Exhibit 10.2
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SECURITY AND PLEDGE AGREEMENT
made by
DATATEC SYSTEMS, INC.,
A DELAWARE CORPORATION
AND
DATATEC INDUSTRIES, INC.,
A NEW JERSEY CORPORATION
AS "PLEDGORS"
to
ALPINE ASSOCIATES, A LIMITED PARTNERSHIP,
A NEW JERSEY LIMITED PARTNERSHIP
AS "SECURED PARTY"
Dated as of December 13, 2004
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TABLE OF CONTENTS
Section 1. Definitions .........................................................1
Section 2. Pledge, Assignment and Grant of Security.............................5
Section 3. Security for Obligations.............................................7
Section 4. Pledge and Security Interest Absolute................................8
Section 5. Pledgor Remains Liable...............................................8
Section 6. Delivery of Collateral...............................................8
Section 7. Representations and Warranties.......................................9
Section 8. Covenants ..........................................................11
Section 9. Secured Party Appointed Attorney-in-Fact............................13
Section 10. Voting Rights; Distributions; Etc...................................14
Section 11. Right of the Secured Party to Take Possession and Foreclose.........15
Section 12. Right of the Secured Party to Use, Operate and Maintain Collateral..16
Section 13. Right of the Secured Party to Appoint Receiver......................17
Section 14. Remedies Cumulative; Delay Not Waiver...............................17
Section 15. Waiver of Rights....................................................17
Section 16. Application of Proceeds.............................................17
Section 17. Indemnity and Expenses..............................................18
Section 18. Amendments; Etc.....................................................19
Section 19. Addresses for Notices...............................................19
Section 20. Survival ...........................................................19
Section 21. Severability........................................................19
Section 22. Continuing Security Interest; Release...............................19
Section 23. Reinstatement.......................................................20
Section 24. Governing Law; Jurisdiction; Consent to Service of Process..........20
Section 25. Incorporation by Reference..........................................21
Section 26. Execution in Counterparts...........................................21
Section 27. Headings ...........................................................21
Section 28. Conflicting Terms...................................................21
SCHEDULES
Schedule I Subsidiaries
Schedule II Perfection Actions
Schedule III Organizational Information
Schedule IV Permitted Liens
(i)
SECURITY AND PLEDGE AGREEMENT, dated as of December 13, 2004 (this
"Agreement"), made by DATATEC SYSTEMS, INC., a Delaware corporation, and DATATEC
INDUSTRIES INC., a New Jersey corporation (each of the foregoing, a "Pledgor,"
and collectively, the "Pledgors"), to ALPINE ASSOCIATES, A LIMITED PARTNERSHIP,
a New Jersey limited partnership (the "Secured Party").
PRELIMINARY STATEMENTS
1. The Pledgors have issued a Senior Secured Note, dated the date hereof,
in the original principal amount of $585,000 to the Secured Party (the "Note")
to evidence their obligation to repay a term loan made by the Secured Party to
the Pledgors on the date hereof (the "Loan").
2. It is a condition to the making of the Loan by the Secured Party that,
among other things, the Pledgors shall have entered into this Agreement.
NOW, THEREFORE, in consideration of the foregoing and in order to induce
the Secured Party to make the Loan and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
Section 1. DEFINITIONS. (a) As used herein, the following terms have the
respective meanings set forth below:
"APPLICABLE LAW" means all laws, rules and regulations applicable to the Person,
conduct, transaction, covenant or Note Document in question, including all
applicable common law and equitable principles; all provisions of all applicable
state and federal constitutions, statutes, rules, regulations and orders of
governmental bodies; and orders, judgments and decrees of all bankruptcy courts
and arbitrators.
"ASSIGNED AGREEMENTS" has the meaning ascribed thereto in Section 2(d).
"BUSINESS DAY" means any day other than a Saturday, a Sunday or a day on which
commercial banks in New York City are required or authorized to be closed.
"CAPITALIZED LEASE OBLIGATIONS" any Debt represented by obligations under a
lease that is required to be capitalized for financial reporting purposes in
accordance with GAAP.
"DEBT" as applied to a Person means, without duplication: (a) all items which in
accordance with GAAP would be included in determining total liabilities as shown
on the liability side of a balance sheet of such Person on the date as of which
Debt is to be determined, including Capitalized Lease Obligations; (b) all
obligations of other Persons which such Person has guaranteed; (c) all
reimbursement obligations in connection with letters of credit or letter of
credit guaranties issued for the account of such Person; and (d) in the case of
Pledgors (without duplication), the Obligations as applied to a Person means,
without duplication: (i) all items which in accordance with GAAP would be
included in determining total liabilities as shown on the liability side of a
balance sheet of such Person on the date as of which Debt is to be determined,
including Capitalized Lease Obligations; (ii) all obligations of other Persons
which such Person has guaranteed; (iii) all reimbursement obligations in
connection with letters of credit or letter of credit guaranties issued for the
account of such Person; and (iv) in the case of Pledgors (without duplication),
the Obligations.
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"DEFAULT" means an event or condition the occurrence or existence of which
would, with the lapse of time or the giving of notice or both, become an Event
of Default.
"DEFAULT RATE" has the meaning ascribed thereto in the Note.
"ERISA" means the Employee Retirement Income Security Act of 1974 and the rules
and regulations promulgated thereunder from time to time in effect.
"EVENT DEFAULT" means those events set forth in Section 1.2 of the Note.
"EQUITY INTEREST" means any and all shares, interest, participations or other
equivalents (however designated) of capital stock of a corporation, any and all
equivalent ownership interests in a Person (other than a corporation) and any
and all warrants, rights or options to purchase any of the foregoing.
"ENVIRONMENTAL LAWS" means any and all laws, statutes, rules, regulations,
orders, ordinances, codes, legal directives, notices, legal requirements and
rules of common law of any effect as of the date hereof in any and all
jurisdictions in which any Pledgor is conducting or at any time has conducted
business or where the Collateral is or was located, and any judicial or
administrative interpretation thereof including, but not limited to, any
judicial or administrative order, consent decree, judgment or settlement
relating to the environment, Hazardous Materials or exposure to Hazardous
Materials.
"EQUIPMENT" has the meaning ascribed thereto in Section 2(g).
"GAAP" means generally accepted accounting principles as in effect from time to
time in the United States of America.
"GOVERNMENTAL AUTHORITY" means any federal, state, municipal, national or other
governmental department, commission, board, bureau, court, agency or
instrumentality or political subdivision thereof or any entity or officer
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to any government or any court, in each case whether
associated with a state of the United States, the District of Columbia or a
foreign entity or government.
"HAZARDOUS MATERIALS" means any "waste," "hazardous waste," "industrial waste,"
"solid waste," "hazardous material," "hazardous substance," "toxic substance,"
"hazardous material," "pollutant," or "contaminant" as those or similar terms
are defined, identified, or regulated under any Environmental Laws; any
asbestos, polychlorinated biphenyls, or radon; any petroleum, petroleum
hydrocarbons, petroleum products, crude oil and any components, fractions or
derivatives thereof; and any substance that, whether by its nature or its use,
is subject to regulation under any Environmental Law or results in any
Governmental Authority requiring any environmental investigation, remediation,
or monitoring thereof.
"INDEMNITEE" has the meaning assigned thereto in Section 18.1(a).
"LIEN" - any interest in Property securing an obligation owed to, or a claim by,
a Person other than the owner of the Property, whether such interest is based on
common law, statute or contract. The term "LIEN" shall also include
reservations, exceptions, encroachments, easements, rights-of-way, covenants,
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conditions, restrictions, leases and other title exceptions and encumbrances
affecting Property. For the purpose of the Agreement, each Borrower shall be
deemed to be the owner of any Property which it has acquired or holds subject to
a conditional sale agreement or other arrangement pursuant to which title to the
Property has been retained by or vested in some other Person for security
purposes.
"MATERIAL ADVERSE EFFECT" means the effect of any event, condition, act,
omission or circumstance, which, alone or when taken together with other events,
conditions, acts, omissions or circumstances occurring or existing concurrently
therewith: (a) has, or could reasonably be expected to have, a material adverse
effect upon the business, operations, Properties, assets, liabilities,
obligations, prospects or condition (financial or otherwise) of the Pledgors
taken as a whole; (b) has or may be reasonably expected to have any material
adverse effect whatsoever upon the validity or enforceability of the Agreement
or any of the other Note Documents; (c) has any material adverse effect upon the
value of the whole or any material part of the Collateral, the Liens of the
Secured Party with respect to the Collateral or the priority of any such Liens;
(d) materially impairs the ability of any Pledgor to perform its obligations
under the Agreement or any of the other Note Documents, including repayment of
any of the Obligations when due; or (e) materially impairs the ability of the
Secured Party to enforce or collect the Obligations or realize upon any of the
Collateral in accordance with the Note Documents and Applicable Law.
"MULTIEMPLOYER PLAN" has the meaning set forth in Section 4001(a)(3) of ERISA.
"NOTE DOCUMENTS" means this Agreement, the Note, and that certain Subordination
and Intercreditor Agreement, dated as of the date hereof, among the Secured
Party and Eagle Acquisition Partners, Inc.
"OBLIGATIONS" means, with respect to each Pledgor, (a) each and every
obligation, covenant and agreement of such Pledgor now or hereafter arising
pursuant to any Note Document, whether for principal, interest, premium, fees,
expenses or otherwise, and any amendments or supplements thereto, extensions or
renewals thereof or replacements therefor, (b) any amounts paid by any
Indemnitee as to which such Indemnitee has a right to reimbursement under
Section 18.1 or under any other Note Document and (d) any amounts paid by the
Secured Party in preservation of its rights or interests in the Collateral,
together with interest on such amounts from the date such amounts are paid until
reimbursement in full at the Default Rate; in each case whether direct or
indirect, absolute or contingent, liquidated or unliquidated, now or hereafter
existing, renewed or restructured, whether or not from time to time decreased or
extinguished and later increased, created or incurred, and including all Debt of
such Pledgor under any instrument now or hereafter evidencing or securing any of
the foregoing.
"ORGANIZATIONAL DOCUMENTS" has the meaning ascribed thereto in Section 2(a).
"PERMITTED INVESTMENTS" means:
(a) direct obligations of the United States of America, or of any
agency thereof, or obligations guaranteed as to principal and interest by the
United States or any agency thereof, maturing not later than 30 days from the
date of acquisition thereof,
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(b) certificates of deposit or bankers' acceptances issued, or time
deposits held, or investment contracts guaranteed, by any domestic or foreign
commercial bank having outstanding unsecured indebtedness that is rated AA or
better by Standard & Poor's Corporation and Aa or better by Xxxxx'x Investors
Service, Inc., or rated AA or Aa or better by one of such credit rating agencies
if only one of such credit rating agencies has rated such unsecured bank
indebtedness (or an equivalent rating by another nationally recognized credit
rating agency of similar standing if neither of such corporations is then in the
business of rating unsecured bank indebtedness), maturing not later than 30 days
from the date of acquisition thereof;
(c) commercial paper rated (on the date of acquisition thereof) A-1
and P-1 or better by Standard & Poor's Corporation and Xxxxx'x Investors
Service, Inc., respectively, or rated A-1 or P-1 or better by one of such credit
rating agencies if only one of such credit rating agencies has rated such
commercial paper (or an equivalent rating by another nationally recognized
credit rating agency of similar standing if neither of such corporations is then
in the business of rating commercial paper), maturing not later than 30 days
from the date of acquisition thereof; and
(d) any other investments approved in writing by the Secured Party
from time to time.
"PERMITTED LIENS" means those liens set forth on Schedule IV hereto.
"PERSON" means an individual, partnership, corporation, limited liability
company, association, trust, unincorporated organization, or a government or
agency or political subdivision thereof.
"PLAN" MEANS an employee benefit plan now or hereafter maintained for employees
of any Borrower that is covered by Title IV of ERISA.
"PLEDGED ENTITIES" has the meaning ascribed thereto in Section 2(a).
"PLEDGED EQUITY INTERESTS" has the meaning ascribed thereto in Section 2(a).
"PROPERLY CONTESTED" means, in the case of any Debt of any Pledgor (including
any Taxes) that is not paid as and when due or payable by reason of such
Pledgor's bona fide dispute concerning its liability to pay same or concerning
the amount thereof: (a) such Debt is being properly contested in good faith by
appropriate proceedings promptly instituted and diligently conducted; (b) such
Pledgor has established appropriate reserves as shall be required in conformity
with GAAP; (c) the non-payment of such Debt will not have a Material Adverse
Effect and will not result in a forfeiture of any assets of such Pledgor; (d) no
Lien is imposed upon any of such Pledgor's assets with respect to such Debt
unless the applicable Lien is at all times junior and subordinate in priority to
the Liens in favor of Lender (except only with respect to property taxes that
have priority as a matter of applicable state law) and enforcement of such Lien
is stayed during the period prior to the final resolution or disposition of such
dispute; (e) if the Debt results from, or is determined by the entry, rendition
or issuance against such Pledgor or any of its assets of a judgment, writ, order
or decree, enforcement of such judgment, writ, order or decree is stayed pending
a timely appeal or other judicial review; and (f) if such contest is abandoned,
settled or determined adversely (in whole or in part) to such Pledgor, such
Pledgor forthwith pays such Debt and all penalties, interest and other amounts
due in connection therewith.
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"PROPERTY" means any interest in any kind of property or asset, whether real,
personal or mixed, or tangible or intangible.
"SECURED OBLIGATIONS" has the meaning ascribed thereto in Section 3.
"SUBSIDIARY" means, as to any Person, any corporation, association or other
business entity in which such Person or one or more of its Subsidiaries or such
Person and one or more of its Subsidiaries owns sufficient equity or voting
interests to enable it or them (as a group) ordinarily, in the absence of
contingencies, to elect a majority of the directors (or Persons performing
similar functions) of such entity, and any partnership or joint venture if more
than a 50% interest in the profits or capital thereof is owned by such Person or
one or more of its Subsidiaries or such Person and one or more of its
Subsidiaries (unless such partnership or joint venture can and does ordinarily
take major business actions without the prior approval of such Person or one or
more of its Subsidiaries).
"TAXES" means any present or future taxes (including value added taxes), levies,
imposts, duties, fees, assessments, deductions, withholdings or other charges of
whatever nature, including income, receipts, excise, property, sales, use,
transfer, license, payroll, withholding, social security and franchise taxes now
or hereafter imposed or levied by the United States, or any state, local or
foreign government or by any department, agency or other political subdivision
or taxing authority thereof or therein and all interest, penalties, additions to
tax and similar liabilities with respect thereto, but excluding, in the case of
Secured Party, taxes imposed on or measured by the net income or overall gross
receipts of Secured Party.
(b) All terms defined in the UCC (as hereinafter defined) shall have
the respective meanings given those terms in the UCC. The term "UCC" means the
Uniform Commercial Code as the same may, from time to time, be in effect in the
State of New York; provided, however, in the event that, by reason of mandatory
provisions of law, any or all of the attachment, perfection or priority of the
security interest in any Collateral is governed by the Uniform Commercial Code
as in effect in a jurisdiction other than New York, the term "UCC" shall mean
the Uniform Commercial Code as in effect in such other jurisdiction for purposes
of the provisions hereof relating to such attachment, perfection, or priority
and for purposes of definitions related to such provisions.
Section 2. PLEDGE, ASSIGNMENT AND GRANT OF SECURITY. Each Pledgor
hereby grants, pledges and assigns to the Secured Party, a security interest in,
and lien on, all of such Pledgor's right, title and interest in and to the
following, whether now owned or existing or hereafter acquired or arising, and
wherever located (collectively, the "COLLATERAL"):
(a) all of the issued and outstanding Equity Interests (the "PLEDGED
EQUITY INTERESTS") in each of such Pledgor's Subsidiaries (the "PLEDGED
ENTITIES"), any options, warrants and other rights in respect of the Pledged
Equity Interests and all rights and benefits under the certificate of formation,
limited liability company agreement and any other organization document of each
of the Pledged Entities (collectively, the "ORGANIZATIONAL DOCUMENTS"),
including (i) all of such Pledgor's interest in the capital of the Pledged
Entities and all rights of such Pledgor to receive distributions, cash,
instruments and other property from time to time receivable or otherwise
distributable in respect of the Pledged Equity Interests or pursuant to the
Organizational Documents, (ii) all other payments due or to become due to such
Pledgor in respect of the Pledged Equity Interests or pursuant to the
Organizational Documents, including, but not limited to, all rights of such
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Pledgor to receive proceeds of any insurance, indemnity, warranty or guaranty
with respect to the Pledged Equity Interests or the Organizational Documents,
(iii) all rights of such Pledgor, as owner of the Pledged Equity Interests, to
all property and assets of the Pledged Entities (whether real property,
inventory, equipment, contract rights, accounts, receivables, general
intangibles, securities, instruments, chattel paper, documents, choses in
action, licenses, permits or otherwise), and (iv) all certificates or
instruments evidencing any ownership interest in the Pledged Entities or their
assets;
(b) all ownership interests, securities, moneys or property
representing a distribution on any of the Pledged Equity Interests, or
representing a return of capital upon or in respect of the Pledged Equity
Interests or resulting from a split-up, revision, reclassification or other like
change of the Pledged Equity Interests or otherwise received in exchange for any
Pledged Equity Interests, and all certificates or instruments representing or
evidencing such ownership interests or securities;
(c) all balances, credits, deposits, "deposit accounts" (as defined
in the UCC), "securities accounts" (as defined in the UCC), or monies whether
now existing or hereafter held in the name or on behalf of such Pledgor, whether
in the possession or control of such Pledgor or held by third parties, together
with all cash, cash equivalents, securities, investments, financial assets,
security entitlements, payments, other amounts, and all other items of property
from time to time held, maintained or carried in, or credited or deposited to,
any such deposit account or securities account, including Permitted Investments,
and all rights, claims and causes of action, if any, that such Pledgor may have
against any Person in respect of the foregoing;
(d) all contracts, leases, licenses and agreements entered into by
such Pledgor and all instruments and documents executed and delivered with
respect to the foregoing contracts, leases, licenses and agreements (all of such
contracts, leases, licenses and agreements, as amended, supplemented or
otherwise modified from time to time in accordance with the terms thereof and of
this Agreement, being the "ASSIGNED AGREEMENTS"), including all rights of such
Pledgor (i) to receive moneys due and to become due under or pursuant to the
Assigned Agreements, (ii) to compel performance and otherwise to exercise all
remedies thereunder, including all rights to make determinations, to exercise
any election or option contained in such agreements (including, but not limited
to, termination thereof), (iii) to give or receive any notice or consent, (iv)
to demand and receive any property that is the subject of any of the Assigned
Agreements, (v) to file any claims and generally to take any action which (in
the reasonable opinion of the Secured Party) may be necessary or advisable in
connection with any of the foregoing, (vi) to receive the proceeds of any claim
for damages arising out of or for breach of any Assigned Agreement and the
proceeds of any insurance, indemnity, warranty or guaranty with respect to the
Assigned Agreements, and (vii) to any warranties, performance bonds or letters
of credit of any manufacturer, contractor or subcontractor or any other Person
pursuant to or relating to the Assigned Agreements;
(e) all "accounts" (as defined in the UCC), including all of such
Pledgor's rights to receive payments for goods sold or leased, or services
performed, by such Pledgor, whether now in existence or arising from time to
time hereafter, and all rights to payment of any kind evidenced by or arising
under or with respect to an account, contract, security agreement, or other
evidence of indebtedness or security, together with (i) all security pledged,
assigned, hypothecated or granted to or held by such Pledgor to secure the
foregoing, (ii) all of such Pledgor's right, title and interest in and to any
goods, general intangibles or other Collateral, the sale of which gave rise
thereto, (iii) all guarantees, credit support agreements, endorsements and
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indemnifications on, or of, any of the foregoing, (iv) all powers of attorney
for the execution of any evidence of indebtedness or security or other writing
in connection therewith, (v) all books, correspondence, credit files, records,
ledger cards, invoices, and other papers relating thereto, including all similar
information stored on a magnetic medium or other similar storage device and
other papers and documents in the possession or under the control of such
Pledgor or any other Person, (vi) all credit information, reports and memoranda
relating thereto, and (vii) all other writings related in any way to the
foregoing;
(f) all "general intangibles" (as defined in the UCC), including (i)
licenses, permits and approvals of any Federal, State, municipal or other
governmental department, commission, board, bureau, agency, court or other
instrumentality, domestic or foreign, now or hereafter held by such Pledgor or
in which such Pledgor may have an interest, except that any such license, permit
or approval which as a matter of law is not assignable is hereby excluded from
such lien and security interest to the extent that and for such time as the same
shall not be so assignable, and (ii) all trademarks, trademark applications,
trademark registrations, trade names, business names, company names, business
identifiers, prints, labels, trade styles and service marks (whether or not
registered), including logos and/or designs, copyrights, patents, patent
applications, goodwill of such Pledgor's business symbolized by any of the
foregoing, trade secrets, license rights, license agreements, permits,
franchises, and any rights to tax refunds to which such Pledgor is now or
hereafter may be entitled;
(g) all "equipment" (as defined in the UCC, "EQUIPMENT");
(h) all "inventory" (as defined in the UCC), whether raw, in
progress or finished, all materials usable in processing the same and all
documents of title covering any inventory, including work in progress, materials
used or consumed in such Pledgor's business, whether now owned or hereafter
acquired or manufactured by such Pledgor and held for sale in the ordinary
course of its business;
(i) all policies of insurance, now or hereafter held by such
Pledgor, including all proceeds therefrom;
(j) to the extent not included in the foregoing: (i) all "goods" (as
defined in the UCC), (ii) all "chattel paper" (as defined in the UCC), (ii) all
"letters of credit" (as defined in the UCC), (iv) all "letter of credit rights"
(as defined in the UCC), (v) all "instruments" (as defined in the UCC), (v) all
"documents" (as defined in the UCC), (vi) all "investment property" (as defined
in the UCC), (vii) all "fixtures" (as defined in the UCC), and (viii) all other
personal property of whatever kind or nature whatsoever of the Pledgor; and
(k) all accessions and additions to, substitutions for, and all
replacements, products and proceeds of any and all of the Collateral (including
any proceeds that constitute property of the types described in subsections
(a)-(j) above);
Section 3. SECURITY FOR OBLIGATIONS. This Agreement secures the
prompt and complete payment and performance of the Obligations and any other
obligations owing by either Pledgor to the Secured Party(the "SECURED
OBLIGATIONS"). Without limiting the generality of the foregoing, this Agreement
also secures the payment of all amounts that constitute part of the Secured
Obligations and would be owed by the Pledgors to the Secured Party but for the
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fact that they are unenforceable or not allowable due to the existence of a
bankruptcy, reorganization or similar proceeding involving the Pledgor.
Section 4. PLEDGE AND SECURITY INTEREST ABSOLUTE. All rights of the
Secured Party, and the pledge and security interests hereunder, shall be
absolute and unconditional irrespective of:
(a) any lack of validity or enforceability of any of the Note
Documents or any other agreement or instrument relating thereto;
(b) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Secured Obligations, or any other amendment or
waiver of or any consent to any departure from the Note Documents or any other
agreement or instrument relating thereto;
(c) any reduction, limitation, impairment or termination of any of
the Secured Obligations for any reason other than the written agreement of the
Secured Party to terminate the Secured Obligations in full, including any claim
of waiver, release, surrender, alteration or compromise;
(d) any exchange, release or non-perfection of any other collateral,
or any release or amendment or waiver of or consent to any departure from any of
the terms of the Note or any other Note Document, for all or any of the Secured
Obligations;
(e) the failure of the Secured Party to assert any claim or demand
or to enforce any right or remedy against either or both of the Pledgors or any
other Person under the provisions of the Note or any other Note Document or
otherwise, or to exercise any right or remedy against any other Person or
collateral securing any of the Secured Obligations; or
(f) any other circumstance which might otherwise constitute a
defense available to, or a discharge of, the Pledgor or a third party pledgor.
Section 5. PLEDGOR REMAINS LIABLE. Anything herein to the contrary
notwithstanding; (a) the Pledgors shall remain liable under the Assigned
Agreements to the extent set forth therein to perform all of their duties and
obligations thereunder to the same extent as if this Agreement had not been
executed; (b) the exercise by the Secured Party of any of the rights hereunder
(other than following an acquisition of the Pledgors' rights as a consequence of
foreclosure, assumption or transfer of the Assigned Agreements) shall not
release the Pledgors from any of their duties or obligations under the Assigned
Agreements; and (c) until assumed or transferred as aforesaid, the Secured Party
shall not have any obligation or liability under the Assigned Agreements by
reason of this Agreement, nor shall the Secured Party be obligated to perform
any of the obligations or duties of the Pledgors thereunder or to take any
action to collect or enforce any claim for payment assigned hereunder.
Section 6. DELIVERY OF COLLATERAL. The Pledgors shall use reasonable
efforts to ensure that all certificates or instruments representing or
evidencing any of the Collateral at any time shall be delivered to and held by
or on behalf of the Secured Party pursuant hereto and shall be in suitable form
for transfer by delivery, or shall be accompanied by stock powers or other
instruments of transfer or assignment duly executed in blank, all in form and
substance satisfactory to the Secured Party; PROVIDED that in the event any such
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certificates or instruments shall be in the possession of either Pledgor, such
certificates and instruments shall be immediately delivered to the Secured
Party. The Secured Party shall have the right, upon the occurrence and
continuance of an Event of Default, in its discretion and without notice to the
Pledgor, to transfer to or to register in the name of the Secured Party or any
of its nominees any or all of the Collateral. In addition, the Secured Party
shall have the right at any time to exchange certificates or instruments
representing or evidencing any of the Collateral for certificates or instruments
of smaller or larger denominations.
Section 7. REPRESENTATIONS AND WARRANTIES. Each Pledgor represents
and warrants as follows:
(a) It is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation, has the power
to own its Properties and to transact the business in which it is presently
engaged or proposed to be engaged and is duly qualified and in good standing in
each jurisdiction in which it presently is, or proposes to be, engaged in
business.
(b) The execution, delivery and performance by such Pledgor of each
of the Note Documents are within such Pledgors's corporate power, have been duly
authorized by all necessary or proper corporate action; will not violate any
Applicable Law; does not require the consent or approval of any Governmental
Authority or any other Person and does not violate any agreement to which either
Pledgor is a party.
(c) Each of the Note Documents has been duly executed and delivered
by such Pledgor and constitutes a legal, valid and binding obligation of such
Pledgor, enforceable against such Pledgor in accordance with its terms.
(d) Since the date of the last internally prepared, unaudited
financial statements of such Pledgor delivered to the Secured Party, no event
has occurred that has or could reasonably be expected to have a Material Adverse
Effect.
(e) All of such Pledgors's business, operations and Properties are
conducted, maintained and owned in accordance with Applicable Law, including all
Environmental Laws, except to the extent that any such noncompliance could not
reasonably be expected to have a Material Adverse Effect.
(f) Such Pledgor has obtained and holds in full force and effect all
Governmental Approvals necessary for the operation of its business as presently,
and proposed to be, conducted to the extent that the failure to obtain same
could not reasonably be expected to have a Material Adverse Effect.
(g) Such Pledgor has filed all federal, state and local tax returns
and other reports that it is required by Applicable Law to file and has paid, or
made for provision of the payment of, all Taxes upon it, its income and
properties as and when such Taxes are due and payable, except to the extent
being Properly Contested and except for amounts not to exceed $25,000 in the
aggregate.
(h) There are no claims for brokerage commissions, finders' fees or
investment banking fees in connection with the transactions contemplated by this
Agreement or any of the other Note Documents.
9
(i) No Default or Event of Default exists at the time, or would
result from the execution, delivery or performance of this Agreement or any
other Note Document by such Pledgor.
(j) Each Pledgor and each of its Subsidiaries are in full compliance
with the requirements of ERISA and the regulations promulgated thereunder with
respect to each Plan. No fact or situation that is reasonably likely to result
in a material adverse change in the financial condition of each Borrower or any
of its Subsidiaries exists in connection with any Plan. Neither Borrower nor any
of their respective Subsidiaries has any withdrawal liability in connection with
a Multiemployer Plan.
(k) Such Pledgor is not an "investment company" or a "person
directly or indirectly controlled by or acting on behalf of an investment
company" within the meaning of the Investment Company Act of 1940; or a "holding
company," or a "subsidiary company" of a "holding company," or an "affiliate" of
a "holding company" or of a "subsidiary company" of a "holding company," within
the meaning of the Public Utility Holding Company Act of 1935.
(l) Neither such Pledgor nor any of its Subsidiaries is engaged,
principally or as one of its important activities, in the business of extending
credit for the purpose of purchasing or carrying any margin stock.
(m) As of the date hereof, such Pledgor is the sole legal and
beneficial owner of all of the Pledged Equity Interests.
(n) Except for the security interest granted to the Secured Party
pursuant to this Agreement and the Permitted Liens, the Pledgors own each item
of the Collateral free and clear of any and all Liens or claims of others. No
financing statement or other public notice with respect to all or any part of
the Collateral is on file or of record in any public office, except such as have
been filed (i) in favor of the Secured Party, for the benefit of the Secured
Party pursuant to this Agreement or (ii) relating to Permitted Liens.
(o) This Agreement creates a valid security interest in the
Collateral in favor of the Secured Party, securing the payment and performance
of the Secured Obligations.
(p) Upon completion of the filings and other actions specified on
Schedule II hereto (which, in the case of all filings and other documents
referred to on such Schedule, have been delivered to the Secured Party in
completed and duly executed form), the security interests granted pursuant to
this Agreement will constitute a first priority, perfected security interest in
all of the Collateral in favor of the Secured Party, prior to all other Liens on
the Collateral in existence on the date hereof, subject only to the Permitted
Liens.
(q) All of the direct and indirect Subsidiaries of such Pledgor are
listed on SCHEDULE I. Each such Subsidiary has no material assets.
(r) As of date hereof, no written information, report, financial
statement or schedule furnished by such Pledgor in connection with this
Agreement or any other Note Document, taken as a whole, as of the date made or
furnished, contains any material misstatement of fact or fails to state any
material fact (as of the date made or furnished) necessary to make the
statements therein, in light of the circumstances under which they were made at
the time, not misleading.
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(s) "DataTec Systems, Inc." and "DataTec Industries, Inc." are the
correct legal names of the respective Pledgors. The Pledgors' respective
jurisdictions of formation are the State of Delaware and the State of New Jersey
and their respective organizational identification numbers, federal tax
identification numbers and mailing addresses are specified on SCHEDULE III
hereto.
Section 8. COVENANTS. Until the irrevocable payment and performance
in full of all Secured Obligations and the expiration or termination of the
Note, each Pledgor hereby covenants and agrees:
(a) Such Pledgor shall not: (i) change its jurisdiction of
incorporation, formation, or organization, as applicable; or (ii) change its
name, identity or organizational structure.
(b) Except as otherwise provided in this subsection (b), each
Pledgor shall continue to collect, at its own expense, all amounts due or to
become due to such Pledgor under the Assigned Agreements. In connection with
such collections, each Pledgor may take (and during an Event of Default, at the
Secured Party's direction shall take) such action as such Pledgor or the Secured
Party may deem necessary or advisable to enforce collection of the amounts due
under the Assigned Agreements. Each Pledgor agrees and confirms that it will,
during the continuance of an Event of Default, notify each party to the Assigned
Agreements and each other account debtor or obligor under the "accounts" (as
defined in the UCC) of the grant of the security interest therein and assignment
thereof to the Secured Party. Neither Pledgor shall take any action in
connection with any Assigned Agreement that would impair the security interest
of the Secured Party.
(c) Neither Pledgor shall take or permit to be taken any action in
connection with the Collateral that would impair in any material respect the
value of the interest or rights of such Pledgor therein or which would impair
the interests or rights of the Secured Party therein or with respect thereto.
(d) Neither Pledgor shall sell, lease, assign, pledge, transfer or
otherwise dispose of any of the Collateral; provided, however, that the
foregoing restriction shall not apply, for so long as no Default or Event of
Default has occurred and is continuing, to (i) dispositions of Equipment in the
ordinary course of business, (ii) dispositions of Equipment of the Pledgors
which, in the aggregate have a fair market value or book value, whichever is
less, of $50,000 or less, provided that all Net Proceeds thereof are remitted to
the Secured Party for application to the Secured Obligations, or (iii)
replacements of Equipment that is substantially worn, damaged or obsolete with
Equipment of like kind, function and value, provided that replacement Equipment
shall be acquired prior to or concurrently with any disposition of the Equipment
that is to be replaced, the replacement Equipment shall be free and clear of
Liens, and Pledgors shall have given the Secured Party at least 10 days prior
written notice of such disposition.
(e) (i) Each Pledgor shall maintain the security interest created by
this Agreement as a first priority, perfected security interest and shall defend
such security interest against the claims and demands of all Persons whomsoever,
except for Permitted Liens.
(ii) Each Pledgor shall furnish to the Secured Party from time to
time, at such Pledgor's sole cost and expense, statements and
schedules further identifying and describing the Collateral and such
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other reports in connection with the Collateral as the Secured Party
may request, all in such detail as the Secured Party may reasonably
request.
(iii) At any time and from time to time, upon the written request
of the Secured Party, and at the sole expense of the Pledgors, the
Pledgors shall promptly and duly execute, deliver and/or have recorded
with appropriate agencies such further instruments and documents and
take such further actions as the Secured Party may reasonably request
for the purpose of obtaining or preserving the full benefits of this
Agreement and of the rights and powers herein granted. Without
limiting the generality of the foregoing, the Pledgors shall: (i) at
the request of the Secured Party, xxxx conspicuously each of its
records pertaining to the Collateral with a legend, in form and
substance satisfactory to the Secured Party, including that such
record is subject to the pledge, assignment and security interest
granted hereby; (ii) if any Collateral shall be evidenced by a
promissory note or other instrument or chattel paper, deliver and
pledge to the Secured Party hereunder such note or instrument or
chattel paper duly endorsed and accompanied by duly executed
instruments of transfer of assignment, all in form and substance
reasonably satisfactory to the Secured Party; and (iii) execute and
file, with a copy thereof to the Secured Party, such financing or
continuation statements, or amendments thereto, and such other
instruments or notices, as may be necessary, or as the Secured Party
may reasonably request, in order to perfect and preserve the pledge,
assignment and security interest granted or purported to be granted
hereby.
(iv) Pursuant to the UCC and any other Applicable Law, each
Pledgor authorizes the Secured Party to file or record financing
statements and other filing or recording documents or instruments with
respect to the Collateral in such form and in such offices as the
Secured Party reasonably determines appropriate to perfect the
security interests of the Secured Party under this Agreement without
the signature of either Pledgor. A photographic or other reproduction
of this Agreement shall be sufficient as a financing statement or
other filing or recording document or instrument for filing or
recording in any jurisdiction. Each Pledgor shall be jointly and
severably liable to the Secured Party for the payment of (or the
reimbursement of the Secured Party for) all filing fees and related
expenses.
(v) Each Pledgor shall make, or reimburse the Secured Party for
the out-of-pocket costs of making, all searches reasonably deemed
necessary or advisable by the Secured Party to establish and determine
the priority of the security interest of the Secured Party or to
determine the presence or priority of other secured parties.
(vi) This Section 8(e) and the obligations imposed on each
Pledgor by this Section 8(e) shall be interpreted as broadly as
possible in favor of the Secured Party in order to effectuate the
purpose and intent of this Agreement.
(f) Each Pledgor shall provide not less than thirty (30) days' prior
written notice to the Secured Party of the formation after the date hereof of a
new Subsidiary. Upon receipt of such notice, SCHEDULE I shall be deemed to be
updated to include such new or modified information (and the Secured Party may,
but shall not be required to, physically replace the existing SCHEDULE I with a
new Schedule reflecting such additional or modified information). Such Pledgor
shall deliver to the Secured Party all certificates representing the ownership
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interests in such new Subsidiary held by such Pledgor.
(g) Neither Pledgor shall assign or otherwise transfer any of its
assets to any of its Subsidiaries.
Section 9. SECURED PARTY APPOINTED ATTORNEY-IN-FACT. (a) Each
Pledgor hereby irrevocably constitutes and appoints the Secured Party and any
officer or agent thereof, with full power of substitution, as its true and
lawful attorney-in-fact with full irrevocable power and authority in the place
and stead of such Pledgor and in the name of such Pledgor or in its own name,
for the purpose of carrying out the terms of this Agreement or any other Note
Document, to take any and all appropriate action and to execute any and all
documents and instruments which may be necessary or desirable to accomplish the
purposes of this Agreement and any other Note Document, and, without limiting
the generality of the foregoing, each Pledgor hereby gives the Secured Party the
power and right, on behalf of such Pledgor, without notice to or assent by such
Pledgor, to do any or all of the following:
(i) in the name of such Pledgor or its own name, or otherwise,
take possession of and indorse and collect any checks, drafts, notes,
acceptances or other instruments made payable to such Pledgor for the
payment of moneys due under any Assigned Agreements or with respect to
any other Collateral and file any claim or take any other action or
proceeding in any court of law or equity or otherwise deemed
appropriate by the Secured Party for the purpose of collecting any and
all such moneys due under any Assigned Agreement or with respect to
any other Collateral whenever payable;
(ii) pay or discharge taxes and liens levied or placed on or
threatened against the Collateral;
(iii) execute, in connection with any sale provided for in
Section 10 hereof, any endorsements, assignments or other instruments
or documents of conveyance or transfer with respect to the Collateral;
and
(iv) (A) direct any party liable for any payment under any of the
Collateral to make payment of any and all moneys due or to become due
thereunder directly to the Secured Party or as the Secured Party shall
direct; (B) ask or demand for, collect, and receive payment of and
receipt for, any and all moneys, claims and other amounts due or to
become due at any time in respect of or arising out of any Collateral;
(C) sign and indorse any invoices, freight or express bills, bills of
lading, storage or warehouse receipts, drafts against debtors,
assignments, verifications, notices and other documents (including any
negotiable documents) in connection with any of the Collateral; (D)
commence and prosecute any suits, actions or proceedings at law or in
equity in any court of competent jurisdiction to collect the
Collateral or any portion thereof and to enforce any other right in
respect of any Collateral; (E) defend any suit, action or proceeding
brought against such Pledgor with respect to any Collateral; (F)
settle, compromise or adjust any such suit, action or proceeding and,
in connection therewith, give such discharges or releases as the
Secured Party may deem appropriate; and (G) generally, sell, transfer,
pledge and make any agreement with respect to or otherwise deal with
any of the Collateral as fully and completely as though the Secured
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Party were the absolute owner thereof for all purposes, and do, at the
Secured Party's option and such Pledgor's expense, at any time, or
from time to time, all acts and things which the Secured Party deems
necessary to protect, preserve or realize upon the Collateral and the
Secured Party's security interests therein and to effect the intent of
this Agreement, all as fully and effectively as such Pledgor might do.
Anything in this Section 9(a) to the contrary notwithstanding, the
Secured Party agrees that it will not exercise any rights under the power of
attorney provided for in this Section 9(a) unless an Event of Default shall have
occurred and be continuing.
(b) During an Event of Default the Secured Party may (but without
any obligation to do so) (i) perform or satisfy any of each Pledgor's
obligations under or pursuant to this Agreement and the other Note Documents
which remain unsatisfied (after providing any notice and opportunity to cure to
which such Pledgor is entitled under any other provision of any Note Document,
if any), and (ii) take all other actions and pay such amounts and claims as the
Secured Party determines in its sole but reasonable discretion, is necessary or
appropriate to protect the rights and interests of the Secured Party under this
Agreement and the other Note Documents to preserve and protect the Collateral or
any part thereof from loss.
(c) The expenses of the Secured Party incurred in connection with
actions undertaken as provided in this Section 9, together with interest thereon
at the Default Rate, from the date of payment by the Secured Party to the date
reimbursed by the Pledgors, shall be payable by the Pledgors to the Secured
Party on demand.
(d) Each Pledgor hereby ratifies all that said attorneys shall
lawfully do or cause to be done pursuant to the powers granted in this Section
9. All powers, authorizations and agencies contained in this Agreement are
coupled with an interest and are irrevocable until this Agreement is terminated
and the security interests created hereby are released.
Section 10. VOTING RIGHTS; DISTRIBUTIONS; ETC. So long as no Event
of Default shall have occurred and be continuing or would result therefrom, but
subject, nevertheless, at all times to the restrictions imposed by subsection
(b) below, each Pledgor shall be entitled to receive free and clear of the
interest of the Secured Party granted under this Agreement all distributions
receivable by it under the Organizational Documents, and shall be entitled to
exercise any and all management, voting and other consensual rights pertaining
to the Organizational Documents, the Pledged Equity Interests and the Pledged
Entities for any purpose not inconsistent with the terms of this Agreement or
any other Note Document; PROVIDED, HOWEVER, that each Pledgor shall exercise, or
refrain from exercising, any such right if such action or inaction could have a
material adverse effect on the value of the Collateral or any material part
thereof.
(b) Each Pledgor's right to receive and retain any and all
distributions and payments in respect of the Collateral purported to be pledged
and assigned by it hereunder shall be further limited as follows:
(i) distributions paid or payable other than in cash in respect
of, and instruments and other property received, receivable or
otherwise distributed in respect of, or in exchange for, any such
Collateral, and
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(ii) distributions paid or payable in cash in respect of any such
Collateral in connection with a partial or total liquidation or
dissolution of any Pledged Entity,
shall be forthwith delivered to the Secured party to hold as
Collateral and shall, if received by any Pledgor, be received in trust for the
benefit of the Secured Party, be segregated from the other property or funds of
such Pledgor and be forthwith delivered to the Secured Party as Collateral in
the same form as so received (with any necessary endorsement or assignment).
The Secured Party shall execute and deliver (or cause to be executed
and delivered) to the applicable Pledgor all such proxies and other instruments
as such Pledgor may reasonably request for the purpose of enabling such Pledgor
to exercise the voting and other rights which it is entitled to exercise
pursuant to subsection (a) above, and to receive the distributions which it is
authorized to receive and retain pursuant to subsection (a) above.
Section 11. RIGHT OF THE SECURED PARTY TO TAKE POSSESSION AND
FORECLOSE. If any Event of Default shall have occurred and be continuing, the
Secured Party shall:
(a) have the right and power to take possession of the Collateral
and of any and all books of account and records of either or both Pledgors
relating to any of the Collateral;
(b) have the right to place the Secured Party's representatives upon
any premises on which the Collateral or any part thereof or any such books of
account or records may be situated with full power to remove the same therefrom;
(c) have the right to enforce all remedies, rights, powers and
privileges of any Pledgor under any or all of the Assigned Agreements; and/or
substitute itself or any nominee or trustee of the Secured Party in lieu of such
Pledgor as party to any of the Assigned Agreements and to notify the obligor of
any "account" (as defined in the UCC) that all payments and performance under
the relevant agreements and accounts shall be made or rendered to the Secured
Party or such other Person as the Secured Party may designate;
(d) have the right to exclude each Pledgor and all persons claiming
under any Pledgor from any access to the Collateral or to any part thereof, and
the Secured Party and such representatives are hereby granted the irrevocable
license to enter upon such premises for such purpose; and
(e) have to the right to exercise in respect of the Collateral, in
addition to other rights and remedies provided for herein or otherwise available
to it, all the rights and remedies of a secured party on default under the UCC
to enforce this Agreement and the security interests contained herein.
The Secured Party may require either or both Pledgors to assemble
the Collateral or any part thereof and to make the same (to the extent same is
moveable) available to the Secured Party at a place to be designated by the
Secured Party which is reasonably convenient to the applicable Pledgor and the
Secured Party. The Secured Party may render the Collateral or any part thereof
unusable without removing the same from the premises on which it may be
situated, and may sell the same on the premises of either or both Pledgors if
such Collateral or part thereof is situated thereon. The Secured Party may make
formal application for the transfer of all of either or both Pledgor's permits,
15
licenses, approvals, and the like relating to the Collateral or to the
applicable Pledgor's business to the Secured Party or to any assignee of the
Secured Party or to any purchaser of any of the Collateral to, the extent the
same are assignable in accordance with their terms and Applicable Law. The
Secured Party will send the Pledgors notification of disposition of any or all
of the Collateral at least ten (10) days prior to the earliest time of
disposition set forth in such notice (which notice shall for all purposes be
deemed commercially reasonably) and such notice shall include the time and place
of any public sale thereof or of the time after which any private sale or any
other intended disposition thereof is to be made.
In addition to exercising the foregoing rights, the Secured Party
may, to the extent permitted by law, arrange for and conduct the sale of the
Collateral at a public or private sale, as the Secured Party may elect, which
sale may be conducted by an employee or representative of the Secured Party, and
any such sale shall be considered or deemed to be a sale made in a commercially
reasonable manner. The Secured Party may release temporarily or otherwise to the
applicable Pledgor any item of Collateral of which the Secured Party has taken
possession pursuant to any right granted to the Secured Party by this Agreement
without waiving any rights granted to the Secured Party under this Agreement,
the other Note Documents or any other agreement related hereto or thereto.
The Secured Party may be a purchaser of the Collateral or any part
thereof or any right or interest therein at any sale thereof, whether pursuant
to foreclosure, power of sale or otherwise hereunder and the Secured Party may
apply the purchase price to the payment of the Secured Obligations secured
hereby. Any purchaser of all or any part of the Collateral shall, upon any such
purchase, acquire good title to the Collateral so purchased, free of the
security interests created by this Agreement.
Section 12. RIGHT OF THE SECURED PARTY TO USE, OPERATE AND MAINTAIN
COLLATERAL. (a) Upon the Secured Party's taking possession of all or any part of
the Collateral in accordance with the terms of this Agreement, the Secured Party
shall have the right to hold, store, and/or use, operate, manage, and control
the same. Upon any such taking of possession, the Secured Party may (but shall
not be obligated to), from time to time, at the expense of either or both
Pledgors, make all such repairs, replacements, alterations, additions, and
improvements to and of all or any, of the Collateral as the Secured Party may
deem proper. In any such case, the Secured Party shall have the right to
exercise all rights and powers of each Pledgor in respect of the Collateral or
any part thereof as the Secured Party shall deem proper, including the right to
enter into any and all such agreements with respect to the leasing and/or
operation of the Collateral or any part thereof as the Secured Party may see
fit, and the Secured Party shall be entitled to collect and receive all rents,
issues, profits, fees, revenues, and other income derived from leasing and/or
operation of the Collateral.
(b) The powers conferred on the Secured Party hereunder are solely
to protect its interest in the Collateral and shall not impose any duty on it to
exercise any such powers. Except for the reasonable care and preservation of any
Collateral in its possession and the accounting for moneys actually received by
it hereunder, the Secured Party shall have no duty as to any Collateral or as to
the taking of any necessary steps to preserve rights against prior parties or
any other rights pertaining to any Collateral.
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Section 13. RIGHT OF THE SECURED PARTY TO APPOINT RECEIVER. Upon the
occurrence and during the continuation of any Event of Default, the Secured
Party shall, as a matter of right, and without any requirement of notice, to the
extent permitted under Applicable Law, be entitled to appoint a receiver for all
or any part of the Collateral whether such receivership be incidental to a
proposed sale of the Collateral or otherwise. All disbursements made by the
receiver under this Section 14 and the expenses of receivership shall be added
to and be a part of the Secured Obligations, and, whether or not said principal
sum, including such disbursements and expenses, exceeds the indebtedness
originally intended to be secured hereby, the entire amount of said sums,
including such disbursements and expenses, shall be secured by this Agreement
and shall be due and payable upon demand therefor and thereafter shall bear
interest at the Default Rate.
Section 14. REMEDIES CUMULATIVE; DELAY NOT WAIVER. The rights and
remedies of the Secured Party under this Agreement, the other Note Documents, or
any other related agreement are cumulative and shall in no way affect, or
deprive the Secured Party of, or be deemed to constitute a waiver by the Secured
Party of any other rights or remedies allowed to the Secured Party at law or in
equity. No notice to or demand on either or both Pledgors in any case shall
entitle the either or both Pledgors to any other notice or demand in similar or
other circumstances and the exercise of any one remedy shall not impair the
Secured Party's right simultaneously or at any time or in any order to exercise
any other remedy nor shall the exercise of any remedy in one case impair or
otherwise affect the Secured Party's right or ability to exercise such remedy
contemporaneously or again in the same case or in any other case. No failure or
delay by the Secured Party in exercising any right or power hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right or power, or any abandonment or discontinuance of steps to enforce
such a right or power, preclude any other or further exercise thereof or the
exercise of any other right or power.
Section 15. WAIVER OF RIGHTS. To the extent permitted under
Applicable Law, each Pledgor waives all rights and remedies of a debtor under
the UCC or other Applicable Law, and all formalities prescribed by law relative
to the sale or disposition of the Collateral (other than notice of sale) after
the occurrence and during the continuation of an Event of Default and all other
rights and remedies of such Pledgor with respect thereto. In exercising its
right to take possession of the Collateral upon the occurrence and during the
continuation of an Event of Default hereunder, the Secured Party, personally or
by its agents or attorneys, and subject to the rights of any tenant under any
lease or sublease of the Collateral, to the fullest extent permitted by law, may
enter upon any land owned or leased by such Pledgor without being guilty of
trespass or any wrongdoing, and without liability for damages thereby
occasioned. In the event the Secured Party elects to proceed with respect to the
Collateral, separately from any real property, the Secured Party shall give such
Pledgor at least ten (10) days' prior notice of the intended disposition of the
Collateral (which notice shall for all purposes be deemed to be commercially
reasonable).
Section 16. APPLICATION OF PROCEEDS. All cash proceeds received by
the Secured Party in respect of any sale of, collection from, or other
realization upon all or any part of the Collateral pursuant to this Agreement
shall be held and applied by the Secured Party shall be applied as follows:
FIRST, to reimbursement of expenses and indemnities owing by the
Pledgors provided for in this Agreement and the other Note Documents
to the Secured Party;
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SECOND, to accrued interest on the Note;
THIRD, to principal outstanding on the Note;
FOURTH, to any other Obligations of the Pledgors;
FIFTH, pro rata to Pledgors, or as otherwise required by Applicable
Law.
Each Pledgor shall remain jointly and severally liable for any deficiency. Any
surplus of such cash or cash proceeds held by the Secured Party and remaining
after payment in full in cash of all the Secured Obligations and the termination
of the Note shall be paid over, pro rata, to the Pledgors or to whomsoever may
be lawfully entitled to receive such surplus.
Section 17. INDEMNITY AND EXPENSES. (a) Each Pledgor agrees to
indemnify and hold the Secured Party and its officers, directors, employees,
professional advisors and Affiliates (each an "INDEMNIFIED PERSON") harmless
from and against any and all liabilities (including reasonable attorney fees),
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind whatsoever which may at any time be
imposed on, incurred by or asserted against any Indemnified Person, in any way
relating to or arising out of this Agreement, or any investigation, litigation
or other proceeding relating to this Agreement (including enforcement of this
Agreement), or the performance of its duties as Secured Party hereunder or any
action taken or omitted by the Secured Party, in its capacity as such, under or
in connection with any of the foregoing; PROVIDED that the Pledgors shall not be
liable for the payment of any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
to the extent that any of the foregoing result from such Indemnified Person's
gross negligence or willful misconduct. In no event shall the Pledgors be liable
for indirect, incidental, special or consequential damages regardless of the
form of action and even if the same are foreseeable. To the extent permitted by
Applicable Law, neither Pledgor shall not assert, and each Pledgor hereby
waives, any claim against any Indemnified Party, on any theory of liability, for
special, indirect, consequential or punitive damages (as opposed to direct or
actual damages) arising out of, in connection with, or as a result of, this
Agreement, any other Note Document or any agreement or instrument relating
contemplated hereby or thereby or relating hereto or thereto, the transactions
contemplated thereby, the Note or the use of the proceeds thereof.
(b) Each Pledgor shall, upon demand (and in any event no later than
ten (10) Business Days after receipt of an invoice by such Pledgor) pay to the
Secured Party the amount of any and all reasonable expenses, including the
reasonable fees and expenses of its counsel (and any local counsel) and of any
experts and agents, that the Secured Party may incur in connection with: (i)
documentation, negotiation or administration of this Agreement or any other Note
Document; (ii) the custody or preservation of, or the sale of, collection from,
or other realization upon, any of the Collateral; (iii) the exercise or
enforcement (whether through negotiations, legal proceedings or otherwise) of
any of the rights of the Secured Party hereunder or under any other Note
Document; or (iv) the failure by any Pledgor to perform or observe any of the
provisions of this Agreement or any other Note Document. Each Pledgor shall be
jointly and severally liable to the Secured Party for their respective
obligations under this Section 17(b).
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Section 18. AMENDMENTS; ETC. No amendment or waiver of any provision
of this Agreement, and no consent to any departure by the Pledgors herefrom,
shall in any event be effective unless the same shall be in writing and signed
by the Pledgors and the Secured Party, and then such waiver or consent shall be
effective only in the specific instances and for the specific purpose for which
given. No delay on the part of the Secured Party in the exercise of any right,
power or remedy shall operate as a waiver thereof, nor shall any single or
partial waiver by the Secured Party of any right, power or remedy preclude any
further exercise thereof, or the exercise of any other right, power or remedy.
Section 19. ADDRESSES FOR NOTICES. All notices and other
communications provided for hereunder shall be in writing and shall be
personally delivered or sent by an overnight courier, by facsimile transmission
or by United States Mail, certified mail, postage prepaid and return receipt
requested, if to the Pledgors or to the Secured Party, at their respective
addresses specified on the signature pages hereto, or, as to either party, at
such other address as shall be designated by such party in a written notice to
the other party. All such notices and other communications that are delivered by
hand or overnight courier shall be deemed received upon delivery. Notices that
are delivered by facsimile shall be deemed delivered upon receipt. Notices that
are deposited in the United States Mail in accordance with the terms of this
Section 20 shall be deemed delivered upon receipt.
Section 20. SURVIVAL. (a) All agreements, statements,
representations and warranties made by the Pledgors herein, in the other Note
Documents or in any certificate or other instrument delivered by either or both
Pledgors or on their behalf under this Agreement or under any other Note
Document shall be considered to have been relied upon by the Secured Party and
shall survive the execution and delivery of this Agreement and the other Note
Documents regardless of any investigation made by the Secured Party or on its
behalf.
(b) The indemnity obligations of the Pledgors contained in Section
18 shall continue in full force and effect notwithstanding full repayment of the
Note and all of the other Secured Obligations and notwithstanding the discharge
thereof. Each Pledgor shall be jointly and severally liable for such indemnity
obligations.
Section 21. SEVERABILITY. Any provision hereof that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof and without affecting the validity or enforceability
of any provision in any other jurisdiction.
Section 22. CONTINUING SECURITY INTEREST; RELEASE. This Agreement
shall create a continuing security interest in the Collateral and shall: (i)
remain in full force and effect until the irrevocable payment in full of all
Secured Obligations and the expiration or termination of the Notes; (ii) be
binding upon each Pledgor, its successors and assigns, PROVIDED that neither
Pledgor may transfer or assign any or all of its rights or obligations hereunder
without the prior written consent of the Secured Party; and (iii) inure to the
benefit of, and be enforceable by, the Secured Party and its respective
successors, transferees and assigns. Without limiting the generality of the
foregoing clause (iii), the Secured Party may assign or otherwise transfer all
or any portion of its rights in the Secured Obligations, and such assignee shall
thereupon become vested with all the benefits in respect thereof granted to such
Secured Party herein or otherwise. Upon the payment in full of the Secured
19
Obligations and the expiration or termination of the Note, the security interest
granted hereby shall terminate and all rights to the Collateral shall revert to
the applicable Pledgor. Upon any such termination, the Secured Party will, at
each Pledgor's expense, execute and deliver to such Pledgor such documents as
such Pledgor shall reasonably request to evidence such termination and reversion
of rights to such Pledgor.
Section 23. REINSTATEMENT. This Agreement shall continue to be
effective or be reinstated, as the case may be, if at any time any amount
received by the Secured Party in respect of the Secured Obligations is rescinded
or must otherwise be restored or returned by the Secured Party upon the
insolvency, bankruptcy, dissolution, liquidation or reorganization of the
Pledgors or upon the appointment of any intervenor or conservator of, or trustee
or similar official for, the Pledgors or any substantial part of its assets, or
otherwise, all as though such payments had not been made.
Section 24. GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF
PROCESS. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT
SHALL BE BROUGHT IN THE COURTS OF THE COUNTY OF NEW YORK OR OF THE UNITED STATES
OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK, AND, BY EXECUTION AND DELIVERY
OF THIS AGREEMENT, EACH PARTY HEREBY ACCEPTS FOR ITSELF AND (TO THE EXTENT
PERMITTED BY LAW) IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE
JURISDICTION OF THE AFORESAID COURTS. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY
OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE
GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
BRINGING OF ANY SUCH ACTION OR PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS. THIS
SUBMISSION TO JURISDICTION IS NON-EXCLUSIVE AND DOES NOT PRECLUDE A PARTY FROM
OBTAINING JURISDICTION OVER ANOTHER PARTY IN ANY COURT OTHERWISE HAVING
JURISDICTION.
(c) EACH PARTY IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF ANY
OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF
COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO IT AT THE
ADDRESS SPECIFIED HEREIN OR SUCH OTHER ADDRESS AS IS SPECIFIED FROM TIME TO TIME
PURSUANT TO THE PROVISIONS HEREIN, SUCH SERVICE TO BECOME EFFECTIVE THIRTY (30)
DAYS AFTER SUCH MAILING. NOTHING HEREIN SHALL AFFECT THE RIGHT OF A PARTY TO
SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL
PROCEEDINGS OR OTHERWISE PROCEED AGAINST ANOTHER PARTY IN ANY OTHER
JURISDICTION.
(d) EACH PARTY HEREBY (i) IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY LAW, TRIAL BY JURY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT AND FOR ANY COUNTERCLAIM THEREIN; (ii)
IRREVOCABLY WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT
MAY HAVE TO CLAIM OR RECOVER IN ANY SUCH LITIGATION ANY SPECIAL, EXEMPLARY,
20
PUNITIVE OR CONSEQUENTIAL DAMAGES, OR DAMAGES OTHER THAN, OR IN ADDITION TO,
ACTUAL DAMAGES; (iii) CERTIFIES THAT NO PARTY HERETO NOR ANY REPRESENTATIVE OR
AGENT OF COUNSEL FOR ANY PARTY HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE,
OR IMPLIED THAT SUCH PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO
ENFORCE THE FOREGOING WAIVERS; AND (iv) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO
ENTER INTO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY BY, AMONG
OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS CONTAINED IN THIS SECTION
25.
Section 25. INCORPORATION BY REFERENCE. Any provisions of the Note
(together with definitions as used therein and the ancillary provisions related
thereto) that are incorporated by reference herein shall be incorporated herein,
MUTATIS MUTANDIS.
Section 26. EXECUTION IN COUNTERPARTS. This Agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
instrument.
Section 27. HEADINGS. The headings of the various articles, sections
and paragraphs of this Agreement are for convenience of reference only, do not
constitute a part hereof and shall not affect the meaning or construction of any
provision hereof.
Section 28. CONFLICTING TERMS. To the extent a term or provision of
this Agreement conflicts with the Note and is not dealt with more specifically
herein, the Note shall control with respect to such term or provision.
[ Signature page follows ]
21
IN WITNESS WHEREOF, each Pledgor has caused this Agreement to be
duly executed and delivered by its officer thereunto duly authorized as of the
date first above written.
PLEDGORS:
DATATEC SYSTEMS, INC., a Delaware corporation
By:
-------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
Address: 0000 Xxxxxxxx Xx.
Xxxxxxxxxx, Xxxxxxx 00000
Attn: Chief Executive Officer
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
DATATEC INDUSTRIES, INC., a New Jersey
corporation
By:
-------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
Address: 0000 Xxxxxxxx Xx.
Xxxxxxxxxx, Xxxxxxx 00000
Attn: Chief Executive Officer
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to:
Xxxxxxxxxx Xxxxxxx PC
00 Xxxxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attn: Xxxxx Xxxxxxxx, Esq.
Facsimile: 000-000-0000
LENDER:
ALPINE ASSOCIATES, A LIMITED PARTNERSHIP,
a New Jersey limited partnership
By:
-------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
Address: 000 Xxxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
Attn: Xx. Xxx Xxxxxxxx
Telephone: 000-000-0000
Facsimile: 000-000-0000
with a copy to:
Xxxxxx & Xxxxxx L.L.P.
000 Xxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx Xxxxxxxxxx, Esq.
Facsimile: 000-000-0000
