The Security Agreement
Exhibit 4
THIS SECURITY AGREEMENT (this “Security Agreement”) is made as of this 3rd day of January,
2008 by and between Riverland Enterprises, LLC, and Xxxxxx Xxxxxxx & Associates, LLC (collectively,
the “Pledgee”), and FP Tech Holdings, LLC (the “Pledgor”).
RECITALS
In connection with the purchase by the Pledgor from the Pledgee of 2,567,414 shares of the
common stock of Firepond, Inc. and senior secured convertible notes due January 2009, which are
convertible into 48,000 shares of common stock of Firepond, Inc., pursuant to the Stock Purchase
Agreement dated as of the date hereof, by and among the Pledgor and the individuals and entities
set forth on Schedule I-A thereto (the “Stock Purchase Agreement”), the Pledgor has issued that
certain Note, herewith, payable to the order of the Pledgee in the aggregate principal amount of
$3,750,000.00.
Such Note is secured initially by 1,875,000 of the shares acquired pursuant to the Stock
Purchase Agreement (the “Shares”); provided that the number of Shares offered as security may
decrease upon the terms set forth in this Security Agreement, but not increase above the initial
1,875,000 shares.
AGREEMENT
NOW, THEREFORE, it is hereby agreed as follows:
1. Grant of Security Interest. The Pledgor hereby grants the Pledgee a security
interest in, and assigns, all of the Pledgor’s right, title and interest in and to that number of
the Shares determined by dividing (x) the principal amount outstanding under the Note and all
accrued and unpaid interest thereon from time to time by (y) $2.00 (the “Collateral”).
2. Warranties. The Pledgor hereby warrants that the Pledgor is the owner of the
Collateral and has the right to pledge the Collateral and that the Collateral is free from all
liens, adverse claims and other security interests (other than those created hereby).
3. Payment of Taxes and Other Charges. The Pledgor shall pay, prior to the
delinquency date, all taxes, liens, assessments and other charges against the Collateral. In the
event of the Pledgor’s failure to do so, the Pledgee in its discretion may pay any or all of such
taxes and other charges without contesting the validity or legality thereof. The payments so made
shall become part of the indebtedness secured hereunder.
4. Rights and Powers of Pledgee. The Pledgee may, without obligation to do so,
exercise at any time and from time to time one or more of the following rights and powers with
respect to any or all of the Collateral:
(i) subject to the applicable limitations of Section 7, accept in its discretion other
property of the Pledgor in exchange for all or part of the Collateral, and in such event the other
property received in the exchange shall become part of the Collateral hereunder;
(ii) perform such acts as are necessary to preserve and protect the Collateral and the rights,
powers and remedies granted with respect to such Collateral by this Security Agreement; and
(iii) exercise any voting rights with respect to the Collateral, transfer record ownership of
the Collateral to the Pledgee or its nominee and receive, endorse and give receipt for, or collect
by legal proceedings or otherwise, dividends or other distributions made or paid with respect to
the Collateral, provided and only if there exists at the time an outstanding Event of Default under
Section 8 of this Security Agreement. Any cash sums which the Pledgee may so receive shall be
applied to the payment of the Note and any other indebtedness secured hereunder, in such order of
application as the Pledgee deems appropriate. Any remaining cash shall be paid over to the
applicable the Pledgor.
5. Care of Collateral.
(i) The Pledgee shall exercise reasonable care in the custody and preservation of the
Collateral.
(ii) Subject to the limitations of Section 7, the Pledgee may at any time release and deliver
all or part of the Collateral to the Pledgor, and the receipt thereof by the Pledgor shall
constitute a complete and full acquittance for the Collateral so released and delivered. The
Pledgee shall accordingly be discharged from any further liability or responsibility for the
Collateral, and the released Collateral shall no longer be subject to the provisions of this
Security Agreement.
6. Transfer of Collateral. In connection with the transfer or assignment of the Note
(whether by negotiation, discount or otherwise), the Pledgee may transfer all or any part of the
Collateral, and the transferee shall thereupon succeed to all the rights, powers and remedies
granted the Pledgee hereunder with respect to the Collateral so transferred.
7. Release of Collateral. Provided all indebtedness secured hereunder shall at the
time have been paid in full and there does not otherwise exist any Event of Default under Section
8, the Collateral shall be released from pledge and returned to the Pledgor.
8. Events of Default. The occurrence of one or more of the following events shall
constitute an event of default under this Security Agreement (each an “Event of Default”):
(i) the failure of the Pledgor to pay the principal, and any interest outstanding, on or
before the Maturity Date (defined in the Note); or
(ii) the commission of any act of bankruptcy by the Pledgor, the execution by the Pledgor of a
general assignment for the benefit of creditors, the filing by or against the Pledgor of any
petition in bankruptcy or any petition for relief under the provisions of the federal bankruptcy
act or any other state or federal law for the relief of debtors and the continuation of such
petition without dismissal for a period of thirty (30) days or more, the appointment of a receiver
or trustee to take possession of any property or assets of the Pledgor; or
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(iii) the failure of the Pledgor to perform any obligation imposed upon the Pledgor by reason
of this Security Agreement; or
(iv) the breach of any warranty of the Pledgor contained in this Security Agreement.
Upon the occurrence of any Event of Default, described in clause (iii) or (iv) of this Section
8, the Pledgee shall provide written notice to the Pledgor of the occurrence of such an Event of
Default. Upon the occurrence of any Event of Default described in clause (i) or (ii) of this
Section 8, or in the event the Pledgor does not cure any Event of Default described in clause (iii)
or (iv) of this Section 8 within 10 business days of the provision of notice, the Pledgee may, in
addition to exercising all rights, powers and remedies granted to the Pledgee under any statute or
rule of law and at its election, declare the Note and all other indebtedness secured hereunder to
become immediately due and dispose of the Collateral by public or private sale or, alternatively,
accept the Collateral and apply it against payment of the Note and all other indebtedness secured
hereunder.
Any proceeds realized from the disposition of the Collateral pursuant to the foregoing power
of sale shall be applied first to the payment of expenses incurred by the Pledgee in connection
with the disposition and then to the payment of the Note. Any surplus proceeds shall be paid over
to the Pledgor.
9. Restrictions on Transfer. Without the Pledgee’s prior written consent, which may
be withheld in the Pledgee’s sole and absolute discretion, the Pledgor may not transfer assign, or
otherwise dispose of its interest in this Security Agreement.
10. Other Remedies. The rights, powers and remedies granted to the Pledgee pursuant
to the provisions of this Security Agreement shall be in addition to all rights, powers and
remedies granted to the Pledgee under any statute or rule of law.
11. Costs and Expenses. All costs and expenses (including reasonable attorneys fees)
incurred by the Pledgee in the exercise or enforcement of any right, power or remedy granted it
under this Security Agreement shall become part of the indebtedness secured hereunder.
12. Applicable Law. This Security Agreement shall be governed by and construed in
accordance with the laws of the State of Texas without resort to that State’s conflict-of-laws
rules. With respect to any suit, action, or other proceeding arising from (or relating to) this
Security Agreement, the parties hereto hereby irrevocably agree to the exclusive personal
jurisdiction and venue of the applicable federal and Texas state courts located within Dallas
County, Texas.
13. Successors. This Security Agreement shall be binding upon the Pledgee and its
successors and assigns and upon the Pledgor’s successors and permitted assigns.
14. Severability. If any provision of this Security Agreement is held to be invalid
under applicable law, then such provision shall be ineffective only to the extent of such
invalidity, and neither the remainder of such provision nor any other provisions of this Security
Agreement shall be affected thereby.
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15. Counterparts. This Security Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
16. Amendments. Any term of this Security Agreement may be amended and the observance
of any term of this Security Agreement may be waived (either generally or in a particular instance
and either retroactively or prospectively), only with the written consent of the Pledgee and the
Pledgor.
17. Notices. All notices and other communications hereunder shall be in writing and
shall be deemed to have been duly given only if (i) delivered personally or by overnight carrier,
(ii) delivered by electronic transmission to the electronic mail address or other proper electronic
destination provided to the Pledgee, (iii) delivered by facsimile transmission with answer back
confirmation or (iv) mailed (postage prepaid by certified or registered mail, return receipt
requested (effective upon actual receipt)).
18. Entire Agreement. This Security Agreement, the Note and the Stock Purchase
Agreement constitute the full and entire understanding and agreement between the parties with
regard to the subject matter hereof and thereof and supersedes any and all prior agreements
relating to the subject matter hereof.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, this Security Agreement has been executed by Pledgor and the Pledgee
effective as of the date first set forth above.
|
PLEDGOR: FP TECH HOLDINGS, LLC |
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| By: | /s/ Xxxxxx Xxxxxxxxxxx | |||
| Name: | Xxxxxx Xxxxxxxxxxx | |||
| Title: | Manager | |||
ACCEPTED AND ACKNOWLEDGED:
| RIVERLAND ENTERPRISES, LLC | ||||
By:
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/s/ Xxxx Xxxxxxx | |||
Name:
|
Xxxx Xxxxxxx | |||
Title:
|
CEO | |||
| XXXXXX XXXXXXX & ASSOCIATES, LLC. | ||||
By:
|
/s/ Xxxx Xxxxxxx | |||
Name:
|
Xxxx Xxxxxxx | |||
Title:
|
CEO
|
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[Signature Page to Security Agreement]
