PLEDGE AGREEMENT
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PLEDGE AGREEMENT, dated as of April 23, 2003 (hereinafter referred to as the
"Pledge Agreement"), made by CNE Group, Inc. (hereinafter referred to as
"Pledgor") and Xxxx Xxxxxxxxxx, (hereinafter referred to as "Pledgee").
W I T N E S S E T H
WHEREAS, Pledgor, to induce Pledgee to accept as consideration for
Pledgee's sale of right, title and interest in U.S. Patent No. 6,060,979 (the
"Patent")to Pledgor pursuant to an Agreement of Sale of even date herewith for
an aggregate of two million dollars ($2,000,000) which is evidenced by four 8%
subordinated promissory notes (the "Notes") of even date issued by Pledgor to
Pledgee desires to provide security to Pledgee, and
WHEREAS, to secure said obligation, Pledgor agrees to transfer and assign
to Pledgee all of the capital stock that it owns of SRC Technologies, Inc. and
of Econo Comm, Inc. in addition to the right, title and interest in the. Patent
(the "Pledged Assets") in accordance with the terms of this Pledge Agreement ,
and
WHEREAS, the Pledged Assets shall be held by Pledgee as collateral security
as provided herein for the prompt payment of the Notes.
NOW THEREFORE, in consideration of the premises, and for other good and
valuable consideration, receipt of which is hereby
acknowledged, Pledgor and Pledgee hereby agrees as follows:
1. Pledge. Pledgor hereby pledges, assigns, hypothecates, transfers and delivers
to Pledgee, and grants to Pledgee a first lien on and security interest in the
Pledged Assets together with appropriate undated stock powers and patent
assignment duly executed in blank; together with (subject to the provisions of
Section 4 hereof) all income and profits thereon, all distributions thereon, all
other proceeds thereof and all rights and privileges pertaining thereto, as
collateral security for (a) the prompt and complete payment when due (whether at
the stated maturity, by acceleration or otherwise) of the unpaid principal and
interest on the Notes issued to evidence the balance due to Pledgee by Pledgor
(the foregoing hereinafter being called the "Obligation"):
TO HAVE AND TO HOLD all and singular the Collateral Security (as defined in
Section 3 hereof) unto Pledgee, his successors and assigns until the Pledgor is
obligated to return the Collateral Security as provided in Section 5 below.
Delivery of Collateral Security shall be made to Xxxxx Xxxxxx, Esquire (the
"Escrow Agent"), counsel for Pledgee, and shall be held by him on behalf of
Pledgee in accordance with the terms of this Agreement and an Escrow Agreement
among Pledgor, Pledgee and Escrow Agent dated as of the date hereof.
2. Stock Dividends, Distributions. If, while this Agreement is in effect,
Pledgor shall become entitled to receive or shall receive any stock certificate,
notes of other security in respect of the Pledged Assets (including without
limitation, any certificate representing a stock dividend or a distribution in
connection with any reclassification, increase or reduction of capital, or
issued in connection with any reorganization), option or rights, whether as an
addition to, in substitution of, or in exchange for any shares of any Pledged
Assets, or otherwise, Pledgor, agrees to accept the same as Pledgee's agent and
to hold the same in trust on behalf of and for the benefit of Pledgee subject to
the terms hereof, as additional Collateral Security for the Obligations.
3. Collateral Security. All property at any time pledged with Pledgee hereunder
or in which Pledgee is granted a security interest hereunder, including but not
limited to the Pledged Assets, (whether described herein or not) and all income
therefrom and proceeds thereof, are herein collectively sometimes called the
"Collateral Security.".
4. Cash Dividends, Payments on Pledged Subsidiary Receivables; Unless a default
under the Notes shall have occurred and be continuing, Pledgor shall be entitled
to receive all cash dividends and other income, receivables and/or cash flow
paid in respect of the Pledged Assets.
5. Re-delivery of Collateral Security; Termination of Agreement. Pledgee shall
be obligated to return the Collateral Security to Pledgor immediately after the
first to occur of the Notes being fully satisfied or the holders of the
CareerEngine Network, Inc. 12% Subordinated Convertible Debentures
("Debentures") having converted all of their Debentures into equity securities,
and shall effect such return within ten banking days thereafter, after which
this Agreement shall terminate immediately.
6. Remedies; Restrictions Thereon. In the event that a default under the Notes
shall occur and shall continue beyond the applicable cure period, if Pledgor
fails to cure such default within 30 days after Pledgee gives notice of such
default to Pledgor,, Pledgee thereafter, without demand of performance or other
demand, advertisement or further notice of any kind (except the notice specified
below of time and place of public or private sale) to or upon the Pledgor or any
other person (all and each of which demands, advertisements and/or notices are
hereby expressly waived), may forthwith collect, receive, appropriate and
realize upon the Collateral Security, or any part thereof, and/or may forthwith
sell, assign, give an option or options to purchase, contract to sell or
otherwise dispose of and deliver said Collateral Security, or any part thereof,
in one or more parcels at public or private sale or sales, at any exchange,
broker's or elsewhere upon such terms and conditions as he may deem advisable
and at such prices as he may deem best, for cash or on credit or for future
delivery without assumption of any credit risk, with the right to Pledgee upon
any such sale or sales, public or private, to purchase the whole or any part of
said Collateral Security so sold, free of any right or equity or redemption in
the Pledgor, which right or equity or redemption is hereby expressly waived or
released. Pledgee shall apply the net proceeds of any such collection, recovery,
receipt, appropriation, realization or sale, after deducting all reasonable
costs and expenses of every kind incurred therein or incidental to the care,
safekeeping or otherwise of any and all of the Collateral Security or in any way
relating to the rights of Pledgee hereunder, including reasonable attorney's
fees and legal expenses, to the payment in whole or in part, of the Obligations
in such order as Pledgee may elect. Anything to the contrary not withstanding,
Pledgee shall have no right to exercise any remedy set forth in this Section 5
unless and until all Senior Debt, as defined in the Notes, has been paid in
full.
7. Representations, Warranties and Covenants of the Pledgor. Pledgor represents,
warrants and agrees that it is the legal, record and beneficial owner of, and
has good and marketable title to, the Pledged Assets, subject to no pledge,
lien, mortgage, hypothecation, security interest, charge, option or other
encumbrance whatsoever, except the lien and security interest created by this
Pledge Agreement.
8. No Disposition, etc. Without the prior written consent of Pledgee, the
Pledgor agrees that it will not sell, assign, transfer, exchange, or otherwise
dispose of, or grant any options, warrants or agreements of any kind or with
respect to, the Collateral Security, nor will it create, incur or permit to
exist any pledge, lien, mortgage, hypothecation, security interest, charge,
option or any other encumbrance with respect to any of the Collateral Security,
or any interest thereon, of any proceeds thereof, except for the lien and
security interest provided for by this Pledsge Agreement.
9. Further Assurances. Pledgor agrees that at any time and from time to time
upon the written request of Pledgee, Pledgor will execute and deliver such
further documents and to such further acts and things as Pledgee may reasonably
request in order to effect the purposes of this Agreement and if Pledgor should
fail or be unable to do so, Pledgor hereby grants Pledgee a power coupled with
an interest to execute and deliver such documents as Pledgor's attorney-in-fact.
10. Severability. Any provision of this Pledge Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
11. Recitals. The recitals set forth above are hereby incorporated herein as a
part hereof.
IN WITNESS WHEREOF, the Pledgor and Pledgee have caused this Pledge Agreement to
be duly executed as of the day and year first above written.
CNE Group, Inc. Pledgor
By:____________________________
Xxxxxx X. Xxxxxx , President
By:____________________________
Xxxx Xxxxxxxxxx, Pledgee
