Document:

f8k092013ex10ii_intercloud.htm

 

Exhibit 10.2

 

PLEDGE AGREEMENT

 

This Pledge Agreement (this “Agreement”) dated as of September 20, 2013 by and among each of the undersigned pledgors (each, a “Pledgor” and, together with any other entity that becomes a pledgor hereunder pursuant to Section 26 hereof, the “Pledgors”) and PNC BANK, NATIONAL ASSOCIATION, as agent for Lenders (as defined below) (in such capacity, “Agent”).

 

BACKGROUND TO THE AGREEMENT

 

Pledgors and the other Loan Parties have entered into a Revolving Credit and Security Agreement dated as of the date hereof (as amended, modified, restated or supplemented from time to time, the “Loan Agreement”) with the financial institutions named therein or which hereafter become a party thereto (each a “Lender” and collectively, “Lenders”) and Agent pursuant to which Agent and Lenders have agreed, subject to the terms and conditions contained therein, to provide certain financial accommodations to certain Loan Parties.

 

In order to induce Agent and Lenders to provide or continue to provide the financial accommodations described in the Loan Agreement, Pledgors have agreed to pledge and grant a security interest to Agent for its benefit and for the ratable benefit of Lenders in the Collateral (as hereinafter defined).

 

NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

 

1.             Definitions.  All capitalized terms used herein which are not defined shall have the meanings given to them in the Loan Agreement.

 

2.             Pledge and Grant of Security Interest.  To secure the full and punctual payment and performance of the Obligations (the “Indebtedness”), each Pledgor hereby pledges, assigns, hypothecates, transfers and grants a security interest to Agent for its benefit and for the ratable benefit of Lenders in all of the following (the “Collateral”):

 

(a)              the shares of stock set forth under such Pledgor’s name on Schedule A annexed hereto (as such schedule may be updated from time to time to reflect the acquisition of any additional shares of stock by such Pledgor in accordance with subsection (c) below or the Collateral of any additional Pledgors which become party to this Agreement in accordance with Section 26) and expressly made a part hereof (the “Pledged Stock”), the certificates representing the Pledged Stock and all dividends, cash, instruments and other property or proceeds from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of the Pledged Stock;

 

  

 

  

 

(b)             all of each Pledgor’s now owned or hereafter acquired rights (but not its obligations), membership interests and other equity ownership interests (whether certificated or uncertificated) in each limited liability company set forth on Schedule A (collectively, the “Pledged Membership Interests”) and each of such limited liability company’s successors, including, without limitation, (i) all rights, proceeds, distributions, interest, dividends, options, warrants, increases, profits and income from such limited liability company (ii) the right to participate in the management of the business and affairs of such limited liability companies, (iii) the right to become, or to exercise the rights or powers of, a member of such limited liability companies, and (iv) the certificates (if any) representing the Pledged Membership Interests;

 

(c)              all additional (i) shares of stock of any issuer of the Pledged Stock and the certificates representing such additional shares, (ii) membership interests of any issuer of Pledged Membership Interests and the certificates evidencing such additional membership interests (to the extent certificated) in each limited liability company set forth on Schedule A (each issuer of the foregoing together with each issuer of Pledged Stock, an “Issuer”) from time to time acquired by any Pledgor in any manner, including, without limitation, stock dividends or a distribution in connection with any increase or reduction of capital, reclassification, merger, consolidation, sale of assets, combination of shares, stock split, spin-off or split-off (which shares and certificates shall be deemed to be part of the Collateral), and all dividends, cash, instruments and other property or proceeds from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such shares of the Pledged Stock or Pledged Membership Interests; and

 

(d)              all options and rights, whether as an addition to, in substitution of or in exchange for any shares of the Pledged Stock or Pledged Membership Interests.

 

3.             Delivery of Collateral.  All certificates representing or evidencing the (i) Pledged Stock and (ii) certificated Pledged Membership Interests (including Pledged Membership Interests which become certificated after the date hereof) shall be delivered to and held by or on behalf of Agent pursuant hereto and shall be accompanied by duly executed instruments of transfer or assignment in blank, all in form and substance satisfactory to Agent.  Each Pledgor hereby authorizes the Issuer upon demand by Agent to deliver any certificates, instruments or other distributions issued in connection with the Collateral directly to Agent, in each case to be held by Agent, subject to the terms hereof.  Agent shall have the right, at any time during the continuance of an Event of Default, in its discretion and without notice to any Pledgor, to transfer to or to register in the name of Agent or any of its nominees any or all of the Pledged Stock or Pledged Membership Interests.  In addition, Agent shall have the right at any time to exchange certificates or instruments representing or evidencing Pledged Stock or Pledged Membership Interests for certificates or instruments of smaller or larger denominations.

 

4.             Representations and Warranties of Pledgor.  Each Pledgor represents and warrants to Agent (which representations and warranties shall be deemed to continue to be made until all of the Indebtedness has been paid in full and the Loan Agreement has been irrevocably terminated) that:

 

  

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(a)              Each Pledgor has the requisite power and authority to enter into this Agreement, to pledge the Collateral for the purposes described herein and to carry out the transactions contemplated by this Agreement.

 

(b)              The execution, delivery and performance by each Pledgor of this Agreement and the pledge of the Collateral hereunder have been duly and properly authorized and do not and will not result in any violation of any agreement, indenture, instrument, license, judgment, decree, order, law, statute, ordinance or other governmental rule or regulation applicable to such Pledgor.

 

(c)              This Agreement constitutes the legal, valid and binding obligation of each Pledgor enforceable against such Pledgor in accordance with its terms.

 

(d)              Each Pledgor is the direct and beneficial owner of each share of the Pledged Stock and Pledged Membership Interests set forth under such Pledgor’s name on Schedule A annexed hereto.

 

(e)              All of the shares of the Pledged Stock and Pledged Membership Interests have been duly authorized, validly issued and are fully paid and nonassessable.

 

(f)               Upon delivery of the Pledged Stock and the Pledged Membership Interests (to the extent certificated) to Agent or an agent for Agent (which, for the avoidance of doubt, includes the Term Lender), this Agreement creates and grants a valid lien on and perfected security interest in the Collateral and the proceeds thereof, subject to no prior security interest, mortgage, pledge, claim, lien, charge, hypothecation, assignment, offset or encumbrance whatsoever (collectively, “Liens”), other than any Permitted Encumbrances, or to any agreement, other than the Term Loan Documents, purporting to grant to any third party a Lien upon the property or assets of any Pledgor which would include the Collateral.

 

(g)              There are no restrictions on transfer of the Pledged Stock or Pledged Membership Interests contained in the certificate of formation, operating agreement Certificate of Incorporation or by-laws, as applicable, of the Issuer or otherwise which have not otherwise been enforceably and legally waived by the necessary parties.

 

(h)              None of the Pledged Stock or Pledged Membership Interests have been issued or transferred in violation of the securities registration, securities disclosure or similar laws of any jurisdiction to which such issuance or transfer may be subject.

 

(i)               There are no pending or, to the best of each Pledgor’s knowledge, threatened actions or proceedings before any court, judicial body, administrative agency or arbitrator which may materially adversely affect the Collateral.

 

(j)               No consent, approval, authorization or other order of any Person other than the Term Lender (which has been obtained), and no consent, authorization, approval or other action by, and no notice to or filing with, any governmental authority or regulatory body is required by any Pledgor either (i) for the pledge of the Collateral pursuant to this Agreement or for the execution, delivery or performance of this Agreement or (ii) for the exercise by the Agent of the voting or other rights provided for in this Agreement or the remedies in respect of the Collateral pursuant to this Agreement, except as may be required in connection with such disposition by laws affecting the offering and sale of securities generally.

 

  

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(k)              No notification of the pledge evidenced hereby to any Person is required.

 

(l)               The Pledged Stock and Pledged Membership Interests constitute the percentage of the issued and outstanding shares of capital stock and limited liability company interests of the Issuers set forth on Schedule A annexed hereto.

 

(m)             As of the date hereof, there are no existing options, warrants, calls or commitments of any such character whatsoever relating to any Pledged Stock or Pledged Membership Interests and no indebtedness or other security convertible into any Pledged Stock or Pledged Membership Interests.

 

The representations and warranties set forth in this Section 4 shall survive the execution and delivery of this Agreement.

 

5.             Covenants.  Until such time as all of the Indebtedness has been paid in full and the Loan Agreement has been irrevocably terminated, each Pledgor shall:

 

(a)              Not sell, assign, transfer, convey, or otherwise dispose of its rights in or to the Collateral or any interest therein; nor create, incur or permit to exist any Lien whatsoever (other than Permitted Encumbrances) with respect to any of the Collateral or the proceeds thereof other than that created hereby.

 

(b)              At Pledgors’ expense, defend Agent’s right, title and security interest in and to the Collateral against the claims of any Person and keep the Collateral free from all Liens, except for the Liens granted to Agent under this Agreement and any Permitted Encumbrances.

 

(c)              Subject to the Intercreditor Agreement, at any time, and from time to time, upon the written request of Agent, execute and deliver such further documents and do such further acts and things as Agent may reasonably request in order to effect the purposes of this Agreement including, but without limitation, delivering to Agent upon the occurrence of an Event of Default irrevocable proxies in respect of the Collateral in form satisfactory to Agent.  Until receipt thereof, but subject to the Intercreditor Agreement, this Agreement shall constitute Pledgor’s proxy to Agent or its nominee to vote all shares of Collateral then registered in such Pledgor’s name.

 

(d)              Within two (2) Business Days of receipt thereof by any Pledgor, deliver to Agent all notices and statements relating to the Collateral received by such Pledgor.

 

(e)              Not consent to or approve the issuance of (i) any additional shares of any class of capital stock of the Issuer; (ii) any securities convertible either voluntarily by the holder thereof or automatically upon the occurrence or nonoccurrence of any event or condition into, or any securities exchangeable for, any such shares; or (iii) any warrants, options, contracts or other commitments entitling any person to purchase or otherwise acquire any such shares.

 

  

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(f)               Not create, incur, assume or suffer to exist any Lien or other encumbrance of any kind (including the charge on property purchased under conditional sales or other title retention agreements) upon any property or assets, whether now owned or hereafter acquired, except for Permitted Encumbrances and other Liens incidental to the conduct of any Pledgor’s business or the ownership of its assets or properties not incurred in connection with the borrowing of money or the acquisition of any asset, and which in the aggregate do not materially detract from any Pledgor’s operations, property or financial condition.

 

(g)              Not convey, sell, lease, transfer or otherwise dispose of in one or a series of related transactions, all or any substantial part of its property, business or assets.

 

6.             Voting Rights and Dividends.  Subject to the Intercreditor Agreement, in addition to Agent’s rights and remedies set forth in Section 8 hereof, in case an Event of Default shall have occurred and has been declared by Agent and is continuing, Agent shall (i) be entitled to vote the Collateral, (ii) be entitled to give consents, waivers and ratifications in respect of the Collateral (each Pledgor hereby irrevocably constituting and appointing Agent, with full power of substitution, the proxy and attorney-in-fact of Pledgor for such purposes) and (iii) be entitled to collect and receive for its own use cash dividends paid on the Collateral.  No Pledgor shall be permitted to exercise or refrain from exercising any voting rights or other powers if, in the reasonable judgment of Agent, such action would have a material adverse effect on the value of the Collateral or any part thereof; and, provided, further, that each Pledgor shall give at least five (5) days’ written notice of the manner in which such Pledgor intends to exercise, or the reasons for refraining from exercising, any voting rights or other powers other than with respect to any election of directors and voting with respect to any incidental matters.  Subject to the Intercreditor Agreement, all dividends and all other distributions in respect of any of the Collateral, whenever paid or made, shall be delivered to Agent to hold as Collateral and shall, if received by any Pledgor, be received in trust for the benefit of Agent, be segregated from the other property or funds of such Pledgor, and be forthwith delivered to Agent as Collateral in the same form as so received (with any necessary endorsement).

 

7.             Events of Default.  The term “Event of Default” wherever used herein shall mean the occurrence of any one of the following events:

 

(a)              An Event of Default shall occur under the Loan Agreement or any Pledgor or the Issuer shall default in the payment of any Obligation;

 

(b)              Any Pledgor shall default in the performance of any of its undertakings or obligations under this Agreement;

 

  

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(c)              Any representation, warranty, statement or covenant made or furnished to Agent by or on behalf of any Pledgor proves to have been false in any material respect when made or furnished or is breached, violated or not complied with; or

 

(d)              The Collateral is subjected to levy of execution, attachment, distraint or other judicial process; or the Collateral is the subject of a claim (other than by Agent or an agent of Agent) of a Lien or other right or interest in or to the Collateral.

 

(e)              Any Loan Party shall (i) apply for, consent to, or suffer to exist the appointment of, or the taking of possession by, a receiver, custodian, trustee, liquidator or other fiduciary of itself or of all or a substantial part of its property, (ii) make a general assignment for the benefit of creditors, (iii) commence a voluntary case under any state or federal bankruptcy laws (as now or hereafter in effect), (iv) be adjudicated a bankrupt or insolvent, (v) file a petition seeking to take advantage of any other law providing for the relief of debtors, (vi) acquiesce to, or fail to have dismissed, within sixty (60) days, any petition filed against it in any involuntary case under such bankruptcy laws, or (vii) take any action for the purpose of effecting any of the foregoing.

 

8.             Remedies.  Subject to the Intercreditor Agreement, upon the occurrence and continuation of an Event of Default, Agent may:

 

(a)              Demand, collect, receipt for, settle, compromise, adjust, sue for, foreclose or realize upon the Collateral (or any part thereof), as Agent may determine in its sole discretion;

 

(b)              Transfer any or all of the Collateral into its name, or into the name of its nominee or nominees;

 

(c)              Exercise all rights with respect to the Collateral including, without limitation, all rights of conversion, exchange, subscription or any other rights, privileges or options pertaining to any shares of the Collateral as if it were the absolute owner thereof, including, but without limitation, the right to exchange, at its discretion, any or all of the Collateral upon the merger, consolidation, reorganization, recapitalization or other readjustment of the Issuer thereof, or upon the exercise by any Issuer of any right, privilege or option pertaining to any of the Collateral, and, in connection therewith, to deposit and deliver any and all of the Collateral with any committee, depository, transfer agent, registrar or other designated agent upon such terms and conditions as it may determine, all without liability except to account for property actually received by it;

 

(d)              Subject to the requirements of applicable law, sell, assign and deliver the whole or, from time to time, any part of the Collateral at the time held by Agent, at any private or public sale or auction, with or without demand, advertisement or notice of the time or place of sale or adjournment thereof or otherwise (all of which are hereby waived, except such notice as is required by applicable law and cannot be waived), for cash or credit or for other property for immediate or future delivery, and for such price or prices and on such terms as Agent in its sole discretion may determine, or as may be required by applicable law.

 

  

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Each Pledgor hereby waives and releases any and all right or equity of redemption, whether before or after sale hereunder.  At any such sale, unless prohibited by applicable law, Agent may bid for and purchase the whole or any part of the Collateral so sold free from any such right or equity of redemption.  All moneys received by Agent hereunder whether upon sale of the Collateral or any part thereof or otherwise shall be held by Agent and applied by it as provided in Section 11 hereof.  No failure or delay on the part of Agent in exercising any rights hereunder shall operate as a waiver of any such rights nor shall any single or partial exercise of any such rights preclude any other or future exercise thereof or the exercise of any other rights hereunder.  Agent shall have no duty as to the collection or protection of the Collateral or any income thereon nor any duty as to preservation of any rights pertaining thereto, except to apply the funds in accordance with the requirements of Section 11 hereof.  Agent may exercise its rights with respect to property held hereunder without resort to other security for or sources of reimbursement for the Indebtedness.  In addition to the foregoing, Agent shall have all of the rights, remedies and privileges of a secured party under applicable law and the Uniform Commercial Code of New York regardless of the jurisdiction in which enforcement hereof is sought.

 

9.             [Intentionally Omitted].

 

10.           Private Sale.  Notwithstanding anything contained in Section 9, each Pledgor recognizes that Agent may be unable to effect (or to do so only after delay which would adversely affect the value that might be realized from the Collateral) a public sale of all or part of the Collateral by reason of certain prohibitions contained in the Securities Act, and may be compelled to resort to one or more private sales to a restricted group of purchasers who will be obliged to agree, among other things, to acquire such Collateral for their own account, for investment and not with a view to the distribution or resale thereof.  Each Pledgor agrees that any such private sale may be at prices and on terms less favorable to the seller than if sold at public sales and that such private sales shall be deemed to have been made in a commercially reasonable manner.  Each Pledgor agrees that Agent has no obligation to delay sale of any Collateral for the period of time necessary to permit any Issuer to register the Collateral for public sale under the Securities Act.

 

11.            Proceeds of Sale.  Subject to the Intercreditor Agreement, the proceeds of any collection, recovery, receipt, appropriation, realization, disposition or sale of the Collateral shall be applied by Agent as follows:

 

(a)              First, to the payment of all costs, expenses and charges of Agent and to the reimbursement of Agent for the prior payment of such costs, expenses and charges incurred in connection with the care and safekeeping of any of the Collateral (including, without limitation, the expenses of any sale or other proceeding, the expenses of any taking, reasonable attorneys’ fees and expenses, court costs, any other fees or expenses incurred or expenditures or advances made by Agent and Lenders in the protection, enforcement or exercise of its rights, powers or remedies hereunder) with interest on any such reimbursement at the rate prescribed in the Loan Agreement as the Default Rate for Revolving Advances consisting of Domestic Rate Loans from the date of payment.

 

  

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(b)              Second, to the payment of the Indebtedness, in whole or in part, in such order as Agent may elect, whether such Indebtedness is then due or not due.

 

(c)              Third, to such Persons as required by applicable law including, without limitation, Section 9-615(a)(3) of the Uniform Commercial Code.

 

(d)              Fourth, to the extent of any surplus thereafter remaining, to Pledgor or as a court of competent jurisdiction may direct.

 

In the event that the proceeds of any collection, recovery, receipt, appropriation, realization or sale are insufficient to satisfy the Indebtedness, each Pledgor shall be liable for the deficiency together with interest thereon at the rate prescribed in the Loan Agreement as the Default Rate for Revolving Advances consisting of Domestic Rate Loans plus the costs and fees of any attorneys employed by Agent and/or Lenders to collect such deficiency.

 

Agent, in its sole and absolute discretion, with or without notice to Pledgors, may deposit any proceeds of any collection, recovery, receipt, appropriation, realization, disposition or sale of the Collateral in a non-interest bearing cash collateral deposit account to be maintained as security for the Indebtedness.

 

12.           Waiver of Marshaling.  Each Pledgor hereby waives any right to compel any marshaling of any of the Collateral.

 

13.           Agent Appointed Attorney-In-Fact and Performance by Agent.  Upon the occurrence and during the continuation of an Event of Default, subject to the Intercreditor Agreement, each Pledgor hereby irrevocably constitutes and appoints Agent as such Pledgor’s true and lawful attorney-in-fact, with full power of substitution, to execute, acknowledge and deliver any instruments and to do in such Pledgor’s name, place and stead, all such acts, things and deeds for and on behalf of and in the name of such Pledgor, which such Pledgor could or might do or which Agent may deem necessary, desirable or convenient to accomplish the purposes of this Agreement, including, without limitation, to execute such instruments of assignment or transfer or orders and to register, convey or otherwise transfer title to the Collateral into Agent’s name.  Each Pledgor hereby ratifies and confirms all that said attorney-in-fact may so do and hereby declares this power of attorney to be coupled with an interest and irrevocable.  If Pledgor fails to perform any agreement herein contained, Agent may itself perform or cause performance thereof, and any costs and expenses of Agent incurred in connection therewith shall be paid by Pledgors as provided in Section 24 hereof.

 

14.           Termination.  This Agreement shall terminate and each Pledgor shall be entitled to the return, at such Pledgor’s expense, of such of the Collateral as has not theretofore been sold, disposed of or otherwise applied pursuant to this Agreement upon payment in full of the Indebtedness and irrevocable termination of the Loan Agreement.

 

  

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15.           Concerning Agent.  The recitals of fact herein shall be taken as statements of Pledgors for which Agent assumes no responsibility.  Agent makes no representation to anyone as to the value of the Collateral or any part thereof or as to the validity or adequacy of the security afforded or intended to be afforded thereby or as to the validity of this Agreement.  Agent shall be protected in relying upon any notice, consent, request or other paper or document believed by it to be genuine and correct and to have been signed by a proper person.  The permissive rights of Agent hereunder shall not be construed as duties of Agent.  Agent shall be under no obligation to take any action toward the enforcement of this Agreement or rights or remedies in respect of any of the Collateral.  Agent shall not be personally liable for any action taken or omitted by it in good faith and reasonably believed by it to be within the power or discretion conferred upon it by this Agreement.

 

16.           Notices.  Any notice or other communication required or permitted pursuant to this Agreement shall be deemed given (a) when personally delivered to any officer of the party to whom it is addressed, (b) on the earlier of actual receipt thereof or three (3) days following posting thereof by certified or registered mail, postage prepaid, (c) upon actual receipt thereof when sent by a recognized overnight delivery service or (d) upon actual receipt thereof when sent by telecopier to the number set forth below with electronic confirmation of receipt, in each case addressed to each party at its address or telecopier number set forth below or at such other address or telecopier number as has been furnished in writing by a party to the other by like notice:

 

	
  

	
If to Agent:

	
PNC Bank, National Association

340 Madison Avenue

New York, New York 10173

Attention:      Patrick McConnell

Telephone:    212-752-6086

Facsimile:       212-303-0060

	
  

	
with a copy to:

	
Hahn & Hessen LLP

488 Madison Avenue

New York, New York 10022

Attention:      Steven J. Seif

Telephone:    212-478-7200

Facsimile:       212-478-7400

	
  

	
If to Pledgors:

	
InterCloud Systems Inc.

331 Newman Springs Road

Red Bank, New Jersey 07701

Attention:      Mr. Daniel Sullivan

Telephone:    (732) 383-1284

E-mail:            daniel@sullivanssite.com

	
  

	
with a copy to:

	
Pryor Cashman LLP

7 Times Square

New York, New York 10036

Attention:      M. Ali Panjwani

Telephone:    212-326-0820

Facsimile:       212-798-6319

 

  

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17.           Governing Law.  This Agreement and all rights and obligations hereunder shall be governed by and construed and enforced in all respects in accordance with the laws of the State of New York applied to contracts to be performed wholly within the State of New York.

 

18.           Waivers.  EACH PARTY HERETO HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (A) ARISING UNDER THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR (B) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OTHER AGREEMENT EXECUTED OR DELIVERED BY THEM IN CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE AND EACH PARTY HERETO HEREBY AGREES AND CONSENTS THAT ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF EACH PARTY TO THE WAIVER OF ITS RIGHT TO TRIAL BY JURY.

 

19.           Litigation.  EACH PLEDGOR EXPRESSLY CONSENTS TO THE JURISDICTION AND VENUE OF EACH COURT OF COMPETENT JURISDICTION LOCATED IN THE STATE OF NEW YORK FOR ALL PURPOSES IN CONNECTION WITH THIS AGREEMENT.  ANY JUDICIAL PROCEEDING BY ANY PLEDGOR AGAINST AGENT INVOLVING, DIRECTLY OR INDIRECTLY ANY MATTER OR CLAIM IN ANY WAY ARISING OUT OF, RELATED TO OR CONNECTED WITH THIS AGREEMENT SHALL BE BROUGHT ONLY IN A STATE COURT LOCATED IN THE COUNTY OF NEW YORK, STATE OF NEW YORK.  EACH PLEDGOR FURTHER CONSENTS THAT ANY SUMMONS, SUBPOENA OR OTHER PROCESS OR PAPERS (INCLUDING, WITHOUT LIMITATION, ANY NOTICE OR MOTION OR OTHER APPLICATION TO EITHER OF THE AFOREMENTIONED COURTS OR A JUDGE THEREOF) OR ANY NOTICE IN CONNECTION WITH ANY PROCEEDINGS HEREUNDER, MAY BE SERVED INSIDE OR OUTSIDE OF THE STATE OF NEW YORK OR THE SOUTHERN DISTRICT OF NEW YORK BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, OR BY PERSONAL SERVICE PROVIDED A REASONABLE TIME FOR APPEARANCE IS PERMITTED, OR IN SUCH OTHER MANNER AS MAY BE PERMISSIBLE UNDER THE RULES OF SAID COURTS.  EACH PLEDGOR WAIVES ANY OBJECTION TO JURISDICTION AND VENUE OF ANY ACTION INSTITUTED HEREON AND SHALL NOT ASSERT ANY DEFENSE BASED ON LACK OF JURISDICTION OR VENUE OR BASED UPON FORUM NON CONVENIENS.

 

  

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20.           No Waiver; Cumulative Remedies.  Any and all of Agent’s and Lenders’ rights with respect to the Liens granted under this Agreement shall continue unimpaired, and each Pledgor shall be and remain obligated in accordance with the terms hereof, notwithstanding (a) the bankruptcy, insolvency or reorganization of any Pledgor, (b) the release or substitution of any item of the Collateral at any time, or of any rights or interests therein, or (c) any delay, extension of time, renewal, compromise or other indulgence granted by Agent and Lenders in reference to any of the Indebtedness.  Each Pledgor hereby waives all notice of any such delay, extension, release, substitution, renewal, compromise or other indulgence, and hereby consents to be bound hereby as fully and effectively as if such Pledgor had expressly agreed thereto in advance.  No failure on the part of Agent or Lenders to exercise, and no delay in exercising, any right, power or remedy hereunder shall operate as a waiver thereof nor shall any single or partial exercise of any such right, power or remedy by Agent and Lenders preclude any other or further exercise thereof or the exercise of any right, power or remedy.  All remedies hereunder are cumulative and are not exclusive of any other remedies provided by law.

 

21.           Severability.  In case any security interest or other right of Agent and/or any Lender shall be held to be invalid, illegal or unenforceable, such invalidity, illegality or unenforceability shall not affect any other security interest or other right, privilege or power granted under this Agreement.  In the event that any provision of this Agreement or the application thereof to Pledgors or any circumstance in any jurisdiction governing this Agreement shall, to any extent, be invalid or unenforceable under any applicable statute, regulation, or rule of law, such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform to such statute, regulation or rule of law, and the remainder of this Agreement and the application of any such invalid or unenforceable provision to parties, jurisdictions, or circumstances other than to whom or to which it is held invalid or unenforceable shall not be affected thereby, nor shall same affect the validity or enforceability of any other provision of this Agreement.

 

22.           Counterparts; Facsimiles.  This Agreement may be executed in one or more counterparts, each of which shall be deemed an original and all of which when taken together shall constitute one and the same instrument.  Any signature delivered by a party by facsimile or other electronic transmission shall be deemed an original signature hereto.

 

23.           Miscellaneous.

 

(a)              This Agreement constitutes the entire and final agreement among the parties with respect to the subject matter hereof and neither this Agreement nor any term hereof may be changed, discharged or terminated orally, but only by an instrument in writing, signed by Agent and each Pledgor.  No waiver of any term or condition of this Agreement, whether by delay, omission or otherwise, shall be effective unless in writing and signed by the party sought to be charged, and then such waiver shall be effective only in the specific instance and for the purpose for which given.

 

(b)              This Agreement shall be binding upon each Pledgor, and each Pledgor’s successors and assigns, and shall inure to the benefit of Agent, Lenders and their successors and assigns.  The term “Agent”, as used herein, shall include any successor or assign of Agent at the time entitled to the pledged interest in the Collateral.

 

(c)              The headings and captions in this Agreement are for purposes of reference only and shall not constitute part of this Agreement for any other purpose.

 

  

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24.           Expenses.  The Collateral shall also secure, and each Pledgor shall pay to Agent on demand, from time to time, all costs and expenses, (including but not limited to, reasonable attorneys’ fees and costs, taxes, and all transfer, recording, filing and other charges) of, or incidental to, the custody, care, transfer, administration of the Collateral or any other collateral, or in any way relating to the enforcement, protection or preservation of the rights or remedies of Agent and Lenders under this Agreement or with respect to any of the Indebtedness.

 

25.           Recapture.  Anything in this Agreement to the contrary notwithstanding, if Agent and/or Lenders receives any payment or payments on account of the Indebtedness, which payment or payments or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside and/or required to be repaid to a trustee, receiver, or any other party under the United States Bankruptcy Code, as amended, or any other federal or state bankruptcy, reorganization, moratorium or insolvency law relating to or affecting the enforcement of creditors’ rights generally, common law or equitable doctrine, then to the extent of any sum not finally retained by Agent and/or Lenders, each Pledgor’s obligations to Agent and Lenders shall be reinstated and this Agreement shall remain in full force and effect (or be reinstated) until payment shall have been made to Agent, which payment shall be due on demand.

 

26.           Additional Pledgors.  Pursuant to the Loan Agreement, each Subsidiary of a Pledgor that was not in existence on the date of the Loan Agreement may be required to enter into this Agreement as a Pledgor upon becoming a Subsidiary of such Pledgor if such Subsidiary owns or possesses property of a type that would be considered Collateral hereunder.  Upon execution and delivery by the Agent and such Subsidiary of a supplement to this Agreement in form and substance satisfactory to Agent, such Subsidiary shall become a Pledgor hereunder with the same force and effect as if originally named as a Pledgor herein.  The execution and delivery of such supplement shall not require the consent of Pledgor hereunder.  The rights and obligations of Pledgor hereunder shall remain in full force and effect notwithstanding the addition of any new Pledgor as a party to this Agreement.

 

27.           Intercreditor Agreement.  Notwithstanding anything herein to the contrary, the obligations of Pledgors under this Agreement, the lien and security interest granted to Agent pursuant to this Agreement, the release of Collateral from the Liens granted and created hereby and the exercise of any right or remedy by Agent hereunder are, in each case, subject to the provisions of the Intercreditor Agreement.  In the event of any conflict or inconsistency between the provisions of the Intercreditor Agreement and this Agreement, the provisions of the Intercreditor Agreement shall control.  Notwithstanding any other provision contained herein, until such time as the Term Loan Agreement has been terminated, physical delivery by any Pledgor of Collateral to the Term Lender shall satisfy any such delivery obligations to the Agent hereunder.

 

[Signature page follows]

 

  

12

  

 

IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the day and year first written above.

 

 

	 	INTERCLOUD SYSTEMS, INC. 

 

By: /s/ Lawrence Sands_____________________

Name:   Lawrence Sands

Its:        Senior Vice President

ADEX CORPORATION

 

By: /s/ Lawrence Sands_____________________

Name:  Lawrence Sands

Its:       Vice President

PNC BANK, NATIONAL ASSOCIATION,

as Agent

 

By:/s/ Kevin Magdan______________________

Name:  Kevin Magdan

Its:       Senior Vice President

 

 

Signature page to Pledge Agreement

  

 

  

 

SCHEDULE A

 

PLEDGED STOCK

 

	
Issuer

	 	
Class of Stock

	 	
Stock Certificate Number

	 	
Par Value

	 	
Number of Shares

	
Tropical Communications, Inc.

	 	
Common

	 	
02

	 	
$1.00

	 	
100

	
ADEX Corporation

	 	
Common

	 	
18

	 	
-

	 	
5

	
ADEX Corporation

	 	
Common

	 	
17

	 	
-

	 	
5

	
ADEX Corporation

	 	
Common

	 	
16

	 	
-

	 	
35

	
ADEX Corporation

	 	
Common

	 	
15

	 	
-

	 	
55

	
T N S, Inc.

	 	
Common

	 	
3

	 	
-

	 	
500

	
T N S, Inc.

	 	
Common

	 	
6

	 	
-

	 	
300

	
T N S, Inc.

	 	
Common

	 	
5

	 	
-

	 	
200

	
ADEXCOMM Corporation

	 	
Common

	 	
1

	 	
-

	 	
100

	
AW Solutions, Inc.

	 	
Common

	 	
10

	 	
$0.01

	 	
5,000

PLEDGED MEMBERSHIP INTERESTS

Rives-Monteiro Leasing, LLC – 100% of membership interests held by InterCloud Systems, Inc.

Rives-Monteiro Engineering, LLC – 49% of membership interests held by InterCloud Systems, Inc.

AW Solutions Puerto Rico, LLC – 100% of membership interests held by InterCloud Systems, Inc.

ADEX Puerto Rico, LLC – 100% of membership interests held by InterCloud Systems, Inc.

Environmental Remediation and Financial Services, LLC – 100% of membership interests held by ADEX Corporation.

 

 

Schedule Af8k092013ex10iii_intercloud.htm

Exhibit 10.3

 

EXECUTION VERSION

 

THIRD AMENDMENT AND CONSENT dated as of September 20, 2013 (“Amendment”), executed in connection with the LOAN AND SECURITY AGREEMENT, dated as of September 17, 2012 (as such Agreement has been and may hereafter be amended, supplemented or restated from time to time, the “Loan Agreement”), by and among INTERCLOUD SYSTEMS, INC. f/k/a GENESIS GROUP HOLDINGS, INC., a Delaware corporation (the “Borrower”), RIVES-MONTEIRO LEASING, LLC, an Alabama limited liability company, TROPICAL COMMUNICATIONS, INC., a Florida corporation, ADEXCOMM CORPORATION, a Florida corporation, ENVIRONMENTAL REMEDIATION AND FINANCIAL SERVICES, LLC, a New Jersey limited liability company, AWS SOLUTIONS, INC., a Florida corporation, and each other Person that is now, or from time to time hereafter may become, a party thereto as a guarantor (collectively, the “Guarantors,” and each a “Guarantor”), MIDMARKET CAPITAL PARTNERS, LLC, a Delaware limited liability company (“MMCP”), in its capacity as agent for the Lenders, as hereinafter defined (in such capacity, the “Agent”), and each of the financial institutions which is now or which hereafter becomes a party thereto as a lender (each individually a “Lender”, and collectively, the “Lenders”). Terms which are capitalized in this Amendment and not otherwise defined shall have the meanings ascribed to such terms in the Loan Agreement.

 

WHEREAS, Borrower has requested and Lenders have agreed to (i) consent to Loan Parties’ execution and delivery of the PNC Loan Documents (defined below) and incurrence of Liens in connection therewith, (ii) consent to the Loan Parties’ incurrence of Indebtedness pursuant to the PNC Credit Agreement (defined below), (iii) extend the Second Additional Term Loan (defined below) to Borrower and (iv) agree to certain modifications to the terms and provisions of the Loan Agreement, in each case on the terms and subject to the conditions contained in this Amendment, as more particularly described in this Amendment;

 

NOW, THEREFORE, in consideration of the mutual promises contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by each party hereto, and intending to be legally bound, the Borrower, the Guarantors, the Agent and the Lenders hereby agree as follows:

 

Section One. Consent.

 

(a)            Effective upon the satisfaction of the conditions precedent contained in Section Four (a) hereof, and notwithstanding any of the restrictions contained in Section 6 of the Loan Agreement or anything to the contrary contained in the Loan Agreement or the other Loan Documents, Lenders hereby consent to the following:

 

(i)               Loan Parties’ execution and delivery of the PNC Loan Documents as in effect on the date of this Amendment and as may be amended to the extent permitted by the Intercreditor Agreement;

 

(ii)              Loan Parties’ incurrence of Liens in connection with the PNC Loan Documents to secure the PNC Obligations, to the extent of the principal amount set forth in clause (k) of Section 6.1 of the Loan Agreement; and

 

  

 

  

 

(iii)             Loan Parties’ incurrence of Indebtedness under the PNC Credit Agreement, to the extent of the principal amount set forth in clause (k) of Section 6.1 of the Loan Agreement (as amended by Section Two (a)(vi) of this Amendment).

 

(b)           Effective upon the satisfaction of the conditions precedent contained in Section Four (b) hereof, and notwithstanding any of the restrictions contained in Section 6 of the Loan Agreement or anything to the contrary contained in the Loan Agreement or the other Loan Documents, Lenders hereby consent to Loan Parties’ incurrence of Indebtedness under the PNC Credit Agreement, to the extent of the principal amount set forth in clause (k) of Section 6.1 of the Loan Agreement (as amended by Section Two (b)(vii) of this Amendment).

 

Section Two. Amendment.

 

(a)           Subject to the satisfaction of the conditions precedent contained in Section Four (a) hereof, the Loan Agreement is hereby amended effective as of the date of this Amendment as follows:

 

(i)              Section 1.1. Certain Defined Terms. Section 1.1 of the Loan Agreement is amended by adding the following defined terms thereto: “Intercreditor Agreement”, “PNC Credit Agreement”, “PNC Loan Documents”, “PNC Obligations”, “Third Amendment” and “Third Amendment Closing Date”:

 

“Intercreditor Agreement” means that certain Intercreditor Agreement, dated as of September 20, 2013, among Agent, as Term Loan Agent (as defined therein) and PNC Bank, National Association, as Revolving Agent (as defined therein).

 

“PNC Credit Agreement” means that certain Revolving Credit and Security Agreement, dated as of September 20, 2013 (as the same may be amended, restated, supplemented or otherwise modified from time to time), among Borrower, Guarantors and any other person that is or becomes a borrower thereunder, the financial institutions which are or which become a party thereto as lenders and PNC Bank, National Association, as agent for such lenders.

 

“PNC Loan Documents” means, collectively, the PNC Credit Agreement and the “Other Documents” as such term is defined in the PNC Credit Agreement.

 

“PNC Obligations” means the “Obligations” as such term is defined in the PNC Credit Agreement.

 

  

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“Third Amendment” means the Third Amendment and Consent executed in connection with this Agreement, dated as of September 20, 2013.

 

“Third Amendment Closing Date” means September 20, 2013.

 

(ii)            Section 1.1. Definition of “Maturity Date”. Section 1.1 of the Loan Agreement is amended by deleting the definition of “Maturity Date” in its entirety and by substituting the following in lieu thereof:

 

“Maturity Date” means September 17, 2017, provided, however, if Borrower fails to raise by the Term Decrease Date at least $20,000,000 in connection with the Offering, the Maturity Date shall automatically mean, and become, June 17, 2014.

 

(iii)           Section 1.1. Definition of “Permitted Encumbrances”. The definition of “Permitted Encumbrances” in Section 1.1 of the Loan Agreement is amended by (i) deleting therefrom the word “and” which immediately precedes clause (L) thereof and (ii) adding the following immediately after clause (L) thereof:

 

; and

 

(M) Liens securing the PNC Obligations, to the extent of the principal amount set forth in clause (k) of Section 6.1 of this Agreement

 

(iv)          Section 1.1. Definition of “Subordinated Debt”. The definition of “Subordinated Debt” in Section 1.1 of the Loan Agreement is amended by deleting the last sentence of such definition in its entirety and by substituting the following in lieu thereof:

 

For the avoidance of doubt, none of the Indebtedness evidenced by or payable pursuant to the ADEX Note, the ADEX Excepted Payments or the PNC Loan Documents shall constitute Subordinated Debt.

 

(v)           Section 2.5(F) clause (i). Mandatory Prepayment. Clause (i) of Section 2.5(F) of the Loan Agreement is amended by deleting therefrom the reference to the date “April 30, 2013” and replacing it with the date “December 31, 2013.”

 

(vi)          Section 6.1. Indebtedness and Liabilities. Section 6.1 of the Loan Agreement is amended by (i) deleting therefrom the word “and” which immediately precedes clause (j) thereof and (ii) adding the following immediately after clause (j) thereof:

 

  

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; and (k) Indebtedness owing under the PNC Credit Agreement in an amount equal to the sum of (i) an aggregate principal amount not to exceed $390,000 at any one time outstanding, provided that any such amount shall be used exclusively to pay the transactional fees and expenses relating to the events contemplated to occur under the PNC Loan Documents and this Amendment on the Third Amendment Closing Date, plus (ii) all interest, fees, costs and expenses that are capitalized into principal under the PNC Loan Documents as in effect on the date of this Amendment and as may be amended to the extent permitted by the Intercreditor Agreement

 

(vii)            Section 6.3(C). No Pledge Restrictions. Section 6.3(C) of the Loan Agreement is amended by deleting therefrom the term “Loan Documents” and replacing it with the terms “Loan Documents and PNC Loan Documents.”

 

(viii)            Section 6.19. Amendments to Subordinated Debt, Earn-Out Obligations  or Preferred Stock. Section 6.19 of the Loan Agreement is amended by deleting (i) the caption “Amendments to Subordinated Debt, Earn-Out Obligations or Preferred Stock” and replacing it with the caption “Amendments to PNC Loan Documents, Subordinated Debt, Earn-Out Obligations or Preferred Stock” and (ii) the first sentence of Section 6.19 in its entirety and by substituting the following in lieu thereof:

 

No Loan Party shall amend, supplement or otherwise modify the terms of payment of any of the PNC Loan Documents (except to the extent permitted by the Intercreditor Agreement), Subordinated Debt, Earn-Out Obligations, ERFS Earn-Out Obligations, Preferred Stock or ERFS Preferred Stock, in any manner adverse to the interests of Agent or any Lender without the prior written consent of Agent.

 

(b)           Subject to the satisfaction of the conditions precedent contained in Section Four (b) hereof, the Loan Agreement is hereby amended effective as of the date such conditions precedent are satisfied:

 

(i)               Section 1.1. Certain Defined Terms. Section 1.1 of the Loan Agreement is amended by (i) deleting the definitions of “Additional Term Loan”, “Additional Term Loan Maturity Date”, “Additional Term Note”, “Term Loan” and “Term Note” in their entirety, and (ii) by adding the following defined terms thereto: “First Additional Term Loan”, “First Additional Term Loan Installment Date”, “First Additional Term Loan Maturity Date”, “First Additional Term Note”, “Second Additional Term Loan”, “Second Additional Term Loan Closing Date” , “Second Additional Term Loan Maturity Date”, “Second Additional Term Loan Transaction Fee”, “Second Additional Term Note”, “Term Loan” and “Term Note”:

 

  

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“First Additional Term Loan” has the meaning given such term in Section 2.1.

 

“First Additional Term Loan Installment Date”

 

means November 13, 2013.

 

“First Additional Term Loan Maturity Date” means the first yearly anniversary of the Second Additional Term Loan Closing Date.

 

“First Additional Term Note” means, collectively, the promissory notes payable by Borrower to Lenders, each in an amount equal to such Lender’s Commitment Percentage of the First Additional Term Loan, each dated as of the First Amendment Closing Date, in a form acceptable to Agent, issued pursuant to Section 2.1, which evidences Borrower’s indebtedness in respect of the First Additional Term Loan, and any amendment or restatement thereof.

 

“Second Additional Term Loan” has the meaning given such term in Section 2.1.

 

“Second Additional Term Loan Closing Date” means the date on which all of the conditions set forth in Section Four (b) of the Third Amendment have been satisfied.

 

“Second Additional Term Loan Maturity Date” means the first yearly anniversary of the Second Additional Term Loan Closing Date.

 

“Second Additional Term Loan Transaction Fee” has the meaning given such term in Section 2.4(A).

 

“Second Additional Term Note” means, collectively, the promissory notes payable by Borrower to Lenders, each in an amount equal to such Lender’s Commitment Percentage of the Second Additional Term Loan, each dated as of the Second Additional Term Loan Closing Date, in a form acceptable to Agent, issued pursuant to Section 2.1, which evidences Borrower’s indebtedness in respect of the Second Additional Term Loan, and any amendment or restatement thereof.

 

  

5

  

 

 

“Term Loan” means, collectively, the Original Term Loan, the First Additional Term Loan and the Second Additional Term Loan, and any amendment or restatement thereof.

 

“Term Note” means, collectively, the Original Term Note, the First Additional Term Note and the Second Additional Term Note.

 

(ii)              Section 2.1. Term Loan. Section 2.1 of the Loan Agreement is deleted in its entirety and the following is substituted in lieu thereof:

 

Term Loan. Subject to the terms and conditions of this Agreement and in reliance upon the representations and warranties of Borrower set forth herein and in the other Loan Documents, Lenders agree to lend to Borrower the Term Loan in the aggregate original principal amount of Seventeen Million Five Hundred Thousand Dollars ($17,500,000) which shall be funded as follows: (a) on the Closing Date, Lenders shall make a loan to Borrower in the original principal amount of Thirteen Million Dollars ($13,000,000) (the “Original Term Loan”), (b) on the First Amendment Closing Date, Lenders shall make a loan to Borrower in the original principal amount of Two Million Dollars ($2,000,000) (the “First Additional  Term Loan”) and (c) on the Second Additional Term Loan Closing Date, Lenders shall make a loan to Borrower in the original principal amount of Two Million Five Hundred Thousand Dollars ($2,500,000) (the “Second Additional Term Loan”). The Original Term Loan shall be due and payable in full on the Maturity Date, the First Additional Term Loan shall be due and payable in full on the First Additional Term Loan Maturity Date and the Second Additional Term Loan shall be due and payable in full on the Second Additional Term Loan Maturity Date, in each case without defense, set off or counterclaim of any sort. Amounts borrowed under this Section 2.1 and repaid may not be reborrowed. In order to evidence each Lender’s Commitment Percentage of the Term Loan, (i) on or prior to the Closing Date, Borrower shall execute and deliver to each Lender the Original Term Note, (ii) on or prior to the First Amendment Closing Date, Borrower shall execute and deliver to each Lender the First Additional Term Note and (iii) on or prior to the Second Additional Term Loan Closing Date, Borrower shall execute and deliver to each Lender the Second Additional Term Note.

 

  

6

  

 

(iii)             Section 2.2. Use of Proceeds. Section 2.2 of the Loan Agreement is amended by adding the following new sentence after the second sentence of Section 2.2: “The proceeds of the Second Additional Term Loan shall be used exclusively to (i) pay the transactional fees and expenses relating to the events contemplated to occur under the Third Amendment on the Second Additional Term Loan Closing Date, (ii) redeem Series F Preferred Stock in an aggregate amount not to exceed $1,500,000 and repay the existing Indebtedness under the ICG Note (as defined in the Second Amendment), provided that such redemption or repayment, as applicable, is otherwise permitted pursuant to this Agreement and (iii) support Borrower’s working capital and long-term financing needs.”

 

(iv)            Transaction Fee. Section 2.4(A) of the Loan Agreement is amended by deleting the last sentence of Section 2.4(A) in its entirety and by substituting the following in lieu thereof:

 

On the Second Additional Term Loan Closing Date, Borrower shall be obligated to pay to Agent for its own account, in cash, a non-refundable fee (a “Second Additional Term Loan Transaction Fee”) in the amount of One Hundred Twenty Thousand Dollars ($120,000). In addition, on the Second Additional Term Loan Closing Date, Borrower shall be obligated to pay or reimburse Agent in cash for all reasonable costs and expenses incurred by Agent in connection with any matters contemplated by the Third Amendment which are due and payable as of the Second Additional Term Loan Closing Date. All amounts payable pursuant to this Section 2.4(A), including without limitation, the Transaction Fee and the Second Additional Term Loan Transaction Fee, shall be paid by netting the amount thereof against the proceeds of the Original Term Loan and the Second Additional Term Loan, as applicable.

 

(v)             Section 2.5(C). Scheduled Payments. Section 2.5(C) of the Loan Agreement is amended by (i) deleting the last sentence of Section 2.5(C) in its entirety and by substituting the following in lieu thereof: “The principal amount of the First Additional Term Loan shall be repaid in two installments, (i) on the First Additional Term Loan Installment Date in the amount of $500,000 and (ii) on the First Additional Term Loan Maturity Date in an amount equal to the entire remaining unpaid principal amount of the First Additional Term Loan, by automatic wire transfer to Agent’s bank account.” and (ii) adding the following new sentence after the last sentence of Section 2.5(C): “The entire principal amount of the Second Additional Term Loan shall become due and payable in full and be repaid in a single installment on the Second Additional Term Loan Maturity Date, by automatic wire transfer to Agent’s bank account.”

 

  

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(vi)            Section 2.5(E). Voluntary Prepayment. Section 2.5(E) of the Loan Agreement is amended by deleting therefrom the reference to the term “Additional Term Loan” and replacing it with the terms “First Additional Term Loan or Second Additional Term Loan.”

 

(vii)            Section 6.1. Indebtedness and Liabilities. Clause (k) of Section 6.1 of the Loan Agreement is deleted in its entirety and the following is substituted in lieu thereof:

 

Indebtedness owing under the PNC Credit Agreement in an aggregate principal amount not to exceed $10,000,000 at any one time outstanding

 

Section Three. Representations and Warranties. To induce the Agent and the Lenders to execute this Amendment, Borrower and each Guarantor warrant and represent as follows:

 

(a)            all of the representations and warranties contained in the Loan Agreement and each other Loan Document are correct on and as of the date hereof as though made on and as of such date, except to the extent that such representations and warranties relate solely to an earlier date, with the exception of any representation or warranty in respect of the non-existence of any Event of Default, to the extent any such Event of Default was waived pursuant to the Second Amendment;

 

(b)           the execution, delivery and performance of this Amendment by Borrower and each Guarantor is within their respective limited liability company or corporate, as applicable, powers, has been duly authorized by all necessary limited liability company or corporate, as applicable, action on their part, and Borrower and each Guarantor have received all necessary amendments and approvals (if any shall be required) for the execution and delivery of this Amendment;

 

(c)            upon its execution, this Amendment shall constitute the legal, valid and binding obligation of Borrower and each Guarantor, enforceable against each of them in accordance with its terms; and

 

(d)           immediately after giving effect to this Amendment, Borrower and Guarantors are not in default under any indenture, mortgage, deed of trust, or other material agreement or material instrument to which any of them are a party or by which any of them may be bound. Neither the execution and delivery of this Amendment, nor the consummation of the transactions herein contemplated, nor compliance with the provisions hereof, in each case by Borrower and each Guarantor will (i) require any authorization, amendment or approval by, or registration, declaration or filing with, or notice to, any governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, or any third party, except such authorization, amendment, approval, registration, declaration, filing or notice as has been obtained, accomplished or given prior to the date hereof; (ii) violate any provision of any law, rule or regulation (including Regulation X of the Board of Governors of the Federal Reserve System) or of any order, writ, injunction or decree presently in effect having applicability to the Borrower or any Guarantor or of the Borrower’s or any Guarantors’ formation or governing documents; (iii) result in a breach of or constitute a default under any indenture or loan or Loan Agreement or any other material agreement, lease or instrument to which the Borrower or any Guarantor is a party or by which the Borrower, any Guarantor or any of their respective properties may be bound or affected; or (iv) result in, or require, the creation or imposition of any lien upon or with respect to any of the properties now owned or hereafter acquired by the Borrower or any Guarantor, other than liens and security interests in favor of the Agent which secure the Obligations.

 

  

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Section Four. Conditions Precedent to Amendment and Consent.

 

(a)           This Amendment (with the exception of the consents and amendments contemplated to occur pursuant to Section One (b) and Section Two (b) hereof, which shall become effective upon the satisfaction of the condition precedent contained in Section Four (b)) shall become effective upon the satisfaction of all of the following conditions precedent:

 

(i)              Agent shall have received this Amendment, duly executed by the Borrower, each Guarantor and each other party hereto, as well as all other agreements, notes, certificates, orders, authorizations, financing statements, mortgages and other documents which Agent may reasonably request;

 

(ii)              Agent shall have entered into an intercreditor agreement with PNC Bank, National Association, on terms and conditions, and in form and substance, satisfactory to Agent;

 

(iii)             Agent shall have received and reviewed to its satisfaction a substantially final draft of the PNC Credit Agreement and each other PNC Loan Document as Agent may reasonably request;

 

(iv)             Borrower shall have paid directly to Agent’s counsel all attorneys’ fees and disbursements incurred by Agent on its behalf, or on behalf of Lenders, in connection with the Loan Agreement, including the negotiation, preparation and entering into of this Amendment;

 

(v)              After giving effect to the transactions contemplated by this Amendment, as of the Third Amendment Closing Date, no Event of Default or Default shall have occurred and be continuing;

 

(vi)             Agent shall have received the compliance certificate required Section 6.1(g)(D) of the Loan Agreement, in form and substance acceptable to Agent in its discretion, with respect to the incurrence of Subordinated Debt in the form of the ICG Note (as defined in the Second Amendment); and

 

  

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(vii)          All corporate and other proceedings, and all documents, instruments and other legal matters in connection with this Amendment and the transactions contemplated hereby shall be reasonably satisfactory in form and substance to the Agent and its counsel.

 

(b)           Section One (b) and Section Two (b) of this Amendment shall become effective upon the satisfaction of all of the following conditions precedent:

 

(i)               Agent shall have received evidence that Borrower has consummated an Offering and, in connection therewith, it has received at least $20,000,000 in net cash proceeds as a result of such Offering;

 

(ii)              Agent shall have received this Amendment and the Second Additional Term Notes, each in form and substance reasonably satisfactory to Agent, each duly executed by the Borrower and each Guarantor, as applicable, as well as all other agreements, notes, certificates, orders, authorizations, financing statements, mortgages and other documents which Agent may reasonably request;

 

(iii)             Agent shall have received the executed legal opinions of (i) Pryor Cashman LLP and (ii) Lawrence M. Sands, Esq., in form and substance reasonably satisfactory to Agent which shall cover such matters incident to the transactions contemplated by this Amendment, the Second Additional Term Notes, the other Loan Documents and related agreements as Agent may reasonably require and Borrower and each Guarantor hereby authorizes and directs such counsel to deliver such opinions to Agent and Lenders;

 

(iv)             Agent shall have received satisfactory results of an updated lien, tax, judgment and pending litigation search against Borrower and each Guarantor in each jurisdiction deemed necessary by the Agent;

 

(v)              After giving effect to the transactions contemplated by this Amendment, as of the Second Additional Term Loan Closing Date, no Event of Default or Default shall have occurred and be continuing;

 

(vi)             Agent shall have received a certificate of the Secretary of the Borrower and each Guarantor, certifying (i) as true and correct a copy of resolutions adopted by Borrower’s and each Guarantor’s members or directors, as applicable, approving and authorizing the execution, delivery and performance by Borrower and each Guarantor of this Amendment and all other Loan Documents (ii) that there have been no amendments, supplements, or other modifications to Borrower’s or any Guarantor’s respective formation and governance documents since the Closing Date, or attaching updated formation and governance documents as of the Second Additional Term Loan Closing Date, as necessary, and in each case, that the copies of such formation and governance documents delivered to the Agent on such date are true, correct and complete copies as in full force and effect on the Second Additional Term Loan Closing Date and (iii) that the incumbency certificates, setting forth the name(s) and signature(s) of the officers of Borrower and each Guarantor authorized to execute and deliver any Loan Document, previously delivered to the Agent have not been amended and are in full force and effect on the date hereof;

 

  

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(vii)            Agent shall have received a closing certificate signed by an authorized officer of Borrower dated as of the Second Additional Term Loan Closing Date, certifying that (i) all representations and warranties set forth in this Amendment, the Loan Agreement and the other Loan Documents are true and correct in all material respects on and as of such date, except to the extent any such representation or warranty relates only to a specific date, in which case such representation or warranty shall be true and correct in all material respects only as of such specific date, (ii) immediately after giving effect to Section One (b) and Section Two (b) of this Amendment, Borrower is on such date in compliance with all the terms and provisions set forth in this Amendment, the Loan Agreement and the other Loan Documents, (iii) immediately after giving effect to Section One (b) and Section Two (b) of this Amendment, no Default or Event of Default has occurred or is continuing, (iv) Borrower is in compliance with all federal, state and local statutes, rules, regulations and ordinances applicable to it, except those the failure with which to comply could not reasonably be expected to have a Material Adverse Effect and (v) all of the conditions set forth in this Section Four (b) have been satisfied;

 

(viii)           Agent shall have received a solvency certificate signed by an authorized officer of Borrower dated as of the Second Additional Term Loan Closing Date, certifying that immediately after giving effect to the transactions contemplated by Section One (b) and Section Two (b) of this Amendment, Borrower is and will be solvent, is and will be able to pay its debts as they mature, has and will have capital sufficient to carry on its business and all businesses in which it is about to engage, and (i) as of the Second Additional Term Loan Closing Date, the fair present saleable value of its assets, calculated on a going concern basis, is in excess of the amount of its liabilities and (ii) immediately subsequent to the Second Additional Term Loan Closing Date, the fair saleable value of its assets (calculated on a going concern basis) will be in excess of the amount of its liabilities; and

 

(ix)            All corporate and other proceedings, and all documents, instruments and other legal matters in connection with this Amendment and the transactions contemplated hereby shall be reasonably satisfactory in form and substance to the Agent and its counsel.

 

Section Five. Release. Borrower and each Guarantor acknowledge and agree that they have no claims, suits or causes of action against Agent or any Lender and hereby remise, release and forever discharge Agent and each Lender, their officers, directors, members, shareholders, employees, agents, successors and assigns, and any of them, from any claims, suits or causes of action whatsoever, in law or at equity, which Borrower or any Guarantor has or may have arising from any act, omission or otherwise, at any time immediately prior to the effectiveness of (i) this Amendment (excluding Section One (b) and Section Two (b) hereof) and (ii) Section One (b)  and Section Two (b) of this Amendment.

 

  

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Section Six. Confirmation of Existing Agreements.

 

(a)            Pledge Agreement. Borrower, in its capacity as Pledgor under the Pledge Agreement dated September 17, 2012 and executed by Borrower in favor of Agent, hereby acknowledges and confirms the continuing validity and enforceability of such Pledge Agreement, and that the Obligations, which are secured by the liens and security interests granted to Agent for the benefit of Lenders pursuant to such Pledge Agreement, include without limitation the Second Additional Term Loan (as of the Second Additional Term Loan Closing Date) and all other Obligations arising in connection with this Amendment or the transactions contemplated hereunder.

 

(b)            Guaranty Agreement. Each Guarantor, in its capacity as Guarantor under the Guaranty and Suretyship Agreement dated as of September 17, 2012 and entered into by each Guarantor, hereby acknowledges and confirms the continuing validity and enforceability of the Guaranty and Suretyship Agreement, and that the Obligations, which are unconditionally guaranteed by each Guarantor pursuant to the Guaranty and Suretyship Agreement, include without limitation the Second Additional Term Loan (as of the Second Additional Term Loan Closing Date) and all other Obligations arising in connection with this Amendment or the transactions contemplated hereunder.

 

Section Seven. General Provisions.

 

(a)           Within thirty (30) days of the date hereof, Borrower shall have delivered to Agent, in form and substance acceptable to Agent, a springing deposit account control agreement in respect of each deposit account maintained by each Loan Party, duly executed by each applicable Loan Party and each bank at which each such deposit account is maintained, in favor of Agent and PNC Bank, National Association, in accordance with Section 4.8(h) of the PNC Credit Agreement.

 

(b)           Agent and Lenders hereby confirm that each of the Designated Events of Default (as defined in the Second Amendment) have been waived pursuant to the Second Amendment.

 

(c)           The Loan Agreement and all of the other Loan Documents are ratified and confirmed in all respects and shall remain in full force and effect in accordance with their respective terms as so amended. The Borrower and each Guarantor, as applicable, hereby confirm their existing pledge, assignment and grant to the Agent, for the ratable benefit of the Lenders, of a perfected lien on and security interest in the Collateral, as security for the payment and performance of all present and future Obligations. Borrower and each Guarantor hereby confirm that all security interests at any time granted by each of them to the Agent for the ratable benefit of the Lenders in any and all of Borrower’s and each Guarantor’s property and assets, including the Collateral, continue in full force and effect and secure and shall continue to secure the Obligations so long as any such Obligations remain outstanding and that all Collateral subject thereto remains free and clear of any liens or encumbrances other than (i) those in favor of the Agent provided for under the Loan Agreement and the other Loan Documents, and (ii) other Permitted Encumbrances.

 

(d)           All references to the Loan Agreement in the other Loan Documents shall mean the Loan Agreement as heretofore and as hereafter amended, supplemented and modified from time to time.

 

  

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(e)           The execution, delivery and effectiveness of this Amendment shall not operate as a waiver of any right, power or remedy of the Lenders under the Loan Agreement or any of the other Loan Documents, nor constitute a waiver of any provision of the Loan Agreement or any of the other Loan Documents.

 

(f)           This Amendment embodies the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all prior agreements, commitments, arrangements, negotiations or understandings, whether written or oral, of the parties with respect thereto.

 

(g)           This Amendment shall be governed by and construed in accordance with the substantive laws of the State of New York.

 

(h)           This Amendment shall be binding upon and inure to the benefit of the Borrower, each Guarantor, Agent and the Lenders and their respective successors and assigns, except that the Borrower shall not have the right to assign its rights hereunder or any interest herein without the prior written agreement of Agent.

 

(i)            Any provision of this Amendment which is prohibited or unenforceable shall be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof.

 

(j)            Borrower and each Guarantor hereby confirm and agree, and represent and warrant, that all Obligations (whether representing outstanding principal, accrued and unpaid interest, accrued and unpaid fees or any other Obligations of any kind or nature) currently owing by Borrower under the Loan Agreement and the other Loan Documents, as reflected in the books and records of Agent as of the date hereof, are unconditionally owing from and payable by Borrower to Lenders and that Borrower is indebted to Lenders with respect thereto, all without any set-off, deduction, counterclaim or defense.

 

(k)           This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed an original, but all of which counterparts together shall constitute but one and the same instrument. Delivery of an executed counterpart of a signature page to this Amendment by email or facsimile shall be as effective as delivery of a manually executed counterpart thereof.

 

  

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IN WITNESS WHEREOF, the Borrower, each Guarantor, Agent and the Lenders have signed below to indicate their agreement with the foregoing and their intent to be bound thereby.

 

 

	AGENT:   	MIDMARKET CAPITAL PARTNERS, LLC
	 	 	 
	 	By: 	/s/ Joseph Haverkamp
	 	Name: 	Joseph Haverkamp
	 	Title:	Managing Director

 

	LENDERS: 	GREAT AMERICAN LIFE INSURANCE COMPANY
	 	 	 
	 	By:  	/s/ Mark E. Muething
	 	Name:	/s/ Mark E. Muething
	 	Title:	Executive Vice President
	 	Commitment Percentage: 70%

 

	 	GREAT AMERICAN INSURANCE COMPANY
	 	 	 
	 	By:  	/s/ Stephen C. Besaha
	 	Name:	Stephen C. Benaha
	 	Title:	Assistant Vice President
	 	Commitment Percentage: 30%

 

	BORROWER:	INTERCLOUD SYSTEMS, INC.
	 	 	 
	 	By:  	/s/Lawrence Sands
	 	Name:	
Lawrence Sands

	 	Title:	
Senior Vice President

 

 

	GUARANTORS: 	RIVES-MONTEIRO LEASING, LLC
	 	 	 
	 	By:  	/s/Lawrence Sands
	 	Name:	
Lawrence Sands

	 	Title:	Vice President

 

	 	TROPICAL COMMUNICATIONS, INC.
	 	 	 
	 	By:  	/s/Lawrence Sands
	 	Name:	
Lawrence Sands

	 	Title:	Vice President

 

[Third Amendment]

 

  

14

  

 

 

	 	ADEX CORPORATION
	 	 	 
	 	By:  	/s/Lawrence Sands
	 	Name:	Lawrence Sands
	 	Title:	Vice President
	 	 

 

	 	T N S, INC.
	 	 	 
	 	By:  	/s/Lawrence Sands
	 	Name:	
Lawrence Sands

	 	Title:	Vice President
	 

 

	 	ADEXCOMM CORPORATION
	 	 	 
	 	By:  	/s/Lawrence Sands
	 	Name:	
Lawrence Sands

	 	Title:	Vice President
	 

 

	 	ENVIRONMENT REMEDIATION AND FINANCIAL SERVICES, LLC
	 	 	 
	 	By:  	/s/Lawrence Sands
	 	Name:	
Lawrence Sands

	 	Title:	Vice President
	 

 

	 	AWS SOLUTION
	 	 	 
	 	By:  	/s/Lawrence Sands
	 	Name:	
Lawrence Sands

	 	Title:	Vice President
	 

 

 

 [Third Amendment]

 

15

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