EXHIBIT 10.23
SECURITY AGREEMENT
(ALL ASSETS)
Bottomline Technologies, Inc., a New Hampshire corporation with a principal
place of business at One Court Street, Exeter, New Hampshire, on behalf of
itself and any successors or assigns (the "BORROWER"), and Shawmut Bank, N.A., a
national banking association organized and existing under the laws of the United
States of America, with a principal place of business at Xxx Xxxxxxx Xxxxxx,
Xxxxxx, Xxxxxxxxxxxxx, 00000-0000, its successors and assigns (the "BANK"), are
the parties to this Agreement. In consideration of the Bank's extending or
having extended loans and/or other financial considerations to the Borrower on
this date or on one or more occasions, the Borrower agrees with the Bank as
follows:
SECTION 1. THE SECURITY INTEREST: As security for the payment and performance
of all Liabilities (as defined below) now existing or hereafter arising of the
Borrower to the Bank, whether arising by future advances or otherwise, the
Borrower hereby grants a security interest to the Bank in the following
property, wherever located, and in all proceeds and products of such property:
1.01 ALL INVENTORY of the Borrower now existing or hereafter arising;
meaning all goods, merchandise, raw materials, supplies, goods in
process, finished goods, and other tangible personal property held by
the Borrower for processing, sale, or other business purpose, or to
be used or consumed in the Borrower's business.
1.02 ALL ACCOUNTS AND ACCOUNTS RECEIVABLE of the Borrower now existing or
hereafter arising; meaning all accounts, accounts receivable, papers,
notes, drafts, acceptances, and all other debts, obligations, and
liabilities in whatever form owing to the Borrower from any person,
firm, corporation, or any other legal entity ("ACCOUNT DEBTORS").
1.03 ALL DOCUMENTS of the Borrower now existing or hereafter arising;
meaning all documents of title, including bills of lading, dock
warrants, dock receipts, warehouse receipts, and orders for the
delivery of goods, and also any other document which in the regular
course of business or financing is treated as adequately evidencing
that the person in the possession of it is entitled to receive, hold,
and dispose of the document and goods it covers.
1.04 ALL INSTRUMENTS of the Borrower now existing or hereafter arising;
meaning all negotiable instruments, securities, and any other
writings which evidence a right to payment of money and are not
themselves security agreements or leases and are of a type which are
in the ordinary course of business transferred by delivery with any
necessary endorsement or assignment.
1.05 ALL CHATTEL PAPER of the Borrower now existing or hereafter arising;
meaning a writing or writings which evidence both a monetary
obligation and a security interest in or a lease of specific goods.
1.06 ALL GENERAL INTANGIBLES, including, but not limited to, choses in
action of the Borrower now existing or hereafter arising, meaning any
personal property other than goods, accounts, chattel papers,
documents, and instruments, including, but not limited to, general
intangibles of the following description or type: goodwill, literary
rights, contract rights and rights to performance, copyrights, trade-
marks, patents, computer programs, access codes, source codes, trade
secrets, customer lists and all tax refunds.
1.07 ALL OTHER GOODS of the Borrower, wherever located, now existing or
hereafter acquired; meaning all motor vehicles, equipment, machinery,
and other tangible personal property, whether fixtures or not, any
and all records relating to any of the Collateral (as defined below)
and all attachments and accessories thereto and substitutes therefor.
It is the Borrower's express intention that the continuing grant of this
security interest remain as security for payment and performance of all of its
Liabilities, whether now existing, or which may hereinafter be incurred by
future advances, or otherwise, and whether or not such Liabilities are related
to any transactions described in this Agreement, by class or kind, or whether or
not contemplated by the parties at the time of the granting of this security
interest. The notice of the continuing grant of this security interest
therefore shall not be required to be stated on the face of any document
representing any of the Borrower's Liabilities nor otherwise identify it as
being secured hereby. If any Liability of the Borrower shall be or become
excused, the Borrower hereby expressly hypothecates his, her, its, or their
ownership interest in the Collateral to the extent required to satisfy such
Liabilities, without restriction or limitation. Any such Liabilities will
include all advances by the Bank whether or not the advances are made pursuant
to commitments.
SECTION 2. DEFINITIONS: All types of Collateral mentioned in Section 1 shall
have the meanings given to them under Chapter 106 of the Massachusetts General
Laws unless specifically defined otherwise in that section or elsewhere in this
Agreement.
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In addition, as used herein, the following terms shall have the following
respective meanings:
2.01 LIABILITIES means all liabilities of the Borrower to the Bank of
every kind and description, including those arising under a loan
agreement with the Bank of even date (the "LOAN AGREEMENT"), direct
or indirect, absolute or contingent, due or to become due, now
existing or hereafter arising, regardless of how they arise or by
what agreement or instrument they may be evidenced, including those
arising under this Agreement, or whether evidenced by any agreement
or instrument, including obligations to perform acts and refrain from
taking action as well as obligations to pay money.
2.02 COLLATERAL means any and all property of the Borrower in which the
Bank now has, by this Agreement, or hereafter acquires a security
interest and specifically includes without limitation all inventory,
accounts, documents, instruments, chattel paper, general intangibles
and other goods, as those terms are defined in Section 1 hereof.
SECTION 3. BORROWER'S REPRESENTATIONS, WARRANTIES AND COVENANTS: To induce the
Bank to enter into this Agreement the Borrower represents, warrants, agrees, and
covenants that:
3.01 BORROWER OWNS ASSETS: The Borrower owns all its assets, including the
Collateral, as represented on any papers furnished to the Bank and
has and will have the exclusive right and authority to grant security
interests therein.
3.02 ASSETS FREE OF ENCUMBRANCES: All the Borrower's assets, including the
Collateral, are and will be kept in good condition and clear of all
security interests, mortgages, liens, and encumbrances, except those
granted or allowed under this Agreement and those set forth on the
attached SCHEDULE A, and the Borrower has marketable title to all
Collateral and shall defend the same against the claims and demands
of all persons. The Bank has the right but not the duty to discharge
any liability giving rise to a lien on Collateral, including any
liens of any taxing authority, and the Borrower shall repay the Bank
immediately for all amounts paid by the Bank to discharge such
liabilities.
3.03 LOCATION OF COLLATERAL: Tangible Collateral, including, but not
limited to, equipment, inventory, and fixtures, and if the Bank
permits the Borrower to retain possession thereof, instruments,
documents, and chattel paper, will be kept in the possession of the
Borrower at its place of business named above, or those set forth on
the attached SCHEDULE A.
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The location or locations of such Collateral shall not be changed
without the prior written notice to the Bank. Bank recognizes that
Borrower intends to change the location of its chief executive office
within New Hampshire and Bank assents to that relocation provided
Borrower promptly notifies Bank of such relocation. Immediately upon
the Bank's request, whether or not the Borrower is in default with
respect to any Liability to the Bank, the Borrower will turn over to
the Bank all instruments, documents and chattel paper which are
Collateral under this Agreement.
3.04 RECORDS AND INFORMATION WITH RESPECT TO BORROWER AND COLLATERAL:
(a) The Borrower will furnish all information, financial or
otherwise, that a duly authorized lending officer of the Bank
deems reasonably necessary to properly inform the Bank with
respect to Collateral or the condition of the Borrower. The
Borrower will inform the Bank immediately in the event of any
material change in the Borrower's financial condition or in
the event of any breach of this Agreement or in the event
that any of the representations and warranties herein
contained do not continue to be true and correct as though
continuously made to the Bank.
(b) The Borrower will execute upon the request of the Bank such
financing statements and like papers as the Bank deems
reasonably necessary to properly protect Collateral and its
security interest therein and will pay the cost of filing
them in such offices as the Bank requests.
3.05 FIXTURES: If any machinery, equipment, or other property serving as
Collateral under this Agreement is or will be attached to any real
estate, the Borrower will, upon Bank's request, furnish the Bank with
a description of such real estate with a disclaimer, signed by all
persons having an interest in said real estate, of any interest in
the Collateral which has or may have priority over the Bank's
interest, and will notify the Bank in writing of any intended sale,
mortgage, or conveyance of such real estate, and will give written
notice of the terms and conditions of this Agreement to any
prospective purchaser, mortgagee, or grantee of such real estate.
3.06 LIABILITIES OWING TO BORROWER: Any liabilities in whatever form owing
to the Borrower from any person, firm, or other legal entity serving
as Collateral are and will be good and valid indebtedness not subject
to any defenses, set-offs, claims, counter-claims, or agreements
under which any deduction or discount may be made thereon, except as
specified to the
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Bank on a statement or invoice made available to the Bank on or prior
to the date hereof or from time to time hereafter.
3.07 RETURNED MERCHANDISE: The Bank may in its unfettered discretion
charge to the Borrower the amount represented to be owing on any
liability, in whatever form owing to the Borrower, from whatever
source, if said liability serves as Collateral under this Agreement,
and if any merchandise giving rise to any such liability is returned,
and until such debit is made, Borrower shall hold any such returned
merchandise segregated in trust for the Bank subject to its exclusive
disposition.
3.08 TAXES: The Borrower will pay any sales or other taxes which may
become due and payable with respect to a sale or other transaction
giving rise to any Collateral.
3.09 CHATTEL PAPER: The Borrower agrees to label all chattel paper serving
as Collateral under this Agreement with the words, "Subject to the
security interest of (the Bank)", naming the Bank.
3.10 INSURANCE:
(a) The Borrower agrees at its or his own expense to keep all
Collateral insured in accordance with the requirements of the
Loan Agreement.
(b) The Bank shall have no risk, liability, or responsibility in
connection with payment or non-payment of any loss, the sole
obligation of the Bank being to credit the Borrower's loan
account with the net proceeds of any insurance payments
received on account of any loss.
3.11 SALE OF COLLATERAL: Unless otherwise specifically provided by this
Agreement or the Loan Agreement, the Borrower will not sell any
Collateral without the prior written consent of the Bank. So long as
the Borrower is not in default hereunder the Borrower shall have the
right to sell inventory, which may be Collateral, in the ordinary
course of its or his business. A sale in the ordinary course of
business shall not include a transfer in total or partial
satisfaction of a debt, other than a debt which has arisen solely as
a result of prepayment or deposit by customers of the Borrower for
items of inventory subsequently to be purchased or delivered.
Borrower shall also be entitled to sell (or trade in) used or
obsolete equipment so long as Borrower receives therefor a sum (or
credit) substantially equal to such equipment's fair value.
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3.12 BANK'S RIGHT TO POSSESSION:
(a) Unless otherwise provided by law, at any time after the
occurrence of an Event of Default hereunder, the Bank shall
have the right to the immediate possession of all Collateral
and its products and proceeds, and in its sole discretion may
operate and use said Collateral, complete work in process, and
sell Collateral without being liable to the Borrower on
account of any losses, damage, or depreciation that may occur
as a result thereof so long as the Bank shall act in good
faith.
(b) Unless otherwise provided by law, at any time after the
occurrence of an Event of Default hereunder, the Bank may, at
the expense of the Borrower, maintain possession of the
Borrower's premises by the use of a custodian or custodians,
or in such other manner as the Bank may determine.
(c) Unless otherwise provided by law, at any time after the
occurrence of an Event of Default hereunder, the Bank may at
all times, at the expense of the Borrower, enter upon any
premises on which Collateral may be situated and remove any
such Collateral to such other places as the Bank determines.
(d) Unless otherwise provided by law, the Bank may at any time,
after the occurrence of an Event of Default hereunder,
transfer any Collateral into its own name or that of its
nominee and may at any time after the occurrence of an Event
of Default hereunder receive the income thereon and hold the
same as security for Liabilities or apply it to principal or
interest due on the Liabilities.
SECTION 4. COLLECTION:
4.01 (a) The Bank may at any time after the occurrence of an Event of
Default hereunder require the Borrower to establish a "lock
box" arrangement with the Bank for the receipt of Account
Debtor remittances.
(b) The Bank may at any time after the occurrence of an Event of
Default hereunder, notify Account Debtors, on any Collateral,
or require the Borrower to notify such Account Debtors, that
they shall make all payments on their account or accounts with
the Borrower directly to the Bank; or require the Borrower to
hold all proceeds received from collection in trust for the
Bank without commingling the same with other funds of the
Borrower, and to turn the same
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over to the Bank immediately upon receipt the identical form
received, at which time the Bank may at its option either
apply such proceeds to the Liabilities of the Borrower, in
accordance with Section 4.03, or release such proceeds to the
Borrower for use in its business.
(c) The Bank has the right at any time after the occurrence of an
Event of Default hereunder, directly or through its agent, to
collect proceeds directly from Account Debtors, on any
Collateral and for that purpose to do all acts and things
necessary or incident thereto, including the right to xxx on
such accounts, and to sell, transfer, set over, compromise,
discharge, or extend the whole or any part of the accounts.
(d) Borrower does hereby make, constitute and appoint any officer
or agent of Bank as Borrower's true and lawful attorney-in-
fact, with power to endorse the name of Borrower or any of
Borrower's officers or agents upon any notices, checks,
drafts, money orders, or other instruments of payment
(including payments payable under any policy of insurance on
the Collateral) or Collateral that may come into possession of
the Bank in full or part payment of any amounts owing to Bank;
to sign and endorse the name of Borrower or any of Borrower's
officers or agents upon any warehouse receipts, drafts against
debtors, assignments, verifications and notices in connection
with accounts, and any instruments or documents relating
thereto, or to Borrower's rights therein; to give written
notice to such office or officials of the United States Post
Office to effect such change or changes of address so that all
mail addressed to the Borrower may be delivered directly to
the Bank; granting unto Borrower's said attorney full power to
do any and all things necessary to be done in and about the
premises as fully and effectually as Borrower might or could
do, and hereby ratifying all that said attorney shall lawfully
do or cause to be done by virtue hereof. Neither the Bank nor
the attorney shall be liable for any acts or omissions nor for
any errors of judgment or mistake, except for their gross
negligence or willful misconduct. This power of attorney shall
be irrevocable for the term of this Agreement and all
transactions hereunder and thereafter as long as Borrower may
be indebted to Bank. With the exception of the power granted
to the Bank to endorse checks, drafts, and any other form of
payment, which right may be exercised at any time and from
time to time, the Bank will not exercise any of the powers
granted hereunder absent the occurrence of an Event of Default
hereunder.
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4.02 Until the Bank exercises the rights contained in Section 4.01 (except
under the last sentence in Section 4.01(d)), the Borrower may
continue to collect proceeds from Account Debtors on any Collateral
and use the proceeds in any lawful manner not inconsistent with the
terms of this Agreement.
4.03 In the event that the Bank exercises the rights contained in Section
4.01 (except under the last sentence in Section 4.01(d)), the Bank
shall credit to the Borrower the proceeds obtained from Account
Debtors of the Borrower, such credits to be entered within two (2)
business days after receipt of the proceeds. Such credits, however,
are conditional upon final payment to the Bank at its office in cash
or solvent credits of the items giving rise to them, and, if any item
is not so paid, the amount of any credit given with respect to any of
the Borrower's Liabilities shall be reversed or, in the discretion of
the Bank, it shall be charged to any deposit accounts of the Borrower
with the Bank, whether or not the item is returned.
SECTION 5. DEFAULT AND ACCELERATION:
5.01 Any or all of the Liabilities of the Borrower to the Bank shall, at
the option of the Bank and notwithstanding any time or credit allowed
by any instrument evidencing a Liability, be immediately due and
payable without notice or demand upon the occurrence of any of the
following Events of Default (each an "EVENT OF DEFAULT"):
(a) Default in the payment, upon demand (or when due and payable,
if not payable on demand), of any Liability of the Borrower;
(b) An injunction or attachment against property of the Borrower
remains undischarged for a period of thirty (30) days;
(c) The failure by the Borrower to promptly, punctually and
faithfully perform, or observe any term, covenant or agreement
on its part to be performed or observed pursuant to any of the
provisions of this Agreement (and the expiration of ten (10)
days from such failure).
(d) The occurrence of any material uninsured loss, theft, damage
or destruction to any material asset(s) of the Borrower.
(e) The security interest granted to the Bank in the Collateral
shall, at any time after the execution and delivery of this
Agreement, for any reason, ceases (i) to create a valid and
perfected first priority security interest in the Collateral
including, without limitation, the occurrence of any event
which would cause a lien creditor, as that term is defined in
Section 9-301 of the Code, to take priority over advances made
by Bank; the filing against or
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relating to the Borrower of a federal tax lien in favor of the
United States of America or any political subdivision of the
United States of America, or the filing against or relating to
the Borrower of a state tax lien in favor of any state of the
United States of America or any political subdivision of any
such state; or (ii) this Agreement shall cease to be in full
force and effect or shall be declared null and void, or the
validity or enforceability hereof shall be contested by the
Borrower.
(f) The occurrence of an Event of Default under the Loan Agreement
after the expiration of any applicable grace period or
termination for any reason of the Loan Agreement.
5.02 Upon the occurrence of any of the Events of Default, the Bank shall
have all the rights and remedies of a secured party under Chapter
106, Article 9, of the Massachusetts General Laws, in addition to all
other rights and remedies mentioned in this Agreement. Unless
otherwise provided by law, the Bank may require the Borrower to
assemble any tangible personal property constituting Collateral and
make it available to the Bank at a place to be designated by the Bank
which is reasonably convenient to both parties.
5.03 The Borrower hereby grants to the Bank a nonexclusive irrevocable
license in connection with the Bank's exercise of its rights
hereunder, to use, apply and affix any trademark, trade name, logo or
the like in which the Borrower now or hereafter has rights, which
license may be used upon the occurrence of any of the Events of
Default, or upon demand, if applicable.
SECTION 6. EXPENSES:
6.01 The Borrower shall pay or reimburse the Bank on demand for all
out-of-pocket expenses of every nature which the Bank may incur in
connection with this Agreement and the preparation thereof, the
making of any loan in connection herewith, or the collection of the
Borrower's Liabilities secured under this Agreement, including but
not limited to reasonable attorney's fees, and fees and expenses
related to the perfection and protection of any security interest
granted by the Borrower; or the Bank, if it chooses, may charge any
of the Borrower's funds on deposit with the Bank.
SECTION 7. GOVERNING LAW, MODIFICATION, AND WAIVERS:
7.01 This Agreement, including modifications or additions thereto, will be
governed, interpreted, and construed in accordance with the laws of
the Commonwealth of Massachusetts.
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7.02 The rights, remedies, powers, privileges and discretions of the Bank
hereunder shall be cumulative and not exclusive of any rights or
remedies which it would otherwise have.
7.03 Any determination that any provision of this Agreement or any
application thereof is invalid, illegal or unenforceable in any
respect in any instance shall not affect the validity, legality and
enforceability of such provision in any other instance, nor the
validity, legality or enforceability of any other provision of this
Agreement.
7.04 No modification of this Agreement will be binding unless in writing
and signed by a duly authorized lending officer of the Bank and a
duly authorized officer of Borrower.
7.05 Any default by the Borrower may be waived by the Bank in writing
signed by a duly authorized lending officer of the Bank, but no such
waiver shall extend to any subsequent default or any other default.
7.06 No delay on the part of the Bank in exercising any of the rights
granted or referred to in this Agreement shall be held to constitute
a waiver.
SECTION 8. NOTICE, ASSIGNMENT, TERMINATION:
8.01 Unless otherwise provided for by law, any demand, notice, or other
communication to the Borrower that the Bank may elect to give shall
be effective if sent in accordance with the terms of the Loan
Agreement.
8.02 This Agreement shall continue until all Liabilities of the Borrower
to the Bank have been satisfied.
8.03 Any obligations the Bank may have to the Borrower, whether now
existing or hereafter arising, run only to the Borrower and may not
be assigned or transferred by said Borrower without the written
consent of a duly authorized officer of the Bank.
SECTION 9. HEADINGS: SEAL:
9.01 Headings preceding the text of the several sections hereof are for
the convenience of reference only and shall not constitute a part of
this Agreement nor shall they affect its meaning, construction, or
effect.
9.02 It is intended that this Agreement take effect as a sealed
instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed
as a sealed instrument this 13th day of January, 1995.
WITNESS: BOTTOMLINE TECHNOLOGIES, INC.
(As to Both)
/s/ Xxxxx X. Xxxxxxx By: /s/ Xxxxx X. Xxxxxx
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Xxxxx X. Xxxxxxx Xxxxx X. Xxxxxx, Treasurer
SHAWMUT BANK, N.A.
By: /s/ Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx, Vice President
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SCHEDULE A
ENCUMBRANCES
------------
SECURED PARTY OR LESSOR: COLLATERAL:
------------------------ ----------
Computer Lab Equipment
People's Heritage Bank Leased Equipment
NYNEX Credit Company Telephone Equipment
IBM Credit Corporation IBM Equipment
Fleet Bank-NH Blanket Security Interest
(to be terminated as part
this transaction)
Purchased Money Secured Parties
for any assets acquired with
purchase money financing, whether
now existing or arising in the future
ADDITIONAL LOCATIONS
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None
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