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Exhibit 10.9
GUARANTY AND PLEDGE AGREEMENT
GUARANTY AND PLEDGE AGREEMENT (this "Agreement"), dated as of
March
19, 2004, among Aquatic Cellulose International Corp., a Nevada
corporation (the
"Company"), Sheridan B. Westgarde (the "Pledgor"), AJW Partners,
LLC, a limited
liability company ("AJW"), AJW Offshore, Ltd., a limited liability
company
("Offshore"), and AJW Qualified Partners, LLC, a limited liability
company
("Qualified"), New Millennium Capital Partners II, LLC ("New
Millennium" and,
together with AJW, Offshore and Qualified, the "Pledgees").
WITNESSETH:
WHEREAS, the Company and the Pledgees are parties to that
certain
Securities Purchase Agreement, of even date herewith (the "Purchase
Agreement"),
pursuant to which the Company (i) has issued (a) 10% secured
convertible
debentures in the aggregate principal amount of $900,000 and (b)
stock purchase
warrants to purchase an aggregate of 900,000 shares of the
Company's common
stock, $.001 par value per share (the "Common Stock"); and
WHEREAS, as a material inducement to the Pledgees to enter into
the
Purchase Agreement, the Pledgees have required and the Pledgor has
agreed (i) to
unconditionally guarantee the timely and full satisfaction of all
obligations of
the Company, whether matured or unmatured, now or hereafter
existing or created
and becoming due and payable (the "Obligations") to the Pledgees,
their
successors, endorsees, transferees or assigns under the Transaction
Documents
(as defined in the Purchase Agreement) to the extent of the
Collateral (as
defined in Section 5 hereof), and (ii) to grant to the Pledgees,
their
successors, endorsees, transferees or assigns a security interest
in the number
of shares of Common Stock currently owned by the Pledgor as set
forth below the
Pledgor's signature on the signature page hereto (collectively, the
"Shares"),
as collateral security for Obligations. Terms used and not defined
herein shall
have the meaning ascribed to them in the Purchase Agreement.
NOW, THEREFORE, in consideration of the foregoing recitals, and
the
mutual covenants contained herein, the parties hereby agree as
follows:
1. Guaranty. To the extent of the Collateral, the Pledgor
hereby
absolutely, unconditionally and irrevocably guarantees to the
Pledgees, their
successors, endorsees, transferees and assigns the due and punctual
performance
and payment of the Obligations owing to the Pledgees, their
successors,
endorsees, transferees or assigns when due, all at the time and
place and in the
amount and manner prescribed in, and otherwise in accordance with,
the
Transaction Documents, regardless of
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any defense or set-off counterclaim which the Company or any other
person may
have or assert, and regardless of whether or not the Pledgees or
anyone on
behalf of the Pledgees shall have instituted any suit, action or
proceeding or
exhausted its remedies or taken any steps to enforce any rights
against the
Company or any other person to compel any such performance or
observance or to
collect all or part of any such amount, either pursuant to the
provisions of the
Transaction Documents or at law or in equity, and regardless of any
other
condition or contingency. The Pledgor shall have no obligation
whatsoever to the
Pledgees beyond the Collateral pledged for the Obligations set
forth herein.
2. Waiver of Demand. The Pledgor hereby unconditionally: (i)
waives
any requirement that the Pledgees, in the event of a breach in any
material
respect by the Company of any of its representations or warranties
in the
Transaction Documents, first make demand upon, or seek to enforce
remedies
against, the Company or any other person before demanding payment
of enforcement
hereunder; (ii) covenants that this Agreement will not be
discharged except by
complete performance of all the Obligations to the extent of the
Collateral;
(iii) agrees that this Agreement shall remain in full force and
effect without
regard to, and shall not be affected or impaired, without
limitation, by, any
invalidity, irregularity or unenforceability in whole or in part of
the
Transaction Documents or any limitation on the liability of the
Company
thereunder, or any limitation on the method or terms of payment
thereunder which
may now or hereafter be caused or imposed in any manner whatsoever;
and (iv)
waives diligence, presentment and protest with respect to, and
notice of default
in the performance or payment of any Obligation by the Company
under or in
connection with the Transaction Documents.
3. Release. The obligations, covenants, agreements and duties of
the
Pledgor hereunder shall not be released, affected or impaired by
any assignment
or transfer, in whole or in part, of the Transaction Documents or
any
Obligation, although made without notice to or the consent of the
Pledgor, or
any waiver by the Pledgees, or by any other person, of the
performance or
observance by the Company or the Pledgor of any of the agreements,
covenants,
terms or conditions contained in the Transaction Documents, or any
indulgence in
or the extension of the time or renewal thereof, or the
modification or
amendment (whether material or otherwise), or the voluntary or
involuntary
liquidation, sale or other disposition of all or any portion of the
stock or
assets of the Company or the Pledgor, or any receivership,
insolvency,
bankruptcy, reorganization, or other similar proceedings, affecting
the Company
or the Pledgor or any assets of the Company or the Pledgor, or the
release of
any proper from any security for any Obligation, or the impairment
of any such
property or security, or the release or discharge of the Company or
the Pledgor
from the performance or observance of any agreement, covenant, term
or condition
contained in or arising out of the Transaction Documents by
operation of law, or
the merger or consolidation of the Company, or any other cause,
whether similar
or dissimilar to the foregoing.
4. Subrogation.
(a) Unless and until complete performance of all the
Obligations
to the extent of the Collateral, the Pledgor shall not be entitled
to exercise
any right of subrogation to any of the rights of the Pledgees
against the
Company or any collateral security or guaranty held by the Pledgees
for the
payment or performance of the Obligations, nor shall the Pledgor
seek any
reimbursement from the Company in respect of payments made by the
Pledgor
hereunder.
(b) In the
extent that the Pledgor shall become obligated to
perform or pay any sums hereunder, or in the event that for any
reason the
Company is now or shall hereafter become indebted to the Pledgor,
the amount of
such sum shall at all times be subordinate as to lien, time of
payment and in
all other respects, to the amounts owing to the Pledgees under the
Transaction
Documents and the Pledgor shall not enforce or receive payment
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thereof until all Obligations due to the Pledgees under the
Transaction have
been performed or paid. Nothing herein contained is intended or
shall be
construed to give to the Pledgor any right of subrogation in or
under the
Transaction Documents, or any right to participate in any way
therein, or in any
right, title or interest in the assets of the Pledgees.
5. Security. As collateral security for the punctual payment
and
performance, when due, by the Company of all the Obligations, the
Pledgor hereby
pledges with, hypothecates, transfers and assigns to the Pledgees
all of the
Shares and all proceeds, shares and other securities received,
receivable or
otherwise distributed in respect of or in exchange for the Shares,
including,
without limitation, any shares and other securities into which such
Shares may
be convertible or exchangeable (collectively, the "Additional
Collateral" and
together with the Shares, the "Collateral"). Simultaneously
herewith, the
Pledgor shall deliver to the Pledgees the certificate(s)
representing the
Shares, stamped with a bank medallion guarantee, along with a stock
transfer
power duly executed in blank by the Pledgor, to be held by the
Pledgees as
security. Any Collateral received by the Pledgor on or after the
date hereof
shall be immediately delivered to the Pledgees together with any
executed stock
powers or other transfer documents requested by the Pledgees, which
request may
be made at any time prior to the date when the Obligations shall
have been paid
and otherwise satisfied in full.
6. Voting Power, Dividends, Etc. and other Agreements.
(a) Unless and until an Event of Default (as set forth in
Section
7 hereof) has occurred, the Pledgor shall be entitled to:
(i) Exercise all vo
