PLEDGE
AGREEMENT
THIS PLEDGE
AGREEMENT (the
“ Agreement ”) is made and entered into as of
September ___, 2008 (the “ Effective Date ”) by
and among VORTEX RESOURCES CORP ., a corporation
organized and existing under the laws of Delaware (the “
Company ” or “Pledgor”), TRAFALGAR
CAPITAL SPECIALIZED INVESTMENT FUND, LUXEMBOURG , (the
“ Pledgee ”).
RECITALS
:
WHEREAS,
in order to secure the full and
prompt payment when due (whether at the stated maturity, by
acceleration or otherwise) of all of the Company’s
obligations (the “ Obligations ”) to the Pledgee
or any successor to the Pledgee under this Agreement, the
Securities Purchase Agreement of even date herewith between the
Company and the Pledgee (the “ Securities Purchase
Agreement ”), the Convertible Debentures (the “
Convertible Debentures ”) issued or to be issued by
the Company to the Pledgee, either now or in the future, up to a
total of Two Million Seven Hundred Fifty Thousand Dollars
($2,750,000) of principal, plus any interest, costs, fees, and
other amounts owed to the Pledgee thereunder, the Security
Agreement of even date herewith between the Company and the Pledgee
(the “ Security Agreement ”), and all other
contracts entered into between the Company and Pledgor in
connection with Securities Purchase Agreement (collectively, the
“ Transaction Documents ”), the Company has
agreed to irrevocably pledge to the Pledgee 4,500,000 restricted
shares of the Company’s common stock (the “ Pledged
Shares ”) in the denominations set forth in Schedule 1
hereto. The parties acknowledge and agree that as of the date of
the first payment due to the Pledgee under the Convertible
Debenture, the amount of pledged shares herein shall be adjusted
such that the value of the pledged shares will be equal to four
times the value of the outstanding loan amount upon each monthly
repayment.
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:
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 the
Company’s obligations under the Convertible Debentures.
Simultaneously with the execution of the Transaction Documents, the
Pledgor shall deliver to the Pledgee stock certificates
representing the Pledged Shares, in such denominations as requested
by the Pledgee, 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 Pledgee
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 and during the
continuance 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 Convertible Debentures or waiver by Pledgee
or termination of the Agreement by the Parties, the Pledgee 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 Convertible Debentures , 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 .
Upon and anytime after the occurrence of an Event of Default and a
thirty (30) day grace period to cure such default, the Pledgee
shall have the right to (i) sell the Pledged Shares and to
apply the proceeds of such sales, net of any selling commissions,
to the Obligations owed to the Pledgee by the Pledgor under the
Transaction Documents, including, without limitation, outstanding
p
|
