Exhibit 10.49
SECURITY AGREEMENT
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THIS SECURITY AGREEMENT, made this 16th day of September, 1996, among
INFORMATION MANAGEMENT ASSOCIATES, INC., having a place of business at Xxx
Xxxxxxxxx Xxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxxxxxx 00000 (hereinafter called the
"Secured Party") and TELEMAR SOFTWARE INTERNATIONAL, LLC, a Delaware limited
liability company having its principal place of business at Xxx Xxxxxxxxx Xxxxx,
Xxxxxxx, Xxxxxxxxxxx 00000 ("Debtor").
W I T N E S E T H :
WHEREAS, the Secured Party and the Debtor are parties to an Asset Purchase
Agreement, dated as of July 31, 1996 (the "Asset Purchase Agreement"), pursuant
to which the Debtor has issued its promissory note to Secured Party in the
principal amount of $650,000 (the "Note").
NOW THEREFORE, for consideration, receipt whereof is hereby acknowledged,
the parties agree as follows:
1. Definitions and Construction.
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The following words and terms shall be defined and construed as set
forth below in connection with their use in this Security Agreement and all
exhibits hereto:
1.1 "Collateral" shall mean the property in which the Debtor has granted
the Secured Party a security interest. Such property is more fully set forth in
EXHIBIT A attached hereto.
1.2 "Obligations" shall mean the Note executed by the Debtor as referenced
above and any obligations of Debtor to Secured Party arising now or subsequently
hereunder or under the Note.
1.3 This Security Agreement shall be interpreted and construed in light of
the sections, the definitions, the "official comments", and the definitional and
substantive cross references of the Uniform Commercial Code as the Code is
adopted in the State of Connecticut. However, where terms are defined by this
Security Agreement, the definitions of such terms in the Uniform Commercial Code
shall be deemed supplementary to those herein contained.
1.4 All headings contained in this Agreement are for reference purposes
only and shall not in any way whatsoever effect the meaning or interpretation of
this Agreement.
1.5 Wherever the singular number is used for any noun, pronoun or verb in
this Agreement, such noun, pronoun or verb shall be deemed to include the plural
number, and the plural number shall likewise be deemed to include the singular,
as the context may require.
2. Grant of Security Interest.
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The Debtor hereby pledges, assigns and grants to the Secured Party a
security interest in the Collateral described on Exhibit A annexed hereto to
secure the payment of all Obligations of the Debtor to the Secured Party.
3. Software Licenses.
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The Debtor may license its software products for use by its customers
as long as the license is made in the ordinary course of business and upon terms
and conditions which are customary or normal in the Debtor's business (a license
in the ordinary course of business shall not include a transfer in total or
partial satisfaction of a debt); provided, however, that the security interest
created under the terms of this Security Agreement shall continue in the
proceeds and products of such licenses.
4. Representations and Warranties of Debtor.
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The Debtor hereby warrants, covenants and agrees that:
4.1 The Debtor is a limited liability company duly organized, validly
existing and in good standing under the laws of the State of Delaware.
4.2 The Debtor has the corporate power to execute, deliver and carry out
this Security Agreement and to incur the Obligations, and has taken all
necessary corporate action to authorize the execution, delivery and performance
of this Security Agreement and the incurring of the Obligations.
4.3 The execution and delivery of this Security Agreement and compliance
by the Debtor with any of the terms and provisions hereof or of any of the other
agreements or instruments referred to herein or therein, will not, on the date
hereof, violate any provision of any existing law or regulation or any writ or
decree of any court or governmental instrumentality or of the Certificate of
Formation or Operating Agreement of the Debtor or any agreement, trust,
indenture, covenant, lease, license, permit, instrument or other obligation to
which the Debtor is a party or which is binding upon it or its assets.
4.4 The Debtor will maintain such title to all of the Collateral as was
delivered to Debtor by the Secured Party pursuant to the Asset Purchase
Agreement. Debtor shall not subject the Collateral to any mortgage, pledge,
lease, trust, bailment, lien, security interest, encumbrance, charge or title
retention or other security agreement or arrangement (each a "Lien" and
collectively "Liens") beyond those to which the Collateral was subject when it
was delivered to Debtor by the Secured Party pursuant to the Asset Purchase
Agreement. Without the prior written consent of Secured Party, Debtor shall not
enter into any agreement with a bank or
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other financial institution or other person (a "Lender") with respect to a
financing which would require the Debtor to xxxxx x Xxxx to such Lender that is
prior to, or pari passu with, the Lien granted hereunder to the Secured Party.
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The Debtor will defend the Collateral against all claims and demands of all
persons other than Secured Party at any time claiming the same or any interest
therein which interest arises on or after the date hereof.
4.5 The Collateral will be kept at the Debtor's principal place of
business in Shelton, Connecticut. The Debtor will not remove the Collateral
from said location without written consent of the Secured Party. The Debtor
agrees to notify the Secured Party in advance of any change of its mailing
address or principal place of business in order that a prompt refiling of any
outstanding financing statements or other notices may be made, if necessary
prior to the change.
4.6 At the request of the Secured Party, the Debtor will, now and in the
future, join with the Secured Party in executing one or more financing
statements pursuant to the Uniform Commercial Code in form satisfactory to the
Secured Party and will pay the cost of filing and recording the same in all
public offices wherever filing and/or recording is deemed by the Secured Party
to be necessary or desirable.
4.7 Other than the licensing or use of its software products in the
ordinary course of business, the Debtor will not sell, exchange, license or
otherwise dispose of the Collateral, or any interest therein, without the
express written authorization of the Secured Party.
4.8 The Note and this Security Agreement securing the Note have all been
duly authorized, executed and delivered by Debtor and constitute valid and
legally binding obligations of Debtor enforceable against Debtor in accordance
with their terms, subject to the provisions of any applicable bankruptcy,
insolvency or other laws generally affecting creditors' rights.
5. Covenants of Debtor.
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The Debtor covenants that until the Obligations are fully paid and
discharged, it shall comply with the following requirements:
5.1 Commencing with the quarter ending December 31, 1996, Debtor will
furnish Secured Party within forty-five days after the close of each quarterly
period of Debtor's fiscal year: (i) a balance sheet; (ii) statement of profit
and loss reflecting the financial condition of Debtor at the end of such period
and the results of its operation during such period; and (iii) a Quarterly
Recapitulation Report setting forth Debtor's outstanding accounts receivable
balance as of the start of the quarter and as of the end of the quarter. Such
balance sheet, statement of profit and loss, and Quarterly Recapitulation Report
shall be certified on behalf of
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the Debtor by an authorized officer of the Debtor to fairly present the
financial condition at the end of such period and the results of its operation
during such period in accordance with generally accepted accounting principles,
consistently applied.
5.2 Debtor shall give any representative of the Secured Party, upon at
least five business days' advanced written notice, access during normal business
hours to permit him to examine, copy, and make extracts from any and all books,
records, correspondence, documents, vouchers and other data pertaining to the
Debtor's assets and otherwise to inspect any of the Collateral.
5.3 So long as an event of default has occurred and is continuing, Debtor
shall pay all reasonable fees and expenses incurred by the Secured Party in
pursuing, protecting, enforcing or releasing any of its rights under this
Security Agreement, including, but not limited to, recording, filing and counsel
fees and travel expenses.
5.4 Debtor shall execute and deliver such further documents and do such
other acts and things as the Secured Party may reasonably request in order to
fully effect the purpose of this Security Agreement, including, without
limitation, executing and filing such financing statements, assignments or other
documents or instruments which may be necessary or appropriate to perfect the
security interest of the Secured Party in the Collateral including, without
limitation, all documents requested by Secured Party for the recordation of the
security interests granted herein with any governmental agency, including,
without limitation, the United States Copyright Office and the United States
Patent and Trademark Office.
5.5 Debtor shall have and maintain insurance at all times with respect to
the Collateral against risks of fire (including so called extended coverage),
theft and such risks as the Secured Party may require, containing such terms, in
such form, and for such periods, and written by such companies and in reasonable
amounts of coverage as may be reasonably satisfactory to the Secured Party.
Such insurance is to be payable to the Secured Party and the Debtor as their
interests may appear. Each policy of insurance shall have endorsements
providing: (i) that so long as an event of default has occurred and is
continuing, loss or damage, if any, under the policy, shall be payable to the
Secured Party, as secured party, as its interest may appear; (ii) that the
insurance as to the interest of the Secured Party shall not be invalidated by
any act or neglect of the insured or owner of the property described in said
policy, nor by any foreclosure, or other proceeding, or notice or sale relating
to said property, nor by any change in the title of ownership of said property,
nor by the occupation of the premises where the property is located for purposes
more hazardous than are permitted by said policy; (iii) that, if the policy is
canceled at any time by the insurance carrier, in such case the policy shall
continue in force for the benefit of the Secured Party for not less than ten
(10) days after
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written notice of cancellation is received by the Secured Party from the
insurance carrier; and (iv) that the policy will not be reduced or canceled at
the request of the insured nor will these endorsements be amended or deleted
without ten days' prior written notice to the Secured Party from the insurance
carrier. The Debtor shall furnish the Secured Party with certificates or other
evidence satisfactory to the Secured Party of compliance with the foregoing
insurance provisions upon the execution of this Security Agreement and with
regard to renewals thereof, at least 30 thirty days prior to the renewal date of
each policy involved.
5.6 Debtor shall keep the Collateral free from any lien, security interest
or encumbrance and in good order and repair, and will not waste or destroy the
Collateral or any part thereof. The Debtor will not use the Collateral in
violation of any statute or ordinance. The Debtor will notify the Secured Party
in the event of loss, theft, damage, destruction, sale or encumbrance to or of
any of the Collateral or the making of any levy, seizure or attachment thereof
or thereon, or the placing of any lien or liens thereon or generally on the
property of the Debtor.
5.7 Debtor shall maintain its corporate existence in good standing and
comply with all laws and regulations of the United States or of any state or
states thereof or of any political subdivision thereof, or of any governmental
authority which may be applicable to it or its business.
5.8 For so long as a default in the payment of principal or interest
under the Note has occurred and is continuing (giving effect to all applicable
grace periods), Debtor shall not declare nor pay any dividend or make any
distribution upon its capital stock, or purchase or retire any of its capital
stock, invest in or purchase any stock or securities of any individual, firm or
corporation, merge or consolidate or be merged or consolidated with or into any
other corporation, otherwise alter or amend its capital structure or sell or
dispose of any of its assets except in the ordinary and usual course of its
business.
6. Rights of Secured Party to Preserve Collateral.
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At its option and in its sole and absolute discretion, to the extent
Debtor fails to do so, the Secured Party may discharge taxes, liens, or security
interests or other encumbrances at any time levied or placed on the Collateral,
may pay for insurance on the Collateral and may pay for the repair, maintenance
and preservation of the Collateral, including, but not limited to, mortgage or
lease payments on any of the Debtor's business premises. Except with respect to
payments made or expenses incurred in discharging taxes, liens, security
interests or other encumbrances in place on the date hereof (which shall be the
responsibility of Seller), the Debtor agrees to reimburse the Secured Party on
demand for any payment made or any expense, including reasonable attorneys'
fees, incurred by the Secured Party pursuant to the foregoing authorization with
interest at the rate
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provided in the Note. Each amount so paid by the Secured Party shall be secured
by the Collateral. Nothing herein contained shall obligate the Secured Party to
make any such payment nor shall the making of one or more of such payments
constitute: (i) an agreement on the Secured Party's part to take any further or
similar action, or (ii) a waiver of any default by the Debtor under the terms of
this Security Agreement. In addition to the foregoing rights, so long as an
event of default has occurred and is continuing, Secured Party shall have the
right to give notice of the Secured Party's security interest in the Collateral,
to communicate in its own name or in the name of others with account debtors in
order to verify with them, to Secured Party's satisfaction, the existence,
amount and terms of any accounts or contract rights, to execute and file in the
Debtor's name any financing statements, certificates of title and amendments
thereto required to perfect the Secured Party's security interest under this
Agreement; and to protect and preserve the Collateral and the Secured Party's
rights hereunder.
7. Power of Attorney.
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Debtor does hereby make, constitute and appoint any officer or agent
of the Secured Party as Debtor's true and lawful attorney-in-fact, effective
upon and during the continuance of an event of default, with power to endorse
Debtor's name or the names of Debtor's agents or Debtor's business name or
tradename upon any notes, checks, drafts, money orders, or other instruments of
payment (including payments payable under any required policies of insurance) or
other Collateral that may be in or come into Secured Party's possession pursuant
to the terms of the Security Agreement; to sign and endorse any of such names
upon any invoice, freight or express xxxx, xxxx of lading, store or warehouse
receipt, draft against debtors, assignment, verification, and notice in
connection with accounts, and any instrument or documents relating thereto or to
Debtor's rights therein. This power of attorney shall be irrevocable as long as
any of the Obligations remain outstanding.
8. Default.
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The Debtor shall be in default under this Security Agreement upon the
happening of any one of the following events or conditions:
(a) The existence of a default in the payment of any monies required
to be paid hereunder or under the Note (which default shall continue for a
period of ten (10) days or more after notice thereof from Secured Party to
Debtor) or in the keeping or performance of any of the terms, conditions,
covenants, or agreements to be performed by the Debtor hereunder or under the
Note (which default shall not be cured within 15 days after notice thereof from
Secured Party to Debtor); or a default in the payment of monies or in the
keeping or performance of any of the terms, conditions, covenants and agreements
on the Debtor's part to be paid, kept or performed by Debtor as mortgagor or
lessee.
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(b) Any representation, warranty or statement made by Debtor herein or
in the Asset Purchase Agreement to the Secured Party proves to have been false
in any material respects when made or furnished.
(c) Dissolution of, termination of the existence of, insolvency of,
business failure of, appointment of a receiver of any part of the property of,
execution of a plan of composition or compromise agreement with creditors by,
assignment for the benefit of creditors by, or the commencement of any
proceedings under any bankruptcy or insolvency laws by or against the Debtor.
(d) Loss, theft, substantial damage, destruction, unauthorized sale or
encumbrance of a substantial portion of the Collateral, or the making of any
levy, seizure, attachment or other judicial process against a substantial
portion of the Collateral, or the placing of any lien or liens thereon or
generally on the property of the Debtor by anyone including the United States of
America or any federal, state or local governmental agency or authority.
9. Acceleration.
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Upon the happening of any event of default specified above, the entire
unpaid balance owed under the Note shall at the option of the Secured Party
automatically become, and shall thereafter be, immediately due and payable.
10. Rights and Obligations of Parties upon Debtor's Default.
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Upon Debtor's default, the parties shall have the following rights and
remedies:
(a) The Secured Party shall have the remedies of a secured party under
the Uniform Commercial Code as now in effect in the State of Connecticut and the
rights and such further remedies as may from time to time be provided by the
laws of the State of Connecticut.
(b) The Secured Party will have the right to possession of the
Collateral and to maintain such possession on the Debtor's business premises or
to remove the Collateral or any part thereof to such places as it may desire.
If the Secured Party exercises its right to take possession of the Collateral,
the Debtor will, upon the Secured Party's demand, assemble the Collateral and
make it available to the Secured Party at a place reasonably convenient to both
parties, including, without limitation, all listings, codes, manuals, programs,
designs and other documentation pertaining to the Collateral.
(c) The Secured Party will have the right to use, in connection with
any assembly or disposition of the Collateral, any trademark, tradename, trade
style, copyright, patent right, or technical process used or utilized by Debtor.
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(d) The Secured Party will have the right to enter into any license
or sublicense with any third party, with Secured Party as licensor, pertaining
to all or part of the software systems products of the Debtor and any other
portion of the Collateral, upon terms acceptable to Secured Party in its
reasonable discretion.
(e) Unless the Collateral is perishable or threatens to decline
speedily in value or is of the type customarily sold on a recognized market,
Secured Party will give the Debtor reasonable notification of the time and place
of any public sale of Collateral, or of the time after which any private sale or
any other intended disposition of the same is to be made. Expenses of retaking,
holding, preparing for sale, selling or the like shall include, but are not
limited to, the Secured Party's reasonable attorneys' fees and legal expenses.
Secured Party may be the purchaser of any or all Collateral or other property
and security so sold, and may hold such Collateral, property or security
thereafter in its own right absolutely free from any claims of Debtor or right
of redemption.
(f) The net proceeds of any sale or sales with respect to Collateral
subject to this Security Agreement, after deducting all costs of collection
(including reasonable attorneys' fees), shall be applied against the amount owed
to Secured Party by Debtor pursuant to the Obligations in whatever order the
Secured Party shall elect. Debtor shall forthwith pay to Secured Party any
deficiency on demand of Secured Party or be liable for interest and/or
attorneys' fees should Secured Party have to pursue Debtor for same. Debtor
shall be entitled to any surplus resulting from such sale or sales.
(g) Effective upon and during the continuance of an event of default,
in protecting, exercising or assuring its interest, rights or remedies under
this Security Agreement, Secured Party may receive, open or dispose of mail
addressed to Debtor and subrogate to all Debtor's interests, rights and remedies
in respect to any Collateral, including the right to stop delivery and, upon
notice from Debtor that an account debtor has returned, rejected, revoked
acceptance of or failed to return goods or that such goods have been reconsigned
or diverted, the right to take possession of and to sell or dispose of said
goods unless Secured Party fails to advise Debtor of its intended exercise of
such rights within five (5) business days after receipt of notice.
11. Waiver of Certain Rights.
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Debtor waives presentment, demand, protest, notice of protest, or
other notice of dishonor or default of any kind with regard to the Obligations.
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12. Right of Setoff.
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With respect to any property of the Debtor in the Secured Party's
possession or control, now or in the future, the Secured Party shall have the
right to set off all or any portion thereof, at any time, against the
Obligations hereunder, as they mature or upon default of Debtor, without prior
notice or demand to the Debtor.
13. Miscellaneous.
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13.1 The Debtor agrees to indemnify the Secured Party from and against all
claims, losses and liabilities growing out of or resulting from this Agreement
(including, without limitation, enforcement of this Agreement), except claims,
losses or liabilities resulting from the Secured Party's negligence or willful
misconduct.
13.2 Upon an event of default, the Debtor will upon demand pay to the
Secured Party the amount of any and all reasonable expenses, including the
reasonable fees and disbursements of its counsel and of any experts and agents,
which the Secured Party may incur in connection with (i) the administration of
this Agreement; (ii) the custody, preservation, use or operation of, or the sale
of, collections from, or other realization upon, any of the Collateral; (iii)
the exercise of enforcement by the Secured Party of any of its rights hereunder;
or (iv) the failure by Debtor to observe or perform any of the provisions
hereof.
13.3 All agreements, representations and warranties made herein, any
agreement, statement, notice, invoice, certificate, schedule, consignment,
designation, document or other instrument delivered to the Secured Party in
connection with this Security Agreement or any other agreement shall survive the
making of this Security Agreement.
13.4 This Security Agreement may not be amended nor any provision hereof
waived except in writing signed by the party to be changed.
13.5 All Exhibits referred to herein and annexed hereto are hereby
incorporated in this Security Agreement and made a part hereof.
13.6 Any notice that either party to this Security Agreement may elect to
give shall be effective if sent by certified mail, return receipt requested,
postage prepaid, addressed to the other party at the address shown on the UCC
financing statements executed by the parties on even date hereof or, if such
other party has given written notice of a change in address, then to the last
such address. Any such notice shall be deemed effective upon receipt.
13.7 This Security Agreement shall be governed and construed according to
the internal laws of the State of Connecticut without
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regard to conflicts of laws principles.
13.8 This Security Agreement may be executed in one or more counterparts
and each of such counterparts shall, for all purposes, be deemed to be an
original, but all such counterparts shall, together, constitute but one and the
same instrument.
IN WITNESS WHEREOF, the parties have caused this Security Agreement to be
duly executed and delivered by the proper and duly authorized officers as of the
date and year first above written.
Debtor
TELEMAR SOFTWARE INTERNATIONAL, LLC
By /s/ Xxxxxx X. Xxxxx, Xx.
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Name: Xxxxxx X. XxXxx, Xx.
Title: President and Chief
Executive Officer
Secured Party
INFORMATION MANAGEMENT
ASSOCIATES, INC.
By /s/ Xxxx X. Xxxxxxx
------------------------------------
Name: Xxxx X. Xxxxxxx
Title: Chairman and Chief Financial
Officer
Exhibit A
(a) All property, real or personal, of the Debtor now owned or
hereafter acquired, wherever located, any additions an accessions thereto and
replacements and renewals thereof; including without limitation:
(1) All accounts, contract rights, chattel paper, instruments,
general intangibles and other obligations of any kind now or hereafter
existing arising out of or in connection with the sale or lease of goods or
the rendering of services, and all rights now or hereafter existing in and
to all security agreements, leases, and other contracts securing or
otherwise relating to any such accounts, contract rights, chattel paper,
instruments, general intangibles or obligations (and all such accounts,
contract rights, chattel paper, instruments, general intangibles and
obligations being the "Receivables," and any and all such leases, security
agreements and other contracts being the "Related Contracts");
(2) All general intangibles, the business as a going concern,
goodwill, contract rights, the "TeleMar(TM)" software system and all other
software products and software systems, including without limitation, all
designs, codes, listings, manuals, and all other embodiments thereof, of
whatever nature, all information and documentation relating thereto; all
future editions, modifications and derivative works and enhancements thereto
which hereinafter may be made; and all other trademarks, copyrights,
patents, proprietary information, computer software, trade styles and trade
names, including, without limitation, all "Intellectual Property Rights" as
that term is defined below.
"Intellectual Property Rights" means: all Trademarks, Patents,
Copyrights and Know-How and Technical Information. "Trademarks" means all
registered and unregistered trademarks, servicemarks, corporate names,
tradenames, logos, designs, product or business identifiers and trade dress
together, in each case, with the good will of the business symbolized
thereby, and United States, state and foreign trademark registrations or
applications for registration and all amendments, renewals and extensions
thereof. "Patents" means United States and foreign patents and patent
applications, certificates of invention, utility models, and all renewals,
extensions, reissues, divisions, continuations and continuations-in-part
thereof. "Copyrights" means registered or unregistered United States or
foreign copyrights (including, but not limited to, copyrights in computer
programs, related documentation and data bases) and United States and
foreign copyright registrations, and applications for registration and all
renewals and extensions thereof. "Know-How and Technical Information" means
data, plans, trade
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secrets, technologies, processes, specifications, know-how, operating
experience and information (business, economic and technical) relating
to the foregoing.
(3) All inventory in all of its forms, wherever located, now or
hereafter existing (including, but not limited to, (i) all products sold
in the ordinary course of business, of the Debtor and raw materials and
work in process therefor, finished goods thereof, and materials used or
consumed in the manufacture or production thereof, (ii) goods in which
Debtor has an interest in mass or a joint or other interest or right of
any kind, and (iii) goods which are returned to or repossessed by the
Debtor), and all accessions thereto and products thereof and documents
therefor (any and all such inventory, accessions, products and
documents being the "Inventory");
(4) All personal property, goods, leasehold improvements (unless
otherwise provided by and underlying lease agreement), machinery,
equipment, furnishings, furniture, fixtures, tools and attachments ("the
Equipment") now or hereafter owned by the Debtor, wherever the Equipment
may be located and whether now owned or hereafter acquired, any
additions and accessions thereto, substitutions therefor and
replacements and renewals thereof.
(b) All proceeds of any and all of the foregoing collateral and, to
the extent not otherwise included, all payments under insurance (whether or not
the Secured Party is the loss payee thereof), or any indemnity, warranty or
guaranty, payable by reason of loss or damage to or otherwise with respect to
any of the foregoing collateral.
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