Back to top

STOCK PLEDGE AND ESCROW AGREEMENT

Stock Pledge Agreement

STOCK PLEDGE AND ESCROW AGREEMENT | Document Parties: DOCUMENT SECURITY SYSTEMS INC | Internet Media Services, Inc | Lester Levin Inc | M&T Bank | Manufacturers and Traders Trust Company You are currently viewing:
This Stock Pledge Agreement involves

DOCUMENT SECURITY SYSTEMS INC | Internet Media Services, Inc | Lester Levin Inc | M&T Bank | Manufacturers and Traders Trust Company

. RealDealDocs™ contains millions of easily searchable legal documents and clauses from top law firms. Search for free - click here.
Title: STOCK PLEDGE AND ESCROW AGREEMENT
Governing Law: New York     Date: 10/14/2009
Industry: Printing Services     Sector: Services

STOCK PLEDGE AND ESCROW AGREEMENT, Parties: document security systems inc , internet media services  inc , lester levin inc , m&t bank , manufacturers and traders trust company
50 of the Top 250 law firms use our Products every day

 

EXHIBIT 10.3

 

 

STOCK PLEDGE AND ESCROW AGREEMENT

 

THIS AGREEMENT is made the 8th day of October, 2009, between Lester Levin Inc., a New York corporation (“ LLI ”), Document Security Systems, Inc., a New York corporation (“ DSS ”) (hereinafter collectively referred to as “ Obligees ”) and Michael Buechler (hereinafter referred to as “ Pledgor ”),  Internet Media Services, Inc., a Delaware corporation (the “Company” ), and Manufacturers and Traders Trust Company (hereinafter referred to as “ Escrow Agent ”).

 

Recitals

 

WHEREAS, Pledgor is a controlling stockholder, President and director of the Company;

 

WHEREAS, LLI and the Company have entered into that certain Asset Purchase Agreement of even date herewith (the “ Asset Purchase Agreement ”) pursuant to which LLI is selling and transferring certain assets of its LegalStore.com business to the Company in exchange for the issuance to LLI’s parent corporation, DSS, 7,500,000 shares of common stock of the Company;

 

WHEREAS, pursuant to the covenants in the Asset Purchase Agreement, following the transaction, the Company is obligated to take certain measures to advance the business of the Company;

 

WHEREAS, Pledgor has agreed to secure the performance of the Company’s obligations to Obligees pursuant to such covenants in the Asset Purchase Agreement by executing this agreement and transferring to and registering in the name of the Escrow Agent the 4,000,000 shares of stock of the Company held by the undersigned.

 

NOW, THEREFORE, in consideration of the premises and understandings contained herein and for good and valuable consideration, receipt of which is hereby acknowledged, the parties agree as follows:

 

1.

Pledge Agreement

 

(a)           As collateral security for the performance of those certain covenants of the Company under the Asset Purchase Agreement set forth in Section 1(b) below, Pledgor hereby (i) grants to Obligees a security interest in and (ii) pledges to Obligees and (iii) transfers as security all of the following instruments and property (receipt of which is hereby acknowledged by Escrow Agent):

 

(i)           Four million (4,000,000) shares of common stock of Company held by the Pledgor and all successor stock to said shares, replacement stock for said shares, substituted stock for said shares or additional shares of stock of Company issued or transferred as a dividend on or stock split of or otherwise received because of or in lieu of the ownership of said shares of common stock of Company during the term of this agreement, whether the same resulted from merger, consolidation, reorganization or otherwise (hereinafter sometimes referred to as “ Shares ”), all to be registered in the name of the Escrow Agent; and

 

 

 

 


 

 

(ii)           Any and all other instruments or cash or, in kind, dividends or other property which anyone is or may hereafter become entitled to receive with respect to replacement of, substitution for, or succession to the aforesaid Shares.

 

All of the foregoing property and instruments shall be individually and collectively hereinafter referred to as “Collateral.” The Collateral shall be held by the Escrow Agent hereinafter named in accordance with the terms and pro-visions contained in this agreement.

 

Certificates registering the Shares should be registered in the name of the Escrow Agent.

 

Pledgor agrees to forthwith deliver to Escrow Agent any and all Collateral hereafter acquired by Pledgor along with stock powers duly endorsed in blank with respect to any stock certificate therefor.

 

(b)           The following events shall constitute an “ Event of Default ” under this agreement:  (i) The Company’s failure to comply with the following covenants in Article VI of the Asset Purchase Agreement:  Section 6.2 Board of Directors ; Section 6.3 Working Capital ; Section 6.4 Registration of Shares ; Section 6.8 Corporate Existence; Reporting Status ; Section 6.9 Certain Negative Covenants (the “ Company’s Covenants ”), which covenants are incorporated herein by reference; and (ii) a breach of the Company’s representations and warranties set forth in Section 5 of the Asset Purchase Agreement, which representations and warranties are incorporated herein by reference.

 

2.

Escrow Agent

 

The parties agree that the Escrow Agent shall be Manufacturers and Traders Trust Company.  Pledgor shall deliver the Collateral described in Paragraph (1) herein, simultaneously with the execution hereof, to Escrow Agent who shall hold and maintain the Collateral pursuant to the terms hereof. The Escrow Agent's compensation, if any, shall be paid one-half by the Company and one-half by DSS.

 

3.

Voting and Dividend Rights

 

During the term of this agreement, and until such time, if any, that an Event of Default has occurred, Pledgor or his assigns shall have the right to vote the Shares now or hereafter pledged. In the event an Event of Default has occurred, (which Event of Default shall be proven by the execution of an affidavit by an DSS officer (the “ Obligee Representative “) stating that Company is in default of one or more such obligations), then upon the Escrow Agent receiving both such affidavit and a proof of service that such affidavit was served upon Pledgor, DSS shall have the right (but not the obligation) to vote the Shares held pursuant to this escrow and exercise and receive all other rights and privileges, including dividends, which are associated with the ownership of such Shares.

 

Other than as set forth above, neither Obligees nor the Escrow Agent, nor their assignees or anyone else taking under them, shall exercise the rights of a holder of the Shares (or its successors) unless and until the Collateral is accepted by the Obligee Representative pursuant to Subparagraph 4(a) herein.

 

 

2


 

 

4.

Default and Remedies

 

(a)           Whenever an Event of Default exists as set forth in Paragraph 3 due to the failure to comply with the Company's Covenants in Section 6.3 Working Capital , and Section 6.4 Registration of Shares of the Asset Purchase Agreement; and such Event of Default has not been cured on or before October 8, 2010 (the " Registration Deadline "), Obligee Representative, at its option, may (in addition to the rights provided for in Paragraph 3):

 

(i)           Accept such portion of the Collateral as is set forth in Schedule I attached hereto based on the Event of Default existing at Registration Deadline, by giving notice of such fact to Pledgor and the Escrow Agent, in which case the Escrow Agent shall forthwith deliver the Collateral to Obligee Representative, as agent for all the Obligees, and this escrow shall be terminated.

 

(ii)           Exercise any remedi


 
SITE SEARCH

AGREEMENTS / CONTRACTS

Document Title:

Entire Document: (optional)

Governing Law:(optional)


Try our advanced search >>
 

CLAUSES

Search Contract Clauses >>

Browse Contract Clause Library>>

Get Email Updates
Email:
This is only a partial view of this document. We have millions of legal documents and clauses drafted by top law firms. learn more search for free browse for free learn more