Exhibit 10.6
STOCK PLEDGE AND SECURITY
AGREEMENT
THIS STOCK PLEDGE
AND SECURITY AGREEMENT is made this 30 th
day of
March, 2007, by MICRONETICS, INC., a Delaware corporation with an
executive office at 26 Hampshire Drive, Hudson, New Hampshire 03051
(“Borrower”), to and for the benefit of CITIZENS BANK
NEW HAMPSHIRE, a guaranty savings bank chartered under the laws of
the State of New Hampshire with a place of business at 875 Elm
Street, Manchester, New Hampshire 03101 (the
“Bank”).
WITNESSETH
:
WHEREAS, pursuant to the Commercial
Loan Agreement of near or even date herewith (the “Loan
Agreement”), by and among Bank, Borrower, and
MICROWAVE & VIDEO SYSTEMS, INC., a Connecticut corporation
with an executive office at 160B Shelton Road, Monroe, Connecticut
06468, ENON MICROWAVE, INC., MICROWAVE CONCEPTS, INC., and STEALTH
MICROWAVE, INC., each a Delaware corporation, and all with an
executive office at 26 Hampshire Drive, Hudson, New Hampshire 03051
(individually, a “Guarantor”, and collectively, the
“Guarantors”), Bank has extended certain credit
facilities to Borrower which are guaranteed by
Guarantors;
WHEREAS, Borrower is the owner of
all of the issued and outstanding shares of the capital stock of
each of the Guarantors, as described on Schedule I attached hereto
(collectively, the “Shares”); and
WHEREAS, the obligation of the Bank
to make the Loans to the Borrower is subject to the condition,
among others, that the Loans and all other obligations of Borrower
under the Loan Agreement and the other Loan Documents shall be
secured by the pledge and collateral assignment of all of the
capital stock of the Guarantors. Terms not otherwise defined herein
shall have the meanings ascribed to them in the Loan
Agreement.
NOW, THEREFORE, in order to induce
the Bank to extend the Loans to the Borrower pursuant to and in
accordance with the terms and conditions of the Loan Agreement, and
for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the Borrower, the
Borrower hereby covenants and agrees as follows:
1. Pledge of Shares .
Borrower hereby pledges and collaterally assigns the Shares, and
all Income and Proceeds thereof (as hereinafter defined), to the
Bank as collateral security for the payment and performance of the
Borrower’s obligations under the Loan Agreement and the Loan
Documents, including, but not limited to, the repayment of the
Loans and all interest, charges, and fees with respect thereto. As
used in this agreement, “Income” means all current and
future
Micronetics Stock Pledge
interest, dividends, distributions and other
payments and benefits in whatever form with respect to the Shares
and “Proceeds” means all proceeds from the sale or
other disposition of the Shares. Notwithstanding anything herein to
the contrary, as long as no Event of Default has occurred and is
continuing, Borrower may use any Income in accordance with the
provisions of the Loan Agreement.
2. Delivery of the Shares .
Borrower herewith delivers to the Bank all certificates evidencing
the Shares and separate assignments of all of the Shares (whether
or not evidenced by certificates) duly executed in blank, together
with irrevocable proxies which provide the Bank with full and
complete voting power and authority respecting the Shares
exercisable however only upon the occurrence of an Event of Default
(hereinafter defined).
3. Grant of Security Interest
. The Borrower hereby grants to the Bank a security interest in the
Shares delivered herewith, and in all Income and Proceeds of the
foregoing, to secure the payment and performance of the
Borrower’s obligations to the Bank under the Loan Agreement
and the other Loan Documents, including but not limited to
repayment of the Loans and all interest, charges, and fees with
respect thereto.
4. Rights Upon Event of
Default . Upon the occurrence and during the continuance of an
Event of Default under the Loan Agreement, the Bank shall then have
all of the rights and remedies provided to it under said agreements
and instruments and, in addition, the right to (a) exercise
each and all the rights and privileges of a record holder of the
Shares, including without limitation, the right to sell, transfer,
or otherwise dispose of the Shares and to retain and/or to collect
any and all Income and Proceeds, and (b) exercise all rights
of a secured party under the Uniform Commercial Code as in effect
in the State of New Hampshire upon the date hereof and under other
applicable law, including without limitation private sale of the
Shares. All amounts received by the Bank through the exercise of
its rights as aforesaid shall be applied to the extent required to
satisfy the obligations of the Borrower under the Loan
Agreement
