Exhibit 9
PLEDGE AND SECURITY AGREEMENT
(Xxxxxx Xxxxxxx Xxxx)
This PLEDGE AND SECURITY AGREEMENT ~ Xxxxxx Xxxxxxx Xxxx (this "Pledge") is made
by and between (a) XXXXXX XXXXXXX XXXX, an individual ("Pledgor"), on the one
hand, and (b) XXXXXX X. XXXXXXXXX, an individual, and XXXXXXX X. SEVEN, an
individual, on the other hand (each, a "Secured Party"), effective as of January
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29, 2003 (the "Effective Date"), based on the following recitals:
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A. Pledgor holds 1,000,000 shares of "free-trading," unrestricted
common stock (the "Shares") of Thinka Weight-Loss Corporation, a Nevada
corporation (the "Company"), as evidenced by that certain share certificate
issued by the Company to Pledgor (the "Certificate").
B. Secured Parties have executed and entered into that certain Put and
Call Agreement, dated as of the Effective Date hereof (the "Put Agreement"). In
connection therewith, Pledgor has executed that certain Indemnity Agreement,
dated as of the Effective Date hereof (the "Indemnity Agreement"), pursuant to
which Pledgor has agreed to assume full responsibility and to indemnify and save
harmless each Secured Party from and against all liabilities, losses, damages,
costs, charges, counsel fees and other expenses of every kind, nature and
character, which Indemnitee may incur as a result of the obligations set forth
in the Put Agreement.
C. As required by the Indemnity Agreement, Pledgor has agreed to pledge
to the Secured Parties the Shares and grant a security interest to Secured
Parties therein in order to secure Pledgor's performance of his obligations
under the Indemnity Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties agree as follows:
1. Security Interest.
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1.1 Grant of Security Interest. Pledgor hereby pledges the Shares
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and hereby grants to Secured Parties a present and continuing security interest
in the Shares (including any and all distributions and proceeds thereof) to
secure Pledgor's payment and performance of Pledgor's obligations arising under
the Indemnity Agreement (the "Obligations"). Upon a Secured Party's reasonable
request, Pledgor shall complete, execute and file one or more Form UCC-1
financing statements to perfect the pledge hereunder.
1.2 Acknowledgments. The parties hereto acknowledge that if suit
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is brought by any Secured Party to enforce such Secured Party's rights under the
Indemnity Agreement or this Pledge, any judgment obtained will be enforced only
against the Shares and against the proceeds of sale or other disposition
thereof, and not personally against Pledgor, his heirs or assigns.
2. Pledgeholder. Pledgor and Secured Parties hereby jointly appoint
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Xxxxxxx X. Xxx, Esq. of Xxx & Xxxxxxx LLP to serve and act as pledgeholder
("Pledgeholder") and to hold and dispose of the Certificate in accordance with
this Pledge. Pledgor hereby collaterally assigns to Pledgeholder the
Certificate without claim of right during the term of this Pledge. Upon
execution of this Pledge, Pledgor shall deliver the Certificate to Pledgeholder
and shall also make, execute and deliver to Pledgeholder an assignment separate
from certificate, endorsed in blank, permitting transfer of the Certificate to
Pledgeholder or Pledgeholder's designee (the "Assignment"), in the form attached
hereto as Exhibit "1."
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2.1 Liability of Pledgeholder. Secured Parties and Pledgor
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acknowledge, understand and agree that Pledgeholder has accepted Pledgeholder's
appointment under this Pledge and shall perform and satisfy Pledgeholder's
duties, liabilities and obligations under this Pledge only as an accommodation
to Secured Parties and Pledgor. Secured Parties and Pledgor, jointly and
severally, hereby indemnify Pledgeholder and each representative of Pledgeholder
and hereby agree to hold Pledgeholder and each such representative free and
harmless from and to defend and protect Pledgeholder and such representative
against any claim made, asserted or threatened against Pledgeholder or such
representative (including any such claim made, asserted or threatened by any
Secured Party, Pledgor or all of them), and any claim incurred by Pledgeholder
or such representative, excluding, however, any claim arising from the gross
negligence, willful misconduct, criminal conduct or intentionally tortious
conduct of Pledgeholder or such representative.
2.2 Proceeding. Pledgeholder, in Pledgeholder's sole discretion,
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may commence any judicial proceeding necessary or appropriate to determining the
respective rights of Secured Parties or Pledgor under this Pledge or to
interpreting or enforcing any term, condition or other provision of this Pledge.
Secured Parties and Pledgor shall jointly and severally be liable for any and
all costs and expenses (including attorneys fees, expert witness fees,
accounting fees and related costs) incurred by Pledgeholder in connection with
such proceeding.
2.3 Release of Escrowed Documents. Pledgeholder shall hold the
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Certificate and Assignment (collectively, the "Escrowed Documents") and shall
release the Escrowed Documents in the following manner:
(a) To Pledgor. If Pledgeholder receives an affidavit sworn
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(or affirmed) by Pledgor stating that all Obligations have been fully paid,
performed and otherwise satisfied, then Pledgeholder shall forthwith deliver a
copy of the affidavit to Secured Parties. Upon the fifteenth (15th) day
following delivery of such copy to Secured Parties, Pledgeholder shall deliver
the Escrowed Documents to Pledgor, unless, on or before such fifteenth (15th)
day, (a) Pledgeholder has been prohibited by order of a court of competent
jurisdiction from delivering such Escrowed Documents to Pledgor or (b)
Pledgeholder has received notice from any Secured Party objecting to Pledgor's
affidavit and stating with particularity those certain Obligations remaining
unpaid, unperformed or otherwise unsatisfied.
(b) To Secured Parties. If Pledgeholder receives an
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affidavit sworn (or affirmed) by a Secured Party stating that Pledgor is in
"Default" (as defined in Section 7 below) and stating with particularity the
nature of such Default, then Pledgeholder shall forthwith deliver a copy of the
affidavit to Pledgor. Upon the fifteenth (15th) day following such delivery,
Pledgeholder shall deliver the Escrowed Documents to such Secured Party unless,
on or before such fifteenth (15th) day, (a) Pledgeholder has been prohibited by
order of a court of competent jurisdiction from delivering the Escrowed
Documents or (b) Pledgeholder has received notice from Pledgor objecting to such
Secured Party's affidavit and stating with particularity the reasons for such
objection.
2.4 Conflict. If Pledgeholder receives conflicting affidavits
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from Secured Parties and Pledgor, then in Pledgeholder's reasonable discretion,
Pledgeholder may refuse to deliver Escrowed Documents to either Secured Parties
or Pledgor and may interplead the Escrowed Documents with a court of competent
jurisdiction and apply to such court for a determination of Secured Parties' and
Pledgor's respective rights regarding the Escrowed Documents and for such other
relief as Pledgeholder may be entitled under applicable law.
3. Secured Parties' Rights. Upon any Default hereunder, each Secured
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Party, without obligation to do so and without notice to or demand upon Pledgor,
may take any action and make any
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expenditure, including attorneys fees, as such Secured Party may deem necessary
to protect its security interest in the Shares. Pledgor hereby agrees to repay
immediately and without demand all sums expended by such Secured Party pursuant
to the provisions of this Section, with interest from the date of expenditure at
the maximum rate allowed by law.
4. Representations and Warranties of Pledgor. Pledgor hereby
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represents and warrants to each Secured Party the following, each of which shall
be true, accurate and complete as of the Effective Date:
4.1 No Violation. Neither (a) Pledgor's grant of the security
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interest in and pledge of the Shares to Secured Parties nor (b) Pledgor's
payment, performance or satisfaction of any duty, liability or obligation under
this Pledge shall result in any violation of, any breach of or any default under
(1) any contract, agreement, covenant, indemnity, representation or warranty to
which Pledgor is a party or which is otherwise binding upon Pledgor or which
affects the Shares or (2) any order, decree, injunction, judgment or award which
is binding upon Pledgor or which affects the Shares.
4.2 Consents. No consent, approval or waiver of any person or
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entity is required in connection with the authorization, execution, delivery or
performance of all obligations of Pledgor under this Pledge.
4.3 No Prior Sale. Pledgor has not, prior to the Effective Date
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hereof, sold, assigned, conveyed, pledged, encumbered, or otherwise disposed of
all or any portion of its right, title or interest in or to the Shares, and is
hereby granting a security interest in and pledging the Shares to Secured
Parties free and clear of any and all claims, liens and encumbrances.
4.4 No Litigation. There are no actions, suits, proceedings,
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orders, decrees, judgments, investigations, or claims pending or, to Pledgor's
knowledge, threatened against or affecting Pledgor, the Company, or the Shares
which, if adversely determined, would materially and adversely affect Pledgor or
the Company, or Pledgor's ability to perform its obligations under this Pledge,
or for which Secured Parties could become liable.
5. Pledgor's Covenants. Except to the extent waived or consented to in
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writing by Secured Party, Pledgor agrees that, pending the payment, performance
or satisfaction in full of all Obligations:
5.1 No Assignment. Pledgor shall not sell, assign, convey,
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pledge, encumber, or otherwise dispose of all or any portion of its right, title
or interest in or to the Shares without the prior written consent of Secured
Parties, which consent may be given or withheld in Secured Parties' sole
discretion. Pledgor shall maintain its right, title and interest in and to the
Shares free and clear of all liens, encumbrances and claims.
5.2 No Default. Pledgor shall not do any act or omit to do any
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act, or permit any act or omission which will cause a breach of any
representation or warranty made in this Pledge.
6. Benefits of Shares. So long as Pledgor is not in Default under this
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Pledge and subject to the covenants set forth in Section 5, all benefits of or
otherwise related to the Shares shall inure to Pledgor and Pledgor may exercise
any right, power, privilege, authority or remedy attendant the Shares, including
without limitation, any and all management, approval, consent and voting rights
and any and all rights to receive distributions related to or derived from the
Shares. Upon or at any time after the occurrence of a Default under this
Pledge, regardless of whether such Default has been cured, the Secured Parties,
at Secured Parties' sole option, may require the Company to remit all
distributions relating to the Shares to
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Secured Parties. Pledgor hereby authorizes and directs the Company, upon receipt
of written notice from Secured Parties that a Default has occurred under this
Pledge, to remit any and all such distributions to Secured Parties, at such
address as Secured Parties may direct, at such time and in such manner as such
distributions would otherwise be remitted to Pledgor. The Company and the
constituent shareholders thereof shall be entitled to conclusively rely on such
notice and remit all such distributions to Secured Parties and shall have no
liability to Pledgor for any loss or damage Pledgor may incur by reason of said
reliance.
7. Default/Remedies. Pledgor shall be in Default of this Pledge upon
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the occurrence of any of the following events (each, a "Default"): (a) Pledgor
fails to pay, perform or satisfy any Obligation and, to the extent that such
cure is reasonably susceptible to completion within fifteen (15) calendar days
following a Secured Party's delivery to Pledgor of notice thereof, Pledgor fails
to cure such failure within such 15-day period; (b) Pledgor admits in writing
Pledgor's inability to pay Pledgor's debts as such debts become due; makes a
general assignment for the benefit of creditors; or files any petition or action
for relief under any bankruptcy, reorganization, insolvency or moratorium law or
under any other law for the relief of debtors; or (c) Pledgor fails to have
dismissed or vacated within thirty (30) calendar days following the date of
filing any involuntary petition filed against Pledgor under any bankruptcy,
reorganization, insolvency or moratorium law or under any other law for the
relief of debtors. Upon any Default hereunder, any Secured Party, at its
option, without demand upon or notice to Pledgor, may do any one or more of the
following: (a) declare all Obligations secured hereby to be immediately due and
payable; (b) dispose of the Shares in accordance with California Commercial Code
Section 9610; (c) retain the Shares in accordance with California Commercial
Code Section 9620 and Section 2 above in full satisfaction of the Obligations;
and (d) exercise any and all other rights and remedies provided a secured party
under the California Commercial Code or any other applicable law. Subject to
the provisions of the Indemnity Agreement and Section 1.2 hereof, all rights and
remedies set forth herein are cumulative and the exercise of one right or remedy
shall not prevent any Secured Party from exercising any other right or remedy
provided herein or by law or at equity.
8. Attorneys Fees. In the event of any action by any Secured Party to
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collect upon or enforce the Obligations (including any such action in any
bankruptcy case in which Pledgor is a debtor), such Secured Party shall be
entitled to collect from Pledgor and Pledgor shall pay to such Secured Party any
and all reasonable out-of-pocket costs and expenses, including accountants fees,
expert witness fees and attorneys fees, actually incurred by such Secured Party
in such action, with or without the initiation of any judicial proceeding. All
such costs and expenses shall be fully secured by this Pledge. In the event of
any mediation, arbitration, administrative proceeding, investigative proceeding
or judicial proceeding (each, a "Proceeding") to enforce or interpret any term,
condition or other provision of this Pledge, the prevailing party in such
Proceeding shall be entitled to recover any and all reasonable out-of-pocket
attorneys fees, expert witness fees, accounting fees and related costs actually
incurred by such prevailing party.
9. Further Assurances. Each party shall sign any other and further
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instruments and documents and shall take any other and further actions as might
be necessary or proper in order to accomplish the intent and purposes of this
Pledge.
10. Notices. All notices and other communications under or in
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connection with this Pledge shall be in writing and shall be deemed given (a) if
delivered personally, upon delivery, (b) if delivered by registered or certified
mail (return receipt requested), upon the earlier of actual delivery or three
days after being so mailed, or (c) if delivered by overnight courier, upon
signature acknowledging receipt thereof, in each case to the parties at the
address set forth on the signature page below.
11. General Provisions. Waiver by any Secured Party of any Default or
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breach contained in or
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secured by this Pledge shall not be construed as a waiver of any subsequent
breach. This Pledge cannot be amended or terminated except in writing signed by
all of the parties hereto. This Pledge shall be governed by and construed in
accordance with the laws of the State of California. If any term of this Pledge
is held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the provisions shall remain in full force and
effect. This Pledge and all other documents and instruments executed in
connection therewith comprise the entire agreement of the parties hereto and
supersede any prior written or oral agreement between them concerning the
subject matter contained herein. This Pledge may be signed in counterparts and
each counterpart shall be deemed to be an original, and all of such counterparts
shall together constitute one and the same Pledge.
[signatures begin on next page]
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IN WITNESS WHEREOF, the parties have executed this Pledge effective as of the
date first above written.
"SECURED PARTIES"
/s/ Xxxxxx X. Xxxxxxxxx
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XXXXXX X. XXXXXXXXX, an individual
ADDRESS FOR NOTICE:
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/s/ Xxxxxxx X. Seven
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XXXXXXX X. SEVEN, an individual
ADDRESS FOR NOTICE:
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"PLEDGOR"
/s/ Xxxxxx Xxxxxxx Xxxx
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XXXXXX XXXXXXX XXXX, an individual
ADDRESS FOR NOTICE:
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EXHIBIT "1"
ASSIGNMENT
(See attached pages)
1
STOCK TRANSFER POWER
I, XXXXXX XXXXXXX XXXX, hereby sell, assign, and transfer to
____________________ the following "free-trading," unrestricted shares of common
stock of THINKA WEIGHT-LOSS CORPORATION, a Nevada corporation (the
"Corporation"), represented by the following certificate, standing in my name on
the books of the Corporation, and do hereby irrevocably appoint the Secretary of
the Corporation or the transfer agent to transfer such shares on the books of
the Corporation in accordance with these instructions:
Certificate No. No. of Shares
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1,000,0000
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/s/ Xxxxxx Xxxxxxx Xxxx
DATED:
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XXXXXX XXXXXXX XXXX, an individual
1
