Document:

EXHIBIT 10.4

PUBCO SECURITY AGREEMENT

THIS SECURITY AGREEMENT (“Agreement”) is made and entered into as of the [____] day of [_____], 2011, by and among Cahaba Pharmaceuticals, Inc., a Nevada corporation (the “Company”), and Gottbetter & Partners, LLP, in its capacity as collateral agent (in such capacity, the “Collateral Agent”) for the Buyers (as defined below) party to that certain Securities Purchase Agreement, dated as of [__________], 2011 (the “Securities Purchase Agreement”),

WITNESSETH:

WHEREAS, the Company and each party listed as a “Buyer” on the Schedule of Buyers attached to the Securities Purchase Agreement (collectively, the “Buyers”) are parties to that Securities Purchase Agreement, pursuant to which the Company shall sell, and the Buyers shall purchase, the “Notes” (as defined therein);

WHEREAS, pursuant to that certain bridge loan agreement dated as of even date herewith (the “Bridge Loan Agreement”) between the Company and DataCom Systems, Incorporated, a Nevada corporation (the “Borrower”), the Company has agreed to lend the proceeds of the Notes to the Borrower (the “Bridge Loan”); and

WHEREAS, the Company has agreed to grant a security interest in and to the Collateral (as defined in this Agreement) to the Buyers on the terms and conditions set forth in this Agreement;

NOW, THEREFORE, for and in consideration of the bridge loan and other premises and intending to be legally bound, the parties covenant and agree as follows:

1.           Definitions. In addition to the words and terms defined elsewhere in this Agreement, the following words and terms shall have the following meanings, unless the context otherwise clearly requires:

“Bridge Loan Documents” shall mean collectively, this Agreement, the Bridge Loan Agreement, the “Notes” (as defined in the Bridge Loan Agreement) representing the Bridge Loan (the “Bridge Notes”), and all other agreements, documents and instruments executed and delivered in connection therewith, as each may be amended, supplemented or modified from time to time.

“Accounts” shall have the meaning given to that term in the Code, but only insofar as they relate to the Bridge Loan Documents or Proceeds thereof.

“Chattel Paper” shall have the meaning given to that term in the Code, but only insofar as they relate to the Bridge Loan Documents or Proceeds thereof.

  

  

  

 

“Code” shall mean the Uniform Commercial Code as in effect on the date of this Agreement and as amended from time to time, of the state or states having jurisdiction with respect to all or any portion of the Collateral from time to time.

“Collateral” shall mean the Bridge Loan Agreements, Accounts, Chattel Paper, Deposit Accounts, Documents, Equipment, Fixtures, General Intangibles, Instruments, Intellectual Property, Inventory, Investment Property, and (ii) Proceeds thereof.

“Deposit Accounts” shall have the meaning given to that term in the Code, but only insofar as they relate to the Bridge Loan Documents or Proceeds thereof.

“Documents” shall have the meaning given to that term in the Code, but only insofar as they relate to the Bridge Loan Documents or Proceeds thereof.

“Equipment” shall have the meaning given to that term in the Code, but only insofar as they relate to the Bridge Loan Documents or Proceeds thereof.

“Event of Default” shall mean (i) any of the Events of Default described in the Securities Purchase Agreement, the Notes, the Bridge Notes or the Bridge Loan Documents, or (ii) any default by the Company in the performance of its obligations under this Agreement.

“Fixtures” shall have the meaning given to that term in the Code, and shall include without limitation leasehold improvements, but only insofar as they relate to the Bridge Loan Documents or Proceeds thereof.

“General Intangibles” shall have the meaning given to that term in the Code , but only insofar as they relate to the Bridge Loan Documents or Proceeds thereof.

“Instruments” shall have the meaning given to that term in the Code , but only insofar as they relate to the Bridge Loan Documents or Proceeds thereof.

“Inventory” shall have the meaning given to that term in the Code , but only insofar as they relate to the Bridge Loan Documents or Proceeds thereof.

“Investment Property,” “Securities Intermediary” and “Commodities Intermediary” each shall have the meaning set forth in the Code, but only insofar as they relate to the Bridge Loan Documents or Proceeds thereof.

“Know-How” means all documented and undocumented research, ideas, data, theories, conclusions, reports, drawings, designs, blueprints, schematics, exhibits, models, prototypes, source code, object code, flow charts, manuals, processes, specifications, formulae, product configurations, notes, inventions (whether or not patentable and whether or not reduced to practice) and any other information of any kind developed, in development or maintained by the Borrower or any of their respective employees, agents or representatives relating to any goods or services sold or licensed or offered for sale or license by the Borrower  or goods or services which the Borrower or the Subsidiary have a present intention to sell or license, but in each case only insofar as they relate to the Bridge Loan Documents or Proceeds thereof.

  

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“Loan Documents” shall mean collectively, this Agreement, the Notes, the Securities Purchase Agreement and all other agreements, documents and instruments executed and delivered in connection therewith, as each may be amended, supplemented or modified from time to time.

“Permitted Liens” shall mean all (i) all existing liens on the assets of the Company which have been disclosed to the Buyers by the Company on a Schedule attached hereto, and (ii) all purchase money security interests hereinafter incurred by the Company in the ordinary course of business.

“Proceeds” shall have the meaning given to that term in the Code and shall include without limitation whatever is received when Collateral or Proceeds are sold, exchanged, collected or otherwise disposed of, whether cash or non-cash, and includes without limitation proceeds of insurance payable by reason of loss of or damage to Collateral.

“Trade Secret Rights” means all documentation, Know-How and other materials owned by the Company that is considered to be proprietary to the Company, is maintained on a confidential or secret basis, and is generally not known to other persons or entities who are not subject to confidentiality restrictions, but only insofar as they relate to the Bridge Loan Documents or Proceeds thereof.

Capitalized terms used herein without definition shall have the meanings ascribed to them in the Securities Purchase Agreement.

	
  

	
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Security Interest.

(a)           As security for the full and timely payment of the Notes in accordance with the terms of the Securities Purchase Agreement and the performance of the obligations of the Company under the Notes and the Securities Purchase Agreement, the Company agrees that the Buyers shall have, and the Company shall grant and convey to and create in favor of the Buyers, a security interest under the Code in and to such of the Collateral, whether now owned or existing or hereafter acquired or arising and regardless of where located.  The security interest granted to the Buyers in this Agreement shall be a first priority security interest, prior and superior to the rights of all third parties existing on or arising after the date of this Agreement, subject to the Permitted Liens.

(b)           None of the Collateral is in the possession of any bailee, warehousemen, processor or consignee.  Schedule I discloses the Company’s name as of the date hereof as it appears in official filings in the state or province, as applicable, of its incorporation, formation or organization, the type of entity of the Company (including corporation, partnership, limited partnership or limited liability company), the organizational identification number issued by the Company’s state of incorporation, formation or organization (or a statement that no such number has been issued), and the chief place of business, chief executive officer and the office where the Company keep its books and records.  The Company has only one state or province, as applicable, of incorporation, formation or organization.  The Company does not do business and has not done business during the past five (5) years under any trade name or fictitious business name except as disclosed on Schedule I attached hereto.

  

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3.           Provisions Applicable to the Collateral. The parties agree that the following provisions shall be applicable to the Collateral:

(a) The Company covenants and agrees that at all times during the term of this Agreement it shall keep accurate and complete books and records concerning the Collateral that is now owned by the Company.

(b) The Buyers or their representatives shall have the right, upon reasonable prior written notice to the Company and during the regular business hours of the Company, to examine and inspect the Collateral and to review the books and records of the Company concerning the Collateral that is now owned or acquired after the date of this Agreement by the Company and to copy the same and make excerpts therefrom; provided, however, that from and after the occurrence of an Event of Default, the rights of inspection and entry shall be subject to the requirements of the Code.

(c) The Company shall not move the location of its principal executive offices without prior written notification to the Buyers.

(d) Promptly upon request of the Buyers from time to time, the Company shall furnish the Buyers with such information and documents regarding the Collateral and the Company’s financial condition, business, assets or liabilities, at such times and in such form and detail as the Buyers may reasonably request.

(e) During the term of this Agreement, the Company shall deliver to the Buyers, upon their reasonable, written request from time to time, without limitation,

(i) all invoices and customer statements rendered to the Borrower, documents, contracts, chattel paper, instruments and other writings pertaining to the Company’s contracts or the performance of the Company’s contracts relating to the Bridge Loan Documents.

(f) Notwithstanding the security interest in the Collateral granted to and created in favor of the Buyers under this Agreement, the Company shall have the right until one or more Events of Default shall occur, at its own cost and expense, to enforce its contract rights.

(g) After the occurrence of an Event of Default, the Collateral Agent shall have the right, in its sole discretion, to give notice of the Buyers’ security interest to the Borrower, to notify the Borrower to make payment directly to the Buyers and to enforce the Company’s contract rights relating to the Bridge Loan Documents.  It is understood and agreed by the Company that Collateral Agent shall have no liability whatsoever under this subsection (i) except for their own gross negligence or willful misconduct.

  

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(h) The Company shall not change its name, entity status, federal taxpayer identification number, or provincial organizational or registration number, or the state under which it is organized without the prior written consent of the Buyers, which consent shall not be unreasonably withheld.

(i) The Company shall cooperate with the Buyers, at the Company’s expense, in perfecting Buyers’ security interest in any of the Collateral.

(j) The Collateral Agent may file any necessary financing statements and other documents the Collateral Agent deems necessary in order to perfect the Buyers’ security interest without the Company’s signature.  The Company grants to Collateral Agent a power of attorney for the sole purpose of executing any documents on behalf of the Company which the Collateral Agent deems necessary to perfect the Buyers’ security interest.  Such power, coupled with an interest, is irrevocable.

4.           Actions with Respect to Accounts. The Company irrevocably makes, constitutes and appoints the Collateral Agent its true and lawful attorney-in-fact with power to sign its name and to take any of the following actions after the occurrence and prior to the cure of an Event of Default, at any time without notice to the Company and at the Company’s expense:

(a) Verify the validity and amount of, or any other matter relating to, the Collateral by mail, telephone, telegraph or otherwise;

 (g) Enforce payment of and collect any Accounts, by legal proceedings  or otherwise, and for such purpose the Buyers may:

(1) Demand payment of any Accounts or direct any account debtors to make payment of Accounts directly to the Buyers;

(2) Receive and collect all monies due or to become due to the Borrower or the Subsidiary pursuant to the Accounts;

(3) Exercise all of the Borrower’s or the Subsidiary’s rights and remedies with respect to the collection of Accounts;

(4)  Settle, adjust, compromise, extend, renew, discharge or release Accounts in a commercially reasonable manner;

(5) Sell or assign Accounts on such reasonable terms, for such reasonable amounts and at such reasonable times as the Buyers reasonably deems advisable;

(6) Prepare, file and sign the Borrower’s or the Subsidiary’s name or names on any Proof of Claim or similar documents in any proceeding filed under federal or state bankruptcy, insolvency, reorganization or other similar law as to any account debtor;

  

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(7) Prepare, file and sign the Borrower’s or the Subsidiary’s name or names on any notice of lien, claim of mechanic’s lien, assignment or satisfaction of lien or mechanic’s lien or similar document in connection with the Collateral;

(8) Endorse the name of the Borrower or the Subsidiary upon any chattel papers, documents, instruments, invoices, freight bills, bills of lading or similar documents or agreements relating to Accounts or goods pertaining to Accounts or upon any checks or other media of payment or evidence of a security interest that may come into the Buyers’ possession;

(9) Sign the name or names of the Borrower or the Subsidiary to verifications of Accounts and notices of Accounts sent by account debtors to the Borrower; or

(10) Take all other actions that the Buyers reasonably deems to be necessary or desirable to protect the Borrower’s or the Subsidiary’s interest in the Accounts.

(h) Negotiate and endorse any Document in favor of the Buyers or its designees, covering Inventory which constitutes Collateral, and related documents for the purpose of carrying out the provisions of this Agreement and taking any action and executing in the name(s) of Borrower or the Subsidiary any instrument which the Buyers may reasonably deem necessary or advisable to accomplish the purpose hereof. Without limiting the generality of the foregoing, the Collateral Agent shall have the right and power to receive, endorse and collect checks and other orders for the payment of money made payable to the Borrower or the Subsidiary representing any payment or reimbursement made under, pursuant to or with respect to, the Collateral or any part thereof and to give full discharge to the same. The Borrower and each Subsidiary does hereby ratify and approve all acts of said attorney and agrees that said attorney shall not be liable for any acts of commission or omission, nor for any error of judgment or mistake of fact or law, except for said attorney’s own gross negligence or willful misconduct. This power, being coupled with an interest, is irrevocable until the Notes are paid in full (at which time this power shall terminate in full) and the Borrower and the Subsidiary shall have performed all of their obligations under this Agreement. The Borrower and the Subsidiary each further agrees to use its reasonable efforts to assist the Collateral Agent in the collection and enforcement of the Accounts and will not hinder, delay or impede the Buyers in any manner in its collection and enforcement of the Accounts.

 

  

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5.           Preservation and Protection of Security Interest. The Company represents and warrants that it has, and covenants and agrees that at all times during the term of this Agreement, it will have, good and marketable title to the Collateral now owned by it free and clear of all mortgages, pledges, liens, security interests, charges or other encumbrances, except for the Permitted Liens and those junior in right of payment and enforcement to that of the Buyers or in favor of the Buyers, and shall defend the Collateral against the claims and demands of all persons, firms and entities whomsoever. Assuming the Buyers have taken all required action to perfect a security interest in the Collateral as provided by the Code, the Company represents and warrants that as of the date of this Agreement the Buyers have, and that all times in the future the Buyers will have, a first priority perfected security interest in the Collateral, prior and superior to the rights of all third parties in the Collateral existing on the date of this Agreement or arising after the date of this Agreement, subject to the Permitted Liens. Except as permitted by this Agreement, the Company covenants and agrees that it shall not, without the prior written consent of the Buyers (i) borrow against the Collateral or any portion of the Collateral from any other person, firm or entity, except for borrowings which are subordinate to the rights of the Buyers, (ii) grant or create or permit to attach or exist any mortgage, pledge, lien, charge or other encumbrance, or security interest on, of or in any of the Collateral or any portion of the Collateral except those in favor of the Buyers or the Permitted Liens, (iii) permit any levy or attachment to be made against the Collateral or any portion of the Collateral, except those subject to the Permitted Liens, or (iv) permit any financing statements to be on file with respect to any of the Collateral, except financing statements in favor of the Buyers or those with respect to the Permitted Liens. The Company shall faithfully preserve and protect the Buyers’ security interest in the Collateral and shall, at their own cost and expense, cause, or assist the Buyers to cause that security interest to be perfected and continue perfected so long as the Notes or any portion of the Notes are outstanding, unpaid or executory. For purposes of the perfection of the Buyers’ security interest in the Collateral in accordance with the requirements of this Agreement, the Company shall from time to time at the request of the Buyers file or record, or cause to be filed or recorded, such instruments, documents and notices, including assignments, financing statements and continuation statements, as the Buyers may reasonably deem necessary or advisable from time to time in order to perfect and continue perfected such security interest. The Company shall do all such other acts and things and shall execute and deliver all such other instruments and documents, including further security agreements, pledges, endorsements, assignments and notices, as the Buyers in their discretion may reasonably deem necessary or advisable from time to time in order to perfect and preserve the priority of such security interest as a first lien security interest in the Collateral prior to the rights of all third persons, firms and entities, subject to the Permitted Liens and except as may be otherwise provided in this Agreement. The Company agrees that a carbon, photographic or other reproduction of this Agreement or a financing statement is sufficient as a financing statement and may be filed instead of the original.

6.           Insurance. At the reasonable request of the Buyers, the Company’s policies of insurance shall contain loss payable clauses in favor of the Company and the Buyers as their respective interests may appear and shall contain provision for notification of the Buyers thirty (30) days prior to the termination of such policy. At the request of the Buyers, copies of all such policies, or certificates evidencing the same, shall be deposited with the Buyers. If the Company fails to effect and keep in full force and effect such insurance or fail to pay the premiums when due, the Buyers may (but shall not be obligated to) do so for the account of the Company and add the cost thereof to the Notes. The Buyers are irrevocably appointed attorney-in-fact of the Company to endorse any draft or check which may be payable to the Borrower in order to collect the proceeds of such insurance. Any balance of insurance proceeds remaining in the possession of the Buyers after payment in full of the Notes shall be paid over to the Borrower or the Subsidiary or their order.

 

7.           [RESERVED]

  

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8.           Preservation of Rights Against Third Parties; Preservation of Collateral in Buyers’s Possession. Until such time as the Buyers exercise their right to effect the enforcement of the Company’s contract rights relating to the Bridge Loan Documents, the Company assumes full responsibility for taking any and all commercially reasonable steps to preserve rights in respect of its contracts against prior parties. The Buyers shall be deemed to have exercised reasonable care in the custody and preservation of such of the Collateral as may come into its possession from time to time if the Buyers take such action for that purpose as the Company shall request in writing, provided that such requested action shall not, in the judgment of the Buyers, impair the Buyers’ security interest in the Collateral or its right in, or the value of, the Collateral, and provided further that the Buyers receive such written request in sufficient time to permit the Buyers to take the requested action.

	
  

	
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Events of Default and Remedies.

(a) If any one or more of the Events of Default shall occur or shall exist, the Collateral Agent may then or at any time thereafter, so long as such default shall continue, foreclose the lien or security interest in the Collateral in any way permitted by law, or upon fifteen (15) days prior written notice to the Borrower or the Subsidiary, sell any or all Collateral at private sale at any time or place in one or more sales, at such price or prices and upon such terms, either for cash or on credit, as the Collateral Agent, in its sole discretion, may elect, or sell any or all Collateral at public auction, either for cash or on credit, as the Collateral Agent, in its sole discretion, may elect, and at any such sale, the Collateral Agent may bid for and become the purchaser of any or all such Collateral. Pending any such action the Collateral Agent may liquidate the Collateral.

(b) If any one or more of the Events of Default shall occur or shall exist, the Collateral Agents may then, or at any time thereafter, so long as such default shall continue, grant extensions to, or adjust claims of, or make compromises or settlements with, debtors, guarantors or any other parties with respect to Collateral or any securities, guarantees or insurance applying thereon, without notice to or the consent of the Borrower or the Subsidiary, without affecting the Borrower’s or the Subsidiary’s liability under this Agreement or the Notes. Each of the Borrower and the Subsidiary waives notice of acceptance, of nonpayment, protest or notice of protest of any Accounts or Chattel Paper, any of its contract rights or Collateral and any other notices to which the Borrower or the Subsidiary may be entitled.

(c) If any one or more of the Events of Default shall occur or shall exist and be continuing, then in any such event, the Collateral Agent shall have such additional rights and remedies in respect of the Collateral or any portion thereof as are provided by the Code and such other rights and remedies in respect thereof which it may have at law or in equity or under this Agreement, including without limitation the right to enter any premises where Equipment, Inventory and/or Fixtures are located and take possession and control thereof without demand or notice and without prior judicial hearing or legal proceedings, which the Borrower and the Subsidiary expressly waive.

(d) The Collateral Agent shall apply the Proceeds of any sale or liquidation of the Collateral, and, subject to Section 5, any Proceeds received by the Collateral Agent from insurance, first to the payment of the reasonable costs and expenses incurred by the Collateral Agent in connection with such sale or collection, including without limitation reasonable attorneys’ fees and legal expenses, second to the payment of the Notes, pro rata , whether on account of principal or interest or otherwise as the Collateral Agent, in its sole discretion, may elect, and then to pay the balance, if any, to the Borrower or the Subsidiary or as otherwise required by law. If such Proceeds are insufficient to pay the amounts required by law, the Borrower shall be liable for any deficiency.

  

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(e) Upon the occurrence of any Event of Default, the Borrower or the Subsidiary shall promptly upon written demand by the Collateral Agent assemble the Equipment, Inventory and Fixtures and make them available to the Buyers at a place or places to be designated by the Collateral Agent The rights of the Collateral Agent under this paragraph to have the Equipment, Inventory and Fixtures assembled and made available to it is of the essence of this Agreement and the Collateral Agent may, at its election, enforce such right by an action in equity for injunctive relief or specific performance, without the requirement of a bond.

10.           Defeasance. Notwithstanding anything to the contrary contained in this Agreement upon payment and performance in full of the Notes, this Agreement shall terminate and be of no further force and effect and the Buyers shall thereupon terminate their security interest in the Collateral. Until such time, however, this Agreement shall be binding upon and inure to the benefit of the parties, their successors and assigns, provided that, without the prior written consent of the Buyers, the Borrower and the Subsidiary may not assign this Agreement or any of its rights under this Agreement or delegate any of its duties or obligations under this Agreement and any such attempted assignment or delegation shall be null and void. This Agreement is not intended and shall not be construed to obligate the Buyers to take any action whatsoever with respect to the Collateral or to incur expenses or perform or discharge any obligation, duty or disability of the Borrower.

	
  

	
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The Collateral Agent.

(a)           Delegation of Duties.  The Collateral Agent may execute any of its duties under this Agreement or any other Transaction Document by or through agents, employees or attorneys in fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties.  The Collateral Agent shall not be responsible for the negligence or misconduct of any agent or attorney in fact that it selects with reasonable care.

(b)           Liability of Collateral Agent.  None of the Collateral Agent Related Persons (as defined below) shall (i) be liable for any action taken or omitted to be taken by any of them under or in connection with this Agreement or any other Transaction Document or the transactions contemplated hereby (except for its own gross negligence or willful misconduct), or (ii) be responsible in any manner to any of the Buyers for any recital, statement, representation or warranty made by any other party, or any officer thereof, contained in this Agreement or in any other Transaction Document, or in any certificate, report, statement or other document referred to or provided for in, or received by the Collateral Agent under or in connection with, this Agreement or any other Transaction Document, or the validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Transaction Document, or for any failure of  any other party to this Agreement or any other Transaction Document to perform its obligations hereunder or thereunder.  No Collateral Agent Related Person shall be under any obligation to any Buyer to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement or any other Transaction Document, or to inspect the properties, books or records of the Company or any of the Company’s Subsidiaries or Affiliates.  “Collateral Agent Related Persons” means the Collateral Agent and any successor agent arising hereunder, together with their respective affiliates, and the officers, directors, employees, agents and attorneys-in-fact of such persons and affiliates.

  

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(c)           Reliance by Collateral Agent.  The Collateral Agent shall be entitled to rely, and shall be fully protected in relying, upon any writing, resolution, notice, consent, certificate, affidavit, letter, telegram, facsimile, telex or telephone message, statement or other document or conversation believed by it to be genuine and correct and to have been signed, sent or made by the proper person or persons, and upon advice and statements of legal counsel (including counsel to the Company or the Borrower), independent accountants and other experts selected by the Collateral Agent. The Collateral Agent shall be fully justified in failing or refusing to take any action under this Agreement or any other Transaction Document unless it shall first receive such advice or concurrence of the Majority Buyers as it deems appropriate and, if it so requests, it shall first be indemnified to its satisfaction by the Buyers against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action.  The Collateral Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement or any other Transaction Document in accordance with a request or consent of the Majority Buyers and such request and any action taken or failure to act pursuant thereto shall be binding upon all of the Buyers. “Majority Buyers” means at any time a Buyer or Buyers then holding in excess of 50%of the then aggregate unpaid principal amount of the Notes.

(d)           Notice of Default.  The Collateral Agent shall not be deemed to have knowledge or notice of the occurrence of any default or Event of Default, except with respect to defaults in the delivery of any documents or certificates required to be delivered to the Collateral Agent hereunder for the benefit of the Buyers, unless the Collateral Agent shall have received written notice from a Buyer or the Company or the Borrower referring to this Agreement, describing such default or Event of Default and stating that such notice is a “notice of default”.  The Collateral Agent will notify the Buyers of its receipt of any such notice.  The Collateral Agent shall take such action with respect to such Default or Event of Default as may be requested by the Majority Buyers in accordance with this Agreement; provided, however, that unless and until the Collateral Agent has received any such request, the Collateral Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such default or Event of Default as it shall deem advisable or in the best interest of the Buyers.

  

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(e)           Indemnification of Collateral Agent.  Whether or not the transactions contemplated hereby and by the other Transaction Documents are consummated, the Buyers shall indemnify upon demand the Collateral Agent Related Persons (to the extent not reimbursed by or on behalf of the Company or the Borrower and without limiting the obligation of the Company or the Borrower to do so), pro rata, from and against any and all Indemnified Liabilities (as defined below); provided, however, that no Buyer shall be liable for the payment to the Collateral Agent Related Persons of any portion of such Indemnified Liabilities resulting solely from such Person’s gross negligence or willful misconduct.  Without limitation of the foregoing, each Buyer shall reimburse the Collateral Agent upon demand for its ratable share of any costs or out of pocket expenses (including fees and disbursements of legal counsel) incurred by the Collateral Agent in connection with the preparation, execution, delivery, administration, modification, amendment or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement, any other Transaction Document, or any document contemplated by or referred to herein, to the extent that the Collateral Agent is not reimbursed for such expenses by or on behalf of the Company.  Notwithstanding the foregoing, no Buyer shall be required to pay, in total under this paragraph (e) and any similar provision in any other Transaction Document, any amount in excess of the total gross purchase price of the Notes purchased by such Buyer.  The undertaking in this paragraph shall survive the payment of all obligations hereunder and the resignation or replacement of the Collateral Agent.  “Indemnified Liabilities” means all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, charges, expenses and disbursements (including fees and disbursements of legal counsel) of any kind or nature whatsoever which may at any time (including at any time following repayment of the Notes and the termination, resignation or replacement of the Collateral Agent)  be imposed on, incurred by or asserted against any Collateral Agent Related Person in any way relating to or arising out of this Agreement or any document contemplated by or referred to herein, or the transactions contemplated hereby and thereby, or any action taken or omitted by any such Collateral Agent Related Person under or in connection with any of the foregoing, including with respect to any investigation, litigation or proceeding (including any bankruptcy or insolvency proceeding or appellate proceeding) related to or arising out of this Agreement or the Notes or the other Transaction Documents or the use of the proceeds thereof, whether or not any Collateral Agent Related Person is a party thereto.

(f)           Collateral Agent in Individual Capacity.  Any Collateral Agent Related Person may engage in trasactions with, make loans to, acquire equity interests in and generally engage in any kind of business with the Company or the Borrower and their affiliates, including purchasing and holding Notes, as though the Collateral Agent were not the Collateral Agent hereunder and without notice to or consent of the Buyers.  The Buyers acknowledge that, pursuant to such activities, any Collateral Agent Related Person may receive information regarding the Company or the Borrower and their affiliates (including information that may be subject to confidentiality obligations in favor of the Company or the Borrower and their affiliates) and acknowledge that the Collateral Agent shall be under no obligation to provide such information to them.  With respect to any Notes it holds, a Collateral Agent Related Person shall have the same rights and powers under this Agreement as any other Buyer and may exercise the same as though the Collateral Agent were not the Collateral Agent, and the terms “Buyer” and “Buyers” include any such Collateral Agent Related Person in its individual capacity.

(g)           Successor Collateral Agent.  The Collateral Agent may, and at the request of the Majority Buyers shall, resign as Collateral Agent upon 30 days’ notice to the Buyers.  If the Collateral Agent resigns under this Agreement, the Majority Buyers shall appoint from among the Buyers a successor agent for the Buyers, which successor agent shall be approved by the Company, such approval not to be unreasonably withheld.  If no successor agent is appointed prior to the effective date of the resignation of the Collateral Agent, the Collateral Agent may appoint, after consulting with the Buyers and the Company, a successor agent from among the Buyers.  Upon the acceptance of its appointment as successor agent hereunder, such successor agent shall succeed to all the rights, powers and duties of the retiring Collateral Agent and the term “Collateral Agent” shall mean such successor agent and the retiring Collateral Agent’s appointment, powers and duties as Collateral Agent shall be terminated. After any retiring Collateral Agent’s resignation hereunder as Collateral Agent, the provisions of this Section 11 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Collateral Agent under this Agreement.  If no successor agent has accepted appointment as Collateral Agent by the date which is 30 days following a retiring Collateral Agent’s notice of resignation, the retiring Collateral Agent’s resignation shall nevertheless thereupon become effective and the Buyers shall perform all of the duties of the Collateral Agent hereunder until such time, if any, as the Majority Buyers appoint a successor agent as provided for above.

 

  

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Miscellaneous.

(a) The provisions of this Agreement are intended to be severable. If any provision of this Agreement shall for any reason be held invalid or unenforceable in whole or in part in any jurisdiction, such provision shall, as to such jurisdiction, be ineffective to the extent of such invalidity or unenforceability without in any manner affecting the validity or enforceability of such provision in any other jurisdiction or any other provision of this Agreement in any jurisdiction.

(b) No failure or delay on the part of the Buyers in exercising any right, remedy, power or privilege under this Agreement and the Notes shall operate as a waiver thereof or of any other right, remedy, power or privilege of the Buyers under this Agreement, the Notes or any of the other Loan Documents; nor shall any single or partial exercise of any such right, remedy, power or privilege preclude any other right, remedy, power or privilege or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges of the Buyers under this Agreement, the Notes and the other Loan Documents are cumulative and not exclusive of any rights or remedies which they may otherwise have.

(c) Unless otherwise provided herein, all demands, notices, consents, service of process, requests and other communications hereunder shall be in writing and shall be delivered in person or by overnight courier service, or mailed by certified mail, return receipt requested, addressed:

If to Company:

Cahaba Pharmaceuticals, Inc.

517 NW 8 Terrace

Cape Coral, FL 33993

Attention:          Kenneth Spiegeland, CEO

Facsimile:         239-628-4591

with a copy to:

Gottbetter & Partners, LLP

488 Madison Avenue, 12th Floor

New York, NY  10022

Attn: Adam S. Gottbetter, Esq.

Facsimile: (212) 400-6901

 

  

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If to Collateral Agent:

Gottbetter & Partners, LLP

488 Madison Avenue, 12th Floor

New York, NY  10022

Attn: Adam S. Gottbetter, Esq.

Facsimile: (212) 400-6901

Any such notice shall be effective (a) when delivered, if delivered by hand delivery or overnight courier service, or (b) five (5) days after deposit in the United States mail, as applicable.

 

(d) The section headings contained in this Agreement are for reference purposes only and shall not control or affect its construction or interpretation in any respect.

(e) Unless the context otherwise requires, all terms used in this Agreement which are defined by the Code shall have the meanings stated in the Code.

(f) The Code shall govern the settlement, perfection and the effect of attachment and perfection of the Buyers’ security interest in the Collateral, and the rights, duties and obligations of the Buyers, the Borrower and the Subsidiary with respect to the Collateral. This Agreement shall be deemed to be a contract under the laws of the State of New York and the execution and delivery of this Agreement and, to the extent not inconsistent with the preceding sentence, the terms and provisions of this Agreement shall be governed by and construed in accordance with the laws of that State.

(g) This Agreement may be executed in several counterparts, each of which shall be deemed an original but all of which shall constitute one and the same instrument. All of such counterparts shall be read as though one, and they shall have the same force and effect as though all the signers had signed a single page.

[SIGNATURE PAGE FOLLOWS]

 

  

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IN WITNESS WHEREOF, and intending to be legally bound, the parties have executed and delivered this Security Agreement as of the day and year set forth at the beginning of this Security Agreement.

	  	
COMPANY:

	  	  
	  	
CAHABA PHARMACEUTICALS, INC.

	  	  
	  	
By:

	  
	  	  	
Name: Kenneth Spiegeland

	  	  	
Title:  Chief Executive Officer

	
ACCEPTED BY:

	  
	
GOTTBETTER & PARTNERS, LLP

	
as Collateral Agent

	  	  
	
By:

	
  

	  
	  	
Name: Adam S. Gottbetter

	  
	  	
Title: Managing Partner

	  

[SIGNATURE PAGE TO SECURITY AGREEMENT]

 

  

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Schedule I

	
1.

	
State(s) in which Collateral is located:

New York

Nevada

	
2.

	
Company Information:

Cahaba Pharmaceuticals, Inc.

a Nevada corporation

NV ID No.: NV20101632974

Executive Offices Address:

517 NW 8 Terrace

Cape Coral, Florida 33993

Chief Executive Officer:  Kenneth Spiegeland

Foreign Corporation Qualification Numbers:Unassociated Document

EXHIBIT 10.5

BRIDGE LOAN AGREEMENT

THIS BRIDGE LOAN AGREEMENT (this “Agreement”) is made this [___] day of [_______], 2011, by and among DataCom Systems, Incorporated, a Nevada corporation (“Borrower”), and Cahaba Pharmaceuticals, Inc., a Nevada corporation (“Lender”).

WITNESSETH:

WHEREAS, simultaneously herewith Lender is engaged in an offering (the “Note Offering”) of its 10% Secured Convertible Promissory Notes (the “Convertible Notes”) in the aggregate principal amount of up to $1,000,000, which offering is being conducted pursuant to the exemption from registration provided by Rule 506 of Regulation D, Regulation S and/or Section 4(2) under the Securities Act of 1933, as amended (the “Securities Act”); and

WHEREAS, to provide Borrower with sufficient working capital to enable Borrower to fulfill its obligations under certain contractual agreements incident to its business while Lender and Borrower prepare the documentation necessary and appropriate to consummate the Transactions and obtain all necessary approvals from stockholders and third parties, Lender has agreed to utilize the net proceeds of the Note Offering to provide Borrower with a temporary loan in the principal amount of up to $1,000,000 in exchange for one or more 10% secured bridge loan promissory notes (the “Note” or “Notes”), to meet working capital requirements agreed upon by Borrower and Lender;

NOW, THEREFORE, in consideration of the premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Borrower and Lender, intending to be legally bound, agree as follows:

ARTICLE I – LOAN

1.1. Loan. Lender agrees, on the terms and conditions of this Agreement, and subject to the closing of the Note Offering for at least an equal aggregate principal amount, to make loans to Borrower in the amount of up to $1,000,000 (the “Loan”).  As of the date hereof, the Lender has closed on the sale of $__________ aggregate principal amount of Convertible Notes under the Note Offering.  Upon the execution and delivery of this Agreement, Lender shall disburse approximately _________ Hundred _______ Thousand Dollars ($_________) of the Loan to Borrower (representing the net proceeds to Lender of the first Note Offering closing, after payment of all brokerage and other fees and expenses.

Upon the closing of any additional amounts of Convertible Notes under the Note Offering, the Lender shall disburse the net proceeds thereof to the Borrower as additional amounts of the Loan.  The aggregate Loan principal shall be equivalent to the gross proceeds of the Note Offering, without regard to the payment by Lender of any fees or expenses from such gross proceeds.

  

  

  

1.2. The Notes. Borrower has authorized the issuance of the Notes made in favor of Lender by Borrower, which shall be substantially in the form set forth in Exhibit A attached hereto. Borrower shall execute and deliver to Lender a Note in the face amount equal to the gross proceeds of each closing under the Note Offering with respect to which the net proceeds are disbursed to the Borrower.  The Loan shall bear interest at the rate or rates, and shall be due and payable on the date or dates, set forth in the Notes; provided, however, that  upon the consummation of the Merger, all indebtedness (including accrued interest) evidenced by the Notes shall be deemed canceled and paid in full.

1.3. Payments. Subject to the proviso in the preceding Section, Borrower shall repay the unpaid principal amount of, and accrued but unpaid interest on, the Loan (the “Repayment Amount”) on the Due Date (as defined in the Notes) or as otherwise set forth in the Notes, as set forth below:

Borrower shall wire the Repayment Amount in same-day funds in accordance with the wire instructions set forth immediately below, which Repayment Amount shall be held in escrow pursuant to the terms of an escrow agreement by and between Lender and CSC Trust Company of Delaware, as escrow agent (the “Bridge Escrow Agent”), and disbursed in accordance therewith solely for repayment of the aggregate amounts due and payable to the Buyers (defined below) on the Convertible Notes.

 

Wire Instructions

 

	
  

	
Bank:

	
Arkansas Bankers Bank

1020 W 2nd Street

Little Rock, AR 77201

	
  

	
ABA#:

	
082001700

	
  

	
Beneficiary:

	
Hot Springs Bank & Trust

	
  

	
4446 Central Ave,

	
  

	
Hot Springs, AR 71913

	
  

	
Tax ID #:

	
71-0054830

	
  

	
Beneficiary Acct. #:

	
90888

	
  

	
For Final Credit to:

	
DataCom Systems, Incorporated

	
  

	
3400 Central Avenue

	
  

	
Hot Springs, AR 71913

	
  

	
Account #:

	
0104001194

1.4. Conditions to Loan. Notwithstanding the foregoing, the obligation of Lender to disburse the Loan to Borrower is subject to the satisfaction of the following conditions:

(a)           Borrower shall have obtained (and shall have provided copies thereof to Lender) all waivers, consents or approvals, if any, from third parties, and shall have given all notices to third parties, and the failure of which to obtain or to give notice would result in a conflict with, result in a breach of, constitute (with or without due notice or lapse of time or both) a default under, result in the acceleration of obligations under, create in any party the right to terminate, modify or cancel, or require any notice, consent or waiver under, any contract or instrument to which Borrower or any of its subsidiaries is a party or by which Borrower or any of its subsidiaries is bound or to which any of their assets is subject, except for any conflict, breach, default, acceleration, termination, modification or cancellation in any contract or instrument which would not have a Company Material Adverse Effect (as hereinafter defined) and would not adversely affect the consummation of the Loan or the other transactions contemplated hereby, including but not limited to the Merger.

  

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(b)           Those stockholders of Borrower listed on Schedule 1 to the Pledge Agreement (defined below) beneficially owning in the aggregate 6,332,042 shares of the capital stock of the Borrower (the “Borrower Control Shares”) shall have entered into a pledge agreement of even date herewith, substantially in the form attached as Exhibit B to this Agreement  (the “Pledge Agreement”) with the Lender and Gottbetter & Partners, LLP as collateral agent (the “Collateral Agent”) pursuant to which such stockholders shall have pledged to, and deposited with, the Collateral Agent the Borrower Control Shares, for the benefit of the purchasers of the Convertible Notes in the Note Offering (the “Buyers”), as security for the full and timely repayment of the Convertible Notes in accordance with the terms of the Convertible Notes.

 

(c)           Borrower shall have entered into a security agreement of even date herewith, substantially in the form attached as Exhibit C to this Agreement  (the “Security Agreement”) with the Lender and the Collateral Agent pursuant to which Borrower shall have granted and conveyed to the Collateral Agent, for the benefit of the Buyers, a first priority security interest in all of the tangible and intangible assets of Borrower now owned or hereafter acquired by Borrower, as security for the full and timely repayment of the Convertible Notes in accordance with the terms of the Convertible Notes.

 

ARTICLE II – REPRESENTATIONS AND WARRANTIES OF BORROWER

Borrower represents and warrants to Lender as follows:

2.1. Organization. Each of Borrower and its Subsidiaries (as defined below) is a corporation and limited liability company, as the case may be, duly existing under the laws of its jurisdiction of organization and qualified and licensed to do business in any jurisdiction in which the conduct of its business or its ownership of property requires that it be so qualified, except where the failure to be so qualified would not have a material adverse effect on the business, operations, condition (financial or otherwise), property or prospects of Borrower or any Subsidiary, or the ability of Borrower and any Subsidiary to carry out its respective obligations under the Loan Documents (as defined in Section 2.3 below) (a “Company Material Adverse Effect”).

2.2. Subsidiaries. All of Borrower’s Subsidiaries are listed in Schedule 2.2 attached hereto.  For purposes of this Agreement, a “Subsidiary” means any corporation, partnership, joint venture or other entity in which Borrower (i) has, directly or indirectly, an equity interest representing 50% or more of the capital stock thereof or other equity interests therein or (ii) by contract or otherwise controls the management of such entity and operates such entity as a combined business.

  

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2.3. Authorization. All corporate action on the part of Borrower (and its Subsidiaries, as applicable) and its officers, directors and stockholders necessary for the authorization, execution, delivery and performance of all obligations of Borrower under this Agreement, the Note, the Security Agreement and all other documents executed in connection with the Loan (collectively, the “Loan Documents”) to which any of them may be a party have been taken. This Agreement, the Note and the other Loan Documents, when executed and delivered by Borrower, shall constitute legal, valid and binding obligations of Borrower, enforceable against Borrower in accordance with their terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, moratorium or similar laws affecting creditors’ rights and the enforcement of debtors’ obligations generally and by general principles of equity, regardless of whether enforcement is pursuant to a proceeding in equity or at law.

2.4. Absence of Conflicts. The execution, delivery and performance of this Agreement and each of the other Loan Documents is not in conflict with nor does it constitute a breach of any provision contained in Borrower’s organizational documents, nor will it constitute an event of default under any material agreement to which Borrower is a party or by which Borrower is bound.

2.5. Consents and Approvals. Borrower has obtained all consents, approvals and authorizations of, made all declarations or filings with, and given all notices to, all governmental authorities and agencies that are necessary for the continued operation of Borrower’s business as currently conducted, or are required by law.

2.6. Capitalization. The authorized and outstanding capital stock of Borrower is described on Schedule 2.6 attached hereto. Except as set forth on Schedule 2.6 or as contemplated by the Transactions, there are no subscriptions, convertible securities, options, warrants or other rights (contingent or otherwise) currently outstanding to purchase any of the authorized but unissued capital stock of Borrower. Except as set forth in Schedule 2.6 or as contemplated by the Transactions, Borrower has no obligation to issue shares of its capital stock, or subscriptions, convertible securities, options, warrants, or other rights (contingent or otherwise) to purchase any shares of its capital stock or to distribute to holders of any of its equity securities, any evidence of indebtedness or asset. No shares of Borrower capital stock are subject to a right of withdrawal or a right of rescission under any applicable securities law.  Except as set forth in Schedule 2.6, there are no outstanding or authorized stock appreciation, phantom stock or similar rights with respect to Borrower.  To the Knowledge (as defined below) of Borrower, except as described in Schedule 2.6 or otherwise contemplated by this Agreement, there are no agreements to which Borrower is a party or by which it is bound with respect to the voting (including without limitation voting trusts or proxies), registration under any applicable securities laws, or sale or transfer (including without limitation agreements relating to pre-emptive rights, rights of first refusal, co-sale rights or “drag-along” rights) of any securities of Borrower. Except as provided in Schedule 2.6, to the Knowledge of Borrower, there are no agreements among other parties, to which Borrower is not a party and by which it is not bound, with respect to the voting (including without limitation voting trusts or proxies) or sale or transfer (including without limitation agreements relating to rights of first refusal, co-sale rights or “drag-along” rights) of any securities of Borrower.

  

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2.7. Litigation. Except as disclosed on Schedule 2.7, there are no actions, suits, claims, investigations, arbitrations or other legal or administrative proceedings, to the Knowledge of Borrower, threatened against Borrower at law or in equity, and to Borrower’s Knowledge, there is no basis for any of the foregoing. Except as disclosed on Schedule 2.7, there are no unsatisfied judgments, penalties or awards against or affecting Borrower or its businesses, properties or assets. Except as disclosed on Schedule 2.7, Borrower is not in default, and no event has occurred which with the passage of time or giving of notice or both would constitute a default by Borrower with respect to any order, writ, injunction or decree known to or served upon Borrower of any court or of any foreign, federal, state, municipal or other governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign. Except as disclosed on Schedule 2.7, there is no action or suit by Borrower pending or threatened against others. Except as disclosed on Schedule 2.7, Borrower has complied with all laws, rules, regulations and orders applicable to its current business, operations, properties, assets, products and services the violation of which would have a Company Material Adverse Effect. There is no existing law, rule, regulation or order, and Borrower has no Knowledge of any proposed law, rule, regulation or order, whether foreign, federal or state, that would prohibit or materially restrict Borrower from, or otherwise materially adversely affect Borrower in, conducting its businesses in any jurisdiction in which it is now conducting business.

As defined in this Agreement, “Knowledge” of Borrower means the actual knowledge by a director or officer of Borrower of a particular fact or circumstance or such knowledge as may reasonably be imputed to such person as a result of such person’s actual knowledge of other facts or circumstances as well as any other knowledge which such person would have possessed had such person made reasonable inquiry of appropriate employees and agents of Borrower with respect to the matter in question.

2.8. Absence of Certain Events. To Borrower’s Knowledge, there is no existing condition, event or series of events which reasonably would be expected to have a Company Material Adverse Effect.

2.9. Title to Property and Assets. Borrower does not own any real property. Except as set forth on Schedule 2.9, Borrower has good and marketable title to all of its personal property and assets free and clear of any material restriction, mortgage, deed of trust, pledge, lien, security interest or other charge, claim or encumbrance which would have a Company Material Adverse Effect. Except as set forth on Schedule 2.9, with respect to properties and assets it leases, Borrower is in material compliance with such leases and holds a valid leasehold interest free of any liens, claims or encumbrances which would have a Company Material Adverse Effect.

2.10. Governmental Permits. Borrower and its Subsidiaries hold all licenses, franchises, permits and other governmental authorizations which are required for the conduct of any aspect of their respective businesses, as presently conducted and as presently contemplated to be conducted, including, but not limited to, all such business operations contemplated by, or incident to, the Transactions. All such licenses, franchises, permits and other governmental authorizations are valid and current, and neither the Borrower nor any of its Subsidiaries has received any notice that any governmental authority intends to cancel, terminate or not renew any such license, franchise, permit or other governmental authorization. Borrower and its Subsidiaries have conducted and are conducting its business in material compliance with the requirements, standards, criteria and conditions set forth in such licenses, franchises, permits and other governmental authorizations, and all laws and regulations applicable thereto, and are not in violation of any of the foregoing. The consummation of the transactions contemplated hereunder will not alter or impair or require changes to any such license, franchise, permit or other governmental authorization.

  

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ARTICLE III.A – COVENANTS OF BORROWER

So long as the Note is outstanding, Borrower agrees that, unless Lender shall give its prior consent in writing:

3.1. Ordinary Course. Borrower shall carry on its business in the ordinary course substantially as conducted heretofore, and shall not engage in any transaction outside of the ordinary course of business.

3.2. Maintain Properties. Borrower shall maintain its properties and facilities in good working order and condition, reasonable wear and tear excepted.

3.3. Performance under Agreements. Borrower shall perform all of its material obligations under agreements relating to or affecting its assets, properties or rights.

3.4. Cooperation with Lender. Borrower shall cooperate with Lender and shall use its reasonable best efforts to complete and sign the merger agreement contemplated by the Merger and shall use its reasonable best efforts to consummate the Transactions contemplated thereby.

3.5. Financial Statements. Borrower shall provide to Lender prior to the Due Date any such audited or unaudited financial statements as may be required under applicable U.S. Securities Exchange Commission (“SEC”) regulations for inclusion of such statements in Lender’s SEC and other regulatory filings upon and following the closing of the Merger.

3.6. Maintenance of Business Organization. Borrower shall maintain and preserve its business organization intact and use its reasonable best efforts to retain its present key employees and relationships with suppliers, customers and others having business relationships with Borrower.

3.7. Compliance with Permits. Borrower shall maintain material compliance with all permits, laws, rules and regulations, consent orders and all other orders of applicable courts, regulatory agencies, and similar governmental authorities.

3.8. Leases. Borrower shall maintain its present leases in accordance with their respective terms, and may enter into new or amended lease instruments.

  

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3.9. Payments. Except with respect to fees due to attorneys, accountants, and investment bankers relating to the Transactions, including with respect to the Loan, Borrower shall not make any payment, or incur any obligation to make any payment in the ordinary course of business in excess of $75,000 without the prior written consent of Lender.  Borrower shall use the proceeds from the Loan (a) immediately at the first closing of the Loan to prepay in full forty thousand dollars ($40,000.00) of the outstanding principal of the loan dated December 17, 2010, from Hot Springs Bank and Trust Company (“Hot Springs”) (which shall be disbursed directly by Lender to Hot Springs), (b) thirty-five thousand dollars ($35,000.00) to pay taxes due to the State of Arkansas that are the subject of the liens identified in Schedule 3.9 hereto pursuant to the repayment plan existing with the State (which shall be retained by Lender in escrow and disbursed directly to the State pursuant to instructions from Borrower when required) and (c) to meet the working capital requirements set forth on Exhibit D attached hereto.

3.10. Loan Documents. Borrower shall comply in all respects with the terms of the Loan Documents.

3.11. Mergers. Except as contemplated by the Transactions, Borrower shall not merge or consolidate with or into any other corporation, or sell, assign, lease or otherwise dispose of or voluntarily part with the control (whether in one transaction or in a series of related transactions) of assets (whether now owned or hereafter acquired) having a fair market value of more than $25,000 at the time(s) of transfer, or sell, assign or otherwise dispose of (whether in one transaction or in a series of transactions) any of its accounts receivable (whether now in existence or hereafter created) at a discount or with recourse, to any person, except sales or other dispositions of assets in the ordinary course of business, including, but not limited to, Borrower’s sale of existing teams or territorial, market and team operating rights.

3.12. Charter Documents. Borrower shall not make any amendment to its Certificate of Incorporation but may amend, revise and/or restate its By-Laws.

3.13. Senior or Pari Passu Indebtedness. Borrower shall not incur, create, assume, guaranty or permit to exist any indebtedness in an amount equal to or greater than $25,000 that ranks senior in priority to, or pari passu with, the obligations under the Notes and the other Loan Documents, except for (i) indebtedness existing on the date hereof and set forth in Schedule 3.13 attached hereto, and (ii) indebtedness created as a result of a subsequent financing if the gross proceeds to the Borrower of such financing are equal to or greater than the aggregate principal amount of the Notes and the Notes are repaid in full upon the closing of such financing.  The aggregate outstanding trade debt of Borrower and its subsidiaries as of December 31, 2010 was approximately $195,175.

3.14. Liens. Borrower shall not create, incur, assume or permit to exist any lien on any property or assets (including stock or other securities of Borrower or any of its Subsidiaries) now owned or hereafter acquired by it or on any income or revenues or rights in respect of any thereof, except:

(a)           liens on property or assets of Borrower and its Subsidiaries existing on the date hereof and set forth in Schedule 3.14 attached hereto, provided that such liens shall secure only those obligations which they secure on the date hereof;

(b)           any lien created under the Loan Documents;

  

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(c)          any lien existing on any property or asset prior to the acquisition thereof by Borrower or any of its Subsidiaries, provided that

1.           such lien is not created in contemplation of or in connection with such acquisition and

2.           such lien does not apply to any other property or assets of Borrower or any of its Subsidiaries;

(d)          liens for taxes, assessments and governmental charges;

(e)          carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s, landlord’s or other like liens arising in the ordinary course of business and securing obligations that are not due and payable;

(f)           pledges and deposits made in the ordinary course of business in compliance with workmen’s compensation, unemployment insurance and other social security laws or regulations;

(g)          deposits to secure the performance of bids, trade contracts (other than for indebtedness), leases, statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business;

(h)          zoning restrictions, easements, licenses, covenants, conditions, rights-of-way, restrictions on use of real property and other similar encumbrances incurred in the ordinary course of business and minor irregularities of title that, in the aggregate, are not substantial in amount and do not materially detract from the value of the property subject thereto or interfere with the ordinary conduct of the business of Borrower or any of its Subsidiaries;

(i)           purchase money security interests in real property, improvements thereto or equipment hereafter acquired (or, in the case of improvements, constructed) by Borrower or any of its subsidiaries, provided that

1.           such security interests secure indebtedness permitted by this Agreement,

2.           such security interests are incurred, and the indebtedness secured thereby is created, within 90 days after such acquisition (or construction),

3.           the indebtedness secured thereby does not exceed 85% of the lesser of the cost or the fair market value of such real property, improvements or equipment at the time of such acquisition (or construction) and

  

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4.           such security interests do not apply to any other property or assets of Borrower or any of its Subsidiaries;

(j)           liens arising out of judgments or awards (other than any judgment that constitutes an Event of Default hereunder) in respect of which Borrower or any of its Subsidiaries shall in good faith be prosecuting an appeal or proceedings for review and in respect of which it shall have secured a subsisting stay of execution pending such appeal or proceedings for review, provided Borrower shall have set aside on its books adequate reserves with respect to such judgment or award; and

(k)          deposits, liens or pledges to secure payments of workmen’s compensation and other payments, public liability, unemployment and other insurance, old-age pensions or other social security obligations, or the performance of bids, tenders, leases, contracts (other than contracts for the payment of money), public or statutory obligations, surety, stay or appeal bonds, or other similar obligations arising in the ordinary course of business.

3.15. Dividends and Distributions. Borrower or any of its Subsidiaries shall not declare or pay, directly or indirectly, any dividend or make any other distribution (by reduction of capital or otherwise), whether in cash, property, securities or a combination thereof, with respect to any shares of its capital stock or directly or indirectly redeem, purchase, retire or otherwise acquire for value (or permit any Subsidiary to purchase or acquire) any shares of any class of its capital stock or set aside any amount for any such purpose.

3.16. Subsidiary Dividends. Borrower shall not permit its Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to exist or become effective any encumbrance or restriction on the ability of such Subsidiary to:

(a)           pay any dividends or make any other distributions on its capital stock or any other interest or

(b)           make or repay any loans or advances to Borrower.

3.17. Limitation on Certain Payments and Prepayments. Borrower shall not:

(a)           pay in cash any amount in respect of any indebtedness or preferred stock that may at the obligor’s option be paid in kind or in other securities; or

(b)           optionally prepay, repurchase or redeem or otherwise defease or segregate funds with respect to any indebtedness of Borrower or its Subsidiaries, other than for senior indebtedness existing on the date hereof and set forth in Schedule 3.17 attached hereto, or indebtedness under the Loan Documents.

Within three (3) business days following Borrower’s request for a waiver of any provision of this Article III, Lender shall provide Borrower with their response to such request.

  

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3.18. Future issuances. Borrower covenants and agrees that it will not during the term of this Agreement issue any of its equity securities (a “Future Issuance”) except if (i) the Borrower issues equity securities in a capital raising offering  with proceeds sufficient to repay the Notes and the Notes are repaid in full simultaneously with the closing of such offering, or (ii) the Borrower causes sufficient additional shares of its common stock, or securities convertible into its common stock without additional consideration, to be delivered under the Pledge Agreement (as defined below) to the Collateral Agent for the Buyers such that the aggregate number of Pledged Shares as a percentage of the total number of shares of capital stock (on an as-converted-into-common-stock basis) of the Borrower outstanding (the “Pledged Percentage”) as of the date of such Future Issuance equals the Pledged Percentage as of the date hereof, which is approximately 63.3%. Capitalized terms used in this Section 3.17 and not otherwise defined in this Agreement shall have those meanings given to them in the Pledge Agreement.

ARTICLE III.B – COVENANTS OF LENDER

Lender covenants and agrees that it shall use the proceeds from Borrower of the Repayment Amount solely to repay in full the outstanding principal amount of the Convertible Notes, with interest, if any, to the Buyers.  Lender further agrees to issue its instruction letter (the “Instruction Letter”) to the Bridge Escrow Agent authorizing the Bridge Escrow Agent to release from escrow in favor of Buyers the Repayment Amount in repayment of the Convertible Notes, which Instruction Letter shall be signed by Lender and held in trust by Gottbetter & Partners, LLP on behalf of Borrower until repayment on the Due Date or as otherwise set forth herein.

ARTICLE IV – DEFAULTS AND REMEDIES

4.1. An “Event of Default” occurs if:

(a)           Borrower defaults in the payment of any principal of the Note when the same shall become due, either by the terms thereof or otherwise as herein provided; or

(b)           Borrower defaults, in whole or in part, in the performance or observance of any other material agreement, term or condition contained in the Note or the other Loan Documents, and such breach shall not have been cured within ten (10) days after receipt of written notice thereof; or

(c)           Borrower defaults with respect to any other indebtedness for borrowed money of Borrower or under any agreement under which such indebtedness may be issued by Borrower and such default shall continue for more than the period of grace, if any, therein specified, if the aggregate amount of such indebtedness for which such default shall have occurred exceeds $25,000;

(d)           Borrower defaults with respect to any contractual obligation of Borrower under or pursuant to any contract, lease, or other agreement to which Borrower is a party and such default shall continue for more than the period of grace, if any, therein specified, if the aggregate amount of Borrower’s contractual liability arising out of such default exceeds or is reasonably estimated to exceed $25,000;

  

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(e)          the Merger shall not have closed and the Note shall not have been repaid in full by the Due Date; or

(f)           Borrower pursuant to or within the meaning of any Bankruptcy Law (as defined below):

(i) commences a voluntary case,

(ii) consents to the entry of an order for relief against it in an involuntary case,

(iii) consents to the appointment of a Custodian (as defined below) of it or for all or substantially all of its property,

(iv) makes a general assignment for the benefit of its creditors, or

(v) is the debtor in an involuntary case which is not dismissed within thirty (30) days of the commencement thereof, or

(g)          a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that:

(i) provides for relief against Borrower in an involuntary case,

(ii) appoints a Custodian of Borrower for all or substantially all of its property, or

(iii) orders the liquidation of Borrower,

(h)          a final judgment for the payment of money in an amount in excess of $25,000 shall be rendered against Borrower (other than any judgment as to which a reputable insurance company shall have accepted full liability in writing) and shall remain undischarged for a period (during which execution shall not be effectively stayed) of 20 days after the date on which the right to appeal has expired; or

(i)           an event shall occur or there exist facts or circumstances which create or result in a Company Material Adverse Effect.

then and in any such case (x) upon the occurrence of any Event of Default described in paragraphs (f) or (g), the unpaid principal amount of the Notes shall automatically become due and payable, without presentment, demand, protest or notice of any kind, all of which are hereby waived by Borrower, and (y) upon the occurrence of any other Event of Default, in addition to any other rights, powers and remedies permitted by law or in equity, Lender may, at its option, by notice in writing to Borrower, declare the Notes to be, and the Notes shall thereupon be and become, immediately due and payable, together with all other sums due hereunder, without presentment, demand, protest or other notice of any kind, all of which are waived by Borrower.

  

11

  

Upon the occurrence of any Event of Default, the holder of the Notes may proceed to protect and enforce its rights by an action at law, suit in equity or other appropriate proceeding, whether for the specific performance of any agreement contained herein or in the Notes held by it, for an injunction against a violation of any of the terms hereof or thereof, or for the pursuit of any other remedy which it may have by virtue of this Agreement or pursuant to applicable law. Borrower shall pay to the holder of the Notes upon demand the reasonable costs and expenses of collection and of any other actions referred to in this Article, including without limitation reasonable attorneys’ fees, expenses and disbursements.

No course of dealing and no delay on the part of the holder of the Notes in exercising any of its rights shall operate as a waiver thereof or otherwise prejudice the rights of such holders, nor shall any single or partial exercise of any right, power or remedy preclude any other or further exercise thereof or the exercise of any other right, power or remedy hereunder. No right, power or remedy conferred hereby or by the Notes on the holder thereof shall be exclusive of any other right, power or remedy referred to herein or therein or now or hereafter available at law, in equity, by statute or otherwise.

4.2. For purposes of this Article, the following definitions shall apply:

“Bankruptcy Law” means Title 11, U.S. Code or any similar federal or state law for the relief of debtors, or equivalent law of a non-U.S. jurisdiction.

“Custodian” means any receiver, trustee, assignee, liquidator or similar official under any Bankruptcy Law.

ARTICLE V – NOTICES

All notices, requests and demands shall be given to or made upon the respective parties hereto in writing, at such address as may be designated by it in a written notice to the other party. All notices, requests, consents and demands hereunder shall be effective when duly deposited in the mails (by overnight delivery by a nationally-recognized overnight courier service or by United States registered or certified mail, postage prepaid, return receipt requested) with a copy via facsimile. Unless the parties designate otherwise, notices should be addressed as follows:

If to Borrower:

DataCom Systems, Incorporated

3400 Central Ave.

Hot Springs, AR 71913

Attn: Jack Bailey, President and CEO

Facsimile: (501) 318-0397

  

12

  

with a copy to:

Quick Law Group PC

900 West Pearl Street, Suite 300

Boulder, CO 80302

Attn:  Jeff Quick

Facsimile:  (303) 845-7315 

If to Lender:

Cahaba Pharmaceuticals, Inc.

517 NW 8 Terrace

Cape Coral, FL 33993

Attention:  Kenneth Spiegeland, CEO

Facsimile:  239-628-4591

with a copy to:

Gottbetter & Partners, LLP

488 Madison Avenue, 12th Floor

New York, NY  10022

Attn: Adam S. Gottbetter, Esq.

Facsimile: (212) 400-6901

ARTICLE VI – MISCELLANEOUS

6.1. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without regard to conflicts of laws principles thereof.

6.2. Amendment. This Agreement may be amended, modified or terminated only by an instrument in writing signed by all parties.

6.3. No Assignment. Neither this Agreement nor any right or obligation provided for herein may be assigned by any party without the prior written consent of the other parties.

6.4. Successors. The terms and provisions of this Agreement shall be binding upon and inure to the benefit of, and be enforceable by, the respective successors and assigns of the parties hereto.

6.5. Counterparts. This Agreement may be executed in any number of counterparts, with the same effect as if all parties had signed the same document. All such counterparts shall be deemed an original, shall be construed together and shall constitute one and the same instrument. This Agreement may be executed by facsimile signature.

6.6. Construction. The language used in this Agreement shall be deemed to be the language chosen by the parties to express their mutual intent, and no rule of strict construction shall be applied against any party.

  

13

  

6.8. Headings. The section headings contained in this Agreement are inserted for convenience only and shall not affect in any way the meaning or interpretation of this Agreement.

6.8. Severability. Any term or provision of this Agreement that is invalid or unenforceable in any situation in any jurisdiction shall not affect the validity or enforceability of the remaining terms and provisions hereof or the validity or enforceability of the offending term or provision in any other situation or in any other jurisdiction. If the final judgment of a court of competent jurisdiction declares that any term or provision hereof is invalid or unenforceable, the parties agree that the court making the determination of invalidity or unenforceability shall have the power to limit the term or provision, to delete specific words or phrases, or to replace any invalid or unenforceable term or provision with a term or provision that is valid and enforceable and that comes closest to expressing the intention of the invalid or unenforceable term or provision, and this Agreement shall be enforceable as so modified.

[Remainder of Page Intentionally Left Blank]

  

14

  

 

IN WITNESS WHEREOF, the parties hereto have caused this Bridge Loan Agreement to be duly executed as of the day and year first above written.

	
LENDER:

	  	
BORROWER:

	  	  	  
	
CAHABA PHARMACEUTICALS, INC.

	  	
DATACOM SYSTEMS, INCORPORATED

	  	  	  
	
By: 

	
  

	  	
By: 

	
  

	
Name: Kenneth Spiegeland

	  	
Name:

	
Title:   Chief Executive Officer

	  	
Title:

[SIGNATURE PAGE TO BRIDGE LOAN AGREEMENT]

  

15

  

EXHIBIT A

Form of Note

  

  

  

EXHIBIT B

Form of Pledge Agreement

  

  

  

EXHIBIT C

Form of Security Agreement

  

  

  

EXHIBIT D

Use of Proceeds

	
Accounts Payable

	 	$	144,000.00	 
	  	 	 	 	 
	
Operational

	 	 	 	 
	
Payroll

	 	$	90,000.00	 
	
Product Development

	 	$	35,000.00	 
	
Inventory

	 	$	45,000.00	 
	
Total Expenses over 12 months

	 	$	170,000.00	 
	  	 	 	 	 
	
Marketting Expenses

	 	 	 	 
	
Sales and Marketing- Events, Shows, Marketing Material, Web Presence enhancement

	 	$	80,000.00	 
	
Demo hardware and software (seed units)- 5 mobile and 2 large systems + new products (matrix, cameras, peripherals)

	 	$	50,000.00	 
	
Dealers and Partners recruitments expenses and training ( a must have to add new sales paths)

	 	$	20,000.00	 
	
Total Marketting Additions

	 	$	150,000.00	 
	  	 	 	 	 
	
Equipment Investments

	 	 	 	 
	
Infrastructure- In House Email Upgrade, Collaboration, ERP Software (accounting)

	 	 	 	 
	
includes hardware, software and training for all personnel and staff

	 	$	15,000.00	 
	
Hardware R&D (not software)- development of new hardware platforms (plans in place for new chassis, new encoders, new matrix, new panels)

	 	$	55,000.00	 
	
Total Equipment Investments

	 	$	70,000.00	 
	  	 	 	 	 
	
IR & Compliance for IPO

	 	$	240,000.00	 
	  	 	$	-	 
	
Reserves

	 	$	190,000.00	 
	
General Working Capital

	 	
Balance of proceeds

	 

  

  

  

SCHEDULES

Schedule 2.2

Subsidiaries

None.

  

  

  

Schedule 2.6

Capitalization

 

	
  

	
a)

	
The authorized capital stock of the Borrower consists of 25,000,000 shares of Common Stock, par value $0.001 per share, 10,000,000 shares of which are issued and outstanding.

 

	
  

	
b)

	
Under the Borrower’s Stock Option Plan dated April 18, 2008 immediately prior to the Closing (i) 564,000 options to purchase shares have been granted and are currently outstanding, and (ii) 1,000,000 shares of Common Stock are reserved for issuance.

	
  

	
c)

	
The Borrower has issued three 8% Convertible Promissory Notes, the holders, amounts and dates of which are as follows (collectively, the “Notes”):

	
  

	
·

	
Hillcrest Financial, LLC in the principal amount of $250,000 dated March 19, 2005;

	
  

	
·

	
Frank Matarazzo in the principal amount of $100,000 dated June 3, 2005; and

	
  

	
·

	
Barry Lewis in the principal amount of $100,000 dated March 19, 2005.

The terms of the Notes provide that the Borrower will pay all principal and accrued interest on the earlier to occur of (i) two years from the date of issuance, (ii) the Borrower’s completion of subsequent financing for a minimum of $5,000,000, or (iii) ten days from the notice from holder to the Borrower that the holder elects to convert all or a portion of the outstanding into the terms of any subsequent financing consummated with the Borrower on terms pari passu with such financing.  As described further in Schedule 2.7, the holders of the Notes have filed a lawsuit against the Borrower alleging that the Notes are now due and payable.  As part of the lawsuit, the Borrower alleges the Notes are not longer convertible pursuant to the terms of the Notes.  To date, the issue of whether the Notes remain convertible has not been adjudicated.  None of the holders of the Notes have indicated that they will attempt to convert the Notes into any subsequent financing.

  

  

  

Schedule 2.7

Litigation

 

1.           On November 15, 2010, Hillcrest Financial, LLC, Frank Matarazzo, and Barry Lewis filed a lawsuit against Borrower in the United States District Court, Southern District of New York, Case Number 10CIV08604. 

Each of Frank Matarazzo and Barry Lewis took subscriptions for stock based on $100,000 convertible promissory notes in 2005.  Frank and Joan Salerno, now calling themselves Hillcrest Financial, LLC, took subscriptions for stock based on a $250,000 convertible promissory note in 2005.  The lawsuit alleges that an event of default has occurred at that amounts are due under the notes.  Borrower does not dispute that these individuals and entities are owed the principal amount plus interest on these convertible promissory, but disputes that the notes are currently in default and now due and payable.

 

2.           On December 23, 2010, Avnet, Inc. (“Avnet”) filed a lawsuit against Borrower in the United States District Court, Western District of Arkansas, Hot Springs Division, Case Number 6:10-cv-06101-RTD.  Avnet is alleging damages in the amount of approximately $140,000 due to claims of breach of contract regarding various outstanding invoices.  On February 8, 2011 Borrower filed an Answer and Counterclaim against Avnet alleging damages of approximately $139,000 due to breach of contract claims.

  

  

  

 

Schedule 2.9

Title to Property and Assets

 

1.          On December 17, 2010, Borrower entered into a Loan Agreement with Hot Spring Bank and Trust Company (“Hot Springs Bank”) in the principal amount of $50,000 at an per annum interest rate of 9% (the “Hot Springs Loan”).  At the closing of the Loans contemplated by this Bridge Loan Agreement, approximately $50,500 is due and payable under the Hot Springs Loan.  The Hot Springs Loan matures on March 17, 2011.  All amounts due under the Hot Springs Loan are secured by a Commercial Security Agreement, also dated December 17, 2010, which grants Hot Springs Bank a security interest in all current and future equipment of Borrower.

2.          UCC-1 filing with the Secretary of State of Nevada on June 18, 2009 by Avnet Inc. creating a lien on inventory of debtor.  Borrower is in the process of terminating the lien by filing a UCC-3.

  

  

  

	
  

	
Schedule 3.9

Arkansas Taxes Due

	
  

	
1.

	
State of Arkansas, Commissioner of Revenues, filed in Garland County Circuit Court on April 2, 2009 for $6,939.53.

	
  

	
2.

	
State of Arkansas, Commissioner of Revenues, filed in Garland County Circuit Court on April 2, 2009 for $4,336.18.

	
  

	
3.

	
State of Arkansas, Commissioner of Revenues, filed in Garland County Circuit Court on April 15, 2009 for $3,399.90.

	
  

	
4.

	
State of Arkansas, Commissioner of Revenues, filed in Garland County Circuit Court on August 12, 2009 for $3,648.04.

	
  

	
5.

	
State of Arkansas, Commissioner of Revenues, filed in Garland County Circuit Court on October 2, 2009 for $795.33.

	
  

	
6.

	
State of Arkansas, Commissioner of Revenues, filed in Garland County Circuit Court on October 23, 2009 for $7842.07.

	
  

	
7.

	
State of Arkansas, Commissioner of Revenues, filed in Garland County Circuit Court on October 23, 2009 for $22,291.29.

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