STOCK PLEDGE AGREEMENT
STOCK PLEDGE AGREEMENT ("Agreement") entered into as of the 27th day of
April 2005 by and among the persons set forth on Schedule 1 (the "Secured
Party"), and Xxxxxxx Xxxxxxxxx, an individual with an office at 000 Xxxxxx
Xxxxxx, XX, Xxxxx 000, Xxxxx Xxxxxx, XX 00000 ("Pledgor").
RECITALS
A. Pledgor has agreed to pledge certain shares as security for the
performance by the Company of its total obligations under its Secured
Convertible Promissory Note due September 27, 2005, payable to the Secured Party
(the "Note") as same has been issued to Secured Party on April 27, 2005.
Capitalized terms in this Agreement which are not identified herein will have
the meanings given such terms in the Transaction Documents.
B. The Secured Party is willing to accept the Note from the Company only
upon receiving a pledge of certain securities from the Pledgor as set forth in
this Agreement.
NOW, THEREFORE, in consideration of the premises, the mutual covenants and
conditions contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
1. Grant of Security Interest. Pledgor hereby pledges to the Secured Party
as collateral and security for the Secured Obligations (as defined in paragraph
2) the securities set forth on the attached Schedule 1 of this Agreement, (the
"Pledged Shares"). Unless otherwise set forth on Schedule 1 of this Agreement,
Pledgor is the beneficial and record owner of the Pledged Shares set forth on
such Schedule free of all liens, restrictive legends or stop transfer
instructions. Such Pledged Shares, together with any substitutes therefor, or
proceeds thereof, are hereinafter referred to collectively as the "Collateral."
2. Obligations Secured. During the term hereof, the Collateral shall
secure the following:
a. The performance by the Company of its obligations, covenants, and
agreements under the Note.
The obligations, covenants and agreements described in clause (a) are the
"Secured Obligations."
3. Perfection of Security Interests. (a) Upon execution of this Agreement
by the Pledgor he shall deliver the Pledged Shares, together with Stock Powers
(with Medallion Guarantees annexed).
(b) The Pledgor will, at its expense, cause to be searched the
public records with respect to the Collateral and will execute, deliver, file
and record (in such manner and form as each Secured Party may require), or
permit each Secured Party to file and record, as its attorney in fact, any
financing statements, any carbon, photographic or other reproduction of a
financing statement or this Agreement (which shall be sufficient as a financing
statement hereunder), any specific assignments or other paper that may be
reasonably necessary or desirable, or that such Secured Party may request, in
order to create, preserve, perfect or validate any Security Interest or to
enable such Secured Party to exercise and enforce its rights hereunder with
respect to any of the Collateral. The Company hereby appoints Secured Party as
the Company's attorney-in-fact to execute in the name and behalf of the Company
such additional financing statements as such Secured Party may request.
4. Assignment. In connection with the transfer of the Note in accordance
with their terms, a Secured Party may assign or transfer the whole or any part
of its security interest granted hereunder, and may transfer as collateral
security the whole or any part of Secured Party's security interest in the
Collateral. Any transferee of the Collateral shall be vested with all of the
rights and powers of Secured Party hereunder with respect to the Collateral.
5. Pledgor's Warranty. (A) Title. Pledgor represents and warrants hereby
to the Secured Party as follows with respect to the Pledged Shares set forth on
Schedule1 to this Agreement:
(i) that the Collateral is free and clear of any encumbrances of
every nature whatsoever and the Pledgor is the sole owner of the Pledged Shares;
Pledgor hereby represents that he was issued the Pledged Shares, has held them
in his name since September 20, 2004.
(ii) if the Pledged Shares are convertible into other securities,
the Pledgor will have right, title and interest to such other securities, free
of restrictive legends or stop transfer instructions.
(iii) Pledgor further agrees not to grant or create, any security
interest, claim, lien, pledge or other encumbrance with respect to such
Collateral or attempt to sell, transfer or otherwise dispose of the Collateral,
until the Secured Obligations have been paid in full or this Agreement
terminates; and
(iv) this Agreement constitutes a legal, valid and binding
obligation of the Company enforceable in accordance with its terms (except as
the enforcement thereof may be limited by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium, and similar laws, now or hereafter in
effect),
B. Other: (i) The Pledgor fully intends to fulfill and has the
capability of fulfilling the Secured Obligations to be performed by the Company
in accordance with the terms of the Notes.
(ii) The Pledgor is not acting, and has not agreed to act, in any
plan to sell or dispose of any shares of common stock of American Pallet
Leasing, Inc. in a manner intended to circumvent the registration requirements
of the Securities Act of 1933, as amended, or any applicable state law. Further,
the Pledgor agrees not to sell any shares of common stock of American Pallet
Leasing, Inc. via Rule 144 of the Securities Act of 1933 so as to render the
Secured Party unable to sell the Collateral via Rule 144 upon any default under
the Note.
6. Collection of Dividends, etc. During the term of this Agreement and
until such time as this Agreement has terminated or the occurrence of an Event
of Default, Pledgor is authorized to collect all cash dividends, distributions,
and other amounts that may be, or may become, due on any of the Collateral.
7. Voting Rights. During the term of this Agreement and until such time as
this Agreement has terminated or the occurrence of an Event of Default, Pledgor
may exercise any voting rights evidenced by, or relating to, the Collateral.
8. Warrants and Options. In the event that, during the term of this
Agreement, subscription, spin-off, warrants, stock dividends, or any other
rights or options shall be issued in connection with the Collateral, such
warrants, dividends, rights and options shall be immediately delivered to
Secured Party to be held under the terms hereof in the same manner as the
Collateral.
9. Preservation of the Value of the Collateral and Reimbursement of
Secured Party. Pledgor shall pay all taxes, charges, and assessments against the
Collateral and do all acts necessary to preserve and maintain the value thereof.
On failure of Company so to do, Secured Party may make such payments on account
thereof as (in Secured Party's discretion) is deemed desirable, and Pledgor
shall reimburse Secured Party immediately on demand for any and all such
payments expended by Secured Party in enforcing, collecting, and exercising its
remedies hereunder.
10. Additional Collateral. Pledgor further covenants that in the event, at
any time, in the reasonable discretion of the Secured Party, the fair market
value of the Collateral shall be less than 200% of the outstanding Principal
Amount of the Note, Pledgor will within two business days after written request,
deposit such additional collateral as shall be reasonably acceptable to Secured
Party, so that the fair market value of the Collateral is at least 200% of the
outstanding Principal Amount of the Note.
11. Default and Remedies.
(a) For purposes of this Agreement, an "Event of Default" shall mean
i. default in the performance by the Company of any of the
Secured Obligations without cure following the expiration of
any applicable cure period; and
ii a breach by the Pledgor of any of its material
representations, warranties, covenants or agreements in this
Agreement.
(b) During the term of this Agreement, and for so long as the Secured
Obligations are not satisfied in full, the Secured Party shall have the
following rights after any Event of Default:
i. the rights and remedies provided by the Uniform Commercial
Code as adopted by the State of New York (as said law may at
any time be amended);
ii the right to receive and retain all dividends, payments and
other distributions of any kind upon any or all of the Pledged
Shares as additional Collateral;
iii the right to cause any or all of the Pledged Shares and all
additional Collateral to be transferred to its own name and
have such transfer recorded in any place or places deemed
appropriate by Secured Party; and
iv the right to sell, at a public or private sale, the
Collateral or any part thereof for cash, upon credit or for
future delivery, and at such price or prices in accordance
with the Uniform Commercial Code (as such law may be
amended from time to time). Upon any such sale, Secured
Party shall have the right to deliver, assign and transfer
to the purchaser thereof the Collateral so sold. In case of
any sale of all or any part of the Collateral upon terms
calling for payments in the future, any Collateral so sold
may be retained by Secured Party until the selling price is
paid by the purchaser thereof, but Secured Party shall
incur no liability in the case of the failure of such
purchaser to take up and pay for the Collateral so sold
and, in the case of such failure, such Collateral may again
be sold upon like notice. Secured Party, however, instead
of exercising the power of sale herein conferred upon it,
may proceed by a suit or suits at law or in equity to
foreclose the security interest and sell the Collateral, or
any portion thereof, under a judgment or decree of a court
or courts of competent jurisdiction, the Company having
been given due notice of all such action. Secured Party
shall incur no liability as a result of a sale of the
Collateral or any part thereof.
12. Waiver. The Pledgor waives any right that it may have to require
Secured Party to proceed against any other person, or proceed against or
exhaust any other security, or pursue any other remedy Secured Party may
have.
13. Term of Agreement. This Agreement shall continue in full force
and effect until the Secured Obligations shall have been paid in full and
the security interests are thereby released.
14. General Provisions:
14.1 Binding Agreement. This Agreement shall be binding upon
and shall inure to the benefit of the successors and assigns of the
respective parties hereto.
14.2 Captions. The headings used in this Agreement are
inserted for reference purposes only and shall not be deemed to define,
limit, extend, describe, or affect in any way the meaning, scope or
interpretation of any of the terms or provisions of this Agreement or the
intent hereof.
14.3 Counterparts. This Agreement may be signed in any number
of counterparts with the same effect as if the signatures upon any
counterpart were upon the same instrument. All signed counterparts shall
be deemed to be one original. This Agreement, once executed by a party,
may be delivered to the other parties hereto by telephone line facsimile
transmission of a copy of this Agreement bearing the signature of the
parties so delivering this Agreement. A facsimile transmission of this
signed Agreement shall be legal and binding on all parties hereto.
14.4 Further Assurances. The parties hereto agree that, from
time to time upon the written request of any party hereto, they will
execute and deliver such further documents and do such other acts and
things as such party may reasonably request in order fully to effect the
purposes of this Agreement.
14.5 Waiver of Breach. Any waiver by either party of any
breach of any kind or character whatsoever by the other, whether such be
direct or implied, shall not be construed as a continuing waiver of or
consent to any subsequent breach of this Agreement.
14.6 Cumulative Remedies. The rights and remedies of the
parties hereto shall be construed cumulatively, and none of such rights
and remedies shall be exclusive of, or in lieu or limitation of any other
right, remedy, or priority allowed by applicable law.
14.7 Amendment. This Agreement may be modified only in a
written document that refers to this Agreement and is executed by Secured
Party and the Pledgor.
14.8 Interpretation. This Agreement shall be interpreted,
construed, and enforced according to the substantive laws of the State of
New York.
14.9 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York. Each of
the parties consents to the jurisdiction of the federal courts whose
districts encompass any part of the City of New York or the state courts
of the State of New York sitting in the City of New York in connection
with any dispute arising under this Agreement and hereby waives, to the
maximum extent permitted by law, any objection, including any objection
based on forum non coveniens, to the bringing of any such proceeding in
such jurisdictions. Each of the parties hereby knowingly and voluntarily
waives the right to a trial by jury in connection with any dispute, claim,
proceeding or action of any nature whatsoever, in law or equity, arising
out of or in any way relating to this Agreement.
14.10 Notice. Any notice or other communication required or
permitted to be given hereunder shall be effective upon receipt. Such
notices may be sent (i) in the United States mail, postage prepaid and
certified, (ii) by express courier with receipt, (iii) by facsimile
transmission, with a copy subsequently delivered as in (i) or (ii) above.
Any such notice shall be addressed or transmitted as follows:
If to Pledgor:
Xxxxxxx X. Xxxxxxxxx
Chief Executive Officer
American Pallet Leasing, Inc.
000 Xxxxxx Xxxxxx, XX
Xxxxx 000
Xxxxx Xxxxxx, XX 00000
Tel: 000.000.0000
with a copy to:
Xxxxx X. Xxxxxxxxx, Esq.
Xxxxxxx, Savage, Kaplowitz, Wolf & Marcus LLP.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Tel: 000.000.0000
Fax: 000.000.0000
If to Secured Party, to the addresses set forth on Schedule 1.
or such other address as may be designated in writing hereafter, in the same
manner, by such Person.
14.11 Acknowledgement by Pledgor In the event that any provision of the
Note or this Agreement as applied to any party or circumstances shall be
adjudged by a court to be invalid or unenforceable, Pledgor acknowledges and
agrees that this Agreement shall remain valid and enforceable in all respects
against the Pledgor.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
day, month and year first above written.
XXXXXXX XXXXXXXXX
/s/ Xxxxxxx Xxxxxxxxx
---------------------------------
BRITTANY CAPITAL MANAGEMENT LIMITED
BY: /s/ Xxxxx X. Xxxxxx
---------------------------------
SCHEDULE 1
Pledged Securities
Issuer Certificate Number Number of Shares
American Pallet Leasing, Inc. 406 600,000
Secured Obligations
Issuer Security Principal Issue Date Due Date
------- ------------ ---------- ---------- --------
American 8% Note $250,000 April 27, 2005 Sept 27, 2005
Pallet Leasing, Inc.
Secured Party:
Brittany Capital Management Limited
c/o Lion Corporate Services
Xxxxxxxxxx Xxxxx
00 Xxxxxxxxxx Xxxxxx
PO Box N-10818
Nassau, New Providence
Bahamas
