COLLATERAL PLEDGE AGREEMENT
AGREEMENT made this 5 day of March, 1999, by and among TouchStone Software
Corporation, a Delaware corporation with a principal place of business at 0000
Xxxx Xxxxxx, Xxxxxxxxxx Xxxxx, Xxxxxxxxxx 00000 (the "Debtor"), Xxxxxxxx Savings
Bank, a Massachusetts savings bank with a principal place of business at 00
Xxxxxxxxxxxxx Xxxxxx, Xxxxx Xxxxxxx, Xxxxxxxxxxxxx 00000 (the "Secured Party")
and Unicore Software, Inc., formerly known as Unicore Acquisition Corp., a
Massachusetts corporation with a principal place of business at 0000 Xxxxxxxx
Xxxxxx, Xxxxx Xxxxxxx, Xxxxxxxxxxxxx 00000 (the "Borrower").
WHEREAS, the Borrower and the Secured Party are parties to those documents
listed on Exhibit A hereto (collectively, the "Loan Documents");
WHEREAS, pursuant to an Agreement and Plan of Acquisition dated March 5,
1999, the Borrower will be merged (the "Merger") with and into a wholly-owned
subsidiary of the Debtor (the "Merger Sub"), with the Merger Sub as the
surviving corporation;
WHEREAS, the Merger and the consummation of the transactions contemplated
thereby require the consent of the Secured Party pursuant to the terms of the
Loan Documents and the Debtor has requested the written consent of the Secured
Party to the Merger, which consent the Secured Party has agreed to give and
which consent is evidenced by that certain Consent dated March 5, 1999 by the
Secured Party in favor of the Borrower (the "Consent Agreement"); and
WHEREAS, pursuant to the Consent Agreement, the Secured Party has agreed to
the substitution of certain Collateral and the Debtor has agreed to replace
certain collateral with respect to the Loan Documents in the form of a
Certificate of Deposit in the amount of $710,000.00.
NOW, THEREFORE, in consideration of the consent to the Merger by the Secured
Party, the receipt and sufficiency of which is hereby acknowledged, the Debtor
agrees as follows.
1. Security Interest and Collateral. To secure the payment and performance
of each and every debt, liability and obligation of every type and description
which the Borrower may now or at any time hereafter owe to the Secured Party
(whether such debt, liability or obligation now exists or is hereafter created
or incurred, and whether it is or may be direct or indirect, due or to become
due, absolute or contingent, primary or secondary, liquidated or unliquidated,
or joint, several or joint and several; all such debts, liabilities and
obligations being herein collectively referred to as the "Obligations"), the
Debtor hereby grants the Secured Party a continuing security interest (herein
called the "Security Interest")in all property of any kind now or at any time
hereafter owned by the Debtor, or in which the Debtor may now or hereafter have
an interest, which may now be or may at any time hereafter (i) come into the
possession or control of the Secured Party or into the possession or control of
the Secured Party's agents or correspondents, whether such possession or control
is given for collateral purposes or for safekeeping; or (ii) be transferred or
assigned to the Secured Party by any means permitted under Article 8 of the
Uniform Commercial Code; together with all rights in connection with such
property (herein called the "Collateral"). Collateral includes, but is not
limited to, those items listed on Schedule "A" attached hereto.
2. Representations, Warranties and Covenants. The Debtor represents,
warrants and covenants that:
(a) The Debtor will duly endorse, in blank, each and every instrument
constituting Collateral by signing on said instrument or by signing a separate
document of assignment or transfer, if required by the Secured Party.
(b) The Debtor is the sole legal and equitable owner of the Collateral free
and clear of all liens, encumbrances, pledges, security interests and
restrictions of every kind and nature, except the Security Interest and any
restrictive legend appearing on any instrument constituting Collateral.
(c) The Debtor will keep the Collateral free and clear of all liens,
encumbrances, pledges and security interests, except the Security Interest.
(d) The Debtor will pay, when due, all taxes and other governmental charges
levied or assessed upon or against any Collateral.
(e) At any time, upon request by the Secured Party, the Debtor will deliver
to the Secured Party all notices, financial statements, reports or other
communications received by the Debtor as an owner or holder of the Collateral.
(f) The Debtor shall, at all times, maintain Collateral hereunder with a
market value of not less than $710,000.00.
(g) The Debtor will pay all legal fees incurred by the Secured Party
relating to this transaction.
(h) The Debtor has full corporate power and authority to execute this
Agreement.
(i) Except as required under this Agreement, the Debtor will not pledge,
endorse or transfer the Collateral.
(j) The Security Interest is a valid first lien position, superior to all
others, and has been duly authorized by all necessary corporate action.
3. Rights of the Secured Party. The Debtor agrees that the Secured Party
may at any time, after the occurrence of an Event of Default hereunder and upon
giving notice to the Debtor, (i) notify the obligor on or issuer of any
Collateral to make payment to the Secured Party of any amounts due or
distributable thereon; (ii) in the Debtor's name or the Secured Party's name
enforce collection of any Collateral by suit or otherwise, or surrender, release
or exchange all or any part of it, or compromise, extend or renew for any period
any obligation evidenced by the Collateral; (iii) receive all proceeds of the
Collateral; and (iv) hold any increase or profits received from the Collateral
as additional security for the Obligations, except that any money received from
the Collateral shall, at the Secured Party's option, be applied in reduction of
the Obligations, in such order of application as the Secured Party may
determine, or be remitted to the Debtor.
4. Events of Default. Each of the following occurrences shall constitute an
event of default under this Agreement (herein called "Event of Default"): (i)
the Borrower or the Debtor shall fail to pay any or all of the Obligations when
due or (if payable on demand) on demand, or the Debtor shall fail to observe or
perform any covenant or agreement herein binding on it; (ii) any representation
or warranty by the Debtor set forth in this Agreement or made by the Borrower to
the Secured Party in any financial statements or reports submitted to the
Secured Party by or on behalf of the Borrower shall prove materially false or
misleading; (iii) an Event of Default pursuant to the Loan Documents, or any
related transaction documents; (iv) the filing of a petition in Bankruptcy by or
against the Debtor or the execution of an Assignment for the Benefit of
Creditors by the Debtor.
5. Remedies upon Event of Default. Upon the occurrence of an Event of
Default and at any time thereafter, the Secured Party may exercise any one or
more of the following rights or remedies: (i) declare all unmatured Obligations
to be immediately due and payable, and the same shall thereupon be immediately
due and payable, without presentment or other notice or demand; (ii) exercise
all voting and other rights as a holder of the Collateral; (iii) exercise and
enforce any or all rights and remedies available upon default to a secured party
under the Uniform Commercial Code as in effect from time to time in the
Commonwealth of Massachusetts, and if notice to the Debtor of any intended
disposition of the Collateral or any other intended action is required by law in
a particular instance, such notice shall be deemed commercially reasonable if
given at least five (5) calendar days prior to the date of intended disposition
or other action; (iv) exercise or enforce any or all other rights or remedies
available to the Secured Party by law or agreement against the Collateral,
against the Debtor or against any other person or property (v) set
off the Collateral against the Obligations.
6. Miscellaneous. Any disposition of the Collateral in the manner
provided in Section 5 shall be deemed commercially reasonable. This Agreement
can be waived, modified, amended, terminated or discharged, and the Security
Interest can be released, only explicitly in a writing signed by the Secured
Party. A waiver signed by the Secured Party shall be effective only in the
specific instance and for the specific purpose given. Mere delay or failure to
act shall not preclude the exercise or enforcement of any of the Secured Party's
rights or remedies. All rights and remedies of the Secured Party shall be
cumulative and may be exercised singularly or concurrently, at the Secured
Party's Option, and the exercise or enforcement of any one such right or remedy
shall neither be a condition to nor bar the exercise or enforcement of any
other. All notices to be given hereunder shall be deemed sufficiently given if
delivered or mailed by registered or certified mail, postage prepaid, or by
telecopier to the party at its address or telecopier number, as the case may be,
set forth above or, to the Debtor, at the most recent address or telecopier
number shown on the Secured Party's records. The Secured Party's duty of care
with respect to Collateral in its possession (as imposed by law) shall be deemed
fulfilled if the Secured Party exercises reasonable care in physically
safekeeping such Collateral or, in the case of Collateral in the custody or
possession of a bailee or other third person, exercises reasonable care in the
selection of the bailee or other third person, and the Secured Party need not
otherwise preserve, protect, insure or care for any Collateral. The Secured
Party shall not be obligated to preserve any rights the Debtor may have against
prior parties, to realize on the Collateral at all or in any particular manner
or order, or to apply any cash proceeds of Collateral in any particular order of
application. The Debtor will reimburse the Secured Party for all expenses
(including reasonable attorneys' fees and legal expenses) incurred by the
Secured Party in the protection, defense or enforcement of the Security
Interest, including expenses incurred in any litigation or bankruptcy or
insolvency proceedings. The Secured Party is hereby appointed the attorney-in-
fact of the Debtor for the purpose of carrying out the provisions hereof. In the
Event of Default, the Secured Party shall have the right and power to receive,
endorse and collect all checks made payable to the order of the Debtor
representing any distribution from the Collateral. This Agreement shall be
binding upon and inure to the benefit of the Debtor and the Secured Party and
their respective heirs, representatives, successors and assigns and shall take
effect when signed by the Debtor and delivered to the Secured Party, and the
Debtor waives notice of the Secured Party's acceptance hereof. If any provision
or application of this Agreement is held unlawful or unenforceable in any
respect, such illegality or unenforceability shall not affect other provisions
or applications which can be given effect, and this Agreement shall be construed
as if the unlawful or unenforceable provision or application had never been
contained herein or prescribed hereby. All representations and warranties
contained in this Agreement shall survive the execution, delivery and
performance of this Agreement and the creation and payment of the Obligations.
If this Agreement is signed by more than one person as the Debtor, the term
"Debtor" shall refer to each of them separately and to both or all of them
jointly; all such persons shall be bound both severally and jointly with the
other(s); and the Obligations shall include all debts, liabilities and
obligations owed to the Secured Party by any Debtor solely or by both or several
or all Debtors jointly or jointly and severally, and all property described in
Section 1 shall be included as part Collateral, whether it is owned jointly by
both or all Debtors or is owned in whole or in part by one (or more) of them.
This Agreement shall be governed by the internal laws (other than conflict laws)
of the Commonwealth of Massachusetts and, unless the context otherwise requires,
all terms used herein which are defined in Articles 1 and 9 of the Uniform
Commercial Code, as in effect in the Commonwealth of Massachusetts, shall have
the meanings therein stated. Each party consents to the personal jurisdiction of
the state and federal courts located in the Commonwealth of Massachusetts in
connection with any controversy related to this Agreement, waives any argument
that venue in any such forum is not convenient, and agrees that any litigation
initiated by any of them in connection with this Agreement shall be venued in
either the Superior Court of Essex County, Massachusetts, or the United States
District Court, District of Massachusetts. THE PARTIES WAIVE ANY RIGHT TO TRIAL
BY JURY IN ANY ACTION OR PROCEEDING BASED ON OR PERTAINING TO THIS AGREEMENT.
Notwithstanding the foregoing, the parties agree that all disputes, claims
and controversies between them, whether arising from this Agreement or
otherwise, including, without limitation, disputes sounding in contract or tort,
shall be resolved in arbitration proceedings in Boston, Massachusetts, in
accordance with the rules of the American Arbitration Association governing
commercial arbitration. Such
arbitration shall be commenced upon the written request of either party
forwarded to the other in accordance with the notice provisions applicable to
this Agreement and shall be conducted before a panel of three (3) arbitrators,
one chosen by the Debtor, one chosen by the Secured Party and one appointed by
said Association. No act to take or dispose of any Collateral securing this
Agreement shall constitute a waiver of this arbitration agreement or be
prohibited by this arbitration agreement, including, without limitation,
obtaining injunctive relief or a temporary restraining order; invoking a power
of sale under any deed of trust or mortgage; obtaining a writ of attachment or
appointment of a receiver; or exercising any rights relating to personal
property, including taking or disposing of such property with or without
judicial process pursuant to Article 9 of the Uniform Commercial Code. Any
disputes, claims, or controversies concerning any Collateral securing this
Agreement, including any claim to rescind, reform, or otherwise modify any
agreement relating to the Collateral securing this Agreement, shall also be
arbitrated, provided however that no arbitrator shall have the right or the
power to enjoin or restrain any act of any party. Judgment upon any award
rendered by any arbitrator may be entered in any court having jurisdiction.
Nothing in this Agreement shall preclude either party from seeking equitable
relief from a court of competent jurisdiction. The statute of limitations,
estoppel, waiver, laches and similar doctrines which would otherwise be
applicable in an action brought by a party shall be applicable in any
arbitration proceeding and the commencement of an action for these purposes.
Chapter 251 of the Massachusetts General laws, as amended (known as the "Uniform
Arbitration Act for Commercial Disputes") shall apply to the construction,
interpretation and enforcement of this arbitration provision.
Executed as an instrument under seal as of the date first above
written.
TOUCHSTONE SOFTWARE CORPORATION
By:_________________________________
Its:________________________________
XXXXXXXX SAVINGS BANK
By:_________________________________
Xxxx X. XxXxxxxx,
Vice President
Schedule "A""
(Collateral Description)
Certificate of Deposit No. 39702335 in the amount of $710,000.00 invested and
deposited herewith with the Secured Party together with any additions to or
substitutions for said Certificate of Deposit and any and all interest earned
thereon and any and all dividends, interest or replacements or reimbursements
thereof, distributions and proceeds of the same.
