PLEDGE AND ESCROW AGREEMENT
THIS PLEDGE AND ESCROW AGREEMENT (the "Agreement") is made
and entered into as of December ___, 2005 (the "Effective Date")
by and among CORNELL CAPITAL PARTNERS, LP (the "Pledgee"), ALFA
INTERNATIONAL HOLDINGS CORP., a corporation organized and
existing under the laws of the State of Delaware (collectively,
the "Pledgor"), and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ESQ., as escrow agent
("Escrow Agent").
RECITALS:
WHEREAS, on even date herewith, the Pledgor and the Pledgee
entered into a Securities Purchase Agreement (the "Securities
Purchase Agreement"), a copy of which is attached as Exhibit
"A,"
WHEREAS, pursuant to the terms of the Securities Purchase
Agreement, the Pledgor is obligated to make certain payments to
the Pledgee, as more particularly described in the Convertible
Debenture to issued in connection therewith;
WHEREAS, in order to secure all of the Alfa International
Holdings Corp.'s obligations under the Securities Purchase
Agreement, Pledgor has agreed to pledge to the Pledgee 3,000,000
shares (the "Shares") of the Alfa International Holdings Corp.'s
common stock, which Shares were, prior to the date hereof,
authorized but unissued shares of the Pledgor.
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:
TERMS AND CONDITIONS
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 Pledgor's
obligations under the Convertible Debentures. Simultaneously
with the execution of the Transaction Documents, the Pledgor
shall deliver to the Escrow Agent stock certificates
representing the Pledged Shares, 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 Escrow
Agent 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 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
Note, the parties hereto shall notify the Escrow Agent to such
effect in writing. Upon receipt of such written notice for
payment of the amounts due to the Pledgee under the Convertible
Debentures, the Escrow Agent 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 Note, 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, the Pledgee shall have the right to provide
written notice of such Event of Default (the "Default Notice")
to the Escrow Agent, with a copy to the Pledgor. After the
expiration of a period of fifteen (15) calendar days (the "Cure
Period"), after receipt of the Default Notice, the Escrow
Agent shall deliver to Pledgee the Pledged Materials held by the
Escrow Agent hereunder. Upon receipt of the Pledged Materials,
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 principal, interest, legal fees, and any
other amounts owed to the Pledgee, and exercise all other rights
and (ii) any and all remedies of a secured party with respect to
such property as may be available under the Uniform Commercial
Code as in effect in the State of New Jersey. To the extent
that the net proceeds received by the Pledgee are insufficient
to satisfy the Obligations in full, the Pledgee shall be
entitled to a deficiency judgment against the Pledgor for such
amount. The Pledgee shall have the absolute right to sell or
dispose of the Pledged Shares in any manner it sees fit and
shall have no liability to the Pledgor or any other party for
selling or disposing of such Pledged Shares even if other
methods of sales or dispositions would or allegedly would result
in greater proceeds than the method actually used. The Escrow
Agent shall have the absolute right to disburse the Pledged
Shares to the Pledgee in batches not to exceed 9.9% of the
outstanding capital of the Pledgor (which limit may be waived by
the Pledgee providing not less than 65 days' prior written
notice to the Escrow Agent). The Pledgee shall return any
Pledged Shares released to it and remaining after the Pledgee
has applied the net proceeds to all amounts owed to the Pledgee.
5.1. Each right, power and remedy of the Pledgee
provided for in this Agreement or any other Transaction
Document shall be cumulative and concurrent and shall be in
addition to every other such right, power or remedy. The
exercise or beginning of the exercise by the Pledgee of any one
or more of the rights, powers or remedies provided for in this
Agreement or any other Transaction Document or now or hereafter
existing at law or in equity or by statute or otherwise shall
not preclude the simultaneous or later exercise by the Pledgee
of all such other rights, powers or remedies, and no failure or
delay on the part of the Pledgee to exercise any such right,
power or remedy shall operate as a waiver thereof. No notice to
or demand on the Pledgor in any case shall entitle it to any
other or further notice or demand in similar or other
circumstances or constitute a waiver of any of the rights of the
Pledgee to any other further action in any circumstances without
demand or notice. The Pledgee shall have the full power to
enforce or to assign or contract is rights under this Agreement
to a third party.
5.2. Demand Registration Rights. In addition to all
other remedies available to the Pledgee, upon an Event of
Default, the Pledgor shall promptly, but in no event more than
thirty (30) days after the date of the Default Notice, file a
registration statement to register with the Securities and
Exchange Commission the Pledged Shares for the resale by the
Pledgee. The Pledgor shall cause the registration statement to
remain in effect until all of the Pledged Shares have been sold
by the Pledgee.
6. Concerning the Escrow Agent.
6.1. The Escrow Agent undertakes to perform only such
duties as are expressly set forth herein and no implied duties
or obligations shall be read into this Agreement against the
Escrow Agent.
6.2. The Escrow Agent may act in reliance upon any
writing or instrument or signature which it, in good faith,
believes to be genuine, may assume the validity and accuracy of
any statement or assertion contained in such a writing or
instrument, and may assume that any person purporting to give
any writing, notice, advice or instructions in connection with
the provisions hereof has been duly authorized to do so. The
Escrow Agent shall not be liable in any manner for the
sufficiency or correctness as to form, manner, and execution, or
validity of any instrument deposited in this escrow, nor as to
the identity, authority, or right of any person executing the
same; and its duties hereunder shall be limited to the
safekeeping of such certificates, monies, instruments, or other
document received by it as such escrow holder, and for the
disposition of the same in accordance with the written
instruments accepted by it in the escrow.
6.3. Pledgee and the Pledgor hereby agree, to defend
and indemnify the Escrow Agent and hold it harmless from any and
all claims, liabilities, losses, actions, suits, or proceedings
at law or in equity, or any other expenses, fees, or charges of
any character or nature which it may incur or with which it may
be threatened by reason of its acting as Escrow Agent under this
Agreement; and in connection therewith, to indemnify the Escrow
Agent against any and all expenses, including attorneys' fees
and costs of defending any action, suit, or proceeding or
resisting any claim (and any costs incurred by the Escrow Agent
pursuant to Sections 6.4 or 6.5 hereof). The Escrow Agent shall
be vested with a lien on all property deposited hereunder, for
indemnification of attorneys' fees and court costs regarding any
suit, proceeding or otherwise, or any other expenses, fees, or
charges of any character or nature, which may be incurred by the
Escrow Agent by reason of disputes arising between the makers of
this escrow as to the correct interpretation of this Agreement
and instructions given to the Escrow Agent hereunder, or
otherwise, with the right of the Escrow Agent, regardless of the
instructions aforesaid, to hold said property until and unless
said additional expenses, fees, and charges shall be fully paid.
Any fees and costs charged by the Escrow Agent for serving
hereunder shall be paid by the Pledgor.
6.4. If any of the parties shall be in disagreement
about the interpretation of this Agreement, or about the rights
and obligations, or the propriety of any action contemplated by
the Escrow Agent hereunder, the Escrow Agent may, at its sole
discretion deposit the Pledged Materials with the Clerk of the
United States District Court of New Jersey, sitting in Newark,
New Jersey, and, upon notifying all parties concerned of such
action, all liability on the part of the Escrow Agent shall
fully cease and terminate. The Escrow Agent shall be
indemnified by the Pledgor, the Alfa International Holdings
Corp. and Pledgee for all costs, including reasonable attorneys'
fees in connection with the aforesaid proceeding, and shall be
fully protected in suspending all or a part of its activities
under this Agreement until a final decision or other settlement
in the proceeding is received.
6.5. The Escrow Agent may consult with counsel of its
own choice (and the costs of such counsel shall be paid by the
Pledgor and Pledgee) and shall have full and complete
authorization and protection for any action taken or suffered by
it hereunder in good faith and in accordance with the opinion of
such counsel. The Escrow Agent shall not be liable for any
mistakes of fact or error of judgment, or for any actions or
omissions of any kind, unless caused by its willful misconduct
or gross negligence.
6.6. The Escrow Agent may resign upon ten (10) days'
written notice to the parties in this Agreement. If a successor
Escrow Agent is not appointed within this ten (10) day period,
the Escrow Agent may petition a court of competent jurisdiction
to name a successor.
6.7 Conflict Waiver. The Pledgor hereby acknowledges
that the Escrow Agent is general counsel to the Pledgee, a
partner in the general partner of the Pledgee, and counsel to
the Pledgee in connection with the transactions contemplated and
referred herein. The Pledgor agrees that in the event of any
dispute arising in connection with this Agreement or otherwise
in connection with any transaction or agreement contemplated and
referred herein, the Escrow Agent shall be permitted to continue
to represent the Pledgee and the Pledgor will not seek to
disqualify such counsel and waives any objection Pledgor might
have with respect to the Escrow Agent acting as the Escrow Agent
pursuant to this Agreement.
6.8 Notices. Unless otherwise provided herein, all
demands, notices, consents, service of process, requests and
other communications hereunder shall be in writing and shall be
delivered in person or by overnight courier service, or mailed
by certified mail, return receipt requested, addressed:
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
If to the Pledgor, to: Alfa International Holdings Corp.
Empire State Building - Suite 1103
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Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: Sichenzia ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ LLP
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▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Pledgee: Cornell Capital Partners, LP
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Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With copy to: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
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Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Any such notice shall be effective (a) when delivered, if
delivered by hand delivery or overnight courier service, or (b)
five (5) days after deposit in the United States mail, as
applicable.
7. Binding Effect. All of the covenants and
obligations contained herein shall be binding upon and shall
inure to the benefit of the respective parties, their successors
and assigns.
8. Governing Law; Venue; Service of Process. The
validity, interpretation and performance of this Agreement shall
be determined in accordance with the laws of the State of New
Jersey applicable to contracts made and to be performed wholly
within that state except to the extent that Federal law applies.
The parties hereto agree that any disputes, claims,
disagreements, lawsuits, actions or controversies of any type or
nature whatsoever that, directly or indirectly, arise from or
relate to this Agreement, including, without limitation, claims
relating to the inducement, construction, performance or
termination of this Agreement, shall be brought in the state
superior courts located in ▇▇▇▇▇▇ County, New Jersey or Federal
district courts located in Newark, New Jersey, and the parties
hereto agree not to challenge the selection of that venue in any
such proceeding for any reason, including, without limitation,
on the grounds that such venue is an inconvenient forum. The
parties hereto specifically agree that service of process may be
made, and such service of process shall be effective if made,
pursuant to Section 8 hereto.
9. Enforcement Costs. If any legal action or other
proceeding is brought for the enforcement of this Agreement, or
because of an alleged dispute, breach, default or
misrepresentation in connection with any provisions of this
Agreement, the successful or prevailing party or parties shall
be entitled to recover reasonable attorneys' fees, court costs
and all expenses even if not taxable as court costs (including,
without limitation, all such fees, costs and expenses incident
to appeals), incurred in that action or proceeding, in addition
to any other relief to which such party or parties may be
entitled.
10. Remedies Cumulative. No remedy herein conferred
upon any party is intended to be exclusive of any other remedy,
and each and every such remedy shall be cumulative and shall be
in addition to every other remedy given hereunder or now or here
after existing at law, in equity, by statute, or otherwise. No
single or partial exercise by any party of any right, power or
remedy hereunder shall preclude any other or further exercise
thereof.
11. Counterparts. This Agreement may be executed in one
or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute the same instrument.
12. No Penalties. No provision of this Agreement is to
be interpreted as a penalty upon any party to this Agreement.
13. JURY TRIAL. EACH OF THE PLEDGEE AND THE PLEDGOR
HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES THE RIGHT
WHICH IT MAY HAVE TO A TRIAL BY JURY OF ANY CLAIM, DEMAND,
ACTION OR CAUSE OF ACTION BASED HEREON, OR ARISING OUT OF, UNDER
OR IN ANY WAY CONNECTED WITH THE DEALINGS BETWEEN PLEDGEE AND
PLEDGOR, THIS PLEDGE AND ESCROW AGREEMENT OR ANY DOCUMENT
EXECUTED IN CONNECTION HEREWITH, OR ANY COURSE OF CONDUCT,
COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR
ACTIONS OF ANY PARTY HERETO OR THERETO IN EACH CASE WHETHER NOW
EXISTING OR HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT,
EQUITY OR OTHERWISE.
IN WITNESS WHEREOF, the parties hereto have duly executed
this Pledge and Escrow Agreement as of the date first above
written.
CORNELL CAPITAL PARTNERS, LP
By: Yorkville Advisors, LLC
Its: General Partner
By: /S/ ▇▇▇▇ ▇▇▇▇▇▇
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Name: ▇▇▇▇ ▇▇▇▇▇▇
Title: Portfolio Manager
PLEDGOR
ALFA INTERNATIONAL HOLDINGS CORP.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President & CEO
Number of shares pledged: 3,000,000
ESCROW AGENT
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.