EXHIBIT 10.14
COLLATERAL FEE AND SECURITY AGREEMENT
This Collateral Fee and Security Agreement (this "Agreement") is made and
entered into this 17th day of March, 2003, by CATALYST INTERNATIONAL, INC., a
Delaware corporation (the "Company") and the individuals listed as security
holders on the signature page hereof (individually, a "Securityholder" and
collectively, the "Securityholders").
BACKGROUND:
The Company has received a revolving facility in the principal amount of One
Million Dollars ($1,000,000.00) (the "Credit Facility") from the First National
Bank of Muscatine, Muscatine, Iowa (the "Bank"). In connection with the Credit
Facility, the Company granted to the Bank a security interest in certain of the
Company's assets, including the Company's Accounts (as defined below), as
security for the Credit Facility. The Securityholders are shareholders in the
Company and have agreed to pledge securities owned by them in favor of the Bank
in order to provide additional security for the Company's obligation under the
Credit Facility. The Company has agreed to pay to the Securityholders a fee for
pledging such securities and also to grant the Securityholders a security
interest in the Company's Accounts, which security interest shall be subordinate
to the security interest of the Bank. The Bank has also agreed to assign its
security interest in the Company's assets upon termination of the Credit
Facility as described below. The parties desire to set forth their agreements in
this Agreement.
NOW, THEREFORE, in consideration for the mutual covenants and agreements set
forth herein, the parties hereby agree as follows:
Pledge of Securities and Collateral Fee. Each of the Securityholders has agreed
to pledge to the Bank securities (collectively, the "Pledged Securities") having
a fair market value as of the date hereof approximating the amount set forth
opposite such Securityholder's name on Exhibit A attached hereto. In
consideration for the Securityholders' agreement to provide such pledge to the
Bank, the Company agrees to pay in cash to each of the Securityholders a fee,
calculated annually, equal to the product of (i) three and one-half percent (3
1/2 %) and (ii) the amount set forth opposite such Securityholder's name on
Exhibit A attached hereto. Such fee shall be paid monthly and shall be prorated
for each partial month that the pledge of the Pledged Securities by the
Securityholders is in effect with the Bank. The Company shall have the right at
any time and from time to time to request that the Bank release the pledge of
the Pledged Securities of any of the Securityholders and, if the Bank agrees to
said release, then effective upon such release, the fee payable by the Company
to any Securityholder whose Pledged Securities has been released by the Bank,
shall terminate. The Company and the Securityholders each acknowledge and agree
that the fee payable by the Company under this Section 1 is fair and reasonable
compensation for the agreement of the Securityholders to provide the pledge of
Pledged Securities to the Bank, and are less than the fees that the Company
would pay for similar collateral provided by third parties. Any Securityholder
may waive his right to the fee upon notice to the Company.
Grant of Security Interest. As additional security for the agreement of the
Securityholders to pledge the Pledged Securities under Section 1, above, the
Company hereby grants to the Securityholders a security interest in all of the
Company's Accounts, and all additions and accessions thereto and all Proceeds
(as defined below) and products of any of the foregoing, wherever located (for
purposes hereof, the foregoing assets of the Company are referred to herein
collectively as the "Collateral"). For purposes hereof, "Accounts" shall have
the meaning assigned thereto by the Uniform Commercial Code as adopted by and in
effect in the State of Wisconsin, as the same may be amended or enacted from
time to time (the "UCC") and shall additionally include, but not be limited to,
all books and records, data processing cards, tapes, tabulating runs, programs
and similar material evidencing, securing or relating thereto and in each case
whether now owned or hereafter acquired or wherever located. For purposes
hereof, "Proceeds" shall have the meaning assigned thereto by the UCC and, in
any event, shall include, but not be limited to, (i) any and all proceeds of any
insurance policy, indemnity, warranty or guaranty payable to any Securityholder
from time to time with respect to any of the Collateral and (ii) any and all
payments in any form whatsoever, made or payable to a Securityholder from time
to time in connection with any of the Collateral. The Securityholders
acknowledge and agree that the security interest granted under this Section 2
shall: (i) remain in full force and effect with respect to each Securityholder
until the earlier of, (A) the date that all obligations due the Bank from the
Company have been paid in full and the Credit Facility has been terminated, or
(B) the date that the Bank releases its interest in the
Pledged Securities of such Securityholder, and (ii) be subordinate and junior to
the security interest of the Bank in and to the Collateral.
Execution of Additional Documents by Securityholders. By the execution of this
Agreement, each of the Securityholders agrees to execute and deliver to the Bank
any and all documentation reasonably requested by the Bank in order to evidence
the subordination of the security interest granted in Section 2, above, or
otherwise to memorialize the agreements between the Bank and the Company, and
among the Bank and the Securityholders. Each of the Securityholders further
agrees to execute any and all documents requested by the Company for tax or
other regular filings required to be made by the Company.
Appointment of Agent. By his execution below, each of the Securityholders hereby
appoints Xxxxxxxx X. Xxxxx and Xxxxxxx X. Xxxxxx, or either of them
(individually an "Agent" and collectively the "Agents") to take any of the
following actions on behalf of the Securityholders as may be required under this
Agreement:
to exercise rights upon a Default (as defined below), including, but not limited
to, the execution of any and all documents required consistent with the actions
permitted under Section 5, below;
accept notices and receive communications on behalf of the Securityholders; and
take any and all actions necessary in the judgment of the Agents for the
accomplishment of the foregoing. Each Securityholder will be bound by all
actions taken and documents executed by the Agents in connection with any of the
foregoing matters. In performing the functions specified in this Section 4, the
Agents will not be liable to any Securityholder in the absence of fraud or
willful misconduct on the part of the Agents. If either of the Agents shall
resign or become unable to fulfill his duties, then Xxx X. Xxxxxx or Xxxxxxx X.
Xxxxxx will be a replacement Agent and will have all powers and authority of an
Agent hereunder.
Rights of the Securityholders. Upon the occurrence and during the continuance of
a Default (as defined below) either of the Agents, acting for the benefit of the
Securityholders, shall have all rights and remedies for Default provided by the
UCC, as well as any other applicable law. Without limiting the foregoing, either
of the Agents may (i) enter into any premises where any of the Collateral may be
located, and take possession of the Collateral, all in accordance with
applicable law; and (ii) dispose of the Collateral in accordance with applicable
law. The Securityholders acknowledge and agree that all rights and remedies of
the Agents are subject to and subordinated to the rights of the Bank in and to
the Collateral. In connection with the exercise of any rights or remedies of the
Securityholders under this Section 6, the Company shall reimburse the
Securityholders for all reasonable expenses incurred by the Securityholders in
protecting or enforcing their rights under this Agreement, including, but not
limited to, reasonable fees of attorneys, legal assistants or paralegals; all
expenses of taking possession, holding, arranging for a disposition of and
disposing of the Collateral; and all expenses and costs in connection with any
proceeding under applicable bankruptcy law. For purposes hereof, a "Default"
shall be deemed to exist if either of the following events shall occur: (i)
there shall be a default or event of default under the documents executed and
delivered in connection with the Credit Facility and the Bank shall have taken
action to foreclose on its lien on the Company's Accounts or (ii) the Bank shall
have taken action to sell any of the Pledged Securities. Upon payment of the
Credit Facility by the securityholders, the Bank's security interest in the
Company's assets.
Disclosure of this Agreement. Each party acknowledges and agrees that the
Company may be required to disclose the contents of this Agreement in connection
with securities or other filings that the Company may make from time to time and
accordingly, each of the parties hereby consents to any and all such disclosure.
Pledge of Additional Securities. Each of the Securityholders agrees that to the
extent the fair market value of the Pledged Securities pledged by such
Securityholder becomes less than the amount set forth opposite such
Securityholder's name on Exhibit A attached hereto, such Securityholder will,
from time to time, pledge to the Bank additional listed securities so that the
aggregate value of the Pledged Securities pledged by such Securityholder equals
or exceeds the amount set forth opposite such Securityholder's name on Exhibit A
attached hereto. All such
additional securities shall be pledged on a prorata basis based on the
percentages listed for each Securityholder on Exhibit A attached hereto.
Prorata Liability of Securityholders. The Securityholders and the Bank have
agreed that to the extent that the Bank is required to sell the Pledged
Securities to pay obligations of the Company owed to the Bank, the Pledged
Securities shall be sold on a prorata basis based on the percentages for each
Securityholder listed in Exhibit A attached hereto so that each Securityholder
will bear his proportionate liability to the Bank based on such percentages.
Governing Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of Wisconsin, without regard for principles of
conflicts of law thereunder.
Successors and Assigns. This Agreement binds the parties hereto, and their
respective successors and assigns.
Counterparts. This Agreement may be executed in counterparts, each of which
shall be deemed an original, and all of which together shall constitute one
instrument.
12. Opportunity For Advice. Each of the undersigned acknowledge that
they have been given the opportunity to obtain independent legal advice
concerning the interpretation of this agreement and that they are executing this
Agreement solely in reliance upon their own knowledge, belief and judgment, and
not upon any representation made by any of the other parties, or others acting
on their behalf.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date set forth above.
CATALYST INTERNATIONAL, INC.
By: /s/ Xxxxx X. Xxxxxxxx
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Executive Vice President and CFO (Title)
SECURITYHOLDERS:
/s/ Xxxxxxxx X. Xxxxx
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Xxxxxxxx X. Xxxxx
/s/ Xxxxxxx X. Xxxxx
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Xxxxxxx X. Xxxxx
/s/ Xxx X. Xxxxxx
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Xxx X. Xxxxxx
/s/ Xxxxxxx X. Xxxxxx
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Xxxxxxx X. Xxxxxx
/s/ Xxxxx X. Xxxxxxx
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Xxxxx X. Xxxxxxx
By its execution below, the Bank hereby acknowledges receipt of this
Agreement and agrees to its terms as of the date set forth above.
THE FIRST NATIONAL BANK OF MUSCATINE
By: /s/ D. Xxxxx Xxxxxxx
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D. Xxxxx Xxxxxxx, President/CEO
Exhibit A
PLEDGED SECURITIES OF SECURITYHOLDERS
Fair Market Value Pro-Rata
Name of Securityholder of Pledged Securities Percentage
---------------------- --------------------- ----------
Xxxxxxxx X. Xxxxx $500,000 50%
Xxxxxxx X. Xxxxx $125,000 12 1/2%
Xxx X. Xxxxxx $250,000 25%
Xxxxxxx X. Xxxxxx $ 75,000 7 1/2%
Xxxxx X. Xxxxxxx $ 50,000 5%
