EXHIBIT 10.6
SECURITY AGREEMENT AND ASSIGNMENT OF ACCOUNT
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Date: February 7, 2001
TO: FLEET NATIONAL BANK (the "Bank"), a national banking association having its
Head Office at 000 Xxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000:
1. ASSIGNMENT OF ACCOUNT. FOR VALUE RECEIVED, and in consideration of
the Bank giving, in its discretion, time, credit or banking facilities or
accommodations to NaviSite Inc. (the "Company" or the "Borrower"), the
undersigned (jointly and severally if more than one) hereby pledges, assigns and
transfers all of its right, title and interest in and to, and grants to the Bank
a security interest in all mutual funds, cash, instruments, securities and other
investment property now or hereafter as maintained or held in that certain Loan
Collateral Account # OFFK 522 137343 - LC (collectively, "Collateral") in an
aggregate amount of not less than $554,730.00 or such greater amount which
constitutes all Obligations to the Bank, together with all interest, dividends
and income thereon and all sums now or at any time hereafter on deposit therein
or due thereon and any instruments, investments, securities or other investment
property purchased with the proceeds thereof, and any and all proceeds and
products of any of the foregoing (collectively, the "Account"), as collateral
security for the payment and performance of the following (collectively, the
"Obligations"): the obligations of the Borrower and the undersigned to the Bank
or any of its branches and affiliates of every kind and description, whether
direct or indirect, absolute or contingent, primary or secondary, joint or
several, due or to become due, now existing or hereafter arising or acquired
arising from a standby letter of credit number 1S50103386 in an aggregate amount
of not less than $504,300.00 (together with all agreements and instruments
executed in connection with any of the foregoing, and as the same may from time
to time be modified, amended, extended or replaced, the "Loan Documents"). The
Bank hereby agrees that if at any time, any of the Obligations have matured and
are indefeasibly repaid in full, the Bank shall immediately reduce the amount
required to be held in the Account by the amount of such repayment. In
addition, the Bank hereby agrees that if at any time, any of the obligations are
permanently reduced (but not reduced to zero), the Bank shall reduce the amount
required to be held by the Bank in the Account by the amount of such permanent
reduction.
2. REPRESENTATIONS, WARRANTIES AND COVENANTS.
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2.1 The undersigned represents and warrants that (a) the undersigned has
the right and legal authority to execute and deliver this Assignment; (b) except
for any financing statement which may have been filed by the Bank, no financing
statement covering the Account has been filed with any filing office; (c) no
other assignment or security agreement has been executed with respect to the
Account; (d) the Account is not is subject to any liens, offsets or rights of
any person or entity other than the Bank; (e) if the undersigned is a
corporation, the opening of the Account, the deposit of funds therein and the
assignment and pledge thereof pursuant to the terms of this Assignment have been
authorized by all necessary corporate action and do not contravene any provision
of its constituent documents or any law, regulation, decree, order or agreement
binding on the undersigned; and (f) this Assignment represents the legal, valid
and binding obligation of the undersigned, enforceable in accordance with its
terms.
2.2 So long as any of the Obligations remain outstanding, the undersigned:
(a) will execute and deliver to the Bank all such other documents, and take such
other actions, as and when the Bank may from time to time request in order to
more fully evidence and perfect the Bank's interest in the Account; (b) will not
take or permit to be taken any action of any kind with respect to the Account,
including any attempt to transfer, assign or create in favor of any party other
than the Bank a security interest in, the Account; (c) will not make, or allow
to be made, any withdrawals from the Account and will not close the Account; and
(d) will immediately segregate from all other funds of the undersigned and hold
in trust for the Bank any funds received from the Account in violation of this
Assignment, and will not exercise dominion or control over such funds except to
pay them immediately into the Account.
3. DEFAULT; REMEDIES. Upon the occurrence of any default in the payment
or performance of any obligation under this Assignment or any other Obligation
(after giving effect to any grace periods applicable thereto) and so long as
such default shall be continuing, the Bank may declare the Obligations
immediately due and payable and may (i) withdraw immediately all or any portion
of the funds on deposit in or payable on the Account, and apply such funds to
the payment of the Obligations in such order and manner as the Bank, in its sole
discretion, may elect; (ii) on behalf of the undersigned endorse the name of the
undersigned upon any checks, drafts, or other instruments payable to the
undersigned evidencing payment on the Account; (iii) surrender or present for
withdrawal the passbook, certificate or other documents issued to the
undersigned in connection with the Account; (iv) liquidate any Collateral on
such terms as the Bank may determine whether by private or public sale and
notify any third party, including the Securities Intermediary, to liquidate the
Collateral on behalf of the Bank and direct the proceeds thereof to the Bank for
application to payment of the Obligations in such order as the Bank may
determine. All transaction costs relating to exercise of any of the Bank's
rights or remedies hereunder shall be borne by the undersigned and the Bank may
deduct any such costs from proceeds of the Collateral before application of such
proceeds to the Obligations. Any such third party may rely on this Assignment
as conclusive evidence that the Bank has the power and authority to provide any
notice or direction relating to the Collateral as the Bank deems necessary in
order to exercise any rights and remedies available to the Bank relating to the
Collateral.
4. BANK AS ATTORNEY-IN-FACT. The undersigned appoints the Bank as its
attorney-in-fact for the purposes of carrying out the provisions of this
Assignment and taking any action and executing any instrument that the Bank may
deem necessary or advisable to accomplish the purposes hereof. This power of
attorney shall be irrevocable and shall not terminate upon the death or any
disability of the undersigned.
5. RIGHTS OF BANK; INDEMNIFICATION.
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5.1 The Bank shall not be liable for its failure to use due diligence in
the collection of the Obligations, or for any action or omission in connection
therewith, or for any loss of interest on, or penalty assessed against, funds in
or payable on the Account as a result of the Bank's exercising any of its rights
or remedies under this Assignment. The Bank may exercise its rights with
respect to the Account and the Collateral without resorting, or regard, to other
collateral or sources of reimbursement for the Obligations. No delay or
omission on the part of the Bank in exercising any right shall operate as a
waiver of such right or any other right. A waiver on any one occasion shall not
bar or waive the exercise of any right on any future occasion. All rights and
remedies of the Bank, whether evidenced hereby or by any other agreement, are
cumulative and not exclusive of any remedies provided by law or any other
agreement, and may be exercised separately or concurrently.
5.2 The undersigned shall indemnify and hold harmless the Bank from and
against any liability or damage which the Bank may incur in the exercise and
performance, in good faith, of any of the Bank's powers and duties set forth
herein.
6. WAIVERS BY THE UNDERSIGNED. The undersigned waives presentment,
demand, notice, protest, notice of acceptance of this Assignment, notice of any
loans made, credit or other extensions granted, collateral received or delivered
or any other action taken in reliance hereon and all other demands and notices
of any description, except for such demands and notices as are expressly
required to be provided to the undersigned under this Assignment or any other
document evidencing the Obligations. With respect to both the Obligations and
the Account, the undersigned assents to any extension or postponement of the
time of payment or any other forgiveness or indulgence, to any substitution,
exchange or release of any collateral securing the Obligations, to the addition
or release of any party or person primarily or secondarily liable, to the
acceptance of partial payment thereon and the settlement, compromise or
adjustment of any thereof, all in such manner and at such time or times as the
Bank may deem advisable. The undersigned waives all rights against the Borrower
arising hereunder by way of subrogation, reimbursement, indemnification,
contribution or otherwise; the undersigned will not prove any claim in
competition with the Bank in respect of any payment hereunder in bankruptcy or
insolvency proceedings of any nature; and the undersigned will not claim any
set-off or counterclaim against the Borrower in respect of any liability of the
undersigned to the Borrower.
7. NOTICES. Any demand upon or notice to the undersigned that the Bank
may give shall be effective when delivered by hand, properly deposited in the
mails postage prepaid, or sent by telex, answer back received, or electronic
facsimile transmission, receipt acknowledged, or delivered to a telegraph
company or overnight courier, in each case addressed to the undersigned at the
address shown next to its signature at the end of this Assignment or as it
appears on the books and records of the Bank. Demands or notices addressed to
any other address at which the Bank customarily communicates with the
undersigned also shall be effective. Any notice by the undersigned to the Bank
shall be given as aforesaid, addressed to the Bank at the address shown at the
beginning of this Assignment or such other address as the Bank may advise the
undersigned in writing.
8. TERMINATION; REINSTATEMENT. This Assignment shall remain in full
force and effect until the Obligations have been repaid in full and the Bank
shall have no further obligation to extend credit to the Borrower or the
undersigned.
9. SUCCESSORS AND ASSIGNS. This Assignment shall be binding upon the
undersigned, its successors and assigns, and shall inure to the benefit of and
be enforceable by the Bank and its successors and assigns. Without limiting the
generality of the foregoing sentence, the Bank may transfer any agreement or any
note held by it evidencing, securing or otherwise executed in connection with
the Obligations, or sell participations in any interest therein, to any other
person or entity, and such other person or entity shall thereupon become vested,
to the extent set forth in the agreement evidencing such assignment, transfer or
participation, with all the rights in respect thereof granted to the Bank
herein.
10. GENERAL. The provisions of this Assignment may not be amended,
modified or waived except by a writing signed by the undersigned and the Bank,
nor may the undersigned assign any of its rights hereunder. This Assignment and
the terms, covenants and conditions hereof shall be construed in accordance
with, and governed by, the laws of The Commonwealth of Massachusetts (without
giving effect to any conflicts of law provisions contained therein). In the
event that the Account is held or stands in the name of the undersigned and
another or others jointly, the Bank may deal with the same for all purposes as
if it belonged to or stood in the name of the undersigned alone. Section
headings are for convenience of reference only and are not a part of this
Assignment.
11. JURY WAIVER. THE BANK (BY ITS ACCEPTANCE OF THIS ASSIGNMENT) AND THE
UNDERSIGNED AGREE THAT NEITHER OF THEM NOR ANY ASSIGNEE OR SUCCESSOR SHALL (A)
SEEK A JURY TRIAL IN ANY LAWSUIT, PROCEEDING, COUNTERCLAIM, OR ANY OTHER ACTION
BASED UPON, OR ARISING OUT OF, THIS ASSIGNMENT, ANY RELATED INSTRUMENTS, ANY
COLLATERAL OR THE DEALINGS OR THE RELATIONSHIP BETWEEN OR AMONG ANY OF THEM, OR
(B) SEEK TO CONSOLIDATE ANY SUCH ACTION WITH ANY OTHER ACTION IN WHICH A JURY
TRIAL CANNOT BE OR HAS NOT BEEN WAIVED. THE PROVISIONS OF THIS PARAGRAPH SHALL
BE SUBJECT TO NO EXCEPTIONS. NEITHER THE BANK NOR THE UNDERSIGNED HAS AGREED
WITH OR REPRESENTED TO THE OTHER THAT THE PROVISIONS OF THIS PARAGRAPH WILL NOT
BE FULLY ENFORCED IN ALL INSTANCES.
IN WITNESS WHEREOF, the undersigned has caused this Assignment to be duly
executed as an instrument under seal as of the date first written above.
NAVISITE INC.
/s/ Xxxxxxx X. Xxxx as CFO
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By: Xxxxxxx X. Xxxx
Title: Chief Financial Officer
