EXHIBIT 10.9
STOCK PLEDGE AGREEMENT
THIS STOCK PLEDGE AGREEMENT (this "Pledge Agreement") is entered into
as of July 29, 2004 among INFOCROSSING, INC., a Delaware corporation (the
"Borrower"), INFOCROSSING SOUTHEAST, INC., a Georgia corporation formerly known
as Amquest, Inc. ("Southeast"), INFOCROSSING WEST, INC., a California
corporation formerly known as ITO Acquisition Corporation and doing business as
Systems Management Specialists ("West") (Southeast and West hereinafter are
referred to individually as a "Guarantor," and collectively as "Guarantors"; and
together with the Borrower, each individually a "Pledgor," and collectively the
"Pledgors") and CAPITALSOURCE FINANCE LLC, in its capacity as agent (in such
capacity, the "Agent") for the lenders from time to time party to the
Acquisition Loan Agreement described below (the "Lenders").
RECITALS
WHEREAS, pursuant to that certain Acquisition Loan Agreement,
dated as of the date hereof (as amended, modified, extended, renewed or replaced
and in effect from time to time, the "Acquisition Loan Agreement"), among the
Borrower, the Lenders and the Agent, the Lenders have agreed to make and hold
Loans upon the terms and subject to the conditions set forth therein; and
WHEREAS, it is a condition precedent to the effectiveness of
the Acquisition Loan Agreement that the Pledgors shall have executed and
delivered this Pledge Agreement to the Agent for the ratable benefit of the
Lenders.
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained and for other good and valuable consideration, the
receipt and sufficiency of which hereby are acknowledged, the parties hereto
agree as follows:
1. Definitions. Unless otherwise defined herein, capitalized terms used
herein shall have the meanings ascribed to such terms in the
Acquisition Loan Agreement, and "Secured Obligations" shall have the
meaning set forth in the Security Agreement.
2. Pledge and Grant of Security Interest. To secure the prompt payment and
performance in full when due, whether by lapse of time or otherwise, of
the Secured Obligations, each Pledgor hereby grants, pledges and
assigns to the Agent, for the ratable benefit of the Lenders, and
grants to the Agent, for the ratable benefit of the Lenders, a
continuing first priority security interest in and Lien on any and all
right, title and interest of such Pledgor in and to the following,
whether now owned or existing or owned, acquired, or arising hereafter
(collectively, the "Pledged Collateral"):
(a) Pledged Shares. (i) 100% (or, if less, the full amount owned by
such Pledgor) of the issued and outstanding shares of Capital Stock
owned by such Pledgor of each Domestic Subsidiary set forth on
Schedule 2(a) attached hereto, and (ii) (A) 65% of the issued and
outstanding voting shares of each class of Capital Stock and (B) 100%
of the issued and outstanding non-voting shares of each class of
Capital Stock (or, in each case, if less, the full amount owned by
such Pledgor) of each Foreign Subsidiary set forth on Schedule 2(a)
attached hereto, in each case together with the certificates (or other
agreements or instruments), if any, representing such shares, and all
options and other rights, contractual or otherwise, with respect
thereto (collectively, together with the shares of Capital Stock
described in Sections 2(b) and 2(c) below, the "Pledged Shares"),
including, but not limited to, the following:
(y) subject to the limitations set forth above in
respect of Foreign Subsidiaries, all Capital Stock
representing a dividend on any of the Pledged Shares, or
representing a distribution or return of capital upon or in
respect of the Pledged Shares, or resulting from a stock
split, revision, reclassification or other exchange therefor,
and any subscriptions, warrants, rights or options issued to
the holder of, or otherwise in respect of, the Pledged Shares;
and
(z) without affecting the obligations of the Pledgors
under any provision prohibiting such action hereunder or under
the Acquisition Loan Agreement, in the event of any
consolidation or merger involving the issuer of any Pledged
Shares and in which such issuer is not the surviving
corporation, all shares of each class of the Capital Stock of
the successor corporation formed by or resulting from such
consolidation or merger.
(b) Additional Shares. 100% (or, if less, the full amount owned by such
Pledgor) of the issued and outstanding shares of Capital Stock owned by
such Pledgor of any Person which hereafter becomes a Domestic
Subsidiary and (i) 65% of the voting Capital Stock and (ii) 100% of the
non-voting Capital Stock owned by such Pledgor (or, in each case, if
less, the full amount owned by such Pledgor) of any Person which
hereafter becomes a direct Foreign Subsidiary, including, without
limitation, the certificates, if any, representing such shares.
(c) Proceeds. All proceeds and products of the foregoing, however and
whenever acquired and in whatever form.
Without limiting the generality of the foregoing, it is hereby
specifically understood and agreed that a Pledgor may from time to time
hereafter deliver additional shares of Capital Stock to the Agent as collateral
security for the Secured Obligations. Upon delivery to the Agent, such
additional shares of Capital Stock shall be deemed to be part of the Pledged
Collateral of such Pledgor and shall be subject to the terms of this Pledge
Agreement whether or not Schedule 2(a) is amended to refer to such additional
shares.
3. Security for Secured Obligations. The security interest
created hereby in the Pledged Collateral of each Pledgor
constitutes continuing collateral security for all of the
Secured Obligations, now existing or hereafter arising
pursuant to the Loan Documents, owing from the Borrower or any
other Loan Party to any Lender or the Agent, howsoever
evidenced, created, incurred or acquired, whether primary,
secondary, direct, contingent, or joint and several,
including, without limitation, liabilities incurred in
connection with collecting and enforcing the foregoing.
4. Delivery of the Pledged Collateral. Each Pledgor hereby agrees
that:
(a) Each Pledgor shall deliver to the Agent (i) simultaneously with or
prior to the execution and delivery of this Pledge Agreement, all
certificates representing the Pledged Shares of such Pledgor and (ii)
promptly upon the receipt thereof by or on behalf of a Pledgor, all
other certificates and instruments constituting Pledged Collateral of
a Pledgor. Prior to delivery to the Agent, all such certificates and
instruments constituting Pledged Collateral of a Pledgor shall be held
in trust by such Pledgor for the benefit of the Agent pursuant hereto.
All such certificates shall be delivered in suitable form for transfer
by delivery or shall be accompanied by duly executed instruments of
transfer or assignment in blank, substantially in the form provided in
Schedule 4(a) attached hereto, accompanied by an irrevocable proxy
coupled with an interest duly executed by such Pledgor in form and
substance satisfactory to Agent.
(b) Additional Securities. Subject to the limitations applicable to
shares of Foreign Subsidiaries set forth in Section 2(a), if such
Pledgor shall receive by virtue of its being or having been the owner
of any Pledged Collateral, any (i) certificate evidencing Capital
Stock, including without limitation, any certificate representing a
dividend or distribution in connection with any increase or reduction
of capital, reclassification, merger, consolidation, sale of assets,
combination of shares, stock splits, spin-off or split-off, promissory
notes or other instrument; (ii) option or right, whether as an
addition to, substitution for, or an exchange for, any Pledged
Collateral or otherwise; (iii) dividends payable in securities; or
(iv) distributions of securities in connection with a partial or total
liquidation, dissolution or reduction of capital, capital surplus or
paid-in surplus, then such Pledgor shall receive such certificate,
instrument, option, right, or distribution in trust for the benefit of
the Agent, shall segregate it from such Pledgor's other property and
shall deliver it forthwith to the Agent in the exact form received
together with any necessary endorsement and/or appropriate transfer
power duly executed in blank, substantially in the form provided in
Schedule 4(a), accompanied by an irrevocable proxy coupled with an
interest duly executed by such Pledgor in form and substance
satisfactory to Agent, to be held by the Agent as Pledged Collateral
and as further collateral security for the Secured Obligations.
(c) Financing Statements. For so long as this Pledge Agreement is
in effect and until this Pledge Agreement is terminated in accordance
with Section 15(a) hereof, each Pledgor authorizes the Agent to
prepare and file such UCC or other applicable financing statements as
may be reasonably requested by the Agent in order to perfect and
protect the security interest created hereby in the Pledged Collateral
of such Pledgor.
5. Representations and Warranties. Each Pledgor hereby represents
and warrants to the Agent, for the ratable benefit of the
Lenders, as follows:
(a) Authorization of Pledged Shares. The Pledged Shares are duly
authorized and validly issued, are fully paid and
nonassessable and are not subject to the preemptive rights of
any Person. All other shares of Capital Stock constituting
Pledged Collateral will be duly authorized and validly issued,
fully paid and nonassessable and not subject to the preemptive
rights of any Person.
(b) Title. Each Pledgor has good and indefeasible title to the
Pledged Collateral of such Pledgor and will at all times be
the legal and beneficial owner of such Pledged Collateral free
and clear of any Lien, other than Liens permitted by Section
6.3 of the Acquisition Loan Agreement. There exists no
"adverse claim" within the meaning of Section 8-302 of the
Uniform Commercial Code as in effect in the State of New York
(the "UCC") as of the date hereof with respect to the Pledged
Shares of such Pledgor.
(c) Exercising of Rights. As of the Closing Date, the exercise by
the Agent of its rights and remedies hereunder will not
violate any law or governmental regulation of the United
States or any state (assuming that the Agent's exercise of
remedies complies with laws affecting the offering and sale of
securities) or any material contractual restriction binding on
or affecting a Pledgor or any of its property.
(d) Pledgor's Authority. The execution, delivery and performance by
each Pledgor of this Pledge Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized
by all necessary corporate actions on the part of such Pledgor and
pursuant to all necessary consents required therefor except as set
forth in the Acquisition Loan Agreement. This Pledge Agreement has
been duly executed and delivered by each Pledgor and constitutes the
legal, valid and binding obligation of such Pledgor, enforceable
against such Pledgor in accordance with its terms, subject to the
effect of any applicable bankruptcy, moratorium, insolvency,
reorganization or other similar law affecting the enforceability of
creditors' rights generally and to the effect of general principles of
equity which may limit the availability of equitable remedies (whether
in a proceeding at law or in equity). No authorization, approval or
action by, and no notice or filing with any Governmental Authority or
with the issuer of any Pledged Shares or with any other Person is
required either (i) for the pledge made by a Pledgor or for the
granting of the security interest by a Pledgor pursuant to this Pledge
Agreement or (ii) for the exercise by the Agent or the Lenders of
their rights and remedies hereunder (except as may be required by laws
affecting the offering and sale of securities).
(e) Security Interest/Priority. This Pledge Agreement creates a valid
security interest in favor of the Agent for the ratable benefit of the
Lenders in the Pledged Collateral. The taking possession by the Agent
of the certificates representing the Pledged Shares and all other
certificates and instruments constituting Pledged Collateral will
perfect and establish the first priority of the Agent's security
interest in the Pledged Shares and, when properly perfected by filing
or registration, in all other Pledged Collateral represented by such
Pledged Shares and instruments securing the Secured Obligations
(except with respect to any Pledged Collateral, including any Pledged
Shares, subject to a Lien permitted by Section 6.3(l) of the
Acquisition Loan Agreement after the Closing Date) to the extent such
security interest can be perfected by filing under the UCC. Except as
set forth in this Section 5(e), no action is necessary
to perfect or otherwise protect such security interest to the extent
such security interest can be perfected by filing under the UCC.
(f) No Other Shares. As of the Closing Date, no Pledgor owns any
shares of Capital Stock other than as set forth on Schedule
2(a) attached hereto.
(g) Partnership and Limited Liability Company Interests. Except as
disclosed to the Agent as of the Closing Date, none of the
Pledged Shares consisting of partnership or limited liability
company interests (i) is dealt in or traded on a securities
exchange or in a securities market, (ii) by its terms
expressly provides that it is a security governed by Article 8
of the UCC, (iii) is an investment company security, (iv) is
held in a securities account or (v) constitutes a "security"
or a "financial asset" as such terms are defined in Article 8
of the UCC.
(h) No Conflicts. The execution, delivery and performance by each
Pledgor of this Pledge Agreement and the consummation of the pledge
contemplated hereby and the granting and creation of the security
interest and Liens contemplated hereby do not and will not (1)
conflict with or violate any provision of any applicable law, statute,
rule, regulation, ordinance, license or tariff or any judgment, decree
or order of any court or other Governmental Authority binding on or
applicable to any Pledgor or any of their respective properties or
assets; (2) conflict with, result in a breach of, constitute a default
of or an event of default under, or an event, fact, condition or
circumstance which, with notice or passage of time, or both, would
constitute or result in a conflict, breach, default or event of
default under, require any consent not obtained under, or result in or
require the acceleration of any indebtedness pursuant to, any
indenture, agreement or other instrument to which any Pledgor is a
party or by which it or any of their properties or assets are bound or
subject except as set forth in the Acquisition Loan Agreement; (3) if
applicable, conflict with or violate any provision of the certificate
of incorporation or by-laws of any Pledgor or any agreement by and
between any Pledgor and its shareholders or equity owners or among any
such shareholders or equity owners; or (4) result in the creation or
imposition of any Lien of any nature whatsoever upon any of the
properties or assets of any Pledgor (except as contemplated herein).
(i) [Reserved].
(j) Litigation and Compliance; Other Agreements. There is no action,
suit, proceeding or investigation pending or, to each Pledgor's
knowledge, threatened, before or by any court, arbitrator or
Governmental Authority (1) against or affecting the Pledged
Collateral, such Pledgor, this Pledge Agreement or the transactions
contemplated by this Pledge Agreement, or (2) that questions or could
reasonably be expected to prevent the validity of this Pledge
Agreement or the right or ability of such Pledgor to execute or
deliver this Pledge Agreement or to consummate the transactions
contemplated by this Pledge Agreement or to create or grant the Liens
and security interests contemplated by this Pledge Agreement. No
Pledgor nor any entity whose securities constitute part of the Pledged
Collateral is (i) a party to any judgment, order or decree or any
agreement, document or instrument, or subject to any restriction,
which would materially adversely affect its ability to execute and
deliver, or perform under, this Pledge Agreement, or (ii) in default
in the performance, observance or fulfillment of any obligation,
covenant or condition contained in any agreement, document or
instrument to which it is a party or to which any of its properties or
assets are subject, which default, if not remedied within any
applicable grace or cure period, could reasonably be expected to have
or be a Material Adverse Effect, nor is there any event, fact,
condition or circumstance which, with notice or passage of time or
both, would constitute or result in a conflict, breach, default or
event of default under, any of the foregoing which, if not remedied
within any applicable grace or cure period could reasonably be
expected to have or be a Material Adverse Effect.
(k) Full Disclosure. No statement of fact made by or on behalf of
any Pledgor in this Pledge Agreement contains any untrue
statement of a material fact or omits to state any material
fact necessary to make statements contained therein or herein
not misleading. There is no fact presently known to any
Pledgor which has not been disclosed to the Lenders in writing
which has had or, as far as such Pledgor can reasonably
foresee, could reasonably be expected to have a Material
Adverse Effect.
6. Covenants. Each Pledgor hereby covenants, that so long as any
Loans are outstanding or any other amount is due and owing to
any Lender or the Agent under the Acquisition Loan Agreement
or under any other Loan Document, such Pledgor shall:
(a) Books and Records. Mark its books and records (and shall cause
the issuer of the Pledged Shares of such Pledgor to mark its
books and records) to reflect the security interest granted to
the Agent, for the ratable benefit of the Lenders, pursuant to
this Pledge Agreement.
(b) Defense of Title. Warrant and defend title to and ownership of
the Pledged Collateral of such Pledgor at its own expense
against the claims and demands of all other parties claiming
an interest therein, keep the Pledged Collateral free from all
Liens, except for Liens permitted by Section 6.3 of the
Acquisition Loan Agreement, and not sell, exchange, transfer,
assign, lease or otherwise dispose of Pledged Collateral of
such Pledgor or any interest therein, except as permitted
under the Acquisition Loan Agreement and the other Loan
Documents.
(c) Further Assurances. Promptly execute and deliver at its expense all
further instruments and documents and take all further action that may
be reasonably necessary and desirable or that the Agent may reasonably
request in order to (i) perfect and protect the security interest
created hereby in the Pledged Collateral of such Pledgor (including
without limitation any and all action necessary to satisfy the Agent
that the Agent has obtained a first priority perfected security
interest in any Capital Stock); (ii) enable the Agent to exercise and
enforce its rights and remedies hereunder in respect of the Pledged
Collateral of such Pledgor; and (iii) otherwise effect the purposes of
this Pledge Agreement (including, without limitation and if requested
by the Agent, delivering to the Agent irrevocable proxies in respect
of the Pledged Collateral of such Pledgor upon the occurrence and
during the continuance of an Event of Default). Without limiting the
foregoing, upon the exercise by Secured Party or any Lender or any of
its or their Affiliates or agents of any right or remedy which
requires any consent, approval or registration with, or consent,
qualification or authorization by, any Person, each Pledgor shall
execute and deliver, or cause the execution and delivery of, all
applications, certificates, instruments and other documents that Agent
or any Lender or its or their Affiliates or agents may be required to
obtain for such consent, approval, registration, qualification or
authorization. Each Pledgor hereby appoints Agent, for the ratable
benefit of the Lenders, as its attorney-in-fact (without requiring
Agent to act as such), with full power of substitution, which
appointment as attorney-in-fact is irrevocable and coupled with an
interest, effective upon the occurrence and during the continuance of
and Event of Default, to take all such actions, whether in the name of
Agent, for the ratable benefit of the Lenders, or such Pledgor, as
Agent in its discretion may consider necessary or desirable with
respect to the foregoing (to the extent such Pledgor fails to so
execute and/or file any of the foregoing within two (2) Business Days
of Agent's request or the time when such Pledgor is otherwise
obligated to do so). Each Pledgor will pay all costs associated with
respect to the foregoing, including without limitation, the cost of
filing any of the foregoing in all public offices or other locations
wherever Agent deems filing to be necessary or desirable. Each Pledgor
shall deliver to Agent any and all documentary tax stamps and other
documents necessary to cause Agent, for the ratable benefit of the
Lenders, to have a good, valid and perfected continuing first priority
pledge of and Lien on the Pledged Collateral of such Pledgor (free and
clear of any other Liens), including, without limitation, any
necessary notations in the books or other records of such Pledgor. If
such Pledgor fails to timely do so, Agent shall have the right (but
not the obligation) to pay any taxes relating to the Pledged
Collateral of such Pledgor and any costs to preserve the Pledged
Collateral of such Pledgor, which payments shall be part of the
Secured Obligations. No injury to, or loss or destruction of any of,
the Pledged Collateral or any Material Adverse Effect shall relieve
any Pledgor of any of the Secured Obligations.
(d) Amendments. Not, except as provided herein or as may be
permitted under the Acquisition Loan Agreement, make or
consent to any amendment or other modification or waiver with
respect to any of the Pledged Collateral of such Pledgor or
enter into any agreement or allow to exist any restriction
with respect to any of the Pledged Collateral of such Pledgor.
(e) Compliance with Securities Laws. File all reports and other
information now or hereafter required to be filed by such
Pledgor with the United States Securities and Exchange
Commission and any other state, federal or foreign agency in
connection with the ownership of the Pledged Collateral of
such Pledgor.
(f) Issuance or Acquisition of Capital Stock. Not without giving
prior written notice to the Agent and executing and delivering, or
causing to be executed and delivered within ten (10) days, to the
Agent such agreements, documents and instruments as the Agent may
reasonably require, issue or acquire any Capital Stock consisting of
an interest in a partnership or a limited liability company that (i)
is dealt in or traded on a securities exchange or in a securities
market, (ii) by its terms expressly provides that it is a security
governed by Article 8 of the UCC, (iii) is an investment company
security, (iv) is held in a securities account or (v) constitutes a
"security" or a "financial asset" as such terms are defined in Article
8 of the UCC.
7. Advances by Lenders. On failure of any Pledgor to perform any
of the covenants and agreements contained herein, after notice
by Agent, the Agent may, at its sole option and in its sole
discretion, perform the same and in so doing may expend such
sums as the Agent may reasonably deem advisable in the
performance thereof, including, without limitation, the
payment of any insurance premiums, the payment of any taxes, a
payment to obtain a release of a Lien or potential Lien,
expenditures made in defending against any adverse claim and
all other expenditures which the Agent or the Lenders may make
for the protection of the security hereof or which may be
compelled to make by operation of law. All such sums and
amounts so expended shall be repayable by the Pledgors on a
joint and several basis promptly upon timely notice thereof
and demand therefor, shall constitute additional Secured
Obligations and shall bear interest from the date said amounts
are expended at the default rate specified in Section 2.4 of
the Acquisition Loan Agreement. No such performance of any
covenant or agreement by the Agent or the Lenders on behalf of
any Pledgor, and no such advance or expenditure therefor,
shall relieve the Pledgors of any default under the terms of
this Pledge Agreement or the other Loan Documents, provided
that if such default shall no longer be continuing as a result
of the performance of any covenant or agreement by the Agent
or the Lenders, or an advance or expenditure therefor, upon
reimbursement by any Obligor (as defined in the Security
Agreement) of the Agent or the Lender, as applicable, for any
sums expended therefor, such default shall be cured. The
Lenders may make any payment hereby authorized in accordance
with any bill, statement or estimate procured from the
appropriate public office or holder of the claim to be
discharged without inquiry into the accuracy of such bill,
statement or estimate or into the validity of any tax
assessment, sale, forfeiture, tax lien, title or claim except
to the extent such payment is being contested in good faith by
a Pledgor in appropriate proceedings and against which
adequate reserves are being maintained in accordance with GAAP
provided that the Agent has given written notice to the
applicable Obligor of its intent to pay such sums.
8. Events of Default. The occurrence of an event which under the
Acquisition Loan Agreement would constitute a Default or Event
of Default shall be a Default or Event of Default, as the case
may be, hereunder.
9. Remedies.
(a) General Remedies. Upon the occurrence of an Event of Default
and during the continuation thereof, the Agent and the Lenders
shall have, in respect of the Pledged Collateral of any
Pledgor, in addition to the rights and remedies provided
herein, in the Loan Documents or by law, the rights and
remedies of a secured party under the UCC or any other
applicable law.
(b) Sale of Pledged Collateral. Upon the occurrence of an Event of
Default and during the continuation thereof, without limiting the
generality of this Section and without notice, the Agent may, in its
sole and absolute discretion, sell or otherwise dispose of or realize
upon the Pledged Collateral, or any part thereof, in one or more
parcels, at public or private sale, at any exchange or broker's board
or elsewhere, at such price or prices and on such other terms as the
Agent may deem commercially reasonable, for cash, credit or for future
delivery or otherwise, in each case in accordance with applicable law.
To the extent permitted by law, any Lender may in such event, bid for
the purchase of such securities. Each Pledgor agrees that, to the
extent notice of sale shall be required by law and has not been waived
by such Pledgor, any requirement of reasonable notice shall be met if
notice, specifying the place of any public sale or the time after
which any private sale is to be made, is personally served on or
mailed, postage prepaid, to such Pledgor, in accordance with the
notice provisions of Section 9.2 of the Acquisition Loan Agreement at
least ten (10) days before the time of such sale. The Agent shall not
be obligated to make any sale of Pledged Collateral of such Pledgor
regardless of notice of sale having been given. The Agent may adjourn
any public or private sale from time to time by announcement at the
time and place fixed therefor, and such sale may, without further
notice, be made at the time and place to which it was so adjourned.
(c) Private Sale. Upon the occurrence of an Event of Default and
during the continuation thereof, the Pledgors recognize that the Agent
may deem it impracticable to effect a public sale of all or any part
of the Pledged Shares or any of the securities constituting Pledged
Collateral and that the Agent may, therefore, determine to make one or
more private sales of any such securities to a restricted group of
purchasers who will be obligated to agree, among other things, to
acquire such securities for their own account, for investment and not
with a view to the distribution or resale thereof. Each Pledgor
acknowledges that any such private sale may be at prices and on terms
less favorable to the seller than the prices and other terms which
might have been obtained at a public sale and, notwithstanding the
foregoing, agrees that such private sale shall be deemed to have been
made in a commercially reasonable manner and that the Agent shall have
no obligation to delay sale of any such securities for the period of
time necessary to permit the issuer of such securities to register
such securities for public sale under the Securities Act of 1933. Each
Pledgor further acknowledges and agrees that any offer to sell such
securities which has been (i) publicly advertised on a bona fide basis
in a newspaper or other publication of general circulation in the
financial community of New York, New York (to the extent that such
offer may be advertised without prior registration under the
Securities Act of 1933), or (ii) made privately in the manner
described above, shall be deemed to involve a "public sale" under the
UCC, notwithstanding that such sale may not constitute a "public
offering" under the Securities Act of 1933, and the Agent may, in such
event, bid for the purchase of such securities.
(d) Retention of Pledged Collateral. In addition to the rights and
remedies hereunder, upon the occurrence and during the
continuance of an Event of Default, the Agent may, after
providing the notices required by Section 9-621 of the UCC or
otherwise complying with the requirements of applicable law of
the relevant jurisdiction, retain all or any portion of the
Pledged Collateral in satisfaction of the Secured Obligations.
Unless and until the Agent shall have provided such notices,
however, the Agent shall not be deemed to have retained any
Pledged Collateral in satisfaction of any Secured Obligations
for any reason.
(e) Deficiency. In the event that the proceeds of any sale,
collection or realization are insufficient to pay all amounts
to which the Agent or the Lenders are legally entitled, the
Pledgors shall be jointly and severally liable for the
deficiency, together with interest thereon at the default rate
specified in Section 2.4 of the Acquisition Loan Agreement,
together with the costs of collection and the reasonable fees
of any attorneys employed by the Agent to collect such
deficiency. Any surplus remaining after the full payment and
satisfaction of the Secured Obligations shall be returned to
the Pledgors or to whomsoever a court of competent
jurisdiction shall determine to be entitled thereto.
(f) Right of Agent to Appoint Receiver. Without limiting and in
addition to any other rights, options and remedies Agent and
Lenders have hereunder or under the Loan Documents, the UCC,
at law or in equity, upon the occurrence and continuation of
an Event of Default to the extent permitted by law, Agent
and Lenders shall have the right to apply for and have a
receiver appointed by a court of competent jurisdiction in
any action taken by Agent and Lenders to enforce their
rights and remedies in order to manage, protect and preserve
the Pledged Collateral and continue the operation of the
businesses of the Pledgors and their Subsidiaries and to
collect all revenues and profits thereof and apply the same
to the payment of all expenses and other charges of such
receivership including the compensation of the receiver and
to the payments as aforesaid until a sale or other
disposition of such Pledged Collateral shall be finally made
and consummated.
10. Rights of the Agent.
(a) Power of Attorney. In addition to other powers of attorney
contained herein, each Pledgor hereby designates and appoints
the Agent, on behalf of the Lenders, and each of its designees
or agents as attorney-in-fact of such Pledgor, irrevocably and
with full power of substitution, with authority to take any or
all of the following actions upon the occurrence and during
the continuance of an Event of Default whether in the name of
the Agent, any Lender or any Pledgor, as Agent may consider
necessary or desirable for the purpose of exercising such
actions:
(i) to demand, collect, settle, compromise, adjust and give
discharges and releases concerning the Pledged Collateral of
such Pledgor, all as the Agent may reasonably determine;
(ii) to commence and prosecute any actions at any court for the
purposes of collecting any of the Pledged Collateral of such
Pledgor and enforcing any other right in respect thereof;
(iii) to pay or discharge taxes, liens, security interests, or other
encumbrances levied or placed on or threatened against the
Pledged Collateral of such Pledgor;
(iv) to direct any parties liable for any payment under any of the
Pledged Collateral to make payment of any and all monies due
and to become due thereunder directly to the Agent or as the
Agent shall direct;
(v) to receive payment of and receipt for any and all monies,
claims, and other amounts due and to become due at any time in
respect of or arising out of any Pledged Collateral of such
Pledgor;
(vi) to sign and endorse any drafts, assignments, proxies, transfer
powers, verifications, notices and other documents relating to
the Pledged Collateral of such Pledgor;
(vii) to settle, compromise or adjust any suit, action or proceeding
described above and, in connection therewith, to give such
discharges or releases as the Agent may deem reasonably
appropriate;
(viii) execute and deliver all assignments, conveyances, statements,
financing statements, renewal financing statements, pledge
agreements, affidavits, notices and other agreements,
instruments and documents that the Agent may determine
necessary in order to perfect and maintain the security
interests and liens granted in this Pledge Agreement and in
order to fully consummate all of the transactions contemplated
herein;
(ix) to exchange any of the Pledged Collateral of such Pledgor or
other property upon any merger, consolidation, reorganization,
recapitalization or other readjustment of the issuer thereof
and, in connection therewith, deposit any of the Pledged
Collateral of such Pledgor with any committee, depository,
transfer agent, registrar or other designated agency upon such
terms as the Agent may determine;
(x) to vote for a shareholder resolution, or to sign an instrument
in writing, sanctioning the transfer of any or all of the
Pledged Shares of such Pledgor into the name of the Agent or
one or more of the Lenders or into the name of any transferee
to whom the Pledged Shares of such Pledgor or any part thereof
may be sold pursuant to Section 10 hereof; and
(xi) to do and perform all such other acts and things as the Agent
may reasonably deem to be necessary, proper or convenient in
connection with the Pledged Collateral of such Pledgor.
This power of attorney is a power coupled with an interest and shall be
irrevocable for so long as this Pledge Agreement is in effect and until
this Pledge Agreement is terminated in accordance with Section 15(a)
hereof. The Agent shall be under no duty to exercise or withhold the
exercise of any of the rights, powers, privileges and options expressly
or implicitly granted to the Agent in this Pledge Agreement, and shall
not be liable for any failure to do so or any delay in doing so. The
Agent shall not be liable for any act or omission or for any error of
judgment or any mistake of fact or law in its individual capacity or
its capacity as attorney-in-fact except acts or omissions resulting
from its gross negligence or willful misconduct. This power of attorney
is conferred on the Agent solely to protect, preserve and realize upon
its security interest in Pledged Collateral.
(b) Performance by the Agent of Pledgor's Obligations. If any Pledgor fails
to perform any agreement or obligation contained herein, after notice
by Agent to Pledgor, the Agent itself may perform, or cause performance
of, such agreement or obligation, and the expenses of the Agent
incurred in connection therewith shall be payable by the Pledgors on a
joint and several basis pursuant to Section 13 hereof.
(c) Assignment by the Agent. The Agent may from time to time assign the
Secured Obligations and any portion thereof and/or the Pledged
Collateral and any portion thereof, and the assignee shall be entitled
to all of the rights and remedies of the Agent under this Pledge
Agreement in relation thereto.
(d) The Agent's Duty of Care in Respect of the Pledged Collateral. The
Agent's sole duty with respect to the safe custody of the Pledged
Collateral, while being held by the Agent hereunder, under Section
9-207 of the UCC (as defined in the Security Agreement), shall be
substantially equal to that which the Agent accords its own property.
Other than this duty, the Agent shall have no duty or liability to
preserve rights pertaining thereto, it being understood and agreed
that the Pledgors shall be responsible for the preservation of all
rights in the Pledged Collateral of such Pledgor, and the Agent shall
be relieved of all responsibility for Pledged Collateral upon
surrendering it or tendering the surrender of it to the Pledgors. It
is understood and agreed that the Agent shall not have responsibility
for (i) ascertaining or taking action with respect to calls,
conversions, exchanges, maturities, tenders or other matters relating
to any Pledged Collateral, whether or not the Agent has or is deemed
to have knowledge of such matters, or (ii) taking any necessary steps
to preserve rights against any parties with respect to any Pledged
Collateral.
(e) Voting Rights in Respect of the Pledged Collateral.
(i) So long as no Default or Event of Default shall have occurred and be
continuing, to the extent permitted by law, each Pledgor may exercise
any and all voting and other consensual rights pertaining to the
Pledged Collateral of such Pledgor or any part thereof for any purpose
not inconsistent with the terms of this Pledge Agreement or the
Acquisition Loan Agreement; and
(ii) Upon the occurrence and during the continuance of a Default or Event of
Default, all rights of a Pledgor to exercise the voting and other
consensual rights which it would otherwise be entitled to exercise
pursuant to paragraph (i) of this Section shall cease immediately and
without notice to any Pledgor or action by or on behalf of Agent or any
other Person and all such rights shall thereupon become vested solely
and exclusively in the Agent for the ratable benefit of the Lenders
automatically without any action by any Person which shall then have
the sole right to exercise such voting and other consensual rights.
(f) Dividend Rights in Respect of the Pledged Collateral.
(i) So long as no Default or Event of Default shall have occurred and be
continuing and subject to Section 4(b) hereof, each Pledgor may receive
and retain any and all dividends (other than dividends constituting
Pledged Collateral which are addressed above) or interest paid in
respect of the Pledged Collateral to the extent they are allowed under
the Acquisition Loan Agreement.
(ii) Upon the occurrence and during the continuance of a Default or Event of
Default:
(A) all rights of a Pledgor to receive the dividends and interest payments
which it would otherwise be authorized to receive and retain pursuant
to paragraph (i) of this Section shall cease immediately without any
notice to such Pledgor or action by or on behalf of Agent or any other
Person and all such rights shall thereupon be vested solely and
exclusively in the Agent which shall then have the sole right to
receive and hold as Pledged Collateral such dividends and interest
payments; and
(B) all dividends and interest payments which are received by a Pledgor
contrary to the provisions of paragraph (A) of this Section shall be
received in trust for the benefit of the Agent, shall be segregated
from other property or funds of such Pledgor, and shall be forthwith
paid over to the Agent as Pledged Collateral in the exact form
received, to be held by the Agent as Pledged Collateral and as further
collateral security for the Secured Obligations.
(g) Release of Pledged Collateral. The Agent may release any of the Pledged
Collateral from this Pledge Agreement or may substitute any of the
Pledged Collateral for other Pledged Collateral without altering,
varying or diminishing in any way the force, effect, lien, pledge or
security interest of this Pledge Agreement as to any Pledged Collateral
not expressly released or substituted, and this Pledge Agreement shall
continue as a first priority lien on all Pledged Collateral not
expressly released or substituted.
11. Rights of Required Lenders. All rights of the Agent hereunder, if not
exercised by the Agent, may be exercised by the Required Lenders.
12. Application of Proceeds. Upon the acceleration of the Secured
Obligations pursuant to Section 7 of the Acquisition Loan Agreement,
any payments in respect of the Secured Obligations and any proceeds of
any Pledged Collateral, when received by the Agent or any of the
Lenders in cash or its equivalent, will be applied in the order set
forth in Section 7 of the Acquisition Loan Agreement, and each Pledgor
irrevocably waives the right to direct the application of such payments
and proceeds and acknowledges and agrees that the Agent shall have the
continuing and exclusive right to apply and reapply any and all such
payments and proceeds in the Agent's sole discretion, notwithstanding
any entry to the contrary upon any of its books and records.
13. Costs of Counsel. At all times hereafter, the Pledgors agree to
promptly pay upon demand any and all reasonable costs and expenses of
the Agent or the Lenders, (a) as required under Section 9.5 of the
Acquisition Loan Agreement and (b) subject to the limitations on the
fees of counsel to the Agent and the Lenders set forth in Section 9.5
of the Acquisition Loan Agreement, as reasonably necessary to protect
the Pledged Collateral or to exercise any rights or remedies under this
Pledge Agreement or with respect to any Pledged Collateral, including
the costs and expenses of the Agent's counsel and of any experts or
agents that the Agent may incur in connection with (i) the
administration of this Pledge Agreement, (ii) the custody,
preservation, sale or collection of, or realization upon, any Pledged
Collateral, and (iii) the failure of a Pledgor to perform or observe
any covenant or agreement hereunder. All of the foregoing costs and
expenses shall constitute Secured Obligations and Secured Obligations
hereunder.
14. Indemnity. Without limitation of its indemnification obligations under
the other Loan Documents, each Pledgor jointly and severally agrees to
indemnify the Agent, each Lender, and each of their Affiliates and
their respective members, partners, directors, officers, employees,
agents and advisors of the Agent, each Lender and each of their
Affiliates (each such Person being called an "Indemnitee") against, and
hold each Indemnitee harmless from, any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses and disbursements of any kind or nature whatsoever
(including, without limitation, fees and disbursements of counsel and
in-house documentation and diligence fees and legal expenses (subject
to any applicable limitation on the fees of counsel to the Agent and
the Lenders set forth in Section 9.5 of the Acquisition Loan
Agreement)) which may be imposed on, incurred by or asserted against
any Indemnitee arising out of, in connection with, or as a result of,
the execution, delivery or performance of this Pledge Agreement or any
claim, litigation, investigation or proceeding relating hereto or to
the Pledged Collateral, whether or not any Indemnitee is a party
thereto; provided that such indemnity shall not, as to any Indemnitee,
be available to the extent that such losses, claims, damages,
liabilities or related expenses are determined by a court of competent
jurisdiction by final and nonappealable judgment to have resulted from
the gross negligence or willful misconduct of such Indemnitee.
15. Continuing Agreement.
(a) This Pledge Agreement shall be a continuing agreement in every respect
and shall remain in full force and effect until the Secured Obligations
have been paid in full (other than any contingent indemnification
obligations set forth in the Loan Documents). Upon such payment in
full, this Pledge Agreement shall be automatically terminated and the
Agent and the Lenders shall, upon the request and at the expense of the
Pledgors, forthwith release all of its liens and security interests
hereunder and shall execute and deliver all UCC termination statements
and/or other documents reasonably requested by the Obligors evidencing
such termination.
(b) This Pledge Agreement shall continue to be effective or be
automatically reinstated, as the case may be, if at any time payment,
in whole or in part, of any of the Secured Obligations is rescinded or
must otherwise be restored or returned by the Agent or any Lender as a
preference, fraudulent conveyance or otherwise under any bankruptcy,
insolvency or similar law, all as though such payment had not been
made; provided that in the event payment of all or any part of the
Secured Obligations is rescinded or must be restored or returned, all
reasonable costs and expenses (including without limitation any
reasonable legal fees and disbursements) incurred by the Agent or any
Lender in defending and enforcing such reinstatement shall be deemed
to be included as a part of the Secured Obligations.
16. Amendments; Waivers; Modifications; No Waiver of Defaults. This Pledge
Agreement and the provisions hereof may not be amended, waived,
modified, changed, discharged or terminated except as set forth in
Section 9.1 of the Acquisition Loan Agreement.
17. Successors in Interest. This Pledge Agreement shall create a continuing
security interest in the Pledged Collateral and shall be binding upon
each Pledgor, its successors and assigns and shall inure, together with
the rights and remedies of the Agent and the Lenders hereunder, to the
benefit of the Agent and the Lenders and their successors and permitted
assigns; provided, however, that none of the Pledgors may assign its
rights or delegate its duties hereunder without the prior written
consent of each Lender or the Required Lenders, as required by the
Acquisition Loan Agreement. To the fullest extent permitted by law,
each Pledgor hereby releases the Agent and each Lender, and its
successors and assigns, from any liability for any act or omission
relating to this Pledge Agreement or the Pledged Collateral, except for
any liability arising from the gross negligence or willful misconduct
of the Agent, or such Lender, or its officers, employees or agents.
18. Notices. All notices required or permitted to be given under this
Pledge Agreement shall be in conformance with Section 9.2 of the
Acquisition Loan Agreement.
19. Counterparts. This Pledge Agreement may be executed in any number of
counterparts, each of which where so executed and delivered shall be an
original, but all of which shall constitute one and the same
instrument. It shall not be necessary in making proof of this Pledge
Agreement to produce or account for more than one such counterpart.
20. Headings. The headings of the sections and subsections hereof are
provided for convenience only and shall not in any way affect the
meaning or construction of any provision of this Pledge Agreement.
21. Governing Law; Submission to Jurisdiction; Venue. THIS PLEDGE
AGREEMENT, AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER,
SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH,
THE LAW OF THE STATE OF NEW YORK. Each Pledgor hereby irrevocably and
unconditionally: (i) submits for itself and its property in any legal
action or proceeding relating to this Pledge Agreement and the other
Loan Documents to which it is a party, or for recognition and
enforcement of any judgment in respect thereof, to the non-exclusive
general jurisdiction of the courts of the State of New York, the courts
of the United States of America for the Southern District of New York,
and appellate courts from any thereof; (ii) consents that any such
action or proceeding may be brought in such courts and waives any
objection that it may now or hereafter have to the venue of any such
action or proceeding in any such court or that such action or
proceeding was brought in an inconvenient court and agrees not to plead
or claim the same; (iii) agrees that service of process in any such
action or proceeding may be effected by mailing a copy thereof by
registered or certified mail (or any substantially similar form of
mail), postage prepaid, to the Borrower at its address set forth in
subsection 9.2 of the Acquisition Loan Agreement or at such other
address of which the Agent shall have been notified pursuant thereto;
(iv) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit
the right of Agent or any Lender to bring proceedings against a Pledgor
in the courts of any other jurisdiction having jurisdiction; (v) agrees
that any judicial proceedings against Agent or any Lender involving,
directly or indirectly, the Secured Obligations, any Loan Document or
any related agreement shall be brought only in courts of the State of
New York, the courts of the United States of America for the Southern
District of New York, and appellate courts from any thereof; and (vi)
waives, to the maximum extent not prohibited by law, any right it may
have to claim or recover in any legal action or proceeding referred to
in this subsection any special, exemplary, punitive or consequential
damages.
22. Waiver of Jury Trial. EACH PLEDGOR, THE AGENT AND THE LENDERS HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION
OR PROCEEDING RELATING TO THIS PLEDGE AGREEMENT OR ANY OTHER LOAN
DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
23. Severability. If any provision of any of this Pledge Agreement is
determined to be illegal, invalid or unenforceable, such provision
shall be fully severable and the remaining provisions shall remain in
full force and effect and shall be construed without giving effect to
the illegal, invalid or unenforceable provisions.
24. Entirety. This Pledge Agreement and the other Loan Documents represent
the entire agreement of the parties hereto and thereto, and supersede
all prior agreements and understandings, oral or written, if any,
including any commitment letters or correspondence relating to the Loan
Documents or the transactions contemplated herein and therein.
25. Survival. All representations and warranties of the Pledgors hereunder
shall survive the execution and delivery of this Pledge Agreement, and
the other Loan Documents, the delivery of the Notes and the making of
the Loans.
26. Other Security. To the extent that any of the Secured Obligations are
now or hereafter secured by property other than the Pledged Collateral
(including, without limitation, real and other personal property owned
by a Pledgor), or by a guarantee, endorsement or property of any other
Person, then the Agent and the Lenders shall have the right to proceed
against such other property, guarantee or endorsement upon the
occurrence and during the continuation of any Event of Default, and the
Agent and the Lenders have the right, in their sole discretion, to
determine which rights, security, liens, security interests or remedies
the Agent and the Lenders shall at any time pursue, relinquish,
subordinate, modify or take with respect thereto, without in any way
modifying or affecting any of them or any of the Agent's and the
Lenders' rights or the Secured Obligations under this Pledge Agreement
or under any other of the Loan Documents.
27. Joint and Several Obligations of Pledgors.
(a) Each of the Pledgors is accepting joint and several
liability hereunder in consideration of the financial accommodation to be
provided by the Lenders under the Acquisition Loan Agreement, for the mutual
benefit, directly and indirectly, of each of the Pledgors and in consideration
of the undertakings of each of the Pledgors to accept joint and several
liability for the obligations of each of them.
(b) Each of the Pledgors jointly and severally hereby
irrevocably and unconditionally accepts, not merely as a surety but also as a
co-debtor, joint and several liability with the other Pledgors with respect to
the payment and performance of all of the Secured Obligations arising under this
Pledge Agreement and the other Loan Documents, it being the intention of the
parties hereto that all the Secured Obligations shall be the joint and several
obligations of each of the Pledgors without preferences or distinction among
them.
(c) Notwithstanding any provision to the contrary contained
herein, or in any other of the Loan Documents the obligations of each Guarantor
under the Acquisition Loan Agreement and the other Loan Documents shall be
limited to an aggregate amount equal to the largest amount that would not render
such obligations subject to avoidance under Section 548 of the Bankruptcy Code
or any comparable provisions of any applicable state law.
[Remainder of Page Intentionally Left Blank]
-Signature Pages Follow-
Each of the parties hereto has caused a counterpart of this Pledge
Agreement to be duly executed and delivered as of the date first above written.
BORROWER: INFOCROSSING, INC., a Delaware corporation
By: /s/ ZACH LONSTEIN
-----------------
Name: Zach Lonstein
Title: Chief Executive Officer
GUARANTORS: INFOCROSSING SOUTHEAST, INC.,
a Georgia corporation formerly known as Amquest, Inc.
By: /s/ ZACH LONSTEIN
-----------------
Name: Zach Lonstein
Title: Chief Executive Officer
INFOCROSSING WEST, INC., a California corporation formerly
known as ITO Acquisition Corporation and doing business as
Systems Management Specialists
By: /s/ ZACH LONSTEIN
-----------------
Name: Zach Lonstein
Title: Chief Executive Officer
Accepted and agreed to as
of the date first above written.
CAPITALSOURCE FINANCE LLC, as Agent
By: /s/ JOSEPH TURITZ
------------------
Name: Joseph Turitz
Title: General Counsel
Schedule 2(a)
to
Pledge Agreement
dated as of July 29, 2004
in favor of CapitalSource Finance LLC
as Agent
PLEDGED SHARES
PLEDGOR: INFOCROSSING, INC.
Number of Class of Certificate Percentage
---------- ---------
Name of Subsidiary Shares Stock Number Ownership
------------------ ------ ----- ------ ---------
Infocrossing Southeast, Inc. 1,000 Common 3 100%
ETG, Inc. 1,000,000 Common 3 100%
Infocrossing Services, Inc. 100 Common 3 100%
Infocrossing West, Inc. 100 Common 2 100%
PLEDGOR: INFOCROSSING SOUTHEAST, INC.
Number of Class of Certificate Percentage
--------- --------
Name of Subsidiary Shares Stock Number Ownership
Infocrossing Services Southeast, Inc. 100 Common 2 100%
PLEDGOR: INFOCROSSING WEST, INC.
Number of Class of Certificate Percentage
--------- --------
Name of Subsidiary Shares Stock Number Ownership
Infocrossing Services West, Inc. 100 Common 1 100%
Schedule 4(a)
to
Pledge Agreement
dated as of July 29, 2004
in favor of CapitalSource Finance LLC
as Agent
Irrevocable Stock Power
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers to
the following shares of capital stock of _________, a ____________ corporation:
No. of Shares Certificate No.
----------- ------------
and irrevocably appoints __________________________________ its agent and
attorney-in-fact to transfer all or any part of such capital stock and to take
all necessary and appropriate action to effect any such transfer. The agent and
attorney-in-fact may substitute and appoint one or more persons to act for him.
-------------------------------
By:
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Name:
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Title: