PLEDGE AND SECURITY
AGREEMENT
THIS PLEDGE AND
SECURITY AGREEMENT is made this 29 th day of March, 2006, by and among (i)
GAIN CAPITAL HOLDINGS, INC. (“Pledgor”) and (ii)
SILICON VALLEY BANK , a California-chartered bank, with its
principal place of business at 3003 Tasman Drive, Santa Clara,
California 95054 (“SVB”), as agent for the Lenders
(“Agent”) and JPMORGAN CHASE BANK, N.A.
(“JPMORGAN”) (SVB and JPMORGAN each, individually, a
“Lender” and collectively, the
“Lenders”).
Lenders agreed to
make advances of money and to extend certain financial
accommodations to Pledgor pursuant to a Loan and Security Agreement
dated as of March 29, 2006 (the “Loan Agreement”). To
secure the obligations set forth in the Loan Agreement, Pledgor has
agreed to pledge to Agent and Lenders Pledgor’s membership
interest (the “Membership Interest”) in Gain Holdings,
LLC (“Gain Holdings”). Any capitalized terms used
without definition herein shall have the meanings assigned to them
in the Loan Agreement.
NOW, THEREFORE,
Pledgor, Agent and Lenders agree as follows:
1. Pledge
of Membership Interest .
(a) Pledgor
hereby pledges, assigns and delivers to Agent for the ratable
benefit of Lenders and grants to Agent for the ratable benefit of
Lenders a security interest in all of the Pledgor’s right,
title and interest in and to the Membership Interest, together with
all proceeds and substitutions thereof, all cash, certificates and
other moneys and property paid thereon, all rights to subscribe for
securities declared or granted in connection therewith, and all
other cash and noncash proceeds of the foregoing (all hereinafter
called the “Pledged Collateral”), as security for the
prompt performance of all of the Obligations (the “Secured
Indebtedness”), and Pledgor’s obligations
hereunder.
(b) The
term “Pledged Collateral” shall also include any
securities, instruments or distributions of any kind issuable,
issued or received by Pledgor upon conversion of, in respect of, or
in exchange for any other Pledged Collateral, including, but not
limited to, those arising from a distribution, reclassification,
reorganization, merger, consolidation, sale of assets or other
exchange of securities or any dividends or other distributions of
any kind upon or with respect to the Pledged Collateral.
(c) The
certificate or certificates for the Membership Interest included in
the Pledged Collateral, accompanied by an instrument of assignment
duly executed in blank by Pledgor, have been, or will be
immediately be, delivered by Pledgor to Agent. Pledgor shall cause
the books of Gain Holdings to reflect the pledge of the Membership
Interest. Upon the occurrence of an Event of Default hereunder,
Agent may effect the transfer of any certificates included in the
Pledged Collateral into the name of Agent and cause new
certificates representing such securities to be issued in the name
of Agent. Pledgor will execute and deliver such documents, and take
or cause to be taken such actions, as Agent may reasonably request
to perfect or continue the perfection of Agent’s and
Lenders’ security interest in the Pledged
Collateral.
2.
Representations, Warranties and Covenants . Pledgor
represents and warrants to and covenants with Agent and each Lender
that:
(a) The
Pledged Collateral is owned by Pledgor free and clear of any
security interests, liens or encumbrances;
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(b) Pledgor
has full power and authority to create a first lien on the Pledged
Collateral in favor of Agent and Lenders and no disability or
contractual obligation exists which would prohibit Pledgor from
pledging the Pledged Collateral pursuant to this Pledge Agreement,
and Pledgor will not assign, create or permit to exist any other
claim to, lien or encumbrance upon, or security interest in any of
the Pledged Collateral;
(c) There
arc no subscriptions or other options exercisable with respect to
the Membership Interest; and
(d) The
Membership Interest has been duly authorized and validly issued,
and is fully paid and non-assessable; and
(e) The
Pledged Collateral is not the subject of any present or threatened
suit, action, arbitration, administrative or other proceeding, and
Pledgor knows of no reasonable grounds for the institution of any
such proceedings.
All the above
representations and warranties shall survive the making of this
Agreement.
3. Voting
Prior to Demand . Unless an Event of Default (as defined below)
shall have occurred and be continuing, Pledgor shall be entitled to
exercise any voting rights with respect to the Pledged Collateral
and to give consents, waivers and ratifications in respect thereof,
provided that no vote shall be cast or consent, waiver or
ratification given or action taken which would be inconsistent with
any of the terms of this Agreement or which would constitute or
create any violation of any of such terms. All such rights of
Pledgor to vote and give consents, waiver and ratifications shall
upon notice to Pledgor cease in case such an Event of Default
hereunder shall occur and be continuing.
4. Events
of Default . Each of the following shall constitut
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