AMENDED PLEDGE AND ESCROW AGREEMENT
THIS AMENDED PLEDGE AND ESCROW AGREEMENT (the "Agreement") is made
and entered into as of June 28, 2005 (the "Effective Date") by and among
CORNELL CAPITAL PARTNERS, LP, a Delaware limited partnership (the
"Pledgee") and HEADLINERS ENTERTAINMENT GROUP, INC., a corporation
organized and existing under the laws of the State of Delaware (the
"Pledgor"), and XXXXX XXXXXXXX, ESQ., as escrow agent ("Escrow Agent").
RECITALS:
WHEREAS, the parties hereto desire that this Agreement amend and
replace the Pledge and Escrow Agreement dated March 17, 2005 between the
parties hereto (the "Pledge Agreement");
WHEREAS, pursuant to the Pledge Agreement, the Pledgor agreed to
pledge to the Pledgee one hundred million (100,000,000) shares of the
Pledgor's common stock, as increased therein and herein, (collectively,
the "Pledged Shares") in order to secure the Pledgor's obligations under
the Promissory Note dated March 17, 2005 issued to the Pledgee (the "March
Promissory Note");
WHEREAS, on the date hereof, the Pledgee has loaned additional money
to the Pledgor as evidenced by a Convertible Debenture issued by the
Pledgor to the Pledgee dated the date hereof with a face amount of
$3,000,000 (the "June Convertible Debenture"), and the Pledgee has loaned
the Pledgor $4,500,000 as evidenced by a Promissory Note issued to the
Pledgee dated January 25, 2005 (the ("January Promissory Note");
WHEREAS, in order to secure the Pledgor's obligations under the
March Promissory Note, the June Convertible Debenture, the January
Promissory Note, and this Agreement (collectively referred to as the
"Transaction Documents"), the Pledgor has agreed to pledge to the Pledgee
the Pledged Shares.
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 Pledgor's obligations under the
March Promissory Note, the June Convertible Debenture, and the January
Promissory Note (collectively referred to herein as the "Promissory
Notes"). The Pledgor has delivered to the Escrow Agent stock certificates
representing the Pledged Shares, together with duly executed stock powers
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 amounts due to the Pledgee under the
Promissory Notes and through repayment in accordance with the terms of the
Promissory Notes, or the termination or expiration of this Agreement.
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, 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 Promissory Notes by repayment in
accordance with the terms of the Promissory Notes, the parties hereto
shall notify the Escrow Agent to such effect in writing. Upon receipt of
such written notice for payment of the amounts due to the Pledgee under
the Promissory Notes, 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. Notwithstanding
anything to the contrary contained herein, upon full payment of all
amounts due to the Pledgee under the Promissory Notes, by repayment in
accordance with the terms of the Promissory Notes, 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 the occurrence of an Event of Default, Pledgee
shall provide written notice of such 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, whereupon
Pledgee may exercise all rights and 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.
6. Concerning the Escrow Agent.
6.1. 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.
6.2. 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 him as such escrow holder, and for the
disposition of the same in accordance with the written instruments
accepted by him in the escrow.
6.3. Pledgee and the Pledgor hereby agree, to defend and
indemnify the Escrow Agent and hold him 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
he may incur or with which he may be threatened by reason of his 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.
6.4. 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 his 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 his activities under this Agreement until a
final decision or other settlement in the proceeding is received.
6.5. The Escrow Agent may consult with counsel of his 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 him 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 his willful misconduct
or gross negligence.
6.6. 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.
6.7 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.
6.8 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:
Headliners Entertainment Group, Inc.
000 Xxxxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Xx Xxxxxxxxx, Chairman and CEO
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy to:
Xxxxxx Xxxxxx, Esq,
000 0xx Xxxxxx
Xxxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to the Investor(s):
Cornell Capital Partners, LP
000 Xxxxxx Xxxxxx -Xxxxx 0000
Xxxxxx Xxxx, XX 00000
Attention: Xxxx Xxxxxx
Portfolio Manager
Telephone: (000)-000-0000
Facsimile: (000) 000-0000
With a Copy to:
Xxxxx Xxxxxxxx, Esq.
000 Xxxxxx Xxxxxx - Xxxxx 0000
Xxxxxx Xxxx, XX 00000
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.
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 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.
9. Enforcement Costs. If any legal action or other proceding 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.
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.
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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.
HEADLINERS ENTERTAINMENT GROUP INC.
By: /s Xx Xxxxxxxxx
---------------------------
Name: Xx Xxxxxxxxx
Title: Chairman & Chief Executive Officer
CORNELL CAPITAL PARTNERS, LP
By: Yorkville Advisors, LLC
Its: General Partner
By: /s/ Xxxx Xxxxxx
-------------------------------
Name: Xxxx Xxxxxx
Title: Portfolio Manager
By: /s/Xxxxx Xxxxxxxx
-------------------------------
Name: Xxxxx Xxxxxxxx, Esq.
EXHIBIT "A"
Pledged Property
100,000,000 Common Stock Shares of Headliners Entertainment Group, Inc.
represented by Stock Certificate No. 2860
