Exhibit 10.6
PLEDGE
AND SECURITY AGREEMENT, dated as of February 23, 2009 (as amended,
supplemented or modified from time to time, this “
Agreement ”), made by Woodland Holdings Corp. (“
Buyer ”), Woodland Wireless Solutions Ltd. (“
Woodland Wireless ”), S Squared, LLC (“
Ranger ”), West Michigan Co-Location Services, LLC
(“ West Michigan ”), T2 TV, LLC (“
T2 ”, and together with Buyer, Woodland Wireless,
Ranger and West Michigan, “ Grantor ”) in favor
of Ned B. Timmer (“ Secured Party ”).
Capitalized terms used but not defined herein shall have the
meanings given such terms in the Debenture (as defined
below).
RECITALS
Pursuant
to (i) the Secured Debenture dated as of the date hereof (as
amended, supplemented or modified from time to time, the “
Debenture ”) issued by Cornerworld Corporation
(“ Parent ”) and Buyer to Secured Party and (ii)
the Purchase Money Note dated as of the date hereof (as amended,
supplemented or modified from time to time, the “ Seller
Note ”) issued by Buyer to Secured Party; Secured Party
has made the Loans to Parent and Buyer.
Parent
and Buyer have used the Loans to purchase the capital stock of
certain entities, including some of the Grantors, in accordance
with the Stock Purchase Agreement, dated as of the date hereof, by
and among Parent, Buyer, Secured Party and HCC Foundation. In order
to induce the Secured Party to make such Loans, Grantor has agreed
to grant a continuing Lien on the Collateral to secure the
Obligations (as hereinafter defined). Accordingly, Grantor hereby
agrees as follows:
1.
Security Interest .
(a)
Grant of Security . As security for the Obligations (as
hereinafter defined), Grantor hereby delivers, assigns, pledges,
sets over and grants to Secured Party a first priority security
interest in all of its right, title and interest, whether now
existing or hereafter arising or acquired, in and to any and all
items of its personal property described on Exhibit A-1
hereto with respect to Buyer, Exhibit A-2 hereto with
respect to Woodland Wireless, Exhibit A-3 with respect to
Ranger, Exhibit A-4 hereto with respect to West Michigan and
Exhibit A-5 hereto with respect to T2, which Exhibits A-1,
A-2, A-3, A-4 and A-5 are each executed by an authorized person of
the applicable Grantor, together with all substitutions and
replacements thereof and any products and proceeds thereof (the
“ Collateral ”) subject to Section
1(d).
(b)
Security for Obligations . This Agreement secures the
payment of all now existing or hereafter arising obligations of
Buyer and Parent to Secured Party, whether primary or secondary,
direct or indirect, absolute or contingent, joint or several,
secured or unsecured, due or not, liquidated or unliquidated,
arising by operation of law or otherwise under the Debenture, the
Seller Note or any other related document, whether for principal,
interest, fees, expenses or otherwise, together with all costs of
collection or enforcement, including, without limitation,
reasonable attorneys’ fees incurred in any collection efforts
or in any action or proceeding (all such obligations being the
“ Obligations ”).
(c)
Subordination . The liens granted hereunder on certain of
the personal property of the Grantor (as more fully described in
the Letter Agreement) are subordinate and junior in all respects to
the liens granted to IU Investments, LLC in accordance with the
Letter Agreement dated as of the date hereof by and among the
Secured Party and IU Investments, LLC (the “ Letter
Agreement ”).
(d)
Buyer and Parent Remain Liable . This Agreement shall not
affect Buyer’s or Parent’s liability to perform all of
its duties and obligations under the transactions giving rise to
the Obligations. The exercise by Secured Party of any of the rights
hereunder shall not release Buyer or Parent from any of its duties
or obligations under the transactions giving rise to the
Obligations, which
shall remain unchanged as if this
Agreement had not been executed. Secured Party shall not have any
obligation or liability under the transactions giving rise to the
Obligations by reason of this Agreement, nor shall Secured Party be
obligated to perform any of the obligations or duties of Buyer or
Parent thereunder or to take any action to collect or enforce any
claim for payment assigned hereunder.
(e)
Continuing Agreement . This Agreement shall create a
continuing security interest in the Collateral and shall remain in
full force and effect until payment in full of the
Obligations.
(f)
Percentage of Shares; No New Shares . Buyer represents and
warrants that (i) the unit certificates of T2 being pledged
pursuant hereto, as described on Exhibit A-1 hereto,
represent 100% of the issued and outstanding membership interest of
T2, (ii) the unit certificates of West Michigan being pledged
pursuant hereto, as described on Exhibit A-1 hereto,
represent 100% of the issued and outstanding membership interest of
West Michigan, and (iii) the stock certificates of Woodland
Wireless being pledged pursuant hereto, as described on Exhibit
A-1 hereto, represent 100% of the issued and outstanding
membership interest of Woodland Wireless. Woodland Wireless
represents and warrants that the unit certificates of Ranger being
pledged pursuant hereto, as described on Exhibit A-3 hereto,
represent 100% of the issued and outstanding membership interest of
Ranger. Without the prior written consent of the Secured Party,
each Grantor shall not, directly and indirectly, vote to enable, or
take any other action to permit, any Grantor to issue any
membership interests or shares, as applicable.
2.
Title; Liens and Encumbrances . Grantor represents and
warrants that it is (or to the extent that this Agreement states
that the Collateral is to be acquired after the date hereof, will
be) the record and beneficial owner of, having (or to the extent
that this Agreement states that the Collateral is to be acquired
after the date hereof, will have) good and marketable title to, the
Collateral pledged by it hereunder, free of any and all Liens or
options in favor of, or claims of, any other person, except the
Liens created by this Agreement and Grantor will promptly notify
Secured Party of any such other Lien or claim made or asserted
against the Collateral and will defend the Collateral against any
such Lien or other claim.
3.
State of Organization or Residence; Legal Name . Grantor
represents and warrants to Secured Party as follows:
(a)
Grantor does not have a state of organization, except as set forth
in Schedule I hereto. Grantor’s chief executive office
or principal office, if it is not a registered organization, as
such term is defined under the Uniform Commercial Code as in effect
in the State of New York as it may be amended, supplemented or
modified from time to time (the “ UCC ”), is set
forth on Schedule I hereto. Grantor shall promptly notify
Secured Party of any change in the foregoing
representations.
(b)
Grantor’s registered or legal name is as set forth on
Schedule I hereto. Grantor currently uses, and during the
last five years has used, no other names including business or
trade names, except as set forth on Schedule I hereto.
Grantor shall not change such name without providing Secured Party
30 days prior written notice.
(c)
Grantor’s organizational identification number is as set
forth on Schedule I hereto. Grantor currently uses, and
during the last five years has used, no other organizational
identification numbers including any used by predecessors to
Grantor, except as set forth on Schedule I hereto. Grantor
shall not change such organizational identification number without
providing Secured Party 30 days prior written notice.
(d)
The grant of the security interest in the Collateral, combined with
the filing of financing statements, the execution of control
agreements, the execution of Assignments, and/or
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possession of the Collateral,
each as appropriate, is effective to vest in Secured Party a valid
and perfected first priority security interest, superior to the
rights of any person in and to the Collateral as set forth
herein.
4.
Perfection of Security Interest . Grantor authorizes Secured
Party to file all such financing statements and amendments thereto
pursuant to the UCC or other notices appropriate under applicable
law, as Secured Party may require, each in form satisfactory to
Secured Party. Such financing statements and amendments may contain
a description of the Collateral as set forth herein or in any
generic manner and may describe the Collateral as “all
assets” or words of similar effect. Secured Party may
transfer, withdraw or redeem any funds or other property in each
deposit account or securities account constituting Collateral
without further consent by Grantor; provided however
, that Secured Party will not exercise any of such rights other
than during an Event of Default. Grantor also shall pay all filing
or recording costs with respect thereto, and all costs of filing or
recording this Agreement or any other agreement or document
executed and delivered pursuant hereto or to the Obligations
(including the cost of all federal, state or local mortgage,
documentary, stamp or other taxes), in each case, in all public
offices where filing or recording is deemed by Secured Party to be
necessary or desirable. Grantor authorizes Secured Party to take
all other action which Secured Party may deem necessary or
desirable to perfect or otherwise protect the Liens created
hereunder and to obtain the benefits of this Agreement.
5.
Covenants Relating to Collateral . Subject to any
requirements under the Letter Agreement, until the Obligations
shall have been paid in full, and the Debenture and the Seller Note
shall have terminated, Grantor covenants and agrees that if Grantor
shall become entitled to receive or shall receive any certificate
or instrument (including, without limitation, any certificate
representing a dividend or a distribution in connection with any
reclassification, increase or reduction of capital or any
certificate issued in connection with any reorganization), option
or rights in respect of the Collateral, whether in addition to, in
substitution of, as a conversion of, or in exchange for, any shares
of the Collateral, or otherwise in respect thereof, Grantor shall
accept the same as the agent of Secured Party, hold the same in
trust for Secured Party and deliver the same forthwith to Secured
Party in the exact form received, duly indorsed by Grantor to
Secured Party, if required, together with an undated assignment
covering such certificate or instrument duly executed in blank by
Grantor and with, if Secured Party so requests, signature
guaranteed, to be held by Secured Party, subject to the terms
thereof, as additional collateral security for the Obligations. If
any of the foregoing property so distributed in respect of the
Collateral shall be received by Grantor, Grantor shall, until such
property is paid or delivered to Secured Party, hold such property
in trust for Secured Party, segregated from other funds or property
of Grantor, as additional collateral security for the
Obligations.
6.
Stock Powers . Concurrently with the delivery to the Secured
Party of each certificate representing the shares of pledged stock
of the pledged subsidiaries, the Grantor in respect of such
certificates shall deliver an undated stock power covering such
certificate, duly executed by the Grantor in blank.
7.
Collections; Other Rights .
(a)
Except as provided herein, Grantor may receive all cash interest,
dividends and distributions paid in respect of the Collateral, and
to exercise all voting rights with respect to the Collateral;
provided , however , that no vote shall be cast or
right exercised or other action taken which, in Secured
Party’s reasonable judgment, would impair the Collateral or
which would be inconsistent with or result in any violation of any
provision of this Agreement or any other relating
document.
(b)
All of the foregoing amounts set forth in paragraph (a) of this
Section 7 so collected after the occurrence of and during the
continuation of an Event of Default, subject to any
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requirements under the Letter
Agreement, shall be held in trust by Grantor for and as the
property of Secured Party, and shall not be commingled with other
funds, money or property of Grantor.
(c)
Subject to any requirements under Letter Agreement, after the
occurrence and during the continuation of an Event of Default,
Grantor will immediately upon receipt of all such checks, cash or
other remittances constituting part of the Collateral or in payment
for any Collateral sold, transferred, leased or otherwise disposed
of, deliver any such items to Secured Party accompanied by a
remittance report in form supplied or approved by Secured Party.
Grantor shall deliver such items in the same form received,
endorsed or otherwise assigned by Grantor where necessary to permit
collection of such items.
8.
Events of Default . The occurrence of any one or more Events
of Default by any Obligor under the Debenture or the Seller Note
shall constitute an event of default (“ Event of
Default ”) under this Agreement.
9.
Rights and Remedies .
(a)
In the event of the occurrence and continuation of any Event of
Default: (i) Secured Party may exercise exclusive control over
the Collateral; (ii) Secured Party shall have the right, with
or without (to the extent permitted by applicable law) notice to
Grantor, as to any or all of the Collateral, by any available
judicial procedure or without judicial process, to take possession
of the Collateral and without liability for trespass to enter any
premises where the Collateral may be located for the purpose of
taking possession of or removing the Collateral, and generally to
exercise any and all rights afforded to a secured party under the
UCC or other applicable law; (iii) Secured Party shall have
the right to sell, lease, or otherwise dispose of all or any part
of the Collateral, whether in its then condition or after further
preparation or processing, either at public or private sale or at
any broker’s board, in lots or in bulk, for cash or for
credit, with or without warranties or representations, and upon
such terms and conditions, all as Secured Party in its sole
discretion may deem advisable; (iv) at Secured Party’s
request, Grantor shall assemble the Collateral and make it
available to Secured Party at places which Secured Party shall
select, whether at Grantor’s premises or elsewhere, and make
available to Secured Party, without rent, all of Grantor’s
premises and facilities for the purpose of Secured Party’s
taking possession of, removing or putting the Collateral in
saleable or disposable form; (v) Secured Party shall have the
right to receive any and all cash interest, dividends,
distributions, payments or other proceeds paid in respect of the
Collateral and made application thereof to the Obligations in such
order as Secured Party may determine; and (vi) any or all of
the Collateral may be registered in the name of Secured Party or
its nominee and they may thereafter exercise (x) all voting,
corporate and other rights pertaining to such Collateral and
(y) any and all rights of conversion, exchange and
subscription and any other rights, privileges or options pertaining
to such Collateral as if it were the absolute owner thereof
(including, without limitation, the right to exchange at its
discretion any and all securities or securities entitlements upon
any merger, consolidation, reorganization, recapitalization or
other fundamental change, or upon the exercise of Grantor or
Secured Party of any right, privilege or option pertaining to such
securities or securities entitlements, and in connection therewith,
the right to deposit and deliver any and all of the securities or
securities entitlements with any committee, depositary, transfer
agent, registrar or other designated agency upon such terms and
conditions as Secured Party may determine), all without liability
except to account for property actually received by it, but Secured
Party shall have no duty to Grantor to exercise any such right,
privilege or option and shall not be responsible for any failure to
do so or delay in so doing.
(b)
Any such sale, lease or other disposition of Collateral may be made
without demand for performance or any notice of advertisement
whatsoever except that where an applicable statute requires
reasonable notice of sale or other disposition, Grantor agrees that
the sending of five days
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notice by ordinary mail, postage
prepaid, to Grantor of the place and time of any public sale or of
the time at which any private sale or other intended disposition is
to be made, shall be deemed reasonable notice thereof.
Notwithstanding the foregoing, if any of the Collateral may be
materially diminished in value during such five-day period, Secured
Party shall provide Grantor with such shorter notice as it deems
reasonable under the circumstances.
(c)
The proceeds of any such sale, lease or other disposition of the
Collateral shall be applied first to the expenses of retaking,
holding, storing, processing and preparing for sale, selling, and
the like, and to the reasonable attorneys’ fees and legal
expenses incurred by Secured Party, and then to satisfaction of the
Obligations (in any order as Secured Party may decide in its sole
discretion), and to the payment of any other amounts required by
applicable law. If, upon the sale, lease or other disposition of
the Collateral, the proceeds thereof are insufficient to pay all
amounts to which Secured Party is legally entitled, Grantor will be
liable for the deficiency, together with interest thereon, at the
rate prescribed in the agreements giving rise to the Obligations,
and the reasonable fees of any attorneys employed by Secured Party
to collect such deficiency. To the extent permitted by applicable
law, Grantor waives all claims, damages and demands against Secured
Party arising out of the repossession, removal, retention or sale
of the Collateral.
(d)
Notwithstanding the foregoing, the rights and remedies of the
Secured Party hereunder shall be subject to the provisions of the
Letter Agreement.
10.
Power of Attorney . Grantor authorizes Secured Party and
does hereby make, constitute and appoint Secured Party, and any
officer or agent of Secured Party, with full power of substitution,
as Grantor’s true and lawful attorney-in-fact, with power, in
its own name or in the name of Grantor: (i) to endorse any
notes, checks, drafts, money orders, or other instruments of
payment (including payments payable under or in respect of any
policy of insurance) in respect of the Collateral that may come
into possession of Secured Party; (ii) to pay or discharge any
taxes, liens, security interest or other encumbrances at any time
levied or placed on or threatened against the Collateral;
(iii) to demand, collect, receipt for, compromise, settle and
sue for monies due in respect of the Collateral; (iv) to
receive, open and dispose of all mail addressed to Grantor and to
notify the post office authorities to change the address for
delivery of mail addressed to Grantor to such address as Secured
Party may designate; (v) to exercise all membership rights, powers
and privileges in connection with the Collateral to the same extent
as Grantor is entitled to exercise such rights, powers and
privileges; and (vi) generally to do all acts and things which
Secured Party deems necessary to protect, preserve and realize upon
the Collateral and Secured Party’s security interest therein.
Grantor hereby approves and ratifies all acts of said attorney or
designee, who shall not be liable for any acts of commission or
omission, nor for any error or judgment or mistake of fact or law
except for its own gross negligence or willful misconduct. This
power of attorney shall be irrevocable for the term of this
Agreement and thereafter as long as any of the Obligations shall be
outstanding. Secured Party may exercise this power of attorney only
after the occurrence and during the continuance of an Event of
Default.
11.
Notices . Notices shall be given in the manner, to the
addresses and with the effect provided in Section 7(a) of the
Debenture, to the addresses set forth on Schedule I
hereto.
12.
Other Security . To the extent that the Obligations are now
or hereafter secured by property other than the Collateral or by
the guarantee, endorsement or property of any other Person, then
Secured Party shall have the right in its sole discretion to
pursue, relinquish, subordinate, modify or take any other action
with respect thereto, without in any way modifying or affecting any
of Secured Party’s rights and remedies hereunder.
13.
No Waiver; Rights Cumulative .
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(a)
No course of dealing between Grantor and Secured Party, or Secured
Party’s failure to exercise or delay in exercising any right,
power or privilege hereunder shall operate as a waiver thereof. Any
single or partial exercise of any right, power or privilege
hereunder shall not preclude any other or further exercise thereof
or the exercise of any other right, power or privilege.
(b)
All of Secured Party’s rights and remedies with respect to
the Collateral, whether established hereby or by any other
agreements, instruments or documents or by law, shall be cumulative
and may be exercised singly or concurrently.
14.
Limitation on Secured Party’s Duty in Respect of
Collateral . Secured Party shall not have any duty as to any
Collateral in its possession or control or in the possession or
control of any agent or nominee of it or any income thereon or
a
