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GLOBAL DATATEL, INC.
SECURITY AGREEMENT
Dated as of December 1, 1999
with
SURGE COMPONENTS, INC.
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TABLE OF CONTENTS
Page
1. REFERENCE TO CREDIT AGREEMENT; DEFINITIONS; CERTAIN RULES OF CONSTRUCTION.......... 1
2. SECURITY........................................................................... 3
2.1. CREDIT SECURITY ........................................................ 3
2.2. ADDITIONAL CREDIT SECURITY.............................................. 6
2.3. CERTAIN COVENANTS WITH RESPECT TO CREDIT SECURITY....................... 7
2.4. ADMINISTRATION OF CREDIT SECURITY...................................... 11
2.5. RIGHT TO REALIZE UPON CREDIT SECURITY.................................. 12
2.6. CUSTODY OF CREDIT SECURITY............................................. 16
3. GENERAL........................................................................... 17
GLOBAL DATATEL, INC.
SECURITY AGREEMENT
This Agreement, dated as of December 1, 1999, is among Global
Datatel, Inc., a Nevada corporation (the "Company") and each of its subsidiaries
listed on Schedule 1 attached hereto (collectively, the "COMPANIES" or the
"Obligors") and Surge Components, Inc., as Lender under the Secured Convertible
Promissory Note (the "Note") dated October 8, 1999. The parties agree as
follows:
1. REFERENCE TO NOTE; DEFINITIONS; CERTAIN RULES OF CONSTRUCTION.
Reference is made to the Note dated as of October 8, 1999,
between the Company and the Lender. Capitalized terms defined in the Note and
not otherwise defined herein are used herein with the meanings so defined.
Certain other capitalized terms are used in this Agreement as specifically
defined below in this Section 1. Except as the context otherwise explicitly
requires, (a) the capitalized term "Section" refers to sections of this
Agreement, (b) the capitalized term "Exhibit" refers to exhibits to this
Agreement, (c) references to a particular Section shall include all subsections
thereof, (d) the word "including" shall be construed as "including without
limitation", (e) terms defined in the UCC and not otherwise defined herein have
the meaning provided under the UCC, (f) references to a particular statute or
regulation include all rules and regulations thereunder and any successor
statute, regulation or rules, in each case as from time to time in effect, and
(g) references to a particular Person include such Person's successors and
assigns to the extent not prohibited by this Agreement and the other Credit
Documents. References to "the date hereof" mean the date first set forth above.
"ACCOUNTS" is defined in Section 2.1.2.
"AGREEMENT" means this Security Agreement as from time to time
in effect.
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"BANKRUPTCY CODE" means Title 11 of the United States Code.
"CODE" means the Federal Internal Revenue Code of 1986.
"CREDIT SECURITY" means all assets now or from time to time
hereafter subjected to a security interest, mortgage or charge (or intended or
required so to be subjected pursuant to this Agreement or any other Credit
Document) to secure the payment or performance of any of the Credit Obligations
on a pari passu basis, including the assets described in Section 2.1.
"DOMESTIC SUBSIDIARY" means any Subsidiary that is not a
Foreign Subsidiary.
"FINANCING DEBT" means (a) borrowed money, (b) indebtedness
evidenced by notes, debentures or similar instruments, (c) capitalized lease
obligations, (d) the deferred purchase price of assets, services or securities,
including related noncompetition, consulting and stock purchase obligations
(other than ordinary trade accounts payable within six months after the
incurrence thereof in the ordinary course of business), (e) mandatory redemption
or dividend rights on capital stock (or other equity), (f) reimbursement
obligations, whether contingent or matured, with respect to letters of credit,
bankers acceptances, surety bonds, other financial guarantees and interest rate
protection agreements (without duplication of other indebtedness supported or
guaranteed thereby) and, without duplication (g) any guarantees of such items.
"FOREIGN SUBSIDIARY" means each Subsidiary that is organized
under the laws of, and conducting its business primarily in a jurisdiction
outside of, the United States of America and that is not domesticated or dually
incorporated under the laws of the United States of America or the states
thereof.
"INTELLECTUAL PROPERTY" is defined in Section 2.3.7.
"PLEDGED INDEBTEDNESS" is defined in Section 2.1.6.
"PLEDGED RIGHTS" is defined in Section 2.1.5.
"PLEDGED SECURITIES" means the Pledged Stock, the Pledged
Rights and the Pledged Indebtedness, collectively.
"PLEDGED STOCK" is defined in Section 2.1.4.
"UCC" means the Uniform Commercial Code as in effect in New
York on the date hereof; PROVIDED, HOWEVER, that with respect to the perfection
of the Lender's lien on the Credit Security and the effect of nonperfection
thereof, the term "UCC" means the Uniform Commercial Code as in effect in any
jurisdiction the laws of which are made applicable by section 9-103 of the
Uniform Commercial Code as in effect in New York.
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1. SECURITY
1 .1 CREDIT SECURITY. As security for the payment and performance of the
Credit Obligations, each of the Companies hereby mortgages, pledges and
collaterally grants and assigns to the Lender and the holders from time to time
of any Credit Obligation, and creates a security interest in favor of the Lender
and such holders in, all of such Obligor's right, title and interest in and to
(but none of its obligations or liabilities with respect to) the items and types
of present and future property described in Sections 2.1.1 through 2.1.14
(subject, however, to Section 2.1.15), whether now owned or hereafter acquired,
all of which shall be included in the term "CREDIT SECURITY":
1 .1 .1 TANGIBLE PERSONAL PROPERTY. All goods, machinery,
equipment, inventory and all other tangible personal property of any
nature whatsoever, wherever located, including raw materials, work in
process, finished parts and products, supplies, spare parts,
replacement parts, merchandise for resale, computers, tapes, disks and
computer equipment.
1 .1 .2 RIGHTS TO PAYMENT OF MONEY. All rights to receive the
payment of money, including accounts and receivables, rights to receive
the payment of money under contracts, franchises, licenses, permits,
subscriptions or other agreements (whether or not earned by
performance), and rights to receive payments from any other source (all
such rights, other than Financing Debt, being referred to herein as
"ACCOUNTS").
1 .1 .3 INTANGIBLES. All of the following (to the extent not
included in 2.1.2): (a) contracts, franchises, licenses, permits,
subscriptions and other agreements and all rights thereunder; (b)
rights granted by others which permit such Obligor to sell or market
items of personal property; (c) United States and foreign common law
and statutory copyrights and rights in literary property and rights and
licenses thereunder; (d) trade names, United States and foreign
trademarks, service marks, internet domain names, registrations of any
of the foregoing and related good will; (e) United States and foreign
patents and patent applications; (f) computer software, designs,
models, know-how, trade secrets, rights in proprietary information,
formulas, customer lists, business plans, backlog, orders,
subscriptions, royalties, catalogues, sales material, documents, good
will, inventions and processes; (g) judgments, causes in action and
claims, whether or not inchoate, and (h) all other general intangibles
and intangible property and all rights thereunder.
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1 .1 .4 PLEDGED STOCK. (a) All shares of capital stock or
other evidence of beneficial interest in any corporation, business
trust or limited liability company, (b) all limited partnership
interests in any limited partnership, (c) all general partnership
interests in any general or limited partnership, (d) all joint venture
interests in any joint venture, and (e) all options, warrants and
similar rights to acquire such capital stock or such interests. All
such capital stock, interests, options, warrants and other rights are
collectively referred to as "PLEDGED STOCK".
1 .1 .5 PLEDGED RIGHTS. All rights to receive profits or
surplus of, or other distributions (including income, return of capital
and liquidating distributions) from, any partnership, joint venture or
limited liability company, including any distribution by any such
Person to partners, joint venturers or members. All such rights are
collectively referred to as the "PLEDGED RIGHTS".
1 .1 .6 PLEDGED INDEBTEDNESS. All Financing Debt from time to
time owing to such Obligor from any Person (all such Financing Debt
being referred to as the "PLEDGED INDEBTEDNESS").
1 .1 .7 CHATTEL PAPER, INSTRUMENTS, ETC. All chattel paper,
non-negotiable instruments, negotiable instruments, documents and
investment property.
1 .1 .8 LEASES. All leases of personal property, whether such
Obligor is the lessor or the lessee thereunder.
1 .1 .9 DEPOSIT ACCOUNTS. All general or special deposit
accounts, including any demand, time, savings, passbook or similar
account maintained by such Obligor with any bank, trust company,
savings and loan association, credit union or similar organization, and
all money, cash and cash equivalents of such Obligor, whether or not
deposited in any such deposit account.
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1 .1 .10 COLLATERAL. All collateral granted by third parties
to, or held by, such Obligor with respect to the Accounts, Pledged
Securities, chattel paper, instruments, leases and other items of
Credit Security.
1 .1 .11 BOOKS AND RECORDS. All books and records, including
books of account and ledgers of every kind and nature, all
electronically recorded data (including all computer programs, disks,
tapes, electronic data processing media and software used in connection
with maintaining such Obligor's books and records), all files,
correspondence and all containers for the foregoing.
1 .1 .12 INSURANCE. All insurance policies which insure
against any loss or damage to any other Credit Security or which are
otherwise owned by such Obligor.
1 .1 .13 ALL OTHER PROPERTY. All other property, assets and
items of value of every kind and nature, tangible or intangible,
absolute or contingent, legal or equitable.
1 .1 .14 PROCEEDS AND PRODUCTS. All proceeds, including
insurance proceeds, and products of the items of Credit Security
described or referred to in Sections 2.1.1 through 2.1.13 and, to the
extent not included in the foregoing, all distributions with respect to
the Pledged Securities.
1 .1 .15 EXCLUDED PROPERTY. Notwithstanding Sections 2.1.1
through 2.1.4 and 2.2.1, the payment and performance of the Credit
Obligations shall not be secured by:
(1) any contract, license, permit, lease or franchise
that validly prohibits the creation by such Obligor of a
security interest in such contract, license, permit, lease or
franchise (or in any rights or property obtained by such
Obligor under such contract, license, permit, lease or
franchise); PROVIDED, HOWEVER, that the provisions of this
Section 2.1.15 shall not prohibit the security interests
created by this Agreement from extending to the proceeds of
such contract, license, permit, lease or franchise (or such
rights or property) or to the monetary value of the good will
and other general intangibles of the Obligors relating
thereto;
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(2) any rights or property to the extent that any
valid and enforceable law or regulation applicable to such
rights or property prohibits the creation of a security
interest therein; PROVIDED, HOWEVER, that the provisions of
this Section 2.1.15 shall not prohibit the security interests
created by this Agreement from extending to the proceeds of
such rights or property or to the monetary value of the good
will and other general intangibles of the Obligors relating
thereto;
(3) any lease of real or personal property to the
extent that the creation of a security interest or lien would
result in a breach or default by such Obligor under such lease
or which would result in a change in control or other matter
requiring the consent of the other party to such lease;
(4) more than 66% of the outstanding voting stock or
other voting equity in any Foreign Subsidiary to the extent
that the pledge or voting stock or other voting equity above
such amount would result in a repatriation of a material
amount of foreign earnings under the Code (including the
"deemed dividend") provisions of section 956 of the Code); or
(5) the property described on EXHIBIT 2.1.15(5) and
in Section 2.2 (but, with respect to such property described
in Section 2.2, only in the event and to the extent the Lender
has not specified that such items be included in the Credit
Security pursuant thereto).
1 .2 ADDITIONAL CREDIT SECURITY. As additional Credit Security, the
Companies covenant that they will mortgage, pledge and collaterally grant and
assign to the Lender and the holders from time to time of any Credit Obligation,
and will create a security interest in favor of the Lender and such holders in,
all of its right, title and interest in and to (but none of its obligations with
respect to) such of the following present or future items as the Lender may from
time to time specify by notice to such Obligor, whether now owned or hereafter
acquired, and the proceeds and products thereof, except to the extent consisting
of rights or property of the types referred to in Section 2.1.15(a) through (e),
subject only to liens permitted by Section 2.3.3, all of which shall thereupon
be included in the term "CREDIT SECURITY:
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1 .2 .1 REAL PROPERTY. All real property and immovable
property and fixtures, leasehold interests and easements wherever
located, together with all estates and interests of such Obligor
therein, including lands, buildings, stores, manufacturing facilities
and other structures erected on such property, fixed plant, fixed
equipment and all permits, rights, licenses, benefits and other
interests of any kind or nature whatsoever in respect of such real and
immovable property.
1 .2 .2 MOTOR VEHICLES AND AIRCRAFT. All motor vehicles and
aircraft.
1 .3 CERTAIN COVENANTS WITH RESPECT TO CREDIT SECURITY. Each
Obligor covenants that:
1 .3 .1 PLEDGED STOCK. All shares of capital stock, limited
partnership interests, membership interests and similar securities
included in the Pledged Stock shall be at all times duly authorized,
validly issued, fully paid and (in the case of capital stock and
limited partnership interests) nonassessable. Each Obligor will deliver
to the Lender certificates representing the Pledged Stock accompanied
by a stock transfer power executed in blank and, if the Lender so
requests, with the signature guaranteed, all in form and manner
reasonably satisfactory to the Lender. Pledged Stock that is not
evidenced by a certificate or an appropriate control statement with
respect thereto shall be provided to the Lender, all in form and
substance reasonably satisfactory to the Lender. The Lender may at any
time transfer to its name or the name of its nominee any Pledged Stock.
In the event the Pledged Stock includes any Margin Stock, the Obligors
will furnish to the Lender an appropriate Federal Reserve form and take
such other action as the Lender may reasonably request to ensure
compliance with applicable laws.
1 .3 .2 ACCOUNTS AND PLEDGED INDEBTEDNESS. Each Obligor will,
immediately upon receipt thereof, deliver to the Lender any promissory
note or similar instrument representing any account or Pledged
Indebtedness, after having endorsed such promissory note or instrument
in blank.
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1 .3 .3 NO LIENS OR RESTRICTIONS ON TRANSFER OR CHANGE OF
CONTROL. All Credit Security shall be free and clear of any liens and
restrictions on the transfer thereof, including contractual provisions
which prohibit the assignment of rights under contracts, except for
liens permitted by this Section 2.3.3. Without limiting the generality
of the foregoing, each Obligor will in good faith attempt to exclude
from agreements, instruments, deeds or leases to which it becomes a
party after the date hereof provisions that would prevent such Obligor
from creating a security interest in such agreement, instrument, deed
or lease or any rights or property acquired thereunder as contemplated
hereby. None of the Pledged Stock shall be subject to any option to
purchase or similar rights of any Person. Except with the written
consent of the Lender, which consent will not be unreasonably withheld,
each Obligor will in good faith attempt to exclude from any agreement,
instrument, deed or lease provisions that would restrict the change of
control or ownership of the Companies or the creation of a security
interest in the ownership of the Companies.
1 .3 .4 LOCATION OF CREDIT SECURITY. Each Obligor shall at
all times keep its records concerning the Accounts at its chief
executive office and principal place of business, which office and
place of business shall be as set forth in EXHIBIT 2.3.4 (as from time
to time supplemented by notice to the Lender as set forth below) or, so
long as such Obligor shall have taken all steps reasonably necessary to
perfect the Lender's security interest in the Credit Security with
respect to such new address, at such other address as such Obligor may
specify by notice actually received by the Lender not less than 10
Banking Days prior to such change of address. No Obligor shall at any
time keep tangible personal property of the type referred to in Section
2.1.1 in any jurisdiction other than the jurisdictions specified in
such EXHIBIT 2.3.4 (as so supplemented) or so long as such Obligor
shall have taken all steps reasonably necessary to perfect the Lender's
security interest in the Credit Security with respect to such other
jurisdiction, other jurisdictions as such Obligor may specify by notice
actually received by the Lender not less than 10 days prior to moving
such tangible personal property into such other jurisdiction
1 .3 .5 TRADE NAMES. No Obligor will adopt or do business
under any name other than its name as set forth on the signature page
to this agreement, except as set forth in Exhibit 2.3.5 or any other
name specified by notice actually received by the Lender less than 10
Banking Days prior to the conduct of business under such additional
name. Since its inception, no Obligor has changed its name or adopted
or conducted business under any trade name other than as set forth on
the signature page hereto or on EXHIBIT 2.3.5.
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1 .3 .6 INSURANCE. Each insurance policy included in, or
insuring against loss or damage to, the Credit Security shall name the
Lender as additional insured party or as loss payee. No such insurance
policy shall be cancelable or subject to termination or reduction in
amount or scope of coverage until after at least 30 days' prior written
notice from the insurer to the Lender. At least 10 days prior to the
expiration of any such insurance policy for any reason, each Obligor
shall furnish the Lender with a renewal or replacement policy and
evidence of payment of the premiums therefor when due. Each Obligor
grants to the Lender full power and authority as its attorney-in-fact,
effective upon notice to such Obligor after the occurrence and during
the continuance of a Default, to obtain, cancel, transfer, adjust and
settle any such insurance policy and to endorse any drafts thereon. Any
amounts that the Lender receives under any such policy (including
return of unearned premiums) insuring against loss or damage to the
Credit Security when no Default has occurred and is continuing shall be
delivered to the Obligors for the replacement, restoration and
maintenance of the Credit Security. Any such amounts that the Lender
receives after the occurrence and during the continuance of a Default
shall, at the Lender's option, be applied to payment of the Credit
Obligations or to the replacement, restoration and maintenance of the
Credit Security. If any Obligor fails to provide insurance as required
by this Agreement, the Lender may, at its option, purchase such
insurance, and such Obligor will on demand pay to the Lender the amount
of any payments made by the Lender for such purpose, together with
interest on the amounts so disbursed from five Banking Days after the
date demanded until payment in full thereof at the Applicable Rate.
1 .3 .7 INTELLECTUAL PROPERTY. Exhibit 2.3.7 shall set forth
the following items (collectively, the "INTELLECTUAL PROPERTY"):
(1) all copyrights owned by the Obligors that are
registered with the United States Copyright Office (or any
office maintaining registration of copyrights in any foreign
jurisdiction) and all applications for such registration and
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(2) all trademarks, tradenames, service marks,
service names and patents owned by the Obligors that are
registered with the United States Patent and Trademark Office
(or any office maintaining registration of such items in any
state of the United States of America or any foreign
jurisdiction) and all applications for such registration.
The Obligors shall duly authorize, execute and deliver to the Lender separate
memoranda of security interests provided by the Lender with respect to the
foregoing Intellectual Property for filing in the offices described above. Upon
the registration of any additional Intellectual Property (or the filing of
applications therefor) in the offices described above, the Obligors shall notify
the Lender and duly authorize, execute and deliver to the Lender separate
memoranda of security interests covering such additional Intellectual Property
for filing in such offices.
1 .3 .8 DEPOSIT ACCOUNTS. The Companies shall keep all their
bank and deposit accounts only with the financial institutions listed
on Exhibit 2.3.8.
1 .3 .9 MODIFICATIONS TO CREDIT SECURITY. Except with the
prior written consent of the Lender, which consent will not be
unreasonably withheld, no Obligor shall amend or modify, or waive any
of its rights under or with respect to, any material Accounts, general
intangibles, Pledged Securities or leases if the effect of such
amendment, modification or waiver would be to reduce the amount of any
such items or to extend the time of payment thereof, to waive any
default by any other party thereto, or to waive or impair any remedies
of the Obligors or the Lender under or with respect to any such
Accounts, general intangibles, Pledged Securities or leases, in each
case other than consistent with past practice in the ordinary course of
business and on an arm's-length basis. Each Obligor will promptly give
the Lender written notice of any request by any Person for any material
credit or adjustment with respect to any Account, general intangible,
Pledged Securities or leases.
1 .3 .10 DELIVERY OF DOCUMENTS. Upon the Lender's request,
each Obligor shall deliver to the Lender, promptly upon such Obligor's
receipt thereof, copies of any agreements, instruments, documents or
invoices comprising or relating to the Credit Security. Pending such
request, such Obligor shall keep such items at its chief executive
office and principal place of business.
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1 .3 .11 PERFECTION OF CREDIT SECURITY. This Agreement shall
create in favor of the Lender, a legal, valid and enforceable security
interest in the Credit Security described herein. In the case of the
Pledged Stock, when stock certificates representing such Pledged Stock
and stock powers related thereto duly executed in blank by the relevant
Pledgor are delivered to the Lender, and in the case of the other
Credit Security described in this Agreement which is subject to a
jurisdiction in which the Uniform Commercial Code is in effect, when
financing statements in appropriate form are filed in the jurisdictions
in which the Obligor is incorporated, its principal executive office
and chief place of business is located and it owns real or tangible
personal property, this Agreement shall provide a fully perfected lien
on, and security interest in, all right, title and interest of the
Obligors in such Credit Security, as security for the Credit
Obligations. Upon the Lender's reasonable request from time to time,
the Obligors will execute and deliver, and file and record in the
proper filing and recording places, all such instruments and
agreements, including financing statements, collateral assignments of
copyrights, trademarks and patents, mortgages or deeds of trust and
notations on certificates of title, and will take all such other action
as the Lender deems reasonably necessary for confirming to it or
perfecting the Lender's security interest in Credit Security (including
actions for the purpose of conforming or perfecting the Lender's
security interest in any Credit Security) or to carry out any other
purpose of this Agreement or any other Credit Document
1 .4 ADMINISTRATION OF CREDIT SECURITY. The Credit Security shall be
administered as follows, and if a Default shall have occurred and be continuing,
Section 2.5 shall also apply.
1 .4 .1 USE OF CREDIT SECURITY. Until the Lender provides
written notice to the contrary, each obligor may use, commingle and
dispose of any part of the Credit Security in the ordinary course of
its business.
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1 .4 .2 ACCOUNTS. To the extent specified by prior written
notice from the Lender after the occurrence and during the continuance
of a Default, all sums collected or received and all property recovered
or possessed by any Obligor in connection with any Credit Security
shall be received and held by such Obligor in trust for and on the
Lender's behalf, shall be segregated from the assets and funds of such
Obligor, and shall be delivered to the Lender. Without limiting the
foregoing, upon the Lender's request after the occurrence and during
the continuance of a Default, each Obligor shall institute depository
collateral accounts, lock-box receipts and similar credit procedures
providing for the direct receipt of payment on Accounts at a separate
address, the segregation of such proceeds for direct payment to the
Lender and appropriate notices to Account debtors. Upon the Lender's
request after the occurrence and during the continuance of a Default,
each Obligor will cause its accounting books and records to be marked
with such legends and segregated in such manner as the Lender may
specify.
1 .4 .3 DISTRIBUTIONS ON PLEDGED SECURITIES
(1) Until a Default shall occur and be continuing,
the respective Obligors shall be entitled, to the extent
permitted by the Credit Documents, to receive all
distributions on or with respect to the Pledged Securities
(other than distributions constituting additional Pledged
Securities). All distributions constituting additional Pledged
Securities will be retained by the Lender (or if received by
any Obligor shall be held by such Person in trust and shall be
immediately delivered by such Person to the Lender in the
original form received, endorsed in blank) and held by the
Lender as part of the Credit Security.
(2) If a Default shall have occurred and be
continuing, all distributions on or with respect to the
Pledged Securities shall be retained by the Lender (or if
received by any Obligor shall be held by such Person in trust
and shall be immediately delivered by it to the Lender in the
original form received, endorsed in blank) and held by the
Lender as part of the Credit Security or applied by the Lender
to the payment of the Credit Obligations in accordance with
Section 2.5.6.
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1 .4 .4 VOTING PLEDGED SECURITIES.
(1) Until a Default shall occur and be continuing,
the respective Obligors shall be entitled to vote or consent
with respect to the Pledged Securities in any manner not
inconsistent with the terms of any Credit Document, and the
Lender will, if so requested, execute appropriate revocable
proxies therefor.
(2) If a Default shall have occurred and be
continuing, if and to the extent that the Lender shall so
notify in writing the Obligor pledging the Pledged Securities
in question, only the Lender shall be entitled to vote or
consent or take any other action with respect to the Pledged
Securities (and any Obligor will, if so requested, execute
appropriate proxies therefor).
1 .5 RIGHT TO REALIZE UPON CREDIT SECURITY. Except to the extent
prohibited by applicable law that cannot be waived, this Section 2.5 shall
govern the Lender's rights to realize upon the Credit Security if any Default
shall have occurred and be continuing. The provisions of this Section 2.5 are in
addition to any rights and remedies available at law or in equity and in
addition to the provisions of any other Credit Document. In the case of a
conflict between this Section 2.5 and any other Credit Document, this Section
2.5 shall govern.
1 .5 .1 ASSEMBLY OF CREDIT SECURITY; RECEIVER. Each Obligor
shall, upon the Lender's request, assemble the Credit Security and
otherwise make it available to the Lender. The Lender may have a
receiver appointed for all or any portion of the Obligors' assets or
business which constitutes the Credit Security in order to manage,
protect, preserve, sell and otherwise dispose of all or any portion of
the Credit Security in accordance with the terms of the Credit
Documents, to continue the operations of the Obligors and to collect
all revenues and profits therefrom to be applied to the payment of the
Credit Obligations, including the compensation and expenses of such
receiver.
1 .5 .2 GENERAL AUTHORITY. To the extent specified in written
notice from the Lender to the Obligor in question, each Obligor grants
the Lender full power and authority, subject to the other terms hereof
and applicable law, to take any of the following actions (for the sole
benefit of the Lender and the holders from time to time of any Credit
Obligations, but at such Obligor's expense):
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(1) To ask for, demand, take, collect, xxx for and
receive all payments in respect of any Accounts, general
intangibles, Pledged Securities or leases which such Obligor
could otherwise ask for, demand, take, collect, xxx for and
receive for its own use.
(2) To extend the time of payment of any Accounts,
general intangibles, Pledged Securities or leases and to make
any allowance or other adjustment with respect thereto.
(3) To settle, compromise, prosecute or defend any
action or proceeding with respect to any Accounts, general
intangibles, Pledged Securities or leases and to enforce all
rights and remedies thereunder which such Obligor could
otherwise enforce.
(4) To enforce the payment of any Accounts, general
intangibles, Pledged Securities or leases, either in the name
of such Obligor or in its own name, and to endorse the name of
such Obligor on all checks, drafts, money orders and other
instruments tendered to or received in payment of any Credit
Security.
(5) To notify the third party payor with respect to
any Accounts, general intangibles, Pledged Securities or
leases of the existence of the security interest created
hereby and to cause all payments in respect thereof thereafter
to be made directly to the Lender; PROVIDED, HOWEVER, that
whether or not the Lender shall have so notified such payor,
such Obligor will at its expense render all reasonable
assistance to the Lender in collecting such items and in
enforcing claims thereon.
(6) To sell, transfer, assign or otherwise deal in or
with any Credit Security or the proceeds thereof, as fully as
such Obligor otherwise could do.
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1 .5 .3 MARSHALING, ETC. The Lender shall not be required to
make any demand upon, or pursue or exhaust any of their rights or
remedies against, any Obligor or any other guarantor, pledgor or any
other Person with respect to the payment of the Credit Obligations or
to pursue or exhaust any of their rights or remedies with respect to
any collateral therefor or any direct or indirect guarantee thereof.
The Lender shall not be required to marshal the Credit Security or any
guarantee of the Credit Obligations or to resort to the Credit Security
or any such guarantee in any particular order, and all of its and their
rights hereunder or under any other Credit Document shall be
cumulative. To the extent it may lawfully do so, each Obligor
absolutely and irrevocably waives and relinquishes the benefit and
advantage of, and covenants not to assert against the Lender, any
valuation, stay, appraisement, extension, redemption or similar laws
now or hereafter existing which, but for this provision, might be
applicable to the sale of any Credit Security made under the judgment,
order or decree of any court, or privately under the power of sale
conferred by this Agreement, or otherwise. Without limiting the
generality of the foregoing, each Obligor (a) agrees that it will not
invoke or utilize any law which might prevent, cause a delay in or
otherwise impede the enforcement of the rights of the Lender in the
Credit Security and (b) waives all such laws. In addition, each Obligor
waives any right to prior notice (except to the extent expressly
required by this Agreement) or judicial hearing in connection with
foreclosure on or disposition of any Credit Security, including any
such right which such Obligor would otherwise have under the
Constitution of the United States of America, any state or territory
thereof or any other jurisdiction.
1 .5 .4 SALES OF CREDIT SECURITY. All or any part of the
Credit Security may be sold for cash or other value in any number of
lots at public or private sale, without demand, advertisement or
notice; PROVIDED, HOWEVER, that unless the Credit Security to be sold
threatens to decline speedily in value or is of a type customarily sold
on a recognized market, the Lender shall give the Obligor granting the
security interest in such Credit Security 10 days' prior written notice
of the time and place of any public sale, or the time after which a
private sale may be made, which notice each of the Obligors and the
Lender agrees to be reasonable. At any sale or sales of Credit
Security, any Lender or any of its respective officers acting on its
behalf, or such Lender's assigns, may bid for and purchase all or any
part of the property and rights so sold, may use all or any portion of
the Credit Obligations owed to such Lender as payment for the property
or rights so purchased, and upon compliance with the terms of such sale
may hold and dispose of such property and rights without further
accountability to the respective Obligors, except for the proceeds of
such sale or sales pursuant to Section 2.5.6. The Obligors acknowledge
that any such sale will be made by the Lender on an "as is" basis with
disclaimers of all warranties, whether express or implied. The
respective Obligors will execute and deliver or cause to be executed
and delivered such instruments, documents, assignments, waivers,
certificates and affidavits, will supply or cause to be supplied such
further information and will take such further action, as the Lender
shall reasonably request in connection with any such sale.
15
1 .5 .5 SALE WITHOUT REGISTRATION. If, at any time when the
Lender shall determine to exercise its rights hereunder to sell all or
part of the securities included in the Credit Security, the securities
in question shall not be effectively registered under the Securities
Act (or other applicable law), the Lender may, in its sole discretion,
sell such securities by private or other sale not requiring such
registration in such manner and in such circumstances as the Lender may
deem necessary or advisable in order that such sale may be effected in
accordance with applicable securities laws without such registration
and the related delays, uncertainty and expense. Without limiting the
generality of the foregoing, in any event the Lender may, in its sole
discretion, (a) approach and negotiate with a single purchaser or one
or more possible purchasers to effect such sale, (b) restrict such sale
to one or more purchasers each of whom will represent and agree that
such purchaser is purchasing for its own account, for investment and
not with a view to the distribution or sale of such securities and (c)
cause to be placed on certificates representing the securities in
question a legend to the effect that such securities have not been
registered under the Securities Act (or other applicable law) and may
not be disposed of in violation of the provisions thereof. Each Obligor
agrees that such manner of disposition is commercially reasonable, that
it will upon the Lender's request give any such purchaser access to
such information regarding the issuer of the securities in question as
the Lender may reasonably request and that the Lender shall not incur
any responsibility for selling all or part of the securities included
in the Credit Security at any private or other sale not requiring such
registration, notwithstanding the possibility that a substantially
higher price might he realized if the sale were deferred until after
registration under the Securities Act (or other applicable law) or
until made in compliance with certain other rules or exemptions from
the registration provisions under the Securities Act (or other
applicable law). Each Obligor acknowledges that no adequate remedy at
law exists for breach by it of this Section 2.5.5 and that such breach
would not be adequately compensable in damages and therefore agrees
that this Section 2.5.5 may be specifically enforced.
16
1 .5 .6 APPLICATION OF PROCEEDS. The proceeds of all sales
and collections in respect of any Credit Security or other assets of
any Obligor, all funds collected from the Obligors and any cash
contained in the Credit Security, the application of which is not
otherwise specifically provided for herein, shall be applied as
follows:
(1) First, to the payment of the costs and expenses
of such sales and collections, the reasonable expenses of the
Lender and the reasonable fees and expenses of its special
counsel;
(2) Second, any surplus then remaining to the payment
of the Credit Obligations in such order and manner as the
Lender may in its reasonable discretion determine; PROVIDED,
HOWEVER, that any such payment shall be distributed to the
Lender in accordance with the Credit Agreement and the other
Credit Documents; and
(3) Third, any surplus then remaining shall be paid
to the Obligors, subject, however, to the rights of the holder
of any then existing lien of which the Lender has actual
notice.
1 .6 CUSTODY OF CREDIT SECURITY. Except as provided by applicable law
that cannot be waived, the Lender will have no duty as to the custody and
protection of the Credit Security, the collection of any part thereof or of any
income thereon or the preservation or exercise of any rights pertaining thereto,
including rights against prior parties, except for the use of reasonable care in
the custody and physical preservation of any Credit Security in its possession.
The Lender will not be liable or responsible for any loss or damage to any
Credit Security, or for any diminution in the value thereof, by reason of the
act or omission of any agent selected by the Lender acting in good faith.
17
2. GENERAL.
Addresses for notices, consent to jurisdiction, jury trial
waiver and numerous other provisions applicable to this Agreement are contained
in the Credit Agreement. The invalidity or unenforceability of any provision
hereof shall not affect the validity or enforceability of any other provision
hereof, and any invalid or unenforceable provision shall be modified so as to be
enforceable to the maximum extent of its validity or enforceability. The
headings in this Agreement are for convenience of reference only and shall not
limit, alter or otherwise affect the meaning hereof. This Agreement and the
other Credit Documents constitute the entire understanding of the parties with
respect to the subject matter hereof and thereof and supersede all prior and
current understandings and agreements, whether written or oral. This Agreement
is a Credit Document and may be executed in any number of counterparts, which
together shall constitute one instrument. This Agreement shall be governed by
and construed in accordance with the laws (other than the conflict of laws
rules) of The State of New York, except as may be required by the UCC of other
jurisdictions with respect to matters involving the perfection of the Lender's
lien on the Credit Security located in such other jurisdictions.
18
Each of the undersigned has caused this Agreement to be executed
and delivered by its duly authorized officer as an agreement under seal as of
the date first written above.
GLOBAL DATATEL, INC.
By: /s/Xxxxxxx Xxxxx
------------------------
Name: Xxxxxxx Xxxxx
Title: Chief Executive Officer
SURGE COMPONENTS, INC.
By: /s/Xxx Xxxx
------------------------
Name: Xxx Xxxx
Title: President
19
Schedule 1
Subsidiaries of Global Datatel, Inc.
------------------------------------
Xxxxx.xxx, Inc.
000 Xxxxxxxx Xxxxxx
Xxxxxx Xxxxx, Xxxxxxx 00000
On Line America, S.A.
Barranguilla, Colombia
Global Datatel de Colombia
Bogota, Colombia
