EXHIBIT 10.3
FIRST AMENDMENT
TO
LOAN AND SECURITY AGREEMENT
This First Amendment to Loan and Security Agreement is entered into as
of December 9, 2003 (the "Amendment"), by and among COMERICA BANK ("Bank"),
QUOVADX, INC. ("Quovadx"), and XXXXXXXXXX.XXX CORPORATION ("Xxxxxxxxxx.xxx")
(each of Quovadx and Xxxxxxxxxx.xxx are individually referred to herein as a
"Borrower" and collectively, the "Borrowers").
RECITALS
Borrowers and Bank are parties to that certain Loan and Security
Agreement dated as of August 26, 2003, as amended (the "Agreement"). The parties
desire to amend the Agreement in accordance with the terms of this Amendment.
NOW, THEREFORE, the parties agree as follows:
1. Certain defined terms in Section 1.1 of the Agreement are hereby
added or amended to read as follows:
"Acquisition Advance" has the meaning set forth in Section
2.1(c).
"Acquisition Line" means a credit extension of up to Twelve
Million Dollars ($12,000,000).
"Acquisition Line End Date" means the date on which the
Acquisition Advance has been repaid in full and Bank has no further
obligation to make an Acquisition Advance to Borrowers.
"Acquisition Maturity Date" means the earlier of (i) April 9,
2004 and (ii) five (5) days after the date of the Equity Event.
"Advance" or "Advances" means a cash advance or cash advances
under the Revolving Facility.
"Borrowing Base" means an amount equal to eighty percent (80%)
of Eligible Accounts, as determined by Bank with reference to the most
recent Borrowing Base Certificate delivered by Borrowers, provided
that, (A) from December 31, 2003 through the Acquisition Line End Date,
"Borrowing Base" shall mean an amount equal to (i) the lesser of sixty
percent (60%) of Eligible Accounts, as determined by Bank with
reference to the most recent Borrowing Base Certificate delivered by
Borrowers and $7,000,000 plus (ii) any amount which has been cash
secured to the satisfaction of Bank, and (B) after the Acquisition Line
End Date, "Borrowing Base" shall mean an amount equal to sixty percent
(60%) of Eligible Accounts, as determined by Bank with reference to the
most recent Borrowing Base Certificate delivered by Borrowers.
"Collateral" means the property described on Exhibit A
attached hereto. Notwithstanding the foregoing, on the Acquisition Line
End Date and thereafter, "Collateral" shall mean the property described
on Exhibit A-1 attached hereto.
"Credit Extension" means each Advance, Acquisition Advance,
Letter of Credit or any other extension of credit by Bank for the
benefit of a Borrower hereunder.
"Equity Event" means the receipt by a Borrower or Borrowers of
cash proceeds from the sale and issuance of its equity securities in an
amount of at least Twelve Million Dollars ($12,000,000).
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"Guarantor" means any Subsidiary of a Borrower which has
provided an unconditional guaranty of all the Obligations or of the
Acquisition Line secured by all its assets, in form and substance
satisfactory to Bank.
"Pledged Subsidiaries" means each of Rogue Wave, Chess
Acquisition Corporation, and Xxxxxxxxxx.xxx.
"Revolving Facility" means the facility under which Borrowers
may request Bank to issue Advances, as specified in Section 2.1(a)
hereof.
"Revolving Line" means a credit extension of up to Three
Million One Hundred Thirty Five Thousand Dollars ($3,135,000).
"Rogue Wave" means Rogue Wave Software, Inc.
2. Subsection (b) of the defined term "Eligible Accounts" in Section
1.1 of the Agreement is hereby amended to add "Unless such Accounts are fully
backed by letters of credit acceptable to Bank," to the beginning of such
subsection.
3. Subsection (i) of the defined term "Eligible Accounts" in Section
1.1 of the Agreement is hereby amended to read as follows:
(i) Unless such Accounts are fully backed by letters of credit
acceptable to Bank, Accounts with respect to an account debtor,
including Subsidiaries and Affiliates, whose total obligations to
Borrowers exceed twenty percent (20%) of all Accounts (the
"Concentration Limit"), to the extent such obligations exceed the
aforementioned percentage, except as approved in writing by Bank,
provided that the Concentration Limit shall be ten percent (10%) for
progress related xxxxxxxx;
4. The following new paragraphs are hereby added to the end of the
definition of "Eligible Accounts" in Section 1.1 of the Agreement:
Any letters of credit required for an Account to qualify as an
"Eligible Account" shall state Borrower's account at Bank as the
recipient account for funds paid on such letters of credit. Any
Accounts which are progress related xxxxxxxx shall not be considered
Eligible Accounts unless Bank has approved the language of the contract
underlying each such Account.
Any Account which is supported by a letter of credit on which
Borrower is the beneficiary and which does not qualify as an "Eligible
Account" may nevertheless be considered an Eligible Account if (i) such
letter of credit is reasonably acceptable to Bank, (ii) an agreement
among Borrower, Bank, and the issuer of such letter of credit has been
put into place giving Bank control (including the ability to
unilaterally modify and draw on such letter of credit) over such letter
of credit and (iii) if Bank has physical possession of such letter of
credit.
5. The following new subsection (g) is hereby added to the defined term
"Permitted Indebtedness" in Section 1.1 of the Agreement to read as follows:
(g) Indebtedness of Subsidiaries to Borrowers to the extent
such Indebtedness would be a Permitted Investment; Indebtedness of one
Borrower or Guarantor to another Borrower or Guarantor; and
Indebtedness of any Borrower or Guarantor to a Subsidiary that is not a
Borrower or Guarantor.
6. The following new subsections (e) and (f) are hereby added to the
defined term "Permitted Investments" in Section 1.1 of the Agreement to read as
follows:
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(e) Investments in Chess made for the purpose of
funding the purchase by Chess of the tendered stock of Rogue Wave; and
(f) Investments by Subsidiaries that are not
Borrowers or Guarantors in any other Subsidiary or in a Borrower.
7. Sections 2.1(a) and (b) of the Agreement are hereby amended in their
entirety to read as follows:
(a) Revolving Advances.
(i) Subject to and upon the terms and conditions of
this Agreement, (i) until the Acquisition Line End Date, Borrowers may request
Advances in an aggregate outstanding amount not to exceed the Revolving Line
minus the aggregate face amount of all outstanding Letters of Credit and (ii)
after the Acquisition Line End Date, Borrowers may request Advances in an
aggregate outstanding amount not to exceed the lesser of (A) the Revolving Line
or (B) the Borrowing Base, minus, in each case, the aggregate face amount of all
outstanding Letters of Credit. Subject to the terms and conditions of this
Agreement, amounts borrowed pursuant to this Section 2.1(a) may be repaid and
reborrowed at any time prior to the Revolving Maturity Date, at which time all
Advances under this Section 2.1(a) shall be immediately due and payable.
Borrowers may prepay any Advances without penalty or premium.
(ii) Whenever a Borrower desires an Advance, a
Borrower will notify Bank by facsimile transmission or telephone no later than
3:00 p.m. Pacific time, on the Business Day that the Advance is to be made. Each
such notification shall be promptly confirmed by a Payment/Advance Form in
substantially the form of Exhibit D hereto. Bank is authorized to make Advances
under this Agreement, based upon instructions received from a Responsible
Officer or a designee of a Responsible Officer, or without instructions if in
Bank's discretion such Advances are necessary to meet Obligations which have
become due and remain unpaid. Bank shall be entitled to rely on any telephonic
notice given by a person who Bank reasonably believes to be a Responsible
Officer or a designee thereof, and Borrowers shall indemnify and hold Bank
harmless for any damages or loss suffered by Bank as a result of such reliance.
Bank will credit the amount of Advances made under this Section 2.1(a) to a
Borrower's deposit account.
(b) Letters of Credit.
(i) Subject to the terms and conditions of this
Agreement, at any time prior to the Revolving Maturity Date, Bank agrees to
issue or cause to be issued letters of credit for the account of a Borrower
(each, a "Letter of Credit" and collectively, the "Letters of Credit") in an
aggregate outstanding face amount (i) prior to the Acquisition Line End Date not
to exceed the Revolving Line minus the aggregate amount of the outstanding
Advances at any time and (ii) after the Acquisition Line End Date not to exceed
the lesser of the Revolving Line or the Borrowing Base minus, in each case, the
aggregate amount of the outstanding Advances at any time. All Letters of Credit
shall be, in form and substance, acceptable to Bank in its sole discretion and
shall be subject to the terms and conditions of Bank's form of standard
application and letter of credit agreement (the "Application"), which Borrowers
hereby agrees to execute, including Bank's standard fee equal to 0.50% per annum
of the face amount of each Letter of Credit. On any drawn but unreimbursed
Letter of Credit, the unreimbursed amount shall be deemed an Advance under
Section 2.1(a). On the Revolving Maturity Date and only if the Revolving Line is
not renewed, Borrower shall secure in cash all obligations under any outstanding
Letters of Credit on terms acceptable to Bank.
(ii) The obligation of each Borrower to reimburse
Bank for drawings made under Letters of Credit shall be absolute, unconditional
and irrevocable, and shall be performed strictly in accordance with the terms of
this Agreement, the Application, and such Letters of Credit, under all
circumstances whatsoever, provided, however, that the Letters of Credit were
issued pursuant to Bank's
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standard policies and no damages were caused by Bank's gross negligence or
willful misconduct. Each Borrower shall indemnify, defend, protect, and hold
Bank harmless from any loss, cost, expense or liability, including, without
limitation, reasonable attorneys' fees, arising out of or in connection with any
Letters of Credit, except for expenses caused by Bank's gross negligence or
willful misconduct.
8. A new Section 2.1(c) is hereby added to the Agreement to read as
follows:
(c) Acquisition Advance.
(i) Subject to and upon the terms and conditions of
this Agreement, at any time from December 9, 2003 through February 9, 2004,
Borrowers may request an Advance (the "Acquisition Advance") from Bank in an
amount not to exceed the lesser of (i) the Acquisition Line and (ii) the
Borrowing Base. The Acquisition Advance shall be used only for the purpose of
Quovadx and its wholly owned Subsidiary Chess Acquisition Corporation ("Chess")
purchasing not less than a majority of the shares of Rogue Wave, and Bank shall
have no obligation to make the Acquisition Advance unless it has reviewed a
complete cash sources and uses statement from Borrower for the acquisition of
Rogue Wave which is in form and substance satisfactory to Bank in its
discretion.
(ii) Interest shall accrue from the date of the
Acquisition Advance at the rate specified in Section 2.3, and shall be payable
monthly on the first day of each month so long as any portion of the Acquisition
Advance is outstanding. Borrowers shall repay the Acquisition Advance in full on
the Acquisition Maturity Date. Notwithstanding any of the foregoing, so long as
any portion of the Acquisition Advance is outstanding, Borrowers shall use the
proceeds of any sale of their equity securities to repay amounts owing under
this Section 2.1(c). The Acquisition Advance, or any portion thereof, once
repaid, may not be reborrowed. Borrowers may prepay the Acquisition Advance or
any portion thereof without penalty or premium.
(iii) When a Borrower desires to obtain the
Acquisition Advance, a Borrower shall notify Bank (which notice shall be
irrevocable) by facsimile transmission to be received no later than 3:00 p.m.
Pacific time on the Business Day before the day on which the Acquisition Advance
is to be made. Such notice shall be substantially in the form of Exhibit D. The
notice shall be signed by a Responsible Officer or its designee and shall
include current accounts receivable and accounts payable agings and a Borrowing
Base Certificate in substantially the form of Exhibit B attached hereto, each of
which must be satisfactory to Bank.
9. Section 2.2 of the Agreement is hereby amended in its entirety to
read as follows
2.2 Overadvances. If, prior to the Acquisition Line End Date, the
outstanding amount of the Acquisition Advance exceeds the lesser of (i) the
Acquisition Line or (ii) the Borrowing Base at any time, Borrowers shall
immediately pay to Bank, in cash, the amount of such excess. If, on or after the
Acquisition Line End Date, the aggregate amount of the outstanding Advances plus
the aggregate face amount of all outstanding Letters of Credit exceeds the
lesser of the Revolving Line or the Borrowing Base at any time, Borrowers shall
immediately cash secure such excess amount to the satisfaction of Bank.
10. Section 2.3(a) of the Agreement is hereby amended in its entirety
to read as follows:
(a) Interest Rate. Except as set forth in Section
2.3(b), the Advances and the Acquisition Advance shall bear interest, on the
outstanding Daily Balance thereof, at a rate equal to the Prime Rate.
11. A new Section 2.5(d) is hereby added to the Agreement to read as
follows:
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(d) First Amendment Fees. Borrowers shall pay to
Bank, on December 9, 2003, a nonrefundable amendment fee equal to $80,000. On
the date on which a Borrower requests the Acquisition Advance, Borrowers shall
pay to Bank an additional nonrefundable fee equal to $40,000.
12. Section 4.1 of the Agreement is hereby amended in its entirety to
read as follows:
4.1 Grant of Security Interest. Each Borrower grants and pledges to
Bank a continuing security interest in all presently existing and hereafter
acquired or arising Collateral in order to secure prompt repayment of any and
all Obligations and in order to secure prompt performance by each Borrower of
each of its covenants and duties under the Loan Documents. Except as set forth
in the Schedule, such security interest constitutes a valid, first priority
security interest in the presently existing Collateral, and will constitute a
valid, first priority security interest in Collateral acquired after the date
hereof. Notwithstanding the foregoing, automatically upon the Acquisition Line
End Date, "Collateral" shall mean the property described on Exhibit A-1 attached
hereto.
13. A new Section 4.5 is hereby added to the Agreement to read as
follows:
4.5 Pledge of Collateral. Each Borrower hereby pledges, assigns and
grants to Bank a security interest in all shares of stock which are part of the
Collateral, including without limitation all each Borrower's equity interests in
its Subsidiaries which are Pledged Subsidiaries (the "Shares"), together with
all proceeds and substitutions thereof, all cash, stock and other moneys and
property paid thereon, all rights to subscribe for securities declared or
granted in connection therewith, and all other cash and noncash proceeds of the
foregoing, as security for the performance of the Obligations, provided that, on
the Acquisition Line End Date, the pledge of the equity interests in Pledged
Subsidiaries other than Xxxxxxxxxx.xxx will be terminated. The certificate or
certificates for the Shares of Pledge Subsidiaries will be delivered to Bank,
accompanied by an instrument of assignment duly executed in blank by the
applicable Borrower, provided that Bank will return such certificate or
certificates to Borrower upon the Acquisition Line End Date. Upon the occurrence
of an Event of Default, Bank may effect the transfer of the Shares into the name
of Bank as security for the Obligations and cause new certificates representing
such securities to be issued in the name of Bank or its transferee. Each
Borrower will execute and deliver such documents, and take or cause to be taken
such actions, as Bank may reasonably request to perfect or continue the
perfection of Bank's security interest in the Shares. Unless an Event of Default
shall have occurred and be continuing, Borrowers shall be entitled to exercise
any rights with respect to the Shares and to give consents, waivers and
ratifications in respect thereof, provided that no vote shall be cast or
consent, waiver or ratification given or action taken which would be
inconsistent with any of the terms of this Agreement or which would constitute
or create any violation of any of such terms. All such rights to vote and give
consents, waivers and ratifications may be terminated by Bank upon the
occurrence and continuance of an Event of Default. Any securities account in
which the Shares are held shall be subject to a securities account control
agreement between a Borrower or Chess (as applicable), Bank, and the securities
intermediary holding such account, in form and substance reasonably satisfactory
to Bank (a "Control Agreement").
14. A new Section 5.18 is hereby added to the Agreement to read as
follows:
5.18 Shares. Each Borrower has full power and authority to create a
first lien on the Shares and no disability or contractual obligation exists that
would prohibit any Borrower from pledging the Shares pursuant to this Agreement.
There are no subscriptions, warrants, rights of first refusal or other
restrictions on, or options exercisable with respect to the Shares. The Shares
have been and will be duly authorized and validly issued, and are fully paid and
non-assessable. The Shares are not the subject of any present or threatened
suit, action, arbitration, administrative or other proceeding, and each Borrower
knows of no reasonable grounds for the institution of any such proceedings.
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15. Section 6.3(b) of the Agreement is hereby amended in its entirety
to read as follows:
(b) Until the Acquisition Line End Date, on a weekly
basis, fifteen days in arrears, and after the Acquisition Line End Date, within
thirty (30) days after the last day of each month, Borrowers shall deliver to
Bank a Borrowing Base Certificate signed by a Responsible Officer in
substantially the form of Exhibit B hereto, together with aged listings of
accounts receivable and accounts payable.
16. Section 6.7 of the Agreement is hereby amended in its entirety to
read as follows:
6.7 Minimum Cash Covenants. Borrowers shall maintain
at all times an aggregate balance of unrestricted cash and investment grade
marketable securities at Bank, Comerica Securities, Inc., and/or Munder
Securities (if a securities account control agreement acceptable to Bank has
been put into place with respect to such account) of at least Eighteen Million
Dollars ($18,000,000) plus 50% of the aggregate proceeds of all sales of a
Borrower's equity securities after December 9, 2003, provided that Borrowers
shall not be required to comply with the foregoing covenant for the five (5)
Business Days after the date on which Quovadx's tender offer to buy Rogue Wave's
shares closes and the consideration is paid to the tendering shareholders (after
such five day period passes, Borrowers shall once again be required to comply
with this covenant and shall be required to comply with this covenant at all
times thereafter). Notwithstanding any of the foregoing, Borrowers shall
maintain a balance of unrestricted cash at Bank which is greater than or equal
to Two Million Dollars ($2,000,000) at all times; provided that such amount
shall constitute a portion of (and shall not be in addition to) the minimum
$18,000,000 requirement specified above in this Section 6.7.
17. New Sections 6.10 and 6.11 are hereby added to the Agreement to
read as follows:
6.10 Acquisition.
(a) Prior to requesting the initial Acquisition Advance, (i) Quovadx
shall pledge its equity interest in Chess to Bank and deliver such share
certificates as are required pursuant to Section 4.4 and (ii) Quovadx shall
cause Chess to provide a guaranty of the Acquisition Line secured by all its
assets, in form and substance satisfactory to Bank.
(b) If Quovadx makes a tender offer for the shares of
Rogue Wave, then following the date on which 50% or more of such shares are
tendered and purchased by Quovadx and Chess, Quovadx shall, as promptly as
practicable, complete a merger which has the effect of eliminating the interest
of any minority shareholders of Rogue Wave, merging Chess with and into Rogue
Wave, and giving Quovadx 100% ownership of Rogue Wave; provided, however, (i)
that if more than 50% but less than 90% of the shares have been tendered to and
purchased by Quovadx and Chess, and Quovadx determines that it will effect a
subsequent offering period, the requirement of completing a merger shall not be
effective until the completion of such subsequent offering period and the
purchase of any shares tendered therein and (ii) that Quovadx shall cause Chess
to pledge to Bank any shares of Rogue Wave which it purchases as promptly as
practicable after such purchase and shall cause Chess and any securities
intermediary holding the shares of Rogue Wave to enter into a Control Agreement
with Bank.
(c) Upon becoming Rogue Wave's sole shareholder, (i)
Quovadx shall pledge its equity interest in Rogue Wave to Bank and deliver such
share certificates as are required pursuant to Section 4.4 and (ii) Rogue Wave
shall provide a guaranty of the Acquisition Line secured by all its assets, in
form and substance satisfactory to Bank
(d) At such time as no amounts are outstanding under
the Acquisition Line and Borrower terminates any right it may have to request an
Acquisition Advance, any guaranty
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provided by Chess and/or Rogue Wave shall be released and any pledge of the
Rogue Wave and/or Chess stock shall be released.
6.11 Accounts. As of the date which is 90 days after
December 9, 2003 and at all times thereafter, Borrowers shall maintain and shall
cause each of its Subsidiaries to maintain its operating accounts with Bank, so
long as Bank's products are competitive in the marketplace with respect to
pricing and functionality.
18. The introductory paragraph of Section 7 of the Agreement is hereby
amended to read as follows: "Each Borrower covenants and agrees that, so long as
any credit hereunder shall be available and until payment in full of the
outstanding Obligations or for so long as Bank may have any commitment to make
any Credit Extensions, neither Borrower will do any of the following without
Bank's prior written consent:".
19. The following sentence is hereby added to the end of Section 7.3:
"Notwithstanding any of the foregoing, nothing in this Section 7.3 shall
prohibit Borrower and Chess from acquiring Rogue Wave and the tendered stock of
Rogue Wave as otherwise permitted under the terms of this Agreement (the "Rogue
Wave Acquisition")."
20. The following words are hereby added to the beginning of Section
7.6 of the Agreement: "Except in connection with the Rogue Wave Acquisition,".
21. Section 7.12 is hereby amended in its entirety to read as follows:
7.12 Subsidiary Cash. Maintain cash and cash equivalents with or at
Borrower's Subsidiaries (measured on a consolidated basis) in an aggregate
amount in excess of Five Million Dollars ($5,000,000) at any time, provided that
Borrower may downstream funds to Chess for the purpose of allowing Chess to
purchase tendered shares of Rogue Wave.
22. A new Section 8.10 is hereby added to the Agreement to read as
follows:
8.10 Guaranty. If any guaranty of all or a portion of the Obligations
(a "Guaranty") ceases for any reason to be in full force and effect, or any
guarantor fails to perform any obligation under any Guaranty or a security
agreement securing any Guaranty (collectively, the "Guaranty Documents"), or any
event of default occurs under any Guaranty Document or any guarantor revokes or
purports to revoke a Guaranty, or any material misrepresentation or material
misstatement exists now or hereafter in any warranty or representation set forth
in any Guaranty Document or in any certificate delivered to Bank in connection
with any Guaranty Document, or if any of the circumstances described in Sections
8.3 through 8.8 occur with respect to any guarantor.
23. A new Section 9.8 is hereby added to the Agreement to read as
follows:
9.8 Shares. Each Borrower recognizes that Bank may be unable to effect
a public sale of any or all the Shares, by reason of certain prohibitions
contained in federal securities laws and applicable state securities laws or
otherwise, and may be compelled to resort to one or more private sales thereof
to a restricted group of purchasers which will be obliged to agree, among other
things, to acquire such securities for their own account for investment and not
with a view to the distribution or resale thereof. Each Borrower acknowledges
and agrees that any such private sale may result in prices and other terms less
favorable than if such sale were a public sale and, notwithstanding such
circumstances, agrees that any such private sale shall be deemed to have been
made in a commercially reasonable manner. Bank shall be under no obligation to
delay a sale of any of the Shares for the period of time necessary to permit the
issuer thereof to register such securities for public sale under federal
securities laws or under applicable state securities laws, even if such issuer
would agree to do so.
24. Exhibit A to the Agreement is hereby amended in its entirety to
read as the attached Exhibit A.
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25. Exhibit A-1 attached hereto is hereby added to the Agreement and
incorporated into the Agreement by this reference.
26. Exhibit B to the Agreement is hereby amended in its entirety to
read as the attached Exhibit B.
27. Exhibit C to the Agreement is hereby amended in its entirety to
read as the attached Exhibit C.
28. Exhibit D attached hereto is hereby added to the Agreement and
incorporated into the Agreement by this reference.
29. Unless otherwise defined, all initially capitalized terms in this
Amendment shall be as defined in the Agreement. The Agreement, as amended
hereby, shall be and remain in full force and effect in accordance with its
respective terms and hereby is ratified and confirmed in all respects. Except as
expressly set forth herein, the execution, delivery, and performance of this
Amendment shall not operate as a waiver of, or as an amendment of, any right,
power, or remedy of Bank under the Agreement, as in effect prior to the date
hereof. Each Borrower ratifies and reaffirms the continuing effectiveness of all
promissory notes, guaranties, security agreements, mortgages, deeds of trust,
environmental agreements, and all other instruments, documents and agreements
entered into in connection with the Agreement.
30. Each Borrower represents and warrants that the representations and
warranties contained in the Agreement are true and correct as of the date of
this Amendment, and that no Event of Default has occurred and is continuing.
31. This Amendment may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one instrument.
32. As a condition to the effectiveness of this Amendment, Bank shall
have received, in form and substance satisfactory to Bank, the following:
(a) this Amendment, duly executed by Borrowers;
(b) an amount equal to all Bank Expenses incurred
through the date of this Amendment (including legal fees and expenses which
shall not exceed $10,000);
(c) Corporate Resolutions to Borrow;
(d) an agreement to provide insurance, an automatic
debit authorization, and disbursement instructions;
(e) two Intellectual Property Security Agreements;
and
(f) such other documents, and completion of such
other matters, as Bank may reasonably deem necessary or appropriate.
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IN WITNESS WHEREOF, the undersigned have executed this Amendment as of
the first date above written.
QUOVADX, INC.
/s/ Xxxx X. Xxxxxxxxx
----------------------------------------
By: Xxxx X. Xxxxxxxxx
Title: Executive Vice President, Finance
COMERICA BANK
/s/ Xxx Xxx Xxxxxxxx
----------------------------------------
By: Xxx Xxx Xxxxxxxx
Title: Vice President & Regional Marketing
Manager
XXXXXXXXXX.XXX CORPORATION
/s/ Xxxx X. Xxxxxxxxx
----------------------------------------
By: Xxxx T, Xxxxxxxxx
Title: Vice President
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DEBTOR: QUOVADX, INC. & XXXXXXXXXX.XXX CORPORATION
SECURED PARTY: COMERICA BANK
EXHIBIT A
COLLATERAL DESCRIPTION ATTACHMENT
TO LOAN AND SECURITY AGREEMENT
All personal property of each Borrower (herein referred to as
"Borrower" or "Debtor") whether presently existing or hereafter created or
acquired, and wherever located, including, but not limited to:
(a) all accounts (including health-care-insurance
receivables), chattel paper (including tangible and electronic chattel paper),
deposit accounts, documents (including negotiable documents), equipment
(including all accessions and additions thereto), general intangibles (including
payment intangibles and software), goods (including fixtures), instruments
(including promissory notes), inventory (including all goods held for sale or
lease or to be furnished under a contract of service, and including returns and
repossessions), investment property (including securities and securities
entitlements), letter of credit rights, money, and all of Debtor's books and
records with respect to any of the foregoing, and the computers and equipment
containing said books and records;
(b) all common law and statutory copyrights and copyright
registrations, applications for registration, now existing or hereafter arising,
in the United States of America or in any foreign jurisdiction, obtained or to
be obtained on or in connection with any of the forgoing, or any parts thereof
or any underlying or component elements of any of the forgoing, together with
the right to copyright and all rights to renew or extend such copyrights and the
right (but not the obligation) of Secured Party to xxx in its own name and/or in
the name of the Debtor for past, present and future infringements of copyright;
(c) all trademarks, service marks, trade names and service
names and the goodwill associated therewith, together with the right to
trademark and all rights to renew or extend such trademarks and the right (but
not the obligation) of Secured Party to xxx in its own name and/or in the name
of the Debtor for past, present and future infringements of trademark;
(d) all (i) patents and patent applications filed in the
United States Patent and Trademark Office or any similar office of any foreign
jurisdiction, and interests under patent license agreements, including, without
limitation, the inventions and improvements described and claimed therein, (ii)
licenses pertaining to any patent whether Debtor is licensor or licensee, (iii)
income, royalties, damages, payments, accounts and accounts receivable now or
hereafter due and/or payable under and with respect thereto, including, without
limitation, damages and payments for past, present or future infringements
thereof, (iv) right (but not the obligation) to xxx in the name of Debtor and/or
in the name of Secured Party for past, present and future infringements thereof,
(v) rights corresponding thereto throughout the world in all jurisdictions in
which such patents have been issued or applied for, and (vi) reissues,
divisions, continuations, renewals, extensions and continuations-in-part with
respect to any of the foregoing; and
(e) any and all cash proceeds and/or noncash proceeds of any
of the foregoing, including, without limitation, insurance proceeds, and all
supporting obligations and the security therefor or for any right to payment.
All terms above have the meanings given to them in the California Uniform
Commercial Code, as amended or supplemented from time to time, including revised
Division 9 of the Uniform Commercial Code-Secured Transactions, added by Stats.
1999, c.991 (S.B. 45), Section 35, operative July 1, 2001.
Notwithstanding the foregoing, the Collateral shall not include the
capital stock of Subsidiaries that are not Pledged Subsidiaries; provided,
however, that the Collateral shall include all accounts and general intangibles
that consist of rights to payment and proceeds from the disposition of all or
any part, or rights in, the foregoing.
10
DEBTOR: QUOVADX, INC. & XXXXXXXXXX.XXX CORPORATION
SECURED PARTY: COMERICA BANK
EXHIBIT A-1
COLLATERAL DESCRIPTION ATTACHMENT
TO LOAN AND SECURITY AGREEMENT
All personal property of each Borrower (herein referred to as
"Borrower" or "Debtor") whether presently existing or hereafter created or
acquired, and wherever located, including, but not limited to:
(a) all accounts (including health-care-insurance
receivables), chattel paper (including tangible and electronic chattel paper),
deposit accounts, payment intangibles, inventory (including all goods held for
sale or lease or to be furnished under a contract of service, and including
returns and repossessions), investment property, letter of credit rights, money,
and all of Debtor's books and records with respect to any of the foregoing, and
the computers and equipment containing said books and records; and
(b) any and all cash proceeds and/or noncash proceeds of any
of the foregoing, including, without limitation, insurance proceeds, and all
supporting obligations and the security therefor or for any right to payment.
All terms above have the meanings given to them in the California Uniform
Commercial Code, as amended or supplemented from time to time, including revised
Division 9 of the Uniform Commercial Code-Secured Transactions, added by Stats.
1999, c.991 (S.B. 45), Section 35, operative July 1, 2001.
Notwithstanding the foregoing, the Collateral shall not include (i) any
copyright rights, copyright applications, copyright registrations and like
protections in each work or authorship and derivative work thereof, whether
published or unpublished and whether or not the same also constitutes a trade
secret, now or hereafter existing, created, acquired or held ("Copyrights"),
patents (issued or provisional), patent applications and like protections
including without limitation improvements, divisions, continuations, renewals,
reissues, extensions and continuations-in-part of the same ("Patents"),
trademarks, servicemarks and applications therefor, whether registered or not,
applications to register and registrations of the same and like protections now
owned or hereafter acquired ("Trademarks"), any and all trade secrets, and any
and all intellectual property rights in computer software and computer software
products now or hereafter existing, created, acquired or held, any and all
design rights which may be available to a Debtor now or hereafter existing,
created, acquired or held, any and all claims for damages by way of past,
present and future infringement of any of the rights included above, with the
right, but not the obligation, to xxx for and collect such damages for said use
or infringement of the intellectual property rights identified above, any claims
for damages by way of any past, present and future infringement of any of the
foregoing, all licenses or other rights to use any of the Copyrights, Patents or
Trademarks, and all license fees and royalties arising from such use to the
extent permitted by such license or rights (collectively, the "Intellectual
Property"), or (ii) equity interests consisting of membership units in a limited
liability company or shares of restricted stock which are (a) subject to
restrictions on transfer or resale under the Securities Act of 1933, as amended,
and (b) not listed on a U.S. national securities exchange or quotation thereof
in an inter-dealer quotation system (collectively, the "Interests"); provided,
however, that the Collateral shall include all accounts and general intangibles
that consist of rights to payment and proceeds from the sale, licensing or
disposition of all or any part, or rights in, the Intellectual Property and the
Interests (the "Rights to Payment").
Notwithstanding the foregoing, the Collateral shall not include the
capital stock of Subsidiaries other than Xxxxxxxxxx.xxx; provided, however, that
the Collateral shall include all accounts and general intangibles that consist
of rights to payment and proceeds from the disposition of all or any part, or
rights in, the foregoing.
11
EXHIBIT B
BORROWING BASE CERTIFICATE
Borrower: QUOVADX, INC. & XXXXXXXXXX.XXX CORPORATION
Lender: Comerica Bank
Commitment Amount: $12,000,000*
ACCOUNTS RECEIVABLE
1. Accounts Receivable Book Value as of ___ $
------------
2. Additions (please explain on reverse) $
------------
3. TOTAL ACCOUNTS RECEIVABLE $
------------
ACCOUNTS RECEIVABLE DEDUCTIONS (without duplication)
4. Amounts over 90 days due $
------------
5. Balance of 20% over 90 day accounts $
------------
6. Concentration Limits
7. Foreign Accounts $
------------
8. Governmental Accounts $
------------
9. Contra Accounts $
------------
10. Demo Accounts $
------------
11. Intercompany/Employee Accounts $
------------
12. Other (please explain on reverse) $
------------
13. TOTAL ACCOUNTS RECEIVABLE DEDUCTIONS $
------------
14. Eligible Accounts (#3 minus #13) $
------------
15. LOAN VALUE OF ACCOUNTS (** of #14) $
------------
BALANCES
16. Maximum Loan Amount $
------------
17. Total Funds Available [Lesser of #15 or #16] $
------------
18. Present balance owing on Line of Credit (including Letters of Credit) $
------------
19. RESERVE POSITION (#17 minus #18) $
------------
The undersigned represents and warrants that the foregoing is true,
complete and correct, and that the information reflected in this
Borrowing Base Certificate complies with the representations and
warranties set forth in the Loan and Security Agreement between the
undersigned and Comerica Bank.
QUOVADX, INC. & XXXXXXXXXX.XXX CORPORATION
By:
-----------------------------
Authorized Signer
----------
*$3,135,000 after the Acquisition Line End Date.
**"Borrowing Base" means an amount equal to eighty percent (80%) of Eligible
Accounts, as determined by Bank with reference to the most recent Borrowing Base
Certificate delivered by Borrowers, provided that, (A) from December 31, 2003
through the Acquisition Line End Date, "Borrowing Base" shall mean an amount
equal to the lesser of (i) sixty percent (60%) of Eligible Accounts, as
determined by Bank with reference to the most recent Borrowing Base Certificate
delivered by Borrowers and (ii) $7,000,000 plus any amount which has been cash
secured to the satisfaction of Bank, and (B) after the Acquisition Line End
Date, "Borrowing Base" shall mean an amount equal to sixty percent (60%) of
Eligible Accounts, as determined by Bank with reference to the most recent
Borrowing Base Certificate delivered by Borrowers.
12
EXHIBIT C
COMPLIANCE CERTIFICATE
TO: COMERICA BANK
FROM: QUOVADX, INC. & XXXXXXXXXX.XXX CORPORATION
The undersigned authorized officer(s) of each of QUOVADX, INC. &
XXXXXXXXXX.XXX CORPORATION hereby certify that in accordance with the terms and
conditions of the Loan and Security Agreement between Borrowers and Bank (the
"Agreement"), (i) each Borrower is in complete compliance for the period ending
_______________ with all required covenants except as noted below and (ii) all
representations and warranties of Borrowers stated in the Agreement are true and
correct as of the date hereof. Attached herewith are the required documents
supporting the above certification. The Officer further certifies that these are
prepared in accordance with Generally Accepted Accounting Principles (GAAP) and
are consistently applied from one period to the next except as explained in an
accompanying letter or footnotes.
PLEASE INDICATE COMPLIANCE STATUS BY CIRCLING YES/NO UNDER
"COMPLIES" COLUMN.
REPORTING COVENANT REQUIRED COMPLIES
------------------ ------------------------------------------ -------------
10-K (Audited) Within 5 days of filing with S.E.C. Yes
10-Q Within 5 days of filing with S.E.C. Yes No
Copies of all statements, reports and notices sent or Within 5 days of mailing Yes
made available generally by Borrowers to its security
holders or to any holders of Subordinated Debt
A/R & A/P Agings, Borrowing Base Cert. Weekly (Monthly after Acquisition Line End Yes No
Date)
A/R Audit Initial and Annual Yes No
FINANCIAL COVENANT REQUIRED ACTUAL COMPLIES
------------------ -------- ------ --------------
At all times
Minimum Cash at Bank, Comerica Securities, and * $ Yes No
--------
Munder
Minimum Cash at Bank $2,000,000 $ Yes No
--------
* Borrowers shall maintain at all times an aggregate balance of unrestricted
cash and investment grade marketable securities at Bank, Comerica Securities,
Inc., and/or Munder Securities (if a securities account control agreement
acceptable to Bank has been put into place with respect to such account) of at
least Eighteen Million Dollars ($18,000,000) plus 50% of the aggregate proceeds
of all sales of a Borrower's equity securities after December 9, 2003, provided
that Borrowers shall not be required to comply with the foregoing covenant for
the five (5) Business Days after the date on which Quovadx's tender offer to buy
Rogue Wave's shares is accepted and Rogue Wave pays for such shares (after such
five day period passes, Borrowers shall once again be required to comply with
this covenant and shall be required to comply with this covenant at all times
thereafter).
COMMENTS REGARDING EXCEPTIONS: See Attached.
BANK USE ONLY
Received by:
-------------------------------------
Sincerely, AUTHORIZED SIGNER
Date:
--------------------------------------------
Verified:
------------------------------------------------- ----------------------------------------
SIGNATURE AUTHORIZED SIGNER
Date:
------------------------------------------------- --------------------------------------------
TITLE
Compliance Status Yes No
-------------------------------------------------
DATE
13
EXHIBIT D
TECHNOLOGY & LIFE SCIENCES DIVISION
LOAN ANALYSIS
LOAN ADVANCE/PAYDOWN REQUEST FORM
DEADLINE FOR SAME DAY PROCESSING IS 3:00* P.M., Pacific Time
DEADLINE FOR WIRE TRANSFERS IS 1:30 P.M., Pacific Time
*At month end and the day before a holiday, the cut off time is 1:30 P.M.,
Pacific Time
TO: Loan Analysis DATE: TIME:
----------------- -------------
FAX #: (000) 000-0000
FROM: QUOVADX, INC. & XXXXXXXXXX.XXX CORPORATION TELEPHONE REQUEST (For Bank Use Only):
------------------------------------------
Borrowers' Name
The following person is authorized to request the loan
payment transfer/loan advance on the designated account
and is known to me.
FROM:
------------------------------------------
Authorized Signer's Name
FROM:
------------------------------------------ ---------------------------------------------------
Authorized Signature (Borrowers) Authorized Request & Phone #
PHONE #:
------------------------------------------ ---------------------------------------------------
Received by (Bank) & Phone #
FROM ACCOUNT#:
------------------------------------------
(please include Note number, if applicable) ---------------------------------------------------
TO ACCOUNT #: Authorized Signature (Bank)
------------------------------------------
(please include Note number, if applicable)
REQUESTED TRANSACTION TYPE REQUESTED DOLLAR AMOUNT For Bank Use Only
-------------------------- -----------------------
PRINCIPAL INCREASE* (ADVANCE) $ Date Rec'd:
----------------------------------------------- Time:
PRINCIPAL PAYMENT (ONLY) $ Comp. Status: YES NO
----------------------------------------------- Status Date:
OTHER INSTRUCTIONS: Time:
Approval:
---------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------
All representations and warranties of Borrowers stated in the Loan Agreement are true, correct and complete in all material respects
as of the date of the telephone request for and advance confirmed by this Borrowing Certificate, including without limitation the
representation that Borrowers have paid for and owns the equipment financed by the Bank; provided, however, that those
representations and warranties the date expressly referring to another date shall be true, correct and complete in all material
respects as of such date.
*IS THERE A WIRE REQUEST TIED TO THIS LOAN ADVANCE? (PLEASE CIRCLE ONE) YES NO
If YES, the Outgoing Wire Transfer Instructions must be completed below.
OUTGOING WIRE TRANSFER INSTRUCTIONS Fed Reference Number Bank Transfer Number
-------------------------- -----------------------------
THE ITEMS MARKED WITH AN ASTERISK (*) ARE
REQUIRED TO BE COMPLETED.
------------------------------------------------------------------------------------------------------------------------------------
*Beneficiary Name
------------------------------------------------------------------------------------------------------------------------------------
*Beneficiary Account Number
------------------------------------------------------------------------------------------------------------------------------------
*Beneficiary Address
------------------------------------------------------------------------------------------------------------------------------------
Currency Type US DOLLARS ONLY
------------------------------------------------------------------------------------------------------------------------------------
*ABA Routing Number (9 Digits)
------------------------------------------------------------------------------------------------------------------------------------
*Receiving Institution Name
------------------------------------------------------------------------------------------------------------------------------------
*Receiving Institution Address
------------------------------------------------------------------------------------------------------------------------------------
*Wire Account $
------------------------------------------------------------------------------------------------------------------------------------
14
INTELLECTUAL PROPERTY SECURITY AGREEMENT
This
Intellectual Property Security Agreement (the "Agreement") is made
as of December 9, 2003, by and between QUOVADX, INC., a Delaware corporation
("Grantor"), and COMERICA BANK ("Secured Party").
RECITALS
A. Secured Party has made loans to Grantor and Xxxxxxxxxx.xxx
Corporation (each a "Borrower", and collectively, "Borrowers'), pursuant to a
Loan and Security Agreement dated as of August 26, 2003, as amended by that
certain First Amendment to Loan and Security Agreement, of even date herewith,
as may be amended from time to time (the "Loan Agreement"). All capitalized
terms used herein without definition shall have the meanings ascribed to them in
the Loan Agreement.
B. Secured Party is willing to continue to make credit extensions to
Borrowers, but only upon the condition, among others, that Grantor shall grant
to Secured Party a security interest in all of Grantor's right title, and
interest in, to and under all of the Collateral whether presently existing or
hereafter acquired until the Acquisition Line End Date, as that term is defined
in the Loan Agreement.
C. Upon the Acquisition Line End Date, Secured Party will release its
security interest in the Collateral and will prepare and file all documents
necessary to release its security interest in the Collateral.
NOW, THEREFORE, THE PARTIES HERETO AGREE AS FOLLOWS:
1. Grant of Security Interest. As collateral security for the prompt
and complete payment and performance of all of Borrowers' present or future
indebtedness, obligations and liabilities to Secured Party, Grantor hereby
grants a security interest and mortgage to Secured Party, as security, in and to
Grantor's entire right, title and interest in, to and under all of its
intellectual property, including without limitation the following (all of which
shall collectively be called the "Collateral"):
(a) Any and all copyright rights, copyright applications,
copyright registrations and like protections in each work or authorship and
derivative work thereof, whether published or unpublished and whether or not the
same also constitutes a trade secret, now or hereafter existing, created,
acquired or held, including without limitation those set forth on Exhibit A
attached hereto (collectively, the "Copyrights");
(b) Any and all trade secrets, and any and all intellectual
property rights in computer software and computer software products now or
hereafter existing, created, acquired or held;
(c) Any and all design rights which may be available to
Grantor now or hereafter existing, created, acquired or held;
(d) All patents, patent applications and like protections
including without limitation improvements, divisions, continuations, renewals,
reissues, extensions and continuations-in-part of the same, including without
limitation the patents and patent applications set forth on Exhibit B attached
hereto (collectively, the "Patents");
(e) Any trademark and servicemark rights, whether registered
or not, applications to register and registrations of the same and like
protections, and the entire goodwill of the business of Grantor connected with
and symbolized by such trademarks, including without limitation those set forth
on Exhibit C attached hereto (collectively, the "Trademarks");
(f) Any and all claims for damages by way of past, present and
future infringement of any of the rights included above, with the right, but not
the obligation, to xxx for and collect such damages for said use or infringement
of the intellectual property rights identified above;
1
(g) All licenses or other rights to use any of the Copyrights,
Patents or Trademarks, and all license fees and royalties arising from such use
to the extent permitted by such license or rights;
(h) All amendments, renewals and extensions of any of the
Copyrights, Trademarks or Patents; and
(i) All proceeds and products of the foregoing, including
without limitation all payments under insurance or any indemnity or warranty
payable in respect of any of the foregoing.
2. Covenants and Warranties. Grantor represents, warrants, covenants
and agrees as follows:
(a) Grantor is now the sole owner of the Collateral, except
for licenses granted by Grantor to its customers in the ordinary course of
business;
(b) Except as set forth in the Schedule, Grantor's rights as a
licensee of intellectual property do not give rise to more than five percent
(5%) of its gross revenue in any given month, including without limitation
revenue derived from the sale, licensing, rendering or disposition of any
product or service;
(c) Performance of this Agreement does not conflict with or
result in a breach of any agreement to which Grantor is party or by which
Grantor is bound;
(d) During the term of this Agreement, Grantor will not
transfer or otherwise encumber any interest in the Collateral, except for
licenses granted by Grantor in the ordinary course of business or as set forth
in this Agreement;
(e) To its knowledge, each of the Patents is valid and
enforceable, and no part of the Collateral has been judged invalid or
unenforceable, in whole or in part, and no claim has been made that any part of
the Collateral violates the rights of any third party;
(f) Grantor shall deliver to Secured Party within thirty (30)
days of the last day of each fiscal quarter, a report signed by Grantor, in form
reasonably acceptable to Secured Party, listing any applications or
registrations that Grantor has made or filed in respect of any patents,
copyrights or trademarks and the status of any outstanding applications or
registrations. Grantor shall promptly advise Secured Party of any material
change in the composition of the Collateral, including but not limited to any
subsequent ownership right of the Grantor in or to any Trademark, Patent or
Copyright not specified in this Agreement;
(g) Grantor shall (i) protect, defend and maintain the
validity and enforceability of the Trademarks, Patents and Copyrights (ii) use
its best efforts to detect infringements of the Trademarks, Patents and
Copyrights and promptly advise Secured Party in writing of material
infringements detected and (iii) not allow any Trademarks, Patents or Copyrights
to be abandoned, forfeited or dedicated to the public unless in its reasonable
business judgment Grantor believes that it is advantageous to do so;
(h) Grantor shall promptly give Secured Party written notice
of any applications or registrations of intellectual property rights filed with
the United States Patent and Trademark Office, including the date of such filing
and the registration or application numbers, if any. Grantor shall give Secured
Party prior written notice of the filing of any applications or registrations
with the United States Copyright Office, including the title of such
intellectual property rights to be registered, as such title will appear on such
applications or registrations, and the date such applications or registrations
will be filed. Upon filing any such applications or registrations with the
United States Copyright Office, Grantor shall promptly provide Secured Party
with a copy of such applications or registrations and the date of such filing.
(i) This Agreement creates, and in the case of after acquired
Collateral, this Agreement will create at the time Grantor first has rights in
such after acquired Collateral, in favor of Secured Party a valid and perfected
first priority (subject to Permitted Liens) security interest in the Collateral
in the United States securing the payment and performance of the obligations
evidenced by the Loan Agreements;
2
(j) All information heretofore, herein or hereafter supplied
to Secured Party by or on behalf of Grantor with respect to the Collateral is
accurate and complete in all material respects;
(k) Grantor shall not enter into any agreement that would
materially impair or conflict with Grantor's obligations hereunder without
Secured Party's prior written consent, which consent shall not be unreasonably
withheld. Grantor shall not permit the inclusion in any material contract to
which it becomes a party of any provisions that could or might in any way
prevent the creation of a security interest in Grantor's rights and interests in
any property included within the definition of the Collateral acquired under
such contracts; and
(l) Upon any executive officer of Grantor obtaining actual
knowledge thereof, Grantor will promptly notify Secured Party in writing of any
event that materially adversely affects the value of any Collateral, the ability
of Grantor to dispose of any Collateral or the rights and remedies of Secured
Party in relation thereto, including the levy of any legal process against any
of the Collateral.
3. Secured Party's Rights. Secured Party shall have the right, but not
the obligation, to take, at Grantor's sole expense, any actions that Grantor is
required under this Agreement to take but which Grantor fails to take, after
fifteen (15) days' notice to Grantor. Grantor shall reimburse and indemnify
Secured Party for all reasonable costs and reasonable expenses incurred in the
reasonable exercise of its rights under this section 3.
4. Inspection Rights. Grantor hereby grants to Secured Party and its
employees, representatives and agents the right to visit, during reasonable
hours upon prior reasonable written notice to Grantor, any of Grantor's plants
and facilities that manufacture, install or store products (or that have done so
during the prior six-month period) that are sold utilizing any of the
Collateral, and to inspect the products and quality control records relating
thereto upon reasonable written notice to Grantor and as often as may be
reasonably requested.
5. Further Assurances; Attorney in Fact.
(a) On a continuing basis, Grantor will make, execute,
acknowledge and deliver, and file and record in the proper filing and recording
places in the United States, all such instruments, including appropriate
financing and continuation statements and collateral agreements and filings with
the United States Patent and Trademark Office and the Register of Copyrights,
and take all such action as may reasonably be deemed necessary or advisable, or
as requested by Secured Party, to perfect Secured Party's security interest in
all Copyrights, Patents and Trademarks and otherwise to carry out the intent and
purposes of this Agreement, or for assuring and confirming to Secured Party the
grant or perfection of a security interest in all Collateral.
(b) Grantor hereby irrevocably appoints Secured Party as
Grantor's attorney-in-fact, with full authority in the place and stead of
Grantor and in the name of Grantor, from time to time in Secured Party's
discretion, to take any action and to execute any instrument which Secured Party
may deem necessary or advisable to accomplish the purposes of this Agreement,
including (i) to modify, in its sole discretion, this Agreement without first
obtaining Grantor's approval of or signature to such modification by amending
Exhibit A, Exhibit B and Exhibit C, hereof, as appropriate, to include reference
to any right, title or interest in any Copyrights, Patents or Trademarks
acquired by Grantor after the execution hereof or to delete any reference to any
right, title or interest in any Copyrights, Patents or Trademarks in which
Grantor no longer has or claims any right, title or interest, (ii) to file, in
its sole discretion, one or more financing or continuation statements and
amendments thereto, relative to any of the Collateral without the signature of
Grantor where permitted by law and (iii) after the occurrence of an Event of
Default, to transfer the Collateral into the name of Secured Party or a third
party to the extent permitted under the
California Uniform Commercial Code.
6. Events of Default. The occurrence of any of the following shall
constitute an Event of Default under the Agreement:
(a) An Event of Default occurs under the Loan Agreements; or
3
(b) Grantor breaches any warranty or agreement made by Grantor
in this Agreement and, as to any breach that is capable of cure, Grantor fails
to cure such breach within five (5) days of the occurrence of such breach.
7. Remedies. Upon the occurrence and continuance of an Event of
Default, Secured Party shall have the right to exercise all the remedies of a
secured party under the
California Uniform Commercial Code, including without
limitation the right to require Grantor to assemble the Collateral and any
tangible property in which Secured Party has a security interest and to make it
available to Secured Party at a place designated by Secured Party. Secured Party
shall have a nonexclusive, royalty free license to use the Copyrights, Patents
and Trademarks to the extent reasonably necessary to permit Secured Party to
exercise its rights and remedies upon the occurrence of an Event of Default.
Grantor will pay any expenses (including reasonable attorneys' fees) incurred by
Secured Party in connection with the exercise of any of Secured Party's rights
hereunder, including without limitation any expense incurred in disposing of the
Collateral. All of Secured Party's rights and remedies with respect to the
Collateral shall be cumulative.
8. Indemnity. Grantor agrees to defend, indemnify and hold harmless
Secured Party and its officers, employees, and agents against: (a) all
obligations, demands, claims, and liabilities claimed or asserted by any other
party in connection with the transactions contemplated by this Agreement, and
(b) all losses or expenses in any way suffered, incurred, or paid by Secured
Party as a result of or in any way arising out of, following or consequential to
transactions between Secured Party and Grantor, whether under this Agreement or
otherwise (including without limitation reasonable attorneys' fees and
reasonable expenses), except for losses arising from or out of Secured Party's
gross negligence or willful misconduct.
9. Course of Dealing. No course of dealing, nor any failure to
exercise, nor any delay in exercising any right, power or privilege hereunder
shall operate as a waiver thereof.
10. Attorneys' Fees. If any action relating to this Agreement is
brought by either party hereto against the other party, the prevailing party
shall be entitled to recover reasonable attorneys' fees, costs and
disbursements.
11. Amendments. This Agreement may be amended only by a written
instrument signed by both parties hereto.
12. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute the same instrument.
13.
California Law and Jurisdiction; Jury Waiver. This Agreement shall
be governed by the laws of the State of
California, without regard for choice of
law provisions. Grantor and Secured Party consent to the exclusive jurisdiction
of any state or federal court located in Santa Xxxxx County,
California. GRANTOR
AND SECURED PARTY EACH WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY
CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THE LOAN AGREEMENTS, THIS
AGREEMENT, OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN, INCLUDING CONTRACT
CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR
STATUTORY CLAIMS.
4
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first above written.
GRANTOR:
Address of Grantor: QUOVADX, INC.
0000 Xxxxx Xxxxxxx'x Xxxxx Xxxxxx, Xxxxx 0000 /s/ Xxxx X. Xxxxxxxxx
----------------------------
Xxxxxxxxx, XX 00000
By: Xxxx X. Xxxxxxxxx
------------------------
Attn: Xxxx Xxxxxxxxx, Chief Financial Officer Its: Executive Vice
President, Finance
-----------------------
SECURED PARTY:
Address of Secured Party: COMERICA BANK
0000 X. Xx Xxxxxxx Xxxx., Xxxxx 0000 /s/ Xxx Xxx Xxxxxxxx
----------------------------
Xxxxxxxxx, XX 00000
Attn: Manager By: Xxx Xxx Xxxxxxxx
------------------------
Its: Vice President &
Regional Marketing
Manager
-----------------------
5
EXHIBIT A
Copyrights
Description Registration Number Registration Date
----------- ------------------- -----------------
6
EXHIBIT B
Patents
Title Serial Number/Patent Number Application/Issue Date
----- --------------------------- ----------------------
Method and apparatus for graphical user 5,786,816 07/28/98*
interface-based and variable result healthcare
plan
Apparatus and method for merging medical 5,826,237 10/20/98*
protocols
Apparatus and method for a graphical user 5,850,221 12/15/98*
interface in a medical protocol system
Security monitor for controlling functional 5,881,225 03/09/99*
access to a computer system
Method and apparatus for processing data across 5,886,693 03/23/99*
a computer network
Graphical user interface in a medical protocol 6,037,940 03/14/00*
system having time delay rules and a publisher's
view
Apparatus and method for managing changes of 6,426,759 07/30/02*
computerized medical protocols
* lien in favor of SVB
7
EXHIBIT C
Trademarks
Registration/Application Registration/Application
Description Number Date
----------- ------ ----
QDX 76/404,087 05/02/02
Insurenet 2,511,895 11/27/01*
Insurenet 2,565,985 04/30/02*
* lien in favor of SVB
8
INTELLECTUAL PROPERTY SECURITY AGREEMENT
This
Intellectual Property Security Agreement (the "Agreement") is made
as of December 9, 2003, by and between XXXXXXXXXX.XXX CORPORATION, a Georgia
corporation ("Grantor"), and COMERICA BANK ("Secured Party").
RECITALS
A. Secured Party has made loans to Grantor and Quovadx, Inc. (each a
"Borrower", and collectively, "Borrowers'), pursuant to a Loan and Security
Agreement dated as of August 26, 2003, as amended by that certain First
Amendment to Loan and Security Agreement, of even date herewith, as may be
amended from time to time (the "Loan Agreement"). All capitalized terms used
herein without definition shall have the meanings ascribed to them in the Loan
Agreement.
B. Secured Party is willing to continue to make credit extensions to
Borrowers, but only upon the condition, among others, that Grantor shall grant
to Secured Party a security interest in all of Grantor's right title, and
interest in, to and under all of the Collateral whether presently existing or
hereafter acquired until the Acquisition Line End Date, as that term is defined
in the Loan Agreement.
C. Upon the Acquisition Line End Date, Secured Party will release its
security interest in the Collateral and will prepare and file all documents
necessary to release its security interest in the Collateral.
NOW, THEREFORE, THE PARTIES HERETO AGREE AS FOLLOWS:
1. Grant of Security Interest. As collateral security for the prompt
and complete payment and performance of all of Borrowers' present or future
indebtedness, obligations and liabilities to Secured Party, Grantor hereby
grants a security interest and mortgage to Secured Party, as security, in and to
Grantor's entire right, title and interest in, to and under all of its
intellectual property, including without limitation the following (all of which
shall collectively be called the "Collateral"):
(a) Any and all copyright rights, copyright applications,
copyright registrations and like protections in each work or authorship and
derivative work thereof, whether published or unpublished and whether or not the
same also constitutes a trade secret, now or hereafter existing, created,
acquired or held, including without limitation those set forth on Exhibit A
attached hereto (collectively, the "Copyrights");
(b) Any and all trade secrets, and any and all intellectual
property rights in computer software and computer software products now or
hereafter existing, created, acquired or held;
(c) Any and all design rights which may be available to
Grantor now or hereafter existing, created, acquired or held;
(d) All patents, patent applications and like protections
including without limitation improvements, divisions, continuations, renewals,
reissues, extensions and continuations-in-part of the same, including without
limitation the patents and patent applications set forth on Exhibit B attached
hereto (collectively, the "Patents");
(e) Any trademark and servicemark rights, whether registered
or not, applications to register and registrations of the same and like
protections, and the entire goodwill of the business of Grantor connected with
and symbolized by such trademarks, including without limitation those set forth
on Exhibit C attached hereto (collectively, the "Trademarks");
1
(f) Any and all claims for damages by way of past, present and
future infringement of any of the rights included above, with the right, but not
the obligation, to xxx for and collect such damages for said use or infringement
of the intellectual property rights identified above;
(g) All licenses or other rights to use any of the Copyrights,
Patents or Trademarks, and all license fees and royalties arising from such use
to the extent permitted by such license or rights;
(h) All amendments, renewals and extensions of any of the
Copyrights, Trademarks or Patents; and
(i) All proceeds and products of the foregoing, including
without limitation all payments under insurance or any indemnity or warranty
payable in respect of any of the foregoing.
2. Covenants and Warranties. Grantor represents, warrants, covenants
and agrees as follows:
(a) Grantor is now the sole owner of the Collateral, except
for licenses granted by Grantor to its customers in the ordinary course of
business;
(b) Except as set forth in the Schedule, Grantor's rights as a
licensee of intellectual property do not give rise to more than five percent
(5%) of its gross revenue in any given month, including without limitation
revenue derived from the sale, licensing, rendering or disposition of any
product or service;
(c) Performance of this Agreement does not conflict with or
result in a breach of any agreement to which Grantor is party or by which
Grantor is bound;
(d) During the term of this Agreement, Grantor will not
transfer or otherwise encumber any interest in the Collateral, except for
licenses granted by Grantor in the ordinary course of business or as set forth
in this Agreement;
(e) To its knowledge, each of the Patents is valid and
enforceable, and no part of the Collateral has been judged invalid or
unenforceable, in whole or in part, and no claim has been made that any part of
the Collateral violates the rights of any third party;
(f) Grantor shall deliver to Secured Party within thirty (30)
days of the last day of each fiscal quarter, a report signed by Grantor, in form
reasonably acceptable to Secured Party, listing any applications or
registrations that Grantor has made or filed in respect of any patents,
copyrights or trademarks and the status of any outstanding applications or
registrations. Grantor shall promptly advise Secured Party of any material
change in the composition of the Collateral, including but not limited to any
subsequent ownership right of the Grantor in or to any Trademark, Patent or
Copyright not specified in this Agreement;
(g) Grantor shall (i) protect, defend and maintain the
validity and enforceability of the Trademarks, Patents and Copyrights (ii) use
its best efforts to detect infringements of the Trademarks, Patents and
Copyrights and promptly advise Secured Party in writing of material
infringements detected and (iii) not allow any Trademarks, Patents or Copyrights
to be abandoned, forfeited or dedicated to the public unless in its reasonable
business judgment Grantor believes that it is advantageous to do so;
(h) Grantor shall promptly give Secured Party written notice
of any applications or registrations of intellectual property rights filed with
the United States Patent and Trademark Office, including the date of such filing
and the registration or application numbers, if any. Grantor shall give Secured
Party prior written notice of the filing of any applications or registrations
with the United States Copyright Office, including the title of such
intellectual property rights to be registered, as such title will appear on such
applications or registrations, and the date such applications or registrations
will be filed. Upon filing any such applications or registrations with the
United States Copyright Office, Grantor shall promptly provide Secured Party
with a copy of such applications or registrations and the date of such filing.
2
(i) This Agreement creates, and in the case of after acquired
Collateral, this Agreement will create at the time Grantor first has rights in
such after acquired Collateral, in favor of Secured Party a valid and perfected
first priority (subject to Permitted Liens) security interest in the Collateral
in the United States securing the payment and performance of the obligations
evidenced by the Loan Agreements;
(j) All information heretofore, herein or hereafter supplied
to Secured Party by or on behalf of Grantor with respect to the Collateral is
accurate and complete in all material respects;
(k) Grantor shall not enter into any agreement that would
materially impair or conflict with Grantor's obligations hereunder without
Secured Party's prior written consent, which consent shall not be unreasonably
withheld. Grantor shall not permit the inclusion in any material contract to
which it becomes a party of any provisions that could or might in any way
prevent the creation of a security interest in Grantor's rights and interests in
any property included within the definition of the Collateral acquired under
such contracts; and
(l) Upon any executive officer of Grantor obtaining actual
knowledge thereof, Grantor will promptly notify Secured Party in writing of any
event that materially adversely affects the value of any Collateral, the ability
of Grantor to dispose of any Collateral or the rights and remedies of Secured
Party in relation thereto, including the levy of any legal process against any
of the Collateral.
3. Secured Party's Rights. Secured Party shall have the right, but not
the obligation, to take, at Grantor's sole expense, any actions that Grantor is
required under this Agreement to take but which Grantor fails to take, after
fifteen (15) days' notice to Grantor. Grantor shall reimburse and indemnify
Secured Party for all reasonable costs and reasonable expenses incurred in the
reasonable exercise of its rights under this section 3.
4. Inspection Rights. Grantor hereby grants to Secured Party and its
employees, representatives and agents the right to visit, during reasonable
hours upon prior reasonable written notice to Grantor, any of Grantor's plants
and facilities that manufacture, install or store products (or that have done so
during the prior six-month period) that are sold utilizing any of the
Collateral, and to inspect the products and quality control records relating
thereto upon reasonable written notice to Grantor and as often as may be
reasonably requested.
5. Further Assurances; Attorney in Fact.
(a) On a continuing basis, Grantor will make, execute,
acknowledge and deliver, and file and record in the proper filing and recording
places in the United States, all such instruments, including appropriate
financing and continuation statements and collateral agreements and filings with
the United States Patent and Trademark Office and the Register of Copyrights,
and take all such action as may reasonably be deemed necessary or advisable, or
as requested by Secured Party, to perfect Secured Party's security interest in
all Copyrights, Patents and Trademarks and otherwise to carry out the intent and
purposes of this Agreement, or for assuring and confirming to Secured Party the
grant or perfection of a security interest in all Collateral.
(b) Grantor hereby irrevocably appoints Secured Party as
Grantor's attorney-in-fact, with full authority in the place and stead of
Grantor and in the name of Grantor, from time to time in Secured Party's
discretion, to take any action and to execute any instrument which Secured Party
may deem necessary or advisable to accomplish the purposes of this Agreement,
including (i) to modify, in its sole discretion, this Agreement without first
obtaining Grantor's approval of or signature to such modification by amending
Exhibit A, Exhibit B and Exhibit C, hereof, as appropriate, to include reference
to any right, title or interest in any Copyrights, Patents or Trademarks
acquired by Grantor after the execution hereof or to delete any reference to any
right, title or interest in any Copyrights, Patents or Trademarks in which
Grantor no longer has or claims any right, title or interest, (ii) to file, in
its sole discretion, one or more financing or continuation statements and
amendments thereto, relative to any of the Collateral without the signature of
Grantor where permitted by law and (iii) after the occurrence of an Event of
Default, to transfer the Collateral into the name of Secured Party or a third
party to the extent permitted under the
California Uniform Commercial Code.
6. Events of Default. The occurrence of any of the following shall
constitute an Event of Default under the Agreement:
3
(a) An Event of Default occurs under the Loan Agreements; or
(b) Grantor breaches any warranty or agreement made by Grantor
in this Agreement and, as to any breach that is capable of cure, Grantor fails
to cure such breach within five (5) days of the occurrence of such breach.
7. Remedies. Upon the occurrence and continuance of an Event of
Default, Secured Party shall have the right to exercise all the remedies of a
secured party under the
California Uniform Commercial Code, including without
limitation the right to require Grantor to assemble the Collateral and any
tangible property in which Secured Party has a security interest and to make it
available to Secured Party at a place designated by Secured Party. Secured Party
shall have a nonexclusive, royalty free license to use the Copyrights, Patents
and Trademarks to the extent reasonably necessary to permit Secured Party to
exercise its rights and remedies upon the occurrence of an Event of Default.
Grantor will pay any expenses (including reasonable attorneys' fees) incurred by
Secured Party in connection with the exercise of any of Secured Party's rights
hereunder, including without limitation any expense incurred in disposing of the
Collateral. All of Secured Party's rights and remedies with respect to the
Collateral shall be cumulative.
8. Indemnity. Grantor agrees to defend, indemnify and hold harmless
Secured Party and its officers, employees, and agents against: (a) all
obligations, demands, claims, and liabilities claimed or asserted by any other
party in connection with the transactions contemplated by this Agreement, and
(b) all losses or expenses in any way suffered, incurred, or paid by Secured
Party as a result of or in any way arising out of, following or consequential to
transactions between Secured Party and Grantor, whether under this Agreement or
otherwise (including without limitation reasonable attorneys' fees and
reasonable expenses), except for losses arising from or out of Secured Party's
gross negligence or willful misconduct.
9. Course of Dealing. No course of dealing, nor any failure to
exercise, nor any delay in exercising any right, power or privilege hereunder
shall operate as a waiver thereof.
10. Attorneys' Fees. If any action relating to this Agreement is
brought by either party hereto against the other party, the prevailing party
shall be entitled to recover reasonable attorneys' fees, costs and
disbursements.
11. Amendments. This Agreement may be amended only by a written
instrument signed by both parties hereto.
12. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute the same instrument.
13.
California Law and Jurisdiction; Jury Waiver. This Agreement shall
be governed by the laws of the State of California, without regard for choice of
law provisions. Grantor and Secured Party consent to the exclusive jurisdiction
of any state or federal court located in Santa Xxxxx County, California. GRANTOR
AND SECURED PARTY EACH WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY
CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THE LOAN AGREEMENTS, THIS
AGREEMENT, OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN, INCLUDING CONTRACT
CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR
STATUTORY CLAIMS.
4
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first above written.
GRANTOR:
Address of Grantor: XXXXXXXXXX.XXX CORPORATION
0000 Xxxxx Xxxxxxx'x Xxxxx Xxxxxx, Xxxxx 0000 /s/ Xxxx X. Xxxxxxxxx
-----------------------------
Xxxxxxxxx, XX 00000
By: Xxxx T, Xxxxxxxxx
-------------------------
Its: Vice President
------------------------
Attn: Xxxx Xxxxxxxxx, Chief Financial Officer
SECURED PARTY:
Address of Secured Party: COMERICA BANK
0000 X. Xx Xxxxxxx Xxxx., Xxxxx 0000 /s/ Xxx Xxx Xxxxxxxx
-----------------------------
Xxxxxxxxx, XX 00000
Attn: Manager By: Xxx Xxx Xxxxxxxx
-------------------------
Its: Vice President &
Regional Marketing
Manager
------------------------
5
EXHIBIT A
Copyrights
Description Registration Number Registration Date
----------- ------------------- -----------------
Cloverleaf* TX 0-000-000 1999
Emerge TX 0-000-000 1999
Cloverleaf TX 0-000-000 1999
*lien in favor of SVB
6
EXHIBIT B
Patents
Title Serial Number/Patent Number Application/Issue Date
----- --------------------------- ----------------------
7
EXHIBIT C
Trademarks
Registration/Application Registration/Application
Description Number Date
----------- ------ ----
Emerge 2,308,395 01/18/00
Cloverleaf 1,994,113 08/13/96
8
