PLEDGE AND SECURITY AGREEMENT
THIS PLEDGE AND SECURITY AGREEMENT (this "Pledge
Agreement") is made in reliance of the recitals set forth
hereinbelow and entered into as of January 24, 2005 between
Xxxxxxxx X. Xxxxxx, an individual principally residing in
the State of New York ("Hudson", "Borrower," or "Pledgor"),
entitled to receive mail at Xxxx Xxxxxx Xxx 000, Xxxxxxx,
Xxx Xxxx 00000 and Xxxxxx X. Apple, an individual
principally residing in the State of New York ("Apple,"
"Lender," or "Pledgee"), entitled to receive mail at
000 Xxxxxx Xxxx, Xxxxxxxxxx, Xxx Xxxx 00000.
W I T N E S S E T H,
WHEREAS, Hudson purchased Ninety-five Percent (95%) of
the total issued and outstanding common voting equity
securities of Montana Acquisition Corporation, a United
States corporation organized under the laws of the State of
Delaware ("Montana") under that certain Common Stock
Purchase Agreement (the "Agreement) of even date herewith;
and
WHEREAS, under the terms of that certain Agreement,
Xxxxxx issued Apple a promissory note (the "Note"), which
requires Xxxxxx to pay Apple the sum of $85,000, without
interest, on or before April 23, 2005; and
WHEREAS, as the result of entering into and consummating
that certain Agreement, Pledgor is the owner of certain
shares of the common stock of Montana (the "Shares"), which
Shares Pledgor desires to pledge to Pledgee, and Pledgee
desire to accept, as collateral security for Borrower's
payment under that certain Note; and
WHEREAS, where applicable, the apparent consent by the
Parties to that certain Agreement and to this Pledge
Agreement is (a) free, (b) by mutual consent, and (c)
communicated by each party to the other, and, where such
apparent consent was not obtained from one party by the
other by means of duress, menace, fraud, undue influence, or
mistake; and
WHEREAS, pursuant to that certain Agreement and to this
Pledge Agreement, Pledgee has agreed to accept the Note as
evidence of indebtedness due Pledgee by Pledgor under the
terms and provisions evidenced hereby;
NOW, THEREFORE, in consideration of the premises and of
the covenants herein contained, the Parties hereby agree as
follows:
1. Pledge of Securities. As security for the full and
prompt performance of all of the obligations (as defined
in Section 3, below), Pledgor hereby pledges to Pledgee a
security interest to Pledgee's reasonable satisfaction,
representing 23,750 shares of Montana common stock (the
"Pledged Stock"), including any proceeds from the sale of
the Pledged Stock, and any and all new substituted or
additional assets acquired in respect of the Pledged
Stock (the "Collateral").
2. Voting Rights Retained by Pledgor until Default. To
become effective only upon the final and absolute default
of the obligation (as defined in Section 3, below) by
Borrower, Pledgor does hereby irrevocably appoint Pledgee
as the custodian with respect to the Pledged Stock
pledged hereunder as Collateral with full authority to
use such Pledged Stock; provided, however, that this
Pledge Agreement shall be operative only upon the
occurrence of a final and absolute default in the
performance of the obligation (as defined in Section 3,
below), and so long as such default continues, this
authorization shall be irrevocable for so long as the
obligation (as defined in Section 3, below) remains in
existence.
3. Obligations Secured. The Pledge of the Collateral is
made by Pledgor to secure performance of the following
described obligations with respect to Pledgor (the
"Obligation"): the payment of all principal and any
interest thereon owed by Borrower to Pledgee pursuant to
the Note, and all of the covenants and conditions of the
Note and of the Agreement.
4. Prioritized Recourse. In the event of any default of the
obligation by Borrower, Pledgee's first recourse shall be
its resort to the Collateral, and then to the Borrower
under the Obligation.
5. Default. Subject to Section 4, above, upon the
occurrence of any default under the Obligation, Pledgee
shall thereupon and thereafter have any or all of the
rights and remedies to which a secured party is entitled
in the event of and after default under the provisions of
the United States Uniform Commercial Code - Secured
Transactions, as are now in effect. In addition to those
rights and remedies, Pledgor agrees that Pledgee may in
its sole discretion do or cause to be done in any one or
more of the following:
(a) proceed to realize upon the Collateral in any manner
or priority;
(b) sell, assign and deliver all or any part of the
Collateral in any manner permitted by law, at any time
and from time to time, at public or private sale, with
or without demand and with or without notice or
advertisement; for cash, upon credit or for future
delivery, as the Pledgee shall deem appropriate. The
Pledgee shall have the right to assign, transfer, and
deliver to the purchaser or purchasers thereof the
Collateral so sold. Each such purchaser at any such
sale shall hold the property sold absolutely, free from
any claim or right on the part of the Pledgor; and
(c) if notice to Pledgor is required, give written
notice to the Pledgor not less than 30 (thirty) days
prior to the date of public sale of the Collateral or
prior to the date after which private sale of the
Collateral will be made.
6. Application of Proceeds of Sale. The proceeds of the
sale of Collateral sold pursuant to Section 5, above,
shall be applied by the Pledgee as follows:
First: to the payment of the costs and expenses of such
sale, including the out-of-pocket expenses of the Pledgee
and the reasonable fees and out-of-pocket expenses of
counsel employed in connection therewith, and to the
payment of all advances made by the Pledgee for the
account of the defaulting Pledgor hereinunder in the
payment of all costs and expenses incurred by the Pledgee
in connection with the administration and enforcement of
this agreement;
Second: to the payment-in-full of all indebtedness
under the Obligation, in the order of priority and in the
manner therein specified; and
Third: the remainder, if any, to the Pledgor.
7. Remedies. Except as otherwise provided herein, no remedy
made available to any party hereto by any of the
provisions of this Agreement is intended to be exclusive
of any other remedy, and each and every remedy shall be
cumulative and shall be in addition to every other remedy
given hereunder or now or hereafter existing at law or in
equity or by statute or otherwise.
8. Final Release of Collateral. Upon Pledgor's performance
in full of the Obligation, all right, title and interest
in and to the Collateral of Pledgor shall completely
revest in Pledgor and Pledgee will execute and deliver
any documents and instruments necessary to accomplish
such revesting.
9. Further Assurances. Upon demand, Pledgor shall execute
and deliver to Pledgee such instruments and documents as
Pledgee may deem reasonably necessary or advisable to
confirm or perfect the rights of the Pledgee under this
Pledge Agreement and Pledgee's interest in and to the
Collateral. Pledgor shall take all necessary actions to
preserve and protect the security interest created hereby
as a lien and encumbrance upon the Collateral.
10. Notices. All notices, requests, demands, and other
communications hereunder shall be in writing and shall be
sent by Certified or Registered Mail, return-receipt
requested, or by commercial courier to the Parties hereto
at their respective addresses set forth at the beginning
of this Pledge Agreement, or to such other person and
place as either party hereto shall designate for itself
by notice to the other party.
11. Binding Effect. This Pledge Agreement shall be binding
upon and inure to the benefit to the Parties hereto,
their respective heirs, successors, personal
representatives and permitted assigns.
12. Entire Agreement. This Pledge Agreement (including the
recitals set forth at the beginning hereof), together
with the Note, represents the entire Agreement and
understanding between the Parties hereto with respect to
the credit accommodation, which is the subject matter
hereof and which supersedes all prior agreements,
understandings, discussions and negotiations. This
Agreement may not be amended, supplemented, or otherwise
modified except in a writing which specifically
references this Agreement and which is signed by the
Parties hereto.
13. Headings. The headings in this Agreement are for the
purpose of reference only and shall not limit or
otherwise effect the interpretation of this Agreement.
14. Severability. In case any one or more of the
provisions contained herein shall, for any reason, be
held to be invalid, illegal, or unforeseeable in any
respect, such invalidity, illegality or unenforceability
shall not affect any other provisions of this Pledge
Agreement, and this Pledge Agreement shall be construed
as such invalid, illegal or unenforceable provisions had
never been contained herein; provided that such invalid,
illegal or unenforceable provisions shall be first
curtailed, limited or eliminated to the extent necessary
to remove such invalidity, illegality, or
unenforceability with respect to applicable law as it
shall then be applied.
15. Waiver. Any waiver of, or promise not to enforce, any
right under this Pledge Agreement shall not be
enforceable unless evidenced by a writing signed by the
party hereto making said waiver or promise.
16. Applicable Law. This Pledge Agreement has been
executed and shall be construed and enforced in
accordance with the laws of the State of New York,
irrespective of its conflict of laws rules.
17. Counterparts. This Pledge Agreement may be executed in
any number of counterparts, each of which shall be deemed
an original, but all of which taken together shall
constitute one in the same instrument.
18. Facsimile Signatures. The Parties hereto agree that
the transmission to the other party with the transmitting
party's facsimile signature shall suffice to bind the
party signing and transmitting the same to this Pledge
Agreement in the same manner as if the Pledge Agreement
with the original signature had been duly delivered.
Without limitation of the foregoing, each party who
transmits this Pledge Agreement with its facsimile
signature covenants to deliver the original thereof to
the other party as soon as possible thereafter.
IN WITNESS WHEREOF, the Parties hereof have duly executed
this Pledge Agreement as of the date first above written.
XXXXXXXX S, XXXXXX
("Pledgor")
/s/ Xxxxxxxx X. Xxxxxx
_____________________________________________
Xxxxxxxx X. Xxxxxx
XXXXXX X. APPLE
("Pledgee")
/s/ Xxxxxx X. Apple
______________________________________________
Xxxxxx X. Apple
ACKNOWLEDGEMENTS
AFFIXED,
PLEASE CONTINUE TO PAGE 5
ACKNOWLEDGMENTS.
State of New York )
) ss.
County of Wyoming )
On this 24th day of January 2005, before me personally
came Xxxxxxxx X. Xxxxxx, satisfactorily proven to be the
person described in and who executed the foregoing
instrument, and acknowledged that he executed the same.
/s/ Xxxxx Xxxxxx
___________________________________________
Xxxxx Xxxxxx
My commission expires on January 3, 2006.
(NOTARIAL SEAL)
State of New York )
) ss.
County of Albany )
On this 26th day of January 2005, before me personally
came Xxxxxx X. Apple, to me known to be the person described
in and who executed the foregoing instrument, and
acknowledged that he executed the same.
/s/ Xxxxxxxxx X. Xxxxxx
___________________________________________
Notary Public
My commission expires on (NOTARIAL SEAL)
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Apple Pledge and Security Agreement, January 24, 2005, Page 1 of 5
