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
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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
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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
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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
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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
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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
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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.
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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:
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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:
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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.
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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
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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
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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
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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
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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
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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.
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SECTION 10. Surrender and Termination. Upon fulfillment and
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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
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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
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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
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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
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Adam Curry, President
THE PLEDGOR:
/s/ Adam Curry
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Adam Curry
THE PLEDGEE:
THINK NEW IDEAS, INC.
By: /s/ Frank M. DeLape
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Frank M. DeLape, President
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