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Exhibit
10.9
EQUITY PLEDGE AGREEMENT
THIS
EQUITY PLEDGE AGREEMENT (this “ Agreement
”) is entered into as of October__, 2007 by and among LV
ADMINISTRATIVE SERVICES, INC., as administrative and
collateral agent for the Creditor Parties (as defined below)
(the “ Pledgee ”), GENERAL ENVIRONMENTAL
MANAGEMENT, INC., a Nevada corporation (the “
Company ”), and each of the undersigned parties,
other than the Agent (the Company and each such other
undersigned party, a “ Pledgor ” and
collectively, the “ Pledgors
”).
RECITALS
WHEREAS,
pursuant to that certain Securities Purchase Agreement dated
as of the date hereof (as amended, modified, extended, renewed
or replaced from time to time, the “ Purchase
Agreement ”) by and among the Company, the
purchasers from time to time party thereto (the “
Purchasers ”) and the Agent (the Purchasers and
the Agent, together, the “ Creditor Parties
”), the Related Agreements (as defined in the Purchase
Agreement) and all other documents, instruments and agreements
executed in connection therewith (the Purchase Agreement,
Related Agreements and all such other documents, instruments
and agreements, collectively, the “ Documents
”), the Creditor Parties have agreed to extend certain
financial accommodations to the Company for its benefit and
the benefit of certain of its subsidiaries.
WHEREAS,
it is a condition precedent to the effectiveness of the
Purchase Agreement and the obligations of the Creditor Parties
thereunder that each Pledgor shall have executed and delivered
this Agreement to Agent in favor of the Creditor
Parties.
NOW,
THEREFORE, in consideration of these premises and other good
and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as
follows:
1.
Definitions . Unless otherwise defined herein,
capitalized terms used herein shall have the meanings ascribed to
such terms in the Purchase Agreement and the Related Agreements, as
applicable.
2.
Pledge and Grant of Security Interest . To secure
the prompt payment and performance in full when due, whether by
lapse of time or otherwise, of the Secured Obligations (as defined
below), each Pledgor hereby pledges and assigns to Agent, for the
ratable benefit of the Creditor Parties, and grants to Agent, for
the ratable benefit of the Creditor Parties, a security interest
(the “ Security Interest ”) in any and all
right, title and interest of such Pledgor in and to the following,
whether now owned or existing or owned, acquired, or arising
hereafter (collectively, the “ Collateral
”):
(a)
Equity Interests . 100% of each class of the issued
and outstanding stock and/or membership interests, as applicable,
owned by each Pledgor of each Subsidiary set forth on Schedule 1
attached hereto together with the certificates or other agreements
or instruments, if any, representing such stock and/or membership
interests, and all options and other rights, contractual or
otherwise, with respect thereto (together with the shares of stock
and membership interests and/or proceeds described in Sections 2(b)
and 2(c) below, the “ Equity Interests ”),
including, but not limited to, the following:
(i)
all
shares or securities representing a dividend on any of the Equity
Interests, or representing a distribution or return of capital upon
or in respect of the Equity Interests, or resulting from a stock
split, revision, reclassification or other exchange therefor, and
any subscriptions, warrants, rights or options issued to the holder
of, or otherwise in respect of, the Equity Interests;
and
(ii)
without
affecting the obligations of the Pledgors under any provision
prohibiting such action hereunder or under any Document, in the
event of any consolidation or merger involving the issuer of any
Equity Interests and in which such issuer is not the surviving
entity, all shares of each class of the stock of the successor
entity formed by or resulting from such consolidation or
merger.
(b)
Additional Interests . 100% of each class of the
issued and outstanding stock and/or membership interests owned by
each Pledgor of any Person which hereafter becomes a Subsidiary,
including, without limitation, the certificates, if any,
representing such stock and/or membership interests.
(c)
Proceeds . All proceeds and products of the
foregoing, however and whenever acquired and in whatever
form.
Without
limiting the generality of the foregoing, it is hereby
specifically understood and agreed that each Pledgor may from
time to time hereafter deliver additional shares of stock
and/or membership interests, as applicable, to Agent, for the
ratable benefit of the Creditor Parties as collateral security
for the Secured Obligations. Upon delivery to
Agent, such additional shares of stock and/or membership
interests shall be deemed to be part of the Collateral and
shall be subject to the terms of this Agreement whether or not
Schedule 1 is amended to refer to such additional shares or
membership interests.
3.
Security for Secured Obligations . The security
interest created hereby in the Collateral of each Pledgor
constitutes continuing collateral security for the Secured
Obligations. The term “ Secured Obligations
” shall mean: (a) the obligations owing to the
Creditor Parties under the Documents and (b) all other obligations
and liabilities of each Pledgor to the Creditor Parties whether now
existing or hereafter arising, direct or indirect, liquidated or
unliquidated, absolute or contingent, due or not due and whether
under, pursuant to or evidenced by a note, agreement, guaranty,
instrument or otherwise (in each case, irrespective of the
genuineness, validity, regularity or enforceability of such Secured
Obligations, or of any instrument evidencing any of the Secured
Obligations or of any collateral therefor or of the existence or
extent of such collateral, and irrespective of the allowability,
allowance or disallowance of any or all of such in any case
commenced by or against any Pledgor under Title 11, United States
Code, including, without limitation, obligations of a Pledgor for
post-petition interest, fees, costs and charges that would have
accrued or been added to the Secured Obligations but for the
commencement of such case).
4.
Delivery of the Collateral . Each Pledgor hereby
agrees that:
(a)
Delivery of Certificates . Each Pledgor shall
deliver to Agent or its designee (i) simultaneously with or prior
to execution and delivery of this Agreement, all certificates
representing Equity Interests of GEM Mobile Treatment Services,
Inc. and (ii) promptly upon the receipt thereof by or on behalf of
each Pledgor, all other certificates and instruments constituting
the Collateral. Prior to delivery to Agent or its
designee, all such certificates and instruments constituting the
Collateral shall be held in trust by each Pledgor for the benefit
of the Creditor Parties pursuant hereto. All such
certificates shall be delivered in suitable form for transfer by
delivery or shall be accompanied by duly executed instruments of
transfer or assignment in blank, substantially in the form provided
in Schedule 2 attached hereto.
(b)
Additional Securities . If any Pledgor shall receive
by virtue of its being or having been the owner of any Collateral,
any (i) stock certificate, membership certificate or other
certificate representing stock or a membership interest, including
without limitation, any certificate representing a dividend or
distribution in connection with any increase or reduction of
capital, reclassification, merger, consolidation, sale of assets,
combination of shares or membership or equity interests, stock
splits, spin-off or split-off, promissory notes or other
instrument; (ii) option or right, whether as an addition to,
substitution for, or an exchange for, any Collateral or otherwise;
(iii) dividends payable in securities; or (iv) distributions of
securities in connection with a partial or total liquidation,
dissolution or reduction of capital, capital surplus or paid-in
surplus, then such Pledgor shall receive such certificate,
instrument, option, right or distribution in trust for the benefit
of the Creditor Parties, shall segregate it from such
Pledgor’s other property and shall deliver it forthwith to
Agent, for the ratable benefit of the Creditor Parties, or the
Agent’s designee, in the exact form received together with
any necessary endorsement and/or appropriate stock power or
membership interest power, as applicable, duly executed in blank,
substantially in the form provided in Schedule 2, to be held by
Agent or its designee, as applicable, as Collateral and as further
collateral security for the Secured Obligations.
(c)
Financing Statements . Each Pledgor authorizes Agent
to file such UCC (as defined in Section 5(b) below) or other
applicable financing statements as may be reasonably requested by
Agent in order to perfect and protect the Security Interest created
hereby in the Collateral.
5.
Representations and Warranties . Each Pledgor hereby
represents and warrants to the Creditor Parties, that until such
time as all of the Secured Obligations shall be indefeasibly paid
in full:
(a)
Authorization of the Equity Interests . The Equity
Interests set forth on Schedule 1 hereto are duly authorized and
validly issued, are fully paid and nonassessable and are not
subject to the preemptive rights of any Person. All
other shares of stock or membership interests constituting
Collateral will be duly authorized and validly issued, fully paid
and nonassessable and not subject to the preemptive rights of any
Person.
(b)
Title . Each Pledgor has good and indefeasible title
to the Collateral and will at all times be the legal and beneficial
owner of such Collateral free and clear of any attachments, levies,
taxes, liens, security interests and encumbrances of every kind and
nature (“ Liens ”), except Liens securing the
Secured Obligations and Liens securing obligations to Laurus Master
Fund, Ltd. (“ Laurus ”) and Valens US SPV I, LLC
(“ Valens US ” and together with Laurus, the
“ Prior Secured Parties ” and each, a “
Prior Secured Party ”). Other than with
respect to the Liens in favor of the Prior Secured Parties, there
exists no “adverse claim” within the meaning of Section
8-102 of the Uniform Commercial Code as in effect in the State of
New York (the “ UCC ”) with respect to the
Equity Interests.
(c)
Exercising of Rights . To the best of each
Pledgor’s knowledge, other than with respect to agreements
between any Pledgor and a Prior Secured Party, the exercise by the
Agent of its rights and remedies hereunder will not violate any law
or governmental regulation or any material contractual restriction
binding on or affecting such Pledgor or any of its
property.
(d)
Pledgor’s Authority . No authorization,
approval or action by, and no notice or filing with any
governmental authority or with the issuer of any Equity Interests
is required either (i) for the pledges made by any Pledgor or for
the granting of the security interests by any Pledgor pursuant to
this Agreement or (ii) to the best of each Pledgor’s
knowledge, for the exercise by the Agent of its rights and remedies
hereunder (except as may be required by laws affecting the offering
and sale of securities).
(e)
Security Interest/Priority . This Agreement creates
a valid security interest in favor of Agent, for the ratable
benefit of the Creditor Parties, in the Collateral. The
taking possession by Agent of the certificates, if any,
representing the Equity Interests and all other certificates and
instruments constituting Collateral and/or the execution and
delivery of a Control Agreement (as defined in Section 6(d) below)
with regard to such uncertificated Equity Interests consisting of
membership interests will perfect and establish the first priority
of Agent’s security interest, for the ratable benefit of the
Creditor Parties, in the Equity Interests and, when properly
perfected by filing or registration, in all other Collateral
represented by such Equity Interests and instruments securing the
Secured Obligations. Except as set forth in this Section
5(e), no action is necessary to perfect or otherwise protect such
security interest.
6.
Covenants . Each Pledgor hereby covenants, that
until such time as all of the Secured Obligations shall be
indefeasibly paid in full, such Pledgor, shall:
(a)
Books and Records . Mark its books and records (and
shall cause each issuer of the Equity Interests of such Pledgor to
mark its books and records) to reflect the security interest
granted to Agent, for the ratable benefit of the Creditor Parties,
pursuant to this Agreement and the other Documents.
(b)
Defense of Title . Warrant and defend title to and
ownership of the Collateral at its own expense against the claims
and demands of all other parties claiming an interest therein, keep
the Collateral free from all Liens, other than Liens in favor of
the Prior Secured Parties, and not sell, exchange, transfer,
assign, lease or otherwise dispose of the Collateral or any
interest therein nor create, incur or permit to exist any Lien
whatsoever with respect to any of the Collateral or the proceeds
thereof other than that created hereby and Liens in favor of the
Prior Secured Parties.
(c)
Additional Equity Interests . Not consent to or
approve the issuance of (i) any additional shares of any class of
capital stock or other equity interests of any issuer of such
Equity Interests; or (ii) any securities convertible either
voluntarily by the holder thereof or automatically upon the
occurrence or nonoccurrence of any event or condition into, or any
securities exchangeable for, any such shares, unless, in either
case, such shares are pledged as Collateral pursuant to this
Agreement.
(d)
Further Assurances . Promptly execute and deliver at
its expense all further instruments and documents and take all
further action that may be reasonably necessary and desirable or
that Agent may reasonably request in order to (i) perfect and
protect the security interest created hereby in the Collateral
(including without limitation any and all action necessary to
satisfy Agent that Agent, for the ratable benefit of the Creditor
Parties, has obtained a perfected Security Interest in any stock
and/or membership interest); (ii) enable Agent, as agent for the
Creditor Parties, to exercise and enforce its rights and remedies
hereunder in respect of the Collateral; and (iii) otherwise effect
the purposes of this Agreement, including, without limitation and
if requested by Agent, (A) delivering to Agent irrevocable proxies
in respect of the Collateral, which irrevocable proxies will be
strictly and only for the purpose of allowing Agent to perfect and
protect the Security Interest granted or purported to be granted
hereby or to enable Agent, as agent for the Creditor Parties, to
exercise and enforce its rights and remedies hereunder with respect
to the Collateral and (B) executing and delivering, and causing the
issuer of such Equity Interests to execute and deliver, a limited
liability company or a limited partnership control agreement
(“ Control Agreement ”) in form and substance
satisfactory to Agent.
(e)
Amendments . Not make or consent to any amendment or
other modification or waiver with respect to any of the Collateral
or enter into any agreement or allow to exist any restriction with
respect to any of the Collateral other than pursuant hereto,
including, without limitation, any amendment that would (i) impair
the Collateral or adversely affect in any respect the rights,
privileges, benefits and security interests provided to or intended
to be provided to Agent, for the ratable benefit of the Creditor
Parties, under this Agreement, other than Liens in favor of the
Prior Secured Parties, or (ii) that in any way adversely affects
the perfection of the Security Interest of Agent, for the ratable
benefit of the Creditor Parties, in the Collateral, including,
without limitation, any amendment electing to no longer treat any
membership interest as a security under Section 8-103 of the UCC,
or any election to turn any previously certificated membership
interest into an uncertificated membership interest.
(f)
Compliance with Securities Laws . File all reports
and other information now or hereafter required to be filed by such
Pledgor with the United States Securities and Exchange Commission
and any other state, federal or foreign agency in connection with
the ownership of the Collateral.
7.
Advances by the Agent . Upon the occurrence and
during the continuance of an Event of Default (as defined below),
Agent may, at its sole option and in its sole discretion, perform
the covenants and agreements of the Pledgors set forth herein, and
in so doing, may expend such sums as Agent may reasonably deem
advisable in the performance thereof, including, without
limitation, the payment of any insurance premiums, the payment of
any taxes, a payment to obtain a release of a Lien or potential
Lien, expenditures made in defending against any adverse claim and
all other expenditures which the Creditor Parties may make for the
protection of the Collateral or which it may be compelled to make
by operation of law. All such sums and amounts so
expended shall be repayable by the applicable Pledgor(s) promptly
upon timely notice thereof and demand therefor, shall constitute
additional Secured Obligations and shall bear interest from the
date said amounts are expended at the Contract Rate for the
Notes. No such performance of any covenant or agreement
by the Creditor Parties on behalf of any Pledgor, and no such
advance or expenditure therefor, shall relieve any Pledgor of any
default under the terms of this Agreement or the other
Documents. The Creditor Parties may make any payment
hereby authorized in accordance with any bill, statement or
estimate procured from the appropriate public office or holder of
the claim to be discharged without inquiry into the accuracy of
such bill, statement or estimate or into the validity of any tax
assessment, sale, forfeiture, tax lien, title or claim except to
the extent such payment is being contested in good faith by a
Pledgor in appropriate proceedings and against which adequate
reserves are being maintained in accordance with GAAP.
8.
Events of Default . Each of the following shall
constitute an event of default (“ Event of Default
”) hereunder:
(a)
An
“Event of Default” under any Document or any agreement
or note related to any Document shall have occurred and be
continuing beyond any applicable cure period;
(b)
Any
Pledgor shall default in the performance of any of its obligations
under any agreement between such Pledgor and Agent and/or the
Creditor Parties, including, without limitation, this Agreement,
and such default shall not be cured during any applicable cure
period;
(c)
Any
representation or warranty of any Pledgor made herein, in any
Document or in any agreement, statement or certificate given in
writing pursuant hereto or thereto or in connection herewith or
therewith shall be false or misleading in any material
respect;
(d)
Any
portion of the Collateral is subjected to a levy of execution,
attachment, distraint or other judicial process or any portion of
the Collateral is the subject of a claim or a Lien (other than by
Agent, for the ratable benefit of the Creditor Parties, or the
Prior Secured Parties) or a Lien or other right or interest in or
to the Collateral and such levy or claim shall not be cured,
disputed or stayed within a period of fifteen (15) business days
after the occurrence thereof; or
(e)
Any
Pledgor shall (i) apply for, consent to, or suffer to exist the
appointment of, or the taking of possession by, a receiver,
custodian, trustee, liquidator or other fiduciary of itself or of
all or a substantial part of its property, (ii) make a general
assignment for the benefit of creditors, (iii) commence a voluntary
case under any state or federal bankruptcy laws (as now or
hereafter in effect), (iv) be adjudicated a bankrupt or insolvent,
(v) file a petition seeking to take advantage of any other law
providing for the relief of debtors, (vi) acquiesce to, or fail to
have dismissed, within thirty (30) days, any petition filed against
it in any involuntary case under such bankruptcy laws, or (vii)
take any action for the purpose of effecting any of the
foregoing.
9.
Remedies .
(a)
General Remedies . Upon the occurrence of an Event
of Default and during the continuation thereof, Agent shall have,
in respect of the Collateral, in addition to the rights and
remedies provided herein, in the Documents or by law, the rights
and remedies of a secured party under the UCC or any other
applicable law.
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