PLEDGE AND SECURITY AGREEMENT
EXHIBIT
10.16
This
PLEDGE AND SECURITY AGREEMENT (this "Agreement")is
made
as of April
24,
2007, by
and
between Xxxxxxx Technologies Corporation, a Delaware corporation
(the "Company"),
and
Xxxx
Xxxx ("Investor").
WHEREAS,
on the same date herewith, Investor is making a loan in the principal amount
of
$50,000 (the "Loan")
to
the
Company, which Loan is evidenced by a Promissory Note dated as of the date
hereof (the "Note")
given
by
the Company;
WHEREAS,
it is a condition precedent to the obligation of Investor to make the Loan
to
the Company
under
the Note that the Company shall have executed and delivered this Agreement
to
Investor.
NOW,
THEREFORE, in consideration of the premises and other good and valuable
consideration, the
receipt
and sufficiency of which are hereby acknowledged, the parties do hereby agree
as
follows:
SECTION
1. The
Secured Obligations.
The
Collateral (as hereafter defined) is pledged to secure the punctual
payment when due of all sums payable under the Note and all other indebtedness
and liabilities of the
Company
to Investor at any time arising under the terms hereof or of the Note (the
"Obligations").
SECTION
2. Grant
of Security.
(a)
The
Company hereby assigns and pledges to Investor, and hereby grants to Investor
for its benefit, a lien on and security interest in all of the Company's right,
title and interest in and to 1,000 units of Resilent LLC d/b/a Digital Defense
Group owned by the Company (the "Pledged
Units"),
and
the certificates representing the Pledged Units, and all dividends,
distributions (whether
in
respect of income, capital or otherwise), cash, instruments and other property
from time to time received, receivable or otherwise distributed in respect
of or
in exchange for the Pledged Units (the "Collateral").
SECTION
3. Security
for Obligations.
This
Agreement creates a security interest in the Collateral to secure the full
payment of all of the Obligations.
SECTION
4. Delivery of Collateral.
The
certificates representing the Pledged Units will be delivered to
and
held by or on behalf of Investor pursuant hereto and will be accompanied by
duly
executed instruments
of
transfer or assignment in blank.
SECTION
5. Votina Rights and Distributions.
(a) So
long
as no Event of Default shall have occurred and be continuing:
(i) The
Company will be entitled to exercise any and all voting and other consensual
rights of a unit holder or other equity holder pertaining to the Collateral
or
any part thereof
for any purpose not inconsistent with the terms of this Agreement; provided,
however,
that the
Company will refrain from exercising any such right if, in Investor's reasonable
judgment, such action would have a material adverse effect on the value of
the
Collateral or any part thereof.
(ii) The
Company will be entitled to receive and retain any and all dividends,
distributions (whether in respect of income, capital or otherwise) and interest
paid in respect of the Collateral; provided, however, that any and all
dividends, distributions (whether in respect of income, capital or otherwise)
and interest paid or payable other than in cash in
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respect
of, and instruments and other property received, receivable or otherwise
distributed in
respect
of, or in exchange for, any Collateral will be, and will be forthwith delivered
to Investor
to hold as, Collateral and will, if received by the Company, be received in
trust for the
benefit of Investor, be segregated from the other property or funds of the
Company, and be
forthwith delivered to Investor as Collateral in the same form as so received
(with any necessary
endorsement). The Company will, upon request by Investor, promptly execute
such documents
and do such acts as may be necessary or advisable in the reasonable judgment
of
Investor
to give effect to the provisions of this paragraph.
(iii)
Investor will execute and deliver (or cause to be executed and delivered) to
the
Company all such proxies and other instruments as the Company may reasonably
request
for the
purpose of enabling the Company to exercise the voting and other rights that
it
is entitled to exercise pursuant to Section 5(a)(i).
(b) Upon
the
occurrence and during the continuance of an Event of Default:
(i) All
rights of the Company to exercise the voting and other consensual rights that
it
would otherwise be entitled to exercise pursuant to Section 5(a)(i) will cease,
immediately upon written notice given by Investor to the Company with respect
to
the exercise of such rights, and upon the giving of such notice, all such rights
will thereupon become
vested in Investor, which will, to any extent permitted by applicable law,
thereupon
have the
sole right to exercise such voting and other consensual rights.
(ii) All
rights of the Company to receive the dividends and interest payments
which
it
would otherwise be authorized to receive and retain pursuant to Section 5(a)(ii)
will cease,
and all such rights will thereupon become vested in Investor, which will, to
any
extent permitted
by applicable law, thereupon have the sole right to receive and hold as
Collateral
such
dividends and interest payments.
(iii) All
dividends and interest payments that are received by the Company contrary to
the
provisions of Section 5(b)(ii) will be received in trust for the benefit of
Investor,
will be segregated from other funds of the Company and will be forthwith paid
over to
Investor as Collateral in the same form as so received (with any necessary
endorsement).
SECTION
6. Transfers and Other Liens.
The
Company will not:
(a) Sell,
assign (by operation of law or otherwise) or otherwise dispose of any of the
Collateral.
(b) Create
or
suffer to exist any lien, security interest or other charge or encumbrance
upon
or
with respect to any of the Collateral, except for the security interest created
by this Agreement.
SECTION
7. Events
of Default.
An
"Event
of Default" means
the
occurrence of any of the following events:
(a) The
failure of the Company to punctually and properly pay the Obligations as they
become due and payable;
(b) The
failure of the Company to punctually and properly perform any covenant,
agreement, or condition contained in this Agreement or the Note; or
(c) Any
statement, representation, or warranty of the Company in this Agreement or
the
Note proves to have been incorrect or incomplete in any material respect when
made.
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SECTION
8. Remedies.
If any
Event of Default shall have occurred and be continuing:
(a) The
Collateral, or part thereof, applied against the Obligations shall be deemed
to
satisfy
the Obligations. For this purpose, the value of each Pledged Share or any other
Collateral shall be
the
fair market value thereof as reasonably determined in good faith by the Board
of
Directors of the
Company. Upon any application of the Pledged Units or any other Collateral
against payment of the
Obligations, the Company's right, title and interest therein, and any rights
of
ownership, control or
otherwise of the Company therein, shall immediately terminate, and such Pledged
Units shall be deemed to have been acquired by Investor in consideration for
extinguishment of the Obligations. Investor
need not provide any notice to the Company of its intention to apply the
Collateral against
payment
of the Obligations as provided herein, except to the extent as may be required
by law.
(b) Investor
shall have all the rights and remedies of a secured party under the Uniform
Commercial
Code as adopted by the State of Texas (the "UCC") (whether or not the UCC
applies to
the
affected Collateral), in addition to all other rights and remedies granted
to
Investor in this Agreement
or in any other document or agreement executed in connection with or as security
for the
Obligations or by applicable law.
(c) Without
limiting the generality of the foregoing, Investor may sell, assign, and deliver
the
whole
or any part of its interest in the Collateral at public or private sale, at
the
option of Investor, either
for cash or on credit or for future delivery without assumption of any credit
risk, and without either
demand, advertisement, or notice of any kind to the Company, all of which are
hereby waived,
and no
delay on the part of Investor in exercising any power of sale or any other
rights or option hereunder,
and no notice or demand, which may be given to or made upon the Company by
Investor to
any
power of sale or other right or option hereunder, shall constitute a waiver
thereof, or limit or impair the right of Investor to take any action or to
exercise any power of sale or any other rights hereunder
without notice or demand, or prejudice the rights of Investor as against the
Company in any
respect.
At any sale of the Collateral in accordance with the preceding sentence, the
Company may itself purchase the whole or any part of the Collateral sold, free
from any right on the part of the Company, all such rights being also hereby
waived and released. In the event of any sale or other disposition of any of
the
Collateral, after deducting all costs or expenses of every kind for care,
safekeeping, collection, sale, delivery or otherwise, Investor shall, after
applying the residue of the proceeds
of the sale, or other disposition thereof, as hereinabove authorized, return
any
excess to the
Company.
(d) The
Company hereby waives notice of an Event of Default, presentment for payment,
demand, notice of dishonor and protest of the Note.
(e) All
payments received by the Company under or in connection with any Collateral
or
otherwise in respect of the Collateral will be received in trust for the benefit
of Investor, will be segregated
from other funds of the Company and will be forthwith paid over to Investor
in
the same
form as
so received (with any necessary endorsement).
SECTION
9. Assignment.
It is
understood and agreed that none of the parties may assign any of its
rights
or obligations under this Agreement without the prior written consent of the
other parties hereto.
SECTION
10. Waiver
of Default, Cumulative Remedies.
The
acceptance by Investor at any time and
from
time to time of partial payment of the aggregate amount of its interest in
the
Obligations shall not be deemed
to
be a waiver of any Event of Default then existing. No waiver by Investor of
any
Event of Default shall
be
deemed to be a waiver of any subsequent Event of Default, nor shall any such
waiver by such Investor
be
deemed to be a continuing waiver. No delay or omission by Investor in exercising
any right or power
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hereunder,
or under any other writings executed by the Company as security for or in
connection with the Note
or the
Obligations, shall impair any such right or power or be construed as a waiver
thereof or any acquiescence therein, nor shall any single or partial exercise
of
any such right or power preclude other or further
exercise of any other right or power of Investor hereunder. The rights and
remedies provided for in this
Agreement are cumulative and not exclusive of any rights and remedies provided
by law.
SECTION
11. Laws
Applicable. THIS
AGREEMENT IS
EXECUTED
UNDER AND SHALL BE GOVERNED BY THE LAWS OF THE STATE OF DELAWARE IN ALL
RESPECTS, INCLUDING MATTERS OF CONSTRUCTION, VALIDITY, AND PERFORMANCE, WITHOUT
REGARD TO CONFLICTS OF LAW PRINCIPLES.
SECTION
12. Notices.
Any
notice, request, instruction, or other document to be given hereunder
or to
any
party shall be delivered to the address stated below that party's signature
hereto. Any party may change its
address for the purposes of this Section 12 by giving notice of such change
of
address to the other parties in the
manner herein provided for giving notice. Any notice or communication hereunder
must be in writing and may
either be given personally or sent by registered or certified mail, postage
prepaid, return receipt requested.
If
notice is given by registered or certified mail, it shall be deemed to have
been
given and received upon deposit
in the United States mail and, if given otherwise than by registered or
certified mail, it shall be deemed to
have
been given when delivered to and received by the parties to whom it is addressed
at the time received.
SECTION
13. Entire Agreement; Amendment.
This
Agreement embodies the final, entire agreement
among
the parties hereto and supersedes any and all prior commitments, agreements,
representations, and understandings,
whether written or oral, relating to the subject matter hereof and may not
be
contradicted or
varied
by evidence of prior, contemporaneous or subsequent oral agreements or
discussions of the parties hereto. None of the terms or provisions of this
Agreement may be waived, altered, modified, or amended except in writing signed
by all the parties hereto.
SECTION
14. Binding Effect.
This
Agreement shall be binding upon and inure to the benefit of the
Company
and Investor and their respective successors, and assigns.
SECTION
15. Counterparts.
This
Agreement may be executed in the original or by facsimile in any number
of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute
one and
the same instrument.
SECTION
16. Severability.
Any
provision of this Agreement which is determined by a court of competent
jurisdiction to be prohibited or unenforceable in any jurisdiction shall, as
to
such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating
the
remaining provisions
of this
Agreement, and any such prohibition or unenforceability in any jurisdiction
shall not invalidate or render unenforceable such provision in any other
jurisdiction.
SECTION
17. Termination.
If all
of the Obligations shall have been paid and performed in full, Investor shall,
upon the written request of the Company, execute and deliver to the Company
a
proper instrument
or instruments acknowledging the release and termination of the security
interests created by this
Agreement.
[SIGNATURE
PAGE FOLLOWS]
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IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day
and
year
first written above.
COMPANY:
XXXXXXX
TECHNOLOGIES CORPORATION
By: /s/
X.X.
X’Xxxxx
Name: X.X.
X’Xxxxx
Its: Acting
COO
Address:
Xxxxxxx
Technologies Corporation
0000 X.
000xx Xxxxxx
Xxxxx,
Xxxxxxxx 00000
INVESTOR:
/s/
Xxxx
Xxxx
XXXX
XXXX
Address:
Pali
Capital
Attention:
Xxxx Xxxx
000
Xxxxx
Xxxxxx, 0xx Xxxxx
XX,
XX
00000
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