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EXHIBIT 10.25
SECURED LOAN AGREEMENT
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This Secured Loan Agreement (this "Agreement") is made as of May ___,
2001 (the "Effective Date") by and among Silvon Software, Inc., an Illinois
corporation (the "Borrower"), and JDA Software Group, Inc., a Delaware
corporation (the "Lender").
RECITALS
The Borrower wishes to borrow from the Lender and the Lender wishes to
loan to the Borrower $3.5 million pursuant to the terms hereof and to be
evidenced by a Secured Promissory Note in the form of Exhibit A hereto (the
"Note").
AGREEMENT
In consideration of the mutual promises contained herein and other good
and valuable consideration, receipt of which is hereby acknowledged, the parties
to this Agreement agree as follows:
1. Loan. Pursuant to the terms and subject to the conditions hereof
(including those in Section 5 hereof), the Lender does hereby agree to make a
secured loan in the amount of $3.5 million to the Borrower to be evidenced by
the Note and the Borrower agrees to repay that loan with interest as described
in the Note.
2. Security Interest. The indebtedness represented by the Note is
secured by a first priority security interest in all of the Borrower's
Intellectual Property Collateral (as defined in the Security Agreement) and a
subordinated security interest in all of the Borrower's other assets pursuant
and subject to the terms and conditions of the Security Agreement by and between
the Borrower and the Lender of even date herewith in the form attached hereto as
Exhibit B (the "Security Agreement") and the Intercreditor Agreement of even
date herewith among the Borrower, the Lender and Xxxx Xxxxxx Bank in the form
attached hereto as Exhibit D (the "Intercreditor Agreement").
3. Representations and Warranties of the Borrower. The Borrower hereby
represents and warrants to the Lender the following as of the date of this
Agreement, and as of the date of the Closing (as defined in Section 5), if a
different date, as though then made, except as set forth on a Schedule of
Exceptions attached hereto as Exhibit C (the "Schedule of Exceptions") delivered
herewith, which exceptions shall be deemed to be representations and warranties
as if made hereunder (the Schedule of Exceptions shall be arranged in paragraphs
corresponding to the numbered paragraphs contained in this Section 3):
(a) Organization, Good Standing and Qualification. The
Borrower is a corporation duly organized, validly existing and in good standing
under the laws of the state of Illinois and has all requisite corporate power
and authority to own or lease and operate its properties and assets and to carry
on its business as now conducted by it and to enter into and perform the Loan
Documents (as defined in Section 3(d)) and to carry out the transactions
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contemplated by the Loan Documents. The Borrower is duly qualified to transact
business and is in good standing in each jurisdiction in which it transacts
business and is required to be so qualified.
(b) Capitalization. The authorized capital of the Borrower
consists of:
(i) 20,000,000 shares of Common Stock, no par value,
7,487,320 shares of which are currently issued and outstanding.
(ii) The Borrower has reserved 3,400,000 shares of
Common Stock for issuance to officers, directors, employees and consultants of
the Borrower pursuant to its Stock Incentive Plan duly adopted by the Board of
Directors (the "Stock Plan"). Of such reserved shares of Common Stock under the
Stock Plan, 481,320 shares have been issued upon exercise of options or as stock
grants or underlying stock options under the Stock Plan, and 2,918,680 shares of
Common Stock remain available for issuance to officers, directors, employees and
consultants pursuant to the Stock Plan.
(iii) The outstanding shares of Common Stock,
options, convertible promissory notes and warrants are owned by the stockholders
and in the numbers specified in the Schedule of Exceptions.
(iv) The outstanding shares of Common Stock have been
duly authorized and validly issued, are fully paid and nonassessable, and were
issued in accordance with the registration or qualification provisions of the
Securities Act of 1933, as amended, and any relevant state securities laws or
pursuant to valid exemptions therefrom.
(v) Except for (A) the outstanding convertible
promissory notes and outstanding warrants described in the Schedule of
Exceptions, and (B) the outstanding options granted under the Stock Plan, there
are no outstanding options, warrants, rights (including conversion or preemptive
rights of first refusal or similar rights) or agreements, orally or in writing,
for the purchase or acquisition from the Borrower of any shares of its capital
stock or any interest therein or securities convertible or exercisable therein.
No stock plan, stock purchase, stock option or other agreement or understanding
between the Borrower and any holder of any equity securities of the Borrower or
rights to purchase equity securities of the Borrower provides for acceleration
or other changes in the vesting provisions or other terms of such securities, as
a result of any merger, sale of stock or assets, change in control, securities
offering, or other similar transaction by the Borrower. The Borrower is not a
party or subject to any agreement or understanding, and, to the Borrower's
knowledge, there is no agreement or understanding between any persons that
affects or relates to the voting or giving of written consents with respect to
any security or the voting by a director of the Borrower.
(c) Subsidiaries. The Borrower does not currently own or
control, directly or indirectly, any interest in any other corporation,
association, partnership, joint venture or other business entity.
(d) Authorization. All corporate action on the part of the
Borrower, its officers and directors necessary for the authorization, execution
and delivery of this Agreement, the Notes and the Security Agreement, the
performance of all obligations of the Borrower
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hereunder and thereunder, the authorization, issuance (or reservation for
issuance), sale and delivery of the Note has been taken, and this Agreement, the
Note, the Security Agreement, the Intercreditor Agreement, the Escrow Agreement
(as defined in Section 5) and the Warrant (as defined in Section 5)
(collectively, the "Loan Documents"), when executed and delivered by the
Borrower, shall constitute valid and legally binding obligations of the
Borrower, enforceable against the Borrower in accordance with their respective
terms except (1) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance, and other laws of general
application affecting enforcement of creditors' rights generally or (2) as
limited by the exercise of judicial discretion or laws relating to the
availability of specific performance, injunctive relief or other equitable
remedies. The Borrower has all requisite legal and corporate power to execute
and deliver the Loan Documents and to carry out and perform its obligations
hereunder and thereunder.
(e) Valid Issuance of Note. The Note that is being issued to
the Lender hereunder, when issued and delivered in accordance with the terms
hereof for the consideration expressed herein, will be duly and validly issued.
(f) Consents. No consent, approval, order or authorization of,
or registration, qualification, designation, declaration or filing with, any
federal, state or local governmental authority on the part of the Borrower is
required in connection with the execution and delivery of the Loan Documents and
the consummation of the transactions contemplated by the Loan Documents.
(g) Litigation. There is no action, suit, proceeding or
investigation pending or, to the Borrower's knowledge, any basis for or threat
thereof, against the Borrower that questions the validity of any Loan Document,
or the right of the Borrower to enter into them, or to consummate the
transactions contemplated thereby, or that is likely to result in a payment by
the Borrower in excess of $100,000, or any material change in the current equity
ownership of the Borrower or its business. The Borrower is not a party to or, to
its knowledge, named in or subject to the provisions of any order, writ,
injunction, judgment or decree of any court or government agency or
instrumentality.
(h) Patents and Trademarks. The Borrower has good title or
possesses sufficient legal rights to, or valid and enforceable licenses to use,
all patents, trademarks, service marks, trade names, copyrights, trade secrets,
permits, licenses, computer programs, software designs, information and
proprietary rights and processes (the "Intellectual Property") necessary or
appropriate for its business as now conducted and as presently proposed to be
conducted without any conflict with, or infringement of, the rights of others
and free and clear of any lien, security interest, encumbrance, license or other
restriction other than the license agreements, OEM agreements, joint marketing
agreements, referral partner agreements and other agreements entered into by
Borrower with customers or clients from time to time in the ordinary course of
business ("Permitted Agreements"). The Borrower's patents, trademarks, service
marks, trade names, copyrights, and applications therefor, together with any
other material Intellectual Property of the Borrower, are listed in Schedule
2(h) of the Schedule of Exceptions. The Borrower has taken reasonable actions to
protect the Intellectual Property. Except for Permitted Agreements, there are no
outstanding options, licenses or agreements of any kind relating to the
Intellectual Property, nor is the Borrower bound by or a party to any options,
licenses or
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agreements of any kind with respect to the patents, trademarks, service marks,
trade names, copyrights, licenses, information and proprietary rights and
processes of any other person or entity. The Borrower has not received any
written communications or, to its knowledge, oral communications alleging
violation of any of the patents, trademarks, service marks, tradenames,
copyrights, trade secrets or other proprietary rights or processes of any other
person or entity. The Borrower is not aware that any of its employees is
obligated under any contract (including licenses, covenants or commitments of
any nature) or other agreement, or subject to any judgment, decree or order of
any court or administrative agency, that would interfere with (1) the use of
such employee's best efforts to promote the interest of the Borrower, (2) the
use of any employee's duties as an officer, employee or director of the Borrower
or (3) that would conflict with the Borrower's business as conducted or proposed
to be conducted. Neither the execution nor delivery of any Loan Document nor the
carrying on of the Borrower's business by the employees of the Borrower, will,
to the Borrower's knowledge, conflict with or result in a breach of the terms,
conditions or provisions of, or constitute a default under, any contract,
covenant or instrument under which any such employee is now obligated. The
Borrower does not believe it is or will be necessary to use any inventions or
works of authorship of any employees (or persons it currently intends to hire)
made prior to their employment by the Borrower.
(i) Compliance with Other Instruments. The Borrower is not in
violation or default of (1) any provision of its charter documents, or bylaws or
(2) any provision of (A) any mortgage, indenture, contract, agreement,
instrument or material contract to which it is a party or by which it is bound
or of any judgment, decree, order, writ or (B) to its knowledge, any statute,
rule or regulation applicable to it. To the best of the Borrower's knowledge, no
employee of the Borrower is in violation of any term of any contract or covenant
(either with the Borrower or with another entity) relating to employment,
patents, proprietary information disclosure, noncompetition or nonsolicitation.
The execution, delivery and performance of the Loan Documents and the
consummation of the transactions contemplated hereby and thereby will not result
in any such violation or be in conflict with or constitute, with or without the
passage of time and giving of notice, either a default under any such provision,
instrument, judgment, order, writ, decree or contract or an event which results
in the creation of any lien, charge or encumbrance upon any assets of the
Borrower.
(j) Agreements; Action. There are no agreements,
understandings, instruments, contracts or proposed transactions (in each case,
oral or written) to which the Borrower is a party or by which it is bound that
involve the transfer or license of any patent, copyright, trade secret or other
proprietary right to or from the Borrower (other than Permitted Agreements or
licenses arising from the purchase of "off the shelf" or other standard
products), or indemnification by the Borrower with respect to infringement of
proprietary rights (other than indemnification obligations arising from
Permitted Agreements.
(k) Title to Property and Assets. Except (1) as reflected in
the Financial Statements (defined in Section 3(l), (2) for liens for current
taxes not yet delinquent, (3) for liens imposed by law and incurred in the
ordinary course of business for obligations not past due to carriers,
warehousemen, laborers, materialmen and the like or (4) for liens in respect of
pledges or deposits under workers' compensation laws or similar legislation,
none of which items (1) through (4), individually or in the aggregate,
materially interferes with the use of or rights to such property, the Borrower
has good title to its property and assets free and clear of all
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mortgages, liens, loans and encumbrances. With respect to the property and
assets it leases, the Borrower is in compliance with such leases and holds a
valid leasehold interest free of any liens, claims or encumbrances, subject to
clauses (1) - (4) above.
(l) Financial Statements. The Borrower has provided or made
available to the Lenders audited financial statements (including balance sheet,
income statement and statement of cash flows) for the fiscal year ended December
31, 1999 and unaudited financial statements (including balance sheet, income
statement and statement of cash flows) for the quarters ended March 31, 2000,
June 30, 2000, September 30, 2000, December 31, 2000 and March 31, 2001, and for
the months ended January 31, 2001, February 28, 2001 and March 31, 2001
(collectively, the "Financial Statements"). The Financial Statements have been
prepared in accordance with generally accepted accounting principles applied on
a consistent basis throughout the periods indicated, except that the unaudited
Financial Statements may not contain all footnotes required by generally
accepted accounting principles and the absence of such notes do not make those
financial statements misleading. The Financial Statements fairly present the
financial condition and operating results of the Borrower as of the dates, and
for the periods indicated therein. Except as set forth in the Financial
Statements, the Borrower has no liabilities in excess of $75,000, contingent or
otherwise, other than (1) liabilities incurred in the ordinary course of
business subsequent to March 31, 2001 and (2) obligations under contracts and
commitments incurred in the ordinary course of business and not required under
generally accepted accounting principles to be reflected in the Financial
Statements, which, in both cases, individually or in the aggregate, are not
material to the financial condition or operating results of the Borrower. Except
as disclosed in the Financial Statements, the Borrower is not a guarantor or
indemnitor of any indebtedness of any other person, firm or corporation. The
Borrower maintains and will continue to maintain a standard system of accounting
established and administered in accordance with generally accepted accounting
principles.
(m) Changes. Since March 31, 2001 there has not been:
(i) any adverse change in the assets, liabilities,
financial condition or operating results of the Borrower from that reflected in
the Financial Statements;
(ii) any damage, destruction or loss, whether or not
covered by insurance;
(iii) any waiver, cancellation, release or compromise
by the Borrower of a valuable right or claim (or series of related rights or
claims) or of a material debt owed to it;
(iv) any adverse change to a material contract;
(v) any change in any compensation arrangement or
agreement with any Borrower senior officer, director or stockholder outside the
ordinary course of business;
(vi) any sale, assignment, transfer or license by the
Borrower (except in the ordinary course of business) of any patents, trademarks,
copyrights, trade secrets or other intangible assets;
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(vii) any resignation or termination of employment of
any officer or key employee of the Borrower, and the Borrower does not know of
any impending resignation or termination of employment of any such officer or
key employee;
(viii) receipt of notice that there has been a loss
of, or material order cancellation by, any major customer of the Borrower;
(ix) any mortgage, pledge, transfer of a security
interest in, or lien, created by the Borrower, with respect to any of its
material properties or assets, except liens for taxes not yet due or payable;
(x) any loans or guarantees made by the Borrower to
or for the benefit of its employees, officers or directors, or any members of
their immediate families, other than travel advances and other advances made in
the ordinary course of its business;
(xi) any declaration, setting aside or payment or
other distribution in respect to any of the Borrower's capital stock, or any
direct or indirect redemption, purchase or other acquisition of any of such
stock by the Borrower;
(xii) any other adverse event or condition of any
character; or
(xiii) any arrangement or commitment to do any of the
things described in this Section 3(m).
(n) Tax Returns and Payments. The Borrower has timely filed
all tax returns and reports as required by law. These returns and reports are
true and correct in all material respects. All taxes shown to be due and payable
on such returns, any assessments imposed, and all other taxes due and payable by
the Borrower on or before the Closing have been paid or have been adequately and
properly reserved in the Financial Statements and will be paid prior to the time
they become delinquent, except those contested by it in good faith. Neither the
Borrower has received any written notice or, to its knowledge, oral notice by
any federal, state or local taxing authorities (1) that any of its returns,
federal, state or other, have been or are being audited as of the date hereof,
or (2) of any deficiency in assessment or proposed judgment to its federal,
state or other taxes. The amount shown on the Borrower's balance sheet as of
February 28, 2001 as the provision for taxes is sufficient for the payment of
all accrued and unpaid Federal, State, local and foreign taxes for all taxable
periods ended prior thereto. The Borrower has no knowledge of any liability of
any tax to be imposed upon its properties or assets of the date of this
Agreement that is not adequately provided for. The Borrower has withheld or
collected from each payment made to each of its employees the amount of all
taxes (including, without limitation, federal income taxes, Federal Insurance
Contribution Act taxes, Federal Unemployment Tax Act taxes and Medicare taxes)
required to be withheld or collected therefrom, and has timely paid the same to
the proper tax receiving or officers or authorized depositories.
(o) Insurance and Indemnification. The Borrower has in full
force and effect a workers' compensation policy, fire and casualty insurance
policies, and general and commercial liability policies, with extended coverage,
and directors and officers liability policies, each in amounts (subject to
reasonable deductibles) customary for companies similarly situated. With
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respect to each such insurance policy: (i) the policy is in full force and
effect; (ii) the Borrower is not in breach or default (including with respect to
the payment of premiums or the giving of notices), and no event has occurred
which, with notice or the lapse of time, would constitute such a breach or
default or permit termination, cancellation, modification or denial of coverage
under the policy; and (iii) no party to the policy has repudiated any of its
provisions.
(p) Labor Agreements and Actions
(i) The Borrower is not bound by or subject to (and
none of its assets or properties is bound by or subject to) any written or oral,
express or implied, contract, commitment or arrangement with any labor union,
and no labor union has requested or has sought to represent any of its
employees, representatives or agents. There is no strike or other labor dispute
involving the Borrower pending or, to the knowledge of the Borrower, threatened,
nor is the Borrower aware of any labor organization activity involving those
employees.
(ii) The Borrower has complied with all applicable
state and federal equal employment opportunity laws and with other laws related
to employment.
(q) Permits. The Borrower has all franchises, permits,
licenses and any similar authority necessary for the conduct of its business as
now being conducted by it. The Borrower is not in default under any of such
franchises, permits, licenses or other similar authority.
(r) Environmental and Safety Laws. The Borrower is not in
violation of any applicable statute, law or regulation relating to the
environment or occupational health and safety, and no material expenditures are
required, are threatened, or will, with the passage of time, be required in
order to comply with any such existing statute, law or regulation.
(s) ERISA. The Borrower has complied with applicable minimum
funding requirements and other applicable and material requirements of the
Employee Retirement Income Security Act of 1974 ("ERISA"), applicable to the
Employee Benefit Plans (as defined in Section 3(3) of ERISA) it sponsors or
maintains, and there are no existing conditions that would give rise to material
liability thereunder. With respect to any Employee Benefit Plan sponsored or
maintained by it, the Borrower has made all contributions or payments to or
under each Employee Benefit Plan required by law, by the terms of such Employee
Benefit Plan or the terms of any contract or agreement. The Borrower has not
been required to contribute to a multiemployer plan, as defined in Section
4001(a)(3) of ERISA, since September 2, 1974. The Borrower has not incurred any
liability to the Pension Benefit Guaranty Corporation. No prohibited transaction
under ERISA has occurred with respect to any Borrower Employee Benefit Plan.
(t) Disclosures. No Loan Document and no exhibit thereto, or
any report, certificate or instrument furnished to the Borrower in connection
with the transactions contemplated in these Loan Documents, when read together,
contains any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements contained therein, in light of
the circumstances under which they were made, misleading. The Borrower knows of
no information or fact that, individually or in the aggregate, has or is likely
to
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materially impair the ability of Borrower to perform its obligations under the
Loan Documents which has not been disclosed to the Borrower in the Loan
Documents or exhibits thereto.
(u) Nondisclosure and Proprietary Rights Agreement. Each past
or present employee, officer and consultant of the Borrower has executed an
agreement with the Borrower containing confidentiality provisions regarding the
Intellectual Property Collateral (as defined in the Security Agreement) and
other confidential information of the Borrower, and provisions confirming that
any work product produced by such individuals in the course of their
employment/engagement by the Borrower is the property of the Borrower.
4. Additional Agreements.
(a) Financial Statements and Other Periodic Deliveries.
(i) As soon as available, but in any event within 45
days after the end of each quarterly accounting period, the Borrower shall
deliver to the Lender unaudited consolidated statements of income and cash flows
for the quarterly period then ended and a balance sheet as of the last day of
that quarterly period, in each case prepared in accordance with GAAP consistent
with past practices.
(ii) As soon as practicable, but in any event within
90 days after the end of its fiscal year, the Borrower shall deliver to the
Lender audited consolidated statements of income and cash flow for the year then
ended and a balance sheet as of the last day of that fiscal year, prepared in
accordance with GAAP consistent with past practice.
(iii) Borrower shall deliver to Lender within thirty
(30) days of the last day of each fiscal quarter, a report signed by Borrower,
in form reasonably acceptable to Lender, listing any applications or
registrations that Borrower has made or filed in respect of any patents,
copyrights, trademarks or mask works and the status of any outstanding
applications or registrations. Borrower shall promptly advise Lender of any
material change in the composition of the Intellectual Property Collateral (as
defined in the Security Agreement), including but not limited to any subsequent
ownership right of Borrower in or to any trademark, patent, copyright or mask
work not specified in the Security Agreement.
(b) So long as the Note is outstanding, the Borrower will
promptly (and in no event later than 5 days after the borrower becomes aware of
such an event or change) inform the Lender of any material adverse events and of
any material change in the nature of the Collateral (as defined in the Security
Agreement).
(c) The Borrower shall not become a party to any agreement
which by its terms restricts the Borrower's performances of any of the
Agreements or the transactions contemplated thereby other than Permitted
Agreements.
(d) So long as the Note issued hereunder is outstanding, the
Borrower shall not, without the written consent of the holder of the Note:
(i) authorize, issue or enter into any agreement
providing for the issuance (contingent or otherwise) of any indebtedness for
borrowed money, other than to a
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Senior Lender (as defined in the Intercreditor Agreement) in an amount not
exceeding $1.5 million;
(ii) directly or indirectly declare or pay any
dividend on its capital stock;
(iii) directly or indirectly redeem, purchase or
otherwise acquire any of its equity securities (including warrants, options and
other rights to acquire equity securities) except as contemplated by existing
stock option plans or repurchases of employee options or restricted stock in the
ordinary course of business;
(iv) increase the compensation for its senior
management except in the ordinary course of business consistent with past
practice;
(v) merge or consolidate with any entity such that
the Borrower is not the surviving entity or that there has been a change in
control of Borrower;
(vi) sell, lease or otherwise dispose of a material
amount of its assets in any transaction or series of related transactions other
than in the ordinary course of business:
(vii) make any amendment to the Borrower's
Certificate of Incorporation, or the Borrower's bylaws, or file any resolution
of the board of directors with the Secretary of State of the State of Illinois
containing any provision which would adversely affect or otherwise impair the
rights of the Lender under this Agreement:
(viii) pledge or encumber any of its assets other
than in the ordinary course of business or;
(ix) liquidate or dissolve.
5. Conditions to Closing. The obligations of the Lender to make the
loan called for by the Note (the "Closing") are subject to the fulfillment of
each of the following conditions:
(a) Perfection of Security Interest. The Borrower shall have
executed the Security Agreement and delivered to the Lenders executed UCC-1
financing statements, together with any other documents or agreements requested
by the Lender in order to perfect the security interest granted to the Lender
under the Security Agreement (such as filings with US Patent and Trademark
Officer or the US Copyright Office).
(b) Intercreditor Agreement. The Borrower, the Lender and the
Senior Lender shall have each executed and delivered an Intercreditor Agreement
in the form attached as Exhibit D hereto (the "Intercreditor Agreement").
(c) Distribution Agreement. The Borrower and the Lender shall
have each executed and delivered a Distribution Agreement in the form attached
as Exhibit E hereto (the "Distribution Agreement").
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(d) Escrow Agreement. The Borrower, the Lender and DSI
Technology Escrow Service, Inc., as escrow agent, shall have each executed and
delivered an Escrow Agreement in the form attached as Exhibit F hereto (the
"Escrow Agreement") and the Borrower shall have deposited in such escrow the
source code for all Intellectual Property Collateral that has source code.
(e) Funding; Receipts and Releases. The proceeds of the loan
evidenced by the Note shall be applied to retire the existing convertible
promissory notes dated May 25, 2000 payable to the order of (i) OPCO Senior
executive Investment Partnership, L.P., a Delaware limited partnership ("OPCO"),
in the principal amount of $75,000, (ii) CIBC WMV Inc., a Delaware corporation
("CIBC"), in the principal amount of $1,500,000, and (iii) Xxxxxxx Xxxxx Capital
Partners V, L.P., a Delaware limited partnership ("Xxxxxxx Xxxxx"), in the
principal amount of $1,500,000 (collectively, the "Existing Notes"), and in
connection therewith, each of OPCO, CIBC and Xxxxxxx Xxxxx shall provide wiring
instructions to the Lender prior to the Closing, execute a Receipt and Release
in the form attached hereto as Exhibit G and execute a Form UCC-3 security
interest release form. Any remaining funds shall be paid pursuant to wiring
instructions provided by the Borrower. The Borrower shall execute a Receipt in
the form attached hereto as Exhibit H and a Form UCC-1 and such other documents
as the Lender shall reasonably request to evidence its security interest
pursuant to the Security Agreement.
(f) Resolutions. The Borrower shall have delivered to the
Lender resolutions of its board of directors authorizing the execution, delivery
and performance of the Loan Documents.
(g) Representations and Warranties. The representations and
warranties of the Borrower contained in Section 3 shall be true and correct in
all material respects on and as of such Closing with the same force and effect
as if they had been made at such Closing, except for items stated to be true as
of a particular date, which shall remain true as of such date.
(h) Performance. The Borrower shall have performed and
complied with all agreements and conditions contained in this Agreement required
to be performed or complied with by it on or before such Closing.
6. Miscellaneous.
(a) Successors and Assigns. The terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the respective
successors and assigns of the parties. Nothing in this Agreement, express or
implied, is intended to confer upon any party other than the parties hereto or
their respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
(b) Governing Law. This Agreement and all acts and
transactions pursuant hereto and the rights and obligations of the parties
hereto shall be governed, construed and interpreted in accordance with the laws
of the State of New York, without giving effect to principles of conflicts of
law.
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(c) Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument. In the event that any signature is
delivered by facsimile transmission, such signature shall create a valid and
binding obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such facsimile signature
page were an original thereof.
(d) Titles and Subtitles. The titles and subtitles used in
this Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
(e) Notices. All notices required or permitted hereunder shall
be in writing and shall be deemed effectively given: (i) upon personal delivery
to the party to be notified; (ii) when sent by confirmed facsimile or electronic
transmission if sent during normal business hours of the recipient on a business
day, or if not, then on the next business day; or (iii) one (1) business day
after deposit with a nationally recognized overnight courier, specifying next
business day delivery, with written verification of receipt. All communications
shall be sent to the Borrower and the Lender at the address as set forth on the
signature page hereof or at such other address as the Borrower or the Lender may
designate by ten (10) days advance written notice to the other parties hereto.
(f) Amendments and Waivers. Any term of this Agreement may be
amended or waived only with the written consent of the Borrower and the Lender.
Any amendment or waiver effected in accordance with this Section 6(f) shall be
binding upon each transferee of the Securities, each future holder of all such
Securities, and the Borrower. Any amendment or waiver effected in accordance
with this Section 6(f) shall be binding upon each transferee of the Securities,
each future holder of all such Securities, and the Borrower. No waiver of any
default with respect to any provision, condition or requirement of this
Agreement shall be deemed to be a continuing waiver in the future or a waiver of
any other provision, condition or requirement hereof, nor shall any delay or
omission of either party to exercise any right hereunder in any manner impair
the exercise of any such right accruing to it thereafter.
(g) Severability. If one or more provisions of this Agreement
are held to be unenforceable under applicable law, the parties agree to
renegotiate such provision(s) in good faith, in order to maintain or achieve the
economic position enjoyed by each party as close as possible to that under the
provision(s) rendered unenforceable. In the event that the parties cannot reach
a mutually agreeable and enforceable replacement for such provision(s), then (i)
such provision(s) shall be excluded from this Agreement, (ii) the balance of the
Agreement shall be interpreted as if such provision(s) were so excluded and
(iii) the balance of the Agreement shall be enforceable in accordance with its
terms.
(h) Entire Agreement. The Loan Documents, together with the
Exhibits and Schedules attached thereto, delivered therewith or referenced
therein, and the documents referred to therein constitute the entire agreement
between the parties hereto pertaining to the subject matter hereof, and any and
all other written or oral agreements existing between the parties hereto are
expressly canceled.
11
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(i) Survival of Warranties and Covenants. Except as otherwise
expressly set forth herein, the warranties, representations and covenants of the
Borrower and the Lenders contained in or made pursuant to this Agreement shall
survive the execution and delivery of this Agreement and the Closing until all
of Borrower's obligations under the Loan Documents have been satisfied.
(j) Remedies. The remedies of the Lender hereunder are
governed by the terms hereof and the Security Agreement.
[signature page follows]
12
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The parties have executed this Secured Convertible Note Purchase
Agreement as of the date first written above.
BORROWER:
SILVON SOFTWARE, INC.
By:
----------------------------------------
Name:
Title:
Address: 000 Xxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: President
Facsimile:
-----------------
LENDER:
JDA SOFTWARE GROUP, INC.
By:
----------------------------------------
Name:
Title:
Address: 00000 Xxxxx 00xx Xxxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Attention: General Counsel
Facsimile: (000) 000-0000
SIGNATURE PAGE FOR
SECURED LOAN AGREEMENT
14
EXHIBIT A
---------
FORM OF SECURED PROMISSORY NOTE
15
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
AND HAS BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION
WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE
EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN
exemption from registration available so that SUCH REGISTRATION IS NOT REQUIRED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
$3,500,000 May _____, 2001
SILVON SOFTWARE, INC.
SECURED PROMISSORY NOTE
-----------------------
FOR VALUE RECEIVED, Silvon Software, Inc., an Illinois corporation (the
"Company"), promises to pay to the order of JDA Software Group, Inc., a Delaware
corporation (and any permitted successor(s) and assign(s) under Section 8
hereof, the "Holder"), the principal amount of Three Million Five Hundred
Thousand Dollars ($3,500,000) together with interest thereon calculated from the
date hereof in accordance with the provisions of this Secured Promissory Note
(this "Note"). Terms not defined herein, shall have the meaning given them in
the Secured Loan Agreement dated as of May _____, 2001 between the Company and
the Holder (the "Loan Agreement"). Neither the foregoing reference to the Loan
Agreement nor any provisions thereof shall affect or impair the absolute and
unconditional obligation of the Company to pay the principal and interest on
this Note as provided herein.
1. Loan Agreement. This Secured Promissory Note (as amended or
otherwise modified from time to time the "Note") is the Note called for by the
Loan Agreement. The Holder is entitled to the benefits of, and subject to the
terms and conditions set forth in the Loan Agreement. The benefits and rights of
the Holder are also subject to certain conditions and restrictions also set
forth in the Loan Agreement, which conditions and restrictions may be enforced
against the Holder.
2. Maturity. The outstanding principal under this Note shall be due and
payable on May ___, 2004 (the "Maturity Date"). Notwithstanding the foregoing,
the entire unpaid principal sum of this Note, together with accrued and unpaid
interest thereon, shall become immediately due and payable upon any Event of
Default (as defined in the Security Agreement referred to in Section 3 hereof).
3. Security Interest and Collateral. This Note is secured by a first
priority security interest in all of the Company's Intellectual Property
Collateral (as defined in the Security Agreement) and a subordinated security
interest in all of the Company's other assets pursuant to the terms of the
Security Agreement of even date herewith by and between the Company and the
Holder (the "Security Agreement") and an Intercreditor Agreement of even date
herewith by and between the Company, the Holder and the Senior Lender (defined
therein) (the "Intercreditor Agreement").
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4. Interest.
(a) The principal of this Note from time to time outstanding
shall bear interest on the unpaid principal amount of this Note outstanding from
time to time on a monthly basis from the date hereof (compounded monthly) at the
rate of the prime rate (as reflected in the money rates section of the Wall
Street Journal as of the date hereof and as it may change from time to time
(i.e., a floating rate)) plus 1.5% per annum (prorated monthly); provided,
however, that upon an Event of Default and while that Event of Default is
continuing, the interest shall be the lesser of (i) eighteen percent (18%) or
(ii) the highest rate of interest then allowed by law. All interest on this Note
shall be due and payable monthly on the first day of each month, with the first
interest payment due June 1, 2001. The interest on the Note will be paid to JDA
monthly separately from any holdbacks of Royalties described in Section 6
hereof.
(b) Following an Event of Default, the Company shall pay to
the Holder on demand all reasonable expenses and expenditures (including, but
not limited to, reasonable fees and expenses of legal counsel) incurred or paid
by the Holder in exercising or protecting its interests, rights and remedies
under this Note, plus interest thereon at the lesser of (i) eighteen percent
(18%) per annum or (ii) the highest rate of interest then allowed by law from
the date of such demand by the Holder until paid.
(c) All agreements between Company and Holder, whether now
existing or hereafter arising and whether written or oral, are expressly limited
so that in no contingency or event whatsoever, whether by conversion,
acceleration of the maturity of this Note or otherwise, shall the amount paid,
or agreed to be paid, to the holder hereof for the use, forbearance or detention
of the money to be loaned hereunder or otherwise, exceed the maximum amount
permissible under applicable law. If from any circumstances whatsoever
fulfillment of any provision of this Note or of any other document evidencing,
securing or pertaining to the indebtedness evidenced hereby, at the time
performance of such provision shall be due, shall involve transcending the limit
of validity prescribed by law, then ipso facto, the obligation to be fulfilled
shall be reduced to the limit of such validity, and if from any such
circumstances the holder of this Note shall ever receive anything of value as
interest or deemed interest by applicable law under this Note or any other
document evidencing, securing or pertaining to the indebtedness evidenced hereby
or otherwise an amount that would exceed the highest lawful rate, such amount
that would be excessive interest shall be applied to the reduction of the
principal amount owing under this Note or on account of any other indebtedness
of Company to Holder relating to this Note, and not to the payment of interest,
or if such excessive interest exceeds the unpaid balance of principal of this
Note and such other indebtedness, such excess shall be refunded to Borrower. In
determining whether or not the interest paid or payable with respect to any
indebtedness of Company to Holder, under any specific contingency, exceeds the
highest lawful rate, Company and Holder shall, to the maximum extent permitted
by applicable law, (i) characterize any nonprincipal payment as an expense, fee
or premium rather than as interest, (ii) amortize, prorate, allocate and spread
the total amount of interest throughout the full term of such indebtedness so
that the actual rate of interest on account of such indebtedness is uniform
throughout the term thereof and/or (iii) allocate interest between portions of
such indebtedness, to the end that no such portion shall bear interest at a rate
greater than that permitted by law. The terms and provisions of this paragraph
shall control and supersede every other conflicting provision of all agreements
between Company and Holder.
2
17
5. Payment. All payments shall be made in lawful money of the United
States of America at such place as the Holder hereof may from time to time
designate in writing to the Company. Payment shall be credited first to the
accrued interest then due and payable and the remainder applied to principal
except in the case of the holdback of Royalties pursuant to Section 6 or payment
because of a new investment under Section 7, each of which shall first be
credited to principal, and only when the principal is completely paid shall any
Royalty holdback be applied to accrued interest. Prepayment of this Note may be
made at any time, and from time to time, without penalty or premium.
6. Royalties.
(a) 50% of the Royalties (as defined in the Distribution
Agreement dated as of May __, 2001 between the Company and the Holder (the
"Distribution Agreement")) due to the Company under the Distribution Agreement
shall be retained by the Holder and applied against the outstanding principal
and interest hereunder.
(b) If the Company draws on its line of credit under the Loan
and Security Agreement dated as of June 1, 2000 between the Company and Xxxx
Xxxxxx Bank (the "Bank Loan Agreement"), then the amount of the Royalties
described in Section 6(a) retained by the Holder and applied against the
outstanding principal and interest hereunder shall increase to:
(i) 60% for so long as less than $750,000 but more
than $0 is owed to the Senior Lender by the Company under the Bank Loan
Agreement; and
(ii) 100% for so long as more than $750,000 is owed
to the Senior Lender by the Company under the Bank Loan Agreement.
(c) If an Event of Default occurs and is continuing, 100% of
the Royalties due to the Company under the Distribution Agreement shall be
retained by the Holder and applied against the outstanding principal and
interest hereunder until the Event of Default is cured.
(d) If the Company has committed an "Event of Default" under
the Bank Loan Agreement, 100% of the royalties due to the Company under the
Distribution Agreement shall be retained by the Holder and applied against the
outstanding principal and interest hereunder until the Event of Default is
cured.
7. New Money. If the Company shall either receive an investment by a
third party investor or borrow money from a bank or other third party lender
(other than up to an aggregate outstanding amount of $1.5 million from the
Senior Lender pursuant to the Bank Loan Agreement), 50% of such investment or
loan must be paid by the Company to the Holder to reduce the outstanding
principal and interest hereunder.
8. Transfer; Successors and Assigns. The terms and conditions of this
Note shall inure to the benefit of and be binding upon the respective successors
and assigns of the parties. The obligations of the Company or the Holder under
this Note may not be assigned without the prior written consent of the other
party hereto which may be given or denied in their sole and absolute discretion.
3
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9. Governing Law. This Note and all acts and transactions pursuant
hereto and the rights and obligations of the parties hereto shall be governed,
construed and interpreted in accordance with the laws of the State of New York,
without giving effect to principles of conflicts of law thereof.
10. Notices. Any notice required or permitted by this Note shall be in
writing and shall be deemed effectively given: (i) upon personal delivery to the
party to be notified; (ii) when sent by confirmed facsimile or electronic
transmission if received during normal business hours of the recipient on a
business day, or if not, then on the next business day; or (iii) one (1)
business day after deposit with a nationally recognized overnight courier,
specifying next business day delivery, with written verification of receipt. All
communications shall be sent to the Company and the Holder at the address as set
forth on the signature page hereof or at such other address as the Company or
the Holder may designate by ten (10) days advance written notice to the other
parties hereto.
11. Lost Documents. Upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this Note or
any Note exchanged for it, and an indemnity agreement reasonably satisfactory to
the Company (in case of loss, theft or destruction) or surrender and
cancellation of such Note (in the case of mutilation), the Company, at its own
expense, will make and deliver in lieu of such Note a new Note of like tenor and
unpaid principal amount and dated as of the date to which interest has been paid
on the unpaid principal amount of the Note in lieu of which such new Note is
made and delivered.
12. Amendments and Waivers. Any term of this Note may be amended or
waived only with the written consent of the Company and the Holder. Any waiver
by the Company or the Holder of a breach of any provision of this Note shall not
operate as or be construed to be a waiver of any other breach of such provision
or of any breach of any other provision of this Note. The failure of the Company
or the Holder to insist upon strict adherence to any term of this Note on one or
more occasions shall not be considered a waiver or deprive that party of the
right thereafter to insist upon strict adherence to that term or any other term
of this Note.
13. Waiver. The Company waives presentment and demand for payment,
notice of dishonor, protest and notice of protest, notice of nonpayment and
notice of acceleration of intent of acceleration of this Note. The right to
plead any and all statutes of limitations as a defense to any demands hereunder
or under the Security Agreement is hereby waived to the fullest extent permitted
by law, regardless of and without any notice, diligence, act or omission as or
with respect to the collection of any amount called for hereunder.
14. Invalidity. If any provision of this Note is invalid, illegal or
unenforceable, the balance of this Note shall remain in effect, and if any
provision is inapplicable to any person or circumstance, it shall nevertheless
remain applicable to all other persons and circumstances. In such an event, the
parties will in good faith attempt to effect the business agreement represented
by such invalidated term to the fullest extent permitted by law.
15. Attorneys' Fees. If an Event of Default occurs, the Holder shall be
entitled to receive and the Company (or its assignee) agrees to pay all costs of
collection incurred by the Holder, including, without limitation, reasonable
attorneys' fees for consultation, suit and/or settlement.
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16. Remedies. The remedies of the Holder hereunder are governed by the
terms hereof and the Security Agreement.
5
20
COMPANY:
SILVON SOFTWARE, INC.
By:
------------------------------------
Name:
-------------------------------
Title:
------------------------------
Address: 000 Xxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000
AGREED TO AND ACCEPTED:
HOLDER:
JDA SOFTWARE GROUP, INC.
By:
------------------------------------
Name:
-------------------------------
Title:
-------------------------------
Address: 00000 Xxxxx 00xx Xxxxxx
Xxxxxxxxxx, Xxxxxxx 00000
SIGNATURE PAGE TO SECURED PROMISSORY NOTE
21
EXHIBIT B
---------
FORM OF SECURITY AGREEMENT
22
THIS AGREEMENT IS SUBJECT TO THE TERMS AND CONDITIONS OF THE INTERCREDITOR
AGREEMENT DATED MAY ___, 2001, BY AND BETWEEN XXXX XXXXXX BANK AND JDA SOFTWARE
GROUP, INC., AS THE SAME MAY BE AMENDED, MODIFIED OR OTHERWISE SUPPLEMENTED FROM
TIME TO TIME.
SILVON SOFTWARE, INC.
SECURITY AGREEMENT
------------------
THIS SECURITY AGREEMENT (this "Security Agreement") is made and entered
into as of May ____, 2001 (the "Effective Date") by and between Silvon Software,
Inc., an Illinois corporation ("Debtor"), and JDA Software Group, Inc., a
Delaware corporation (the "Secured Party"), which is the lender under Debtor's
Secured Promissory Note (as amended or otherwise modified from time to time, the
"Secured Note") issued pursuant to that certain Secured Loan Agreement between
Debtor and the Secured Party of even date herewith (the "Loan Agreement",
together with the Secured Note, this Security Agreement, the Escrow Agreement
(as defined in the Loan Agreement), the Intercreditor Agreement (as defined in
the Loan Agreement), the Escrow Agreement (as defined in Section 7 hereof) and
any additional agreements executed by the parties after the date hereof in order
to perfect or continue the perfection of the security interest granted
hereunder, the "Loan Documents").
1. CREATION OF SECURITY INTEREST; TERM. Debtor hereby grants to the
Secured Party a security interest in the Collateral described in Section 2 of
this Security Agreement to secure performance and payment of all obligations and
indebtedness of Debtor arising from the Secured Note, including, but not limited
to, the obligations and indebtedness of Debtor to the Secured Party described in
Section 3 of this Security Agreement (collectively, the "Indebtedness"). The
security interest created hereby shall be: (i) a first priority security
interest with respect to the Intellectual Property Collateral (defined below)
and (ii) with respect to all other Collateral (defined below), a security
interest subordinated only to the rights of the Senior Lender (as defined in the
Intercreditor Agreement) as described in the Intercreditor Agreement and those
of the other creditors with respect to certain assets as described in Exhibit F
hereto. This Security Agreement shall automatically terminate upon the full
performance, payment and satisfaction of the Indebtedness. Until termination of
this Agreement, the Secured Party's security interest in the Collateral, and all
proceeds and products thereof, shall continue in full force and effect, subject
to the terms and conditions of the Loan Documents.
2. COLLATERAL. In order to secure the payment when due of any and all
Indebtedness, Debtor hereby pledges to the Secured Party and grants to the
Secured Party a security interest in and to the following properties
(collectively, the "Collateral"):
(a) Any and all intellectual property of Debtor currently in
existence or developed in the future including, without limitation, all patents,
patent applications, copyrights, copyright applications, trademarks, trademark
applications and trade secrets, and further includes any and all tangible and
intangible products, discoveries, developments, designs, improvements,
inventions, formulas, processes, techniques, know-how, data and software source
code whether
23
or not registrable or patentable under statute, whenever made, conceived,
reduced to practice, learned or developed by or for Debtor (including, without
limitation, any and all of Grantor's Copyrights, Patents, Trademarks and Mask
Works as listed on Exhibits A, B, C, and D), and including, without limitation,
all proceeds thereof (such as by proceeds of infringement suits or license
royalties for exclusive licenses granted outside of the ordinary course of
business), the right to xxx for past, present and future infringements
throughout the world and all re-issues, divisions continuations, renewals,
extensions and continuations-in-part. (the "Intellectual Property Collateral");
(b) All "accounts," as such term is defined under the Uniform
Commercial Code of the State of New York as may, from time to time, be in effect
(the "UCC"), now owned or hereafter acquired by Borrower, including all accounts
receivable and other receivables, whether arising out of goods sold or services
rendered or from any other transaction.
(c) All of Debtor's inventory (as defined in the UCC), both
now owned and hereafter acquired, including, without limitation, all goods,
merchandise, raw materials, goods in process, finished goods and other tangible
personal property both now owned and hereafter acquired by Debtor and held for
sale or lease or furnished or to be furnished under contracts of service or used
or consumed in Debtor's business, and all proceeds thereof any products made or
processed from such inventory, as well as all additions and accessions thereto
and substitutions and replacements for any thereof;
(d) All of Debtor's other tangible personal property, both now
owned and hereafter acquired, including, without limitation, all equipment,
consumer goods, furniture, fixtures, machinery, operating equipment, assembly
and production equipment, engineering and electrical equipment, and all proceeds
of any thereof, including without limitation all tapes, cards, computer runs and
other papers and documents in the possession or under the control of the Debtor
or any computer bureau or service company from time to time acting for the
Debtor, as well as all additions and accessions thereto and substitutions and
replacements for any thereof excluding property held by Debtor pursuant to
leases currently in effect;
(e) All of Debtor's other intangible personal property, cash
on hand and cash in and deposits with banks or other financial institutions,
whether now owned or hereafter acquired, including, without limitation, all
chattel paper, documents, instruments and general intangibles, as those terms
are defined in the UCC, all contracts, shares of stock, bonds, notes, evidences
of indebtedness and other securities, bills, notes and accounts receivable,
interests in life insurance policies, claims, credits, choses in action,
licenses, permits, franchises and grants;
(f) All rights, title and interests, now owned or hereafter
acquired (other than property that may be held by Debtor pursuant to leases) to
all other property and assets, real, personal or mixed;
(g) All awards in respect of any "Taking" (as used herein, a
"Taking" shall mean a taking, conveyance or sale of all or any part of the
Collateral or any interest therein or right accruing thereto, as a result of, or
in lieu or anticipation of, the proper exercise of the right of condemnation or
eminent domain by a governmental authority having jurisdiction over real
property owned by Debtor);
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(h) All rents, income and issues arising from or in connection
with, and all proceeds of, any of the foregoing; and
(i) All other real, personal and mixed (tangible and
intangible) property of every character and wherever situated, now owned and
hereafter acquired (other than property that may be held by Debtor pursuant to
leases) by Debtor.
3. PAYMENT OBLIGATIONS OF DEBTOR.
(a) Debtor shall pay to the Secured Party any sum or sums due
or which may become due pursuant to the Secured Note in accordance with the
terms of the Loan Documents and any and all renewals, rearrangements or
extensions thereof.
(b) Debtor shall account fully and faithfully to the Secured
Party for proceeds from disposition (i) of the Intellectual Property Collateral
in any manner other than pursuant to Permitted Agreements (as defined in the
Loan Agreement) and (ii) of any other Collateral in any manner outside the
ordinary course of business and, following an Event of Default (as defined
below) hereunder which is continuing, shall, subject to the terms of the
Intercreditor Agreement, pay or turn over promptly in cash, negotiable
instruments, drafts, assigned accounts or chattel paper all the proceeds from
each sale to be applied to Debtor's Indebtedness to the Secured Party, subject,
if other than cash, to final payment or collection. Application of such proceeds
to Indebtedness of Debtor shall be in the sole discretion of the Secured Party,
provided such application of proceeds is made by the Secured Party in a
reasonable manner.
(c) Following an Event of Default hereunder or under the
Secured Note which is continuing, Debtor shall pay to the Secured Party on
demand all reasonable expenses and expenditures (including, but not limited to,
reasonable fees and expenses of legal counsel) incurred or paid by the Secured
Party in exercising or protecting its interests, rights and remedies under this
Security Agreement, plus interest thereon at the lesser of (i) 18% per annum or
(ii) the highest rate of interest then allowed by law from the date of any such
demand by the Secured Party until paid.
(d) Debtor shall pay immediately, without notice, the entire
unpaid Indebtedness of Debtor plus any accrued but unpaid interest, to the
Secured Party whether created or incurred pursuant to this Security Agreement or
any other Loan Document, upon an Event of Default.
4. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF DEBTOR.
(a) All information supplied and statements made by Debtor in
any financial, credit or accounting statement or provided to the Secured Party
prior to, contemporaneously with or subsequent to the execution of this Security
Agreement are and shall be true, correct, complete, valid and genuine in all
material respects as of the date made.
(b) The location where Debtor maintains its chief executive
office is as set forth on the execution page hereof. All of Debtor's assets in
the United States are located at its chief executive office except for the
source code to the Intellectual Property collateral, which is maintained in
accordance with the terms of Escrow Agreement (defined below).
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(c) The Collateral shall remain in Debtor's possession or
control at all times at its chief executive office at Debtor's risk of loss
until (i) sold, licensed or otherwise disposed of in the ordinary course of
business, provided that the Secured Party shall be granted a security interest
in the proceeds and other consideration received for such Collateral or (ii) as
authorized in writing by the Secured Party.
(d) Until an Event of Default which has not been cured, Debtor
may use the Collateral in any lawful manner not inconsistent with this Security
Agreement or with the terms or conditions of any policy of insurance thereon and
may also sell, license or otherwise dispose of the Collateral in the ordinary
course of business. The Secured Party's security interest shall attach to all
proceeds of sales, licenses and other dispositions of the Collateral.
(e) Debtor will promptly notify the Secured Party in writing
of any change in the location of its chief executive office as set forth in
paragraph 4(b) of this Security Agreement.
(f) Debtor shall pay prior to delinquency all material taxes,
charges, liens and assessments against the Collateral except those Debtor is
contesting in good faith and for which adequate accruals have been made, and
upon Debtor's failure to do so after ten days' prior written notice, the Secured
Party at their option may pay any of them and shall be the sole judge of the
legality or validity thereof and the amount necessary to discharge the same.
Such payment shall become part of the Indebtedness secured by this Security
Agreement and shall be paid to the Secured Party by Debtor immediately and
without demand, with interest thereon at the rate set forth in paragraph 3(c)
hereof.
(g) Debtor will have and maintain insurance at all times with
respect to all Collateral against risks of fire, theft and such other risks as
are generally insured against by companies in the Debtor's line of business,
including extended coverage. Following an Event of Default and during its
continuation, the Secured Party may act as attorney for Debtor in obtaining,
adjusting, settling and canceling such insurance and endorsing any drafts drawn
by insurers of the Collateral. The Secured Party may apply any proceeds of such
insurance which may be received by it in payment on account of the obligations
secured hereby, whether due or not.
(h) Debtor shall, at its own expense, do, make, procure,
execute and deliver all acts, things, writings and assurances as the Secured
Party may at any time reasonably request to protect, assure or enforce their
interests, rights and remedies created by, provided in or emanating from this
Security Agreement. Debtor will execute financing statements and take whatever
other actions are reasonably requested by the Secured Party to perfect and
continue the Secured Party's security interests in the Collateral; including the
filing of Forms UCC-1 in the State of Illinois and in any other State or local
jurisdiction where the Collateral may be located and filings in the United
States Patent and Trademark Office and the United States Copyright Office, as
applicable. Upon the reasonable request of the Secured Party, the Debtor will
deliver to the Secured Party any and all of the documents evidencing or
constituting the Collateral (if applicable), and the Debtor will note Secured
Party's interests upon any and all of such documents if not delivered to the
Secured Party's representative for possession by it. Debtor hereby agrees that a
carbon, photographic, photostatic or other reproduction of this Security
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26
Agreement or of a financing statement is sufficient as a financing statement
where permitted by law.
(i) Except in the ordinary course of business, Debtor shall
not sell, lend, license, rent, lease or otherwise dispose of the Collateral or
any interest therein except as authorized in this Security Agreement, in any
other Loan Document or in writing by the Secured Party, and Debtor shall keep
the Collateral, including the proceeds thereof, free from unpaid charges,
including taxes, and from liens, encumbrances and security interests other than
that of the Secured Party and those in existence as of the date hereof as
described in Section 4(k) (except such encumbrances and liens which arise in the
ordinary course of business and both (i) do not materially impair the Debtor's
ownership or use of the Collateral and (ii) are junior to and do not adversely
affect the security interest granted hereunder to the Secured Party or taxes or
other charges not yet due).
(j) Debtor shall keep accurate and complete records of the
Collateral and its proceeds.
(k) Debtor is the owner of the Collateral other than the
Intellectual Property Collateral (the "Other Collateral") free of all liens,
claims and encumbrances, except as created by this Security Agreement, the
security interest of the Senior Lender in the Other Collateral under the Loan
and Security Agreement dated as of June 1, 2000 between Debtor and Xxxx Xxxxxx
Bank (the "Bank Loan Agreement") and the other security interests set forth on
Exhibit F hereto (except such encumbrances and liens which arise in the ordinary
course of business and both (i) do not materially impair the Debtor's ownership
or use of the Other Collateral and (ii) are junior to and do not adversely
affect the security interest granted hereunder to the Secured Party), and except
as noted above in this subsection, no financing statement covering the Other
Collateral or its proceeds is on file in any public office.
(l) Debtor is the owner of the Intellectual Property
Collateral free of all liens, claims and encumbrances, except as created by this
Security Agreement and the security interest of the Senior Lender under the Bank
Loan Agreement, which has been subordinated to the interest of the Secured Party
under the terms of the Intercreditor Agreement (except such encumbrances and
liens which arise in the ordinary course of business and both (i) do not
materially impair the Debtor's ownership or use of the Intellectual Property
Collateral and (ii) are junior to and do not adversely affect the security
interest granted hereunder to the Secured Party), and other than the security
interest under the Bank Loan Agreement, no financing statement covering the
Intellectual Property Collateral or its proceeds is on file in any public
office.
(m) As to that portion of the Collateral which is accounts,
Debtor represents, warrants and agrees with respect to each such account that:
(i) The account arose from the performance of
services by Debtor which have been performed or from the lease or the absolute
sale of goods by Debtor in which Debtor had the sole and complete ownership, and
the goods have been shipped or delivered to the account debtor.
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(ii) The account is not subject to any prior or
subsequent assignment, claim, lien or security interest other than that of the
Secured Party and of the Senior Lender under the Bank Loan Agreement.
(iii) The account is not subject to set-off,
counterclaim, defense, allowance or adjustment other than discounts for prompt
payment shown on the invoice, or to dispute, objection or complaint by the
account debtor concerning his liability on the account, and the goods, the sale
or lease of which gave rise to the account, have not been returned, rejected,
lost or damaged.
(iv) The account arose in the ordinary course of
Debtor's business, and no notice of bankruptcy, insolvency or financial
embarrassment of the account debtor has been received by Debtor.
5. EVENTS OF DEFAULT. Debtor shall be in default under this Security
Agreement upon the happening of any condition or event set forth below (each, an
"Event of Default"):
(a) The Debtor shall file a certificate of dissolution under
applicable state law or shall be liquidated, dissolved or wound-up or shall
commence or have commenced against it any action or proceeding for dissolution,
winding-up or liquidation, or shall take any corporate action in furtherance
thereof.
(b) The filing or commencement of an involuntary case or other
legal proceeding against the Debtor seeking liquidation, reorganization or other
relief with respect to it or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it or any
substantial part of its property which has not been dismissed within 30 days of
the filing thereof; or an order for relief shall be entered against the Company
under the federal bankruptcy laws as now or hereafter in effect.
(c) The filing or commencement by the Debtor of a voluntary
case or other proceeding seeking liquidation, reorganization or other relief
with respect to it or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it or any
substantial part of its property; or the Debtor shall consent to any such relief
or to the appointment of or taking possession by any such official in an
involuntary case or other proceeding commenced against it, or shall make a
general assignment for the benefit of creditors.
(d) The Secured Party's security interest in the Intellectual
Property Collateral (as defined in the Security Agreement) shall for any reason
fail or cease to create a valid and perfected first priority lien on the
Intellectual Property Collateral (and such is not cured within 10 days of the
date on which the Debtor becomes aware of such failure).
(e) The Debtor's failure to timely make any payment (whether
principal, interest or otherwise) under the Note when due, whether upon demand
or otherwise (and such failure is not cured within 10 days).
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(f) Any representation, warranty or other statement made by
the Debtor in any Loan Document, or any certificate or other instrument
furnished by the Debtor to the Secured Party in connection with the transactions
contemplated thereby and taken as a whole, is false or misleading as of the date
made and such misrepresentation or breach of warranty, either individually or
collectively, has materially impaired or is reasonably likely to materially
impair the ability of the Debtor to perform its obligations under Loan Document
or any of the transactions contemplated thereby; provided, however, that if such
false or misleading representations, warranties or other statements were not
made intentionally or due to Debtor's gross negligence, the Debtor shall have
180 days from the date on which the Debtor becomes aware of it to cure before it
shall be deemed an Event of Default hereunder.
(g) The Debtor's failure to perform any of its obligations
under Section 4 of the Secured Loan Agreement within 10 days of the date
required for the performance of that obligation under Section 4.
(h) The Debtor's failure to perform or observe, any other
term, covenant or agreement contained in any Loan Document or other certificate
or instrument delivered in connection therewith to be performed or observed by
the Debtor that has materially impaired or is reasonably likely to materially
impair the ability of the Debtor to perform its obligations under any Loan
Document, or any of the transactions contemplated thereby (and such failure is
not cured within 180 days from the date on which the Debtor becomes aware of
such failure).
(i) The loss, theft, substantial damage, destruction, sale
(other than pursuant to Permitted Agreements (as defined in the Loan Agreement))
of any material portion of the Intellectual Property Collateral or the making of
any levy, seizure or attachment thereof or thereon.
The Debtor shall promptly notify the Secured Party in writing of any
Event of Default, any event that will be an Event of Default if not cured within
the applicable time periods described above, or the occurrence of any event that
will or is reasonably likely to result in an Event of Default. Failure to so
notify the Secured Party within 10 days shall be an Event of Default hereunder.
6. SECURED PARTY' RIGHTS AND REMEDIES.
(a) Rights in the Event of Default. In addition to those
rights, if any, specified in the other Loan Documents, but subject to the terms
and conditions of the Loan Documents, upon the occurrence of an Event of Default
and during its continuation, and at any time thereafter, the Secured Party may
do each of the following, subject to the Intercreditor Agreement and the Escrow
Agreement:
(i) Enter Debtor's premises to inspect the Collateral
and Debtor's books and records pertaining to the Collateral,
and Debtor shall assist the Secured Party in making any such
inspection.
(ii) Execute, sign, endorse, transfer or deliver in
the name of Debtor, notes, checks, drafts or other instruments
for the payment of money and receipts, certificates of origin,
applications for certificates of
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title or any other documents, necessary to evidence, perfect
or realize upon the security interest and obligations created
by this Security Agreement.
(iii) Agree to discharge taxes, liens or security
interests or other encumbrances at any time levied or placed
on the Collateral, pay for the insurance on the Collateral and
pay for the maintenance and preservation of the Collateral.
Debtor agrees to reimburse the Secured Party on demand for any
payment made, or expense incurred by the Secured Party
pursuant to the foregoing authorization, plus interest thereon
at the rate set forth in paragraph 3(c) hereof, and will
indemnify and hold the Secured Party harmless from and against
liability in connection therewith.
(iv) Subject to the terms and conditions of the Loan
Documents, declare all obligations secured hereby immediately
due and payable and shall have the rights and remedies of a
"secured party" under the UCC in effect in the local
jurisdiction where the Collateral is located, including,
without limitation, the right to sell, lease or otherwise
dispose of any or all of the Collateral and the right to take
possession of the Collateral, and for that purpose the Secured
Party may enter any premises on which the Collateral or any
part thereof may be situated and remove the same therefrom, so
long as the same may be accomplished without a breach of the
peace. The Secured Party may require Debtor to assemble the
Collateral and make it available to the Secured Party at a
place to be designated by the Secured Party and thereafter
hold the Collateral absolutely free from any claim or right of
set off whatsoever, including any right of redemption
(statutory or otherwise), and such demand, notice and right or
equity being hereby expressly waived and released. Unless the
Collateral is perishable or threatens to decline speedily in
value or is of a type customarily sold on a recognized market,
the Secured Party will send Debtor reasonable notice of the
time and place of any public sale thereof or of the time after
which any private sale or other disposition thereof is to be
made. The requirement of sending reasonable notice shall be
met if such notice is given to Debtor at least ten days before
the time of the sale or disposition. Expenses of retaking,
holding, preparing for sale, selling or the like shall include
the Secured Party's reasonable fees and expenses actually
incurred by or on behalf of the Secured Party (including, but
not limited to, reasonable fees and expenses of legal
counsel), and Debtor agrees to pay such reasonable fees and
expenses, plus interest thereon at the rate set forth in
paragraph 3(c) hereof.
(v) Notify the account of debtors or obligors of any
accounts, chattel paper, negotiable instruments or other
evidences of indebtedness remitted by Debtor to the Secured
Party as proceeds to pay the Secured Party directly.
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(vi) Demand, xxx for, collect or make any compromise
or settlement with reference to the Collateral as the Secured
Party, in their sole discretion, choose.
(vii) Remedy any default and may waive any default
without waiving or being deemed to have waived any other prior
or subsequent default.
(viii) To the extent not wholly inconsistent with any
remedy expressly provided for under this Agreement, the
Intercreditor Agreement or the Escrow Agreement, the Secured
Party may exercise any other rights or remedies it may have at
law or under the Loan Documents or Escrow Agreement (defined
below).
(b) Deficiency. If the proceeds of sale, collection or other
realization of or upon the Collateral pursuant to this Section 6 are
insufficient to cover the costs and expenses of such realization and the payment
in full of the Indebtedness, Debtor shall remain liable for any deficiency.
7. Escrow of Source Code. Concurrent with the execution of this
Agreement, as further security for the Indebtedness, Debtor, Secured Party and
DSI Technology Escrow Services, Inc. ("DSI") have entered into a Preferred
Escrow Agreement, in the form attached hereto as Exhibit E (the "Escrow
Agreement"). Debtor shall be responsible for all amounts payable to DSI pursuant
to Section 6 of the Escrow Agreement. If the Secured Party makes any payment to
DSI required to be made by Debtor pursuant to such Xxxxxxx 0, Xxxxxx shall
promptly reimburse the Secured Party for all of such payment.
8. MISCELLANEOUS.
(a) Notices. Any notice required or permitted by this Security
Agreement shall be in writing and shall be deemed effectively given: (i) upon
personal delivery to the party to be notified; (ii) when sent by confirmed
facsimile or electronic transmission if received during normal business hours of
the recipient on a business day, or if not, then on the next business day; or
(iii) one (1) business day after deposit with a nationally recognized overnight
courier, specifying next business day delivery, with written verification of
receipt. All communications shall be sent to the Debtor and the Secured Party at
the addresses set forth on the signature pages hereof or at such other address
as the Debtor or the Secured Party may designate by ten (10) days' advance
written notice to the other parties hereto.
(b) Construction. "Secured Party" and "Debtor", as used in
this instrument, include the administrators, successors, representatives,
receivers, trustees and assigns of such party.
(c) Headings. The headings appearing in this instrument have
been inserted for convenience of reference only and shall be given no
substantive meaning or significance whatever in construing the terms and
provisions of this instrument.
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(d) Governing Law. The law governing this secured transaction
shall be that of the State of New York in force at the date of this instrument.
(e) Further Assurances. All property acquired by Debtor after
the date hereof, which by the terms hereof is required or intended to be
subjected to the lien of this Security Agreement, shall, immediately upon the
acquisition thereof and without further mortgage, conveyance or assignment,
become subject to the lien of this Security Agreement as fully as though now
owned by Debtor and specifically described herein. Nevertheless, Debtor will do
all such further acts and execute, acknowledge and deliver all such further
conveyances, mortgages, financing statements and assurances as the Secured Party
shall reasonably require for accomplishing the purposes of this Security
Agreement.
(f) Rights Cumulative; No Waiver. The rights and remedies of
the Secured Party hereunder are cumulative, and the exercise (or waiver) of any
one or more of the remedies provided for herein shall not be construed as a
waiver of any of the other rights and remedies of the Secured Party. No delay on
the part of the holder of this Security Agreement in the exercise of any power
or right under this Security Agreement or under any other instrument executed
pursuant hereto shall operate as a waiver thereof, nor shall a single or partial
exercise of any power or right preclude other or further exercise thereof or the
exercise of any other power or right.
(g) Successors and Assigns. The rights and obligations of the
Secured Party and the Debtor hereunder may not be transferred or assigned by any
party without the prior written consent of the other parties hereto, except the
Secured Party may transfer or assign its rights and obligations under this
Security Agreement to any of its subsidiaries or affiliates without such consent
and in such case the assignee shall be entitled to all of the rights, privileges
and remedies granted in this Security Agreement to the Secured Party provided
that the transfer does not violate applicable securities laws and is in
connection with a concurrent assignment or transfer of Secured Note to such
assignee or transferee; and in such event Debtor will assert no claims or
defenses, other than a defense that it has performed its obligations under the
Loan Documents, it may have against the Secured Party against the assignee,
except those granted in this Security Agreement. Any assignee of Debtor or the
Secured Party shall agree in writing prior to the effectiveness of such
assignment to be bound by the provisions hereof. All of the stipulations,
promises and agreements in this Security Agreement made by Debtor shall bind the
successors and permitted assigns of Debtor, whether so expressed or not, and
inure to the benefit of the successors and permitted assigns of Debtor and the
Secured Party.
(h) Severability. In the event any one or more of the
provisions contained in this Security Agreement shall for any reason be held to
be invalid, illegal or unenforceable in any respect, such invalidity, illegality
or unenforceability shall not affect any other provision hereof, and this
Security Agreement shall be construed as if such invalid, illegal or
unenforceable provision had never been contained herein.
(i) Amendment and Waiver. Any term of this Security Agreement
may be amended or waived only with the written consent of the Debtor and the
Secured Party. Any waiver by the Debtor or the Secured Party of a breach of any
provision of this Security Agreement shall not operate as or be construed to be
a waiver of any other breach of such
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provision or of any breach of any other provision of this Security Agreement.
The failure of the Debtor or the Secured Party to insist upon strict adherence
to any term of this Security Agreement on one or more occasions shall not be
considered a waiver or deprive that party of the right thereafter to insist upon
strict adherence to that term or any other term of this Security Agreement.
(j) Entire Agreement. The Loan Documents constitute the full
understanding between the parties hereto with respect to the subject matter
hereof, and no statements, written or oral, made prior to or at the signing
hereof shall vary or modify the terms hereof.
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IN WITNESS WHEREOF, the undersigned parties have executed this
Security Agreement on and as of the Effective Date.
DEBTOR:
-------
SILVON SOFTWARE, INC.
By:
-------------------------------------
Name:
Title:
Address: 000 Xxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000
SECURED PARTY:
--------------
JDA SOFTWARE GROUP, INC.
By:
-------------------------------------
Name:
Title:
Address: 00000 Xxxxx 00xx Xxxxxx
Xxxxxxxxxx, Xxxxxxx 00000
SIGNATURE PAGE TO SECURITY AGREEMENT
34
EXHIBIT C
SCHEDULE OF EXCEPTIONS
35
EXHIBIT D
---------
INTERCREDITOR AGREEMENT
36
EXHIBIT E
DISTRIBUTION AGREEMENT
37
EXHIBIT F
ESCROW AGREEMENT
38
EXHIBIT G
RECEIPT AND RELEASE
39
EXHIBIT H
RECEIPT
