EXHIBIT 10.4
 
STOCK PLEDGE AGREEMENT
 
THIS STOCK PLEDGE AGREEMENT (this “Agreement”) is made and entered into by and
among James D. Burchetta, a natural person (“Burchetta”), Charles S. Brofman, a
natural person (“Brofman” and, together with Burchetta, the “Pledgors”), CAMOFI
Master LDC, a Cayman Islands limited duration company (the “Agent”), and each of
the purchasers set forth on the counterpart signature pages hereto (the
“Purchasers,” and each a “Pledgee” or together the “Pledgees”), is acknowledged
by Debt Resolve, Inc., a Delaware corporation, with its principal executive
offices located at 707 Westchester Avenue, Suite L7, White Plains, New York
10604 (the “Company”), and is dated with respect to each of the Purchasers as of
the date noted on each such Purchaser’s counterpart signature page.
 
WHEREAS, in connection with the Securities Purchase Agreement by and among the
Company and the Purchasers of even date herewith (the “Securities Purchase
Agreement”), the Company has agreed, upon the terms and subject to the
conditions contained therein, to issue and sell to the Purchasers (i) 15% senior
secured convertible promissory notes, or 15% senior secured promissory notes in
the case of one Purchaser, of the Company in the aggregate principal amount of
up to Four Million Dollars ($4,000,000), which includes a $1,000,000
over-allotment option (together with any note(s) issued in replacement thereof
or as a dividend thereon or otherwise with respect thereto in accordance with
the terms thereof, the “Notes”), a portion of which Notes is convertible into
shares of common stock, par value $.001 per share, of the Company (the “Common
Stock”), and (ii) warrants to purchase shares of Common Stock of the Company
(the “Warrants”);
 
WHEREAS, the Pledgors are the co-chairmen of the Company and own 16,500,000
shares of Common Stock; and
 
WHEREAS, in order to induce the Purchasers to purchase the Notes and Warrants,
the Pledgors have agreed to pledge to the Pledgees all of the Securities (as
such term is hereinafter defined) and all proceeds thereof as collateral
security for the Secured Obligations (as such term is hereinafter defined).
 
NOW, THEREFORE, in consideration of the premises and the mutual covenants herein
contained, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:
 
1. Definitions.
 
In addition to those terms defined elsewhere in this Agreement, the following
terms shall have the following meanings wherever used in this Agreement:
 
(a) “Event of Default” shall have the same meaning ascribed thereto in the
Security Agreement, except as modified by the terms of Section 5(b) hereof.
 
(b) “Satisfaction Date” shall mean that date on which all of the Secured
Obligations have been paid in full.
 
(c) “Secured Obligations” shall have the same meaning ascribed thereto in the
Security Agreement.
 

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(d) “Securities” shall mean, collectively, (i) an aggregate of 6,500,000 shares
of Common Stock currently outstanding and held (beneficially and of record) by
Burchetta (the “Burchetta Shares”), (ii) an aggregate of 10,000,000 shares of
Common Stock currently outstanding and held (beneficially and of record) by
Brofman and Arisean Capital Ltd., an entity controlled by Brofman (the “Brofman
Shares” and together with the Burchetta Shares, the “Shares”), (iii) any and all
securities which may hereafter be issued upon, in respect of or in exchange for
such Shares (whether by reason of any stock split, stock dividend,
recapitalization, merger, consolidation or otherwise), (iv) any dividends or
distributions paid in respect of any Securities in contemplation of or in
respect of the dissolution, liquidation or winding up of the Company or any
other issuer of Securities (“Liquidating Distributions”), and (v) any and all
dividends or distributions paid in respect of any Securities during the
continuance of any Event of Default.
 
(e) “Security Agreement” shall mean that certain Security Agreement, of even
date herewith, by and among the Company, the Agent and the Purchasers.
 
2. Pledge of the Securities; Appointment of Agent.
 
(a) As security for the due and timely payment (whether upon maturity, by
acceleration or otherwise) and performance of all of the Secured Obligations
from time to time, the Pledgors hereby pledge to the Pledgees, and grant to the
Pledgees a first priority lien and security interest in, all of the Securities
(as same are constituted from time to time) and all proceeds thereof (other than
dividends or distributions which do not constitute Liquidating Distributions and
which are paid when no Event of Default exists), until the Satisfaction Date.
 
(b) The Pledgees hereby irrevocably designate CAMOFI Master LDC (and its
successors and assigns) as their agent and CAMOFI Master LDC hereby accepts such
designation, in order to execute any and all instruments or other documents on
behalf of the Pledgees and to do any and all other acts or things on behalf of
the Pledgees that CAMOFI Master LDC (or its successors or assigns) in its sole
discretion deems necessary or advisable or that may be required pursuant to this
Agreement or otherwise, to exercise the Pledgees’ rights and remedies under this
Agreement. None of the Pledgees may take any action or exercise any rights under
this Agreement except through CAMOFI Master LDC as their agent. Each Pledgee
hereby appoints the Agent the attorney-in-fact of such Pledgee solely for the
purpose of carrying out the provisions of this Agreement and taking any action
and executing any instrument which the Agent may reasonably deem necessary or
advisable to accomplish the purposes hereof, which appointment is irrevocable so
long as this Agreement has not been terminated and coupled with an interest.
 
(c) In furtherance of the pledge hereunder, the Pledgors will, within ten
business days, deliver to the Agent the certificate(s) representing all of the
Shares, accompanied by appropriate undated stock powers duly endorsed in blank
by the Pledgors. The Pledgors shall hereafter take similar action from time to
time if, as and when additional Securities may be issued, created or arise, and
shall promptly pay over to the Agent (for application to the Secured
Obligations) any and all Liquidating Distributions received by the Pledgors at
any time and from time to time.
 
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3. Retention of the Securities.
 
(a) Except as otherwise provided herein, the Agent shall have no obligation with
respect to the Securities or any other property held or received by the Agent
hereunder, except to use reasonable care in the custody and preservation
thereof, to the extent required by law.
 
(b) The Agent shall hold the Securities and any other property held or received
by the Pledgee hereunder in the form in which same are delivered herewith,
unless and until there shall occur an Event of Default.
 
4. Rights of the Pledgors. Throughout the term of this Agreement, so long as no
Event of Default has occurred and is continuing, the Pledgors shall have the
right (a) to vote the Securities in all matters, except in a manner inconsistent
with the terms of this Agreement or in a manner which would frustrate or impair
the provisions or intent of this Agreement, and (b) to receive and retain any
and all dividends and distributions (other than Liquidating Distributions) in
respect of the Securities which are paid at any time and from time to time when
no Event of Default exists.
 
5. Event of Default; Power of Attorney.
 
(a) Upon the occurrence and during the continuance of any Event of Default, the
Agent shall have the right to (i) vote the Securities in all matters, (ii) apply
any funds or other property received in respect of the Securities to the Secured
Obligations, and receive in the Pledgees’ name any and all further distributions
which may be paid in respect of the Securities, all of which shall, upon receipt
by the Agent, be applied to the Secured Obligations on a pro-rata basis, (iii)
transfer all or any portion of the Securities (as determined by the Agent in its
discretion) on the books of the issuer thereof to and in the name of the
Pledgees or such other person or persons as the Pledgees may designate, (iv)
effect any sale, transfer or disposition of all or any portion of the Securities
in accordance with Paragraph 6 below, and in furtherance thereof, take
possession of and endorse any and all checks, drafts, bills of exchange, money
orders or other documents and instruments received on account of the Securities,
and apply the net proceeds thereof to the Secured Obligations on a pro-rata
basis, (v) collect, sue for and give acquaintance for any money due on account
of any of the foregoing, and (vi) take any and all other action contemplated by
this Agreement, or as otherwise permitted by law, or as the Agent may reasonably
deem necessary or appropriate, in order to accomplish the purposes of this
Agreement.
 
(b) Notwithstanding anything to the contrary contained herein or in the Security
Agreement, the liability and obligation of the Pledgors hereunder is a secondary
and not a primary liability and obligation, and under no circumstances shall the
Pledgors be responsible to pay or perform the Secured Obligations, or shall an
Event of Default have or be deemed to have occurred, without recourse first
being had against the Company. If the Company does not comply with the Secured
Obligations, the Pledgors shall have no liability hereunder unless and until the
Agent has obtained a final judgment against the Company, or an injunction
compelling performance by the Company of the Secured Obligations under the
Security Agreement, and despite its best efforts to (i) collect from the Company
the amount of such judgment or (ii) compel performance of the injunction, the
judgment remains unsatisfied and/or the injunction is not followed. Prior to any
Event of Default hereunder, the Agent shall provide written notice to the
Pledgors not less than 180 days prior thereto, stating the details of the Event
of Default and the recourse previously taken against the Company, during which
period the Pledgors shall have the right to cure any such Event of Default.
 
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(c) In furtherance of the foregoing powers of the Agent, the Pledgors hereby
authorize and appoint the Agent, with full powers of substitution, as the true
and lawful attorney-in-fact of the Pledgors, in their name, place and stead,
solely during the continuance of an Event of Default, to take any and all such
action as the Agent, in its sole discretion, may deem necessary or appropriate
in furtherance of the exercise of the aforesaid powers. Such power of attorney
shall be coupled with an interest, and shall be irrevocable until the
Satisfaction Date. Without limitation of the foregoing, such power of attorney
shall not in any manner be affected or impaired by reason of any act of the
Pledgors or by operation of law. Nothing herein contained, however, shall be
deemed to require or impose any duty upon the Agent to exercise any of the
rights or powers granted herein.
 
(d) The foregoing rights and powers granted to the Agent, and the foregoing
power of attorney, are granted for the benefit of the Pledgees and shall be
fully binding upon any person who may acquire any beneficial interest in any of
the Securities or any other property held or received by the Agent hereunder.
 
6. Foreclosure; Sale of Securities.
 
(a) In the event that the Agent shall make any sale or other disposition of any
or all of the Securities following an Event of Default, the Agent may:
 
(i) offer and sell all or any portion of the Securities by means of a (X)
private placement restricting the offer or sale to a limited number of
prospective purchasers who meet such suitability standards as the Agent and its
counsel may deem appropriate, and who may be required to represent that they are
purchasing Securities for investment and not with a view to distribution, (Y)
pursuant to Rule 144 promulgated under the Securities Act of 1933 (the
“Securities Act”, as amended, if a sale under Rule 144 is available, or (Z)
pursuant to an effective registration statement under the Securities Act, if
applicable; and the Pledgors hereby acknowledge, confirm and consent that (A)
the requirement to effect the offer and sale of Securities in such manner may
result in lower proceeds and/or less favorable terms than would otherwise obtain
if the subject Securities were registered for public sale and sold by means of
public offer and sale, (B) the Agent shall not be required to defer or delay any
sale of Securities in order to effect any registration thereof under applicable
securities laws, and (C) the sale of Securities in such manner shall not, by
reason thereof, be deemed to have been made in a commercially unreasonable
manner;
 
(ii) sell all or any portion of the Securities to the Pledgees for the Pledgees’
own accounts at a price not less than the highest bona fide offer received
therefor, which if effected in a manner in compliance with applicable law, shall
be deemed to be a commercially reasonable disposition of the subject Securities;
and
 
(iii) receive and collect the net proceeds of any sale or other disposition of
any Securities, and apply same first to costs, then to accrued interest and then
to principal on the Secured Obligations.
 
(b) The Agent shall give the Pledgor not less than ten (10) days’ prior written
notice of the time and place of any sale or other intended disposition of any of
the Securities, and the parties hereby agree that such notice constitutes
“reasonable notification” within the meaning of the Uniform Commercial Code.
Such notice shall state the time and place fixed for such sale or disposition,
and in the case of sale at a broker’s board or on a securities exchange, shall
state the board or exchange at which such sale or disposition is to be made and
the time and day on which the subject Securities will first be offered for sale
at such board or exchange. Any such sale shall be held at such time or times
within ordinary business hours and at such place or places as the Agent may
fixed in the notice of such sale.
 
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(c) Upon any sale of any of the Securities in accordance with this Agreement,
the Agent shall have the right to assign, transfer and deliver the subject
Securities to the purchaser(s) thereof, and each such purchaser shall be
entitled to hold such Securities absolutely free from any right or claim of the
Pledgors and/or any other person claiming any beneficial interest in the
Securities, including any equity of redemption (which right and all other such
rights are hereby waived by the Pledgors to the fullest extent permitted by
law).
 
(d) Nothing herein contained shall be deemed to require the Agent to effect any
sale or disposition of any Securities at any time, or to consummate any proposed
public or private sale at the time and place at which same was initially called;
and any such public or private sale may, without notice or publication, be
adjourned from time to time by announcement at the time and place fixed for the
sale, and such sale may be made at any time or place to which the same may be so
adjourned. It is the intention of the parties hereto that the Agent shall,
subject to any further conditions imposed by this Agreement, at all times during
the continuance of an Event of Default, have the right to use or deal with the
Securities as if the Pledgees were the outright owners thereof, and to exercise
any and all rights and remedies, as a secured party in possession of collateral
or otherwise, under any and all provisions of law. The Pledgors hereby waive any
requirement for marshalling of assets, or for the Agent to proceed against any
guarantor of the Secured Obligations or any other collateral for the Secured
Obligations.
 
7. Covenants, Representations and Warranties.
 
In connection with the transactions contemplated by this Agreement, and knowing
that the Pledgees are and shall be relying hereon, the Pledgors hereby covenant,
represent and warrant that:
 
(a) the Shares have been validly issued and are fully paid and nonassessable,
are owned by the Pledgors free and clear of any and all Liens (as defined in the
Securities Purchase Agreement) of any kind (other than the pledge to the
Pledgees pursuant to this Agreement), and constitute, on the date hereof, 55.55%
of the issued and outstanding common stock of the Company;
 
(b) this Agreement has been duly authorized, executed and delivered by the
Pledgors, and constitutes the legal, valid and binding obligation of the
Pledgors, enforceable against the Pledgors in accordance with its terms;
 
(c) neither the execution or delivery of this Agreement, nor the consummation of
the transactions contemplated hereby, nor the compliance with or performance of
this Agreement by the Pledgors, conflicts with or will result in the breach or
violation of or a default under the terms of (i) any note, indenture, other
evidence of indebtedness, mortgage, security agreement or other agreement,
instrument, obligation or undertaking to which the Pledgors are a party or by
which the Pledgors are bound, or (ii) any provision of law, any order of any
court or administrative agency, or any rule or regulation applicable to the
Pledgors; and there are no actions, suits or proceedings pending or threatened
against or affecting either of the Pledgors that involve or relate to the
Shares;
 
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(d) the Pledgors have not taken (and, during the effectiveness of this
Agreement, will not take) any action to assign, transfer, encumber or place a
Lien on any of the Securities or any interest therein, other than pursuant to
this Agreement;
 
(e) each Pledgor is the direct and beneficial owner of each of their respective
Shares;
 
(f) there are no pending or, to the best of each Pledgor's knowledge, threatened
actions or proceedings before any court, judicial body, administrative agency or
arbitrator which may materially adversely affect the Shares or the ownership
interest of the Pledgor’s therein;
 
(g) none of the Shares have been issued or transferred in violation of the
securities registration, securities disclosure or similar laws of any
jurisdiction to which such issuance or transfer may be subject;
 
(h) the pledge and assignment of the Shares and the grant of a security interest
under this Agreement vest in the Pledgees all rights of each Pledgor in the
Shares as contemplated by this Agreement; and
 
(i) the Pledgors have made no other representations or warranties with respect
to the nature or value of the Shares or any other Securities.
 
8. Value of the Collateral. Each Pledgee acknowledges that it is familiar with
the Company or has independent access to information regarding the Company, and
is not relying upon any representations of the Pledgors as to the value of the
Securities being pledged hereunder or the present or future prospects or value
of the Company.
 
9. Satisfaction of Secured Obligations; Return of the Securities.  To the extent
that the Agent shall not previously have taken, acquired, sold, transferred,
disposed of or otherwise realized value on the Securities in accordance with
this Agreement, the Agent shall release the lien hereunder, and return the
Securities to and in the name of the Pledgors, at the Satisfaction Date. The
foregoing notwithstanding, in the event and to the extent that any payment
received by the Agent in respect of the Secured Obligations is reduced or
rescinded or is required to be repaid to the Pledgors or to any trustee or other
official on behalf of the Pledgors, then such Secured Obligations shall be
restored and the Pledgees shall be restored to their collateral position with
respect to any and all Securities theretofore returned hereunder.
 
10. Expenses of the Pledgee. All expenses incurred by the Agent (including but
not limited to reasonable attorneys’ fees) in connection with any actual or
attempted sale or other disposition of Securities hereunder during the
continuance of an Event of Default shall be reimbursed to the Agent by the
Pledgor on demand, or, at the Agent’s option, such expenses may be added to the
Secured Obligations and shall be payable on demand and may (in addition to any
and all other means of collection) be recovered out of any proceeds of sale of
Securities.
 
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11. Further Assurances. From time to time hereafter, each party shall take any
and all such further action, and shall execute and deliver any and all such
further documents and/or instruments, as the other party may request in order to
accomplish the purposes of and fulfill the parties’ obligations under this
Agreement, in order to enable the Pledgees to exercise any of their rights
hereunder, and/or in order to secure more fully the Pledgees’ interest in the
Securities.
 
12. Miscellaneous.
 
(a) Any notices required or permitted to be given under the terms hereof shall
be sent by certified or registered mail (return receipt requested) or delivered
personally or by courier (including a recognized overnight delivery service) or
by facsimile and shall be effective five days after being placed in the mail, if
mailed by regular United States mail, or upon receipt, if delivered personally
or by courier (including a recognized overnight delivery service) or by
facsimile, in each case addressed to a party. The addresses for such
communications shall be:
 
(i) If to the Pledgors:
 
James D. Burchetta
c/o Debt Resolve, Inc.
707 Westchester Avenue, Lobby Level
White Plains, New York 10604
Telephone: (914) 949-5500
Facsimile: (914) 428-3044
 
and
 
Charles S. Brofman
c/o Cybersettle, Inc.
44 South Broadway, Suite 510
White Plains, New York 10601
Telephone: (914) 286-5600
Facsimile: (914) 286-5740
 
(ii) If to the Agent:
 
CAMOFI Master LDC
c/o Centrecourt Asset Management
350 Madison Avenue, 8th Floor
New York, New York 10017
Attention: Keith D. Wellner, General Counsel
Telephone: (646) 758-6755
Facsimile: (646) 304-0500
 
(i) If to the Company:
 
Debt Resolve, Inc.
707 Westchester Avenue, Lobby Level
White Plains, New York 10604
Attention: James D. Burchetta
Telephone: (914) 949-5500
Facsimile: (914) 428-3044

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With a copy to:
 
Greenberg Traurig LLP
MetLife Building
200 Park Avenue, 15th Floor
New York, NY 10166
Attention: Spencer G. Feldman, Esq.
Telephone: (212) 801-9200
Facsimile: (212) 801-6400
 

 
(iii)
If to a Pledgee: To the address and fax number set forth immediately below such
Pledgee’s name on the signature pages to this Agreement.

 
With copy to:
 
Capital Growth Financial, Inc.
225 NE Mizner Boulevard, Suite #750
Boca Raton, FL 33432
Attention: Alan Jacobs
Telephone: (561) 417-5680
Facsimile: (561) 417-5680

and

Maxim Group LLC
405 Lexington Avenue
New York, NY 10174
Attention: Clifford A. Teller
Telephone: (212) 895-3500
Facsimile: (212) 895-3783
 
Each party shall provide notice to the other party of any change in address.
 
(b) The laws of the State of New York shall govern the construction and
enforcement of this Agreement and the rights and remedies of the parties hereto.
The parties hereby consent to the jurisdiction of all courts (state and federal)
sitting in the State of New York in connection with any action or proceeding
under or relating to this Agreement, and waive trial by jury in any such action
or proceeding.
 
(c) This Agreement may be executed in counterparts and by facsimile. This
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and permitted assigns. The Pledgors shall
not, however, assign any of their rights or obligations hereunder without the
prior written consent of the Agent. Except as otherwise referred to herein, this
Agreement, and the documents executed and delivered pursuant hereto, constitute
the entire agreement between the parties relating to the specific subject matter
hereof.
 
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(d) Neither any course of dealing between the Pledgors, the Agent and the
Pledgees nor any failure to exercise, or any delay in exercising, on the part of
the Agent or the Pledgees, any right, power or privilege hereunder shall operate
as a waiver thereof; nor shall any single or partial exercise of any right,
power or privilege operate as a waiver of any other exercise of such right,
power or privilege or any other right, power or privilege.
 
(e) The Pledgees’ rights and remedies, whether hereunder or pursuant to any
other agreements or by law or in equity, shall be cumulative and may be
exercised singly or concurrently
 
(f) No change, amendment, modification, waiver, assignment of rights or
obligations, cancellation or discharge hereof, or of any part hereof, shall be
valid unless the Pledgees and the Agent (and, in the case of any change,
amendment or modification, the Pledgors) shall have consented thereto in
writing.
 
(g) The captions and paragraph headings in this Agreement are for convenience of
reference only, and shall not in any way define, limit or describe the
construction, terms or provisions of this Agreement.
 
(h) If any provision of this Agreement is held invalid or unenforceable, either
in its entirety or by virtue of its scope or application to given circumstances,
such provision shall thereupon be deemed modified only to the extent necessary
to render same valid, or not applicable to given circumstances, or excised from
this Agreement, as the situation may require, and this Agreement shall be
construed and enforced as if such provision had been included herein as so
modified in scope or application, or had not been included herein, as the case
may be.
 
[Remainder of page intentionally left blank; signature pages follow.]

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

        PLEDGORS:  
 
 
/s/James D. Burchetta

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James D. Burchetta

 

       
   /s/ Charles S. Brofman

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Charles S. Brofman

 

        AGENT:  
 
 
 CAMOFI MASTER LDC
 
  By:   /s/ Jeffrey M. Haas  

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Name: Jeffrey M. Haas
Title: Authorized Signatory

 

 
PLEDGEES:
 
The Pledgees executing the Signature Page in the form attached hereto as Annex A
and delivering the same to the Company or its agents shall be deemed to have
executed this Agreement and agreed to the terms hereof.

 
 

 ACKNOWLEDGEMENT BY THE COMPANY:                DEBT RESOLVE, INC.              
 By: /s/ James D. Burchetta        

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Name: James D. Burchetta
Title: Co-chairman, President and CEO
     

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Annex A

Stock Pledge Agreement
Pledgee Counterpart Signature Page

The undersigned, desiring to enter into this Stock Pledge Agreement dated as of
_________________ ___, 2006 (the “Agreement”), between the undersigned, James D.
Burchetta, Charles S. Brofman, CAMOFI Master LDC, a Cayman Islands limited
duration company (the “Agent”), and the other parties thereto, in or
substantially in the form furnished to the undersigned, hereby agrees to join
the Agreement as a party thereto, with all the rights and privileges
appertaining thereto, and to be bound in all respects by the terms and
conditions thereof.
 
IN WITNESS WHEREOF, the undersigned has executed the Agreement as of
_________________ ___, 2006.
 

 
PLEDGEE: 
     
Name and Address, Fax No. and Social
Security No./EIN of Purchaser: 
   

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     Fax No.: __________________________________      
Soc. Sec. No./EIN: ___________________________
     
If a partnership, corporation, trust or other business 
entity: 
              By:        

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Name:
Title: 
       
If  an individual: 
         

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Signature  

 
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