PLEDGE AGREEMENT
Exhibit
10.2
This
Pledge Agreement (this “Agreement”), dated as of August 3, 2006, among Bullion
River Gold Corp., a Nevada corporation (“Pledgor”) and Xxxxx
Participation Corp., a British Virgin Islands corporation (the“Secured
Party”).
Recitals
The
Pledgor is
contemporaneously herewith entering
into a
Securities Purchase Agreement dated as of the date hereof (the “Purchase
Agreement”), with Secured
Party,
pursuant to which the
Secured Party
agrees to purchase
a
Debenture from the Pledgor
in
accordance with and subject to the terms of the Purchase Agreement.
It
is a
condition precedent to a Secured Party’s obligation
to purchase
a
Debenture under the Purchase Agreement that the Pledgor execute and deliver
to
the Secured Party
a Pledge
Agreement in substantially the form hereof.
French
Gulch (Nevada) Mining Corp., a corporation organized under the laws of the
State
of Nevada (“French Gulch”), is a wholly-owned subsidiary of Pledgor. Pledgor has
agreed to pledge all of its shares of French Gulch to the Secured Party
to
secure Pledgor’s obligations to the Secured Party
under
the Purchase Agreement and other Transaction Documents
NOW,
THEREFORE, in consideration of the premises and for other good and valuable
consideration the receipt of which is hereby acknowledged, the parties hereto
agree as follows:
AGREEMENT
1.
Defined
Terms.
All
capitalized terms used herein which are not defined herein shall have the
meanings given to them in the Purchase Agreement.
2.
Pledge
and Grant of Security Interest.
To
secure the prompt
payment
and performance in
full
when due, whether at stated maturity, by required prepayment, declaration,
acceleration, demand or otherwise (including the payment of amounts that
would
become due but for the operation of the automatic stay under Section 362(a)
of
the Bankruptcy Code), of all obligations and liabilities of every nature
of
Pledgor now or hereafter existing under or arising out of or in connection
with
the Purchase Agreement, the other Transaction Documents and all extensions
or
renewals thereof, whether for principal, interest (including, without
limitation, interest that, but for the filing of a petition in bankruptcy
with
respect to the Borrower or any other Pledgor, would accrue on such obligations,
whether or not such interest is an allowed claim), fees, expenses, indemnities
or otherwise, whether voluntary or involuntary, direct or indirect, absolute
or
contingent, liquidated or unliquidated, whether or not jointly owed with
others,
and whether or not from time to time decreased or extinguished and later
increased, created or incurred, and all or any portion of such obligations
or
liabilities that are paid, to the extent all or any part of such payment
is
avoided or recovered directly or indirectly from the Secured Party as a
preference, fraudulent transfer or otherwise, and all obligations of every
nature of Pledgor now or hereafter existing under this Agreement (all such
obligations of Pledgor being the “Obligations”),
the
Pledgor hereby pledges, assigns, hypothecates, transfers and grants a security
interest to Secured Party
in all
of the following (the “Collateral”):
(a)
all
shares of stock
of
French
Gulch owned
by
Pledgor (the “Pledged Stock”), the certificates representing the Pledged Stock
and all dividends, cash, warrants,
rights, instruments
and other property or Proceeds
from
time to time received, receivable or otherwise distributed in respect of
or in
exchange for any or all of the Pledged Stock;
(b)
all
additional shares of stock of French Gulch from time to time acquired by Pledgor
in any manner, including, without limitation, stock dividends or a distribution
in connection with any increase or reduction of capital, reclassification,
merger, consolidation, sale of assets, combination of shares, stock split,
spin-off or split-off (which shares shall be deemed to be part of the
Collateral), and the certificates representing such additional shares, and
all
dividends, cash, instruments and other property or proceeds from time to time
received, receivable or otherwise distributed in respect of or in exchange
for
any or all of such shares;
(c)
all
options,
warrants
and
rights, whether as an addition to, in substitution of or in exchange for
any
shares of any Pledged Stock and all dividends, cash, instruments and other
property or proceeds from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all such options,
warrants
and
rights;
and
(d) to
the
extent not covered by clauses (a) through (c) above, all Proceeds of any
or all
of the foregoing Pledged Collateral. For purposes of this Agreement, the
term
“Proceeds” includes whatever is receivable or received when Collateral or
proceeds are sold, exchanged, collected or otherwise disposed of, whether
such
disposition is voluntary or involuntary, and includes, without limitation,
proceeds of any indemnity or guaranty payable to such Pledgor or the Secured
Party from time to time with respect to any of the Collateral
3.
Delivery
of Collateral.
All
certificates or
instruments representing
or evidencing the Collateral
shall
be
delivered to and
held by
or
on
behalf of the Secured Party pursuant hereto and shall be in suitable form
for
transfer by delivery or, as applicable, shall be accompanied by the Pledgor’s
endorsement, where necessary, or duly executed instruments of transfer or
assignment in blank, all in form and substance satisfactory to the Secured
Party. The Secured Party shall have the right, at any time in its discretion
and
without
notice to the Pledgor, to register
in the name
of the
Secured Party
or
any of its nominees, as pledgee,
any or
all of the Collateral.
In
addition, the Secured Party
shall
have the right at any
time to
exchange certificates or instruments representing or evidencing the
Collateral
for
certificates or instruments of smaller or larger
denominations.
4.
Representations
and Warranties of the Pledgor.
The
Pledgor represents and warrants to the Secured Party
(which
representations and warranties shall be deemed to continue to be made until
all
of the Obligations have been
indefeasibly
paid in
full and each Transaction Document and each agreement and instrument entered
into in connection therewith has been irrevocably terminated) that:
(a)
the
execution, delivery and performance by the Pledgor of this Agreement and the
pledge of the Collateral hereunder do not and will not result in any violation
of any agreement, indenture, instrument, license, judgment, decree, order,
law,
statute, ordinance or other governmental rule or regulation applicable to
Pledgor;
2
(b)
this
Agreement constitutes the legal, valid, and binding obligation of the Pledgor
enforceable against the Pledgor in accordance with its terms;
(c)
(i)
the
Pledgor is the direct and beneficial owner of each share of the Pledged
Stock;
(d)
all
of
the shares of the Pledged Stock have been duly authorized, validly issued and
are fully paid and nonassessable;
(e)
no
consent or approval of any person, corporation, governmental body, regulatory
authority or other entity, is or will be necessary for (i) the execution,
delivery and performance of this Agreement, (ii) the exercise by the Secured
Party
of any
rights with respect to the Collateral or (iii) the pledge and assignment
of, and
the grant of a security interest in, the Collateral
hereunder;
(f)
there
are
no pending or, to the best of Pledgor’s knowledge, threatened actions or
proceedings before any court, judicial body, administrative agency or arbitrator
which may adversely
affect the Collateral;
(g)
the
Pledgor has the requisite power and authority to enter into this Agreement
and
to pledge and assign the Collateral to the Secured Parties in accordance with
the terms of this Agreement;
(h)
the
Pledgor owns each item of the Collateral and, except for the pledge and security
interest granted to Secured Party
hereunder, the Collateral is
and
shall be at all times
free and
clear of any other security interest, mortgage, pledge, claim, lien, charge,
hypothecation, assignment, offset or encumbrance whatsoever (collectively,
“Liens”);
(i)
there
are
no restrictions on transfer of the Pledged Stock contained in the certificate
of
incorporation or by-laws (or equivalent organizational documents) of
Pledgor
or French
Gulch or otherwise which have not otherwise been enforceably and legally
waived
by the necessary parties;
(j)
none
of
the Pledged Stock has been issued or transferred in violation of the securities
registration, securities disclosure or similar laws of any jurisdiction to
which
such issuance or transfer may be subject;
(k) The
pledge of the Collateral pursuant to this Agreement creates a valid and
perfected first priority security interest in such Collateral, securing the
payment of the Obligations; provided,
that
the Secured Party retains physical possession of any of the Pledged Stock
the
possession of which is required for perfection;
3
(l) All
information heretofore, herein or hereafter supplied to the Secured Party
by or
on behalf of the Pledgor with respect to the Collateral is accurate and complete
in all material respects;
(m) the
pledge and assignment of the Collateral and the grant of a security interest
under this Agreement vest in the Secured Party
all
rights of the Pledgor in the Collateral as contemplated by this Agreement;
and
(n)
the
Pledged Stock constitutes one hundred percent (100%) of the issued and
outstanding shares of capital stock of French Gulch.
5.
Covenants.
The
Pledgor covenants that, until the Obligations shall be indefeasibly satisfied
in
full:
(a)
the
Pledgor will not sell, assign, transfer, convey, grant
any
option with respect to or
otherwise dispose of its rights in or to the Pledged Stock or any interest
therein; nor will Pledgor create, incur or permit to exist any Lien whatsoever
with respect to any of the Pledged Stock or the proceeds thereof other than
that
created hereby.
(b)
the
Pledgor will, at its expense, defend Secured Party’s
right,
title and security interest in and to the Collateral against the claims of
any
other party.
(c)
the
Pledgor shall at any time, and from time to time, upon the written request
of
Secured Party,
execute
and deliver such further documents and do such further acts and things as
Secured Party
may
reasonably request in order to effectuate the purposes of this Agreement
including, but without limitation, delivering to Secured Party,
upon
the occurrence of an Event of Default, irrevocable proxies in respect of
the
Collateral in form satisfactory to Secured Parties. Until receipt thereof,
upon
an Event of Default that has occurred and is continuing beyond any applicable
grace period, this Agreement shall constitute Pledgor’s proxy to Secured Parties
or its nominee to vote all shares of Collateral then registered in the Pledgor’s
name.
The
Pledgor
hereby irrevocably authorizes
the Secured Party at any time and from time to time to file in any filing
office
in any Uniform Commercial Code jurisdiction any initial financing statements
and
amendments thereto that (a) describe the Collateral as the collateral thereunder
and (b) provide any other information required by Part 5 of Article 9 of
the
Uniform Commercial Code of such jurisdiction for the sufficiency or filing
office acceptance of any financing statement or amendment. The Pledgor agrees
to
furnish any such information to the Secured Party promptly upon the Secured
Party’s request. The Pledgor also ratifies its authorization for the Secured
Party to have filed in any Uniform Commercial Code jurisdiction any like
initial
financing statements or amendments thereto if filed prior to the date
hereof.
(d)
Pledgor
will not consent to or approve the issuance of (i) any additional shares of
any
class of capital stock or other equity interests of French Gulch; or (ii) any
securities convertible either voluntarily by the holder thereof or automatically
upon the occurrence or nonoccurrence of any event or condition into, or any
securities exchangeable for, any such shares, unless, in either case, such
shares are pledged as Collateral pursuant to this Agreement.
4
(e) Except
for use by the Company in its ordinary course of business, the Company or
its
subsidiaries shall not make any distributions or dividend payments. The Secured
Party acknowledges and agrees that the general and administrative expense
of the
Company and its currently planned exploration activities in its other
subsidiaries will be funded by the operations of French Gulch. The Company
and
its subsidiaries with not enter into any new ventures nor make any divergent
exploration expenses from what is disclosed in its Securities Act or Exchange
Act filings, until the Company has set aside an amount equal to the amount
need
to repay the Debenture in full into an account pledged for such repayment
and
satisfactory in all respect to Secured Party or has in fact repayed the
Debenture in full, without prior approval of the Secured Party, which shall
not
be unreasonably withheld.
(f) In
the
event the Company determines to wind up and terminate its operations or the
operations of French Gulch, it shall provide twenty (20) days written notice
to
Secured Party prior to taking any substantive step in connection with such
winding up and termination of business.
6.
Voting
Rights and Dividends.
So long
as no Event of Default shall have occurred and be continuing, the Pledgor
shall
be entitled to exercise or refrain from exercising any and all voting and
other
consensual rights pertaining to the Pledged Stock
for
any purpose not inconsistent with the terms of this Agreement or the Purchase
Agreement; provided,
however,
that
the Pledgor shall not exercise any such right if the Secured Party shall
have
notified the Pledgor that, in the Secured Party’s judgment, such action would
have an
adverse
effect on the value of the Pledged
Stock or any part thereof; and provided,
further,
that
the Pledgor shall give the
Secured Party at least five days’ prior
written
notice of the manner in
which
it
intends
to exercise, or the reasons for refraining from exercising, any such
right.
So long
as no Event of Default shall have occurred and be continuing, the Pledgor
shall
be entitled to receive any and all cash dividends paid on the Pledged
Stock.
In
addition to the Secured Party’s
rights and remedies set forth in Section 8 hereof, in case an Event of Default
shall have occurred and be continuing, (i) all rights of the Pledgor to exercise
the voting and other consensual rights which it would otherwise be entitled
to
exercise pursuant to the immediately preceding paragraph shall cease, and
all
such rights shall thereupon become vested in the Secured Party who shall
thereupon have the sole right to exercise such voting and other consensual
rights; (ii) all rights of Pledgor to receive the dividends or other
distributions which it would otherwise be authorized to receive and retain
pursuant to the immediately preceding paragraph shall cease, and all such
rights
shall thereupon become vested in the Secured Party who shall thereupon have
the
sole right to receive and hold as Collateral such dividends or other
distributions.
Following
the occurrence of an Event of Default, all dividends and all other distributions
in respect of any of the Collateral, shall be delivered to the Secured
Party
to hold
as Collateral and shall, if received by the Pledgor, be received in trust
for
the benefit of the Secured Party,
be
segregated from the other property or funds of Pledgor, and be forthwith
delivered to the Secured Party
as
Collateral in the same form as so received (with any necessary
endorsement).
5
In
order
to permit the Secured Party to exercise the voting and other consensual rights
which it may be entitled to exercise pursuant to this Section 6 and to receive
all dividends and other distributions which it may be entitled to receive
herein, (i) the Pledgor shall promptly execute and deliver (or cause to be
executed and delivered) to the Secured Party all such proxies, dividend payment
orders and other instruments as the Secured Party may from time to time
reasonably request and (ii) without limiting the effect of the immediately
preceding clause (i), the Pledgor hereby grants to the Secured Party an
irrevocable proxy to vote the Pledged Stock pledged by it hereunder and to
exercise all other rights, powers, privileges and remedies to which a holder
of
such Pledged Stock would be entitled (including, without limitation, giving
or
withholding written consents of shareholders or members, calling special
meetings of shareholders or members and voting at such meetings), which proxy
shall be effective, automatically and without the necessity of any action
(including any transfer of any such Pledged Stock on the record books of
the
issuer thereof) by any other Person (including the issuer of such Pledged
Stock
or any officer or agent thereof), upon the occurrence of an Event of Default
and
which proxy shall only terminate upon the indefeasible payment in full in
cash
of the Obligations.
7.
Event
of Default.
An
“Event of Default” under this Agreement shall occur upon the happening of any of
the following events:
(a)
an
“Event
of Default” under any Transaction Document or any agreement or note related to
any Transaction Document shall have occurred;
(b)
the
Pledgor shall default in the performance of any of its obligations under any
Transaction Document, including, without limitation, this Agreement, and such
default shall not be cured during the cure period applicable
thereto;
(c)
any
representation or warranty of the Pledgor made herein, in any Transaction
Document or in any agreement, statement or certificate given in writing pursuant
hereto or thereto or in connection herewith or therewith shall be false or
misleading in any material respect;
(d)
any
portion of the Collateral is subjected to a levy of execution, attachment,
distraint or other judicial process or any portion of the Collateral is the
subject of a claim (other than by the Secured Party)
of a
Lien or other right or interest in or to the Collateral and such levy or
claim
shall not be cured, disputed or stayed within a period of fifteen (15) business
days after the occurrence thereof; or
(e)
the
Pledgor shall (i) apply for, consent to, or suffer to exist the appointment
of,
or the taking of possession by, a receiver, custodian, trustee, liquidator
or
other fiduciary of itself or of all or a substantial part of its property,
(ii)
make a general assignment for the benefit of creditors, (iii) commence a
voluntary case under any state or federal bankruptcy laws (as now or hereafter
in effect), (iv) be adjudicated a bankrupt or insolvent, (v) file a petition
seeking to take advantage of any other law providing for the relief of debtors,
(vi) acquiesce to, or fail to have dismissed, within thirty (30) days, any
petition filed against it in any involuntary case under such bankruptcy laws,
or
(vii) take any action for the purpose of effecting any of the
foregoing.
6
8.
Remedies.
In case
an Event of Default shall have occurred and is continuing, the Secured
Party
may:
(a)
transfer
any or all of the Collateral into its
name, or
into the name of its
nominee
or nominees;
(b)
exercise
all corporate rights with respect to the Collateral including, without
limitation, all rights of conversion, exchange, subscription or any other
rights, privileges or options pertaining to any shares of the Collateral
as if
the Secure Party
were the
absolute owner thereof, including, but without limitation, the right to
exchange, at their discretion, any or all of the Collateral upon the merger,
consolidation, reorganization, recapitalization or other readjustment of
the
Issuer thereof, or upon the exercise by the Issuer of any right, privilege
or
option pertaining to any of the Collateral, and, in connection therewith,
to
deposit and deliver any and all of the Collateral with any committee,
depository, transfer agent, registrar or other designated agent upon such
terms
and conditions as it may determine, all without liability except to account
for
property actually received by it; and
(c)
subject
to any requirement of applicable law, sell, assign and deliver the whole
or,
from time to time, any part of the Collateral at the time held by the Secured
Party,
at any
private sale or at public auction, with or without demand, advertisement
or
notice of the time or place of sale or adjournment thereof or otherwise (all
of
which are hereby waived, except such notice as is required by applicable
law and
cannot be waived), for cash or credit or for other property for immediate
or
future delivery, and for such price or prices and on such terms as the Secured
Party
in its
sole discretion may determine, or as may be required by applicable
law.
The
Pledgor hereby waives and releases any and all right or equity of redemption,
whether before or after sale hereunder. At any such sale, unless prohibited
by
applicable law, the Secured Party
may bid
for and purchase the whole or any part of the Collateral so sold free from
any
such right or equity of redemption. All moneys received by the Secured
Party
hereunder, whether upon sale of the Collateral or any part thereof or otherwise,
shall be held by the Secured Party
and
applied as provided in Section 10 hereof. No failure or delay on the part
of the
Secured Party
in
exercising any rights hereunder shall operate as a waiver of any such rights
nor
shall any single or partial exercise of any such rights preclude any other
or
future exercise thereof or the exercise of any other rights hereunder. The
Secured Party
shall
have no duty as to the collection or protection of the Collateral or any
income
thereon nor any duty as to preservation of any rights pertaining thereto,
except
to apply the funds in accordance with the requirements of Section 10 hereof.
The
Secured Party
may
exercise their rights with respect to property held hereunder without resort
to
other security for or sources of reimbursement for the Obligations. In addition
to the foregoing, Secured Party
shall
have all of the rights, remedies and privileges of a secured party under
the
Uniform Commercial Code of Nevada (the “UCC”) regardless of the jurisdiction in
which enforcement hereof is sought.
7
9.
Private
Sale.
The
Pledgor recognizes that the Secured Party
may be
unable to effect (or to do so only after delay which would adversely affect
the
value that might be realized from the Collateral) a public sale of all or
part
of the Collateral by reason of certain prohibitions contained in the Securities
Act, and may be compelled to resort to one or more private sales to a restricted
group of purchasers who will be obliged to agree, among other things, to
acquire
such Collateral for their own account, for investment and not with a view
to the
distribution or resale thereof. The Pledgor agrees that any such private
sale
may be at prices and on terms less favorable to the seller than if sold at
public sales and that such private sales shall be deemed to have been made
in a
commercially reasonable manner. The Pledgor agrees that the Secured Party
has
no
obligation to delay sale of any Collateral for the period of time necessary
to
permit French Gulch to register the Collateral for public sale under the
Securities Act.
10.
Proceeds
of Sale.
The
proceeds of any collection, recovery, receipt, appropriation, realization
or
sale of the Collateral shall be applied by the Secured Party
as
follows:
(a)
first,
to
the payment of all costs, reasonable expenses and charges of the Secured
Party
and to
the reimbursement of the Secured Party
for the
prior payment of such costs, reasonable expenses and charges incurred in
connection with the care and safekeeping of the Collateral (including, without
limitation, the reasonable expenses of any sale or any other disposition
of any
of the Collateral), attorneys’ fees and reasonable expenses, court costs, any
other fees or expenses incurred or expenditures or advances made by Secured
Party
in the
protection, enforcement or exercise of its rights, powers or remedies
hereunder;
(b)
second,
to the payment of the Obligations, in whole or in part, in such order as
the
Secured Party
may
elect, whether or not such Obligations are
then
due;
(c)
third,
to
such persons, firms, corporations or other entities as required by applicable
law including, without limitation, Section 9-615(a)(3) of the UCC;
and
(d)
fourth,
to the extent of any surplus,
to the
Pledgor
or as a
court of competent jurisdiction may direct.
In
the
event that the proceeds of any collection, recovery, receipt, appropriation,
realization or sale are insufficient to satisfy the Obligations, the Pledgor
shall be jointly and severally liable for the deficiency plus the costs and
fees
of any attorneys employed by Secured Party
to
collect such deficiency.
11.
No
Waiver.
Any and
all of the Secured Party’s
rights
with respect to the Liens granted under this Agreement shall continue
unimpaired, and Pledgor shall be and remain obligated in accordance with
the
terms hereof, notwithstanding (a) the bankruptcy, insolvency or reorganization
of any Pledgor, (b) the release or substitution of any item of the Collateral
at
any time, or of any rights or interests therein, or (c) any delay, extension of
time, renewal, compromise or other indulgence granted by the Secured
Party
in
reference to any of the Obligations. The Pledgor hereby waives all notice
of any
such delay, extension, release, substitution, renewal, compromise or other
indulgence, and hereby consents to be bound hereby as fully and effectively
as
if such Pledgor had expressly agreed thereto in advance. No delay or extension
of time by the Secured Party
in
exercising any power of sale, option or other right or remedy hereunder,
and no
failure by the Secured Party
to give
notice or make demand, shall constitute a waiver thereof, or limit, impair
or
prejudice the Secured Party’s
right
to take any action against any Pledgor or to exercise any other power of
sale,
option or any other right or remedy.
8
12.
Expenses.
The
Collateral shall secure, and the
Pledgor
shall pay to Secured Party
on
demand, from time to time, all reasonable costs and expenses, (including
but not
limited to, reasonable attorneys’ fees and costs, taxes, and all transfer,
recording, filing and other charges) of, or incidental to, the custody, care,
transfer, administration of the Collateral or any other collateral, or in
any
way relating to the enforcement, protection or preservation of the rights
or
remedies of the Secured Party
under
this Agreement or with respect to any of the Obligations.
13.
The
Secured Party
Appointed Attorney-In-Fact and Performance by the Secured
Parties.
Upon
the occurrence of an Event of Default, the
Pledgor
hereby irrevocably constitutes and appoints the Secured Party
as the
Pledgor’s true and lawful attorney-in-fact, with full power of substitution, to
execute, acknowledge and deliver any instruments and to do in the
Pledgor’s name, place and stead, all such acts, things and deeds for and on
behalf of and in the name of such Pledgor, which the
Pledgor
could or might do or which the Secured Party
may deem
necessary, desirable or convenient to accomplish the purposes of this Agreement,
including, without limitation, to execute such instruments of assignment
or
transfer or orders and to register, convey or otherwise transfer title to
the
Collateral into the Secured Party’s
name.
The Pledgor hereby ratifies and confirms all that said attorney-in-fact may
so
do and hereby declares this power of attorney to be coupled with an interest
and
irrevocable. If any Pledgor fails to perform any agreement herein contained,
the
Secured Party
may
itself perform or cause performance thereof, and any costs and expenses of
the
Secured Party
incurred
in connection therewith shall be paid by the Pledgor as provided in Section
10
hereof.
14. Continuing
Security Interest; Transfer Of Secured Obligations. This
Agreement shall create a continuing security interest in the Collateral and
shall remain in full force and effect until the indefeasible
payment
in full
in
cash
of all
Obligations. Upon the indefeasible
payment
in full
in
cash
of all
Obligations, the security interest granted hereby shall terminate hereunder
and
of record and all rights to the Collateral shall revert to Pledgor.
15.
Waivers.
THE
PARTIES HERETO DESIRES THAT THEIR DISPUTES BE RESOLVED BY A JUDGE APPLYING
SUCH
APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS
OF
THE JUDICIAL SYSTEM AND OF ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHTS
TO
TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE,
WHETHER ARISING IN CONTRACT, TORT, OR OTHERWISE BETWEEN LAURUS, AND/OR ANY
COMPANY ARISING OUT OF, CONNECTED WITH, RELATED OR INCIDENTAL TO THE
RELATIONSHIP ESTABLISHED BETWEEN THEN IN CONNECTION WITH THIS AGREEMENT, ANY
OTHER DOCUMENT OR THE TRANSACTIONS RELATED HERETO OR THERETO.
16.
Recapture.
Notwithstanding anything to the contrary in this Agreement, if the
Secured Party
receives
any payment or payments on account of the Obligations, which payment or payments
or any part thereof are subsequently invalidated, declared to be fraudulent
or
preferential, set aside and/or required to be repaid to a trustee, receiver,
or
any other party under the United States Bankruptcy Code, as amended, or any
other federal or state bankruptcy, reorganization, moratorium or insolvency
law
relating to or affecting the enforcement of creditors’ rights generally, common
law or equitable doctrine, then to the extent of any sum not finally retained
by
the Secured Party,
the
Pledgor’s obligations to the Secured Party
shall be
reinstated and this Agreement shall remain in full force and effect (or be
reinstated) until payment shall have been made to Secured Party,
which
payment shall be due on demand.
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17.
Captions.
All
captions in this Agreement are included herein for convenience of reference
only
and shall not constitute part of this Agreement for any other
purpose.
18. Action
by Secured Party.
If
the
Secured Party
shall
take any action, including any waiver, under this Pledge Agreement, the action
of the Secured Party
shall be
determined by the written consent of the holders of a majority of the dollar
amount of the Debentures then outstanding.
19.
Miscellaneous.
(a)
This
Agreement constitutes the entire and final agreement among the parties with
respect to the subject matter hereof and may not be changed, terminated or
otherwise varied except by a writing duly executed by the parties
hereto.
(b)
No
waiver
of any term or condition of this Agreement, whether by delay, omission or
otherwise, shall be effective unless in writing and signed by the party sought
to be charged, and then such waiver shall be effective only in the specific
instance and for the purpose for which given.
(c)
In
the
event that any provision of this Agreement or the application thereof to any
Pledgor or any circumstance in any jurisdiction governing this Agreement shall,
to any extent, be invalid or unenforceable under any applicable statute,
regulation, or rule of law, such provision shall be deemed inoperative to the
extent that it may conflict therewith and shall be deemed modified to conform
to
such statute, regulation or rule of law, and the remainder of this Agreement
and
the application of any such invalid or unenforceable provision to parties,
jurisdictions, or circumstances other than to whom or to which it is held
invalid or unenforceable shall not be affected thereby, nor shall same affect
the validity or enforceability of any other provision of this
Agreement.
(d)
This
Agreement shall be binding upon the Pledgor, and Pledgor’s successors and
assigns, and shall inure to the benefit of the Secured Party
and
its
successors and assigns.
(e)
Any
notice or other communication required or permitted pursuant to this Agreement
shall be given in accordance with the Security Purchase Agreement.
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(f)
THIS
AGREEMENT AND THE OTHER DOCUMENTS SHALL BE GOVERNED BY AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEVADA APPLICABLE TO
CONTRACTS MADE AND PERFORMED IN SUCH STATE, WITHOUT REGARD TO PRINCIPLES
OF
CONFLICTS OF LAW. THE PLEDGOR AND THE SECURED PARTY
HEREBY
CONSENT AND AGREE THAT THE STATE OR FEDERAL COURTS LOCATED IN THE COUNTY
OF
WASHOE, STATE OF NEVADA SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE
ANY CLAIMS OR DISPUTES BETWEEN PLEDGOR
AND
THE
SECURED PARTY,
PERTAINING TO THIS AGREEMENT OR ANY OF THE OTHER TRANSACTION
DOCUMENTS.
(i)
This
Agreement may be executed in one or more counterparts, each of which shall
be
deemed an original and all of which when taken together shall constitute one
and
the same agreement. Any signature delivered by a party by facsimile transmission
shall be deemed an original signature hereto.
IN
WITNESS WHEREOF, the parties have duly executed this Agreement as of the day
and
year first written above.
a
Nevada
corporation
By:
/s/
Xxxxx X. Xxxxx
Xxxxx X.
Xxxxx
Xxxxx
Participation Corp.
a
British
Virgin Islands corporation
By:
/s/
Xxxxx-Xxxx Xxxxxxx
Xxxxx-Xxxx
Xxxxxxx
11