PLEDGE AGREEMENT
EXECUTION
VERSION
This
PLEDGE AGREEMENT (this “Agreement”) is made
as of July 14, 2010, by and between DESERT HAWK GOLD CORP., a Nevada
corporation (the “Pledgor”), and DMRJ
GROUP I, LLC, a Delaware limited liability company, or its successors and
assigns (the “Secured
Party”).
RECITALS
A. Contemporaneously
with the execution and delivery hereof, the Pledgor and the Secured Party
entered into that certain Investment Agreement, dated as of the date hereof,
pursuant to which the Secured Party agreed to make available to the Pledgor a
senior secured term loan credit facility of up to $6,500,000 for the purpose of,
among other things, providing capital to the Secured Party for the conduct of
certain mining activities (as the same may be amended, modified, supplemented,
renewed, restated, extended or replaced, the “Investment
Agreement”).
B. Pledgor
is the owner of 2,713,636 shares of common stock, par value $0.001 per share, of
Blue Fin Capital, Inc., a Utah corporation (the “Blue Fin Shares”),
which represents all of the issued and outstanding shares of Blue Fin Capital,
Inc.
C. In
order to induce the Secured Party to enter into the Investment Agreement and
make available to the Pledgor the senior secured term loan credit facility
contemplated thereby, the Pledgor agreed to execute and deliver to and for the
benefit of the Secured Party this Agreement pursuant to which the Pledgor shall
pledge to the Secured Party the Blue Fin Shares as collateral security for the
timely payment and performance in full of the Secured Obligations (as defined
herein).
D. This
Pledge Agreement is the “Pledge Agreement” defined and referenced in the
Investment Agreement.
AGREEMENT
ACCORDINGLY,
in consideration of the premises and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the Pledgor agrees
with and for the benefit of the Secured Party as follows:
1. Definitions: The
following terms shall have the meanings ascribed to them below:
“Agreement” has the
meaning set forth in the preamble hereof.
“Blue Fin Shares” has
the meaning set forth in the Recitals hereof.
“Business Day” means a
day of the year on which banks are not required or authorized by law to close in
New York City.
“Distributions” has
the meaning specified in Section 2(a) hereof.
“Foreclosure Event”
shall mean any “Event of Default” (as defined in the Investment
Agreement).
“Investment Agreement”
has the meaning set forth in the Recitals hereof.
“Note” has the meaning
set forth in the Investment Agreement.
“Person” shall mean
any individual, partnership (including limited partnership), corporation,
limited liability company, association, joint stock company, trust, joint
venture, unincorporated organization or governmental entity or department,
agency or political subdivision thereof.
“Pledged Collateral”
has the meaning specified in Section 2 hereof.
“Pledgor” has the
meaning set forth in the preamble hereof.
“Secured Obligations”
shall mean the Obligations (as defined in the Investment
Agreement).
“Secured Party” has
the meaning set forth in the preamble hereof.
“UCC” shall mean the
Uniform Commercial Code as in effect from time to time in the State of New
York.
2. Security
Interest. As security for the prompt and complete payment and
performance, when due (whether at stated maturity, acceleration or otherwise),
of the Secured Obligations, the Pledgor, for value received, hereby pledges and
assigns to the Secured Party and grants to the Secured Party a continuing, first
priority security interest in and lien on the following (the “Pledged
Collateral”):
(a) the
Blue Fin Shares and the certificates, if any, representing such Blue Fin Shares,
and all products and proceeds of such Blue Fin Shares, including, without
limitation, all distributions, dividends, cash, instruments, subscription,
warrants and any other rights and options and other property from time to time
received, receivable or otherwise distributed in respect of or in exchange for
any or all of such Blue Fin Shares (“Distributions”) and
including, without limitation, all “proceeds” as such term is defined in the
UCC;
(b) all
additional shares of stock or other equity interests of or in Blue Fin Capital,
Inc. from time to time acquired by the Pledgor in any manner, and the
certificates, if any, representing such additional shares or interests (any such
additional shares or interests will constitute part of the Blue Fin Shares under
and as defined in this Agreement), and all products and proceeds of any such
additional Blue Fin Shares, including, without limitation, all distributions,
dividends, cash, instruments, subscription, warrants and any other rights and
options and other property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such additional Blue
Fin Shares;
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(c) all
other claims of any kind or nature and any instruments, certificates, chattel
paper or other writings evidencing such claims, whether in contract or tort and
whether arising by operation of law, consensual agreement or otherwise, at any
time acquired by the Pledgor against Blue Fin Capital, Inc. or any other Person
having any liability to holders of the Blue Fin Shares; and
(d) any
“investment property” (as defined in the UCC) now owned or hereafter acquired by
the Pledgor with respect to the property described in clauses (a), (b) or (c)
above.
3. Voting Rights;
Distributions. So long as no Foreclosure Event has occurred
and is continuing, the Pledgor may exercise any voting rights incident to the
Pledged Collateral and shall have the right to receive and retain any and all
Distributions to the extent that all or any portion of such Distributions are
permitted to be made by Blue Fin Capital, Inc. in accordance with the provisions
of the Investment Agreement.
4. Delivery of Pledged
Collateral. The Pledgor shall deliver to the Secured Party
(i) simultaneously with or prior to the execution and delivery of this
Pledge Agreement, all certificates representing the Blue Fin Shares, and
(ii) promptly upon the receipt thereof by the Pledgor, all other
certificates and instruments constituting Pledged Collateral owned by the
Pledgor. All such certificates shall be delivered in suitable form
for transfer by delivery or shall be accompanied by duly executed instruments of
transfer or assignment in blank, substantially in the form provided in Exhibit A attached
hereto.
5. Representations and
Warranties. The Pledgor hereby represents and warrants to the
Secured Party as follows:
(a) Enforceability; Creation of
Security Interest. This Agreement has been duly executed and
delivered by Pledgor and constitutes the legal, valid and binding obligation of
the Pledgor, enforceable against the Pledgor in accordance with its terms,
subject to bankruptcy, insolvency, moratorium, reorganization and similar laws
of general applicability affecting the rights and remedies of creditors and to
general principles of equity, regardless of whether enforcement is sought in
proceedings in equity or at law. The security interest created hereby
constitutes (i) a legal and valid security interest in the Pledged Collateral
owned by the Pledgor securing the payment and performance of the Secured
Obligations, and (ii) a first priority and perfected security interest in the
Pledged Collateral. The security interest created hereby shall be
prior to any lien on the Pledged Collateral, other than liens arising by
operation of law and that would be prior in right.
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(b) Ownership and
Liens. The Pledgor is the record and beneficial owner of Blue
Fin Shares, and the Blue Fin Shares constitute all of the issued and outstanding
capital stock of Blue Fin Capital, Inc. The Pledgor owns
the Pledged Collateral, free and clear of all liens, except for the security
interest created by this Agreement and the Transaction Documents (as defined in
the Investment Agreement). The Pledgor has not executed any other
security agreement affecting the Pledged Collateral, and no financing statement
or other similar instrument in respect of the Pledged Collateral is in effect or
on file in any recording office in any jurisdiction, except pursuant to the
Transaction Documents.
6. Covenants. The
Pledgor shall comply with the covenants contained in this Section 6 at all times
during the period of time this Agreement remains in effect unless the Secured
Party shall otherwise consent in writing:
(a) Ownership and
Liens. The Pledgor will maintain good and valid title to the
Pledged Collateral, free and clear of all liens, except for the security
interest created by this Agreement and the Transaction Documents.
(b) Adverse
Claim. The Pledgor will promptly notify the Secured Party of
any claim, action or proceeding affecting ownership of the Pledged Collateral,
or any part thereof, or the security interest created hereunder. The
Pledgor will promptly deliver to the Secured Party a copy of all written notices
received by the Pledgor with respect to the Pledged Collateral. The
Pledgor will defend the Pledged Collateral pledged hereby against, and take such
other action as is necessary to remove, any lien or charge on, defect in title
to, or other encumbrance on, any of the Pledged Collateral.
(c) Further
Assurances. The Pledgor will from time to time at its expense
promptly execute and deliver all further instruments and documents and take all
further action necessary or appropriate or that the Secured Party may reasonably
request in order (i) to perfect and protect the security interest created
or purported to be created hereby and the priority of such security interest,
(ii) to enable the Secured Party to exercise and enforce its rights and
remedies hereunder in respect of the Pledged Collateral, and (iii) to
otherwise effect the purposes of this Agreement.
7. Transfer or
Encumbrance. The Pledgor will not (i) sell, assign (by
operation of law or otherwise), transfer or otherwise dispose of the Pledgor’s
rights in any of the Pledged Collateral, or (ii) xxxxx x xxxx or security
interest in or execute, file or record any financing statement or other security
instrument with respect to the Pledged Collateral to any party other than the
Secured Party.
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8. Remedies Upon Foreclosure
Event. If a Foreclosure Event occurs, the Secured Party may
exercise any and all the rights, powers and remedies of any owner of the Pledged
Collateral (including the right to vote the securities and receive dividends and
distributions with respect to such securities) and shall have and may exercise
without demand any and all the rights and remedies granted to a secured party
upon default under the UCC or otherwise available to the Secured Party under
applicable law. Without limiting the foregoing, following a Foreclosure Event,
the Secured Party is authorized to sell, assign, convey, transfer and deliver at
its discretion, from time to time, all or any part of the Pledged Collateral
together with all rights and entitlements appurtenant thereto at any private
sale or public auction, on not less than ten (10) days written notice to the
Pledgor, at such price or prices and upon such terms as the Secured Party may
deem commercially reasonable. The Pledgor shall have no right to
redeem the Pledged Collateral after any such sale or assignment. At
any such sale or auction, the Pledgor may bid for, and become the purchaser of,
the whole or any part of the Pledged Collateral offered for sale. In
case of any such sale, after deducting the reasonable costs, attorneys’ fees and
other expenses of sale and delivery, the remaining proceeds of such sale shall
be applied to the Secured Obligations (first, to the payment in full of all
amounts owing under the Investment Agreement, with the balance to the remaining
Secured Obligations); provided that after
payment in full of the indebtedness under the Note and all other Secured
Obligations, the balance of the proceeds of sale then remaining shall be paid to
the Pledgor, and the Pledgor shall be entitled to any remaining portion of the
Pledged Collateral. The Pledgor shall be liable for any deficiency if
the remaining proceeds are insufficient to pay the indebtedness under the Note
in full and the other Secured Obligations, including the reasonable fees of any
attorneys employed by the Secured Party to collect such
deficiency. Upon the occurrence and during the continuation of a
Foreclosure Event and upon request of the Secured Party, the Pledgor will not
exercise any voting rights with respect to the Pledged Collateral.
9. Waiver of
Presentment. The Pledgor hereby waives, to the fullest extent
permitted by applicable law, presentment, notice (other than such notices as are
expressly provided for) and demand with respect to breaches of the payment of
any of the Secured Obligations.
10. Power of Attorney;
Performance. The Pledgor hereby irrevocably appoints the
Secured Party as its attorney-in-fact during the term of this Agreement (such
power of attorney being coupled with an interest and with full right of
substitution) and proxy to exercise any voting rights with respect to the
Pledged Collateral, and to take such other actions and exercise such other
remedies provided herein, but only upon the occurrence and during the
continuation of a Foreclosure Event. If the Pledgor fails to perform
any obligation hereunder required to be performed on the part of the Pledgor,
the Secured Party may itself perform (or cause the performance of) such
obligation, and the reasonable expenses of the Secured Party incurred in
connection therewith shall be paid by the Pledgor.
11. No Assumption of Duties;
Reasonable Care. The rights and powers granted to the Secured
Party hereunder are being granted in order to preserve and protect the Secured
Party’s security interest in and to the Pledged Collateral granted hereby and
will not be interpreted to, and will not, impose any duties on the Secured Party
in connection therewith. The Secured Party will be deemed to have
exercised reasonable care in the custody and preservation of the Pledged
Collateral in its possession if the Pledged Collateral is accorded treatment
substantially similar to that which the Secured Party accords its own
property.
12. Miscellaneous.
(a) Amendment. No
modification, consent or amendment of any provision of this Agreement shall be
valid or effective unless the same is in writing and signed by the party against
whom it is sought to be enforced.
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(b) Waiver by the Secured
Party. The Secured Party may waive any Foreclosure Event
without waiving any other subsequent Foreclosure Event. Neither the
failure by the Secured Party to exercise, nor the delay by the Secured Party in
exercising, any right or remedy upon any Foreclosure Event shall be construed as
a waiver of such Foreclosure Event or as a waiver of the right to exercise any
such right or remedy at a later date. No single or partial exercise
by the Secured Party of any right or remedy hereunder shall exhaust the same or
shall preclude any other or further exercise thereof, and every such right or
remedy hereunder may be exercised at any time. No waiver of any
provision hereof or consent to any departure by the Pledgor therefrom shall be
effective unless the same shall be in writing and signed by the Secured Party
and then such waiver or consent shall be effective only in the specific
instances, for the purpose for which given and to the extent therein
specified. No notice to or demand on the Pledgor in any case shall of
itself entitle the Pledgor to any other or further notice or demand in similar
or other circumstances.
(c) Costs and
Expenses. The Pledgor will, within five (5) days after
demand, pay to the Secured Party the amount of any and all reasonable costs and
expenses (including, but not limited to, attorneys’ fees and expenses and all
costs and expenses of collection and sale of collateral), which the Secured
Party may incur after a Foreclosure Event in connection with (i) the
exercise or enforcement of any of the rights or remedies of the Secured Party
under the Investment Agreement, this Agreement or applicable law, or
(ii) the failure by the Pledgor to perform or observe any of the provisions
hereof.
(d) GOVERNING
LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE
AND TO BE PERFORMED IN SUCH STATE, WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW
PRINCIPLES THEREOF, EXCEPT FOR SECTIONS 5-1401 AND 5-4102 OF THE NEW YORK
GENERAL OBLIGATIONS LAW.
(e) Jurisdiction,
Etc.
(i) Each
of the parties hereto hereby irrevocably and unconditionally submits, for itself
and its property, to the nonexclusive jurisdiction of any New York State court
or Federal court of the United States of America sitting in New York County, and
any appellate court from any thereof, in any action or proceeding arising out of
or relating to this Agreement, or for recognition or enforcement of any
judgment, and each of the parties hereto hereby irrevocably and unconditionally
agrees that all claims in respect of any such action or proceeding may be heard
and determined in any such New York State court or, to the fullest extent
permitted by law, in such Federal court. Each of the parties hereto
agrees that a final judgment in any such action or proceeding, to the extent
permitted by law, shall be conclusive and may be enforced in other jurisdictions
by suit on the judgment or in any other manner provided by
law. Nothing in this Agreement shall affect any right that any party
may otherwise have to bring any action or proceeding relating to this Agreement
in the courts of any jurisdiction.
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(ii) Each
of the parties hereto irrevocably and unconditionally waives, to the fullest
extent it may legally and effectively do so, any objection that it may now or
hereafter have to the laying of venue of any suit, action or proceeding arising
out of or relating to this Agreement in any New York State or Federal
court. Each of the parties hereto hereby irrevocably waives, to the
fullest extent permitted by law, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any such court.
(f) WAIVER OF JURY
TRIAL. EACH OF THE PLEDGOR AND THE SECURED PARTY IRREVOCABLY
WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
(WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR THE ACTIONS OF THE PARTIES IN THE NEGOTIATION, ADMINISTRATION,
PERFORMANCE OR ENFORCEMENT THEREOF.
(g) Severability. If
any provision of this Agreement is held by a court of competent jurisdiction to
be illegal, invalid or unenforceable under present or future laws, such
provision shall be fully severable, shall not impair or invalidate the remainder
of this Agreement and the effect thereof shall be confined to the provision held
to be illegal, invalid or unenforceable
(h) Notices. All notices
and other communications provided for hereunder shall be in writing (including
telecopy communication confirmed by mail or delivery) and mailed, telecopied,
e-mailed or delivered:
(i) if
to the Pledgor, to it at:
0000
Xxxxx Xxxxxx Xxxxx Xxxx
Xxxxxx
000
Xxxxxxx,
XX 00000
Attention: Xxx
Xxxxxxxxx
Telephone: (000)
000-0000
Telecopier: (000)
000-0000
E-mail
Address: xxxxx00@xxxxx.xxx
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with a
copy to:
Holland
& Xxxx LLP
000
Xxxxxxxxxxx Xxxxxx
Xxxxxx,
XX 00000
Attention: Xxxxx
X. Xxxxxxx
Telephone: (000)
000-0000
Telecopier: (000)
000-0000
E-mail
Address: Xxxxxxxx@xxxxxxxxxxx.xxx
(ii) if
to the Secured Party, to it at:
Carnegie
Hall Tower
000 Xxxx
00xx
Xxxxxx
Xxx Xxxx,
XX 00000
Attention:
Xxxxx Xxxx
Telephone: 212)
000-0000
Telecopier: (000)
000-0000
E-mail
Address: xxxxx@xxxxxxxxxx.xxx
with a
copy to:
Xxxxxx
Xxxxxx Rosenman LLP
000
Xxxxxxx Xxxxxx
Xxx Xxxx,
XX 00000
Attention: Elliot
Press
Telephone: (000)
000-0000
Telecopier: (000)
000-0000
E-mail
address: xxxxxx.xxxxx@xxxxxxxxx.xxx
or, as to
any party, at such other telecopy number or address as shall be designated by
such party in a written notice to the other parties. All such notices
and other communications shall, when mailed, telecopied, e-mailed or delivered,
be effective when received or, in the case of delivery by mail, on the fourth
(4th)
Business Day after such notice or other communication shall have been deposited
in the mail, postage prepaid, return receipt requested or, in the case of
delivery by overnight express courier, on the Business Day following the
Business Day such notice or communication shall have been deposited with such
courier service. Delivery by telecopier of an executed counterpart of
any amendment or waiver of any provision of this Agreement shall be effective as
delivery of an original executed counterpart thereof. Notwithstanding
anything to the contrary contained herein, with respect to any notice or
communication given by email: (i) such notice or communication
sent to an email address shall be deemed received upon the sender’s receipt of
an acknowledgment from the intended recipient, such as by the “return receipt
requested” function, as available, return email or other written acknowledgment,
and (ii) if such notice or communication shall have been given after normal
business hours of the recipient, such notice or communication shall be deemed to
have been given at the opening of business on the next Business Day for the
recipient.
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(i) Binding Effect and
Assignment. This Agreement (i) creates a continuing
security interest in the Pledged Collateral, (ii) shall be binding on the
Pledgor and the successors and permitted assigns of the Pledgor, and
(iii) shall inure to the benefit of the Secured Party and any permitted
assignee under the Investment Agreement. The Pledgor may not assign
or delegate any of its rights or obligations hereunder without the prior written
consent of the Secured Party.
(j) Termination. This
Agreement (and the pledge hereunder) shall terminate upon the payment and
performance in full in cash of the Secured Obligations. Upon the
termination of this Agreement, the Secured Party shall promptly deliver to the
Pledgor any certificates or instruments representing the Pledged Collateral
delivered to the Secured Party in accordance with Section 4 of this Agreement
that have not previously been sold or otherwise applied pursuant to this
Agreement.
(k) Gender and
Number. Within this Agreement, words of any gender shall be
held and construed to include the other gender, and words in the singular number
shall be held and construed to include the plural and words in the plural number
shall be held and construed to include the singular, unless in each instance the
context requires otherwise.
(l) Descriptive
Headings. The headings in this Agreement are for convenience
only and shall in no way enlarge, limit or define the scope or meaning of the
various and several provisions hereof.
(m) Construction. The
construction and interpretation of this Agreement shall not take into
consideration the party who drafted or whose representatives drafted this
Agreement or any portion hereof, and no canon of construction shall be applied
that resolves ambiguities against the drafter of a document. The
parties hereto are sophisticated parties and have been represented by counsel
throughout the negotiation, execution and delivery of this Agreement and have
carefully negotiated the provisions hereof. Each of the parties
hereto waives, to the fullest extent permitted by applicable law, any statute,
rule, regulation or other law that relates to, or provides for, the construction
or interpretation of a contract against the drafter of such
contract.
(n) Counterparts. This
Agreement may be executed in any number of counterparts and by different parties
hereto in separate counterparts, each of which when so executed shall be deemed
to be an original and all of which taken together shall constitute one and the
same agreement. Delivery of an executed counterpart of a signature
page to this Agreement by telecopier shall be effective as delivery of an
original executed counterpart of this Agreement.
[Signature
Page Follows]
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EXECUTED
as of the date first written above.
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PLEDGOR:
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By:
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/s/ Xxxxxx X. Xxxxxxxxx
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Name: Xxxxxx
X. Xxxxxxxxx
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Title: Chief
Executive Officer
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SECURED PARTY:
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DMRJ
GROUP I, LLC
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By:
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/s/ Xxxxxx Xxxxx
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Name:
Xxxxxx Xxxxx
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Its: Portfolio
Manager
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[Signature Page to Pledge Agreement]
Exhibit
A
to
dated as
of July 14, 2010
in favor
of DMRJ GROUP I, LLC
as
Secured Party
Irrevocable Stock
Power
FOR VALUE
RECEIVED, Desert Hawk Gold Corp., a Nevada corporation, hereby sells, assigns
and transfers unto __________________________ 2,713,636 shares of Common Stock
of Blue Fin Capital, Inc. (the “Shares”), standing in
its name on the books of Blue Fin Capital, Inc., and does hereby irrevocably
constitute and appoint ____________________________ attorney to transfer such
Shares on the books of Blue Fin Capital, Inc., with full power of
substitution.
Dated:
_____________________
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By:
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Name: Xxxxxx
X. Xxxxxxxxx
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Title: Chief
Executive Officer
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