PLEDGE AND ESCROW AGREEMENT
THIS PLEDGE AND ESCROW AGREEMENT (the "Agreement") is made and entered
into as of April 1, 2005 (the "Effective Date") by and among HIGHGATE HOUSE
FUNDS, LTD. (the "Pledgee"), DIRECTVIEW, INC., a corporation organized and
existing under the laws of the State of Nevada (the "Pledgor"), and XXXXX
XXXXXXXX, ESQ., as escrow agent ("Escrow Agent").
RECITALS:
WHEREAS, in order to secure the Company's obligations under the
Securities Purchase Agreement, the Convertible Debentures, the Security
Agreement, this Agreement and the Escrow Agreement all of even date herewith
(collectively referred to as the "Transaction Documents"), the Pledgor has
agreed to pledge to the Pledgee Two Hundred Fifty Million (250,000,000) shares
(the "Pledged Shares") of the Pledgor's common stock.
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.
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.
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.
5.1. Upon the occurrence of an Event of Default, Pledgee shall provide written
notice of such Default (the "Default Notice") to the Escrow Agent, with a copy
to the Pledgor. As soon as practicable after receipt of the Default Notice, but
in no event prior to delivery of a copy of the Default Notice to the Pledgor,
the Escrow Agent shall deliver to Pledgee the Pledged Materials held by the
Escrow Agent hereunder, whereupon Pledgee may exercise all rights and 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.
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.
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: DirectView, Inc.
0000 Xxxx Xxxxxx Xxxx, Xxxxx 000
Xxxx Xxxxx, XX 00000
Attention: Xxxxxxx Xxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy to: Xxxxxx X. Xxxxxxxxxx, Esq.
Xxxxxxxxx, Xxxxxxxxxx & Beilly, LLP
0000 Xxxxxxxxx Xxxx., XX, Xxxxx 000
Xxxx Xxxxx, XX 00000-0000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to the Pledgee: Highgate House Funds, Ltd.
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx Xxxx, XX 00000
Attention: Xxxx X. Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With copy to: Xxxx Xxxxx, 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.
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.
IN WITNESS WHEREOF, the parties hereto have duly executed this Pledge
and Escrow Agreement as of the date first above written.
HIGHGATE HOUSE FUNDS, LTD
By:
-----------------------------------
Name: Xxxx Xxxxxx
Title: Portfolio Manager
DIRECTVIEW, INC.
By:
------------------------------------
Name: Xxxxxxx Xxxxx
Title: Chief Executive Officer
ESCROW AGENT
By:
-------------------------------------
Name: Xxxxx Xxxxxxxx, Esq.
