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EXHIBIT 10.44
SECURITY AGREEMENT
This Security Agreement, as amended, modified or otherwise supplemented
from time to time (this "AGREEMENT"), is made and entered into as of December
__, 2000 by and between The Santa Xxxx Operation, Inc., a California corporation
with principal offices at 000 Xxxxxxx, Xxxxx Xxxx, Xxxxxxxxxx 00000 ("DEBTOR"),
and Caldera Systems, Inc., a Delaware corporation, with principal offices at 000
Xxxx Xxxxxx Xxxxxx, Xxxx, Xxxx 00000 ("SECURED PARTY").
RECITALS
A. In connection with the execution of the Secured Convertible
Promissory Note of even date herewith (the "NOTE") and as security for its
obligations under the Note, Debtor has agreed, among other things, to grant
Secured Party a security interest in the Collateral (as defined below) on the
terms set forth in this Agreement. An Intercreditor Agreement of even date
herewith (the "INTERCREDITOR AGREEMENT") by and among Debtor, the Secured Party
and The Canopy Group, Inc. ("CANOPY") sets forth the parties' agreement with
respect to the relative priorities of the Liens of Secured Party and Canopy.
NOW, THEREFORE, in consideration of the foregoing recitals, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:
1. DEFINED TERMS. All capitalized terms used in this Agreement that are
listed on Exhibit A attached hereto (which is incorporated by this reference)
will have the meanings indicated thereon. Unless otherwise defined herein, all
other capitalized terms used in this Agreement will have the same meanings given
to such terms in the Note.
2. GRANT OF SECURITY INTEREST; COLLATERAL ASSIGNMENT. As collateral
security for the prompt and complete payment and performance when due (whether
at the stated maturity, by acceleration or otherwise) of the Obligations, and
subject to Prior Liens set forth in Exhibit B to this Agreement, Debtor hereby
grants to Secured Party a first priority security interest in all of Debtor's
assets, which assets are collectively referred to herein as the "COLLATERAL" and
include, without limitation:
(a) General Intangibles. All of Debtor's General Intangibles,
now existing or hereafter arising or acquired, together with the proceeds there
from. As used herein, the term "GENERAL INTANGIBLES" means all personal property
(including things in action) other than goods, accounts, chattel paper,
documents, instruments, and money, and includes, but is not limited to, business
records, deposit accounts, inventions, intellectual property, designs, patents,
patent applications, patent rights, trademarks, trademark applications,
trademark registrations, service marks, service xxxx applications, service
registrations, trade names, goodwill, technology, know-how, confidential
information, trade secrets, customer lists, supplier lists, copyrights,
copyright applications, copyright registrations, licenses, permits, franchises,
tax refund claims, and any letters of credit, guarantee claims, security
interests, or other security held by Debtor to secure any "Accounts" (as
hereinafter defined).
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(b) Accounts (including Accounts Receivable). All of Debtor's
Accounts, whether now existing or hereafter arising or acquired, together with
the proceeds there from. As used herein, the term "ACCOUNTS" means any right of
Debtor to receive payment from another person or entity, including payment for
goods sold or leased, or for services rendered, no matter how evidenced or
arising, and regardless of whether yet earned by performance. It includes, but
is not limited to, accounts, accounts receivable, contract rights, contracts
receivable, purchase orders, notes, drafts, acceptances, all rights to payment
earned or unearned under a charter or other contract involving the use or hire
of a vessel and all rights incident to the charter or contract, and other forms
of obligations and receivables.
(c) Inventory. All of Debtor's Inventory, whether now owned or
hereafter acquired, together with the products and proceeds there from and all
packaging, manuals, and instructions related thereto. As used herein, the term
"INVENTORY" means all goods, merchandise, and personal property held for sale or
lease or furnished or to be furnished under contracts of service, and all raw
materials, work in process, or materials used or consumed in Debtor's business,
wherever located and whether in the possession of Debtor, a warehouseman, a
bailee, or any other person.
(d) Equipment. All of Debtor's Equipment, now owned or
hereafter acquired, together with the products and proceeds there from, and all
substitutes and replacements therefor. As used herein, the term "EQUIPMENT"
includes all equipment, machinery, tools, office equipment, supplies,
furnishings, furniture, or other items used or useful, directly or indirectly,
in Debtor's business, all accessions, attachments, and other additions thereto,
all parts used in connection therewith, all packaging, manuals, and instructions
related thereto, and all leasehold or equitable interests therein.
(e) Fixtures. All of Debtor's interest in and to all fixtures
and furnishings, now owned or hereafter acquired, together with the products and
proceeds there from, all substitutes and replacements therefor, all accessories,
attachments, and other additions thereto, all tools, parts, and supplies used in
connection therewith, and all packaging, manuals, and instructions related
thereto, located on or attached to Debtor's business premises located at 000
Xxxxxxx, Xxxxx Xxxx, Xxxxxxxxxx 00000.
(f) Chattel Paper, Documents and Instruments. All of Debtor's
right, title, and interest in any chattel paper, documents, or instruments, now
owned or hereafter acquired or arising, or now or hereafter coming into the
possession, control, or custody of either Debtor or Secured Party, together with
all proceeds there from. The terms "chattel paper," "documents," and
"instruments" shall have those meanings ascribed to them in the Utah Uniform
Commercial Code.
(g) Excluded Assets. Notwithstanding the foregoing, in no
event shall Collateral include, and debtor shall not be deemed to have an
interest in, any of Debtor's right, title or interest (a) in any Intellectual
Property if the grant of such interest shall constitute or result in the
abandonment, invalidation or rendering unenforceable any right, title or
interest of Debtor therein and (b) in any license, contract or agreement to
which Debtor is a party or any of
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its rights or interests thereunder to the extent, but only to the extent, that
such a grant would, under the terms of such license, contract or agreement, or
otherwise, result in a breach or termination of the terms or, constitute a
default under or termination of, any such license, agreement or contract (other
than to the extent that any such term would be rendered ineffective pursuant to
the Uniform Commercial Code of any relevant jurisdiction, and any other
applicable law or principles of equity); provided that immediately upon the
ineffectiveness, lapse or termination of any such provision, the Collateral
shall include, and Debtor shall be deemed to have granted a security interest
in, all such rights and interests as if such provision had never been in effect.
3. REPRESENTATIONS AND WARRANTIES. Debtor hereby represents and
warrants to Secured Party that:
(a) Title; No Other Liens. Except for (i) the liens granted to
Secured Party pursuant to this Agreement (ii) the Prior Liens, and (iii) the
Permitted Liens, Debtor owns (and, in the case of after-acquired Collateral,
will own at the time it is acquired) all right, title and interest in and to
each item of the Collateral free and clear of any and all liens, claims,
security interests, encumbrances and restrictions of any kind. No security
agreement, financing statement or other public notice with respect to all or any
part of the Collateral is on file or of record in any public office, except such
as may have been filed in favor of Secured Party pursuant to this Agreement and
except such as may have been filed with respect to the Prior Liens or the
Permitted Liens. Debtor has provided Secured Party with copies of all
obligations exceeding $50,000 secured by a lien on any of the Collateral.
(b) No Consents. Debtor has all right, power and authority
necessary to grant Secured Party the security interest granted in Section 2
above, without the need for the consent or approval of any third party other
than consents or approvals that have been obtained.
(c) Location of Collateral. The Collateral (other than the
Intellectual Property) is located and will at all times be kept at Debtor's
office at the address indicated above, and such other premises owned or leased
by Debtor.
4. COVENANTS. Debtor covenants and agrees with Secured Party that, from
and after the date of this Agreement until all Obligations are paid in full and
satisfied:
(a) Further Documentation. Upon Secured Party's written
request and at Debtor's sole expense, Debtor will promptly and duly execute and
deliver such further instruments and documents and take such further action as
Secured Party may reasonably request for the purpose of obtaining, giving notice
of, protecting, preserving and perfecting the security interests granted under
this Agreement, including, without limitation, the filing of any financing or
continuation statements under the Code in effect in any jurisdiction with
respect to the security interests created hereby and the recording of the
security interests granted hereunder in any Intellectual Property with the
appropriate governmental or other authorities in any jurisdiction. Debtor agrees
that a carbon, photographic or other reproduction of this Agreement (or, if
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appropriate, any other Security Document) will be sufficient as a financing
statement for filing in any jurisdiction, if permitted by such jurisdiction.
(b) Maintenance of Records. Debtor will keep and maintain
complete records of the Collateral as it does in the ordinary course of
business. For Secured Party's further security, Secured Party will have a
security interest in all of the books and records of Debtor pertaining to the
Collateral.
(c) No Liens on Collateral. Debtor will not create, incur or
permit to exist, will defend the Collateral against, and will take such other
action as is necessary to remove, any lien, claim, security interest or
encumbrance on or to any of the Collateral, other than the liens granted to
Secured Party under this Agreement and the Prior Liens and Permitted Liens.
(d) Limitation on Dispositions of Collateral. Debtor will use
all commercially reasonable efforts to preserve the Collateral without material
impairment while conducting its business in the ordinary course in a manner that
is consistent with Debtor's past business practices. Debtor will not, through
any license, encumbrance, assignment, transfer or disposition of any of the
Collateral, any creation of obligations of Debtor, any issuance of securities,
or any other action, (i) avoid or seek to avoid the observation or performance
of any of the terms to be observed or performed by Debtor under this Agreement,
(ii) materially impair the benefit of this Agreement or the Collateral to
Secured Party, or (iii) materially and adversely affect Secured Party's ability
to operate, or obtain the financial or economic benefit of, the Collateral in
accordance with the terms of this Agreement; provided, however, that Debtor may
(A) enter into Licenses with third parties in the ordinary course of its
business and consistent with its past licensing practice of Intellectual
Property owned or licensed by Debtor, and (B) sell or otherwise dispose of
worn-out or obsolete Equipment or Fixtures. Debtor will at all times in good
faith take, and assist in taking, all such action as may be necessary or
appropriate to protect Secured Party's rights under this Agreement from
impairment and to preserve for Secured Party's benefit the value of the
Collateral.
(e) No Change in Location, Name, etc. Except upon thirty (30)
days prior written notice to Secured Party, Debtor will not move the Collateral
(other than the Intellectual Property) from the location specified in Section
3(c) above or change Debtor's name, identity or structure to such an extent that
any financing statement or other Security Documents filed by Secured Party would
become misleading.
(f) Payment of Taxes and Assessments. Debtor will pay prior to
delinquency all taxes and assessments assessed against, levied upon or placed
against the Collateral, other than taxes and assessments being contested in good
faith and by appropriate proceedings, and for which adequate reserves are
maintained on the books of the Debtor in accordance with GAAP.
(g) Insurance. Debtor shall maintain insurance with respect to
the Collateral in accordance with the insurance standards and practices adhered
to generally by owners of like collateral.
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5. SECRECY AND ASSIGNMENT OF INTELLECTUAL PROPERTY. Debtor will use
commercially reasonable efforts to ensure that each current and future employee
and contractor hired or engaged by Debtor who receives trade secrets or other
confidential and proprietary information of Debtor and/or who in the course of
his/her employment or engagement with Debtor is involved in any way whatsoever
with the Intellectual Property executes and delivers to Debtor a Debtor's
employee or contractor invention assignment and confidentiality agreement, in
Debtor's customary form, imposing invention and intellectual property rights
assignment obligations and confidentiality obligations on the part of such
employee or contractor to Debtor. Debtor will further take reasonable steps and
procedures to preserve and protect the secrecy of Debtor's trade secrets and
other confidential or proprietary information.
6. APPOINTMENT OF SECURED PARTY AS ATTORNEY-IN-FACT.
(a) Powers. Debtor hereby irrevocably constitutes and appoints
Secured Party, and any agent of Secured Party, with full power of substitution,
as its true and lawful attorney-in-fact with full irrevocable power and
authority in the place and stead of Debtor and in the name of Debtor or in the
name of Secured Party, from time to time in Secured Party's discretion, for the
purpose of carrying out the terms of this Agreement, to take any and all
appropriate actions and to execute any and all documents which may be necessary
or desirable to accomplish the purposes of this Agreement, including (without
limiting the generality of the foregoing) to execute, in connection with any
sale or other disposition of Collateral pursuant to Section 7 hereof, any
endorsements, assignments, bills of sale, licenses or other instruments of
conveyance or transfer with respect to the Collateral. This power of attorney is
a power coupled with an interest and is irrevocable.
(b) No Duty on Secured Party's Part. The powers conferred on
Secured Party hereunder are solely to protect Secured Party's interests in the
Collateral and will not impose any duty upon it to exercise any such powers.
Secured Party and its agents will not be responsible to Debtor for any act or
failure to act hereunder, except for Secured Party's own gross negligence or
willful misconduct. It is further agreed and understood between the parties
hereto that such care as Secured Party gives to the safekeeping of its own
property of like kind shall constitute reasonable care of the Collateral when in
Secured Party's possession.
7. SECURED PARTY'S RIGHTS AND REMEDIES; RELEASE.
(a) General Remedies. If an Event of Default occurs, then in
addition to exercising any other right or remedies Secured Party may have under
the Note, at law or in equity, or pursuant to the provisions of the Code,
Secured Party may, at its sole option and without demand first made, exercise
any one, some or all of the following rights and remedies:
(i) Collect the Collateral and its Proceeds;
(ii) Take possession of the Collateral and its
Proceeds wherever such may be found or require Debtor to assemble the Collateral
and make it available to Secured Party at a place designated by Secured Party
which is reasonably convenient to Debtor and Secured Party;
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(iii) Proceed with the foreclosure of the security
interest in the Collateral or any part thereof granted herein and the sale or
endorsement and collection of the Proceeds of such Collateral in any manner
permitted by law or provided for herein;
(iv) Sell, lease, license or otherwise dispose of the
Collateral or any part thereof at public or private sale, with or without having
the Collateral at the place of sale, after giving Debtor ten (10) days prior
written notice of such sale, lease, license or other disposition of Collateral;
(v) Institute a suit or other action against Debtor
for recovery on the Note;
(vi) Exercise any rights and remedies of a secured
party under the Code; and/or
(vii) With respect to any Software, Inventions,
Documentation, Intellectual Property and Licenses, in the exercise of the rights
of a secured party under applicable law with respect thereto, and subject to the
rights of any licensor of any such property not owned by Debtor, use, exercise,
practice, reproduce, perform, display, distribute, create derivative works,
make, have made, sell, license, sublicense, transfer, assign and commercialize.
(b) No Election of Remedies. The election by Secured Party of
any right or remedy will not prevent Secured Party from exercising any other
right or remedy against Debtor.
(c) Proceeds. If an Event of Default occurs, all proceeds and
payments with respect to the Collateral will be retained by Secured Party (or,
if received by Debtor, will be held in trust and will be delivered by Debtor to
Secured Party in the original form received, endorsed in blank) and held by
Secured Party as part of the Collateral or applied by Secured Party to the
payment of the Obligations.
(d) Sale of Collateral. Any item of Collateral may be sold,
leased or licensed or otherwise disposed of for cash or other value at public or
private sale or other disposition and the Proceeds thereof collected by or for
Secured Party. Debtor agrees to promptly execute and deliver, or promptly cause
to be executed and delivered, such instruments, documents, assignments, waivers,
certificates and affidavits and supply or cause to be supplied such further
information and take such further action as Secured Party may require in
connection with any such sale or disposition. Secured Party shall have the right
upon any such public sale or sales, and, to the extent permitted by law, upon
any such private sale or sales, to purchase the whole or any part of the
Collateral so sold, free of any right or equity of redemption in Debtor, which
right or equity is hereby waived or released. If any notice of a proposed sale,
lease, license or other disposition of Collateral shall be required by law, such
notice shall be deemed reasonable and proper if given at least ten (10) days
before such sale, lease, license or other disposition. Secured
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Party agrees to give Debtor ten (10) days prior written notice of any sale,
lease, license or other disposition of Collateral (or any part thereof) by
Secured Party.
(e) Application of Proceeds. The Proceeds of all sales and
collections in respect of the Collateral, the application of which is not
otherwise specifically herein provided for, will be applied as follows:
(i) First, to the payment of the costs and expenses
of such sale or sales and collections and the attorneys' fees and out-of-pocket
expenses incurred by Secured Party relating to costs of collection;
(ii) Second, any surplus then remaining will be
applied first, to the payment of all unpaid interest accrued under the Note,
next to the payment of unpaid principal under the Note, and next to the
satisfaction of any remaining Obligations; and
(iii) Third, any surplus then remaining will be paid
to Debtor.
(f) Liability for Deficiency. Debtor will remain liable for
any deficiency if the Proceeds of any sale or other disposition of the
Collateral are insufficient to pay the Obligations and the fees and
disbursements of any attorneys or agents employed by Secured Party to collect
such deficiency.
(g) Limitation on Duties Regarding Collateral. Secured Party's
sole duty with respect to the custody, safekeeping and physical preservation of
the Collateral in its possession, under the Code or otherwise, shall be to deal
with it in the same manner as Secured Party deals with similar property for its
own account. Secured Party and its agents will not be liable for failure to
demand, collect or realize upon all or any part of the Collateral or for any
delay in doing so nor will any of them be under any obligation to sell or
otherwise dispose of any Collateral upon the request of Debtor or otherwise.
(h) Release. Upon the full and complete payment and
performance when due of the Obligations, upon Debtor's written request and at
Debtor's sole expense, Secured Party will promptly and duly execute and deliver
such further instruments and documents and take such further action as Debtor
may reasonably request for the purpose of releasing or terminating the security
interests granted under this Agreement.
8. GOVERNING LAW; VENUE.
(i) This Agreement shall be governed by and construed
under the laws of the State of California as applied to agreements among
California residents entered into and to be performed entirely within
California, without reference to principles of conflict of laws or choice of
laws (except to the extent governed by the UCC).
(ii) The parties agree that any dispute regarding the
interpretation or validity of, or otherwise arising out of this Agreement, shall
be subject to the exclusive jurisdiction of the California State Courts in and
for Santa Xxxxx County, California, or, in the
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event of federal jurisdiction, the United States District Court for the Northern
District of California sitting in Santa Xxxxx County, California, and each party
hereby agrees to submit to the personal and exclusive jurisdiction and venue of
such courts and not to seek the transfer of any case or proceeding out of such
courts.
9. NO WAIVER. Secured Party will not by any act (except by a written
instrument pursuant to Section 11 hereof), delay, indulgence, omission or
otherwise be deemed to have waived any right or remedy hereunder or to have
acquiesced in any Event of Default or in any breach of any of the terms and
conditions hereof. No failure to exercise, nor any delay in exercising, on the
part of Secured Party, any right, power or privilege hereunder will operate as a
waiver thereof. No single or partial exercise of any right, power or privilege
hereunder will preclude any other or further exercise thereof or the exercise of
any other right, power or privilege. A waiver by Secured Party of any right or
remedy hereunder on any one occasion shall not be construed as a bar to any
right or remedy which Secured Party would otherwise have on any future occasion.
The rights and remedies of Secured Party herein provided are cumulative, may be
exercised singly or concurrently and are not exclusive of any other rights or
remedies provided by law.
10. SUCCESSORS AND ASSIGNS. The terms and conditions of this Agreement
shall inure to the benefit of and be binding upon the successors and permitted
assigns of the parties; provided, however, that Debtor may not assign or
delegate any of its rights or obligations hereunder without Secured Party's
prior written consent, and any assignment or delegation without such consent
shall be void. Nothing herein shall be interpreted to prevent, limit or
otherwise restrain Debtor's grant of licenses to customers and other third
parties in the ordinary course of its business.
11. AMENDMENTS AND WAIVERS. Any term of this Agreement may be amended
and the observance of any term of this Agreement may be waived (either generally
or in a particular instance and either retroactively or prospectively), only
with the written consent of both Debtor and Secured Party.
12. RIGHTS AND REMEDIES CUMULATIVE. The rights and remedies herein
provided will be cumulative and not exclusive of any other rights or remedies
provided by law or otherwise.
13. SEVERABILITY. If any provision of this Agreement, or the
application thereof, will for any reason and to any extent be invalid or
unenforceable, the remainder of this Agreement and application of such provision
to other persons or circumstances will be interpreted so as reasonably to effect
the intent of the parties hereto. The parties further agree to replace such void
or unenforceable provision of this Agreement with a valid and enforceable
provision that will achieve, to the extent possible, the economic, business and
other purposes of the void or unenforceable provision.
14. NOTICES. Any notice or other communication required or permitted to
be given under this Agreement shall be in writing, shall be delivered by hand or
overnight courier service, by certified mail, postage prepaid, or by facsimile,
and will be deemed given upon delivery, if
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delivered personally, one business day after deposit with a national courier
service for overnight delivery, or one business day after transmission by
facsimile with confirmation of receipt, and three days after deposit in the
mails, if mailed, to the following addresses:
(i) If to Secured Party:
Caldera Systems, Inc.
000 Xxxx Xxxxxx Xxxxxx
Xxxx, Xxxx 00000
Attention: President and CEO
With a copy (which shall not constitute
notice) to:
Xxxxxxx Xxxxxxx & Xxxxxxxx LLP
000 Xxxxxxxxxxx Xxxx., Xxxxx 000
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxx X. Xxxxx, III
(ii) If to Debtor:
The Santa Xxxx Operation, Inc.
000 Xxxxxxx
Xxxxx Xxxx, Xxxxxxxxxx 00000
Attention: Chief Executive Officer and Law
and Corporate Affairs
With a copy (which shall not constitute
notice) to:
Wilson, Sonsini, Xxxxxxxx & Xxxxxx
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx Xxxxxxx
or to such other address as a party may have furnished to the other parties in
writing pursuant to this Section 14, except that notices of change of address
shall only be effective upon receipt.
15. ATTORNEYS' FEES. If any action at law or in equity is necessary to
enforce or interpret the terms of this Agreement, the prevailing party shall be
entitled to recover, as an element of the costs of suit and not as damages,
reasonable attorneys' fees, costs and necessary disbursements in addition to any
other relief to which such party may be entitled. The prevailing party will be
entitled to recover its costs of suit, regardless of whether such suit proceeds
to final judgment.
16. ENTIRE AGREEMENT. This Agreement and the Loan Documents and all
exhibits and schedules hereto and thereto, when taken together, constitute the
entire understanding and agreement of the parties hereto with respect to the
subject matter hereof and supersede all prior
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and contemporaneous agreements or understandings, inducements or conditions,
express or implied, written or oral, between the parties with respect hereto.
17. CONSTRUCTION OF AGREEMENT. This Agreement has been negotiated by
the respective parties hereto and their attorneys and the language hereof will
not be construed for or against either party. Unless otherwise explicitly set
forth, a reference to a Section or an Exhibit will mean a Section in, or Exhibit
to, this Agreement, all of which Exhibits are incorporated herein by this
reference. The titles and headings herein are for reference purposes only and
will not in any manner limit the construction of this Agreement, which will be
considered as a whole.
18. COUNTERPARTS. This 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. This Agreement will
become binding when one or more counterparts hereof, individually or taken
together, will bear the signatures of all parties reflected hereon as
signatories.
[SIGNATURE PAGE TO FOLLOW]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the date first above written.
DEBTOR: SECURED PARTY:
THE SANTA XXXX OPERATION, INC. CALDERA SYSTEMS, INC.
By: By:
---------------------------------- ---------------------------------
Name: Name:
-------------------------------- -------------------------------
Title: Title:
------------------------------- ------------------------------
[SIGNATURE PAGE TO SECURITY AGREEMENT BETWEEN
THE SANTA XXXX OPERATION, INC. AND CALDERA SYSTEMS, INC.]
ATTACHMENTS:
Exhibit A - Definitions
Exhibit B - Liens
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EXHIBIT A
DEFINITIONS
As used in the Security Agreement to which this Exhibit A is attached,
the following terms will have the following meanings:
(a) "CAPITALIZED LEASE OBLIGATIONS" shall mean any and all lease
obligations that, in accordance with GAAP, are required to be capitalized on the
books of a lessee.
(b) "CODE" means the Uniform Commercial Code (or successor law) as from
time to time in effect in the State of California.
(c) "COLLATERAL" will have the meaning assigned to such term in Section
2 of the Security Agreement.
(d) "COPYRIGHTS" means all past, present and future copyrights,
copyright applications and copyright registrations in the United States and in
any and all other countries and jurisdictions, including, without limitation,
all of the exclusive rights afforded a copyright owner in the United States
under 17 U.S.C. Section 106 and any rights relating to copyrights which may in
the future arise by act of Congress or any foreign governmental entity, and any
rights given to a copyright owner or registrant in or under any copyright
conventions, treaties or foreign laws, and further including, without
limitation, all renewals extensions, and modifications thereof, all income,
royalties, damages and payments now or hereafter due and/or payable under or
with respect thereto, the right to xxx for, and to recover damages and receive
remedies for, all past, present and future infringements thereof, and all other
rights of any kind whatsoever accruing thereunder or pertaining thereto anywhere
in the world.
(e) "DOCUMENTATION" means, collectively: (i) all documentation,
manuals, drawings, designs, plans, blueprints, specifications, schematics,
layouts, flow charts, logic diagrams, engineering and test reports, components
lists, customer lists, suppliers lists, user, installation or repair manuals,
programmers' notes, programming documentation, any recorded information
regarding any Invention, and any other works of authorship; (ii) all
documentation regarding the design, development, testing or manufacture of any
products or any equipment used to design, develop, test, or manufacture any such
products or components of such products; (iii) all field repair data, sales data
and other information relating to sales or service of any products; and (iv) all
media in which or on which any of the are recorded or stored or from which they
can be read or retrieved.
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(f) "EVENT OF DEFAULT" Ten (10) days after written notice from Lender
to Borrower for monetary defaults and thirty (30) days after written notice from
Lender to Borrower for non-monetary defaults, if such defaults are not cured
within such ten (10) day or thirty day (30) periods, respectively, each of the
following shall constitute an event of default ("EVENT OF DEFAULT") under this
Agreement:
(i) Default in Payment. If Borrower fails to make any payment
due and payable under the terms of the Note, this Agreement or the Loan
Agreement.
(ii) Representations and Warranties. If any of the
representations and warranties made by Borrower shall be false or misleading in
any material respect.
(iii) Covenants. If Borrower shall be in material default
under any of the material terms, covenants, conditions, or obligations under any
Loan Document.
(iv) Dissolution. If Borrower is dissolved.
(v) Receiver. If a receiver, trustee, or custodian is
appointed for any part of the Collateral, or any part of the Collateral is
assigned for the benefit of creditors.
(vi) Impairment to Lien. If at any time any lien created under
the Note, this Agreement or the Loan Agreement on any of the Collateral may be
impaired by any material lien, encumbrance or other defect other than the Prior
Liens or the Permitted Liens.
(vii) Bankruptcy. If a petition in bankruptcy is filed against
Borrower, and such petition is not dismissed within ninety (90) days of filing,
a petition in bankruptcy is filed by Borrower or a receiver, trustee or
custodian of any part of the Collateral is appointed; or if Borrower files a
petition for reorganization under any of the provisions of the Bankruptcy Act or
any law, State or Federal, or makes an assignment for the benefit of creditors
or is adjudged insolvent by any State or Federal Court of competent
jurisdiction.
(viii) Judgment or Attachment. If any writ, attachment,
citation, judgment, lien or distress warrant being issued against or levied on
the Collateral for an amount in excess of $100,000.00 and such judgment or
attachment is not paid or otherwise fully satisfied within thirty (30) days of
the date it is entered.
(ix) Diminished Value. If the Collateral is subject to any
uninsured loss, theft, damage or destruction to the Collateral which materially
and substantially diminishes the value of the Collateral.
(g) "GENERAL INTANGIBLES" means any personal property (including things
in action) other than goods, Accounts (as defined in the Code), Instruments (as
defined in the Code) and money.
(h) "GOVERNMENTAL AUTHORITY" shall mean any domestic or foreign
national, state or local government, any political subdivision thereof, any
department, agency, authority or bureau
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of any of the foregoing, or any other entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government.
(i) "GOVERNMENTAL CHARGES" shall mean all taxes, levies, assessments,
fees, claims or other charges imposed by any Governmental Authority upon or
relating to (i) Debtor, (ii) the Note, (iii) employees, payroll, income or gross
receipts of Debtor, (iv) the ownership or use of any of its assets by Debtor, or
(v) any other aspect of the business of Debtor.
(j) "INTELLECTUAL PROPERTY" means, any, some or all of the following:
(i) Copyrights, Patents, Mask Works, Trademarks, know-how, trade secrets,
proprietary information, Moral Rights and any and all other forms of
intellectual property; (ii) all Licenses and similar rights granted to or held
by Debtor with respect to any Copyrights, Patents, Mask Works, Trademarks,
Inventions, Software, Documentation, know-how, trade secrets, proprietary
information, Moral Rights or other form of intellectual property, (iii) all
licenses, consents, permits, variances, certifications and approvals of
governmental agencies; and (iv) all causes of action, claims and warranties in
respect of any of the items listed above.
(k) "INVENTIONS" means all past, present and future inventions,
improvements, enhancements, processes, production or manufacturing methods,
compositions of matter, formulas, Software, works of authorship, data, and other
proprietary information, whether or not protected or protectable by copyright,
patent, mask work, trade secret or other laws regarding intellectual property.
(l) "LICENSES" means all past, present and future licenses,
sublicenses, covenants-not-to-xxx, consents and authorizations relating to any
Intellectual Property, Documentation, Software or Inventions.
(m) "LOAN DOCUMENTS" means the Note, the Intercreditor Agreement, and
this Agreement together with all schedules and exhibits attached thereto.
(n) "MASK WORK" means mask work as defined in the Semiconductor Chip
Protection Act of 1984 and all registrations of claims of protection for such
mask work under the laws of the United States of America or any other
jurisdiction.
(o) "MORAL RIGHTS" means any right to claim authorship to or to object
to any distortion, mutilation, or other modification or other derogatory action
in relation to a work, whether or not such would be prejudicial to the author's
reputation, and any similar right, existing under common or statutory law of any
country in the world or under any treaty, regardless of whether or not such
right is denominated or generally referred to as a "moral right." "Moral Rights"
include, without limitation, anything designated as a moral right under any law,
statute, treaty or convention.
(p) "OBLIGATIONS" means all obligations, liabilities and indebtedness
of Debtor to Secured Party and/or its assigns, whether direct or indirect,
absolute or contingent, due or to become due, now existing or hereafter
incurred, which may arise under or out of the Note and the
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Loan Documents, whether for obligations with respect to principal, interest,
costs, expenses (including, without limitation, all reasonable fees and
disbursements of counsel to Secured Party) or otherwise.
(q) "PATENTS" means all past, present and future patents and patent
applications in the United States and in all other countries and jurisdictions,
including, without limitation, the inventions and improvements described or
claimed therein, together with the reissues, divisions, continuations, renewals,
extensions and continuations-in-part thereof, and all rights given to a patent
owner in or under any patent conventions, treaties and foreign laws, and further
including, without limitation, all income, royalties, damages and payments now
or hereafter due and/or payable under or with respect thereto, the right to xxx
for, and to recover damages and receive remedies for, all past, present and
future infringements thereof, and all rights of any kind accruing thereunder or
pertaining thereto anywhere in the world.
(r) "PERMITTED LIENS" shall mean and include:
(i) Liens securing obligations of less than $50,000 each, and
that are:
(A) Liens for taxes or other Governmental Charges not
at the time delinquent or thereafter payable without penalty or being contested
in good faith, provided provision is made to the reasonable satisfaction of
Secured Party for the eventual payment thereof if subsequently found payable.
(Adequate reserves maintained on the books of the Debtor in accordance with GAAP
shall be deemed reasonably satisfactory to Secured Party);
(B) Liens of carriers, warehousemen, mechanics,
materialmen, vendors, and landlords incurred in the ordinary course of business
for sums not overdue or being contested in good faith, provided provision is
made to the reasonable satisfaction of Secured Party for the eventual payment
thereof if subsequently found payable;
(C) Deposits under workers' compensation,
unemployment insurance and social security laws or to secure the performance of
bids, tenders, contracts (other than for the repayment of borrowed money) or
leases, or to secure statutory obligations of surety or appeal bonds or to
secure indemnity, performance or other similar bonds in the ordinary course of
business;
(D) Liens securing obligations under a Capitalized
Lease Obligation or operating lease and if such Liens do not extend to property
other than the property leased under such Capitalized Lease Obligation or
operating lease; and
(E) Liens upon any equipment acquired or held by
Debtor to secure the purchase price of such equipment or indebtedness incurred
solely for the purpose of financing the acquisition of such equipment;
(F) Easements, reservations, rights of way,
restrictions, minor defects or irregularities in title and other similar charges
or encumbrances affecting real property in a manner not materially or adversely
affecting the value or use of such property;
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(G) Liens on insurance proceeds in favor of insurance
companies to secure the financing of insurance premiums;
(H) Liens which constitute rights of setoff of a
customary nature or bankers' Liens with respect to amounts on deposit, whether
arising by operation of law or by contract, in connection with arrangements
entered into with banks in the ordinary course of business not relating to a
financing transaction;
(ii) Liens arising out of a judgment or award in circumstances
not constituting an Event of Default;
(iii) Leases, subleases, licenses and sublicenses entered into
by Debtor in the ordinary course of business;
(iv) Liens in favor of Secured Party, or;
(v) Liens that have been approved in writing by Secured Party.
(vi) Liens incurred in connection with the extension, renewal
or refinancing of the indebtedness secured by liens of the type described in
clauses (i) through (v) above, provided that any extension, renewal or
replacement lien shall be limited to the property encumbered by the existing
lien and the principal amount of the indebtedness being extended, renewed or
refinanced does not increase.
(s) "PRIOR LIENS" means liens that are not Permitted Liens and are
listed in Exhibit B and attached hereto.
(t) "PROCEEDS" means whatever is received upon the sale, exchange,
collection, licensing or other disposition of Collateral or proceeds of
Collateral, including, without limitation, insurance proceeds.
(u) "SOFTWARE" means all past, present and future computer programs, in
any and all forms including source code, object code, executable code, binary
code and machine readable code, and including applications, system software,
communications software, development tools, software utilities, development
environments, interfaces, and other computer code, and further including the
graphics, sounds, data and other content in or generated by the foregoing
computer programs. The Software includes, but is not limited to, the Software
identified in Exhibit B.
(v) "TRADEMARKS" means all past, present and future trade names,
trademarks, trademark applications, trademark registrations, service marks,
service xxxx applications, and service xxxx registrations in the United States
and any and all other countries and jurisdictions, including, without
limitation, all renewals of trademark and service xxxx registrations, and all
rights given to a trademark or service xxxx owner or registrant in or under any
trademark or service xxxx conventions, treaties and foreign laws, and further
including, without limitation, all income, royalties, damages and payments now
or hereafter due and/or payable under or with respect thereto, the right to xxx
for, and to recover damages and receive remedies for, all past, present and
future infringements thereof, and all rights of any kind accruing thereunder or
pertaining thereto anywhere in the world.
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EXHIBIT B
LIENS
