PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT (this "PLEDGE AGREEMENT",) is entered into as of
________ __, 1998 (the "EFFECTIVE DATE",), by and between INTELECT
COMMUNICATIONS, INC., a Delaware corporation ("PLEDGOR"), and ST. XXXXX CAPITAL
PARTNERS, L.P., a Delaware limited partnership, ("SECURED PARTY").
RECITALS
Pursuant to the terms, and subject to the conditions, set forth in the
Agreement of Purchase and Sale dated the Effective Date (the "PURCHASE
AGREEMENT") and that certain Convertible Promissory Note (the "NOTE") dated the
Effective Date issued by Pledgor, payable to the order of Secured Party in the
original principal sum of $15,000,000, Secured Party has agreed to advance funds
to the Pledgor.
Pledgor owns one hundred percent (100%) of the issued and outstanding
capital stock of DNA Enterprises, Inc., a Texas corporation, Intelect Visual
Communications Corp., a Delaware corporation and Intelect Network Technologies
Company, a Nevada corporation, and will derive both direct and indirect benefit
from the issuance and sale of the Note to the Purchaser.
It is a condition to the agreement of Secured Party to advance such funds
and to consummate the transactions contemplated by the Note that this Pledge
Agreement shall have been executed and delivered by Pledgor and shall be in full
force and effect.
NOW, THEREFORE, in order to induce, and in consideration of, the execution
and delivery of the Note, the advancement of funds under the Note by Secured
Party and the consummation of the transactions contemplated by the Note, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged by Pledgor, Pledgor hereby covenants and agrees with Secured
Party as follows:
SECTION 1. DEFINITIONS
1.1 CERTAIN DEFINED TERMS. As used in this Pledge Agreement, the following
terms or phrases have the respective meanings set forth below or in the Section
following such term:
"COASTAL" means The Coastal Corporation Second Pension Trust.
"COASTAL PLEDGE" means the pledge by Pledgor of the Pledged Securities to
Coastal.
"COLLATERAL" means the aggregate of:
(a) the DNA Shares, the IVC Shares and the INT Shares;
(b) (i) the certificates or instruments, if any, representing the
DNA Shares, the IVC Shares and the INT Shares (ii) all dividends (cash,
stock or otherwise), cash, instruments, rights to subscribe, purchase or
sell and all other rights and property from time to time received,
receivable or otherwise distributed in respect of or in exchange for any
or all of such securities,
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(iii) all replacements, additions to and substitutions for any of the
property referred to in this definition, including, without limitation,
claims against third parties, (iv) the proceeds, interest, profits and
other income of or on any of the property referred to in this definition,
and (v) all books and records relating to any of the property referred to
in this definition.
"DNA" means DNA Enterprises, Inc., a Texas corporation and a wholly-owned
Subsidiary of Pledgor.
"DNA SHARES" has the meaning assigned that term in the definition of
Pledged Securities below.
"EFFECTIVE DATE" has the meaning given that term in the introduction to
this Pledge Agreement.
"INT" means Intelect Network Technologies Company, a Nevada corporation
and a wholly-owned Subsidiary of Pledgor.
"INT SHARES" has the meaning given that term in the definition of Pledged
Securities below.
"IVC" means Intelect Visual Communications Corp., a Delaware corporation
and a wholly-owned Subsidiary of Pledgor.
""IVC SHARES" has the meaning given that term in the definition of Pledged
Securities below.
"NOTE" has the meaning given that term in the first Recital to this Pledge
Agreement.
"OBLIGATIONS" means the aggregate of:
(a) the indebtedness evidenced by the Note;
(b) all sums advanced and costs and expenses incurred by Secured
Party in accordance with the Note, this Pledge Agreement and the other
Transaction Documents, including, without limitation, all reasonable
legal, accounting, consulting or like fees, made and incurred in
connection with the Obligations described in clause (1) above or any part
thereof, any renewal, extension, or modification of, or substitution for,
the foregoing Obligations or any part thereof, or the acquisition,
perfection or maintenance and preservation of the security for the
Obligations, whether such advances, costs, or expenses shall have been
made and incurred at the request of Pledgor or Secured Party,
(c) all other obligations of Pledgor pursuant to the Purchase
Agreement, the Note and the other Transaction Documents; and
(d) any and all extensions and renewals of, substitutions for, or
modifications or amendments of any of the foregoing Obligations or any
part thereof.
"PARI PASSU AGREEMENT" means the In Pari Passu Agreement dated the date
hereof among Secured Party SJ Corp. and Coastal.
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"PLEDGE AGREEMENT" means this Pledge Agreement dated as of the Effective
Date, between Pledgor and Secured Party, as said agreement may be amended,
modified, supplemented, and/or extended from time to time.
"PLEDGED SECURITIES" means all of the following securities and all
additional securities (as that term is defined in the UCC), if any, constituting
Collateral under this Pledge Agreement, including:
(a) All of the issued and outstanding shares of common capital stock
of DNA Enterprises, Inc., consisting of 1,100 shares, evidenced by
Certificate Number 8, and any other shares of common stock of DNA now
owned or hereafter acquired by Pledgor or any of its affiliates (such
shares of stock referred to in this subsection 1.1(a) are hereinafter
sometimes referred to as the "DNA Shares".
(b) All of the issued and outstanding shares of common capital stock
of Intelect Visual Communications Corporation, consisting of 500 shares,
evidenced by Certificate Number 1, and any other shares of the common
capital stock of IVC now owned or hereafter acquired by Pledgor or any of
its affiliates (such shares of stock referred to in this subsection 1.1(a)
are hereinafter sometimes referred to as the "IVC Shares".
(c) All of the issued and outstanding shares of common capital stock
of Intelect Network Technologies, Inc., consisting of 1,000 shares of
common capital stock, evidenced by Certificate Number 1, and any other
shares of the common capital stock of INT now owned or hereafter acquired
by Pledgor or any of its affiliates (such shares of stock referred to in
this subsection 1.1(a) are hereinafter sometimes referred to as the "INT
Shares".
"PLEDGOR" has the meaning given that term in the introduction to this
Pledge Agreement.
"PROCEEDS" means whatever is received upon the sale, exchange, collection,
or other disposition of the Collateral and insurance payable or damages or other
payments by reason of loss or damage to the Collateral.
"SECURED PARTY" has the meaning given that term in the introduction to
this Pledge Agreement.
"SECURITY INTEREST" has the meaning assigned to that term in SECTION 2.1.
"SJ CORP." means St. Xxxxx Capital Corp.
"SJ CORP. PLEDGE" means the pledge by Pledgor of the Pledged Securities to
SJ Corp.
"UCC" means the Uniform Commercial Code as in effect in any jurisdiction
applicable.
1.2 OTHER DEFINITIONS. Other capitalized terms used herein have the
meanings given them herein or in the Note.
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SECTION 2. CREATION OF SECURITY INTEREST
2.1 CREATION OF SECURITY INTEREST. In consideration of Secured Party's
advancing or extending the funds or credit constituting the Obligations
(including the indebtedness evidenced by the Note), as a condition to such
advances and extensions, in consideration of the mutual covenants contained
herein, and for the purpose of securing the payment and performance of the
Obligations, Pledgor hereby grants to Secured Party a continuing security
interest in and to all Collateral, including in all Proceeds (the "SECURITY
INTEREST").
2.2 PROCEEDS. Except as otherwise permitted herein, the security interest
of Secured Party hereunder in the Proceeds shall not be construed to mean that
Secured Party consents to the sale or other disposition of any part of the
Collateral.
2.3 TRANSFER OF COLLATERAL. All certificates or instruments representing
or evidencing the Pledged Securities shall be delivered to and held pursuant
hereto by Secured Party or a person or entity designated by Secured Party and
shall be in suitable form for transfer by delivery, or shall be accompanied by
duly executed instruments of transfer or assignment in blank. Notwithstanding
the preceding sentence, at Secured Party's discretion all Pledged Securities
must be delivered or transferred as set forth in Section 8-301(a) of the UCC.
Notwithstanding anything herein contained to the contrary, Secured Party
acknowledges that the certificates or instruments representing the Pledged
Securities have been delivered to Coastal pursuant to the Coastal Pledge and the
rights of the Secured Party and Coastal in and to the Pledged Securities and the
Proceeds are further governed by the terms of the Pari Passu Agreement;
PROVIDED, HOWEVER, that if the Coastal Pledge is terminated and any obligations
are then outstanding, Pledgor shall deliver to Secured Party all such
certification and instruments pursuant to the terms hereof.
SECTION 3. PLEDGOR'S REPRESENTATIONS, WARRANTIES, AND COVENANTS
3.1 RECORDING AND FILING. Pledgor shall pay all costs of filing,
registering, and recording this and every other instrument in addition or
supplemental hereto and all financing statements Secured Party may reasonably
require, in such offices and places and at such times and as often as may be, in
the judgment of Secured Party, necessary to create, perfect, preserve, protect,
and renew the Lien hereof on and in the Collateral, and otherwise do and perform
all matters or things necessary or expedient to be done or observed by reason of
any law or regulation of any applicable jurisdiction or any other competent
authority for the purpose of effectively creating, perfecting, preserving,
protecting, maintaining, and renewing the Lien hereof in and on the Collateral
and the priority thereof. Pledgor shall also pay the costs of obtaining reports
from appropriate filing offices concerning Lien filings in respect of any of the
Collateral. A carbon, photographic, or other reproduction of this Pledge
Agreement or of any financing statement relating hereto shall be sufficient as a
financing statement.
3.2 SECURED PARTY'S RIGHT TO PERFORM PLEDGOR'S OBLIGATIONS; FURTHER
ASSURANCES. Pledgor agrees that, if Pledgor fails to perform any act that
Pledgor is required to perform under this instrument, Secured Party may, but
shall not be obligated to, perform or cause to be performed such act.
Accordingly, to the extent permitted by law, Pledgor hereby authorizes Secured
Party to execute and file financing statements and continuation statements
without Pledgor's signature thereon. Any expense incurred by Secured Party in
taking action in accordance with the preceding two sentences shall be a demand
obligation owing by Pledgor to Secured Party, shall bear interest in accordance
with SECTION 6.14, and shall be a part of the Obligations, and Secured Party
shall be subrogated to all of the rights of the party receiving the
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benefit of such performance. The undertaking of such performance by Secured
Party as aforesaid shall not obligate such Person to continue such performance
or to engage in such performance or performance of any other act in the future,
shall not relieve Pledgor from the observance or performance of any covenant,
warranty, or agreement contained in this instrument or constitute a waiver of
default hereunder, and shall not affect the right of Secured Party to accelerate
the payment of all indebtedness and other sums secured hereby or to resort to
any other of its rights, powers, or remedies hereunder or under applicable law.
In the event Secured Party undertakes any such action, it shall have liability
to Pledgor only upon a showing of its bad faith, gross negligence or willful
misconduct (BUT SPECIFICALLY EXCLUDING ITS ORDINARY OR PARTIAL NEGLIGENCE), and
in all events no party other than the acting party shall be liable to Pledgor.
Pledgor will from time to time (a) sign, execute, deliver, and file, alone or
with Secured Party, all further financing statements, security agreements, or
other documents that are reasonably necessary; (b) procure any instruments or
documents as may be reasonably requested by Secured Party, and (c) take all
further action that may be reasonably necessary, or that Secured Party may
reasonably request, to confirm, perfect, preserve, and protect the security
interests intended to be granted hereby.
3.3 DEFENSE OF CLAIMS. Pledgor will preserve, warrant, and defend the
Security Interest created hereby in the Collateral against the claims of all
Persons whomsoever; will maintain and preserve such Security Interest at all
times as contemplated by the Transaction Documents; and will not do or suffer
any matter or thing whereby such Security Interest might or could be impaired.
Pledgor shall promptly notify Secured Party in writing of the commencement of
any legal proceedings affecting Secured Party's interest in the Collateral, or
any part thereof, and shall take such action, employing attorneys reasonably
acceptable to Secured Party, as may be necessary to preserve Pledgor's and
Secured Party's rights affected thereby, and should Pledgor fail or refuse to
take any such action, Secured Party may take the action on behalf of and in the
name of Pledgor and at Pledgor's expense. Moreover, Secured Party may take
independent action in connection therewith as it may in its sole discretion deem
proper, and Pledgor hereby agrees to make reimbursement for all reasonable sums
advanced and all reasonable expenses incurred in such actions plus interest in
accordance with SECTION 6.14.
3.4 CORPORATE IDENTITY.
(a) Pledgor will maintain (i) the location of its places of business
and its primary corporate office and (ii) the locations where it keeps or
holds records relating to the Collateral at the locations at which the
same are located as of the date of this Pledge Agreement or at locations
other than those specified above if, prior to such relocation, Secured
Party shall have given Pledgor written notice thereof. Pledgor shall not
in any event change the location of any Collateral if such change would
cause the Security Interest in such Collateral to lapse or cease to be
perfected.
(b) Pledgor, to the extent not otherwise restricted in the Note,
will not change its name, identity or form of organization in any manner
unless it shall have given prior written notice to Secured Party. On any
such change, Pledgor will execute and file such financing statements or
other documents as may be reasonably requested by Secured Party to
maintain the perfection of its Security Interest in the Collateral.
3.5 PLEDGED SECURITIES. The Pledged Securities have been duly authorized
and validly issued, and are fully paid and non-assessable. The Pledged
Securities constitute 100% of the issued and
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outstanding common stock of DNA, INT and IVC. Except as evidenced by the Pari
Passu Agreement, no other person or entity has any interest in or rights to
acquire any interest in DNA, INT or IVC.
3.6 FIRST PRIORITY SECURITY INTEREST. The pledge of Pledged Securities
pursuant to this Pledge Agreement creates a valid and perfected first priority
security interest in the Collateral, subject only to the security interest of
Coastal under the Coastal Pledge that is pari passu with the security interest
granted hereby and the security interest of SJ Corp. under the SJ Corp. Pledge
that is pari passu with the security interest granted hereby, enforceable
against Pledgor and all third parties and securing the payment and performance
of the Obligations.
3.7 SALE, DISPOSITION OR ENCUMBRANCE OF COLLATERAL. Pledgor will not in
any way encumber any of the Collateral (or permit or suffer any of the
Collateral to be encumbered) or sell, pledge, assign, lend or otherwise dispose
of or transfer any of the Collateral to or in favor of any person or entity
other than Secured Party, except for the Coastal Pledge and the SJ Corp. Pledge.
3.8 DIVIDENDS OR DISTRIBUTIONS. Subject to the Pari Passu Agreement, any
and all:
(a) dividends and other distributions paid or payable in cash in
respect of any Collateral in connection with a partial or total
liquidation or dissolution or in connection with a reduction of capital,
capital surplus or paid-in surplus, or reclassification, and
(b) cash paid, payable or otherwise distributed in redemption of, or
in exchange for, any Collateral,
shall be, and shall be forthwith delivered to Secured Party to hold as,
Collateral and shall, if received by Pledgor, be received in trust for the
benefit of Secured Party, be segregated from the other property or funds of
Pledgor, and be forthwith delivered to Secured Party as Collateral in the same
form as so received (with any necessary indorsement); provided, however, that
Secured Party shall have no duty to receive and hold such dividends and interest
payments and shall not be responsible for any failure to do so or delay in so
doing.
3.9 STOCK POWERS. Subject to the Pari Passu Agreement, Pledgor shall
furnish to Secured Party such stock powers and other instruments as may be
required by Secured Party to assure the transferability of the Collateral when
and as often as may be requested by Secured Party.
3.10 VOTING AND OTHER CONSENSUAL RIGHTS. Except to the extent otherwise
provided in SECTION 4.6(C), and subject to the Pari Passu Agreement Pledgor
shall be entitled to exercise any and all voting and other consensual rights
pertaining to the Collateral or any part thereof for any purpose not
inconsistent with the terms of this Pledge Agreement, the Note or any other
Transaction Document; provided however, that Pledgor shall not exercise or
refrain from exercising any such right if such action would have a material
adverse effect on the value of the Collateral or any part thereof, and,
provided, further, that upon request of Secured Party at any time or from time
to time, Pledgor shall give Secured Party prompt written notice of the manner in
which Pledgor has exercised, or the reasons for refraining from exercising, any
such right.
3.11 ATTORNEY-IN-FACT. Subject to the Pari Passu Agreement, Pledgor hereby
irrevocably appoints Secured Party as Pledgor's attorney-in-fact, with full
authority in the place and stead of Pledgor
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and in the name of Pledgor or otherwise, from time to time in Secured Party's
discretion, but at Pledgor's cost and expense and without notice to Pledgor, to
take any action and to execute any assignment, certificate, financing statement,
stock power, notification, document or instrument which Secured Party may deem
necessary or advisable to accomplish the purposes of this Pledge Agreement,
including, without limitation, to receive, endorse and collect all instruments
made payable to Pledgor representing any dividend, interest payment or other
distribution in respect of the Collateral or any part thereof and to give full
discharge for the same.
3.12 CUSTODY AND PRESERVATION OF THE COLLATERAL. Secured Party shall be
deemed to have exercised reasonable care in the custody and preservation of the
Collateral in its possession if the Collateral is accorded treatment
substantially equal to that which comparable secured parties accord comparable
collateral, it being understood and agreed, however, that Secured Party shall
not have responsibility for (i) ascertaining or taking action with respect to
calls, conversions, exchanges, maturities, tenders or other matters relative to
any Collateral, whether or not Secured Party has or is deemed to have knowledge
of such matters, (ii) taking any necessary steps to preserve rights against
persons or entities with respect to any Collateral,(iii) any actions taken by
Coastal respecting the Pledged Securities that are not approved by or consented
to by Secured Party or (iv) any actions taken by SJ Corp. respecting the Pledged
Securities that are not approved by or consented to by Secured Party.
SECTION 4. DEFAULT
4.1 EVENTS OF DEFAULT. Upon the occurrence and continuation of an Event of
Default beyond any applicable cure periods, as provided in the Note, Secured
Party may declare all Obligations immediately due and payable.
4.2 RIGHTS IN RESPECT OF COLLATERAL. Upon the occurrence and continuation
of any Event of Default, in addition to all other rights of Secured Party,
Secured Party will have the right and power, but will not be obligated, to enter
upon and take possession of all or any part of the Collateral, exclude Pledgor
therefrom, and to hold, use, administer, manage, and operate the same to the
extent that Pledgor could do so. After a Default under the Note, Secured Party
may exercise every power, right, and privilege of Pledgor with respect to the
Collateral (including, without limitation, the right of collection) without any
liability (SPECIFICALLY INCLUDING LIABILITY FOR ORDINARY OR PARTIAL NEGLIGENCE)
to Pledgor in connection therewith except with respect to bad faith, gross
negligence or willful misconduct; provided, however, that Secured Party may
notify account debtors of Pledgor to make payments directly to Secured Party
only after all cure periods, as provided in the Note, applicable to such Default
have lapsed. Provided there has been no foreclosure sale, when and if such
expenses of operation have been paid and the Obligations paid in full, the
remaining Collateral shall be returned to Pledgor.
4.3 ANCILLARY RIGHTS. Upon the occurrence and continuation of an Event of
Default, in addition to all other rights of Secured Party hereunder, without
notice, demand, or declaration of default, all of which are hereby expressly
waived by Pledgor, Secured Party may proceed by a suit or suits in equity or at
law (a) for the seizure and sale of the Collateral or any part thereof, (b) for
the specific performance of any covenant or agreement contained in this Pledge
Agreement, the Note or any of the other Transaction Documents or in aid of the
execution of any power herein granted, (c) for the foreclosure or sale of the
Collateral or any part thereof under the judgment or decree of any court of
competent jurisdiction, or (d) for the enforcement of any other appropriate
legal or equitable remedy.
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4.4 RECEIVERSHIP. Upon the occurrence and continuation of an Event of
Default, in addition to all other rights of Secured Party, Secured Party from
time to time may apply to a court of competent jurisdiction for the appointment
of one or more receivers to take possession of and to manage and administer the
Collateral or any portion thereof and to collect the Proceeds, all without
demand or declaration of default, which are hereby waived by Pledgor. Secured
Party shall be entitled to the appointment of such receiver(s) as a matter of
right, without regard to the value of the Collateral as security for the
Obligations or the solvency of Pledgor or any Person liable for the payment or
performance of all or any part of the Obligations. Such receiver(s) shall serve
without bond and shall have all usual and customary powers and authorities in
addition to all other powers and authorities permitted by the law of the
jurisdiction where the Collateral is situated and all powers and authorities
granted to Secured Party herein.
4.5 EXPENSES. Pledgor will pay to Secured Party all reasonable expenses,
including, without limitation, fees and expenses of any receiver(s), reasonable
attorneys' and consultants' fees and expenses, advanced by Secured Party and
incurred pursuant to the provisions contained in this SECTION 4, and all such
unpaid expenses shall be (a) a Lien against the Collateral; (b) added to the
Obligations, and (c) payable upon demand, with interest in accordance with
SECTION 6.14; PROVIDED, HOWEVER, that the existence of said Lien shall in no way
waive, diminish, or prejudice any other rights, remedies, powers, and privileges
that Secured Party or any receiver(s) may have under the applicable laws in the
collection of such funds as loans or otherwise.
4.6 PLEDGED SECURITIES. Upon the occurrence and during the continuance of
an Event of Default:
(a) All dividends and interest payments that are received by Pledgor
contrary to the provisions of this Pledge Agreement shall be received in
trust for the benefit of Secured Party, shall be segregated from other
funds of Pledgor and shall be forthwith paid over to Secured Party as
Collateral in the same form as so received (with any necessary
indorsement).
(b) Secured Party may exercise any and all rights of conversion,
exchange, subscription or any other rights, privileges or options
pertaining to any of the Pledged Securities as if it were the absolute
owner thereof, including without limitation, the right to exchange at its
discretion, any and all of the Pledged Securities upon the merger,
consolidation, reorganization, recapitalization or other readjustment of
any issuer of such Pledged Securities or upon the exercise by any such
issuer or Secured Party of any right, privilege or option pertaining to
any of the Pledged Securities, and in connection therewith, to deposit and
deliver any and all of the Pledged Securities with any committee,
depository, transfer agent, registrar or other designated agency upon such
terms and conditions as it may determine, all without liability except to
account for property actually received by it, but Secured Party shall have
no duty to exercise any of the aforesaid rights, privileges or options and
shall not be responsible for any failure to do so or delay in so doing.
(c) at the option of Secured Party and upon written notification
thereof to Pledgor, all rights of Pledgor to exercise the voting and other
consensual rights which Pledgor would otherwise be entitled to exercise
pursuant to SECTION 3.10 with respect to the Pledged Securities shall
cease, and all such rights shall thereupon become vested in Secured Party
who shall thereupon have the sole right to exercise such voting and other
consensual rights, but Secured Party shall have no duty
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to exercise any such voting or other consensual rights and shall not be
responsible for any failure to do so or delay in so doing.
SECTION 5. FORECLOSURE ON COLLATERAL
5.1 SALE. Upon the occurrence and continuation of an Event of Default,
Secured Party will have all rights and remedies granted by law, and particularly
by the UCC, including, without limitation, the right to take possession of the
Collateral, and for this purpose Secured Party may enter upon any premises on
which any or all of the Collateral is situated and take possession of and manage
the Collateral or remove it therefrom. Secured Party may require Pledgor to
assemble the Collateral and make it available to Secured Party at a place to be
designated by Secured Party that is reasonably convenient to all parties. Unless
the Collateral is perishable or threatens to decline speedily in value or is of
a type customarily sold on a recognized market, Secured Party will give Pledgor
reasonable notice of the time and place of any public sale or of the time after
which any private sale or other disposition of the Collateral is to be made.
This requirement of sending reasonable notice will be met if the notice is sent
to Pledgor as provided in the Note at least ten days before the time of the sale
or disposition.
5.2 PRIVATE SALE. If Secured Party in good faith believes that the
Securities Act of 1933 or any other state or federal law prohibits or restricts
the customary manner of sale or distribution of any of the Collateral, or if
Secured Party determines that there is any other restraint or restriction
limiting the timely sale or distribution of any such property in accordance with
the customary manner of sale or distribution, Secured Party may sell such
property privately or in any other manner it deems, in good faith, advisable at
such price or prices as it determines in good faith, but otherwise without any
liability whatsoever to Pledgor in connection therewith. Pledgor recognizes and
agrees that such prohibition or restriction may cause such property to have less
value than it otherwise would have and that, consequently, such sale or
disposition by Secured Party may result in a lower sales price than if the sale
were otherwise held.
5.3 SECURED PARTY AS PURCHASER. Secured Party will have the right to
become the purchaser at any foreclosure sale, and it will have the right to
credit upon the amount of the bid the amount payable to it out of the net
proceeds of sale.
5.4 RECITALS CONCLUSIVE; WARRANTY; RATIFICATION. Recitals contained in any
assignment or xxxx of sale to any purchaser at any sale made hereunder will
conclusively establish, as between the parties to such assignment or xxxx of
sale, the truth and accuracy of the matters therein stated, including, without
limitation, nonpayment of the unpaid principal sum of, and the interest accrued
on, the written instruments constituting part or all of the Obligations after
the same have become due and payable, nonpayment of any other of the
Obligations, or advertisement and conduct of the sale in the manner provided
herein. Secured Party will have authority to appoint an attorney-in-fact to act
in conducting any foreclosure sale and executing assignments and bills of sale.
All assignments and bills of sale may contain a general warranty of title from
the grantor. Pledgor ratifies and confirms all legal acts that Secured Party may
do in accordance with this Pledge Agreement.
5.5 EFFECT OF SALE. Any sale or sales of the Collateral or any part
thereof will operate to divest all right, title, interest, claim, and demand
whatsoever, either at law or in equity, of Pledgor in and to the property sold,
and will be a perpetual bar, both at law and in equity, against Pledgor,
Pledgor's successors or assigns and against any and all persons claiming or who
shall thereafter claim all or any of the property
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sold from, through, or under Pledgor, or Pledgor's successors or assigns. The
purchaser or purchasers at the foreclosure sale will receive immediate
possession of the property purchased.
5.6 APPLICATION OF PROCEEDS. Secured Party shall apply the proceeds of any
sale or other disposition of the Collateral as follows: First, to the payment of
all its expenses incurred in retaking, holding, and preparing any of the
Collateral for sale(s) or other disposition, in arranging for such sale(s) or
other disposition, and in actually selling or disposing of the same (all of
which are part of the Obligations); second, toward repayment of amounts
reasonably expended by Secured Party under SECTION 5 hereof; and third, toward
payment of the balance of the Obligations in the order and manner determined by
Secured Party in its sole discretion. Any surplus remaining shall be delivered
to Pledgor or as a court of competent jurisdiction may direct.
5.7 DEFICIENCY. Pledgor shall remain liable for any deficiency owing to
Secured Party after application of the net proceeds of any foreclosure sale.
Nothing herein contained shall be construed as limiting Secured Party to the
collection of any Obligations only out of the income, revenue, rents, issues,
and profits from the Collateral or as obligating Secured Party to delay or
withhold action upon any default that may be occasioned by failure of such
income or revenue to be sufficient to retire the principal or interest when due
on the indebtedness secured hereby. It is expressly understood between Secured
Party and Pledgor that any Obligations shall constitute an absolute,
unconditional obligation of Pledgor to pay as provided herein or in the Note in
accordance with the terms of the instrument evidencing such Obligations in the
amount therein specified at the maturity date or at the respective maturity
dates of the installments thereof, whether by acceleration or otherwise.
5.8 PLEDGOR'S WAIVER OF APPRAISEMENT, MARSHALLING, ETC. To the extent
permitted by applicable law, Pledgor agrees that Pledgor will not at any time
insist upon or plead or in any manner whatsoever claim the benefit of any
appraisement, valuation, stay, extension, or redemption law, if any, now or
hereafter in force, to prevent or hinder the enforcement or foreclosure of this
instrument, the absolute sale of the Collateral or the possession thereof by any
purchaser at any sale made pursuant to this instrument or pursuant to the decree
of any court having jurisdiction. To the extent permitted by applicable law,
Pledgor, for Pledgor and all who may claim by, through, or under Pledgor, hereby
waives the benefit of all such laws, if any, and to the extent that Pledgor may
lawfully do so under applicable law, waives any and all right to have any
Collateral marshaled upon any foreclosure of the Lien hereof or sold in inverse
order of alienation, and Pledgor agrees that Secured Party may sell the
Collateral as an entirety.
5.9 DISCHARGE OF PURCHASER. Upon any sale made under the powers of sale
herein granted and conferred, the sales receipt issued by Secured Party will be
sufficient discharge to the purchaser or purchasers at any sale for the purchase
money, and such purchaser or purchasers and the heirs, devisees, personal
representatives, successors, and assigns thereof will not, after paying such
purchase money and receiving such receipt of Secured Party, be obliged to see to
the application thereof or be in anywise answerable for any loss,
misapplication, or nonapplication thereof.
SECTION 6. MISCELLANEOUS
6.1 PARI PASSU AGREEMENT. The rights of Secured Party to foreclose on and
sell the Pledged Securities, to apply the Proceeds to the obligations and to
exercise the powers set forth in SECTION 4.6 hereof are subject to the terms of
the Pari Passu Agreement for so long as such agreement remains in effect.
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6.2 TERMINATION. If all the Obligations are paid and performed in full and
the covenants herein contained are performed in all respects, then Secured Party
shall, upon the request of Pledgor and at Pledgor's cost and expense, deliver to
Pledgor proper instruments executed by Secured Party evidencing the release of
this instrument. Until such delivery, this instrument shall remain and continue
in full force and effect.
6.3 REMEDIES CUMULATIVE. No failure on the part of Secured Party or any
holder of the Note to exercise, and no delay in exercising, any right, power or
privilege hereunder, under the Note or under any other Transaction Document and
no course of dealing between Pledgor and Secured Party or any holder of the Note
shall operate as a waiver thereof; nor shall any single or partial exercise of
any such right, power or privilege, or any abandonment or discontinuance of any
steps to enforce such right, power or privilege, preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. No
notice to or demand on Pledgor in any case shall entitle Pledgor to any other or
further notice or demand in similar or other circumstances. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law.
6.4 PARTIAL RELEASE. Except as expressly set forth therein, no release
from the Lien of this instrument of any part of the Collateral by Secured Party
shall in any way alter, vary, or diminish the force, effect or lien of this
instrument on the balance or remainder of the Collateral.
6.5 SUBROGATION. This Pledge Agreement is made with full substitution and
subrogation of Secured Party in and to all covenants and warranties by others
heretofore given or made in respect of the Collateral or any part thereof.
6.6 SUCCESSOR LENDER. Any Person that succeeds to St. Xxxxx Capital
Partners, L.P. as Holder pursuant to, and as permitted by, the terms of the Note
automatically shall become Secured Party hereunder.
6.7 NOTICES. Subject to the provisions of SECTION 5.1, all communications
under this Pledge Agreement shall be given as provided in the Note and shall be
effective as therein provided.
6.8 SUCCESSORS AND ASSIGNS. Neither party may assign its rights or
delegate its duties hereunder to any Person without prior written consent of the
other party, which consent will not be unreasonably withheld. This Pledge
Agreement shall be binding upon the successors and permitted assigns of each of
the parties, and, except as expressly set forth in the Note and this SECTION
6.7, shall inure to the benefit of the successors and permitted assigns of each
of the parties. The provisions of this Pledge Agreement are intended to be for
the benefit of all Persons constituting Secured Party.
6.9 AMENDMENT AND WAIVER.
(a) This Pledge Agreement may be amended, and the observance of any
term of this Pledge Agreement may be waived, with (and only with) the
written consent of Pledgor and Secured Party.
(b) Pledgor shall not solicit, request, or negotiate for or with
respect to any proposed waiver or amendment hereof except in accordance
with the provisions of this Agreement and the Note.
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(c) Any such amendment or waiver shall apply equally to all persons
constituting Secured Party or Pledgor and shall be binding upon each
future Secured Party and upon each person constituting Pledgor regardless
of whether this Pledge Agreement, the Note or any other document shall
have been marked to indicate such amendment or waiver. No such amendment
or waiver shall extend to or affect any obligation not expressly amended
or waived or impair any right consequent thereon.
6.10 GOVERNING LAW. THIS PLEDGE AGREEMENT, THE LEGAL RELATIONS AMONG THE
PARTIES HERETO, AND ALL RIGHTS AND OBLIGATIONS HEREUNDER, INCLUDING MATTERS OF
CONSTRUCTION, VALIDITY, AND PERFORMANCE, SHALL BE GOVERNED BY AND INTERPRETED,
CONSTRUED, APPLIED, AND ENFORCED IN ACCORDANCE WITH THE LAW OF THE STATE OF
TEXAS WITHOUT REFERENCE TO THE LAW OF ANOTHER JURISDICTION AND THE LAWS OF THE
UNITED STATES OF AMERICA; PROVIDED, HOWEVER, THAT MATTERS RELATING TO THE
PERFECTION OF SECURITY INTERESTS UPON ANY PERSONAL PROPERTY SHALL BE GOVERNED BY
THE LAW OF ANOTHER JURISDICTION TO THE EXTENT REQUIRED BY THE NONWAIVABLE
PROVISIONS OF SUCH LAW OR THE LAW OF THE STATE OF TEXAS.
6.11 SEVERABILITY. If any provision in this Pledge Agreement is rendered
or declared illegal, invalid, or unenforceable by reason of any rule of law,
public policy, or final judicial decision, all other terms and provisions of
this Pledge Agreement shall nevertheless remain in full force and effect so long
as the economic or legal substance of the transactions contemplated hereby are
not affected in any manner adverse to Pledgor or Secured Party. Upon such
determination that any term or other provision is invalid, illegal, or incapable
of being enforced, Pledgor and Secured Party shall negotiate in good faith to
modify this Pledge Agreement so as to effect the original intent of the parties
hereto as closely as possible to the end that the transactions contemplated
hereby are fulfilled to the extent possible.
6.12 ENTIRE AGREEMENT. This Pledge Agreement constitutes the entire
agreement of the parties hereto with respect to the matters contained herein and
supersede all prior contracts and agreements with respect thereto, whether
written or oral.
6.13 MULTIPLE COUNTERPARTS. The parties may execute more than one
counterpart of this Pledge Agreement, each of which shall be an original but all
of which together shall constitute one and the same instrument.
6.14 REFERENCES. All references herein to one gender shall include the
other. Unless otherwise expressly provided, all references to "Sections" are to
Sections of this Pledge Agreement and all references to "Exhibits" are to the
exhibits attached hereto, each of which is made a part hereof for all purposes.
6.15 INTEREST. The Obligations of Pledgor pursuant to SECTIONS 3.2 AND 4.5
shall bear interest at an annual rate equal to the default rate set forth in the
Note from the date that is ten days after the date Secured Party notifies
Pledgor that Secured Party has paid amounts required to be paid by Pledgor
hereunder until such amounts are reimbursed to Secured Party. Secured Party
agrees to use all reasonable efforts to forward expense invoices to Pledgor for
direct payment by Pledgor before Secured Party advances amounts to be reimbursed
by Pledgor, and no interest shall accrue on amounts directly paid by Pledgor.
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6.16 FINAL AGREEMENT OF THE PARTIES. THIS PLEDGE AGREEMENT (INCLUDING THE
EXHIBITS HERETO), THE NOTE AND THE OTHER TRANSACTION DOCUMENTS TO WHICH PLEDGOR
OR ANY OF ITS SUBSIDIARIES IS A PARTY CONSTITUTE A "LOAN AGREEMENT" AS DEFINED
IN SECTION 26.02(A) OF THE TEXAS BUSINESS AND COMMERCE CODE, AND REPRESENT THE
FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
THERE ARE NO ORAL AGREEMENTS BETWEEN THE PARTIES.
EXECUTED as of the Effective Date.
Pledgor: INTELECT COMMUNICATIONS, INC.
Address:
0000 Xxxxxxxxx Xxxxx By:
Xxxxxxxxxx, Xxxxx 00000 Name:
Title:
SECURED PARTY: ST. XXXXX CAPITAL PARTNERS, L.P.
By: St. Xxxxx Capital Corp.,
General Partner
Address:
0000 Xxxx Xxx Xxxx By:
Suite 2030 Name:
Xxxxxxx, Xxxxx 00000 Title:
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IRREVOCABLE STOCK POWER
For Value Received, the undersigned hereby sells, assigns and transfers to
________________________, One Thousand One Hundred (1,100) shares of the common
stock of DNA Enterprises, Inc., a corporation organized under the laws of the
State of Texas, standing in the undersigned's name on the books of the
corporation, represented by Certificate No. 8, and the undersigned does hereby
irrevocably constitute and appoint my true and lawful attorney-in-fact, with
full power of substitution, to transfer this stock on the books of the
corporation.
Dated:
INTELECT COMMUNICATIONS, INC.
By:
Name:
Title:
In the presence of:
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IRREVOCABLE STOCK POWER
For Value Received, the undersigned hereby sells, assigns and transfers to
___________________, Five Hundred (500) shares of the common stock of Intelect
Visual Communications Corp, a corporation organized under the laws of the State
of Delaware, standing in the undersigned's name on the books of the corporation,
represented by Certificate No. 1, and the undersigned does hereby irrevocably
constitute and appoint my true and lawful attorney-in-fact, with full power of
substitution, to transfer this stock on the books of the corporation.
Dated:
INTELECT COMMUNICATIONS, INC.
By:
Name:
Title:
In the presence of:
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IRREVOCABLE STOCK POWER
For Value Received, the undersigned hereby sells, assigns and transfers to
_________________________, One Thousand One Hundred (1,100) shares of the common
stock of Intelect Network Technologies Company, a corporation organized under
the laws of the State of Nevada, standing in the undersigned's name on the books
of the corporation, represented by Certificate No. 1, and the undersigned does
hereby irrevocably constitute and appoint my true and lawful attorney-in-fact,
with full power of substitution, to transfer this stock on the books of the
corporation.
Dated:
INTELECT COMMUNICATIONS, INC.
By:
Name:
Title:
In the presence of:
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