STOCK PLEDGE AGREEMENT
STOCK
PLEDGE AGREEMENT
Date:
August
7,
2002
TO
: ________________
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);
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;
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of
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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
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.
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of
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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 ________________________________,
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 | ||
| ________________ | ||
| By: | ||
|
|
||
| PLEDGOR | ||
|
AGREED:
|
||
| MOUNTAIN RESERVOIR CORPORATION | ||
|
By: Xxxxx Xxxxx, President |
||
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