EXHIBIT 10.7
SECURITY AGREEMENT IN COPYRIGHTED WORKS
This Security Agreement In Copyrighted Works (this "Agreement") is made at
Chicago, Illinois as of December 28, 1998, is entered into between ODETICS,
INC., a Delaware corporation ("Grantor"), which has a mailing address at 0000 X.
Xxxxxxxxxx, Xxxxxxx, Xxxxxxxxxx 00000, and TRANSAMERICA BUSINESS CREDIT
CORPORATION, a Delaware corporation, ("TBCC") having its principal office at
0000 Xxxx Xxxxxxx Xxxx, Xxxxx 000, Xxxxxxxx, Xxxxxxxx 00000 and having an office
at 00000 Xxxxxxx Xxxx., Xxxxx 0000, Xxxxxxx Xxxx, Xxxxxxxxxx 00000.
RECITALS
A. TBCC is providing financing to Grantor pursuant to the Loan and
Security Agreement of even date herewith between TBCC and Grantor (as amended
from time to time, the "Loan Agreement"). Pursuant to the Loan Agreement,
Grantor has granted to TBCC a security interest in all of Grantor's present and
future assets, including without limitation all of Grantor's present and future
general intangibles, and including without limitation the "Copyrights" (as
defined below), to secure all of its present and future indebtedness,
liabilities, guaranties and other obligations to TBCC.
B. To supplement TBCC's rights in the Copyrights, Grantor is executing and
delivering this Agreement.
NOW, THEREFORE, for valuable consideration, Grantor agrees as follows:
1. Assignment. To secure the complete and timely payment and performance
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of all "Obligations" (as defined in the Loan Agreement), and without limiting
any other security interest Grantor has granted to TBCC, Grantor hereby
hypothecates to TBCC and grants, assigns, and conveys to TBCC a security
interest in Grantor's entire right, title, and interest in and to all of the
following, now owned and hereafter acquired (collectively, the "Collateral"):
(a) Registered Copyrights and Applications for Copyright
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Registrations. All of Grantor's present and future United States registered
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copyrights and copyright registrations, including, without limitation, the
registered copyrights listed in Schedule A to this Agreement (and including all
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of the exclusive rights afforded a copyright registrant in the United States
under 17 U.S.C. (S)106 and any exclusive rights which may in the future arise by
act of Congress or otherwise) and all of Grantor's present and future
applications for copyright registrations (including applications for copyright
registrations of derivative works and compilations) (collectively, the
"Registered Copyrights"), and any and all royalties, payments, and other amounts
payable to Grantor in connection with the Registered Copyrights, together with
all renewals and extensions of the Registered Copyrights, the right to recover
for all past, present, and future infringements of the Registered Copyrights,
and all computer programs, computer databases, computer program flow diagrams,
source codes, object codes and all tangible property embodying or incorporating
the Registered Copyrights, and all other rights of every kind whatsoever
accruing thereunder or pertaining thereto.
(b) Unregistered Copyrights. All of Grantor's present and future
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copyrights which are not registered in the United States Copyright Office (the
"Unregistered Copyrights"), whether now owned or hereafter acquired, including
without limitation the Unregistered Copyrights listed in Schedule B to this
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Agreement, and any and all royalties, payments, and other amounts payable to
Grantor in connection with the Unregistered Copyrights, together with all
renewals and extensions of the Unregistered Copyrights, the right to recover for
all past, present, and future infringements of the Unregistered Copyrights, and
all computer programs, computer databases, computer program flow diagrams,
source codes, object codes and all tangible property
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embodying or incorporating the Unregistered Copyrights, and all other rights of
every kind whatsoever accruing thereunder or pertaining thereto. The Registered
Copyrights and the Unregistered Copyrights collectively are referred to herein
as the "Copyrights."
(c) Licenses. All of Grantor's right, title and interest in and to
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any and all present and future license agreements with respect to the
Copyrights, including without limitation the license agreements listed in
Schedule C to this Agreement (the "Licenses").
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(d) Accounts Receivable. All present and future accounts, accounts
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receivable and other rights to payment arising from, in connection with or
relating to the Copyrights.
(e) Proceeds. All cash and non-cash proceeds of any and all of the
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foregoing.
2. Representations. Grantor represents and warrants that:
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(a) Each of the Copyrights is valid and enforceable (except to the
extent that the Unregistered Copyrights must be registered to be enforced);
(b) Except for the security interest granted hereby and the non-
exclusive licenses granted to Grantor's licensees with respect to the Copyrights
in the ordinary course of business of Grantor, Grantor is (and upon creation of
all future Copyrights, will be) the sole and exclusive owner of the entire and
unencumbered right, title, and interest in and to each of the Copyrights and
other Collateral, free and clear of any liens, charges, or encumbrances;
(c) There is no pending claim that the use of any of the Copyrights
does or may infringe upon or violate the rights of any third person nor does
Grantor have knowledge of any pending or threatened infringement of any of the
Copyrights by any third person.
(d) Listed on Schedules A and B are all copyrights owned by Grantor,
in which Grantor has an interest, or which are used in Grantor's business.
(e) Listed on Schedule C are all Licenses to which Grantor is a party.
(f) Each employee, agent and/or independent contractor who has
participated in the creation of the property constituting the Collateral has
either executed an assignment of his or her rights of authorship to Grantor or
is an employee of Grantor acting within the scope of his or her employment and
was such an employee at the time of said creation.
(g) All of Grantor's present and future software, computer programs
and other works of authorship subject to United States copyright protection, the
sale, licensing or other disposition of which results in royalties receivable,
license fees receivable, accounts receivable or other sums owing to Grantor
(collectively, "Receivables"), have been and shall be registered with the United
States Copyright Office prior to the date Grantor requests or accepts any loan
from TBCC with respect to such Receivables and prior to the date Grantor
includes any such Receivables in any accounts receivable aging, borrowing base
report or certificate or other similar report provided to TBCC, and Grantor
shall provide to TBCC copies of all such registrations promptly upon the receipt
of the same*.
*except that Grantor shall have 60 days after the date hereof to register all of
its present software with the United States Copyright Office (as provided in the
Schedule to the Loan Agreement), and during such 60-day period Grantor may
request and accept loans with respect to Receivables arising from the licensing
of such software.
3. Covenants. Until all of the Obligations have been satisfied in full
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and the Loan Agreement has terminated:
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(a) Grantor shall not grant a security interest in any of the
Copyrights or other Collateral to any other person and shall not enter into any
agreement or take any action that is inconsistent with Grantor's obligations
hereunder or Grantor's other Obligations or would impair TBCC's rights, under
this Agreement or otherwise, without TBCC's prior written consent.
(b) Grantor shall ensure that each use of the Copyrights described in
Section 1 of this Agreement carries a complete and accurate copyright notice.
(c) Grantor shall use its best efforts to preserve and defend
Grantor's rights in the Copyrights unless Grantor, with the concurrence of TBCC,
reasonably determines that a Copyright is not worth preserving or defending.
(d) Grantor shall undertake all reasonable measures to cause its
employees, agents and independent contractors to assign to Grantor all rights of
authorship to any copyrighted material in which Grantor has or may subsequently
acquire any right or interest.
4. License Rights. Grantor may license or sublicense the Copyrights only
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in the ordinary course of business and only on a non-exclusive basis, and only
to the extent of Grantor's rights and subject to TBCC's security interest and
Grantor's obligations under this Agreement.
5. TBCC May Supplement. Grantor authorizes TBCC to modify this Agreement
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by amending Schedule A or B to include any future copyrights to be included in
the Copyrights. Grantor shall from time to time update the lists of Registered
Copyrights and Unregistered Copyrights on Schedules A and B and lists of License
Agreements on Schedule C as Grantor obtains or acquires copyrights or grants or
obtains licenses in the future. Notwithstanding the foregoing, no failure to so
modify this Agreement or amend Schedules A or B or C shall in any way affect,
invalidate or detract from TBCC's continuing security interest in all
Copyrights, whether or not listed on Schedule A or B and all license agreements
whether or not listed on Schedule C.
6. Default. Upon an Event of Default (as defined in the Loan Agreement)
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TBCC shall have, in addition to all of its other rights and remedies under the
Loan Agreement, all rights and remedies of a secured party under the Uniform
Commercial Code (as enacted in any jurisdiction in which the Copyrights or other
Collateral are located or deemed to be located) or other applicable law. Upon
occurrence of an Event of Default, Grantor shall, upon request of TBCC, give
written notice to all parties to the Licenses that all payments thereunder shall
be made to TBCC, and TBCC may itself give such notice.
7. Fees and Expenses. On demand by TBCC, without limiting any of the
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terms of the Loan Agreement, Grantor shall pay all reasonable fees, costs, and
expenses (including without limitation reasonable attorneys' fees and legal
expenses) incurred by TBCC in connection with (a) preparing this Agreement and
all other documents relating to this Agreement, (b) consummating this
transaction, (c) filing or recording any documents (including all taxes in
connection therewith) in public offices; and (d) paying or discharging any
taxes, counsel fees, maintenance fees, encumbrances, or other amounts in
connection with protecting, maintaining, or preserving the Copyrights or
defending or prosecuting any actions or proceedings arising out of or related to
the Copyrights.
8. TBCC's Rights. In the event that Grantor fails to use its best efforts
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to preserve and defend Grantor's rights in the Copyrights (except as permitted
by paragraph 3(c) hereof) within a reasonable period of time after learning of
the existence of any actual or threatened infringement thereof, upon twenty (20)
days prior written notice to Grantor, TBCC shall have the right, but shall in no
way be obligated to, bring suit or take any other action, in its own name or in
Grantor's name, to enforce or preserve TBCC's or Grantor's rights in the
Copyrights. Grantor shall at the request of TBCC and at Grantor's expense do
any lawful acts and execute any documents requested by TBCC to assist with such
enforcement. In the event Grantor has not taken action to enforce or preserve
TBCC's and Grantor's rights in the Copyrights and TBCC
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thereupon takes such action, Grantor, upon demand, shall promptly reimburse and
indemnify TBCC for all costs and expenses incurred in the exercise of TBCC's or
Grantor's rights under this Section 8.
9. No Waiver. No course of dealing between Grantor and TBCC, nor any
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failure to exercise nor any delay in exercising, on the part of TBCC, any right,
power, or privilege under this Agreement or under the Loan Agreement or any
other agreement, shall operate as a waiver. No single or partial exercise of
any right, power, or privilege under this Agreement or under the Loan Agreement
or any other agreement by TBCC shall preclude any other or further exercise of
such right, power, or privilege or the exercise of any other right, power, or
privilege by TBCC.
10. Rights Are Cumulative. All of TBCC's rights and remedies with respect
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to the Copyrights and other Collateral whether established by this Agreement,
the Loan Agreement, or any other documents or agreements, or by law shall be
cumulative and may be exercised concurrently or in any order.
11. Copyright Office. At the request of TBCC, Grantor shall execute any
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further documents necessary or appropriate to create and perfect TBCC's security
interest in the Copyrights, including without limitation any documents for
filing with the United States Copyright Office and/or any applicable state
office. TBCC may record this Agreement, an abstract thereof, or any other
document describing TBCC's interest in the Copyrights with the United States
Copyright Office, at the expense of Grantor.
12. Indemnity. Grantor shall protect, defend, indemnify, and hold
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harmless TBCC and TBCC's assigns from all liabilities, losses, and costs
(including without limitation reasonable attorneys' fees) incurred or imposed on
TBCC relating to the matters in this Agreement, including, without limitation,
in connection with TBCC's defense of any infringement action brought by a third
party against TBCC.
13. Severability. The provisions of this Agreement are severable. If any
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provision of this Agreement is held invalid or unenforceable in whole or in part
in any jurisdiction, then such invalidity or unenforceability shall affect only
such provision, or part thereof, in such jurisdiction, and shall not in any
manner affect such provision or part thereof in any other jurisdiction, or any
other provision of this Agreement in any jurisdiction.
14. Amendments; Entire Agreement. This Agreement is subject to
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modification only by a writing signed by the parties, except as provided in
Section 5 of this Agreement. To the extent that any provision of this Agreement
conflicts with any provision of the Loan Agreement, the provision giving TBCC
greater rights or remedies shall govern, it being understood that the purpose of
this Agreement is to add to, and not detract from, the rights granted to TBCC
under the Loan Agreement. This Agreement, the Loan Agreement, and the documents
relating thereto comprise the entire agreement of the parties with respect to
the matters addressed in this Agreement.
15. Further Assurances. At TBCC's request, Grantor shall execute and
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deliver to TBCC any further instruments or documentation, and perform any acts,
that may be reasonably necessary or appropriate to implement this Agreement, the
Loan Agreement or any other agreement, and the documents relating thereto,
including without limitation any instrument or documentation reasonably
necessary or appropriate to create, maintain, perfect, or effectuate TBCC's
security interests in the Copyrights or other Collateral.
16. Release. At such time as Grantor shall completely satisfy all of the
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Obligations and the Loan Agreement shall be terminated, TBCC shall execute and
deliver to Grantor all assignments and other instruments as may be reasonably
necessary or proper to terminate TBCC's security interest in the Copyrights,
subject to any disposition of the Copyrights which may have been made by TBCC
pursuant to this Agreement. For the purpose of this Agreement, the Obligations
shall be deemed to continue if Grantor enters into any bankruptcy or similar
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proceeding at a time when any amount paid to TBCC could be ordered to be repaid
as a preference or pursuant to a similar theory, and shall continue until it is
finally determined that no such repayment can be ordered.
17. True and Lawful Attorney. Grantor hereby appoints TBCC as Grantor's
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true and lawful attorney, with full power of substitution, to do any or all of
the following, in the name, place and stead of Grantor: (a) execute an abstract
of this Agreement or any other document describing TBCC's interest in the
Copyrights, for filing with the United States Copyright Office; (b) execute any
modification of this Agreement pursuant to Section 5 of this Agreement; and (c)
following an Event of Default (as defined in the Loan Agreement) execute any
assignments, notices or transfer documents for purposes of transferring title or
right to receive any of the Copyrights or other Collateral to any person,
including without limitation TBCC.
18. Successors. The benefits and burdens of this Agreement shall inure to
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the benefit of and be binding upon the respective successors and permitted
assigns of the parties; provided that Grantor may not transfer any of the
Collateral or any rights hereunder, without the prior written consent of TBCC,
except as specifically permitted hereby.
19. Governing Law. THE VALIDITY, INTERPRETATION AND ENFORCEMENT OF THIS
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AGREEMENT AND ANY DISPUTE ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT,
WHETHER SOUNDING IN CONTRACT, TORT, EQUITY OR OTHERWISE, SHALL BE GOVERNED BY
THE INTERNAL LAWS AND DECISIONS OF THE STATE OF ILLINOIS. ALL DISPUTES BETWEEN
THE GRANTOR AND TBCC, WHETHER SOUNDING IN CONTRACT, TORT, EQUITY OR OTHERWISE,
SHALL BE RESOLVED ONLY BY STATE AND FEDERAL COURTS LOCATED IN CHICAGO, ILLINOIS,
AND THE COURTS TO WHICH AN APPEAL THEREFROM MAY BE TAKEN; PROVIDED, HOWEVER,
THAT TBCC SHALL HAVE THE RIGHT, TO THE EXTENT PERMITTED BY APPLICABLE LAW, TO
PROCEED AGAINST THE GRANTOR OR ITS PROPERTY IN ANY LOCATION REASONABLY SELECTED
BY TBCC IN GOOD FAITH TO ENABLE TBCC TO REALIZE ON SUCH PROPERTY, OR TO ENFORCE
A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF TBCC. THE GRANTOR AGREES THAT IT
WILL NOT ASSERT ANY PERMISSIVE COUNTERCLAIMS, SETOFFS OR CROSS-CLAIMS IN ANY
PROCEEDING BROUGHT BY TBCC. THE GRANTOR WAIVES ANY OBJECTION THAT IT MAY HAVE
TO THE LOCATION OF THE COURT IN WHICH TBCC HAS COMMENCED A PROCEEDING,
INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON
FORUM NON CONVENIENS.
20. Waiver of Right to Jury Trial. TBCC AND GRANTOR EACH HEREBY WAIVE THE
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RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, ARISING OUT OF,
OR IN ANY WAY RELATING TO: (I) THIS AGREEMENT; OR (II) ANY OTHER PRESENT OR
FUTURE INSTRUMENT OR AGREEMENT BETWEEN TBCC AND GRANTOR; OR (III) ANY CONDUCT,
ACTS OR OMISSIONS OF TBCC OR GRANTOR OR ANY OF THEIR DIRECTORS, OFFICERS,
EMPLOYEES, AGENTS, ATTORNEYS OR ANY OTHER PERSONS AFFILIATED WITH TBCC OR
GRANTOR; IN EACH OF THE FOREGOING CASES, WHETHER SOUNDING IN CONTRACT OR TORT OR
OTHERWISE.
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WITNESS the execution hereof as of the date first written above.
Grantor:
ODETICS, INC.
By: /s/ Xxxxxxx X. Xxxxx
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Name (please print):
Xxxx Xxxxx
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Title:VP & CFO
Chairman of the Board, President, or Vice President
Accepted.
TBCC:
TRANSAMERICA BUSINESS CREDIT
CORPORATION
By: /s/
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Name (please print):
Xxxxxxxx
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Title: Senior Vice President and General Manager
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Schedule A
to
Security Agreement in Copyrighted Works
Odetics, Inc.
Registered Copyrights
U.S. Copyrights
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TITLE OF WORK/YEAR OF REGISTRATION
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CREATION NUMBER USER
-------- ------ ----
Gyyr Digiquad Operating Instruction TX2469442 Gyyr
Operating Instructions Time Lapse TX1640148 Gyyr
Video
Cassette Recorder
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Schedule B
to
Security Agreement in Copyrighted Works
Odetics, Inc.
Unregistered Copyrights
(Where No Copyright Application Is Pending)
TITLE OF WORK/YEAR OF REGISTRATION
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CREATION NUMBER USER
-------- ------ ----
Copyright to the computer program --- Broadcast
known as Xxxxxx which was developed
by IMIS during the period Oct. 1, 1997
to Sept. 12, 1998 (date of acquisition)
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Schedule C
to
Security Agreement in Copyrighted Works
Odetics, Inc.
License Agreements
None
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