PLEDGE AND SECURITY AGREEMENT
THIS
PLEDGE AND SECURITY AGREEMENT (this “Agreement”),
dated
September _____ , 2006, made by Science Dynamics Corporation, a Delaware
corporation having offices at 0000 X. Xxxx Xxxxx, Xxxxx 000, Xxxxxxxxxx, Xxx
Xxxxxx 00000 (“Pledgor”)
in
favor of and being delivered to Xxxxxxx Xxxxxxxxx (“Owner
Representative”)
as a
representative of all of the Owners (collectively, the “Pledgee”)
in
connection with that certain Stock Purchase Agreement, dated as of September
__,
2006, by and between Pledgor, Xxxxxxxxx Technologies, Inc. (“Company”) and the
Owners set forth on Schedule O thereto (the “Purchase
Agreement”).
WITNESSETH:
WHEREAS,
Pledgor is indebted to Pledgee in the amount of $500,000.00 pursuant to that
certain secured promissory note of even date herewith (“Note”)
on
account of that portion of the Purchase Price (as defined in the Purchase
Agreement) which is payable to the Owners pursuant to Section 3.1(a)(iii) of
the
Purchase Agreement;
WHEREAS,
as consideration for the execution of the Purchase Agreement and this Agreement
by the Pledgee, and to further secure Pledgor’s obligations under the Note
(“Obligations”),
Pledgor agrees to pledge and grant to Pledgee a security interest in 3,050
shares of the Transferred Shares, as such term is defined in the Purchase
Agreement (the “Pledged
Interest”);
NOW
THEREFORE, in consideration of the premises and the mutual covenants contained
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby covenant
and agree as follows (capitalized terms used herein and not otherwise defined
shall have the meanings ascribed to such terms in the Note):
Section
1. Pledge.
Pledgor
hereby pledges, assigns, hypothecates, delivers, sets over and grants to Pledgee
a lien on and first priority security interest in and to all right, title and
interest of Pledgor in the Pledged Interest, any certificates, instruments
or
documents representing the same, all options and other rights, contractual
or
otherwise, in respect thereof (including, without limitation, any registration
rights) and all dividends, distributions, liquidation proceeds, cash,
instruments and other property to which Pledgor is entitled with respect to
the
Pledged Interest, whether or not received by or otherwise distributed to
Pledgor, whether such dividends, distributions, liquidation proceeds, cash,
instruments and other property are paid or distributed by the issuer of any
Pledged Interest (each, an “Issuer”)
in
respect of operating profits, sales, exchanges, refinancing, condemnations
or
insured losses of the assets of such Issuer, the liquidation of such Issuer’s
assets and affairs, management fees, guaranteed payments, repayment of loans,
reimbursement of expenses or otherwise (collectively, the “Distributions”)
in
respect of or in exchange for any or all of the Pledged Interest, and Pledgor's
rights, remedies and benefits under the organizational documents of any Issuer,
all rights and powers of Pledgor arising under the organizational documents
of
any Issuer or under law, including, without limitation, all rights of Pledgor
to
vote on any matter specified therein or under law; all rights of Pledgor to
cause an assignee to be substituted as a member or partner, as the case may
be,
in any Issuer in the place and stead of Pledgor; all rights, remedies, powers,
privileges, security interests, liens, and claims of Pledgor for damages arising
out of or for breach of or default under the organizational documents of any
Issuer; all present and future claims, if any, of Pledgor against any Issuer
under or arising out of the organizational documents of such Issuer for monies
loaned or advanced, for services rendered or otherwise; all rights of Pledgor
to
access to the books and records of any Issuer and to other information
concerning or affecting such Issuer; all rights of Pledgor to terminate the
organizational documents of any Issuer, to perform thereunder, to compel
performance and otherwise to exercise all remedies thereunder; and all rights
of
Pledgor to acquire the rights or interests of any other shareholder, member
or
partner in any Issuer and all increases and profits of any of the foregoing
and
all proceeds thereof. The security interests, rights, remedies and benefits
of
Pledgee granted by this Section 1(a) and all proceeds thereof are hereinafter
collectively referred to as the “Pledged
Collateral.”
The
Pledgor hereby pledges, assigns and grants a security interest in the Pledged
Collateral and delivers the same to the Escrow Agent hereunder for and on behalf
of Pledgee. As of the date hereof, all of the stock certificates and other
document representing the Pledged Collateral shall be duly endorsed in blank
by
the appropriate party or parties and delivered to the Escrow Agent to be held
by
Xxxxxxx
X. Xxxxxxx, Esq., of Shaiman, Drucker, Beckman, Xxxxx & Xxxxxxx,
LLP
in
pledge, according to the terms and provisions of this Agreement as collateral
security for the prompt payment of the Obligations. Pledgor agrees to execute
the Stock Power, in the form attached hereto as Exhibit
A,
and
such financing statements, agreements and other instruments and to perform
such
acts to create a valid, perfected, first position security interest in the
Pledged Collateral. All reasonable costs of filing and recording of the
financing statements shall be paid by Pledgor.
Section
2. Security
for Obligations.
This
Agreement secures (i) the prompt payment when due, whether at the respective
stated maturity dates, by acceleration or otherwise, of all obligations and
any
other amounts due or to become due under the Note whether for principal,
interest, fees, expenses or otherwise, (ii) the due and punctual performance
or
satisfaction of all obligations of Pledgor under the Note, and (iii) any and
all
obligations of Pledgor now or hereafter existing under this
Agreement.
Section
3. Voting
Power, Distributions, Etc.
Notwithstanding
anything to the contrary contained in Section 1 hereof, provided that no Event
of Default (as hereinafter defined) shall have occurred and be continuing,
subject to the cure period therefore as provided in the Note, as applicable,
and
in all respects subject to the terms, conditions, prohibitions or limitations
on
the following actions of Pledgor as member, manager or shareholder of Issuer
provided in the Organizational Documents of Issuer, (i) Pledgor shall be
entitled to exercise all voting, consensual and other powers of ownership
pertaining to the Pledged Collateral (including, without limitation, to make
determinations, to exercise any election (including, without limitation,
election of remedies) or option, and to give or receive any notice, consent,
amendment, waiver, approval or other rights described in Section 1 hereof),
provided that no ratification shall be given, nor any power pertaining to the
Pledged Collateral exercised, nor any other action taken, which would violate
or
be inconsistent with the terms of this Agreement or any of the other security
documents delivered hereunder, or which would have the effect of impairing
the
position or interests of Pledgee, or, in each case, in such a manner as would
reasonably be expected to have a material adverse effect on the ability of
Pledgor to perform its obligations hereunder, and (ii) Pledgor shall be entitled
to all Distributions. If any of the foregoing rights are exercised by Pledgor,
Pledgor shall promptly give written notice to Pledgee of its exercise of such
right. Upon the occurrence of any Event of Default and for so long as such
Event
of Default is continuing, Pledgee shall have the sole and exclusive right to
exercise all voting, consensual and other powers of ownership pertaining to
the
Pledged Collateral.
-2-
Section
4. Events
of Default.
The
occurrence of any of the following events shall constitute an “Event
of Default”
under
this Agreement: (a) if Pledgor shall at any time fail timely to perform or
comply with any provision of this Agreement and, if such failure is capable
of
being cured, the same shall not have been cured within thirty (30) days
following notice thereof; or (b) if there shall occur any default under the
terms and conditions of the Note; or (c) if Pledgor shall at any time fail
to
perform or comply with any provision of the Note.
Section
5. Remedies
Upon Default.
Upon
the
occurrence of any Event of Default:
a. Pledgee
may instruct the Escrow Agent to transfer all or any part of the Pledged
Collateral into Pledgee's name or the name of its nominee or nominees.
b. Pledgee
may vote all or any part of the Pledged Collateral (whether or not transferred
into the name of Pledgee) and give all consents, waivers and ratifications
in
respect of the Pledged Collateral and otherwise act with respect thereto as
though Pledgee were the outright owner thereof.
c. Pledgee
shall receive any and all distributions from the Pledgor with respect to the
Pledged Collateral.
Section
6. Full
Payment.
In
the
event of the timely performance and payment in full of the Obligations, written
notice to that effect will be delivered by Pledgor to the Escrow Agent. Upon
receipt of such notice, the Escrow Agent will mail a copy of such notice to
Pledgee. If, fifteen (15) business days after the notice has been mailed by
the
Escrow Agent to Pledgee, the Escrow Agent has not received from Pledgee written
notice to the contrary regarding payment, the Escrow Agent forthwith shall
deliver to Pledgor all Stock Certificates then deposited, and this Agreement
shall terminate.
Section
7. Escrow
Agent.
The
Escrow Agent shall not be responsible for the genuineness of any certificates
or
signature and may rely conclusively upon and shall be protected when acting
upon
any notice, affidavit, request, consent, instruction, check or other instrument
believed by them in good faith to be genuine or to be signed or presented by
the
proper person, or duly authorized and properly made. The Escrow Agent, absent
a
willful breach, shall have no responsibility except for the performance of
Escrow Agent’s express duties hereunder and no additional duties shall be
inferred herefrom or implied hereby. The Escrow Agent shall not be responsible
or liable for any act or omission on the Escrow Agent’s part in the performance
of the Escrow Agent’s duties under this Agreement, except as such act or
omission finally is determined by a court of competent jurisdiction to
constitute gross negligence or fraud. The Escrow Agent shall not be required
to
institute or defend any action involving any matters referred to herein or
which
affects them or their duties hereunder unless or until requested to do so by
any
party to this Pledge Agreement, and then only upon receiving full indemnity
in
character satisfactory to the Escrow Agent against any and all claims,
liabilities and expenses in relation thereto. In the event of any dispute among
the parties hereto in relation to the Escrow Agent and attendant duties, the
Escrow Agent may: (i) act or refrain from acting in respect to any matter
referred to herein in full reliance upon the advice of counsel selected, and
shall be fully protected in so acting or refraining from acting upon the advice
of such counsel, (ii) refrain from acting until required to do so by an order
of
a court of competent jurisdiction; or (iii) implead the Pledged Collateral
then
held into a court of competent jurisdiction and thereupon shall be relieved
of
any further duties hereunder. Each party hereto agrees to jointly and severally
indemnify and hold harmless Escrow Agent from all or any manner or claim,
liability or cause of action arising from the performance of the duties imposed
on him hereby, direct or indirect, except for acts or omissions determined
by a
court of competent jurisdiction to constitute gross negligence, willful
misconduct or fraud. The parties hereto acknowledge that the Escrow Agent may
have represented one or more parties with respect to the transactions
contemplated by the Pledge Agreement and each party consents to the continuing
representation thereof by the Escrow Agent notwithstanding any conflict created
thereby. In the event the individual named above as Escrow Agent is unable
or
refuses to serve in such capacity, then another individual shall so serve and
any reference in this Pledge Agreement to the term Escrow Agent shall include
such successor. Pledgee shall select the successor Escrow Agent and shall have
the right to substitute any other individual or entity for the Escrow Agent
upon
delivery of written notice to Pledgor, so long as the substituted individual
or
entity is independent from the transactions identified herein and accepts the
obligations of the Escrow Agent under this Agreement.
-3-
Section
8. Amendments,
Waivers, Etc.
No
amendment or waiver of any provision of this Agreement, nor consent to any
departure by Pledgor herefrom, shall in any event be effective unless the same
shall be in writing and signed by Pledgee, and then such waiver or consent
shall
be effective only in the specific instance and for the specific purpose for
which given.
Section
9. Notices.
All
notices required to be given to any of the parties to this Agreement shall
be in
writing and shall be deemed to have been sufficiently given, subject to the
further provisions of this Section 9, for all purposes when presented
personally to such party or sent by certified or registered mail, return receipt
requested, with proper postage prepaid, or any national overnight delivery
service, with proper charges prepaid, to such party at its address set forth
below:
-4-
If
to Pledgee:
|
Mr.
Xxxxxxx Xxxxxxxxx
0000
Xxx Xxxxxxx Xxxx
Xxxxxxx,
XX 00000
|
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With
a copy to:
|
Holland
& Knight LLP
0000
Xxxxxx Xxxxxxxxx, Xxxxx 000
XxXxxx,
Xxxxxxxx 00000
Attention:
Xxxxxxx X. Xxxxxx
(Fax)
703/000-0000
|
|
If
to Pledgor:
|
Science
Dynamics Corporation.
0000
X. Xxxx Xxxxx, Xxxxx 000
Xxxxxxxxxx,
Xxx Xxxxxx 00000
Attention:
Mr. Xxxx Xxxxxxx
|
|
With
a copy to:
|
Shaiman,
Drucker, Beckman, Xxxxx & Xxxxxxx LLP
0000
Xxxxxx Xxxxxx, 00xx
Xxxxx
Xxxxxxxxxxxx,
XX 00000
Attention:
Xxxxxxx X. Xxxxxxx, Esquire
Facsimile:
215.972.0048
|
|
If
to Escrow Agent:
|
Shaiman,
Drucker, Beckman, Xxxxx & Xxxxxxx LLP
0000
Xxxxxx Xxxxxx, 00xx
Xxxxx
Xxxxxxxxxxxx,
XX 00000
Attention:
Xxxxxxx X. Xxxxxxx, Esquire
Facsimile:
215.972.0048
|
Such
notice shall be deemed to be received when delivered if delivered personally,
the next business day after the date sent if sent by a national overnight
delivery service, or three (3) business days after the date mailed if mailed
by
certified or registered mail. Any notice of any change in such address shall
also be given in the manner set forth above. Whenever the giving of notice
is
required, the giving of such notice may be waived in writing by the party
entitled to receive such notice.
Section
10. Severability.
If
for
any reason any provision or provisions hereof are determined to be invalid
and
contrary to any existing or future law, such invalidity shall not impair the
operation of or affect those portions of this Agreement which are valid.
Section
11. Governing
Law; Terms.
This
Agreement shall be governed by, and construed in accordance with, the internal
laws of the State of New Jersey (without giving effect to principles of
conflicts of law). Unless otherwise defined herein, terms defined in Article
9
of the Code are used herein as therein defined.
-5-
Section
12. Recitals.
The
Recitals at the beginning of this Agreement are hereby incorporated into the
substantive provisions of this Agreement.
Section
13. Definitions.
Each
capitalized term not otherwise defined herein shall have the meaning ascribed
to
such term in the Note.
Section
14. Counterparts.
This
Agreement may be executed in multiple counterparts, each of which shall
constitute an original, and together shall constitute one and the same
agreement.
{Signature
page follows.}
-6-
IN
WITNESS WHEREOF, Pledgor has caused this Agreement to be executed and delivered
by its duly authorized representatives as of the date first set forth above.
WITNESS: |
PLEDGOR:
SCIENCE DYNAMICS CORPORATION
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By: |
(SEAL)
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Xxxx Xxxxxxx |
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Title: |
PLEDGEE:
XXXXXXX
XXXXXXXXX
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(SEAL)
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Xxxxxxx Xxxxxxxxx, as the Owner |
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Representative pursuant to Section 14.12 of the Purchase Agreement |
For
the
limited purposes set forth herein above, by
ESCROW AGENT: | ||
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Xxxxxxx X. Xxxxxxx, Esq., of Shaiman, |
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Drucker, Beckman, Xxxxx & Xxxxxxx, LLP |
Exhibit
A
Stock
Power
FOR
VALUE
RECEIVED, the undersigned does hereby sell, assign and transfer to
_______________, ___________ shares of the Common Stock of Xxxxxxxxx
Technologies, Inc.., a Virginia corporation (the "Company"), standing in the
name of the undersigned on the books of the Company represented by Certificate
No. ___, which is attached hereto, and does hereby irrevocably constitute and
appoint the Xxxxxxx X. Xxxxxxx, Esq., of Shaiman, Drucker, Beckman, Xxxxx &
Xxxxxxx, LLP, or such other successor Escrow Agent under the Pledge and Security
Agreement to which this stock power is attached, as the undersigned's
attorney-in-fact to transfer said stock on the books of the Company, with full
power of substitution in the premises.
DATED:
SCIENCE DYNAMICS CORPORATION | ||
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By: Xxxx Xxxxxxx |
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Title: |