Exhibit 10.34
-------------------------------------------------------------------------------
SECURITY AGREEMENT
among
SCALABLE SOFTWARE, INC.,
as Assignor
and
NEON SYSTEMS, INC.,
as Secured Party
---------------------------------
Dated as of June 26, 2002
---------------------------------
-------------------------------------------------------------------------------
TABLE OF CONTENTS
Page
ARTICLE I SECURITY INTERESTS.........................................................................1
1.1 Grant of Security Interests..............................................................1
1.2 Power of Attorney........................................................................2
ARTICLE II GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS.........................................2
2.1 Necessary Filings........................................................................2
2.2 No Liens.................................................................................2
2.3 Other Financing Statements...............................................................3
2.4 Chief Executive Office, Record Locations.................................................3
2.5 Legal Names; Organizational Identification Number; Trade Names; Change of Name...........3
2.6 Jurisdiction and Type of Organization....................................................4
ARTICLE III SPECIAL PROVISIONS CONCERNING TRADEMARKS.................................................4
3.1 Additional Representations and Warranties................................................4
3.2 Licenses and Assignments.................................................................5
3.3 Infringements............................................................................5
3.4 Preservation of Marks....................................................................5
3.5 Maintenance of Registration..............................................................5
3.6 Future Registered Marks..................................................................5
3.7 Remedies.................................................................................6
ARTICLE IV SPECIAL PROVISIONS CONCERNING PATENTS, COPYRIGHTS AND TRADE SECRETS.......................6
4.1 Additional Representations and Warranties................................................6
4.2 Registered Copyrights....................................................................7
4.3 Licenses and Assignments.................................................................7
4.4 Infringements............................................................................7
4.5 Maintenance of Patents or Copyright......................................................7
4.6 Prosecution of Patent Applications.......................................................7
4.7 Other Patents and Copyrights.............................................................8
4.8 No Restrictions from Third Party Licensors...............................................8
4.9 Remedies.................................................................................8
ARTICLE V SPECIAL PROVISIONS CONCERNING ELIGIBLE RECEIVABLES.........................................8
5.1 Additional Representations and Warranties................................................8
5.2 Maintenance of Records...................................................................9
5.3 Direction to Account Debtors; etc........................................................9
5.4 Modification of Terms; etc...............................................................9
5.5 Collection..............................................................................10
5.6 Assignor Remains Liable Under Receivables...............................................10
ARTICLE VI PROVISIONS CONCERNING ALL COLLATERAL.....................................................10
6.1 Protection of Secured Party's Security..................................................10
6.2 Further Actions.........................................................................11
6.3 Financing Statements or Other Notices...................................................11
ARTICLE VII REMEDIES UPON OCCURRENCE OF AN EVENT OF DEFAULT.........................................11
7.1 Remedies; Obtaining the Collateral Upon Default.........................................11
i
7.2 Remedies; Disposition of the Collateral.................................................12
7.3 Waiver of Claims........................................................................13
7.4 Application of Proceeds.................................................................14
7.5 Remedies Cumulative.....................................................................14
7.6 Discontinuance of Proceedings...........................................................15
ARTICLE VIII INDEMNITY..............................................................................15
8.1 Indemnity...............................................................................15
8.2 Indemnity Obligations Secured by Collateral; Survival...................................16
ARTICLE IX DEFINITIONS..............................................................................16
ARTICLE X MISCELLANEOUS.............................................................................19
10.1 Notices.................................................................................19
10.2 Waiver; Amendment.......................................................................20
10.3 Obligations Absolute....................................................................20
10.4 Successors and Assigns..................................................................20
10.5 Headings Descriptive....................................................................20
10.6 Governing Law...........................................................................20
10.7 Assignor's Duties.......................................................................21
10.8 Termination.............................................................................21
10.9 Counterparts............................................................................21
10.10 Severability............................................................................21
10.11 The Secured Party.......................................................................21
10.12 Benefit of Agreement....................................................................21
ii
ANNEX A Schedule of Legal Names, Organizational Identification Numbers and
Trade and Fictitious Names
ANNEX B Schedule of Marks
ANNEX C Schedule of Patents
ANNEX D Schedule of Copyrights
ANNEX E Form of Grant of Security Interest in United States Trademarks
ANNEX F Form of Grant of Security Interest in United States Patents
ANNEX G Form of Grant of Security Interest in United States Copyrights
iii
SECURITY AGREEMENT
THIS SECURITY AGREEMENT, dated as of June 26, 2002, made by SCALABLE
SOFTWARE, INC., a Delaware corporation, organizational identification number
_________, ("Assignor"), with its chief executive office being located at 000
Xxxxx Xxxx Xxx Xxxx, Xxxxx 000, Xxxxxxx, Xxxxx 00000, in favor of NEON SYSTEMS,
INC., a Delaware corporation ("Secured Party"), whose address for notice
hereunder is 00000 Xxxxxxxxx Xxxxxxx, Xxxxx 000, Xxxxx Xxxx, Xxxxx 00000. Except
as otherwise defined herein, all capitalized terms used herein and defined in
the Note (as defined below) shall be used herein as therein defined.
R E C I T A L S
A. Assignor and Secured Party have entered into a Promissory Note
dated as of June 26, 2002 (as the same may from time to time be amended,
renewed, modified, extended, increased and/or rearranged, the "Note"), providing
for the making of a term loan, available in multiple advances, in the principal
amount of up to $5,500,000 to Assignor (the "Loan") as contemplated therein.
B. It is a condition precedent to the making of the Loan or any
advance under the Note that Assignor shall have executed and delivered to
Secured Party this Agreement and Assignor has agreed to execute and deliver to
Secured Party this Agreement.
C. In consideration of the benefits accruing to Assignor, the
receipt and sufficiency of which are hereby acknowledged, Assignor hereby makes
the following representations and warranties to Secured Party and hereby
covenants and agrees with Assignee as follows:
ARTICLE I
SECURITY INTERESTS
1.1 Grant of Security Interests. As security for the prompt and
---------------------------
complete payment and performance when due of all of its Obligations under the
Note, Assignor does hereby assign and transfer unto Secured Party, and does
hereby pledge and grant to Secured Party a continuing security interest in and
to the following (collectively, the "Collateral"):
(a) All of the right, title and interest of Assignor in, to and
under all of the following, whether now existing or hereafter
from time to time acquired: (i) all Marks, together with the
registrations and right to all renewals thereof, and the
goodwill of the business of Assignor symbolized by the Marks,
(ii) all Patents and Copyrights, (iii) all computer programs
of Assignor and all intellectual property rights therein and
all other proprietary information of Assignor, including, but
not limited to, Trade Secret Rights;
(b) All of the right, title and interest of Assignor in, to and
under all Eligible Receivables, whether now existing or
hereafter from time to time arising or acquired;
(c) All General Intangibles (including payment intangibles and
software) and other personal property of Assignor of every
kind and nature (including, without
limitation, cash, tort claims (commercial or otherwise) and
letter of credit rights) relating to any or all of Assignor's
property, rights, titles and interests described or referred
to in clauses (a) and (b) of this Section 1.1; and
(d) All Proceeds and products of any and all of the foregoing.
The security interest of Secured Party under this Agreement extends to
all Collateral which Assignor may acquire at any time during the term of this
Agreement.
1.2 Power of Attorney. Assignor hereby constitutes and appoints
-----------------
Secured Party its true and lawful attorney, irrevocably, with full power after
the occurrence of and during the continuance of an Event of Default (in the name
of Assignor or otherwise) to act, require, demand, receive, compound and give
acquaintance for any and all moneys and claims for moneys due or to become due
to Assignor under or arising out of the Collateral, to endorse any checks or
other instruments or orders in connection therewith and to file any claims or
take any action or institute any proceedings which Secured Party may deem to be
necessary or advisable to protect its interests, which appointment as attorney
is coupled with an interest.
ARTICLE II
GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS
Assignor represents, warrants and covenants, which representations,
warranties and covenants shall survive execution and delivery of this Agreement,
as follows:
2.1 Necessary Filings. All filings, registrations and recordings
-----------------
necessary or appropriate to create, preserve and perfect the security interest
granted by Assignor to Secured Party hereby in respect of the Collateral have
been accomplished and the security interest granted to Secured Party pursuant to
this Agreement in and to the Collateral creates a perfected security interest
therein prior to the rights of all other Persons therein and subject to no other
Liens and is entitled to all the rights, priorities and benefits afforded by the
UCC or other relevant law as enacted in any relevant jurisdiction to perfected
security interests, in each case to the extent that the Collateral consists of
the type of property in which a security interest may be perfected by
possession, by filing a financing statement under the UCC as enacted in any
relevant jurisdiction and by a filing of a Grant of Security Interest in the
respective form attached hereto in the United States Patent and Trademark Office
or in the United States Copyright Office or a similar statement or instrument in
a foreign equivalent office.
2.2 No Liens. Assignor is, and as to Collateral acquired by it
--------
from time to time after the date hereof Assignor will be, the owner of all
Collateral free from any Lien, security interest, encumbrance or other right,
title or interest of any Person, and Assignor shall defend the Collateral
against all claims and demands of all Persons at any time claiming the same or
any interest therein adverse to Secured Party.
2.3 Other Financing Statements. As of the date hereof, there is no
--------------------------
financing statement (or similar statement or instrument of registration under
the law of any jurisdiction) covering or purporting to cover any interest of any
kind in the Collateral (other than financing statements being terminated in
connection with the Loan, so long as such financing statements (or similar
statements or instruments of registration under the law of any jurisdiction) are
in fact
2
terminated within 10 days after the Closing Date), and so long as the
Termination Date has not occurred, Assignor will not execute or authorize to be
filed in any public office any financing statement (or similar statements or
instruments of registration under the law of any jurisdiction) or statements
relating to the Collateral, except financing statements (or similar statements
or instruments of registration under the law of any jurisdiction) filed or to be
filed in respect of and covering the security interests granted hereby by
Assignor.
2.4 Chief Executive Office, Record Locations. The chief executive
----------------------------------------
office of Assignor is located at the address indicated in the opening paragraph
of this Agreement. Assignor will not move its chief executive office except to
such new location as Assignor may establish in accordance with the last sentence
of this Section 2.4. The originals of all documents evidencing all Eligible
Receivables of Assignor and the only original books of account and records of
Assignor relating thereto are, and will continue to be, kept at such chief
executive office, at one or more of the other locations set forth on Annex A
hereto or at such new locations as Assignor may establish in accordance with the
last sentence of this Section 2.4. All Eligible Receivables of Assignor are, and
will continue to be, maintained at, and controlled and directed (including,
without limitation, for general accounting purposes) from, the office locations
described above or such new location established in accordance with the last
sentence of this Section 2.4. Assignor shall not establish new locations for
such offices until (i) it shall have given to Secured Party not less than 15
days' prior written notice of its intention to do so, clearly describing such
new location and providing such other information in connection therewith as
Secured Party may reasonably request, and (ii) with respect to such new
location, it shall have taken all action reasonably satisfactory to Secured
Party to maintain the security interest of Secured Party in the Collateral
intended to be granted hereby at all times fully perfected and in full force and
effect.
2.5 Legal Names; Organizational Identification Number; Trade
--------------------------------------------------------
Names; Change of Name. The legal name of Assignor, and the organizational
---------------------
identification number (if any) of Assignor, is as set forth in the opening
paragraph of this Agreement. Assignor has not operated in any jurisdiction
under, or in the preceding five years has not had nor has it operated in any
jurisdiction under, any trade names, fictitious names or other names except its
legal name and such other trade or fictitious names as are listed on Annex A
hereto for Assignor. Assignor shall not change its legal name, organizational
identification number (if any) or assume or operate in any jurisdiction under
any trade, fictitious or other name except its legal name, organizational
identification number and those trade names in each case listed on Annex A
hereto for Assignor and those that may be established in accordance with the
immediately succeeding sentence of this Section 2.5. Assignor shall not change
its legal name or organizational identification number or assume or operate in
any jurisdiction under any new trade, fictitious or other name until (i) it
shall have given to Secured Party not less than 15 days prior written notice of
its intention so to do, clearly describing such new name and the jurisdictions
in which such new name shall be used and providing such other information in
connection therewith as Secured Party may reasonably request, and (ii) with
respect to such new name, it shall have taken all action reasonably requested by
Secured Party to maintain the security interest of Secured Party in the
Collateral intended to be granted hereby at all times fully perfected and in
full force and effect. In addition, to the extent that Assignor does not have an
organizational identification number on the date hereof and later obtains one,
Assignor shall promptly thereafter notify Secured Party of such organizational
identification number and shall take all actions reasonably
3
satisfactory to Secured Party to the extent necessary to maintain the security
interest of Secured Party in the Collateral intended to be granted hereby fully
perfected and in full force and effect.
2.6 Jurisdiction and Type of Organization. The jurisdiction of
-------------------------------------
organization of Assignor and the type of organization of Assignor are as set
forth in the opening paragraph of this Agreement. Assignor shall not change its
jurisdiction of organization or its type of organization until (i) it shall have
given to Secured Party not less than 15 days prior written notice of intention
so to do, clearly describing such new jurisdiction of organization and/or type
of organization and providing such other information in connection therewith as
Secured Party may reasonably request, and (ii) with respect to such new
jurisdiction of organization and/or type of organization, it shall have taken
all actions reasonably requested by Secured Party to maintain the security
interest of Secured Party in the Collateral intended to be granted hereby at all
times fully perfected and in full force and effect.
ARTICLE III
SPECIAL PROVISIONS CONCERNING TRADEMARKS
3.1 Additional Representations and Warranties. Assignor represents
-----------------------------------------
and warrants that it is the true and lawful owner of or otherwise has the right
to use (as such may be limited by law) the registered Marks listed in Annex B
hereto for Assignor and that said listed Marks include all United States and
foreign marks registered in and applications for marks filed with the United
States Patent and Trademark Office or any foreign equivalent that Assignor owns
or uses in connection with its business as of the date hereof. Assignor
represents and warrants that it owns, is licensed to use or otherwise has the
right to use, all Marks that it uses. Assignor further warrants that it has no
knowledge of any third party claim received by it that any aspect of Assignor's
present or contemplated business operations infringes or will infringe any
trademark, service xxxx or trade name of any other Person other than as could
not, either individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect. Assignor represents and warrants that it is the true
and lawful owner of or otherwise has the right to use all U.S. trademark
registrations and applications and all foreign trademark registrations and
applications, in each case, listed in Annex B hereto and that said registrations
are valid, subsisting, have not been canceled and that Assignor is not aware of
any third-party claim that any of said registrations is invalid or
unenforceable, is not aware that there is any reason that any of said
registrations is invalid or unenforceable, and is not aware that there is any
reason that any of said applications will not pass to registration. Assignor
hereby grants to the Secured Party an absolute power of attorney to sign, upon
the occurrence and during the continuance of an Event of Default, any document
which may be required by the United States Patent and Trademark Office or
foreign equivalent office in order to effect an absolute assignment of all
right, title and interest in each Xxxx, and record the same.
3.2 Licenses and Assignments. Except as otherwise permitted
------------------------
hereby, Assignor hereby agrees not to divest itself of any right under any Xxxx
absent prior written approval of the Secured Party.
3.3 Infringements. Assignor agrees, promptly upon learning
-------------
thereof, to notify the Secured Party in writing of the name and address of, and
to furnish such pertinent information that may be available with respect to, any
party who Assignor believes is infringing or diluting or
4
otherwise violating any of Assignor's rights in and to any Xxxx in any manner
that could reasonably be expected to have a Material Adverse Effect, or with
respect to any party claiming that Assignor's use of any Xxxx violates any
property right of that party other than as could not reasonably be expected to
have a Material Adverse Effect. Assignor further agrees to prosecute in
accordance with reasonable business practices any Person infringing any Xxxx in
any manner that could reasonably be expected to have a Material Adverse Effect.
3.4 Preservation of Marks. Assignor agrees to use its Marks in
---------------------
interstate commerce during the time in which this Agreement is in effect and to
take all such other actions as are reasonably necessary to preserve such Marks
as trademarks or service marks under the laws of the United States or foreign
jurisdictions (other than any such Marks determined by Assignor, in the exercise
of its reasonable business judgment, to be no longer useful or advantageous to
the ongoing conduct of its business).
3.5 Maintenance of Registration. Assignor shall, at its own
---------------------------
expense, in a commercially reasonable manner process such documents as are
reasonably required to maintain trademark registrations, including but not
limited to affidavits of use and applications for renewals of registration in
the United States Patent and Trademark Office or foreign equivalent office for
all of its material registered Marks, and shall pay all fees and disbursements
in connection therewith and shall not abandon any such filing of affidavit of
use or any such application of renewal prior to the exhaustion of all
administrative and judicial remedies without prior written consent of the
Secured Party (other than with respect to registrations and applications
determined by Assignor, in the exercise of its reasonable business judgment, to
be no longer materially useful or advantageous to the ongoing conduct of its
business).
3.6 Future Registered Marks. If any Xxxx registration is issued
-----------------------
hereafter to Assignor as a result of any application now or hereafter pending
before the United States Patent and Trademark Office or foreign equivalent
office, within 30 days of receipt of such certificate, Assignor shall deliver to
the Secured Party a copy of such certificate, and an assignment for security in
such Xxxx, to the Secured Party and at the expense of Assignor, confirming the
assignment for security in such Xxxx to the Secured Party hereunder, the form of
such security to be substantially in the form of Annex E hereto or in such other
form as may be reasonably satisfactory to the Secured Party.
3.7 Remedies. If an Event of Default shall occur and be
--------
continuing, the Secured Party may, by written notice to Assignor, take any or
all of the following actions: (i) declare the entire right, title and interest
of Assignor in and to each of the Marks, together with all trademark rights and
rights of protection to the same, vested in the Secured Party in which event
such rights, title and interest shall immediately vest, and the Secured Party
shall be entitled to exercise the power of attorney referred to in Section 3.1
hereof to execute, cause to be acknowledged and notarized and record said
absolute assignment with the applicable agency; (ii) take and use or sell the
Marks and the goodwill of Assignor's business symbolized by the Marks and the
right to carry on the business and use the assets of Assignor in connection with
which the Marks have been used; and (iii) direct Assignor to refrain, in which
event Assignor shall refrain, from using the Marks in any manner whatsoever,
directly or indirectly, and Assignor shall execute such further documents that
the Secured Party may reasonably request to further confirm this and to
5
transfer ownership of the Marks and registrations and any pending trademark
application in the United States Patent and Trademark Office or foreign
equivalent office to the Secured Party.
ARTICLE IV
SPECIAL PROVISIONS CONCERNING
PATENTS, COPYRIGHTS AND TRADE SECRETS
4.1 Additional Representations and Warranties. Assignor represents
-----------------------------------------
and warrants that it is the true and lawful owner or licensee of all rights in
(i) all United States trade secrets and proprietary information necessary to
operate the business of the Assignor (the "Trade Secret Rights"), (ii) the
Patents listed in Annex C hereto for Assignor and that said Patents include all
the United States and foreign patents and applications for United States and
foreign patents that Assignor owns as of the date hereof and (iii) the
Copyrights listed in Annex D hereto for Assignor and that said Copyrights
constitute all the United States and foreign copyrights and applications to
United States and foreign copyrights that Assignor owns as of the date hereof.
Assignor further warrants that it has no knowledge of any third party claim that
any aspect of Assignor's present or contemplated business operations infringes
or will infringe any patent of any other Person or Assignor has misappropriated
any trade secret or proprietary information which, either individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect.
Assignor hereby grants to the Secured Party an absolute power of attorney to
sign, upon the occurrence and during the continuance of any Event of Default,
any document which may be required by the United States Patent and Trademark
Office or foreign equivalent office in order to effect an absolute assignment of
all right, title and interest in each Patent, and to record the same.
4.2 Registered Copyrights. Assignor represents and warrants that
---------------------
it does not as of the date hereof own any Copyrights that are registered with
the United States Copyright Office or foreign equivalent office. Assignor
covenants that should it at any time intend to apply for registration for any of
its Copyrights with the United States Copyright Office or foreign equivalent
office, or should it apply for a Patent with the United States Patent and
Trademark Office or foreign equivalent office, it will give Secured Party
written notice of such intent to apply for a Copyright registration or Patent
with such office 30 days prior to the making of such application.
4.3 Licenses and Assignments. Except as otherwise permitted
------------------------
hereby, Assignor hereby agrees not to divest itself of any right under any
Patent or Copyright acquired after the date hereof absent prior written approval
of the Secured Party, which shall not be unreasonably withheld.
4.4 Infringements. Assignor agrees, promptly upon learning
-------------
thereof, to furnish the Secured Party in writing with all pertinent information
available to Assignor with respect to any infringement, contributing
infringement or active inducement to infringe of any Patent or Copyright or to
any claim that the practice of any Patent or use of any Copyright violates any
property right of a third party in each case, in any manner which, either
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect, or that with respect to any misappropriation of any
Trade Secret Right or any claim that practice of any Trade Secret Right violates
any property right of a third party, in each case, in any manner which, either
6
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect. Assignor further agrees, absent direction of the
Secured Party to the contrary, to prosecute in a commercially reasonable manner
any Person infringing any Patent or Copyright or any Person misappropriating any
Trade Secret Right, in each case to the extent that such infringement or
misappropriation, either individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect.
4.5 Maintenance of Patents or Copyright. At its own expense,
-----------------------------------
Assignor shall as promptly as practicable pay all post-issuance fees required
pursuant to 35 U.S.C. ss.41 (and all foreign equivalent fees (if any), as
applicable) to maintain in force its rights under each Patent or Copyright,
absent prior written consent of the Secured Party (other than any such Patents
or Copyrights determined by Assignor, in the exercise of its reasonable business
judgment, to be no longer useful or advantageous to the ongoing conduct of its
business).
4.6 Prosecution of Patent Applications. At its own expense,
----------------------------------
Assignor shall in a commercially reasonable manner prosecute all material
applications for (i) United States and foreign Patents listed in Annex C hereto
and (ii) Copyrights listed on Annex D hereto, in each case for Assignor and
shall not abandon any such application prior to exhaustion of all administrative
and judicial remedies (other than applications determined by Assignor, in the
exercise of its reasonable business judgment, to be no longer useful or
advantageous to the ongoing conduct of its business), absent written consent of
the Secured Party.
4.7 Other Patents and Copyrights. Within 10 days of the
----------------------------
acquisition of a United States or foreign Patent or acquisition of a registered
Copyright, other than such Patents or Copyrights issued to Assignor upon the
filing of an application for Copyright or Patent with the relevant United States
or foreign office, which are addressed in Section 4.2 hereof, Assignor shall
deliver to the Secured Party a copy of said Copyright or certificate or
registration of, said Patents, as the case may be, with an assignment for
security as to such Patent or Copyright, as the case may be, to the Secured
Party and at the expense of Assignor, confirming the assignment for security,
the form of such assignment for security to be substantially in the form of
Annex F or G hereto, as appropriate, or in such other form as may be reasonably
satisfactory to the Secured Party.
4.8 No Restrictions from Third Party Licensors. Assignor hereby
------------------------------------------
represents and warrants that none of the Collateral with respect to which it
owns a Copyright involves any license or licenses granted by third party
licensors that impose any restriction upon the grant of a security interest in
such Copyright or the ownership transfer or sale of such Copyright to Secured
Party or any designee or assignee thereof.
4.9 Remedies. If an Event of Default shall occur and be
--------
continuing, the Secured Party may, by written notice to Assignor, take any or
all of the following actions: (i) declare the entire right, title, and interest
of Assignor in each of the Patents and Copyrights vested in the Secured Party in
which event such right, title, and interest shall immediately vest in the
Secured Party in which case the Secured Party shall be entitled to exercise the
power of attorney referred to in Section 4.1 hereof to execute, cause to be
acknowledged and notarized and to record said absolute assignment with the
applicable agency; (ii) take and practice or sell the Patents and Copyrights;
and (iii) direct Assignor to refrain, in which event Assignor shall refrain,
from
7
practicing the Patents and using the Copyrights directly or indirectly, and
Assignor shall execute such further documents as the Secured Party may
reasonably request further to confirm this and to transfer ownership of the
Patents and Copyrights to the Secured Party.
ARTICLE V
SPECIAL PROVISIONS CONCERNING ELIGIBLE RECEIVABLES
5.1 Additional Representations and Warranties. As of the time when
-----------------------------------------
each of its Eligible Receivables arises, Assignor shall be deemed to have
represented and warranted that each such Eligible Receivable, and all records,
papers and documents relating thereto (if any) are genuine and what they purport
to be, and that all papers and documents (if any) relating thereto (i) will, to
the knowledge of Assignor, represent the genuine, legal, valid and binding
obligation of the account debtor evidencing indebtedness unpaid and owed by the
respective account debtor arising out of the performance of labor or services or
the sale or lease and delivery of the merchandise listed therein, or both, (ii)
will be the only original writings evidencing and embodying such obligation of
the account debtor named therein (other than copies created for general
accounting purposes), (iii) will, to the knowledge of Assignor, evidence true
and valid obligations, enforceable in accordance with their respective terms,
and (iv) will be in compliance and will conform in all material respects with
all applicable federal, state and local laws and applicable laws of any relevant
foreign jurisdiction.
5.2 Maintenance of Records. Assignor will keep and maintain at its
----------------------
own cost and expense accurate records of its Eligible Receivables, including,
but not limited to, originals of all documentation with respect thereto, records
of all payments received, all credits granted thereon, all merchandise returned
and all other dealings therewith, and Assignor will make the same available on
Assignor's premises to Secured Party for inspection, at Assignor's own cost and
expense, at any and all reasonable times upon prior notice to Assignor. Upon the
occurrence and during the continuance of an Event of Default and at the request
of Secured Party, Assignor shall, at its own cost and expense, deliver all
tangible evidence of its Eligible Receivables (including, without limitation,
all documents evidencing the Eligible Receivables) and such books and records to
Secured Party or to its representatives (copies of which evidence and books and
records may be retained by Assignor). Assignor shall legend, in form and manner
satisfactory to Secured Party, the Eligible Receivables, as well as books,
records and documents (if any) of Assignor evidencing or pertaining to such
Eligible Receivables, with an appropriate reference to the fact that such
Eligible Receivables have been assigned to Secured Party and that Secured Party
has a security interest therein.
5.3 Direction to Account Debtors; etc. Upon the occurrence and
----------------------------------
during the continuance of an Event of Default, if Secured Party so directs
Assignor, Assignor agrees (x) to cause all payments on account of the Eligible
Receivables to be made directly to Secured Party, (y) that Secured Party may, at
its option, directly notify the obligors with respect to any Eligible
Receivables to make payments with respect thereto as provided in the preceding
clause (x), and (z) that Secured Party may enforce collection of any such
Eligible Receivables and may adjust, settle or compromise the amount of payment
thereof, in the same manner and to the same extent as Assignor. Without notice
to or assent by any Assignor, Secured Party may, upon the occurrence and during
the continuance of an Event of Default, apply any or all amounts received by
Secured Party on account of the Eligible Receivables toward the payment of the
Obligations
8
in the manner provided in Section 7.4 of this Agreement. The reasonable costs
and expenses (including reasonable attorneys' fees) of collection, whether
incurred by Assignor or Secured Party, shall be borne by Assignor. The Secured
Party shall deliver a copy of such notice referred to in the preceding clause
(y) to Assignor, provided that the failure by Secured Party to so notify
Assignor shall not affect the effectiveness of such notice or the other rights
of Secured Party created by this Section 5.3.
5.4 Modification of Terms; etc. Except in accordance with
---------------------------
Assignor's ordinary course of business and consistent with reasonable business
judgment, Assignor shall not rescind or cancel any indebtedness evidenced by any
Eligible Receivable, or modify any term thereof or make any adjustment with
respect thereto, or extend or renew the same, or compromise or settle any
material dispute, claim, suit or legal proceeding relating thereto, or sell any
Eligible Receivable, or interest therein, without the prior written consent of
Secured Party. Assignor will not do anything to impair the rights of Secured
Party in the Eligible Receivables.
5.5 Collection. Assignor shall endeavor in accordance with
----------
reasonable business practices to cause to be collected from the account debtor
named in each of its Eligible Receivables, as and when due (including, without
limitation, amounts which are delinquent, such amounts to be collected in
accordance with generally accepted lawful collection procedures) any and all
amounts owing under or on account of such Eligible Receivable, and apply
forthwith upon receipt thereof all such amounts as are so collected to the
outstanding balance of such Eligible Receivable. Except as otherwise directed by
Secured Party after the occurrence and during the continuation of an Event of
Default, Assignor may allow in the ordinary course of business as adjustments to
amounts owing under its Eligible Receivables (i) an extension or renewal of the
time or times of payment, or settlement for less than the total unpaid balance,
which Assignor finds appropriate in accordance with reasonable business judgment
and (ii) a refund or credit due as a result of returned or damaged merchandise
or improperly performed services or for other reasons which Assignor finds
appropriate in accordance with reasonable business judgment. The reasonable
costs and expenses (including, without limitation, reasonable attorneys' fees)
of collection, whether incurred by Assignor or Secured Party, shall be borne by
Assignor.
5.6 Assignor Remains Liable Under Receivables. Anything herein to
-----------------------------------------
the contrary notwithstanding, Assignor shall remain liable under each of the
Eligible Receivables to observe and perform all of the conditions and
obligations to be observed and performed by it thereunder, all in accordance
with the terms of any agreement giving rise to such Eligible Receivables.
Secured Party shall not have any obligation or liability under any Eligible
Receivable (or any agreement giving rise thereto) by reason of or arising out of
this Agreement or the receipt by Secured Party of any payment relating to such
Eligible Receivable pursuant hereto, nor shall Secured Party be obligated in any
manner to perform any of the obligations of any Assignor under or pursuant to
any Eligible Receivable (or any agreement giving rise thereto), to make any
payment, to make any inquiry as to the nature or the sufficiency of any payment
received by them or as to the sufficiency of any performance by any party under
any Eligible Receivable (or any agreement giving rise thereto), to present or
file any claim, to take any action to enforce any performance or to collect the
payment of any amounts which may have been assigned to them or to which they may
be entitled at any time or times.
9
ARTICLE VI
PROVISIONS CONCERNING ALL COLLATERAL
6.1 Protection of Secured Party's Security. Except as expressly
--------------------------------------
permitted hereunder, Assignor will do nothing to impair the rights of the
Secured Party in the Collateral. Assignor assumes all liability and
responsibility in connection with the Collateral acquired by it and the
liability of Assignor to pay the Obligations shall in no way be affected or
diminished by reason of the fact that such Collateral may be for any reason
whatsoever unavailable to Assignor.
6.2 Further Actions. Assignor will, at its own expense and upon
---------------
the reasonable request of the Secured Party, make, execute, endorse,
acknowledge, file and/or deliver to the Secured Party from time to time such
lists, descriptions and designations of its Collateral, warehouse receipts,
receipts in the nature of warehouse receipts, bills of lading, documents of
title, vouchers, invoices, schedules, confirmatory assignments, conveyances,
financing statements, transfer endorsements, certificates, reports and other
assurances or instruments and take such further steps relating to the Collateral
and other property or rights covered by the security interest hereby granted,
which the Secured Party deems reasonably appropriate or advisable to perfect,
preserve or protect its security interest in the Collateral.
6.3 Financing Statements or Other Notices. Assignor agrees to
-------------------------------------
execute and deliver to the Secured Party such financing statements or other
notices, in form reasonably acceptable to the Secured Party, as the Secured
Party may from time to time reasonably request or as are reasonably necessary or
desirable in the opinion of the Secured Party to establish and maintain a valid,
enforceable, first priority perfected security interest in the Collateral as
provided herein and the other rights and security contemplated hereby. Assignor
will pay any applicable filing fees, recordation taxes and related expenses
relating to its Collateral. Assignor hereby authorizes the Secured Party to file
any such financing statements or other notices without the signature of Assignor
where permitted by law.
ARTICLE VII
REMEDIES UPON OCCURRENCE OF AN EVENT OF DEFAULT
7.1 Remedies; Obtaining the Collateral Upon Default. Assignor
-----------------------------------------------
agrees that, if any Event of Default shall have occurred and be continuing, then
and in every such case, the Secured Party, in addition to any rights now or
hereafter existing under applicable law and under the other provisions of this
Agreement, shall have all rights as a secured creditor under any UCC, and such
additional rights and remedies to which a secured creditor is entitled under the
laws in effect in all relevant jurisdictions and may:
(a) personally, or by agents or attorneys, immediately take
possession of the Collateral or any part thereof, from
Assignor or any other Person who then has possession of any
part thereof with or without notice or process of law, and for
that purpose may enter upon Assignor's premises where any of
the Collateral is located and remove the same and use in
connection with such removal any and all services, supplies,
aids and other facilities of Assignor;
10
(b) instruct the obligor or obligors on any agreement, instrument
or other obligation constituting the Collateral (including,
without limitation, the Eligible Receivables) to make any
payment required by the terms of such agreement, instrument or
other obligation directly to Secured Party and may exercise
any and all remedies of Assignor in respect of such
Collateral;
(c) sell, assign or otherwise liquidate any or all of the
Collateral or any part thereof in accordance with Section 6.2
hereof, or direct Assignor to sell, assign or otherwise
liquidate any or all of the Collateral or any part thereof,
and, in each case, take possession of the proceeds of any such
sale or liquidation;
(d) take possession of the Collateral or any part thereof, by
directing Assignor in writing to deliver the same to the
Secured Party at any reasonable place or places designated by
the Secured Party, in which event Assignor shall at its own
expense:
(i) forthwith cause the same to be moved to the place or
places so designated by the Secured Party and there delivered to the Secured
Party;
(ii) store and keep any Collateral so delivered to the Secured
Party at such place or places pending further action by the Secured Party as
provided in Section 7.2 hereof; and
(iii) while the Collateral shall be so stored and kept, provide
such security and maintenance services as shall be reasonably necessary to
protect the same and to preserve and maintain it in good condition; and
(e) license or sublicense, whether on an exclusive or nonexclusive
basis, any Marks, Patents or Copyrights included in the
Collateral for such term and on such conditions and in such
manner as the Secured Party shall in its sole judgment
determine;
it being understood that Assignor's obligation so to deliver the Collateral is
of the essence of this Agreement and that, accordingly, upon application to a
court of equity having jurisdiction, the Secured Party shall be entitled to a
decree requiring specific performance by Assignor of said obligation.
7.2 Remedies; Disposition of the Collateral. If any Event of
---------------------------------------
Default shall have occurred and be continuing, then any Collateral repossessed
by the Secured Party under or pursuant to Section 7.1 hereof and any other
Collateral whether or not so repossessed by the Secured Party, may be sold,
assigned, leased or otherwise disposed of under one or more contracts or as an
entirety, and without the necessity of gathering at the place of sale the
property to be sold, and in general in such manner, at such time or times, at
such place or places and on such terms as the Secured Party may, in compliance
with any mandatory requirements of applicable law, determine to be commercially
reasonable. Any of the Collateral may be sold, leased or otherwise disposed of,
in the condition in which the same existed when taken by the Secured Party or
after any overhaul or repair at the expense of Assignor which the Secured Party
shall determine to be commercially reasonable. Any such disposition which shall
be a private sale or other private proceedings permitted by such requirements
shall be made upon not less
11
than 10 days' prior written notice to Assignor specifying the time at which such
disposition is to be made and the intended sale price or other consideration
therefor, and shall be subject, for the 10 days after the giving of such notice,
to the right of Assignor or any nominee of Assignor to acquire the Collateral
involved at a price or for such other consideration at least equal to the
intended sale price or other consideration so specified. Any such disposition
which shall be a public sale permitted by such requirements shall be made upon
not less than 10 days' prior written notice to Assignor specifying the time and
place of such sale and, in the absence of applicable requirements of law, shall
be by public auction (which may, at the Secured Party's option, be subject to
reserve), after publication of notice of such auction (where required by
applicable law) not less than 10 days prior thereto. The Secured Party may,
without notice or publication, adjourn any public or private sale or cause the
same to be adjourned from time to time by announcement at the time and place
fixed for the sale, and such sale may be made at any time or place to which the
sale may be so adjourned. To the extent permitted by any such requirement of
law, the Secured Party may bid for and become the purchaser of the Collateral or
any item thereof, offered for sale in accordance with this Section 7.2 without
accountability to Assignor. If, under applicable law, the Secured Party shall be
permitted to make disposition of the Collateral within a period of time which
does not permit the giving of notice to Assignor as hereinabove specified, the
Secured Party need give Assignor only such notice of disposition as shall be
reasonably practicable in view of such applicable law. Assignor agrees to do or
cause to be done all such other acts and things as may be reasonably necessary
to make such sale or sales of all or any portion of the Collateral valid and
binding and in compliance with any and all applicable laws, regulations, orders,
writs, injunctions, decrees or awards of any and all courts, arbitrators or
governmental instrumentalities, domestic or foreign, having jurisdiction over
any such sale or sales, all at Assignor's expense.
7.3 Waiver of Claims. Except as otherwise provided in this
----------------
Agreement, ASSIGNOR HEREBY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAW,
NOTICE AND JUDICIAL HEARING IN CONNECTION WITH THE SECURED PARTY'S TAKING
POSSESSION OR THE SECURED PARTY'S DISPOSITION OF ANY OF THE COLLATERAL,
INCLUDING, WITHOUT LIMITATION, ANY AND ALL PRIOR NOTICE AND HEARING FOR ANY
PREJUDGMENT REMEDY OR REMEDIES, and Assignor hereby further waives, to the
extent permitted by law:
(a) all damages occasioned by such taking of possession except any
damages which are the direct result of the Secured Party's
gross negligence or willful misconduct (as determined by a
court of competent jurisdiction in a final and non-appealable
decision);
(b) all other requirements as to the time, place and terms of sale
or other requirements with respect to the enforcement of the
Secured Party's rights hereunder; and
(c) all rights of redemption, appraisement, valuation, stay,
extension or moratorium now or hereafter in force under any
applicable law in order to prevent or delay the enforcement of
this Agreement or the absolute sale of the Collateral or any
portion thereof, and Assignor, for itself and all who may
claim under it, insofar as it or they now or hereafter
lawfully may, hereby waives the benefit of all such laws.
12
Any sale of, or the grant of options to purchase, or any other realization upon,
any Collateral shall operate to divest all right, title, interest, claim and
demand, either at law or in equity, of Assignor therein and thereto, and shall
be a perpetual bar both at law and in equity against Assignor and against any
and all Persons claiming or attempting to claim the Collateral so sold, optioned
or realized upon, or any part thereof, from, through and under Assignor.
7.4 Application of Proceeds. All moneys collected by the Secured
-----------------------
Party upon any sale or other disposition of the Collateral, together with all
other moneys received by the Secured Party hereunder, shall be applied as
follows:
(a) to the payment of all amounts owing the Secured Party of the
type described in clauses (ii) and (iii) of the definition of
"Obligations";
(b) to the extent proceeds remain after the application pursuant
to the preceding clause (a), an amount equal to the
outstanding Primary Obligations shall be paid to the Secured
Party;
(c) to the extent proceeds remain after the application pursuant
to the preceding clauses (a), and (b), an amount equal to the
outstanding Secondary Obligations shall be paid to the Secured
Party; and
(d) to the extent proceeds remain after the application pursuant
to the preceding clauses (a) through (c), inclusive, and
following the termination of this Agreement pursuant to
Section 10.8(a) hereof, to Assignor or to whomever may be
lawfully entitled to receive such surplus.
7.5 Remedies Cumulative. Each and every right, power and remedy
-------------------
hereby specifically given to the Secured Party shall be in addition to every
other right, power and remedy specifically given to the Secured Party under this
Agreement, the Note or now or hereafter existing at law, in equity or by statute
and each and every right, power and remedy whether specifically herein given or
otherwise existing may be exercised from time to time or simultaneously and as
often and in such order as may be deemed expedient by the Secured Party. All
such rights, powers and remedies shall be cumulative and the exercise or the
beginning of the exercise of one shall not be deemed a waiver of the right to
exercise any other or others. No delay or omission of the Secured Party in the
exercise of any such right, power or remedy and no renewal or extension of any
of the Obligations shall impair any such right, power or remedy or shall be
construed to be a waiver of any Default or Event of Default or an acquiescence
therein. No notice to or demand on any Assignor in any case shall entitle it to
any other or further notice or demand in similar or other circumstances or
constitute a waiver of any of the rights of the Secured Party to any other or
further action in any circumstances without notice or demand. In the event that
the Secured Party shall bring any suit to enforce any of its rights hereunder
and shall be entitled to judgment, then in such suit the Secured Party may
recover reasonable expenses, including reasonable attorneys' fees, and the
amounts thereof shall be included in such judgment.
7.6 Discontinuance of Proceedings. In case the Secured Party shall
-----------------------------
have instituted any proceeding to enforce any right, power or remedy under this
Agreement by foreclosure, sale,
13
entry or otherwise, and such proceeding shall have been discontinued or
abandoned for any reason or shall have been determined adversely to the Secured
Party, then and in every such case Assignor and the Secured Party shall be
restored to their former positions and rights hereunder with respect to the
Collateral subject to the security interest created under this Agreement, and
all rights, remedies and powers of the Secured Party shall continue as if no
such proceeding had been instituted.
ARTICLE VIII
INDEMNITY
8.1 Indemnity. (a) Assignor jointly and severally agrees to
---------
indemnify, reimburse and hold the Secured Party and its successors, assigns,
employees, affiliates and agents (hereinafter in this Section 8.1 referred to
individually as "Indemnitee," and collectively as "Indemnitees") harmless from
any and all liabilities, obligations, damages, injuries, penalties, claims,
demands, actions, suits, judgments and any and all costs, expenses or
disbursements (including reasonable attorneys' fees and expenses) (for the
purposes of this Section 8.1 the foregoing are collectively called "expenses")
of whatsoever kind and nature imposed on, asserted against or incurred by any of
the Indemnitees in any way relating to or arising out of (i) this Agreement or
any other document executed in connection herewith or therewith or in any other
way connected with the administration of the transactions contemplated hereby or
thereby or the enforcement of any of the terms of, or the preservation of any
rights under any thereof, or (ii) any claim by any Person that is not an
Indemnitee in any way relating to or arising out of the manufacture, ownership,
ordering, purchase, delivery, control, acceptance, lease, financing, possession,
operation, condition, sale, return or other disposition, or use of the
Collateral (including, without limitation, latent or other defects, whether or
not discoverable), the violation of the laws of any country, state or other
governmental body or unit, any tort (including, without limitation, claims
arising or imposed under the doctrine of strict liability, or for or on account
of injury to or the death of any Person (including any Indemnitee), or property
damage), or contract claim; provided that no Indemnitee shall be indemnified
pursuant to this Section 8.1(a) for losses, damages or liabilities to the extent
caused by the gross negligence or willful misconduct of such Indemnitee (as
determined by a court of competent jurisdiction in a final and non-appealable
decision). Assignor agrees that upon written notice by any Indemnitee of the
assertion of such a liability, obligation, damage, injury, penalty, claim,
demand, action, suit or judgment, Assignor shall assume full responsibility for
the defense thereof. Each Indemnitee agrees to use its best efforts to promptly
notify Assignor of any such assertion of which such Indemnitee has knowledge.
(b) Without limiting the application of Section 8.1(a) hereof,
Assignor agrees, jointly and severally, to pay or reimburse
the Secured Party for any and all reasonable fees, costs and
expenses of whatever kind or nature incurred in connection
with the creation, preservation or protection of the Secured
Party's Liens on, and security interest in, the Collateral,
including, without limitation, all fees and taxes in
connection with the recording or filing of instruments and
documents in public offices, payment or discharge of any taxes
or Liens upon or in respect of the Collateral, premiums for
insurance with respect to the Collateral and all other fees,
costs and expenses in connection with protecting, maintaining
or preserving the Collateral and the Secured Party's interest
therein, whether through judicial
14
proceedings or otherwise, or in defending or prosecuting any
actions, suits or proceedings arising out of or relating to
the Collateral.
(c) If and to the extent that the obligations of Assignor under
this Section 8.1 are unenforceable for any reason, Assignor
hereby agrees to make the maximum contribution to the payment
and satisfaction of such obligations which is permissible
under applicable law.
8.2 Indemnity Obligations Secured by Collateral; Survival. Any
-----------------------------------------------------
amounts paid by any Indemnitee as to which such Indemnitee has the right to
reimbursement shall constitute Obligations secured by the Collateral. The
indemnity obligations of Assignor contained in this Article VIII shall continue
in full force and effect notwithstanding the full payment of all of the other
Obligations and notwithstanding the full payment of all the Notes issued, and
the payment of all other Obligations and notwithstanding the discharge thereof.
ARTICLE IX
DEFINITIONS
The following terms shall have the meanings herein specified. Such
definitions shall be equally applicable to the singular and plural forms of the
terms defined.
"Agreement" shall mean this Security Agreement as the same may be
modified, supplemented, amended and/or restated from time to time in accordance
with its terms.
"Assignor" shall have the meaning provided in the first paragraph of
this Agreement.
"Copyrights" shall mean any United States and foreign copyright owned
now or hereafter by Assignor, including any registrations of any Copyrights, in
the United States Copyright Office or any foreign equivalent office, as well as
any application for a copyright registration now or hereafter made with the
United States Copyright Office or any foreign equivalent office by Assignor,
including, without limitation, Assignor's software for, among other things,
measuring actual usage of information technology resources known as "Survey,"
more particularly described on attached Annex D, in object code form only, its
accompanying documentation and any updates and releases as may be developed
after the date hereof.
"Default" shall mean any event which with notice or lapse of time, or
both, would constitute an Event of Default.
"Eligible Receivables" shall mean a portion of all Receivables that are
not Ineligible Receivables that is equal in value to the amount of outstanding
principal on the Note.
"Eligible Receivables Collateral" shall mean all Collateral described
in Section 1.1(b), together with all General Intangibles and Proceeds relating
thereto.
"Event of Default" shall mean any Event of Default under, and as
defined in, the Note and shall in any event include, without limitation, any
payment default on any of the Obligations after the expiration of any applicable
grace period.
15
"General Intangibles" shall have the meaning provided in the UCC.
"Indemnitee" shall have the meaning provided in Section 7.1 of this
Agreement.
"IP Collateral" shall mean all Collateral described in Section 1.1(a),
together with all General Intangibles and Proceeds relating thereto.
"Ineligible Receivables" shall mean all Receivables which are (i)
subject to a Lien in favor of any Person other than Secured Party (ii) not paid
for 91 days after the date of original invoice, [add others].
"Liens" shall mean security interest, mortgage, pledge, lien, claim,
charge, encumbrance, title retention agreement, lessor's interest in a financing
lease or analogous instrument, in, of, or on Assignor's property.
"Loan Document Obligations" shall have the meaning provided in the
definition of "Obligations" in this Article VIII.
"Marks" shall mean all right, title and interest in and to (or as may
hereafter be acquired in and to) any trademarks, service marks and trade names
now held or hereafter acquired by Assignor, including any registration of any
trademarks and service marks in the United States Patent and Trademark Office or
in any equivalent foreign office and any trade dress including logos and/or
designs used by Assignor, but excluding any such right, title and interest of
Assignor in and to same as licensee pursuant to a contract which is expressly
excluded from the definition of "Contract" contained herein pursuant to the
terms of such definition.
"Obligations" shall mean (i) the full and prompt payment when due
(whether at the stated maturity, by acceleration or otherwise) of all
obligations, liabilities and indebtedness (including, without limitation,
principal, premium, interest, reimbursement obligations, fees and indemnities
(including, without limitation, all interest that accrues after the commencement
of any case, proceeding or other action relating to the bankruptcy, insolvency,
reorganization or similar proceeding of Assignor at the rate provided for in the
respective documentation, whether or not a claim for post-petition interest is
allowed in any such proceeding)) of Assignor to the Secured Party, whether now
existing or hereafter incurred under, evidenced by, arising out of, or in
connection with, the Note and the other documents executed in connection with or
as security for the Note, and the due performance and compliance by Assignor
with all of the terms, conditions and agreements contained in the Note or any
other such document (all such obligations, liabilities and indebtedness under
this clause (i), being herein collectively called the "Loan Document
Obligations"); (ii) any and all sums advanced by the Secured Party in order to
preserve the Collateral or preserve its security interest in the Collateral;
(iii) in the event of any proceeding for the collection or enforcement of any
indebtedness, obligations, or liabilities of Assignor referred to in clause (i)
above, after an Event of Default shall have occurred and be continuing, the
reasonable expenses of retaking, holding, preparing for sale or lease, selling
or otherwise disposing of or realizing on the Collateral, or of any exercise by
the Secured Party of its rights hereunder, together with reasonable attorneys'
fees and court costs; and (iv) all amounts paid by any Indemnitee as to which
such Indemnitee has the right to reimbursement under Section 7.1 of this
Agreement; it being acknowledged and agreed that the "Obligations" shall
16
include extensions of credit of the types described above, whether outstanding
on the date of this Agreement or extended from time to time after the date of
this Agreement.
"Patents" shall mean any United States or foreign patent to which
Assignor now or hereafter has right, title and interest therein, and any
divisions, continuations (including, but not limited to, continuations-in-parts)
and improvements thereof, as well as any application for a patent now or
hereafter made by Assignor.
"Permits" shall mean, to the extent permitted to be assigned by the
terms thereof or by applicable law, all licenses, permits, rights, orders,
variances, franchises or authorizations of or from any governmental authority or
agency.
"Person" shall mean an individual, a corporation, a company, a
partnership, a joint venture, an association, a joint stock company, a trust, an
unincorporated organization, a government or any agency or political subdivision
thereof.
"Primary Obligations" shall mean all principal of, premium (if any),
and interest on, all amounts advanced and outstanding under the Note.
"Proceeds" shall have the meaning provided in the Uniform Commercial
Code as in effect in the State of Texas on the date hereof or under other
relevant law and, in any event, shall include, but not be limited to, (i) any
and all proceeds of any insurance, indemnity, warranty or guaranty payable to
the Secured Party or Assignor from time to time with respect to any of the
Collateral, (ii) any and all payments (in any form whatsoever) made or due and
payable to time to time in connection with any requisition, confiscation,
condemnation, seizure or forfeiture of all or any part of the Collateral by any
governmental authority (or any person acting under color of governmental
authority) and (iii) any and all other amounts from time to time paid or payable
under or in connection with any of the Collateral.
"Receivables" shall mean any "account" as such term is defined in the
UCC, now or hereafter owned by any Assignor and, in any event, shall include,
but shall not be limited to, all of such Assignor's rights to health-care
insurance receivables and to payment for goods sold or leased or services
performed by such Assignor, whether now in existence or arising from time to
time hereafter, including, without limitation, rights evidenced by an account,
note, contract, security agreement, chattel paper, or other evidence of
indebtedness or security, together with (a) all security pledged, assigned,
hypothecated or granted to or held by such Assignor to secure the foregoing, (b)
all of any Assignor's right, title and interest in and to any goods, the sale of
which gave rise thereto, (c) all guarantees, endorsements and indemnifications
on, or of, any of the foregoing, (d) all powers of attorney for the execution of
any evidence of indebtedness or security or other writing in connection
therewith, (e) all books, records, ledger cards, and invoices relating thereto,
(f) all instruments in connection therewith and amendments thereto, notices to
other creditors or secured parties, and certificates from filing or other
registration officers, (g) all credit information, reports and memoranda
relating thereto and (h) all other writings related in any way to the foregoing.
"Secondary Obligations" shall mean obligations other than Primary
Obligations.
"Trade Secret Rights" shall have the meaning provided in Section 4.1 of
this Agreement.
17
"UCC" shall mean the Uniform Commercial Code as in effect from time to
time in the relevant jurisdiction.
"United States" and "U.S." shall each mean the United States of
America.
ARTICLE X
MISCELLANEOUS
10.1 Notices. All notices, requests and demands to or upon the
-------
respective parties hereto to be effective shall be in writing (including by
telecopy), and, unless otherwise expressly provided herein, shall be deemed to
have been duly given or made when delivered, or three Business Days after being
deposited in the mail, postage prepaid, or, in the case of telecopy notice, when
received, addressed as follows in the case of Assignor and the Secured Party, or
to such other address as may be hereafter notified by the respective parties
hereto:
the Assignor:
Scalable Software, Inc.
000 Xxxxx Xxxx Xxx Xxxx
Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxxxxx, President and CEO
Telephone: ________________
Telecopier: ________________
with copies to:
-----------------------------
-----------------------------
-----------------------------
-----------------------------
Secured Party:
NEON Systems, Inc.
00000 Xxxxxxxxx Xxxxxxx, Xxxxx 000
Xxxxx Xxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxx, General Counsel
Telephone: ________________
Telecopier: ________________
provided that any notice, request or demand to or upon Secured Party shall not
be effective until received.
18
10.2 Waiver; Amendment. None of the terms and conditions of this
-----------------
Agreement or any other document executed in connection herewith or the Note may
be changed, waived, modified or varied in any manner whatsoever unless in
writing duly signed by Assignor.
10.3 Obligations Absolute. The obligations of Assignor hereunder
--------------------
shall remain in full force and effect without regard to, and shall not be
impaired by, (a) any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation or the like of Assignor; (b) any exercise
or non-exercise, or any waiver of, any right, remedy, power or privilege under
or in respect of this Agreement or the Note; or (c) any amendment to or
modification of the Note, or any instrument or document executed in connection
with or as security for any of the Obligations; whether or not Assignor shall
have notice or knowledge of any of the foregoing.
10.4 Successors and Assigns. This Agreement shall be binding upon
----------------------
Assignor and its successors and assigns (although Assignor may not assign its
rights and obligations hereunder) and shall inure to the benefit of the Secured
Party and its respective successors and assigns. All agreements, statements,
representations and warranties made by Assignor herein or in any certificate or
other instrument delivered by Assignor or on its behalf under this Agreement
shall be considered to have been relied upon by the Secured Party and shall
survive the execution and delivery of this Agreement, the Note, or any other
instrument or document executed in connection with or as security for any of the
Obligations regardless of any investigation made by the Secured Party or on its
behalf.
10.5 Headings Descriptive. The headings of the several sections
--------------------
of this Agreement are inserted for convenience only and shall not in any way
affect the meaning or construction of any provision of this Agreement.
10.6 Governing Law. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS
-------------
OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED
BY THE LAW OF THE STATE OF TEXAS.
10.7 Assignor's Duties. It is expressly agreed, anything herein
-----------------
contained to the contrary notwithstanding, that Assignor shall remain liable to
perform all of the obligations, if any, assumed by it with respect to the
Collateral and the Secured Party shall not have any obligations or liabilities
with respect to any Collateral by reason of or arising out of this Agreement,
nor shall the Secured Party be required or obligated in any manner to perform or
fulfill any of the obligations of Assignor under or with respect to any
Collateral.
10.8 Termination. Upon the satisfaction in full of the Obligations
-----------
and upon written request for the termination hereof delivered by Assignor to
Secured Party, this Agreement and the security interest created hereby shall
terminate and all rights to the Collateral shall revert to Assignor. Secured
Party will thereafter, upon Assignor's request and at Assignor's expense, (i)
return to Debtor such of the Collateral in Secured Party's possession as shall
not have been sold or otherwise disposed of or applied pursuant to the terms
hereof and (ii) execute and deliver to Assignor such documents as Assignor shall
reasonably request to evidence such termination.
10.9 Counterparts. This Agreement may be executed in any number of
------------
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and
19
delivered shall be an original, but all of which shall together constitute one
and the same instrument. A set of counterparts executed by all the parties
hereto shall be lodged with Assignor and the Secured Party.
10.10 Severability. Any provision of this Agreement which is
------------
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
10.11 The Secured Party. The Secured Party will hold in accordance
-----------------
with this Agreement all items of the Collateral at any time received under this
Agreement. It is expressly understood and agreed that the obligations of the
Secured Party as holder of the Collateral and interests therein and with respect
to the disposition thereof, and otherwise under this Agreement, are only those
expressly set forth in this Agreement. Secured Party shall act hereunder on the
terms and conditions set forth herein.
10.12 Benefit of Agreement. This Agreement shall be binding upon the
--------------------
parties hereto and their respective successors and assigns and shall inure to
the benefit of and be enforceable by each of the parties hereto and its
successors and assigns.
* * *
20
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered by their duly authorized officers as of the date first
above written.
SCALABLE SOFTWARE, INC.,
as Assignor
By: ________________________________
Name:
Title:
Accepted and Agreed to:
NEON SYSTEMS, INC.,
as Secured Party
By: _________________________________
Name:
Title:
21
ANNEX A
to
SECURITY AGREEMENT
------------------
SCHEDULE OF LEGAL, TRADE AND FICTITIOUS NAMES
AND ORGANIZATIONAL IDENTIFICATION NUMBERS
I. Legal Name/Organizational Identification Number
II. Trade and Fictitious Names
ANNEX A - 1
ANNEX B
to
SECURITY AGREEMENT
------------------
SCHEDULE OF MARKS
-----------------
Marks Country Registration No.
----- ------- ----------------
You Can't Manage What U.S.A. 2,569,742
You Can't Measure
Scalable Software and U.S.A. 2,555,471
Design
Survey A Scalable U.S.A. 3,552,260
Solution and Design
ANNEX B - 1
ANNEX C
to
SECURITY AGREEMENT
------------------
SCHEDULE OF PATENTS
-------------------
None.
ANNEX C - 1
ANNEX D
to
SECURITY AGREEMENT
------------------
SCHEDULE OF COPYRIGHTS
----------------------
The computer software application called "Survey," including, but not limited
to, the following modules, whether sold separately or together:
. Survey Hardware Manager;
. Survey Inventory Manager;
. Survey IT Portfolio Manager;
. Survey Software Manager;
. Survey Suite;
. Survey Workforce Manager; and
. Survey Suite;
and any and all related source code, enhancements, upgrades, new versions,
modifications, patches, fixes, revisions or any and all derivative work of or
derived from or related to all or any of the above.
ANNEX D - 1
ANNEX E
to
SECURITY AGREEMENT
------------------
GRANT OF SECURITY INTEREST
IN UNITED STATES TRADEMARKS
---------------------------
FOR GOOD AND VALUABLE CONSIDERATION, receipt and sufficiency of which
are hereby acknowledged, [Name of Grantor], a __________ _________ (the
"Grantor") with principal offices at ____________________________, hereby
assigns and grants to NEON Systems, Inc., as Secured Party, with principal
offices at 00000 Xxxxxxxxx Xxxxxxx, Xxxxx 000, Xxxxx Xxxx, Xxxxx 00000 (the
"Grantee"), a security interest in (i) all of the Grantor's right, title and
interest in and to the United States trademarks, trademark registrations and
trademark applications (the "Marks") set forth on Schedule A attached hereto,
(ii) all Proceeds (as such term is defined in the Security Agreement referred to
below) and products of the Marks, (iii) the goodwill of the businesses with
which the Marks are associated and (iv) all causes of action arising prior to or
after the date hereof for infringement of any of the Marks or unfair competition
regarding the same.
THIS GRANT is made to secure the satisfactory performance and payment
of all the Obligations of the Grantor, as such term is defined in the Security
Agreement among the Grantor and the Grantee, dated as of June ___, 2002 (as
amended from time to time, the "Security Agreement"). Upon full and final
payment of all Obligations of the Grantor to the Grantee secured by the Security
Agreement, the Grantee shall execute, acknowledge, and deliver to the Grantor an
instrument in writing releasing the security interest in the Marks acquired
under this Grant.
ANNEX E - 1
This Grant has been granted in conjunction with the security interest
granted to the Grantee under the Security Agreement. The rights and remedies of
the Grantee with respect to the security interest granted herein are as set
forth in the Security Agreement, all terms and provisions of which are
incorporated herein by reference. In the event that any provisions of this Grant
are deemed to conflict with the Security Agreement, the provisions of the
Security Agreement shall govern.
* * *
ANNEX E - 2
IN WITNESS WHEREOF, the undersigned have executed this Grant as of the
____ day of ____________, ____.
[NAME OF GRANTOR], Grantor
By: ___________________________
Name:
Title:
NEON SYSTEMS, INC.,
as Secured Party
By: ___________________________
Name:
Title:
ANNEX E - 3
STATE OF )
) ss.:
COUNTY OF )
On this ____ day of _________, ____, before me personally came ________
________________ who, being by me duly sworn, did state as follows: that [s]he
is ______________ of [Name of Grantor], that [s]he is authorized to execute the
foregoing Grant on behalf of said ____________ and that [s]he did so by
authority of the [Board of Directors] of said ____________.
___________________________
Notary Public
ANNEX E - 4
STATE OF )
) ss.:
COUNTY OF )
On this ____ day of _________, ____, before me personally came ________
_____________________ who, being by me duly sworn, did state as follows: that
[s]he is __________________ of ___________________________, that [s]he is
authorized to execute the foregoing Grant on behalf of said corporation and that
[s]he did so by authority of the Board of Directors of said corporation.
___________________________
Notary Public
ANNEX E - 5
SCHEDULE A
to
ANNEX E
-------
XXXX REG. NO. REG. DATE
SCHEDULE A - 1
ANNEX F
to
SECURITY AGREEMENT
------------------
GRANT OF SECURITY INTEREST
IN UNITED STATES PATENTS
------------------------
FOR GOOD AND VALUABLE CONSIDERATION, receipt and sufficiency of which
are hereby acknowledged, [Name of Grantor], a __________ _________ (the
"Grantor") with principal offices at ____________________________, hereby
assigns and grants to NEON Systems, Inc., as Secured Party, with principal
offices at 00000 Xxxxxxxxx Xxxxxxx, Xxxxx 000, Xxxxx Xxxx, Xxxxx 00000 (the
"Grantee"), a security interest in (i) all of the Assignor's rights, title and
interest in and to the United States patents (the "Patents") set forth on
Schedule A attached hereto, in each case together with (ii) all Proceeds (as
such term is defined in the Security Agreement referred to below) and products
of the Patents, and (iii) all causes of action arising prior to or after the
date hereof for infringement of any of the Patents or unfair competition
regarding the same.
THIS GRANT is made to secure the satisfactory performance and payment
of all the Obligations of the Grantor, as such term is defined in the Security
Agreement among the Grantor and the Grantee, dated as of June ___, 2002 (as
amended from time to time, the "Security Agreement"). Upon full and final
payment of all Obligations of the Grantor to the Grantee secured by the Security
Agreement, the Grantee shall execute, acknowledge, and deliver to the Grantor an
instrument in writing releasing the security interest in the Patents acquired
under this Grant.
This Grant has been granted in conjunction with the security interest
granted to the Grantee under the Security Agreement. The rights and remedies of
the Grantee with respect to
ANNEX F - 1
the security interest granted herein are as set forth in the Security Agreement,
all terms and provisions of which are incorporated herein by reference. In the
event that any provisions of this Grant are deemed to conflict with the Security
Agreement, the provisions of the Security Agreement shall govern.
* * *
ANNEX F - 2
IN WITNESS WHEREOF, the undersigned have executed this Grant as of the
____ day of____________, ____.
[NAME OF GRANTOR], Grantor
By: ________________________________
Name:
Title:
NEON SYSTEMS, INC.,
as Secured Party and Grantee
By: ________________________________
Name:
Title:
ANNEX F - 3
STATE OF )
) ss.:
COUNTY OF )
On this ____ day of _________, ____, before me personally came ________
________________ who, being by me duly sworn, did state as follows: that [s]he
is ______________ of [Name of Grantor], that [s]he is authorized to execute the
foregoing Grant on behalf of said ____________ and that [s]he did so by
authority of the Board of Directors of said ____________.
___________________________
Notary Public
ANNEX F - 4
STATE OF )
) ss.:
COUNTY OF )
On this ____ day of _________, ____, before me personally came ________
_____________________ who, being by me duly sworn, did state as follows: that
[s]he is __________________ of ______________________, that [s]he is authorized
to execute the foregoing Grant on behalf of said corporation and that [s]he did
so by authority of the Board of Directors of said corporation.
___________________________
Notary Public
ANNEX F - 5
SCHEDULE A
to
ANNEX F
-------
PATENT PATENT NO. ISSUE DATE
------ ---------- ----------
SCHEDULE A - 1
ANNEX G
to
SECURITY AGREEMENT
------------------
GRANT OF SECURITY INTEREST
IN UNITED STATES COPYRIGHTS
---------------------------
WHEREAS, [Name of Grantor], a _______________ _____________ (the
"Grantor"), having its chief executive office at _______________________,
___________________ , is the owner of all right, title and interest in and to
the United States copyrights and associated United States copyright
registrations and applications for registration set forth in Schedule A attached
hereto;
WHEREAS, NEON SYSTEMS, INC., as Secured Party, having its principal
offices at 00000 Xxxxxxxxx Xxxxxxx, Xxxxx 000, Xxxxx Xxxx, Xxxxx 00000 (the
"Grantee"), desires to acquire a security interest in said copyrights and
copyright registrations and applications therefor; and
WHEREAS, the Grantor is willing to assign to the Grantee, and to grant
to the Grantee a security interest in and lien upon the copyrights and copyright
registrations and applications therefor described above.
NOW, THEREFORE, for good and valuable consideration, the receipt of
which is hereby acknowledged, and subject to the terms and conditions of the
Security Agreement, dated as of June 26, 2002, made by the Grantor and the
Grantee (as amended from time to time, the "Security Agreement"), the Grantor
hereby assigns to the Grantee as collateral security, and grants to the Grantee
a security interest in all rights, title and interest in and to Grantor's
copyrights and copyright registrations and applications therefor more
particularly set forth in Schedule A attached hereto (the "Copyrights"),
together with (i) all Proceeds (as such term is defined in the Security
Agreement) of the Copyrights, and (ii) all causes of action arising prior to or
after the date hereof for infringement of any Copyright.
This Grant has been granted in conjunction with the security interest granted to
the Grantee under the Security Agreement. The rights and remedies of the Grantee
with respect to the security interest granted herein are as set forth in the
Security Agreement, all terms and provisions of which are incorporated herein by
reference. In the event that any provisions of this Grant are deemed to conflict
with the Security Agreement, the provisions of the Security Agreement shall
govern.
* * *
ANNEX G - 1
Executed at ____________, ______________, the __ day of ________, ____.
[NAME OF GRANTOR], as Grantor
By ______________________________
Name:
Title:
NEON SYSTEMS, INC., as
Secured Party
By: ______________________________
Name:
Title:
ANNEX G - 2
STATE OF )
) ss.:
COUNTY OF )
On this __ day of _________, ____, before me personally came
___________ ______________, who being duly sworn, did depose and say that [s]he
is ___________________ of [Name of Grantor], that [s]he is authorized to execute
the foregoing Grant on behalf of said corporation and that [s]he did so by
authority of the Board of Directors of said corporation.
___________________________
Notary Public
ANNEX G - 3
STATE OF )
) ss
COUNTY OF )
On this ____ day of _________, ____, before me personally came ________
__________________ who, being by me duly sworn, did state as follows: that [s]he
is __________________ of Bankers Trust Company, that [s]he is authorized to
execute the foregoing Grant on behalf of said __________ and that [s]he did so
by authority of the Board of Directors of said _____________.
___________________________
Notary Public
ANNEX G - 4
SCHEDULE A
TO
ANNEX G
-------
U.S. COPYRIGHTS
---------------
REGISTRATION PUBLICATION COPYRIGHT
NUMBERS DATE TITLE
----------- ---------- --------
SCHEDULE A - 1
