders agreement or other agreement purporting to prohibit or restrict the transfer of the Pledged Stock to which the Pledgor or On Ramp was a party has been terminated and the Pledgor shall not enter into any such agreement after the date hereof. SECTION 5. Miscellaneous. The parties hereto further agree that: ------------- 5.1 Except for the use of reasonable care in the custody and preservation of collateral in its possession, the Pledgee shall have no duty as to the collection of any collateral in its possession and shall have no duty or liability to preserve rights against prior parties pertaining thereto, and shall be relieved of all responsibilities for the Pledged Stock upon surrendering the same to the Pledgor or in accordance with the Pledgor's instructions. 5.2 No course of dealing between or among any of On Ramp, the Pledgor and the Pledgee, nor any failure to exercise, nor any delay in exercising, on the part of the Pledgee, any right, power or privilege hereunder or under the Promissory Note or the Line of Credit Documents shall operate as a waiver thereof; nor shall any single or partial exercise of any right, power or privilege hereunder or thereunder preclude any other or further exercise thereof or the exercise of any other right, power or privilege. 5 <PAGE> 5.3 The rights and remedies herein provided, and provided in the Promissory Note and the Line of Credit Documents and in all other agreements, instruments and documents delivered pursuant hereto, are cumulative and are in addition to, and not exclusive of, any rights or remedies provided by law, including without limitation, the rights and remedies of a secured party under the UCC. 5.4 It shall not be necessary for the Pledgee (and the Pledgor hereby waives any rights which the Pledgor may have to require the Pledgee), in order to exercise its rights hereunder, first to: (i) enforce the Pledgee's rights against any security which shall ever have been given to secure the Obligations, (ii) enforce the Pledgee's rights against any guarantors of the Obligations, (iii) exhaust any remedies available to the Pledgee against any security which shall ever have been given to secure the Obligations, or (iv) resort to any other means of obtaining payment of the Obligations. The Pledgee shall not be required to mitigate damages or take any other action to reduce, collect or enforce the Obligations. 5.5 The Pledgor hereby waives notice of: (i) acceptance of this Pledge Agreement, (ii) any amendment, extension for any period of rearrangement of the Obligations or of any other instrument or document pertaining to all or any part of the Obligations; (iii) sale or foreclosure (or posting or advertising for sale or foreclosure) of any collateral for the Obligations after any cure period set forth in the Promissory Note or the Line of Credit Documents has expired; (iv) protest, proof of non-payment or default; or (v) any other action at any time taken or omitted by the Pledgee, and, generally, all demands and notices of every kind in connection with this Pledge Agreement or any documents or agreements evidencing, securing or relating to any of the Obligations. SECTION 6. Notice. All notices and other communications deliverable ------ pursuant to this Pledge Agreement shall be in writing and mailed (express, next day or two-day service), sent by registered or certified mail (return receipt requested) or hand delivered as follows: If to On Ramp: Adam Curry, President On Ramp, Inc. c/o 30 Glenn Road Verona, New Jersey 07044 Facsimile: (201) 857-9612 If to the Pledgor: Adam Curry 30 Glenn Road Verona, New Jersey 07044 Facsimile: (201) 857-9612 If to the Pledgee: Frank M. DeLape, President Think New Ideas, Inc. c/o 16815 Royal Crest Drive, Suite 160 Houston, Texas 77058 Facsimile: (713) 488-5353 or as to each party to such other address as shall be designated by such party in a written notice complying with the terms of this section. All such notices and other communications shall be deemed 6 <PAGE> to have been delivered when received as evidenced by a return receipt or such other written evidence or receipt of delivery as regularly provided by the mail, delivery or courier service entrusted with delivery of such notice. SECTION 7. Binding Effect. This Agreement shall inure to the benefit -------------- of, and be binding upon the successors, heirs and assigns of the parties hereto. SECTION 8. Governing Law. This Agreement shall be governed by and ------------- construed in accordance with the laws of the State of Delaware without giving effect to the principles of conflicts of laws thereof. SECTION 9. Severability. The provisions of this Pledge Agreement ------------ shall be considered severable in the event that any of such provisions are held by a court of competent jurisdiction to be invalid, void or otherwise unenforceable. Such invalid, void or otherwise unenforceable provisions shall be automatically replaced by other provisions which are valid and enforceable and which are as similar as possible in term and intent to those provisions deemed to be invalid, void or otherwise unenforceable. Notwithstanding the foregoing, the remaining provisions hereof shall remain enforceable to the fullest extent permitted by law. 7 <PAGE> SECTION 10. Surrender and Termination. Upon fulfillment and ------------------------- satisfaction of the Obligations or upon the Permitted Transfer, this Pledge Agreement will be deemed to have been terminated and be of no further force and effect. SECTION 11. Amendments, Etc. No amendment or waiver of any provision ---------------- of this Pledge Agreement nor consent to any departure herefrom by the parties hereto shall in any event be effective unless the same shall be in writing and signed by the parties hereto and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. SECTION 12. Headings of No Effect. Section headings set forth herein --------------------- are for convenience of reference only and shall in no way affect the interpretation of this Pledge Agreement. SECTION 13. Counterparts. This Pledge Agreement may be executed in ------------ two or more counterparts, each of which shall be an original, but all of which shall constitute but one agreement. IN WITNESS WHEREOF, the parties hereto have executed and delivered or have caused the execution and delivery of this Pledge Agreement as of the date first above written. ON RAMP, INC. By: /s/ Adam Curry ------------------------------ Adam Curry, President THE PLEDGOR: /s/ Adam Curry ------------------------------------ Adam Curry THE PLEDGEE: THINK NEW IDEAS, INC. By: /s/ Frank M. DeLape ------------------------------ Frank M. DeLape, President 8