Exhibit 10.17
PLEDGE AND SECURITY AGREEMENT
This Pledge and Security Agreement ("AGREEMENT") is made and entered into
this 30th day of April, 1999, by and among The Cobalt Group, a Washington
corporation ("PLEDGOR"), and Compu-Time, Inc., Parts Finder Locating Systems,
Inc. and Locators, Inc., an Oregon corporation ("SECURED PARTY").
RECITALS:
A. Pursuant to the terms of a Purchase Agreement dated as of the date
hereof ("PURCHASE AGREEMENT"), Pledgor has purchased from Secured Party all of
the membership interest units ("UNITS") of PartsVoice LLC, an Oregon limited
liability company ("PARTSVOICE"). As payment of the purchase price for the
Units, Pledgor has executed and delivered to Secured Party $3,000,000 in cash,
three promissory notes in the aggregate principal amount of $12,000,000 of even
date herewith due in 90 days (THE "90-DAY NOTES"), and three promissory notes in
the aggregate principal amount of $15,000,000 of even date herewith due in 270
days (THE "270-DAY NOTES", AND TOGETHER WITH THE 90-DAY NOTES, THE "NOTES").
B. To secure payment of the Notes and performance of other obligations
described herein, Pledgor has agreed to pledge the Units, and grant a security
interest in the Units, to Secured Party on the terms set forth below.
AGREEMENT:
1. SECURITY INTEREST AND OBLIGATIONS SECURED. Pledgor hereby
assigns and pledges the Units to Secured Party, and grants a security interest
in the Units to Secured Party, to secure the full, complete and timely payment
of the Notes and the performance of Cobalt's obligations under this Agreement
and the Management Agreement (as defined in Section 5).
2. CERTIFICATE AND ASSIGNMENT. Upon execution of this Agreement,
Pledgor shall deliver to Secured Party a certificate representing all of the
Units ("CERTIFICATE"), together with an executed assignment separate from
certificate assigning all of the Units to Secured Party, in the form of Exhibit
A attached hereto ("ASSIGNMENT"). Upon payment in full of the Notes, Secured
Party shall promptly return the Certificate and the Assignment to Pledgor.
3. FINANCING STATEMENTS. Upon execution of this Agreement, Pledgor
shall execute and deliver to Secured Party such financing statements for filing
as deemed necessary or appropriate by Secured Party. Upon payment in full of
the Notes and the performance of all other obligations secured hereunder,
Secured Party shall terminate any financing statements filed by Secured Party
hereunder.
4. REPRESENTATIONS AND WARRANTIES OF PLEDGOR. Pledgor represents
and warrants to Secured Party that:
(a) Pledgor is the sole legal and equitable owner of the Units,
free and clear of any pledges, security interests, liens, encumbrances,
restrictions on transfer, options, or agreements to sell the Units, except for
the pledge and security interest granted hereunder.
(b) Pledgor has full power and authority to execute, deliver and
perform this Agreement, and to pledge and grant a security interest in the Units
as provided herein.
(c) The execution, delivery and performance of this Agreement by
Pledgor has been duly and properly authorized and will not result in any
violation of Pledgor's articles of incorporation or bylaws or any agreement,
license, instrument, judgment, decree or order applicable to Pledgor.
5. COVENANTS OF PLEDGOR WITH RESPECT TO UNITS. Pledgor agrees that:
(a) Prior to payment in full of the Notes, Pledgor shall not
transfer (whether by sale, gift, or otherwise) any interest in the Units unless
such transfer is (i) expressly subject to the terms of this Agreement and the
Agreement for Management of Security of even date herewith among Pledgor,
Compu-Time, Inc., Parts Finder Locating Systems, Inc., and Locators, Inc.
("MANAGEMENT AGREEMENT"), and (ii) made with the prior written consent of
Secured Party in Secured Party's sole and absolute discretion. Prior to payment
in full of the 90-Day Notes, Pledgor shall not pledge or grant a security
interest in the Units, nor create, incur or allow any other lien, encumbrance or
restriction on transfer with respect to the Units, without the prior written
consent of Secured Party in Secured Party's sole and absolute discretion.
Following payment in full of the 90-Day Notes, Pledgor shall not pledge or grant
a security interest in the Units, nor create, incur or allow any other lien,
encumbrance or restriction on transfer with respect to the Units, unless such
pledge, security interest, lien, encumbrance or restriction is expressly
subordinate and subject to the terms of this Agreement and the Management
Agreement and made with the prior written consent of Secured Party which will
not be unreasonably withheld.
(b) Pledgor shall procure, execute, and deliver from time to
time any assignments, financing statements, continuation statements and other
writings reasonably necessary to perfect, maintain, and protect Secured Party's
security interest in the Units and its priority therein.
(c) Prior to payment in full of Notes, Pledgor shall not,
without the prior written consent of Secured Party in Secured Party's sole and
absolute discretion, (i) amend or restate the articles of organization or
operating agreement of PartsVoice, (ii) effect any reorganization,
consolidation, merger, dissolution or liquidation of PartsVoice (iii) sell,
lease, exchange, mortgage or effect any other transfer or disposition of assets
of PartsVoice other than in the ordinary course of business, (iv) effect the
incurrence by PartsVoice of any indebtedness other than in the ordinary course
of business, (v) effect any material change in the nature of the business of
PartsVoice, or (vi) effect any withdrawal or distribution of cash or assets of
any kind of PartsVoice, except as provided in this Agreement or the Management
Agreement.
(d) Prior to payment in full of the Notes, Pledgor shall not
effect the admission of any additional members of PartsVoice without the prior
written consent of Secured Party in Secured Party's sole and absolute
discretion.
6. AUTHORIZED ACTION BY SECURED PARTY; PROXY. Subject to Section
7(a) hereof, Pledgor irrevocably appoints Secured Party as attorney-in-fact and
grants Secured Party a proxy to do any act that Pledgor is obligated by this
Agreement to do and to exercise such rights and powers as Pledgor might exercise
with respect to the Units pursuant to this Agreement. With respect to voting
the Units as provided in Section 7(b), this Section 6 constitutes an irrevocable
appointment of a proxy, coupled with an interest, which shall continue until the
Notes are paid in full.
7. VOTING OF UNITS.
(a) Unless and until an Event of Default (as hereinafter
defined) has occurred and is continuing, neither party shall exercise any voting
rights pertaining to the Units; provided, however, that Pledgor may vote for,
consent to, authorize or approve actions or transactions which provide for or
result in the payment in full of the Notes.
(b) If an Event of Default has occurred and is continuing,
Secured Party shall, at its option and election evidenced by a notice to
Pledgor, and whether or not Secured Party exercises any other rights or remedies
available to it under this Agreement, have the right to exercise all voting
rights with respect to the Units.
8. EVENTS OF DEFAULT. Any one or more of the following events
constitutes an event of default ("EVENT OF DEFAULT"):
(a) Occurrence and continuation of an Event of Default (as
therein defined) under the Notes;
(b) A breach or failure by Pledgor to perform any of the terms
of this Agreement, which breach or failure has not been cured within twenty (20)
days after written notice has been given of such breach or failure, including,
without limitation, the covenants contained in Section 5 of this Agreement;
(c) If any representation or warranty in this Agreement shall
prove to have been false when made; or
(d) A breach or failure by Pledgor to perform any of the terms
of the Management Agreement, which breach or failure has not been cured within
twenty (20) days after written notice has been given of such breach or failure.
9. REMEDIES UPON DEFAULT. Upon the occurrence of any Event of
Default, Secured Party may, in Secured Party's sole discretion and with or
without further notice to Pledgor and in addition to all rights and remedies at
law or in equity or otherwise:
(a) Transfer any or all of the Units into the Secured Party's
name.
(b) Exercise Secured Party's proxy rights with respect to all or
a portion of the Units. In such event, Pledgor agrees to deliver promptly to
Secured Party evidence of the grant of such proxy in any form reasonably
requested by Secured Party.
(c) Continue the management of PartsVoice pursuant to the terms
of Management Agreement.
(d) Sell or otherwise dispose of the Units in accordance with
Section 10 below.
Upon the occurrence of an Event of Default that has been caused by a
material breach or material failure of Pledgor to perform its obligations under
this Agreement or the Management Agreement, Secured Party may, in addition to
the foregoing rights and remedies, declare in writing the entire amount of the
principal and interest due under the Notes immediately due and payable.
Pledgor shall be liable for Secured Party's reasonable costs and
expenses, including attorney fees, incurred or paid in exercising any remedy
under this Agreement or in the enforcement hereof, in either such case after an
Event of Default has occurred and while it is continuing, which costs and
expenses shall become part of the indebtedness secured hereby and shall be paid
to Secured Party immediately upon demand.
10. SALE UPON DEFAULT. Pledgor and Secured Party acknowledge and
agree that the Units are restricted, unregistered securities that are difficult
to value and for which no public market exists. The parties further agree that
the Units are not subject to sale in a "recognized market" as that term is
described in ORS 79.5040. Pledgor and Secured Party wish to agree to reasonable
standards for conducting a commercially reasonable sale of the Units. Without
limiting rights and remedies otherwise available to Pledgor, the parties agree
that compliance with the following steps shall satisfy requirements of a
commercially reasonable sale:
(a) The sale may be either a public or a private sale, at
Secured Party's reasonable discretion, and it may be for all or any portion of
the Units.
(b) Secured Party shall set a date for public sale of the Units,
or a date after which a private sale may occur, which date shall be not less
than thirty (30) days after the date notice of the sale is given to Pledgor, and
shall send written notification to Pledgor in advance regarding the date and the
time of the public sale, or the date after which a private sale may occur.
(c) Any public sale shall take place at a site in Portland,
Oregon and time during normal business hours selected by Secured Party in its
reasonable discretion.
(d) As soon as practicable after request therefor by Secured
Party, and in any event within twenty (20) days, Pledgor shall provide Secured
Party with information relating to Pledgor requested by Secured Party for
compliance with state or federal securities laws.
(e) At any sale of any of the Units, Secured Party may restrict
the prospective bidders or purchasers to persons or entities who, by certain
representations made by them, would render registration of the sale under state
or federal securities laws unnecessary.
Upon any sale of the Units as provided above, the sale proceeds shall
be applied as follows: first, to the payment of all costs and expenses incurred
in connection with the holding, preparing for sale and sale of the Units,
including but not limited to attorneys' fees and legal expenses incurred by
Secured Party in connection therewith; second, to payment of all amounts due
under the Notes; and third, any surplus thereafter remaining shall be paid to
Pledgor or whoever may be lawfully entitled thereto.
11. REMEDIES CUMULATIVE. The rights and remedies of Secured Party
herein shall be cumulative and in addition to, and not exclusive of, any rights
or remedies provided by law.
12. NOTICES. Notices, requests, demands and other communications
required under this Agreement shall be in writing and considered validly served
when delivered by first-class mail, facsimile, telex or telecopy to the address
or telephone number specified below:
TO PLEDGOR: The Cobalt Group, Inc.
Attn: Geoffrey T. Barker
1525 First Avenue, Third Floor
Seattle, WA 98101
Fax (206) __________
With a copy to:
Stoel Rives LLP
Attn: Ronald J. Lone
3600 One Union Square
600 University Street
Seattle, WA 98101
Fax (206) 386-7500
TO PLEDGEE: Compu-Time, Inc.
8305 S.E. Monterey, Suite 110
Portland, OR 97266
Fax (503) 659-3753
Parts Finder Locating Systems, Inc.
14718 S.W. Scarlett Drive
Tigard, OR 97224
Fax (503) 538-9103
Locators, Inc.
8305 S.E. Monterey, Suite 104
Portland, OR 97266
Fax (503) 653-9536
With a copy to:
Bullivant Houser Bailey
Professional Corporation
Attention: Stephen B. Hill, Esq.
888 S.W. Fifth Avenue
300 Pioneer Tower
Portland, Oregon 97204-20898
Fax (503) 295-0915
Any party may alter its address by giving written notice of such
change to the other parties hereto.
13. SECURED PARTY REPRESENTATIONS. The Manager of PartsVoice, as
defined in Section 2 of the Management Agreement, shall serve as the sole and
exclusive agent of Secured Party for purposes of any decision or action required
or permitted to be taken by Secured Party hereunder unless any of the entities
collectively known as the Secured Party shall have given notice to Pledgor to
the contrary and, prior to the actual receipt of such notice by Pledgor, Pledgor
shall be entitled to rely on the authority of the Manager as such.
14. BINDING AGREEMENT AND ASSIGNMENT. This Agreement shall be
binding upon the respective successors and assigns of the parties hereto.
15. ENTIRE AGREEMENT AND AMENDMENT. This Agreement, together with
the Purchase Agreement and the other related agreements and documents included
as Exhibits thereto constitute the complete and final agreement of the parties
with regard to the transactions contemplated hereby and thereby and all previous
and contemporaneous
understandings and agreements not stated herein or therein are hereby waived and
abandoned by the parties. No supplement, modification or amendment to this
Agreement shall be binding unless executed in writing by all the parties hereto.
16. WAIVER. No waiver of any provision of this Agreement shall be
deemed or shall constitute a waiver of any other provision, whether or not
similar, nor shall any waiver constitute a continuing waiver. No waiver shall
be binding unless executed in writing by the party making the waiver.
17. APPLICABLE LAW. The law applicable to this Agreement shall be
the law of the State of Oregon.
18. ATTORNEY FEES. If a suit, action or other proceeding of any
nature whatsoever (including any contested matter or adversary proceeding under
the U.S. Bankruptcy Code) is instituted in connection with any controversy
arising out of this Agreement or to interpret or enforce any rights hereunder,
the prevailing party shall be entitled to recover its reasonable attorneys',
paralegals', accountants' and other experts' fees, and all other fees, costs and
expenses actually incurred in connection therewith, as determined by the judge
at trial or on appeal or review, in addition to all other amounts provided by
law.
19. COUNTERPARTS. This Agreement maybe executed in any number of
counterparts, each of which shall constitute an original of this Agreement.
PLEDGOR: The Cobalt Group, Inc.
By:
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Its:
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SECURED PARTY: Compu-Time, Inc.
By:
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Its:
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Parts Finder Locating Systems, Inc.
By:
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Its:
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Locators, Inc.
By:
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Its:
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EXHIBIT A
(Form of Assignment Separate From Certificate)