EXHIBIT 10.4
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COLLATERAL PLEDGE AGREEMENT
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This Collateral Pledge Agreement ("Agreement") dated as of December 31,
2004 is made by Global Matrechs, Inc., a Delaware corporation ("Pledgor") in
favor of Mark Allen ("Secured Party").
BACKGROUND
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A. Secured Party has extended credit to True To Form, Limited ("Debtor") as
evidenced by that certain Secured Note dated as of December 31, 2004 (as
amended, restated, modified, or replaced from time to time, the "Note"), in
connection with the merger of in connection with the merger of True to Form,
Limited , a Massachusetts corporation and TTF Acquisition Corp., a wholly owned
subsidiary of Pledgor. To induce Secured Party to extend credit to Debtor,
Pledgor has guaranteed the Note and executes and delivers this Agreement to
Secured Party. All capitalized terms used herein and not otherwise defined shall
have the same meanings assigned to such terms in the Note or the Security
Agreement, as hereinafter defined.
B. This Agreement is given and is intended to provide additional security
for the Obligations as defined in the Security Agreement of even date herewith
among Debtor and Secured Party (the "Security Agreement").
NOW THEREFORE, for other good and sufficient consideration, the receipt of
which is hereby acknowledged, Pledgor, intending to be legally bound hereby,
covenants and agrees as follows:
1. Pledgor, for the purpose of granting a continuing lien and security
interest to secure the Obligations, does hereby assign, pledge, hypothecate,
deliver and set over to Secured Party, its successors and assigns, 100% of its
interest in all of the shares of capital stock of Debtor , as more specified in
Schedule I, whether now owned or hereafter acquired by Pledgor or in which
Pledgor now or hereafter has any rights, options or warrants, together with all
certificates representing such shares and all rights (but none of the
obligations) under or arising out of the applicable organizational documents of
such corporations, together with any additions, exchanges, replacements and
substitutions therefor, dividends and distributions with respect thereto, and
the proceeds thereof (collectively, the "Pledged Collateral").
2. The pledge and security interest described herein shall continue in
effect to secure all Obligations from time to time incurred or arising unless
and until all Obligations have been indefeasibly paid and satisfied in full.
3. Pledgor, severally hereby represents and warrants that:
(a) Except as pledged herein, Pledgor has not sold, assigned,
transferred, pledged or granted any option or security interest in or otherwise
hypothecated the Pledged Collateral in any manner whatsoever and the Pledged
Collateral is pledged herewith free and clear of any and all liens, security
interests, encumbrances, claims, pledges, restrictions, legends, and options,
except for Permitted Liens, as defined in the Security Agreement.
(b) Pledgor has the full power and authority to execute, deliver, and
perform under this Agreement and to pledge the Pledged Collateral hereunder.
(c) This Agreement constitutes the valid and binding obligation of
Pledgor, enforceable in accordance with its terms, and the pledge of the Pledged
Collateral referred to herein is not in violation of and shall not create any
default under any agreement, undertaking or obligation of Pledgor.
(d) Pledgor is pledging hereunder all of the Pledgor's interest and
ownership in Debtor.
(e) Contemporaneously with the execution hereof, Pledgor is delivering
to Secured Party all certificates representing or evidencing the Pledged
Collateral, accompanied by duly executed instruments of transfer or assignments
in blank, to be held by Secured Party in accordance with the terms hereof.
(f) The Secured Party is authorized to file such UCC financing
statements as it may deem necessary to perfect the pledge anticipated hereby.
4. If an Event of Default (as defined in the Note) occurs, then Secured
Party may, at its sole option, exercise from time to time with respect to the
Pledged Collateral any and/or all rights and remedies available to it hereunder,
under the Uniform Commercial Code as adopted in the State of Delaware ("UCC"),
or otherwise available to it, at law or in equity, including, without
limitation, the right to dispose of the Pledged Collateral at public or private
sale(s) or other proceedings, and Pledgor agrees that, if permitted by law,
Secured Party or its nominee may become the purchaser at any such sale(s).
5. (a) In addition to all other rights granted to Secured Party herein or
otherwise available at law or in equity, Secured Party shall have the following
rights, each of which may be exercised at Secured Party's sole discretion (but
without any obligation to do so), at any time following the occurrence of an
Event of Default under the Note, without further consent of Pledgor: (i)
transfer the whole or any part of the Pledged Collateral into the name of itself
or its nominee for the purpose of selling the same, or to conduct a sale of the
Pledged Collateral pursuant to the UCC or pursuant to any other applicable law;
(ii) vote the Pledged Collateral; (iii) notify the persons obligated on any of
the Pledged Collateral to make payment to Secured Party of any amounts due or to
become due thereon; and (iv) release, surrender or exchange any of the Pledged
Collateral at any time, or to compromise any dispute with respect to the same.
Secured Party may proceed against the Pledged Collateral, or any other
collateral securing the Obligations, in any order, and against Pledgor and any
other obligor, jointly and/or severally, in any order to satisfy the
Obligations. Each Pledgor waives and releases any right to require Secured Party
to first collect any of the Obligations secured hereby from any other collateral
of Pledgor, any other Pledgor or any other party securing the Obligations under
any theory of marshalling of assets, or otherwise. All rights and remedies of
Secured Party are cumulative, not alternative.
(b) Pledgor hereby irrevocably appoints Secured Party its
attorney-in-fact, subject to the terms hereof, following the occurrence of an
Event of Default under the Note, at Secured Party's option, (i) to effectuate
the transfer of the Pledged Collateral on the books of the issuer thereof to the
name of Secured Party or to the name of Secured Party's nominee, designee or
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assignee; (ii) to endorse and collect checks payable to such Pledgor
representing distributions or other payments on the Pledged Collateral; and
(iii) to carry out the terms and provisions hereof.
6. The proceeds of any Pledged Collateral received by Secured Party at any
time, whether from the sale of Pledged Collateral or otherwise, may be applied
to or on account of the Obligations and in such order as Secured Party may
elect. In addition, Secured Party may, in its discretion, apply any such
proceeds to or on account of the payment of all costs, fees and expenses
(including, without limitation, attorneys' fees) which may be incurred by
Secured Party.
7. Pledgor recognizes that Secured Party may be unable to effect, or may
effect only after such delay which would adversely affect the value that might
be realized from the Pledged Collateral, a public sale of all or part of the
Pledged Collateral by reason of certain prohibitions contained in the Securities
Act of 1933, as amended ("Securities Act"), and 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 private sale may be at prices and on terms
less favorable to Secured Party or the seller than if sold at public sales, and
therefore recognizes and confirms that such private sales shall not be deemed to
have been made in a commercially unreasonable manner solely because they were
made privately. Pledgor agrees that Secured Party has no obligation to delay the
sale of any such securities for the period of time necessary to permit the
issuer of such securities to register such securities for public sale under the
Securities Act.
8. In the event that any stock dividend, reclassification, readjustment or
other change is made or declared in the capital structure of Debtor or any
option included within the Pledged Collateral is exercised, any and all new,
substituted or additional shares, or other securities, issued by reason of any
such change or exercise, shall be delivered to and held by Secured Party under
the terms hereof in the same manner as the Pledged Collateral originally pledged
hereunder. No distribution may be paid to or retained by Pledgor unless
expressly permitted in writing by the Note.
9. So long as no Event of Default has occurred under the Note, and, until
Secured Party notifies Pledgor in writing of the exercise of its rights
hereunder, Pledgor shall retain the sole right to vote the Pledged Collateral
and exercise all rights of ownership with respect to all corporate questions for
all purposes not inconsistent with the terms hereof.
10. Secured Party shall have no obligation to take any steps to preserve,
protect or defend the rights of Pledgor or Secured Party in the Pledged
Collateral against other parties. Secured Party shall have no obligation to sell
or otherwise deal with the Pledged Collateral at any time for any reason,
whether or not upon request of any Pledgor, and whether or not the value of the
Pledged Collateral, in the opinion of Secured Party or Pledgor, is more or less
than the aggregate amount of the Obligations secured hereby, and any such
refusal or inaction by Secured Party shall not be deemed a breach of any duty
which Secured Party may have under law to preserve the Pledged Collateral.
Except as provided by applicable law, no duty, obligation or responsibility of
any kind is intended to be delegated to or assumed by Secured Party at any time
with respect to the Pledged Collateral.
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11. To the extent Secured Party is required by law to give Pledgor prior
notice of any public or private sale, or other disposition of the Pledged
Collateral, Pledgor agrees that ten (10) days prior written notice to Pledgor
shall be a commercially reasonable and sufficient notice of such sale or other
intended disposition.
12. Pledgor shall indemnify, defend and hold harmless Secured Party from
and against any and all claims, losses and liabilities resulting from any breach
by Pledgor of Pledgor's, or any of their, representations and covenants under
this Agreement.
13. Pledgor, in its capacity as a pledgor hereunder, hereby waives notice
of (a) acceptance of this Agreement and (b) demand and default hereunder.
14. This Agreement shall remain in full force and effect and shall not be
limited, impaired or otherwise affected in any way by reason of (a) any delay in
making demand on Pledgor for, or delay in enforcing or failure to enforce,
performance or payment of Pledgor's Obligations, (b) any failure, neglect or
omission on Secured Party's part to perfect any lien upon, protect, exercise
rights against, or realize on, any property of Pledgor or any other party
securing the Obligations, (c) any failure to obtain, retain or preserve, or the
lack of prior enforcement of, any rights against any person or persons
(including Pledgor) or in any property, (d) the invalidity or unenforceability
of any Obligations or rights in any collateral, (e) the existence of
nonexistence of any defenses which may be available to Pledgor with respect to
the Obligations, or (f) the commencement of any bankruptcy, reorganization,
liquidation, dissolution or receivership proceeding or case filed by or against
Pledgor.
15. Pledgor covenants and agrees that Pledgor shall not, without the prior
written consent of Secured Party, sell, encumber or grant any lien, security
interest or option on or with respect to any of the Pledged Collateral.
16. Pledgor hereby authorizes and instructs each issuer of the Pledged
Collateral to comply with any instruction received by it from Secured Party in
writing that (a) states that an Event of Default has occurred and (b) is
otherwise in accordance with the terms of this Agreement, without any other or
further instructions from Pledgor, and Pledgor agrees that each such issuer
shall be fully protected in so complying.
17. Any failure of or delay by Secured Party to exercise any right or
remedy hereunder shall not be construed as a waiver of the right to exercise the
same or any other right or remedy at any other time.
18. This Agreement constitutes the entire agreement between the parties
hereto regarding the subject matter hereof and may be modified only by a written
instrument signed by Pledgor and Secured Party.
19. This Agreement is made in and shall be governed by and construed in
accordance with the laws of the State of New York, and the provisions hereof
shall be deemed severable in the event of the invalidity of any provision.
Pledgor irrevocably consents to the exclusive jurisdiction of the federal courts
or the state courts of the State of New York sitting in the Borough of Manhattan
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in connection with any and all actions and proceedings whether arising hereunder
or under any other agreement or undertaking and irrevocably agrees to service of
process to the address of Debtor set forth herein by certified mail, return
receipt requested.
20. All notices and other communications hereunder shall be in writing and
shall be deemed given if delivered by hand, sent by facsimile transmission with
confirmation of receipt, sent via a reputable overnight courier service with
confirmation of receipt requested, or mailed by registered or certified mail
(postage prepaid and return receipt requested) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice), and shall be deemed given on the date on which delivered by hand or
otherwise on the date of receipt as confirmed:
To the Pledgor:
Global Matrechs, Inc.
90 Grove Street, Suite 201
Ridgefield, Connecticut 06877
Attn: Michael Sheppard
Facsimile: (203) 431-8304
With a copy to:
Foley Hoag LLP
155 Seaport Boulevard
Boston, Massachusetts 02210
Attn: David A Broadwin, Esq.
Facsimile: (617) 832-7000
To the Secured Party:
Mark Allen
91 French Avenue
Braintree, MA 02184
PH: 781.848.1174
FX: 781.848.1175
With a copy to:
Samuel Krieger
Krieger & Prager LLP
39 Broadway
New York, NY 10006
Facsimile: (212 ) 363-2999
21. This Agreement shall be binding upon and inure to the benefit of the
parties hereto, and their respective successors and assigns.
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22. PLEDGOR HEREBY WAIVES THE RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT,
PROCEEDING, OR COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED TO THIS
AGREEMENT, THE NOTE, THE OBLIGATIONS OR THE PLEDGED COLLATERAL.
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Dated as of the date and year first set forth above.
GLOBAL MATRECHS, INC.
By: /s/ Michael Sheppard
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Name: Michael Sheppard
Title: President
Acknowledged and Accepted:
/s/ Mark J. Allen
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Mark Allen
SCHEDULE I
Security Number of Shares Certificate Number
True To Form, Limited 100 1
Common Stock
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