EXHIBIT 8
EXECUTION COPY
SECURITY AGREEMENT
DATE: February 11, 2005
DEBTOR: CorVu Corporation EIN: 00-0000000
(Collectively) 0000 Xxxx 00xx Xxxxxx Organization I.D. #4I-202
Xxxxx 000
Xxxxx, XX 00000
XxxXx Xxxxx Xxxxxxx, Inc. EIN: 00-0000000
0000 Xxxx 00xx Xxxxxx Organization I.D. #8V-868
Xxxxx 000
Xxxxx, XX 00000
SECURED PARTY: ComVest Investment Partners II LLC
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
1. Security Interest and Collateral. To secure the payment of
outstanding principal and interest on that certain Promissory Note of even date
herewith in the original principal amount of $1,500,000 by Debtor to Secured
Party (the "Note") and the performance of every liability and obligation of
every type and description that Debtor may now or at any time hereafter owe to
Secured Party under the Note, whether such debt, liability or obligation now
exists or is hereafter created or incurred, and whether it is absolute or
contingent, liquidated or unliquidated, or sole, joint, several or joint and
several (all such debts, liabilities and obligations and any amendments,
extensions, renewals or replacements thereof collectively referred to herein as
the "Obligations"), Debtor hereby grants Secured Party a first priority security
interest (the "Security Interest") in all of Debtor's property (the
"Collateral"), including without limitation the following:
A. Inventory. All inventory of Debtor, whether now owned or
hereafter acquired and wherever located and other tangible
personal property held for sale or lease or furnished or to be
furnished under contracts of service or consumed in Debtor's
business, and all goods of Debtor, whether now owned or
hereafter acquired and wherever located, including without
limitation all computer programs embedded in goods, and all
other Inventory and Goods of the Debtor, as such terms may be
defined in the Uniform Commercial Code as may be in effect in
the State of Minnesota from time to time (the "UCC");
B. Equipment. All equipment of Debtor, whether now owned or
hereafter acquired and wherever located, including but not
limited to all present and future equipment, machinery, tools,
motor vehicles, trade fixtures, furniture, furnishings,
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office and recordkeeping equipment and all goods for use in
Debtor's business and all other Equipment of the Debtor, as
such term may be defined in the UCC, together with all parts,
equipment and attachments relating to any of the foregoing;
C. Accounts, Contract Rights and Other Rights to Payment: Each
and every right of Debtor to the payment of money, whether
such right to payment now exists or hereafter arises, whether
such right to payment arises out of a sale, lease, license,
assignment or other disposition of goods or other property by
Debtor, out of a rendering of services by Debtor, out of a
loan by Debtor, out of the overpayment of taxes or other
liabilities of Debtor, or otherwise arises under any contract
or agreement, whether such right to payment is or is not
already earned by performance, and howsoever such right to
payment may be evidenced, together with all other rights and
interests (including all liens and security interests) which
Debtor may at any time have by law or agreement against any
account debtor or other obligor obligated to make any such
payment or against any of the property of such account debtor
or other obligor; all including but not limited to all present
and future debt instruments, chattel paper, accounts, license
fees, contract rights, loans and obligations receivable and
tax refunds and all other Accounts of the Debtor, as such term
may be defined in the UCC;
D. Instruments: All instruments, chattel paper, letters of credit
or other documents of Debtor, whether now owned or hereafter
acquired, including but not limited to promissory notes,
drafts, bills of exchange and trade acceptances; all rights
and interests of Debtor, whether now existing or hereafter
created or arising, under leases (where Debtor is the lessor),
licenses or other contracts, in each case where assignment for
security purposes is not expressly prohibited by the terms of
such instruments and all other Instruments of the Debtor, as
such term may be defined in the UCC;
E. Deposit Accounts and Investment Property: All right, title and
interest of Debtor in all deposit and investment accounts
maintained with any bank, savings and loan association,
broker, brokerage, or any other financial institution,
together with all monies and other property deposited or held
therein, including, without limitation, any checking account,
savings account, escrow account, savings certificate and
margin account, and all securities, whether certificated or
uncertificated, security entitlements, securities accounts,
commodity contracts, and commodity accounts and all other
Deposit Accounts and Investment Property of the Debtor, as
such terms may be defined in the UCC;
F. General Intangibles: All general intangibles of Debtor,
whether now owned or hereafter acquired, including, but not
limited to, applications for patents, patents, copyrights,
trademarks, trade secrets, good will, tradenames, customer
lists, permits and franchises, software, all licenses of any
of the foregoing and the right to use Debtor's name, and any
and all membership interests, governance rights, and financial
rights in each and every limited liability company, and all
payment
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intangibles and all other General Intangibles of the Debtor,
as such term may be defined in the UCC;
G. Chattel Paper: All Chattel Paper of the Debtor, whether
tangible or electronic, as such term may be defined in the
UCC; and
H. Supporting Obligations, Embedded Software, etc.: All of
Debtor's rights, whether now existing or hereafter acquired,
in promissory notes, documents, embedded software, letter of
credit rights and supporting obligations (and security
interests and liens securing them) as such terms may be
defined in the UCC.
together with all substitutions and replacements for and products of any of the
foregoing property and proceeds of any and all of the foregoing property
together with (i) all accessories, attachments, parts, equipment, accessions and
repairs and embedded software now or hereafter attached or affixed to or used in
connection with any such goods, (ii) all warehouse receipts, bills of lading and
other documents of title now or hereafter covering such goods, and (iii) all
books and records of Debtor related to the Collateral.
2. Representations, Warranties and Agreements. Debtor jointly and
severally represents, warrants and agrees that:
2.1. Debtor is a corporation duly organized, validly existing
and in good standing under the laws of the state of Minnesota, and the
state of Minnesota has been Debtor's state of organization since the
date of Debtor's organization. Debtor has full power and authority to
execute this Agreement, to perform Debtor's obligations hereunder and
to subject the Collateral to the Security Interest. Debtor's taxpayer
identification number is the number shown at the beginning of this
Agreement. Debtor's organizational identification number is the number
shown at the beginning of this Agreement.
2.2. Debtor's chief place of business is, and has been for the
five years preceding the date of this Agreement, located at the address
shown at the beginning of this Agreement. Debtor's records concerning
its accounts and contract rights are kept at such address. The
Collateral is located at the address shown at the beginning of this
Agreement, and there are no other locations where any of the Collateral
may be kept except as set forth on Schedule 2.2 hereto. All Collateral
has been located at the address shown at the beginning of this
Agreement or at the locations set forth on Schedule 2.2, for the five
years prior to execution of this Agreement. Debtor will give at least
30 days' advance written notice to Secured Party of any change in
Debtor's jurisdiction of organization or chief place of business and
any change in or addition of any Collateral location. Debtor will take
all such actions as Secured Party may reasonably request to permit
Secured Party to establish and perfect the Security Interest in all
jurisdictions Secured Party deems necessary, including but not limited
to the execution, delivery or endorsement of any and all instruments,
documents, assignments, security agreements and other agreements and
writings that Secured Party may at any time reasonably request in order
to secure, protect, perfect or enforce the Security Interest and
Secured Party's
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rights under this Agreement.
2.3. Debtor has (or will have at the time Debtor acquires
rights in Collateral hereafter arising) absolute title to each item of
Collateral free and clear of all security interests, liens and
encumbrances. Debtor will keep all Collateral free and clear of all
security interests, liens and encumbrances except the Security
Interest, and will defend the Collateral against all claims or demands
of all persons other than Secured Party. Debtor will promptly pay or
properly and timely contest all taxes and other governmental charges
levied or assessed upon or against any Collateral or upon or against
the creation, perfection or continuance of the Security Interest.
2.4. Until the Obligations are satisfied in full, Debtor will
not, without Secured Party's prior written consent, sell any of the
Collateral or enter into any agreement that is inconsistent with
Debtor's obligations or Secured Party's rights under this Agreement,
except that Debtor may sell or discard the Collateral in the ordinary
course of business so long as such agreements are not inconsistent with
Secured Party's rights or Debtor's obligations under this Agreement.
Debtor further agrees that it will not take any action, or permit any
action to be taken by others under its control, or fail to take any
action, that would affect the validity of the Collateral or enforcement
of Secured Party's rights in the Collateral. In addition, Debtor agrees
not to enter into any instruments, chattel paper, letters of credit or
other documents, including but not limited to promissory notes, drafts,
bills of exchange and trade acceptances, which expressly prohibit
assignment for security purposes.
2.5. This Agreement has been duly and validly authorized by
all necessary action by Debtor.
2.6. Debtor will keep all tangible Collateral in good repair,
working order and condition, normal depreciation excepted, and will,
from time to time, replace any worn, broken or defective parts thereof.
2.7. Debtor will at all reasonable times permit Secured Party
or its representatives to examine or inspect any Collateral, wherever
located, and to examine, inspect and copy Debtor's books and records
pertaining to the Collateral and its business and financial condition.
2.8. If Secured Party at any time so requests after the
occurrence of an Event of Default, Debtor will promptly transfer to
Secured Party any instrument, document, chattel paper, or investment
properties constituting the Collateral, duly endorsed or assigned by
Debtor.
2.9. Debtor will keep accurate and complete records pertaining
to the Collateral and pertaining to Debtor's business and financial
condition and submit to Secured Party such periodic reports concerning
the Collateral and Debtor's business and financial condition as Secured
Party may from time to time reasonably request.
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2.10. Debtor will at all times keep all tangible Collateral
insured against risks of fire (including so-called extended coverage),
theft, and such other risks and in such amounts as Secured Party may
reasonably request, with any loss payable to Secured Party to the
extent of its interest.
2.11. Debtor will pay when due or reimburse Secured Party on
demand for all costs of collection of any of the Obligations and all
other out-of-pocket expenses (including all reasonable attorneys' fees)
incurred by Secured Party in connection with the creation, perfection,
satisfaction, protection, defense or enforcement of the Security
Interest or the creation, continuance, protection, defense or
enforcement of this Agreement or any or all of the Obligations,
including expenses incurred in any litigation or bankruptcy or
insolvency proceedings.
2.12. The Obligations have been incurred and the Collateral
will be used primarily for business purposes.
2.13. All rights to payment and all instruments, documents,
chattel papers and other agreements constituting or evidencing
Collateral are (or will be when arising or issued) the valid, genuine
and legally enforceable obligation, subject to no defense, set-off or
counterclaim (other than those arising in the ordinary course of
business) of each account debtor or other obligor named therein or in
Debtor's records pertaining thereto as being obligated to pay such
obligation. Debtor will not agree to any modification, amendment or
cancellation of any such obligation without Secured Party's prior
written consent except discounts provided by Debtor in the ordinary
course of business, and will not subordinate any such right to payment
to claims of other creditors of such account debtor or other obligor.
2.14. Debtor will promptly notify Secured Party of any
material loss of or damage to any Collateral or of any adverse change
in the prospect of payment of any material sums due on or under any
instrument, chattel paper, account or contract right constituting
Collateral.
2.15. Debtor will from time to time execute such financing
statements or control agreements as Secured Party may reasonably deem
necessary in order to perfect the Security Interest and, if any
Collateral is covered by a certificate of title, execute such documents
as may be required to have the Security Interest properly noted on a
certificate of title. In addition, Debtor authorizes Secured Party to
file any financing statement the Secured Party deems necessary,
describing any liens held by Secured Party. Such financing statements
may describe the Collateral in the same manner as described herein or
may contain an indication or description of the Collateral that
describes such property in any other manner as the Secured Party may
determine, in its reasonable discretion, is necessary to ensure the
perfection of the Security Interest, including, without limitation,
describing such property as "all assets" or "all personal property."
2.16 Debtor will not use or keep any Collateral, or permit it
to be used or kept, for any unlawful purpose or in violation of any
federal, state or local law, statute or
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ordinance.
2.17. If Debtor at any time fails to perform or observe any
agreement contained in this Section 2, and if such failure shall
continue for a period of 30 calendar days after Secured Party gives
Debtor written notice thereof, Secured Party may (but need not) perform
or observe such agreement on behalf and in the name, place and stead of
Debtor (or, at Secured Party's option, in Secured Party's own name) and
may (but need not) take any and all other actions that Secured Party
may reasonably deem necessary to cure or correct such failure. Debtor
shall pay Secured Party on demand the amount of all monies expended and
all costs and expenses (including reasonable attorneys' fees) incurred
by Secured Party in connection with or as a result of Secured Party's
performing or observing such agreements or taking such actions,
together with interest thereon from the date expended or incurred by
Secured Party at the highest rate then applicable to any of the
Obligations. To facilitate the performance or observance by Secured
Party of such agreements of Debtor (in the event Debtor does not cure
any such failure during the above-described 30-day period), Debtor
hereby irrevocably appoints (which appointment is coupled with an
interest) Secured Party, or its delegate, as the attorney-in-fact of
Debtor with the right (but not the duty) from time to time to create,
prepare, complete, execute, deliver, endorse or file, in the name and
on behalf of Debtor, any and all instruments, documents, financing
statements, and other agreements and writings required to be obtained,
executed, delivered or endorsed by Debtor under this Section 2.
3. Account Verification and Collection Rights of Secured Party. Secured
Party shall have the right to verify any accounts in the name of Debtor or in
Secured Party's own name; and Debtor, whenever requested pursuant to the terms
of this Section, shall furnish Secured Party with duplicate statements of the
accounts, which statements may be mailed or delivered by Secured Party for that
purpose. Secured Party may at any time after the occurrence of an Event of
Default notify any account debtor, or any other person obligated to pay any
amount due, that such chattel paper, account, or other right to payment has been
assigned or transferred to Secured Party for security and shall be paid directly
to Secured Party. If Secured Party so requests at any time after the occurrence
of an Event of Default, Debtor will so notify such account debtors and other
obligors in writing and will indicate on all invoices to such account debtors or
other obligors that the amount due is payable directly to Secured Party. At any
time after Secured Party or Debtor gives such notice to an account debtor or
other obligor, Secured Party may (but need not), in Secured Party's own name or
in Debtor's name, demand, xxx for, collect or receive any money or property at
any time payable or receivable on account of, or securing, any such chattel
paper, account, or other right to payment, or grant any extension to, make any
compromise or settlement with or otherwise agree to waive, modify, amend or
change the obligations (including collateral obligations) of any such account
debtor or other obligor.
4. Events of Default. The occurrence of any of the following shall, at
the sole option of the Secured Party, be an Event of Default:
A. Any "Event of Default" (as defined in such agreement) by
Debtor under the Note or any other agreement evidencing the
Obligations, which default is not cured within any grace period granted
with respect to such default or, if no specific grace period
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is granted with respect to such default, where such default is not
cured within five (5) business days after written notice thereof from
the Secured Party;
B. Debtor's failure to comply with any representation,
warranty or covenant hereunder if not cured within thirty (30) days
after written notice;
C. Transfer or disposition of any of the Collateral, except as
permitted by this Agreement; or
D. Attachment, execution or levy on any of the Collateral.
5. Remedies upon Event of Default. Upon the occurrence of an Event of
Default and at any time thereafter, Secured Party may exercise any one or more
of the following rights and remedies:
5.1. declare all Obligations to be immediately due and
payable, which shall then be immediately due and payable, without
presentment or other notice or demand;
5.2. exercise and enforce any or all rights and remedies
available upon default to a secured party under the Uniform Commercial
Code, including but not limited to the right to take possession of any
Collateral, proceeding without judicial process if permitted by law or
by judicial process, and the right to use, sell, lease or otherwise
dispose of any or all of the Collateral, and in connection therewith,
Secured Party may require Debtor to make the Collateral available to
Secured Party at a place to be designated by Secured Party that is
reasonably convenient to both parties, and if notice to Debtor of any
intended disposition of Collateral or any other intended action is
required by law in a particular instance, such notice shall be deemed
commercially reasonable if given (in the manner specified in Section
8.2) at least 10 business days prior to the date of intended
disposition or other action; or
5.3. exercise or enforce any or all other rights or remedies
available to Secured Party by law or agreement against the Collateral,
including specifically the right to use the Collateral, against Debtor
or against any other person or property.
All rights and remedies of Secured Party shall be cumulative and may be
exercised singularly or concurrently, at Secured Party's option, and the
exercise or enforcement of any one such right or remedy shall neither be a
condition to nor bar the exercise or enforcement of any other.
6. Other Personal Property. Unless at the time Secured Party takes
possession of any tangible Collateral, or within seven days thereafter, Debtor
gives written notice to Secured Party of the existence of any goods, papers or
other property of Debtor, not affixed to or constituting a part of such
Collateral, but which are located or found upon or within such Collateral,
Secured Party shall not be responsible or liable to Debtor for any action taken
or omitted by or on behalf of Secured Party with respect to such property
without actual knowledge of the existence of any such property or without actual
knowledge that it was located or to be found upon or within such Collateral.
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7. Assignment of Insurance. Debtor hereby assigns to Secured Party, as
additional security for the payment of the Obligations, any and all moneys
(including but not limited to proceeds of insurance and refunds of unearned
premiums) due or to become due under, and all other rights of Debtor under or
with respect to, any and all policies of insurance covering the Collateral, and
Debtor hereby directs the issuer of any such policy to pay any such moneys
directly to Secured Party. Both before and after the occurrence of an Event of
Default, Secured Party may (but need not), in Secured Party's own name or in
Debtor's name, execute and deliver proofs of claim, receive all such moneys,
endorse checks and other instruments representing payment of such moneys, and
adjust, litigate, compromise or release any claim against the issuer of any such
policy.
8. Miscellaneous.
8.1. This Agreement can be waived, modified, amended,
terminated or discharged, and the Security Interest can be released,
only explicitly in a writing signed by Secured Party. A waiver signed
by Secured Party shall be effective only in the specific instance and
for the specific purpose given. Mere delay or failure to act shall not
preclude the exercise or enforcement of any of Secured Party's rights
or remedies.
8.2. All notices to be given to Debtor shall be deemed
sufficiently given if delivered or mailed by registered or certified
mail, postage prepaid, to Debtor at its address set forth above or at
such other address as Debtor may subsequently provide to Secured Party.
8.3. Secured Party's duty of care with respect to Collateral
in its possession (as imposed by law) shall be deemed fulfilled if
Secured Party exercises reasonable care in physically safekeeping such
Collateral or, in the case of Collateral in the custody or possession
of a bailee or other third person, exercises reasonable care in the
selection of the bailee or other third person, and Secured Party need
not otherwise preserve, protect, insure or care for any Collateral.
Secured Party shall not be obligated to preserve any rights Debtor may
have against prior parties, to realize on the Collateral at all or in
any particular manner or order, or to apply any cash proceeds of
Collateral in any particular order of application.
8.4. This Agreement shall be binding upon and inure to the
benefit of Debtor and Secured Party and their respective successors and
assigns and shall take effect when signed by Debtor and delivered to
Secured Party, and Debtor waives notice of Secured Party's acceptance
hereof.
8.5. A carbon, photographic or other reproduction of this
Agreement or of any financing statement signed by Debtor shall have the
same force and effects as the original for all purposes of a financing
statement.
8.6. This Agreement shall be governed by the internal laws of
the State of Minnesota. If any provision or application of this
Agreement is held unlawful or unenforceable in any respect, such
illegality or unenforceability shall not affect other
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provisions or applications which can be given effect and this Agreement
shall be construed as if the unlawful or unenforceable provision or
application had never been contained herein or prescribed hereby. Any
dispute arising out of or relating to this Agreement, including the
formation, interpretation or alleged breach hereof, shall be brought in
the state or federal courts located in Hennepin County, Minnesota, and
the parties hereto consent to the personal jurisdiction and venue of
such courts.
8.7. All representations and warranties contained in this
Agreement shall survive the execution, delivery and performance of this
Agreement and the creation and payment of the Obligations.
(signature page on following page)
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ACCORDINGLY, this Agreement has been duly executed by the parties as of
the date first set forth above.
CORVU CORPORATION
By:
-----------------------------------------
Its:
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CORVU NORTH AMERICA, INC.
By:
-----------------------------------------
Its:
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COMVEST INVESTMENT PARTNERS II LLC
By:
-----------------------------------------
Its:
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SCHEDULE 2.2
Other Locations
000 Xxxxx Xxxxx Xxxxxx Xxxx
Xxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
0000 XxxXxxxxx Xxxxxxxxx
00xx Xxxxx
Xxxxxx, XX 00000
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