EXHIBIT 10.4
BORROWER PLEDGE AGREEMENT
THIS BORROWER PLEDGE AGREEMENT (this "PLEDGE AGREEMENT"), is entered into
as of September 14, 1998 (the "EFFECTIVE DATE"), by and between INTELECT
COMMUNICATIONS, INC., a Delaware corporation ("ICI" or THE "PLEDGOR"), and THE
COASTAL CORPORATION SECOND PENSION TRUST, a trust organized under the laws of
the state of Texas ("SECURED PARTY").
W I T N E S S :
WHEREAS, pursuant to the terms, and subject to the conditions, set forth
in that certain Promissory Note (the "NOTE",) dated the Effective Date issued by
Pledgor and payable to the order of Secured Party in the original principal sum
of $5,000,000, Secured Party has agreed to advance funds to the Makers.
WHEREAS, it is a condition to the agreement of Secured Party to advance
such funds and to consummate the transactions contemplated by the Note that this
Pledge Agreement granting a Security Interest in the Collateral shall have been
executed and delivered by Pledgor and shall be in full force and effect.
NOW, THEREFORE, in order to induce, and in consideration of, the execution
and delivery of the Note, the advancement of funds under the Note by Secured
Party and the consummation of the transactions contemplated by the Note, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged by Pledgor, Pledgor hereby covenants and agrees with Secured
Party as follows:
SECTION 1. DEFINITIONS
1.1 CERTAIN DEFINED TERMS. As used in this Pledge Agreement, the following
terms or phrases have the respective meanings set forth below or in the Section
following such term:
"COLLATERAL" means (i) the aggregate of the Pledged Securities and (ii)
all dividends (cash, stock or otherwise), cash, instruments, rights to
subscribe, purchase or sell and all other rights and property from time to time
received, receivable or otherwise distributed in respect of or in exchange for
any or all of such securities, (iii) all replacements, additions to and
substitutions for any of the property referred to in this definition, including,
without limitation, claims against third parties, (iv) the Proceeds, interest,
profits and other income of or on any of the property referred to in this
definition, and (v) all books and records relating to any of the property
referred to in this definition.
"CONSOLIDATED SUBSIDIARIES" means Intelect Network Technologies Company
(formerly Intelect, Inc.); DNA Enterprises, Inc.; Intelect Visual Communications
Corp. and Intelect Network Systems, Ltd.
"DESIGNATED SUBSIDIARIES" means Intelect Network Technologies Company; DNA
Enterprises, Inc.; and Intelect Visual Communications Corp.
"EFFECTIVE DATE" has the meaning given that term in the introduction to
this Pledge Agreement.
"INTERCREDITOR AGREEMENT" means the Intercreditor Agreement between St.
Xxxxx Capital Partners, L.P. and SJMB, L.P. (collectively, "St Xxxxx") and
Secured Party dated September 14, 1998
"LIEN" shall mean any mortgage, pledge, Security Interest, encumbrance,
lien or charge of any kind (including any agreement to give any of the
foregoing, any conditional sale or other title retention agreement or any lease
in the nature thereof).
"MAKERS" has the meaning given that term in the Recitals to this Pledge
Agreement.
"NOTE" has the meaning given that term in the Recitals to this Pledge
Agreement.
"OBLIGATIONS" means the aggregate of:
(1) the indebtedness evidenced by the Note;
(2) all sums advanced and costs and expenses incurred by Secured
Party in accordance with the Note, this Pledge Agreement and the other
Transaction Documents, including, without limitation, all reasonable legal,
accounting, consulting or like fees, made and incurred in connection with the
Obligations described in clause (1) above or any part thereof, any renewal,
extension, or modification of, or substitution for, the foregoing Obligations or
any part thereof, or the acquisition, perfection or maintenance and preservation
of the security for the Obligations, whether such advances, costs, or expenses
shall have been made and incurred at the request of Pledgor or Secured Party,
(3) all other Obligations of Pledgor pursuant to the Note and the
other Transaction Documents; and
(4) any and all extensions and renewals of, substitutions for, or
modifications or amendments of any of the foregoing Obligations or any part
thereof.
"PLEDGE AGREEMENT" means this Borrower Pledge Agreement dated as of the
Effective Date, between Pledgor, the Designated Subsidiaries and Secured Party,
as said agreement may be amended, modified, supplemented, and/or extended from
time to time.
"PLEDGED SECURITIES" means all of the following securities and all
additional securities (as that term is defined in the UCC), if any, constituting
Collateral under this Pledge Agreement, including:
(1) all of the 1,100 outstanding shares of the common capital stock
of DNA Enterprises, Inc., and any other shares of the common capital stock of
DNA now owned or hereafter acquired by Pledgor (such shares of stock referred to
in this SUBSECTION 1.1 are hereinafter sometimes referred to as the "DNA
SHARES").
(2) all of the outstanding common capital stock of Intelect Visual
Communications Corporation.
(3) all of the outstanding common capital stock of Intelect Network
Technologies Company.
"PLEDGOR" has the meaning given that term in the introduction to this
Pledge Agreement.
"PROCEEDS" means whatever is received upon the sale, exchange, collection,
or other disposition of the Collateral and insurance payable or damages or other
payments by reason of loss or damage to the Collateral.
"SECURED PARTY" has the meaning given that term in the introduction to
this Pledge Agreement.
"SECURITY INTEREST" has the meaning assigned to that term in SECTION 2.1.
"ST. XXXXX" means St. Xxxxx Capital Partners, L.P. and SJMB, L.P.
"ST. XXXXX BORROWER PLEDGE AGREEMENT" means this Borrower Pledge Agreement
dated February 12, 1998 by and between ICI and St. Xxxxx Capital Partners, L.P.,
as partially assigned to SJMB, L.P.
"TRANSACTION DOCUMENTS" means this Note, the Loan Agreement, the Pledge
Agreement, the Security Agreement and the Intercreditor Agreement.
"UCC" means the Uniform Commercial Code as in effect in any jurisdiction
applicable.
1.2 OTHER DEFINITIONS. Other capitalized terms used herein have the
meanings given them herein or in the Loan Agreement.
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SECTION 2. CREATION OF SECURITY INTEREST
2.1 CREATION OF SECURITY INTEREST. In consideration of Secured Party's
advancing or extending the funds or credit constituting the Obligations
(including the indebtedness evidenced by the Note), as a condition to such
advances and extensions, in consideration of the mutual covenants contained
herein, and for the purpose of securing the payment and performance of the
Obligations, Pledgor hereby grants to Secured Party a continuing Security
Interest in and to all Collateral, including in all Proceeds, and subject to the
Intercreditor Agreement (the "SECURITY INTEREST").
2.2 PROCEEDS. Except as otherwise permitted herein and subject to the
Intercreditor Agreement, the Security Interest of Secured Party hereunder in the
Proceeds shall not be construed to mean that Secured Party consents to the sale
or other disposition of any part of the Collateral.
2.3 TRANSFER OF COLLATERAL. Subject to the Intercreditor Agreement, all
certificates or instruments representing or evidencing the Pledged Securities
shall be delivered to and held pursuant hereto by Secured Party or a person or
entity designated by Secured Party and shall be in suitable form for transfer by
delivery, or shall be accompanied by duly executed instruments of transfer or
assignment in blank.
SECTION 3. PLEDGOR'S REPRESENTATIONS, WARRANTIES, AND COVENANTS
3.1 RECORDING AND FILING. Pledgor shall pay all costs of filing,
registering, and recording this and every other instrument in addition or
supplemental hereto and all financing statements Secured Party may reasonably
require, in such offices and places and at such times and as often as may be, in
the reasonable judgment of Secured Party, necessary to create, perfect,
preserve, protect, and renew the Lien hereof on and in the Collateral, and
otherwise do and perform all matters or things necessary or expedient to be done
or observed by reason of any law or regulation of any applicable jurisdiction or
any other competent authority for the purpose of effectively creating,
perfecting, preserving, protecting, maintaining, and renewing the Lien hereof in
and on the Collateral and the priority thereof. Pledgor shall also pay the costs
of obtaining reports from appropriate filing offices concerning Lien filings in
respect of any of the Collateral. A carbon, photographic, or other reproduction
of this Pledge Agreement or of any financing statement relating hereto shall be
sufficient as a financing statement.
3.2 SECURED PARTY'S RIGHT TO PERFORM PLEDGOR'S OBLIGATIONS; FURTHER
ASSURANCES. Pledgor agrees that, if Pledgor fails to perform any act that
Pledgor is required to perform under this instrument, Secured Party may, but
shall not be obligated to, perform or cause to be performed such act.
Accordingly, to the extent permitted by law, Pledgor hereby authorizes Secured
Party to execute and file financing statements and continuation statements
without Pledgor's signature thereon. Any expense incurred by Secured Party in
taking action in accordance with the preceding two sentences shall be a demand
obligation owing by Pledgor to Secured Party, shall bear interest in accordance
with SECTION 6.14, and shall be a part of the Obligations, and Secured Party
shall be subrogated to all of the rights of the party receiving the benefit of
such performance. The undertaking of such performance by Secured Party as
aforesaid shall not obligate such Person to continue such performance or to
engage in such performance or performance of any other act in the future, shall
not relieve Pledgor from the observance or performance of any covenant,
warranty, or agreement contained in this instrument or constitute a waiver of
default hereunder, and shall not affect the right of Secured Party to accelerate
the payment of all indebtedness and other sums secured hereby or to resort to
any other of its rights, powers, or remedies hereunder or under applicable law.
In the event Secured Party undertakes any such action, it shall have liability
to Pledgor only upon a showing of its bad faith, gross negligence or willful
misconduct (BUT SPECIFICALLY EXCLUDING ITS ORDINARY OR PARTIAL NEGLIGENCE), and
in all events no party other than the acting party shall be liable to Pledgor.
Pledgor will from time to time (a) sign, execute, deliver, and file, alone or
with Secured Party, all further financing statements, security agreements, or
other documents that are reasonably necessary; (b) procure any instruments or
documents as may be reasonably requested by Secured Party, and (c) take all
further action that may be reasonably necessary, or that Secured Party may
reasonably request, to confirm, perfect, preserve, and protect the Security
Interests intended to be granted hereby.
3.3 DEFENSE OF CLAIMS. Pledgor will preserve, warrant, and defend the
Security Interest created hereby in the Collateral against the claims of all
Persons whomsoever; will maintain and preserve such Security Interest at all
times as contemplated by the Transaction Documents; and will not do or suffer
any matter or thing whereby such Security Interest might or could be impaired,
it being understood that the Secured Party's right in the Collateral is subject
to the
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rights of St. Xxxxx in accordance with the Intercreditor Agreement. Pledgor
shall promptly notify Secured Party in writing of the commencement of any legal
proceedings affecting Secured Party's interest in the Collateral, or any part
thereof, and shall take such action, employing attorneys reasonably acceptable
to Secured Party, as may be necessary to preserve Pledgor's and Secured Party's
rights affected thereby, and should Pledgor fail or refuse to take any such
action, Secured Party may take the action on behalf of and in the name of
Pledgor and at Pledgor's expense. Moreover, Secured Party may take independent
action in connection therewith as it may in its sole discretion deem proper, and
Pledgor hereby agrees to make reimbursement for all reasonable sums advanced and
all reasonable expenses incurred in such actions plus interest in accordance
with SECTION 6.14.
3.4 CORPORATE IDENTITY.
(a) Pledgor will maintain (i) the location of its places of business
and its primary corporate office and (ii) the locations where it keeps or holds
records relating to the Collateral at the locations at which the same are
located as of the date of this Pledge Agreement or at locations other than those
specified above if, prior to such relocation, Secured Party shall have given
Pledgor written notice thereof. Pledgor shall not in any event change the
location of any Collateral if such change would cause the Security Interest in
such Collateral to lapse or cease to be perfected.
(b) Pledgor, to the extent not otherwise restricted in the Note,
will not change its name, identity or form of organization in any manner unless
it shall have given prior written notice to Secured Party. On any such change,
Pledgor will execute and file such financing statements or other documents as
may be reasonably requested by Secured Party to maintain the perfection of its
Security Interest in the Collateral.
3.5 PLEDGED SECURITIES. The Pledged Securities have been duly authorized
and validly issued, and are fully paid and non-assessable. The Pledged
Securities constitute 100% of the issued and outstanding common stock of the
Consolidated Subsidiaries. No other person or entity has any interest in or
rights to acquire any interest in the Consolidated Subsidiaries, except as
provided in the St. Xxxxx Borrower Pledge Agreement, and subject to the
Intercreditor Agreement.
3.6 FIRST PRIORITY SECURITY INTEREST. Except as provided in the
Intercreditor Agreement, the pledge of Pledged Securities pursuant to this
Pledge Agreement creates a valid and perfected first priority Security Interest
in the Collateral, enforceable against Pledgor and all third parties and
securing the payment and performance of the Obligations.
3.7 SALE, DISPOSITION OR ENCUMBRANCE OF COLLATERAL. Except as provided in
the Intercreditor Agreement, Pledgor will not in any way encumber any of the
Collateral (or permit or suffer any of the Collateral to be encumbered) or sell,
pledge, assign, lend or otherwise dispose of or transfer any of the Collateral
to or in favor of any person or entity other than Secured Party.
3.8 DIVIDENDS OR DISTRIBUTIONS. Subject to the Intercreditor Agreement,
any and all:
(a) dividends and other distributions paid or payable in cash in
respect of any Collateral in connection with a partial or total liquidation or
dissolution or in connection with a reduction of capital, capital surplus or
paid-in surplus, or reclassification, and
(b) cash paid, payable or otherwise distributed in redemption of, or
in exchange for, any Collateral,
shall be, and shall be forthwith delivered to Secured Party to hold as,
Collateral and shall, if received by Pledgor, and be received in trust for the
benefit of Secured Party, be segregated from the other property or funds of
Pledgor, and be forthwith delivered to Secured Party as Collateral in the same
form as so received (with any necessary indorsement); provided, however, that
Secured Party shall have no duty to receive and hold such dividends and interest
payments and shall not be responsible for any failure to do so or delay in so
doing.
3.9 STOCK POWERS. Pledgor shall furnish to Secured Party such stock powers
and other instruments as may be required by Secured Party to assure the
transferability of the Collateral when and as often as may be requested by
Secured Party.
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3.10 VOTING AND OTHER CONSENSUAL RIGHTS. Except to the extent otherwise
provided in SECTION 4.6(C), Pledgor shall be entitled to exercise any and all
voting and other consensual rights pertaining to the Collateral or any part
thereof for any purpose not inconsistent with the terms of this Pledge
Agreement, the Note or any other Transaction Document; provided however, that
Pledgor shall not exercise or refrain from exercising any such right if such
action would have a material adverse effect on the value of the Collateral or
any part thereof, and, provided, further, that upon request of Secured Party at
any time or from time to time, Pledgor shall give Secured Party prompt written
notice of the manner in which Pledgor has exercised, or the reasons for
refraining from exercising, any such right.
3.11 ATTORNEY-IN-FACT. Subject to the Intercreditor Agreement, Pledgor
hereby irrevocably appoints Secured Party as Pledgor's attorney-in-fact, with
full authority in the place and stead of Pledgor and in the name of Pledgor or
otherwise, from time to time in Secured Party's discretion, but at Pledgor's
cost and expense and without notice to Pledgor, to take any action and to
execute any assignment, certificate, financing statement, stock power,
notification, document or instrument which Secured Party may deem necessary or
advisable to accomplish the purposes of this Pledge Agreement, including,
without limitation, to receive, endorse and collect all instruments made payable
to Pledgor representing any dividend, interest payment or other distribution in
respect of the Collateral or any part thereof and to give full discharge for the
same.
3.12 CUSTODY AND PRESERVATION OF THE COLLATERAL. Secured Party shall be
deemed to have exercised reasonable care in the custody and preservation of the
Collateral in its possession if the Collateral is accorded treatment
substantially equal to that which comparable secured parties accord comparable
Collateral, it being understood and agreed, however, that Secured Party shall
not have responsibility for (i) ascertaining or taking action with respect to
calls, conversions, exchanges, maturities, tenders or other matters relative to
any Collateral, whether or not Secured Party has or is deemed to have knowledge
of such matters, or (ii) taking any necessary steps to preserve rights against
persons or entities with respect to any Collateral.
SECTION 4. DEFAULT
4.1 EVENTS OF DEFAULT. Subject to the Intercreditor Agreement, upon the
occurrence and continuation of an Event of Default beyond any applicable cure
periods, as provided in the Note, Secured Party may declare all Obligations
immediately due and payable.
4.2 RIGHTS IN RESPECT OF COLLATERAL. Subject to the Intercreditor
Agreement, upon the occurrence and continuation of any Event of Default, in
addition to all other rights of Secured Party, Secured Party will have the right
and power, but will not be obligated, to enter upon and take possession of all
or any part of the Collateral, exclude Pledgor therefrom, and to hold, use,
administer, manage, and operate the same to the extent that Pledgor could do so.
After a Default under the Note, Secured Party may exercise every power, right,
and privilege of Pledgor with respect to the Collateral (including, without
limitation, the right of collection) without any liability (SPECIFICALLY
INCLUDING LIABILITY FOR ORDINARY OR PARTIAL NEGLIGENCE) to Pledgor in connection
therewith except with respect to bad faith, gross negligence or willful
misconduct; provided, however, that Secured Party may notify account debtors of
Pledgor to make payments directly to Secured Party only after all cure periods,
as provided in the Note, applicable to such Default have lapsed. Provided there
has been no foreclosure sale, when and if such expenses of operation have been
paid and the Obligations paid in full, the remaining Collateral shall be
returned to Pledgor.
4.3 ANCILLARY RIGHTS. Subject to the Intercreditor Agreement, upon the
occurrence and continuation of an Event of Default, in addition to all other
rights of Secured Party hereunder, without notice, demand, or declaration of
default, all of which are hereby expressly waived by Pledgor, Secured Party may
proceed by a suit or suits in equity or at law (a) for the seizure and sale of
the Collateral or any part thereof, (b) for the specific performance of any
covenant or agreement contained in this Pledge Agreement, the Note or any of the
other Transaction Documents or in aid of the execution of any power herein
granted, (c) for the foreclosure or sale of the Collateral or any part thereof
under the judgment or decree of any court of competent jurisdiction, or (d) for
the enforcement of any other appropriate legal or equitable remedy.
4.4 RECEIVERSHIP. Subject to the Intercreditor Agreement, upon the
occurrence and continuation of an Event of Default, in addition to all other
rights of Secured Party, Secured Party from time to time may apply to a court of
competent jurisdiction for the appointment of one or more receivers to take
possession of and to manage and administer the Collateral or any portion thereof
and to collect the Proceeds, all without demand or declaration of default,
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which are hereby waived by Pledgor. Secured Party shall be entitled to the
appointment of such receiver(s) as a matter of right, without regard to the
value of the Collateral as security for the Obligations or the solvency of
Pledgor or any Person liable for the payment or performance of all or any part
of the Obligations. Such receiver(s) shall serve without bond and shall have all
usual and customary powers and authorities in addition to all other powers and
authorities permitted by the law of the jurisdiction where the Collateral is
situated and all powers and authorities granted to Secured Party herein.
4.5 EXPENSES. Pledgor will pay to Secured Party all reasonable expenses,
including, without limitation, fees and expenses of any receiver(s), reasonable
attorneys' and consultants' fees and expenses, advanced by Secured Party and
incurred pursuant to the provisions contained in this SECTION 4, and all such
unpaid expenses shall be (a) a Lien against the Collateral; (b) added to the
Obligations, and (c) payable upon demand, with interest in accordance with
SECTION 6.14; provided, however, that the existence of said Lien shall in no way
waive, diminish, or prejudice any other rights, remedies, powers, and privileges
that Secured Party or any receiver(s) may have under the applicable laws in the
collection of such funds as loans or otherwise.
4.6 PLEDGED SECURITIES. Subject to the Intercreditor Agreement, upon the
occurrence and during the continuance of an Event of Default:
(a) All dividends and interest payments that are received by Pledgor
contrary to the provisions of this Pledge Agreement shall be received in trust
for the benefit of Secured Party, shall be segregated from other funds of
Pledgor and shall be forthwith paid over to Secured Party as Collateral in the
same form as so received (with any necessary indorsement).
(b) Secured Party may exercise any and all rights of conversion,
exchange, subscription or any other rights, privileges or options pertaining to
any of the Pledged Securities as if it were the absolute owner thereof,
including without limitation, the right to exchange at its discretion, any and
all of the Pledged Securities upon the merger, consolidation, reorganization,
recapitalization or other readjustment of any issuer of such Pledged Securities
or upon the exercise by any such issuer or Secured Party of any right, privilege
or option pertaining to any of the Pledged Securities, and in connection
therewith, to deposit and deliver any and all of the Pledged Securities with any
committee, depository, transfer agent, registrar or other designated agency upon
such terms and conditions as it may determine, all without liability except to
account for property actually received by it, but Secured Party shall have no
duty to exercise any of the aforesaid rights, privileges or options and shall
not be responsible for any failure to do so or delay in so doing.
(c) At the option of Secured Party and upon written notification
thereof to Pledgor, all rights of Pledgor to exercise the voting and other
consensual rights which Pledgor would otherwise be entitled to exercise pursuant
to SECTION 3.10 with respect to the Pledged Securities shall cease, and all such
rights shall thereupon become vested in Secured Party who shall thereupon have
the sole right to exercise such voting and other consensual rights, but Secured
Party shall have no duty to exercise any such voting or other consensual rights
and shall not be responsible for any failure to do so or delay in so doing.
SECTION 5. FORECLOSURE ON COLLATERAL
5.1 SALE. Subject to the Intercreditor Agreement, upon the occurrence and
continuation of an Event of Default, Secured Party will have all rights and
remedies granted by law, and particularly by the UCC, including, without
limitation, the right to take possession of the Collateral, and for this purpose
Secured Party may enter upon any premises on which any or all of the Collateral
is situated and take possession of and manage the Collateral or remove it
therefrom. Secured Party may require Pledgor to assemble the Collateral and make
it available to Secured Party at a place to be designated by Secured Party that
is reasonably convenient to all parties. Unless the Collateral is perishable or
threatens to decline speedily in value or is of a type customarily sold on a
recognized market, Secured Party will give Pledgor reasonable notice of the time
and place of any public sale or of the time after which any private sale or
other disposition of the Collateral is to be made. This requirement of sending
reasonable notice will be met if the notice is sent to Pledgor as provided in
the Note at least ten days before the time of the sale or disposition.
5.2 PRIVATE SALE. If Secured Party in good faith believes that the
Securities Act of 1933 or any other state or federal law prohibits or restricts
the customary manner of sale or distribution of any of the Collateral, or if
Secured Party determines that there is any other restraint or restriction
limiting the timely sale or distribution of any such property
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in accordance with the customary manner of sale or distribution, Secured Party
may sell such property privately or in any other manner and at such price or
prices it deems, in good faith, advisable, but otherwise without any liability
whatsoever to Pledgor in connection therewith. Pledgor recognizes and agrees
that such prohibition or restriction may cause such property to have less value
than it otherwise would have and that, consequently, such sale or disposition by
Secured Party may result in a lower sales price than if the sale were otherwise
held.
5.3 SECURED PARTY AS PURCHASER. Secured Party will have the right to
become the purchaser at any foreclosure sale, and it will have the right to
credit upon the amount of the bid the amount payable to it out of the net
Proceeds of sale.
5.4 RECITALS CONCLUSIVE; WARRANTY; RATIFICATION. Recitals contained in any
assignment or xxxx of sale to any purchaser at any sale made hereunder will
conclusively establish, as between the parties to such assignment or xxxx of
sale, the truth and accuracy of the matters therein stated, including, without
limitation, nonpayment of the unpaid principal sum of, and the interest accrued
on, the written instruments constituting part or all of the Obligations after
the same have become due and payable, nonpayment of any other of the
Obligations, or advertisement and conduct of the sale in the manner provided
herein. Secured Party will have authority to appoint an attorney-in-fact to act
in conducting any foreclosure sale and executing assignments and bills of sale.
All assignments and bills of sale may contain a general warranty of title from
the grantor. Pledgor ratifies and confirms all legal acts that Secured Party may
do in accordance with this Pledge Agreement.
5.5 EFFECT OF SALE. Any sale or sales of the Collateral or any part
thereof will operate to divest all right, title, interest, claim, and demand
whatsoever, either at law or in equity, of Pledgor in and to the property sold,
and will be a perpetual bar, both at law and in equity, against Pledgor,
Pledgor's successors or assigns and against any and all persons claiming or who
shall thereafter claim all or any of the property sold from, through, or under
Pledgor, or Pledgor's successors or assigns. The purchaser or purchasers at the
foreclosure sale will receive immediate possession of the property purchased.
5.6 APPLICATION OF PROCEEDS. Secured Party shall apply the Proceeds of any
sale or other disposition of the Collateral as follows: First, to the payment of
all its expenses incurred in retaking, holding, and preparing any of the
Collateral for sale(s) or other disposition, in arranging for such sale(s) or
other disposition, and in actually selling or disposing of the same (all of
which are part of the Obligations); second, toward repayment of amounts
reasonably expended by Secured Party under SECTION 5 hereof; and third, toward
payment of the balance of the Obligations in the order and manner determined by
Secured Party in its sole discretion. Any surplus remaining shall be delivered
to Pledgor or as a court of competent jurisdiction may direct.
5.7 DEFICIENCY. Pledgor shall remain liable for any deficiency owing to
Secured Party after application of the net Proceeds of any foreclosure sale.
Nothing herein contained shall be construed as limiting Secured Party to the
collection of any Obligations only out of the income, revenue, rents, issues,
and profits from the Collateral or as obligating Secured Party to delay or
withhold action upon any default that may be occasioned by failure of such
income or revenue to be sufficient to retire the principal or interest when due
on the indebtedness secured hereby. It is expressly understood between Secured
Party and Pledgor that any Obligations shall constitute an absolute,
unconditional obligation of Pledgor to pay as provided herein or in the Note in
accordance with the terms of the instrument evidencing such Obligations in the
amount therein specified at the maturity date or at the respective maturity
dates of the installments thereof, whether by acceleration or otherwise.
5.8 PLEDGOR'S WAIVER OF APPRAISEMENT, MARSHALING, ETC. To the extent
permitted by applicable law, Pledgor agrees that Pledgor will not at any time
insist upon or plead or in any manner whatsoever claim the benefit of any
appraisement, valuation, stay, extension, or redemption law, if any, now or
hereafter in force, to prevent or hinder the enforcement or foreclosure of this
instrument, the absolute sale of the Collateral or the possession thereof by any
purchaser at any sale made pursuant to this instrument or pursuant to the decree
of any court having jurisdiction. To the extent permitted by applicable law,
Pledgor, for Pledgor and all who may claim by, through, or under Pledgor, hereby
waives the benefit of all such laws, if any, and to the extent that Pledgor may
lawfully do so under applicable law, waives any and all right to have any
Collateral marshaled upon any foreclosure of the Lien hereof or sold in inverse
order of alienation, and Pledgor agrees that Secured Party may sell the
Collateral as an entirety.
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5.9 DISCHARGE OF PURCHASER. Upon any sale made under the powers of sale
herein granted and conferred, the sales receipt issued by Secured Party will be
sufficient discharge to the purchaser or purchasers at any sale for the purchase
money, and such purchaser or purchasers and the heirs, devisees, personal
representatives, successors, and assigns thereof will not, after paying such
purchase money and receiving such receipt of Secured Party, be obliged to see to
the application thereof or be in anywise answerable for any loss,
misapplication, or nonapplication thereof.
SECTION 6. MISCELLANEOUS
6.1 TERMINATION. If all the Obligations are paid and performed in full and
the covenants herein contained are performed in all respects, then Secured Party
shall, upon the request of Pledgor and at Pledgor's cost and expense, deliver to
Pledgor proper instruments executed by Secured Party evidencing the release of
this instrument. Until such delivery, this instrument shall remain and continue
in full force and effect.
6.2 REMEDIES CUMULATIVE. No failure on the part of Secured Party or any
holder of the Note to exercise, and no delay in exercising, any right, power or
privilege hereunder, under the Note or under any other Transaction Document and
no course of dealing between Pledgor and Secured Party or any holder of the Note
shall operate as a waiver thereof; nor shall any single or partial exercise of
any such right, power or privilege, or any abandonment or discontinuance of any
steps to enforce such right, power or privilege, preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. No
notice to or demand on Pledgor in any case shall entitle Pledgor to any other or
further notice or demand in similar or other circumstances. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law.
6.3 PARTIAL RELEASE. Except as expressly set forth therein, no release
from the Lien of this instrument of any part of the Collateral by Secured Party
shall in any way alter, vary, or diminish the force, effect or Lien of this
instrument on the balance or remainder of the Collateral.
6.4 SUBROGATION. This Pledge Agreement is made with full substitution and
subrogation of Secured Party in and to all covenants and warranties by others
heretofore given or made in respect of the Collateral or any part thereof.
6.5 SUCCESSOR LENDER. Any Person that succeeds to Secured Party as Holder
pursuant to, and as permitted by, the terms of the Note automatically shall
become Secured Party hereunder.
6.6 NOTICES. Subject to the provisions of SECTION 5.1, all communications
under this Pledge Agreement shall be given as provided in the Note and shall be
except as otherwise specified herein, all notices, requests, demands or other
communications to or upon the respective parties hereto shall be deemed to have
been duly given or made when delivered to the party to which such notice,
request, demand or other communication is required or permitted to be given or
made under this Agreement or the Note, addressed to such party at its address
set forth below or at such other address as either of the parties hereto may
hereafter notify the other in writing.
To Pledgor: INTELECT COMMUNICATIONS, INC.
0000 Xxxxxxxxx Xxxxx
Xxxxxxxxxx, Xxxxx 00000
Telephone972-367-2100
Telecopy:000-000-0000
Attention: Xxxxxx Xxxxxxxx, President and CEO
with a copy to:Xxxxxx X. Sudan, Jr.,
XXXX & SUDAN, L.L.P.
000 Xxxxxx, 00xx Xxxxx,
Xxxxxxx, Xxxxx 00000;
Telephone713-652-0501
Telecopy:000-000-0000
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Secured Party: THE COASTAL CORPORATION SECOND PENSION TRUST
Nine Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxx 00000-0000
Telephone713-877-6825
Telecopy:000-000-0000
Attn: Corporate Secretary
with a copy to:THE COASTAL CORPORATION
Nine Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxx 00000-0000
Telephone713-877-6920
Telecopy:000-000-0000
Attn: Director, Financial Administration
For wire transfers of funds to Lender under all Transaction Documents:
Custodian: Chase Bank of Texas - Houston, Texas
ABA #000000000
Trust Wires Clearing Account
DDA #00101606276
DescriptiIntelect Communication Receipts
OBI# Attn: Trust Receipts
FFC: 5502001-1867300
THE COASTAL CORPORATION SECOND TRUST
Attn: Xxxx Xxxxx Xxxxxxxxx
(000) 000-0000
6.7 SUCCESSORS AND ASSIGNS. Neither party may assign its rights or
delegate its duties hereunder to any Person without prior written consent of the
other party, which consent will not be unreasonably withheld. This Pledge
Agreement shall be binding upon the successors and permitted assigns of each of
the parties, and, except as expressly set forth in the Note and this SECTION
6.7, shall inure to the benefit of the successors and permitted assigns of each
of the parties. The provisions of this Pledge Agreement are intended to be for
the benefit of all Persons constituting Secured Party.
6.8 AMENDMENT AND WAIVER.
(a) This Pledge Agreement may be amended, and the observance of any
term of this Pledge Agreement may be waived, with (and only with) the written
consent of Pledgor and Secured Party.
(b) Pledgor shall not solicit, request, or negotiate for or with
respect to any proposed waiver or amendment hereof except in accordance with the
provisions of this Agreement and the Note.
(c) Any such amendment or waiver shall apply equally to all persons
constituting Secured Party or Pledgor and shall be binding upon each future
Secured Party and upon each person constituting Pledgor regardless of whether
this Pledge Agreement, the Note or any other document shall have been marked to
indicate such amendment or waiver. No such amendment or waiver shall extend to
or affect any obligation not expressly amended or waived or impair any right
consequent thereon.
6.9 GOVERNING LAW. THIS PLEDGE AGREEMENT, THE LEGAL RELATIONS AMONG THE
PARTIES HERETO, AND ALL RIGHTS AND OBLIGATIONS HEREUNDER, INCLUDING MATTERS OF
CONSTRUCTION, VALIDITY, AND PERFORMANCE, SHALL BE GOVERNED BY AND INTERPRETED,
CONSTRUED, APPLIED, AND ENFORCED IN ACCORDANCE WITH THE LAW OF THE STATE OF
TEXAS WITHOUT REFERENCE TO THE LAW OF ANOTHER JURISDICTION AND THE LAWS OF THE
UNITED STATES OF AMERICA; PROVIDED, HOWEVER, THAT MATTERS RELATING TO THE
PERFECTION OF SECURITY INTERESTS UPON ANY PERSONAL PROPERTY SHALL BE GOVERNED
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BY THE LAW OF ANOTHER JURISDICTION TO THE EXTENT REQUIRED BY THE NONWAIVABLE
PROVISIONS OF SUCH LAW OR THE LAW OF THE STATE OF TEXAS.
6.10 SEVERABILITY. If any provision in this Pledge Agreement is rendered
or declared illegal, invalid, or unenforceable by reason of any rule of law,
public policy, or final judicial decision, all other terms and provisions of
this Pledge Agreement shall nevertheless remain in full force and effect so long
as the economic or legal substance of the transactions contemplated hereby are
not affected in any manner adverse to Pledgor or Secured Party. Upon such
determination that any term or other provision is invalid, illegal, or incapable
of being enforced, Pledgor and Secured Party shall negotiate in good faith to
modify this Pledge Agreement so as to effect the original intent of the parties
hereto as closely as possible to the end that the transactions contemplated
hereby are fulfilled to the extent possible.
6.11 MULTIPLE COUNTERPARTS. The parties may execute more than one
counterpart of this Pledge Agreement, each of which shall be an original but all
of which together shall constitute one and the same instrument.
6.12 REFERENCES. All references herein to one gender shall include the
other. Unless otherwise expressly provided, all references to "SECTIONS" are to
Sections of this Pledge Agreement and all references to "Exhibits" are to the
exhibits attached hereto, each of which is made a part hereof for all purposes.
6.13 INTEREST. The Obligations of Pledgor pursuant to SECTIONS 3.2 AND 4.5
shall bear interest at an annual rate equal to the default rate set forth in the
Note from the date that is ten days after the date Secured Party notifies
Pledgor that Secured Party has paid amounts required to be paid by Pledgor
hereunder until such amounts are reimbursed to Secured Party. Secured Party
agrees to use all reasonable efforts to forward expense invoices to Pledgor for
direct payment by Pledgor before Secured Party advances amounts to be reimbursed
by Pledgor, and no interest shall accrue on amounts directly paid by Pledgor.
6.14. FINAL AGREEMENT OF THE PARTIES. THIS PLEDGE AGREEMENT (INCLUDING THE
EXHIBITS HERETO), THE NOTE AND THE OTHER TRANSACTION DOCUMENTS TO WHICH PLEDGOR
OR ANY OF ITS SUBSIDIARIES IS A PARTY CONSTITUTE A "LOAN AGREEMENT" AS DEFINED
IN SECTION 26.02(A) OF THE TEXAS BUSINESS AND COMMERCE CODE, AND REPRESENT THE
FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE
NO ORAL AGREEMENTS BETWEEN THE PARTIES.
EXECUTED as of the Effective Date.
SECURED PARTY: PLEDGOR:
THE COASTAL CORPORATION SECOND INTELECT COMMUNICATIONS, INC.
PENSION TRUST
By:_____________________________ By:_____________________________
Xxxxxx X. Xxxxxxxxx Xxxxxx X. Xxxxxxxx
Senior Vice President President and CEO
The Coastal Corporation
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IRREVOCABLE STOCK POWER
For Value Received, the undersigned hereby sells, assigns and transfers to
THE COASTAL CORPORATION SECOND PENSION TRUST, a Delaware corporation ("SECURED
PARTY"),_______________________________________ (______ ) shares of the common
stock of ____________________________ a corporation organized under the laws of
standing in the undersigned's name on the books of the corporation, represented
by Certificate No.____, and the undersigned does hereby irrevocably constitute
and appoint
__________________________ my true and lawful attorney-in-fact, with full power
of substitution, to transfer this stock on the books of the corporation.
Dated:________________________________
INTELECT COMMUNICATIONS, INC.
By:______________________________
Name:____________________________
Title:___________________________
In the presence of:
__________________________________
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