Exhibit 10.41

 

PLEDGE AGREEMENT

 

THIS PLEDGE AGREEMENT made as of March 1, 2019 (as amended, restated,
supplemented or otherwise modified from time to time, this “Agreement”), by each
“Pledgor” signatory hereto (collectively, the “Pledgors”, each a “Pledgor”) and
Rose Capital Fund I, LP, a Delaware limited partnership, in its capacity as
agent (“Collateral Agent”) for itself and the other Purchasers identified below
(together with their respective successors and assigns).

 

WHEREAS:

 

A.  WHEREAS, the purchasers as from time to time parties to the Rose Purchase
Agreement (as hereafter defined), together with their successors and assigns,
and each other purchaser of a Note (as defined) together with their respective
successors and assigns, (the “Purchasers”), will purchase from the Company
certain senior secured notes each made by the Company and dated as of the date
hereof in an initial aggregate principal amount of $1,950,000 (all such notes,
together with any promissory notes or other securities issued in exchange or
substitution therefor or replacement thereof, and as any of the same may be
amended, supplemented, restated or modified and in effect from time to time, the
“Rose Notes”), and receive certain Common Stock Purchase Warrants (all such
Warrants, together with any promissory notes or other securities issued in
exchange or substitution therefor or replacement thereof, and as any of the same
may be amended, supplemented, restated or modified and in effect from time to
time, the “Rose Warrants”);

 

B.  WHEREAS, the Company delivered a convertible promissory note (the “Existing
RedDiamond Note”) in the aggregate principal amount of $208,333.33 to RedDiamond
Partners, LLC (“RD”) and Common Stock Purchase Warrants (the “Existing
RedDiamond Warrants”), in each case pursuant to that certain Securities Purchase
Agreement by and between the Company and RD, dated as of February 13, 2017 (the
“Existing RedDiamond Purchase Agreement”);

 

C.  WHEREAS, as of the date hereof the principal amount outstanding on the
RedDiamond Note is $116,780;

 

D.  WHEREAS, RD transferred the RedDiamond Note to DiamondRock LLC (“Rock”);

 

E.  WHEREAS, the RedDiamond Note was secured pursuant to that certain security
agreement by and among the Company, all the subsidiaries of the Company and RD,
dated as of February 14, 2017 (the “RedDiamond Security Agreement”);

 

F.  WHEREAS, on the date hereof, Rock terminated the RedDiamond Security
Agreement and became a party to that certain Security Agreement dated as of the
date hereof among the Secured Parties and the Debtors (as defined therein) (the
“Security Agreement”);

 

G.  WHEREAS, Rock will purchase a secured convertible promissory note (the “New
Rock Note” and, with the Existing RedDiamond Note and the Rose Notes,
collectively, the “Notes”) in the aggregate principal amount of $450,000.00, and
Common Stock Purchase Warrants (the “New Rock Warrants” and, with the Existing
RedDiamond Warrants and the Rose Warrants, collectively, the “Warrants”), in
each case pursuant to that certain Securities Purchase Agreement by and between
the Company and Rock, dated as of the date hereof (the “New Rock Purchase
Agreement”);

 

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H.  WHEREAS, the Rose Notes are being acquired by the Secured Parties other than
Rock, and the Secured Parties other than Rock have made certain financial
accommodations to the Company pursuant to a Securities Purchase Agreement, dated
as of the date hereof, by and among the Company and the Secured Parties other
than Rock (as the same may be amended, restated, supplemented or otherwise
modified from time to time, the “Rose Purchase Agreement”, and together with the
Existing RedDiamond Purchase Agreement and the New Rock Purchase Agreement, the
“Purchase Agreements”). Capitalized terms used herein but not otherwise defined
shall have the meanings set forth in the Rose Purchase Agreement;

 

I.  WHEREAS, each Debtor will derive substantial benefit and advantage from the
financial accommodations to the Company set forth in the Purchase Agreements,
and the Notes, and it will be to each such Debtor’s direct interest and economic
benefit to assist the Company in procuring said financial accommodations from
the Secured Parties;

 

J.  WHEREAS, to induce the Secured Parties other than Rock to enter into the
Rose Purchase Agreement and New Rock Purchase Agreement, and to purchase the
Rose Notes and the New Rock Note, and in order to obtain additional investment
in the Company in the form of the Rose Notes and the New Rock Note and thereby
make the investment in the Company made by Rock pursuant to the RedDiamond Note
more secure, (i) each Debtor (other than the Company) will guaranty the
Obligations (as hereinafter defined) of the Company pursuant to the terms of one
or more guaranties by each such Debtor in favor of the Secured Parties (such
guaranties, as amended, restated, modified or supplemented and in effect from
time to time, individually, a “Subsidiary Guaranty”, and collectively, the
“Subsidiary Guaranties”) and (ii) each Debtor will pledge and grant a security
interest in all of its right, title and interest in and to the Collateral (as
hereinafter defined) as security for its Obligations for the benefit of the
Secured Parties.

 

K.  Each Pledgor legally and beneficially owns the interests specified opposite
its name on Exhibit A hereto and each other corporation or other entity, the
stock or other equity interests and securities (any, “Securities”) of which are
owned or acquired by such Pledgor and described on an addendum hereto from
time-to-time executed by a Pledgor in form and substance satisfactory to the
Collateral Agent (each such entity is referred to herein as a “Pledge Entity”
and collectively as the “Pledge Entities,” which shall include all subsidiaries
of each Pledgor during the time this Agreement remains in effect); provided that
the parties hereto agree that, as of the date hereof, the Pledge Entities
specified on Exhibit A are the only Pledge Entities. The failure to execute an
addendum shall not relieve the Debtors of their obligation to pledge any after
acquired Securities.

 

L.  Pursuant to the Security Agreement, each Pledgor and each other Debtor has
granted the Collateral Agent, for its benefit and the benefit of the other
Purchasers, a first priority security interest in, lien upon and pledge of all
of such Pledgor’s or other Debtor’s rights in such Pledgor’s or other Debtor’s
Collateral (as defined in the Security Agreement), subject to the prior security
interests reflected on Exhibit B hereto.

 

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M.  To induce the Purchasers to enter into the Purchase Agreement, purchase the
Notes and to make the financial accommodations available to the Pledgors under
the Purchase Agreement, and in order to secure the payment and performance by
the Pledgors of the Obligations (as hereafter defined), each Pledgor has agreed
to pledge to the Purchasers all of the Securities (the “Pledged Equity”) of the
Pledge Entities now or hereafter owned or acquired by such Pledgor to secure the
Obligations. For purposes of this Agreement, “Obligations” means all
obligations, liabilities and indebtedness of every nature of the Pledgors or any
other Debtor from time-to-time owed or owing under or in respect of this
Agreement, the Purchase Agreements, the Notes, the Security Agreement, and any
of the other Transaction Documents, and under all other prior loans made to the
Pledgors by any of the Purchasers, including, without limitation, the principal
amount of all debts, claims and indebtedness, accrued and unpaid interest and
all fees, costs and expenses, whether primary, secondary, direct, contingent,
fixed or otherwise, heretofore, now and/or from time to time hereafter owing,
due or payable whether before or after the filing of a bankruptcy, insolvency or
similar proceeding under applicable federal, state, foreign or other law and
whether or not an allowed claim in any such proceeding.

 

NOW, THEREFORE, in consideration of the premises and in order to induce the
Purchasers to purchase the Notes under the Purchase Agreements and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, each Pledgor hereby agrees with the Collateral Agent as follows:

 

1.  Defined Terms. Unless otherwise defined herein, all capitalized terms used
herein shall have the meanings given them in the Rose Purchase Agreement.

 

2.  Pledge.

 

(a)  Subject to the security interests reflected on Exhibit B, each Pledgor
hereby pledges, assigns, hypothecates, transfers, delivers and grants to the
Collateral Agent, for the benefit of itself and the other Purchasers, a first
lien on and first priority perfected security interest in (i) all of the Pledged
Equity of the Pledge Entities now owned or hereafter acquired by such Pledgor
(collectively, the “Pledged Interests”), (ii) any other shares of Pledged Equity
hereafter pledged or referred to be pledged to the Collateral Agent pursuant to
this Agreement; (ii) all “investment property” as such term is defined in
§9-102(a)(49) of the UCC (as defined below) with respect thereto; (iv) any
“security entitlement” as such term is defined in § 8-102(a)(17) of the UCC with
respect thereto; (v) all books and records relating to the foregoing; and (vi)
all Accessions and Proceeds (as each is defined in the UCC) of the foregoing,
including, without limitation, all distributions (cash, stock, or otherwise),
dividends, stock dividends, securities, cash, instruments, rights to subscribe,
purchase, or sell, and other property, rights, and interest that such Pledgor is
at any time entitled to receive or is otherwise distributed in respect of, or in
exchange for, any or all of the Pledged Collateral (as defined below), and
without affecting the obligations of such Pledgor under any provision of the
Security Agreement, in the event of any consolidation or merger in which such
Pledgor is not the surviving corporation, all shares of each class or Pledged
Equity of the successor entity formed by or resulting from such consolidation or
merger (the collateral described in clauses (i) through (vi) of this Section 2
being collectively referred to as the “Pledged Collateral”), as collateral
security for the prompt and complete payment and performance when due (whether
at the stated maturity, by acceleration or otherwise) of the Obligations. All of
the Pledged Interests now owned by each Pledgor, which are presently represented
by certificates, are listed on Exhibit A hereto, which certificates, with
undated assignments separate from the certificates or stock/membership interest
powers duly executed in blank by such Pledgor and to the extent such
certificates are available and not covered by an existing lien or pledge, or
irrevocable proxies, are being delivered to the Collateral Agent simultaneously
herewith. Upon the creation or acquisition of any new Pledged Interests, to the
extent such certificates are available and not covered by an existing lien or
pledge, the Company shall cause the relevant Debtor shall execute an Addendum in
the form of Exhibit C attached hereto (a “Pledge Addendum”). Any Pledged
Collateral described in a Pledge Addendum executed by any Pledgor shall
thereafter be deemed to be listed on Exhibit A hereto. The Collateral Agent
shall maintain possession and custody of the certificates representing the
Pledged Interests and any additional Pledged Collateral.

 

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(b)  Each Pledged Interest consisting of either (i) a membership interest in a
Person that is a limited liability company or (ii) a partnership interest in a
Person that is a partnership (if any) (1) is not and will not be evidenced by a
certificate and (2) is not and will not be deemed a “security” governed by
Article 8 of the UCC.

 

3. Representations and Warranties of Pledgors. Each Pledgor represents and
warrants to the Collateral Agent, and covenants with the Collateral Agent, that:

 

(a)  Exhibit A sets forth (i) the authorized capital stock and other equity
interests of each Pledge Entity, (ii) the number of shares of capital stock and
other equity interests of each Pledge Entity that are issued and outstanding as
of the date hereof, and (iii) the percentage of the issued and outstanding
shares of capital stock and other equity interests of each Pledge Entity held by
such Pledgor. Subject to the liens, pledges and security interests set forth in
Section 3.1(o) of the Rose Purchase Agreement (the “Existing Liens”), such
Pledgor is the record and beneficial owner of, and has good and marketable title
to, the Pledged Interests of such Pledgor, and subject to the Existing Liens,
such shares are and will remain free and clear of all pledges, liens, security
interests and other encumbrances and restrictions whatsoever, except the liens
and security interests in favor of the Collateral Agent created by this
Agreement;

 

(b)  Except as set forth on Exhibit A, there are no outstanding options,
warrants or other similar agreements with respect to the Pledged Interests or
any of the other Pledged Collateral;

 

(c)  This Agreement is the legal, valid and binding obligation of each Pledgor,
enforceable against such Pledgor in accordance with its terms except to the
extent that such enforceability is subject to applicable bankruptcy, insolvency,
reorganization, fraudulent conveyance and moratorium laws and other laws of
general application affecting enforcement of creditors’ rights generally, or the
availability of equitable remedies, which are subject to the discretion of the
court before which an action may be brought;

 

(d)  The Pledged Interests have been duly and validly authorized and issued, are
fully paid and non-assessable, and the Pledged Interests listed on Exhibit A
constitute all of the issued and outstanding capital stock or other equity
interests of the Pledge Entities;

 

(e)  No consent, approval or authorization of or designation or filing with any
governmental or regulatory authority on the part of any Pledgor is required in
connection with the pledge and security interest granted under this Agreement;

 

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(f) The execution, delivery and performance of this Agreement will not violate
any provision of any applicable law or regulation or of any order, judgment,
writ, award or decree of any court, arbitrator or governmental authority, which
are applicable to any Pledgor, or of the articles or certificate of
incorporation, certificate of formation, bylaws or any other similar
organizational documents of any Pledgor or any Pledge Entity or of any
securities issued by any Pledgor or any Pledge Entity or subject to the
obtaining of a waiver agreement from the holder of the Existing Liens of any
mortgage, indenture, lease, contract, or other agreement, instrument or
undertaking to which such Pledgor or any Pledge Entity is a party or which is
binding upon such Pledgor or any Pledge Entity or upon any of the assets of such
Pledgor or any Pledge Entity, and subject to the Existing Liens will not result
in the creation or imposition of any lien, charge or encumbrance on or security
interest in any of the assets of such Pledgor or any Pledge Entity, except as
otherwise contemplated by this Agreement;

 

(g)  The pledge, assignment and delivery of the Pledged Interests and the other
Pledged Collateral pursuant to this Agreement creates a valid first lien on and
perfected first priority security interest in such Pledged Interests and Pledged
Collateral and the proceeds thereof in favor of the Collateral Agent, subject to
the security interests reflected on Exhibit B. Until this Agreement is
terminated pursuant to Section 11 hereof, each Pledgor covenants and agrees that
it will defend, for the benefit of the Collateral Agent and each other
Purchaser, the Collateral Agent’s right, title and security interest subject to
the Existing Liens in and to the Pledged Interests, the other Pledged Collateral
and the proceeds thereof against the claims and demands of all other Persons;
and

 

(h)  Neither any Pledgor nor any Pledged Entity (i) will become a Person whose
property or interests in property are blocked or subject to blocking pursuant to
Section 1 of Executive Order 13224 of September 23, 2001 Blocking Property and
Prohibiting Transactions with Persons Who Commit, Threaten to Commit or Support
Terrorism (66 Fed. Reg. 49079(2001), (ii) will engage in any dealings or
transactions prohibited by Section 2 of such executive order, or (iii) will
otherwise become a Person on the list of Specially Designated Nationals and
Blocked Persons or subject to the limitations or prohibitions under any other
Office of Foreign Asset Control regulation or executive order.

 

4.  Dividends, Distributions, Etc. If, prior to irrevocable repayment in full in
cash of the Obligations, each Pledgor shall receive any certificate (including,
without limitation, any certificate representing a dividend or a distribution in
connection with any reclassification, increase or reduction of capital, or
issued in connection with any reorganization, merger or consolidation), or any
options or rights, whether as an addition to, in substitution for, or in
exchange for any of the Pledged Interests or otherwise, such Pledgor agrees, in
each case, to accept the same as the Collateral Agent’s agent and to hold the
same in trust for the Collateral Agent, and to deliver the same promptly (but in
any event within five days) to the Collateral Agent in the exact form received,
with the endorsement of such Pledgor when necessary and/or with appropriate
undated assignments separate from certificates or stock powers duly executed in
blank, to be held by the Collateral Agent subject to the terms hereof, as
additional Pledged Collateral. Each Pledgor shall promptly deliver to the
Collateral Agent (i) a Pledge Addendum with respect to such additional
certificates, and (ii) any financing statements or amendments to financing
statements as requested by the Collateral Agent. Each Pledgor hereby authorizes
the Collateral Agent to attach each such Pledge Addendum to this Agreement.
Except as provided in Section 5(b) below, all sums of money and property so paid
or distributed in respect of the Pledged Interests which are received by a
Pledgor shall, until paid or delivered to the Collateral Agent, be held by such
Pledgor in trust as additional Pledged Collateral.

 

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5.  Voting Rights; Dividends; Certificates.

 

(a)  So long as no Event of Default (as defined in the Notes) has occurred and
is continuing, each Pledgor shall be entitled (subject to the other provisions
hereof, including, without limitation, Section 8 below) to exercise its voting
and other consensual rights with respect to the Pledged Interests and otherwise
exercise the incidents of ownership thereof in any manner not inconsistent with
this Agreement, the Purchase Agreements and/or any of the other Transaction
Documents. Subject to the rights of the Existing Liens, as applicable, such
Pledgor hereby grants to the Collateral Agent or its nominee, an irrevocable
proxy to exercise all voting, corporate and limited liability company rights
relating to the Pledged Interests in any instance, which proxy shall be
effective, at the discretion of the Collateral Agent, upon the occurrence and
during the continuance of an Event of Default. Upon the request of the
Collateral Agent at any time, such Pledgor agrees to deliver to the Collateral
Agent such further evidence of such irrevocable proxy or such further
irrevocable proxies to vote the Pledged Interests as the Collateral Agent may
request.

 

(b)  So long as no Event of Default shall have occurred and be continuing, each
Pledgor shall be entitled to receive cash dividends or other distributions made
in respect of the Pledged Interests, to the extent permitted to be made pursuant
to the terms of the Notes and the Purchase Agreements. Upon the occurrence and
during the continuance of an Event of Default, in the event that any Pledgor, as
record and beneficial owner of the Pledged Interests, shall have received or
shall have become entitled to receive, any cash dividends or other distributions
in the ordinary course, such Pledgor shall deliver to the Collateral Agent, and
the Collateral Agent shall be entitled to receive and retain, for the benefit of
itself and the other Purchasers, all such cash or other distributions as
additional security for the Obligations.

 

(c)  Subject to any sale or other disposition by the Collateral Agent of the
Pledged Interests, any other Pledged Collateral or other property pursuant to
this Agreement, upon the indefeasible full payment in cash, satisfaction and
termination of all of the Obligations and the termination of this Agreement
pursuant to Section 11 hereof and of the liens and security interests hereby
granted, the Pledged Interests, the other Pledged Collateral and any other
property then held as part of the Pledged Collateral in accordance with the
provisions of this Agreement shall be returned to the Pledgors or to such other
Persons as shall be legally entitled thereto.

 

(d)  Each Pledgor shall cause all Pledged Interests (other than the Pledged
Interests consisting of limited liability company interests) to be certificated
at all times while this Agreement is in effect.

 

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6. Rights of Collateral Agent. The Collateral Agent shall not be liable for
failure to collect or realize upon the Obligations or any collateral security or
guaranty therefor, or any part thereof, or for any delay in so doing, nor shall
the Collateral Agent be under any obligation to take any action whatsoever with
regard thereto. Any or all of the Pledged Interests held by the Collateral Agent
hereunder may, if an Event of Default has occurred and is continuing, without
notice, be registered in the name of the Collateral Agent or its nominee, and
the Collateral Agent or its nominee may thereafter without notice exercise all
voting and corporate rights at any meeting with respect to any Pledge Entity and
exercise any and all rights of conversion, exchange, subscription or any other
rights, privileges or options pertaining to any of the Pledged Interests as if
it were the absolute owner thereof, including, without limitation, the right to
vote in favor of, and to exchange at its discretion any and all of the Pledged
Interests upon the merger, consolidation, reorganization, recapitalization or
other readjustment with respect to any Pledge Entity or upon the exercise by any
Pledge Entity, the Pledgors or the Collateral Agent of any right, privilege or
option pertaining to any of the Pledged Interests, and in connection therewith,
to deposit and deliver any and all of the Pledged Interests with any committee,
depository, transfer agent, registrar or other designated agency upon such terms
and conditions as the Collateral Agent may reasonably determine, all without
liability except to account for property actually received by the Collateral
Agent, but the Collateral Agent shall have no duty to exercise any of the
aforesaid rights, privileges or options and shall not be responsible for any
failure to do so or delay in so doing.

 

7. Remedies. Upon the occurrence and during the continuance of an Event of
Default, the Collateral Agent may exercise in respect of the Pledged Collateral,
in addition to other rights and remedies provided for herein or otherwise
available to it, all the rights and remedies of a secured party under the
Uniform Commercial Code (“UCC”) of the jurisdiction applicable to the affected
Pledged Collateral from time-to-time. Without limiting the foregoing, the
Collateral Agent may, without demand of performance or other demand,
advertisement or notice of any kind (except the notice specified below of time
and place of public or private sale) to or upon any Pledgor or any other Person
(all and each of which demands, advertisements and/or notices are hereby
expressly waived), upon the occurrence and during the continuance of an Event of
Default forthwith collect, receive, appropriate and realize upon the Pledged
Collateral, or any part thereof, and/or may forthwith date and otherwise fill in
the blanks on any assignments separate from certificates or stock powers or
otherwise sell, assign, give an option or options to purchase, contract to sell
or otherwise dispose of and deliver said Pledged Collateral, or any part
thereof, in one or more portions at one or more public or private sales or
dispositions, at any exchange or broker’s board or at any of the Collateral
Agent’s offices or elsewhere upon such terms and conditions as the Collateral
Agent may deem advisable and at such prices as it may deem best, for any
combination of cash and/or securities or other property or on credit or for
future delivery without assumption of any credit risk, with the right to the
Collateral Agent upon any such sale, public or private, to purchase the whole or
any part of said Pledged Collateral so sold, free of any right or equity of
redemption in any Pledgor, which right or equity is hereby expressly waived or
released. The Collateral Agent shall apply the net proceeds of any such
collection, recovery, receipt, appropriation, realization, sale or disposition,
after deducting all costs and expenses of every kind incurred therein or
incidental to the safekeeping of any and all of the Pledged Collateral or in any
way relating to the rights of the Collateral Agent hereunder, including
reasonable attorneys’ fees and legal expenses, to the payment, in whole or in
part, of the Obligations, in such order as the Collateral Agent may elect. Each
Pledgor shall remain liable for any deficiency remaining unpaid after such
application. Only after so paying over such net proceeds and after the payment
by the Collateral Agent of any other amount required by any provision of law,
including, without limitation, Section 9-608 of the UCC, need the Collateral
Agent account for the surplus, if any, to the Pledgors. Each Pledgor agrees that
the Collateral Agent need not give more than ten (10) days’ notice of the time
and place of any public sale or of the time after which a private sale or other
intended disposition is to take place and that such notice is reasonable
notification of such matters. No notification need be given to any Pledgor if
after default it has signed a statement renouncing or modifying any right to
notification of sale or other intended disposition. Notwithstanding any
provision in any shareholder’s agreement or any applicable laws to the contrary,
each Pledgor acknowledge and agrees that such Pledgor may pledge to the
Collateral Agent all of such Pledgor’s right, title and interest in all of the
Pledged Entities, and upon foreclosure the successful bidder (which may include
the Collateral Agent) will be deemed admitted as a member and/or shareholder, as
applicable, of each Pledged Entity, and will automatically succeed to all of
such Pledgor’s right, title and interest, including without limitation, such
Pledgor’s limited liability company and equity interests, right to vote and
participate in the management and business affairs of the Pledged Entities,
right to a share of the profits and losses of the Pledged Entities and right to
receive distributions from the Pledged Entities.

 

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8.  No Disposition, Etc. Until the irrevocable payment in full, satisfaction or
expiration of the Obligations, each Pledgor agrees that it will not sell,
assign, transfer, exchange, or otherwise dispose of, or grant any option with
respect to, the Pledged Interests or any other Pledged Collateral, nor will any
Pledgor create, incur or permit to exist any Lien or other encumbrance with
respect to any of the Pledged Interests or any other Pledged Collateral, or any
interest therein, or any proceeds thereof, except for the Lien and security
interest of the Collateral Agent provided for by this Agreement and the Security
Agreement and Permitted Liens as defined in the Notes.

 

9.  Sale of Pledged Interests.

 

(a)  Each Pledgor recognizes that the Collateral Agent may be unable to effect a
public sale or disposition (including, without limitation, any disposition in
connection with a merger of a Pledge Entity) of any or all the Pledged Interests
by reason of certain prohibitions contained in the Securities Act, and
applicable state securities laws, but may be compelled to resort to one or more
private sales or dispositions thereof to a restricted group of purchasers who
will be obliged to agree, among other things, to acquire such securities for
their own account, for investment and not with a view to the distribution or
resale thereof. Each Pledgor acknowledges and agrees that any such private sale
or disposition may result in prices and other terms (including the terms of any
securities or other property received in connection therewith) less favorable to
the seller than if such sale or disposition were a public sale or disposition
and such Pledgor agrees that it is not commercially unreasonable for the
Collateral Agent to engage in any such private sales or dispositions under such
circumstances. The Collateral Agent shall be under no obligation to delay a sale
or disposition of any of the Pledged Interests in order to permit such Pledgor
or a Pledge Entity to register such securities for public sale under the
Securities Act, or under applicable state securities laws, even if such Pledgor
or a Pledge Entity would agree to do so.

 

(b) Each Pledgor further agrees to do or cause to be done all such other acts
and things as may be reasonably necessary to make such sales or dispositions of
the Pledged Interests valid and binding and in compliance with any and all
applicable laws, regulations, orders, writs, injunctions, decrees or awards of
any and all courts, arbitrators or governmental instrumentalities, domestic or
foreign, having jurisdiction over any such sales or dispositions, all at such
Pledgor’s expense; provided that such Pledgor shall not have any obligation to
register the Pledged Interests as securities under the Securities Act or the
applicable state securities laws solely by virtue of this Section 9(b). Each
Pledgor further agrees that a breach of any of the covenants contained in
Sections 4, 5(a), 5(b), 8, 9 and 24 will cause irreparable injury to the
Collateral Agent and that the Collateral Agent has no adequate remedy at law in
respect of such breach and, as a consequence, agrees, without limiting the right
of the Collateral Agent to seek and obtain specific performance of other
obligations of such Pledgor contained in this Agreement, that each and every
covenant referenced above shall be specifically enforceable against such
Pledgor, and such Pledgor hereby waives and agrees not to assert any defenses
against an action for specific performance of such covenants.

 

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(c) Each Pledgor further agrees to indemnify and hold harmless the Collateral
Agent and each other Purchaser, their respective successors and assigns and all
of their collective officers, directors, shareholders, members, managers,
partners, employees, attorneys and agents, and any Person in control of any
thereof, from and against any loss, liability, claim, damage and expense,
including, without limitation, legal fees and expenses (in this paragraph
collectively called the “Indemnified Liabilities”), under federal and state
securities laws or otherwise insofar as such Indemnified Liability (i) arises
out of or is based upon any untrue statement or alleged untrue statement of a
material fact contained in any registration statement, prospectus or offering
memorandum or in any preliminary prospectus or preliminary offering memorandum
or in any amendment or supplement to any thereof or in any other writing
prepared by such Pledgor in connection with the offer, sale or resale of all or
any portion of the Pledged Collateral unless such untrue statement of material
fact was provided by the Collateral Agent, in writing, specifically for
inclusion therein, or (ii) arises out of or is based upon any omission or
alleged omission to state therein a material fact required to be stated or
necessary to make the statements therein not misleading, such indemnification to
remain operative regardless of any investigation made by or on behalf of the
Collateral Agent or any successor thereof, or any Person in control of any
thereof. In connection with a public sale or other distribution, such Pledgor
will provide customary indemnification to any underwriters, their successors and
assigns, officers and directors and each Person who controls any such
underwriter (within the meaning of the Securities Act). If and to the extent
that the foregoing undertakings in this paragraph may be unenforceable for any
reason, each Pledgor agrees to make the maximum contribution to the payment and
satisfaction of each of the Indemnified Liabilities which is permissible under
applicable law. The obligations of each Pledgor under this paragraph (c) shall
survive any termination of this Agreement.

 

(d)  Each Pledgor further agrees not to exercise any and all rights of
subrogation it may have against a Pledge Entity upon the sale or disposition of
all or any portion of the Pledged Collateral by the Collateral Agent pursuant to
the terms of this Agreement until the termination of this Agreement in
accordance with Section 11 below.

 

10. No Waiver; Cumulative Remedies. The Collateral Agent shall not by any act,
delay, omission or otherwise be deemed to have waived any of its remedies
hereunder, and no waiver by the Collateral Agent shall be valid unless in
writing and signed by the Collateral Agent, and then only to the extent therein
set forth. A waiver by the Collateral Agent of any right or remedy hereunder on
any one occasion shall not be construed as a bar to any right or remedy which
the Collateral Agent would otherwise have on any further occasion. No course of
dealing between any Pledgor and the Collateral Agent or any other Purchaser, and
no failure to exercise, nor any delay in exercising on the part of the
Collateral Agent or any other Purchaser of, any right, power or privilege
hereunder or under the other Transaction Documents shall impair such right or
remedy or operate as a waiver thereof; nor shall any single or partial exercise
of any right, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. The
rights and remedies herein provided are cumulative and may be exercised singly
or concurrently, and are not exclusive of any rights or remedies provided by law
or in the Purchase Agreements.

 

11. Termination. This Agreement and the Liens and security interests granted
hereunder shall terminate and the Collateral Agent, at the Pledgors’ sole
reasonable cost and reasonable expense, shall immediately return any Pledged
Interests or other Pledged Collateral then held by the Collateral Agent in
accordance with the provisions of this Agreement to the Pledgors upon the full
and complete performance and indefeasible satisfaction of all of the Obligations
(including, without limitation, the indefeasible payment in full in cash of all
such Obligations) (i) in respect of the Transaction Documents, and (ii) with
respect to which claims have been asserted by the Collateral Agent and/or any
other Purchaser.

 

12. Possession of Collateral. Beyond the exercise of reasonable care to assure
the safe custody of the Pledged Interests in the physical possession of the
Collateral Agent pursuant hereto, neither the Collateral Agent, nor any nominee
of the Collateral Agent, shall have any duty or liability to collect any sums
due in respect thereof or to protect, preserve or exercise any rights pertaining
thereto (including any duty to ascertain or take action with respect to calls,
conversions, exchanges, maturities, tenders or other matters relating to the
Pledged Collateral and any duty to take any necessary steps to preserve rights
against any parties with respect to the Pledged Collateral), and shall be
relieved of all responsibility for the Pledged Collateral upon surrendering them
to the Pledgors. Each Pledgor assumes the responsibility for being and keeping
itself informed of the financial condition of a Pledge Entity and of all other
circumstances bearing upon the risk of non-payment of the Obligations, and the
Collateral Agent shall have no duty to advise any Pledgor of information known
to the Collateral Agent regarding such condition or any such circumstance. The
Collateral Agent shall have no duty to inquire into the powers of a Pledge
Entity or its officers, directors, managers, members, partners or agents thereof
acting or purporting to act on its behalf.

 

13. Taxes and Expenses. Each Pledgor will pay to the Collateral Agent within the
Applicable Time Frame (as hereafter defined) (a) any taxes (excluding income
taxes, franchise taxes or other taxes levied on gross earnings, profits or the
like of the Collateral Agent) payable or ruled payable by any Governmental
Authority (as defined in the Security Agreement) in respect of this Agreement,
together with interest and penalties, if any, and (b) all expenses, including
the fees and expenses of counsel for the Collateral Agent and of any experts or
agents that the Collateral Agent may incur in connection with (i) the
administration, modification or amendment of this Agreement, (ii) the custody or
preservation of, or the sale of, collection from, or other realization upon, any
of the Pledged Collateral, (iii) the exercise or enforcement of any of the
rights of the Collateral Agent hereunder, or (iv) the failure of any Pledgor to
perform or observe any of the provisions hereof. For purposes hereof, the term
“Applicable Time Frame” means the earlier of (x) ten (10) days after the
Collateral Agent’s written demand for such payment and (y) the date set forth in
the Collateral Agent’s written demand for such payment if such payment is
required to be made by the Collateral Agent prior to the ten (10) day period
referred to in the foregoing clause (x).

 

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14. The Collateral Agent Appointed Attorney-In-Fact. Each Pledgor hereby
irrevocably appoints the Collateral Agent as such Pledgor’s attorney-in-fact,
with full authority in the place and stead of such Pledgor and in the name of
such Pledgor or otherwise, from time to time in the Collateral Agent’s
discretion, to take any action and to execute any instrument that the Collateral
Agent deems reasonably necessary or advisable to accomplish the purposes of this
Agreement, including, without limitation, to receive, endorse and collect all
instruments made payable to such Pledgor representing any dividend, interest
payment or other distribution in respect of the Pledged Collateral or any part
thereof and to give full discharge for the same, when and to the extent
permitted by this Agreement; provided that the power of attorney granted
hereunder shall only be exercised by the Collateral Agent after the occurrence
and during the continuance of an Event of Default.

 

15.  Governing Law; Jurisdiction; Jury Trial. All questions concerning the
construction, validity, enforcement and interpretation of this Agreement shall
be governed by the internal laws of the State of New York, without giving effect
to any choice of law or conflict of law provision or rule (whether of the State
of New York or any other jurisdiction) that would cause the application of the
laws of any jurisdiction other than the State of New York. Each party hereby
irrevocably submits to the exclusive jurisdiction of the state and federal
courts sitting in New York County, New York, for the adjudication of any dispute
hereunder or in connection herewith or with any transaction contemplated hereby
or discussed herein, and hereby irrevocably waives, and agrees not to assert in
any suit, action or proceeding, any claim that it is not personally subject to
the jurisdiction of any such court, that such suit, action or proceeding is
brought in an inconvenient forum or that the venue of such suit, action or
proceeding is improper. Each party hereby irrevocably waives personal service of
process and consents to process being served in any such suit, action or
proceeding by mailing by registered or certified mail a copy thereof to such
party at the address for such notices to it under this Agreement and agrees that
such service shall constitute good and sufficient service of process and notice
thereof ten (10) business days after the mailing thereof. Nothing contained
herein shall be deemed to limit in any way any right to serve process in any
manner permitted by law. Notwithstanding the foregoing, the Collateral Agent may
enforce its rights and remedies in any other jurisdiction applicable to the
Pledged Collateral. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE,
AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE
HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY
TRANSACTION CONTEMPLATED HEREBY.

 

16. Counterparts. This Agreement may be executed in two or more identical
counterparts, all of which together shall be considered one and the same
agreement and shall become effective when counterparts have been signed by each
party and delivered to the other party; provided that a facsimile, .pdf or
similar electronically transmitted signature shall be considered due execution
and shall be binding upon the signatory thereto with the same force and effect
as if the signature were an original signature.

 

17. Headings. The headings of this Agreement are for convenience of reference
and shall not form part of, or affect the interpretation of, this Agreement.

 

10

 

 

18. Severability. If any provision of this Agreement shall be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect the validity or enforceability of the remainder of this Agreement in that
jurisdiction or the validity or enforceability of any provision of this
Agreement in any other jurisdiction.

 

19. ENTIRE AGREEMENT; AMENDMENTS. THIS AGREEMENT, TOGETHER WITH THE OTHER
TRANSACTION DOCUMENTS, SUPERSEDES ALL OTHER PRIOR ORAL OR WRITTEN AGREEMENTS
BETWEEN THE PLEDGORS, THE COLLATERAL AGENT, THEIR AFFILIATES AND PERSONS ACTING
ON THEIR BEHALF WITH RESPECT TO THE MATTERS DISCUSSED HEREIN, AND THIS
AGREEMENT, TOGETHER WITH THE OTHER TRANSACTION DOCUMENTS AND THE OTHER
INSTRUMENTS REFERENCED HEREIN AND THEREIN, CONTAIN THE ENTIRE UNDERSTANDING OF
THE PARTIES WITH RESPECT TO THE MATTERS COVERED HEREIN AND THEREIN AND, EXCEPT
AS SPECIFICALLY SET FORTH HEREIN OR THEREIN, NEITHER THE COLLATERAL AGENT NOR
ANY OF THE PLEDGORS MAKES ANY REPRESENTATION, WARRANTY, COVENANT OR UNDERTAKING
WITH RESPECT TO SUCH MATTERS. AS OF THE DATE OF THIS AGREEMENT, THERE ARE NO
UNWRITTEN AGREEMENT BETWEEN THE PARTIES WITH RESPECT TO THE MATTERS DISCUSSED
HEREIN. EXCEPT AS SET FORTH IN SECTION 2(A) HEREOF, NO PROVISION OF THIS
AGREEMENT MAY BE AMENDED, MODIFIED OR SUPPLEMENTED OTHER THAN BY AN INSTRUMENT
IN WRITING SIGNED BY THE PLEDGORS AND THE PURCHASERS (INCLUDING THE COLLATERAL
AGENT) HOLDING A MAJORITY OF THE OUTSTANDING PRINCIPAL OF THE NOTES.

 

20.  Notices. All notices, approvals, requests, demands and other communications
hereunder shall be delivered or made in the manner set forth in, and shall be
effective in accordance with the terms of, the Purchase Agreements, in the case
of communications to the Collateral Agent, directed to the notice address set
forth in the Security Agreement.

 

21.  Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of the parties and their respective successors and assigns,
including any Purchasers of the Notes. Each Pledgor shall not assign this
Agreement or any rights or obligations hereunder without the prior written
consent of the Collateral Agent. The Collateral Agent may assign its rights
hereunder without the consent of the Pledgors, or any of them, or any Purchaser
(including any Person who becomes a Purchaser after the date hereof), in which
event such assignee shall be deemed to be the Collateral Agent hereunder with
respect to such assigned rights.

 

22.  No Third Party Beneficiaries. This Agreement is intended for the benefit of
the parties hereto and their respective successors and permitted assigns, and is
not for the benefit of, nor may any provision hereof be enforced by, any other
Person.

 

23.  Survival. All representations, warranties, covenants and agreements of the
Pledgors and the Collateral Agent shall survive the execution and delivery of
this Agreement.

 

11

 

 

24.  Further Assurances. Each Pledgor agrees that it will, at any time and from
time to time upon the written request of the Collateral Agent, execute and
deliver all assignments separate from certificates or stock powers, financing
statements and such further documents and do such further acts and things as the
Collateral Agent may reasonably request consistent with the provisions hereof in
order to carry out the intent and accomplish the purpose of this Agreement and
the consummation of the transactions contemplated hereby.

 

25.  No Strict Construction. The language used in this Agreement will be deemed
to be the language chosen by the parties to express their mutual intent, and no
rules of strict construction will be applied against any party.

 

26.  Collateral Agent Authorized. Each Pledgor hereby authorizes the Collateral
Agent to file one or more financing or continuation statements and amendments
thereto (or similar documents required by any laws of any applicable
jurisdiction) relating to all or any part of the Pledged Interests or other
Pledged Collateral without the signature of such Pledgor.

 

27.  Collateral Agent Acknowledgement. Each Pledgor acknowledges receipt of an
executed copy of this Agreement. Each Pledgor waives the right to receive any
amount that it may now or hereafter be entitled to receive (whether by way of
damages, fine, penalty, or otherwise) by reason of the failure of the Collateral
Agent to deliver to any Pledgor a copy of any financing statement or any
statement issued by any registry that confirms registration of a financing
statement relating to this Agreement.

 

28.  Collateral Agent. The terms and provisions of the Purchase Agreements which
set forth the appointment of Rose Capital Fund I, LP as Collateral Agent and the
terms and provisions of the Security Agreement which set forth the
indemnifications to which the Collateral Agent is entitled are hereby
incorporated by reference herein as if fully set forth herein.

 

[Signature Page Follows]

 

12

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Pledge Agreement to be
duly executed and delivered by their duly authorized officers on the date first
above written.

 

  PLEDGOR:         HELIX TCS, INC.         By:     Name:     Title:          
HELIX TCS, LLC         By:     Name:     Title:           ENGENI LLC         By:
    Name:     Title:           COLLATERAL AGENT:         ROSE CAPITAL FUND I, LP
  By: Rose Capital Fund I GP, LLC   Its: General Partner         By: Rose
Management Group LLC   Its: Manager         By:     Name:   Jonathan Rosenthal  
Title:  Member         By:     Name:   Andrew Schweibold   Title:     Member

 

13

 

 

ACKNOWLEDGEMENT

 

Each of the undersigned hereby (i) acknowledges receipt of a copy of the
foregoing Pledge Agreement, (ii) waives any rights or requirement at any time
hereafter to receive a copy of such Pledge Agreement in connection with the
registration of any Pledged Interests (as defined therein) in the name of the
Collateral Agent or its nominee or the exercise of voting rights by the
Collateral Agent and (iii) agrees promptly to note on its books and records the
grant of the security interest in the stock or other equity interests of the
undersigned as provided in such Pledge Agreement.

 

Dated: March 1, 2019

 

GUARANTORS:               Helix TCS, LLC   Engeni LLC           By:     By:    
Name:     Name:   Title:        Title:             

Security Consultants Group, LLC

 

Engeni S.A.

          By:     By:     Name:     Name:   Title:        Title:             

Boss Security Solutions, Inc.

                By:            Name:         Title:                

Security Grade Protective Services, Ltd.

              By:

        Name:         Title:                   

Bio-Tech Medical Software, Inc.

              By:           Name:         Title:         

  

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EXHIBIT A

to Pledge Agreement

 

Description of Pledged Interests or Units

 

Pledgor  Name of
Pledged Entity  Class  Stock or Unit
Certificate No.  Percentage of Units
Held by Pledgor Helix TCS, Inc.  Helix TCS LLC  N/A  N/A  100% Helix TCS, Inc. 
Engeni LLC  N/A  N/A  100% Helix TCS, Inc.  Bio-Tech Medical Software, Inc. 
Common  N/A  100% Helix TCS, Inc.  Boss Security Solutions Inc.  Common  N/A 
100% Helix TCS, Inc.  Security Grade Protective Services Ltd  Class A and Class
B  N/A  100% Helix TCS, LLC  Security Consultants Group LLC  N/A  N/A  100%
Engeni LLC  Engeni S.A. (Argentina)  Common  N/A  99% Bio-Tech Medical Software,
Inc.  BioTrack Consulting (No activity)  Common  N/A  100% Bio-Tech Medical
Software, Inc.  BioTrackTHC Michigan (No activity)  Common  N/A  100% Bio-Tech
Medical Software, Inc.  BioTrack PR (Puerto Rico)  Common  N/A  100% Bio-Tech
Medical Software, Inc.  BT UCS  Common  N/A  100% Bio-Tech Medical Software,
Inc.  iKush (No activity)  Common  N/A  100% Bio-Tech Medical Software, Inc. 
KushFair (No activity)  Common  N/A  100% Bio-Tech Medical Software, Inc. 
KushFair WA (No activity)  Common  N/A  100%

 

15

 

 

EXHIBIT B

to Pledge Agreement

 

Security Interests

 

 

Deline Associates, Inc.; Greenwood Village landlord, has an express contract
lien on and security interest in and to all furniture, equipment, computers,
programs, supplies, and materials owned by Security Consultants Group, LLC and
located in the office. They also have a lien on all insurance proceeds which may
accrue to Security Consultants Group, LLC by reason of damage to or destruction
of such property.

 

All landlords for rented office premises have standard claims on any insurance
proceeds that would result from damage or detsruction of such property.

 

CIT Finance as Lessor to 2 Ricoh copiers leased to the Bio-Tech Medical Software
Inc. entity

 

VAP Funding Master Note Trust (Illinois) was assigned the receviables from the
state of Illinois in April 2016, at a 10% discount rate. Less than $20,000
remains due from Illinois.

 

Automated Business Products as Lessor of 1 Okidata 4242 All-in-One machine to
Security Consultants Group LLC

 

Ford Motor Credit Co. as lender on the Ford Cargo Van Vin NM0LE7E72G1258079

 

Ford Motor Credit Co. as lender on the Ford Cargo Van

 

Larry H Miller Nissan Southwest as lender on the Nissan Cargo Van Vin
3N6CM0KN1GK701639

 

Larry H Miller Nissan Southwest as lender on the Nissan Cargo Van Vin
3N6CM0KN7GK701371

  

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EXHIBIT C

to Pledge Agreement

 

Addendum to Pledge Agreement

 

The undersigned (the “New Pledgor”), being a Debtor pursuant to that certain
Security Agreement dated as of March 1, 2019 (as amended, restated, supplemented
or otherwise modified from time to time, the “Pledge Agreement”) in favor of the
holders of those certain Notes (as defined in the Pledge Agreement), with Rose
Capital Fund I, LP, a Delaware limited partnership, acting as Collateral Agent
(as defined in the Security Agreement), by executing this Addendum to that
certain Pledge Agreement dated as of March 1, 2019, by and among the Debtors
party thereto and the Collateral Agent, hereby acknowledges that it has acquired
and legally and beneficially owns all of the issued and outstanding shares of
capital stock of __________________, a _______ (“Pledged Entity”) described
below (the “Shares”). The New Pledgor hereby agrees and acknowledges that the
Shares shall be deemed Pledged Interests pursuant to the Pledge Agreement. The
New Pledgor hereby represents and warrants to the Collateral Agent that (i) all
of the capital stock/type of interest of the Pledged Entity now owned by the New
Pledgor is presently represented by the certificates listed below, which
certificates, with undated assignments separate from certificate or stock powers
duly executed in blank by the New Pledgor, are being delivered to the Collateral
Agent, simultaneously herewith (or have been previously delivered to the
Collateral Agent), and (ii) after giving effect to this addendum, the
representations and warranties set forth in Section 3 of the Pledge Agreement
are true, complete and correct as of the date hereof.

 

Pledged Interests

 

Name of the

Pledged Entity

Class of

Equity Interest

 

Certificate No.

Percentage of Units

Held by Pledgor

 

 

     

 

 

     

  

IN WITNESS WHEREOF, the New Pledgor has executed this Addendum this _____ day of
____________.

  

  [NAME OF NEW PLEDGOR]         By:       Name:     Title:

 

 

17