Exhibit 10.5
PLEDGE AND SECURITY AGREEMENT
 
THIS PLEDGE AND SECURITY AGREEMENT (this “Agreement”) is made as of the 29th day
of March, 2010, by Fund.com, Inc., a Delaware corporation (the “Pledgor”), in
favor of Albert Hallac, on behalf of himself and the other Hallac Members who
have executed this Agreement (individually and collectively, the “Secured
Party”, and together with the Pledgor, collectively, the “Parties”), and
Zukerman Gore Brandeis & Crossman, LLP (the “Collateral Agent”).
 
WHEREAS, the Pledgor and the Secured Party are parties to that certain
Securities Purchase and Restructuring Agreement, dated as of March 26, 2010, by
and among Weston Capital Management, LLC, a Delaware limited liability company
(the “Company”), PBC-Weston Holdings, LLC, a Delaware limited liability company,
the Pledgor and the Secured Party (the “Restructuring Agreement”);
 
WHEREAS, pursuant to the Restructuring Agreement, among other things, the
Pledgor is acquiring 50.9% of the membership interests of the Company (the
“Membership Interests”) from the Hallac Members for $5.5 million, of which $5.0
million dollars will be evidenced by a Senior Secured Variable Principal Amount
Promissory Note (the “Reset Note”) attached as Exhibit A hereto (unless
otherwise defined herein, capitalized terms shall have the same meaning as
defined in the Reset Note);
 
WHEREAS, the Pledgor has agreed to pledge to the Secured Party pursuant to this
Agreement all of the Membership Interests it has acquired from the Hallac
Members in order to secure the Pledgor’s obligations under the Reset Note; and
 
WHEREAS, the Collateral Agent has been appointed by the Secured Party to act as
the representative of the Secured Party for all purposes under this Agreement.
 
NOW, THEREFORE, the Pledgor agrees as follows:
 
1.   OBLIGATIONS SECURED.  This Agreement secures (a) the payment in full of the
$2,450,000 Installment Payment due and owing by the Pledgor to the Secured Party
under the Reset Note, and (b) the payment and performance of all other
agreements, obligations and covenants of the Pledgor to the Secured Party under
the Reset Note (including, without limitation, any and all payment obligations,
restrictive covenants, Liquidity Rights and other obligations that may arise at
any time whatsoever pursuant to the Restructuring Agreement, including but not
limited to the provisions set forth in Article 5, Article 7 and Article 8
thereof, including, without limitation, after any election by the Holders to
cause a Mandatory Prepayment and Conversion of the Reset Note in whole or in
part and for so long as any member of the Secured Party beneficially owns any
“Note Shares” (as defined in the Restructuring Agreement)) (collectively, the
“Obligations”).
 
 
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2.   PLEDGE.  In consideration of the Secured Party having extended credit to
Pledgor pursuant to the Reset Note, the Pledgor hereby pledges and grants to the
Secured Party, as security for the Obligations, a first priority lien and
security interest in 50.9% of the Membership Interests (subject to any pro rata
dilution or adjustment that would result solely from actions taken by the
Company from and after the date hereof that do not result in any default or
violation of the provisions of the Reset Note, this Agreement or the
Restructuring Agreement) held by the Pledgor and described on Exhibit B attached
hereto and the instruments representing such Membership Interests, and all cash,
rights, instruments and other property or proceeds from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or all
of the Membership Interests (collectively, the “Pledged Collateral”).  The
Pledged Collateral is hereby expressly governed by Article 8 of the New York
Uniform Commercial Code.
 
3.   THE COLLATERAL AGENT.  The Collateral Agent agrees to hold the Pledged
Collateral and to perform its obligations in accordance with the terms and
provisions of this Agreement.  The Parties agree that the Collateral Agent shall
not assume any responsibility for the failure of the Parties or the Company to
perform in accordance with the Restructuring Agreement, the Reset Note and any
other agreements related to the foregoing.  The acceptance by the Collateral
Agent of its responsibilities hereunder is subject to the following terms and
conditions which the parties hereto agree shall govern and control with respect
to the Collateral Agent's rights, duties and liabilities hereunder:
 
(a)   Documents.  The Collateral Agent shall be protected in acting upon any
written notice, request, waiver, consent, receipt or other paper or document
furnished to it, not only as to its due execution and validity and the
effectiveness of its provisions, but also as to the truth and accuracy of any
information therein contained, which the Collateral Agent in good faith believes
to be genuine and what it purports to be.  The Collateral Agent shall be
entitled to rely upon and shall be fully protected in acting upon any written
notices or instructions provided by the Secured Party, including but not limited
pursuant to Section 9(a) hereof.  Should it be necessary for the Collateral
Agent to act upon any instructions, directions, documents or instruments issued
or signed by or on behalf of any corporation, partnership, fiduciary or
individual acting on behalf of another party hereto, it shall not be necessary
for the Collateral Agent to inquire into such corporation's, partnership's,
fiduciary's or individual's authority.  The Collateral Agent is also relieved
from the necessity of satisfying itself as to the authority of the persons
executing this Agreement in a representative capacity on behalf of any of the
Parties.
 
(b)   Status.  The Collateral Agent is acting under this Agreement as a
stakeholder only and shall be considered an independent contractor with respect
to the Parties.  No term or provision of this Agreement is intended to create,
nor shall any such term or provision be deemed to have created, any
principal-agent, trust, joint venture, partnership, debtor-creditor or
attorney-client relationship between or among the Collateral Agent, the Parties
or the Company.  To the extent any beneficiary under this Agreement is or has
been represented by the Collateral Agent, such beneficiary hereby waives any
conflict of interest and irrevocably authorizes and directs the Collateral Agent
to carry out the terms and provisions of this Agreement fairly as to all
parties, without regard to any such representation.  The Collateral Agent’s only
duties are those expressly set forth in this Agreement, and the Secured Party
authorizes the Collateral Agent to perform those duties in accordance with its
usual practices.  The Collateral Agent may exercise or otherwise enforce any of
its rights, powers, privileges, remedies and interests under this Agreement and
applicable law, or perform any of its duties under this Agreement by or through
its partners, employees, attorneys, agents or designees.  Notwithstanding the
foregoing, the Pledgor expressly acknowledges that it is aware that the
Collateral Agent has previously and is currently representing the Secured Party
(and certain of its affiliates) on certain matters, including but not limited to
the transactions contemplated by the Restructuring Agreement and the Reset Note,
and nothing herein shall prevent or preclude the Collateral Agent from
continuing to represent the Secured Party and its affiliates in any fashion or
with respect to any matter whatsoever, including but not limited to, any dispute
relative to the Pledged Collateral, this Pledge Agreement, the Restructuring
Agreement, the Reset Note , the Fifth Amended and Restated Operating Agreement
of the Company or in connection with any matter relative to the Secured Party (
or any affiliate thereof), the Pledgor or otherwise.
 
 
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(c)   Discharge of Collateral Agent.  Upon delivery of all of the Pledged
Collateral pursuant to the terms hereof or to a successor collateral agent, or
upon the termination of this Agreement, the Collateral Agent shall thereafter be
discharged from any further obligations hereunder.  The Collateral Agent is
hereby authorized, in any and all events, to comply with and obey any and all
final judgments, orders and decrees of any court of competent jurisdiction which
may be filed, entered or issued, and all final arbitration awards and, if it
shall so comply or obey, it shall not be liable to any other person by reason of
such compliance or obedience.
 
(d)   Disputes; Interpleader.  In the event that (i) any dispute shall arise
between the Parties with respect to the disposition or disbursement of any of
the assets held hereunder or (ii) the Collateral Agent shall be uncertain as to
how to proceed in a situation not explicitly addressed by the terms of this
Agreement whether because of conflicting demands by the other parties hereto or
otherwise, the Collateral Agent shall be permitted to interplead all of the
assets held hereunder into a court of competent jurisdiction, and thereafter be
fully relieved from any and all liability or obligation with respect to such
interpleaded assets.  The parties hereto other than the Collateral Agent further
agree to pursue any redress or recourse in connection with such a dispute,
without making the Collateral Agent a party to the same.
 
(e)   Limitations on Collateral Agent Duties.  The Collateral Agent shall have
only those duties as are specifically provided herein, which shall be deemed
purely ministerial in nature, and shall under no circumstance be deemed a
fiduciary for any of the parties to this Agreement.  The Collateral Agent shall
neither be responsible for, nor chargeable with, knowledge of the terms and
conditions of any other agreement, instrument or document between the other
parties hereto, in connection herewith, including without limitation the Reset
Note, Restructuring Agreement and any other agreements relating to the
foregoing.  This Agreement sets forth all matters pertinent to the collateral
agency contemplated hereunder, and no additional obligations of the Collateral
Agent shall be inferred from the terms of this Agreement or any other agreement
 
(f)   Court Orders.  In the event that any Pledged Collateral shall be attached,
garnished or levied upon by any court order, or the delivery thereof shall be
stayed or enjoined by an order of a court, or any order, judgment or decree
shall be made or entered by any court order affecting the property deposited
under this Agreement, the Collateral Agent is hereby expressly authorized, in
its sole discretion, to obey and comply with all writs, orders or decrees so
entered or issued, which it is advised by legal counsel of its own choosing is
binding upon it, whether with or without jurisdiction, and in the event that the
Collateral Agent obeys or complies with any such writ, order or decree it shall
not be liable to any of the parties hereto or to any other person, firm or
corporation, by reason of such compliance notwithstanding such writ, order or
decree be subsequently reversed, modified, annulled, set aside or vacated.
 
 
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(g)   Exculpation.  The Collateral Agent and its designees, and each of their
respective partners, members, employees, attorneys and agents, shall not incur
any liability whatsoever for the taking of any action in accordance with the
terms and provisions of this Agreement, for any mistake or error in judgment,
for compliance with any applicable law or any attachment, order or other
directive of any court or other authority (irrespective of any conflicting term
or provision of this Agreement), or for any act or omission of any other person
engaged by the Collateral Agent in connection with this Agreement other than
those attributable to the gross negligence or willful misconduct as finally
determined pursuant to applicable law by a court or governmental authority
having jurisdiction; and each of the Parties hereby irrevocably waives any and
all claims and actions whatsoever against the Collateral Agent and its
designees, and each of their respective partners, members, employees, attorneys
and agents, arising out of or related directly or indirectly to any and all of
the foregoing acts, omissions and circumstances other than those of gross
negligence or willful misconduct as finally determined pursuant to applicable
law by a court or governmental authority having jurisdiction.
 
 
(h)   Resignation or Termination of Collateral Agent.  The Collateral Agent
shall have the right to resign at any time by giving written notice of such
resignation to the Secured Party and the Pledgor and the Secured Party and the
Pledgor shall have the right to terminate the services of the Collateral Agent
hereunder at any time by giving a joint written notice of such termination to
the Collateral Agent, in each case specifying the effective date of such
resignation or termination.  Within thirty (30) days after receiving or
delivering the aforesaid notice, as the case may be, the Secured Party and the
Pledgor agree to appoint a successor collateral agent to which the Collateral
Agent shall surrender the Pledged Collateral then held hereunder to such
successor collateral agent.  Except as otherwise agreed to in writing by the
Parties, no Pledged Collateral shall be released unless and until a successor
collateral agent has been appointed in accordance with this Section 3(h).
 
4. COVENANTS OF THE PLEDGOR.
 
(a)   The Pledgor will defend the Pledged Collateral against the claims and
demands of all other parties, will keep the Pledged Collateral free from all
other security interests, liens or other encumbrances and will not sell,
transfer, lease, assign, deliver or otherwise dispose of any Pledged Collateral
or any interest therein without the prior written consent of the Secured Party;
 
(b)   Without the prior written consent of the Secured Party, the Pledgor will
not change its address, will not change the address at which all records
concerning the Pledged Collateral are kept and will not make any change in the
Pledgor’s name, identity or organizational status, unless it has given thirty
days prior written notice thereof to the Secured Party;
 
 
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(c)   The Pledgor will pay all taxes, assessments and other charges of every
nature that may be levied or assessed against the Pledged Collateral and which,
if unpaid, would become a lien against any of the Pledgor’s assets, except to
the extent the Pledgor is reasonably contesting in good faith any such tax,
assessment or other charge with an adequate reserve provided therefore; and
 
(d)   The Pledgor will provide to the Secured Party, in form reasonably
satisfactory to the Secured Party, promptly upon the request of the Secured
Party, all information relating to the Pledgor and to the business, operations,
assets, affairs or condition (financial or other) of the Pledgor that is so
requested.
 
5.   PROCEEDS.  Except as otherwise provided in the Restructuring Agreement and
Reset Note, as long as no Event of Default (as defined below), has occurred, the
Pledgor shall be entitled to receive and retain, and to utilize free and clear
of the lien of this Agreement, any and all distributions and other payments paid
in respect of the Pledged Collateral.
 
6.   NO LIABILITY AS MEMBER.  The Secured Party shall have no liability or
duties as a member of the Company or for any obligations of the Pledgor, unless
and until the Secured Party, or his assignee(s) enforces this pledge and becomes
a member and then only from and after the date of becoming a member of the
Company.
 
7.   NOTIFICATION AND PAYMENTS.  The Secured Party may notify the Pledgor in
writing, at any time after the occurrence of an Event of Default (as hereinafter
defined), and without waiving in any manner the pledge, that any distributions
and other payments on account of and from the Pledged Collateral received by the
Pledgor (a) shall be held by the Pledgor in trust for the Secured Party in the
same medium in which received, (b) shall not be commingled with any assets of
the Pledgor and (c) shall be turned over to the Secured Party not later than the
next business day following the day of its receipt.
 
8.   EVENTS OF DEFAULT.  The happening of any of the following events shall
constitute an “Event of Default” hereunder: (a) the occurrence and continuation
of an “Event of Default” as defined in Section 8 of the Note, (b) the default by
the Pledgor in the performance of any Obligation or undertaking or any
representation or warranty in this Agreement (and the failure of the Pledgor to
cure such default during any applicable cure period under the Reset Note), (c)
the filing of any voluntary or involuntary petition under any chapter of the
United States Bankruptcy Code or any similar federal or state statute by or
against the Pledgor, (d) the application for the appointment of a receiver or a
custodian under the United States Bankruptcy Code or applicable state law of any
property of the Pledgor, the making of a general assignment for the benefit of
the creditors of the Pledgor, the insolvency of the Pledgor however evidenced or
the failure of the Pledgor to pay its debts as they mature or (e) the issuing of
any attachment, execution or other process or the filing of any lien against any
of the Pledged Collateral.
 
 
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9.   REMEDIES.  Upon the occurrence of an Event of Default:
 
(a)   The Secured Party may, at any time and from time to time without notice to
the Pledgor, instruct the Collateral Agent to transfer the Pledged Collateral
into its name or the name of its nominee without reference to this Agreement or
the interest granted to the Secured Party in this Agreement; and
 
(b)   The Secured Party may, in its sole discretion, declare all or any part of
the Obligations due and payable immediately without demand or notice of any
kind.
 
10.   ELECTION OF REMEDIES BY SECURED PARTY.
 
(a)           All cash proceeds received by the Secured Party in respect of any
sale of, collection from, or other realization upon all or any part of the
Pledged Collateral pursuant to the exercise by the Secured Party of its remedies
under this Agreement shall be applied promptly from time to time by the Secured
Party first to the payment of the reasonable expenses (including, but not
limited to, reasonable and documented attorneys’ fees) incurred by the Secured
Party as a result of any Event of Default and then to payment of the
Obligations.
 
(b)           NOTWITHSTANDING ANYTHING TO THE CONTRARY, EXPRESS OR IMPLIED,
CONTAINED IN THE RESTRUCTURING AGREEMENT, THE RESET NOTE OR IN THIS AGREEMENT,
UPON THE OCCURRENCE OF AN EVENT OF DEFAULT, IN LIEU OF THE REMEDIES SET FORTH IN
HEREIN AND NOTWITHSTANDING ANY OTHER OBLIGATIONS OF A SECURED PARTY UNDER THE
UNIFORM COMMERCIAL CODE WITH RESPECT TO THE DISPOSITION OF COLLATERAL OR PLEDGED
ASSETS, THE SECURED PARTY MAY ELECT TO ACCEPT AND TAKE LEGAL AND BENEFICIAL
OWNERSHIP AND TITLE TO ALL OF THE PLEDGED COLLATERAL (OR ASSIGN SUCH PLEDGED
COLLATERAL TO ITS DESIGNEE(S)) AS FULL AND COMPLETE LIQUIDATED DAMAGES AND IN
FULL SATISFACTION OF ALL PAYMENT OBLIGATIONS IN RESPECT OF ALL OF THE
OBLIGATIONS.  THE EXERCISE BY SECURED PARTY OF THE REMEDY UNDER THIS SECTION
10(b) SHALL NOT RELIEVE THE PLEDGOR OF ITS OTHER OBLIGATIONS UNDER THE
RESTRUCTURING AGREEMENT OR OTHER “TRANSACTION DOCUMENTS” (AS THAT TERM IS
DEFINED IN THE RESTRUCTURING AGREEMENT, BUT EXCLUDING THE RESET NOTE).

11.   EXPENSES.  The Pledgor will upon demand pay to the Secured Party the
amount of any and all reasonable and documented expenses, including the
reasonable and documented fees and expenses of its counsel, which the Secured
Party may incur in connection with (a) the custody or preservation of, or the
sale of, collection from, or other realization upon, any of the Pledged
Collateral, (b) the exercise or enforcement of any of the rights of the Secured
Party hereunder or (c) the failure by the Pledgor to perform or observe any of
the provisions hereof.
 
 
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12.   MISCELLANEOUS.
 
(a)   No course of dealing and no delay or omission by the Secured Party in
exercising any right or remedy hereunder or with respect to any of the
Obligations shall operate as a waiver thereof or of any other right or remedy,
and no single or partial exercise thereof shall preclude any other or further
exercise thereof or the exercise of any other right or remedy.  The Secured
Party may remedy any default by the Pledgor hereunder or with respect to any of
the Obligations in any reasonable manner without waiving the default remedied
and without waiving any other prior or subsequent default by the Pledgor.  All
rights and remedies of the Secured Party hereunder are cumulative and are in
addition to any and all rights and remedies available to the Secured Party under
the Uniform Commercial Code and other applicable law in effect from time to
time.
 
(b)   The rights and benefits of the Secured Party hereunder shall, if the
Secured Party so agrees, inure to any party acquiring any interest in the
Obligations or any part thereof.
 
(c)   The Secured Party and the Pledgor shall include the heirs, distributees,
executors or administrators, successors and assigns of those parties.
 
(d)   In the event that the Pledgor shall default in making the Installment
Payment under the Reset Note and Restructuring Agreement, when due, the
Collateral Agent shall have no liabilities or obligations hereunder, other than
to act immediately upon and in accordance with the written instructions of the
Secured Party.  Subject to Article 3 hereof, if any other Event of Default
hereunder shall occur and be continuing the Collateral Agent shall act in
accordance with the written instructions of the Secured Party not earlier than
ten (10) days following receipt such written instructions, a copy of which the
Collateral Agent shall furnish to the Pledgor not later than ten (10) days
before the Collateral Agent shall take any action in accordance with the
instructions of Secured Party.
 
(e)   No modification, rescission, waiver, release or amendment of any provision
of this Agreement shall be binding except by a written agreement subscribed by
the Pledgor and by the Secured Party.
 
(f)   This Agreement and the transactions evidenced hereby shall be construed
under the laws of New York as the same may from time to time be in effect.  All
terms, unless otherwise defined in this Agreement or in any financing statement,
shall have the definitions set forth in the Uniform Commercial Code adopted in
New York, as the same may from time to time be in effect.  If any term of this
Agreement shall be held to be invalid, illegal or unenforceable, the validity of
all other terms hereof shall in no way be affected thereby.
 
(g)   This Agreement is and is intended to be a continuing security agreement
and shall remain in full force and effect until all of the Obligations and any
extensions or renewals thereof shall be indefeasibly paid in full.  The headings
in this Agreement are for purposes of reference only and shall not limit or
otherwise affect the meaning or construction of any provision of this Agreement.
 

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IN WITNESS WHEREOF, the Pledgor has duly executed and delivered this Agreement
as of the date first above written.
 

  FUND.COM, INC.          
 
By:
 /s/ Gregory Webster              Name: Gregory Webster       Title:    Chief
Executive Officer  

 

   SECURED PARTY      /s/ Albert Hallac     ALBERT HALLAC                    
/s/ Mitzi Hallac Liotta     MITZI HALLAC LIOTTA                     /s/ Joanna
Hallac     JOANNA HALLAC                     /s/ Jeffrey Hallac     JEFFREY
HALLAC                     /s/ Russell Hallac     RUSSELL HALLAC                
    /s/ Victor Elmaleh     VICTOR ELMALEH                     COLLATERAL AGENT:
   
  ZUKERMAN GORE BRANDEIS
& CROSSMAN LLP
            BY            

 
 
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EXHIBIT B
DESCRIPTION OF MEMBERSHIP INTERESTS

Membership Interest certificate #2, representing 5,090 Membership Interests
owned of record and beneficially by Fund.com, Inc., or 50.9% of the aggregate
10,000 Membership Interests of Weston Capital Management LLC that are issued and
outstanding and owned of record and beneficially by Fund.com, Inc.
 
 
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