STOCK PLEDGE AGREEMENT
In order to secure payment of the promissory note dated
March 27, 2006 (the "Note") payable to Xxxxxx Xxxxxx, his wife
Xxxxx XxxXxx, sons Xxxxxxxx XxxXxx and Xxxxxx XxxXxx (the
"Bentovs"), in the principal amount of five million three
hundred fifty thousand dollars ($5,350,000.00), which Note
Helios & Xxxxxxxx Information Technology Ltd., ("Promisor")
delivered in connection with the purchase of 1,024,697 shares
fully diluted equity shares of The A Consulting Team Inc.
("TACT"), the Promisor hereby grants the Bentovs a security
interest in, and pledges to the Bentovs, the following
securities and other property:
PROPERTY: 1,024,697 shares of TACT's Common Stock (the
"Common Stock" or the "Collateral") delivered to and deposited
with Pledge Holder, Olshan, Grundman, Frome, Xxxxxxxxxx & Xxxxxxx
LLP, or any other escrow party acceptable to both the Sellers
Bentovs and the Promisor, "Pledge Holder", as collateral for
the Note; and
Pledge Holder shall hold the Collateral in accordance with
the following terms and provisions:
1. Warranties and Covenants.
a) The Promisor hereby warrants that the Promisor is the
owner of the Collateral and has the right to pledge the Collateral
and that the Collateral is free from all liens, advance claims and
other security interests (other than those created hereby). The
Common Stock pledged by Promisor shall be held in trust by the
Pledge Holder for the benefit of Promisor and shall not be alienated
or encumbered in any manner during the time the pledge exists.
b) The pledge of the Common Stock pursuant to this Agreement
creates and will create a valid and perfected first priority security
interest in and valid lien on the Common Stock, securing the payment
of the Promisor's obligations under the Note, subject to no prior
security interest, lien, charge or encumbrance or to any agreement
purporting to grant any third party a security interest in the Common
Stock. Further, the Promisor hereby authorizes the Bentovs or their
agents or assigns to prepare and file one or more UCC Financing
Statements relating to the Common Stock in all jurisdictions deemed
necessary by the Bentovs.
(c) The Promisor, at its cost and expense, shall protect
and defend the Common Stock, this Agreement and all of the rights of
the Bentovs hereunder against all claims and demands of other parties.
The Promisor shall pay all claims and charges that in the reasonable
opinion of the Bentovs might prejudice, imperil or otherwise affect
the Common Stock. The Promisor shall promptly notify the Bentovs of
any levy, distraint or other seizure, by legal process or otherwise,
of all or any part of the Common Stock and of any threatened or filed
claims or proceedings that might in any way affect or impair the terms
of this Agreement.
(d) If the Promisor shall fail to pay any taxes, assessments,
expenses or charges, to keep all of the Common Stock free from other
security interests, encumbrances or claims, or to perform otherwise
as required herein, the Bentovs may advance the monies necessary to
pay the same or to so perform and such monies shall be added to the
principal amount of the Note.
2. Substitute Collateral: Pledge Holder, on behalf of
the Bentovs may, accept other property of the Promisor in exchange
for all or part of the Collateral and release Collateral to the Promisor
to the extent necessary to effect such exchange, and in such event the
money, property or securities received in the exchange shall be held
by Pledge Holder as substitute security for the Note. If Promisor at any
point after the execution of this Agreement is able to procure a letter
of credit or bank guarantee or any other form of collateral acceptable
to the Bentovs, and if the Buyer requests the Bentovs to cancel the Common
Stock pledge and accept the new collateral, then the Bentovs will accept
the new collateral and not unreasonably withhold the acceptance.
3. Release of Collateral. Upon payment or prepayment of
principal under the Note to the Pledge Holder for the Bentovs, together
with payment of all accrued interest to date, the Collateral hereunder
shall be released from pledge and returned to the Promisor.
If Bentov's Employment Agreement with TACT is terminated, except
for termination without cause, the Collateral hereunder shall be released
from pledge and returned to the Promisor within three days.
4. Purpose of Stock Pledge and Promissory Note. The Promissory
Note is for the purpose of securing Deferred Payouts to the Sellers under
an even dated Stock Purchase Agreement ("SPA"). The Deferred Payout section
of the Stock Purchase Agreement is reproduced here for reference:
2.02 (a) $8,750,000 Payout Amount. Buyer will pay a total of Eight
Million Seven Hundred Fifty Thousand United States Dollars (USD $8,750,000)
("Payout Amount") as per the following structure:
1. First Payment of Three Million Four Hundred Thousand Dollars
(US$3,400,000) upon signing of definitive documents ("Closing");
2. Second Payment of Three Hundred Fifty Thousand Dollars (USD $350,000)
within Six (6) months from Closing;
3. Third Payment of Two Million Five Hundred Thousand Dollars
(USD $2,500,000) plus interest thereon on the first anniversary of
Closing ("Anniversary Date"); and
4. Fourth Payment of Two Million Five Hundred Thousand Dollars
(US $2,500,000) plus interest thereon on the second anniversary of
Closing ("Anniversary Date").Payments under Section 2.02 (a), 3,
and 4 will be referred to as Deferred Payouts
5. Event of Default for Payment under SPA 2.02 (a) 3.
The failure of the Promisor to pay the Deferred Payout under
SPA Section 2.02 (a) 3, when due, shall constitute a Default. In the
event of this Default, and after the passing of 45 days, and after
serving two written notices to the Promisor, the Promisor shall
instruct the Pledge Holder to release the
Common Stock to the Bentovs.
6. Event of Default for Payment under SPA 2.02 (a) 4.
The failure of the Promisor to pay the Deferred Payout under SPA
Section 2.02 (a) 4, when due, shall constitute Default. In the event of
this Default, and after the passing of 45 days, and after serving two written
notices to the Promisor, Bentovs and Promisor will give joint instructions
to the Pledge Holder.
7. Applicable Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York and shall
be binding upon the executors, administrators, heirs and assigns of
the Promisor.
8. Arbitration. Any controversy between the parties hereto
involving the construction or application of any terms, covenants or
conditions of this Agreement or the Note, or any claims arising out of
or relating to this Agreement or the Note, or the breach hereof or thereof,
will be submitted to and settled by final and binding arbitration in New
York, in accordance with the rules of the American Arbitration Association
then in effect, and judgment upon the award rendered by the arbitrator may
be entered in any court having jurisdiction thereof. In the event of any
arbitration under this Agreement or the Note, the prevailing party shall
be entitled to recover from the losing party reasonable expenses, attorneys'
fees and costs incurred therein or in the enforcement or collection of any
judgment or award rendered therein. The "prevailing party" means the party
determined by the arbitrator to have most nearly prevailed, even if such
party did not prevail in all matters, not necessarily the one in whose favor
a judgment is rendered.
9. Severability. If any provision of this Agreement is held to
be invalid under applicable law, then such provision shall be ineffective
only to the extent of such invalidity, and neither the remainder of such
provision nor any other provisions of this Agreement shall be affected
thereby.
10. The Stock Purchase Agreement, the Stock Pledge Agreement, the
Promissory Note, the Escrow Agreement, all dated March 28, 2006, and the
Bentov Employment Agreement dated December 1, 2005 are all to be read together
for interpretation of the entire transaction.
IN WITNESS WHEREOF, this Agreement has been executed by the Promisor on
this 30th day of March, 2006.
Promisor: Helios & Xxxxxxxx Information Technology Ltd.
/s/X. Xxxxxxxxxxxxx
__________________________
By: X. Xxxxxxxxxxxxx, Chairman
/s/Xxxxxx Xxxxxx
__________________________
Xxxxxx Xxxxxx,
/s/Xxxxx Xxxxxx
__________________________
Xxxxx Xxxxxx,
/s/Xxxxxxxx Xxxxxx
__________________________
Xxxxxxxx Xxxxxx
/s/Xxxxxx Xxxxxx
__________________________
Xxxxxx Xxxxxx
