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EXHIBIT 10.10
SHARE PLEDGE AGREEMENT
THIS AGREEMENT made as of the 2nd day of March, 1999.
AMONG:
INTERNATIONAL BARTER CORP., a corporation formed pursuant to the
laws of the State of Nevada
(hereinafter called the "PLEDGOR")
OF THE FIRST PART
- and -
XXX XXXXX, an individual residing in the City of Xxxxxxxxxxx,
Xxxxxxx, Xxxxxx
(hereinafter called the "SECURED PARTY")
OF THE SECOND PART
- and -
BARTER BUSINESS EXCHANGE INC., a corporation incorporated under
the laws of the Province of Ontario
(hereinafter called the "CORPORATION")
OF THE THIRD PART
WHEREAS the Pledgor has purchased from the Secured Party 200 common shares
of the Corporation (the "PURCHASED SHARES") pursuant to the terms of a purchase
agreement (the "PURCHASE AGREEMENT") made as of the 28th day of February, 1999
among the Secured Party, the Pledgor and the Corporation;
AND WHEREAS the Purchase Agreement contemplates the issuance by the Pledgor
to the Secured Party of a promissory note in the principal amount of
(Cdn.)$850,000, to be reduced by the amount, if any, that 10% of Cash Revenues
is less than $750,000 for the period ended March 1, 2000 (the "REDUCTION"),
provided that in no event may the Reduction exceed $750,000, which promissory
note is dated March 2, 1999 (the "NOTE") to evidence an outstanding amount
payable for the Purchased Shares;
AND WHEREAS in order to provide security for the Pledgor's obligations for
the payment due March 1, 2000 under the Note (the "INDEBTEDNESS"), the Pledgor
has agreed to pledge and charge to the Secured Party the Purchased Shares;
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NOW THEREFORE IN CONSIDERATION OF good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged by the parties, the
parties covenant and agree with each other as follows:
1 GRANT OF SECURITY INTEREST
The Pledgor hereby pledges, assigns and hypothecates to the Secured Party,
and hereby grants to the Secured Party a security interest (to which the Ontario
Personal Property Security Act (the "PPSA") applies) in the Purchased Shares in
the capital of the Corporation owned by the Pledgor (the "SHARES"), and in all
income thereon and proceeds thereof, all pursuant to and in accordance with the
provisions of this Agreement.
2 SECURED OBLIGATIONS
The security interest granted hereby secures the performance and the
payment to the Secured Party of the Indebtedness by the Corporation and any
amounts collectable under this pledge (the "OBLIGATIONS").
3 ATTACHMENT
Each of the parties intends the security interest granted hereby to attach
forthwith with respect to the Shares and, with respect to Substituted or
Additional Shares (as defined below), forthwith upon the Pledgor first acquiring
rights in such Substituted or Additional Shares.
For greater certainty, without in any way limiting the above, each of the
parties intends the security interests to attach at the respective times set out
above notwithstanding actual notice, if any, of the Secured Party of any other
security interests in or encumbrances on or against the Shares.
4 PERFECTION
(50) Subject to paragraph 4(b) hereof, in order to perfect and in
furtherance of the security interest hereby granted to the Secured
Party, the Pledgor agrees that contemporaneously with the execution of
this Agreement, it shall deliver the following to the counsel to the
Corporation upon the terms hereof:
(1) the relevant share certificate(s) representing all of the Shares,
duly registered in the name of Xxxxxxxx Partnership, as trustee
(the "TRUSTEE"), and duly endorsed in blank for transfer
hereunder and noting conspicuously on the face thereof that they
are subject to this Agreement; and
(2) a certified copy of a resolution of the directors of the
Corporation approving the pledge, assignment and hypothecation of
the Shares to the Secured Party, the notation of the Secured
Party's interest on the relevant share certificate(s) and in the
shareholder ledgers of the Corporation, the transfer to the
Trustee, any further transfers of the Shares made pursuant to
this Agreement, and the recording of same in the books and
records of the Corporation, and which resolution shall state that
it may not be amended or revoked without the prior written
consent of the Secured Party and/or Trustee.
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(51) The Trustee acknowledges and agrees that it shall hold the Shares
hereby delivered to it solely in accordance with the terms of this
Agreement and that it will not at any time dispose, encumber, deal
with or take any action with respect to the Shares except as provided
in this Agreement.
(52) Beyond the exercise of reasonable care to assure the safe custody of
the Shares, neither the Secured Party nor the Trustee shall have any
duty or liability to preserve rights pertaining thereto, except as
specifically requested by the Pledgor and at the expense of the
Pledgor, and shall be relieved of all responsibility for the Shares
upon surrendering them or tendering them to the Pledgor under the
terms of this Agreement.
(4) The Pledgor agrees that the Secured Party may also at any time perfect
its security interest in the Shares by registration under the PPSA.
1 RIGHT TO VOTE
So long as no Event of Default has occurred hereunder the Pledgor shall be
entitled to remain as shareholder of record of the Shares and to exercise all
voting rights in respect of the Shares.
2 RIGHT TO DIVIDENDS, ETC.
So long as no Event of Default has occurred hereunder the Pledgor shall be
entitled to receive all dividends and other distributions paid or payable in
respect of the Shares. In the event that the Pledgor receives any dividend or
other distribution contrary to the foregoing it shall stand possessed of same in
trust solely for the Secured Party and shall forthwith pay or deliver the same
to the Secured Party to be applied in accordance with paragraph 15.
3 PLEDGOR'S WARRANTIES
The Pledgor hereby represents and warrants to and covenants with the
Secured Party as follows and acknowledges that the Secured Party is, in part,
relying upon such representations, warranties and covenants in accepting the
security interest granted upon the terms of this Agreement:
(1) Ownership of Shares: Subject to the representations and warranties of
the Secured Party under the Purchase Agreement, the Pledgor is the
absolute and beneficial owner of the Shares and none of the Shares is
held in the name of any person other than the Pledgor, whether as
agent, trustee or other nominee for the Pledgor, the Shares are
recorded in the name of the Pledgor in the shareholder ledgers and
registers in the Corporation's minute book.
(2) No Encumbrances: Subject to the representations and warranties of the
Secured Party under the Purchase Agreement, the Shares are owned by
the Pledgor with good and marketable title thereto and they are and
shall at all times be kept free and clear of any and all mortgages,
hypothecs, pledges, claims, adverse claims, demands, liens, charges,
security interests, encumbrances, agreements, rights and equities of
any kind whatsoever other than those given by the Pledgor to or in
favour of the Secured Party.
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(3) Right to Grant: The Pledgor has and shall at all relevant times have
the full right, power and authority to enter into and perform its
obligations under this Agreement and to grant the security interest as
herein provided.
(4) No Agreements or Options: No person, firm or corporation other than
the Secured Party has any agreement or option (whether written or
oral) or any right or privilege (whether by law, pre-emptive or
contractual) capable of becoming an agreement or option for the
purchase of the Shares or any interests therein or rights thereto.
(5) No Litigation: There is not pending any suit, action or other legal
proceeding of any sort either to restrain or otherwise prevent in any
manner the Pledgor from effectually and legally hypothecating and
pledging the Shares to the Secured Party free and clear of any and all
mortgages, hypothecs, pledges, claims, adverse claims, demands, liens,
charges, security interests, encumbrances agreements, rights and
equities of any kind whatsoever or any suit, action or proceeding the
effect of which would to cause a lien to attach to the Shares or to
divest title to the Shares in any manner whatsoever.
4 PLEDGOR'S COVENANTS
The Pledgor covenants and agrees with the Secured Party that:
(53) No Transfers or Encumbrances: The Pledgor shall not either directly or
indirectly (including by way of corporate reorganization, amalgamation
or otherwise) sell, transfer convey, assign, exchange, convert or in
any manner dispose of, pledge or in any manner encumber any of the
Shares without the prior written consent of the Secured Party, except
as expressly permitted or required elsewhere herein. Such written
consent shall not be arbitrarily withheld or unduly delayed.
(2) Substituted or Additional Shares: In the event any substituted or
additional shares in the capital of the Corporation are received or
acquired (directly or indirectly) by or on behalf of the Pledgor,
whether as a result of a share issuance, subdivision, consolidation,
conversion, reclassification, stock dividend, transfer, sale,
reorganization, amalgamation or otherwise (the "SUBSTITUTED OR
ADDITIONAL SHARES"), the Pledgor shall stand possessed of the
Substituted or Additional Shares in trust for the Secured Party and
shall forthwith deliver to the Secured Party the certificate or
certificates representing the Substituted or Additional Shares
together with a certified copy of the resolution of the directors of
the Corporation and the Pledgor approving the hypothecation and pledge
thereof to the Secured Party whereupon the Secured Party shall hold
and deal with the Substituted or Additional Shares and the certificate
or certificates evidencing the same as the Shares.
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1 EVENTS OF DEFAULT
Forthwith upon the occurrence of any of the following events (an "EVENT OF
DEFAULT"), the Obligations will, without the Secured Party being required to
give notice or demand, become due an payable in full and, to the extent
applicable, be required to be fully performed:
(54) the failure of the Pledgor to pay when due any payment of any of the
Obligations;
(55) any representation, warranty, statement or report which is false or
incorrect in any respect having been made or given by the Pledgor to
the Secured Party, contained herein;
(56) the Corporation ceasing or threatening to cease carrying on its
business or any of its businesses;
(57) the Pledgor transfering any assets of the Corporation out of the usual
and normal course of Business or in any case for consideration greater
than $25,000 without the consent of the Vendor, not to be unreasonably
withheld;
(58) the filing of an application or petition or the passing of a
resolution for the winding-up or dissolution of the Corporation or the
granting or issuing of an order for the winding-up or dissolution of
the Corporation;
(59) the appointment of a receiver, receiver and manager, agent, liquidator
or other similar administrator of any part(s) of the assets of the
Pledgor or the taking by a secured party or any other encumbrancer of
possession of the assets of the Pledgor or any part(s) thereof;
(60) any proceedings which relate or extend to the Corporation being
commenced under the Companies' Creditors Arrangement Act, the
Bankruptcy and Insolvency Act, or any other legislation of the
Province of Ontario, any other province or territory in Canada, the
Parliament of Canada or any other country, state or jurisdiction,
which legislation deals with companies' creditors arrangements or
other creditors' arrangements; or
(8) the Pledgor or the Corporation committing or threatening to commit any
act of bankruptcy, filing a voluntary assignment in bankruptcy, making
a proposal under the Bankruptcy Act or otherwise, or taking any action
in respect of the settlement of any claims of its creditors whether
under the provisions of the Bankruptcy Act or otherwise, or any
person(s) taking any proceedings which may result in the Pledgor or
the Corporation being declared bankrupt.
1 RIGHTS AND REMEDIES
Forthwith upon the occurrence of an Event of Default, the security interest
granted herein shall be enforceable and the Pledgor and the Secured Party shall
have, in addition to any other rights and remedies provided by law, the rights
and remedies of a debtor and a secured party respectively under the PPSA and
those provided by this Agreement and, further, the right to direct the Trustee
to deal with and dispose of the Shares as the Secured Party directs.
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2 EXPENSES
The reasonable expenses expressly provided for in the PPSA and, in addition
thereto, the cost of any insurance, taxes, solicitor's fees, costs and other
legal expenses and all other costs, charges and expenses of or incurred (on a
scale as between a solicitor and his own client) by the Secured Party in respect
of the enforcement of the Obligations, including taking possession, custody,
holding, preserving, protecting, repairing, using or operating, collecting,
realizing, processing, preparing for disposition and disposing of the Shares
(collectively, the "EXPENSES") shall be payable by the Pledgor to the Secured
Party forthwith upon demand, shall be deemed advanced to the Pledgor by the
Secured Party, shall bear interest at a rate equal to the Prime Rate (defined
below) plus 1% per annum calculated, both before and after demand, maturity,
default and judgment, from the date each of the Expenses, respectively, were
incurred until fully paid by the Pledgor and shall be secured by this Agreement.
"PRIME RATE" means the annual rate of interest announced from time to time
by the Royal Bank of Canada as a reference rate then in effect for determining
interest rates on Canadian dollar commercial loans in Canada.
3 NOTICE OF DISPOSITION
The Secured Party shall give to the Pledgor at least 15 days' written
notice of the Secured Party's intention to dispose of the Shares. Such notice
may be sent by registered mail to the last known post office address of the
Pledgor.
4 MODE OF DISPOSITION
The Secured Party may dispose of the Shares by a private sale or public
auction or tender at any place and time whatsoever and in such manner and at
such price as the Secured Party may reasonably determine, either for cash or on
credit, or for part cash and part credit. The Secured Party may postpone any
sale prior to the date thereof and may sell the Shares as a whole or in parcels
and if in parcels in such order and manner as the Secured Party may reasonably
determine. Until the time such sale is completed, the amount of any dividends or
other distributions paid or payable by the Corporation in respect of the Shares
shall be paid to the Secured Party.
5 SECURED PARTY MAY PURCHASE
The Secured Party may become a purchaser of the Shares free of any right or
equity of redemption which right or equity is hereby expressly waived.
6 PROCEEDS OF DISPOSITION/DEFICIENCY
Any proceeds of any disposition of any of the Shares shall be applied by
the Secured Party firstly on account of the Expenses, and any balance of such
proceeds shall be applied by the Secured Party on account of the Obligations
(other than the Expenses) in such order of application as the Secured Party may
from time to time effect and the same shall not be subject to dispute by the
Pledgor. If such proceeds fail to satisfy the Obligations, the Pledgor shall not
be liable for any further payments or any deficiency resulting to the Secured
Party, and the Pledgor and the Corporation shall be fully and finally released
from any further obligations to the Secured Party under the Note or under this
Agreement.
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7 MISCELLANEOUS PROVISIONS
(61) Discharge: The security interest granted hereby shall not be released,
discharged, impaired or affected by any extension of time, additional
advances, renewals, amendments or extensions to this Agreement, any
waiver by or failure of the Secured Party to enforce any provision of
this Agreement or any other agreement, the taking of further security,
releasing security, extinguishment of the security interest as to all
or any part of the Shares, or any other act except a release or
discharge by the Secured Party of the security interest granted hereby
upon the full payment and performance of the Obligations, at which
time the Secured Party shall, at the Pledgor's expense, deliver to the
Pledgor the relevant share certificate(s) representing all of the
Shares duly endorsed in blank for transfer, all other documents held
by the Secured Party pursuant to this Agreement, and all necessary
discharges and releases of the security interest granted hereby.
(62) Waiver, etc.: No failure or delay on the part of the Secured Party to
exercise any right provided for in or contemplated by this Agreement
and no waiver as to an Event of Default hereunder shall operate as a
waiver thereof unless made in writing and signed by the Secured Party
and, in that event, such waiver shall operate only as a waiver of the
right or Event of Default expressly referred to therein. Nothing in
this Agreement and nothing referred to in the Obligations shall
preclude any other remedy by action or otherwise for the enforcement
of this Agreement or the payment and performance in full of the
Obligations.
(63) Failure to Perfect: The Secured Party shall not be liable or
accountable for any negligence or failure to perfect its security
interest in, seize, collect, realize, sell or obtain payment for the
Shares or any part thereof and shall not be bound to institute
proceedings for the purpose of seizing, collecting, realizing or
obtaining possession or payment of the same for the purpose of
preserving the rights of the Pledgor, the Corporation or any other
person, firm or corporation in respect of same.
(64) Entire Agreement: This Agreement sets forth the entire intent and
understanding of the parties relating to the subject-matter hereof and
supersedes and replaces all prior agreements and commitments, whether
written or oral, made between the parties concerning the granting of a
security interest in the Shares and all earlier discussions and
negotiations between them concerning the granting of a security
interest in the Shares. The parties are not relying upon and there are
no collateral or other representations, warranties, agreements, or
covenants made by any of the parties hereto which are not contained
herein.
(65) No Amendment: This Agreement may not be amended, altered or qualified
except by a memorandum in writing signed by all of the parties hereto
and any amendment, alteration or qualification hereof shall be null
and void and shall not be binding upon any party who has not signed
such memorandum.
(66) Further Assurances: Each of the parties hereto shall and will, from
time to time and at all times hereafter upon every reasonable written
request so to do, cause such meetings to be held, resolutions passed
and by-laws enacted, exercise its
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vote and influence, make, do, execute and deliver, or cause to be
made, done, executed and delivered, all such further papers, acts,
deeds, assurances and things as may be necessary or desirable in the
opinion of any party or counsel for any party, acting reasonably, for
implementing and carrying out more effectually the true intent and
meaning of this Agreement including, without limitation, to perfect or
better perfect the security interest of the Secured Party in the
Shares or any part thereof.
(67) Power of Attorney: The Secured Party is hereby irrevocably constituted
as the duly appointed lawful attorney of the Pledgor in accordance
with the Powers of Attorney Act (Ontario), with full power to execute,
complete and deliver in the name and on behalf of the Pledgor all such
documents as the Pledgor is required to deliver pursuant to this
Agreement. The power of attorney hereby granted is a power coupled
with an interest and shall survive the dissolution, liquidation,
winding-up or other termination of existence of the Pledgor. The
Pledgor hereby ratifies all acts done and all documents executed and
delivered by the Secured Party pursuant to the power of attorney
hereby granted and the Pledgor hereby confirms that parties are
entitled to rely upon such ratification.
(68) Meaning of Shares: The term "Shares" as used herein shall include
Substituted or Additional Shares.
(69) Headings: All headings and titles in this Agreement are for
convenience of reference only and shall not affect the interpretation
of the terms hereof.
(70) Gender, etc.: In construing this Agreement, all words and personal
pronouns relating thereto shall be read and construed as the number
and gender of the party or parties referred to in each case require,
and the verb agreeing therewith shall be construed as agreeing with
the required word and pronoun. Words such as "hereunder", "hereto",
"hereof", "herein", and other words commencing with "here", shall
unless the context clearly indicates the contrary refer to the whole
of this Agreement and not to any particular paragraph or part thereof.
(71) Severability: In the event any covenant or provision in this Agreement
is held to be invalid, illegal or unenforceable in whole or in part,
the validity, legality and enforceability of the remaining covenants
and provisions shall not be affected or impaired thereby and all such
remaining covenants and provisions shall continue in full force and
effect. All covenants and provisions hereof are declared to be
separate and distinct covenants or provisions, as the case may be.
(72) Time of Essence: Time shall be strictly of the essence of this
Agreement and of every part thereof and no extension or variation of
this Agreement shall operate as a waiver of this provision.
(73) Governing Law: This Agreement shall be governed in all respects
exclusively by the laws of the Province of Ontario, and the laws of
Canada, as applicable.
(74) Re Liabilities: If more than one person executes this Agreement as
Pledgor, their obligations under this Agreement shall be joint and
several.
(75) Notice: Subject to the specific requirements of the PPSA, any demand,
notice,
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request, consent, approval or other communication required or
permitted to be made or given by any party hereto to any other party
hereto in connection with this Agreement shall be in writing and may
be made or given by personal delivery to such party or, if a
corporation, to a director thereof or, if postal services and
deliveries are then operating, by mailing the same by prepaid
registered post to such party at its address noted on page one of this
Agreement or at such other address which the party to whom such
communication is being given may have designated by notice given in
accordance with the provisions of this paragraph. Any communication so
delivered shall be deemed to have been given and received on the day
of delivery, if a business day, or if not a business day, on the
business day next following the day of delivery, and any communication
so mailed shall be deemed to have been given and received on the
fourth business day following and exclusive of the date of mailing. In
this paragraph, "business day" means any day except a Saturday, Sunday
or statutory holiday. Either party may give notice in writing to the
other in the manner provided in this paragraph of any change of
address of the party giving such notice, and from and after the giving
of such notice, the address therein specified shall be deemed to be
the address of such party for purposes of this paragraph.
(76) Binding Effect: All rights of the Secured Party hereunder shall enure
to the benefit of its successors and assigns and all obligations of
the Pledgor hereunder shall bind the Pledgor, its successors and
assigns. Each reference to the Secured Party in this Agreement shall
be deemed to include a reference to the Secured Party, its successors
and assigns and each reference to the Pledgor in this Agreement shall
be deemed to include a reference to the Pledgor, its successors and
assigns.
(17) Pledgor's Receipt: The Pledgor hereby acknowledges receipt of a fully
signed copy of this Agreement.
IN WITNESS WHEREOF the parties have executed this Agreement on the date
first set out on the first page of this Agreement.
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Witness XXX XXXXX
INTERNATIONAL BARTER CORP.
Per: c/s
---------------------------------
Name: Xxxxxx X. Xxxxx
Title: President and Chief Executive
Officer
BARTER BUSINESS EXCHANGE INC.
Per: c/s
---------------------------------
Name: Xxx Xxxxx
Title: President
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TRUSTEE'S AGREEMENT
The undersigned agrees to hold the Shares as Trustee in accordance with the
terms specified above.
XXXXXXXX PARTNERSHIP
DATED Per:
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Xxxxxx X. Xxxxxx
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