PLEDGE AGREEMENT, dated as of July 10, 2003, by and among DCAP GROUP, INC.,
a Delaware corporation (the "Pledgor"), and each of the undersigned
(individually referred to as a "Pledgee," and collectively referred to as the
"Pledgees").
W I T N E S S E T H:
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WHEREAS, the Pledgor and the Pledgees have entered into a Unit Purchase
Agreement, dated as of July 2, 2003 (the "Unit Purchase Agreement"), pursuant to
which the Pledgees are purchasing the Units (as defined in the Unit Purchase
Agreement).
WHEREAS, included as a component of the Units are Secured Subordinated
Promissory Notes of the Pledgor payable to the Pledgees in the aggregate
principal amount of $3,500,000 (the "Notes").
WHEREAS, the Pledgor has agreed to pledge all of the issued and outstanding
shares of common stock (the "Pledged Shares") of its wholly-owned subsidiary,
Payments Inc, a New York corporation ("Payments"), to the Pledgees as security
for the payment of all amounts due under the Notes.
WHEREAS, the pledge of the Pledged Shares is to be subordinated to the
security interest granted by the Pledgor to Manufacturers and Traders Trust
Company (together with its successors and assigns, "M&T") with respect thereto.
WHEREAS, pursuant to an Appointment of Representative, dated as of July 2,
2003 (the "Appointment"), the Pledgees have appointed Xxxx Xxxxxxx (the
"Representative") as their representative and attorney-in-fact with respect to
this Pledge Agreement.
WHEREAS, capitalized terms used and not otherwise defined herein shall have
the meanings ascribed to them in the Unit Purchase Agreement.
NOW, THEREFORE, the parties hereto agree as follows:
1. Pledge and Grant of Security Interest; Subordination.
(a) The Pledgor hereby pledges to the Pledgees, and grants to the
Pledgees a security interest in, all of its right, title and interest in and to
the Pledged Shares as security for the payment of all amounts due under the
Notes (the "Obligations").
(b) The Pledgees acknowledge and agree that the security interest
granted herein is subordinate to the security interest granted to M&T with
respect to the Pledged Shares (the "M&T Pledge") and that the certificate
representing the Pledged Shares (the "Pledged Certificate") is being delivered
to M&T in connection therewith. The terms and conditions of this Pledge
Agreement are subject to the provisions of those certain Subordination
Agreements of even date, as such agreements may be amended, by the Pledgees, the
Pledgor and Payments in favor of M&T. In the event of the
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termination of the M&T Pledge and redelivery to the Pledgor of the Pledged
Certificate, the Pledgor shall deliver to the Representative (on behalf of the
Pledgees) the Pledged Certificate, accompanied by an appropriate stock power
executed by the Pledgor (the "Stock Power"). In such event, so long as any of
the Obligations remain unsatisfied, the Pledged Certificate and the Stock Power
shall be held by and in the custody of the Representative subject to and in
accordance with the terms and provisions hereof.
(c) Beyond the exercise of reasonable care to assure the safe custody
of the Pledged Certificate and any monies held hereunder, neither the
Representative nor any of the Pledgees shall have any duty or liability to
preserve rights pertaining thereto, and each shall be relieved of all
responsibility for the Pledged Certificate upon the Representative surrendering
it to the Pledgor upon satisfaction in full of the Obligations.
2. Representations. The Pledgor represents and warrants to the Pledgees
as follows:
(a) The Pledgor is a corporation duly incorporated and in good
standing under the laws of the State of Delaware.
(b) This Pledge Agreement has been duly authorized by all necessary
corporate action and represents the binding obligation of the Pledgor in
accordance with its terms.
(c) The Pledgor owns the Pledged Shares free and clear of all liens
and other encumbrances.
3. Covenants. From and after the date hereof and continuing so long as
any of the Obligations shall remain unpaid, unless the Representative shall
otherwise consent in writing,
(a) The Pledgor will defend the Pledgees' subordinated security
interest in and to the Pledged Shares against the claims of any person, firm,
corporation or other entity.
(b) The Pledgor will not sell, assign, transfer, dispose of, pledge
or encumber in any manner any of the Pledged Shares, except in favor of M&T.
4. Remedies of the Pledgees upon Default. In the event that there shall
occur an Event of Default (as defined in the Notes), the Pledgees, acting
through the Representative, shall have all of the rights and remedies afforded
to secured parties with respect to the Pledged Shares as set forth in the
Uniform Commercial Code from time to time in effect in the State of New York.
5. Termination of Agreement. Upon (i) the Pledgor's satisfaction of the
Obligations in full (at which time the Representative shall deliver the Pledged
Certificate and Stock Power (to the extent in his possession) to the Pledgor),
or (ii) the conclusion of the actions contemplated by Section 4 hereof, this
Pledge Agreement shall terminate.
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6. Representative. The Pledgees acknowledge and agree that, pursuant to
the Appointment, the Representative has been appointed the representative and
attorney-in-fact for each of the Pledgees with respect to this Pledge Agreement.
7. Miscellaneous.
(a) This Pledge Agreement constitutes the entire agreement between
the parties pertaining to the subject matter hereof, and supersedes all prior
agreements or understandings as to such subject matter.
(b) No waiver of any of the provisions of this Pledge Agreement shall
be deemed, or shall constitute, a waiver of any other provisions, whether or not
similar, nor shall any waiver constitute a continuing waiver. No waiver shall be
binding unless executed in writing by the Pledgor and the Representative.
(c) No amendment or modification of this Pledge Agreement shall be
valid unless made in writing and signed by the Pledgor and the Representative.
(d) This Pledge Agreement shall be binding upon and shall inure to
the benefit of the parties hereto and their respective heirs, legal
representatives, executors, administrators, successors and assigns.
(e) This Pledge Agreement shall be construed and interpreted and the
rights granted herein governed in accordance with the laws of the State of New
York, without giving effect to conflict of laws principles.
(f) Each of the parties to this Pledge Agreement agrees to execute
and deliver any and all additional papers, documents and other assurances, and
shall perform any and all acts and things, reasonably necessary to effectuate
the purposes and intents of this Pledge Agreement.
(g) This Pledge Agreement may be executed in any number of
counterparts, each of which shall be deemed an original and all of which shall
constitute one instrument.
(h) All notices or other communications or deliveries required or
permitted hereunder shall be sufficiently given if delivered by hand, or sent by
certified or registered mail (return receipt requested, postage prepaid),
facsimile transmission or overnight mail or courier, addressed as follows:
If to the Pledgor, at:
0000 Xxxxxxxx
Xxxxxxx, Xxx Xxxx 00000
Attn: Chief Executive Officer
Facsimile No.: (000) 000-0000
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With a copy to:
Certilman Balin Xxxxx & Xxxxx, LLP
00 Xxxxxxx Xxxxxx
Xxxx Xxxxxx, Xxx Xxxx 00000
Attn: Xxxx Xxxxxxx, Esq.
Facsimile No.: (000) 000-0000
If to any of the Pledgees, at:
c/o Xxxx Xxxxxxx
0000 Xxxxxxx Xxxxx Xxxx
Xxxxxxx Xxxxxx, XX 00000
Facsimile No.: (000) 000-0000
with a copy to:
Xxxxx Xxxx Xxxxxxxx Xxxxxxxxx
Xxxxx Cave LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Facsimile No.: (000) 000-0000
or at such other address as any party or person shall designate by notice to the
other parties in accordance with the provisions hereof.
(i) 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 construed
in order to carry out the intentions of the parties hereto as nearly as may be
possible.
9. Representation by Counsel; Interpretation. Each party acknowledges
that he has been represented by counsel, or has been afforded the opportunity to
be represented by counsel, in connection with this Pledge Agreement and the
transactions contemplated hereby. Accordingly, any rule or law or any legal
decision that would require the interpretation of any claimed ambiguities in
this Pledge Agreement against the party that drafted it has no application and
is expressly waived by the parties. The provisions of this Pledge Agreement
shall be interpreted in a reasonable manner to give effect to the intent of the
parties hereto.
10. Gender. All references to the masculine gender herein shall be deemed
to refer to the feminine and neuter where applicable.
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IN WITNESS WHEREOF, the undersigned have executed this Pledge Agreement as
of the date first above written.
PLEDGOR:
DCAP GROUP, INC.
By:
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Name: Xxxxx Xxxxxxxxx
Title: Chief Executive Officer
PLEDGEES:
TO BE COMPLETED BY INDIVIDUAL TO BE COMPLETED BY CORPORATE,
PLEDGEE PARTNERSHIP, LIMITED LIABILITY
COMPANY OR TRUST PLEDGEE
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Name(s) of Pledgee(s) [Please Print] Name of Pledgee [Please Print]
___________________________________ By:__________________________________
Signature of Pledgee Authorized Signatory
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Signature of Pledgee, if jointly held Name and Title of Authorized Signatory
[Please Print]
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