Exhibit 10.5
STOCK
PLEDGE AGREEMENT
In
consideration of NEWSTAR FINANCIAL, INC. (the
“Lender”) selling certain assets to USDC
Portsmouth, Inc., a California corporation
(“Borrower”), pursuant to Secured Party Sale
Agreement of even date between the Lender, the Borrower and
the undersigned, the Lender’s acceptance of the
Borrower’s note in partial payment of the purchase
price, and to secure the undersigned’s Guaranty of even
date in favor of the Lender with respect to the obligations of
the Borrower to the Lender (the “Guaranty”),
evidenced by that certain Time Note of even date (the
“Time Note”) in the principal amount of $975,000,
U.S. Dry Cleaning Corporation (the “Pledgor”), as
collateral security for the performance of all obligations
hereunder and the payment of the indebtedness and the
performance of all other obligations relating to the Guaranty,
the security documents, and other documents relating thereto,
and all amendments and replacements thereof (collectively
hereinafter called the “Obligations”), hereby
deposits with the Lender and pledges, collaterally assigns,
delivers, and grants a security interest in the following
property:
100
shares of common stock (par value $0.01 of USDC PORTSMOUTH,
INC., a California corporation, evidenced by certificate
number No. 1,
together
with any shares or fractional shares of stock issued or to be
issued as a result of a stock dividend or stock split-up on or
with respect to the above-described property, any additional
shares which may be delivered and pledged to the Lender as
hereinafter provided, and all dividends, distributions, and
other proceeds of all of the foregoing, in each case whether
now existing or hereafter arising (all of the foregoing is
hereinafter called the “Collateral”).
The
Pledgor hereby represents and warrants that (a) the Pledgor is
the sole owner of the Collateral free from any adverse lien or
security interest (other than the pledge of the Collateral in
favor of Setal 2, LLC (with it successors and assigns, the
“First Lien Lender”) to secure certain obligations
of Pledgor under that certain Convertible Note, dated March
12, 2008, in the original principal amount of $1,725,000 (as
amended from time to time, the “First Lien Note”),
(b) the Collateral is freely transferable by the Pledgor
without notice to or consent by any other person, corporation,
or other entity (other than the First Lien Lender until the
payment in full of the First Lien Note), (c) the delivery by
the Pledgor of the Collateral will create a valid and
perfected security interest therein in the Lender, (d) there
are no restrictions on the transferability of the Collateral
to the Lender by the Pledgor or with respect to the
foreclosure and transfer thereof by the Lender (other than in
favor of the First Lien Lender until the payment in full of
the First Lien Note), (e) the Collateral is registered in the
Pledgor’s name on the books of the Borrower, (f) the
Pledgor will warrant and defend title to the Collateral
against the claims and demands of any person, firm,
corporation, trust, partnership, or other entity (other than
the First Lien Lender until the payment in full of the First
Lien Note), (g) the Collateral constitutes all of the
presently issued and outstanding shares of Borrower owned by
the Pledgor, and (h) the Pledgor owns 100% of the voting stock
of Borrower and is the controlling stockholder of
Borrower. The Pledgor agrees that the Collateral
will not be sold, assigned, transferred (other than in
connection with the existing pledge in favor of the First Lien
Lender until the payment in full of the First Lien Note), on
further pledged without the prior written consent of the
Lender.
Until
such time as the Obligations have been paid in full, the
Pledgor, except with the written consent of the Lender which
will not be unreasonably withheld, as the controlling
stockholder of Borrower, shall not suffer, cause, or permit
any other or further shares of Borrower to be issued to the
Pledgor unless such shares are pledged with the Lender as
additional Collateral for the obligations, nor shall the
Pledgor suffer, cause, or permit the Collateral to be
purchased or retired by Borrower, nor
