EXHIBIT 10.5
STOCK PLEDGE AGREEMENT
THIS AGREEMENT is made this 29 day of Dec, 2003, by and between ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇ (the "Secured Party") and Environmental Technologies, Inc. (the
"Debtor").
WHEREAS, the Secured Party, pursuant to that certain Plan and Agreement
of Triangular Merger dated December 29, 2003 (the "Merger Agreement") has sold
to the Debtor ________ shares (the "Company Common Stock") of the issued and
outstanding common stock, no par value per share, in ENVIRONMENTAL TECHNOLOGIES,
INC., a Nevada corporation (the "Company"); and
WHEREAS, pursuant to the Merger Agreement, the Debtor has executed and
delivered to the Secured Party that one certain promissory note of even date
herewith executed by the Debtor in the original principal amount of $____
payable to the order of the Secured Party (the "Note");
NOW, THEREFORE, in consideration of the foregoing and the following
mutual covenants and agreements, the parties hereto do hereby agree as follows:
1. SECURITY INTEREST. The Debtor hereby grants to the Secured Party a
security interest and agrees and acknowledges that the Secured Party has and
shall continue to have a security interest in the Company Common Stock acquired
by the Debtor from the Secured Party pursuant to the Merger Agreement, together
with all monies, income, proceeds, substitutions, replacements, and benefits
attributable or accruing to said property, including, but not limited to, all
stock rights, rights to subscribe, liquidating dividends, stock dividends,
dividends paid in stock, new securities or other properties or benefits for
which the Debtor is or may hereafter become entitled to receive on account of
said property, and in the event that the Debtor shall receive any of such, the
Debtor shall hold same as trustee for the Secured Party and will immediately
deliver same to the Secured Party to be held hereunder in the same manner as the
properties specifically described above are held hereunder. All property of all
kinds in which the Secured Party is herein granted a security interest,
including, but not limited to, the Company Common Stock, shall hereinafter be
referred to as the "Collateral."
The Debtor agrees to execute such stock powers, endorse such
instruments, or execute such additional pledge agreements or other documents as
may be required by the Secured Party in order to effectively grant to the
Secured Party the security interest in the Collateral. The security interest
granted hereby is to secure the payment of any and all indebtedness and
liabilities whatsoever of the Debtor to the Secured Party whether direct or
whether now existing or hereafter arising, and howsoever evidenced or acquired,
and whether joint or several, including, but not limited to, the Merger
Agreement and the Note, and all costs incurred by the Secured Party to enforce
this Agreement or any of the above described agreements and instruments,
including but not limited to attorney's fees and expenses (all of such
obligations, indebtedness and liabilities being hereinafter collectively
referred to as the "Obligations").
2. WARRANTIES AND COVENANTS OF THE DEBTOR. The Debtor, for so long as
it has any duty with respect to the Obligations, hereby warrants and covenants
as follows:
(a) The security interest granted hereby will attach to the
Collateral on the date hereof.
(b) Except for the security interest granted hereby and for
taxes not yet due, the Debtor is the owner of the Collateral free of any adverse
claim, security interest or encumbrance, and the Debtor will defend the
Collateral against all claims and demands of all persons at any time claiming
the same or any interest therein.
(c) The Debtor authorizes the Secured Party to file, in the
office of the Secretary of State of California, a financing statement signed
only by the Secured Party covering the Collateral, and at the request of the
Secured Party, the Debtor will join the Secured Party in executing one or more
financing statements pursuant to the Uniform Commercial Code in effect in the
State of California on the date hereof in a form satisfactory to the Secured
Party, and the Secured Party will pay the cost of filing the same, or filing or
recording the financing statements in all public offices wherever filing or
recording is deemed by the Secured Party to be necessary or
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desirable. It being further stipulated in this regard that the Secured Party may
also at any time or times sign a counterpart of this Agreement signed by the
Debtor and file same as a financing statement if the Secured Party shall elect
to do so.
(d) The Debtor will not sell or offer to sell or otherwise
transfer or encumber the Collateral or any interest therein.
(e) The Debtor will keep the Collateral free from any adverse
lien, security interest, or encumbrance, except the security interest granted
hereby and for taxes not yet due.
(f) The Debtor will pay to the Secured Party all costs and
expenses, including reasonable attorney's fees, incurred or paid by the Secured
Party in exercising or protecting his interests, rights and remedies under this
Agreement in the event of default by the Debtor hereunder or under the Merger
Agreement or the Note.
(g) The Debtor will pay all expenses incurred by the Secured
Party in preserving, defending, and enforcing this security interest in the
Collateral and in collecting or enforcing the Obligations. Expenses for which
the Debtor is liable include, but are not limited to, taxes, assessments,
reasonable attorney's fees, and other legal expenses. These expenses will bear
interest from the dates of payment at the highest rate stated in the
Obligations, and the Debtor will pay the Secured Party this interest on demand
at a time and place reasonably specified by the Secured Party. These expenses
and interest will be part of the Obligations and will he recoverable as such in
all respects.
(h) The Debtor will immediately notify the Secured Party of
any change in the Debtor's name, address, or location, change in any matter
warranted or represented in this Agreement, change that may affect this security
interest, and any Event of Default.
(i) The Debtor appoints the Secured Party as the Debtor's
attorney-in-fact, effective if an Event of Default as hereinafter defined is not
cured within 30 days after receipt by the Debtor from the Secured Party of
notice thereof, to do any act that the Debtor is obligated to do by this
Agreement, to exercise all rights of the Debtor in the Collateral, to make all
collections, to execute any papers and instruments, and to do all other things
necessary to preserve and protect the Collateral and to make collections and to
protect the Secured Party's security interest in the Collateral.
3. GENERAL COVENANTS. The security interest granted hereby shall in no
way be affected by any indulgence or indulgences, extension or extensions,
change or changes in the form, evidence, maturity, rate of interest or otherwise
of the Obligations, or by want of presentment, notice, protest, suit, or
indulgence upon the Obligations, or shall any release of any security for any of
the parties liable for the payment of the Obligations in any manner affect or
impair this Agreement, and same shall continue in full force and effect in
accordance with their terms until the Obligations have been fully paid.
Any and all securities and other properties of the Debtor heretofore,
now or hereafter delivered to the Secured Party, or in the Secured Party's
possession, shall also secure the Obligations and shall be held and construed to
be a part of the Collateral hereunder to the same extent as fully described
herein.
4. EVENTS OF DEFAULT. The Debtor shall be in default under this
Agreement upon the happening of any of the following events or conditions
(hereinafter severally referred to as an "Event of Default" and collectively
referred to as the "Events of Default"):
(a) Default by the Debtor with respect to any of the
Obligations.
(b) The levy of any attachment, execution or other process
against the Debtor, the Company, or any of the Collateral that is not stayed or
dismissed within 30 days.
(c) Dissolution, termination of existence, insolvency or
business failure of the Debtor, the Company, or any endorser, guarantor or
surety of the Obligations, or commission of the act of bankruptcy by, or the
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appointment of a receiver or other legal representative for any part of the
property of, assignment for the benefit of creditors by, or commencement of any
proceedings under any bankruptcy or insolvency law by or against, the Debtor,
the Company or any endorser, guarantor, or surety for the Obligations that are
not stayed or dismissed within 30 days of tiling.
(d) Default in the performance of any covenant or agreement of
the Debtor or the Company to the Secured Party, whether under this Agreement or
the Note, or any other instrument executed in connection with said agreements or
otherwise.
(e) The occurrence of any event which under the terms of any
evidence of indebtedness, indenture, loan agreement, security agreement, or
similar instrument permits the acceleration of maturity of any indebtedness of
the Company or the Debtor to the Secured Party, or to persons other than the
Secured Party, or the Secured Party receives notification that another person
has or expects to acquire a security interest in the Collateral or any part
thereof.
(f) If any warranty, covenant, or representation made to the
Secured Party by or on behalf of the Debtor or the Company proves to have been
false in any material respect when made.
(g) If any lien attaches to any of the Collateral.
5. REMEDIES. Upon the failure of the Debtor or the Company to cure an
Event of Default within 30 days after receipt of notice from the Secured Party
of such Event of Default and at any time thereafter, at the option of the holder
thereof, any or all of the Obligations shall become immediately due and payable
without presentment or demand or any further notice to the Debtor, the Company
or any other person obligated thereon and the Secured Party shall have and may
exercise with reference to the Collateral any and all of the rights and remedies
of a secured party under the Uniform, Commercial Code as adopted in the State of
California, and as otherwise granted herein or under any other agreement
executed by the Debtor, including, without limitation, the right and power to
sell at public or private sale or sales, or otherwise dispose of or utilize the
Collateral and any part or parts thereof in any manner authorized or permitted
under this Agreement or under the Uniform Commercial Code as adopted in the
State of California after default by the Debtor or the Company and to apply the
proceeds thereof toward the payment of any costs and expenses and attorney's
fees thereby incurred by the Secured Party and toward payment of the
Obligations, in such order or manner as the Secured Party may elect, including,
without limiting the foregoing:
(a) The Secured Party is hereby granted the right, at his
option, upon the occurrence of an Event of Default hereunder, to transfer at any
time to himself or to his nominee securities or other property hereby pledged,
or any part thereof, and to thereafter exercise all voting rights with respect
to such security so transferred and to receive the proceeds, payments, monies,
income or benefits attributable or accruing thereto and to hold the same as
security for the Obligations hereby secured or at the Secured Party's election,
to apply such amounts to the Obligations, whether or not then due, in such order
as the Secured Party may elect, or, the Secured Party may, at his option,
without transferring such securities or properties to his nominee, exercise all
voting rights with respect to the securities pledged hereunder and vote all or
any part of such securities at any regular or special meeting of the
stockholders of the Company, and the Debtor does hereby name, constitute and
appoint as a proxy of the Debtor the Secured Party, in the Debtor's name, place
and stead to vote any and all such securities, as said proxy may elect for and
in the name, place and stead of the Debtor, such proxy to be irrevocable and
deemed coupled with an interest.
(b) Sell, lease, or otherwise dispose of any of the Collateral
in accordance with the rights, remedies, and duties of a secured party under
Chapters 2 and 9 of the California Uniform Commercial Code after giving notice
as required by those chapters; unless the Collateral threatens to decline
speedily in value, is perishable, or would typically be sold on a recognized
market. The Secured Party will give the Debtor reasonable notice of any public
sale of the Collateral or of a time after which it may be otherwise disposed of
without further notice of the Debtor. In such event, notice will be deemed
reasonable if it is mailed, postage prepaid, to the Debtor at the address
specified in this Agreement at least 30 days before any public sale or 30 days
before the time when the Collateral may be otherwise disposed of without further
notice to the Debtor.
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(c) Apply any proceeds from disposition of the Collateral
after default in the manner specified in Chapter 9 of the California Uniform
Commercial Code, including payment of the Secured Party's reasonable attorney's
fees and court expenses.
(d) If, after disposition of the Collateral, the Obligations
remain unsatisfied, collect the deficiency from the Debtor,
6. VOTING RIGHTS. So long as no Event of Default has occurred and
remains uncured for the applicable grace period under the Merger Agreement, the
Note, or hereunder, the Debtor shall have the right to vote all of the Debtor's
shares of the Company Common Stock or items of the Collateral subject to this
Agreement, and the Secured Party shall on demand execute and deliver an
effective proxy or proxies in favor of the Debtor, whenever demand is made upon
the Secured Party for such proxy or proxies by the Debtor.
7. PAYMENT OF THE OBLIGATIONS. Simultaneously with the payment in full
of the Obligations, or the Obligations are otherwise deemed to have been paid in
full pursuant to the terms of the Merger Agreement and the Note, the Secured
Party shall execute and file at his own expense any and all instruments
necessary to terminate the security interest in the Collateral created by this
Agreement and also execute any and all other instruments deemed reasonably
necessary by the Debtor to vest in the Debtor title in the Company Common Stock
and any other item constituting the Collateral, free from any claim by the
Secured Party.
8. NO USURY. It is the intention of the parties hereto to comply with
the usury laws of the State of California. Accordingly, it is agreed that
notwithstanding any provision to the contrary in this Agreement or in any of the
documents evidencing the Obligations or otherwise relating thereto, no such
provision shall require the payment or permit the collection of interest in
excess of the maximum permitted by law. If any excess of interest in such
respect is provided for, or shall be adjudicated to be so provided for, in this
Agreement, or any of the documents evidencing the Obligations or otherwise
relating thereto, then in such event:
(a) The provisions of this paragraph shall govern and control;
(b) Neither the Debtor, the Company nor their successors or
assigns, or any other party liable for the payment of the Obligations, shall be
obligated to pay the amount of such interest to the extent that it is in excess
of the maximum amount permitted by law;
(c) Any such excess interest which may have been collected
shall be, at the option of the holder of the instrument evidencing the
Obligations, either applied as a credit against the unpaid principal amount
thereof or refunded to the maker thereof, and
(d) The effective rate of interest shall be automatically
subject to reduction to the maximum lawful contract rate allowed under the usury
laws of the State of California as now or hereafter construed by any court of
competent jurisdiction.
9. ATTORNEY'S FEES. In the event that it should become necessary for
any party entitled hereunder to bring suit against the other party to this
Agreement for enforcement of the covenants herein contained, the parties hereby
covenant and agree that the party who is found to be in violation of said
covenants shall also be liable for all reasonable attorney's fees and costs of
court incurred by the other party hereto.
10. BENEFIT. All the terms and provisions of this Agreement shall be
binding upon and inure to the benefit of and be enforceable by the parties
hereto, and their respective heirs, executors, administrators, personal
representatives, successors and permitted assigns.
11. NOTICES. All notices, requests, demands, and other communications
hereunder shall be in writing and delivered personally or sent by registered or
certified United States mail, return receipt requested with postage prepaid, if
to the Secured Party, addressed to ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇; and if to the Debtor, addressed to
▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇
▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇. Any party hereto may change its
address upon 10 days' written notice to any other party hereto.
12. CONSTRUCTION. Words of any gender used in this Agreement shall be
held and construed to include any other gender, and words in the singular number
shall be held to include the plural, and vice versa, unless the context requires
otherwise. In addition, the pronouns used in this Agreement shall be understood
and construed to apply whether the party referred to is an individual,
partnership, joint venture, corporation or an individual or individuals doing
business under a firm or trade name, and the masculine, feminine and neuter
pronouns shall each include the other and may be used interchangeably with the
same meaning.
13. WAIVER. No course of dealing on the part of any party hereto or its
agents, or any failure or delay by any such party with respect to exercising any
right, power or privilege of such party under this Agreement or any instrument
referred to herein shall operate as a waiver thereof, and any single or partial
exercise of any such right, power or privilege shall not preclude any later
exercise thereof or any exercise of any other right, power or privilege
hereunder or thereunder.
14. CUMULATIVE RIGHTS. The rights and remedies of any party under this
Agreement and the instruments executed or to be executed in connection herewith,
or any of them, shall be cumulative and the exercise or partial exercise of any
such right or remedy shall not preclude the exercise of any other right or
remedy.
15. INVALIDITY. In the event any one or more of the provisions
contained in this Agreement or in any instrument referred to herein or executed
in connection herewith shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality, or unenforceable
shall not affect the other provisions of this Agreement or any such other
instrument.
16. TIME OF THE ESSENCE. Time is of the essence of this Agreement.
17. HEADINGS. The headings used in this Agreement are for convenience
and reference only and in no way define, limit, simplify or describe the scope
or intent of this Agreement, and in no way effect or constitute a part of this
Agreement.
18. EXCUSABLE DELAY. None of the parties hereto shall be obligated to
perform and none shall be deemed to be in default hereunder, if the performance
of a non-monetary obligation is prevented by the occurrence of any of the
following, other than as the result of the financial inability of the party
obligated to perform: acts of God, strikes, lock-outs, other industrial
disturbances, acts of a public enemy, terrorists, wars or war-like action
(whether actual, impending or expected and whether de jury or de facto), arrest
or other restraint of governmental (civil or military) blockades, insurrections,
riots, epidemics, landslides, lightning, earthquakes, fires, hurricanes, storms,
floods, washouts, sink holes, civil disturbances, explosions, breakage or
accident to equipment or machinery, confiscation or seizure by any government of
public authority, nuclear reaction or radiation, radioactive contamination or
other causes, whether of the kind herein enumerated, or otherwise, that are not
reasonably within the control of the party claiming the right to delay
performance on account of such occurrence.
19. MULTIPLE 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 one and the same instrument.
20. LAW GOVERNING. This Agreement shall be construed and governed by
the laws of the State of California, and all obligations hereunder shall be
deemed performable in Riverside County, California.
21. PERFECTION OF TITLE. The parties hereto shall do all other acts and
things that may be reasonably necessary or proper, fully or more fully, to
evidence, complete or perfect this Agreement, and to carry out the intent of
this Agreement.
22. ENTIRE AGREEMENT. This instrument contains the entire Agreement of
the parties with respect to the subject matter hereof, and may not be changed
orally, but only by an instrument in writing signed by the party against whom
enforcement of any waiver, change, modification, extension, or discharge is
sought.
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IN WITNESS WHEREOF, the parties have executed this Agreement on the
date first written above.
THE SECURED PARTY:
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
THE DEBTOR:
ENVIRONMENTAL TECHNOLOGIES, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Chief Executive Officer
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