EXHIBIT 10.15
PLEDGE AND SECURITY AGREEMENT
PLEDGE AND SECURITY AGREEMENT, dated as of February 8, 1999, between Xxx
Xxxxx, an individual, having an address at 000 Xxxxxxxxx Xxxxxx, Xxxx Xxxx,
Xxxxxxx 00000 (referred to as the "Pledgor"), Xxxxxx Xxxx, an individual having
an address at Kazi Foods, Inc., 0000 Xxxxxxxx Xxxxx, Xxxxxx Xxxx, XX (referred
to as the "Pledgee") and Financial Intranet Inc., 000 Xxx Xxxx Xxxxx Xxxx,
Xxxxxxx, Xxx Xxxx 00000 (the "Corporation").
W I T N E S E T H:
WHEREAS, on February 8, 1999, the Corporation issued a 7% convertible note
to the Pledgee, a copy of which is attached, under which Corporation is required
to pay to Pledgee the principal amount of $600,000.00 (the "Note"). Pursuant to
the terms of the Note, $240,000.00 principal amount will be due and payable by
the Corporation to the Pledgee on demand (in the form of a Conversion Notice
pursuant to the terms of the Note) by the Pledgee, at any time or times on or
after February 16, 1999, while the remaining balance of $360,000 principal
amount will be due and payable by the Corporation to the Pledgee on demand (in
the form of a Conversion Notice pursuant to the terms of the Note) by the
Pledgee, at any time or times on or after 90 days from the date of the Note.
WHEREAS, in order to induce Pledgee to purchase the Note, Pledgor has
agreed to execute and deliver this Agreement and to pledge to Pledgee as
security for repayment of the Note, subject to the provisions of this Agreement,
one million five hundred thousand (1,500,000) shares
of the Corporation's common stock (the "Common Stock") owned by the
Pledgor, par value $.001 per share, all of which is owned solely by Pledgor.
WHEREAS, Pledgor has executed a Guaranty whereby Pledgor has guaranteed to
Pledgee the full and prompt payment of the Corporation's obligations under the
Note.
NOW, THEREFORE, for good and valuable consideration, the receipt of which
is hereby acknowledged, the Pledgor and the Pledgee hereby agree as follows:
1. Pledge. Pledgor hereby pledges to Pledgee on behalf of and for the
benefit of Pledgee, up to 600,000 shares of Common Stock to secure the payment
of $240,000 principal amount due and payable by the Corporation on demand (in
the form of a Conversion Notice) by the Pledgee, at any time or times on or
after February 16, 1999 under the terms of the Note (the "February Pledged
Stock"), and up to 900,000 shares of Common Stock to secure the payment of
$360,000 principal amount due and payable by the Corporation on demand (in the
form of a Conversion Notice) by the Pledgee at any time or times on or after
ninety (90) days from the date of the Note (the "Ninety Day Pledged Stock", the
February Pledged Stock, the Ninety Day Pledged Stock and the Endorsed Stock
Power as per Section 2 herein is collectively referred to as the "Pledged
Stock"). Pledgor has pledged such Pledged Stock and all proceeds thereof as
collateral security for the prompt and complete payment when due and performance
and observance of all obligations of the Corporation under the Note. The Note
(including all representations, warranties, covenants or obligations provided
for herein), together with all replacements, amendments, extensions and renewals
thereof, if any from time to time are hereinafter collectively called the
"Obligations".
2. Stock Certificates. Simultaneously with the execution of this Agreement,
Pledgor has delivered to Escrow Agent II (as defined below) certificates for the
Pledged Stock to be held by Escrow Agent II as collateral under this Agreement,
to secure complete and final payment by the Pledgor of the Obligations in
accordance with the terms and provisions of this Agreement. Simultaneously with
the execution of this Agreement, Pledgor has delivered to Escrow Agent II duly
endorsed stock powers (the "Endorsed Stock Powers") that permit Pledgee to
transfer the Pledged Stock to the Pledgee if an Event Default occurs, as set
forth in the Note or in Paragraph 12 hereof (a copy of each stock power is
attached hereto).
3. Stock Dividends, Distributions, etc. If, while this Agreement is in
effect, the Pledgor shall became entitled to receive or shall receive any stock
certificate (including, without limitation, any certificate representing a stock
dividend, stock split, conversion of a convertible security or a distribution in
connection with any reclassification or any increase or reduction of capital, or
issued in connection with any reorganization), option or right, whether as an
addition to, in substitution, of or in exchange for any of the Pledged Stock,
Pledgor agrees that such stock certificate, option or right shall be additional
collateral security for the Obligations, and shall be delivered to Escrow Agent
II to be held as Collateral (as defined below) pursuant to the terms of this
Agreement.
4. Collateral. All property at any time pledged to Pledgee under this
Agreement and all income therefrom and proceeds thereof, including, without
limitation, the Pledged Stock, are herein collectively sometimes called the
"Collateral".
5. Escrow Agent. Pledgor and Pledgee each hereby designate
XxXxxxxxxx & Xxxxx LLP, 000 Xxxxxxx Xxxxxx, Xxx Xxxx XX 00000 as Escrow
Agent II ("Escrow Agent II") to hold the Pledged Stock in accordance with the
escrow agreement dated as of the date hereof.
6. Voting Rights. Unless an Event of Default, as defined herein or in the
Note, shall have occurred, Pledgor shall be entitled to vote the February
Pledged Stock and the Ninety Day Pledged Stock and to give consents, waiver and
ratification in respect of the February Pledged Stock and Ninety Day Pledged
Stock; provided, however, that no vote shall be cast, or consent, waiver or
ratification given or action taken, which would violate any provision of this
Agreement, the Note or the Guaranty.
7. Rights of Pledgee. Any of the Pledged Stock may, if an Event of Default
has occurred and is continuing (as defined below or in the Note), (a) be
registered in the name of Pledgee and its nominees (for which a power of
attorney coupled with an interest is hereby granted), which may thereafter
exercise all voting and other rights and exercise any and all rights of
conversion, exchange, subscription or any other rights, privileges or options
pertaining to any of the Pledged Stock as if it were the absolute owner thereof
or (b) to the extent permitted by law, be sold by Pledgee in the name of Pledgor
to any third party with all proceeds of such sale being paid to Pledgee (for
which a power of attorney coupled with an interest is hereby granted). In
addition, Pledgor grants to Pledgee a power of attorney coupled with an interest
to sign on behalf of Pledgor after an Event of Default (as defined herein or in
the Note), a statement renouncing or modifying Pledgor's right under section
9-505 of the Uniform Commercial Code of the State of New York.
8. Remedies. In the event that any portion of the Obligations has been
declared, or becomes, due and payable, or an Event of Default (as defined herein
or in the Note) has occurred and is continuing, Pledgee, upon notice to the
Pledgor, may forthwith collect, receive and realize upon the Collateral, or any
part thereof, and shall have all applicable remedies set forth in the New York
Uniform Commercial Code.
9. Representations and Warranties of the Pledgor. Pledgor represents,
warrants and covenants to Pledgee that:
(a) Pledgor is, and as long as this Pledge Agreement shall be in effect
pursuant to its terms, shall be the sole, record, legal and beneficial owner of,
and has good and marketable title to, the Pledged Stock, subject to no lien,
pledge or encumbrance, except the lien on the Pledged Stock created by this
Agreement.
(b) Pledgor has duly executed and delivered this Agreement, which is a
legal, valid and binding obligation of Pledgor, enforceable in accordance with
its terms and not in violation of any other agreements, instruments, order or
judgment by which Pledgor is bound or subject. The execution, delivery and
performance of this Agreement by Pledgor does not require the consent or
approval of any other person, entity or governmental agency.
(c) Pledgor represents that he is an affiliate of the Corporation, as that
term is defined in Rule 144 of the Securities Act of 1933, and has been the
beneficial owner of the Pledged Stock for a period of at least two (2) years
from the date he acquired them from the Corporation.
(d) Pledgor represents that the pledge of the Pledged Stock represents a
bona
fide pledge of the Obligation's under the Note and that the Pledgor will
remain liable for any deficiency in the event that the delivery of the Pledged
Stock to the Pledgee is insufficient to satisfy the Corporation's obligations
under the Note.
(e) Pledgor hereby represents and warrants to the Pledgee that from and
after the date hereof and so long as this Pledge Agreement shall be in effect
pursuant to its terms, the Pledgor agrees that it shall not take any action that
would cause the Pledgor to be in breach or default of any of the Obligations,
that all representations and warranties made by Pledgor shall survive this
Agreement and that as of the date hereof, the Pledgee shall be deemed to have a
priority lien on the Pledged Stock for the purposes and in accordance with the
terms and provisions hereof, and the Pledgor shall cooperate with the Pledgee
and take all action requested by the Pledgee to ensure the representations and
warranties shall survive this Pledge Agreement with respect thereto.
(f) Upon the Pledged Stock being delivered to the Pledgee as heretofore
provided, they shall become fully the property of the Pledgee. The Pledgor shall
take all action necessary, as the Pledgee shall request, to cause the
Corporation and/or the Corporation's transfer agent to have the Pledgee or its
nominee registered as the holder of record of such shares at no cost to the
Pledgee. In addition, in the event that the certificates representing the
Pledged Stock shall bear a restrictive legend, the Pledgor shall promptly take
all necessary action, (including obtaining an opinion of counsel satisfactory to
the foregoing transfer agent) at the direction of the Pledgee (at no cost to the
Pledgee, the Corporation, and/or the Corporation's transfer agent,) to transfer
the shares to Pledgee or its nominee for sale without restrictive legend
pursuant to Rule 144(k) in accordance with the Securities Act of 1933, as
amended. In addition, in the event that the
certificates representing the Pledged Stock shall bear a legend restricting
the Pledgee's ability to freely transfer such shares, upon request of the
Pledgee the Pledgor shall promptly take all necessary action, at the direction
of the Pledgee, to convert the securities into Common Stock and to sell the
Common Stock pursuant to an effective registration statement in accordance with
the Securities Act of 1933, as amended, and the blue sky laws or such states as
the Pledgee may request.
10. Representations and Warranties of the Pledgee
(a) Pledgee has duly executed and delivered this Agreement, which is a
legal, valid and binding obligation of Pledgee, enforceable in accordance with
its terms and not in violation of any other agreements, instruments, order or
judgment by which Pledgee is bound or subject. The execution, delivery and
performance of this Agreement by Pledgee does not require the consent or
approval of any other person, entity or governmental agency.
(b) Pledgee represents that he is not an affiliate of the Corporation, as
that term is defined in Rule 144 of the Securities Act of 1933 (without limiting
Pledgee's right to sell, transfer, convey or assign the Pledged Stock), that he
will not be acquiring the Pledged Stock with a view towards distribution and
that, in the event of that Pledgee sells or transfers the Pledged Stock, such
sale or transfer will be in compliance with the applicable state and federal
securities laws, including Rule 144 of the Securities Act.
11. Representations and Warranties of the Corporation The Corporation
represents and warrants that it shall take all action necessary to have the
Pledged Stock transferred in the name of the Pledgee, including but not limited
to, instructing the transfer agent to transfer the
Pledged Stock to Pledgee and providing an opinion of counsel if one is
requested by Pledgee.
12. Events of Default. If any one of the following events shall occur or
continue and shall not be waived in writing by Pledgee (an "Event of Default"):
(a) the Corporation shall default in the payment (including timely delivery of
shares due upon receipt of a Notice of Conversion), when due and payable, of any
amount due under the Note or shall be in default of any provision of the Note
which shall constitute an Event of Default thereunder or (b) the Pledgor shall
file, or there shall be filed against the Pledgor, a petition under any title,
section or chapter of the Federal Bankruptcy Code, then, at any time, the
outstanding principal amount of the Note shall be immediately due and payable,
and Pledgee shall be entitled to pursue all remedies provided for in this
Agreement or by law upon such acceleration upon Default. In the event the
Pledgor shall file, or there shall be filed against the Pledgor, a petition
under any title, section or chapter of the Federal Bankruptcy Code, then Pledgee
shall have a first priority security interest with respect to the Pledged Stock
13. Release of Collateral to Pledgee. The Pledged Stock shall be released
to the Pledgor (a) upon the satisfaction by the Corporation of all of its
Obligations, or (b) upon the delivery by the Corporation to Escrow Agent II of a
number of shares of Common Stock in the name of the Pledgee free of liens and/or
encumbrances, equal to the number of shares of Pledged Stock then held by Escrow
Agent II, provided that the certificates so delivered by the Corporation shall
be free of restrictive legend and subject to a Registration Statement which has
been effective without suspension by the Securities and Exchange Commission for
a minimum of 30 days. Upon the release of the Collateral to the Pledgor, this
Agreement and the Guaranty shall
terminate.
14. Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally or by facsimile or
five days following being mailed by certified or registered mail, postage
prepaid, return-receipt requested, addressed (1) to the Pledgee of record at its
address appearing on the books of the Company, (2) to the Pledgor at 000
Xxxxxxxxx Xxxxxx, Xxxx Xxxx, Xxxxxxx 00000, facsimile number: (000) 000-0000
with a copy to Xxxxxx Xxxxxxxx, Esq., XxXxxxxxxx & Xxxxx, LLP, 000 Xxxxxxx
Xxxxxx, Xxx Xxxx, XX 00000, facsimile number: (000)-000-0000.
15. Waivers, Amendments. None of the terms or provisions of this Agreement
may be waived, altered, modified or amended except by an instrument in writing,
duly executed by Pledgee and Pledgor. This Agreement and all obligations of the
Pledgor hereunder shall be binding upon the successors and assigns of the
Pledgor. This Agreement shall inure to the benefit or and be enforceable by
Pledgee and its successors and assigns.
16. Applicable Law. This Agreement shall be governed by the laws of the
State of New York without regard to conflict of law rules applied in the State
of New York and has been executed and delivered in the State of New York.
17. Jurisdiction. Any litigation based thereon, or arising out of, under,
or in connection with, this agreement or any course of conduct, course of
dealing, statements (whether oral or written) or actions of the Pledgor or
Pledgee shall be brought and maintained exclusively in the Federal Courts of the
state of New York without reference to its conflicts of laws rules or
principles. The Pledgor and the Pledgee hereby expressly and irrevocably submits
to the exclusive
jurisdiction of the Federal Court of the state of New York sitting in the
Southern District for the purpose of any such litigation as set forth above.
Each party further irrevocably consents to the service of process by registered
mail, postage prepaid, or by personal service within or without the State of New
York. To the extent that the Pledgee or Pledgor has or hereafter may acquire any
immunity from jurisdiction of any court or from any legal process (whether
through service or notice, attachment prior to judgment, attachment in aid of
execution or otherwise) with respect to itself or its property, Pledgee and
Pledgor hereby irrevocably waives such immunity in respect of its obligations
under this agreement and the other documents.
18. Counterparts. This Pledge Agreement may be executed in counterparts,
each of which shall be an original, and such counterparts together shall
constitute one and the same instrument.
19. Entire Agreement. This Pledge Agreement constitutes the entire
agreement between the parties hereto with respect to the subject matter hereof
and may not be changed or modified except by a written agreement signed by the
parties whose duties, obligations, rights or interest is affected thereby.
IN WITNESS WHEREOF, the parties above executed and delivered this Agreement
on the day and year first above written.
PLEDGOR:
/s/Xxx Xxxxx
Xxx Xxxxx
PLEDGEE:
/s/Xxxxxx Xxxx
Xxxxxx Xxxx
FINANCIAL INTRANET, INC.
By:/s/Xxxxxxx Xxxxxxxx
Xxxxxxx Xxxxxxxx, President
