EXHIBIT 4.10
SECURITY AGREEMENT
This Security Agreement (the "Agreement") is dated as of January
15, 2004, between Digital Fusion, Inc., a Delaware corporation (the
"Debtor"), and Xxx X. Xxxxxxx, III (the "Secured Party").
Background
The Secured Party has agreed to make a loan to the Debtor as
evidenced by a Promissory Note in the principal amount of $136,580.32
dated January 15, 2004 (the "Note"). The Note is subject to a
Subordination Agreement among the Secured Party, the Debtor and Laurus
Master Fund, Ltd. dated January 15, 2004 (the "Subordination
Agreement").
Subject to the Subordination Agreement, the Debtor has agreed to
grant the Secured Party a security interest in property currently
owned or later acquired by the Debtor to secure the prompt payment and
performance of all liabilities, obligations, and indebtedness of the
Debtor under the Note.
Terms
In consideration of the foregoing, the Secured Party and the
Debtor agree as follows:
1. Grant of Security Interest. To secure the due and punctual
payment of the obligations under the Note and all extensions or
renewals of the Note, including without limitation all costs and
expenses (including reasonable attorneys' fees) incurred in collecting
amounts due, the Debtor grants to the Secured Party a security
interest in all tangible and intangible personal property of the
Debtor, whether now owned or hereafter acquired by the Debtor, or in
which the Debtor may now have or hereafter acquire an interest,
including without limitation, all accounts, inventory, equipment,
goods, documents, instruments (including without limitation,
promissory notes), contract rights, general intangibles (including
without limitation, payment intangibles), chattel paper, supporting
obligations, investment property, letter-of-credit rights, trademarks
and tradestyles, and in all proceeds and products of such property in
any form (collectively, the "Collateral").
2. Representations and Warranties. The Debtor represents and
warrants as follows:
a. The execution, delivery and performance of this Agreement are
within the Debtor's corporate powers, have been duly authorized, are
not in contravention of law or the terms of the Debtor's charter or
bylaws, or any indenture, agreement, or undertaking to which the
Debtor is a party or by which it is bound.
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b. On demand, the Debtor will execute and deliver to the Secured
Party such financing statements and other papers, and do all acts, as
in the reasonable judgment of the Secured Party may be necessary or
appropriate to establish and maintain a valid and prior security
interest in the Collateral.
c. The Debtor will pay when due all taxes and assessments and will
discharge any liens on or affecting the Collateral or its use. If the
Debtor fails so to do, the Secured Party may at its option pay or
discharge the same, unless the Debtor is contesting such taxes,
assessments, or liens, and the Debtor will reimburse the Secured Party
on demand for any such payment, and if payment is delayed then with
interest, which shall begin to accrue beginning five business days
after the date of demand at the highest rate allowable by law.
d. The Debtor has obtained the written consent of Laurus Master
Fund, Ltd. to the transactions contemplated by the Note, the
Subordination Agreement and this Agreement.
3. Default. The Debtor will be in default on the occurrence of any
of the following events or conditions (hereafter called an "Event of
Default"):
a. Any default by the Debtor under the Note, or any failure to
perform any of the agreements of the Debtor contained in this
Agreement;
b. The filing of any petition under the Bankruptcy Code, or any
similar federal or state statute, by or against the Debtor;
c. The filing of an application for the appointment of a receiver
for, the making of a general assignment for the benefit of creditors
by, or the insolvency of the Debtor;
d. The issuing of any attachment or garnishment or the filing of
any lien against any property of the Debtor; or
e. The taking of possession of any substantial part of the
property of the Debtor at the instance of any governmental authority.
4. Remedies on Default. On occurrence of an Event of Default, the
Secured Party may, at any time after the Event of Default, declare all
or any of the obligations under the Note immediately due and payable.
The Secured Party will have, in addition to all its other rights and
remedies, the rights and remedies of a secured party under the Uniform
Commercial Code. In exercising its remedies, the Secured Party shall
comply with all applicable requirements of the Uniform Commercial
Code, including the exercise of commercial reasonableness in
connection with any disposition of the Collateral. The remedies of the
Secured Party under this Agreement are cumulative, and the exercise of
any one or more of them shall not constitute a general election of
remedies. Nothing in this Agreement shall limit the Secured Party's
right to pursue a judgment on any deficiency that may exist after the
exercise of any remedy granted in this Agreement.
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5. Waiver. No act, delay, omission, or course of dealing between
the Secured Party and the Debtor shall be a waiver of any of the
Secured Party's rights or remedies under this Agreement, and no
waiver, change, modification, or discharge in whole or in part of this
Agreement or of any obligation will be effective unless in a writing
signed by the Secured Party. A waiver by the Secured Party of any
rights or remedies under the terms of this Agreement or with respect
to any obligation on any occasion will not be a bar to the exercise of
any right or remedy on any subsequent occasion. All rights and
remedies of the Secured Party hereunder are cumulative and may be
exercised singly or concurrently, and the exercise of any one or more
of them will not be a waiver of any other.
6. Power of Attorney. The Debtor appoints the Secured Party as its
attorney, with power to execute such documents on the Debtor's behalf
and to supply any omitted information and correct patent errors in any
documents executed by the Debtor or on the Debtor's behalf; to file
financing statements against the Debtor covering the Collateral; to
sign the Debtor's name on public records; and to do all other things
the Secured Party deems necessary, appropriate or convenient, in his
sole discretion, to carry out this Agreement. The Debtor ratifies and
approves all acts of the attorney and neither the Secured Party nor
the attorney will be liable for any acts of commission or omission,
nor for any error of judgment or mistake of fact or law. This power
being coupled with an interest, is irrevocable so long as any amount
under the Note remains unpaid. Notwithstanding the foregoing, the
Secured Party will not exercise any rights contemplated by this
paragraph unless an Event of Default has occurred and the Debtor
otherwise fails (following the request of the Secured Party) to
execute any such documents, supply any such information, correct any
such errors, sign the Debtor's name on any such financing statements
or do such other things as the Secured Party may deem necessary to
carry out this Agreement.
7. Subordination Agreement. This Agreement is subject to the
Subordination Agreement and the terms of the Subordination Agreement
are incorporated by reference.
8. Notice. All notices, requests, demands, claims and other
communications under this Agreement shall be in writing, and sent (a)
by registered or certified mail, return receipt requested, postage
prepaid, or (b) by nationally recognized overnight courier, to the
intended recipient as set forth below:
If to the Secured Party: Copy to:
Xx. Xxx X. Xxxxxxx, III Digital Fusion, Inc.
000 Xxxxxxxxx Xx., XX 0000-X Xxxxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000 Xxxxxxxxxx, XX 00000
Attn: Xxx Xxxxxxx
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If to the Debtor: Copy to:
Digital Fusion, Inc. Holland & Knight LLP
0000-X Xxxxxxxxx Xxxxx X.X. Xxx 0000
Xxxxxxxxxx, Xxxxxxx 00000 Xxxxx, Xxxxxxx 00000-0000
Phone: (000) 000-0000 Phone: (000) 000-0000
Attn: Elisa Means Attn: Xxxxxxx X. Xxxxxx, Esq.
9. Termination. This Agreement and the security interest of the
Secured Party under it shall terminate when the Note is paid in full.
10. Binding Effect; Assignment. This Agreement shall be binding
on, and shall inure to the benefit of the parties and their heirs,
successors, assigns, and legal or personal representatives but shall
not be assigned by either party without the prior written consent of
the other party.
11. Modification. This Agreement cannot be modified or amended
except by a written agreement signed by or on behalf of each of the
parties to this Agreement.
12. Counterparts. This Agreement may be executed in two or more
counterparts, each of which will be deemed an original, but all of
which together shall constitute one and the same instrument.
13. Headings. The titles and headings preceding the text of the
paragraphs and other parts of this Agreement have been inserted solely
for convenience of reference and do not constitute a part of this
Agreement or affect its meaning, interpretation, or effect.
14. Choice of Law. This Agreement shall be governed by, and
construed in accordance with, the laws of Alabama, without respect to
principles of conflicts of laws.
[signatures appear on next page]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first written above.
DIGITAL FUSION, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
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Name: Xxxxxxx X. Xxxxxxxx
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Title: Vice President
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/s/ Xxx X. Xxxxxxx, III
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Xxx X. Xxxxxxx, III
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