PLEDGE AND SECURITY AGREEMENT
THIS PLEDGE AND SECURITY AGREEMENT (this "Agreement"), dated as of this
___ day of July, 1999, is made by XXXXXXX XXXXXXXX, residing at
________________________________, XXXXX XXXXX, residing at
______________________________________, and XXXXX XXXX, residing at
________________________________,(the "Pledgors") in favor of XXXXX LLC, a
corporation organized and existing under the laws of Cayman Islands (the
"Secured Party"), having an address at ____________________________________
______________________________________________________________________________.
1. Pledge. In order to induce the Secured Party to extend the
Obligations (as defined below), each Pledgor hereby grants a security interest
in and absolutely and presently pledges to the Secured Party all of the
Pledgor's right, title and interest in and to the collateral described in
Exhibit A attached hereto and made a part hereof, whether now owned or hereafter
acquired, together with all additions, substitutions, replacements and proceeds
and all income interest, dividends and other distributions thereon (the
"Collateral"). If the Collateral includes certificated securities, documents or
instruments, such certificates are herewith delivered to the Secured Party
accompanied by duly executed blank stock or bond powers or assignments, as
applicable. Each Pledgor hereby authorizes the transfer of possession of all
certificates, instruments, documents and other evidence of the Collateral to the
Secured Party. Notwithstanding anything to the contrary contained herein, this
Agreement evidences a present and absolute pledge of the Collateral to the
Secured Party, which shall be effective upon the execution of this Agreement.
2. Obligations Secured. The Collateral secures payment to the Secured
Party of all loans, advances, debts, liabilities, obligations, covenants and
duties owing to the Secured Party from FINANCIAL INTERNET, INC. (the
"Borrower"), of any kind or nature, present or future, under that certain
Debenture of even date herewith payable to Secured Party in the original
principal amount of $500,000 (the "Note"), the payment of which has been
personally guaranteed by the Pledgors, and the obligations of Borrower to
Secured Party under that certain Bridge Loan Financing Agreement of even date
herewith (the "Loan Agreement"), all of the foregoing whether arising under any
agreement, instrument or document, whether or not for the payment of money,
whether arising by reason of an extension of credit, opening a letter of credit,
loan or guarantee or in any other manner, whether direct or indirect (including
those acquired by assignment or participation), absolute or contingent, joint or
severally, due or to become due, now existing or hereafter arising, and any
amendments, extensions, renewals or increases, and all costs and expenses of the
Secured Party incurred in the documentation, negotiation, modification,
enforcement, collection or otherwise in connection with any of the foregoing,
including reasonable attorneys fees and expenses (collectively, the
"Obligations"). All capitalized terms not otherwise defined herein shall have
the meanings given to such terms in the Loan Agreement.
3. Representations and Warranties. Each Pledgor severally represents
and warrants to the Secured Party as follows:
(a) There arc no restrictions on the pledge or transfer of any
of the Collateral, other than restrictions referenced on the face of any
certificates evidencing the Collateral.
(b) The Pledgor is the legal owner of the Collateral, which is
registered in the name of the Pledgor as of the date hereof
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(c) Except as otherwise provided in the Loan Agreement or as
approved in advance by Secured Party, the Collateral is free and clear of any
security interests, pledges, liens, encumbrances charges, agreements, claims or
other arrangements or restrictions of any kind, [except as otherwise referenced
in Section 3.1 above]; and the Pledgor will not incur, create, assume or permit
to exist and pledge, security interest, lien, charge or other encumbrance of any
nature whatsoever on any of the Collateral or assign, pledge or otherwise
encumber any right to receive income from the Collateral.
(d) The Pledgor has the right to transfer the Collateral free
of any encumbrances and the Pledgor will defend the Pledgors title to the
Collateral against the claims of all persons, and any registration with, or
consent or approval to or action by, any federal, state or other governmental
authority or regulatory body which was or is necessary for the validity of the
pledge and grant of the security interest in the Collateral has been obtained
(e) The pledge of and grant of the security interest in the
Collateral is effective to vest in the Secured Party a valid and perfected first
priority security interest, superior to the rights of any other person, in and
to the Collateral as set forth herein
(f) Upon the occurrence of an Event of Default, no third party
has any rights to receive notice of such default or the sale of the Collateral
or any portion thereof, and no third party has rights to purchase all or any
portion of the Collateral.
4. Governmental Approvals. The Secured Party hereby acknowledges that
any transfer of the Collateral shall be subject to the approval of any
governmental authorities to the extent required by applicable law.
5. Default.
(a) If any of the following shall occur (each an "Event of
Default"): (i) any Event of Default under the Note or the Loan Agreement; (ii)
demand by the Secured Party under any of the Obligations that have such a demand
feature; or (iii) the failure by a Pledgor to perform any of its obligations
hereunder after written notice from the Secured Party and a reasonable
opportunity to cure, which cure period shall in no event be less than ten (10)
days, then the Secured Party is authorized in its discretion to declare any or
all of the Obligations to be immediately due and payable without further demand
or notice of any kind whatsoever which are expressly waived, and may exercise
any one or more of the rights and remedies granted pursuant to this Agreement or
given to a secured party under the Uniform Commercial Code of New Jersey, as it
may be amended from time to time, or otherwise at law or in equity, including
the right to sell or otherwise dispose of the Collateral. The parties
acknowledge that in the event that the Secured Party demands the release of less
than all of the Collateral, the first Collateral to be released shall be the
Collateral owned by Xxxxx Xxxxx, the next Collateral to be released shall be the
Collateral owned by Xxxxxxx Xxxxxxxx and the last Collateral to be released
shall be the Collateral owned by Xxxxx Xxxx.
(b) (i) At any bona fide public sale the Secured Party shall
be free to purchase all or any part of the Collateral. Any such sale may be on
cash or credit. The Secured Party shall be authorized at any such sale (if deems
it advisable to do so) to restrict the prospective bidders or purchasers to
persons who will represent and agree that they are purchasing the Collateral for
their own account in compliance with Regulation D of the Securities Act of 1933
or any other applicable exemption available under such Act. The Secured Party
will not be obligated to make any sale and sell at
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the time and place to which the sale is adjourned. If the Collateral is
customarily sold on a recognized market or threatens to decline speedily in
value, the Secured Party may sell such Collateral at any time without giving
prior notice to the Pledgor. Whenever notice is otherwise required by law to be
sent by the Secured Party to the Pledgor of any sale or other disposition of the
Collateral, five (5) days written notice sent to the Pledgor at the notice
address specified below will be reasonable.
(ii) The Pledgor recognizes that the Secured Party
may be unable to effect or cause to be effected a public sale of the Collateral
by reason of certain prohibitions contained in the Securities Act of 1933, as
amended (the "Act"), so that the Secured Party may be compelled to resort to one
or more private sales to a restricted group of purchasers who will be obligated
to agree, among other things, to acquire the Collateral for resale thereof. The
Pledgor understands that private sales so made may be at prices and on other
terms less favorable to the seller than if the Collateral were sold at public
sales, and agrees that the Secured Party has no obligation to delay or agree to
delay the sale of any of the Collateral from the period of time necessary to
permit the issuer of the securities which are part of the Collateral (even if
the issuer would agree), to register suet securities for sale under the Act. The
Pledgor agrees that private sales made under the foregoing circumstances shall
be deemed to have been made in a commercially reasonable manner.
(c) The net proceeds arising from the disposition of the
Collateral, if any, after deducting expenses incurred by the Secured Party, will
be applied to the Obligations in the order determined by the Secured Party in
its sole discretion. If any excess remains after the discharge of all of the
Obligations the same will be paid to the Pledgor.
(d) If any demand is made at any time upon the Secured Party
for the repayment or recovery of any amount received by it in payment or on
account of any of the Obligations from the disposition of the Collateral and if
the Secured Party repays all or any party of such amount the Pledgor, will be
and remain liable for the amounts so repaid or recovered to the same extends as
if never originally received by the Secured Party.
6. Voting Rights and Transfer. At any time after the occurrence of an
Event of Default, the Secured Party may transfer any or all of the Collateral
into its name or that of its nominee and may exercise all voting rights with
respect to the Collateral, but no such transfer shall constitute a taking of
such Collateral in satisfaction of any or all of the Obligations unless the
Secured Party expressly so indicates by written notice to the Pledgor.
7. Dividends, Interest and Premiums. The Pledgor will have the right to
receive all cash dividends, interest and premiums declared and paid on the
Collateral prior to the occurrence of any Event of Default. In the event any
additional shares are issued to the Pledgor as a stock dividend or in lieu of
interest on any of the Collateral, as a result of any split of any of the
Collateral by reclassification or otherwise, any certificates evidencing any
such additional shares will be immediately delivered to the Secured Party and
such shares will be subject to this Agreement and a part of the Collateral to
the same extent as the original Collateral. At any time after the occurrence of
an Event of Default, the Secured Party shall be entitled to receive all cash or
stock dividends, interest and premiums declared or paid on the Collateral, all
of which shall be subject to the Secured Party's rights under Section 5 above.
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8. Further Assurances. At any time and from time to time, upon demand
of the Secured Party, the Pledgor will give, execute, file and record any
notice, financing statement, continuation statement, instrument, document or
agreement that the Secured Party may consider necessary or desirable to create,
preserve, continue, perfect or validate any security interest granted hereunder
or to enable the Secured Party to inform its rights hereunder with respect to
such security interest. Without limiting the generality of the foregoing, the
Pledgor hereby irrevocably appoints the Secured Party as the Pledgor s
attorney-in-fact to do all acts and things in the Pledgor's name that the
Secured Party may deem necessary or desirable, which appointment is deemed to be
coupled with an interest. The Secured Party is authorized to file financing
statements, continuation statements and other documents under the Uniform
Commercial Code relating to the Collateral without the Pledgor's signature,
naming the Pledgor as debtor and the Secured Party as secured party.
9. Notices. All notices, demands, requests, consents, approval and
other communications required or permitted hereunder shall be sent and delivered
in accordance with Section 7.07 of the Loan Agreement.
10. Preservation of Rights. No delay or omission on the Secured Parties
part to exercise any right or power arising hereunder, including without
limitation, the failure of the Secured Party to exercise its rights against the
Collateral after the Holding Period, will impair any such right or power or be
considered a waiver of any such right or power, nor will the Secured Party's
action or inaction impair any such right or power. The Secured Party's rights
and remedies hereunder are cumulative and not exclusive of an other rights or
remedies which the Secured Party may have under other agreements, at law or in
equity.
11. Illegality. In case any one or more of the provisions contained in
this Agreement should be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby.
12. Changes in Writing. No modification, amendment or waiver of any
provision of this Agreement nor consent to any departure by the Pledgor
therefrom will be effective unless made in a writing signed by the Secured
Party, and then such waiver or consent shall be effective only in the specific
instance and for the purpose for which given. No notice to or demand on the
Pledgor in any case will entitle the Pledgor to any other or further notice or
demand in the same, similar or other circumstance.
13. Entire Agreement. This Agreement (including the documents and
instruments referred to herein) constitutes the entire agreement and supersedes
all other prior agreements and understandings, both written and oral, between
the Pledgor and the Secured Party with respect to the subject matter hereof.
14. Successors and Assigns. This Agreement will be binding upon and
inure to the benefit of the Pledgor and the Secured Party and their respective
heirs, executors, administrators, successors and assigns; provided, however,
that the Secured Party may not assign this Agreement in whole or in part without
the Pledgor's prior written consent.
15. Interpretation. In this Agreement, unless the Secured Party and the
Pledgor otherwise agree in writing, the singular includes the plural and the
plural the singular; references to statutes are to be construed as including all
statutory provisions consolidating, amending or replacing the statute
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referred to; the word or shall be deemed to include and/or, the works
"including", "includes and including shall be deemed to be followed by the words
"without limitation." Section headings in this Agreement are included for the
convenience of reference only and shall not constitute a part of this Agreement
for any other purpose. If this Agreement is executed by more titan one party as
Pledgor, the obligations of such persons or entities will be joint and several.
16. Indemnity. Each Pledgor severally agrees to indemnify each of the
Secured Party, its directors, officers and employees and each legal entity, if
any, who controls the Secured Party (the "Indemnified Parties") and to hold each
Indemnified Party harmless from and against any and all claims, damages, losses,
liabilities and expenses (including all fees of counsel with whom any
indemnified Party may consult and all expenses of litigation or preparation
therefor) which any Indemnified Party may incur or which may be asserted against
any Indemnified Party as a result of the execution of or performance under this
Agreement; provided, however, that the foregoing indemnity agreement shall not
apply to claims, damages, losses, liabilities and expenses solely attributable
to an Indemnified Parties negligence or willful misconduct.
17. Governing Law and Jurisdiction. This Pledge Agreement has been
delivered to and accepted by the Secured Party and will be deemed to be made in
the State of New York. THIS PLEDGE AGREEMENT WILL BE INTERPRETED AND THE RIGHTS
AND LIABILITIES OF THE PLEDGOR AND SECURED PARTY DETERMINED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK, EXCLUDING ITS CONFLICT OF LAWS RULES. The
Pledgor hereby irrevocably consents to the exclusive jurisdiction of any state
or federal court for New York County and consents that all service of process be
sent by nationally recognized overnight courier service directed to the Pledgor
at the Pledgor's address set forth herein and service so made will be deemed to
be completed on the business day after deposit with such courier; provided that
nothing contained in this Agreement will prevent the Secured Party from bringing
any action, enforcing any award or judgment or exercising any rights against the
Pledgor individually, against any security or against any property of the
Pledgor within any other county state or other foreign or domestic jurisdiction.
The Pledgor acknowledges and agrees that the venue provided above is the most
convenient forum for both the Secured Party and the Pledgor. The Pledgor waives
any objection to venue and any objection based on a more convenient forum in any
action instituted under this Agreement.
18. WAIVER OF JURY TRIAL. THE PLEDGOR IRREVOCABLY WAIVES ANY AND ALL
RIGHTS THE PLEDGOR MAY HAVE TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
CLAIM OF ANY INURE RELATING TO THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED IN
ANY OF THE LOAN DOCUMENTS. THE PLEDGOR ACKNOWLEDGES THAT THE FOREGOING WAIVER IS
MADE KNOWINGLY AND VOLUNTARILY.
The Pledgor acknowledges that it has read and understood all
of the provisions of this Agreement including the waiver of a jury
trial and has been advised by counsel as necessary or appropriate.
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IN WITNESS WHEREOF, intending to be legally bound, Pledgor has heretofore
executed this Agreement as of the date and year first above written.
WITNESS:
By: /s/Xxxxxxx Xxxxxxxx
------------------------------------ ------------------------------------
Print Name: XXXXXXX XXXXXXXX
----------------------------
/s/Xxxxx Xxxxx
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XXXXX XXXXX
/s/Xxxxx Xxxx
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XXXXX XXXX
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EXHIBIT A TO PLEDGE AGREEMENT
(CERTIFIED SECURITIES)
The specific assets are listed below are pledged as collateral and are
restricted from trading and withdrawals. The Secured Party's written approval is
required prior to any trading or withdrawals of such assets.
Pledgor Quantity Description of Securities Certificate Number(s)
------- -------- ------------------------- ---------------------
Xxxxx Xxxx 26,884 Common Stock of
Financial Intranet, Inc. 2530
Xxxxx Xxxx 75,000 Common Stock of
Financial Intranet, Inc. 2527
Xxxxxxx Xxxxxxxx 51,884 Common Stock of
Financial Intranet, Inc. 2522
Xxxxxxx Xxxxxxxx 44,267 Common Stock of
Financial Intranet, Inc. 2716
Xxxxx Xxxx 26,884 Common Stock of
Financial Intranet, Inc. 2530
Xxx Xxxxx 400,000 Common Stock of
Financial Intranet, Inc. 3010
Xxx Xxxxx 350,000 Common Stock of 2722
Financial Intranet, Inc.
Xxx Xxxxx 174,517 Common Stock of 2717
Financial Intranet, Inc.
A-7
STOCK POWER
FOR VALUE RECEIVED, the undersigned does hereby sell, assign and
transfer to _________________________________________________________________,
having an address at ________________________________________________, Tax I.D.
No. _________, __________ shares of the capital stock (the "Stock") of FINANCIAL
INTRANET, INC., a ___________ corporation, represented by Certificate Number
______________, standing in the name of the undersigned on the books of said
Company; and do hereby irrevocably constitute __________________________________
Attorney to transfer the said Shares on the books of the within named
Corporation with full power of substitution in the premises.
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WITNESS/ATTEST:
By:
----------------------------------------
Print Name:
DATED:
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A-8
