Exhibit 10.3
SECURITIES PLEDGE AGREEMENT
THIS STOCK PLEDGE AGREEMENT (the "Agreement"), dated May 5, 2005, is
made and entered into by and between TriMedia Entertainment Group, Inc., a
Delaware corporation ("Pledgor"), and IL Resources, LLC, a Delaware limited
liability company (the "Secured Party").
WHEREAS, pursuant to that certain Securities Purchase Agreement dated
as of even date herewith (as it may hereafter from time to time be restated,
amended, modified or supplemented, the "Purchase Agreement") by and between the
Pledgor and the Secured Party, the Secured Party purchased that certain Secured
Convertible Term Note dated the date hereof in the principal amount of
$1,590,000 (as it may hereafter from time to time be restated, amended, modified
or supplemented, the "Note"); and
WHERAS, in order to secure the Pledgor's obligations under the Note and
Purchase Agreement, the Secured Party has requested that the Pledgor pledge and
grant a security interest in and to the securities owned by the Pledgor set
forth on Schedule A hereto.
NOW, THEREFORE, intending to be legally bound hereby, the parties
hereto hereby agree as follows:
1. Defined Terms.
(a) Except as otherwise expressly provided herein, capitalized
terms used in this Agreement shall have the respective meanings assigned to them
in the Purchase Agreements or Instruments, as applicable. Where applicable and
except as otherwise expressly provided herein, terms used herein (whether or not
capitalized) shall have the respective meanings assigned to them in the Uniform
Commercial Code or its equivalent as enacted in the province of British
Columbia, Canada, as amended from time to time (the "Code").
(b) "Pledged Collateral" shall mean and include the following:
(i) the stock, shares, membership interests, securities and all other ownership
interests listed on Schedule A attached hereto and made a part hereof, and all
rights and privileges pertaining thereto, including, without limitation, all
present and future securities, shares, capital stock, membership interests, and
other ownership interests receivable in respect of or in exchange for any such
securities, shares, capital stock, membership interest or ownership interests,
all rights under operating agreements, member agreements, shareholder agreements
and other similar agreements relating to all securities, shares, capital stock,
membership interests, and other ownership interests, all rights to subscribe for
securities, shares, capital stock, membership interests, or other ownership
interests incident to or arising from ownership of such securities, shares,
capital stock, membership interests, or other ownership interests, all cash,
interest, stock, membership interests, and other dividends or distributions paid
or payable on such securities, shares, capital stock, membership interests, or
other ownership interests, and all books and records (whether paper, electronic
or any other medium) pertaining to the foregoing, including, without limitation,
all stock or membership record and transfer books, (ii) any and all other
securities, shares, capital stock, membership interests, and other ownership
interests hereafter pledged by Pledgor to the Secured Party to secure the
Secured Obligations (as hereinafter defined), and all rights and privileges
pertaining thereto, including, without limitation, all securities, shares,
capital stock, membership interests, and other ownership interests receivable in
respect of or in exchange for such securities, shares, capital stock, membership
interests, or other ownership interests, all rights to subscribe for securities,
shares, capital stock, membership interests, or other ownership interests
incident to or arising from ownership of such securities, shares, capital stock,
membership interests or other ownership interests, all cash, interest, stock and
other dividends or distributions paid or payable on such securities, shares,
capital stock, membership interests or other ownership interests, and all books
and records pertaining to the foregoing, (iii) whatever is received when any of
the foregoing is sold, exchanged, replaced or otherwise disposed of, including
all proceeds, as such term is defined in the Code, thereof and (iv) in the event
Pledgor exercises its rights under that certain joint venture
agreement/operating agreement dated March 17, 2005 by and between Pledgor and
International Equities Group, Inc., any additional membership interests it
acquires in Battle Rap, LLC as a result of such exercise.
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2. Grant of Security Interests.
(a) To secure the payment and performance of all obligations
and of all indebtedness of Pledgor under the Note and Purchase Agreement
(collectively, the "Secured Obligations"), Pledgor hereby grants to the Secured
Party a first priority security interest in and hereby pledges to the Secured
Party, all of such Pledgor's now existing and hereafter acquired or arising
right, title and interest in, to and under the Pledged Collateral whether now or
hereafter existing and wherever located.
(b) Upon the execution and delivery of this Agreement (or in
the case of Pledged Collateral acquired after the date hereof ("After-acquired
Pledged Collateral"), at the time Pledgor acquires rights in such After-acquired
Pledged Collateral), Pledgor shall deliver to and deposit with the Secured Party
in pledge, all certificates and other instruments evidencing the Pledged
Collateral owned by Pledgor, together with undated stock powers signed in blank
by Pledgor. The stock powers delivered by Pledgor hereunder shall be utilized by
Secured Party only after a default under the Note or breach of any of the
Conditions set forth in the Note.
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3. Further Assurances.
Prior to or concurrently with the execution of this Agreement,
and thereafter at any time and from time to time upon reasonable request of the
Secured Party, Pledgor shall execute and deliver to the Secured Party all
financing statements, continuation financing statements, assignments,
certificates and documents of title, affidavits, reports, notices, schedules of
account, letters of authority, further pledges, powers of attorney and all other
documents (collectively, the "Security Documents") which the Secured Party may
reasonably request, in form reasonably satisfactory to the Secured Party, and
take such other action which the Secured Party may reasonably request, to
perfect and continue perfected and to create and maintain the first priority
status of the Secured Party's security interest in the Pledged Collateral and to
fully consummate the transactions contemplated under this Agreement. Pledgor
hereby irrevocably makes, constitutes and appoints the Secured Party as
Pledgor's true and lawful attorney with power to sign the name of such Pledgor
on all or any of the documents which the Secured Party determines must be
executed, filed, recorded or sent in order to perfect or continue perfected the
Secured Party' security interest in the Pledged Collateral in any jurisdiction.
Such power, being coupled with an interest, is irrevocable until all of the
Secured Obligations have been indefeasibly in full paid and the Instruments have
terminated.
4. Representations and Warranties.
Pledgor hereby represents and warrants to the Secured Party as
follows:
(a) Pledgor has and will continue to have (or, in the case of
After-acquired Pledged Collateral, at the time such Pledgor acquires rights in
such Pledged Collateral, will have and will continue to have), title to the
Pledged Collateral, free and clear of all liens.
(b) The capital stock, shares, membership interests,
securities, and other ownership interests constituting the Pledged Collateral
have been duly authorized and validly issued to Pledgor (as set forth on
Schedule A hereto), are fully paid and nonassessable.
(c) The security interests in the Pledged Collateral granted
hereunder are valid, perfected and of first priority, subject to the lien of no
other Person.
(d) There are no restrictions upon the transfer of the Pledged
Collateral and Pledgor has the power and authority and right to transfer the
Pledged Collateral owned by Pledgor free of any encumbrances and without
obtaining the consent of any other Person.
(e) Pledgor has all necessary power to execute, deliver and
perform this Agreement.
(f) There are no actions, suits, or proceedings pending or, to
Pledgor's best knowledge after due inquiry, threatened against or affecting
Pledgor with respect to the Pledged Collateral, at law or in equity or before or
by any governmental authority, and Pledgor is not in default with respect to any
judgment, writ, injunction, decree, rule or regulation which could adversely
affect Pledgor's performance hereunder.
(g) This Agreement has been duly executed and delivered and
constitutes the valid and legally binding obligation of Pledgor, enforceable in
accordance with its terms, except to the extent that enforceability of this
Agreement may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforceability of creditors'
rights generally or limiting the right of specific performance.
(h) Neither the execution and delivery by Pledgor of this
Agreement, nor the compliance with the terms and provisions hereof, will violate
any provision of any law or conflict with or result in a breach of any of the
terms, conditions or provisions of any judgment, order, injunction, decree or
ruling of any governmental authority to which Pledgor is subject or any
provision of any agreement, understanding or arrangement to which Pledgor is a
party or by which Pledgor is bound.
(i) Pledgor's chief executive office address is as set forth
on the signature page hereto.
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(j) All rights of Pledgor in connection with its ownership of
the Pledged Collateral are evidenced and governed solely by (i) the
certificates, articles of incorporation, bylaws and other organizational
documents of a corporation in the case of RuffNation Music, Inc., Metropolitan
Recording, Inc., TriMedia Film Group, Inc., TM Film Distribution, Inc., TME
Entertainment Film und Musik Productions and Verwertungs Gessellschaft m.b.H
(Austria); (ii) the certificates and operating agreements of RuffNation Films
LLC, Battle Rap LLC, Snipes Productions LLC and FourPoint Play Productions, LLC,
as applicable, in the case of membership interest in those entities, and no
shareholder or other similar agreements are applicable to the Pledged
Collateral; and (iii) the organizational documents of each entity contain no
restrictions on the rights of shareholders or members, as applicable, other than
those that normally would apply to a company organized under the laws of its
jurisdiction of organization.
5. General Covenants.
Pledgor hereby covenants and agrees as follows:
(a) Pledgor shall do all reasonable acts that may be necessary
and appropriate to maintain, preserve and protect the Pledged Collateral;
Pledgor shall be responsible for the risk of loss of, damage to, or destruction
of the Pledged Collateral owned by Pledgor, unless such loss is the result of
the gross negligence or willful misconduct of any Secured Party. Pledgor shall
notify the Secured Party in writing ten (10) days prior to any change in such
Pledgor's chief executive office address.
(b) Pledgor shall appear in and defend any action or
proceeding of which Pledgor is aware which could reasonably be expected to
affect Pledgor's title to, or the Secured Party's interest in, the Pledged
Collateral or the proceeds thereof; provided, however, that with the consent of
the Secured Party, Pledgor may settle such actions or proceedings with respect
to the Pledged Collateral, which consent shall not be unreasonably withheld or
delayed.
(c) Pledgor shall, and shall cause the parties to, keep
separate, accurate and complete records of the Pledged Collateral, disclosing
the Secured Party's security interest hereunder.
(d) Pledgor shall comply with all laws applicable to the
Pledged Collateral unless any noncompliance would not individually or in the
aggregate materially impair the use or value of the Pledged Collateral or the
Secured Party's rights hereunder.
(e) Pledgor shall pay any and all taxes, duties, fees or
imposts of any nature imposed by any governmental authority on any of the
Pledged Collateral, except to the extent contested in good faith by appropriate
proceedings.
(f) To the extent, following the date hereof, Pledgor acquires
capital stock, shares, securities, and other ownership interests of any Person
or any of the rights, property or securities, shares, capital stock or other
ownership interests described in the definition of Pledged Collateral with
respect to any Person, such stock, rights, property or securities, shares,
capital stock or ownership interests shall be subject to the terms hereof and,
upon such acquisition, shall be deemed to be hereby pledged to the Secured
Party; and, Pledgor thereupon shall deliver all such securities, shares, capital
stock, and other ownership interests together with an updated Schedule A hereto,
to the Secured Party.
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(g) During the term of this Agreement, Pledgor shall not sell,
assign, replace, retire, transfer or otherwise dispose of its Pledged
Collateral.
6. Other Rights With Respect to Pledged Collateral.
In addition to the other rights with respect to the Pledged
Collateral granted to the Secured Party hereunder, at any time and from time to
time, after and during the continuation of any default under the Note or breach
of any of the conditions set forth in the Note, the Secured Party, at its option
and at the expense of the Pledgor, may (a) transfer into the name of the Secured
Party or into the name of its nominee, all or any part of the Pledged
Collateral, thereafter receiving all dividends, income or other distributions
upon the Pledged Collateral; (b) take control of and manage all or any of the
Pledged Collateral; (c) apply to the payment of any of the Secured Obligations,
whether any be due and payable or not, any moneys, including cash dividends,
distributions and income from any Pledged Collateral, now or hereafter in the
hands of the Secured Party, on deposit or otherwise, belonging to Pledgor, as
the Secured Party in its sole discretion shall determine; and (d) do anything
which Pledgor is required but fails to do hereunder.
7. Additional Remedies Upon Event of Default.
Upon the occurrence of any default under the Note and while
such default shall be continuing, the Secured Party shall have, in addition to
all rights and remedies of a secured party under the Code or other applicable
law, and in addition to its rights under Section 6 above and under the Note, the
following rights and remedies:
(a) The Secured Party may, after ten (10) days' advance notice
to the Pledgor, sell, assign, give an option or options to purchase or otherwise
dispose of the Pledged Collateral or any part thereof at public or private sale,
at the Secured Party's offices or elsewhere, for cash, on credit or for future
delivery, and upon such other terms as the Secured Party may deem commercially
reasonable. Pledgor agrees that ten (10) days' advance notice of the time and
place of any public sale or the time after which any private sale is to be made
shall constitute reasonable notification. The Secured Party shall not be
obligated to make any sale of Pledged Collateral regardless of notice of sale
having been given. The Secured Party may adjourn any public or private sale from
time to time by announcement at the time and place fixed therefor, and such sale
may, without further notice, be made at the time and place to which it was so
adjourned. Pledgor recognizes that the Secured Party may be compelled to resort
to one or more private sales of the Pledged Collateral to a restricted group of
purchasers who will be obliged to agree, among other things, to acquire such
securities, shares, capital stock or ownership interests for their own account
for investment and not with a view to the distribution or resale thereof.
(b) The proceeds of any collection, sale or other disposition
of the Pledged Collateral, or any part thereof, shall, after the Secured Party
has made all deductions of expenses, including but not limited to, attorneys'
fees and other expenses incurred in connection with repossession, collection,
sale or disposition of such Pledged Collateral or in connection with the
enforcement of the Secured Party's rights with respect to the Pledged
Collateral, including in any insolvency, bankruptcy or reorganization
proceedings, be applied against the Secured Obligations, whether or not all the
same be then due and payable, as follows:
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(i) first, to the Secured Obligations and to reimburse the
Secured Party for out-of-pocket costs, expenses and disbursements, including
without limitation reasonable attorneys' fees and legal expenses, incurred by
the Secured Party in connection with realizing on the Pledged Collateral
including expense incurred by the Secured Party for the reasonable maintenance,
preservation, protection or enforcement of, or realization upon, the Pledged
Collateral, including without limitation advances for taxes, insurance, and the
like, and reasonable expenses incurred to sell or otherwise realize on, or
prepare for sale of or other realization on, any of the Pledged Collateral, in
such order as the Secured Party may determine in its discretion; and
(ii) the balance, if any, as required by law.
8. Secured Party's Duties.
The powers conferred on the Secured Party hereunder are solely
to protect their interest in the Pledged Collateral and shall not impose any
duty upon it to exercise any such powers. Except for the safe custody of any
Pledged Collateral in its possession and the accounting for moneys actually
received by it hereunder, the Secured Party shall have no duty as to any Pledged
Collateral or as to the taking of any necessary steps to preserve rights against
prior parties or any other rights pertaining to any Pledged Collateral.
9. No Waiver; Cumulative Remedies.
No failure to exercise, and no delay in exercising, on the
part of any Secured Party, any right, power or privilege hereunder shall operate
as a waiver thereof; nor shall any single or partial exercise of any right,
power or privilege hereunder preclude any further exercise thereof or the
exercise of any other right, power or privilege. The remedies herein provided
are cumulative and not exclusive of any remedies provided under the Note or by
law. Pledgor waives any right to require the Secured Party to proceed against
any other person or to exhaust any of the Pledged Collateral or other security
for the Secured Obligations or to pursue any remedy in the Secured Party's
power.
10. Assignment.
All rights of the Secured Party under this Agreement shall
inure to the benefit of its successors and assigns. All obligations of Pledgor
shall bind its successors and assigns; provided, however, Pledgor may not assign
or transfer any of its rights and obligations hereunder or any interest herein.
11. Severability.
Any provision of this Agreement which shall be held invalid or
unenforceable shall be ineffective without invalidating the remaining provisions
hereof.
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12. Governing Law.
This Agreement shall be construed in accordance with and
governed by the internal laws of the Commonwealth of Pennsylvania without regard
to its conflicts of law principles, except to the extent the validity or
perfection of the security interests or the remedies hereunder in respect of any
Pledged Collateral are governed by the law of a jurisdiction other than the
Commonwealth of Pennsylvania.
13. Notices.
All notices, requests, demands, directions and other
communications (collectively, "notices") given to or made upon any party hereto
under the provisions of this Agreement shall be by telephone or in writing
(including telex or facsimile communication) unless otherwise expressly
permitted hereunder and shall be delivered or sent by telex or facsimile to the
respective parties at the addresses and numbers set forth in the signature page
hereto or in accordance with any subsequent unrevoked written direction from any
party to the others. All notices shall, except as otherwise expressly herein
provided, be effective in the case of telex or facsimile, when received, in the
case of hand delivered notice, when hand delivered, or in the case of telephone
when telephoned, provided, however, that in order to be effective, telephonic
notices must be confirmed in writing no later than the next day by letter,
facsimile or telex.
14. Specific Performance.
Pledgor acknowledges and agrees that, in addition to the other
rights of the Secured Party hereunder and under the Note, because the Secured
Party's remedies at law for failure of Pledgor to comply with the provisions
hereof relating to the Secured Party rights (i) to inspect the books and records
related to the Pledged Collateral, (ii) to receive the various notifications
Pledgor is required to deliver hereunder, (iii) to obtain copies of agreements
and documents as provided herein with respect to the Pledged Collateral, (iv) to
enforce the provisions hereof pursuant to which the Pledgor has appointed the
Secured Party its attorney-in-fact, and (v) to enforce the Secured Party's
remedies hereunder, would be inadequate and that any such failure would not be
adequately compensable in damages, Pledgor agrees that each such provision
hereof may be specifically enforced.
15. Voting Rights in Respect of the Pledged Collateral.
So long as no default shall occur and be continuing under the
Note, Pledgor may exercise any and all voting and other consensual rights
pertaining to the Pledged Collateral or any part thereof for any purpose not
inconsistent with the terms of this Agreement or the Notes.
16. Entire Agreement; Amendments.
This Agreement constitutes the entire agreement between the
parties with respect to the subject matter hereof and supersedes all prior
agreements relating to a grant of a security interest in the Pledged Collateral
by Pledgor. This Agreement may not be amended or supplemented except by a
writing signed by the Secured Party and the Pledgor.
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17. Counterparts.
This Agreement may be executed in any number of counterparts,
and by different parties hereto in separate counterparts, each of which when so
executed shall be deemed an original and all of which taken together shall
constitute but one and the same agreement.
18. Descriptive Headings.
The descriptive headings which are used in this Agreement are
for the convenience of the parties only and shall not affect the meaning of any
provision of this Agreement.
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SIGNATURE PAGE 1 OF 1 TO
STOCK PLEDGE AGREEMENT
IN WITNESS WHEREOF, and intending to be legally bound, the parties
hereto have caused this Agreement to be duly executed as of the date first above
written.
TRIMEDIA ENTERTAINMENT GROUP, INC.
By: /s/Christopher Schwartz
-------------------------------------
Name: Chris Schwartz
Title: Chief Executive Officer
IL RESOURCES, LLC
By: /s/Howard Appel
-------------------------------------
Name: Howard Appel
Title: President, 1025 Investments, Inc.,
Managing Member
SCHEDULE A
TO
STOCK PLEDGE AGREEMENT
DESCRIPTION OF PLEDGED COLLATERAL
Pledgor Pledged Collateral
- ---------------------------------- ---------------------------------------
TriMedia Entertainment Group, Inc. RuffNation Music, Inc.,
Metropolitan Recording, Inc.,
TM Film Distribution, Inc.,
TriMedia Film Group, Inc.
Battle Rap LLC,
TME Film Musik (Austria)
RuffNation Films LLC Snipes Productions LLC,
FourPoint Play LLC,
Metropolitan Recording Inc. RuffNation Films LLC