SECURITY AGREEMENT
Exhibit
10.3
This
SECURITY AGREEMENT is entered into as of March 31, 2008, by and between SILICON VALLEY BANK, a
California corporation, with its principal place of business at 0000 Xxxxxx
Xxxxx, Xxxxx Xxxxx, Xxxxxxxxxx 00000 and with a loan production office located
at 0000 Xxxxxx Xxxxxxxx Xxxxx, Xxxxx 000, Xxxxxx, Xxxxxxxx 00000
(“Bank”) and GLOBALOPTIONS
GROUP, INC., a Delaware corporation, with offices at 00 Xxxxxxxxxxx
Xxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000 (“Debtor”).
RECITALS
Debtor
has executed and delivered a certain Unconditional Guaranty to Bank dated as of
March 31, 2008 of the obligations and liabilities of GLOBALOPTIONS, INC., a
Delaware corporation and THE
BODE TECHNOLOGY GROUP, INC., a Delaware corporation (individually and
collectively, jointly and severally, the “Borrower”), to Bank (as may be amended
from time to time, the “Guaranty”). Bank has agreed to lend money to
Borrower, but only upon the condition that Debtor execute and deliver this
Security Agreement to secure the payment and performance of the Obligations
under the Guaranty (the “Obligations”) in accordance with the terms of this
Agreement. Capitalized terms used but not otherwise defined herein
shall have the same meaning as in the Fourth Amended and Restated Loan and
Agreement by and between the Borrower and the Bank dated as of March 31, 2008
(as amended and in effect, collectively, the “Loan Agreement”).
AGREEMENT
The
parties agree as follows:
1 CREATION OF SECURITY
INTEREST
1.1 Grant of
Security Interest. Debtor hereby grants Bank, to secure the
payment and performance in full of all of the Obligations and the performance of
each of Debtor’s duties under the Guaranty, a continuing security interest in,
and pledges and assigns to the Bank, the Collateral, wherever located, whether
now owned or hereafter acquired or arising, and all proceeds and products
thereof. Debtor warrants and represents that the security interest
granted herein shall be a first priority security interest in the
Collateral.
Except as
noted on the Perfection Certificate, Debtor is not a party to, nor is bound by,
any material license (other than over the counter software that is commercially
available to the public) or other material agreement with respect to which the
Debtor is the licensee that prohibits or otherwise restricts Debtor from
granting a security interest in Debtor’s interest in such license or agreement
or any other property. Debtor shall provide written notice to Bank
within ten (10) days of entering or becoming bound by, any such license or
agreement which is reasonably likely to have a material impact on Debtor’s
business or financial condition. Debtor shall take such steps as Bank
reasonably requests to obtain the consent of, authorization by or waiver by, any
person whose consent or waiver is necessary for all such licenses or contract
rights to be deemed “Collateral” and for Bank to have a security interest in it
that might otherwise be restricted or prohibited by law or by the terms of any
such license or agreement, whether now existing or entered into in the
future.
Bank’s
lien and security interest in the Collateral shall continue until the Guaranty
is terminated in writing by Bank. If Debtor shall at any time,
acquire a commercial tort claim, Debtor shall promptly notify Bank in a writing
signed by Debtor of the brief details thereof and grant to Bank in such writing
a security interest therein and in the proceeds thereof, all upon the terms of
this Agreement, with such writing to be in form and substance satisfactory to
Bank.
1.2 Authorization
to File Financing Statements. Debtor hereby authorizes Bank to
file financing statements, without notice to Debtor, with all appropriate
jurisdictions in order to perfect or protect Bank’s interest or rights
hereunder, including a notice that any disposition of the Collateral, by either
the Debtor or any other Person, shall be deemed to violate the rights of the
Bank under the Code.
2 REPRESENTATIONS AND
WARRANTIES
Debtor
represents and warrants as follows:
2.1 Due
Organization and Authorization. Debtor and each Subsidiary is
duly existing and in good standing in its state of formation and qualified and
licensed to do business in, and in good standing in, any state in which the
conduct of its business or its ownership of property requires that it be
qualified except where the failure to do so could not reasonably be expected to
cause a Material Adverse Change. In connection with this Agreement,
the Debtor delivered to the Bank a certificate signed by the Debtor and entitled
“Perfection Certificate” (the “Perfection Certificate”). The Debtor
represents and warrants to the Bank that: (a) the Debtor’s exact legal name is
that indicated on the Perfection Certificate and on the signature page hereof;
and (b) the Debtor is an organization of the type, and is organized in the
jurisdiction, set forth in the Perfection Certificate; and (c) the Perfection
Certificate accurately sets forth the Debtor’s organizational identification
number or accurately states that the Debtor has none; and (d) the Perfection
Certificate accurately sets forth the Debtor’s place of business, or, if more
than one, its chief executive office as well as the Debtor’s mailing address if
different, and (e) all other information set forth on the Perfection Certificate
pertaining to the Debtor is accurate and complete. If the Debtor does
not now have an organizational identification number, but later obtains one,
Debtor shall forthwith notify the Bank of such organizational identification
number.
The
execution, delivery and performance of the Guaranty have been duly authorized,
and do not conflict with Debtor’s organizational documents, nor constitute an
event of default under any material agreement by which Debtor is
bound. Debtor is not in default under any agreement to which or by
which it is bound in which the default could reasonably be expected to cause a
Material Adverse Change.
2.2 Collateral. Debtor
has good title to the Collateral, free of Liens except Permitted
Liens. Debtor has no deposit account, other than the deposit accounts
with Bank and deposit accounts described in the Perfection Certificate delivered
to the Bank in connection herewith. The Accounts are bona fide,
existing obligations, and the service or property has been performed or
delivered to the account debtor or its agent for immediate shipment to and
unconditional acceptance by the account debtor. The Collateral is not in the
possession of any third party bailee (such as a warehouse). Except as
hereafter disclosed to the Bank in writing by Debtor, none of the components of
the Collateral shall be maintained at locations other than as provided in the
Perfection Certificate. In the event that Debtor, after the date
hereof, intends to store or otherwise deliver any portion of the Collateral to a
bailee, then Debtor will first receive the written consent of Bank and such
bailee must acknowledge in writing that the bailee is holding such Collateral
for the benefit of Bank. All Inventory is in all material respects of
good and marketable quality, free from material defects. Debtor is
the sole owner of the Intellectual Property, except for non-exclusive licenses
granted to its customers in the ordinary course of business. Each
Patent is valid and enforceable and no part of the Intellectual Property has
been judged invalid or unenforceable, in whole or in part, and no claim has been
made that any part of the Intellectual Property violates the rights of any third
party except to the extent such claim could not reasonably be expected to cause
a Material Adverse Change.
2.3 Litigation. Except
as shown in the Perfection Certificate, there are no actions or proceedings
pending or, to the knowledge of Debtor’s Responsible Officers, threatened by or
against Debtor or any Subsidiary in which an adverse decision could reasonably
be expected to cause a Material Adverse Change.
2.4 No
Material Deterioration in Financial Statements. All
consolidated financial statements for Debtor and any Subsidiary delivered to
Bank fairly present in all material respects Debtor’s consolidated financial
condition and Debtor’s consolidated results of operations. There has
not been any material deterioration in Debtor’s consolidated financial condition
since the date of the most recent financial statements submitted to
Bank.
2.5 Solvency. The
fair salable value of Debtor’s assets (including goodwill minus disposition
costs) exceeds the fair value of its liabilities; the Debtor is not left with
unreasonably small capital after the transactions in this Agreement; and Debtor
is able to pay its debts (including trade debts) as they mature.
2.6 Regulatory
Compliance. Debtor is not an “investment company” or a company
“controlled” by an “investment company” under the Investment Company
Act. Debtor is not engaged as one of its important activities in
extending credit for margin stock (under Regulations T and U of the Federal
Reserve Board of Governors). Debtor has complied in all material
respects with the Federal Fair Labor Standards Act. Debtor has not
violated any laws, ordinances or rules, the violation of which could reasonably
be expected to cause a Material Adverse Change. None of Debtor’s or
any Subsidiary’s properties or assets has been used by Debtor or any Subsidiary
or, to the best of Debtor’s knowledge, by previous
Persons, in disposing, producing, storing, treating, or transporting any
hazardous substance other than legally. Debtor and each Subsidiary
has timely filed all required tax returns and paid, or made adequate provision
to pay, all material taxes, except those being contested in good faith with
adequate reserves under GAAP. Debtor and each Subsidiary has obtained
all consents, approvals and authorizations of, made all declarations or filings
with, and given all notices to, all government authorities that are necessary to
continue its business as currently conducted except where the failure to make
such declarations, notices or filings would not reasonably be
expected to cause a Material Adverse Change.
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2.7 Subsidiaries. Debtor
does not own any stock, partnership interest or other equity securities except
for Permitted Investments.
2.8 Full
Disclosure. No written representation, warranty or other
statement of Debtor in any certificate or written statement given to Bank taken
together with all such written certificates and written statements given to Bank
contains any untrue statement of a material fact or omits to state a material
fact necessary to make the statements contained in the certificates or
statements not misleading (it being recognized by Bank that the projections and
forecasts provided by Debtor in good faith and based upon reasonable assumptions
are not viewed as facts and that actual results during the period or periods
covered by such projections and forecasts may differ from the projected or
forecasted results).
3 AFFIRMATIVE
COVENANTS
Debtor
shall do all of the following:
3.1 Government
Compliance. Debtor shall maintain its and all Subsidiaries’
legal existence and good standing in its jurisdiction of formation and maintain
qualification in each jurisdiction in which the failure to so qualify would
reasonably be expected to have a material adverse effect on Debtor’s business or
operations. Debtor shall comply, and have each Subsidiary comply,
with all laws, ordinances and regulations to which it is subject, noncompliance
with which could have a material adverse effect on Debtor’s business or
operations or would reasonably be expected to cause a Material Adverse
Change.
3.2 Inventory;
Returns. Debtor shall keep all Inventory in good and
marketable condition, free from material defects. Returns and
allowances between Debtor and its account debtors shall follow Debtor’s
customary practices as they exist at the Closing Date.
3.3 Taxes. Debtor
shall make, and cause each Subsidiary to make, timely payment of all material
federal, state, and local taxes or assessments (other than taxes and assessments
which Debtor is contesting in good faith, with adequate reserves maintained in
accordance with GAAP) and will deliver to Bank, on demand, appropriate
certificates attesting to such payments.
3.4 Insurance. Debtor
shall keep its business and the Collateral insured for risks and in
amounts, and as Bank may reasonably
request. Insurance policies shall be in a form, with companies, and
in amounts that are satisfactory to Bank. All property policies shall
have a lender’s loss payable endorsement showing Bank as an
additional loss payee and all liability policies shall show the Bank
as an additional insured and all policies shall provide that the
insurer must give Bank at least thirty (30) days notice before canceling its
policy. At Bank’s request, Debtor shall deliver certified copies of
policies and evidence of all premium payments. Proceeds payable under any policy
shall, at Bank’s option, be payable to Bank on account of the
Obligations. Notwithstanding the foregoing, so long as no Event of
Default has occurred and is continuing, Debtor shall have the option of applying
the proceeds of any casualty policy up to $50,000.00, in the aggregate, toward
the replacement or repair of destroyed or damaged property; provided that (i)
any such replaced or repaired property (a) shall be of equal or like value as
the replaced or repaired Collateral and (b) shall be deemed Collateral in which
Bank has been granted a first priority security interest and (ii) after the
occurrence and during the continuation of an Event of Default all proceeds
payable under such casualty policy shall, at the option of the Bank, be payable
to Bank on account of the Obligations. If Debtor fails to obtain
insurance as required under Section 3.4 or to pay any amount or furnish any
required proof of payment to third persons and the Bank, Bank may make all or
part of such payment or obtain such insurance policies required in Section 3.4,
and take any action under the policies Bank deems prudent.
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3.5 Accounts.
(a) In
order to permit the Bank to monitor the Debtor’s financial performance and
condition, Debtor, and all Debtor’s Subsidiaries, shall maintain Debtor’s, and
such Subsidiaries, depository, operating, and securities accounts with
Bank.
(b) Debtor
shall identify to Bank, in writing, any bank or securities account opened by
Debtor with any institution other than Bank. In addition, for each
such account that the Debtor at any time opens or maintains, Debtor shall, at
the Bank’s request and option, pursuant to an agreement in form and substance
acceptable to the Bank, cause the depository bank or securities intermediary to
agree that such account is the collateral of the Bank pursuant to the terms
hereunder. The provisions of the previous sentence shall not apply to
deposit accounts exclusively used for payroll, payroll taxes and other employee
wage and benefit payments to or for the benefit of the Debtor’s
employees.
3.6 Protection
and Registration of Intellectual Property Rights. Debtor shall
not register any Copyrights or Mask Works in the United States Copyright Office
unless it: (i) has given at least five (5) days’ prior written notice to Bank of
its intent to register such Copyrights or Mask Works and has provided Bank with
a copy of the application it intends to file with the United States Copyright
Office (excluding exhibits thereto); (ii) executes a security agreement/IP
Agreement or such other documents as Bank may reasonably request in order to
maintain the perfection and priority of Bank’s security interest in the
Copyrights proposed to be registered with the United States Copyright Office;
and (iii) records such security agreement/IP Agreement with the United States
Copyright Office contemporaneously with filing the Copyright application(s) with
the United States Copyright Office. Debtor shall promptly provide to
Bank a copy of the Copyright application(s) filed with the United States
Copyright Office, together with evidence of the recording of the security
documents/IP Agreement necessary for Bank to maintain the perfection and
priority of its security interest in such Copyrights or Mask
Works. Debtor shall provide written notice to Bank of any application
filed by Debtor in the United States Patent Trademark Office for a patent or to
register a trademark or service xxxx within thirty (30) days of any such
filing.
Debtor shall: (a) protect,
defend and maintain the validity and enforceability of the Intellectual
Property; (b) promptly advise Bank in writing of infringements of the
Intellectual Property; and (c) not allow any Intellectual Property to be
abandoned, forfeited or dedicated to the public without Bank’s written
consent.
3.7 Further
Assurances. Debtor shall execute any further instruments and
take further action as Bank reasonably requests to perfect or continue Bank’s
security interest in the Collateral or to effect the purposes of this
Agreement.
4 NEGATIVE
COVENANTS
Debtor
shall not do any of the following without the Bank’s prior written
consent:
4.1 Dispositions. Convey,
sell, lease, transfer, assign or otherwise dispose of (collectively a
“Transfer”), or permit any of its Subsidiaries to Transfer, all or any part of
its business or property, including the Intellectual Property, except for
Transfers (a) of Inventory in the ordinary course of business; (b) of
non-exclusive licenses and similar arrangements for the use of the property of
Debtor or its Subsidiaries in the ordinary course of business; (c) of worn-out
or obsolete Equipment; and (d) of non-exclusive licenses in the ordinary course
of business. The Debtor shall not enter into an agreement with any
Person other than the Bank which restricts the subsequent granting of a security
interest in the Intellectual Property.
4.2 Changes
in Business, Ownership, Management or Business
Locations. Engage in or permit any of its Subsidiaries to
engage in any business other than the businesses currently engaged in by Debtor
or reasonably related thereto, or have a material change in its ownership (other
than by the sale of Debtor’s equity securities in a public offering or to
venture capital investors so long as Debtor identifies to Bank the venture
capital investors prior to the closing of the investment), or
management. Debtor shall not, without at least thirty (30) days prior
written notice to Bank: (i) relocate its chief executive office, or add any new
offices or business locations, including warehouses (unless such new offices or
business locations contain less than Five Thousand Dollars ($5,000.00) in
Debtor’s assets or property), or (ii) change its jurisdiction of organization,
or (iii) change its organizational structure or type, or (iv) change its legal
name, or (v) change any organizational number (if any) assigned by its
jurisdiction of organization.
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4.3 Mergers
or Acquisitions. Merge or consolidate, or permit any of its
Subsidiaries to merge or consolidate, with any other Person, or acquire, or
permit any of its Subsidiaries to acquire, all or substantially all of the
capital stock or property of another Person. A Subsidiary may merge
or consolidate into another Subsidiary or into Debtor.
4.4 Indebtedness. Create,
incur, assume, or be liable for any Indebtedness, or permit any Subsidiary to do
so, other than Permitted Indebtedness.
4.5 Encumbrance. Create,
incur, or allow any Lien on any of its property, including the Intellectual
Property, or assign or convey any right to receive income, including the sale of
any Accounts, or permit any of its Subsidiaries to do so, except for Permitted
Liens, or permit any Collateral not to be subject to the first priority security
interest granted herein. The Collateral may also be subject to
Permitted Liens.
4.6 Distributions;
Investments. (i) Directly or indirectly acquire or own any
Person, or make any Investment in any Person, other than Permitted Investments,
or permit any of its Subsidiaries to do so; or (ii) pay any dividends or make
any distribution or payment or redeem, retire or purchase any capital stock.
4.7 Transactions
with Affiliates. Directly or indirectly enter into or permit
to exist any material transaction with any Affiliate of Debtor, except for
transactions that are in the ordinary course of Debtor’s business, upon fair and
reasonable terms that are no less favorable to Debtor than would be obtained in
an arm’s length transaction with a non-affiliated Person.
4.8 Subordinated
Debt. Make or permit any payment on any Subordinated Debt,
except under the terms of the Subordinated Debt, or amend any provision in any
document relating to the Subordinated Debt, without Bank’s prior written
consent.
4.9 Compliance. Become
an “investment company” or a company controlled by an “investment company”,
under the Investment Company Act of 1940 or undertake as one of its important
activities extending credit to purchase or carry margin stock, or use the
proceeds of any Credit Extension for that purpose; fail to meet the minimum
funding requirements of ERISA, permit a Reportable Event or Prohibited
Transaction, as defined in ERISA, to occur; fail to comply with the Federal Fair
Labor Standards Act or violate any other law or regulation, if the violation
could reasonably be expected to have a material adverse effect on Debtor’s
business or operations or would reasonably be expected to cause a Material
Adverse Change, or permit any of its Subsidiaries to do so.
5 EVENTS OF
DEFAULT
Any one
of the following is an Event of Default:
5.1 Payment
Default. Debtor fails to pay any of the Obligations by their
due date;
5.2 Covenant
Default. (i) Debtor fails or neglects to perform
any obligation in Section 3 or violates any covenant in Section 4; or
(ii) Debtor fails or neglects to perform, keep, or observe any other
material term, provision, condition, covenant or agreement contained
in this Agreement, the Guaranty, or in any present or future agreement between
Debtor and Bank and as to any default under such other material term, provision,
condition, covenant or agreement that can be cured, has failed to cure the
default within ten (10) days after the occurrence thereof; provided, however,
that if the default cannot by its nature be cured within the ten (10) day period
or cannot after diligent attempts by Debtor be cured within such ten (10) day
period, and such default is likely to be cured within a reasonable time, then
Debtor shall have an additional period (which shall not in any case
exceed thirty (30) days) to attempt to cure such default, and within such
reasonable time period the failure to cure the default shall not be deemed an
Event of Default (but no Credit Extensions shall be made during such cure
period). Grace periods provided under this section shall not apply,
among other things, to financial covenants or any other covenants that are
required to be satisfied, completed or tested by a date certain;
5.3 Material
Adverse Change. A Material Adverse Change occurs;
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5.4 Attachment. (i)
Any material portion of Debtor’s assets is attached, seized, levied on, or comes
into possession of a trustee or receiver and the attachment, seizure or levy is
not removed in ten (10) days; (ii) the service of process upon the Debtor
seeking to attach, by trustee or similar process, any funds of the Debtor on
deposit with the Bank, or any entity under control of Bank (including a
subsidiary); (iii) Debtor is enjoined, restrained, or prevented by court order
from conducting a material part of its business; (iv) a judgment or other claim
becomes a Lien on a material portion of Debtor’s assets; or (v) a notice of
lien, levy, or assessment is filed against any of Debtor’s assets by any
government agency and not paid within ten (10) days after Debtor receives
notice. These are not Events of Default if stayed or if a bond is
posted pending contest by Debtor (but no Credit Extensions shall be made during
the cure period);
5.5 Insolvency. (i)
Debtor is unable to pay its debts (including trade debts) as they become due or
otherwise becomes insolvent; (ii) Debtor begins an Insolvency Proceeding; or
(iii) an Insolvency Proceeding is begun against Debtor and not dismissed or
stayed within thirty (30) days (but no Credit Extensions shall be made before
any Insolvency Proceeding is dismissed);
5.6 Other
Agreements. If there is a default in any agreement to which
Debtor is a party with a third party or parties resulting in a right by such
third party or parties, whether or not exercised, to accelerate the maturity of
any Indebtedness in an amount in excess of One Hundred Thousand Dollars
($100,000) or that could result in a Material Adverse
Change;
5.7 Judgments. If
a judgment or judgments for the payment of money in an amount, individually or
in the aggregate, of at least Fifty Thousand Dollars ($50,000) shall be rendered
against Debtor and shall remain unsatisfied and unstayed for a period of ten
(10) days (provided that no Credit Extensions will be made prior to the
satisfaction or stay of such judgment);
5.8 Misrepresentations. If
Debtor or any Person acting for Debtor makes any material misrepresentation or
material misstatement now or later in any warranty or representation in this
Agreement or in any writing delivered to Bank or to induce Bank to enter this
Agreement or any Loan Document;
5.9 Subordinated
Debt. A default or breach occurs under any agreement between
Debtor and any creditor of Debtor that signed a subordination agreement with
Bank, or any creditor that has signed a subordination agreement with Bank
breaches any terms of the subordination agreement;
5.10 Guaranty. (i)
Any guaranty of any Obligations terminates or ceases for any reason to be in
full force; or (ii) any Guarantor does not perform any obligation or covenant
under any guaranty of the Obligations; or (iii) any material misrepresentation
or material misstatement exists now or later in any warranty or representation
in any guaranty of the Obligations or in any certificate delivered to Bank in
connection with the guaranty; or (iv) any circumstance described in Section 4,
or Sections 5.4, 5.5 or 5.7 occurs to any Guarantor, or (v) the liquidation,
winding up, termination of existence, or insolvency of any Guarantor;
or
5.11 Loan
Agreement. An Event of Default under the Loan
Agreement.
6 BANK’S RIGHTS AND
REMEDIES
6.1 Rights
and Remedies. When an Event of Default occurs and continues
Bank may, without notice or demand, do any or all of the following:
(a) Settle
or adjust disputes and claims directly with account debtors for amounts, on
terms and in any order that Bank considers advisable and notify any Person owing
Debtor money of Bank’s security interest in such funds and verify the amount of
such account;
(b) Make
any payments and do any acts it considers necessary or reasonable to protect its
security interest in the Collateral. Debtor shall assemble the
Collateral if Bank requests and make it available as Bank
designates. Bank may enter premises where the Collateral is located,
take and maintain possession of any part of the Collateral, and pay, purchase,
contest, or compromise any Lien which appears to be prior or superior to its
security interest and pay all expenses incurred. Debtor grants Bank a license to
enter and occupy any of its premises, without charge, to exercise any of Bank’s
rights or remedies;
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(c) Apply
to the Obligations any (i) balances and deposits of Debtor it holds, or (ii) any
amount held by Bank owing to or for the credit or the account of
Debtor;
(d) Ship,
reclaim, recover, store, finish, maintain, repair, prepare for sale, advertise
for sale, and sell the Collateral. Bank is hereby granted a
non-exclusive, royalty-free license or other right to use, without charge,
Debtor’s labels, patents, copyrights, mask works, rights of use of any name,
trade secrets, trade names, trademarks, service marks, and advertising matter,
or any similar property as it pertains to the Collateral, in completing
production of, advertising for sale, and selling any Collateral and, in
connection with Bank’s exercise of its rights under this Section, Debtor’s
rights under all licenses and all franchise agreements inure to Bank’s
benefit;
(e)
Place a “hold” on any account maintained with Bank and/or deliver a notice of
exclusive control, any entitlement order, or other directions or instructions
pursuant to any control agreement or similar agreements providing control of any
Collateral; and
(f) Exercise
all rights and remedies and dispose of the Collateral according to the
Code.
6.2 Power of
Attorney. Debtor hereby irrevocably appoints Bank as its
lawful attorney-in-fact, to be effective upon the occurrence and during the
continuance of an Event of Default, to: (i) endorse Debtor’s name on
any checks or other forms of payment or security; (ii) sign Debtor’s name on any
invoice or xxxx of lading for any Account or drafts against account debtors;
(iii) settle and adjust disputes and claims about the Accounts directly with
account debtors, for amounts and on terms Bank determines reasonable; (iv) make,
settle, and adjust all claims under Debtor’s insurance policies; and (v)
transfer the Collateral into the name of Bank or a third party as the Code
permits. Debtor hereby appoints Bank as its lawful attorney-in-fact
to sign Debtor’s name on any documents necessary to perfect or continue the
perfection of any security interest regardless of whether an Event of Default
has occurred until all Obligations have been satisfied in full and Bank is under
no further obligation to make Credit Extensions hereunder. Bank’s
foregoing appointment as Debtor’s attorney in fact, and all of Bank’s rights and
powers, coupled with an interest, are irrevocable until all Obligations have
been fully repaid and performed and Bank’s obligation to provide Credit
Extensions terminates.
6.3 Accounts
Notification/Collection. In the event that an Event of Default
occurs and is continuing, Bank may notify any Person owing Debtor money of
Bank’s security interest in the funds and verify and/or collect the amount of
the Account. After the occurrence of an Event of Default, any amounts
received by Debtor shall be held in trust by Debtor for Bank, and, if requested
by Bank, Debtor shall immediately deliver such receipts to Bank in the form
received from the account debtor, with proper endorsements for
deposit.
6.4 Bank
Expenses. Any amounts paid by Bank as provided herein shall
constitute Bank Expenses and are immediately due and payable, and shall bear
interest at the then applicable rate and be secured by the
Collateral. No payments by Bank shall be deemed an agreement to make
similar payments in the future or Bank’s waiver of any Event of
Default.
6.5 Bank’s
Liability for Collateral. So long as the Bank complies with
reasonable banking practices regarding the safekeeping of collateral, the Bank
shall not be liable or responsible for: (a) the safekeeping of the Collateral;
(b) any loss or damage to the Collateral; (c) any diminution in the value of the
Collateral; or (d) any act or default of any carrier, warehouseman, bailee, or
other Person. Debtor bears all risk of loss, damage or destruction of
the Collateral.
6.6 Remedies
Cumulative. Bank’s rights and remedies under this Agreement,
the Guaranty, and all other agreements are cumulative. Bank has all
rights and remedies provided under the Code, by law, or in equity. Bank’s
exercise of one right or remedy is not an election, and Bank’s waiver of any
Event of Default is not a continuing waiver. Bank’s delay is not a waiver,
election, or acquiescence. No waiver hereunder shall be effective unless signed
by Bank and then is only effective for the specific instance and purpose for
which it was given.
6.7 Demand
Waiver. Debtor waives demand, notice of default or dishonor,
notice of payment and nonpayment, notice of any default, nonpayment at maturity,
release, compromise, settlement, extension, or renewal of accounts, documents,
instruments, chattel paper, and guarantees held by Bank on which Debtor is
liable.
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7 NOTICES
All
notices or demands by any party to this Agreement or any other related agreement
must be in writing and be personally delivered or sent by an overnight delivery
service, by certified mail, postage prepaid, return receipt requested, or by
telefacsimile at the addresses listed below. Either Bank or
Debtor may change its notice address by giving the other party
written notice.
|
If to
Debtor:
|
GlobalOptions Group,
Inc.
00
Xxxxxxxxxxx Xxxxx
00xx
Xxxxx
Xxx
Xxxx, XX 00000
Attn:
Xxxx Xxxxxxx, CFO
|
|
If to
Bank:
|
Silicon Valley
Bank
0000
Xxxxx Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxx,
Xxxxxxxx 00000
Attn:
Xx. Xxxxx Xxxxxxxx
Fax:
(000) 000-0000
Email:
xxxxxxxxx@xxxxxx.xxx
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with a
copy to:
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Xxxxxx &
Xxxxxxxxxx LLP
Xxxxx
Xxxxxx Xxxxx
Xxxxxx,
Xxxxxxxxxxxxx 00000
Attn:
Xxxxx X. Xxxxxxx, Esquire
Fax:
(000) 000-0000
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8 CHOICE OF LAW, VENUE AND
JURY TRIAL WAIVER
Massachusetts
law governs the Guaranty without regard to principles of conflicts of
law. Debtor and Bank each submit to the exclusive jurisdiction of the
State and Federal courts in Massachusetts; provided, however, that if for any
reason Bank cannot avail itself of such courts in the Commonwealth of
Massachusetts, Debtor accepts jurisdiction of the courts and venue in Santa
Xxxxx County, California. NOTWITHSTANDING THE FOREGOING, THE BANK
SHALL HAVE THE RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST THE DEBTOR OR ITS
PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION WHICH THE BANK DEEMS NECESSARY
OR APPROPRIATE IN ORDER TO REALIZE ON THE COLLATERAL OR TO OTHERWISE ENFORCE THE
BANK’S RIGHTS AGAINST THE DEBTOR OR ITS PROPERTY.
DEBTOR AND BANK EACH WAIVE THEIR
RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION ARISING OUT OF OR BASED
UPON THIS AGREEMENT, THE GUARANTY OR ANY CONTEMPLATED TRANSACTION, INCLUDING
CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER CLAIMS. THIS WAIVER IS A MATERIAL
INDUCEMENT FOR BOTH PARTIES TO ENTER INTO THIS AGREEMENT. EACH PARTY
HAS REVIEWED THIS WAIVER WITH ITS COUNSEL.
9 GENERAL
PROVISIONS
9.1 Successors
and Assigns. This Agreement binds and is for the benefit of
the successors and permitted assigns of each party. Debtor may not
assign this Agreement or any rights or Obligations under it without Bank’s prior
written consent which may be granted or withheld in Bank’s
discretion. Bank has the right, without the consent of or notice to
Debtor, to sell, transfer, negotiate, or grant participation in all or any part
of, or any interest in, Bank’s obligations, rights and benefits under this
Agreement, the Guaranty or any related agreement.
9.2 Indemnification. Debtor
hereby indemnifies, defends and holds the Bank and its directors, officers,
employees and agents harmless against: (a) all obligations, demands,
claims, and liabilities asserted by any other party or Person in connection with
the transactions contemplated by the Guaranty; and (b) all losses or Bank
Expenses incurred, or paid by Bank from, following, or consequential to
transactions between Bank and Debtor (including reasonable attorneys’ fees and
expenses), except for losses caused by Bank’s gross negligence or willful
misconduct.
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9.3 Right of
Set-Off. Debtor hereby grants to Bank, a lien, security
interest and right of setoff as security for all Obligations to Bank, whether
now existing or hereafter arising upon and against all deposits, credits,
collateral and property, now or hereafter in the possession, custody,
safekeeping or control of Bank or any entity under the control of the Bank
(including a Bank subsidiary) or in transit to any of them. At any
time after the occurrence and during the continuance of an Event of Default,
without demand or notice, Bank may set off the same or any part thereof and
apply the same to any liability or obligation of Debtor even though unmatured
and regardless of the adequacy of any other collateral securing the
Obligations. ANY AND ALL RIGHTS TO REQUIRE BANK TO EXERCISE ITS
RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THE
OBLIGATIONS, PRIOR TO EXERCISING ITS RIGHT OF SETOFF WITH RESPECT TO SUCH
DEPOSITS, CREDITS OR OTHER PROPERTY OF THE DEBTOR ARE HEREBY KNOWINGLY,
VOLUNTARILY AND IRREVOCABLY WAIVED.
9.4 Time of
Essence. Time is of the essence for the performance of all
Obligations in this Agreement.
9.5 Severability
of Provision. Each provision of this Agreement is severable
from every other provision in determining the enforceability of any
provision.
9.6 Amendments
in Writing; Integration. All amendments to this Agreement must
be in writing signed by both Bank and Debtor. This Agreement and the
Guaranty represent the entire agreement about this subject matter, and supersede
prior negotiations or agreements. All prior agreements,
understandings, representations, warranties, and negotiations between the
parties about the subject matter of this Agreement and the Guaranty merge into
this Agreement and the Guaranty.
9.7 Counterparts. This
Agreement may be executed in any number of counterparts and by different parties
on separate counterparts, each of which, when executed and delivered, are an
original, and all taken together, constitute one Agreement.
9.8 Survival. All
covenants, representations and warranties made in this Agreement continue in
full force while any Obligations remain outstanding. The
obligation of Debtor in Section 9.2 to indemnify Bank shall survive until the
statute of limitations with respect to such claim or cause of action shall have
run.
9.9 Confidentiality. In
handling any confidential information, Bank shall exercise the same degree of
care that it exercises for its own proprietary information, but disclosure of
information may be made: (i) to Bank’s subsidiaries or affiliates in connection
with their business with Debtor; (ii) to prospective transferees or purchasers
of any interest in the Credit Extensions (provided, however, Bank shall use
commercially reasonable efforts in obtaining such prospective transferee’s or
purchaser’s agreement to the terms of this provision); (iii) as required by law,
regulation, subpoena, or other order, (iv) as required in connection with Bank’s
examination or audit; and (v) as Bank considers appropriate in exercising
remedies under this Agreement. Confidential information does not
include information that either: (a) is in the public domain or in Bank’s
possession when disclosed to Bank, or becomes part of the public domain after
disclosure to Bank; or (b) is disclosed to Bank by a third party, if Bank does
not know that the third party is prohibited from disclosing the
information.
10 DEFINITIONS
10.1 Definitions. In
this Agreement:
“Accounts” are all existing and
later arising accounts, contract rights,
and other obligations owed Debtor in connection with its
sale or lease of goods (including licensing software and other technology) or
provision of services, all credit insurance, guaranties, other security
and all merchandise returned or reclaimed by Debtor and Debtor’s
Books relating to any of the foregoing, as such definition may be amended from
time to time according to the Code.
“Affiliate” is a Person that
owns or controls directly or indirectly the Person, any Person that controls or
is controlled by or is under common control with the Person, and each of that
Person’s senior executive officers, directors, partners and, for any Person that
is a limited liability company, that Person’s managers and members.
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“Bank Expenses” are all audit
fees and expenses and reasonable costs or expenses (including reasonable
attorneys’ fees and expenses) for preparing, negotiating, defending and
enforcing the Guaranty and this Agreement (including appeals or Insolvency
Proceedings).
“Business Day” is any day that
is not a Saturday, Sunday or a day on which the Bank is closed.
“Closing Date” is the date of
this Agreement.
“Code” is the Uniform
Commercial Code as adopted in Massachusetts, as amended and as may be amended
and in effect from time to time.
“Collateral” is any and all
properties, rights and assets of the Debtor granted by the Debtor to Bank or
arising under the Code, now, or in the future, in which the Debtor obtains an
interest, or the power to transfer rights, in the property described on Exhibit
A.
“Contingent Obligation” is, for
any Person, any direct or indirect liability, contingent or not, of that Person
for (i) any indebtedness, lease, dividend, letter of credit or other obligation
of another such as an obligation directly or indirectly guaranteed, endorsed,
co-made, discounted or sold with recourse by that Person, or for which that
Person is directly or indirectly liable; (ii) any obligations for undrawn
letters of credit for the account of that Person; and (iii) all obligations from
any interest rate, currency or commodity swap agreement, interest rate cap or
collar agreement, or other agreement or arrangement designated to protect a
Person against fluctuation in interest rates, currency exchange rates or
commodity prices; but “Contingent Obligation” does not include
endorsements in the ordinary course of business. The amount of a
Contingent Obligation is the stated or determined amount of the primary
obligation for which the Contingent Obligation is made or, if not determinable,
the maximum reasonably anticipated liability for it determined by the Person in
good faith; but the amount may not exceed the maximum of the obligations under
any guarantee or other support arrangement.
“Copyrights” are all copyright
rights, applications or registrations and like protections in each work or
authorship or derivative work, whether published or not (whether or not it is a
trade secret) now or later existing, created, acquired or held.
“Debtor’s Books” are all
Debtor’s books and records including ledgers, records regarding Debtor’s assets
or liabilities, the Collateral, business operations or financial condition and
all computer programs or storage or any equipment containing the
information.
“Equipment” is all present and
future machinery, equipment, tenant improvements, furniture, fixtures, vehicles,
tools, parts and attachments in which Debtor has any interest.
“ERISA” is the Employee
Retirement Income Security Act of 1974, and its regulations.
“GAAP” is generally accepted
accounting principles.
“Guarantor” is any present or
future guarantor of the Obligations.
“Indebtedness” is (a)
indebtedness for borrowed money or the deferred price of property or services,
such as reimbursement and other obligations for surety bonds and letters of
credit, (b) obligations evidenced by notes, bonds, debentures or similar
instruments, (c) capital lease obligations and (d) Contingent
Obligations.
“Insolvency Proceeding” is any
proceeding by or against any Person under the United States Bankruptcy Code, or
any other bankruptcy or insolvency law, including assignments for the benefit of
creditors, compositions, extensions generally with its creditors, or proceedings
seeking reorganization, arrangement, or other relief.
“Intellectual Property” is the
“Intellectual Property Collateral” as defined in the IP Agreement.
“IP Agreement” is a certain
Intellectual Property Security Agreement executed and delivered by Debtor to
Bank.
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“Inventory” is present and
future inventory in which Debtor has any interest, including merchandise, raw
materials, parts, supplies, packing and shipping materials, work in process and
finished products intended for sale or lease or to be furnished under a contract
of service, of every kind and description now or later owned by or in the
custody or possession, actual or constructive, of Debtor, including inventory
temporarily out of its custody or possession or in transit and including returns
on any accounts or other proceeds (including insurance proceeds) from the sale
or disposition of any of the foregoing and any documents of title.
“Investment” is any beneficial
ownership of (including stock, partnership interest or other securities) any
Person, or any loan, advance or capital contribution to any Person.
“Lien” is a mortgage, lien,
deed of trust, charge, pledge, security interest or other
encumbrance.
“Mask Works” are all mask
works or similar rights available for the protection of semiconductor chips, now
owned or later acquired.
“Material Adverse Change “ is
(a) a material impairment in the perfection or priority of Bank’s Lien in the
Collateral or in the value of such Collateral; (b) a material adverse change in
the business, operations, or condition (financial or otherwise) of Debtor; or
(c) a material impairment of the prospect of repayment of any portion of the
Obligations.
“Obligations” are debts,
principal, interest, Bank Expenses and other amounts Debtor owes Bank now or
later, including the Guaranty, letters of credit, cash management services, and
foreign exchange contracts, if any, and including interest accruing after
Insolvency Proceedings begin and debts, liabilities, or obligations of Debtor
assigned to Bank.
“Patents” are patents, patent
applications and like protections, including improvements, divisions,
continuations, renewals, reissues, extensions and continuations-in-part of the
same.
“Permitted Indebtedness”
is:
(a) Debtor’s
indebtedness to Bank under this Agreement or the Guaranty;
(b) Subordinated
Debt;
(c) Indebtedness
to trade creditors incurred in the ordinary
course of business; and
(d) Indebtedness
secured by Permitted Liens; and
(e) Extensions,
refinancings, modifications, amendments and restatements of any items of
Permitted Indebtedness (a) through (d) above, provided that the principal amount
thereof is not increased or the terms thereof are not modified to impose more
burdensome terms upon Debtor or its Subsidiary, as the case may be.
“Permitted Investments”
are:
(a) Investments
shown on the Perfection Certificate and existing on the Closing Date;
and
(b)
(i) marketable direct obligations issued or unconditionally
guaranteed by the United States or its agency or any state maturing within 1
year from its acquisition, (ii) commercial paper maturing no more than 1 year
after its creation and having the highest rating from either Standard &
Poor’s Corporation or Xxxxx’x Investors Service, Inc., (iii) Bank’s certificates
of deposit issued maturing no more than 1 year after issue, (iv) any other
investments administered through the Bank.
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“Permitted Liens”
are:
(a) Liens
existing on the Closing Date and shown on the Perfection Certificate or arising
under this Agreement or the Guaranty;
(b) Liens
for taxes, fees, assessments or other government charges or levies, either not
delinquent or being contested in good faith and for which Debtor maintains
adequate reserves on its Books, if they have no
priority over any of Bank’s security interests;
(c) Leases
or subleases and non-exclusive licenses or sublicenses granted in the ordinary
course of Debtor’s business, if the leases,
subleases, licenses and sublicenses permit granting Bank a security interest;
and
(d) Liens
incurred in the extension, renewal or refinancing of the indebtedness secured by
Liens described in (a) through (c), but any extension,
renewal or replacement Lien must be limited to the property encumbered by the
existing Lien and the principal amount of the indebtedness may not
increase.
“Person” is any individual,
sole proprietorship, partnership, limited liability company, joint venture,
company, trust, unincorporated organization, association, corporation,
institution, public benefit corporation, firm, joint stock company, estate,
entity or government agency.
“Subordinated Debt” is debt
incurred by Debtor subordinated to Debtor’s debt to Bank (pursuant to a
subordination agreement entered into between the Bank, the Debtor and the
subordinated creditor), on terms acceptable to Bank.
“Subsidiary” is any Person,
corporation, partnership, limited liability company, joint venture, or any other
business entity of which more than fifty percent (50.0%) of the voting stock or
other equity interests is owned or controlled, directly or indirectly, by the
Person or one or more Affiliates of the Person.
“Trademarks” are trademark and
service xxxx rights, registered or not, applications to register and
registrations and like protections, and the entire goodwill of the business of
Debtor connected with the trademarks.
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IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as
a sealed instrument under the laws of the Commonwealth of Massachusetts as of
the date first above written.
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BORROWER:
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GLOBALOPTIONS,
INC.
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By:
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/s/
Xxxxxx X. Xxxxxxxx
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Name:
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Xxxxxx
X. Xxxxxxxx
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Title:
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Chairman
and CEO
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BANK:
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SILICON
VALLEY BANK
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By:
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/s/
Xxxxx Xxxxxxxx
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Name:
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Xxxxx
Xxxxxxxx
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Title:
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Vice-President
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S-1
