Exhibit 10.30
EXHIBIT A
SECURITY AGREEMENT
FOR VALUE RECEIVED, and to induce the investors signatory hereto
(hereinafter referred to each as an "Secured Party" and collectively as the
"Secured Parties"), to extend credit and other financial accommodations to Data
Race, Inc., a Texas corporation having its principal place of business at 0000
Xxxxxxxxx, Xxxxx 000, Xxxxx, Xxxxx 00000 (hereinafter referred to as "Debtor"),
Debtor hereby agrees that the Secured Parties shall have the rights, remedies
and benefits hereinafter set forth.
ARTICLE 1
DEFINITIONS
As used in this Agreement, the following terms shall have the following
meanings:
"Collateral" shall mean all of Debtor's now existing and hereafter
arising interests in and to all of the items set forth on Schedule A
hereto.
"Event of Default" shall have the meaning assigned to such term in the
Convertible Debentures, and shall include, without limitation, the
occurrence or existence of any of the following events or conditions
(regardless of the reason therefor): (a) the failure or neglect of Debtor
to observe or perform any covenant, agreement or obligation under this
Agreement; or (b) any representation or warranty made under this Agreement
shall be breached or shall be untrue or incorrect in any material respect
as of the date when made or deemed made.
"Financing Agreements" shall mean this Agreement, the Purchase
Agreement and all other exhibits thereto, the Convertible Debentures
executed by Debtor in favor of the each of the Secured Parties, and all
present and future related agreements, documents and instruments, as now
existing and as hereafter amended, modified or supplemented.
"Purchase Agreement" shall mean that certain Convertible Debentures
and Warrants Purchase Agreement, dated June 12, 2001, between Debtor and
the Secured Parties, as amended from time to time.
"Obligations" shall mean all present and future indebtedness,
obligations, covenants, duties and liabilities of any kind or nature of
Debtor to the Secured Parties, now or hereafter existing, arising directly
between Debtor and the Secured Parties or acquired outright, conditionally
or as collateral security from another by the Secured Parties, absolute or
contingent, joint and/or several, secured or unsecured, due or not due,
contractual or tortious, liquidated or unliquidated, arising by operation
of law or otherwise, direct or indirect, whether or not evidenced by any
note, agreement or other instrument, including, but without limiting the
generality of the foregoing, indebtedness, obligations, covenants, duties
and liabilities of Debtor to the Secured Parties pursuant to
the Financing Agreements and, to the extent not otherwise included, all
obligations described and defined in the Purchase Agreement and the
exhibits thereto.
All other terms defined in the preamble or the recitals hereto shall have
the respective meanings ascribed to them therein. Unless the context otherwise
indicates all terms used without definition in this Agreement shall have the
meanings ascribed to them in the Purchase Agreement or in the Uniform Commercial
Code of the State of New York as presently in effect, to the extent the same are
used or defined therein.
ARTICLE 2
SECURITY
2.1 Grant of Security Interest. As security for the payment and performance
of the Obligations, Debtor hereby grants to the Secured Parties a continuing
security interest in and a general lien upon the Collateral.
ARTICLE 3
REPRESENTATIONS, WARRANTIES
AND COVENANTS OF DEBTOR
Debtor hereby represents and warrants to, and covenants and agrees with,
the Secured Parties that:
3.1 Organization and Good Standing. Debtor is a corporation duly organized
and existing under the laws of the State of Texas and is duly qualified or
licensed to do business in all countries, states and provinces in which the laws
thereof require Debtor to be so qualified or licensed.
3.2 Authority and Power. Debtor has the right and power and is duly
authorized and empowered to enter into, execute, deliver and perform this
Agreement, the other Financing Agreements, and all agreements, documents and
instruments executed in connection herewith and therewith, and this Agreement,
the other Financing Agreements and such other agreements, documents and
instruments constitute and will constitute legal, valid and binding obligations
of Debtor, enforceable in accordance with their respective terms.
3.3 Performance of Obligations. Debtor will pay and perform all of the
Obligations according to their terms.
3.4 Locations of Offices and Collateral. Schedule B annexed hereto
accurately and completely sets forth the mailing addresses of the chief
executive office of Debtor, the principal and other places of business of
Debtor, the office where Debtor keeps its books and records concerning the
Collateral and the locations where any of the Collateral is or may hereafter be
located, and Debtor will not change any of the same, nor open or make use of any
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new place of business or location of Collateral or books and records, without
thirty (30) days' prior written notice to each Secured Party.
3.5 Further Assurances; Financing Statements. Upon the request of any
Secured Party, at any time and from time to time, Debtor will, at its own cost
and expense, execute and deliver to the Secured Parties one or more financing
statements pursuant to the Uniform Commercial Code, or amendments or
continuations thereof, and any other documents required by the Secured Parties
to further evidence, effect or perfect the security interest granted herein or
to otherwise effectuate the purposes of this Agreement, and, to the extent
permitted by applicable law, Debtor hereby authorizes each Secured Party to
execute and file at any time or times one or more financing statements pursuant
to the Uniform Commercial Code with respect to any or all of the Collateral,
signed only by such Secured Party. Debtor hereby agrees that a carbon,
photographic or other reproduction of this Agreement or of a financing statement
shall be sufficient as a financing statement.
3.6 Title to Collateral. The leasehold rights which constitute the
Collateral are, and shall at all times be, owned by Debtor free and clear of any
security interests, liens or encumbrances.
3.7 Disposition of Collateral. Debtor will not sell, exchange or otherwise
dispose of any of the Collateral, or any rights thereto, without having obtained
a majority in interest of the Secured Parties' prior written consent in each
instance (based on each Secured Party's then outstanding principal amount of
Convertible Debentures).
3.8 Discharge of Liens. Debtor shall immediately pay and cause the
discharge of any liens, taxes or assessments which may be levied upon the
Collateral.
3.9 Actions by the Secured Parties. Each Secured Party may, in its sole
discretion and at any time, for the account and expense of Debtor, pay any
amount or do any act required of Debtor hereunder or requested by such Secured
Party to preserve, protect, maintain or enforce the obligations, the Collateral
or the security interest granted herein.
3.10 Adverse Changes. Debtor shall promptly notify each Secured Party in
writing of any material adverse change in Debtor's or any Guarantor's financial
condition or any event which affects the value of the Collateral or the rights
or remedies of the Secured Parties in relation to any Guarantor or any
Collateral.
3.11 Inspection of Collateral. Debtor will at all times during normal
business hours allow the Secured Parties or their agents to examine and inspect
the Collateral as well as Debtor's books and records pertaining thereto, and to
make extracts and copies thereof.
3.12 Financial Statements. Debtor will promptly furnish to the Secured
Parties such financial statements, audited and unaudited, as any Secured Party
may request from time to time.
3.13 Reports. Debtor will report, in form satisfactory to any Secured
Party, such information as such Secured Party may request from time to time
regarding the Collateral;
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such reports shall be for such periods, shall reflect Debtor's records as at
such time and shall be rendered with such frequency as such Secured Party may
designate.
3.14 Changes in Structure. Debtor shall not become a party to any
consolidation, merger, liquidation or dissolution without the prior written
consent of the Secured Parties.
3.15 Name Changes. Debtor will notify each Secured Party of any intended
change in Debtor's name, and will notify each Secured Party when such change
becomes effective.
3.16 Former or Fictitious Names. The Schedule annexed hereto accurately and
completely sets forth all corporate or fictitious names, tradenames and
tradestyles used by Debtor or by which Debtor has been known during the
preceding five (5) years, and Debtor will give each Secured Party prior written
notice of Debtor's use of any fictitious name, tradename or tradestyle not
listed on the annexed Schedule.
3.17 Required Consents. No consent or approval of any governmental body or
regulatory authority or of any other person corporation or entity is or will be
necessary or required for the execution, delivery and performance of this
Agreement, or for the pay, including, against Debtor, any lien, claim
Collateral, and Obligations and grant of a security interest in the Collateral
to the Secured Parties, or the exercise by any Secured Party of any rights with
respect to the Collateral, except such consents as have heretofore been obtained
and delivered to such Secured Party.
3.18 No Litigation. There are no pending or threatened actions or
proceedings before any court, judicial body, administrative agency or arbitrator
which may materially adversely affect (a) the financial condition or operations
of Debtor, (b) the Collateral, or (c) the ability of Debtor to perform
hereunder.
3.19 No Default. Debtor is not in default in any material respect under any
indenture, mortgage, deed of trust, agreement or other instrument to which it is
a party or by which it or any of its properties may be bound. Neither the
execution and delivery of this Agreement, the other Financing Agreements or any
of the instruments and documents to be delivered pursuant hereto or thereto, nor
the consummation of the transactions herein or therein contemplated, nor
compliance with the provisions hereof or thereof, will violate any law or
regulation, or any order or decree of any court or governmental instrumentality
in any respect, or will conflict with, or result in the breach of, or constitute
a default under, any indenture, mortgage, deed of trust, agreement or other
instrument to which Debtor is a party or by which it or its properties may be
bound, or result in the creation . or imposition of any lien, charge or
encumbrance upon any of the property of Debtor (except as contemplated hereunder
or under the other Financing Agreements) or violate any provision of the
Certificate of Incorporation or By-laws of Debtor.
3.20 Compliance With Applicable Laws. Debtor is in compliance in all
material respects with the requirements of all applicable laws, rules,
regulations and orders of any governmental authority relating to its business,
including without limitation the Employee
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Retirement Income Security Act of 1974, as amended, the Internal Revenue Code of
1954, as amended, and the Pension Benefit Guarantee Corporation.
3.21 No Filing Required. No action of, or filing with, any governmental or
public body or authority (other than the filing or recording of Uniform
Commercial Code financing statements and other instruments typically required to
perfect security interests in the types of property constituting Collateral) is
required in connection with the execution, delivery and performance of this
Agreement, the other Financing Agreements or any of the instruments or documents
to be delivered pursuant hereto or thereto.
3.22 Licenses and Approvals. Debtor has obtained all necessary licenses and
approvals and is in compliance in all material respects with all applicable
state and federal laws and regulations relating to the conduct of its business
as presently conducted or contemplated.
3.23 Preservation of Corporate Existence, Etc. Debtor will at all times
preserve and keep in full force and effect its corporate existence, licenses,
permits, rights and franchises.
ARTICLE 4
RIGHTS AND REMEDIES UPON DEFAULT
Upon and after the occurrence of an Event of Default, each Secured Party
shall have all of the following rights and remedies, in addition to those
available to it under other sections of this Agreement, under the other
Financing Agreements, by applicable law or otherwise:
4.1 Acceleration of Obligations. All or any portion of the Obligations
shall, at the option of each Secured Party and without notice, demand or legal
process, become immediately due and payable.
4.2 Rights Under Uniform Commercial Code. In addition to all of its other
rights and remedies under this Agreement, the other Financing Agreements and any
other agreement with Debtor, the Secured Parties shall have all of the rights
and remedies of a secured party under the Uniform Commercial Code of the State
of California and of any state in which Collateral is located from time to time.
4.3 Possession of Collateral. Any Secured Party shall have the right: (a)
to enter upon the premises of Debtor or any other place or places where the
Collateral is located and kept through self-help and without judicial process
without first obtaining a final judgment or giving Debtor notice and opportunity
for a hearing on-the validity of such Secured Party's claim and without any
obligation to pay rent; (b) to prepare, assemble or process the Collateral for
sale, lease, or other disposition; (c) to remove the Collateral to the premises
of such Secured Party or any agent of such Secured Party, for such time as such
Secured Party may desire, in order to collect or dispose of the Collateral; and
(d) to require Debtor to assemble the Collateral and make it available to such
Secured Party at a place to be designated by such Secured Party.
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4.4 Action Pending Disposition. Each Secured Party shall have the right to
use or take such action with respect to the Collateral, or any part thereof, as
it deems appropriate for the purpose of preserving the Collateral or its value
or for any other purpose deemed appropriate by such Secured Party. The Secured
Parties shall have no obligation to Debtor to maintain or preserve the rights of
Debtor as against third parties with respect to the Collateral while the
Collateral is in the possession of the Secured Parties. Each Secured Party may,
if it so elects, seek the appointment of a receiver or keeper to take possession
of the Collateral and to enforce any of such Secured Party's remedies with
respect to such appointment without prior notice or hearing.
4.5 Disposition of Collateral. Each Secured Party shall have the right to
dispose of all or any of the Collateral as such Secured Party, in its sole
discretion, may deem advisable. Such Secured Party will give Debtor notice of
the time and place of any disposition of the Collateral, or of the time after
which any intended disposition thereof is to be made, by sending notice, as
provided in Section 6.2 below, at least ten (10) days before the time of the
sale or disposition, which provisions for notice Debtor and such Secured Party
agree are reasonable. To enable the Secured Parties to effect any such
disposition, assignment and/or transfer, Debtor hereby makes, constitutes and
appoints each Secured Party as its true and lawful attorney, in its name, place
and stead, and for its account and risk, to make, execute and deliver any and
all assignments or other instruments which any Secured Party may deem necessary
or proper to effectuate the authority hereby conferred by signing Debtor's name
only or by signing the same as its attorney-in-fact, as may be deemed by such
Secured Party to be necessary or proper in connection with any disposition,
assignment or transfer of all or any part of the Collateral. The foregoing power
of attorney is coupled with an interest and shall be a continuing one and
irrevocable so long as any portion of the Obligations remains unpaid in whole or
in part.
Except as otherwise provided by law, the proceeds realized from the
disposition of any of the Collateral may be applied by the Secured Parties first
to the reasonable costs, expenses and attorneys' fees and expenses incurred by
the Secured Parties in connection with the exercise of their rights hereunder,
and then to any of the Obligations of the Secured Parties in proportion to each
Secured Parties respective initial purchases of the Convertible Debentures
pursuant to the Purchase Agreement and/or initial purchases of the Prior
Debentures issued pursuant to the Securities Agreement, regardless of whether
the other Secured Parties have exercised their rights hereunder. If any
deficiency shall arise, Debtor shall remain liable to the Secured Parties
therefor.
4.6 Waiver of Bond. In connection with the foregoing remedies, Debtor
hereby waives the posting of any bond which might otherwise be required.
4.7 Remedies Cumulative. All rights and remedies of the Secured Parties
arising under this Agreement, the other Financing Agreements, any other
agreement with Debtor or by operation of law shall be cumulative and
non-exclusive, to the fullest extent permitted by law.
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ARTICLE 5
SECURED PARTY'S EXPENSES AND ATTORNEYS' FEES
5.1 Debtor's Liability for the Secured Parties' Expenses. Debtor will be
liable to the Secured Parties for any and all sums, costs and expenses which the
Secured Parties may pay or incur pursuant to the provisions of this Agreement or
in defending, protecting or enforcing the security interest granted herein or in
enforcing payment of the Obligations or otherwise in connection with the
provisions hereof, including without limitation all search, filing and recording
fees, appraisal fees, taxes, levies and reasonable attorneys' and accountants'
fees and expenses, all fees and expenses for the service and filing of papers,
fees of marshals, sheriffs, custodians, auctioneers and others, travel expenses,
court costs and collection charges, all expenditures in connection with the
repossession, holding, preparation for sale and sale of the Collateral, as well
as all damages for breach of warranty, misrepresentation or breach of covenant
by Debtor, and all such liabilities shall be part of the Obligations and shall
be payable upon demand.
ARTICLE 6
MISCELLANEOUS
6.1 Waivers. Any failure or delay by the Secured Parties to require strict
performance by Debtor of any of the provisions, warranties, terms or conditions
contained herein or in any of the other Financing Agreements shall not affect
the Secured Parties' right to demand strict compliance therewith and performance
thereof, and any waiver of any default shall not waive or affect any other
default, whether prior or subsequent thereto, and whether of the same or of a
different type. None of the warranties, conditions, provisions-and terms
contained herein or in any other agreement, document or instrument shall be
deemed to have been waived by any act or knowledge of the Secured Parties, their
agents, officers, stockholders or employees, but only by an instrument in
writing, signed by appropriate officers of any such the Secured Parties and
directed to Debtor, specifying such waiver.
6.2 Notices.
(a) Any notice, demand, consent, approval, disapproval or statement
(collectively, "Notices") required or permitted to be given by the terms
and provisions of this Agreement, or by any law or governmental regulation,
shall be in writing and, unless otherwise required by such law or
regulation, shall be personally delivered or sent by United States mail,
postage prepared, as registered or certified mail or by nationally
recognized overnight courier service as set forth in the Purchase
Agreement. By giving the other party at least ten (10) days' prior written
notice, any party may, by Notice given as above provided, designate a
different address or address for Notices.
(b) Any Notice shall be deemed given as of the date of delivery, with
receipt acknowledged or as indicated by affidavit, in the case of personal
delivery; in the case of mailing, any Notice shall be deemed given on the
third business day after mailing; in the case of delivery by nationally
recognized overnight courier service, and Notice shall be deemed given on
the next business day after dispatch.
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6.3 Severability. Wherever possible, each provision of this Agreement shall
be interpreted in a manner so as to be effective and valid under applicable law.
If any provision of this Agreement shall be held to be prohibited by or invalid
under applicable law, such provision shall be ineffective only to the extent of
such provision and the remaining provisions of this Agreement shall remain
unaffected and in full force and effect.
6.4 Successors and Assigns. This Agreement shall be binding upon and for
the benefit of the parties hereto and their respective legal representatives,
successors and assigns.
6.5 Governing Law; Consent to Jurisdiction; Venue Waiver; Waiver of Jury
Trial. The validity, interpretation and effect of this Agreement shall be
governed as set forth in the Purchase Agreement.
6.6 Articles and Section Tittles. The titles of articles and sections
contained in this Agreement are merely for convenience and shall be without
substantive meaning or content.
6.7 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be considered an original but all of which
shall constitute one and the same Agreement.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
October 18, 2001.
DEBTOR
DATA RACE, INC.
By: /s/ Xxxxx X. Xxxxxx
Name: Xxxxx X. Xxxxxx
Title: President and CFO
SECURED PARTIES:
XXXXXXXXXXX X.X.
By: /s/ Xxxxxxx Xxxxxxxxxxx
Xxxxxxx Xxxxxxxxxxx, Authorized Signatory
ALPHA CAPITAL AG
By: /s/ Xxxxxx Xxxxxxxxx
Xxxxxx Xxxxxxxxx, Authorized Signatory
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SCHEDULE A
"Collateral" shall consist of all of the rights, title and interest in and
to all of the personal property and interests in property of the Debtor
(collectively, the "Assets"), whether tangible or intangible and whether now
owned or existing or hereafter arising or acquired and wheresoever located, both
in the U.S. and abroad, including:
(i) Accounts: All present and future rights of Debtor to payment for
goods sold or leased or for services rendered, which are not evidenced by
instruments or chattel paper, and whether or not earned by performance or
any other accounts as defined in the Uniform Commercial Code (hereafter
collectively referred to as "Accounts");
(ii) General Intangibles: All present and future contract rights,
general intangibles (including, without limitation, tax and duty refunds,
registered and unregistered patents, trademarks, service marks, copyrights,
trade names, applications for the foregoing, trade secrets, goodwill,
processes, drawings, blueprints, customer lists, licenses, whether as
licensor or licensee, choses in action and other claims and existing and
future leasehold interests in equipment, real estate and fixtures), chattel
paper, documents, instruments, securities, letters of credit, bankers'
acceptances, guaranties and all other intellectual property rights of any
kind and any other General Intangibles as defined in the Uniform Commercial
Code;
(iii) Deposit Accounts: All present and future monies, securities,
credit balances, deposits, deposit accounts, investment property and other
property of Debtor now or hereafter held or received by or in transit to
either Creditor or its affiliates or at any depository or other institution
from or for the account of Debtor, whether for safekeeping, pledge,
custody, transmission, collection or otherwise, and all present and future
liens, security interests, rights, remedies, title and interest in, to and
in respect of Accounts, and other Collateral, including, without
limitation, (A) rights and remedies under or relating to guaranties,
contracts of suretyship, letters of credit and credit and other insurance
related to the Collateral, (B) rights of stoppage and transit, replevin,
repossession, reclamation and other rights and remedies of unpaid vendor,
lienor or secured party, (C) goods described in invoices, documents,
contracts, or instruments with respect to, or otherwise representing or
evidencing, Accounts or other Collateral, including, without limitation,
returned, repossessed and reclaimed goods, and (D) deposits by and property
of account debtors or other persons securing the obligations of account
debtors and any other Deposit Accounts as defined in the Uniform Commercial
Code;
(iv) Inventory: All of Debtor's now owned or hereafter existing or
acquired raw materials, work in process, finished goods and all other
inventory of whatsoever kind or nature and any other Inventory as defined
in the Uniform Commercial Code;
(v) Equipment: All of Debtor's now owned and hereafter acquired
equipment, machinery, computers and computer hardware and software (whether
owned
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or licensed), vehicles, tools, furniture, fixtures, all attachments,
accessions and property now or hereafter affixed thereto or used in
connection therewith, and substitutions and replacements thereof, wherever
located and any other Equipment as defined in the Uniform Commercial Code;
(vi) Documents: All of Debtor's present and future books of account of
every kind or nature, purchase and sale agreements, invoices, ledger cards,
bills of lading and other shipping evidence, statements, correspondence,
memoranda, credit files and other data relating to the Collateral or any
account debtor, together with tapes, disks, diskettes and other data and
software storage media and devises, file cabinets or containers in or on
which the foregoing are stored (including any rights of Debtor with respect
to the foregoing maintained with or by any other person) or any other
Documents as defined in the Uniform Commercial Code
(vii) Proceeds: All products and proceeds of the foregoing in any
form, including, without limitation, insurance proceeds and all claims
against third parties for loss or damage to or destruction of any or all of
the foregoing or any other Proceeds as defined in the Uniform Commercial
Code.
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SCHEDULE B
Address of Debtor's Chief 0000 Xxxxxxxxx, Xxxxx 000
Executive Office: Xxxxx, Xxxxx 00000
Address of Debtor's Principal 6509 Windcrest, Suite 120
Place of Business: Xxxxx, Xxxxx 00000
Other Places of Business:
Office Where Books and Records
re: Collateral Are Kept: 0000 Xxxxxxxxx, Xxxxx 000
Xxxxx, Xxxxx 00000
Locations of Collateral: 0000 Xxxxxxxxx, Xxxxx 000
Xxxxx, Xxxxx 00000
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