Converted by FileMerlin


ANNEX VII

TO

BRIDGE LOAN AGREEMENT




SECURITY INTEREST AND PLEDGE AGREEMENT




SECURITY INTEREST AND PLEDGE AGREEMENT ("Pledge Agreement"), dated as of 

October 20, 2004, by and among the persons set forth on Schedule 1 (each a “Secured Party” and 

collectively, the “Secured Parties”), INFINIUM LABS, INC., a Delaware corporation having its 

principal executive offices at 2033 Main Street, Suite 1309, Sarasota, FL 34237 (the “Company” or 

the “Debtor”), TIMOTHY M. ROBERTS (the “Pledgor”) and KRIEGER & PRAGER, LLP, as agent 

for the Secured. Parties (the “Agent”).




RECITALS

 

   

A.

Reference is made to (i) that certain Bridge Loan Agreement of even date herewith 

(the “Loan Agreement”) to which the Company and the Secured Parties are parties, and (ii) the 

Transaction Agreements (as that term is defined in the Loan Agreement), including, without 

limitation, the Notes.  Capitalized terms not otherwise defined herein shall have the meanings 

ascribed to them in the relevant Transaction Agreements.

  

  

B.

Pursuant to the Transaction Agreements, the Debtor has certain obligations to the 

Secured Parties (all such obligations, the “Obligations”), including, but not limited to, obligations 

to pay principal and interest of the Notes on the Maturity Date The Note Obligations are personally 

guaranteed by the Pledgor (each such guaranty, a “Guarantee”).  The obligations of the Company and 

of the Pledgor under each Note and each related Guarantee are referred to collectively as the “Note 

Obligations.”




C.

To secure the Note Obligations,  the Pledgor has agreed to pledge certain shares of 

Common Stock of the Company held by the Pledgor to the Secured Parties as security for the 

performance of the Note Obligations.




D.

The Pledgor is a principal shareholder of the Debtor and has determined that it is in 

the Pledgor’s best interests, including to the benefit the other interests of the Pledgor in the 

Company, to provide the Guarantee pledge referred to herein.




E.

The Secured Parties are willing to enter into the Loan Agreement and the other 

Transaction Agreements only upon receiving Pledgor’s guarantee under the Guarantee and pledge 

of certain stock of the Company, as set forth in this Pledge Agreement.




NOW, THEREFORE, in consideration of the premises, the mutual covenants and conditions 

contained herein, and for other good and valuable consideration, the receipt and sufficiency of which 

are hereby acknowledged, the parties hereto hereby agree as follows:






1.

Grant of Security Interest.




(a)

To secure the Note Obligations of Debtor and the Pledgor’s obligations under 

the Guarantee, the Pledgor hereby pledges to the Secured Parties (and to each of them based on the 

Lender’s Allocable Share of such Secured Party), all of the shares of Common Stock set forth on the 

attached Schedule 2 of this Agreement (the “Pledged Shares”).  Unless otherwise set forth on 

Schedule 2 of this Agreement, the Pledgor is the beneficial and record owner of the Pledged Shares 

set forth opposite such Pledgor’s name on such Schedule.  Such Pledged Shares, together with any 

substitutes therefor, or proceeds thereof, are hereinafter referred to collectively as the “Collateral.”




(b)

The Company represents and warrants to the Secured Parties that the Pledged 

Shares are duly authorized, validly issued, fully paid and non-assessable and that it will not permit 

the transfer of the Pledged Shares except in accordance with this Pledge Agreement while the same 

is in effect.




(c)

(i)

The Company has given written notice to the Transfer Agent regarding 

the creation of the security interest of the Secured Parties in the Collateral.  The Company has 

instructed the Transfer Agent (A) to record on its books the existence of such security interest with 

respect to the Pledged Shares, (B) to transfer Pledged Shares in accordance with the instructions of 

the Agent without further action of the Company, and (C) except upon such instructions of the Agent 

or until written notice is given by the Agent that such security interest has been released to the 

Pledgor in whole or in part, to not allow a transfer of the shares representing any part of the 

Collateral or to replace the certificates representing the Collateral.




(ii)

The Pledgor hereby consents to the provisions of the preceding 

subparagraph (i) and authorize the Company to provide such notice and instructions to the Transfer 

Agent.




(iii)

The Transfer Agent has confirmed to the Agent that (i) the Transfer 

Agent has received such notice and instructions and (ii) without the prior written consent of the 

Agent, the Transfer Agent will not take any action inconsistent with such notice or instructions.




2.

Obligations Secured.  During the term hereof, the Collateral shall secure the 

following:




(a)

The performance by the Company of the Note Obligations; and




(b)

The performance by the Pledgor of its obligations, covenants, and agreements under 

the Guarantee.




The obligations, covenants and agreements described in clauses (a) and (b) are the “Obligations.”




3.

Perfection of Security Interests.  Upon execution of this Pledge Agreement by the 

Debtor and the Pledgor, 






 

(a)

the Pledgor shall deliver and transfer possession of the stock certificates 

identified opposite such Pledgor’s name on Schedule 2 of this Agreement (the “Pledged 

Certificates”), together with stock transfer powers duly executed in blank by the registered owner 

of the shares represented by such Certificates, with appropriate Medallion signature guaranty1 

(“Stock Powers”), to the Secured Parties to be held by the Agent, as agent for the Secured Parties.

 

 

(b)

The Collateral will be held by the Agent, to perfect the security interest of the 

Secured Parties, until the earlier of




 (i) the payment in full of all amounts due under the Note, or




(ii) foreclosure of Secured Party's security interests as provided herein.




(c)

The Debtor and the Pledgor, and each of them, hereby appoint Samuel M. 

Krieger or Ronald Nussbaum (each one of whom may act independently), as attorney-in-fact with 

powers of substitution, to execute all documents and perform all acts as Secured Party, may 

reasonably request in order to perfect and maintain a valid security interest for Secured Party in the 

Collateral.

  

  

4.

[Reserved]. 

  

  

5.

Pledgor’s Warranty.  The Pledgor represents and warrants hereby to the Secured 

Parties as follows with respect to the Pledged Shares set forth opposite such Pledgor’s name on 

Schedule 2 to this Agreement: 




A.

With respect to title to the Transferred Shares




(i)

that upon transfer by Pledgor of such Pledgor’s Certificates and Stock Powers 

to Secured Parties pursuant to this Agreement at such time, if any, as contemplated hereby upon the 

occurrence of an Event of Default, the purchaser of the Pledged Shares or the Secured Party, as 

contemplated herein, as the case may be, will have good title (both record and beneficial) to the 

relevant Pledged Shares;




(ii)

that there are no restrictions upon transfer and pledge of the Pledged Shares 

pursuant to the provisions of this Agreement except the restrictions imposed by Rule 144 under the 

Securities Act of 1933;




1 The Medallion signature guaranty requirement will be satisfied by any other format for 

confirmation of the Pledgor’s signature which the Transfer Agent is willing to accept in connection 

with the transfer of the Pledged Shares to the Secured Parties, provided the Transfer Agent has 

confirmed such willingness to the Agent in writing.



(iii)

that the Pledged Shares are free and clear of any encumbrances of every nature 

whatsoever, such Pledgor is the sole owner of the Pledged Shares, and such shares are duly 

authorized, validly issued, fully paid and non-assessable,




(iv)

that such Pledgor has owned the Pledged Shares since the date specified on 

Schedule 2 to this Agreement and that such shares were fully paid for as of such specified date,




(v)

that such Pledgor agrees not to grant or create, any security interest, claim, 

lien, pledge or other encumbrance with respect to such Pledgor’s Pledged Shares or attempt to sell, 

transfer or otherwise dispose of any of such shares until the Obligations have been paid in full or this 

Agreement has terminated; and




B.

With respect to certain other matters:




(i)

that such Pledgor has made necessary inquiries of the Company and believes 

that the Company fully intends to fulfill and has the capability of fulfilling the Obligations to be 

performed by the Company in accordance with the terms of the Transaction Agreements,




(ii)

that the Pledgor is not acting, and has not agreed to act, in any plan to sell or 

dispose of the Pledged Shares in a manner intended to circumvent the registration requirements of 

the Securities Act of 1933, as amended, or any applicable state law,




(iii)

that Pledgor has been advised by counsel of the elements of a bona-fide pledge 

for purposes of Rule 144(d)(3)(iv) under the Securities Act of 1933, as amended, including the 

relevant SEC interpretations and affirms the pledge of shares by such Pledgor pursuant to this Pledge 

Agreement will constitute a bona-fide pledge of such shares for purposes of such Rule,




(iv)

that this Pledge Agreement constitutes a legal, valid and binding obligation 

of such Pledgor enforceable in accordance with its terms (except as the enforcement thereof may be 

limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium, and similar 

laws, now or hereafter in effect), and




(v)

that the Pledgor’s residence address and social security number are as 

provided under the Pledgor’s signature on the signature page hereof and that attached hereto is a true 

photocopy of the Pledgor’s current driver’s license.




6.

Reports under Securities Act and Exchange Act.  With a view to making available 

to Secured Party the benefits of Rule 144 promulgated under the Securities Act or any other similar 

rule or regulation of the SEC that may at any time permit Secured Party to sell securities of the 

Company to the public without Registration (“Rule 144”), the Company agrees to:




(i)

make and keep public information available, as those terms are understood 

and defined in Rule 144;






(ii)

file with the SEC in a timely manner all reports and other documents required 

of the Company under the Securities Act and the Exchange Act; and




(iii)

until the  date when the Secured Party may sell all Registrable Securities under 

Rule 144 without volume or other restrictions or limits (the “Unrestricted Sale Date”), furnish to the 

Secured Party so long as the Secured Party owns or has a security interest in the Pledged Shares (a 

“Holder”), promptly upon request, (i) a written statement by the Company that it has complied with 

the reporting requirements of Rule 144, the Securities Act and the Exchange Act, (ii) if not available 

on the SEC’s EDGAR system, a copy of the most recent annual or quarterly report of the Company 

and such other reports and documents so filed by the Company and (iii) such other information as 

may be reasonably requested to permit the Secured Party to sell such securities pursuant to Rule 144 

without registration; and




(d)

at the request of any Holder, give its Transfer Agent instructions (supported 

by an opinion of Company counsel, if required or requested by the Transfer Agent) to the effect that, 

upon the Transfer Agent’s receipt from such Holder of




(i) a certificate (a “Rule 144 Certificate”) certifying (A) that the Holder’s holding 

period (as determined in accordance with the provisions of Rule 144) for the Pledged 

Shares which the Holder proposes to sell (the “Securities Being Sold”) is not less 

than (1) year and (B) as to such other matters as may be appropriate in accordance 

with Rule 144 under the Securities Act, and 




(ii) an opinion of counsel acceptable to the Company (for which purposes it is agreed 

that Krieger & Prager LLP shall be deemed acceptable if not given by Company 

Counsel) that, based on the Rule 144 Certificate, Securities Being Sold may be sold 

pursuant to the provisions of Rule 144, even in the absence of an effective 

Registration Statement, 




the Transfer Agent is to effect the transfer of the Securities Being Sold and issue to the buyer(s) or 

transferee(s) thereof one or more stock certificates representing the transferred Securities Being Sold 

without any restrictive legend and without recording any restrictions on the transferability of such 

shares on the Transfer Agent’s  books and records (except to the extent any such legend or restriction 

results from facts other than the identity of the Holder, as the seller or transferor thereof, or the 

status, including any relevant legends or restrictions, of the shares of the Securities Being Sold while 

held by the Holder). If the Transfer Agent reasonably requires any additional documentation at the 

time of the transfer, the Company shall deliver or cause to be delivered all such reasonable additional 

documentation as may be necessary to effectuate the issuance of an unlegended certificate.




7.

Voting Rights.  During the term of this Pledge Agreement and until such time as this 

Pledge Agreement has terminated or Secured Party has exercised its rights under this Pledge 

Agreement to foreclose its security interest in the Collateral, Pledgor shall have the right to exercise 

any voting rights evidenced by, or relating to, the Collateral.






8.

Warrants and Options.  In the event that, during the term of this Pledge Agreement, 

subscription, warrants, dividends, or any other rights or option shall be issued in connection with the 

Collateral, such warrants, dividends, rights and options shall be immediately delivered to Secured 

Party to be held under the terms hereof in the same manner as the Collateral.




9.

Preservation of the Value of the Collateral and Reimbursement of Secured Party.  

Pledgor shall pay all taxes, charges, and assessments against the Collateral and do all acts necessary 

to preserve and maintain the value thereof.  On failure of Pledgor so to do, Secured Party may make 

such payments on account thereof as (in Secured Party's discretion) is deemed desirable, and Pledgor 

shall reimburse Secured Party immediately on demand for any and all such payments expended by 

Secured Party in enforcing, collecting, and exercising its remedies hereunder.




10.

Default and Remedies.  




(a)

For purposes of this Agreement, “Event of Default” shall mean any one or more of 

the following events:




(i)

any default in the performance by the Company or the Pledgor of any of the 

Note Obligations or the Guarantee, as the case may be, after the expiration, without cure, of the cure 

period (but only if any such cure period is specifically provided in the Transaction Agreements and 

without any regard to any cure period if no such cure period is provided; it being specifically 

acknowledged by the Company and the Pledgor that all payment obligations are time of the essence 

obligations, with no cure periods provided), or 




(ii)

a breach by a Pledgor of any of such Pledgor’s representations, warranties, 

covenants or agreements in this Pledge Agreement.




(b)

During the term of this Pledge Agreement, the Secured Party shall have the following 

rights after any Event of Default and for so long as the Obligations are not satisfied in full:




(i)  the rights and remedies provided by the Uniform Commercial Code as adopted 

by the State of New York (as said law may at any time be amended), except that the 

Secured Party waives any right to a deficiency pursuant to Section 9-608 thereof or 

otherwise;




(ii)  the right to receive and retain all dividends, payments and other distributions of 

any kind upon any or all of the Pledged Shares as additional Collateral;




(iii)  to the extent of the Lender’s Allocable Share of the Secured Party, the right to 

cause any or all of the Pledged Shares and all additional Collateral to be transferred 

to its own name and have such transfer recorded in any place or places deemed 

appropriate by Secured Party; and






(iv)  the right to sell, at a public or private sale, to the extent of the Lender’s 

Allocable Share of the Secured Party, the Collateral or any part thereof for cash, upon 

credit or for future delivery, and at such price or prices in accordance with the 

Uniform Commercial Code (as such law may be amended from time to time); it 

being understood that one or more of the Secured Parties may, but shall not be 

required to, take such actions jointly.  Upon any such sale, Secured Party shall have 

the right to deliver, assign and transfer to the purchaser thereof the Collateral so sold.  

Secured Party shall give the Pledgor not less than ten (10) days written notice of its 

intention to make any such sale.  Any such sale shall be held at such time or times 

during ordinary business hours and at such place or places as Secured Party may fix 

in the notice of such sale.  Secured Party may adjourn or cancel any sale or cause the 

same to 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.  In case of any sale of all or any part of the Collateral upon terms 

calling for payments in the future, any Collateral so sold may be retained by Secured 

Party until the selling price is paid by the purchaser thereof, but Secured Party shall 

incur no liability in the case of the failure of such purchaser to take up and pay for the 

Collateral so sold and, in the case of such failure, such Collateral may again be sold 

upon like notice.  Secured Party, however, instead of exercising the power of sale 

herein conferred upon it, may proceed by a suit or suits at law or in equity to 

foreclose the security interest and sell the Collateral, or any portion thereof, under a 

judgment or decree of a court or courts of competent jurisdiction, the Pledgor having 

been given due notice of all such action.  Secured Party shall incur no liability as a 

result of a sale of the Collateral or any part thereof.

  

  

11.

Waiver.  Each of the Debtor and the Pledgor waives any right that it may have to 

require Secured Party to proceed against any other person, or proceed against or exhaust any other 

security, or pursue any other remedy Secured Party may have.

  

  

12.

Term of Agreement.  This Pledge Agreement shall continue in full force and effect 

until the earlier of the payment in full of the Notes.  If the Notes are paid in full, the security interests 

in the relevant Collateral shall be deemed released, and any portion of the Collateral not transferred 

to or sold by any one or more Secured Parties shall be returned to the Pledgor (and for such purpose, 

delivery to Darrin Ocasio, Esq., of Sichenzia Ross Friedman Ference LLP of New York, NY shall 

deemed to comply with such return requirement).  Upon termination of this Pledge Agreement, the 

relevant Collateral shall be returned within five (5) Trading Days to Debtor or to the Pledgor, as 

contemplated above.




13.

Provisions Affecting the Agent.




(a)

The Agent is acting as agent for the Secured Parties solely for the administrative 

convenience of the Debtor, the Pledgor and the Secured Parties.






(b)

The Agent is authorized to execute and file any and all financing statements desired 

to be filed by the Secured Parties to reflect the security interest in the Collateral in any and all 

jurisdictions.  For such purposes, each of the Debtor and the Pledgor irrevocably appoints the Agent 

(acting by Samuel M. Krieger or Ronald Nussbaum, or either one of them), with full power of 

substitution to execute and file such financing statements naming the Debtor and the Pledgor as 

debtors thereon.

  

(c)

Reference is made to the provisions of Sections 2 through 12, inclusive of the Joint 

Escrow Instructions.  All such provisions are incorporated herein by reference as if set forth herein 

in full, except that, for such purposes, the references therein to (i) the “Escrow Agent” shall be 

deemed to be references to the “Agent” under this Pledge Agreement, (ii) the “Company” shall be 

deemed to be references to the Debtor and to the Pledgor under this Pledge Agreement, and (iii) each 

“Lender” shall be deemed to be references to each Secured Party under this Pledge Agreement.




14.

General Provisions:




14.1

Binding Agreement; No Modification of Transaction Agreements.  This Pledge 

Agreement shall be binding upon and shall inure to the benefit of the successors and assigns of the 

respective parties hereto.  Except to the extent specifically provided herein, nothing in this Pledge 

Agreement shall limit or modify any provision of any of the Transaction Agreements




14.2

Captions.  The headings used in this Pledge Agreement are inserted for reference 

purposes only and shall not be deemed to define, limit, extend, describe, or affect in any way the 

meaning, scope or interpretation of any of the terms or provisions of this Pledge Agreement or the 

intent hereof.




14.3

Counterparts.  This Pledge Agreement may be signed in any number of counterparts 

with the same effect as if the signatures upon any counterpart were upon the same instrument.  All 

signed counterparts shall be deemed to be one original.  A facsimile transmission of this signed 

Pledge Agreement shall be legal and binding on all parties hereto.




14.4

Further Assurances.  The parties hereto agree that, from time to time upon the written 

request of any party hereto, they will execute and deliver such further documents and do such other 

acts and things as such party may reasonably request in order fully to effect the purposes of this 

Pledge Agreement. The Transfer Agent Instructions annexed hereto are deemed an integral part of 

this Pledge Agreement.




14.5

Waiver of Breach.  Any waiver by either party of any breach of any kind or character 

whatsoever by the other, whether such be direct or implied, shall not be construed as a continuing 

waiver of or consent to any subsequent breach of this Pledge Agreement.




14.6

Cumulative Remedies.  The rights and remedies of the parties hereto shall be 

construed cumulatively, and none of such rights and remedies shall be exclusive of, or in lieu or 

limitation of any other right, remedy, or priority allowed by applicable law.






14.7

Amendment.  This Pledge Agreement may be modified only in a written document 

that refers to this Pledge Agreement and is executed by Secured Party, the Pledgor and the Debtor.




14.8

Interpretation.  This Pledge Agreement shall be interpreted, construed, and enforced 

according to the substantive laws of the State of New York.




14.9

Governing Law.  This Pledge Agreement shall be governed by and construed in 

accordance with the laws of the State of New York.  Each of the parties consents to the jurisdiction 

of the federal courts whose districts encompass any part of the County of New York or the state 

courts of the State of New York sitting in the County of New York in connection with any dispute 

arising under this Pledge Agreement and hereby waives, to the maximum extent permitted by law, 

any objection, including any objection based on forum non coveniens, to the bringing of any such 

proceeding in such jurisdictions.




14.10

WAIVER OF JURY TRIAL.  The parties to this Pledge Agreement hereby waive a 

trial by jury in any action, proceeding or counterclaim brought by any of them against any other in 

respect of any matter arising out or in connection with this Pledge Agreement.




14.11

 Notice.  Any notice or other communication required or permitted to be given 

hereunder shall be effective upon receipt.  Such notices may be sent (i) in the United States mail, 

postage prepaid and certified, (ii) by express courier with receipt, (iii) by facsimile transmission, with 

a copy subsequently delivered as in (i) or (ii) above.  Any such notice shall be addressed or 

transmitted as follows:




If to Pledgor, to:




Timothy M. Roberts

511 Harbor Gate Way

Longboat Key, FL 34228

Tel:  (941) 383-2940

  

Fax:  (   )    -    




If to the Debtor, any Secured Party, or the Agent, to

the addresses of the Company, the 

relevant Lender and the Escrow Agent, respectively, as provided by the Loan Agreement.




Any party may change its address by notice similarly given to the other parties (except that a Secured 

Party need not give notice to other Secured Parties).




14.12

Acknowledgement by Debtor and Pledgor.  In the event that any provision of the 

Transaction Agreements, the Guarantee or this Pledge Agreement as applied to any party or 

circumstances shall be adjudged by a court to be invalid or unenforceable, each of the Debtor or the 

Pledgor, as the case may be, acknowledges and agrees that this Pledge Agreement shall remain valid 

and enforceable in all respects against the Debtor and the Pledgor.






 [THE REMAINDER OF THIS PAGE IS INTENTIONALLY BLANK.

  THE SIGNATURES OF THE PARTIES ARE ON THE NEXT PAGE.]



IN WITNESS WHEREOF, the Parties have executed this Agreement as of the day, month 

and year first above written.




SECURED PARTIES (named in Schedule 1):

By:  Krieger & Prager LLP, as their agent




By:_________________________________________










DEBTOR:

INFINIUM LABS, INC. 







By:__________________________________________

Its: _______________

  

  

PLEDGOR:







__________________________________________

Tim Roberts

Residence Address: 

511 Harbor Gate Way

Longboat Key, FL 34228




Social Security No.: 

###-##-####







AGENT:

KRIEGER & PRAGER, LLP







By:_________________________________________



SCHEDULE 1




The Secured Parties are:




	  Name

	  Address


	 Hazinu Ltd

	5 St.  Kilda Road

Victoria, Australia


	  

  

	 
	  

  

	 
	  

  

	 
	  

  

	 





The “Lender’s Allocable Share” of each Secured Party is determined as provided in the Loan 

Agreement.



SCHEDULE 2

  

 

The following shares are pledged hereunder as the Pledged Shares, each certificate in the 

name of:

  

Holder’s Name 

       Certificate No.      

No. of Shares               Date of Acquisition2

  

Timothy M. Roberts 

3155-9

1,000,000

January 20, 2004

Timothy M. Roberts

3156-7

1,000,000

January 20, 2004

Timothy M. Roberts

3157-5

1,000,000

January 20, 2004

___________

 

 

Total:

3,000,000 shares

  

  

  

Footnotes

2This is date shares were originally acquired by Pledgor.  The specific stock certificates were 

issued Sept.  20, 2004 in exchange for Pledgor’s submission of one or more previously issued 

certificates.