STOCK PLEDGE AND ESCROW AGREEMENT
This
Stock Pledge and Escrow Agreement (this "Agreement") is executed on July 5,
2007, is made by and between Secure System, Inc., a New Jersey corporation
("Pledgor"), Xxxxx Xxxxxxxxx and Xxxxxxx Xxxxxxxxx (collectively referred to
as
"the Secured Party") and Xxxxx, Xxxxxxxxx & Xxxxxx, P.C., solely in its
capacity as the escrow agent (the "Escrow Agent").
RECITALS:
Whereas,
Pledgor and the Secured Party entered into a certain Stock Purchase Agreement
executed on July 5, 2007 and effective as of June 30, 2007 (the "Stock Purchase
Agreement"), pursuant to which, upon the terms and conditions therein set forth,
Pledgor has agreed to purchase 100% of the issued and outstanding common stock
of Meadowlands Fire, Security & Electrical Supply Co., Inc., a New Jersey
corporation ("MFS"), and Xxxxxxx Electronics, Inc., a New Jersey corporation
("Xxxxxxx") (collectively "the Meadowlands shares"); and
Whereas,
under the terms of the Stock Purchase Agreement, Somerset International Group,
Inc., which is the beneficial and record owner of all of the issued and
outstanding capital stock of Pledgor ("Somerset"), has agreed to issue certain
promissory notes to the Secured Party; and
Whereas,
Pledgor is simultaneously herewith executing a corporate guaranty dated the
date
hereof (the "Corporate Guaranty") whereby Pledgor has unconditionally guaranteed
payment of the promissory notes issued, and to be issued, by Somerset to the
Secured Party; and
Whereas,
Pledgor is required to provide security in respect of Pledgor's guarantee of
the
promissory notes issued, and to be issued, by Somerset to the Secured Party
and
the Secured Party requires that this Agreement be entered into by Pledgor as
a
condition of the purchase and sale of the Meadowlands shares.
NOW,
THEREFORE, in consideration of the premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the
parties hereto agree as follows:
ARTICLE
I
Security
Interest and Pledge
1.01 Security
Interest and Pledge.
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(a)
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Xxxxxxx
has authorized capital stock consisting solely of 2,500 shares of
common
stock, no par value (the "Common Stock"), of which 190 shares of
Common
Stock are issued and outstanding, and all of which are duly authorized,
validly issued, fully paid, non-assessable and free of preemptive
rights.
Pledgor hereby pledges and grants to Secured Party a first priority
security interest in ninety five (95) shares of Common Stock (the
"Pledged
Shares") representing 50% of the issued and outstanding shares of
the
capital stock Xxxxxxx. The Pledged Shares are represented by Certificate
No. 18 registered in the name of Pledgor (the
"Certificate").
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(b)
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Simultaneously
with the execution and delivery of this Agreement, Pledgor delivered
to
the Escrow Agent the Certificate together with an executed stock
power
duly endorsed in blank for the Pledged Shares. The Escrow Agent hereby
acknowledges physical
receipt and possession of the Certificate and the stock power duly
endorsed in blank (the "Escrow
Items").
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1.02 Obligations.
The Collateral shall secure the following obligations, indebtedness and
liabilities (all such obligations, indebtedness and liabilities being
hereinafter sometimes called the "Obligations"):
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(a)
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the
payment of the indebtedness evidenced by the Convertible
Note;
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(b)
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the
payment of the indebtedness evidenced by the Net Current Asset
Note;
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(c)
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the
payment of the indebtedness evidenced by the EBIDTA Adjustment
Note;
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(d)
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the
performance of all obligations evidenced by the Corporate
Guaranty;
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(e)
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the
performance of all obligations evidenced by a certain Covenants Agreement
date of even date herewith by and among inter alia Pledgor and
the Secured Party;
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(f)
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all
extensions, renewals, rearrangements and modifications of any of
the
foregoing.
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1.03. Collateral.
As used herein, the term "Collateral" means the Escrow Items plus all
certificates issued by Xxxxxxx representing stock dividends, stock splits and
any other additional issuance of stock respecting the Common Stock.
ARTICLE
II
Representations
and Warranties
Pledgor
represents and warrants to Secured Party that:
2.01.
Title. Pledgor owns or, with respect to Collateral acquired after the
date hereof, Pledgor will own, legally and beneficially, the Collateral free
and
clear of any lien, security interest, pledge, claim, or other encumbrance or
any
right or option on the part of any third person to purchase or otherwise acquire
the Collateral or any part thereof. Pledgor has the unrestricted right to pledge
the Collateral as contemplated hereby. All of the Collateral consisting of
shares of capital stock has been duly and validly issued and is fully paid
and
nonassessable.
2.02.
Organization and Authority. Neither the execution, delivery or
performance by Pledgor of this Agreement nor compliance by Pledgor with the
terms and provisions hereof, nor the consummation of the transactions
contemplated herein, will (i) contravene in any material respect any applicable
provision of any law, statute, rule or regulation, or any order, writ,
injunction or decree of any court or governmental instrumentality, (ii) conflict
with or result in any breach of any term, covenant, condition or other provision
of, or constitute a default under any contractual obligation to which Pledgor
is
a party or by which it or any of its properties or assets are bound or to which
it may be subject.
2.03.
Percentage of Stock. Upon the date hereof, the Collateral constitutes not
less than fifty (50.0%) percent of the issued and outstanding shares of Common
Stock. Upon satisfaction of the Convertible Note and EBITDA Adjustment Note,
the
Collateral shall constitute not less than twenty-five (25.0%) of the issued
and
outstanding shares of Common Stock.
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2.04.
First Priority Perfected Security Interest. This Agreement creates in
favor of Secured Party a first priority security interest in the Collateral
currently in existence, which will be perfected upon delivery to the Escrow
Agent of the Escrow Items.
ARTICLE
III
Covenants
Pledgor
covenants and agrees with Secured Party that, during the term of this
Agreement:
3.01.
Encumbrances. Pledgor shall not create, permit, or suffer to exist, and
shall defend the Collateral against, any Lien on the Collateral except the
pledge and security interest of Secured Party hereunder, and shall defend
Pledgor's rights in the Collateral and Secured Party's security interest in
the
Collateral against the claims of all persons and entities (other than any person
or entity claiming by, through or under Secured Party or any obligee of the
Obligations).
3.02.
Sale of Collateral. Pledgor shall not reissue, sell, assign, or otherwise
dispose of the Collateral or any part thereof.
3.03.
Distributions. If Pledgor shall become entitled to receive or shall
receive any stock certificate (including, without limitation, any certificate
representing a stock dividend or a distribution in connection with any
reclassification, increase, or reduction of capital or issued in connection
with
any reorganization), option or rights constituting Collateral, whether as an
addition to, in substitution of, or in exchange for any Collateral or otherwise,
Pledgor agrees to accept the same as Secured Party's agent and to hold the
same
in trust for Secured Party and to deliver the same (to the extent in form
capable of delivery) promptly to Secured Party in the exact form received,
with
the appropriate endorsement of Pledgor when necessary and/or appropriate undated
stock powers duly executed in blank, to be held by Secured Party, as additional
Collateral for the Obligations, subject to the terms hereof. Any sums paid
upon
or in respect of the Collateral upon the liquidation or dissolution of Xxxxxxx
shall be paid over to Secured Party to be held by it as additional Collateral
for the Obligations subject to the terms hereof; and in case any distribution
of
capital shall be made on or in respect of the Collateral while a Default or
an
Event of Default shall be continuing or any property shall be distributed while
a Default or an Event of Default shall be continuing upon or with respect to
the
Collateral pursuant to any recapitalization or reclassification of the capital
of Xxxxxxx or pursuant to any reorganization of Xxxxxxx, the property so
distributed shall be delivered to the Secured Party to be held by it, as
additional Collateral for the Obligations, subject to the terms hereof. All
sums
of money and property so paid or distributed in respect of the Collateral that
are received by Pledgor shall, until paid or delivered to Secured Party, be
held
by Pledgor in trust as additional security for the Obligations.
3.04.
Further Assurances. Pledgor has delivered the Escrow Items to the Escrow
Agent, subject to the terms hereof. At any time and from time to time, upon
the
request of Secured Party, and at the sole expense of Pledgor, Pledgor shall
promptly execute and deliver all such further instruments and documents and
take
such further action as Secured Party may deem reasonably necessary or desirable
to preserve and perfect its security interest in the Collateral and carry out
the provisions and purposes of this Agreement, including, without limitation,
the execution and filing of such financing statements as Secured Party may
require. A carbon, photographic, or other reproduction of this Agreement or
of
any financing statement covering the Collateral or any part thereof shall be
sufficient as a financing statement and may be filed as a financing statement
to
the extent provided by applicable law.
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3.05.
Inspection Rights. Upon reasonable notice from Secured Party, Pledgor
shall permit Secured Party and its representatives to examine, inspect, and
copy
Pledgor's books and records concerning ownership of the Collateral at any
reasonable time during normal business hours and as often as Secured Party
may
desire.
3.06.
Notification. Pledgor shall promptly after either Person has knowledge
hereof, notify Secured Party of (i) any lien, security interest, encumbrance,
or
claim made or threatened against the Collateral, and (ii) the occurrence or
existence of any Default or Event of Default.
3.07.
Books and Records. Pledgor shall xxxx its books and records and shall
cause Xxxxxxx to annotate its share transfer register to reflect the pledge
and
security interest made in favor of Secured Party under this
Agreement.
3.08.
Additional Securities. Pledgor shall not consent to or approve the
issuance of any additional shares of any class of capital stock of Xxxxxxx
or
any securities convertible into, or exchangeable for, any such shares or any
warrants, options, rights, or other commitments entitling any person or entity
to purchase or otherwise acquire any such shares.
ARTICLE
IV
Rights
of Secured Party and Pledgor
4.01.
Power of Attorney. Pledgor hereby irrevocably constitutes and appoints
Secured Party and/or its agent, with full power of substitution, as Pledgor's
true and lawful attorney-in-fact with full irrevocable power and authority
in
the place and stead and in the name of Pledgor or in its own name, from time
to
time in Secured Party's discretion during the continuance of an Event of Default
and prior to the Collateral Termination Date, to take any and all action and
to
execute any and all documents and instruments which may be necessary or
desirable to accomplish the purposes of this Agreement and, without limiting
the
generality of the foregoing, hereby gives Secured Party the power and right
on
behalf of Pledgor and in its own name to do any of the following after the
occurrence and during the continuance of an Event of Default and to the extent
permitted by applicable laws, without notice to or the consent of
Pledgor:
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(a)
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to
demand, xxx for, collect, or receive in the name of Pledgor or in
its own
name, any money or property at any time payable or receivable on
account
of or in exchange for any of the Collateral and, in connection therewith,
endorse checks, notes, drafts, acceptances, money orders, or any
other
instruments for the payment of money under the
Collateral;
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(b)
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to
pay or discharge taxes, liens, security interests, or other encumbrances
levied or placed on or threatened against the Collateral demand,
xxx for,
collect, or receive in the name of Pledgor or in its own
name;
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(c)
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to
direct account debtors and any other parties liable for any payment
under
any of the Collateral to make payment of any and all monies due
and to
become due thereunder directly to Secured Party or as Secured
Party shall
direct; (ii) to receive payment of and receipt for any and all
monies,
claims, and other amounts due and to become due at any time in
respect of
or arising out of any Collateral; (iii) to sign and endorse any
drafts,
assignments, proxies, stock powers, verifications, notices, and
other
documents relating to the Collateral; (iv) to commence and prosecute
any
suit, actions or proceedings at law or in equity in any court
of competent
jurisdiction to collect the Collateral or any part thereof and
to enforce
any other right in respect of any
Collateral;
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(v)
to defend any suit, action, or proceeding brought against Pledgor with respect
to any Collateral; (vi) to settle, compromise, or adjust any suit, action,
or
proceeding described in clause (v) above and, in connection therewith, to give
such discharges or releases as Secured Party may deem appropriate; (vii) to
exchange any of the Collateral for other property upon any merger,
consolidation, reorganization, recapitalization, or other readjustment of the
issuer thereof and, in connection therewith, deposit any of the Collateral
with
any committee, depositary, transfer agent, registrar, or other designated agency
upon such terms as Secured Party may determine; (viii) to add or release any
guarantor, endorser, surety, or other party to any of the Collateral or the
Obligations; and (ix) to sell, transfer, pledge, make any agreement with respect
to or otherwise deal with any of the Collateral as fully and completely as
though Secured Party were the absolute owner thereof for all purposes, and
to
do, at Secured Party's option and Pledgor's expense, at any time, or from time
to time, all acts and things which Secured Party deems necessary to protect,
preserve, or realize upon the Collateral and Secured Party's security
interest.
This
power of attorney is a power coupled with an interest and shall be irrevocable.
The Secured Party shall be under no duty to exercise or withhold the exercise
of
any of the rights, powers, privileges, and options expressly or implicitly
granted to Secured Party in this Agreement, and shall not be liable for any
failure to do so or any delay in doing so. Secured Party shall not be liable
for
any act or omission or for any error of judgment or any mistake of fact or
law
in its individual capacity or in its capacity as attorney-in-fact except acts
or
omissions constituting or resulting from its willful misconduct or gross
negligence. This power of attorney is conferred on Secured Party solely to
protect, preserve, and realize upon its security interest in the
Collateral.
4.02.
Voting Rights. Unless and until written notice shall be given to Pledgor
in accordance with Section 5.02(d) that Secured Party has exercised its rights
under Section 5.02(d) to vote the Collateral (provided, however, if Secured
Party is prevented from providing such notice as a result of Section 362 of
the
United States Bankruptcy Code or similar law Pledgor shall be entitled to
exercise such rights so long as no Event of Default shall have occurred and
be
continuing), Pledgor shall be entitled to exercise any and all voting and other
rights relating or pertaining to the Collateral or any part thereof (and the
Secured Party shall execute and deliver (or cause to be executed and delivered)
to Pledgor all such proxies and other instruments as Pledgor may reasonably
request for the purpose of enabling Pledgor to exercise the voting and other
rights which it is entitled to exercise pursuant to this sentence).
4.03.
Dividends. Unless and until written notice shall be given to Pledgor in
accordance with Section 5.02 that an Event of Default has occurred, Pledgor
shall be entitled to receive and collect for its own use all cash dividends
issued in respect of the Collateral.
4.04.
Performance of Pledgor's Obligations. If an Event of Default has occurred
and is continuing, or if Pledgor fails to perform or comply with any of its
agreements contained herein and Secured Party itself shall cause performance
of
or compliance with such agreement, the reasonable expenses of Secured Party
including, without limitation, legal fees and related expenses, shall be payable
by Pledgor to Secured Party on demand and shall constitute Obligations secured
by this Agreement.
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ARTICLE
V
Default
5.01. Events
of Default. Each of the following shall be deemed an "Event of
Default":
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(a)
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The
failure of the Collateral pledged to Secured Party hereunder to constitute
at least fifty (5 0%) percent of the issued and outstanding stock
of
Xxxxxxx while any Indebtedness other than the Net Current Asset Note
remains unpaid;
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(b)
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The
failure of the Collateral pledged to Secured Party hereunder to constitute
at least twenty-five (25%) percent of the issued and outstanding
stock of
Xxxxxxx while only the Net Current Asset Note remains
unpaid;
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(c)
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A
default under the Corporate Guaranty shall have
occurred;
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(d)
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Failure
by Pledgor to perform any agreement contained herein and continuance
of
such non-compliance or failure for thirty (30) days after notice
thereof
to Pledgor from Secured Party;
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(e)
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Any
representation, statement or warranty of Pledgor contained herein
shall be
untrue in any material respect as of the date
made.
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(f)
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Failure
by Pledgor and/or Somerset to honor fully and completely any of their
respective Obligations on a timely
basis.
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5.02.
Rights and Remedies. Prior to the Collateral Termination Date (as
hereinafter defined), upon the occurrence of an Event of Default Secured Party
shall have the following rights and remedies to the extent not prohibited by
applicable laws:
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(a)
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In
addition to all other rights and remedies granted to Secured Party
in this
Agreement and in any other instrument or agreement securing, evidencing,
or relating to the Obligations, Secured Party shall have all of the
rights
and remedies of a secured party under the Uniform Commercial Code
as
adopted by the State of New Jersey. Without limiting the generality
of the
foregoing, Secured Party may (1) without demand or notice to Pledgor,
collect, receive, or take possession of the Collateral or any part
thereof, (2) sell or otherwise dispose of the Collateral, or any
part
thereof, in one or more parcels at public or private sale or sales,
at
Secured Party's offices or elsewhere, for cash, on credit, or for
future
delivery without assumption of any credit risk, and/or (3) bid and
become
a purchaser at any such sale free of any right or equity of redemption
in
Pledgor, which right or equity is hereby expressly waived and released
by
Pledgor. Upon the request of Secured Party, Pledgor shall assemble
the
Collateral and make it available to Secured Party at any place designated
by Secured Party that is reasonably convenient to Pledgor and Secured
Party.
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(b)
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Pledgor
agrees that Secured Party shall not be obligated to give more than
ten
(10) days' prior written notice of the time and place of any public
sale
or of the time after which any private sale may take place and that
such
notice shall constitute reasonable notice of such matters. Pledgor
shall
be liable for all reasonable expenses of retaking, holding, preparing
for
sale, or the like, and all reasonable attorneys' fees and other reasonable
expenses incurred by Secured Party in connection with the collection
of
the Obligations and the enforcement of Secured Party's rights under
this
Agreement, in each case during the continuance of an Event of Default,
all
of which expenses and fees shall constitute additional Obligations
secured
by this Agreement.
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Secured
Party may apply the Collateral against the Obligations then due and payable
in
such order and manner as provided in this Agreement. Pledgor shall remain liable
for any deficiency if the proceeds of any sale or disposition of the Collateral
are insufficient to pay the Obligations. Pledgor waives all rights of
marshalling in respect of the Collateral.
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(c)
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Secured
Party may cause any or all of the Collateral held by it to be transferred
into the name of Secured Party or the name or names of Secured Party's
nominee or nominees (in each case as pledgee
hereunder).
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(d)
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Secured
Party shall have the right, but shall not be obligated to, exercise
or
cause to be exercised all voting rights and corporate powers in respect
of
the Collateral, and Pledgor shall deliver to Secured Party, if requested
by Secured Party, irrevocable proxies with respect to the Collateral
in
form satisfactory to Secured Party.
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(e)
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Because
of applicable securities laws, including without limitation, the
Securities Act of 1933, as amended, the securities laws of New Jersey,
and
other applicable state securities laws, there may be legal restrictions
or
limitations affecting attempts of Secured Party to dispose of the
Collateral in the enforcement of its rights and remedies hereunder.
Secured Party is hereby authorized by Pledgor, but not obligated,
upon the
occurrence and during the continuance of an Event of Default, to
the
extent permitted by applicable law, to sell all or any part of the
Collateral at private sale, subject to investment letters or in any
other
manner which will not require the Collateral or any part thereof,
to be
registered in accordance with the Securities Act of 1933, as amended,
or
the rules and regulations promulgated thereunder, or any other applicable
securities law or regulation. Pledgor specifically agrees that under
these
circumstances, such a sale is a commercially reasonable method of
disposition of the Collateral.
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(f)
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Secured
Party is also hereby authorized by Pledgor, but not obligated, to
take
such actions, give such notices, obtain such rulings and consents,
and do
such other things as Secured Party may deem appropriate in the event
of
such a sale or disposition of any of the Collateral. Pledgor acknowledges
that Secured Party may, in its reasonable discretion, approach a
restricted number of potential purchasers and that a sale under such
circumstances may yield a lower price for the Collateral or any part
or
parts thereof than would otherwise be obtainable if the same were
registered and sold in the open market. Pledgor agrees that such
private
sale shall constitute a commercially reasonable method of disposing
of the
Collateral in view of the time, expense, and potential liability
to the
parties of such transactions of registration of the Collateral in
accordance with applicable securities
laws.
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Article
VI
Escrow
Agent
6.01.
Designation of Escrow Agent. The parties hereby designate and appoint
Xxxxx, Xxxxxxxxx & Xxxxxx, P.C., 00 Xxxx Xxxxxx, Xxxxx 000, Xxxxxxxx, Xxx
Xxxxxx 00000 as Escrow Agent with the following limited duties:
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(a)
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To
keep, hold and preserve the Collateral in its possession pending
satisfaction of the Obligations;
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(b)
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On
expiration of the fifteenth (15th) day after receipt of written
notice
from the Secured Party that an Event of Default has occurred,
together
with reasonable evidence that a copy of said notice was simultaneously
or
previously given to the Pledgor, the Escrow Agent shall deliver
to the
Secured Party all of the Collateral then held by the Escrow Agent
unless,
prior to the expiration of such fifteen (15) day period, the
Pledgor shall
notify the Escrow Agent in writing to withhold release of the
Collateral.
In such event, the Escrow Agent shall not release the Collateral
until the
controversy with respect thereto shall have been settled either
by an
agreement between the Secured Party and the Pledgor, or by a
final
judgment of a court of competent
jurisdiction.
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(c)
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On
expiration of the fifteenth (15th) day after receipt of written
notice
from Pledgor that the Collateral Expiration Date has occurred
and that the
payment Obligations under the Convertible Note, the EBITDA
Adjustment Note
and the Net Current Asset Note have been paid in full, together
with
reasonable evidence that a copy of said notice was simultaneously
or
previously given to the Secured Party, the Escrow Agent shall
deliver to
Pledgor such of the Collateral as may be in the possession
of the Escrow
Agent and as has not theretofore been sold or otherwise applied
pursuant
to this Agreement unless, prior to the expiration of such
fifteen (15) day
period, the Secured Party shall notify the Escrow Agent in
writing to
withhold release of the Collateral. In such event, the Escrow
Agent shall
not release the Collateral until the controversy with respect
thereto
shall have been settled either by an agreement between the
Secured Party
and the Pledgor, or by a final judgment of a court of competent
jurisdiction.
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6.02.
Limited Liability of Escrow Agent. The Escrow Agent shall not be liable
for any exercise of judgment in the performance of its duties hereunder, but
only for its own actual fraud, willful misconduct, or gross negligence. The
duties of the Escrow Agent shall be determined solely by the express provisions
of this Agreement.
6.03.
Disputes Involving the Collateral. In the event the Collateral becomes
the subject matter of any litigation (including arbitration or any other type
of
proceeding which may affect the rights to and ownership of the Pledged Shares),
the parties hereby authorize the Escrow Agent, without creating any obligation
on the part of the Escrow Agent, to deposit the Collateral with the clerk of
the
court in which the litigation is pending, or with the arbitrator(s) in the
case
of arbitration, and thereupon the Escrow Agent shall be fully relieved and
discharged of any further responsibility under this Agreement. The parties
also
authorize the Escrow Agent, if it is threatened with litigation, to interplead
all interested parties in any court of competent jurisdiction and to deposit
the
Collateral with the clerk of that court and thereupon the Escrow Agent shall
be
fully relieved and discharged of any further responsibility
hereunder.
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6.04
Indemnification
of Escrow Agent. Pledgor and the Secured Party agree, jointly and severally,
to indemnify and hold the Escrow Agent harmless from and against all costs,
damages, judgments, attorneys' fees, expenses, obligations and liabilities
of
any kind or nature, which in good faith the Escrow Agent may incur or sustain
in
connection with or arising out of this Agreement, and the Escrow Agent is
hereby
given a lien upon all the rights, title, and interest of each of the undersigned
in all Collateral deposited in this escrow to protect the Escrow Agent's
rights
and to indemnify and reimburse it as a result of taking action in good faith
consistent with this Agreement.
6.05
Resignation
of Escrow Agent. The Escrow Agent may resign and may be discharged from its
duties hereunder at any time by giving notice of such resignation to all
parties
specifying a date (not less than ten (10) days after the giving of such notice)
when such resignation shall take effect. Promptly after such notice, a successor
escrow agent shall be appointed by mutual agreement of Pledgor and the Secured
Party, such successor escrow agent to become the Escrow Agent hereunder upon
the
resignation date specified in such notice. If Pledgor and the Secured Party
are
unable to agree upon a successor escrow agent within ten (10) days after
such
notice, the Secured Party shall, and the Escrow Agent may instead appoint
a
reputable commercial bank located in New Jersey to be the successor Escrow
Agent.
6.06
Pledgor
and the Secured Party acknowledge, understand and agree that the Secured
Party
has been and continues to be represented by Xxxxx Xxxxxxxxx & Xxxxxx, P.C.,
not in its capacity as Escrow Agent, with respect to the transactions
contemplated in the Stock Purchase Agreement. Pledgor and the Secured Party
have
chosen the Escrow Agent to act as escrow agent in this Agreement notwithstanding
the fact that the Escrow Agent has represented the Secured Party and that
the
parties hereto may in the future have substantially conflicting interests.
Pledgor has had the opportunity to consult with counsel on this matter and
has
been advised that the Escrow Agent can and will continue to represent the
Secured Party with respect to the transactions contemplated in the Stock
Purchase Agreement and the matters, if any, arising out of or relating thereto.
As partial consideration for the Escrow Agent to enter into this Agreement
and
with the knowledge that but for the following waiver and consent the Escrow
Agent would not have entered into this Agreement, Pledgor and the Secured
Party
hereby irrevocably waive and consent to the Escrow Agent's continuing
representation of the Secured Party.
ARTICLE
VII
Miscellaneous
7.01.
Defined Terms. The following terms as used in this Agreement shall have
the meanings:
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(a)
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"Convertible
Note" shall mean the Convertible Promissory Note in the principal
amount
of $250,000 issued to the Secured Party pursuant to paragraph 4(a)(ii)
of
the Stock Purchase Agreement;
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(b)
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"EBIDTA
Adjustment Note" shall mean the promissory note, if any, issued to
the
Secured Party pursuant to paragraph 4(b)(iv) of the Stock Purchase
Agreement;
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(c)
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"Net
Current Asset Note" shall mean the promissory note, if any, issued
to the
Secured Party
pursuant to paragraph 4(b)(iii) of the Stock Purchase
Agreement;
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9
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(d)
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"Collateral
Termination Date" shall mean the first date on which the
principal and
interest, if any, due upon the Convertible Note, EBIDTA Adjustment
Note,
and Net Current Asset Note shall have been paid or otherwise
satisfied in
full.
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7.02.
No Waiver; Cumulative Remedies. No failure on the part of Secured Party
to exercise and no delay in exercising, and no course of dealing with respect
to, any right, power, or privilege under this Agreement shall operate as a
waiver thereof, nor shall any single or partial exercise of any right, power,
or
privilege under this Agreement preclude any other or further exercise thereof
or
the exercise of any other right, power, or privilege. To the fullest extent
permitted by applicable laws, the rights and remedies provided for in this
Agreement are cumulative and not exclusive of any rights and remedies provided
by law.
7.03.
Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of Pledgor and Secured Party and their respective heirs, successors,
and assigns, except that Pledgor may not assign any of its rights or obligations
under this Agreement without the prior written consent of Secured
Party.
7.04.
Amendment; Entire Agreement. This Agreement, together with any applicable
pledge or other agreement required by applicable laws, embodies the final,
entire agreement among the parties hereto and supersedes any and all prior
commitments, agreements, representations, and understandings, whether written
or
oral, relating to the subject matter hereof. The provisions of this Agreement
may be amended or waived only by an instrument in writing signed by the parties
hereto.
7.05.
Notices. Any notice pursuant to this Agreement required to be given or
made shall be sufficiently given or made if sent by certified or registered
mail, postage prepaid, addressed as follows:
To
the Pledgor:
Secure
System, Inc.
c/o
Somerset International Group
00
Xxxxxxxxxx Xxxxxx Xxxx
Xxxxxxxxxx,
XX 00000
Attn:
Xxxx X. Xxxxxxxx, Chief Executive Officer
with
a copy to:
Xxxxxxxx
& XxXxxxx, Esqs.
000
Xxxxxxxxxx Xxxx, Xxxxx 000
Xxxx
Xxxx, Xxx Xxxxxx 00000
Attn:
Xxxxxxx X. XxXxxxx, Esq.
To
the Secured Party:
Mr
&
Xxx. Xxxxx Xxxxxxxxx
00
Xxxxx
Xxxx Xxxxx
Xxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
10
with a copy to:
Xxxxx,
Xxxxxxxxx & Xxxxxx, P.C.
00
Xxxx
Xxxxxx, Xxxxx 000
Xxxxxxxx,
Xxx Xxxxxx 00000
Attn:
Xxxxxx X. Xxxxx, Esq.
To
the Escrow Agent:
Xxxxx,
Xxxxxxxxx & Xxxxxx, P.C.
00
Xxxx
Xxxxxx, Xxxxx 000
Xxxxxxxx,
Xxx Xxxxxx 00000
Attn:
Xxxxxx X. Xxxxx, Esq.
with
a copy each to the Pledgor and to the Secured Party.
Any
such
notice, consent, or other communication shall be deemed given when delivered
in
person or, if given by mail, five (5) days after such communication is deposited
in the mail, certified or registered with return receipt requested.
7.06.
Governing Law. This Agreement, and the rights and duties of the parties
hereto, shall be construed in accordance with and governed by the internal
laws
of the State of New Jersey; provided, however that any enforcement of Secured
Party's rights and remedies in any other jurisdiction shall, to the extent
required by applicable laws, be governed by the laws of the jurisdiction of
enforcement. Each party hereto hereby submits to the exclusive jurisdiction
of
the Superior Court of New Jersey for the purposes of all legal proceedings
arising out of or relating to this Agreement or the transactions contemplated
hereby.
7.07.
Headings. The headings, captions, and arrangements used in this Agreement
are for convenience only and shall not affect the interpretation of this
Agreement.
7.08.
Survival of Representations. All representations and warranties made in
this Agreement or in any certificate delivered pursuant hereto shall survive
the
execution and delivery of this Agreement, and no investigation by Secured Party
shall affect the representations and warranties or the right of Secured Party
to
rely upon them.
7.09.
Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
7.10.
Severability. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating
the
remaining provisions of this Agreement, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
7.11.
Construction. Pledgor and Secured Party acknowledge that each of them has
had the benefit of legal counsel of its own choice and has been afforded an
opportunity to review this Agreement with its legal counsel and that this
Agreement shall be construed as if jointly drafted by Pledgor and Secured
Party.
7.12.
Obligations Absolute. The obligations of Pledgor under this Agreement
shall be absolute and unconditional and shall not be released, discharged,
reduced, or in any way impaired by any circumstance whatsoever, including,
without limitation, any amendment, modification, extension, or renewal of this
Agreement, the Obligations, or any document or instrument evidencing, securing,
or
otherwise
relating to the Obligations, or any release, subordination, or impairment of
collateral, or any waiver, consent, extension, indulgence, compromise,
settlement, or other action or inaction in respect of this Agreement, the
Obligations, or any document or instrument evidencing, securing, or otherwise
relating to the Obligations, or any exercise or failure to exercise any right,
remedy, power, or privilege in respect of the Obligations.
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7.13.
Termination. Except as otherwise provided in this Agreement, upon the
Collateral Termination Date, the liens upon the Collateral created hereby shall
terminate, and the Secured Party, at the request and expense of Pledgor,
forthwith will execute and deliver to Pledgor a proper instrument or instruments
acknowledging the satisfaction and termination of the liens created hereby
and
will authorize the Escrow Agent, in writing, to release and redeliver the
Collateral to the Pledgor. Upon such release and redelivery, this Agreement
shall terminate.
IN
WITNESS WHEREOF, the parties have entered into this Stock Pledge and Escrow
Agreement as of the date set forth on the first page.
Pledgor:
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ATTEST:
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Secure
System, Inc.
|
|
|
By:_______________________________ |
|
Name:
Xxxx X. Xxxxxxxx
|
Name:
Xxxx X. Xxxxxxxx
|
|
Title:
Secretary
|
Title: Chief
Executive Officer
|
|
Secured
Party:
|
|
|
Xxxxx
Xxxxxxxxx
|
Xxxxxxx
Xxxxxxxxx
|
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Escrow
Agent:
|
|
|
Xxxxx,
Xxxxxxxxx & Xxxxxx, P.C.
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12
