AMENDED AND RESTATED
PLEDGE AND ESCROW AGREEMENT
THIS AMENDED AND RESTATED PLEDGE AND ESCROW AGREEMENT (the "Agreement")
is made and entered into as of February 2, 2006 (the "Effective Date") by and
among ICOA, INC., a corporation organized and existing under the laws of the
State of Nevada (the "Pledgor"), CORNELL CAPITAL PARTNERS, LP, (the "Pledgee"),
and XXXXX XXXXXXXX, ESQ., as escrow agent ("Escrow Agent").
RECITALS:
WHEREAS, in order to secure the full and prompt payment when due
(whether at the stated maturity, by acceleration or otherwise) of all of the
Company's obligations (the "Obligations") to the Pledgee or any successor to the
Pledgee under this Agreement, the Securities Purchase Agreement dated November
2, 2005 between the Pledgor and the Pledgee (the "Initial Securities Purchase
Agreement"), the Convertible Debentures (the "Initial Convertible Debentures")
issued by the Company to the Pledgee, for a total of Two Million Three Hundred
Eighty Seven Thousand Three Hundred Twenty Seven Dollars and Twenty Four Cents
($2,387,327.24) of principal, plus any interest, costs, fees, and other amounts
owed to the Pledgee thereunder, the Securities Purchase Agreement dated the date
hereof between the Pledgor and the Pledgee (the "Subsequent Securities Purchase
Agreement" and together with the Initial Securities Purchase Agreement, the
"Securities Purchase Agreement"), the Convertible Debentures (the "Subsequent
Convertible Debentures" and together with the Initial Convertible Debentures,
the "Convertible Debentures")) issued or to be issued by the Company to the
Pledgee, either now or in the future, up to a total of Three Hundred Thousand
Dollars ($300,000) of principal, plus any interest, costs, fees, and other
amounts owed to the Pledgee thereunder the Security Agreements dated November 2,
2005 between the Pledgor and the Pledgee (the "Security Agreement"), and all
other contracts entered into between the parties hereto (collectively, the
"Transaction Documents"), the Pledgor has agreed to irrevocably pledge to the
Pledgee one hundred eighty million (180,000,000) shares and any Subsequent
Shares (as provided in Section 1.2 below) (collectively referred to as the
"Pledged Shares") of the Pledgor's common stock.
WHEREAS, subject to the terms of the Convertible Debentures, the
Pledgee has the right to convert at any time until payment in full, the
Convertible Debentures into shares of the Pledgor's common stock (the
"Conversion Shares").
WHEREAS, the parties initially entered into the Pledge and Escrow
Agreement on November 2, 2005 and desire that this Agreement shall amend,
replace, and supersede the original Pledge and Escrow Agreement.
NOW, THEREFORE, in consideration of the mutual covenants, agreements,
warranties, and representations herein contained, and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
TERMS AND CONDITIONS
1. Pledge and Transfer of Pledged Shares.
1.1. The Pledgor hereby grants to Pledgee a security interest in all Pledged
Shares as security for Pledgor's obligations under the Convertible Debentures.
Simultaneously with the execution of the Transaction Documents, the Pledgor
shall deliver to the Escrow Agent stock certificates representing the Pledged
Shares, together with duly executed stock powers or other appropriate transfer
documents executed in blank by the Pledgor (the "Transfer Documents"), and such
stock certificates and Transfer Documents shall be held by the Escrow Agent
until the full payment of all amounts due to the Pledgee under the Convertible
Debentures and through repayment in accordance with the terms of the Convertible
Debentures, or the termination or expiration of this Agreement.
1.2. Subsequent Shares. In the event that the Market Value of the Pledged Shares
(as determined by multiplying the number of Pledged Shares by the average
closing price as reported by Bloomberg L.P. of the Pledgor's common stock on its
principal market for the 7 trading days prior to the Pricing Date) is less than
two and one half (2.5) times the amount of the outstanding principal balance and
accrued interest under the Convertible Debentures, as determined on the
fifteenth (15th) day from the date hereof, and as redetermined every fifteenth
(15th) day thereafter (each individually referred to as a "Pricing Date"), the
Pledgor shall, within three (3) business days of the Pricing Date, pledge
additional shares of the Pledgor's common stock (the "Subsequent Shares"), and
deliver to the Escrow Agent the Subsequent Shares, along with the related
Transfer Documents such that the Market Value of the Pledged Shares, along with
the Subsequent Shares, shall collectively be equal to or exceed three (3) times
the amount of the outstanding principal balance and accrued interest under the
Convertible Debentures as determined on such Pricing Date. In the event a
Pricing Date shall fall on a Saturday, Sunday or on a holiday, the Pricing Date
shall be the next trading date. Failure of the Pledgee to enforce any provisions
of this section for any period of time shall not be deemed a waiver of the
Pledgee's rights under this section.
1.3. Return of Pledged Shares. Upon each conversion by the Pledgee into an
excess of 20,000,000 Conversion Shares, the number of Pledged Shares pursuant to
this Agreement shall be reduced by the number of Conversion Shares issued to the
Pledgee, in 20,000,000 share blocks. The Pledgor and Pledgee shall provide joint
written notice to the Escrow Agent of such conversions instructing the Escrow
Agent to return to the Pledgor the Pledged Shares being reduced pursuant to this
Section 1.3.
2. Rights Relating to Pledged Shares. Upon the occurrence of an Event of Default
(as defined herein), the Pledgee shall be entitled to vote the Pledged Shares,
to receive dividends and other distributions thereon, and to enjoy all other
rights and privileges incident to the ownership of the Pledged Shares.
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3. Release of Pledged Shares from Pledge. Upon the payment of all amounts due to
the Pledgee under the Convertible Debentures by repayment in accordance with the
terms of the Note, the parties hereto shall notify the Escrow Agent to such
effect in writing. Upon receipt of such written notice for payment of the
amounts due to the Pledgee under the Convertible Debentures, the Escrow Agent
shall return to the Pledgor the Transfer Documents and the certificates
representing the Pledged Shares, (collectively the "Pledged Materials"),
whereupon any and all rights of Pledgee in the Pledged Materials shall be
terminated. Notwithstanding anything to the contrary contained herein, upon full
payment of all amounts due to the Pledgee under the Convertible Debentures, by
repayment in accordance with the terms of the Note, this Agreement and Pledgee's
security interest and rights in and to the Pledged Shares shall terminate.
4. Event of Default. An "Event of Default" shall be deemed to have occurred
under this Agreement upon an Event of Default under the Transaction Documents.
5. Remedies. Upon and anytime after the occurrence of an Event of Default, the
Pledgee shall have the right to provide written notice of such Event of Default
(the "Default Notice") to the Escrow Agent, with a copy to the Pledgor. As soon
as practicable after receipt of the Default Notice, the Escrow Agent shall
deliver to Pledgee the Pledged Materials held by the Escrow Agent hereunder.
Upon receipt of the Pledged Materials, the Pledgee shall have the right to (i)
sell the Pledged Shares and to apply the proceeds of such sales, net of any
selling commissions, to the Obligations owed to the Pledgee by the Pledgor under
the Transaction Documents, including, without limitation, outstanding principal,
interest, legal fees, and any other amounts owed to the Pledgee, and exercise
all other rights and (ii) any and all remedies of a secured party with respect
to such property as may be available under the Uniform Commercial Code as in
effect in the State of New Jersey. To the extent that the net proceeds received
by the Pledgee are insufficient to satisfy the Obligations in full, the Pledgee
shall be entitled to a deficiency judgment against the Pledgor for such amount.
The Pledgee shall have the absolute right to sell or dispose of the Pledged
Shares in any manner it sees fit and shall have no liability to the Pledgor or
any other party for selling or disposing of such Pledged Shares even if other
methods of sales or dispositions would or allegedly would result in greater
proceeds than the method actually used. The Escrow Agent shall have the absolute
right to disburse the Pledged Shares to the Pledgee in batches not to exceed
9.9% of the outstanding capital of the Pledgor (which limit may be waived by the
Pledgee providing not less than 65 days' prior written notice to the Escrow
Agent). The Pledgee shall return any Pledged Shares released to it and remaining
after the Pledgee has applied the net proceeds to all amounts owed to the
Pledgee.
5.1. Each right, power and remedy of the Pledgee provided for in this Agreement
or any other Transaction Document shall be cumulative and concurrent and shall
be in addition to every other such right, power or remedy. The exercise or
beginning of the exercise by the Pledgee of any one or more of the rights,
powers or remedies provided for in this Agreement or any other Transaction
Document or now or hereafter existing at law or in equity or by statute or
otherwise shall not preclude the simultaneous or later exercise by the Pledgee
of all such other rights, powers or remedies, and no failure or delay on the
part of the Pledgee to exercise any such right, power or remedy shall operate as
a waiver thereof. No notice to or demand on the Pledgor in any case shall
entitle it to any other or further notice or demand in similar or other
circumstances or constitute a waiver of any of the rights of the Pledgee to any
other further action in any circumstances without demand or notice. The Pledgee
shall have the full power to enforce or to assign or contract is rights under
this Agreement to a third party.
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5.2. Demand Registration Rights. In addition to all other remedies available to
the Pledgee, upon an Event of Default, the Pledgor shall promptly, but in no
event more than thirty (30) days after the date of the Default Notice, file a
registration statement to register with the Securities and Exchange Commission
the Pledged Shares for the resale by the Pledgee. The Pledgor shall cause the
registration statement to remain in effect until all of the Pledged Shares have
been sold by the Pledgee.
6. Concerning the Escrow Agent.
6.1. The Escrow Agent undertakes to perform only such duties as are expressly
set forth herein and no implied duties or obligations shall be read into this
Agreement against the Escrow Agent.
6.2. The Escrow Agent may act in reliance upon any writing or instrument or
signature which it, in good faith, believes to be genuine, may assume the
validity and accuracy of any statement or assertion contained in such a writing
or instrument, and may assume that any person purporting to give any writing,
notice, advice or instructions in connection with the provisions hereof has been
duly authorized to do so. The Escrow Agent shall not be liable in any manner for
the sufficiency or correctness as to form, manner, and execution, or validity of
any instrument deposited in this escrow, nor as to the identity, authority, or
right of any person executing the same; and its duties hereunder shall be
limited to the safekeeping of such certificates, monies, instruments, or other
document received by it as such escrow holder, and for the disposition of the
same in accordance with the written instruments accepted by it in the escrow.
6.3. Pledgee and the Pledgor hereby agree, to defend and indemnify the Escrow
Agent and hold it harmless from any and all claims, liabilities, losses,
actions, suits, or proceedings at law or in equity, or any other expenses, fees,
or charges of any character or nature which it may incur or with which it may be
threatened by reason of its acting as Escrow Agent under this Agreement; and in
connection therewith, to indemnify the Escrow Agent against any and all
expenses, including attorneys' fees and costs of defending any action, suit, or
proceeding or resisting any claim (and any costs incurred by the Escrow Agent
pursuant to Sections 6.4 or 6.5 hereof). The Escrow Agent shall be vested with a
lien on all property deposited hereunder, for indemnification of attorneys' fees
and court costs regarding any suit, proceeding or otherwise, or any other
expenses, fees, or charges of any character or nature, which may be incurred by
the Escrow Agent by reason of disputes arising between the makers of this escrow
as to the correct interpretation of this Agreement and instructions given to the
Escrow Agent hereunder, or otherwise, with the right of the Escrow Agent,
regardless of the instructions aforesaid, to hold said property until and unless
said additional expenses, fees, and charges shall be fully paid. Any fees and
costs charged by the Escrow Agent for serving hereunder shall be paid by the
Pledgor.
6.4. If any of the parties shall be in disagreement about the interpretation of
this Agreement, or about the rights and obligations, or the propriety of any
action contemplated by the Escrow Agent hereunder, the Escrow Agent may, at its
sole discretion deposit the Pledged Materials with the Clerk of the United
States District Court of New Jersey, sitting in Newark, New Jersey, and, upon
notifying all parties concerned of such action, all liability on the part of the
Escrow Agent shall fully cease and terminate. The Escrow Agent shall be
indemnified by the Pledgor, the Company and Pledgee for all costs, including
reasonable attorneys' fees in connection with the aforesaid proceeding, and
shall be fully protected in suspending all or a part of its activities under
this Agreement until a final decision or other settlement in the proceeding is
received.
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6.5. The Escrow Agent may consult with counsel of its own choice (and the costs
of such counsel shall be paid by the Pledgor and Pledgee) and shall have full
and complete authorization and protection for any action taken or suffered by it
hereunder in good faith and in accordance with the opinion of such counsel. The
Escrow Agent shall not be liable for any mistakes of fact or error of judgment,
or for any actions or omissions of any kind, unless caused by its willful
misconduct or gross negligence.
6.6. The Escrow Agent may resign upon ten (10) days' written notice to the
parties in this Agreement. If a successor Escrow Agent is not appointed within
this ten (10) day period, the Escrow Agent may petition a court of competent
jurisdiction to name a successor.
6.7 Conflict Waiver. The Pledgor hereby acknowledges that the Escrow Agent is
general counsel to the Pledgee, a partner in the general partner of the Pledgee,
and counsel to the Pledgee in connection with the transactions contemplated and
referred herein. The Pledgor agrees that in the event of any dispute arising in
connection with this Agreement or otherwise in connection with any transaction
or agreement contemplated and referred herein, the Escrow Agent shall be
permitted to continue to represent the Pledgee and the Pledgor will not seek to
disqualify such counsel and waives any objection Pledgor might have with respect
to the Escrow Agent acting as the Escrow Agent pursuant to this Agreement.
6.8 Notices. Unless otherwise provided herein, all demands, notices, consents,
service of process, requests and other communications hereunder shall be in
writing and shall be delivered in person or by overnight courier service, or
mailed by certified mail, return receipt requested, addressed:
If to the Pledgor, to: ICOA, Inc.
000 Xxxxxxx Xxxx
Xxxxxxx, XX 00000
Attention: Xxxxx Xxxxxxxx, Xx.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy to: Xxxxxxxxxxx & Xxxxxxxx Xxxxxxxxx Xxxxxx LLP
000 Xxxxx Xxxxxxxx Xxxxxxxxx - Xxxxx 0000
Xxxxx, XX 00000-0000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
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If to the Pledgee: Cornell Capital Partners, LP
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx Xxxx, XX 00000
Attention: Xxxx X. Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With copy to: Xxxxx Xxxxxxxx, Esq.
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx Xxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Any such notice shall be effective (a) when delivered, if delivered by hand
delivery or overnight courier service, or (b) five (5) days after deposit in the
United States mail, as applicable.
7. Binding Effect. All of the covenants and obligations contained herein shall
be binding upon and shall inure to the benefit of the respective parties, their
successors and assigns.
8. Governing Law; Venue; Service of Process. The validity, interpretation and
performance of this Agreement shall be determined in accordance with the laws of
the State of New Jersey applicable to contracts made and to be performed wholly
within that state except to the extent that Federal law applies. The parties
hereto agree that any disputes, claims, disagreements, lawsuits, actions or
controversies of any type or nature whatsoever that, directly or indirectly,
arise from or relate to this Agreement, including, without limitation, claims
relating to the inducement, construction, performance or termination of this
Agreement, shall be brought in the state superior courts located in Xxxxxx
County, New Jersey or Federal district courts located in Newark, New Jersey, and
the parties hereto agree not to challenge the selection of that venue in any
such proceeding for any reason, including, without limitation, on the grounds
that such venue is an inconvenient forum. The parties hereto specifically agree
that service of process may be made, and such service of process shall be
effective if made, pursuant to Section 8 hereto.
9. Enforcement Costs. If any legal action or other proceeding is brought for the
enforcement of this Agreement, or because of an alleged dispute, breach, default
or misrepresentation in connection with any provisions of this Agreement, the
successful or prevailing party or parties shall be entitled to recover
reasonable attorneys' fees, court costs and all expenses even if not taxable as
court costs (including, without limitation, all such fees, costs and expenses
incident to appeals), incurred in that action or proceeding, in addition to any
other relief to which such party or parties may be entitled.
10. Remedies Cumulative. No remedy herein conferred upon any party is intended
to be exclusive of any other remedy, and each and every such remedy shall be
cumulative and shall be in addition to every other remedy given hereunder or now
or hereafter existing at law, in equity, by statute, or otherwise. No single or
partial exercise by any party of any right, power or remedy hereunder shall
preclude any other or further exercise thereof.
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11. Counterparts. This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute the same instrument.
12. No Penalties. No provision of this Agreement is to be interpreted as a
penalty upon any party to this Agreement.
13. JURY TRIAL. EACH OF THE PLEDGEE AND THE PLEDGOR HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVES THE RIGHT WHICH IT MAY HAVE TO A TRIAL BY
JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION BASED HEREON, OR ARISING
OUT OF, UNDER OR IN ANY WAY CONNECTED WITH THE DEALINGS BETWEEN PLEDGEE AND
PLEDGOR, THIS PLEDGE AND ESCROW AGREEMENT OR ANY DOCUMENT EXECUTED IN CONNECTION
HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL
OR WRITTEN) OR ACTIONS OF ANY PARTY HERETO OR THERETO IN EACH CASE WHETHER NOW
EXISTING OR HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR
OTHERWISE.
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IN WITNESS WHEREOF, the parties hereto have duly executed this Pledge
and Escrow Agreement as of the date first above written.
CORNELL CAPITAL PARTNERS, LP
By: Yorkville Advisors, LLC
Its: General Partner
By:
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Name: Xxxx Xxxxxx
Title: Portfolio Manager
ICOA, INC.
By:
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Name:
Title: Chief Financial Officer
ESCROW AGENT
By:
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Name: Xxxxx Xxxxxxxx, Esq.
