PLEDGE AND SECURITY AGREEMENT
AGREEMENT made July _____, 1996, between ______________________________
of __________________________________(the "Pledgor"), and ELECTRONICS
COMMUNICATIONS CORP., 00 Xxxx Xxxx, Xxxxxxxxx, Xxx Xxxxxx 00000 (the
"Pledgee").
WHEREAS, at the execution of this agreement the Pledgee has made a
loan to the Pledgor in the sum of $1,500,000 (hereinafter referred to as
the "Loan"), as evidenced by the Promissory Note of the Pledgor payable to
Pledgee for such amount; and
WHEREAS, in order to induce the Pledgee to make the Loan, the Pledgor has
agreed to pledge certain stock with the Pledgee as security for the payment of
the Loan.
It is therefore agreed:
1. PLEDGE. In consideration of the Pledgee making the Loan, the
Pledgor hereby grants a security interest to the Pledgee in instruments of
the following description, duly endorsed in blank or accompanied by duly
endorsed stock powers, separate form, and herewith delivered to the Pledgee:
NO. OF SHARES
OF SERIES B
ISSUER PREFERRED STOCK CERTIFICATE NO.
------ --------------- ---------------
Electronics Communications Corp. 1,000,000
The Pledgee shall hold the pledged shares on the books of the Company in
the name of the Pledgor. The Pledgee shall hold the pledged shares as
security for the payment of the Loan as security for the return of the
collateral and shall not encumber or dispose of the shares except in accordance
with the provisions of paragraph 8 of this agreement.
2. DIVIDENDS. During the term of this pledge, all dividends and
other amounts received by the Pledgor as a result of his record ownership of
the pledged shares shall be applied by him to the payment of the principal and
interest on the Loan.
3. VOTING RIGHTS. During the term of this pledge, and so long as the
Pledgor is not in default in the performance of any of the terms of this
agreement or in the payment of the principal or interest of the Loan, the
Pledgor shall have the right to vote the pledged shares on all corporate
questions.
4. REPRESENTATIONS. The Pledgor warrants and represents that there
are no restrictions upon the transfer of any of the pledged shares, other than
may appear on the face of the certificates, and that the Pledgor has the right
to transfer such shares free of any
encumbrances and without obtaining the consents of the other shareholders.
5. ADJUSTMENTS. In the event that, during the term of this pledge,
any share dividend, reclassification, readjustment, or other change is
declared or made in the capital structure of the Company which has issued the
pledged shares, all new, substituted, and additional shares, or other
securities, issued by reason of any such change shall be held by the Pledgee
under the terms of this agreement in the same manner as the shares
originally pledged hereunder.
6. WARRANTS AND RIGHTS. In the event that during the term of this
pledge, subscription warrants or any other rights or options shall be issued in
connection with the pledged shares, such warrants, rights, and options shall
be immediately assigned by the Pledgor to the Pledgee to be held under the
terms of this agreement, and if exercised by the Pledgor all new shares or
other securities so acquired by the Pledgor shall be immediately assigned to
the Pledgee to be held under the terms of this agreement in the same manner as
the shares originally pledged hereunder.
7. PAYMENT OF LOAN. Upon payment at maturity of the principal and
interest of the Loan, less amounts theretofore received and applied by the
Pledgee in reduction thereof, the Pledgee shall return to the Pledgor all the
pledged shares.
8. DEFAULT. In the event that the Pledgor defaults in the performance
of any of the terms of this agreement, or in the payment at maturity of the
principal or interest of the Loan, the Pledgee shall have the rights and
remedies provided in the Uniform Commercial Code in force in the State of New
Jersey at the date of this agreement and in this connection, the Pledgee
may upon five days' notice to the Pledgor, sent by registered mail, and
without liability for any diminution in price which may have occurred, sell all
the pledged shares in such manner and for such price as the Pledgee may
determine. At any bona fide public sale the Pledgee shall be free to purchase
all or any part of the pledged shares. Out of the proceeds of any sale the
Pledgee may retain an amount equal to the principal and interest then due on
the Loan, plus the amount of the expenses of the sale, and shall pay any
balance of such proceeds to the Pledgor.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF the parties have executed this agreement on the day
first above written.
PLEDGOR
_________________________
PLEDGEE
ELECTRONICS COMMUNICATIONS CORP.
___________________________
By:
