STOCK PLEDGE AGREEMENT
This STOCK PLEDGE AGREEMENT ("Agreement") is made and entered into
effective as of the 4th day of November, 2005 ("Effective Date"), by and among
ITECHEXPRESS, INC., a corporation organized and existing under the laws of the
State of Nevada ("Pledgor"), SENIOR HOSPITALITY CORPORATION, a nonprofit
public benefit corporation organized and existing under the laws of the State
of California ("Pledgee"), and Best Best & Krieger LLP, a limited liability
partnership organized and existing under the laws of the State of California
("Pledgeholder").
RECITALS
A. Pledgor is the holder of Seventy Thousand (70,000) shares ("Shares")
representing one hundred percent of the issued and outstanding stock of DRUG
CONSULTANTS, INC., a corporation organized and existing under the laws of the
State of California ("Company"). Pledgor and Pledgee are parties to that
certain Stock Purchase Agreement, of even date herewith ("Stock Purchase
Agreement"), pursuant to which Pledgee acquired the Shares.
B. In order to consummate the transactions contemplated by the Stock
Purchase Agreement, Pledgor shall execute that certain Secured Promissory Note
("Note") in the sum of Two Hundred Thousand and NO/100 Dollars ($200,000.00)
payable to Pledgee.
C. In order to induce Pledgee to accept the Note, Pledgor desires to
enter into this Agreement to pledge and assign Thirty-Five Thousand Seven
Hundred (35,700) of the Shares ("Pledged Shares") to Pledgee to secure the
full and prompt payment and performance of the obligations ("Secured
Obligations") of Pledgor under the Note, the Stock Purchase Agreement, and
that certain Independent Contractor Agreement, of even date herewith, by and
between Company and Carl E. Rowe, a married individual (collectively,
"Transaction Documents").
AGREEMENT
In consideration of the foregoing recitals and the mutual covenants and
conditions set forth herein and other sufficient consideration, the parties,
intending to be legally bound, agree as follows:
1. Grant of Security Interest.
1.1 To secure the full and prompt payment and performance of the
Secured Obligations, Pledgor hereby grants in favor of Pledgee a security
interest under the California Commercial Code ("CCC") in, and does hereby
pledge and hypothecate to Pledgee, and deposit with Pledgeholder, as security
for the Secured Obligations, the Pledged Shares. The certificate for the
Shares comprising the Pledged Shares are accompanied by instruments of
assignment in the form attached as Attachment 1 hereto, duly executed in blank
by Pledgor, and are being delivered concurrently herewith to Pledgeholder.
1.2 In addition, Pledgor hereby grants to Pledgee a security
interest in the following (which hereby are deemed to be included in the term
"Pledged Shares"): (i) all dividends, cash, securities, instruments, and other
property form time to time paid, payable or otherwise distributed in respect
of or in exchange for any or all of such Pledged Shares; (ii) any and all
warrants, options, subscriptions or other contractual arrangements hereafter
issued by Company to Pledgor for the purchase of stock or securities
convertible into stock; (iii) any and all distributions made by Company with
respect to the Pledged Shares, whether in cash or in-kind, by way of dividends
or stock splits, or pursuant to a merger or consolidation or otherwise, or any
substitute security issued upon conversion, reorganization or otherwise; (iv)
any and all property hereafter delivered to Pledgor or Company in substitution
for or in addition to any of the foregoing (including all securities issued
pursuant to any shareholder agreement, stock purchase agreement, stock
purchase rights or other agreement with respect to the capital stock of
Company to which Pledgor may now or hereafter be a party, all certificates and
instruments representing or evidencing such property and all cash, securities,
interest, dividends, rights, and other property at any time and from time to
time received, receivable or otherwise distributed in respect of or in
exchange for any and all thereof; and (v) any and all proceeds of any of the
foregoing (with the foregoing sometimes, both exclusive and inclusive of the
Pledged Shares, collectively referred to herein as the "Collateral"). If any
of the foregoing Collateral is received by Pledgor, then Pledgor will
immediately deliver the same to Pledgeholder by proper instruments of
assignment and/or stock powers executed by Pledgor in accordance with
Pledgee's instructions, to be held subject to the terms of this Agreement. If
Pledgor fails to make delivery to Pledgeholder in compliance with the
preceding sentence, then all such Collateral shall be deemed received by
Pledgor in trust for the exclusive benefit of Pledgee and shall be segregated
from the other property and funds of Pledgor.
2. Registration; Voting Rights. Until the Secured Obligations have
been fully and irrevocably paid or performed, as the case may be:
2.1 Pledgeholder shall hold the Pledged Shares for the period
hereinafter specified, but all of the Pledged Shares shall be registered on
the books of Company in the name of Pledgor;
2.2 Pledgee has the sole right to vote the Pledged Shares with
regard to (but only in regard to) any proposed amendment to the Articles of
Incorporation of Company which would result in a change in the preferences,
qualifications, limitations, restrictions, or the special or relative rights
with respect to the Pledged Shares;
2.3 Upon the occurrence of an "Event of Default" (as that term is
defined in Section 4.2 hereof), all rights of Pledgor to exercise the voting
and other consensual rights which it would otherwise be entitled to exercise
pursuant hereto shall cease, and all such rights shall, upon notice by Pledgee
to Pledgor, become vested in Pledgee who thereupon shall have the sole right
to exercise such voting and other consensual rights and the sole right receive
and hold as Collateral any dividends (and to the extent permissible, apply any
such dividends to the Secured Obligations);
2.4 Except to the extent otherwise provided in Sections 2.2 and
2.3 hereof, Pledgor has the sole right to vote the Pledged Shares.
3. Representations and Warranties of Pledgor. Pledgor represents and
warrants that:
3.1 Pledgor owns the Pledged Shares, free and clear of all claims,
mortgages, pledges, liens, encumbrances and restrictions of every nature
whatsoever;
3.2 the Pledged Shares constitute duly and validly issued, fully
paid and nonassessable shares of capital stock of Company and are duly and
validly pledged with Pledgee in accordance with applicable law;
3.3 the deposit of the Pledged Shares with Pledgeholder pursuant
to this Agreement create a valid and fully perfected first priority security
interest in the Pledged Shares and the Collateral, securing the payment and
performance of the Secured Obligations;
3.4 no consent of any other party (including any stockholder or
creditor of Pledgor) and no governmental approval is required for the exercise
by Pledgee of the voting rights or other rights or remedies granted in this
Agreement with respect to the Pledged Shares and/or the Collateral;
3.5 Pledgor is duly authorized to execute and deliver this
Agreement to Pledgee, and this Agreement constitutes the legal, valid and
binding obligation of Pledgor, enforceable against Pledgor in accordance with
its terms; and
3.6 Pledgor owns one hundred percent (100%) of the issued and
outstanding capital stock of Company.
4. Default.
4.1 Rights of Secured Party upon an Event of Default. Upon an
Event of Default, Pledgee may, without demand or other notice of any kind, at
its option:
(a) Possession. Immediately upon demand to Pledgeholder take
possession of the Pledged Shares and/or other Collateral, wherever they may be
found, and Pledgeholder, after inquiry and without the necessity for any
further authorization from any party, shall thereupon deliver all of the
Pledged Shares and/or other Collateral to Pledgee for the purpose of
permitting Pledgee to exercise its rights hereunder, and Pledgee may, at any
time in its discretion and without notice to Pledgor transfer any or all of
the Pledged Shares and/or other Collateral to, or register any or all of the
Pledged Shares in the name of, Pledgee or any of its nominees;
(b) Disposal of Pledged Shares and/or Other Collateral.
Sell, lease, or otherwise dispose of the Pledged Shares and/or other
Collateral (or cause Pledgeholder to do so) at a public or private sale
(without advertisement) for a price which is reasonable in light of the
circumstances, with or without having such Pledged Shares and/or other
Collateral at the place of sale, and upon terms and in such manner as Pledgee
may reasonably determine, and Pledgee is not obligated to sell the any of the
Pledged Shares and/or Collateral at any such noticed sale, and Pledgee may
purchase the Pledged Shares and/or other Collateral at any such public sale
and credit bid all or any part of the Secured Obligations then outstanding;
provided, however, that notwithstanding any provision to the contrary in the
CCC, Pledgee shall give the defaulting Pledgor not less than ten (10) calendar
days notice (which shall be deemed reasonable whenever the CCC requires that
notice be reasonable) of the date on which any public sale or private sale
will be held; and
(c) Other Rights and Remedies. Exercise all of its rights
and remedies under the CCC and any other applicable law.
Pledgor hereby appoints Pledgee as Pledgor's attorney-in-fact
effective upon the occurrence of an Event of Default, with full authority in
the place and stead of Pledgor and in the name of Pledgor or otherwise, from
time to time in Pledgee's discretion to take any action and to execute any
instrument which Pledgee may deem necessary or advisable to accomplish the
purposes of this Agreement.
4.2 Events of Default. An "Event of Default" shall occur with
respect to Pledgor upon the happening of any of the following events:
(a) Default or Breach Under the Transaction Documents. Any
default or other breach by Pledgor under the Transaction Documents (including
any agreement, document, or instrument delivered in accordance therewith);
(b) Default of Breach Under this Agreement. Any default or
breach by Pledgor under this Agreement;
(c) Attachment. The levy of, or any attachment, execution or
other process against, the Pledged Shares owned by Pledgor or the assets of
Pledgor or Company; or
(d) Bankruptcy. The general assignment for the benefit of
Pledgor or Company, or the filing of any petition in bankruptcy or for relief
under the provisions of the Federal Bankruptcy Act, by or against Pledgor or
Company; or the appointment of a receiver by any court, whether permanent or
temporary, for all or substantially all of the property of Pledgor or Company.
5. Covenants of Pledgor. Until the Secured Obligations have been fully
and irrevocably paid or performed, as the case may be, Pledgor covenants and
agrees that it shall:
5.1 Information Affecting Pledged Shares. Promptly notify Pledgee
of any attachment or other legal process levied against any of the Pledged
Shares or the Collateral or the assets of Pledgor or Company and any
information received by Pledgor relative to the Pledged Shares or the
Collateral or the assets of Pledgor or Company which may materially affect the
value of such Pledged Shares or the Collateral or the rights and remedies of
Pledgee in respect thereto;
5.2 Execution of Documents. Execute any and all documents and do
all other things reasonably requested by Pledgee as necessary or appropriate
to perfect the first priority security interest in the Pledged Shares and the
Collateral. Pledgor hereby appoints Pledgee as Pledgor's attorney-in-fact to
do, at Pledgee's option and at Pledgor's expense, all acts and things which
Pledgee may reasonably deem necessary or desirable to perfect and continue the
perfection and priority of such security interest hereby created;
5.3 Sales or Encumbrances of the Pledged Shares. Not sell,
convey, retire or otherwise dispose of all or any of the Pledged Shares or any
interest therein, beneficial or otherwise, or create, incur or permit to exist
any pledge, mortgage, lien, charge, encumbrance, or any security interest
whatsoever in or with respect to any of the Pledged Shares or the proceeds
thereof, other than that created hereby;
5.4 Sales or Encumbrances of Collateral (Other than the Pledged
Shares). Not sell, convey, retire or otherwise dispose of all or any of the
Collateral (other than the Pledged Shares) or any interest therein, beneficial
or otherwise, or create, incur or permit to exist any pledge, mortgage, lien,
charge, encumbrance, or any security interest whatsoever in or with respect to
any such Collateral or the proceeds thereof, other than that created hereby
and without the prior written consent of Pledgee;
5.5 Dilution of Capital Stock. Not cause or permit Company to
issue any stock or other securities (including any warrants, options,
subscriptions or other contractual arrangements for the purchase of stock or
securities convertible into stock) in addition to or in substitution for the
Pledged Shares. Pledgor will deliver hereunder, immediately upon its
acquisition (directly or indirectly) thereof, any and all writings evidencing
any additional shares together with executed stock powers duly endorsed in
blank;
5.6 Maintenance of Good Standing; No Liquidation or Dissolution.
Until Pledgeholder returns the certificates representing the Pledged Shares to
Pledgor and such Pledged Shares and the Collateral are released from the
security interest hereof in accordance with Section 6 hereof, Pledgor shall
cause Company and Pledgor to maintain in good standing its corporate existence
and its right to transact business in those jurisdictions in which it is now
or hereafter doing business. Pledgor shall not at any time liquidate or
dissolve Company or Pledgor, or cause the same to occur, without the prior
written consent of Pledgee; and
5.7 Additional Security Interests. Pledgor agrees not (1) to sell
or otherwise dispose of, or grant any option with respect to, any of the
Pledged Shares, (2) to create or permit to exist any security interest upon or
with respect to any of the Pledged Shares, except for the security interest
created by this Agreement, or (3) to enter into any other contractual
obligations which may restrict or inhibit Pledgee's right or ability to sell
or otherwise dispose of the Pledged Shares or any part thereof after the
occurrence of an Event of Default.
6. Termination; Return of Pledged Shares. In the event all of the
Secured Obligations have been fully and irrevocably paid and performed, as the
case may be, and Pledgee has received a written request from Pledgor in
connection therewith, Pledgee will, at Pledgor's sole cost and expense, cause
Pledgeholder to return to Pledgor all certificates representing the Pledged
Shares that have, and cause the release of all security interests covering the
Collateral that has, not been sold, disposed of, retained or applied to the
Secured Obligations, with, in the case of the Pledged Shares, the stock powers
executed by Pledgor attached, and such Pledged Shares and Collateral will be
deemed released from any security interest hereunder.
7. Pledgeholder Rights and Duties.
7.1 Notices. Pledgee shall deliver to Pledgeholder copies of all
notices that Pledgee may give to Pledgor under the provisions hereof
concurrently with the giving thereof to Pledgor.
7.2 Disputes. If conflicting demands are made upon Pledgeholder,
or if Pledgeholder is unable to determine from the information available to it
the manner in which it should proceed under this Agreement, Pledgeholder may
file an interpleader, or other appropriate action, to have the dispute or
uncertainty determined by an appropriate court of law. Pledgeholder shall not
be held liable for the sufficiency or correctness as to form, manner or
execution or validity of any instrument deposited or referred to in this
Agreement and Pledgeholder's duties hereunder shall be limited to the
safekeeping of such money, instruments, or other documents received by it and
to the disposition of the same in accordance with the written instruments and
instructions accepted hereunder. Pledgor agrees to pay on demand, as well as
to indemnify, defend and hold Pledgeholder harmless from, all costs,
expenditures, obligations, liabilities and expenses whatsoever which
Pledgeholder may incur and sustain, without gross negligence, in connection
with, or arising out of, its rights and duties under this Agreement, and
Pledgeholder is hereby given a lien upon all of the rights, titles, and
interests of Pledgor in all its property and monies, subject only to the
security interests therein of Pledgee created by this Agreement, to protect
Pledgeholder's rights and to indemnify and reimburse Pledgeholder hereunder.
7.3 Successors. If Pledgeholder shall resign or be unable to
serve, it shall be succeeded by such successor as Pledgee shall appoint, with
the written approval of Pledgor, or, if no appointment is made and approved as
aforesaid, by a bank or trust company appointed by a court of competent
jurisdiction. Any party or Pledgeholder may petition such a court to appoint
a successor Pledgeholder. The resigning Pledgeholder shall, upon payment in
full by Pledgor or all its costs and expenses incurred in connection with, or
arising out of, this Agreement, transfer to its successor all stock, money
and other property then held subject to this Agreement, and shall thereupon be
discharged, and the successor shall thereupon succeed to all the rights,
powers, and duties and shall assume all the obligations of the resigning
Pledgeholder.
7.4 Expenses. After an Event of Default, Pledgeholder may consult
with counsel selected or employed by Pledgeholder or represent itself, at the
sole cost and expense of the defaulting Pledgor, and shall be fully and
adequately protected with respect to any action under this Agreement taken or
suffered by Pledgeholder. Should Pledgeholder represent itself in connection
with an Event of Default, Pledgor shall pay Pledgeholder's costs and expenses
in connection therewith, including reasonable attorneys' fees. Pledgeholder
shall not be responsible for the collection of any monies provided to be paid
to it, nor for the genuineness or validity of any documents deposited with it
under this Agreement. Pledgeholder shall not be responsible for any action or
omission hereunder on its part so long as such act or omission is without
gross negligence.
8. Custody and Preservation of the Collateral. The powers conferred on
Pledgee and Pledgeholder hereunder are solely to protect Pledgee's interest in
the Collateral (including the Pledged Shares) and shall not impose any duty on
either to exercise any such powers. Except, as to Pledgeholder, for the safe
custody of such Collateral, if any, in its possession and the accounting for
monies actually received by it hereunder, neither Pledgee nor Pledgeholder
otherwise shall have any duty as to such Collateral. It is expressly
acknowledged and agreed that neither Pledgee nor Pledgeholder shall have any
responsibility for (i) ascertaining or taking any action with respect to
calls, conversions, exchanges, maturities, tenders or other matters relative
to the Pledged Shares, or (ii) taking any necessary steps to preserve rights
against any third parties with respect to such Collateral. Pledgee and
Pledgeholder shall be deemed to have exercised reasonable care in the custody
and preservation of any such Collateral in its possession even if, upon or
after the occurrence of an Event of Default, either fails to sell or convert
such Collateral which is falling in market value, but either may do so, upon
or after the occurrence of an Event of Default, at its option and all
reasonable expenses incurred in connection therewith shall be for the sole
account of Pledgor. The failure of either of Pledgee or Pledgeholder to
preserve or protect any rights with respect to such Collateral against other
parties will not be deemed a failure to exercise reasonable care in the
custody or preservation of such Collateral.
9. Miscellaneous.
9.1 Remedies Cumulative. The rights and remedies provided herein
in favor of Pledgee shall not be deemed exclusive or construed as limiting,
but shall be cumulative and shall be in addition to all of the rights and
remedies existing at law or in equity.
9.2 Severability. Any provision of this Agreement which is
prohibited, unenforceable or not authorized by a court of competent
jurisdiction shall be ineffective only to the extent of such prohibition,
unenforceability or nonauthorization without invalidating the remaining
provisions hereof or affecting the validity, enforceability or legality
thereof.
9.3 Waiver of Rights, Modification of Agreement. No delay on the
part of Pledgee in exercising any of Pledgee's options, powers or rights, or
the partial or single exercise thereof, shall constitute a waiver thereof. No
provision of this Agreement may be changed, waived, modified or varied in any
manner orally, but only by an instrument in writing signed by the party
against whom enforcement of the change, waiver, modification or variation is
sought.
9.4 Notices. All notices, requests, demands or other
communications hereunder shall be in writing and shall be deemed to have been
duly given to Pledgor and Pledgee in the manner set forth in the Stock
Purchase Agreement, and the same to Pledgeholder shall be given as follows:
Best Best & Krieger LLP
3750 University Avenue, Suite 400
Riverside, California 92501
Attn: Dwight M. Montgomery, Esq.
9.5 Successors; Agreement Binding Upon Successors. This Agreement
is binding upon and shall inure to the benefit of the parties and their
respective heirs, executors, administrators, successors, transferees or
assigns. Pledgor may not delegate or transfer any of its obligations under
this Agreement without the prior written consent of Pledgee. With respect to
Pledgor's successors and assigns, such successors and assigns include any
receiver, trustee or debtor-in-possession of or for Pledgor.
9.6 Arbitration. Any dispute arising out of, or relating to, this
Agreement or the breach, termination or the validity hereof, shall be settled
by arbitration in accordance with the then current End Dispute Judicial
Arbitration and Mediation Services (JAMS) rules for arbitration of business
disputes by a sole arbitrator who shall be a former superior court or
appellate court judge or justice with experience in resolving business
disputes. The arbitration shall be governed by the California Code of Civil
Procedure Section 1280 et seq. and the parties intend this procedure to be
specifically enforceable in accordance with such provisions. Judgment upon
the award rendered by the arbitrator may be entered by any court having
jurisdiction thereof. The place of arbitration shall be in Riverside County,
California. THE ARBITRATOR IS NOT EMPOWERED TO AWARD DAMAGES IN EXCESS OF
COMPENSATORY DAMAGES (INCLUDING REASONABLE ATTORNEYS' FEES AND EXPERT WITNESS
FEES) AND EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT TO RECOVER SUCH
DAMAGES (INCLUDING, WITHOUT LIMITATION, PUNITIVE DAMAGES) IN ANY FORUM. The
arbitrator may award equitable relief in those circumstances where monetary
damages would be inadequate. The arbitrator shall be required to follow the
applicable law as set forth in the governing law section of this Agreement.
The arbitrator shall award reasonable attorneys' fees and costs of arbitration
to the prevailing party in such arbitration.
9.7 Attorneys' Fees and Other Costs. Pledgor will reimburse
Pledgee for all expenses incurred by Pledgee in seeking to collect and enforce
the Secured Obligations and any other rights under this Agreement or any other
instrument, document or agreement (including the Transaction Documents)
evidencing or executed in connection with any of the Secured Obligations or
otherwise with the transactions contemplated by the Stock Purchase Agreement,
including reasonable attorneys' fees, and actual attorneys' expenses (whether
or not there is litigation or arbitration), court costs and all costs in
connection with any proceedings under the United States Bankruptcy Code, and
any expenses incurred on account of damage to any property to which any of the
Collateral may be affixed. Notwithstanding the foregoing, Pledgor shall not
be obligated to pay any costs or attorney's fees of Pledgee in any action in
which Pledgor is the prevailing party over Pledgee.
9.8 Applicable Law. This Agreement and the rights and obligations
of the parties hereunder shall be construed in accordance with and governed by
the internal laws of the State of California.
9.9 Reinstatement. This Agreement and any and all security
interests created or evidenced hereby will continue to be effective or be
reinstated, as the case may be, as though such payments had not been made, if
at any time any amount received by Pledgee in respect of the Secured
Obligations is rescinded or must otherwise be restored or returned by Pledgee,
including upon the insolvency, bankruptcy, dissolution, liquidation or
reorganization of Pledgor or upon the appointment of any intervenor or
conservator of, or trustee or similar official for, Pledgor, any substantial
part of its assets, or otherwise.
IN WITNESS WHEREOF, the undersigned have duly executed this Agreement as
of the date first above written.
[signatures follow on next page]
("Pledgor"):
ITECHEXPRESS, INC.
a Nevada corporation
/s/ David Walters
By: __________________________________
Name: David Walters
Its: President
/s/ Keith Moore
By: __________________________________
Name: Keith Moore
Its: Secretary
("Pledgee"):
SENIOR HOSPITALITY CORPORATION
a California nonprofit public benefit corporation
/s/ Carl E. Rowe
By: __________________________________
Name: Carl E. Rowe
Its: President
/s/ Margaret Luggar
By: __________________________________
Name: Margaret Luggar
Its: Secretary
("Pledgeholder"):
BEST BEST & KRIEGER LLP
a California limited liability partnership
/s/ Glen W. Price
By: __________________________________
Name: Glen W. Price
Its: Partner
ATTACHMENT 1
Pledged Shares
Shareholder Number of Shares Share Certificate No.
ITECHEXPRESS, INC. 35,700 12
ATTACHMENT 2
Form of Stock Assignment
Attached.
STOCK ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and transfers
unto _________________________________________, Thirty-Five Thousand Seven
Hundred (35,700) shares of the common stock of DRUG CONSULTANTS, INC., a
California corporation ("Corporation"), standing in its name on the books of
said Corporation represented by Certificate No. 12 herewith, and does hereby
irrevocably constitute and appoint Dwight M. Montgomery, Esq., or other
partner of Best Best & Krieger LLP, a California limited liability
partnership, to transfer said stock on the books of the within-named
Corporation with full power of substitution.
DATED: November 4, 2005
ITECHEXPRESS, INC.
a Nevada corporation
By: _________________________________
Name: _________________________________
Its: President
By: __________________________________
Name: _________________________________
Its: Secretary