EXHIBIT 10.23
PLEDGE AND ESCROW AGREEMENT
THIS PLEDGE AND ESCROW AGREEMENT (the "Agreement") is made and entered
into as of April 27, 2005 (the "Effective Date") by and among CORNELL CAPITAL
PARTNERS, LP (the "Pledgee"), CORD BLOOD AMERICA, INC., a Florioda corporation
(the "Company"), Xxxxxxx X. Xxxxxxxxx and Xxxxxxxxx X. Xxxxxxxxx (collectively
the "Pledgor") and XXXXX XXXXXXXX, ESQ., as escrow agent ("Escrow Agent").
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 Promissory Notes (the "Promissory Notes")
issued or to be issued by the Company to the Pledgee, either now or in the
future, up to a total of Three Hundred Fifty Thousand ($350,000) of principal,
plus any interest, costs, fees, and other amounts owed to the Pledgee
thereunder, and all other contracts entered into between the parties hereto
(collectively, the "Transaction Documents"), the Pledgor has agreed to
irrevocably pledge to the Pledgee a total of Eighteen Million Nine Hundred Forty
Four Thousand Three Hundred Three (18,944,313) shares (the "Pledged Shares") of
common stock of the Company beneficially owned by the Pledgor in the amounts set
forth next to each Pledgor's name on the signature page hereto.
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. The Pledgor hereby grants to
Pledgee an irrevocable, first priority security interest in all Pledged Shares
as security for the Company's obligations under the Transaction Documents. On or
before the closing of the Transaction Documents, the Pledgor shall deliver to
the Escrow Agent stock certificates representing the Pledged Shares, together
with duly executed stock powers or other appropriate transfer documents with
medallion bank guarantees and executed in blank by the Pledgor (the "Transfer
Documents"), and such stock certificates and Transfer Documents shall be held by
the Escrow Agent until the full payment of all Obligations due to the Pledgee
under the Transaction Documents, including the repayment of all amounts owed by
the Company to the Pledgee under the Promissory Notes (whether outstanding
principal, interest, legal fees, or any other amounts owed to the Pledgee by the
Company).
2. RIGHTS RELATING TO PLEDGED SHARES. Upon the occurrence of an Event
of Default (as defined herein), the Pledgee shall be entitled to vote the
Pledged Shares, receive dividends and other distributions thereon, and enjoy all
other rights and privileges incident to the ownership of the number of Pledged
Shares actually released from escrow in accordance with Section 5.1 hereof.
3. RELEASE OF PLEDGED SHARES FROM PLEDGE. Upon the full payment of all
Obligations due to the Pledgee under the Transaction Documents, including the
repayment of all amounts owed by the Company to the Pledgee under the Promissory
Notes (whether outstanding principal, interest, legal fees, and any other
amounts owed to the Pledgee by the Company), the parties hereto shall notify the
Escrow Agent to such effect in writing. Promptly upon receipt of such written
notice, the Escrow Agent 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.
4. EVENT OF DEFAULT. An "Event of Default" shall be deemed to have
occurred under this Agreement upon an Event of Default as defined in Section 11
of the Promissory Note.
5. REMEDIES. Upon and anytime after the occurrence of an Event of
Default, the Pledgee shall have the right to provide written notice of such
Event of Default (the "Default Notice") to the Escrow Agent, with a copy to the
Pledgor. As soon as practicable after receipt of the Default Notice, the Escrow
Agent shall deliver to Pledgee the Pledged Materials held by the Escrow Agent
hereunder. Upon receipt of the Pledged Materials, 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 Pledgor by the
Company 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 New Jersey. To the extent
that the net proceeds received by the Pledgee are insufficient to satisfy the
Obligations in full, the Pledgee shall be entitled to a deficiency judgment
against the Pledgor or the Company for such amount. 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, the Company 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 Escrow Agent shall have the absolute right to disburse
the Pledged Shares to the Pledgee in batches not to exceed 9.9% of the
outstanding capital of the Company (which limit may be waived by the Pledgee
providing not less than 65 days' prior written notice to the Escrow Agent). 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.
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.
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6. REPRESENTATIONS, WARRANTIES AND COVENANTS.
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6.1 The Pledgor represents, warrants and covenants that:
(i) the Pledgor is, and at the time when
pledged hereunder will be, the legal, beneficial and record owner of, and has
(and will have) good and valid title to, all Pledged Shares pledged by the
Pledgor hereunder, subject to no pledge, lien, mortgage, hypothecation, security
interest, charge, option or other encumbrance whatsoever;
(ii) the Pledgor has full power, authority
and legal right to pledge all the Pledged Shares pledged by the Pledgor pursuant
to this Agreement; and
(iii) all the Pledged Shares have been duly
and validly issued, are fully paid and non-assessable and are subject to no
options to purchase or similar rights.
6.2 The Pledgor covenants and agrees that it will take all
reasonable steps to defend the Pledgee's right, title and security interest in
and to the Pledged Shares and the proceeds thereof against the claims and
demands of all persons whomsoever (other than the Pledgee and the Escrow Agent);
and the Pledgor covenants and agrees that it will have like title to and right
to pledge any other property at any time hereafter pledged to the Pledgee as
Collateral hereunder and will likewise take all reasonable steps to defend the
right thereto and security interest therein of the Pledgee.
6.3 The Pledgor covenants and agrees that it will take no
action which would violate or be inconsistent with any of the terms of any
Transaction Document, or which would have the effect of impairing the position
or interests of the Pledgee under any Transaction Document.
6.4 The Pledgor represents, warrants and covenants that (i)
the Pledgor acquired 16,100,000 shares of Common Stock on March 31, 2004 in
exchange for the Pledgor's shares of Cord Partners, Inc. in connection with a
reverse merger in which the company acquired Cord Partners, Inc., of which
15,820,000 have been pledged to the Pledgee hereunder (ii) the Pledgor has owned
its shares of Cord Partners, Inc. since its inception in January 2003, (iii)
with respect to Xxxxxxx Xxxxxxxxx, the Pledgor acquired 3,124,313 of the Pledged
Shares in exchange for his shares of Career Channel, Inc. in connection with the
Company's acquisition of 100% of the outstanding shares of Career Channel, Inc.,
in February 2005, and (iv) this Agreement is made with recourse. Upon an Event
of Default, the Pledgee shall be deemed to have acquired the Pledged Shares on
the date they were acquired by the Pledgor. The Pledgor is an "affiliate" of the
Company, as such term is defined in Rule 144(a) promulgated under the Securities
Act of 1933, as amended.
7. CONCERNING THE ESCROW AGENT.
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7.1. The Escrow Agent undertakes to perform only such duties
as are expressly set forth herein and no implied duties or obligations shall be
read into this Agreement against the Escrow Agent.
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7.2. The Escrow Agent may act in reliance upon any writing or
instrument or signature which it, in good faith, believes to be genuine, may
assume the validity and accuracy of any statement or assertion contained in such
a writing or instrument, and may assume that any person purporting to give any
writing, notice, advice or instructions in connection with the provisions hereof
has been duly authorized to do so. The Escrow Agent shall not be liable in any
manner for the sufficiency or correctness as to form, manner, and execution, or
validity of any instrument deposited in this escrow, nor as to the identity,
authority, or right of any person executing the same; and its duties hereunder
shall be limited to the safekeeping of such certificates, monies, instruments,
or other document received by it as such escrow holder, and for the disposition
of the same in accordance with the written instruments accepted by it in the
escrow.
7.3. Pledgee and the Pledgor hereby agree, to defend and
indemnify the Escrow Agent and hold it harmless from any and all claims,
liabilities, losses, actions, suits, or proceedings at law or in equity, or any
other expenses, fees, or charges of any character or nature which it may incur
or with which it may be threatened by reason of its acting as Escrow Agent under
this Agreement; and in connection therewith, to indemnify the Escrow Agent
against any and all expenses, including attorneys' fees and costs of defending
any action, suit, or proceeding or resisting any claim (and any costs incurred
by the Escrow Agent pursuant to Sections 6.4 or 6.5 hereof). The Escrow Agent
shall be vested with a lien on all property deposited hereunder, for
indemnification of attorneys' fees and court costs regarding any suit,
proceeding or otherwise, or any other expenses, fees, or charges of any
character or nature, which may be incurred by the Escrow Agent by reason of
disputes arising between the makers of this escrow as to the correct
interpretation of this Agreement and instructions given to the Escrow Agent
hereunder, or otherwise, with the right of the Escrow Agent, regardless of the
instructions aforesaid, to hold said property until and unless said additional
expenses, fees, and charges shall be fully paid. Any fees and costs charged by
the Escrow Agent for serving hereunder shall be paid by the Pledgor.
7.4. If any of the parties shall be in disagreement about the
interpretation of this Agreement, or about the rights and obligations, or the
propriety of any action contemplated by the Escrow Agent hereunder, the Escrow
Agent may, at its sole discretion deposit the Pledged Materials with the Clerk
of the United States District Court of New Jersey, sitting in Newark, New
Jersey, and, upon notifying all parties concerned of such action, all liability
on the part of the Escrow Agent shall fully cease and terminate. The Escrow
Agent shall be indemnified by the Pledgor, the Company and Pledgee for all
costs, including reasonable attorneys' fees in connection with the aforesaid
proceeding, and shall be fully protected in suspending all or a part of its
activities under this Agreement until a final decision or other settlement in
the proceeding is received.
7.5. The Escrow Agent may consult with counsel of its own
choice (and the costs of such counsel shall be paid by the Pledgor and Pledgee)
and shall have full and complete authorization and protection for any action
taken or suffered by it hereunder in good faith and in accordance with the
opinion of such counsel. The Escrow Agent shall not be liable for any mistakes
of fact or error of judgment, or for any actions or omissions of any kind,
unless caused by its willful misconduct or gross negligence.
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7.6. The Escrow Agent may resign upon ten (10) days' written
notice to the parties in this Agreement. If a successor Escrow Agent is not
appointed within this ten (10) day period, the Escrow Agent may petition a court
of competent jurisdiction to name a successor.
7.7. Conflict Waiver. The Pledgor hereby acknowledges that the
Escrow Agent is general counsel to the Pledgee, a partner in the general partner
of the Pledgee, and counsel to the Pledgee in connection with the transactions
contemplated and referred herein. The Pledgor agrees that in the event of any
dispute arising in connection with this Agreement or otherwise in connection
with any transaction or agreement contemplated and referred herein, the Escrow
Agent shall be permitted to continue to represent the Pledgee and the Pledgor
will not seek to disqualify such counsel and waives any objection Pledgor might
have with respect to the Escrow Agent acting as the Escrow Agent pursuant to
this Agreement.
7.8. 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 the Company, to: Cord Blood America, Inc.
0000 X. Xxxxxx Xxxxxxxxx, Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Attention: Xxxxxxx Xxxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy to: Xxxxxxxxxxx & Xxxxxxxx Xxxxxxxxx Xxxxxx, LLP
000 Xxxxx Xxxxxxxx Xxxxxxxxx, Xxxxx 0000
Xxxxx, Xxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to the Pledgee: Cornell Capital Partners LP
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx Xxxx, XX 00000
Attention: Xxxx X. Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With copy to: Cornell Capital Partners, LP
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx Xxxx, XX 00000
Attention: Xxxx X. Xxxxx, Esquire
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
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If to the Pledgor, to: Cord Blood America, Inc.
0000 X. Xxxxxx Xxxxxxxxx, Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Attention: Xxxxxxx Xxxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
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.
8. 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.
9. 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 New Jersey 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 superior courts
located in Xxxxxx County, New Jersey or Federal district courts located in
Newark, New Jersey, 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.
10. 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.
11. 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.
12. 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.
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13. NO PENALTIES. No provision of this Agreement is to be interpreted
as a penalty upon any party to this Agreement.
14. 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.
[SIGNATURE PAGE TO FOLLOW]
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IN WITNESS WHEREOF, the parties hereto have duly executed this Pledge
and Escrow Agreement as of the date first above written.
CORNELL CAPITAL PARTNERS, LP
By: Yorkville Advisors, LLC
Its: General Partner
By:
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Name: Xxxx Xxxxxx
Title: Portfolio Manager
PLEDGOR
Xxxxxxx X. Xxxxxxxxx
10,894,313 Shares
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Xxxxxxxxx X. Xxxxxxxxx
8,050,000 Shares
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CORD BLOOD AMERICA, INC.
By:
Name: Xxxxxxx Xxxxxxxxx
Title: Chairman and Chief Executive Officer
ESCROW AGENT
By:
-----------------------------------------
Name: Xxxxx Xxxxxxxx, Esq.
FOR VALUE RECEIVED, the Pledgor hereby unconditionally and absolutely
guarantees the Company's Obligations (as defined above). This Agreement is made
with recourse.
Xxxxxxx X. Xxxxxxxxx Xxxxxxxxx X. Xxxxxxxxx
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