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EXHIBIT 10.4
SECURITY AGREEMENT
THIS AGREEMENT, dated as of the 3rd day of June, 1997, by and between
Online Resources & Communications Corporation, a Delaware corporation having
its principal place of business at 0000 Xxxxx Xxxxxx Xxxxx, XxXxxx, Xxxxxxxx
00000 ("the Company"), and Dominion Fund IV, a Delaware Limited Partnership,
having an address at 00 Xxxxxxxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxxxxxxx, XX 00000
(the "Secured Party").
WITNESSETH:
WHEREAS, the Company and the Secured Party entered into a Loan
Agreement dated as of the date hereof (as amended from time to time, the "Loan
Agreement") pursuant to which the Secured Party agreed, subject to the terms
and conditions set forth therein, to make a loan to the Company (the "Loan"),
such Loan to be evidenced by a Promissory Note of the Company payable to the
order of the Secured Party (the "Note"); and
WHEREAS, the obligation of the Secured Party to make the Loan is
subject to the condition, among others, that the Company shall execute and
deliver this Agreement and grant the security interest hereinafter described;
NOW, THEREFORE, in consideration of the willingness of the Secured
Party to enter into the Loan Agreement and to agree, subject to the terms and
conditions set forth therein, to make the Loan to the Company pursuant thereto,
and for other good and valuable consideration, receipt of which is hereby
acknowledged, it is hereby agreed as follows:
1. Security Interest. As security for the Secured Obligations
described in section 2 hereof, the Company hereby grants to the Secured Party a
security interest in and lien on all of the tangible and intangible personal
property and fixtures of the Company described below, whether now owned or
existing or hereafter acquired or arising, together with any and all additions
thereto and replacements and proceeds thereof (hereinafter referred to
collectively as the "Collateral"):
(a) all of the Company's tangible personal property, set
forth in Schedule 1 hereof as the same may be amended from time to time; and
(b) All of the Company's inventory, goods, raw materials,
supplies, work-in-process and finished goods (collectively, "Inventory")
whether now owned or hereafter acquired.
2. Secured Obligations. The security interest hereby granted
shall secure the due and punctual payment and performance of the following
liabilities and obligations of the Company (herein called the "Secured
Obligations"):
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(a) Principal of and interest on the Note; and
(b) Any and all other obligations of the Company to the
Secured Party under the Loan Agreement or under any agreement or instrument
relating thereto, all as amended from time to time.
3. Special Warranties and Covenants of Company. The Company
hereby warrants and covenants to the Secured Party that:
(a) The address shown at the beginning of this Agreement
is the principal place of business of the Company and all of the Company's
additional places of business, if any, and the locations of all of the
Collateral are listed in Schedule 2 attached hereto. The Company will not
change its principal or any other place of business, or the location of any
Collateral, or make any change in the Company's name or conduct the Company's
business operations under any fictitious business name or trade name, without,
in any such case, at least thirty (30) days' prior written notice to the
Secured Party.
(b) The Company is the owner of the Collateral free from
any lien, security interest or encumbrance and the Company will defend the
Collateral against all claims and demands of all persons at any time claiming
the same or any interest therein.
(c) Except as permitted by the Loan Agreement or
otherwise consented to in writing by the Secured Party, the Company will not
sell or otherwise dispose of any of the Collateral or any interest therein,
other than inventory sold in the ordinary course of business, nor will the
Company create, incur or permit to exist any mortgage, lien, charge,
encumbrance or security interest whatsoever with respect to the Collateral,
other than the liens permitted by Section 7.2 of the Loan Agreement.
(d) The Company will keep the Collateral in good order
and repair and adequately insured at all times in accordance with the
provisions of the Loan Agreement. The Company will pay promptly when due all
taxes and assessments on the Collateral or for its use or operation, except for
taxes and assessments permitted to be contested as provided in Section 6. of
the Loan Agreement. The Secured Party may at its option discharge any taxes,
liens, security interests or other encumbrances to which any Collateral is at
any time subject, and may, upon the failure of the Company so to do, purchase
insurance on any Collateral and pay for the repair, maintenance or preservation
thereof, and the Company agrees to reimburse the Secured Party on demand for
any reasonable payments or expenses incurred by the Secured Party pursuant to
the foregoing authorization and any unreimbursed amounts shall constitute
Secured Obligations for all purposes hereof.
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(e) The Company will promptly execute and deliver to the
Secured Party such financing statements, certificates and other documents or
instruments as may be necessary to enable the Secured Party to perfect or from
time to time renew the security interest granted hereby, including, without
limitation, such financing statements, certificates and other documents as may
be necessary to perfect a security interest in any additional Collateral
hereafter acquired by the Company or in any replacements or proceeds thereof.
The Company authorizes and appoints the Secured Party, in case of need, to
execute such financing statements, certificates and other documents in its
stead, with full power of substitution, as the Company's attorney in fact. The
Company further agrees that a carbon, photographic or other reproduction of a
security agreement or financing statement is sufficient as a financing
statement under this Agreement.
4. Fixtures, etc. It is the intention of the parties hereto that
none of the Collateral shall become fixtures and the Company will take all such
reasonable action or actions as may be necessary to prevent any of the
Collateral from becoming fixtures. Without limiting the generality of the
foregoing, the Company will, if requested by the Secured Party, use its best
efforts to obtain waivers of lien, in form satisfactory to the Secured Party,
from each lessor of real property on which any of the Collateral is or is to be
located.
5. Events of Default. The Company shall be in default under this
Agreement upon the happening of any of the following events or conditions
(herein called "Events of Default"):
(a) Default shall be made in the due and punctual payment
of any principal of or premium, if any, or interest on any of the Secured
Obligations when and as the same shall be due and payable (whether at maturity
or at a date fixed for any prepayment or installment or by declaration or
acceleration or otherwise) and such default shall continue beyond the
expiration of the applicable period of grace, if any; or
(b) Any other Event of Default (as defined or provided in
the Loan Agreement) shall occur.
6. Rights and Remedies of Secured Party. Upon the occurrence of
any Event of Default, such default not having previously been remedied or
cured, the Secured Party shall have the following rights and remedies:
(a) All rights and remedies provided by law, including,
without limitation, those provided by the Uniform Commercial Code;
(b) All rights and remedies provided in this Agreement; and
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(c) All rights and remedies provided in the Loan
Agreement, or in the Note or in any other agreement, document or instrument
pertaining to the Secured Obligations.
7. Right of Secured Party to Dispose of Collateral, etc. Upon the
occurrence of any Event of Default, such default not having previously been
remedied or cured, but subject to the provisions of the Uniform Commercial Code
or other applicable law, the Secured Party shall have the right to take
possession of the Collateral and, in addition thereto, the right to enter upon
any premises on which the Collateral or any part thereof may be situated and
remove the same therefrom. The Secured Party may require the Company to make
the Collateral (to the extent the same is moveable) available to the Secured
Party at a place to be designated by the Secured Party which is reasonably
convenient to both parties. 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 give the Company at least ten (10) days' prior
written notice at the address of the Company set forth above (or at such other
address or addresses as the Company shall specify in writing to the Secured
Party) of the time and place of any public sale thereof or of the time after
which any private sale or any other intended disposition thereof is to be made.
Any such notice shall be deemed to meet any requirement hereunder or under any
applicable law (including the Uniform Commercial Code) that reasonable
notification be given of the time and place of such sale or other disposition.
After deducting all costs and expenses of collection, storage, custody, sale or
other disposition and delivery (including legal costs and attorneys' fees) and
all other charges against the Collateral, the residue of the proceeds of any
such sale or disposition shall be applied to the payment of the Secured
Obligations in such order of priority as the Secured Party shall determine and
any surplus shall be returned to the Company or to any person or party lawfully
entitled thereto (including, if applicable, any subordinated creditors of the
Company). Such sale of the Collateral shall be conducted in a commercially
reasonable manner. In the event the proceeds of any sale, lease or other
disposition of the Collateral hereunder are insufficient to pay all of the
Secured Obligations in full, the Company will be liable for the deficiency (to
the extent such sale of Collateral was conducted in a commercially reasonable
manner) together with interest thereon at the maximum rate provided in the
Note, and the cost and expenses of collection of such deficiency, including (to
the extent permitted by law), without limitation, reasonable attorneys' fees,
expenses and disbursements.
8. Right of Secured Party to Use and Operate Collateral, etc.
Upon the occurrence and during the continuance of any Event of Default, but
subject to the provisions of the Uniform Commercial Code or other applicable
law, the Secured Party shall have the right and power to take possession of all
or any part of the Collateral, and to exclude the Company and all persons
claiming under the Company wholly or partly
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therefrom, and thereafter to hold, store, and/or use, operate, manage and
control the same. Upon any such taking of possession, the Secured Party may,
from time to time, at the expense of the Company, make all such repairs,
replacements, alterations, additions and improvements to and of the Collateral
as the Secured Party may deem proper. In any such case the Secured Party shall
have the right to manage and control the Collateral and to carry on the
business and to exercise all rights and powers of the Company in respect
thereto as the Secured Party shall deem best, including the right to enter into
any and all such agreements with respect to the operation of the Collateral or
any part thereof as the Secured Party may see fit; and the Secured Party shall
be entitled to collect and receive all rents, issues, profits, fees, revenues
and other income of the same and every part thereof. Such rents, issues,
profits, fees, revenues and other income shall be applied to pay the expenses
of holding and operating the Collateral and of conducting the business thereof,
and of all maintenance, repairs, replacements, alterations, additions and
improvements, and to make all payments which the Secured Party may be required
or may elect to make, if any, for taxes, assessments, insurance and other
charges upon the Collateral or any part thereof, and all other payments which
the Secured Party may be required or authorized to make under any provision of
this Agreement (including legal costs and attorneys' fees). The remainder of
such rents, issues, profits, fees, revenues and other income shall be applied
to the payment of the Secured Obligations in such order of priority as the
Secured Party shall determine and, unless otherwise provided by law or by a
court of competent jurisdiction, any surplus shall be returned to the Company
or to any person or party lawfully entitled thereto (including, if applicable,
any subordinated creditors of the Company). Without limiting the generality of
the foregoing, the Secured Party shall have the right to apply for and have a
receiver appointed by a court of competent jurisdiction in any action taken by
the Secured Party to enforce its rights and remedies hereunder in order to
manage, protect and preserve the Collateral and continue the operation of the
business of the Company, or to sell or dispose of the Collateral, and to
collect all revenues and profits thereof and apply the same to the payment of
all expenses and other charges of such receivership, including the compensation
of the receiver, and to the payment of the Secured Obligations as aforesaid
until a sale or other disposition of such Collateral shall be finally made and
consummated.
9. (Intentionally Omitted]
10. Waivers, etc. The Company hereby waives presentment, demand,
notice, protest and, except as is otherwise provided herein, all other demands
and notices in connection with this Agreement or the enforcement of the Secured
Party's rights hereunder or in connection with any Secured Obligations or any
Collateral; consents to and waives notice of the granting of renewals,
extensions of time for payment or other indulgences to the Company or to any
account debtor in respect of any account receivable or to any other third
party, or substitution, release or surrender of any Collateral, the addition or
release of
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persons primarily or secondarily liable on any Secured Obligation or on any
account receivable or other Collateral, the acceptance of partial payments on
any Secured Obligation or on any account receivable or other Collateral and/or
the settlement or compromise thereof. No delay or omission on the part of the
Secured Party in exercising any right hereunder shall operate as a waiver of
such right or of any other right hereunder. Any waiver of any such right on any
one occasion shall not be construed as a bar to or waiver of any such right on
any future occasion. The Company further waives any right it may have under the
constitution of The Commonwealth of Massachusetts, the Commonwealth of Virginia
(or under the constitution of any other state in which any of the Collateral
may be located), or under the Constitution of the United States of America, to
notice (other than any requirement of notice provided herein) or to a judicial
hearing prior to the exercise of any right or remedy provided by this Agreement
to the Secured Party and waives its rights, if any, to set aside or invalidate
any sale duly consummated in accordance with the foregoing provisions hereof on
the grounds (if such be the case) that the sale was consummated without a prior
judicial hearing. The Company's waivers under this section have been made
voluntarily, intelligently and knowingly and after the Company has been
apprised and counseled by its attorneys as to the nature thereof and its
possible alternative rights.
11. Termination: Assignment, etc. This Agreement and the security
interest in the Collateral created hereby shall terminate after all of the
Secured Obligations have been paid and finally discharged in full (provided
that the Secured Party is no longer obligated to make loans under the Loan
Agreement). No waiver by the Secured Party or by any other holder of Secured
Obligations of any default shall be effective unless in writing nor operate as
a waiver of any other default or of the same default on a future occasion. In
the event of a sale or assignment by the Secured Party of all or any of the
Secured Obligations held by it, the Secured Party may assign or transfer its
rights and interest under this Agreement in whole or in part to the purchaser
or purchasers of such Secured Obligations, whereupon such purchaser or
purchasers shall become vested with all of the powers and rights of the Secured
Party hereunder, and the Secured Party shall thereafter be forever released and
fully discharged from any liability or responsibility hereunder with respect to
the rights and interest so assigned.
12. Reinstatement. Notwithstanding the provisions of section 11,
this Agreement shall continue to be effective or be reinstated, as the case may
be, if at any time any amount received by the Secured Party in respect of the
Secured Obligations is rescinded or must otherwise be restored or returned by
the Secured Party upon the insolvency, bankruptcy, dissolution, liquidation or
reorganization of the Company or upon the appointment of any intervenor or
conservator of, or trustee or similar official for, the Company or any
substantial part of its properties, or otherwise, all as though such payments
had not been made.
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13. Notices. Except as otherwise provided herein, all notices to
the Company or to the Secured Party shall be in writing and shall be deemed to
have been sufficiently given or served for all purposes hereof if delivered by
facsimile where confirmation of receipt by the receiving party's receiver can
be documented, or personally delivered by hand or by reputable overnight
courier or mailed by first class certified or registered mail, postage prepaid,
as follows:
(a) if to the Company, at the address set forth in the
Loan Agreement;
(b) if to the Secured Party, at the address set forth in
the Loan Agreement;
or at such other address as the party to whom such notice is directed may have
designated in writing to the other party hereto. A notice shall be deemed to
have been given upon receipt by the party to whom such notice is directed.
14. Miscellaneous. This Agreement shall inure to the benefit of
and be binding upon the Secured Party and the Company and their respective
successors and assigns, and the term "Secured Party" shall be deemed to include
any other holder or holders of any of the Secured Obligations. In case any
provision in this Agreement shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby. This Agreement may be executed in any
number of counterparts and by the different parties hereto on separate
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
15. Governing Law, jurisdiction, Waiver of Jury Trial. This
Agreement, including the validity hereof and the rights and obligations of the
parties hereunder, shall be construed in accordance with and governed by the
laws of The Commonwealth of Massachusetts (without regard to its choice of law
provisions). The Company, to the extent that it may lawfully do so, hereby
consents to service of process, and to be sued, in The Commonwealth of
Massachusetts and consents to the jurisdiction of the courts of The
Commonwealth of Massachusetts and the United States District Courts for the
District of Massachusetts, as well as to the jurisdiction of all courts to
which an appeal may be taken from such courts, for the purpose of any suit,
action or other proceeding arising out of any of its obligations hereunder or
with respect to the transactions contemplated hereby, and expressly waives any
and all objections it may have as to venue in any such courts. The Company
further agrees that a summons and complaint commencing an action or proceeding
in any of such courts shall be properly served and shall confer personal
jurisdiction if served personally or by certified mail to it at its address
provided in section 14 hereof or as otherwise provided under the laws of The
Commonwealth of Massachusetts. The Company irrevocably waives all right to a
trial by jury in any suit,
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action or other proceeding instituted by or against the Company in a respect of
its obligations hereunder or the transactions contemplated hereby.
IN WITNESS WHEREOF, the parties have executed this Agreement as a
sealed instrument as of the date first above written.
ONLINE RESOURCES & COMMUNICATIONS
CORPORATION
By [sig]
------------------------------------
Chairman CEO
DOMINION FUND IV, A DELAWARE
LIMITED PARTNERSHIP
By Dominion Management IV, L.L.C.
Its general partner
By [sig]
-----------------------------------
Xxxxxxx Xxx
Member
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SCHEDULE 1
All of the Company's Inventory and Equipment now held and hereafter
acquired including all Proceeds derived therefrom. The capitalized terms
referred to above shall have the same meanings as are given to those terms by
the Uniform Commercial Code as in effect in any jurisdiction in which any
financing statement pertaining to the above is filed.
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Schedule 2
Locations of Collateral
7923 and 0000 Xxxxx Xxxxxx Xxxxx
XxXxxx, Xxxxxxxx 00000
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