PLEDGE AND SECURITY AGREEMENT
Exhibit
10.27
This
Pledge and Security Agreement (this "Agreement") is made effective as of
_______________, 2009 ("Effective Date"), by and between Xxx Xxxxxxxxx, an
individual ("Pledgor"), and Xxxx Xxxxxx Financial, Inc., a New York corporation
("JTF"), in its capacity as representative of the Investors, as hereinafter
defined.
RECITALS:
A. The
Pledgor is the Chief Executive Officer and a principal stockholder of Amber
Ready, Inc., a Nevada corporation (the “Company”).
B. The
Company is desirous of concluding a private offering of its secured three year
convertible promissory notes (the “Convertible Notes”) to a number of
“accredited investors” (the “Investors”), as such term is defined in Rule 501 of
Regulation D under the Securities Act of 1933, as amended.
C. To induce
the Investors to purchase the Convertible Notes, the Pledgor has agreed to
guarantee the attainment by the Company of a certain Target, as hereinafter
defined, pursuant to a guarantee of even date herewith (the “Guarantee”) and to
grant a security interest in the Pledged Securities, as hereinafter defined, to
secure the attainment of the Target.
D. It is a
condition precedent to the effectiveness of the Investors’ subscriptions for
Convertible Notes that this Agreement shall have been executed and delivered by
Pledgor and shall be in full force and effect; and
E. Pledgor
has determined that Pledgor's execution, delivery and performance of this
Agreement may reasonably be expected to provide substantial benefit to Pledgor,
directly or indirectly, and to be in the best interests of Pledgor.
NOW,
THEREFORE, FOR VALUE RECEIVED, the sufficiency of which is acknowledged by the
parties, the parties hereto agree as follows:
ARTICLE
I.
SECURITY
INTEREST AND PLEDGE
Section
1.01 DEFINED
TERMS AND RELATED MATTERS.
(a) Capitalized
terms used and not otherwise defined herein that are defined in the Convertible
Note shall have the meanings specified therein. Capitalized terms
used and not otherwise defined herein or in the Convertible Note that are
defined in the Guarantee shall have the meanings specified
therein. Terms defined in the singular include the plural and terms
defined in the plural include the singular.
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(b) The words
"hereof", "herein" and "hereunder" and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not to any particular
provision of this Agreement.
(c) Unless
otherwise defined herein or in the Purchase Agreement, the terms defined in
Articles 8 and 9 of the Uniform Commercial Code as enacted in the State of New
York as in effect from time to time (the "Code"), are used herein as therein
defined.
(d) "Pledged
Securities" means 13,814,000 shares of the common stock, $0.0001 par value per
share (the “Common Stock”), owned by Pledgor. The certificate
number(s) and other information with respect to the Pledged Securities are set
forth on Schedule A to this Agreement.
Section
1.02 SECURITY
INTEREST AND PLEDGE. Subject to the terms of this Agreement, Pledgor
hereby pledges and delivers to JTF, and hereby grants to JTF, a lien on and
security interest all of Pledgor's rights, titles, interests and privileges in
and with respect to the Pledged Securities, including, without limitation: (a)
all certificates or instruments representing Pledged Securities and all
proceeds, income and profits thereon, and all interest, dividends and other
payments, property, revenues, and distributions with respect thereto; (b) all
proceeds received or receivable by Pledgor in cash, stock or otherwise, from any
recapitalization, reclassification, merger, dissolution, liquidation or other
termination of the existence of the Company relating to the Pledged Securities;
and (c) all other proceeds or assets received or receivable by Pledgor in
respect of its status as a stockholder of the Company with respect to the
Pledged Securities (all such property, collectively, the "Collateral");
provided, that the inclusion of proceeds in this Agreement does not authorize
Pledgor to sell, dispose of or otherwise use the Collateral in any manner not
specifically authorized hereby. All certificates representing the
Pledged Securities shall be deposited into escrow pursuant to the Escrow
Agreement (the “Escrow Agreement”) being executed simultaneously
herewith.
Section
1.03 OBLIGATIONS
SECURED.
(a) This
Agreement secures: (i) the addition by the Company, at any time within 18 months
after the closing of the Minimum Offering (the “Measuring Date”), of 500,000 new
Qualified Subscribers (as hereinafter defined) and (ii) the Company being Cash
Flow Positive (as hereinafter defined) no later than the Measuring Date (the
addition of such minimum number of new Qualified Subscribers and the Company
being Cash Flow Positive no later than the Measuring Date are collectively
referred to as the “Target”) (the Company’s obligation to attain such Target is
sometimes referred to as the "Obligations"). A Qualified Subscriber
shall mean a subscriber for the Company’s services who has paid at least $25.00
to the Company during the 18 months preceding the Measuring Date. The
Company being “Cash Flow Positive” no later than the Measuring Date shall mean
that during any three month period prior to the Measuring Date, the Company’s
business, operated in the ordinary course consistent with past practice, has
generated cash receipts during such period in excess of the Company’s cash
disbursements during such period.
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(b) No later
than 30 days following the Measuring Date, the Company shall deliver to JTF, as
representative of the Investors, a certificate (the “Certificate”) signed by the
Pledgor, in his capacity as the Company’s Chief Executive Officer, and by the
Company’s Chief Financial Officer, certifying that the Company has timely
attained the Target. The Certificate shall be accompanied by (i) a
copy of a report from the Company’s independent auditors wherein the auditors,
based upon a review of the Company’s records, confirm that the Target has been
timely attained by the Company and (ii) such additional supporting documentation
as JTF shall reasonably request. If within 15 days following receipt
of the Certificate and the other supporting documentation, JTF does not deliver
to the Company a notice (the “Notice”) disputing the Company’s timely attainment
of the Target, the Company shall be deemed to have timely attained the
Target. If TJF shall deliver a Notice to the Company, the matter
shall be referred to an independent firm of public accountants mutually agreed
by the Company and TJF, whose decision shall be final and binding on the
parties. The fees charged by independent firm of public accountants
shall be paid by the non-prevailing party. If the Company fails to
deliver to TJF a Certificate within 30 days following the Measuring Date, it
shall be deemed that the Company has failed to timely attain the
Target.
Section
1.04 FORMALITIES. (a)
All certificates and instruments representing the Pledged Securities have been,
or, in the case of all Pledged Securities hereafter acquired, immediately upon
acquisition shall be, delivered to and shall be held by or on behalf of JTF
pursuant hereto in suitable form for transfer by delivery, or accompanied by
undated stock powers or other instruments of transfer or assignment, duly
executed in blank, all in form and substance satisfactory to JTF (“Transfer
Documents”).
(b) Notwithstanding
anything to the contrary contained in clause (a) above, if any Pledged
Securities (whether now owned or hereafter acquired) are uncertificated
securities, Pledgor shall promptly notify JTF thereof, and shall promptly take
all actions required to perfect the security interest of JTF under applicable
law (including, in any event, under the provisions of Article 8 or 9 of the
Code, if applicable). Pledgor further agrees to take such actions as
JTF deems necessary or desirable to effect the foregoing and to permit JTF to
exercise any of its rights and remedies hereunder, and agrees, promptly upon the
request of JTF, to provide an opinion of counsel, in form and substance
satisfactory to JTF, as to the validity and enforceability of the security
interest created by this Agreement with respect to such uncertificated
securities, the perfection of JTF's security interest therein and such other
matters as may be reasonably requested by JTF.
(c) JTF shall
have the right, at any time in its reasonable discretion and without notice to
Pledgor, to (i) transfer to any of its nominees any or all of the Collateral,
subject only to the revocable rights set forth in Section 4.01 hereof and
applicable law, and (ii) so long as an Event of Default shall have occurred and
be continuing, to register any or all of the Collateral in its own
name. In addition, JTF shall have the right at any time to exchange
certificates or instruments representing or evidencing Collateral for
certificates or instruments of smaller or larger denominations.
(d) The
Pledgor hereby authorizes JTF, at the expense of Pledgor (including the fees and
expenses of counsel to JTF), to file one or more financing or continuation
statements, and amendments thereto, relating to all or any part of the
Collateral without the signature of Pledgor where permitted by law. A
photocopy or other reproduction of this Agreement or any financing statement
covering the Collateral or any part thereof shall be sufficient as a financing
statement where permitted by law. Pledgor understands and agrees that
even though JTF has no obligation to do so, with respect to any financing
statement, JTF intends to file (at the expense of Pledgor, including the fees
and expenses of counsel to JTF) any continuation statement or amendment where
failure to so file could reasonably be expected to result in the lapse of such
financing statement at any time within three months of any such proposed
filing.
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ARTICLE
II.
REPRESENTATIONS
AND WARRANTIES
Section
2.01 REPRESENTATIONS
AND WARRANTIES. Pledgor represents, warrants, and covenants to JTF as
follows:
(a) The
Pledged Securities outstanding on the date hereof: (i) have been duly and
validly issued and are fully paid and non-assessable; and (iii) are subject to
no options, warrants, calls or commitments of any character whatsoever relating
thereto.
(b) Any
instruments of transfer or assignment relating to certificates representing or
evidencing the Pledged Securities, executed in blank and delivered by Pledgor to
JTF herewith, have been duly executed by Pledgor and vest in JTF the authority
that they purport to confer.
(c) Upon (i)
the pledge, assignment and delivery to JTF by Pledgor of the Collateral pursuant
to this Agreement and (ii) the filing of UCC 1 financing statements and other
necessary or appropriate registrations and recordings in the Office of the
Secretary of State of the State of New Jersey, all filings, registrations and
recordings necessary or appropriate to create, preserve, protect and perfect the
security interest granted by Pledgor to JTF hereby in respect of the Collateral
will have been accomplished, and the security interest granted by Pledgor to JTF
pursuant to this Agreement in and to the Collateral will constitute a perfected
security interest therein superior and prior to the rights of all other Persons
therein and subject to no other liens and security interests (other than the
liens and security interests created hereunder), and will be entitled to all the
rights, priorities and benefits afforded by the Code or other relevant law as
enacted in any relevant jurisdiction to perfected security
interests.
(d) The
principal place of business of Pledgor and the sole location where the records
of Pledgor with respect to the Collateral are kept are located at 000 Xxxxxxxxx
Xxxxx 0xx
Xxxxx, Xxxxxxxx, Xxx Xxxxxx 00000. Pledgor shall not move such
location of records unless (i) it shall have given to JTF not less than 5 days'
prior written notice of its intention so to do, clearly describing such new
location and providing such other information in connection therewith as JTF may
reasonably request and (ii) with respect to such new location, it shall have
taken all action required by Sections 1.04, 2.01, and 3.04 with respect to such
new jurisdiction and all other action, reasonably satisfactory to JTF, to
maintain the security interest of JTF in the Collateral intended to be granted
hereby at all times fully perfected and in full force and effect.
(e) Pledgor
is the legal and beneficial owner of the Collateral free and clear of any lien
or security interest (except the liens and security interests), and Pledgor has
not sold, granted any option with respect to, assigned, transferred or otherwise
disposed of any of its rights or interests in or to such
Collateral.
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(f) No
effective financing statement or other document similar in effect covering all
or any part of the Collateral is on file in any recording office, except such as
may have been filed in favor of JTF relating to this Agreement, and Pledgor has
not authorized the filing of any such financing statement or other
document. Pledgor will not, without the prior written consent of JTF,
authorize or authenticate any such financing statements after the date hereof,
and there will not ever be on file in any public office, any enforceable
financing statement or statements covering any or all of the Collateral, except
financing statements filed or to be filed in favor of JTF.
(g) No
consent, authorization, approval or other action by, and no notice to or filing
with, any governmental authority or any other Person is required: (i) for the
valid execution, delivery and performance by Pledgor of this Agreement, the
Guarantee or the Escrow Agreement, as hereinafter defined; (ii) for the pledge
by Pledgor of a security interest in the Collateral or for the granting,
perfection and maintenance of the liens and security interests created hereby
and the first priority nature of such liens and security interests (other than
the timely and proper filing of financing statements and continuation statements
related thereto); or (iii) for the exercise by JTF of the voting or other rights
provided for in this Agreement or the remedies in respect of the Collateral
pursuant to this Agreement (except as may be required in connection with such
disposition by laws affecting the offering and sale of securities
generally).
(h) This
Agreement, the Guarantee and the Escrow Agreement have been duly authorized,
executed and delivered by Pledgor and constitute legal, valid and binding
obligations of Pledgor, enforceable against Pledgor in accordance with their
respective terms, except to the extent that the enforceability hereof may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting creditors' rights generally and by equitable
principles (regardless of whether enforcement is sought in equity or at
law).
(i) The
execution, delivery and performance of this Agreement, the Guarantee and the
Escrow Agreement is not in conflict with and does not violate any instrument or
agreement to which Pledgor is a party or by which Pledgor is bound.
(j) Pledgor
covenants and agrees that it will defend JTF's right, title and security
interest in and to the Collateral and the proceeds thereof against the claims
and demands of all persons whomsoever, and Pledgor covenants and agrees that it
will have like title to and right to pledge any other property at any time
hereafter pledged by Pledgor to JTF as Collateral hereunder and will likewise
defend the right thereto and the security interest therein of the
Secured Party.
(k) None of
the Pledged Securities is subject to any defense, offset or counterclaim, nor
have any of the foregoing been asserted or alleged against Pledgor by any Person
with respect thereto.
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(l) Except as
permitted by JTF, Pledgor will not sell, assign, or otherwise dispose of, grant
any option with respect to, or pledge, grant a security interest in or otherwise
encumber any of the Collateral or any interest therein, or suffer any of the
same to exist, and any sale, assignment, option, pledge, security interest or
other encumbrance or disposition of any nature whatsoever made in violation of
this covenant shall be a nullity and of no force and effect, and upon demand of
JTF, shall forthwith be canceled or satisfied by an appropriate instrument in
writing.
(m) Pledgor
shall give JTF prompt notice of any claim relating to the
Collateral. Pledgor shall deliver to JTF a copy of each written
demand, notice or document received by it which may adversely affect JTF's
interest in the Collateral promptly upon, but in any event within five days
after, Pledgor's receipt thereof.
The
representations and warranties set forth in this Section 2.01 shall survive the
execution and delivery of this Agreement.
ARTICLE
III.
AFFIRMATIVE
AND NEGATIVE COVENANTS
Pledgor
covenants and agrees with JTF that until the Obligations are satisfied and
performed in full:
Section
3.01 ENCUMBRANCES. Pledgor
shall not create, permit, or suffer to exist, and shall defend the Collateral
against, any lien, security interest, or other encumbrance on the Collateral
except the pledge and security interest of JTF hereunder, and shall defend
Pledgor's rights in the Collateral and JTF’s security interest in the Collateral
against the claims of all persons.
Section
3.02 SALE OF
COLLATERAL. Pledgor shall not sell, assign, or otherwise dispose of
the Collateral or any part thereof without the prior written consent of
JTF.
Section
3.03 FURTHER
ASSURANCES. (a) At any time and from time to time, upon the request
of JTF, and at the sole expense of Pledgor, Pledgor shall promptly execute and
deliver all such further instruments and documents and take such further action
as JTF may deem necessary or desirable to preserve and perfect its security
interest in the Collateral and carry out the provisions and purposes of this
Agreement, including, without limitation, the execution and/or filing of such
financing statements as JTF may require (and any such filing is hereby
authorized by Pledgor). A carbon, photographic, or other reproduction
of this Agreement or of any financing statement covering the Collateral or any
part thereof shall be sufficient as a financing statement and may be filed as a
financing statement.
(b) In
addition to performing its obligations under Section 3.04 (a) above, Pledgor
will, upon acquiring any additional Pledged Securities, promptly (and in any
event within ten days) deliver to JTF a Supplement to Pledge Agreement, duly
executed by such Pledgor (each, a "Supplement to Pledge Agreement"), identifying
such additional Pledged Securities. Pledgor hereby authorizes JTF to
attach each Supplement to Pledge Agreement to this Agreement and agrees that all
additional Pledged Securities listed on any Supplement to Pledge Agreement
(including any schedules(s) thereto) delivered to JTF shall for all purposes
hereunder constitute Collateral. Pledgor will, at the request of JTF,
deliver an opinion of counsel, in form and substance reasonably satisfactory to
JTF, as to the validity and perfection of the security interest granted in the
Collateral identified in any Supplement to Pledge Agreement (including any
schedule(s) thereto) and the proceeds thereof.
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Section
3.04 OBLIGATIONS. Pledgor
shall duly and punctually pay and perform the Obligations, including without
limitation, the obligations of Pledgor under this Agreement.
Section
3.05 NOTIFICATION. Pledgor
shall promptly notify JTF of (i) any lien, security interest, encumbrance or
claim made or threatened against the Collateral, (ii) any material change in the
Collateral, including, without limitation, any material decrease in the value of
the Collateral, and (iii) the occurrence or existence of any Event of Default
(hereinafter defined) or the occurrence or existence of any condition or event
that, with the giving of notice or lapse of time or both, would be an Event of
Default.
Section
3.06 COMPLIANCE
WITH LAWS. Pledgor shall comply with all applicable laws, rules,
regulations, and orders of any court or governmental authority.
ARTICLE
IV.
RIGHTS OF
JTF AND PLEDGOR
Section
4.01 VOTING
RIGHTS. So long as no Event of Default shall have occurred and be
continuing and this Agreement is in force and effect, Pledgor shall be entitled
to exercise any voting and other consensual rights relating or pertaining to the
Collateral or any part thereof provided, however, that no vote shall be cast or
consent, waiver or ratification given or action taken that would be inconsistent
with or violate any provision of this Agreement or any other Transaction
Document. Upon the occurrence and during the continuance of an Event
of Default, at the sole option of JTF, all voting rights shall thereupon become
vested in JTF or its assignee, who shall thereupon have the sole right to
exercise or to assign the right to exercise such voting and other consensual
rights.
Section
4.02 DIVIDENDS;
DISTRIBUTIONS. Until an Event of Default occurs and is continuing, Pledgor shall
be entitled to receive, retain and use any and all dividends, distributions and
other payments paid in respect of the Collateral to the extent not otherwise
prohibited hereby or by any other Transaction Documents; provided, however, that
any and all
(a) dividends,
distributions and other amounts paid or payable other than in cash in respect
of, and instruments and other property received, receivable or otherwise
distributed in respect of, or in exchange for, any of the
Collateral;
(b) dividends
or distributions hereafter paid or payable in cash in respect of any of the
Collateral in connection with a partial or total liquidation or dissolution;
and
(c) cash
paid, payable or otherwise distributed in redemption of, or in exchange for,
Pledgor's portion of the Collateral; shall be,
and shall be forthwith delivered to JTF to hold as, Collateral and shall, if
received by such Pledgor, be received in trust for the benefit of JTF, be
segregated from the other property or funds of such Pledgor and be forthwith
delivered to JTF as Collateral in the same form as so received (with any
necessary endorsement).
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Section
4.03 EXERCISE
OF RIGHTS. Upon the occurrence and during the continuance of an Event
of Default:
(i) JTF
shall, without notice to Pledgor, transfer or register in the name of JTF or any
of its nominees any or all certificates, if any, of the Collateral held by JTF
hereunder, and JTF or its nominee may thereafter, after delivery of notice to
each Pledgor, exercise all voting and other rights with respect to the
Collateral (in each such case whether exercisable at any meeting of the Company
or by written consent or otherwise) and any and all rights of conversion,
exchange, subscription or any other rights, privileges or options pertaining to
any of the Collateral, as if it were the absolute owner thereof, including,
without limitation, the right to exchange at its discretion any and all of the
Collateral upon the merger, consolidation, reorganization, recapitalization or
other readjustment of the Company or upon the exercise by Pledgor or JTF of any
right, privilege or option pertaining to any certificates of the Collateral, and
in connection therewith, to deposit and deliver any and all of the Collateral
with any committee, depositary, transfer agent, registrar or other designated
agency upon such terms and conditions as it may determine, all without liability
except to account for property actually received by it, but JTF shall have no
duty to exercise any of the aforesaid rights, privileges or options, and JTF
shall not be responsible for any failure to do so or delay in so
doing.
(ii) All
rights of Pledgor to exercise the voting and other consensual rights which it
would otherwise be entitled to exercise pursuant to Section 4.01 hereof and to
receive the dividends, distributions and other payments which it would otherwise
be authorized to receive and retain pursuant to Section 4.02 hereof shall cease,
and all such rights shall thereupon become vested in JTF which shall thereupon
have the sole right to exercise such voting and other consensual rights and to
receive and hold as Collateral such dividends, distributions and other
payments.
(iii) All
dividends, distributions or other payments which are received by Pledgor
contrary to the provisions of this Article shall be received in trust for the
benefit of JTF, shall be segregated from other funds of Pledgor, and shall be
forthwith paid over to JTF as Collateral in the same form as so received (with
any necessary endorsement).
(iv) Pledgor
shall execute and deliver (or cause to be executed and delivered) to JTF all
such instruments as JTF may reasonably request for the purpose of enabling JTF
to exercise the voting and other rights which it is entitled to exercise
pursuant to this Article and to receive the dividends, distributions or other
payments which it is entitled to receive and retain pursuant to this
Article.
Section
4.04 JTF
APPOINTED ATTORNEY-IN-FACT. Pledgor hereby irrevocably designates,
makes, constitutes and appoints JTF Pledgor's attorney-in-fact, with full
authority in the place and stead of Pledgor and in the name of Pledgor or
otherwise, from time to time in JTF's discretion, to take any action and to
execute any agreement, document or instrument which JTF may deem necessary or
advisable to accomplish the purposes of this Agreement, including, without
limitation:
(a) upon the
occurrence and during the continuance of an Event of Default, to ask, demand,
collect, xxx for, recover, compromise, receive and give acquittance and receipts
for monies due and to become due under or in connection with the
Collateral;
(b) upon the
occurrence and during the continuance of an Event of Default, to receive,
indorse and collect any drafts or other instruments, documents and chattel
paper, in connection therewith; and
(c) upon the
occurrence and during the continuance of an Event of Default, to file any claims
or take any action or institute any proceedings that JTF may deem necessary or
desirable for the collection of any of the Collateral or otherwise to enforce
the rights of JTF with respect to any of the Collateral.
Section
4.05 PERFORMANCE
BY JTF OF PLEDGOR'S OBLIGATIONS. If Pledgor fails to perform or
comply with any of the agreements contained herein and JTF itself shall cause
performance of or compliance with such agreement, the expenses of JTF shall be
payable by Pledgor to JTF on demand and shall constitute Obligations secured by
this Agreement.
Section
4.06 POSSESSION;
REASONABLE CARE. The powers conferred on JTF hereunder are solely to
protect its interest in the Collateral and shall not impose any duty upon it to
exercise any such powers. Except for the safe custody of any
Collateral in its possession and the accounting for monies actually received by
it hereunder, JTF shall have no duty as to any Collateral or as to the taking of
any necessary steps to preserve rights against prior parties or any other rights
pertaining to any Collateral. JTF shall hold in its possession all
Collateral pledged, assigned or transferred hereunder, except as from time to
time any documents or instruments may be required for recordation or for the
purpose of enforcing or realizing upon any right or value thereby
represented. JTF may, from time to time, in its sole discretion,
appoint one or more agents to hold physical custody, for the account of JTF, of
any or all of the Collateral. JTF shall be deemed to have exercised
reasonable care in the custody and preservation of any Collateral in its
possession if such Collateral is accorded treatment substantially equal to that
which JTF accords its own property, it being understood that JTF shall not have
any responsibility for (a) ascertaining or taking action with respect to calls,
conversions, exchanges, maturities, tenders or other matters relative to any
Collateral, whether or not JTF has or is deemed to have knowledge of such
matters, or (b) taking any necessary steps to preserve rights against any
parties with respect to any Collateral.
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Section
4.07 RELEASE
OF COLLATERAL. Upon the timely attainment of the Target or if the
Minimum Offering is not attained by March 31, 2009, the parties hereto shall
notify the Escrow Agent, as such term is defined in the Escrow Agreement, to
such effect in writing. Upon receipt of such written notice, the
Escrow Agent shall return to the party designated in the notice the Transfer
Documents and the certificates representing the Pledged
Securities. Notwithstanding anything to the contrary contained
herein, upon the timely attainment of the Target or if the Minimum Offering is
not attained by March 31, 2009, this Agreement and JTF’s security interest and
rights in and to the Pledged Securities shall terminate..
ARTICLE
V.
DEFAULT
Section
5.01 EVENT OF
DEFAULT. Each of the following shall be deemed an "Event of
Default":
(a) A failure
by the Company to timely attain the Target;
(b) Any
representation or warranty made by Pledgor in this Agreement is false,
misleading, or erroneous in any material respect on the date when made;
or
(c) Pledgor
shall fail to perform, observe, or comply with any covenant, agreement or term
contained in this Agreement and such failure continues, without cure, for twenty
(20) days after written notice to Pledgor.
Section
5.02 RIGHTS
AND REMEDIES. Upon the occurrence of an Event of Default, and subject
to the notice and opportunity to cure (if any), JTF, on behalf of the Investors,
shall have the following rights and remedies:
(i) JTF may
declare that the Obligations have not been attained, without demand,
presentment, notice of dishonor, notice of acceleration, notice of intent to
accelerate, notice of intent to demand, protest, or any other notice whatsoever,
all of which are hereby expressly waived by Pledgor;
(ii) In
addition to all other rights and remedies granted to JTF in this Agreement and
in any other instrument or agreement securing, evidencing, or relating to the
Obligations, JTF shall have all of the rights and remedies of a secured party
under the Uniform Commercial Code in force in the State of New York as of the
date of this Agreement. Without limiting the generality of the
foregoing, JTF may (A) without demand or notice to Pledgor, collect, receive, or
take possession of the Collateral or any part thereof, (B) sell or otherwise
dispose of the Collateral, or any part thereof, in one or more parcels at public
or private sale or sales, at JTF's offices or elsewhere, for cash or on credit,
and/or (C) bid and become a purchaser at any sale free of any right or equity of
redemption in Pledgor, which right or equity is hereby expressly waived and
released by Pledgor. Upon the request of JTF, Pledgor shall assemble
the Collateral and make it available to JTF at any place designated by
JTF. Pledgor agrees that JTF shall not be obligated to give more than
five (5) days written notice of the time and place of any public sale or of the
time after which any private sale may take place and that such notice shall
constitute reasonable notice of such matters. JTF shall not be
obligated to make any sale of the Collateral regardless of notice of sale having
been given. JTF may adjourn any public or private sale from time to
time by announcement at the time and place fixed therefor, and such sale may,
without further notice, be made at the time and place to which it was so
adjourned;
(iii) JTF may
cause any or all of the Collateral held by it to be transferred into the name of
JTF or the name or names of JTF's nominee or nominees;
(iv) JTF may
cause any or all of the Collateral held by it to be transferred, pro rata, into
the names of the Investors;
(v) JTF shall
be entitled to receive all cash and non-cash dividends payable in respect of the
Collateral;
(vi) JTF shall
have the right, but shall not be obligated to, exercise or cause to be exercised
all voting rights and corporate powers in respect of the Collateral, and Pledgor
shall deliver to JTF, if requested by JTF, irrevocable proxies with respect to
the Collateral in form satisfactory to JTF;
9
(vii) Pledgor
hereby acknowledges and confirms that JTF may be unable to effect a public sale
of any or all of the Collateral by reason of certain prohibitions contained in
the Securities Act of 1933, as amended, and applicable state securities laws and
may be compelled to resort to one or more private sales thereof to a restricted
group of purchasers who will be obligated to agree, among other things, to
acquire any shares of the Collateral for their own respective accounts for
investment and not with a view to distribution or resale
thereof. Pledgor further acknowledges and confirms that any such
private sale may result in prices or other terms less favorable to Pledgor or
other seller than if such sale were a public sale and, notwithstanding such
circumstances, agree that any such private sale shall be deemed to have been
made in a commercially reasonable manner, and JTF shall be under no obligation
to take any steps in order to permit the Collateral to be sold at a public
sale. JTF shall be under no obligation to delay a sale of any of the
Collateral for any period of time necessary to permit any issuer thereof to
register such Collateral for public sale under the Securities Act of 1933, as
amended, or under applicable state securities laws. Pledgor hereby
waives any claims against JTF arising by reason of the fact that the price at
which the Collateral may have been sold at such private sale was less than the
price which might have been obtained at a public sale or was less than the
Obligations even if JTF accepts the first offer received and does not offer the
Collateral to more than one offeree (and JTF or an affiliate of JTF may be the
only offeree and the purchaser of the Collateral); and
(viii) On any
sale of the Collateral, JTF is hereby authorized to comply with any limitation
or restriction compliance with which is necessary, in the view of JTF's counsel,
in order to avoid any violation of applicable law or in order to obtain any
required approval of the purchaser or purchasers by any applicable governmental
authority.
Section
5.03 SECURITY
INTEREST ABSOLUTE. All rights of JTF hereunder and in and to the
Collateral, and all obligations of Pledgor hereunder, shall be absolute and
unconditional irrespective of:
(a) any lack
of validity or enforceability of the Convertible Note, any agreement with
respect to any of the Obligations or any other agreement or instrument relating
to any of the foregoing;
(b) any
change in the time, manner or place of payment of, or in any other term of, all
or any of the Obligations or any other amendment or waiver of or any
consent to any departure from this Agreement or any other agreement
or instrument; or
(c) any sale,
exchange, release or nonperfection of any other collateral, or any release of
any guarantor or any person liable in any manner for the collection of any of
the Obligations or any amendment or waiver of or consent to or departure from
the Convertible Note or any guaranty for all or any of the
Obligations.
Section
5.04 WAIVER
AND CONSENT.
(a) Pledgor
consents and agrees that JTF may in its absolute and sole discretion, at any
time and from time to time, without notice or demand, and without affecting the
enforceability or security hereof: (i) accept new or additional instruments,
documents or agreements in exchange for or relative to any of the Collateral or
any part thereof; (ii) receive and hold additional security or guaranties for
the Obligations or any part thereof; (iii) release, reconvey, terminate, waive,
abandon, fail to perfect, subordinate, exchange, substitute, transfer or enforce
any security or guarantees and apply any security and direct the order or manner
of sale thereof; (iv) release any person from any personal liability with
respect to the Obligations or any part thereof; and (v) settle, release on terms
satisfactory to JTF or by operation of applicable laws or otherwise liquidate or
enforce any Obligations and any security or guaranty in any manner, and consent
to the transfer of any security.
10
(b) Upon the
occurrence and during the continuance of an Event of Default, and subject to the
notice and opportunity to cure, if any, hereunder, JTF may enforce this
Agreement independently from any other document and independently of any other
remedy, security or guaranty JTF at any time may have or hold in connection with
the Obligations, and it shall not be necessary for JTF to marshal assets in
favor of Pledgor or any other person or to proceed upon or against and/or
exhaust my other security or remedy before proceeding to enforce this
Agreement. Pledgor expressly agrees that JTF may proceed against any
or all of the Collateral or guaranties for the Obligations in such order and in
such manner as it shall determine in its sole and absolute
discretion. JTF may file a separate action or actions against
Pledgor, whether action is brought or prosecuted with respect to any other
security or against any other person, or whether any other person is joined in
any such action or actions. Pledgor expressly waives the benefit of
any statute(s) of limitations affecting its liability hereunder or the
enforcement of the Obligations or the lien or security interest created or
granted herein.
(c) Pledgor
expressly waives any and all defenses now or hereafter arising or asserted by
reason of (i) the failure of priority of any security for the Obligations (ii)
any failure of JTF to give notice of sale or other disposition of any property
securing the Obligations to Pledgor or any other person or any defect in any
notice that may be given in connection with any sale or disposition of any
property securing the Obligations, (iii) any failure of JTF to comply with
applicable laws in connection with the sale or other disposition of any property
securing the Obligations, including, without limitation, any failure of JTF to
conduct a commercially reasonable sale or other disposition of any property
securing the Obligations, (iv) any act or omission of JTF or others that
directly or indirectly results in or aids the discharge or release of the
Obligations or any other security or guaranty therefor by operation of law or
otherwise, (v) any law that provides that the obligation of a surety or
guarantor must neither be larger in amount nor in other respects more burdensome
than that of the principal or that reduces a surety's or guarantor's obligation
in proportion to the principal's obligation, (vi) any failure of JTF to file or
enforce a claim in any bankruptcy or other proceeding with respect to any
person, (vii) the election by JTF, in any bankruptcy proceeding of any person,
of the application or nonapplication of Section 1111(b)(2) of the United States
Bankruptcy Code, (viii) any extension of credit or the grant of any lien under
Xxxxxxx 000 xx xxx Xxxxxx Xxxxxx Bankruptcy Code, (ix) any use of cash
collateral under Section 363 of the United States Bankruptcy Code, (x) any
agreement or stipulation with respect to the provision of adequate protection in
any bankruptcy proceeding of any person, (xi) the avoidance of any bankruptcy,
insolvency, reorganization, arrangement, readjustment of debt, liquidation or
dissolution proceeding of any Person, including any discharge of, or bar or stay
against collecting, all or any of the Obligations in or as a result of any such
proceeding, or (xii) any action taken by JTF that is authorized by this Section
or any other provision of the Guarantee.
ARTICLE
VI.
MISCELLANEOUS
Section
6.01 EXPENSES;
INDEMNIFICATION. Pledgor agrees to pay on demand all costs and
expenses incurred by JTF in connection with the preparation, negotiation, and
execution of any and all amendments, modifications, and supplements
hereto. Pledgor agrees to pay and to hold JTF harmless from and
against all excise, sales, stamp, or other taxes and all fees payable in
connection with this Agreement or the transactions contemplated hereby, and
agree to hold JTF harmless from and against any and all present or future claims
or liabilities with respect to or resulting from Pledgor performing or delaying
in performing their obligations under this Agreement.
Section
6.02 NO
WAIVER; CUMULATIVE REMEDIES. No failure on the part of JTF to
exercise and no delay in exercising, and no course of dealing with respect to,
any right, power, or privilege under this Agreement shall operate as a waiver
thereof, nor shall any single or partial exercise of any right, power, or
privilege under this Agreement preclude any other or further exercise thereof or
the exercise of any other right, power, or privilege. The rights and
remedies provided for in this Agreement are cumulative and not exclusive of any
rights and remedies provided by law.
11
Section
6.03 SUCCESSORS
AND ASSIGNS. This Agreement shall be binding upon and inure to the
benefit of Pledgor and JTF and their respective heirs, successors, and assigns,
except that Pledgor may not assign any of its rights or obligations under this
Agreement without the prior written consent of JTF in its sole
discretion. JTF may assign this Agreement to any assignee or
transferee.
Section
6.04 AMENDMENT;
ENTIRE AGREEMENT. This Agreement embodies the entire agreement among
the parties hereto and supersedes all prior agreements and understandings, if
any, relating to the subject matter hereof. The provisions of this
Agreement may be amended or waived only by an instrument in writing signed by
the parties hereto.
Section
6.05 NOTICES. Any
notice, consent, or other communication required or permitted to be given under
this Agreement to JTF or Pledgor must be in writing and delivered in person, or
mailed by registered or certified mail, return receipt requested, postage
prepaid, or sent by facsimile transmission with evidence of receipt if also sent
by registered or certified mail, return receipt requested, postage prepaid as
follows:
To
JTF: Xxxx
Xxxxxx Financial, Inc.
00 Xxxx
Xxxxxx, 0xx
Xxxxx
Xxx Xxxx,
XX 00000
Attn: Xxxxxx
Xxxxxxx
FAX: (000)
000-0000
With a copy
to: Xxxxxxx
Xxxxxx & Xxxx LLP
Two Grand Central Tower
000 Xxxx 00xx
Xxxxxx, 00xx
Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxxx Xxxxxxxx,
Esq.
FAX: (000)
000-0000
To
Pledgor: Xxx
Xxxxxxxxx
c/o Xxxxx Ready, Inc.
000 Xxxxxxxxx Xxxxx, 0xx
Xxxxx
Xxxxxxxx, XX 00000
FAX: (000)
000-0000
with a
copy
to: Sichenzia
Xxxx Xxxxxxxx Xxxxxxx LLP
00 Xxxxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxx X. Xxxx,
Esq.
FAX: (000)
000-0000
Any such
notice, consent, or other communication shall be deemed given when delivered in
person, or if sent by facsimile transmission as provided above, on the day the
transmission was received if before 5:00 p.m. local time that day (or on the
next day, if received after 5:00 p.m. local time) or, if mailed, when duly
deposited in the mails.
Section
6.06 CHOICE OF
LAW. This Agreement shall be governed by, and construed in accordance
with, the laws of the State of New York, without regard to principles of
conflict of laws. In any action between or among any of the parties,
whether arising out of this Agreement or otherwise, each of the parties
irrevocably consents to the exclusive jurisdiction and venue of the federal and
state courts located in the City, County and State of New York.
12
Section
6.07 INTERPRETATION. The
parties hereto have participated jointly in the negotiating and drafting of this
Agreement. If an ambiguity or a question of intent or interpretation
arises, this Agreement shall be construed as if drafted jointly by the parties,
and no presumption or burden of proof shall arise favoring or disfavoring any
party by virtue of the authorship of any provisions of this
Agreement.
Section
6.08 HEADINGS. The
headings, captions, and arrangements used in this Agreement are for convenience
only and shall not affect the interpretation of this Agreement.
Section
6.09 SURVIVAL
OF REPRESENTATIONS AND WARRANTIES. All representations and warranties
made in this Agreement or in any certificate delivered pursuant hereto shall
survive the execution and delivery of this Agreement, and no investigation by
JTF shall affect the representations and warranties made by Pledgor or the right
of JTF to rely upon them.
Section
6.10 EXECUTION. This
Agreement may be executed in two or more counterparts, all of which when taken
together shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each party and delivered to the
other party, it being understood that both parties need not sign the same
counterpart. In the event that any signature is delivered by
facsimile transmission or by e-mail delivery of a ".pdf" format data file, such
signature shall create a valid and binding obligation of the party executing (or
on whose behalf such signature is executed) with the same force and effect as if
such facsimile or ".pdf" signature page were an original thereof.
Section
6.11 SEVERABILITY. Any
provision of this Agreement which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions of this Agreement, and any such prohibition or unenforceability in
any jurisdiction shall not invalidate or render unenforceable such provision in
any other jurisdiction.
[SIGNATURES
APPEAR ON THE FOLLOWING PAGE.]
13
IN WITNESS WHEREOF, the undersigned
have executed this Pledge and Security Agreement as of the date first written
above.
| "Pledgor" | |||
| XXX XXXXXXXXX | |||
|
|
By:
|
/s/ XXX XXXXXXXXX | |
| Name | |||
| Title | |||
| "JTF" | |||
| XXXX XXXXXX FINANCIAL, INC. | |||
|
|
By:
|
/s/ XXXXXX XXXXXXX | |
| Xxxxxx Xxxxxxx | |||
| Chief Executive Officer | |||
14
SCHEDULE
A
Pledged
Securities
|
Certificate
Number
|
Registered
Owner
|
Number
of Shares
|
|
1242
|
Xxx
X. Xxxxxxxxx
|
13,814,000
|
15
