Document:

ex102.htm

Exhibit 10.2

 

STOCK PLEDGE AGREEMENT

 

PLEDGE AGREEMENT (this “Agreement”), dated April 6, 2011, made by and among Vanity Events Holding, Inc., a Delaware corporation (the “Company”) and the holders signatory hereto (the “Pledgor”) of certain shares of series A convertible preferred stock of the Company, in favor the holder of the Company’s 10% Convertible Debentures, dated April 6, 2011 due, unless due earlier pursuant to the terms therein, one year following their issuance  (the “Pledgee”).

W  I  T  N  E  S  S  E  T  H:

WHEREAS, Pledgee has agreed to lend to the Company, and the Company has agreed to borrow from the Pledgee, up to an aggregate of $135,000 evidenced by the Company’s 10% Convertible Debentures (the “Debentures”) issuable pursuant to the terms and conditions set forth in a securities purchase agreement dated April 6, 2011 among the Company and the Pledgee (the “Purchase Agreement”);

WHEREAS, pursuant to the provisions of the Purchase Agreement, and as a condition to the obligation of the Pledgee to lend thereunder, the Pledgor, as principal, employee and shareholder of the Company, has agreed to make the pledge contemplated by this Agreement in order to induce Pledgee to perform its obligations under the Purchase Agreement and the Debentures;

 WHEREAS, as a condition to the obligation of the Pledgee to lend pursuant to the Debentures, the Company agrees to undertake such action contemplated by this Agreement in order to induce Pledgee to perform their obligations under the Debentures;

WHEREAS, Pledgor own the shares of series A convertible preferred stock, par value $0.001 per share, of the Company (the “Preferred Stock”), set forth opposite the Pledgor’ names on Schedule A attached hereto;

WHEREAS, terms used but not otherwise defined in this Agreement that are defined in Article 9 of the Uniform Commercial Code in effect in the State of New York at that time (whether or not the UCC applies to the affected Pledged Collateral) (the “UCC”) shall have the meanings ascribed to them in the UCC; and

NOW, THEREFORE, in consideration of the premises, covenants and promises 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:

 

SECTION 1.                     Pledge and Security Interest.  Each Pledgor hereby unconditionally and irrevocably pledges, grants and hypothecates to the Pledgee, and grants to the Pledgee a continuing first priority security interest in, a first lien upon and a right of set-off against, all of its respective rights, titles and interests of whatsoever kind and nature in (the “Security Interest”), and to secure the complete and timely payment, performance and discharge in full, as the case may be, of all of the obligations pursuant to the Debentures, the following (collectively, the “Pledged Collateral”):

 

(a)           270,262 shares of Preferred Stock owned by such Pledgor and set forth on Schedule A attached hereto (the “Pledged Shares”), and all dividends, cash, instruments and other property from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of the Pledged Shares; and

 

(b)           all proceeds of any and all of the foregoing Pledged Collateral, in whatever form (including, without limitation, proceeds that constitute property of the types described above).

 

  

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SECTION 2.                     Security for Obligations.  This Agreement secures the payment and performance of the following obligations (collectively, the “Obligations”): all present and future indebtedness, obligations, covenants, duties and liabilities of any kind or nature of the Company to the Pledgee now existing or hereafter arising, including but not limited to, under or in connection with this Agreement, the Debentures, the Purchase Agreement and all agreements and documents executed and delivered in connection therewith (collectively, the “Transaction Documents”).

 

SECTION 3.                      Delivery of Pledged Collateral.

 

(a)           On or before the date hereof, all certificates representing or evidencing the Pledged Shares, in suitable form for transfer by delivery, or accompanied by instruments of transfer or assignment duly executed in blank, including a signature guarantee, are being deposited with and delivered to Sichenzia Ross Friedman Ference LLP (the “Escrow Agent”), as escrow agent for the Pledged Shares.  The Pledgee shall have the right, at any time after the occurrence of an Event of Default (as hereinafter defined), without notice to the Pledgor, to transfer to or to register in the name of the Pledgee or their nominees any or all of the Pledged Collateral.  In addition, the Pledgee shall have the right at any time after the occurrence of an Event of Default, to exchange certificates or instruments representing or evidencing Pledged Collateral for certificates or instruments of smaller or larger denominations.

 

(b)           If any Pledgor shall receive, by virtue of its being or having been an owner of any Pledged Collateral, any (i) stock certificate (including, without limitation, any certificate representing a stock dividend or distribution in connection with any increase or reduction of capital, reclassification, merger, consolidation, sale of assets, combination of shares, stock split, spin-off or split-off), promissory note or other instrument, (ii) option or right, whether as an addition to, substitution for, or in exchange for, any Pledged Collateral, or otherwise, (iii) dividends or interest payable in cash or in securities or other property, (iv) dividends, interest and other distributions paid or payable other than in cash in respect of, and instruments and other property received, receivable or otherwise distributed in respect of or in exchange for, any Pledged Collateral, (v) dividends or other distributions in connection with a partial or total liquidation or dissolution or in connection with a reduction of capital, capital surplus or paid-in surplus, or (vi) cash paid, payable or otherwise distributed in redemption of, or in exchange for, any Pledged Collateral, such stock certificate, promissory note, instrument, option, right, property, payment or distribution constituting Pledged Collateral shall be, and shall forthwith be delivered to the Escrow Agent to hold as, Pledged Collateral and shall be received in trust for the benefit of the Pledgee, shall be segregated from Pledgor's other property and shall be delivered forthwith to the Escrow Agent in the exact form received, with any necessary endorsement and/or appropriate stock powers duly executed in blank, to be held by the Pledgee as Pledged Collateral and as further collateral security for the Obligations.

 

SECTION 4.                      Representations and Warranties.  Each Pledgor represents and warrants as follows:

 

(a)           Such Pledgor is the legal, record and beneficial owner of the Pledged Collateral owned by such Pledgor, free and clear of any lien, security interest, restriction, option or other charge or encumbrance (collectively, “Liens”).

 

(b)           The pledge of the Pledged Collateral and the grant of the Security Interest pursuant to this Agreement creates a valid and perfected first priority security interest in the Pledged Collateral, securing payment and performance of the Obligations.

 

(c)           No consent of any other person or entity and no authorization, approval, or other action by, and no notice to or filing with, any governmental authority or regulatory body is required (i) for the pledge by the Pledgor of the Pledged Collateral pursuant to this Agreement or for the execution, delivery or performance of this Agreement by the Pledgor, (ii) for the perfection or maintenance of the security interest created hereby, or (iii) for the exercise by the Pledgee of the voting or other rights provided for in this Agreement or the remedies in respect of the Pledged Collateral pursuant to this Agreement (except as may be required in connection with any disposition of any portion of the Pledged Collateral by laws affecting the offering and sale of securities generally).

 

(d)           There are no conditions precedent to the effectiveness of this Agreement that have not been satisfied or waived.

 

(e)           No authorization or approval of or filing with or notice to any governmental authority or regulatory body is required either (i) for the grant by such Pledgor of, or the effectiveness of, the Security Interest granted hereby or for the execution, delivery and performance of this Agreement by such Pledgor or (ii) for the perfection of or exercise by the Pledgee of their rights and remedies hereunder.

 

  

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(f)           Such Pledgor will not transfer, pledge, hypothecate, sell or otherwise dispose of any of the Pledged Collateral without the prior written consent of the Pledgee.

 

(g)           Such Pledgor shall promptly execute and deliver to the Pledgee such further assignments, security agreements, financing statements or other instruments, documents, certificates and assurances and take such further action as the Pledgee may from time to time request and may in its sole discretion deem necessary to perfect, protect or enforce its security interest in the Pledged Collateral.

 

(h)           Such Pledgor shall promptly notify the Pledgee, in sufficient detail, upon becoming aware of any attachment, garnishment, execution or other legal process levied against any Pledged Collateral and of any other information received by such Pledgor that may materially affect the Security Interest or the rights and remedies of the Pledgee hereunder.

 

(i)           All information heretofore, herein or hereafter supplied to the Pledgee by or on behalf of such Pledgor with respect to the Pledged Collateral is accurate and complete in all material respects as of the date furnished.

 

SECTION 5.                      Further Assurances.  Each Pledgor agrees that at any time and from time to time, at the expense of such Pledgor, the Pledgor shall promptly execute and deliver all further instruments and documents, and take all further action, that may be necessary or desirable, or that the Agent and/or the Pledgee may reasonably request, in order to perfect and protect any security interest granted or purported to be granted hereby or to enable the Agent and/or Pledgee to exercise and enforce their rights and remedies hereunder with respect to any Pledged Collateral.  The Company agrees that at any time and from time to time, at the expense of the Company, the Company shall promptly execute and deliver all further instruments and documents, and take all further action, that may be necessary or desirable, or that the Pledgee may reasonably request.

 

SECTION 6.                      Voting Rights in respect of the Pledged Collateral.

 

(a)           So long as no Event of Default shall have occurred (unless such Event of Default is waived in writing by the Pledgee):

 

(i)           Each Pledgor shall be entitled to exercise or refrain from exercising any and all voting and other consensual rights pertaining to the Pledged Collateral or any part thereof for any purpose not inconsistent with the terms of this Agreement; provided, however, that such Pledgor shall not exercise or refrain from exercising any such right if, in the reasonable judgment of such Pledgee, such action would have a material adverse effect on the Security Interest or the rights and remedies of the Pledgee hereunder; provided, further, that such Pledgor shall give the Pledgee at least ten (10) days' prior written notice of the manner in which it intends to exercise, or the reasons for refraining from exercising, any such right.

 

(b)           Upon and after the occurrence of any Event of Default (unless such Event of Default is waived in writing by the Pledgee):

 

(i)           All rights of each Pledgor to exercise or refrain from exercising the voting and other consensual rights which it would otherwise be entitled to exercise pursuant to Section 6(a)(i) shall cease, and all such rights shall thereupon become vested in the Agent who shall thereupon have the sole right to exercise or refrain from exercising such voting and other consensual rights.

 

SECTION 7.                      Transfers and Other Liens; Additional Shares.

 

(a)           The Pledgor agrees that it shall not (i) sell, assign (by operation of law or otherwise) or otherwise dispose of, or grant any option with respect to, any of the Pledged Collateral, or (ii) create or permit to exist any Lien upon or with respect to any of the Pledged Collateral, except for the security interest granted pursuant to this Agreement.

 

(b)           From the date hereof until the Debentures have been indefeasibly paid in full, neither the Company nor any Subsidiary shall issue any shares of Common Stock or Common Stock Equivalents to any Pledgor or to any of their respective affiliates.

 

  

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SECTION 8.                      Pledgees Appointed Attorney-in-Fact.

 

(a)           Effective only upon an Event of Default (unless such

 

Event of Default is waived in writing by the Pledgee), the Pledgor hereby appoints the Pledgee as the Pledgor’ attorney-in-fact, with full authority in the place and stead of, and in the name of, the Pledgor or otherwise, from time to time in the Pledgee's discretion to take any action and to execute any instrument which the Pledgee may deem necessary or desirable to accomplish the purposes of this Agreement, including, without limitation, to receive, endorse and collect all instruments made payable to the 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.

 

(b)           Each Pledgor authorizes the Pledgee, and do hereby make, constitute and appoint the Pledgee and its respective officers, agents, successors or assigns with full power of substitution, as the Pledgor’ true and lawful attorney-in-fact, with power, , to, after the occurrence and during the continuance of an Event of Default, (i) endorse any checks, drafts, money orders or other instruments of payment (including payments payable under or in respect of any policy of insurance) in respect of the Pledged Collateral that may come into possession of the Pledgee; (ii) to sign and endorse any financing statement pursuant to the UCC or any invoice, freight or express bill, bill of lading, storage or warehouse receipts, drafts against Pledgor, assignments, verifications and notices in connection with accounts, and other documents relating to the Pledged Collateral; (iii) to pay or discharge taxes, liens, security interests or other encumbrances at any time levied or placed on or threatened against the Pledged Collateral; (iv) to demand, collect, receipt for, compromise, settle and sue for monies due in respect of the Pledged Collateral; (v) generally, to do, at the option of the Pledgee, and at the expense of the Pledgor, severally and jointly, at any time, or from time to time, all acts and things which the Pledgee deem necessary to protect, preserve and realize upon the Pledged Collateral and the Security Interest granted herein in order to effect the intent of this Agreement all as fully and effectually as the Pledgor might or could do; and (vi) in the event of the bankruptcy of any Pledgor, to appoint a receiver or equivalent person to marshall such Pledgor’s assets, and such Pledgor hereby ratifies all that said attorney shall lawfully do or cause to be done by virtue hereof. This power of attorney is coupled with an interest and shall be irrevocable for the term of this Agreement and thereafter as long as any of the Obligations shall be outstanding.

 

(c)           Each Pledgor hereby irrevocably appoints the Pledgee 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, from time to time in the Agent’s discretion, to take any action and to execute any instrument which the Pledgee may deem necessary or advisable to accomplish the purposes of this Agreement, including the filing, in its sole discretion, of one or more financing or continuation statements and amendments thereto, relative to any of the Collateral without the signature of such Pledgor where permitted by law.

 

SECTION 9.                      Pledgee May Perform.  If any Pledgor fails to perform any agreement contained herein, Pledgee may itself perform, or cause performance of, such agreement, and the expenses of the Pledgee incurred in connection therewith shall be payable by such Pledgor under Section 14 hereof.

 

SECTION 10.                    The Pledgee's Duties.  Except for the safe custody of any Pledged Collateral in its possession and the accounting for moneys actually received it hereunder, neither no Pledgee shall have any duty as to any Pledged Collateral, as to ascertaining or taking action with respect to calls, conversions, exchanges, maturities, tenders or other matters relative to any Pledged Collateral, whether or not such party has or is to have knowledge of such matters, or as to the taking of any necessary steps to preserve rights against any parties or any other rights pertaining to any Pledged Collateral.  Each Pledgee shall be deemed to have exercised reasonable care in the custody and preservation of any Pledged Collateral in its possession if such Pledged Collateral is accorded treatment substantially equal to that which such party accords its own property.

 

SECTION 11.                    Event of Default.  The occurrence of any of the following events shall constitute an event of default under this Agreement (each, an “Event of Default”):

 

 

(a)           The failure of any Pledgor to observe, perform or comply with any act, duty, covenant, agreement or obligation under this Agreement, which is not cured within five business days following written notice by Agent to such Pledgor;

 

(b)           If any of the representation or warranty of any Pledgor set forth in this Agreement shall be breached or shall be untrue or incorrect in any material respect, and is not cured within ten business days following written notice by Agent to such Pledgor;

 

(c)           The filing of any financing statement with regard to any of the Pledged Collateral other than pursuant to this Agreement, or the attachment of any additional Lien to any portion of the Pledged Collateral in favor of any Person other than the Pledgee; or

 

(d)           If any event of default (and expiration of any cure period) shall occur under any of the Transaction Documents.

 

  

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SECTION 12.                    Cross-Default; Cross-Collateralization.

 

 The Pledgor acknowledges and agrees that any default under the terms of this Agreement shall constitute a default by the Company under the Debentures, and that any event of default (following expiration of any applicable cure period) under the Debentures shall constitute a default under this Agreement.  The security interests, liens and other rights and interests in and relative to any of the real or personal property of the Pledgor now or hereafter granted to the Pledgee by the Pledgor pursuant to any agreement, document or instrument, including, but not limited to, this Agreement or the Debentures shall serve as security for any and all of the Obligations, and, for the repayment thereof, Pledgee may resort to any such collateral in such order and manner as they may elect.

 

SECTION 13.                    Remedies upon Event of Default.  Upon and after the occurrence of any Event of Default:

 

(a)           The Agent may exercise in respect of the Pledged Collateral, in addition to other rights and remedies provided for herein or otherwise available to the Agent (including, without limitation, the vesting in the Agent pursuant to Section 6(b)(i) of the sole right to exercise voting rights pertaining to the Pledged Collateral, including, without limitation, voting rights with respect to the sale of assets of the issuer of such Pledged Collateral), all the rights and remedies of a secured party on default under the UCC, and may also, without notice except as specified below, sell the Pledged Collateral or any part thereof at public or private sale, at any exchange, broker's board or at any of the Agent's offices or elsewhere, for cash, on credit or for future delivery, and upon such other terms as the Agent may deem commercially reasonable.  Each Pledgor agrees that, to the extent notice of sale shall be required by law, at least ten (10) days’ notice to such Pledgor of the time and place of any public sale or the time after which any private sale is to be made shall constitute reasonable notification.  The Agent shall not be obligated to make any sale of Pledged Collateral regardless of notice of sale having been given. The Agent may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned.  Each Pledgor acknowledges and agrees that the Pledged Collateral consisting of the Pledged Shares, and/or any other shares of common stock of the Company, is of a type customarily sold on a recognized market, and accordingly that no notice of the sale thereof need be given.  In addition, Agent may transfer all of the Pledged Collateral to Pledgee, who may hold all of such Pledged Collateral as payment in full of the Obligations

 

(b)           Any cash held by the Agent or the Pledgee as Pledged Collateral and all cash proceeds received by the Agent or the Pledgee in respect of any sale of, collection from, or other realization upon all or any part of the Pledged Collateral may, in the discretion of the Agent or the Pledgee, be held as collateral for, and/or then or at any time thereafter be applied (after payment of any amounts payable pursuant to Section 14) in whole or in part against, all or any part of the Obligations.  Any surplus of such cash or cash proceeds held by the Agent or the Pledgee and remaining after payment in full of all the Obligations shall be paid over to the Pledgor, pro-rata, or to whomsoever may be lawfully entitled to receive such surplus.

 

SECTION 14.                    Expenses.  The Pledgor and the Company, severally and jointly, shall upon demand pay to the Agent and/or the Pledgee the amount of any and all reasonable expenses, including reasonable attorneys’ fees and expenses and the reasonable fees and expenses of any experts and agents, which the Agent and/or Pledgee may incur in connection with (a) the administration of this Agreement, (b) the custody or preservation of, or the sale of, collection from, or other realization upon, any of the Pledged Collateral, (c) the exercise or enforcement of any of the rights of the Agent and/or Pledgee hereunder or (d) the failure by any Pledgor to perform or observe any of the provisions hereof.

 

SECTION 15.                   Continuing Security Interest; Termination.  This Agreement shall create a continuing security interest in the Pledged Collateral and shall remain in full force and effect until the indefeasible payment in full of the Obligations.  Upon the indefeasible payment in full of the Obligations, the security interest granted hereby shall terminate and all rights to the Pledged Collateral shall revert to the Pledgor.  Upon any such termination, the Agent shall, at the Pledgor’ expense, return, pro-rata, to the Pledgor such of the Pledged Collateral as shall not have been sold or otherwise applied pursuant to the terms hereof and execute and deliver to the Pledgor such documents as the Pledgor shall reasonably request to evidence such termination.

 

 

SECTION 16.                    Governing Law; Terms.  This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York, without regard to principles of conflict of laws.  Each Pledgor agrees to submit to the in personam jurisdiction of the state and federal courts situated within the City of New York, State of New York with regard to any controversy arising out of or relating to this Agreement.  Unless otherwise defined herein, terms defined in Article 9 of the UCC are used herein as therein defined.

 

 

SECTION 17.                    Notice.  All notices and other communications hereunder shall be in writing and shall be deemed to have been received when delivered personally (which shall include, without limitation, via express overnight courier) or if mailed, three (3) business days after having been mailed by registered or certified mail, return receipt requested, postage prepaid, to the addresses of the parties as set forth herein.

 

  

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SECTION 18.                     Waivers.

 

(a)           Waivers.  Each Pledgor waives any right to require the Pledgee to (i) proceed against any person,  (ii) proceed against any other collateral under any other agreement, (iii) pursue any other remedy, or (iv) make presentment, demand, dishonor, notice of dishonor, acceleration and/or notice of non-payment.

 

(b)           Waiver of Defense.  No course of dealing between the Pledgor and the Pledgee, nor any failure to exercise nor any delay in exercising on the part of the Agent or Pledgee, any right, power, or privilege under this Agreement or under any of the other Transaction Documents shall operate as a waiver.  No single or partial exercise of any right, power, or privilege under this Agreement or under any of the other Transaction Documents shall preclude any other or further exercise of such right, power, or privilege or the exercise of any other right, power, or privilege.

 

SECTION 19.                    Rights Are Cumulative.  All rights and remedies of the Agent and the Pledgee with respect to the Pledged Collateral, whether established by this Agreement, the other Transaction Documents or by law, shall be cumulative and may be exercised concurrently or in any order.

 

SECTION 20.                     Indemnity.  Each Pledgor, jointly and severally, agrees to indemnify and hold harmless the Agent, the Pledgee and their respective heirs, successors and assigns against and from all liabilities, losses and costs (including, without limitation, reasonable attorneys' fees) arising out of or relating to the taking or the failure to take action in respect of any transaction effected under this Agreement or in connection with the lien provided for herein, including, without limitation, any and all excise, sales or other taxes which may be payable or determined to be payable with respect to any of the Pledged Collateral, except to the extent resulting from their gross negligence or intentional misconduct.  The liabilities of the Pledgor under this Section 20 shall survive the termination of this Agreement.

 

SECTION 21.                    Severability.  The provisions of this Agreement are severable.  If any provision of this Agreement is held invalid or unenforceable in whole or in part in any jurisdiction, then such invalidity or unenforceability shall affect only such provision, or part thereof, in such jurisdiction, and shall not in any manner affect such provision or part thereof in any other jurisdiction, or any other provision of this Agreement in any jurisdiction.

 

SECTION 22.                    Counterparts.  This Agreement may be executed in several counterparts, each of which shall be considered an original, but all of which together shall constitute one and the same instrument.

 

SECTION 23.                   Amendments; Entire Agreement.  This Agreement is subject to modification only by a writing signed by the parties.  To the extent any provision of this Agreement conflicts with any provision of the Debentures, the provision giving Pledgee greater rights or remedies shall govern, it being understood that the purpose of this Agreement is to add to, and not detract from, the rights granted to Pledgee under the Debentures.  This Agreement and the other Transaction Documents constitute the entire agreement of the parties with respect to the subject matter of this Agreement.

 

SECTION 24.                   Successors and Assigns.  This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, executors, legal representatives, successors and assigns; provided, however, that no Pledgor may, without the prior written consent of the Pledgee, assign or delegate any rights, powers, duties or obligations hereunder, and any such purported assignment or delegation without such consent shall be null and void.

 

  

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

	 	

PLEDGOR:

	 
	 	 	 	 
	 	
By: 

	/s/ Shawn Knapp	 
	 	 	Print Name: Shawn Knapp	 
	 	 	Address for Notice:	 
	 	 	 	 
	 	 	 	 
	 	 	Print Name:	 
	 	 	Address for Notice:	 
	 	 	 	 

 

	 	THE COMPANY:	 
	 	 	 
	 	VANITY EVENTS HOLDING, INC.	 
	 	 	 	 
	
 

	
By: 

	/s/ Shawn Knapp	 
	 	 	Name: Shawn Knapp	 
	 	 	Title: CEO	 
	 	 	 	 

 

                                                              

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

SIGNATURE PAGE FOR PLEDGEE FOLLOWS]

 

 

 

  

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[PLEDGEE SIGNATURE PAGES TO VAEV PLEDGE AGREEMENT]

Name of Pledgee: IIG Management LLC

Signature of Authorized Signatory of Pledgee: /s/ Norman Nepo

Name of Authorized Signatory: Norman Nepo

Title of Authorized Signatory: Managing Member

E-mail Address of Authorized Signatory: _______________________

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

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SCHEDULE A

 

Pledged Shares

270,262 shares of series A convertible preferred stock of the Company certificated as follows:

  

	Pledgor:      	Number of Shares:	 	 
	 	 	 	 
	Shawn Knapp 	270,262       	 	 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9ex103.htm

Exhibit 10.3

 

MAKE GOOD ESCROW AGREEMENT

This Agreement, dated as of April 6, 2011 (this “Agreement”), is entered into by and among Shawn Knapp (“Mr. Knapp”), IIG Management LLC (the “Purchaser”), and Sichenzia Ross Friedman Ference LLP (the “Escrow Agent”).  Mr. Knapp and the Purchaser shall collectively be referred to as the “Escrowing Parties.” The principal address of each party hereto is set forth on Exhibit A.

 

WITNESSETH:

 

WHEREAS, Purchaser and Vanity Events Holding, Inc. (the “Company”) have entered into that certain securities purchase agreement dated on even date herewith (the “Purchase Agreement”) whereby the Company has agreed to sell and Purchaser has agreed to purchase a 10% convertible debenture (the “Debenture”), and  a warrant to purchase shares of the Company’s common stock (the “Warrants”) (the Debenture and the Warrant shall collectively be referred to as the “Securities”) for a total consideration of $135,000 (“Purchase Price”);

 

WHEREAS, pursuant to Section 6.1 of the Purchase Agreement, Purchaser and Mr. Knapp desire to deposit the Make Good Documents (as defined below) with the Escrow Agent, to be held and disbursed by the Escrow Agent pursuant to this Agreement and the Purchase Agreement; and

 

WHEREAS, Escrow Agent is willing to hold the Make Good Documents in escrow subject to the terms and conditions of this Agreement.

 

NOW, THEREFORE, in consideration of the mutual promises herein contained and intending to be legally bound, the parties hereby agree as follows:

 

Unless otherwise defined, all terms used herein shall bear the same meaning as set forth in the Stock Purchase Agreement.

 

1. Appointment of Escrow Agent.  Each Purchaser and the Company hereby appoint Escrow Agent as escrow agent in accordance with the terms and conditions set forth herein and the Escrow Agent hereby accepts such appointment.

 

2. Terms of Escrow

 

a. Mr. Knapp shall deliver to the Escrow Agent (i) certificate(s) representing an aggregate of 129,738 shares of the Company’s series A convertible preferred stock, registered in the name of Shawn Knapp, the Company’s chief executive officer (the “Make Good Shares”), such shares to be held in escrow for the benefit of the Investor and (ii) a stock power duly executed in blank and with signature medallion guaranteed by a national bank or trust company, to be held in escrow in accordance with this Section 6.1 (collectively, the “Make Good Documents”).

 

b. For purposes of this Section 2, the Company’s gross revenues for the fiscal year ended December 31, 2011 is less than $2,500,000.00 (the “2011 Target Number”).

 

c. If the Company’s gross revenues are not equal to the 2011 Target Number, the Escrow Agent shall deliver all the Make Good Documents to the Investor.

 

d. If the Company’s gross revenues greater than or equal to the 2011 Target Number, the Escrow Agent shall deliver the Make Good Documents to Mr. Knapp.

 

e. The distribution of Make Good Documents pursuant to this Section 2 shall be made within five (5) business days after the Company files its Form 10-K with the SEC for the fiscal year ended December 31, 2011.  In the event that the Company does not file its Form 10-K for the year ended December 31, 2011 with the SEC within thirty (30) days after the date that filing was required, after giving effect to any extension pursuant to Rule 12b-25 of the 1934 Act, the Make Good Documents shall be delivered to the Investor.

 

  

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3. Exculpation and Indemnification of Escrow Agent.

 

a. The Escrow Agent shall have no duties or responsibilities other than those expressly set forth herein.  The Escrow Agent shall have no duty to enforce any obligation of any person to make any payment or delivery, or to direct or cause any payment or delivery to be made, or to enforce any obligation of any person to perform any other act.  The Escrow Agent shall be under no liability to the other parties hereto or anyone else, by reason of any failure, on the part of any party hereto or any maker, guarantor, endorser or other signatory of a document or any other person, to perform such person’s obligations under any such document.  Except for amendments to this Agreement referenced below, and except for written instructions given to the Escrow Agent by the Company relating to the Escrowed Funds, the Escrow Agent shall not be obligated to recognize any agreement between or among any of the Escrowing Parties, notwithstanding that references hereto may be made herein and whether or not it has knowledge thereof.

 

b. The  Escrow Agent shall not be liable to the Company or Purchaser or to anyone else for any action taken or omitted by it, or any action suffered by it to be taken or omitted, in good faith and acting upon any order, notice, demand, certificate, opinion or advice of counsel (including counsel chosen by the Escrow Agent), statement, instrument, report, or other paper or document (not only as to its due execution and the validity and effectiveness of its provisions, but also as to the truth and acceptability of any information therein contained), which is believed by the Escrow Agent to be genuine and to be signed or presented by the proper person or persons.  The  Escrow Agent shall not be bound by any of the terms thereof, unless evidenced by written notice delivered to the Escrow Agent signed by the proper party or parties and, if the duties or rights of the Escrow Agent are affected, unless it shall give its prior written consent thereto.

 

c. The Escrow Agent shall not be responsible for the sufficiency or accuracy of the form, or of the execution, validity, value or genuineness of, any document or property received, held or delivered to it hereunder, or of any signature or endorsement thereon, or for any lack of endorsement thereon, or for any description therein; nor shall the Escrow Agent be responsible or liable to the Company or Purchasers or to anyone else in any respect on account of the identity, authority or rights, of the person executing or delivering or purporting to execute or deliver any document or property or this Agreement. The Escrow Agent shall have no responsibility with respect to the use or application of the Escrowed Funds pursuant to the provisions hereof.

 

d. The Escrow Agent shall have the right to assume, in the absence of written notice to the contrary from the proper person or persons, that a fact or an event, by reason of which an action would or might be taken by the Escrow Agent, does not exist or has not occurred, without incurring liability to the Company or Purchasers or to anyone else for any action taken or omitted to be taken or omitted, in good faith and in the exercise of its own best judgment, in reliance upon such assumption.

 

e. To the extent that the Escrow Agent becomes liable for the payment of taxes, including withholding taxes, in respect of income derived from the investment of the Escrowed Funds, or any payment made hereunder, the Escrow Agent may pay such taxes; and the Escrow Agent may withhold from any payment of the Escrowed Funds such amount as the Escrow Agent estimates to be sufficient to provide for the payment of such taxes not yet paid, and may use the sum withheld for that purpose.  The Escrow Agent shall be indemnified and held harmless against any liability for taxes and for any penalties in respect of taxes, on such investment income or payments in the manner provided in this Agreement.

 

f. The Escrow Agent will be indemnified and held harmless by the Escrowing Parties from and against all expenses, including all counsel fees and disbursements, or loss suffered by the Escrow Agent in connection with any action, suit or proceedings involving any claim, or in connection with any claim or demand, which in any way, directly or indirectly, arises out of or relates to this Agreement, the services of the Escrow Agent hereunder, except for claims relating to gross negligence by Escrow Agent or breach of this Agreement by the Escrow Agent, or the monies or other property held by it hereunder.  Promptly after the receipt of the Escrow Agent of notice of any demand or claim or the commencement of any action, suit or proceeding, the Escrow Agent shall, if a claim in respect thereof is to be made against the Company or any of the Purchasers, notify each of them thereof in writing, but the failure by the Escrow Agent to give such notice shall not relieve any such party from any liability which such party may have to the Escrow Agent hereunder.  Notwithstanding any obligation to make payments and deliveries hereunder, the Escrow Agent may retain and hold for such time as it deems necessary such amount of monies or property as it shall, from time to time, in its sole discretion, seem sufficient to indemnify itself for any such loss or expense and for any amounts due it under Section 7.

 

g. For purposes hereof, the term “expense or loss” shall include all amounts paid or payable to satisfy any claim, demand or liability, or in settlement of any claim, demand, action, suit or proceeding settled with the express written consent of the Escrow Agent, and all costs and expenses, including, but not limited to, counsel fees and disbursements, paid or incurred in investigating or defending against any such claim, demand, action, suit or proceeding.

 

  

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4. Termination of Agreement and Resignation of Escrow Agent

 

a. This Agreement shall terminate upon disbursement of all of the Escrowed Funds, provided that the rights of the Escrow Agent and the obligations of the Company and the Purchasers under Section 4 shall survive the termination hereof.

 

b. The Escrow Agent may resign at any time and be discharged from its duties as Escrow Agent hereunder by giving the Company and the Purchasers at least five (5) business days written notice thereof (the “Notice Period”).  As soon as practicable after its resignation, the Escrow Agent shall, if it receives notice from the Escrowing Parties within the Notice Period, turn over to a successor escrow agent appointed by the Purchaser all Escrowed Funds (less such amount as the Escrow Agent is entitled to retain pursuant to Section 7) upon presentation of the document appointing the new escrow agent and its acceptance thereof.  If no new agent is so appointed within the Notice Period, the Escrow Agent shall return the Escrowed Funds to the parties from which they were received without interest or deduction.

 

5. Form of Payments by Escrow Agent.  Any payments by the Escrow Agent pursuant to the terms of this Agreement shall be made by wire transfer unless directed to be made by check by the Escrowing Parties.  All amounts referred to herein are expressed in United States Dollars and all payments by the Escrow Agent shall be made in such dollars.

 

6. Compensation.  The Escrow Agent shall be entitled to compensation for its services in the amount of $2,500.00, which compensation shall be paid by the Investors on the date hereof. The fee agreed upon for the services rendered hereunder is intended as full compensation for the Escrow Agent’s services as contemplated by this Agreement; provided, however, that in the event that the conditions for the disbursement of funds under this Agreement are not fulfilled, or the Escrow Agent renders any service not contemplated in this Agreement, or there is any assignment of interest in the subject matter of this Agreement, or any material modification hereof, or if any material controversy arises hereunder, or the Escrow Agent is made a party to any litigation pertaining to this Agreement or the subject matter hereof, then the Escrow Agent shall be compensated for such extraordinary services and reimbursed for all costs and expenses, including reasonable attorneys’ fees and expenses, occasioned by any such delay, controversy, litigation or event by the Company.  If any amount due to the Escrow Agent hereunder is not paid within thirty (30) days of the date due, the Escrow Agent in its sole discretion may charge interest on such amount up to the highest rate permitted by applicable law.   The Escrow Agent shall have, and is hereby granted, a prior lien upon the escrow funds with respect to its unpaid fees, non-reimbursed expenses and unsatisfied indemnification rights, superior to the interests of any other persons or entities and is hereby granted the right to set off and deduct any unpaid fees, non-reimbursed expenses and unsatisfied indemnification rights from the escrow funds..

 

7. Notices.  All notices, demands, consents, requests, instructions and other communications to be given or delivered or permitted under or by reason of the provisions of this Agreement or in connection with the transactions contemplated hereby shall be in writing and shall be deemed to be delivered and received by the intended recipient as follows: (i) if personally delivered, on the business day of such delivery (as evidenced by the receipt of the personal delivery service), (ii) if mailed certified or registered mail return receipt requested, two (2) business days after being mailed, (iii) if delivered by overnight courier (with all charges having been prepaid), on the business day of such delivery (as evidenced by the receipt of the overnight courier service of recognized standing), or (iv) if delivered by facsimile transmission, on the business day of such delivery if sent by 6:00 p.m.  in the time zone of the recipient, or if sent after that time, on the next succeeding business day (as evidenced by the printed confirmation of delivery generated by the sending party’s telecopier machine).  If any notice, demand, consent, request, instruction or other communication cannot be delivered because of a changed address of which no notice was given (in accordance with this Section 8), or the refusal to accept same, the notice, demand, consent, request, instruction or other communication shall be deemed received on the second business day the notice is sent (as evidenced by a sworn affidavit of the sender).  All such notices, demands, consents, requests, instructions and other communications will be sent to addresses or facsimile numbers as applicable set forth on Exhibit A hereto.

 

8. Further Assurances.  From time to time on and after the date hereof, the Company and each of the Purchasers, if applicable, shall deliver or cause to be delivered to the Escrow Agent such further documents and instruments and shall do and cause to be done such further acts as the Escrow Agent shall reasonably request (it being understood that the Escrow Agent shall have no obligation to make any such request) to carry out more effectively the provisions and purposes of this Agreement, to evidence compliance herewith or to assure itself that it is protected in acting hereunder.

 

9. Consent to Service of Process.  The Company and each Purchaser hereby irrevocably consents to the jurisdiction of the courts of the State of New York and of any Federal court located in such state in connection with any action, suit or proceedings arising out of or relating to this Agreement or any action taken or omitted hereunder, and waives personal service of any summons, complaint or other process and agrees that the service thereof may be made by certified or registered mail directed to it at the address listed on Exhibit A hereto.

 

  

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10. Miscellaneous.

 

a. This Agreement shall be construed without regard to any presumption or other rule requiring construction against the party causing such instrument to be drafted.  The terms “hereby,” “hereof,” “hereunder,” and any similar terms, as used in this Agreement, refer to the Escrow Agreement in its entirety and not only to the particular portion of this Agreement where the term is used.  The word “person” shall mean any natural person, partnership, corporation, government and any other form of business of legal entity.  All words or terms used in this Agreement, regardless of the number or gender in which they were used, shall be deemed to include any other number and any other gender as the context may require.  This Agreement shall not be admissible in evidence to construe the provisions of any prior agreement.

 

b. This Agreement and the rights and obligations hereunder of the Company and Purchasers may not be assigned.  This Agreement and the rights and obligations hereunder of the Escrow Agent may be assigned by the Escrow Agent, with the prior consent of the Escrowing Parties.  This Agreement shall be binding upon and inure to the benefit of each party’s respective successors, heirs and permitted assigns. No other person shall acquire or have any rights under or by virtue of this Agreement. This Agreement may not be changed orally or modified, amended or supplemented without an express written agreement executed by the Escrow Agent, the Company, and the Purchasers. This Agreement is intended to be for the sole benefit of the parties hereto and their respective successors, heirs and permitted assigns, and none of the provisions of this Agreement are intended to be, nor shall they be construed to be, for the benefit of any third person.

 

c. This Agreement shall be governed by, and construed in accordance with, the internal laws of the State of New York. The representations and warranties contained in this Agreement shall survive the execution and delivery hereof and any investigations made by any party.  The headings in this Agreement are for purposes of reference only and shall not limit or otherwise affect any of the terms thereof.

 

11. Execution of Counterparts.   This Agreement may be executed in a number of counterparts, by facsimile, each of which shall be deemed to be an original as of those whose signature appears thereon, and all of which shall together constitute one and the same instrument.  This Agreement shall become binding when one or more of the counterparts hereof, individually or taken together, are signed by all the parties.

 

 

 

[SIGNATURE PAGE TO VAEV MAKE GOOD ESCROW AGREEMENT]

 

 

 

 

 

 

  

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IN WITNESS WHEREOF, the parties hereto have executed this Escrow Agreement as of date first written above.

 

 

 

By: /s/ Shawn Knapp

Shawn Knapp

 

SICHENZIA ROSS FRIEDMAN FERENCE LLP

 

By: ______________________________

Name:

Title: Partner

 

PURCHASER

 

IIG MANAGEMENT LLC

 

By: /s/ Norman Nepo

Name: Norman Nepo

Title: Managing Member

 

 

 

 

 

  

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EXHIBIT A

PARTIES TO AGREEMENT

Escrow Agent

Sichenzia Ross Friedman Ference LLP

61 Broadway, 32nd Floor

New York, New York 10006

Attn: Richard A Friedman, Esq.

Tel: (212) 930-9700

Email: rfriedman@srff.com

Shawn Knapp

118 Front Street

Brookings, South Dakota  57006

Tel. No.: 605-692-8226

Email: shawn@shogunenergy.com

Purchaser

Name of Purchaser: IIG Management LLC

Address: 1170 Kane Concourse # 404, Bay Harbor, FL  33154

Attention: Norman Nepo, Managing Member

Tel: 305-436-2000

Email: drnepo@iig.com

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