PLEDGE AGREEMENT, dated February 25, 1999, by and between
▇▇▇▇▇ ▇▇▇▇ (the "Pledgor") and DCAP GROUP, INC. (formerly EXTECH Corporation), a
Delaware corporation (the "Pledgee").
WHEREAS, simultaneously herewith, the Pledgor is purchasing
from the Pledgee four hundred seventy-five thousand (475,000) shares of Common
Stock of the Pledgee and, in partial consideration therefor, is executing and
delivering to the Pledgee a Promissory Note of even date in the principal amount
of One Hundred Fourteen Thousand Dollars ($114,000) (the "Note").
WHEREAS, the Pledgee desires, and the Pledgor is willing, to
secure performance of the Note.
WHEREAS, certain capitalized terms used herein are defined in
Section 8 hereof.
NOW, THEREFORE, the parties hereto agree as follows:
1. PLEDGE. The Pledgor hereby grants to the Pledgee, as security for
the performance by the Pledgor of all of his obligations under the Note (the
"Obligations"), a valid and binding first security interest in the Collateral
(as hereinafter defined). The Pledgor has delivered simultaneously herewith to
the Pledgee, and the Pledgee hereby acknowledges receipt of, a certificate
evidencing the Pledged Shares registered in the name of the Pledgor (the
"Pledged Certificate"), accompanied by appropriate stock powers endorsed by the
Pledgor (the "Stock Powers").
2. TERM. This Agreement shall continue in effect until terminated in
accordance with Section 7 hereof.
3. SHARE RIGHTS; CASH DIVIDENDS.
(a) In the event of any change in the Pledged Shares during
the term of this Agreement by reason of any stock dividend, stock split-up,
reverse split, recapitalization, combination, reclassification, exchange of
shares, merger, consolidation or the like, all new, substituted, or additional
stock, or other securities, issued by reason of any such change (the "Adjusted
Shares") (the Pledged Shares and the Adjusted Shares are hereinafter referred to
collectively as the "Shares") shall be retained by or delivered to, as the case
may be, and held by the Pledgee under the terms of this Agreement in the same
manner as the Pledged Shares originally pledged hereunder.
(b) Unless and until the occurrence of a Default (as
hereinafter defined), the Pledgor shall have the right to vote the Shares. Upon
the occurrence of a Default, the Shares shall be registered in the name of the
Pledgee and the Pledgee shall have all incidents of ownership thereof.
(c) Provided that no Default has occurred, any and all cash
dividends paid in respect of the Shares shall be paid to the Pledgor; provided,
however, that, in any event, any extraordinary distributions made in respect of
the Shares shall be retained by the Pledgee and held by it in accordance with
the terms hereof.
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4. REPRESENTATIONS. The Pledgor hereby represents and warrants to the
Pledgee that:
(a) The Pledgor is the sole record and beneficial owner of the
Pledged Shares, free and clear of all liens, pledges, security interests,
encumbrances, restrictions, subscriptions, hypothecations, charges and claims of
any kind whatsoever.
(b) No consents of governmental and other regulatory agencies,
foreign or domestic, or of other parties are required to be received by or on
the part of the Pledgor to enable him to enter into and carry out this Agreement
and the transactions contemplated hereby.
(c) The Pledgor has the power to enter into this Agreement and
to carry out his obligations hereunder. This Agreement constitutes the valid and
binding obligation of the Pledgor, and is enforceable in accordance with its
terms.
(d) Neither the execution and delivery of this Agreement nor
compliance by the Pledgor with any of the provisions hereof nor the consummation
of the transactions contemplated hereby will violate or, alone or with notice or
the passage of time, result in the material breach or termination of, or
otherwise give any contracting party the right to terminate, or declare a
default under, the terms of any agreement, understanding or arrangement to which
the Pledgor is a party or by which he or his assets or properties may be bound.
5. COVENANTS.
(a) The Pledgor hereby covenants that from and after the date
hereof and until the Obligations shall have been satisfied in full:
(i) The Pledgor will not grant, create, incur, assume
or suffer to exist any Lien in the Collateral (except for the Lien created
hereby).
(ii) The Pledgor will defend the Pledgee's right,
title, and security interest in and to the Collateral against the claims of any
person, firm, corporation or other entity.
(iii) The Pledgor shall at any time and from time to
time, upon the written request of the Pledgee, execute and deliver such other
instruments and documents and do such further acts and things as the Pledgee
may reasonably request in order to effect the purposes of this Agreement.
(b) The Pledgee's sole duty with respect to the custody,
safekeeping and physical preservation of the Collateral in its possession, under
Section 9-207 of the Code or otherwise, shall be to deal with it in the same
manner as the Pledgee deals with similar securities and property for its own
account.
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6. DEFAULT. (a) In the event that the Pledgor fails to pay to the
Pledgee any Obligation when due or there shall otherwise occur an Event of
Default (as defined in the Note) ("Default"), the Pledgee shall have all of the
rights and remedies afforded to secured parties with respect to the Collateral
as set forth in the Code as well as all other rights and remedies granted in the
Note and this Agreement. Without limiting the generality of the foregoing, the
Pledgee, without demand of performance or other demand, presentment, protest,
advertisement or notice of any kind (except any notice required by law referred
to below) to or upon the Pledgor (all and each of which demands, defenses,
advertisements and notices are hereby waived), may in such circumstances
forthwith collect, receive, appropriate and realize upon the Collateral, or any
part thereof, and/or may forthwith sell, assign, give an option or options to
purchase or otherwise dispose of and deliver the Collateral or any part thereof
(or contract to do any of the foregoing), in one or more parcels at public or
private sale or sales, upon such terms and conditions and at such prices as it
may deem advisable, for cash or on credit or for future delivery without
assumption of any credit risk. The Pledgee shall have the right upon any such
public sale or sales, and, to the extent permitted by law, upon any such private
sale or sales, to purchase the whole or any part of the Collateral so sold. The
Pledgee shall apply any proceeds from time to time held by it and the net
proceeds of any such sale or other disposition, after deducting all reasonable
costs and expenses of every kind incurred in respect thereof or incidental to
the care or safekeeping of any of the Collateral or in any way relating to the
Collateral or the rights of the Pledgee hereunder, including, without
limitation, reasonable attorneys' fees and disbursements of counsel to the
Pledgee, to the satisfaction in whole or in part of the Obligations, in such
order as the Pledgee may elect and only after such application and after the
payment by the Pledgee of any other amount required by any provision of law,
including, without limitation, Section 9-504 (1)(c) of the Code, need the
Pledgee account for the surplus, if any, to the Pledgor. To the extent permitted
by applicable law, the Pledgor waives all claims, damages and demands he may
acquire against the Pledgee arising out of the lawful exercise by it of any
rights hereunder. Neither the Pledgee nor any of its respective directors,
officers, employees or agents shall be liable for failure to sell or otherwise
dispose of the Collateral or for any delay in doing so. If any notice of a
proposed sale or other disposition of the Collateral shall be required by law,
such notice shall be deemed reasonable and proper if given at least ten (10)
days before such sale or other disposition. In any event, notice of a proposed
sale or other disposition shall be given at least ten (10) days before such sale
or other disposition to the Pledgor and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇. The Pledgor shall
remain liable for any deficiency if the proceeds of any sale or other
disposition of the Collateral are insufficient to pay all of the Obligations and
any and all costs and expenses of every kind incurred by the Pledgee with
respect to the collection of such deficiency, including, without limitation, all
reasonable fees and disbursements of any attorneys employed by the Pledgee.
The Pledgor recognizes that the Pledgee may be unable to
effect a public sale of any or all the Collateral by reason of certain
restrictions contained in the Securities Act of 1933, as amended, and applicable
state securities laws or otherwise, and may be compelled to resort to one or
more private sales thereof to a restricted group of purchasers which will be
obliged to agree, among other things, to acquire such securities for their own
account for investment and not with a view to the distribution or resale
thereof. The Pledgor acknowledges and agrees that any such private sale may
result in prices and other terms less favorable than if such sale were a public
sale
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and agrees that any such private sale under such circumstances shall not be
evidence that it has been made in other than a commercially reasonable manner.
The Pledgor agrees to use his best efforts to do or cause to
be done all such other acts as may be necessary to make such sale or sales of
all or any portion of the Collateral pursuant to this section valid and binding
and in compliance with any and all other applicable requirements of law.
(b) The rights of the Pledgee hereunder shall not be
conditioned or contingent upon the pursuit by the Pledgee of any right or remedy
against the Pledgor, any other person which may be or become liable in respect
of all or any part of the Obligations or against any collateral security
therefor, guarantee therefor or right of offset with respect thereto. Neither
the Pledgee nor any of its affiliates or representatives shall be liable for any
failure to demand, collect or realize upon all or any part of the Collateral or
for any delay in doing so, nor shall the Pledgee be under any obligation to sell
or otherwise dispose of any Collateral upon the request of the Pledgor or any
other person or to take any other action whatsoever with regard to the
Collateral or any part thereof.
7. TERMINATION OF AGREEMENT; PARTIAL RELEASE. (a) Upon (i) the
Pledgor's satisfaction of the Obligations in full (at which time the Pledgee
shall redeliver the Pledged Certificate and accompanying Stock Powers to the
Pledgor), or (ii) the conclusion of the actions contemplated by Section 6
hereof, this Agreement shall thereupon terminate.
(b) Provided that no Default has occurred and is continuing,
for each one dollar ($1.00) of principal amount of the Note, together with
accrued interest thereon, that is paid to the Pledgee, five (5) Pledged Shares
shall be released from the pledge created hereby and redelivered to the Pledgor.
8. DEFINED TERMS. The following terms shall have the following
meanings:
(a) "Code" means the Uniform Commercial Code from time to time
in effect in the State of New York.
(b) "Collateral" means the Pledged Shares and all Proceeds.
(c) "Pledged Shares" means five hundred seventy thousand
(570,000) shares of Common Stock of the Pledgee, together with any and all
shares, stock certificates, options or rights of any nature whatsoever that may
be issued or granted to the Pledgor with regard thereto, in substitution or
replacement thereof, as a conversion thereof, in exchange therefor or otherwise
in respect thereof.
(d) "Proceeds" means all "proceeds" as such term is defined in
Section 9-306(1) of the Code on the date hereof and, in any event, shall
include, without limitation, all dividends or other income from the Pledged
Shares, collections thereon and distributions with respect thereto.
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9. MISCELLANEOUS.
(a) This Agreement shall be binding upon and shall inure to
the benefit of the parties hereto and their respective legal representatives,
successors and assigns.
(b) This Agreement contains the entire agreement and
understanding between the parties in respect of the subject matter hereof, and
cannot be modified, changed, discharged or terminated except by an instrument in
writing, signed by the party against whom enforcement of any modification,
change, discharge or termination is sought.
(c) A waiver of the breach of any term or condition of this
Agreement shall not be deemed to constitute a waiver of any other breach of the
same or any other term or condition.
(d) This Agreement will be construed and governed in
accordance with the laws of the State of New York, excluding choice of law rules
thereof.
(e) All notices or other communications required or permitted
hereunder shall be sufficiently given if delivered by hand, or sent by certified
mail, return receipt requested, postage prepaid, facsimile transmission or
overnight mail or courier, addressed as follows:
If to the Pledgor:
c/o Dealers Choice Automotive Planning Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopier Number: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Weil & ▇▇▇▇▇▇▇▇▇▇
▇▇-▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, Esq.
Telecopier Number: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Pledgee:
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Chairman of the Board
Telecopier Number: (▇▇▇) ▇▇▇-▇▇▇▇
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with a copy to:
Certilman Balin ▇▇▇▇▇ & ▇▇▇▇▇, LLP
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
Telecopier Number: (▇▇▇) ▇▇▇-▇▇▇▇
(f) The Pledgor waives any and all notice of the extension or
modification of the terms of the Note.
(g) In the event that the Collateral or any portion thereof is
released to the Pledgor and any payments of, or proceeds of any security for,
the Obligations, or any part thereof, are subsequently invalidated, declared to
be fraudulent or preferential, set aside and/or required to be repaid to a
trustee, receiver or any other party under any bankruptcy law, state or federal
law, common law or equitable cause, then the Pledgor shall redeliver the
Collateral and Stock Powers to the Pledgee and, until so redelivered, shall hold
the Collateral and Stock Powers as agent of, and in trust for, the Pledgee.
(h) If any provision hereof is declared to be invalid and
unenforceable, then, to the fullest extent permitted by law, the other
provisions hereof shall remain in full force and effect and shall be liberally
construed in favor of the Pledgee in order to carry out the intentions of the
parties hereto as nearly as may be possible.
(i) Each party acknowledges that he or it has been represented
by counsel in connection with this Agreement. Accordingly, any rule or law or
any legal decision that would require the interpretation of any claimed
ambiguities in this Agreement against the party that drafted it has no
application and is expressly waived by the parties. The provisions of this
Agreement shall be interpreted in a reasonable manner to give effect to the
intent of the parties hereto.
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
/s/ ▇▇▇▇▇ ▇▇▇▇
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▇▇▇▇▇ ▇▇▇▇
DCAP GROUP, INC.
By:/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇,
Chairman of the Board
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