SECURITY AGREEMENT
Exhibit 10.3
This
Security Agreement (this “Agreement”) is
entered into as of October 14, 2009 by and between MIDAS MEDICI GROUP HOLDINGS,
INC., a Delaware corporation (“Midas Medici”), UTILIPOINT INTERNATIONAL, INC., a
New Mexico corporation (“Utilipoint”) (Midas Medici and Utilipoint,
collectively, the “Borrower”), on the
one hand, and PROFICIO BANK, a Utah corporation (the “Lender”), on the
other hand.
Recitals
A. Borrower
desires to borrow funds from the Lender.
B. As a
condition precedent to making a revolving loan to Borrower pursuant to that
certain Revolving Loan Agreement by and between and among Borrower and Lender of
even date herewith (the “Loan Agreement”), the
Lender has required Borrower to execute and deliver this Agreement.
Agreement
NOW,
THEREFORE, in consideration of the above recitals and the mutual covenants
hereinafter set forth, the parties hereto agree as follows:
1. Creation of Security
Interest. In order to secure the payment and performance of
the Secured Obligations (as defined below), the Borrower hereby assigns, pledges
and grants to the Lender, a security interest in all of the following of their
respective properties and assets, in each case whether now owned or hereafter
acquired and wherever located (collectively, the “Collateral”):
All
property and assets of the Borrower of every nature and kind whatsoever,
including, without limitation, all machinery, equipment and supplies,
appliances, computers and related equipment, tools, tooling, furniture,
furnishings, fixtures, goods, inventory, raw materials, work in process,
finished goods and materials owned by the Borrower, accounts, accounts
receivable, general intangibles, names, trademarks, service marks, intellectual
property, software, chattel paper, documents, instruments (whether negotiable or
non-negotiable), deposit accounts, investment property, securities, securities
entitlements, money, contract rights and rights to payment of every kind; and
all products, additions, accessions, replacements and substitutions of or for
any of the above-described collateral; and all books and records of the Borrower
with respect to all such collateral; and all proceeds therefrom,
including: (i) whatever is now or hereafter receivable or
received by Borrower upon the sale, exchange, collection or other disposition of
any item of collateral, whether voluntary or involuntary, whether such proceeds
constitute accounts, inventory, general intangibles, equipment, intellectual
property or other assets; (ii) any such items which are now or hereafter
acquired by the Borrower with any proceeds of any such collateral; and
(iii) any insurance or payments under any indemnity, warranty or guaranty
now or hereafter payable by reason of damage or loss or otherwise with respect
to any item of collateral or any proceeds thereof.
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2. Secured
Obligations. For purposes of this Agreement, “Secured Obligations”
shall mean any and all obligations, indebtedness and liabilities owed by
Borrower to the Lender under the Loan Agreement and all amendments,
modifications, extensions and renewals thereof.
3. Representation and
Warranties. Borrower represents and warrants as
follows:
(a) Chief Executive
Office. Midas Medici’s chief executive office is located at
000 Xxxx Xxxxxx, 00xx
Xxxxx, Xxx Xxxx, Xxx Xxxx 00000. Utilipoint’s chief executive office
is located at 0000 Xxxxxx Xxxx., X.X., Xxxxx 000, Xxxxxxxxxxx, XX
00000.
(b) Existence and
Power. Each Borrower is a corporation duly organized and
existing under the laws of its state of incorporation, and is qualified to do
business in all jurisdictions in which it conducts its business, except where
the failure to be so qualified is not reasonably likely to have a material
adverse affect on such Borrower. Each Borrower has the power and
authority to own its property and assets and to execute and deliver, and perform
its obligations under, this Agreement.
(c) Enforceability. This
Agreement has been duly authorized, executed and delivered by Borrower and
constitutes the legal, valid and binding obligation of Borrower, enforceable
against Borrower in accordance with its terms.
(d) No
Conflict. The execution, delivery and performance of this
Agreement by Borrower and the consummation of the transactions contemplated
hereby will not (i) conflict with or result in a breach of any of the terms
and provisions of, or constitute a default (or an event which with the giving of
notice or the lapse of time or both would constitute a default) under, its
organizational documents or any agreement, indenture, mortgage, deed of trust,
equipment lease, instrument or other document to which Borrower is a party; or
(ii) conflict with any law, order, rule or regulation of any court or any
federal or state government, regulatory body or administrative agency, or any
other governmental body having jurisdiction over Borrower or its
properties.
(e) Priority. Borrower
is the sole owner of the Collateral; the security interest created hereunder in
the Collateral is a first priority, perfected security interest; there are no
security interests, liens or encumbrances, or adverse claims of title to, or any
other interest whatsoever in, the Collateral or any portion thereof except that
created by this Agreement; and no financing statement, mortgage or deed of trust
covering the Collateral or any portion thereof exists or is on file in any
public office.
4. Covenants. Borrower
covenants and agrees as follows:
(a) Change in Address or
Corporate Structure. Borrower shall not change its name,
identity, or corporate structure, move all or any portion of the Collateral or
relocate its chief executive office or reincorporate in another state without
the prior written consent of the Lender and the prior filing of a financing
statement with the proper office and in the proper form to perfect or continue
the perfection of the security interests (without loss of priority) created
herein, which filing shall be satisfactory in form, substance and location to
the Lender prior to such filing.
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(b) Payment of Taxes and
Liens. Borrower shall pay and discharge all taxes, assessments
and charges or levies against the Collateral prior to the delinquency
thereof.
(c) No
Transfer. Borrower shall not sell, assign (by operation of law
or otherwise), exchange or otherwise voluntarily or involuntarily transfer or
dispose of all or any portion of the Collateral (other than in the ordinary
course of business) or encumber, or hypothecate, or create or permit to exist
any material lien, security interest, charge or encumbrance or adverse claim
upon or other interest in all or any portion of the Collateral without the prior
written consent of the Lender, except for liens for taxes not yet due and
payable or which are being actively contested in good faith by appropriate
proceedings and for which adequate reserves are being maintained by Borrower,
and those liens disclosed to Lender by Borrower in writing prior to the
execution of this Agreement.
(d) Operating and Deposit
Accounts. Borrower shall maintain the following bank accounts
for operating purposes and for the deposit of cash receipts, checks and other
items of payment:
Proficio
Bank
000 X.
Xxxxx Xxxxxx, Xxxxx 000
Xxxx Xxxx
Xxxx, XX 00000
ABA#: 000000000
Operating
Account #: 38722
Deposit
Account #: 38731
5. Right to
Enter. The Lender shall have, at all times, during regular
business hours, with or without notice, the right to enter into and upon any
premises where any of the Collateral or records with respect thereto are located
for the purpose of inspecting the same, performing an audit, making copies of
records, observing the use of any part of the Collateral, protecting the
Lender’s security interest in the Collateral, or otherwise determining whether
Borrower is in compliance with the terms of this Agreement.
6. Further
Assurances. Borrower shall execute and file any financing or
continuation statement, or amendments thereto, and such agreements (including,
without limitation, deposit account control agreements), instruments or notices
as may be necessary or desirable, which the Lender may reasonably request in
order to perfect and preserve the perfection and the priority of the security
interests granted or purported to be granted under this
Agreement. Borrower agrees that, at the Lender’s option, this
Agreement, or a photocopy hereof, may be filed by the Lender as a financing
statement, and that Borrower’s execution hereof shall constitute the execution
by Borrower of a financing statement. Borrower further authorizes the
Lender to execute by and on behalf of the Borrower if necessary, and file all
necessary financing statements on form UCC-1 as it deems proper to perfect the
security interest granted by this Agreement. At such time as all of
the Secured Obligations shall have been fully repaid and performed or this
Agreement has been earlier terminated, the Lender shall execute and deliver to
Borrower all releases, termination statements, and other instruments as may be
necessary or proper to release or reflect the release of the Lender’s security
interest in the Collateral.
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7. Default. Borrower
shall be in default under this Agreement upon the happening of any one or more
of the following events:
(a) Default Under Loan
Agreement. An “Event of Default” shall occur under the Loan
Agreement;
(b) Representations and
Warranties. Any representation or warranty made by Borrower in
this Agreement or in the Loan Agreement shall prove to have been untrue,
incorrect or misleading in any material respect when made;
(c) Other
Covenants. Borrower shall fail to observe or perform any
covenant or agreement contained in this Agreement, or in the Loan Agreement or
in the Secured Revolving Promissory Note; or
(d) Collateral. Borrower
shall fail to pay and discharge any judgment or levy of any attachment,
execution or other process against all or any portion of the Collateral and such
judgment shall not be satisfied, or such levy or other process shall not be
removed within ten (10) calendar days after the entry or levy thereof, or at
least five (5) calendar days prior to the time of any proposed sale under any
such judgment levy.
Upon such
default, the Lender may declare all Secured Obligations to be immediately due
and payable. The Lender shall have all of the rights and remedies of
a secured party under the Utah Uniform Commercial Code and may require Borrower
to assemble the Collateral and turn it over to the Lender at a place designated
by the Lender. Borrower hereby expressly waives and releases all
rights to have any of the Collateral marshalled upon the exercise of any
remedies under this Agreement.
8. Cost and
Expenses. Borrower agrees to pay on demand all costs and
expenses, including legal fees, incurred or paid by the Lender in preparing,
executing or amending this Agreement.
9. Notices. All
notices and communications required or provided for hereunder by any party shall
be in writing and shall be (a) delivered personally, (b) sent by certified or
registered mail, postage prepaid, (c) sent by private courier or other overnight
delivery service, or (d) sent by telecopy (with evidence of transmittal) to the
party or parties to whom such notice is required to be given, to the address set
forth below (or to such other address as any party may designate from time to
time in accordance with the terms of this section:
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If to
Bank:
Proficio
Bank
000 X.
Xxxxx Xxxxxx, Xxxxx 000
Xxxx Xxxx
Xxxx, Xxxx 00000
Attention: Xxxxx
Xxxxx, Chief Credit & Lending Officer
Facsimile
No.: (000) 000-0000
With a copy
to:
Xxxxxx X.
Xxxxxx, Esq.
Holme,
Xxxxxxx & Xxxx, LLP
000 Xxxxx
Xxxx Xx., Xxxxx 0000
Xxxx Xxxx
Xxxx, Xxxx 00000
Facsimile
No.: (000) 000-0000
If to
Borrower:
000 Xxxx
Xxxxxx, 00xx
Xxxxx
Xxx Xxxx,
Xxx Xxxx 00000
Attention: Xxxx
Xxxxxxx, Chief Executive Officer
Facsimile
No.: (000) 000-0000
With a copy
to:
Xxxxxx X.
Xxxx, Esq.
360
Venture Law (Shmalo Lang) LLP
X.X. Xxx
00000
Xxxxxxx,
Xxxxxxx 00000
Facsimile
No.: (000) 000-0000
A notice
delivered personally shall be effective upon receipt. A notice
delivered by private courier or other overnight delivery service shall be
effective on the day delivered (or the day on which delivery is refused in the
event delivery is refused). A notice delivered by certified or
registered mail shall be effective on the third business day after the day of
mailing. A notice sent by telecopy shall be effective twenty-four
(24) hours after the dispatch thereof.
10. Headings. The
various headings in this Agreement are inserted for convenience only and shall
not affect the meaning or interpretation of this Agreement or any provision
hereof.
11. Amendments. No
amendment or modification of this Agreement nor any waiver of any rights under
this Agreement shall be valid, binding or effective against Lender unless it is
in writing and signed by Lender. No amendment or modification of this
Agreement nor any waiver of any rights under this Agreement shall be valid,
binding or effective against Borrower unless it is in writing and signed by
Borrower.
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12. Entire
Agreement. This Agreement, the Loan Agreement and the Secured
Revolving Promissory Note issued pursuant to the Loan Agreement are intended by
the parties as a final expression of their agreement relating to the subject
matter thereof and are intended as a complete and exclusive statement of the
terms and conditions thereof. Acceptance of or acquiescence in a
course of performance rendered under this Agreement shall not be relevant to
determine the meaning of this Agreement even though the accepting or acquiescing
party had knowledge of the nature of the performance and opportunity for
objection.
13. Severability. If
any provision or obligation of this Agreement should be found to be invalid,
illegal or unenforceable in any jurisdiction, the validity, legality and
enforceability of the remaining provisions and obligations or any other
agreement executed in connection herewith, or of such provision or obligation in
any other jurisdiction, shall not in any way be affected or impaired thereby and
shall nonetheless remain in full force and effect to the maximum extent
permitted by law.
14. Successors and
Assigns. All rights of the Lender hereunder shall inure to the
benefit of its successors and assigns. Borrower shall not assign any
of its interest under this Agreement without the prior written consent of the
Lender which can be denied in its sole discretion. Any purported
assignment inconsistent with this provision shall, at the option of the Lender,
be null and void.
15. Governing Law, Jurisdiction
and Venue. This Agreement shall be construed in accordance
with and governed by the laws of the State of Utah, and any disputes now or
hereafter arising in connection with the execution or operation of this
Agreement, regardless of whether such disputes shall arise in contract, tort or
otherwise, shall be governed and determined by the laws of the State of Utah,
without regard to the conflicts of laws provisions
thereof. Jurisdiction and venue for purposes of this Agreement shall
be solely with the state and federal courts sitting in Salt Lake City, Salt Lake
County, Utah.
16. Delay;
Waiver. No delay in enforcing or failing to enforce any right
under this Agreement by the Lender shall constitute a waiver by the Lender of
such right. No waiver by the Lender of any default hereunder shall be
effective unless in writing, nor shall any waiver operate as a waiver of any
other default or of the same default on a future occasion.
17. Time of
Essence. Time is of the essence of each provision of this
Agreement of which time is an element.
18. Survival of Representations
and Warranties. All representations, warranties and covenants
of Borrower contained herein shall survive the execution and delivery of this
Agreement, and shall terminate upon the full payment and performance by Borrower
of the Secured Obligations or the earlier termination of this
Agreement.
19. Counterparts. This
Agreement may be executed in any number of counterparts, each of which when so
executed and delivered shall be deemed an original, but all of which shall
together constitute one and the same agreement.
20. Construction. The
parties to this Agreement have participated jointly in the negotiation and
drafting of this Agreement. In the event of an ambiguity or if a
question of intent or interpretation arises, this Agreement shall be constructed
as if drafted jointly by the parties to this Agreement and no presumption or
burden of proof shall arise favoring or disfavoring either party to this
Agreement by virtue of the authorship of any of the provisions of this
Agreement.
21. Attorneys
Fees. If any lawsuit is brought to enforce this Agreement or
in connection with any breach or violation hereof, the prevailing party shall be
entitled to recover from the non-prevailing party all of its costs and expenses,
including, without limitation, all reasonable attorneys’ fee and
expenses.
[Signatures
on following page]
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IN
WITNESS WHEREOF, the parties hereto have caused this Security Agreement to be
duly executed and delivered by their respective officers as of the date first
above written.
|
BORROWER:
MIDAS MEDICI GROUP HOLDINGS, INC., a Delaware corporation
|
|||
|
By:
|
/s/ Xxxx Xxxxxxx | ||
| Name: Xxxx Xxxxxxx | |||
| Title: Chief Executive Officer | |||
|
[CORPORATE
SEAL]
|
|||
| UTILIPOINT INTERNATIONAL, a New Mexico corporation | |||
|
|
By:
|
/s/ Xxxx Xxxxxxx | |
| Name: Xxxx Xxxxxxx | |||
| Title: Chief Executive Officer | |||
|
[CORPORATE
SEAL]
|
|||
| PROFICIO BANK, a Utah corporation | |||
|
|
By:
|
/s/ Xxxxx X. Xxxxx | |
| Name: Xxxxx X. Xxxxx | |||
| Title: CCO | |||
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