Exhibit 10.4

 

STOCK PLEDGE AND SECURITY AGREEMENT

 

THIS STOCK PLEDGE AND SECURITY AGREEMENT (“Agreement”) is made as of April 1,
2016, by and between EFACTOR GROUP CORP., a Nevada corporation, with
headquarters located at 1177 Avenue of the Americas, Suite 5060, New York, New
York 10036, (the “Pledgor”), and MAGNA EQUITIES II, LLC, a New York corporation,
(“Magna”) and INCREASIVE VENTURES B.V., a Netherlands limited company (“IV” and
together with “Magna” collectively, the “Purchasers” and individually, each the
“Purchaser”).

 

Recitals

 

The following recitals of fact are a material part of this Agreement:

 

A.           Purchasers and Pledgor are parties to that certain Securities
Purchase Agreement of even date herewith (as the same may hereafter be modified,
amended, restated or supplemented from time to time, the “Securities Purchase
Agreement”), pursuant to which, among other things, Pledgor has agreed to issue
and sell, and each Purchaser has agreed to purchase from Pledgor, a 12% Senior
Secured Convertible Secured Note (the “Note” and collectively the “Notes”) in
the principal amount of $112,500 ($225,000 for both Notes). Capitalized terms
used in this Agreement without definition have the definitions given to them in
the Securities Purchase Agreement.

 

B.           To induce Purchasers to enter into the Securities Purchase
Agreement and to purchase the Notes as contemplated in the Securities Purchase
Agreement and to enter into that certain Forbearance Agreement of even date
herewith (as the same may hereafter be modified, amended, restated or
supplemented from time to time, the “Forbearance Agreement”),, each Purchaser
has required that Pledgor execute and deliver this Agreement, pledging to the
Purchaser the Pledged Stock (as defined below) in order to secure the prompt and
complete payment, observance and performance of all of the Obligations (as
defined below).

 

AGREEMENT

 

NOW, THEREFORE, to induce Purchasers to enter into the Securities Purchase
Agreement and to purchase the Notes, and in recognition that Purchasers would
not enter into the Securities Purchase Agreement or purchase the Notes or enter
into the Forbearance Agreement but for Pledgor’s promises and agreements
hereunder, and for other good and valuable consideration the receipt and
sufficiency of which are hereby acknowledged by the parties, Pledgor and
Purchasers agree as follows:

 

1.          Definitions. Capitalized terms used and not otherwise defined herein
that are defined in the Purchase Agreement or the Notes shall have the meanings
given such terms in the Purchase Agreement or the Notes. As used in this
Agreement, the following terms shall have the following meanings:

 

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1.1           “Pledged Stock” The term “Pledged Stock” means the shares of
capital stock of the Subsidiaries set forth in Schedule 3(a) to the Purchase
Agreement and made a part hereof and as set forth on Schedule 1.1 hereto,
together with all certificates, options, rights and other distributions issued
as an addition to, in substitution or exchange for, or on account of, any such
Pledged Stock, options, rights and warrants, all accounts, contract rights and
general intangibles arising from any and all of the foregoing or relating
thereto, and all proceeds of all the foregoing, whether now or hereafter owned
or acquired by Pledgor.

 

1.2            “Pledged Collateral” means, collectively, the Pledged Stock and
all products and proceeds thereof.

 

1.3           “Obligations” means all obligations (including, but not limited
to, all Liabilities) of Pledgor to the Purchasers now or hereafter existing
under the Notes, the other Transaction Documents, the notes set forth on Exhibit
A hereto (the “Prior Notes”) and/or otherwise all other obligations.

 

2.          Pledged Collateral.

 

2.1           As partial security for the payment, performance and satisfaction
of the Obligations, Pledgor hereby grants, assigns and pledges to the Purchasers
a security interest in and to all of such Pledgor’s right, title and interest in
and to the Pledged Stock and the Pledge Collateral.

 

2.2           Contemporaneously herewith, Pledgor shall register all existing
Pledged Stock in the name of Purchasers as “Co-Pledgees” shall deliver to the
Escrow Agent pursuant to the Security Escrow Agreement dated on or about the
date hereof by and among the Pledgor, the Purchasers and the escrow agent named
therein (the “Escrow Agent”) stock certificates representing the Pledged Stock
(the “Certificates”), and such other instruments, documents and agreements as
may be reasonably requested by Purchaser to perfect the security interest
granted under this Agreement and to transfer the Pledged Securities to the
Purchasers as provided elsewhere herein. Such Certificates shall be delivered by
the Pledgor to the Escrow Agent no later than five (5) business days after the
date hereof (the “Delivery Date”).

 

3.          Release Upon Termination and Payment of All Indebtedness. Upon
payment in full and the satisfaction of all of the Obligations, the Purchaser
shall release the security interest in the Pledged Collateral, return the
Certificate to the Pledgor and file any necessary termination statements with
respect to all financing statements covering the Pledged Collateral, all at
Pledgor’s expense.

 

4.          Representations and Warranties. Pledgor represents and warrants
that:

 

4.1           Organization, Existence and Good Standing. Pledgor is a
corporation duly organized and validly existing as a corporation in good
standing under the laws of the State of Nevada.

 

4.2           Power and Authority; Authorization. Pledgor has all requisite
power and authority to execute, deliver and perform this Agreement and to
consummate the transactions contemplated hereby. The execution, delivery and
performance by Pledgor of this Agreement and the consummation by Pledgor of the
transactions contemplated hereby (a) have been authorized by all necessary
corporate action on the part of Pledgor and (b) do not violate Pledgor’s
Articles of Incorporation or By-laws. This Agreement has been duly executed and
delivered by Pledgor. This Agreement constitutes, the legal, valid and binding
obligation of Pledgor, enforceable against it in accordance with its terms,
except as such enforceability may be limited by applicable laws relating to
bankruptcy, insolvency, reorganization, moratorium or other similar legal
requirement relating to or affecting creditors’ rights generally and except as
such enforceability is subject to general principles of equity (regardless of
whether enforceability is considered in a proceeding in equity or at Law).

 

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4.3           The Pledged Stock. The Pledged Stock has been duly authorized and
validly issued, and is fully-paid and non-assessable, free and clear of any and
all Liens.

 

4.4           Security Interest. The security interest granted by Pledgor to the
Purchaser in the Pledged Collateral constitutes a valid first priority lien and
security interest in the Pledged Collateral.

 

5.          Covenants. Pledgor covenants that:

 

5.1           Notice of Actions. Pledgor shall promptly give written notice to
the Purchaser of the institution of any action involving any part of the Pledged
Collateral, or any of the transactions contemplated by this Agreement.

 

5.2           No Transfer. Pledgor shall not directly and/or indirectly sell,
assign or otherwise transfer its interest in or to the Pledged Collateral under
any circumstance.

 

5.3           No Liens. The Company shall not and shall ensure no other Persons
including, but not limited to, any of its Subsidiaries, takes any direct and/or
indirect actions resulting in a Lien(s) being placed on any of the Pledged
Collateral other than to and for the benefit of the Purchaser.

 

6.          Events of Default; Rights and Remedies on Default.

 

6.1           Event of Default. The occurrence of any one or more of the
following shall constitute an “Event of Default” under the terms of this
Agreement:

 

(a)          Pledgor shall fail or neglect to perform or observe any term,
covenant, warranty or representation contained in this Agreement, or the
Transaction Documents that is required to be performed or observed by Pledgor
and the same, if capable of being cured, is not cured within 30 days after the
giving of notice by the Purchaser to Pledgor of such failure;

 

(b)          Pledgor shall fail to deliver the Certificates by the Delivery
Date;

 

(c)          An “Event of Default” as defined in the Notes shall occur.

 

6.2           Remedies.

 

(a)          If an Event of Default shall have occurred and be continuing, the
Purchasers, by unanimous written consent of both Purchasers, may at their
option:

 

(i)          without presentment, demand, notice, protest or legal process of
any kind, declare all of the Obligations immediately due and payable;

 

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(ii)         immediately exercise all enforcement and other ownership rights
pertaining to any or all of the Pledged Collateral as though Purchasers were the
outright owners of such Pledged Collateral;

 

(iii)        subject to restrictions on transfer under applicable State and
Federal securities laws, sell, assign and deliver the whole or, from time to
time, any part of the Pledged Collateral at any private sale or at public
auction, in accordance with the Uniform Commercial Code; and

 

(iv)        exercise any other remedy specifically granted under this Agreement,
the Notes, the Prior Notes and/or any other Transaction Document now or
hereafter existing in equity, at law, by virtue of statute, whether as a secured
party in possession of collateral or otherwise.

 

(b)          The Purchasers shall apply the proceeds of any sale of the whole or
any part of the Pledged Collateral and any other monies at the time held by such
Purchasers under the provisions of this Agreement (the “Proceeds”), after
deducting all reasonable costs and expenses of collection, sale and delivery
incurred by such Purchasers in connection with such sale, towards the payment of
the Obligations. Such Proceeds shall be applied and distributed; (1) to interest
on the Prior Notes ratably in proportion to the interest accrued thereon; (2) to
principal of the Prior Notes ratably in proportion to the outstanding principal
amounts thereof; and (3) to all other Obligations of the Pledgor to the
Purchasers ratably in proportion to the unpaid amount thereof.

 

(c)          After full and final payment to the Purchasers in cash of all such
Obligations, the Purchasers shall remit any surplus to Pledgor.

 

(d)          Unless and until there occurs an Event of Default under this
Agreement, Purchasers shall have no right to vote any of the Pledged Stock and
shall not be entitled to receive any distributions thereon.

 

6.3           Notice. Any notice required to be given by the Purchaser or
Pledgor may be given in any manner provided for delivery of notices in the
Purchase Agreement.

 

6.4           Costs. Pledgor shall pay all out-of-pocket fees and expenses
reasonably incurred by the Purchaser in connection with the enforcement of such
Purchaser’s rights hereunder.

 

7.          Power of Attorney. Pledgor authorizes Purchasers and does hereby
make, constitute and appoint such Purchasers, with full power of substitution,
as Pledgor’s true and lawful attorney-in-fact, with power, in its own name upon
the occurrence and continuation of an Event of Default: (a) to pay or discharge
any taxes or other Liens at any time levied or placed on or threatened against
the Pledged Collateral; and (b) generally, to do, at Purchasers’ option and at
Pledgor’s expense, all acts and things that Purchasers deems reasonably
necessary and with notice to Pledgor to protect, preserve and realize upon the
Pledged Collateral and Purchasers’ security interest therein in order to effect
the intent of this Agreement and the other Transaction Documents. This power of
attorney is coupled with an interest and shall be irrevocable.

 

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8.          Miscellaneous.

 

8.1           Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement, and
will become effective when one or more counterparts have been signed by a party
and delivered to the other parties. Copies of executed counterparts transmitted
by telecopy or other electronic transmission service shall be considered
original executed counterparts for purposes of this Section 8.1, provided that
receipt of copies of such counterparts is confirmed.

 

8.2           Successors and Assigns. This Agreement will be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns.

 

8.3           Headings. The Section and other headings contained in this
Agreement are inserted for convenience of reference only and will not affect the
meaning or interpretation of this Agreement.

 

8.4           Amendments and Waivers. This Agreement may not be modified or
amended except by an instrument or instruments in writing signed by each party
hereto. Any party hereto may, only by an instrument in writing, waive compliance
by any other party or parties hereto with any term or provision hereof on the
part of such other party or parties hereto to be performed or complied with. No
failure or delay of any party in exercising any right or remedy hereunder shall
operate as a waiver thereof, nor will any single or partial exercise of any
right or power, or any abandonment or discontinuance of steps to enforce such
right or power, preclude any other or further exercise thereof or the exercise
of any other right or power. The waiver by any party hereto of a breach of any
term or provision hereof shall not be construed as a waiver of any subsequent
breach. The rights and remedies of the parties hereunder are cumulative and are
not exclusive of any rights or remedies that they would otherwise have
hereunder.

 

8.5           Interpretation; Absence of Presumption.

 

(a)          For the purposes hereof: (i) words in the singular shall be held to
include the plural and vice versa and words of one gender shall be held to
include the other gender as the context requires; (ii) the terms “hereof”,
“herein”, and “herewith” and words of similar import shall, unless otherwise
stated, be construed to refer to this Agreement as a whole and not to any
particular provision of this Agreement, and Section, paragraph, and Schedule
references are to the Sections, paragraphs, and Schedule in this Agreement
unless otherwise specified; (iii) the word “including” and words of similar
import when used in this Agreement shall mean “including, without limitation”,
unless the context otherwise requires or unless otherwise specified; and
(iv) the word “or” shall not be exclusive.

 

(b)          With regard to each and every term and condition of this Agreement
and each of the other Transaction Documents, the parties hereto understand and
agree that the same have or has been mutually negotiated, prepared and drafted,
and if at any time the parties hereto desire or are required to interpret or
construe any such term or condition or any other Transaction Document, no
consideration will be given to the issue of which party hereto actually
prepared, drafted or requested any term or condition of this Agreement or any of
the other Transaction Documents.

 

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8.6           Severability. Any provision hereof that is held to be invalid,
illegal or unenforceable in any respect by a court of competent jurisdiction,
shall be ineffective only to the extent of such invalidity, illegality or
unenforceability, without affecting in any way the remaining provisions hereof,
provided, however, that the parties will attempt in good faith to reform this
Agreement in a manner consistent with the intent of any such ineffective
provision for the purpose of carrying out such intent.

 

8.7           Jurisdiction, Etc. This Agreement and the terms and conditions set
forth herein, shall be governed by and construed solely and exclusively in
accordance with the internal laws of the State of New York without regard to the
conflicts of laws principles thereof. The parties hereto hereby expressly and
irrevocably agree that any suit or proceeding arising directly and/or indirectly
pursuant to or under this Agreement shall be brought solely in a federal or
state court located in the City, County and State of New York. By its execution
hereof, the parties hereto covenant and irrevocably submit to the in personam
jurisdiction of the federal and state courts located in the City, County and
State of New York and agree that any process in any such action may be served
upon any of them personally, or by certified mail or registered mail upon them
or their agent, return receipt requested, with the same full force and effect as
if personally served upon them in New York, New York. The parties hereto
expressly and irrevocably waive any claim that any such jurisdiction is not a
convenient forum for any such suit or proceeding and any defense or lack of in
personam jurisdiction with respect thereto. In the event of any such action or
proceeding, the party prevailing therein shall be entitled to payment from the
other parties hereto of all of its reasonable counsel fees and disbursements.

 

8.8           Purchasers’ Actions. Notwithstanding anything to the contrary
provided herein or elsewhere, the Purchasers may only act with respect to this
Agreement, the Pledged Securities and Pledge Collateral based upon unanimous
written consents of both Purchasers.         

  

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IN WITNESS WHEREOF, the parties have executed and delivered this Pledge
Agreement as of the date first written above.

  

EFACTOR GROUP CORP.       By: /s/ Mark Noffke     Name: Mark Noffke     Title:
Chief Financial Officer         MAGNA EQUITIES II, LLC         By: /s/ Joshua
Sason     Name: Joshua Sason     Title: Managing Member         INCREASIVE
VENTURES B.V.       By: /s/ Ad Prins     Name: Ad Prins     Title: Managing
Director  

 

 

 

 

Schedule 1.1

Pledged Stock

 

Pledgor  Pledged Entity  Jurisdiction  Description
of Pledged
Shares  Certificate
No.’s  % of
Outstanding
Interests                    EFactor Group Corp.  The E-Factor Corporation 
Delaware  Shares acquired as part of acquisition    CS- 239   100%            
       EFactor Group Corp.  MCC International Limited  United Kingdom  Shares
acquired as part of acquisition      100%                    EFactor Group
Corp.  RocketHub Inc.  New York  Shares acquired as part of acquisition  C-1 
 100%                    EFactor Group Corp.  ELEQT Ltd  United Kingdom  Shares
acquired as part of acquisition      100%                    EFactor Group
Corp.  HT Skills Ltd  United Kingdom  Shares acquired as part of acquisition    
 100%                    EFactor Group Corp.  GroupCard BV  The Netherlands 
Shares acquired as part of acquisition      100%                    EFactor
Group Corp.  Member Digital Ltd  United Kingdom  Shares acquired as part of
acquisition      100%                    EFactor Group Corp.  Sub Hub LLC 
Florida  Shares acquired as part of acquisition      100%                   
EFactor Group Corp.  Robson Dowry Associates Ltd.  United Kingdom  Shares
acquired as part of acquisition      100%

 

  

 

 

  

EXHIBIT A

 

Note  Issue Date  Principal Amount   Maturity Date Increasive Ventures BV 
7/31/2015   1,250,000.00   12/31/2015 Magna Tranche I Convertible Note 
3/2/2015   175,000.00   3/1/2016 Magna Tranche I Third Party Note Purchase 
3/2/2015   200,000.00   3/1/2016 Magna Tranche II Convertible Note  3/15/2015 
 15,000.00   3/14/2016 Magna Tranche III Convertible Note  3/27/2015 
 29,500.00   3/26/2016 Magna Tranche IV Third Party Note Purchase  4/8/2015 
 200,000.00   4/7/2016 Magna Tranche V Convertible Note  5/1/2015   53,000.00  
4/30/2016 Magna Tranche VI Third Party Note Purchase  5/22/2015   200,000.00  
5/21/2016 Magna Tranche VII Convertible Note  5/27/2015   85,000.00   5/26/2016