SECURITY AGREEMENT DATED: February 20, 2007
Exhibit
10.3
SECURITY
AGREEMENT
DATED:
February 20, 2007
| DEBTOR: | SECURED PARTY: |
| CorVu Corporation | Commerce Bank |
| 0000 Xxxx 00xx Xxxxxx, Xxxxx 000 | 0000 Xxxxxxxxxxx Xxx, Xxxxx 000 |
| Xxxxx, XX 00000 | Xxxxx, XX 00000 |
| State of Formation: Minnesota | |
| State Organizational No.: 0X-000 | |
| XxxXx Xxxxx Xxxxxxx, Inc. | |
| 0000 Xxxx 00xx Xxxxxx, Xxxxx 000 | |
| Xxxxx, XX 00000 | |
| State of Formation: Minnesota | |
| State Organizational No.: 8V-868 |
1. Security
Interest and Collateral.
To secure the payment and performance of each and every debt, liability and
obligation of every type and description that Debtor may now or at any time
hereafter owe to Secured Party (whether such debt, liability or obligation
now
exists or is hereafter created or incurred, and whether it is or may be direct
or indirect, due or to become due, absolute or contingent, primary or secondary,
liquidated or unliquidated, or joint, several or joint and several; all such
debts, liabilities and obligations collectively referred to as the
“Obligations”), Debtor hereby grants Secured Party a security interest (the
“Security Interest”) in the following property (the “Collateral”):
(a) INVENTORY:
All
inventory of Debtor, whether now owned or hereafter acquired and wherever
located;
(b) EQUIPMENT:
All
equipment of Debtor, whether now owned or hereafter acquired, including but
not
limited to all present and future machinery, vehicles, furniture, fixtures,
manufacturing equipment, shop equipment, office and recordkeeping equipment,
parts and tools, and the goods described in any equipment schedule or list
herewith or hereafter furnished to Secured Party by Debtor (but no such schedule
or list need be furnished in order for the security interest granted herein
to
be valid as to all of Debtor’s equipment);
(c) ACCOUNTS
AND OTHER RIGHTS TO PAYMENT:
Each
and every right of Debtor to the payment of money, whether such right to payment
now exists or hereafter arises, whether such right to payment arises out of
a
sale, lease or other disposition of goods or other property by Debtor, out
of a
rendering of services by Debtor, out of a loan by Debtor, out of the overpayment
of taxes or other liabilities of Debtor, or otherwise arises under any contract
or agreement, whether such right to payment is or is not already earned by
performance, and howsoever such right to payment may be evidenced, together
with
all other rights and interests (including all liens and security interests)
that
Debtor may at any time have by law or agreement against any account debtor
or
other obligor obligated to make any such payment or against any of the property
of such account debtor or other obligor; all including but not limited to all
present and future payment intangibles, debt instruments, chattel paper,
accounts, deposit accounts, loans and obligations receivable and tax
refunds;
(d) INTANGIBLES:
All
intangibles of Debtor, whether now owned or hereafter acquired, including but
not limited to, general intangibles, investment property, software, including,
without limitation, all source code, all object code and all rights to Debtor’s
proprietary performance management software, applications for patents, patents,
copyrights, trademarks, trade secrets, goodwill, tradenames, customers lists,
permits and franchises, internet domain names, uniform resource locators
(URL’s), website contracts and registration rights and the right to use Debtor’s
name;
2
together
with all substitutions and replacements for and products of any of the foregoing
property and together with proceeds of any and all of the foregoing property
and, in the case of all tangible Collateral, together with all accessions and
together with (i) all accessories, attachments, parts, equipment and repairs
now
or hereafter attached or affixed to or used in connection with any such goods,
and (ii) all warehouse receipts, bills of lading and other documents of title
now or hereafter covering such goods.
2. Representations,
Warranties and Agreements.
Debtor represents, warrants and agrees that:
(a) Debtor
is a corporation.
(b) The
Collateral will be used primarily for business purposes.
(c) Debtor’s
chief executive office is located at the address of Debtor shown at the
beginning of this Agreement.
3. Additional
Representations, Warranties and Agreements. Debtor represents, warrants and
agrees that:
(a) Debtor
has (or will have at the time Debtor acquires rights in Collateral hereafter
arising) absolute title to each item of Collateral free and clear of all
security interests, liens and encumbrances, except the Security Interest and
purchase money liens on, and leases of, equipment, and will defend the
Collateral against all claims or demands of all persons other than Secured
Party
and the holders of purchase money liens on, and leases of, equipment. Any such
security interests, liens or encumbrances not permitted under this Agreement
shall be void. Debtor will not sell or otherwise dispose of the Collateral
or
any interest therein without the prior written consent of Secured Party, except
that, until the occurrence of an Event of Default and the revocation by Secured
Party of Debtor’s right to do so, Debtor may sell any inventory constituting
Collateral to buyers in the ordinary course of business. This Agreement has
been
duly and validly authorized by all necessary corporate action.
3
(b) Debtor
will not permit any tangible Collateral to be located in any state (and, if
county filing is required, in any county) in which a financing statement
covering such Collateral is required to be, but has not in fact been, filed
in
order to perfect the Security Interest.
(c) Each
right to payment and each instrument, document, chattel paper and other
agreement constituting or evidencing Collateral is (or will be when arising
or
issued) the valid, genuine and legally enforceable obligation, subject to no
defense, set-off or counterclaim (other than those arising in the ordinary
course of business) of the account debtor or other obligor named therein or
in
Debtor’s records pertaining thereto as being obligated to pay such obligation.
Debtor will neither agree to any material modification or amendment nor agree
to
any cancellation of any such obligation without Secured Party’s prior written
consent, and will not subordinate any such right to claims of other creditors
of
such account debtor or other obligor.
(d) Debtor
will:
| (i) |
keep
all tangible Collateral in good repair, working order and condition,
normal depreciation excepted, and will, from time to time, replace
any
worn, broken or defective parts
thereof;
|
| (ii) |
promptly
pay all taxes and other governmental charges levied or assessed upon
or
against any Collateral or upon or against the creation, perfection
or
continuance of the Security Interest except as Debtor shall contest
in
good faith and by appropriate proceedings providing such reserves
as are
required by generally accepted accounting
principles;
|
4
| (iii) |
keep
all Collateral free and clear of all security interests, liens and
encumbrances except the Security Interest and purchase money liens
on, and
leases of, equipment;
|
| (iv) |
at
all reasonable times, permit Secured Party or its representatives
to
examine or inspect any Collateral, wherever located, and to examine,
inspect and copy Debtor’s books and records pertaining to the Collateral
and its business and financial condition and to send and discuss
with
account debtors and other obligors requests for verifications of
amounts
owed to Debtor;
|
| (v) |
keep
accurate and complete records pertaining to the Collateral and pertaining
to Debtor’s business and financial condition and submit to Secured Party
such periodic reports concerning the Collateral and Debtor’s business and
financial condition as Secured Party may from time to time reasonably
request;
|
| (vi) |
promptly
notify Secured Party of any loss of or material damage to any Collateral
or of any adverse change, known to Debtor, in the prospect of payment
of
any sums due on or under any instrument, chattel paper, or account
constituting Collateral;
|
| (vii) |
if
Secured Party at any time so requests (whether the request is made
before
or after the occurrence of an Event of Default), promptly deliver
to
Secured Party any instrument, document or chattel paper constituting
Collateral, duly endorsed or assigned by
Debtor;
|
| (viii) |
at
all times keep all tangible Collateral insured against risks of fire
(including so-called extended coverage), theft, collision (in case
of
Collateral consisting of motor vehicles) and such other risks and
in such
amounts as Secured Party may reasonably request with any loss payable
to
Secured Party to the extent of its
interest;
|
| (ix) |
from
time to time authorize such financing statements as Secured Party
may
reasonably require in order to perfect the Security Interest and,
if any
Collateral consists of an asset subject to a certificate of title,
execute
such documents as may be required to have the Security Interest properly
noted on a certificate of title;
|
5
| (x) |
pay
when due or reimburse Secured Party on demand for all costs of collection
of any of the Obligations and all other out-of-pocket expenses (including
in each case all reasonable attorneys’ fees) incurred by Secured Party in
connection with the creation, perfection, satisfaction, protection,
defense or enforcement of the Security Interest or the creation,
continuance, protection, defense or enforcement of this Agreement
or any
or all of the Obligations, including expenses incurred in any litigation
or bankruptcy or insolvency
proceedings;
|
| (xi) |
execute,
deliver or endorse any and all instruments, documents, assignments,
security agreements, source code escrow agreements and other agreements
and writings that Secured Party may at any time reasonably request
in
order to secure, protect, perfect or enforce the Security Interest
and
Secured Party’s rights under this
Agreement;
|
| (xii) |
not
use or keep any Collateral, or permit it to be used or kept, for
any
unlawful purpose or in violation of any federal, state or local law,
statute or ordinance;
|
| (xiii) |
not
permit any tangible Collateral to become part of or to be affixed
to any
real property without first assuring to the reasonable satisfaction
of
Secured Party that the Security Interest will be prior and senior
to any
interest, or lien then held or thereafter acquired by any mortgagee
of
such real property or the owner or purchaser of any interest therein;
and
|
| (xiv) |
inform
Secured Party of any change to Debtor’s name, address or state of
formation prior to the effective date of such change and authorize
and
deliver to Secured Party any financing statement that is necessary
as a
result of that change to maintain the perfected status of the Security
Interest.
|
6
If
Debtor at any time fails to perform or observe any agreement contained in this
Section 3(d), and if such failure shall continue for a period of ten calendar
days after Secured Party gives Debtor written notice thereof (or, in the case
of
the agreements contained in clauses (viii) and (ix) of this Section 3(d),
immediately upon the occurrence of such failure, without notice or lapse of
time), Secured Party may (but need not) perform or observe such agreement on
behalf and in the name, place and stead of Debtor (or, at Secured Party’s
option, in Secured Party’s own name) and may (but need not) take any and all
other actions that Secured Party may reasonably deem necessary to cure or
correct such failure (including, without limitation, the payment of taxes,
the
satisfaction of security interests, liens, or encumbrances, the performance
of
obligations under contracts or agreements with account debtors or other
obligors, the procurement and maintenance of insurance, the filing of financing
statements, the endorsement of instruments, and the procurement of repairs,
transportation or insurance); and, except to the extent that the effect of
such
payment would be to render any loan or forbearance of money usurious or
otherwise illegal under any applicable law, Debtor shall thereupon pay Secured
Party on demand the amount of all moneys expended and all costs and expenses
(including reasonable attorneys’ fees) incurred by Secured Party in connection
with or as a result of Secured Party’s performing or observing such agreements
or taking such actions, together with interest thereon from the date expended
or
incurred by Secured Party at the highest rate then applicable to any of the
Obligations. To facilitate the performance or observance by Secured Party of
such agreements of Debtor, Debtor hereby irrevocably appoints (which appointment
is coupled with an interest) Secured Party, or its delegate, as the
attorney-in-fact of Debtor with the right (but not the duty) from time to time
to create, prepare, complete, execute, deliver, endorse or file, in the name
and
on behalf of Debtor, any and all instruments, documents, financing statements,
termination statements for filings not permitted under this Agreement held
by
other secured parties, applications for insurance and other agreements and
writings required to be obtained, executed, delivered or endorsed by Debtor
under this Section 3 and Section 4.
7
4. Lock
Box, Collateral Account.
If Secured Party so requests at any time (whether before or after the occurrence
of an Event of Default), Debtor will direct each of its account debtors to
make
payments due under the relevant account or chattel paper directly to a special
lockbox to be under the control of Secured Party. Debtor hereby authorizes
and
directs Secured Party to deposit into a special collateral account to be
established and maintained with Secured Party all checks, drafts and cash
payments, received in such lockbox. All deposits in such collateral account
shall constitute proceeds of Collateral and shall not constitute payment of
any
Obligations. At its option, Secured Party may at any time, apply finally
collected funds on deposit in such collateral account to the payment of the
Obligations in such order of application as Secured Party may determine, or
permit Debtor to withdraw all or any part of the balance on deposit in such
collateral account. If a collateral account is so established, Debtor agrees
that it will promptly deliver to Secured Party, for deposit into such collateral
account all payments on accounts and chattel paper received by it. All such
payments shall be delivered to Secured Party in the form received (except for
Debtor’s endorsement where necessary). Until so deposited, all payments on
accounts and chattel paper received by Debtor shall be held in trust by Debtor
for and as the property of Secured Party and shall not be commingled with any
funds or property of Debtor.
5. Account
Verification and Collection Rights of Secured Party.
Secured Party shall have the right to verify any accounts in the name of Debtor
or in its own name; and Debtor, whenever requested, shall furnish Secured Party
with duplicate statements of the accounts, which statements may be mailed or
delivered by Secured Party for that purpose. Notwithstanding Secured Party’s
rights under Section 4 with respect to any and all debt instruments, chattel
papers, accounts, and other rights to payment constituting Collateral (including
proceeds), Secured Party may at any time (both before and after the occurrence
of an Event of Default) notify any account debtor, or any other person obligated
to pay any amount due, that such chattel paper, account, or other right to
payment has been assigned or transferred to Secured Party for security and
shall
be paid directly to Secured Party. If Secured Party so requests at any time,
Debtor will so notify such account debtors and other obligors in writing and
will indicate on all invoices to such account debtors or other obligors that
the
amount due is payable directly to Secured Party. At any time after Secured
Party
or Debtor gives such notice to an account debtor or other obligor, Secured
Party
may (but need not), in its own name or in Debtor’s name, demand, xxx for,
collect or receive any money or property at any time payable or receivable
on
account of, or securing, any such chattel paper, account, or other right to
payment, or grant any extension to, make any compromise or settlement with
or
otherwise agree to waive, modify, amend or change the obligations (including
collateral obligations) of any such account debtor or other
obligor.
8
6. Assignment
of Insurance.
Debtor hereby assigns to Secured Party, as additional security for the payment
of the Obligations, any and all moneys (including but not limited to proceeds
of
insurance and refunds of unearned premiums) due or to become due under and
all
other rights of Debtor under or with respect to, any and all policies of
insurance covering the Collateral, and Debtor hereby directs the issuer of
any
such policy to pay any such moneys directly to Secured Party. Both before and
after the occurrence of an Event of Default, Secured Party may (but need not),
in its own name or in Debtor’s name, execute and deliver proofs of claim,
receive all such moneys, endorse checks and other instruments representing
payment of such moneys, and adjust, litigate, compromise or release any claim
against the issuer of such policy.
7. Events
of Default.
An Event of Default under the Term Loan Agreement between CorVu Corporation
and
Secured Party dated as of the date hereof shall be an Event of Default
hereunder.
9
8. Remedies
upon Event of Default.
Upon the occurrence of an Event of Default under Section 7 and at any time
thereafter, Secured Party may exercise any one or more of the following rights
and remedies: (i) declare all unmatured Obligations to be immediately due and
payable, and the same shall thereupon be immediately due and payable, without
presentment of other notice or demand; (ii) exercise and enforce any or all
rights and remedies available upon default to a secured party under the Uniform
Commercial Code, including but not limited to the right to take possession
of
any Collateral, proceeding without judicial process or by judicial process
(without a prior hearing or notice thereof, which Debtor hereby expressly
waives), and the right to sell, lease or otherwise dispose of any or all of
the
Collateral, and in connection therewith, Secured Party may require Debtor to
make the Collateral available to Secured Party at a place to be designated
by
Secured Party that is reasonably convenient to both parties, and if notice
to
Debtor of any intended disposition of Collateral or any other intended action
is
required by law in a particular instance, such notice shall be deemed
commercially reasonable if given (in the manner specified in Section 10) at
least 10 calendar days prior to the date of intended disposition or other
action; (iii) exercise or enforce any or all other rights or remedies available
to Secured Party by law or agreement against the Collateral, against Debtor
or
against any other person or property. Effective upon an Event of Default,
Secured Party is hereby granted a nonexclusive, worldwide and royalty-free
license to use or otherwise exploit all trademarks, trade secrets, franchises,
copyrights and patents of Debtor that Secured Party deems necessary or
appropriate to the disposition of any Collateral.
10
9. Other
Personal Property.
Unless at the time Secured Party takes possession of any tangible Collateral,
or
within seven days thereafter, Debtor gives written notice to Secured Party
of
the existence of any goods, papers or other property of Debtor, not affixed
to
or constituting a part of such Collateral, but that are located or found upon
or
within such Collateral, describing such property, Secured Party shall not be
responsible or liable to Debtor for any action taken or omitted by or on behalf
of Secured Party with respect to such property without actual knowledge of
the
existence of any such property or without actual knowledge that it was located
or to be found upon or within such Xxxxxxxxxx.
00
00. Miscellaneous.
This Agreement does not contemplate a sale of accounts, payment intangibles
or
chattel paper. This Agreement can be waived, modified, amended, terminated
or
discharged and the Security Interest can be released, only explicitly in a
writing signed by Secured Party. A waiver signed by Secured Party shall be
effective only in a specific instance and for the specific purpose given. Mere
delay or failure to act shall not preclude the exercise or enforcement of any
of
Secured Party’s rights or remedies. All rights and remedies of Secured Party
shall be cumulative and may be exercised singularly or concurrently, at Secured
Party’s option, and the exercise or enforcement of any one such right or remedy
shall neither be a condition to nor bar the exercise or enforcement of any
other. All notices to be given to Debtor shall be deemed sufficiently given
if
delivered or mailed by registered or certified mail, postage prepaid, to Debtor
at its address set forth above or at the most recent address shown on Secured
Party’s records. Secured Party’s duty of care with respect to Collateral in its
possession (as imposed by law) shall be deemed fulfilled if Secured Party
exercises reasonable care in physically safekeeping such Collateral or, in
the
case of Collateral in the custody or possession of a bailee or other third
person, exercises reasonable care in the selection of the bailee or other third
person, and Secured Party need not otherwise preserve, protect, insure or care
for any Collateral. Secured Party shall not be obligated to preserve any rights
Debtor may have against prior parties, to realize on the Collateral at all
or in
any particular manner or order, or to apply any cash proceeds of Collateral
in
any particular order of application and Secured Party may disclaim any and
all
implied warranties (as imposed by law) in connection with the disposition of
Collateral. This Agreement shall be binding upon and inure to the benefit of
Debtor and Secured Party and their respective heirs, representatives, successors
and assigns and shall take effect when signed by Debtor and delivered to Secured
Party, and Debtor waives notice of Secured Party’s acceptance hereof. Secured
Party may execute this Agreement if appropriate for the purpose of filing,
but
the failure of Secured Party to execute this Agreement shall not affect or
impair the validity or effectiveness of this Agreement. This Agreement shall
be
governed by the internal laws of the State of Minnesota. If any provision or
application of this Agreement is held unlawful or unenforceable in any respect,
such illegality or unenforceability shall not affect other provisions or
applications that can be given effect and this Agreement shall be construed
as
if the unlawful or unenforceable provision or application had never been
contained herein or prescribed hereby. All representations and warranties
contained in this Agreement shall survive the execution, delivery and
performance of this Agreement and the creation and payment of the Obligations.
Debtor hereby irrevocably submits to the jurisdiction of the Minnesota District
Court, Fourth District, and the Federal District Court, District of Minnesota,
Fourth Division, over any action or proceeding arising out of or relating to
this Agreement and agrees that all claims in respect of such action or
proceeding may be heard and determined in any such court. The term “Debtor”
refers to each party signing this Agreement as Debtor separately and to both
or
all of them jointly; all such persons shall be bound both severally and jointly
with the other(s); and the Obligations shall include all debts, liabilities
and
obligations owed to Secured Party by any Debtor solely or by both or several
or
all Debtors jointly or jointly and severally, and all property described in
Section 1 shall be included as part of the Collateral, whether it is owned
jointly by both or all Debtors or is owned in whole or in part by one (or more)
of them.
[Signatures
follow on next page]
12
IN
WITNESS WHEREOF, this security agreement has been duly executed by the
undersigned the day and year first above written.
| Commerce Bank | CorVu Corporation | |||
| By | /s/ Xxxxx X. Xxxxxx | By | /s/ Xxxxxx X. Xxxxxxxxxx | |
|
Its President |
Its CEO |
|||
| CorVu North America, Inc. | ||||
| By | /s/ Xxxxxx X. Xxxxxxxxxx | |||
|
Its CEO |
||||
13
