PLEDGE AGREEMENT
THIS
PLEDGE AGREEMENT (the
“Agreement”)
is
made and entered into as of September ___, 2008 (the “Effective
Date”)
by and
among VORTEX
RESOURCES CORP.,
a
corporation organized and existing under the laws of Delaware (the “Company”
or
“Pledgor”), TRAFALGAR
CAPITAL SPECIALIZED INVESTMENT FUND, LUXEMBOURG,
(the
“Pledgee”).
RECITALS:
WHEREAS,
in
order
to secure the full and prompt payment when due (whether at the stated maturity,
by acceleration or otherwise) of all of the Company’s obligations (the
“Obligations”)
to the
Pledgee or any successor to the Pledgee under this Agreement, the Securities
Purchase Agreement of even date herewith between the Company
and the
Pledgee (the “Securities
Purchase Agreement”),
the
Convertible Debentures (the “Convertible
Debentures”)
issued
or to be issued by the Company to the Pledgee, either now or in the future,
up
to a total of Two Million Seven Hundred Fifty Thousand Dollars ($2,750,000)
of
principal, plus any interest, costs, fees, and other amounts owed to the Pledgee
thereunder, the Security Agreement of even date herewith between the
Company
and the
Pledgee (the “Security
Agreement”),
and
all other contracts entered into between the Company
and Pledgor in connection with Securities Purchase Agreement
(collectively, the “Transaction
Documents”),
the
Company has agreed to irrevocably pledge to the Pledgee 4,500,000 restricted
shares of the Company’s common stock (the “Pledged
Shares”)
in the
denominations set forth in Schedule 1 hereto. The parties acknowledge and agree
that as of the date of the first payment due to the Pledgee under the
Convertible Debenture, the amount of pledged shares herein shall be adjusted
such that the value of the pledged shares will be equal to four times the value
of the outstanding loan amount upon each monthly repayment.
NOW,
THEREFORE, in
consideration of the mutual covenants, agreements, warranties, and
representations herein contained, and for other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
TERMS
AND CONDITIONS
1. Pledge
and Transfer of Pledged Shares.
1.1.
The
Pledgor hereby grants to Pledgee a security interest in all Pledged Shares
as
security for the Company’s obligations under the Convertible Debentures.
Simultaneously with the execution of the Transaction Documents, the Pledgor
shall deliver to the Pledgee stock certificates representing the Pledged Shares,
in such denominations as requested by the Pledgee, together with duly executed
stock powers or other appropriate transfer documents executed in blank by the
Pledgor (the “Transfer
Documents”),
and
such stock certificates and Transfer Documents shall be held by the Pledgee
until the full payment of all amounts due to the Pledgee under the Convertible
Debentures and through repayment in accordance with the terms of the Convertible
Debentures, or the termination or expiration of this Agreement.
2. Rights
Relating to Pledged Shares.
Upon
the occurrence and
during the continuance
of an
Event of Default (as defined herein), the Pledgee shall be entitled to vote
the
Pledged Shares, to receive dividends and other distributions thereon, and to
enjoy all other rights and privileges incident to the ownership of the Pledged
Shares.
3. Release
of Pledged Shares from Pledge.
Upon
the payment of all amounts due to the Pledgee under the Convertible Debentures
by repayment in accordance with the terms of the Convertible
Debentures
or
waiver by Pledgee or termination of the Agreement by the Parties,
the
Pledgee shall return to the Pledgor the Transfer Documents and the certificates
representing the Pledged Shares, (collectively the “Pledged
Materials”),
whereupon any and all rights of Pledgee in the Pledged Materials shall be
terminated. Notwithstanding anything to the contrary contained herein, upon
full
payment of all amounts due to the Pledgee under the Convertible Debentures,
by
repayment in accordance with the terms of the Convertible
Debentures,
this
Agreement and Pledgee’s security interest and rights in and to the Pledged
Shares shall terminate.
4. Event
of Default.
An
“Event
of Default”
shall
be deemed to have occurred under this Agreement upon an Event of Default under
the Transaction Documents.
5. Remedies.
Upon
and anytime after the occurrence of an Event of Default and a thirty (30) day
grace period to cure such default, the Pledgee shall have the right to
(i) sell the Pledged Shares and to apply the proceeds of such sales, net of
any selling commissions, to the Obligations owed to the Pledgee by the Pledgor
under the Transaction Documents, including, without limitation, outstanding
principal, interest, legal fees, and any other amounts owed to the Pledgee,
and
exercise all other rights and (ii) any and all remedies of a secured party
with respect to such property as may be available under the Uniform Commercial
Code as in effect in the State of Florida.
The
Pledgee shall have the absolute right to sell or dispose of the Pledged Shares
in any manner it sees fit and shall have no liability to the Pledgor or any
other party for selling or disposing of such Pledged Shares even if other
methods of sales or dispositions would or allegedly would result in greater
proceeds than the method actually used. The Pledgee shall return any Pledged
Shares released to it and remaining after the Pledgee has applied the net
proceeds to all amounts owed to the Pledgee.
5.1.
Each
right, power and remedy of the Pledgee provided for in this Agreement or any
other Transaction Document shall be cumulative and concurrent and shall be
in
addition to every other such right, power or remedy. The exercise or beginning
of the exercise by the Pledgee of any one or more of the rights, powers or
remedies provided for in this Agreement or any other Transaction Document or
now
or hereafter existing at law or in equity or by statute or otherwise shall
not
preclude the simultaneous or later exercise by the Pledgee of all such other
rights, powers or remedies, and no failure or delay on the part of the Pledgee
to exercise any such right, power or remedy shall operate as a waiver thereof.
No notice to or demand on the Pledgor in any case shall entitle it to any other
or further notice or demand in similar or other circumstances or constitute
a
waiver of any of the rights of the Pledgee to any other further action in any
circumstances without demand or notice. The Pledgee shall have the full power
to
enforce or to assign or contract is rights under this Agreement to a third
party.
2
5.2.
Demand Registration Rights. In
addition to all other remedies available to the Pledgee, upon an Event of
Default, the Pledgor shall promptly, but in no event more than sixty
(60) days
after the date of the Default Notice, file a registration statement to register
with the Securities and Exchange Commission the Pledged Shares for the resale
by
the Pledgee. The Pledgor shall cause the registration statement to remain in
effect until all of the Pledged Shares have been sold by the Pledgee.
6.
Notices.
Unless
otherwise provided herein, all demands, notices, consents, service of process,
requests and other communications hereunder shall be in writing and shall be
delivered in person or by overnight courier service, or mailed by certified
mail, return receipt requested, addressed:
|
If
to a Pledgor, to such
|
|
Xxxxx
Xxxxx, CEO
|
|
Pledgor’s attention c/o:
|
|
0000
Xxxxxxxx Xxxx., Xxxxx 000
|
|
|
|
Xxxxxxx
Xxxxx, XX 00000
|
|
|
|
Facsimile:
000-000-0000
|
|
With
Copy to:
|
|
Law
Offices of Xxxxxxx X. Xxxxxxx LLC
|
|
|
|
000
Xxxxxxx Xxxxxx, 0xx
Xxxxx
|
|
|
|
Xxxx
Xxxxxx XX 00000
|
|
|
|
Facsimile
000-000-0000
|
|
If
to the Pledgee:
|
|
Trafalgar
Capital Specialized
Investment
Fund, Luxembourg
|
|
|
|
00000
XX 00xx
Xxxxxx
|
|
|
|
Xxxxxxxx,
Xxxxxxx
|
|
Suite
306
|
||
|
|
|
Attention:
Xxx Xxxxx
Portfolio
Manager
|
|
|
|
Facsimile:
1-786-323-1651
|
3
Any
such
notice shall be effective (a) when delivered, if delivered by hand delivery
or overnight courier service, or (b) five (5) days after deposit in
the United States mail, as applicable.
7. Binding
Effect.
All of
the covenants and obligations contained herein shall be binding upon and shall
inure to the benefit of the respective parties, their successors and assigns.
8. Governing
Law; Venue; Service of Process.
The
validity, interpretation and performance of this Agreement shall be determined
in accordance with the laws of the State of Florida applicable to contracts
made
and to be performed wholly within that state except to the extent that Federal
law applies. The parties hereto agree that any disputes, claims, disagreements,
lawsuits, actions or controversies of any type or nature whatsoever that,
directly or indirectly, arise from or relate to this Agreement, including,
without limitation, claims relating to the inducement, construction, performance
or termination of this Agreement, shall be brought in the state courts
located in Broward County, Florida or United States District Courts for the
Southern District of Florida, and the parties hereto agree not to challenge
the
selection of that venue in any such proceeding for any reason, including,
without limitation, on the grounds that such venue is an inconvenient forum.
The
parties hereto specifically agree that service of process may be made, and
such
service of process shall be effective if made, pursuant to Section 8
hereto.
9. Enforcement
Costs.
If
any
legal action or other proceeding is brought for the enforcement of this
Agreement, or because of an alleged dispute, breach, default or
misrepresentation in connection with any provisions of this Agreement, the
successful or prevailing party or parties shall be entitled to recover
reasonable attorneys’ fees, court costs and all expenses even if not taxable as
court costs (including, without limitation, all such fees, costs and expenses
incident to appeals), incurred in that action or proceeding, in addition to
any
other relief to which such party or parties may be entitled.
10. Remedies
Cumulative.
No
remedy
herein conferred upon any party is intended to be exclusive of any other remedy,
and each and every such remedy shall be cumulative and shall be in addition
to
every other remedy given hereunder or now or hereafter existing at law, in
equity, by statute, or otherwise. No single or partial exercise by any party
of
any right, power or remedy hereunder shall preclude any other or further
exercise thereof.
11. Counterparts.
This
Agreement may be executed in one or more counterparts, each of which shall
be
deemed an original, but all of which together shall constitute the same
instrument.
12. No
Penalties.
No
provision of this Agreement is to be interpreted as a penalty upon any party
to
this Agreement.
4
13. JURY
TRIAL.
EACH OF
THE PLEDGEE AND THE PLEDGOR HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY
WAIVES THE RIGHT WHICH IT MAY HAVE TO A TRIAL BY JURY OF ANY CLAIM, DEMAND,
ACTION OR CAUSE OF ACTION BASED HEREON, OR ARISING OUT OF, UNDER OR IN ANY
WAY
CONNECTED WITH THE DEALINGS BETWEEN PLEDGEE AND PLEDGOR, THIS PLEDGE AND ESCROW
AGREEMENT OR ANY DOCUMENT EXECUTED IN CONNECTION HEREWITH, OR ANY COURSE OF
CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS
OF
ANY PARTY HERETO OR THERETO IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER
ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE.
IN
WITNESS WHEREOF,
the
parties hereto have duly executed this Pledge Agreement as of the date first
above written.
|
By:
|
||
|
Name: Xxxxx
Xxxxx
|
||
|
Title: Chief
Executive Officer
|
||
|
TRAFALGAR
CAPITAL SPECIALIZED
|
||
|
INVESTMENT
FUND, LUXEMBOURG
|
||
|
By:
|
Trafalgar
Capital Sarl
|
|
|
Its:
|
General
Partner
|
|
|
By:
|
||
|
Name: Xxxxxx
Xxxxx
|
||
|
Title: Chairman
of the Board
|
||
5
Schedule
1
|
Number of Shares Pledged:
|
Free Trading
|
||||||
| 4,500,000 | No | ||||||
