PLEDGE AGREEMENT
Exhibit
10.22
THIS
PLEDGE AGREEMENT (“Agreement”) is entered into as of this 27th
day
of
February, 2008, by and among ASSOCIATED THIRD PARTY ADMINISTRATORS (“Pledgor”)
and INFORMATION CONCEPTS, INC. (“Pledgee or Secured Party”).
RECITALS
A. PARTIES.
The
parties hereto have entered into a WebERF Software License Agreement (“License
Agreement”) dated January 31, 2008, by and among BENEFITS TECHNOLOGIES, LLC
(“BT”), Pledgor and Pledgee. Capitalized terms not otherwise defined herein
shall have the meaning given such terms in the License Agreement.
B. PURPOSE.
Pursuant to Paragraph 9.1 of the License Agreement, fifty percent (50%) of
the
membership interest owned by Pledgor in BT shall be pledged as security for
the
performance of Pledgor of its Obligations (defined below) under the License
Agreement.
NOW,
THEREFORE, in consideration of the mutual covenants, agreements,
representations, and warranties contained in this Agreement, the parties hereto
agree as follows:
AGREEMENT
1. INCORPORATION
OF RECITALS.
The
Recitals set forth above are true and correct and are incorporated herein by
this reference.
2. PLEDGE.
To
secure the prompt and complete payment and performance when due of the
obligations of Pledgor under the License Agreement (the "Obligations"), Pledgor
hereby grants a security interest to Pledgee in all of Pledgor's right, title
and interest in and to the following: (a) one half (1/2) of the units comprising
its membership interest in BT, and all of Pledgor's rights and benefits arising
from such membership interest (the “Collateral" or "Pledged Interest”). Pledgor
represents that as of the date hereof, Pledgor's units comprise a forty percent
(40%) voting membership interest in BT, and that the Pledged Interest granted
hereunder equals a twenty percent (20%) voting membership interest in BT.
3. DIVIDENDS
OR DISTRIBUTIONS.
During
the term of this Agreement, and so long as Pledgor is not in default under
the
License Agreement or this Agreement, Pledgor shall be entitled to receive any
dividends or distributions declared on the Pledged Interest by BT.
4. VOTING
RIGHTS.
During
the term of this Agreement, and so long as Pledgor is not in default under
the
License Agreement or this Agreement, Pledgor shall have the right to vote the
Pledged Interest on any matters.
5. RESTRICTIONS
ON SHARES.
Pledgee
acknowledges that he/she is aware that the Pledged Shares are subject to the
Limited Liability Company Agreement of BT (the “LLC Agreement”), and that the
LLC Agreement places restrictions on the transferability of membership
interests.
6. PAYMENT.
Upon
satisfactory written evidence that the payments under the License Agreement
have
been fully paid, including the receipt by Pledgee of releases from certain
creditors specified in the License Agreement, the License Agreement will
terminate, the WebERF software will transfer immediately to BT, and this Pledge
Agreement will be extinguished.
7. REPRESENTATIONS
AND COVENANTS OF PLEDGOR.
(a)
Pledgor owns, and all times hereunder will own, the Collateral free and clear
of
all liens, restrictions, and limitations, other than those set forth in the
LLC
Agreement; (b) Pledgor has authority to enter into this Agreement, and this
Agreement constitutes the legal, valid and binding obligation of Pledgor, and
does not conflict with any other agreement, instrument or order to which Pledgor
is subject; and (c) there are no options, privileges or rights, and there is
no
legal action pending or threatened, which would affect Pledgor's interest in
and
to the Collateral. During the term of this Agreement, Pledgor (i) will not
transfer, assign or encumber the Collateral, except only pursuant to this
Agreement and any documents entered into pursuant to this Agreement, and (ii)
will take any action reasonably necessary or appropriate to protect and preserve
Pledgee's interest in the Collateral, at Pledgor's expense.
8. DEFAULT.
(a) In
the event that Pledgor defaults in the performance of any of the terms of this
Agreement or the License Agreement, Pledgee shall give written notice of the
default (the “Notice”) to the Pledgor at the address set forth in the License
Agreement or at such other address as any party may direct in writing. If the
default is not cured within the time frames required under the License
Agreement, Pledgor shall deliver to Pledgee the blank endorsed membership
certificate(s), evidencing the Pledged Interest. Upon Pledgee’s receipt of the
certificates, the Pledged Interest shall be deemed to have been reissued by
TBT
to Pledgee with all the voting, dividend and other rights conferred upon a
member, subject to any reduction that may have occurred prior to such date
as a
result of the sliding scale reduction in the Pledged Collateral set forth in
subparagraph (b) herein below;
(b)
From
and after the one year anniversary of the Effective Date (as defined in the
License Agreement), and provided that Pledgor and BT have fully and timely
performed their obligations under the License Agreement at all times prior
thereto and there is no event of default existing (or circumstances which with
the passage of time would constitute an event of default under the License
Agreement), the membership interests that are subject to the Pledge Agreement
shall be reduced by fifteen percent (15%) of the initial pledged amount for
every $100,000 thereafter paid by Pledgor to Pledgee pursuant to the License
Agreement. Notwithstanding the foregoing, it is agreed that the Pledged Interest
shall never be reduced below an amount such that the sum of Pledgee’s membership
interest and the pledged amount is less than fifty-one percent (51%) of the
total voting membership interest of BT, and provided further that in the event
of issuances of additional voting membership interests of BT or other diluting
events, the Pledge Interest shall be adjusted (including increased, as
applicable, but not above one-half of Pledgor's total membership interest),
to
meet the minimum fifty-one percent (51%) requirement.
(c)
In
order to preserve and protect Pledgee's rights under this Agreement and in
the
Collateral, effective automatically upon the occurrence of a default that is
not
cured as required under this Section 8, Pledgor appoints Pledgee as its true
and
lawful attorney in fact, with full power of substitution to perform any and
all
acts which Pledgor is obligated to do or is entitled to do under this Agreement.
In addition to any other remedies, in the event of a default that is not cured
as required under this Section 8, all rights of Pledgor to vote the units
comprising the Pledged Interest, and the right to receive any distributions
or
dividends shall cease, and Pledgee shall have the sole right to exercise such
rights.
9. WAIVER.
Pledgee’s failure to promptly exercise any right or remedy provided herein or by
law shall not be a waiver of any obligation of Pledgor nor shall it constitute
a
modification of this Agreement.
10. AMENDMENTS.
This
Agreement may be amended only by written consent of all of the parties
hereto.
11. NOTICES.
Any and
all notices, demands, requests, or other communications required or permitted
by
this Agreement or by law to be served on, given to, or delivered to any party
hereto by any other party to this Agreement shall be in writing and shall be
transmitted to the last known address of the recipient. Notice may be given
by
U.S. first-class mail, postage prepaid; certified mail, return receipt
requested; U.S. Express Mail; courier; facsimile, or by electronic transmission
(“e-mail”). If sent by U.S. first-class mail, it shall be deemed given
forty-eight (48) hours after mailing. With all other means of delivery, it
shall
be deemed given on the date confirmed by the transmitter.
12. ATTORNEY'S
FEES.
Should
any arbitration or litigation be commenced between the parties to this
Agreement, concerning any provision of this Agreement or the rights and
obligations of any party or the estate of any party in relation thereto, the
party prevailing in such proceeding shall be entitled, in addition to such
other
relief as may be granted, to a reasonable sum as and for attorney's fees and
costs.
13. ARBITRATION.
All
disputes arising under or in connection with this Agreement or among the
Members, shall be submitted to a mutually agreeable arbitrator, or if the
parties are unable to agree on an arbitrator within fifteen (15) days after
a
written demand for arbitration is made by either party, to JAMS/Endispute
(“JAMS”) or successor organization, for binding arbitration in Los Angeles
County by a single arbitrator who shall be a former California Superior Court
judge. Except as may be otherwise provided herein, the arbitration shall be
conducted under the California Arbitration Act, Code of Civil Procedure 1280
et
seq. The parties shall have the discovery rights provided in Code of Civil
Procedure 1283.05 and 1283.1. The arbitration hearing shall be commenced within
ninety (90) days after the selection of an arbitrator by mutual agreement or,
absent such mutual agreement, the filing of the application with JAMS by either
party hereto, and a decision shall be rendered by the arbitrator within thirty
(30) days after the conclusion of the hearing. The arbitrator shall have
complete authority to render any and all relief, legal and equitable,
appropriate under California law, including the award of punitive damages where
legally available and warranted. The arbitrator shall award costs of the
proceeding, including reasonable attorneys’ fees and the arbitrator’s fee and
costs, to the party determined to have substantially prevailed. Judgment can
be
entered in a court of competent jurisdiction.
NOTWITHSTANDING
THE FOREGOING, PLEDGEE SHALL BE ENTITLED TO ALL RIGHTS AND REMEDIES AVAILABLE
TO
IT UNDER THE UNIFORM COMMERCIAL CODE, AS ADOPTED IN CALIFORNIA, IN ENFORCING
ITS
RIGHTS, AND REALIZING UPON, THE COLLATERAL DELIVERED BY PLEDGEE PURSUANT TO
THIS
AGREEMENT.
14. BINDING
AGREEMENT.
This
Agreement shall bind and inure to the benefit of the parties hereto and their
respective successors, assigns, personal representatives, heirs and
legatees.
15. SEVERABILITY.
If any
provision of this Agreement is held by a Court of competent jurisdiction to
be
invalid, void or unenforceable, the remaining provisions shall nevertheless
continue in full force without being impaired or invalidated in any
way.
16. GOVERNING
LAW.
This
Agreement shall be construed in accordance with, and governed by the laws of
the
State of California.
17. ASSIGNMENT.
The
rights and obligations hereunder shall not be assignable by any party, except
by
Corporation to a wholly-owned subsidiary, division or affiliate, without the
prior written consent of all parties hereto.
18. COUNTERPARTS.
This
Agreement may be executed in counterparts and facsimile signatures have the
same
force and effect as an original signature.
IN
WITNESS WHEREOF, the parties to this Agreement have duly executed it on the
day
and year first above written.
| PLEDGOR: | PLEDGEE: | |||
| INFORMATION CONCEPTS, INC. | ASSOCIATED THIRD PARTY ADMINISTRATORS | |||
| By | /s/ Xxxxx Xxxxxx | By | /s/ Xxxx Xxxxxxxxx | |
|
Authorized Signature |
Authorized Signature |
|||
| Name: Xxxxx Xxxxxx | Name: Xxxx Xxxxxxxxx | |||
| Title: President | Title: President | |||
ACKNOWLEDGEMENT
AND CONSENT REGARDING PLEDGED INTEREST
To:
Information Concepts, Inc.
The
undersigned acknowledges that Associated Third Party Administrators
("ATPA”)
has
granted to ICI a security interest in 50% of all of ATPA's right, title and
interest in and to ATPA's units (the "Pledged Units") in Benefits Technologies,
LLC.
Therefore,
intending that ICI may rely hereon in entering into an agreement with ATPA,
the
undersigned irrevocably and unconditionally consents to ATPA's grant to ICI
of a
security interest in the Pledged Units, and the resultant succession and
substitution of ICI in the event of a default as provided for in the Pledge
Agreement, and agrees to comply with the instructions of ICI in the enforcement
of its rights under the Pledge Agreement.
Agreed
to
and executed as of this 27th
day of
February, 2008.
| BENEFITS TECHNOLOGIES, LLC | ||
| |
|
|
| By | /s/ Xxxxxxx Xxxxxxx | |
|
Xxx Xxxxxxx, Chairman |
||
