EXHIBIT 10.3
SAGENT TECHNOLOGY, INC.
SECURITY AGREEMENT
This SECURITY AGREEMENT dated as of April 15, 2003 (as amended,
modified or otherwise supplemented from time to time, this "Security Agreement")
is executed by Sagent Technology, Inc., a Delaware corporation with its
principal executive offices at 000 Xxxx Xx Xxxxxx Xxxx, Xxxxx 000, Xxxxxxxx
Xxxx, Xxxxxxxxxx 00000 ("Debtor"), in favor of Group 1 Software, Inc., a
Delaware corporation with its principal executive offices at 0000 Xxxxxxxxxx
Xxxxx, Xxxxx 000, Xxxxxx, Xxxxxxxx, 00000 ("Secured Party").
RECITALS
A. Pursuant to a Note Purchase Agreement dated as of the date hereof
between Debtor and Secured Party (the "Note Purchase Agreement"), Debtor will
issue to Secured Party, subject to the terms and conditions set forth in the
Note Purchase Agreement, one or more secured promissory notes in the aggregate
principal amount not to exceed $7,000,000 (collectively, the "Notes").
B. In order to induce Secured Party to extend the credit evidenced
by the Notes, Debtor has agreed to enter into this Security Agreement and to
grant to Secured Party the security interest in the Collateral described below,
subject to the terms and conditions set forth in this Security Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the above recitals and for other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Debtor hereby agrees with Secured Party as follows:
1. Definitions. When used in this Security Agreement, the following
terms have the following respective meanings:
"Accounts" means "accounts" as such term is defined in the UCC.
"Collateral" has the meaning given to that term in Section 3 hereof.
"Obligations" means all loans, advances, debts, liabilities and
obligations owed by Debtor to Secured Party pursuant to the terms of the Notes
and the other Transaction Documents, including, all interest, fees, charges,
expenses, attorneys' fees and costs and accountants' fees and costs chargeable
to and payable by Debtor thereunder, in each case, whether direct or indirect,
absolute or contingent, due or to become due, and whether or not arising after
the commencement of a proceeding under Title 11 of the United States Code (11
U.S.C. Section 101 et seq.), as amended from time to time (including
post-petition interest), and whether or not allowed or allowable as a claim in
any such proceeding.
"UCC" means the Uniform Commercial Code as in effect in the State of
California and State of Delaware from time to time, as applicable. All
capitalized terms not otherwise defined herein shall have the respective
meanings given in the Notes. Unless otherwise defined herein, all terms defined
in the UCC have the respective meanings given to those terms in the UCC.
2. Term and Termination.
(a) Term. The term of this Security Agreement shall begin on the
date stated above and shall continue and be binding upon Debtor until all the
Obligations have been indefeasibly fully paid and satisfied in accordance with
the terms hereof and of the Notes.
(b) Termination Statement. Upon payment in full of the Obligations,
Secured Party shall, upon request, deliver to Debtor a termination statement
releasing the Collateral from the liens created by this Agreement and do all
further acts and execute and deliver all instruments and documents necessary to
terminate the security interests granted herein.
3. Grant of Security Interest. Subject to the terms and conditions
of this Security Agreement, as security for the Obligations, Debtor pledges to
Secured Party and grants to Secured Party a security interest in all right,
title and interests of Debtor in and to the property described in Attachment 1
hereto, whether now existing or hereafter from time to time acquired
(collectively, the "Collateral"). Notwithstanding the foregoing, the security
interest granted herein shall not extend to and the term "Collateral" shall not
include any property, rights or licenses to the extent the granting of a
security interest therein (i) would be contrary to applicable law, (ii) is
prohibited by or would constitute a default under any agreement or document
governing such property, rights or licenses (but only to the extent such
prohibition is enforceable under applicable law), or (iii) the outstanding
capital stock of a "controlled foreign corporation" (as defined in the Internal
Revenue Code of 1986, as amended) in excess of 65% of the voting power of all
classes of capital stock of such controlled foreign corporation entitled to
vote.
4. Representations and Warranties. Debtor represents and warrants to
Secured Party that:
(a) Debtor is the owner of the Collateral (or, in the case of
after-acquired Collateral, at the time Debtor acquires rights in the Collateral,
will be the owner thereof). There are no Liens on any of the Collateral, other
than Permitted Liens;
(b) Upon the filing of UCC-1 financing statements in the appropriate
filing offices, Secured Party will have (or in the case of after-acquired
Collateral, at the time Debtor acquires rights therein, will have) a perfected
security interest in the Collateral to the extent that a security interest in
the Collateral can be perfected by such filing, except for Permitted Liens;
(c) All accounts receivable and payment intangibles are genuine and
enforceable against the party obligated to pay the same; and
(d) All Collateral consisting of tangible personal property is
located at the Company's offices listed on Attachment 2, except for Collateral
which is mobile by nature.
5. Covenants Relating to Collateral. Debtor hereby covenants and
agrees:
(a) Subject to the terms of the Pledge Agreement, to perform all
acts that may be necessary (including such actions as Secured Party may
reasonably request) to maintain, preserve, protect and perfect the Collateral,
the Lien granted to Secured Party therein and the perfection and priority of
such Lien, except for Permitted Liens, it being agreed and understood that
Debtor is not required to obtain account control agreements in favor of Secured
Party;
(b) Not to create or suffer to exist any Lien upon any Collateral,
except Permitted Liens;
(c) Not to use or permit any Collateral to be used (i) in violation
in any material respect of any applicable law, rule or regulation, or (ii) in
violation of any policy of insurance covering the Collateral;
(d) To pay promptly when due all taxes and other governmental
charges, all Liens and all other charges now or hereafter imposed upon or
affecting any Collateral;
(e) Without written notice to Secured Party, (i) not to change
Debtor's name, place of business (or, if Debtor has more than one place of
business, its chief executive office), location of any material portion of the
Collateral or the office in which Debtor's records relating to accounts
receivable and payment intangibles are kept, (ii) not to change Debtor's state
of incorporation;
(f) To procure, execute and deliver from time to time any
endorsements, assignments, financing statements and other writings reasonably
deemed necessary or appropriate by Secured Party to perfect, maintain and
protect its Lien hereunder and the priority thereof;
(g) Not to surrender or lose possession of (other than to Secured
Party), sell, encumber, lease, rent, or otherwise dispose of or transfer any
Collateral or right or interest therein, and to keep the Collateral free of all
Liens except Permitted Liens; provided that Debtor may sell, lease, transfer,
license or otherwise dispose of any of the Collateral in the ordinary course of
business consisting of (i) the sale of inventory, (ii) sales of worn-out or
obsolete equipment, (iii) non-exclusive licenses and similar arrangements for
the use of the property of Debtor and (iv) the sale or factoring of the
promissory notes that were issued to the Company by former employees of the
Company;
(h) To collect, enforce and receive delivery of the accounts
receivable and payment intangibles in accordance with past practice until
otherwise notified by Secured Party;
(i) To maintain, at its expense, insurance policies insuring the
Collateral against loss or damage by fire, theft, explosion, sprinklers and all
other hazards and risks, such policies to (i) be of a type and in coverage
amounts as are customary to businesses similar to Company's and (ii) name
Secured Party as loss payee thereunder;
(j) To comply with all material requirements of law relating to the
production, possession, operation, maintenance and control of the Collateral;
and
(k) To permit Secured Party and its representatives the right, at
any time during normal business hours, upon reasonable prior notice, to visit
and inspect the properties of Debtor and its corporate, financial and operating
records, and make abstracts therefrom, and to discuss Debtor's affairs, finances
and accounts with its directors and officers.
6. Default.
(a) Default. Debtor shall be deemed in default under this Security
Agreement upon the occurrence and during the continuance of an Event of Default
(as defined in the Notes).
(b) Remedies Upon Default. Upon the occurrence and during the
continuance of any such Event of Default, Secured Party shall have the rights of
a secured creditor under the UCC, all rights granted by this Security Agreement
and by law, including the right to:
(i) Settle or adjust disputes and claims directly with account
debtors for amounts, upon terms and in whatever order that the Security
Party reasonably considers advisable;
(ii) Make such payments and do such acts as Secured Party considers
necessary or reasonable to protect its security interest in the
Collateral. Debtor agrees to assemble the Collateral if Secured Party so
requires, and to make the Collateral available to Secured Party in a
mutually convenient location as Secured Party may designate. Debtor
authorizes Secured Party to enter the premises where the Collateral is
located, to take and maintain possession of the Collateral, or any part of
it, and to pay, purchase, contest or compromise any encumbrance, charge or
Lien, which in Secured Party's determination appears to be prior or
superior to its security interest and to pay all expenses incurred in
connection therewith. With respect to any of the Debtor's owned or leased
premises, the Debtor hereby grants Secured Party a license to, upon the
occurrence and continuance of an Event of Default, enter into possession
of such premises and to occupy the same, without charge, in order to
exercise any of Secured Party's rights or remedies provided herein, at
law, in equity or otherwise;
(iii) Ship, reclaim, recover, store, finish, maintain, repair,
prepare for sale, advertise for sale and sell (in the manner provided for
herein) the Collateral. Secured Party is hereby granted a license or other
right, solely pursuant to the provisions of this Section 6(b), to use,
without charge, the Debtor's intellectual property, or any property of a
similar nature, as it pertains to the Collateral, in completing production
of, advertising for sale and selling any Collateral and, in connection
with Secured Party's exercise of its rights under this Section 6(b),
Debtor's rights under all licenses and all franchise agreements shall
inure to Secured Party's benefit;
(iv) Sell the Collateral at either a public or private sale, or
both, by way of one or more contracts or transactions, for cash or on
terms, in such manner and at such places (including Debtor's premises) in
a commercially reasonable manner, and apply any proceeds to the
Obligations in whatever manner or order Secured Party deems appropriate;
(v) Credit bid and purchase at any public sale in accordance with
the UCC or comparable law of any jurisdiction; and
(vi) Notify any Person owing funds to the Debtor of Secured Party's
security interest in such funds and verify the amount of such Account and
Debtor agrees to collect all amounts owing to Debtor for Secured Party,
receive in trust all payments as Secured Party's trustee and immediately
deliver such payments to Secured Party in their original form as received
from the account debtor, with proper endorsements for deposit.
Any deficiency that exists after disposition of the Collateral as
provided above will remain due and payable pursuant to the terms of the Notes.
(c) Power of Attorney. Effective only during the existence of an
Event of Default, Debtor hereby irrevocably appoints Secured Party (and any of
Secured Party's designated officers or employees) as Debtor's true and lawful
attorney to:
(i) send requests for verification of Accounts or notify account
debtors of Secured Party's security interest in the Accounts;
(ii) endorse Debtor's name on any checks or other forms of payment
or security that may come into Secured Party's possession;
(iii) sign Debtor's name on any invoice or xxxx of lading relating
to any Account, drafts against account debtors, schedules and assignments
of Accounts, verifications of Accounts and notices to account debtors;
(iv) after acceleration of the Obligations, dispose of any
Collateral;
(v) make, settle and adjust all claims under and decisions with
respect to Debtor's policies of insurance;
(vi) settle and adjust disputes and claims respecting the accounts
directly with account debtors, for amounts and upon terms which Secured
Party determines to be reasonable;
(vii) after acceleration of the Obligations, to transfer the
Intellectual Property into the name of Secured Party or a third party to
the extent permitted under the UCC; and
(viii) to file, in its sole discretion, one or more financing or
continuation statements and amendments thereto, relative to any of the
Collateral; provided that Secured Party may exercise such power of
attorney to sign the name of Debtor on any of the documents described in
Section 8 of this Security Agreement regardless of whether an Event of
Default has occurred.
The appointment of Secured Party as Debtor's attorney-in-fact, and
each and every one of Secured Party's rights and powers, being coupled with an
interest, is irrevocable until all of the Obligations have been fully satisfied
and performed.
7. Material Adverse Effect. In the event that there shall have
occurred any event, condition or state of facts that could reasonably be
expected to have a Material Adverse Effect, then Secured Party shall have the
right to take any and all actions as are reasonably necessary to protect Secured
Party's interest in the Collateral, including the right to:
(a) Make such payments and do such acts as Secured Party considers
necessary or reasonable to protect its security interest in the Collateral;
(b) Notify any Person owing funds to the Debtor of Secured Party's
security interest in such funds and verify the amount of such Account; and
Debtor agrees to collect all amounts owing to Debtor for Secured Party, receive
in trust all payments as Secured Party's trustee and immediately deliver such
payments to Secured Party in their original form as received from the account
debtor, with proper endorsements for deposit; and
(c) Settle or adjust disputes and claims directly with account
debtors for amounts, upon terms and in whatever order that the Security Party
reasonably considers advisable.
8. Authorization to File; Delivery of Additional Documentation
Required. Debtor authorizes Lender to file financing statements without notice
to Company, with all appropriate jurisdictions, as Lender deems appropriate, in
order to perfect or protect Lender's security interest in the Collateral. The
Company shall execute and deliver to Lender, at the request of Lender, all
documents that Lender may reasonably request, in form satisfactory to Lender, to
perfect and continue perfected Lender's security interest in the Collateral and
in order to fully consummate all of the transactions contemplated under the
Transaction Documents.
9. Miscellaneous. (a) Notices. All notices, requests, demands,
consents, instructions or other communications required or permitted hereunder
shall be in writing and faxed or delivered by courier to each party as follows:
if to Secured Party, to;
Group 1 Software, Inc.
0000 Xxxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx, 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attention: General Counsel
with a copy to:
Cadwalader, Xxxxxxxxxx & Xxxx LLP
000 Xxxxxx Xxxx
Xxx Xxxx, Xxx Xxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Xxxxx X. Xxxxxxxxxx, Esq.
or if to Debtor, to;
Sagent Technology, Inc.
000 Xxxx Xx Xxxxxx Xxxx
Xxxxx 000
Xxxxxxxx Xxxx, XX, 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attention: Chief Executive Officer
with a copy to:
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx, Esq.
All such notices and communications shall be effective (a) when sent
by Federal Express or other overnight service of recognized standing, on the
third business day following the deposit with such service; and (b) when faxed,
upon confirmation of receipt.
(b) Nonwaiver. No failure or delay on Secured Party's part in
exercising any right hereunder shall operate as a waiver thereof or of any other
right nor shall any single or partial exercise of any such right preclude any
other further exercise thereof or of any other right.
(c) Amendments and Waivers. This Security Agreement may not be
amended or modified, nor may any of its terms be waived, except by written
instruments signed by Debtor and Secured Party. Each waiver or consent under any
provision hereof shall be effective only in the specific instances for the
purpose for which given.
(d) Assignments. This Security Agreement shall be binding upon and
inure to the benefit of Secured Party and Debtor and their respective successors
and assigns; provided, however, that Debtor may not sell, assign or delegate
rights and obligations hereunder without the prior written consent of Secured
Party.
(e) Payments Free of Taxes, Etc. All payments made by Debtor under
this Security Agreement shall be made by Debtor free and clear of and without
deduction for any and all present and future taxes, levies, charges, deductions
and withholdings. In addition, Debtor shall pay upon demand any stamp or other
taxes, levies or charges of any jurisdiction with respect to the execution,
delivery, registration, performance and enforcement of this Security Agreement.
Upon request by Secured Party, Debtor shall furnish evidence satisfactory to
Secured Party that all requisite authorizations and approvals by, and notices to
and filings with, governmental authorities and regulatory bodies have been
obtained and made and that all requisite taxes, levies and charges have been
paid.
(f) Partial Invalidity. If at any time any provision of this
Security Agreement is or becomes illegal, invalid or unenforceable in any
respect under the law or any jurisdiction, neither the legality, validity or
enforceability of the remaining provisions of this Security Agreement nor the
legality, validity or enforceability of such provision under the law of any
other jurisdiction shall in any way be affected or impaired thereby.
(g) Headings. Headings in this Security Agreement are for
convenience of reference only and are not part of the substance hereof or
thereof.
(h) Construction. Each of this Security Agreement and the Notes are
the result of negotiations among, and has been reviewed by, Debtor, Secured
Party and their respective counsel. Accordingly, this Security Agreement and the
Notes shall be deemed to be the product of all parties hereto, and no ambiguity
shall be construed in favor of or against Debtor or Secured Party.
(i) Entire Agreement. This Security Agreement and the other
Transaction Documents, taken together, constitute and contain the entire
agreement of Debtor and Secured Party and supersede any and all prior
agreements, negotiations, correspondence, understandings and communications
among the parties, whether written or oral, respecting the subject matter
hereof.
(j) Governing Law. This Security Agreement shall be governed by and
construed in accordance with the laws of the State of California without
reference to conflicts of law rules (except to the extent governed by the UCC)
THE PARTIES HERETO, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, EACH
HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY AS TO ANY ISSUE RELATING
HERETO IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO
THIS AGREEMENT.
(k) Counterparts. This Security Agreement may be executed in any
number of counterparts, each of which shall be an original, but all of which
together shall be deemed to constitute one instrument.
[The remainder of this page is intentionally left blank]
IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers as of
the date and year first written above.
GROUP 1 SOFTWARE, INC.
By: /s/ Xxxx X. Xxxxxxx
-----------------------------------
Name: Xxxx X. Xxxxxxx
Title: Chief Executive Officer
SAGENT TECHNOLOGY, INC.
By: /s/ Xxxxx Xxxxxxxx
-----------------------------------
Name: Xxxxx Xxxxxxxx
Title: Chairman and CEO
ATTACHMENT 1
To Security Agreement
All right, title, interest, claims and demands of Debtor in and to
all of its assets and properties including, without limitation, the following:
(i) All goods and equipment now owned or hereafter acquired,
including, without limitation, all laboratory equipment, computer
equipment, office equipment, machinery, fixtures, vehicles, and any
interest in any of the foregoing, and all attachments, accessories,
accessions, replacements, substitutions, additions, and improvements
to any of the foregoing, wherever located;
(ii) All inventory now owned or hereafter acquired, including,
without limitation, all merchandise, raw materials, parts, supplies,
packing and shipping materials, work in process and finished
products including such inventory as is temporarily out of Debtor's
custody or possession or in transit and including any returns upon
any accounts or other proceeds, including insurance proceeds,
resulting from the sale or disposition of any of the foregoing and
any documents of title representing any of the above, and Debtor's
books relating to any of the foregoing;
(iii) All contract rights, general intangibles, health care
insurance receivables, payment intangibles and commercial tort
claims, now owned or hereafter acquired, including, without
limitation, all patents, patent rights (and applications and
registrations therefor), trademarks and service marks (and
applications and registrations therefor), inventions, copyrights,
mask works (and applications and registrations therefor), trade
names, trade styles, software and computer programs, trade secrets,
methods, processes, know how, drawings, specifications,
descriptions, and all memoranda, notes, and records with respect to
any research and development, goodwill, license agreements,
franchise agreements, blueprints, drawings, purchase orders,
customer lists, route lists, infringements, claims, computer
programs, computer disks, computer tapes, literature, reports,
catalogs, design rights, income tax refunds, payments of insurance
and rights to payment of any kind and whether in tangible or
intangible form or contained on magnetic media readable by machine
together with all such magnetic media;
(iv) All now existing and hereafter arising accounts, contract
rights, royalties, license rights and all other forms of obligations
owing to Debtor arising out of the sale or lease of goods, the
licensing of technology or the rendering of services by Debtor
(subject, in each case, to the contractual rights of third parties
to require funds received by Debtor to be expended in a particular
manner), whether or not earned by performance, and any and all
credit insurance, guaranties, and other security therefor, as well
as all merchandise returned to or reclaimed by Debtor and Debtor's
books relating to any of the foregoing;
(v) All documents, cash, deposit accounts, letters of credit,
letter of credit rights, supporting obligations, certificates of
deposit, instruments, chattel paper, electronic chattel paper,
tangible chattel paper and investment property, including, without
limitation, all securities, whether certificated or uncertificated,
security entitlements, securities accounts, commodity contracts and
commodity accounts, and all financial assets held in any securities
account or otherwise, wherever located, now owned or hereafter
acquired and Debtor's books relating to the foregoing;
(vi) Any and all claims, rights and interests in any of the
above and all substitutions for, additions and accessions to and
proceeds thereof, including, without limitation, insurance,
condemnation, requisition or similar payments and the proceeds
thereof; and
(vii) Any Lien obtained by Debtor from any third party as
security for the payment or enforcement of accounts.
ATTACHMENT 2
TO SECURITY AGREEMENT
1. 000 X. Xx Xxxxxx Xxxx, Xxxxxxxx Xxxx, XX
2. 000 XxxxXxxx Xxxxx, Xxxxx 000, Xxxxxxxx, XX 00000
3. Suite 1 of 000000 Xxx 0, Xxx 0, Xxxxxx, XX 00000
4. 000 Xxxx Xxxxxx Xxx, Xxx. 0, Xxxxxxxx Xxxx, XX 00000
5. West Oaks Executive Park, 0000 Xxxxxx Xxxxx, Xxxxx 000, Xxxxx 000,
Xxxxxxx, XX
6. 0000 Xxxx Xx, Xxx 0000, Xxxxxx, XX 00000
7. One X'Xxxx Centre, 0000 X. Xxxxx Xxxx, Xxxxx 0000, Xxxxxxxx, XX 00000
8. 00 Xxxxx Xxxxx 00 Xxxxx, Xxxxx 0000, Xxxx Xxxxxxxxx, XX 00000
9. 0000 Xxxxxx Xx., Xxxxx 000, Xxxxxxx, XX 00000-0000
10. Building 0, Xxxxxxx Xxxx Xxxxxx, Xxxxxxxxx Xxxxx, Xxxxxxxx, 0000 Xxxxx
Xxxxxx
11. Far East Architects Building 0X, 0-00-0 Xxxxxxxxxx, Xxxxxx-xx, Xxxxx,
Xxxxx 106-0031
12. 00 Xxxxxxx Xxxxx, 00xx Xxxxx, XXX Xxxxx 0, Xxxxxxxxx 000000
13. 000 Xxxxxxxxx Xxxxxx, Xxxxx Xxxx, Xxxxxxx, Xxxxxxxxx, XX0 0XX Xxxxxx
Xxxxxxx
14. 000 Xxx Xxxxxxx, Xxx X, 0xx Xxxxx, Xx. Germain en Laye 00000 Xxxxxx
15. Muenchner Stra(beta)e 11, D-85540 Xxxx xxx Xxxxxxxx, Xxxxxxx
00. Room 1215 Canway Building, 00 Xxx Xx Xxx Xxxx, Xxxxxxx, Xxxxx 000000
17. 144-27 00xx Xxxxx, Xxxxxx Xxxxxxxx, Xxxxxxx-Xxxx, Xxxxx, Xxxxx
18. Xxxxx 0-0, Xxxxx 0, Xxxxx XXX II, 00 Xxxxx Xxxxxx, Xxxxx Xxxxxx 00000
(closing in May 2003)
