THIS PLEDGE AGREEMENT
(" Agreement "), dated August
28, 2009, is executed by and among (A) IP Global Investors Ltd., a
Nevada corporation (“ Purchaser ”); (B)
DANIEL KLAUS , an individual (“ Klaus ”);
and (C) Hodgson Russ LLP , a law firm with an address at
1540 Broadway, New York, New York 10036 (the “ Collateral
Agent ”). Purchaser is sometimes referred to herein as
the “ Pledgor ,” Klaus is hereinafter sometimes
referred to as the “ Secured Party ,” and the
Pledgor and the Secured Party are hereinafter sometimes
collectively referred to as the “ Business Parties
.”
W I T N E S S E T
H :
WHEREAS, Purchaser has issued to Secured Party
an installment promissory note in the amount of $225,000 dated of
even date herewith (individually and collectively, the “
Note ”); and
WHEREAS, as collateral security for the
obligations of Purchaser under the Note (the “
Obligations ”), Purchaser has agreed to (i) pledge to
Secured Party up to 1,000,000 shares of the Class A Common Stock of
FUND.COM INC., a Delaware corporation (“ the Company
”) that was acquired by the Purchaser pursuant to a Stock
Purchase, Stock Redemption and Option agreement, dated of even date
herewith between, among other, Purchaser and Secured Party (the
“ Purchase Agreement ”); and
WHEREAS, all capitalized terms that are not
otherwise defined in this Agreement shall have the same meaning as
are defined in the Purchase Agreement.
NOW, THEREFORE,
in consideration of the premises
and of the mutual covenants set forth herein and for other good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as
follows:
1.
Pledge and Assignment of the Collateral .
(a)
As collateral security for the Obligations, Pledgor hereby
pledges to Secured Party, and creates in the Secured Party for its
benefit, from the date hereof through the date the Obligations have
been fully and completely satisfied, a first priority lien on and
security interest in and to, all of Purchaser’s right, title
and interest in and to 1,000,000 shares of the Class A Common
Stock, $0.001 par value per share (“ Common Stock
”) of the Company that was acquired by Purchaser pursuant to
the Agreement (such 1,000,000 shares are hereinafter referred to as
the “ Pledged Securities ”), together with all
proceeds from the sale of the Pledged Securities, all dividends
paid in respect of the Pledged Securities and any property or
securities delivered to the holder of the Pledged Securities in
respect thereof in the event of a merger or takeover of the Company
by a third party (collectively, together with the Pledged
Securities, the “ Pledged Collateral
”).
(b) Simultaneous
with the execution and delivery of this
Agreement, Pledgor does hereby agree to execute and
deliver to the Collateral Agent:
(i) any
documents reasonably requested by Secured Party to perfect its
security interest in the Pledged Collateral, including, assignments
separate from the Pledged Securities substantially in the form of
Exhibit A hereto, undated and appropriately endorsed
in blank, with respect to the Pledged Securities,
(ii) if
legally required to perfect Secured Party’s security interest
in the Pledged Collateral, such financing statements as Secured
Party and/or the Collateral Agent may reasonably request with
respect to the Pledged Collateral (or, if execution by Pledgor is
not required pursuant to the applicable Uniform Commercial Code,
Pledgor hereby authorizes the Collateral Agent to file all
financing statements deemed necessary by Secured Party to perfect
the security interests granted hereunder),
In addition, Pledgor does
hereby authorize the Collateral Agent to take such other steps as
Secured Party may from time to time reasonably request to perfect
Secured Party's security interest in the Pledged Collateral or any
part thereof under applicable law, and upon the occurrence and
during the continuance of an Event of Default (as defined in the
Note) (“Event of Default”) to execute and deliver on
behalf of Pledgor such other documents of transfer as
Secured Party or the Collateral Agent may from time to time
reasonably require to enable Secured Party to transfer the Pledged
Collateral into the name of Secured Party or the name of its
nominee (all of the foregoing are hereinafter collectively referred
to as the " Assignments ”).
2.
Definition; Security for Secured Obligation .
(a) Unless
otherwise defined in this Agreement, when used herein all
capitalized terms shall have the same meaning as such terms are
defined in the Purchase Agreement.
(b) The
Pledged Collateral secures the prompt and complete payment,
performance and observance of the Obligations.
3.
Pledged Collateral Adjustments . If
during the term of this Agreement:
(a) any
non-cash dividend or distribution, reclassification, readjustment
or other change is declared or made in the capital structure of
Company, or any option, warrant or similar instrument included
within the Pledged Collateral is exercised, or both, or
(b) any
subscription, warrants, options shall be issued in connection with
the Pledged Collateral,
then Pledgor shall (i) promptly
deliver new, substituted and additional shares, warrants, options,
or other equity securities, issued by reason of any of the
foregoing, and all certificates and other instruments evidencing
the same to Secured Party to be held under the terms of this
Agreement and shall constitute Pledged Collateral hereunder, and
(ii) promptly deliver to Secured Party or the Collateral Agent such
additional Pledged Collateral.
4.
Release of Pledged Collateral .
(a) Upon
confirmation from Secured Party that payment of a $45,000 monthly
installment payment due to such Secured Party under the Note (each
an “ Installment Payment ”) has been paid in
compliance with the Note, (or based upon receipt by the
Collateral Agent of a bank confirmation of payment by wire transfer
of such Installment Payment having been made in compliance with the
Note), the Collateral Agent shall release to the Purchaser Pledged
Securities constituting 200,000 shares of Class A Common Stock of
the Company (the “ Released Collateral
”). The Purchaser shall receive and retain good
and marketable title to the Released Collateral and, upon
confirmation of each such Installment Payment, as aforesaid, the
applicable amount of the Released Collateral shall no longer be
subject to this Agreement or the pledge and security interest
granted hereunder.
(b) Upon
payment in full of the Note, all of the remaining Pledged
Collateral held under this Agreement shall be released to the
Purchaser and this Agreement shall terminate and be of no further
force or effect.
5.
Remedies Following an Event of Default.
(a) Upon
the occurrence and during the continuation of an Event of Default,
(as defined in the Note), upon not less than thirty (30) calendar
days prior written notice to Pledgor and the Collateral Agent,
Secured Party, may, at his option, request that the Collateral
Agent transfer or register the Pledged Collateral or any part
thereof into his or their nominee's name with or without any
indication that such Pledged Collateral is subject to the lien
created hereunder. In addition, upon the occurrence and during the
continuance of an Event of Default, Secured Party may at any time
exchange certificates or other instruments representing or
evidencing Pledged Collateral for certificates or other instruments
of smaller or larger denominations.
(b) Upon
the occurrence and during the continuation of an Event of Default,
in addition to having the right to exercise any right or remedy of
a secured party upon default under the New York State Uniform
Commercial Code or applicable law or at equity, Secured Party may,
to the extent permitted by law, subject to giving notice as set
forth below, to Pledgor but without being required to take or do
any action (except as provided below):
(i) apply any cash
held by it hereunder to the payment of Obligations; and
(ii) if there shall be
no such cash or if the cash so applied shall be insufficient to pay
in full the Obligations, collect, receive, appropriate and realize
upon the Pledged Collateral or any part thereof, and/or sell,
assign, transfer, contract to sell or otherwise dispose of and
deliver the Pledged Collateral or any part thereof, in its entirety
or in portions, at public or private sale or at any broker's board,
on any securities exchange or at any of Secured Party places of
business or elsewhere, for cash, upon credit or for future
delivery, and at such price or prices as Secured Party may deem
best, and Secured Party may (except as otherwise provided by law)
be the purchaser of any or all of the Pledged Collateral so sold
and thereafter may hold the same, absolutely, free from any right
or claim of whatsoever kind.
(1) In the event of a
sale as set forth in section 4(b)(ii) above, Secured Party may, at
any such sale, restrict the number of prospective bidders or
purchasers and/or further restrict such prospective bidders or
purchasers to Persons who will represent and agree that they are
purchasing for their own account, for investment and not with a
view to the distribution or resale of the Pledged Collateral, and
may otherwise require that such sale be conducted subject to
restrictions as to such other matters as Secured Party may deem
necessary in order that such sale may be effected in such manner as
to comply with all applicable state and federal securities and
other laws. Upon any such sale, Secured Party shall have
the right to deliver, assign and transfer the Pledged Collateral so
sold to the purchaser thereof.
(2) Pledgor hereby
acknowledges that, notwithstanding that a higher price might be
obtained for the Pledged Collateral at a public sale than at a
private sale or sales, the making of a public sale of the Pledged
Collateral may be subject to registration requirements under
applicable securities laws and other legal restrictions, compliance
with which would make a public sale of the Pledged Collateral
impractical. Accordingly, Pledgor hereby agrees that
private sales made by Secured Party in good faith in accordance
with the provisions of this Section 4 may be at prices and
on other terms less favorable to the seller than if the Pledged
Collateral were sold at a public sale, and that Secured Party shall
not have any obligation to take any steps in order to permit the
Pledged Collateral to be sold at a public sale.
(3) Each purchaser at
any such sale shall hold the property sold, absolutely free from
any claim or right whatsoever, including any equity or right of
redemption of Pledgor, and Pledgor hereby specifically waives all
rights of redemption, stay or appraisal and other rights that
Pledgor has or may have under any law, regulation or statute now
existing or hereafter adopted or otherwise. Secured
Party shall give Pledgor not less than twenty (20) days written
notice of its intention to make any such public or private
sale. Such notice, in case of a public sale, shall state
the time and place fixed for such sale, and, in case of a sale at
broker's board, on a securities exchange, at one or more of Secured
Party’s places of business or elsewhere, shall state the
board, exchange or other location at which such sale is to be made
and the day on which the Pledged Collateral, or that portion
thereof so being sold, will first be offered for sale at such
location. Such notice, in case of a private sale, shall
state only the date on or after which such sale may be
made. Any such notice given as aforesaid shall be deemed
to be reasonable notification.
(4) Any such public
sale shall be held at such time or times within ordinary business
hours and at such place or places as Secured Party may fix in the
notice of such sale. At any sale the Pledged Collateral
may be sold in one lot as an entirety or in parts, as Secured Party
may determine. Secured Party shall not be obligated to
make any sale pursuant to any such notice. Secured Party
may, without notice or publication, adjourn any sale or cause the
same to be adjourned from time to time by announcement at the time
and place fixed for the sale, and such sale may be made at any time
or place to which the same may be so adjourned. In case
of any sale of all or any part of the Pledged Collateral on credit
or for future delivery, the Pledged Collateral so sold may be
retained by Secured Party until the selling price is paid by the
purchaser thereof, but Secured Party shall not incur any liability
in case of the failure of such purchaser to take up and pay for the
Pledged Collateral so sold and, in case of any such failure, such
Pledged Collateral may again be sold upon like notice.
(g) On
any sale of any part of the Pledged Collateral, Secured Party is
hereby authorized to comply with any limitation or restriction in
connection with such sale that may be necessary in order to avoid
any violation of applicable law or in order to obtain any required
approval of the purchaser(s) by any governmental authority or
officer or court.
(h) Pledgor
hereby acknowledges, understands and agrees that compliance with
the foregoing procedures shall satisfy any applicable requirements
that such sale or disposition be made in a commercially reasonable
manner.
(i) Notwithstanding
anything to the contrary, express or implied, contained in this
Section 4, following the occurrence and during the continuation of
any Event of Default, Secured Party may elect, as his sole and
exclusive remedy under the Note and this Agreement, to retain the
Pledged Collateral and not effect a sale of same (at either a
public or private sale). In the event that a Secured
Party elects to retain the Pledged Collateral (as distinguished
from deploying commercially reasonable efforts to attempt to sell
the Pledged Collateral, in which event this Section 4(i) shall not
be applicable) , all further obligations of the Pledgor
to such Secured Party under the Note shall be deemed to be fully
paid and satisfied.
5.
Representations and Warranties .
(a) The Pledgor does
hereby represent and warrant to Secured Party as
follows:
(1) the
Pledgor is, and upon delivery thereof and payment therefore will
be, the legal and beneficial owner of the Pledged Collateral owned
by the Pledgor, free and clear of any lien, except for the lien
created by this Agreement;
(2) The Pledgor has
full power and authority to enter into this Agreement, assign,
deposit, pledge and grant a lien on or otherwise transfer all of
its rights in the Pledged Collateral free and clear of any liens;
and,
(3) The execution,
delivery and performance of this Agreement and the
Note and the consummation of the transactions
contemplated hereby and thereby will not violate or conflict with,
or result in a breach of any provision of, or constitute a default
(or an event which with notice or lapse of time or both could
become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, any
agreement or instrument to which Pledgor is a party or
is otherwise bound or is a beneficiary, or result in a violation of
any law, rule, regulation, order, judgment or decree (including
federal, state and foreign securities laws and regulations and
regulations of any self-regulatory organizations to which Pledgor
is subject) applicable to Pledgor or by which any property or asset
of Pledgor is bound or affected (except for such
conflicts, defaults, terminations, amendments, accelerations,
cancellations and violations as would not, individually or in the
aggregate, have a material adverse effect on the business, assets,
properties or financial condition of the Pledgor. The
Pledgor is not in default (and no event has occurred which with
notice or lapse of time or both could put the Pledgor in default)
under, and the Pledgor has not taken any action or failed to take
any action that would give to others any rights of termination,
amendment, acceleration or cancellation of, any agreement,
indenture or instrument to which the Pledgor is a Party or by which
any property or assets of the Pledgor is bound or affected, except
for possible defaults as would not, individually or in the
aggregate, have a Material Adverse Effect, The Pledgor is not
required to obtain any consent, authorization or order of, or make
any filing or registration with, any court, governmental agency,
regulatory agency, self regulatory organization or stock market or
any third Party, in order for the execution, delivery or
performance of any of its obligations under this Agreement in
accordance with the terms hereof or thereof, or to issue the Loan
in accordance with the terms hereof and the terms of the
Note. Any and all consents, authorizations, orders,
filings and registrations which the Pledgor is required to obtain
pursuant to the preceding sentence have been obtained or effected
on or prior to the date hereof.
(b) Secured Party does
hereby represent and warrant to Pledgor as follows:
(1) The Secured Party
has full power and authority to enter into this
Agreement.
(2) The execution,
delivery and performance of this Agreement and the Note and the
consummation of the transactions contemplated hereby and thereby
will not violate or conflict with, or result in a breach of any
provision of, or constitute a default (or an event which with
notice or lapse of time or both could become a default) under, or
give to others any rights of termination, amendment, acceleration
or cancellation of, any agreement or instrument to which Secured
Party is a Party or is otherwise bound or is a beneficiary, or
result in a violation of any law, rule, regulation, order, judgment
or decree (including federal, state and foreign securities laws and
regulations and regulations of any self-regulatory organizations to
which Secured Party is subject) applicable to Secured Party or by
which any property or asset of Secured Party is bound or affected
(except for such conflicts, defaults, terminations, amendments,
accelerations, cancellations and violations as would not,
individually or in the aggregate, have a Material Adverse
Effect). The Secured Party is not in default (and no
event has occurred which with notice or lapse of time or both could
put Secured Party in default) under,
and Secured Party has not taken any action or failed to
take any action that would give to others any rights of
termination, amendment, acceleration or cancellation of, any
agreement, indenture or instrument to which Secured
Party is a Party or by which any property or assets of Secured
Party is bound or affected. The Secured Party is not
required to obtain any consent, authorization or order of, or make
any filing or registration with, any court, governmental agency,
regulatory agency, self regulatory organization or stock market or
any third Party, in order for the execution, delivery or
performance of any of his obligations under this Agreement in
accordance with the terms hereof or thereof, or to issue the Loan
in accordance with the terms hereof and the terms of the
Note. Any and all consents, authorizations, orders,
filings and registrations which Secured Party is required to obtain
pursuant to the preceding sentence have been obtained or effected
on or prior to the date hereof.
(a) During
the term of this Agreement Pledgor shall have the right to vote any
Pledged Securities which form all or a portion of the Pledged
Collateral, to the extent such Pledged Securities may be voted, on
all question
