SECURITY AGREEMENT
Exhibit
99.3
THIS
SECURITY AGREEMENT (this “Agreement”)
is
entered into and made effective as of July 25, 2008, by and between InferX
Corporation, a Delaware corporation with its principal place of business located
at 0000 Xxxxxxxxxxxxx Xxxxx, Xxxxx 000, XxXxxx, Xxxxxxxx 00000 (the
“Company”),
and
_____________ (“________”) a _____________ ___________, with its principal place
of business located at ________________ and the other parties participating
in
the financing of the Company set forth in Exhibit
B
attached
to this Agreement (the “Secured
Parties”).
WHEREAS,
the Company issued to ______________________ a Convertible Note in the aggregate
principal amount of _______________ Dollars ($________) and to other Secured
Parties additional Convertible Notes and warrants to purchase common stock
of
the Company as part of a financing for the Company (the “Convertible
Notes”
and
“Warrants”,
respectively).
WHEREAS,
to induce the Secured Parties to purchase the Convertible Notes, the Company
hereby grants to the Secured Parties a security interest in and to the pledged
property identified on Exhibit
A
hereto
(the “Pledged
Property”)
until
the satisfaction of the Obligations, as defined herein.
WHEREAS,
the Secured Parties agree that Xxxxxxx X’Xxxxx shall act as their
attorney-in-fact under the terms of this Agreement, including the right to
make
all decisions regarding the pursuit of any remedies under this Agreement in
the
event of any default by the Company under the terms of this Agreement and to
receive notices under this Agreement.
NOW,
THEREFORE, in consideration of the promises and the mutual covenants herein
contained, and for other good and valuable consideration, the adequacy and
receipt of which are hereby acknowledged, the parties hereto hereby agree as
follows:
ARTICLE
1.
DEFINITIONS
AND INTERPRETATIONS
Section
1.1. Recitals.
The
above recitals are true and correct and are incorporated herein, in their
entirety, by this reference.
Section
1.2. Interpretations.
Nothing
herein expressed or implied is intended or shall be construed to confer upon
any
person other than the Secured Parties any right, remedy or claim under or by
reason hereof.
Section
1.3. Obligations
Secured.
The
obligations secured hereby are any and all obligations of the Company now
existing or hereinafter incurred to the Secured Parties, whether oral or written
and whether arising before, on or after the date hereof including, without
limitation, those obligations of the Company to the Secured Parties under this
Agreement and any other amounts now or hereafter owed to the Secured Parties
by
the Company hereunder (the “Obligations”).
ARTICLE
2.
PLEDGED
COLLATERAL, ADMINISTRATION OF COLLATERAL
AND
TERMINATION OF SECURITY INTEREST
Section
2.1. Pledged
Property.
(a)
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The
Company hereby pledges to the Secured Parties, and creates in the
Secured
Parties for their benefit, a security interest for such time until
the
Obligations are paid in full, in and to all of the Pledged Property,
and
the products thereof and the proceeds of all such items are hereinafter
collectively referred to as the “Pledged
Collateral”.
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(b)
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Simultaneously
with the execution and delivery of this Agreement, the Company
shall:
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(i)
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make,
execute, acknowledge, file, record and deliver to the Secured Parties
any
documents reasonably requested by the Secured Parties to perfect
its
security interest in the Pledged Property;
and
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(ii)
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make,
execute, acknowledge and deliver to the Secured Parties such documents
and
instruments, including, without limitation, financing statements,
certificates, affidavits and forms as may, in the Secured Parties’
reasonable judgment, be necessary to effectuate, complete or perfect,
or
to continue and preserve, the security interest of the Secured Parties
in
the Pledged Property, and the Secured Parties shall hold such documents
and instruments as Secured Parties, subject to the terms and conditions
contained herein.
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Section
2.2. Rights;
Interests; Etc.
(a)
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So
long as no Event of Default (as hereinafter defined) shall have occurred
and be continuing:
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(i)
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the
Company shall be entitled to exercise any and all rights pertaining
to the
Pledged Property or any part thereof for any purpose not inconsistent
with
the terms hereof; and
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(ii)
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the
Company shall be entitled to receive and retain any and all payments
paid
or made in respect of the Pledged
Property.
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(b)
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Upon
the occurrence and during the continuance of an Event of
Default:
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2
(i)
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all
rights of the Company to exercise the rights which it would otherwise
be
entitled to exercise pursuant to Section 2.2(a)(i) hereof and to
receive
payments which it would otherwise be authorized to receive and retain
pursuant to Section 2.2(a)(ii) hereof shall be suspended, and all
such
rights shall thereupon become vested in the Secured Parties who shall
thereupon have the sole right to exercise such rights and to receive
and
hold as Pledged Collateral such payments; provided, however, that
if the
Secured Parties shall become entitled and shall elect to exercise
their
rights to realize on the Pledged Collateral pursuant to Article 5
hereof,
then all cash sums received by the Secured Parties, or held by Company
for
the benefit of the Secured Parties and paid over pursuant to Section
2.2(b)(ii) hereof, shall be applied against any outstanding Obligations;
and
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(ii)
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all
interest, dividends, income and other payments and distributions
which are
received by the Company contrary to the provisions of Section 2.2(b)(i)
hereof shall be received in trust for the benefit of the Secured
Parties,
shall be segregated from other property of the Company and shall
be
forthwith paid over to the Secured Parties;
or
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(iii)
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the
Secured Parties in their sole discretion shall be authorized to sell
any
or all of the Pledged Property at public or private sale in order
to
recoup all of the outstanding principal plus accrued interest owed
pursuant to the Convertible Notes as described
herein.
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(c)
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Each
of the following constitutes an Event of Default under the Convertible
Notes and shall constitute a default under this Agreement (an
“Event
of Default”):
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(i)
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failure
by the Company to make payment of principal and interest when due
under
the Convertible Note;
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(ii)
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upon
the filing by or against the Company of any voluntary or involuntary
petition in bankruptcy or any petition for relief under the federal
bankruptcy code or any other state or federal law for the relief
of
debtors; provided, however, with respect to an involuntary petition
in
bankruptcy, such petition has not been dismissed within ninety (90)
days
after the filing of such petition; or
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(iii)
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upon
the execution by the Company of an assignment for the benefit of
creditors
or the appointment of a receiver, custodian, trustee or similar party
to
take possession of the Company’s assets or
property.
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ARTICLE
3.
ATTORNEY-IN-FACT;
PERFORMANCE
Section
3.1. Secured
Parties Appointed Attorney-In-Fact.
Upon
the occurrence of an Event of Default, the Company hereby appoints Xxxxxxx
X’Xxxxx as its attorney-in-fact, with full authority in the place and stead of
the Company and in the name of the Company or otherwise, from time to time
in
Xxxxxxx X’Xxxxx’x discretion to take any action and to execute any instrument
which Xxxxxxx X’Xxxxx may reasonably deem necessary to accomplish the purposes
of this Agreement, including, without limitation, to receive and collect all
instruments made payable to the Company representing any payments in respect
of
the Pledged Collateral or any part thereof and to give full discharge for the
same. Xxxxxxx X’Xxxxx may demand, collect, receipt for, settle, compromise,
adjust, xxx for, foreclose, or realize on the Pledged Property as and when
Xxxxxxx X’Xxxxx may determine. To facilitate collection, Xxxxxxx X’Xxxxx may
notify account debtors and obligors on any Pledged Property or Pledged
Collateral to make payments directly to the Secured Parties. In the event that
Xxxxxxx X’Xxxxx has been repaid in full by the Company under the terms of the
Convertible Note issued to Xxxxxxx X’Xxxxx by the Company, the Secured Parties
shall be appointed as attorney-in-fact under the terms of this Section
3.1.
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Section
3.2. Secured
Parties May Perform.
If the
Company fails to perform any agreement contained herein, the Secured Parties,
at
their option, may themselves perform, or cause performance of, such agreement,
and the expenses of the Secured Parties incurred in connection therewith shall
be included in the Obligations secured hereby and payable by the Company under
Section 8.3.
ARTICLE
4.
REPRESENTATIONS
AND WARRANTIES
Section
4.1. Authorization;
Enforceability.
Each of
the parties hereto represents and warrants that it has taken all action
necessary to authorize the execution, delivery and performance of this Agreement
and the transactions contemplated hereby; and upon execution and delivery,
this
Agreement shall constitute a valid and binding obligation of the respective
party, subject to applicable bankruptcy, insolvency, reorganization, moratorium
and similar laws affecting creditors’ rights or by the principles governing the
availability of equitable remedies.
Section
4.2. Ownership
of Pledged Property.
The
Company warrants and represents that it is the legal and beneficial owner of
the
Pledged Property free and clear of any lien, security interest, option or other
charge or encumbrance.
ARTICLE
5.
DEFAULT;
REMEDIES; SUBSTITUTE COLLATERAL
Section
5.1. Default
and Remedies.
(a)
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If
an Event of Default described in Section 2.2(c)(i) occurs, then in
each
such case the Secured Parties may declare the Obligations to be due
and
payable immediately, by a notice in writing to the Company, and upon
any
such declaration, the Obligations shall become immediately due and
payable. If an Event of Default described in Sections 2.2(c)(ii)
or (iii)
occurs and is continuing for the period set forth therein, then the
Obligations shall automatically become immediately due and payable
without
declaration or other act on the part of the Secured
Parties.
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(b)
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Upon
the occurrence of an Event of Default, the Secured Parties shall:
(i) be
entitled to receive all distributions with respect to the Pledged
Collateral, (ii) to cause the Pledged Property to be transferred
into the
name of the Secured Parties or its nominee, (iii) to dispose of the
Pledged Property, and (iv) to realize upon any and all rights in
the
Pledged Property then held by the Secured
Parties.
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Section
5.2. Method
of Realizing Upon the Pledged Property: Other Remedies.
Upon
the occurrence of an Event of Default, in addition to any rights and remedies
available at law or in equity, the following provisions shall govern the Secured
Parties’ right to realize upon the Pledged Property:
(a)
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any
item of the Pledged Property may be sold for cash or other value
in any
number of lots at brokers board, public auction or private sale and
may be
sold without demand, advertisement or notice (except that the Secured
Parties shall give the Company ten (10) days’ prior written notice of the
time and place or of the time after which a private sale may be made
(the
“Sale
Notice”)),
which notice period is hereby agreed to be commercially reasonable.
At any
sale or sales of the Pledged Property, the Company may bid for and
purchase the whole or any part of the Pledged Property and, upon
compliance with the terms of such sale, may hold, exploit and dispose
of
the same without further accountability to the Secured Parties. The
Company will execute and deliver, or cause to be executed and delivered,
such instruments, documents, assignments, waivers, certificates,
and
affidavits and supply or cause to be supplied such further information
and
take such further action as the Secured Parties reasonably shall
require
in connection with any such sale.
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(b)
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Any
cash being held by the Secured Parties as Pledged Collateral and
all cash
proceeds received by the Secured Parties in respect of, sale of,
collection from, or other realization upon all or any part of the
Pledged
Collateral shall be applied as
follows:
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(i)
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to
the payment of all amounts due the Secured Parties for the expenses
reimbursable to it hereunder or owed to it pursuant to Section 8.3
hereof;
then
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(ii)
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to
the payment of the Obligations then due and unpaid; and
then
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(iii)
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to
the balance, if any, to the person or persons entitled thereto, including,
without limitation, the Company.
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(c)
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In
addition to all of the rights and remedies which the Secured Parties
may
have pursuant to this Agreement, the Secured Parties shall have all
of the
rights and remedies provided by law, including, without limitation,
those
under the Uniform Commercial
Code.
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(i)
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If
the Company fails to pay such amounts due upon the occurrence of
an Event
of Default which is continuing, then the Secured Parties may institute
a
judicial proceeding for the collection of the sums so due and unpaid,
may
prosecute such proceeding to judgment or final decree and may enforce
the
same against the Company and collect the monies adjudged or decreed
to be
payable in the manner provided by law out of the property of Company,
wherever situated.
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(ii)
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The
Company agrees that it shall be liable for any reasonable fees, expenses
and costs incurred by the Secured Parties in connection with enforcement,
collection and preservation of the terms of this Agreement, including,
without limitation, reasonable legal fees and expenses, and such
amounts
shall be deemed included as Obligations secured hereby and payable
as set
forth in Section 8.3 hereof.
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Section
5.3. Proofs
of Claim.
In case
of the pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other judicial
proceeding relating to the Company or the property of the Company or of such
other obligor or its creditors, the Secured Parties (irrespective of whether
the
Obligations shall then be due and payable as therein expressed or by declaration
or otherwise and irrespective of whether the Secured Parties shall have made
any
demand on the Company for the payment of the Obligations), subject to the rights
of previous security holders, shall be entitled and empowered, by intervention
in such proceeding or otherwise:
(a)
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to
file and prove a claim for the whole amount of the Obligations and
to file
such other papers or documents as may be necessary or advisable in
order
to have the claims of the Secured Parties (including any claim for
the
reasonable legal fees and expenses and other expenses paid or incurred
by
the Secured Parties permitted hereunder and of the Secured Parties
allowed
in such judicial proceeding); and
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(b)
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to
collect and receive any monies or other property payable or deliverable
on
any such claims and to distribute the same; and any custodian, receiver,
assignee, trustee, liquidator, sequestrator or other similar official
in
any such judicial proceeding is hereby authorized by the Secured
Parties
to make such payments to the Secured Parties and, in the event that
the
Secured Parties shall consent to the making of such payments directed
to
the Secured Parties, to pay to the Secured Parties any amounts for
expenses due it hereunder.
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Section
5.4. Duties
Regarding Pledged Collateral.
The
Secured Parties shall have no duty as to the collection or protection of the
Pledged Property or any income thereon or as to the preservation of any rights
pertaining thereto, beyond the safe custody and reasonable care of any of the
Pledged Property actually in the Secured Parties’ possession.
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ARTICLE
6.
AFFIRMATIVE
COVENANTS
The
Company covenants and agrees that, from the date hereof and until the
Obligations have been fully paid and satisfied, unless the Secured Parties
shall
consent otherwise in writing (as provided in Section 8.4 hereof):
Section
6.1. Existence,
Properties, Etc.
(a)
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The
Company shall do, or cause to be done, all things, or proceed with
due
diligence with any actions or courses of action, that may be reasonably
necessary:
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(i)
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to
maintain Company’s due organization, valid existence and good standing
under the laws of its state of incorporation,
and
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(ii)
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to
preserve and keep in full force and effect all qualifications, licenses
and registrations in those jurisdictions in which the failure to
do so
could have a Material Adverse Effect (as defined
below).
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(b)
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The
Company shall not do, or cause to be done, any act impairing the
Company’s
corporate power or authority:
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(i)
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to
carry on the Company’s business as now
conducted;
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(ii)
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to
execute or deliver this Agreement or any other document delivered
in
connection herewith, including, without limitation, any UCC-1 Financing
Statements required by the Secured Parties to which they are or will
be
party; or
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(iii)
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perform
any of the Company’s obligations hereunder or
thereunder.
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For
purpose of this Agreement, the term “Material
Adverse Effect”
shall
mean any material and adverse affect as determined by Secured Parties in their
sole discretion, whether individually or in the aggregate, upon (a) the
Company’s assets, business, operations, properties or condition, financial or
otherwise; (b) the Company’s to make payment as and when due of all or any part
of the Obligations; or (c) the Pledged Property.
Section
6.2. Financial
Statements and Reports.
The
Company shall furnish to the Secured Parties within a reasonable time such
financial data as the Secured Parties may reasonably request, including, without
limitation, the following:
(a)
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The
balance sheet of the Company as of the close of each fiscal year,
the
statement of earnings and retained earnings of the Company as of
the close
of such fiscal year, and statement of cash flows for the Company
for such
fiscal year, all in reasonable detail, prepared in accordance with
generally accepted accounting principles consistently applied, certified
by the chief executive and chief financial officers of the Company
as
being true and correct and accompanied by a certificate of the chief
executive and chief financial officers of the Company, stating that
the
Company has kept, observed, performed and fulfilled each covenant,
term
and condition of this Agreement during such fiscal year and that
no Event
of Default hereunder has occurred and is continuing, or if an Event
of
Default has occurred and is continuing, specifying the nature of
same, the
period of existence of same and the action the Company proposes to
take in
connection therewith;
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7
(b)
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On
a quarterly basis a balance sheet of the Company, and statement of
earnings and retained earnings of the Company as of the close of
such
quarter, all in reasonable detail, and prepared substantially in
accordance with generally accepted accounting principles consistently
applied, certified by the chief executive and chief financial officers
of
the Company as being true and correct;
and
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(c)
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Copies
of all accountants’ reports and accompanying financial reports submitted
to the Company by independent accountants in connection with each
annual
examination of the Company.
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Section
6.3. Accounts
and Reports.
The
Company shall maintain a standard system of accounting in accordance with
generally accepted accounting principles consistently applied and provide,
at
its sole expense, to the Secured Parties the following:
(a)
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as
soon as available, a copy of any notice or other communication alleging
any nonpayment or other material breach or default, or any foreclosure
or
other action respecting any material portion of its assets and properties,
received respecting any of the indebtedness of the Company in excess
of
$100,000 (other than the Obligations), or any demand or other request
for
payment under any guaranty, assumption, purchase agreement or similar
agreement or arrangement respecting the indebtedness or obligations
of
others in excess of $100,000, including any received from any person
acting on behalf of the Secured Parties or beneficiary thereof;
and
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(b)
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within
fifteen (15) days after the making of each submission or filing,
a copy of
any report, financial statement, notice or other document, whether
periodic or otherwise, submitted to the shareholders of the Company,
or
submitted to or filed by the Company with any governmental authority
involving or affecting (i) the Company that could have a Material
Adverse
Effect; (ii) the Obligations; (iii) any part of the Pledged Collateral;
or
(iv) any of the transactions contemplated in this Agreement or the
Convertible Notes.
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Section
6.4. Maintenance
of Books and Records; Inspection.
The
Company shall maintain its books, accounts and records in accordance with
generally accepted accounting principles consistently applied, and permit the
Secured Parties, their officers and employees and any professionals designated
by the Secured Parties in writing, at any time to visit and inspect any of
its
properties (including but not limited to the collateral security described
in
this Agreement), corporate books and financial records, and to discuss its
accounts, affairs and finances with any employee, officer or director
thereof.
8
Section
6.5. Maintenance
and Insurance.
The
Company shall maintain or cause to be maintained, at its own
expense:
(a)
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all
of its assets and properties in good working order and condition,
making
all necessary repairs thereto and renewals and replacements thereof;
and
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(b)
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insurance
with adequate, financially sound and reputable insurers, in form,
substance and amounts (including deductibles), which the Company
deems
reasonably necessary to the Company’s
business:
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(i)
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adequate
to insure all assets and properties of the Company, which assets
and
properties are of a character usually insured by persons engaged
in the
same or similar business against loss or damage resulting from fire
or
other risks included in an extended coverage
policy;
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(ii)
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against
public liability and other tort claims that may be incurred by the
Company;
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(iii)
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as
may be required by applicable law; and
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(iv)
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as
may be reasonably requested by Secured
Parties.
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Section
6.6. Contracts
and Other Collateral.
The
Company shall perform all of its obligations under or with respect to each
instrument, receivable, contract and other intangible included in the Pledged
Property to which the Company is now or hereafter will be party on a timely
basis and in the manner therein required, including, without limitation, this
Agreement.
Section
6.7. Defense
of Collateral, Etc.
The
Company shall defend and enforce its right, title and interest in and to any
part of: (a) the Pledged Property; and (b) if not included within the Pledged
Property, those assets and properties whose loss could have a Material Adverse
Effect, the Company shall defend the Secured Parties’ right, title and interest
in and to each and every part of the Pledged Property, each against all manner
of claims and demands on a timely basis to the full extent permitted by
applicable law.
Section
6.8. Payment
of Debts, Taxes, Etc.
The
Company shall use its commercial best efforts to pay, or cause to be paid,
all
of its indebtedness and other liabilities and perform, or cause to be performed,
all of its obligations in accordance with the respective terms thereof, and
pay
and discharge, or cause to be paid or discharged, all taxes, assessments and
other governmental charges and levies imposed upon it, upon any of its assets
and properties on or before the last day on which the same may be paid without
penalty, as well as pay all other lawful claims (whether for services, labor,
materials, supplies or otherwise) as and when due.
9
Section
6.9. Taxes
and Assessments; Tax Indemnity.
The
Company shall (a) file all tax returns and appropriate schedules thereto that
are required to be filed under applicable law, prior to the date of delinquency,
(b) pay and discharge all taxes, assessments and governmental charges or levies
imposed upon the Company, upon its income and profits or upon any properties
belonging to it, prior to the date on which penalties attach hereto, and (c)
pay
all taxes, assessments and governmental charges or levies that, if unpaid,
might
become a lien or charge upon any of its properties; provided, however, that
the
Company in good faith may contest any such tax, assessment, governmental charge
or levy described in the foregoing clauses (b) and (c) so long as appropriate
reserves are maintained with respect thereto.
Section
6.10. Compliance
with Law and Other Agreements.
The
Company shall maintain its business operations and property owned or used in
connection therewith in compliance with (a) all applicable federal, state and
local laws, regulations and ordinances governing such business operations and
the use and ownership of such property, and (b) all agreements, licenses,
franchises, indentures and mortgages to which the Company is a party or by
which
the Company or any of its properties is bound. Without limiting the foregoing,
the Company shall use its commercial best efforts to pay all of its indebtedness
promptly in accordance with the terms thereof.
Section
6.11. Notice
of Default.
The
Company shall give written notice to the Secured Parties of the occurrence
of
any default or Event of Default under this Agreement promptly upon the
occurrence thereof.
Section
6.12. Notice
of Litigation.
The
Company shall give notice, in writing, to the Secured Parties
of:
(a)
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any
actions, suits or proceedings wherein the amount at issue is in excess
of
$25,000, instituted by any persons against the Company, or affecting
any
of the assets of the Company, and
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(b)
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any
dispute, not resolved within fifteen (15) days of the commencement
thereof, between the Company on the one hand and any governmental
or
regulatory body on the other hand, which might reasonably be expected
to
have a Material Adverse Effect on the business operations or financial
condition of the Company; provided that any disclosure by the Company
of
such information under the Securities Exchange Act of 1934, as amended,
shall be deemed to be in compliance with this Section
6.12.
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ARTICLE
7.
NEGATIVE
COVENANTS
The
Company covenants and agrees that, from the date hereof until the Obligations
have been fully paid and satisfied, the Company shall not, unless the Secured
Parties shall consent otherwise in writing:
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Section
7.1. Liens
and Encumbrances.
The
Company shall not directly or indirectly make, create, incur, assume or permit
to exist any assignment, transfer, pledge, mortgage, security interest or other
lien or encumbrance of any nature in, to or against any part of the Pledged
Property, or offer or agree to do so, or assign, pledge or in any way transfer
or encumber its right to receive any income or other distribution or proceeds
from any part of the Pledged Property; or enter into any sale-leaseback
financing respecting any part of the Pledged Property as lessee, or cause or
assist the inception or continuation of any of the foregoing.
Section
7.2. Dividends,
Etc.
The
Company shall not declare or pay any dividend of any kind, in cash or in
property, on any class of its capital stock, nor purchase, redeem, retire or
otherwise acquire for value any shares of such stock, nor make any distribution
of any kind in respect thereof, nor make any return of capital to shareholders,
nor make any payments in respect of any pension, profit sharing, retirement,
stock option, stock bonus, incentive compensation or similar plan (except as
required or permitted hereunder), without the prior written consent of the
Secured Parties.
Section
7.3. Conduct
of Business.
The
Company will continue to engage, in an efficient and economical manner, in
a
business of the same general type as conducted by it on the date of this
Agreement.
Section
7.4. Places
of Business.
The
location of the Company’s chief place of business is set forth above. The
Company shall not change the location of its chief place of business, chief
executive office or any place of business disclosed to the Secured Parties
or
move any of the Pledged Property from its current location without thirty (30)
days prior written notice to the Secured Parties in each instance.
ARTICLE
8.
MISCELLANEOUS
Section
8.1. Notices.
All
notices or other communications required or permitted to be given pursuant
to
this Agreement shall be in writing and shall be considered as duly given on:
(a)
the date of delivery, if delivered in person, by nationally recognized overnight
delivery service or (b) five (5) days after mailing if mailed from within the
continental United States by certified mail, return receipt requested to the
party entitled to receive the same:
if
to the Company:
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InferX
Corporation
0000
Xxxxxxxxxxxxx Xxxxx, Xxxxx 000
XxXxxx,
XX 00000
Attn:
Xxxx X. Xxxxxxxxx, President and CEO
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with
a copy to:
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Seyfarth
Xxxx LLP
000
Xxxxxxxxxxx Xxxxxx, X.X., Xxxxx 000
Xxxxxxxxxx,
X.X. 00000-0000
Attn:
Xxxxxx X. Xxxxx, Esq.
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11
If
to the Secured Parties:
|
Xxxxxxx
X’Xxxxx
c/o
Lacuna Hedge Fund LLLP
0000
Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx,
XX 00000
|
Any
party
may change its address by giving notice to the other party stating its new
address. Commencing on the tenth (10th) day after the giving of such notice,
such newly designated address shall be such party’s address for the purpose of
all notices or other communications required or permitted to be given pursuant
to this Agreement.
Section
8.2. Severability.
If any
provision of this Agreement shall be held invalid or unenforceable, such
invalidity or unenforceability shall attach only to such provision and shall
not
in any manner affect or render invalid or unenforceable any other severable
provision of this Agreement, and this Agreement shall be carried out as if
any
such invalid or unenforceable provision were not contained herein.
Section
8.3. Expenses.
In the
event of an Event of Default, the Company will pay to the Secured Parties the
amount of any and all reasonable expenses, including the reasonable fees and
expenses of its counsel, which the Secured Parties may incur in connection
with:
(a) the custody or preservation of, or the sale, collection from, or other
realization upon, any of the Pledged Property; (b) the exercise or enforcement
of any of the rights of the Secured Parties hereunder or (c) the failure by
the
Company to perform or observe any of the provisions hereof.
Section
8.4. Waivers,
Amendments, Etc.
The
Secured Parties’ delay or failure at any time or times hereafter to require
strict performance by Company of any undertakings, agreements or covenants
shall
not waiver, affect, or diminish any right of the Secured Parties under this
Agreement to demand strict compliance and performance herewith. Any waiver
by
the Secured Parties of any Event of Default shall not waive or affect any other
Event of Default, whether such Event of Default is prior or subsequent thereto
and whether of the same or a different type. None of the undertakings,
agreements and covenants of the Company contained in this Agreement, and no
Event of Default, shall be deemed to have been waived by the Secured Parties,
nor may this Agreement be amended, changed or modified, unless such waiver,
amendment, change or modification is evidenced by an instrument in writing
specifying such waiver, amendment, change or modification and signed by the
Secured Parties.
Section
8.5. Continuing
Security Interest.
This
Agreement shall create a continuing security interest in the Pledged Property
and shall: (a) remain in full force and effect until payment in full of the
Obligations; and (b) be binding upon the Company and its successors and heirs
and (c) inure to the benefit of the Secured Parties and its successors and
assigns. Upon the payment or satisfaction in full of the Obligations, the
Company shall be entitled to the return, at its expense, of such of the Pledged
Property as shall not have been sold in accordance with Section 5.2 hereof
or
otherwise applied pursuant to the terms hereof.
12
Section
8.6. Independent
Representation.
Each
party hereto acknowledges and agrees that it has received or has had the
opportunity to receive independent legal counsel of its own choice and that
it
has been sufficiently apprised of its rights and responsibilities with regard
to
the substance of this Agreement.
Section
8.7. Applicable
Law; Jurisdiction.
This
Agreement shall be governed by and interpreted in accordance with the laws
of
the State of Delaware without regard to the principles of conflict of laws.
Section
8.8. Waiver
of Jury Trial.
AS A
FURTHER INDUCEMENT FOR THE SECURED PARTIES TO ENTER INTO THIS AGREEMENT AND
TO
MAKE THE FINANCIAL ACCOMMODATIONS TO THE COMPANY, THE COMPANY HEREBY WAIVES
ANY
RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING RELATED IN ANY WAY TO THIS
AGREEMENT AND/OR ANY AND ALL OTHER DOCUMENTS RELATED TO THIS
TRANSACTION.
Section
8.9. Entire
Agreement.
This
Agreement constitutes the entire agreement among the parties and supersedes
any
prior agreement or understanding among them with respect to the subject matter
hereof.
[SIGNATURE
PAGE FOLLOWS]
13
IN
WITNESS WHEREOF, the parties hereto have executed this Security Agreement as
of
the date first above written.
THE
COMPANY:
/s/
X.X.
Xxxxx
|
By:
X.X. Xxxxx
|
Its:
Chairman of the Board
|
SECURED
PARTIES:
|
XXXXXXX
X’XXXXX
|
__________________________
|
By:
__________________
|
Title:
_____________
|
OTHER
SECURED PARTIES
|
__________________________
|
14
EXHIBIT
A
DEFINITION
OF PLEDGED PROPERTY
For
the
purpose of securing prompt and complete payment and performance by the Company
of all of the Obligations, the Company unconditionally and irrevocably hereby
grants to the Secured Parties a continuing security interest in and to, and
lien
upon, the following Pledged Property of the Company:
(a)
|
all
of the software, intellectual property, including any patents, or
patents-pending of the Company and its subsidiaries, including any
and all
and
|
(b)
|
all
products and proceeds (including, without limitation, insurance proceeds)
from the above-described Pledged
Property.
|
15
EXHIBIT
B
SECURED
PARTIES
16