Exhibit 10.7
SECURITY AGREEMENT
THIS AGREEMENT is dated as of November 4, 1999, and is entered into by
and between SQL Acquisition LLC, a Delaware limited liability company with a
principal place of business 0000 Xxxx Xxxxxxxxx Xxxx, Xxxxx 000, Xxxxxxx,
Xxxxxxx 00000 (the "Debtor") and ASA International Ltd., a Delaware corporation
with a principal place of business at 00 Xxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxxxxxxx
00000 (the "Secured Party").
NOW THEREFORE, in consideration of the provisions herein contained,
and for other good and valuable consideration, the receipt and adequacy of which
is hereby acknowledged, the parties hereto agree as follows:
1. CREATION OF SECURITY INTEREST
The Debtor hereby grants to the Secured Party a security interest in
the collateral described in Section 2 below to secure the payment of the
Debtor's Obligations to the Secured Party described in Section 3 below.
2. COLLATERAL
The property which is subject to the security interest created by this
Agreement consists of the following (hereinafter referred to as the
"Collateral"):
All right, title and interest of Debtor in and to (a) the software
previously designed, developed, maintained, implemented, supported, licensed or
sold by Design Data Systems Corporation ("DDS") commonly referred to as
"SQL*TIME" ("SQL*TIME"), including all released and unreleased source code and
object code versions thereof and all related documentation and development notes
(the "Software"), and (b) all other intellectual property of DDS specifically
related to the Software, including databases, market information, research and
development, patents, patent applications, copyrights, copyright registration
applications, trademarks and service marks and related applications, trade
names, trade secrets, proprietary information, technology rights and licenses,
proprietary rights and processes, know-how, research and development in
progress, and any and all other intellectual property including, without
limitation, all things authored, discovered, developed, made, perfected,
improved, designed, engineered, devised, acquired, produced, conceived or first
reduced to practice by DDS, or that are relevant to an understanding or to the
development of the Software or to the performance by the Software of its
intended functions or purposes, whether tangible or intangible, in any stage of
development, including without limitation enhancements, designs, technology,
improvements, inventions, works of authorship, formulas, processes, routines,
subroutines, techniques, concepts, object code, flow charts, diagrams, coding
sheets, source code, listings and annotations, programmers' notes, information,
work papers, work product and other materials of any types whatsoever, and all
rights of any kind in or to any of the foregoing (collectively, with the
Software, "Intellectual Property", and being the same Intellectual Property
acquired by SQLALLC from DDS on this date).
The Debtor shall permit the Secured Party and/or its agents and
representatives to inspect the Collateral upon request during the Debtor's
normal business hours and upon reasonable notice to the Debtor.
3. DEBTOR'S OBLIGATIONS
This Agreement secures the payment of all amounts and performance of
all obligations of the Debtor (the "Obligations") as provided in (i) the License
granted pursuant that certain License Agreement of even date herewith between
the Debtor and the Secured Party (the "License Agreement"); and (ii) that
certain Promissory Note in the principal amount of $4,300,000 from the Debtor to
the Secured Party, dated the date hereof (the "Note").
4. COVENANTS OF DEBTOR
(a) The places where all records relating to the Collateral are
presently kept, and the Debtor's only places of business, are listed on Schedule
A hereto. The Debtor shall notify Secured Party not less than five (5) days
before any change is intended to be made in the foregoing addresses.
(b) The Debtor shall at all reasonable times and from time to time
upon due notice allow the Secured Party, by or through any of its officers,
agents, attorneys or accountants, to examine or inspect the Collateral wherever
located and to examine, inspect and make extracts from the Debtor's books and
records. The Debtor shall do, make, execute and deliver all such additional and
further acts, things, deeds, assurances and instruments as Secured Party may
reasonably require, to vest more completely in and assure to Secured Party its
rights hereunder and in or to the Collateral.
(c) The Debtor shall not sell, encumber, grant a security interest in
or dispose of or permit the sale, encumbrance or disposal of any Collateral
without the Secured Party's prior written consent.
(d) The Debtor shall perform any and all steps reasonably requested by
the Secured Party to perfect the Secured Party's security interest in the
Collateral, such as executing and filing financing or continuation statements in
form and substance satisfactory to the Secured Party, executing collateral
assignments of patents and trademarks (including filings at the United States
Patent and Trademark Office), and making notations of such security interest on
certificates of title. The Debtor hereby nominates and appoints the Secured
Party as attorney-in-fact to do all acts and things which the Secured Party may
deem reasonably necessary or advisable to perfect and continue perfected the
security interests created by this Agreement.
(e) The Debtor hereby covenants that (a) the Debtor will promptly pay
any and all taxes, assessments and governmental charges upon the Collateral
prior to the date penalties are attached thereto, except to the extent that such
taxes, assessments and charges shall be contested in good faith by the Debtor;
(b) the Debtor will immediately notify the Secured Party of any event causing a
substantial loss or diminution in the value of all or any material part of the
Collateral and an estimate of the amount of such loss or diminution; and (c) the
Debtor will not use the Collateral in violation of any statute or ordinance and
will keep the Collateral free from any adverse lien, security interest or
encumbrance, except as permitted herein, in good condition and will not waste or
destroy the same.
5. DEFAULT
(a) Upon the occurrence of (i) the failure by the Debtor to observe
any provision or perform any other obligation set forth in this Agreement or the
License Agreement; or (ii) default by Debtor of its obligations in the Note; the
Debtor shall be in default hereunder, and the Secured Party shall be entitled to
any and all remedies available under the Uniform Commercial Code in force in the
Commonwealth of Massachusetts on the date of this Agreement, including, but not
limited to, the repossession, sale or other disposition of all or any portion of
the Collateral. Any sale or other disposition of the Collateral may be at public
or private sale upon such terms and in such manner as the Secured Party
reasonably deems advisable, having due regard to compliance with any statute or
regulation which might affect, limit or apply to the Secured Party's disposition
of the Collateral. The Secured Party may conduct any such sale or other
disposition of the Collateral upon the Debtor's premises. The Secured Party
shall give the Debtor at least the minimum notice required by law of the date,
time and place of any proposed public sale, and of the date after which any
private sale or other disposition of the Collateral may be made. The Secured
Party may purchase the Collateral, or any portion of it, at any such sale.
(b) Notwithstanding anything to the contrary in this Security
Agreement, this is a non-recourse obligation with respect to Pacific. Payee's
sole source for repayment or performance of the obligations contained in the
Note and this Security Agreement is Borrower and the Collateral. Neither Pacific
nor its directors, officers or assigns shall have personal liability for the
repayment of any amounts evidenced by the Note or secured by this Security
Agreement or for the performance or observance of any covenant, indemnification,
or condition contained herein. No personal deficiency judgment shall be sought
or entered against Pacific as a result of any default under this Security
Agreement.
6. GOVERNING LAW/BINDING EFFECT
This Agreement shall be construed according to the laws of the
Commonwealth of Massachusetts and shall be binding upon the successors and
assigns of the Debtor, and shall inure to the benefit of the successors and
assigns of the Secured Party.
7. WAIVERS
The Secured Party shall have the right to enforce any remedies
hereunder alternatively, successively or concurrently. A waiver of any default
of the Debtor shall not be a waiver of any subsequent, similar or other default.
No delay in the exercise of any of the Secured Party's rights or remedies
hereunder shall constitute a waiver of such right or remedy.
8. TERMINATION
This Agreement shall terminate when all of the Obligations have been
paid and the terms and covenants hereof have been performed in full. As soon as
practical following such termination, the Secured Party shall make the
appropriate governmental and regulatory filings (including a filing at the
United States Patent and Trademark Office) to terminate the Secured Party's
security interest in the Collateral.
Notwithstanding anything to the contrary contained herein, this
Agreement may be terminated by the Debtor with the prior consent of the Secured
Party, which consent shall not be unreasonably withheld, provided, however, that
the Debtor substitutes collateral security and/or guaranties for the Obligations
of equal or greater value than the Collateral, and expenses paid in connection
with such substitution (including reasonable legal or other necessary expenses)
shall be paid by the Debtor.
IN WITNESS WHEREOF, this Agreement has been executed by the parties as
of the date first above written.
WITNESS: DEBTOR:
SQL ACQUISITION LLC
/S/ XXXXX XXXXXXXX By: /S/ E. XXXX XXXXX
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Title: PRESIDENT
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WITNESS: SECURED PARTY:
ASA INTERNATIONAL LTD.
/S/ XXXX X. XXXXXX By: /S/ XXXXXX X. XXXXXXXX
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Title: CHIEF EXECUTIVE OFFICER
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SCHEDULE A
PLACES OF BUSINESS
1. 0000 Xxxx Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
