STOCK PLEDGE AND ESCROW AGREEMENT
AGREEMENT, dated as of December 1, 2003, between those individually identified
on Schedule R-1 (collectively and individually "Pledgee" and/or "Seller"), being
all of the shareholders of SubContracting Concepts, Inc., a New York corporation
("SCI"), SubContracting Concepts, Inc., a Connecticut corporation ("SCI-CN") and
SCI Two-Wheel, Inc., a Georgia corporation ("SCI-GA" and together with SCI and
SCI-CN individually and collectively the "Company"), Universal Express, Inc., a
Nevada corporation collectively hereinafter referred to as "Pledgor" or
"Purchaser"), and Scott Reid, Esq. having an office at Lemery Greisler LLC, 10
Railroad Place, Saratoga Springs, New York 12866 (hereinafter referred to as
"Escrow Agent")
W I T N E S S E T H:
WHEREAS, EACH Pledgee have sold his Ownership Interest in the Company
as defined in the Stock Purchase Agreement of even date herewith between the
Pledgee, Pledgor and the Company (the "SPA"); and
WHEREAS, Pledgor is obligated to the Pledgee in accordance with the terms of the
SPA, including, but not limited to an obligation to make additional
consideration payments (including the issuance of Buyer Shares) under section
1.3.2, thereof and to issue 5,000,000 Buyer Shares to the Pledgee in accordance
with the terms of section 1.3.1.2 thereof (such obligations being collectively
referred to herein as the "SPA Obligation"); and
WHEREAS, in order to induce Pledgee to enter into the SPA and accept
the SPA Obligation as consideration for the delivery of the Seller Shares
including the Seller Shares as set forth in the whereas clause(s) of the SPA,
Pledgor has agreed to pledge all shares of stock issued to the Pledgor in
connection with its acquisition of the Seller Shares, including the following
shares of stock: (i) 200 shares of common stock of SCI TWO-WHEEL, INC., a
Georgia corporation, represented by certificate(s) numbered 13; (ii) 5000 shares
of common stock of SUBCONTRACTING CONCEPTS, INC., a Connecticut corporation,
represented by certificate(s) numbered 10; and (iii) 200 shares of common stock
of SUBCONTRACTING CONCEPTS, INC., a New York corporation, represented by
certificate(s) numbered 8 (collectively the "Escrow Interests") to the Pledgee
to secure the SPA Obligations;
NOW THEREFORE, in consideration of Ten Dollars, and other
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
1. PLEDGE OF THE SHARES. Pledgor hereby pledges, hypothecates,
assigns and transfers the Escrow Interests to Pledgee and hereby grants to
Pledgee a lien on and security interest in the Escrow Interests to secure the
full and prompt payment of the SPA Obligation.
2. PLEDGOR'S REPRESENTATIONS AND WARRANTIES. Pledgor hereby
represents and warrants to Pledgee that:
(a) There are no restrictions upon the transfer of any of the Escrow
Interests, other than may appear on the face of the certificates, and
Pledgor has the right to transfer the Escrow Interests free of any
encumbrance without the consent of any person or entity.
(b) Pledgor has the power to execute, deliver and perform the
provisions of this Agreement and all instruments and documents
delivered or to be delivered pursuant hereto, and has taken or caused
to be taken all necessary or appropriate actions to authorize the
execution, delivery and performance of this Agreement and all such
instruments and documents.
(c) Pledgor is the legal and equitable owner of the Escrow Interests,
free and clear of all security interests, liens, claims and
encumbrances of every kind and nature.
(d) There are no actions, suits, proceedings (including proceedings
by or before any arbitrator or administrative agency) or claims
pending or, to the Pledgor's knowledge, threatened against or
affecting the Pledgor that relate to the transactions contemplated by
this Agreement.
(b) The pledge, assignment and delivery of the Escrow Interests
creates a valid lien on, and perfected security interest in, such
Escrow Interests and the proceeds thereof, subject to no prior lien
or option or any agreement purporting to grant to any third party a
prior lien on the Escrow Interests.
(c) The Pledgor covenant that they will not sell, assign, transfer,
exchange or otherwise dispose of, or grant any option with respect to
any of the Escrow Interests, nor will it create, incur or permit to
exist any lien with respect of any of the Collateral, any interest
therein or any proceeds thereof (except for the liens created by this
Agreement).
3. PROTECTION OF THE SHARES. Pledgor shall defend the title to the
Escrow Interests against all claims and demands whatsoever. Pledgor shall not
sell, exchange, assign, transfer or otherwise dispose of the Escrow Interests,
and shall not pledge, encumber, hypothecate, mortgage, create a lien on or
security interest in the Escrow Interests, without the prior written consent of
Pledgee in each instance.
In the event that during the term of this Agreement any dividend,
reclassification, readjustment or other change is declared or made in the
capital structure of any of the entities comprising the Company, all new,
substituted and additional Escrow Interests or other securities issued by reason
of any such change immediately shall be assigned and delivered by Pledgor to
Pledgee and shall be held by Pledgee pursuant to this Agreement.
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In the event that during the term of this Agreement any warrants or
other rights or options shall be issued in connection with the Escrow Interests,
such warrants, rights and options immediately shall be assigned and delivered by
Pledgor to Pledgee and shall be held by Pledgee pursuant to this Agreement.
4. DEFAULT. The occurrence of any one or more of the following events
(hereinafter referred to as "Events of Default") shall constitute a default
hereunder:
(a) Purchasers failure to make timely payments of any amounts due or
delivery of any consideration due under the SPA, including the SPA
Obligation in accordance with the terms of the SPA.
(b) The sale or other transfer of more than twenty five (25%) of the
assets or the Ownership Interests of any entity comprising the
Company, in a single transaction or a series or related or unrelated
transactions.
(c) If any representation, warranty or other statement of fact herein
or in any writing, certificate, report or statement at any time
furnished to Pledgee pursuant to or in connection with this Agreement
or the SPA Obligation shall be false or misleading in any material
respect; or
(d) If the Pledgor or any affiliate, subsidiary or associate of the
Pledgor (a "Pledgor Party") shall: admit in writing its inability to
pay its debts generally as they become due; file a petition for
relief under the bankruptcy laws or a petition to take advantage of
any insolvency act; make an assignment for the benefit of creditors;
commence a proceeding for the appointment of a receiver, trustee,
liquidator or conservator of itself or the whole or any substantial
part of its property; file a petition or answer seeking
reorganization or arrangement or similar relief under the Federal
Bankruptcy Laws or any other applicable law or statute of the United
States or any State; or if any Pledgor Party shall be adjudged a
bankrupt or insolvent, or a court of competent jurisdiction shall
enter any order, judgment or decree appointing a receiver, trustee,
liquidator or conservator of any Pledgor Party or of the whole or any
substantial part of the property of any Pledgor Party or approves a
petition filed against any Pledgor Party, including itself, any
Pledgor seeking reorganization or similar relief under the Federal
Bankruptcy Laws or any other applicable law or statute of the United
States or any State.
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(e) Purchaser's failure to observe or perform any obligation,
covenant, term or provision, required to be observed or performed by
Purchaser when, and in the manner required, pursuant to the SPA.
5. RIGHTS AND REMEDIES. Each Pledgee shall have all rights and
remedies provided by the Uniform Commercial Code in effect in the State of New
York on the date hereof or at his option may retain a percentage of the Escrow
Interest equal to its Ownership Interest.
6. ESCROW AGENT. The parties hereto hereby appoint and designate
Scott Reid, as the Escrow Agent under this Agreement, and Scott Reid, hereby
accepts his designation as Escrow Agent hereunder. All parties hereto
acknowledge that Scott Reid has served as counsel to the Sellers and acknowledge
that he may continue in that capacity following the date hereof.
7. DEPOSIT OF ESCROW SHARES. Purchasers hereby pledge and deposit
with the Escrow Agent for the benefit of each Seller, and the Escrow Agent
hereby acknowledges receipt of endorsed negotiable stock certificates, endorsed
in blank (or accompanied by a blank stock power), being shares of the capital
stock of each entity comprising the Company ( the "Escrow Interests") as set
forth in the whereas clause(s) of the SPA.
8. DELIVERY. The Escrow Agent will hold the Escrow Interests in his
possession until authorized hereunder to deliver same upon the happening of the
following events:
(a) Upon Purchaser making all the payments due to the Seller under
the SPA, the Escrow Agent will deliver the Escrow Interests to the
Purchaser, duly endorsed for transfer and free and clear of any
security interest of any Seller therein. As evidence of such
payments, the Escrow Agent shall rely conclusively upon either (i) a
written notification to such effect by Seller, or (ii) the exhibition
by Purchasers of cancelled checks or written receipts evidencing full
payment of the amounts due. The parties acknowledge that no periodic
distribution of the Escrow Interests to Purchasers is intended.
(b) Upon the occurrence of any of the events of default listed in
Paragraph "4" of this Agreement, any person constituting a Seller
shall deliver to the Escrow Agent, a written notice indicating the
nature of such default ("Default Notice") which shall contain (i) an
affidavit, sworn to by such person, stating that Purchaser has
defaulted, with specific reference to the date or dates of default;
and (ii) direction to the Escrow Agent to return all of such Seller's
Escrow Interests to that Seller.
(c) Upon receipt by the Escrow Agent of the Default Notice, the
Escrow Agent shall forthwith notify Purchasers' of such receipt. If
Purchasers' claim that no such default has occurred and the event of
default set forth in the Default Notice is the nonpayment of amounts
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due or delivery of Buyer Shares under the SPA Obligation, Purchasers
must, within ten (10) days after receipt of such notice from the
Escrow Agent, exhibit to the Escrow Agent cancelled checks or written
receipts evidencing payment of such alleged defaulted payments or
delivery and receipt of any such shares. If no controverting
affidavit or other evidence of payment is received by Escrow Agent
from Purchaser within such ten (10) day period and if such Seller has
complied with all the requirements of subparagraph "(b)" above, the
Escrow Agent shall return all of the Escrow Interests to all Sellers
with and pursuant to the direction given by such Seller in his
Default Notice to Escrow Agent. If the event of default set forth in
the Default Notice is a default other than the nonpayment of amounts
due under the SPA Obligation, Purchasers shall, within the same ten
(10) day period set forth above, exhibit to the Escrow Agent evidence
or an affidavit controverting the allegation of default.
(d) At such time of receipt of Notice of Default, Purchaser's
beneficial ownership and right to exercise and enjoy rights of
ownership of the Escrow Interests shall cease.
9. SHAREHOLDER AND MEMBER RIGHTS. During the term of this Agreement,
Purchasers shall be the beneficial owners of and exercise and enjoy all rights
and incidents of ownership with respect to the respective Escrow Interests,
including the right to vote such interests, and the right to all income and
distributions with respect thereto until the Escrow Agent and Purchasers shall
have received a Notice of Default from Seller directing the Escrow Agent to
deliver the Escrow Interests to Seller.
10. ESCROW EXPENSES. Purchasers and Sellers agree to each reimburse
the Escrow Agent for 1/2 of all reasonable attorney fees, expenses,
disbursements and advances incurred or made by the Escrow Agent in performance
of his duties hereunder.
11. RESIGNATION OF ESCROW AGENT. The Escrow Agent may resign as such
at any time by giving written notice thereof to Purchasers and Seller or their
legal representatives. Upon such notice, a successor Escrow Agent shall be
appointed upon unanimous consent of the parties. If the parties are unable to
agree upon a successor Escrow Agent within thirty (30) days after such notice,
the Escrow Agent shall designate any bank or trust company in New York State as
his successor. In the event any such designee fails to accept such appointment,
the Escrow Agent shall be entitled to appoint his successor. The Escrow Agent
shall continue to serve until his successor accepts the escrow and receives the
Escrow Interests. The parties shall have the right at any time upon unanimous
consent to substitute a new Escrow Agent by giving written notice thereof to the
Escrow Agent then acting.
12. LIABILITY OF ESCROW AGENT. The Escrow Agent shall be obligated
only for the performance of such duties as are specifically set forth herein and
may rely and shall be protected in acting or refraining from action on any
instrument or signature believed by him to be genuine and to have been signed or
presented by the proper party or parties duly authorized to do so. The Escrow
Agent shall have no responsibility for the contents of any writing contemplated
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herein and may rely without liability upon the contents thereof. The Escrow
Agent shall not be liable for any obligation taken or omitted by him in good
faith and believed by him to be authorized hereby, nor for action taken or
omitted by him in accordance with advice of counsel, and shall not be liable for
any mistake of fact or error of judgment or for any acts or omissions of any
kind unless caused by willful misconduct or gross negligence. Each party agrees
to indemnify the Escrow Agent and hold him harmless against any and all
liabilities incurred by him hereunder as a consequence of such party's action,
and the parties agree jointly to indemnify the Escrow Agent and hold him
harmless against any and all liabilities incurred by him hereunder which are not
a consequence of any party's action, except in either case for the Escrow
Agent's own willful misconduct or gross negligence.
13. DISPUTE. It is understood and agreed that if any dispute arises
with respect to the delivery and/or ownership or right of possession of the
Escrow Interests, or the facts upon which such determinations are based, or the
duties of the Escrow Agent hereunder, the Escrow Agent, at his sole option, is
authorized and directed to elect to either:
(a) retain in his possession, without liability to anyone, all or any
part of the Escrow Interests until such dispute shall have been
settled, either by mutual agreement of the parties concerned
(evidenced by appropriate instructions in writing to the Escrow
Agent, signed by all of the parties) or by binding arbitration, or by
a final order, decree, or judgment of a court of competent
jurisdiction in the State of New York (the time for appeal having
expired and no appeal having been perfected), all costs and expenses
of which shall be paid by the parties, but the Escrow Agent shall be
under no duty whatsoever to institute or defend any such proceedings;
or
(b) commence an action in the nature of an inter-pleader and seek to
deposit the Escrow Interests in the Supreme Court, County of Albany,
State of New York, and the remaining parties hereto shall be
thereupon permitted to pursue their remedies and claims, and resolve
their disputes, in such court.
14. NOTICES. Any notice or other communication required to be given
under this Agreement shall be given in writing and delivered personally or by
certified or registered mail, return receipt requested, to the last known
address of the party to whom it is directed. Notice shall be deemed given if
personally served, on the date of its actual receipt, and, if given by certified
or registered mail, on the date of its mailing.
15. BENEFIT. This Agreement shall be binding upon and shall inure to
the benefit of the legal representatives, heirs, assigns and successors of the
respective parties.
16. GOVERNING LAW. This Agreement shall be governed under the laws of
the State of New York.
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17. MODIFICATION AND WAIVER. No modification or waiver of any
provision of this Agreement, and no consent by Pledgee to any breach thereof by
Pledgor, shall be effective unless such modification or waiver shall be in
writing and signed by Pledgee, and the same shall then be effective only for the
period and on the conditions and for the specific instances and purposes
specified in such writing. No course of dealing between Pledgor and Pledgee in
exercising any rights or remedies hereunder shall operate as a waiver or
preclude the exercise of any other rights or remedies hereunder.
18. UNCONDITIONAL OBLIGATIONS: The obligations and liabilities of the
Pledgor hereunder shall not be conditioned or contingent upon the pursuit by the
Pledgee or any other person at anytime of any right or remedy against any other
person that may be or become liable in respect of all or any part of the
obligations under the SPA Obligation or against any collateral security or
guaranty therefore or right of offset with respect thereto. This Pledge
Agreement shall remain in full force and effect and be binding in accordance
with and to the extent of its terms upon the Pledgor until all of the
obligations under the SPA Obligation have been fully satisfied.
19. FURTHER ASSURANCES: The Pledgor agrees that at any time and from
time to time, on the written request of the Pledgee, the Pledgor will execute
and deliver such further documents and do such further acts and things as the
Pledgee may reasonably request in order to effectuate the purposes of this
Agreement. All terms used herein that are not defined herein but are defined in
the SPA shall have that meaning ascribed to such term in the SPA.
The foregoing is established by the following signatures of the parties.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement on the date first above written.
UNIVERSAL EXPRESS, INC.
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By:
Its:
/s/CARMEN B. LEFEBVRE
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Carmen B. Lefebvre
/S/ MARK LEFEBVRE
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Mark Lefebvre
/S/ SCOTT LEFEBVRE
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Scott Lefebvre
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Edmund Lefebvre
/S/ PAUL GAP
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Paul Gap
/S/ ROBERT J. SLACK
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Robert J. Slack
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Escrow Agent
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