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EXECUTIVE COPY
STOCK PLEDGE AGREEMENT
This Stock Pledge Agreement ("Agreement") is
entered into as of the 27th day of December, 2006, by and
between STOMPSOFT, INC. , a
California corporation ("Pledgor") and MIGO
SOFTWARE, INC. , a Delaware
corporation (the
"Company").
RECITALS
A. Simultaneously herewith, the parties
hereto are entering into an Asset Purchase Agreement (the "APA")
under which the Company is purchasing substantially all of the
assets and business of Pledgor.
B. Pledgor has
agreed to indemnify the Company against claims for breaches by
Pledgor of its representations, warranties and covenants under the
APA, to the extent provided for in Article 8 of the APA ("Claims")
and to secure such indemnification provisions by pledging a portion
of the shares of stock in the Company received by Pledgor under the
APA.
C. The pledged shares shall be 5,000,000 shares of the common
stock, $.0001 par value per share, of the Company (the "Subject
Shares").
D. The Subject Shares are to be subject to the terms of this
Agreement until such time as they have been released in accordance
with the terms hereof.
E. Upon the terms and subject to the conditions set forth in this
Agreement, Pledgor hereby pledges the Subject Shares to the Company
by depositing them with the Company.
F. This Agreement is effective upon the closing of the sale
contemplated by the APA.
AGREEMENT
1.
Pledge . Pledgor hereby assigns and
delivers to the Pledgeholder certificate numbers ___, which
represent a total of 5,000,000 shares of the common stock of the
Company. Such stock constitutes the Subject Shares. Together with
such stock, Pledgor hereby delivers to the Pledgeholder stock
powers separate from the stock certificate duly endorsed by Pledgor
as transferor and authorizing the transfer of such stock on the
records of the Company.
2.
Stock .
2.1 The Subject Shares shall be and are
hereby held by the Pledgeholder as security for Claims the Company
may have under the APA. The Subject Shares shall not be disposed of
by Pledgor, nor shall they be encumbered except as provided in
Section 2.3 below; provided, however, that such Subject Shares
shall be and may be encumbered in favor of Camel Financial, Inc.,
Dennis Stetson and Steven R. Skaggs, existing secured creditors of
the Company (together with their successors and assigns,
collectively the "Junior Creditors"); provided that such Junior
Creditors shall at all times be junior in lien priority to the
Company.
2.2
On September 30, 2007, there shall be released from
the pledge under this Agreement 2,500,000 shares of the common
stock of the Company except to the extent the aggregate amount of
Claims by the Company that have not otherwise been satisfied by
Pledgor exceed the value (at the Market Average Price per share
determined on September 30, 2007) of the remaining Subject Shares.
On June 30, 2008, the remaining Subject Shares shall be released to
Pledgor except to the extent of outstanding Claims as of that date
that have not yet been resolved by the parties or by way of
litigation. Upon the resolution of all outstanding Claims, the
Subject Shares not remitted to the Company for cancellation as
provided herein shall be released to the Pledgor.
2.3
If Pledgor shall have sold all of the other shares
of common stock received by it under the APA, Pledgor shall have
the right to sell Subject Shares for cash to a third party in a
bona fide transaction at such time, for such price and upon such
terms as Pledgor may determine in good faith. In such event, the
proceeds of such sale shall be held by the Pledgeholder in lieu of
the Subject Shares in accordance with the terms hereof. The parties
agree to make reasonable modifications to this Agreement in the
event cash proceeds are substituted for Subject Shares hereunder,
including, without limitation, the following: upon receipt of
direction from the Pledgor, Pledgeholder shall invest the cash
proceeds in an interest bearing account or accounts with FDIC
insured banks naming the Pledgor as the owner of the account
subject to this Pledge Agreement, with such investment to be as
reasonably directed by the Pledgor from time to time and which
investment shall be for the benefit of Pledgor and the Pledgor
shall provide its taxpayer identification number to Pledgeholder in
connection with opening such bank account or accounts.
2.4
For all purposes of this Agreement, the "Market
Average Price" of the Company’s common stock means, as of any
date, the volume weighted average closing sales price per share of
common stock as reported in the Nasdaq System or on the
over-the-counter market during the last 10 consecutive trading days
on which there were sales of the Company’s common stock
immediately preceding, but not including, such determination
date.
3. Voting Rights . Pledgor shall
have the right to vote the Subject Shares so long as there is no
event of default in existence hereunder.
4. Default .
4.1
Events of Default . The failure of Pledgor
to satisfy any Claims made by the Company under the APA shall
constitute an event of default hereunder if such default continues
for more than the cure period set forth in Section 5.1
below.
4.2
Notice of Default . Upon the occurrence of
any default, the Company shall give Pledgor written notice
thereof.
2
5. Remedies Upon Default
.
5.1
Right to Cure . Pledgor shall have the
right to cure any default for a period of ten (10) days from the
date Pledgor receives written notice of default pursuant to the
provisions of Section 4.2. During this cure period, the Company
shall not have the right to exercise any of its remedies
hereunder.
5.2
Additional Remedies . In addition to all
other rights and remedies which the Company may have under law, the
Company shall have all rights and remedies of a secured party under
the Uniform Commercial Code in any jurisdiction where enforcement
of this Agreement is sought. In addition thereto, the Company shall
have the right, upon an event of default, to either:
5.2.1. To have transferred into the
Company’s name the Subject Shares, in satisfaction of Claims
based on a valuation of the Market Average Price per share of
common stock of the Company determined as of the date of the event
of default (and after any applicable cure period as provided for
under this Agreement), or
5.2.2.
Sell or otherwise dispose of the Subject Shares or
any part thereof, in one or more sales, at a public or private
sale, for cash, on credit or otherwise with or without
representations or warranties, and upon such terms as shall be
acceptable to the Company, subject to any restrictions imposed by
applicable state or federal securities laws.
Notwithstanding the foregoing, in no event shall
the Company transfer or sell any of the Subject Sh
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