Exhibit 10.5


 


PLEDGE AGREEMENT


 


This PLEDGE AGREEMENT (the “Agreement”) is
made effective as of November 22, 2005, by and among STEN Acquisition
Corporation, a Minnesota corporation (the “Lender”), and Site Equities
International, Inc., a Nevada corporation (the “Borrower”).


 


BACKGROUND


 


A.                                   Concurrently with the execution of this Agreement, the Borrower and
the Lender are entering into a loan and merger option agreement (the “Loan
Agreement”) dated as of the same date hereof, under which Lender has agreed to
advance to Borrower certain funds pursuant to the terms of the Loan Agreement
and evidenced by a certain promissory note of Borrower dated as of the same
date as the Loan Agreement (the “Initial Note”), and a certain Replacement Note
(as defined in the Loan Agreement) (the Initial Note and the Replacement Note
are referred to herein as the “Notes”).


 


B.                                     The Borrower is the sole member of Paycenters, LLC, a Nevada
limited liability company (the “Issuer”).


 


C.                                     As a material inducement to enter into the Loan Agreement, the
Lender desires the Borrower to pledge to Lender, and the Borrower agrees to
grant to Lender, a security interest in 100% of the membership interests of
Issuer (the “Membership Interests”) as collateral to secure the obligations of
Borrower under the Loan Agreement and the Notes.


 


NOW, THEREFORE, in consideration of the
premises and other good and valuable consideration, the receipt, adequacy and
sufficiency of which are hereby acknowledged, the Lender and Borrower hereby
agree as follows:


 


1.                                       Definitions.  All capitalized terms which are not defined
herein shall have the respective meanings provided for in the Loan
Agreement.  All terms not defined herein
or in the Loan Agreement shall have the meaning set forth in Article 9 of
the Uniform Commercial Code in effect in the State of Minnesota.  The term “Obligations”, as used herein, means
all of the indebtedness, obligations and liabilities of Borrower to Lender, due
or to become due, now existing or hereafter arising under or in respect of the
Notes and Loan Agreement.  The term “Event
of Default” as used herein, means an event of default as either described or
listed in the Notes or the Loan Agreement.


 


2.                                       Pledge.  The Borrower hereby pledges to the Lender and
grants to the Lender a security interest in the Membership Interests, including
all present and future rights of Borrower to receive distributions, cash,
instruments, all proceeds and other property (cash or non-cash) from time to
time received, receivable or otherwise distributed in respect of or in exchange
for the Membership Interests, and all other rights of Borrower as a member
under the organizational documents of Issuer.


 


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3.                                       Security for Obligations.  This Agreement secures payment of the
principal, interest and other Obligations required of Borrower under the Loan
Agreement and the Notes.


 


4.                                       Representation on Issuer’s Books.  For the better perfection of the Lender’s
rights in and to the Membership Interests, the Borrower shall obtain from the
Issuer a notation on the books of the Issuer acknowledging the pledge of the
Membership Interests.


 


5.                                       Representations and Warranties.  The Borrower represents and warrants as
follows:


 


(a)                                  Borrower is a corporation, duly organized and in good standing
under the laws of the State of Nevada and has full power and authority to
execute this Agreement, to perform its obligations hereunder and to grant the
security interest provided hereunder.


 


(b)                                 The Borrower is the legal and beneficial owner of the Membership
Interests free and clear of any lien, security interest, option or other charge
or encumbrance except for the security interest created by this Agreement.


 


(c)                                  The pledge of the Membership Interests pursuant to this Agreement
creates a valid and perfected first priority security interest in the
Membership Interests, securing the payment of the Obligations.


 


(d)                                 The pledged Membership Interests constitute one hundred percent
(100%) of the issued and outstanding Membership Interests of Issuer as of the
date of this Agreement.


 


(e)                                  The execution, delivery and performance of this Agreement and the
delivery and the granting of a valid and enforceable security interest in the
Membership Interests does not and will not violate any provision of law or any
order, rule, or regulation of any court or other governmental agency or
authority or regulatory body, any provision of any articles or certificate of
organization, member control agreement, operating agreement or other governing
document of Borrower, and will not violate or constitute a breach or default
under any other agreement, contract, mortgage or instrument to which Borrower
is a party or to which its properties are bound.


 


6.                                       Covenants.


 


(a)                                  Borrower agrees that it shall not during the term of this Agreement
cause or permit the Issuer to issue any Membership Interests that may have the
direct or indirect effect of diluting the financial or governance rights of the
Membership Interests.


 


(b)                             The Issuer agrees that it shall not cause or permit to be issued
during the term of this Agreement any membership interests or other rights that
may have the direct or indirect effect of diluting the financial or governance
rights of the Membership Interests.


 


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(c)                              Borrower expressly waives demand, presentment, protest or notice of
dishonor of the Notes.


 


7.                                       Further Assurances.  The Borrower agrees that at any time and from
time to time, the Borrower will promptly execute and deliver all further
instruments and documents, and take all further action, that may be necessary
or desirable, or that the Lender may request, in order to perfect and protect
any security interest granted or purported to be granted hereby or to enable
the Lender to exercise and enforce its rights and remedies hereunder with
respect to any Membership Interests.


 


8.                                       Voting Rights; Dividends.   So long as no Event of Default or event
which, with the giving of notice or the lapse of time, or both, would become an
Event of Default shall have occurred and be continuing:


 


(a)                                  The Borrower shall be entitled to exercise any and all voting and
other consensual rights pertaining to the Membership Interests or any part
thereof for any purpose not inconsistent with the terms of this Agreement;


 


(b)                                 The Borrower shall be entitled to receive and retain any and all
distributions and interest paid in respect of the Membership Interests.


 


9.                                       Further Covenants.  The Borrower agrees that it: (a) will
not, without the consent of Lender, create or permit to exist any lien or
security interest, or other charge or encumbrance upon or with respect to any
of the Membership Interests, except for the security interest under this
Agreement, (b) will not exercise its voting and other consensual rights
pertaining to the Membership Interests or any part thereof for any purpose
inconsistent with the terms of this Agreement,


 


10.                                 Remedies upon Default.  If any Event of Default shall have occurred
and be continuing for a period of five (5) business days following
delivery of written notice thereof by Lender to Borrower, the Lender may: (a) cause
the Issuer to cancel the Membership Interests and reissue such cancelled
Membership Interests in the name of the Lender, (b) sell all or part of
the Membership Interests in accordance with Section 11 below, or (c) exercise
such other rights and remedies of a secured party under the Uniform Commercial
Code (the “Code”) in effect in the State of Minnesota at that time.


 


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11.                                 Sale of Membership Interests.  A sale of Membership Interests, as provided
in Section 10(b), may be made by Lender at a public or private sale,
following the notice hereinafter provided, for cash, upon credit or for future
delivery at such price or prices as the Lender deems satisfactory.  Lender or any parties related to or
affiliated with it, may purchase any or all of the Membership Interests sold at
a public sale.  Lender is authorized at
any sale, if Lender deems it advisable to do so, to restrict the prospective
bidders or purchasers to persons who will represent and agree that they are
purchasing for their own account for investment, and not with a view to the
distribution or sale of any of the Membership Interests.  Upon any such sale, Lender shall have the
right to deliver, assign and transfer to the purchaser thereof the Membership
Interests so sold.  Each purchaser at any
such sale shall hold the property sold absolutely, free from any claim or right
of whatsoever kind, including any equity or right of redemption of Borrower
which it has or may have under any rule of law or statute now existing or
hereafter adopted; and as to such purchaser, Borrower hereby specifically
waives all such rights of redemption, of stay or of appraisal, which might in
any way affect such purchaser.  Lender
shall give Borrowers ten (10) days written notice of intention to make
such public or private sale, which notice shall state the time and place fixed
for such sale and whether the sale is to be public or private.  The Lender shall not be obligated to complete
any sale for which he sends out notice and may, without notice or publication,
adjourn any sale or cause the same to be adjourned by announcement at the time
and place fixed for such sale, and such sale may thereafter be made at the time
and place to which the same has been so adjourned.  The Lender instead of exercising the power of
sale herein conferred upon them, may proceed by a suit or suits at law of in
equity to foreclose the pledge and sell the Membership Interests, or any portion
thereof, under a judgment or decree of a court or courts of competent
jurisdiction.


 


12.                                 Facilitation of Rights under this Agreement. Upon the occurrence
and continuance of any Event of Default, Lender or its nominee or nominees
shall be deemed to be granted a proxy from Borrower to exercise the sole and
exclusive right to exercise all powers of voting and/or consent pertaining to
the Membership Interests, for the purpose of taking any and all action which
the Lender may deem necessary or advisable to protect its security interest in
the Membership Interests and to assure repayment of the Notes, which grant is
deemed to be coupled with an interest and shall be irrevocable; provided that
in no event shall the Lender be deemed under any obligation to exercise any
such right or privilege.  In addition,
Borrower hereby designates Lender, or any agent designated by Lender, as
attorney-in-fact of Borrower, to (a) endorse in favor of the Lender any of
the Membership Interests; (b) cause the transfer of any of the Membership
Interests in such name as Lender may from time to time determine; (c) cause
the issuance of certificates for book entry and/or uncertificated securities; (d) make,
demand and initiate actions to enforce any of the Membership Interests or
rights therein; (e) take such action with respect to the Membership
Interests as Lender may reasonably determined to be necessary to protect and
preserve its interest therein.  It is
understood and agreed that, upon an Event of Default, Lender shall have and may
exercise at any time all rights, remedies, powers and privileges of the
Borrowers with respect to and under the Membership Interests.


 


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13.                                 Additional Collateral/Notes. The
Lender may from time to time, without notice to Borrower and without impairing
or affecting the security interest created hereby:  (i) acquire a security interest in any
property owned by a third party in addition to the Membership Interests, or
release any such interest so acquired, or permit any substitution or exchange
for such property or any part thereof; (ii) modify, extend or renew for
any period one or more of the Notes; and (iii) upon the occurrence of an
Event of Default resort to the Membership Interests for payment of the Notes
whether or not the Lender shall have resorted to any other collateral or
proceeded against any other party primarily or secondarily liable under the
Notes.


 


14.                                 Deficiency.  If the proceeds of the sale, collection or
other realization of or upon the Collateral are insufficient to cover the costs
and expenses of such realization and the payment in full of the Notes, the
Borrower shall remain liable for any deficiency.


 


15.                                 Amendments.  No amendment or waiver of any provision of
this Agreement nor consent to any departure by the Borrower herefrom, shall in
any event be effective unless the same shall be in writing and signed by the
Lender, and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.


 


16.                                 Notices.  All notices and other communications
hereunder shall be in writing and shall be deemed duly given upon delivery
either by commercial delivery service, or sent via facsimile (receipt
confirmed), to the parties at the following address or facsimile numbers (or at
such other address or facsimile numbers for a party as shall be specified by
like notice):


 


If to the Lender:


 


STEN Acquisition Corporation


10275 Minnetonka Boulevard, Suite 310


Wayzata, MN 55305


Attention: 
Kenneth W. Brimmer, Chief Executive Officer


Facsimile: 952-545-2795


 


with a copy to:


 


Lindquist & Vennum P.L.L.P.


4200 IDS Center


80 South Eighth Street


Minneapolis, Minnesota 55402


Attention: Girard P. Miller


Facsimile: 612-371-3207


 


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If to Borrower:


 


Site Equities International Inc


8370 W. Cheyenne Ave.


Suite 109-300


Las Vegas, NV 89129


Attn Ken Antos


Facsimile: 702-248-4193


 


Any party hereto may by notice so given
provide and change its address for future notices hereunder.  Notice shall conclusively be deemed to have
been given when personally delivered or when deposited in the mail in the
manner set forth above.


 


17.           Continuing
Security Interest.  This Agreement
shall create a continuing security interest in the pledged Membership Interests
and shall (i) remain in full force and effect until satisfaction in full
of the Obligations, (ii) be binding upon the Borrower, its successors and
assigns, and (iii) inure, together with the rights and remedies of the
Lender hereunder, to the benefit of the Lender, its successors and
assigns.  Borrower shall be entitled to
the return, upon its request and at its expense, of any Membership Interests
transferred to Lender pursuant to the terms of this Agreement upon: (i) the
Borrower’s cure of an Event of Default within any stated cure period, and if no
cure period is stated within thirty (30) days from written notice of the Event
of Default, or (ii) upon full satisfaction of the Obligations within the
period described in the Loan Agreement or Notes.


 


18.                                 Governing Law.  This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Minnesota except as
required by mandatory provisions of law and except to the extent that the
validity or perfection of the security interest hereunder, or remedies
hereunder, in respect of any particular Membership Interests are governed by
the laws of a jurisdiction other than the State of Minnesota.


 


19.                                 Submission to Jurisdiction; Consent to Service; Waiver of Jury
Trial.  Each
of the parties acknowledges and agrees that Section 8.06, 8.07 and 8.09 of
the Loan Agreement is binding upon the parties with respect any dispute under
this Agreement and the same is incorporated by reference herein as if fully set
forth.


 


The
Remainder of this Page is Intentionally Blank


 


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IN WITNESS WHEREOF, the Borrower has caused
this Agreement to be duly executed and delivered as of the above referenced
effective date.


 


 


	
   

  	
  Borrower:

  
	
   

  	
   

  
	
   

  	
  SITE EQUITIES INTERNATIONAL, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Kenneth Antos

  	
   

  
	
   

  	
  Its:

  	
  President

  
	
   

  	
   

  
	
   

  	
  Lender:

  
	
   

  	
   

  
	
   

  	
  STEN ACQUISITION CORPORATION

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Kenneth W. Brimmer

  	
   

  
	
   

  	
  Its:

  	
  Chief Executive Officer

  
							



 


The undersigned Issuer hereby agrees to
comply with its Obligations under Section 6(b) of this Agreement and
agrees to cancel the number of Membership Interests instructed by Lender and to
reissue such Membership Interests in the name of Lender upon written notice by
Lender and evidence of an Event of Default.


 


 


	
   

  	
  ISSUER:

  
	
   

  	
   

  
	
   

  	
  PAYCENTERS, LLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Kenneth Antos

  	
   

  
	
   

  	
  Its:

  	
  Manager

  
					



 


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