EXHIBIT 10.87(b)
STOCK PLEDGE AGREEMENT
----------------------
Date: August 7, 2002
TO : XXXX XXXX
PLEDGE OF STOCK
To induce you to make a loan of U.S. $25,000.00 to Vertical Computer
Systems as evidenced by its Promissory Note by and between Vertical Computer
Systems, Inc., a Delaware corporation ("Company") and you in that amount dated
the date of this Stock Pledge Agreement (the "Agreement"), bearing interest at
the rate of twelve percent (12%) per annum, and payable to your order on August
16, 2001 (the "Note", which term will include any amendments thereto and
substitutions therefor), and in consideration of your making said loan, and to
secure payment of all amounts owing under the Note and this Agreement and
performance of all of our other obligations under the Note and under this
Agreement, we, the undersigned, Mountain Reservoir Corporation ("Pledgor"),
hereby pledge to you and grant you a security interest in Ten Million
(10,000,000) shares of Vertical Computer Systems common stock.
DEFINITION OF COLLATERAL; METHOD OF SELLING COLLATERAL AND REPAYMENT OF
PROMISSORY NOTE
The term "Collateral" means (i) the shares of stock pledged under the
foregoing paragraph (collectively called the "Stock"), and (ii) any cash,
securities or other property paid or otherwise distributed on, with respect to,
or in exchange for any Collateral. Upon default under this Agreement, you may at
any time transfer the stock or any other Collateral into your name or the name
of your nominee. The method of repayment of the Promissory Note upon default
shall be as follows: Pledgor shall transfer the collateral to the Company or as
otherwise directed by the Company. The Company shall open an account and deposit
the 10,000,000 Vertical Computer Systems common stock shares with a brokerage
firm agreed upon by the parties (the "Broker"). The brokerage firm shall be
given instructions which are mutually agreeable to the parties to sell the
10,000,000 shares in such manner to timely repay all sums due the Lender
pursuant to the Note. Notwithstanding the foregoing, the parties agree that, in
the event of default, the Stock shall be resold as follows: The Broker shall
resell the Stock into the market until the principal and interest has been paid
pursuant to the terms set forth herein. The Stock shall be sold in increments of
10,000 shares and the stock shall be sold into the public in an orderly and
nondisruptive manner. Both parties agree that the Broker shall have the right to
sell up to 10% of the daily volume unless otherwise agreed to in writing. In no
event shall the Stock be "shorted" as such term is commonly understood. The
Company or Pledgor shall have the express right, at any time, to pay any
outstanding amounts owed to you and, upon such payment, the Broker shall return
any remaining Stock immediately to the Company or Pledgor, as the case may be;
WARRANTIES
We hereby warrant to you that:
a. we are the sole owner of the Stock(s);
1 of 4
b. the Stock is validly issued, is fully paid and non-assessable, and
is not subject to any claim, restriction, lien or other encumbrance except as
provided in this Agreement, except that the stock is subject to SEC Rule 144;
c. we may pledge and grant a security interest in the Stock without
obtaining the approval of any other person, corporation, partnership, or other
entity, or any governmental authority,
PROHIBITION ON TRANSFER OF COLLATERAL
We agree that we will not sell, transfer, assign or encumber any of our
rights in any of the Collateral or grant any rights in or to any of the
Collateral except pursuant to this Agreement.
DEFAULT
Upon a default under any of the provisions of the Note, or if any warranty
by us hereunder is incorrect, or if we fail to perform any of our obligations
under this Agreement (any such default or breach of warranty or failure being
herein called "a default under this Agreement"), you may, without notice, take
such action as you deem advisable with respect to the Collateral, including,
without limitation, selling any of the Collateral at public or private sale on
such terms as you deem appropriate; and you are also authorized as our
attorney-in-fact to endorse or otherwise effect the transfer of any of the
Collateral. At any such sale you may be the purchaser.
REMEDIES; ORDER OF PURSUIT
You shall not be required to resort to or pursue any of your rights or
remedies under or with respect to any other agreement or any other collateral
before pursuing any of your rights or remedies under this Agreement. You may
pursue your rights and remedies in such order as you determine, and the exercise
by you of any right or remedy will not preclude your exercising any other right
or remedy.
DELAY; WAIVER
The failure or delay by you in exercising any of your rights hereunder or
with respect to the Note or any other collateral securing the Note in any
instance shall not constitute a waiver thereof in that or any other instance.
You may waive your rights only by an instrument in writing signed by you.
EXPENSES
We agree to pay on demand (a) all expenses (including, without limitation,
legal fees and disbursements) incurred by you in connection with the negotiation
and preparation of this Agreement and the perfection of your security interest
in any of the Collateral, and (b) all expenses of enforcing the provisions of
this Agreement and your rights against any of the Collateral, including, without
limitation, expenses and fees of legal counsel, court costs and the cost of
appellate proceedings.
WHERE TO MAKE PAYMENTS
2 of 4
All payments under this Agreement shall be made in lawful currency of the
United States of America in immediately available funds at the address as
provided in the Note, or in such other manner or at such other place as you
shall designate in writing.
GOVERNING LAW; AGENT FOR SERVICE OF PROCESS
This Agreement and your rights and our obligations hereunder shall be
governed by and construed in accordance with the law of the State of California.
We agree that any legal action or proceeding with respect to this Agreement or
any of the Collateral may be brought in the courts of the State of California
and of the United States having jurisdiction in the County of Los Angeles and
State of California and for the purpose of any such legal action or proceeding,
we hereby submit to the non-exclusive jurisdiction of such courts and agree not
to raise and waive any objection we may have based upon personal jurisdiction or
the venue of any such court or forum non conveniens. We agree not to bring any
action or other proceeding with respect to this Agreement or any of our
obligations under this Agreement in any other court unless such courts of the
State of California and of the United States determine that they do not have
jurisdiction in the matter. For purposes of any proceeding involving this
Agreement, we hereby irrevocably appoint Xxxx X. Xxxx, Esq., 0000 Xxxxxxxx
Xxxx., #000, Xxx Xxxxxxx, XX 00000, our agent to receive service of process for
us and on our behalf.
We will at all times maintain an agent to receive service of process in
California, on our behalf with respect to this Agreement, and in the event that,
for any reason, the agent named above or any successor agent shall no longer
serve as our agent to receive service of process in California, we shall
promptly appoint a successor and advise you thereof.
AMENDMENT
This Agreement may only be amended by an instrument in writing signed by
you and us.
Very truly yours,
PLEDGEE
XXXX XXXX
___________________________________________
By: Xxxx Xxxx
PLEDGOR
AGREED:
MOUNTAIN RESERVOIR CORPORATION
3 of 4
___________________________________________
By: Xxxxx Xxxxx, President
4 of 4
