EXHIBIT 10.28
SECURITY AGREEMENT
From: Connectria Corporation, a Missouri corporation ("Debtor"), whose chief
executive office is located at 00000 Xxxxx Xxxxxxxxx, Xxxxx 000, Xxxxx
Xxxxx, Xxxxxxxx, 00000.
To: MDSI Mobile Data Solutions Inc., a Canadian corporation (the "Secured
Party").
(A) Grant of Security Interest.
In consideration of financial accommodations given or continued, Debtor
grants to the Secured Party a security interest in the properties, tangible or
intangible, described in the Property Schedule attached hereto as Exhibit A (the
"Collateral") to secure payment and performance of all Debtor's obligations to
the Secured Party, whether currently existing or arising after the date hereof,
including, without limitation, the Debtor's obligations pursuant to the $250,000
Promissory Note dated June __, 2002, made by Debtor in favor of the Secured
Party (collectively, the "Indebtedness"). Unless otherwise defined herein, words
used in this agreement shall have the meanings given them in the Uniform
Commercial Code. An "Obligor" shall mean any person other than or in addition to
Debtor who now or hereafter is indebted or obligated on sums or other
obligations secured hereby, including, without limitation, any guarantor.
(B) Debtor's Representations and Agreements. Debtor warrants, represents and
agrees:
1. Debtor will immediately pay: (a) any Indebtedness when due, with
interest at the rate or rates provided for by any instrument or document ("Loan
Document") evidencing the Indebtedness or from which the Indebtedness arises and
(b) the Secured Party's reasonable costs of collecting the Indebtedness and
realizing on Collateral, including attorneys fees and expenses (whether or not
proceedings are instituted, and including costs relating to bankruptcy or
insolvency proceedings), with interest from date of demand at the maximum rate
provided for by any Loan Document to which the Secured Party is a party.
2. Debtor owns all Collateral absolutely and no other person has or claims
any interest in any Collateral, except for such interests of other persons that
exist as of the date of this agreement or that arise in the ordinary course of
business. Debtor will defend any proceeding that may affect the Secured Party's
security interest in any Collateral, and will indemnify the Secured Party for
all costs and expenses of the Secured Party's defense. Notwithstanding the
foregoing, in connection with any financing arrangement entered into (and any
indebtedness incurred by Debtor thereunder, including future advances made)
after the date hereof with a financial institution, Debtor may grant to such
financial institution a security interest or other lien on any or all of
Debtor's assets to secure such financing arrangement.
3. Debtor will give the Secured Party 30 days' prior written notice of any
change in Debtor's name, the location of any tangible Collateral or the Debtor's
jurisdiction of organization.
4. Debtor will pay when due all existing or future charges, liens or
encumbrances on and all taxes and assessments now or hereafter levied or imposed
on or affecting the Collateral.
5. Debtor agrees that from time to time, at the expense of Debtor, Debtor
shall promptly execute and deliver all further instruments and documents, and
take all further action, that may be necessary or desirable in order to perfect
and protect any security interest granted hereby or to enable the Secured Party
to exercise and enforce their rights and remedies hereunder with respect to any
Collateral. Debtor hereby authorizes the Secured Party to file one or more
financing or continuation statements, and amendments thereto, relative to all or
any part of the Collateral without the signature of Debtor where permitted by
law. A carbon, photographic or other reproduction of this agreement or any
financing statement covering the Collateral or any part thereof shall be
sufficient as a financing statement where permitted by law. Debtor will provide
the Secured Party such information regarding the nature, extent, condition and
location of the Collateral as the Secured Party may request from time to time.
6. The Secured Party is irrevocably appointed Debtor's attorney-in-fact to
do any act which Debtor is obligated hereby to do and fails to do within ten
(10) days after demand therefor, and to execute and file in Debtor's name any
financing statements and amendments or other filings, notices and documents
thereto required to protect
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or perfect the Secured Party's security interest hereunder, all to protect and
preserve the Collateral and the Secured Party's rights hereunder. While an Event
of Default has occurred and is continuing, the Secured Party may: (a) endorse,
collect and receive delivery or payment of instruments and documents
constituting Collateral; (b) make extension agreements with respect to or
affecting Collateral, exchange it for other Collateral, release persons liable
thereon or take security for the payment thereof, and compromise disputes in
connection therewith; (c) use or operate Collateral for the purpose of
preserving Collateral or its value and for preserving or liquidating Collateral;
(d) demand, xxx for, collect, receive and give acquittance for any and all
monies due or to become due thereon or by virtue thereof; and (e) settle,
compromise, compound, prosecute or defend an action or proceeding with respect
thereto.
7. The Debtor waives (a) any right to require the Secured Party to proceed
against any Obligor before the Debtor, or to pursue any other remedy; (b)
presentment, protest and notice of protest; (c) any right to direct the
application proceeds of the Secured Party's realization on any Collateral to
particular Indebtedness; and (d) any right of subrogation to the Secured Party
until Indebtedness shall have been paid or performed in full.
(C) Defaults and Remedies; Non-waiver.
1. Each of the following shall constitute an "Event of Default:" (a)
Debtor's failure to pay any sum secured hereby when the same is due; (b) failure
to perform or comply with any agreement, condition or provision in this
agreement or any Loan Document within 30 days after written notice from the
Secured Party indicating that a failure to perform will constitute an "Event of
Default" hereunder; (c) any warranty contained in this agreement shall prove to
have been materially inaccurate when made; or (d) the filing of any petition
under bankruptcy or similar debtors' relief laws by the Debtor or any Obligor,
the passage of 60 days after the filing of any such petition by another against
the Debtor or any Obligor without the relevant proceeding being discharged or
stayed, or any assignment for the benefit of creditors or appointment of a
receiver involving substantially all of the Debtor's assets.
2. During the continuance of an Event of Default, the Secured Party may, by
notice to the Debtor, declare that they are realizing upon the Collateral
hereunder. Upon such notice, so long as an Event of Default is continuing: (a)
the Secured Party may declare all or any part of the Indebtedness owed to the
Secured Party to be immediately due and (b) the Secured Party shall have all
rights provided by this agreement or provided by law, including the Uniform
Commercial Code, and may sell Collateral in one or more sales, and such rights
shall be exercised as determined by the Secured Party. (The preceding sentence
shall not limit the rights and remedies of the Secured Party pursuant to the
Loan Documents with respect to its Indebtedness.) Upon the occurrence and during
the continuance of an Event of Default, the proceeds of any sale of, or other
realization upon, all or any part of the Collateral and any cash held shall be
applied by the Secured Party in the following order of priorities: (i) first, to
payment of the expenses of such sale or other realization, including reasonable
compensation to agents and counsel for the Secured Party, and all expenses,
liabilities and advances incurred or made by the Secured Party in connection
therewith; (ii) second, to the payment of all indebtedness of any other secured
parties with respect to security interests (A) granted prior to the effective
date of this Security Agreement for indebtedness incurred prior to the effective
date of this Security Agreement, or (B) granted pursuant to Section (B)2 of this
Security Agreement, until all such indebtedness of such parties have been paid
in full; (iii) third, to the payment of all Indebtedness to the Secured Party or
its respective successors and assigns, until all Indebtedness of the Secured
Party shall have been paid in full; (v) fourth, to the payment of amounts
required by law; and (iv) finally, to payment to the Debtor or its successors or
assigns, or as a court of competent jurisdiction may direct, of any surplus then
remaining from such proceeds. At the Secured Party's option, any such sale may
be conducted in any locality where the Secured Party has an office. The Secured
Party may purchase at such sale. The Secured Party may require Debtor to
assemble the Collateral and make it available to the Secured Party at a place
designated by the Secured Party that is reasonably convenient to both parties.
The Secured Party's acceptance of partial or delinquent payments or failure of
the Secured Party to exercise any right or remedy at any time shall not waive
any obligation of any Debtor or Obligor, or any right or remedy of the Secured
Party, or modify this agreement, or waive any other similar default.
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(D) Expenses.
In the event that the Debtor fails to comply with the provisions of the
Loan Documents or this Security Agreement, such that the validity, perfection or
rank of any security interest is thereby diminished or put at risk, the Secured
Party (i) may deliver written notice of such non-compliance to the Debtor
requesting that it cure such non-compliance, and (ii) if within ten business
days after delivery of such notice the Debtor has failed to cure such
non-compliance, the Secured Party may, but shall not be required to, effect such
compliance on behalf of the Debtor, and the Debtor shall reimburse the Secured
Party for the reasonable costs thereof on demand. All insurance expenses and all
expenses of protecting, storing, warehousing, appraising, insuring, handling,
maintaining and shipping the Collateral, any and all excise, property, sales,
and use taxes imposed by any state, federal, or local authority on any of the
Collateral, or in respect of periodic appraisals and inspections of the
Collateral to the extent the same may reasonably be requested by the Secured
Party from time to time, or in respect of the sale or other disposition thereof,
shall be borne and paid by the Debtor; and if the Debtor fails to promptly pay
any portion thereof when due, the Secured Party may, at their option, but shall
not be required to, pay the same and charge the Debtor's account therefor, and
the Debtor agrees to reimburse the Secured Party therefor on demand. All
reasonable sums so paid or incurred by the Secured Party for any of the
foregoing and any and all other sums for which the Debtor may become liable
hereunder and all costs and expenses (including attorneys' fees, legal expenses
and court costs) reasonably incurred by the Secured Party in enforcing or
protecting the security interests or any of their rights or remedies under this
Security Agreement, shall, together with interest thereon for each day from the
date demanded until paid at the rate of 8% per annum, be obligations secured by
this Security Agreement.
(E) Subordination.
Secured Party hereby agrees that in connection with Debtor's entering into
any credit facility or finance arrangement with a financial institution for
purposes of obtaining working capital and other general corporate financing,
Secured Party shall execute and deliver to such financial institution a
subordination agreement subordinating in favor of such financial institution its
rights to payment of any indebtedness owed by Debtor to Secured Party and all
security interests which Debtor has then granted to Secured Party. Secured Party
further agrees to execute and deliver to such financial institution such other
documents as such financial institution may reasonably request in order to
implement such subordination agreement.
(F) General Provisions.
1. On transfer of all or any part of the Indebtedness, as permitted by the
Loan Document, Secured Party may transfer all or any part of the Security
Interest securing such Indebtedness. This agreement benefits the Secured Party's
successors and assigns and binds Debtor's successors and assigns. Time is of the
essence. This agreement and supplementary schedules hereto contain the entire
security agreement between the Secured Party and Debtor. Debtor will execute any
additional agreements, assignments or documents which the Secured Party
reasonably may reasonably request to effectuate this agreement or perfect any
rights or interests of Secured Party hereunder. This agreement shall be governed
by, and construed in accordance with, the laws of the State of Washington.
2. Beyond the exercise of reasonable care in the custody thereof, the
Secured Party shall have no duty as to any Collateral in its possession or
control or in the possession or control of any agent or bailee or any income
thereon or as to the preservation of rights against prior parties or any other
rights pertaining thereto. The Secured Party shall be deemed to have exercised
reasonable care in the custody of the Collateral in its possession if the
Collateral is accorded treatment substantially equal to that which it accords
its own property, and shall not be liable or responsible for any loss or damage
to any of the Collateral, or for any diminution in the value thereof, by reason
of the act or omission of any warehouseman, carrier, forwarding agency,
consignee or other agent or bailee selected by the Secured Party in good faith;
provided, however, nothing in this Section shall be deemed to prejudice any
rights of the Debtor against such warehouseman, carrier, forwarding agency,
consignee or other agent or bailee.
3. Neither this Security Agreement nor any provision hereof may be changed,
waived, discharged or terminated orally, but only in writing signed by the
Debtor and the Secured Party.
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4. All notices, approvals, requests, demands and other communications shall
be given in accordance with the Loan Documents.
5. Upon the repayment in full of the Indebtedness, this Security Agreement
shall terminate and all rights to the Collateral shall revert to the Debtor.
6. Captions, titles and section and paragraph divisions and arrangements in
this agreement and in any instruments and documents heretofore or hereafter made
or executed are for convenience and for reference only, and shall not affect the
meaning, interpretation or construction thereof. Whenever the context so
requires, any gender shall include all other genders, and the singular number
shall include the plural.
ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, EXTEND CREDIT, OR TO FORBEAR
FROM ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER WASHINGTON LAW.
Dated this 30th day of June, 2002
CONNECTRIA CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxxx
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Name: Xxxxxxx X. Xxxxxxxx
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Its: President
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EXHIBIT A
PROPERTY SCHEDULE
Description of Collateral:
All Debtor's right, title and interest in and to the following:
(a) All inventory now owned or hereafter at any time acquired by Debtor
which is held for sale or lease, or is furnished or to be furnished under
contracts of service, or is held as raw materials, work in process, or materials
used or consumed or to be used or consumed in Debtor's business, and all
manufacturing and processing rights, patents, patent rights, licenses,
trademarks, trade names, domain names, royalties and copyrights in connection
therewith to the extent that such rights may be assigned to the Secured Party
including without limiting the generality of the foregoing, all documents of
title now existing or hereafter at any time acquired by Debtor and covering
goods of any type or kind hereinabove described;
(b) All accounts (rights to payment for property that has been or is to be
sold, leased, licensed, assigned or otherwise disposed of sold or leased, or for
services rendered or for services rendered or to be rendered, or for a secondary
obligation incurred or to be incurred) of Debtor now existing or hereafter at
any time acquired;
(c) All general intangibles, including without limitation payment
intangibles and other rights of Debtor to the payment of money no matter how
evidenced, rights to tax refunds, and all chattel paper, investment property,
documents, letters of credit and letter of credit rights, instruments and other
writings evidencing such right now existing or hereafter at any time, and all
commercial tort claims, and all contracts (rights to payment under a contract
for the sale or lease of goods or the furnishing of services, which rights have
not been earned by performance) and contract rights of Debtor now existing or
hereafter at any time arising;
(d) All equipment, and all accessions thereto;
(e) All now existing and hereafter acquired books and records relating to
the foregoing collateral and all equipment containing such books and records;
and
(f) All proceeds of the foregoing collateral (including, without limitation
proceeds which constitute property of the types described in clauses (a) through
(e) above), and including proceeds of insurance, products thereof and any
property which Debtor may receive on account thereof . "Proceeds" includes
whatever is acquired upon the sale, lease, licenses, exchange or other
disposition of collateral or proceeds, whether such disposition is voluntary or
involuntary, whatever is collected on, or distributed on account of, collateral,
rights arising out of collateral, claims arising out of the loss, nonconformity
or interference with the use of, defects or infringements of rights in, or
damage to, collateral and insurance payable (whether or not the Secured Party is
the loss payee thereof) by reason of the loss or nonconformity of, defects or
infringement of rights in, or damage to, the collateral or otherwise with
respect to any of the foregoing.
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