EXHIBIT 10.17
SECURITY AGREEMENT
This SECURITY AGREEMENT (this "Agreement") is made effective as of
December 31, 2002 ("Effective Date") by and between US Dataworks, Inc., a Nevada
corporation (the "Borrower"), and ACI Communications Holdings, Inc. f/k/a
Allstate Communications, Inc. ("ACI"), a California corporation. Borrower and
ACI sometimes referred to collectively as the "Parties" or each individually as
a "Party."
WHEREAS, the Parties have entered in a Settlement Agreement dated July
25, 2002 (the "Settlement Agreement"), which settles certain debts and other
obligations owed by each of the Parties to the other. Pursuant to the terms of
the Settlement Agreement, a Promissory Note dated July 25, 2002 in the principal
amount of One Million One Hundred Fifty Thousand Dollars ($1,150,000.00) (the
"Promissory Note") was executed by Borrower, which, with any other secured
obligations, is to be secured by a lien upon and security interest in all of the
assets of Borrower in accordance with the terms of this Agreement;
WHEREAS, the Parties have entered into an amended settlement agreement,
of even date herewith (the "Amended Settlement Agreement"), which supercedes the
terms and conditions of the Settlement Agreement and provides, INTER ALIA, for
the execution of the New ACI Promissory Note. A copy of the Amended Settlement
Agreement is attached hereto as Exhibit A;
In mutual consideration of the forgoing premises and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged
Borrower and ACI hereby agree as follows:
SECTION 1. DEFINITIONS AND INTERPRETATION.
1.01 CERTAIN DEFINED TERMS. Unless otherwise defined, all capitalized
terms used in this Agreement that are defined in the Basic Documents (including
those terms incorporated by reference) shall have the respective meanings
assigned to them in the Basic Documents. In addition, the following terms shall
have the following meanings under this Agreement:
"ACCOUNTS" shall have the meaning assigned to that term in Section
2.01(a).
"BASIC DOCUMENTS" shall mean the New ACI Promissory Note, the Amended
Settlement Agreement and this Agreement.
"COPYRIGHTS COLLATERAL" shall mean all Copyrights identified in Annex
2.
"COPYRIGHTS" shall mean as each f the following relates to the
Copyrights Collateral, (a) all copyrights, copyright registrations and
applications for copyright registrations, (b) all renewals and extensions of all
copyrights, copyright registrations and applications for copyright registration
and (c) all rights, now existing or hereafter coming into existence, (i) to all
income, royalties, damages and other payments (including in respect of all past,
present or future infringements) now or hereafter due or payable under or with
respect to any of the Copyrights Collateral (ii) to xxx for all past, present
and future infringements with respect to any of the Copyrights Collateral and
(iii) otherwise accruing under or pertaining to any Copyrights Collateral
throughout the world.
"DOCUMENTS" shall have the meaning assigned to that term in Section
2.01(e).
"DOMAIN REGISTRATION" shall mean any registration of a second level
domain or third level domain in the case of certain foreign domains under the
Domain Name System for symbolic address as established for usage on the
Internet, whether under United States registry or the registry of any other
jurisdiction.
"EQUIPMENT" shall have the meaning assigned to that term in Section
2.01(d).
"EVENT OF DEFAULT" shall have the meaning assigned to that term in
Section 5.01 .
"GOVERNMENTAL APPROVAL" shall mean an approval by a governmental
agency, documented as is required by law, or to the extent the form of
documentation is not dictated by law. As documented in accordance with
prevailing industry practices.
"INSTRUMENTS" shall have the meaning assigned to that term in Section
2.01(b).
"INTELLECTUAL PROPERTY" shall mean all Copyrights Collateral, all
Patents Collateral and all Trademarks Collateral, together with all (a)
inventions, processes, production methods, original works of authorship,
proprietary information, know-how and trade secrets; (b) licenses or other
agreements granted to Borrower with respect to any Copyright Collateral,
Trademark Collateral and Patents Collateral including the licenses or other
agreements listed in Annex 4; (c) information, customer lists, identification of
suppliers, data, plans, blueprints, specifications, designs, drawings, surveys,
engineering reports, tests reports, manuals, materials standards, processing
standards, performance standards, catalogs, computer and automatic machinery
software and programs; (d) field repair data, sales data and other information
relating to sales or service of products; (e) accounting information and all
media in which or on which such information may be recorded or stored and all
computer programs used for the complication or printout of such information; (f)
Governmental Approvals; and (g) causes of action, claims and warranties now
owned or hereafter acquired by Borrower. It is understood that Intellectual
Property shall include all of the Copyright Collateral, Trademark Collateral and
Patents Collateral owned or acquired by Borrower on a worldwide basis.
"INVENTORY" shall have the meaning assigned to that term in Section
2.01(c).
"PATENTS COLLATERAL" shall mean each patent identified in Annex 3.
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"PATENTS" shall mean, as each of the following relates to the Patents
Collateral, all related (a) patents and patent applications, including without
limitation provisional applications, non-provisional applications and PCT
applications, (b) reissues, divisions, continuations, renewals, extensions and
continuations-in-part of all patents or patent applications and (c) rights, now
existing or hereafter coming into existence, (i) to all income, royalties,
damages, and other payments (including in respect of all past, present and
future infringements) now or hereafter due or payable under or with respect to
any of the Patents Collateral (ii) to xxx for all past, present and future
infringements with respect to any of the Patents Collateral and (iii) otherwise
accruing under or pertaining to any of the Patents Collateral throughout the
world, including all inventions and improvements described or discussed in all
such patents and patent applications.
"SECURED OBLIGATIONS" shall mean any and all obligations of Borrower
under the Basic Documents.
"SENIOR SECURED PARTY" shall mean any commercial lending institution or
bank and any investment entity or person that loans, invests, makes available
any credit instrument for operation of Borrower's business, or commits to
perform any of the foregoing, in an amount of not less than Three Million
Dollars ($3,000,000) in the aggregate. A list of each Senior Secured Party as of
the Effective Date is attached in Annex 6.
"TRADEMARKS COLLATERAL" shall mean all Trademarks identified in Annex
4. Notwithstanding the foregoing, the Trademarks Collateral shall not include
any Trademark that would be rendered invalid, abandoned, void or unenforceable
by reason of its being included as part of the Trademarks Collateral.
"TRADEMARKS" shall mean as each of the following relates to the
Trademarks Collateral, all related (a) trade names, trademarks and service
marks, logos, trademark and service xxxx registrations and applications for
trademark and service xxxx registrations, (b) renewals and extensions and (c)
rights, now existing or hereafter coming into existence, (i) to all income,
royalties, damages and other payments (including in respect of all past, present
and future infringements) now or hereafter due or payable under or with respect
to any Trademarks Collateral (ii) to xxx for all past, present and future
infringements with respect to any of the Trademarks Collateral and (iii)
otherwise accruing under or pertaining to any of the Trademarks Collateral
throughout the world, together, in case, with the product lines and goodwill of
the business connected with the use of, or otherwise symbolized by, each such
trade name, trademark and service xxxx.
"UNIFORM COMMERCIAL CODE" shall mean the Uniform Commercial Code as in
effect in the State of California from time to time or, by reason of mandatory
application, any other applicable jurisdiction.
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1.02 INTERPRETATION. In this Agreement, unless otherwise indicated, the
singular includes the plural and plural the singular; words importing either
gender include the other gender; references to statutes or regulations are to be
construed as including all statutory or regulatory provisions consolidating,
amending or replacing the statute or regulation referred to; reference to
"writing" include printing, typing, lithography and other means of reproducing
words in a tangible visible form; the words "including" "include" shall be
deemed to be followed by the words "without limitation"; references to articles,
sections (or subdivisions of sections), exhibits, annexes or schedules are to
this Agreement; references to agreements and other contractual instruments shall
be deemed to include all subsequent amendments, extensions and other
modifications to such instruments (without, however, limiting any prohibition on
any such amendments. Extensions and other modifications by the terms of any
Basic Document); and references to persons include their respective permitted
successors and assigns and, in the case of any governmental agency, any entity
succeeding to its respective functions and capacities.
SECTION 2. COLLATERAL.
2.01 GRANT. As collateral security for the prompt payment in full when
due (whether at stated maturity, by acceleration or otherwise) and the
performance of the Secured Obligations, Borrower hereby pledges and grants to
ACI a security interest in all of Borrower's right, title and interest in the
Copyrights Collateral, Patents Collateral and Trademarks Collateral
(collectively, the "COLLATERAL") to the extent such security interest is and
will be in the future subordinated to any Senior Secured Party (the "Lien"):
(a) all accounts and general intangibles (each as defined in
the Uniform Commercial Code) of Borrower Constituting a right
to the payment of money, whether or not earned by performance,
including all moneys due and to become due to the Borrower in
repayment of any loans or advances, in payment for goods
(including Inventory and Equipment) sold or leased or for
services rendered, in payment of tax refunds and in payment of
any guarantee of any of the forgoing (collectively, the
"ACCOUNTS");
(b) all instruments, chattel paper or letters of credit (each
as defined in Uniform Commercial Code) of Borrower evidencing,
representing, arising from or existing in respect of, relating
to, securing or otherwise supporting the payment of, any of
the Accounts (collectively, the "INSTRUMENTS");
(c) all inventory (as defined in the Uniform Commercial Code)
and all other goods of Borrower that are held by Borrower for
sale, lease or furnishing under a contract of service
(including to its Subsidiaries or Affiliates), that are so
leased or furnished or that constitute raw materials, work in
process or material used or consumed in its business,
including all spare parts and related supplies, all goods
obtained by Borrower in exchange for any such goods, all
products made or processed from any such goods and all
substances, if any, commingled with or added to any such goods
(collectively, the "INVENTORY");
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(d) all equipment (as defined in the Uniform Commercial Code)
and all other goods of Borrower that are used or bought for
use primarily in its business, including all spare parts and
related supplies, all goods obtained by Borrower in exchange
for any such goods, all substances, if any, commingled with or
added to such goods and all upgrades and other improvements to
such goods, in each case to the extent not constituting
Inventory (collectively, the "EQUIPMENT");
(e) all documents of title (as defined in the Uniform
Commercial Code) or other receipts of Borrower covering,
evidencing or representing Inventory or Equipment
(collectively, "Documents");
(f) all contracts and other agreement of Borrower relating to
the sale or other disposition of all or any part of the
Inventory, Equipment or Documents and all rights, warranties,
claims and benefits of Borrower against any person or entity
arising out of, relating to or in connection with all or any
part of the Inventory, Equipment or Documents of Borrower,
including any such rights, warranties, claims or benefits
against any person storing or transporting any such Inventory
or Equipment or issuing any such Documents;
(g) all proceeds and products in whatever form of all or any
part of the Collateral, including all proceeds of insurance
and all condemnation awards and all other compensation for any
loss or destruction with respect to all or any part of the
Collateral (together with all rights to recover and proceed
with respect to the same), and all accessories to,
substitutions, for replacements of all or any part of the
Collateral.
2.02 NONEXCLUSIVE INTELLECTUAL PROPERTY LICENSE. For the purpose of
enabling ACI to exercise its rights, remedies, powers and privileges under
section 5 at such time or times as ACI shall be lawfully entitled to exercise
such rights, remedies, powers and privileges, and for no other purpose, Borrower
hereby grants to ACI, to the extent assignable, an irrevocable, nonexclusive
license (exercisable without payment of royalty or compensation to Borrower) to
use, assign, license or sublicense any of the Intellectual Property of Borrower
("IP License"), together with reasonable access to all media in which the
licensed items may be recorded or stored and to all computer programs used for
the compilation or printout of such items, for such period of time until the IP
License is cancelled pursuant to Section 2.10 herein.
2.03 PERFECTION. Concurrently with the execution of this Agreement,
Borrower shall (i) file such financing statements, instrument of recordation and
other documents in such offices to perfect and establish the priority of the
Lien granted by this Agreement, (ii) deliver and pledge to ACI any and all
Instruments, endorsed or accompanied by such instruments of assignment and
transfer in such form and substance as ACI may reasonably request,; and (iii)
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take all such other actions as shall be necessary or as ACI may reasonably
request, to perfect and establish the priority of the Lien as granted by this
Agreement. The Lien shall be subordinated to, and shall be made so as to be
subordinated in the future to, any Senior Secured Party.
2.04 PRESERVATION AND PROTECTION OF SECURITY INTERESTS. Borrower shall
give, execute, deliver, file or reword any and all financing statements,
instrument of recordation, notices, contracts, agreements or other instruments,
obtain any and all Governmental Approvals and take any and all steps that may be
necessary or as ACI may reasonably request to create, perfect, establish the
priority of, or to preserve the validity, perfection or priority (subject only
any Senior Secured Party) of, the Lien granted by this Agreement or to enable
ACI to exercise and enforce ACI's rights, remedies, powers and privileges under
this Agreement with respect to such Lien.
2.05 ATTORNEY-IN-FACT. Upon the occurrence and continuation of an Event
of Default and subject to the rights of Borrower under Sections 2.06, 2.07 and
2.08, ACI is appointed the attorney-in-fact of Borrower for the purpose of
carrying out the provisions of this Agreement and taking any action reasonably
necessary to accomplish the purposes of this Agreement, to preserve the
validity, perfection and priority of the Lien granted by this Agreement and to
exercise its rights, remedies, powers and privileges under this Agreement. This
appointment of attorney-in-fact is irrevocable and coupled with an interest.
Without limiting the generality of the foregoing, ACI shall be entitled under
this Agreement upon the occurrence of any Event of Default to (i) ask, demand,
collect, xxx, recover, receive and give receipt and discharge for amounts due
under and in respect of all or any part of the Collateral; (ii) receive, endorse
and collect any Instruments or other drafts, instruments, documents and chattel
paper in connection with clause (i) above (including any draft or check
representing the proceeds of insurance or the return of unearned premiums);
(iii) file any claims or take any action or proceeding that ACI may deem
reasonably necessary for the collection of all or any part of the Collateral,
including the collection of any compensation due and to become due under any
contract or agreement with respect to all or any part of the Collateral, any
endorsements, assignments, bills of sale or other instruments of conveyance or
transfer with respect to all or any part of the Collateral.
2.06 USE OF INTELLECTUAL PROPERTY. Subject to such action not otherwise
constituting an Event of Default and so long as no Event of Default shall have
occurred and be continuing, Borrower will be permitted to exploit, use, enjoy,
protect, license, sublicense, assign, sell, dispose of or take other actions
with respect to the Intellectual Property in the ordinary course of the business
of Borrower. Borrower shall be required to notify and obtain the written consent
of ACI, which ACI shall give or withhold in its sole discretion, in the event
Borrower wishes to assign, sell or dispose of any Intellectual Property; should
ACI fail to furnish Borrower with its consent (or non-consent) in writing within
five (5) business days following Borrower's notification, ACI shall be deemed to
have given its consent. In furtherance of the foregoing, so long as no Event of
Default shall have occurred and be continuing, ACI shall from time to time, upon
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the request of, and at the expense of, Borrower, execute and deliver any
instruments, certificates or other documents, in the form so requested, which
Borrower shall have certified are appropriate (in its judgment) to allow it to
take any action permitted above (including relinquishment of the license
provided pursuant to Section 2.02 as to any specific Intellectual Property). The
exercise of rights, remedies, powers and privileges under Section 5 by ACI shall
not terminate the rights of the holders of any licenses or sublicenses
theretofore granted by Borrower, provided that such grant does not otherwise
constitute an Event of Default.
2.07 INSTRUMENTS. So long as no Event of Default shall have occurred
and be continuing, Borrower may retain for collection any Instruments obtained
by it in the ordinary course of business..
2.08 USE OF COLLATERAL. So long as no Event of Default shall have
occurred and be continuing, Borrower shall, in addition to its rights
contemplated under Sections 2.06, and 2.07 be entitled to use and possess the
Collateral and to exercise its rights, title and interest in the Collateral,
subject to the terms and conditions set forth in Section.
2.09 RIGHTS AND OBLIGATIONS.
(a) Borrower shall remain liable to perform its duties and
obligations under the contracts and agreements included in the
Collateral in accordance with their respective terms to the
same extent as if this Agreement had not been executed and
delivered. The exercise by ACI of any right, remedy, power or
privilege in respect of this Agreement shall not release
Borrower from any of its duties and obligations under such
contracts and agreements. ACI shall have no duty, obligation
or liability under such contracts and agreements or in respect
to any Governmental Approval included in the Collateral by
reason of this Agreement or any other Basic Document, nor
shall ACI be obligated to perform any of the duties or
obligations of Borrower under any such contract or agreement
or any such Governmental Approval or to take any action to
collect or enforce any claim (for payment) under any such
contract or agreement or Governmental Approval
(b) The Lien granted by this Agreement in Borrower's right,
title and interest in any contract, agreement or Governmental
Approval shall not be deemed to be a consent by ACI to any
such contract, agreement or Governmental Approval.
(c) No reference in this Agreement to proceeds or to the sale
of other disposition of Collateral shall authorize Borrower to
sell or otherwise dispose of any Collateral except in the
ordinary course of business or as otherwise expressly
permitted by any of the terms of the Basic Documents.
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(d) ACI shall not be required to take steps necessary to
preserve any rights against prior Parties to any part of the
Collateral.
2.10 TERMINATION. When all Secured Obligations shall have been
satisfied in full, expired or been terminated: (i) this Agreement shall
terminate; (ii) ACI shall forthwith cause to be assigned, transferred and
delivered, against receipt but without any recourse, warranty or representation
whatsoever, any remaining Collateral and money received in prospect of
Collateral to Borrower or Borrower's designee within ten (10) days of the
Agreement's termination; (iii) all license and rights referred to in Section
2.02 shall be cancelled and ACI shall provide Borrower any documentation as
shall be reasonably requested by Borrower to evidence the cancellation of such
license and rights; and (iv) within ten (10) days of the Agreement's
termination, ACI shall execute and deliver to Borrower such Uniform Commercial
Code statements and such other documentation as shall be reasonably requested by
Borrower to evidence the termination and release of the Lien granted by this
Agreement on the Collateral.
SECTION 3. REPRESENTATIONS AND WARRANTIES. As of the Effective Date, Borrower
represents and warrants to ACI as follows:
3.1 TITLE. Borrower is the sole beneficial owner of the Collateral in
which it purports to xxxxx x Xxxx pursuant to this Agreement, and, except as set
forth on Schedule 3.1 hereto, such Collateral is free and clear of all liens,
security interest claims or other encumbrances. The Lien granted by this
Agreement in favor of ACI will attach and constitute a perfected security
interest in all of such Collateral (other than Intellectual Property registered
or otherwise located outside of the United States of America) and shall be
senior to all other interests in the Collateral, except the interest of any
Senior Secured Party.
3.2 INTELLECTUAL PROPERTY.
(a) Annexes 1, 2 and 3 attached hereto and incorporated
herein, respectively set forth completely and correctly all
Copyrights, Patents and Trademarks owned by Borrower on the
Effective Date. Except the licenses and other user agreements
entered into by Borrower in the ordinary course of business
and listed in Annex 4, Borrower exclusively owns and possesses
the right to use, and has done nothing to authorize or enable
any other person or entity to use, any Copyright, Patent or
Trademark listed in Annexes 1, 2 and 3 respectively; all
registrations listed in Annexes 1, 2 and 3 are valid and in
full force and effect; and, except as may be set forth in
Annex 4, Borrower owns and possesses the right to use all
Copyrights, Patents and Trademarks listed in Annex 1, 2 and 3
respectively.
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(b) Annex 4 sets forth completely and correctly all license
and other user agreements included in the Intellectual
Property on the Effective Date;
(c) To Borrower's knowledge, (i) except as set forth in
Schedule 3.2, there is no violation by others of any right of
Borrower with respect to any Copyright, Patent or Trademark
listed in Annex 1, 2 or 3 and (ii) Borrower is not infringing
in any respect upon any Copyright, Patent or Trademark of any
other person or entity; and no proceedings have been
instituted are pending against Borrower or, to Borrower's
knowledge, have been threatened against, and no claim has been
received by, Borrower, alleging any such violation, except as
may be set forth in Schedule 3.2.
SECTION 4. COVENANTS.
4.1 RECORDKEEPING.. Borrower covenants, agrees and undertakes to:
(a) Keep full and accurate books and records relating to the
Collateral and stamp or otherwise xxxx such books and records
in such manner as ACI may reasonably require in order to
reflect the Lien granted by this Agreement;
(b) Furnish ACI from time to time, but no more frequently than
quarterly (unless an Event of Default has occurred and is
continuing, upon which Borrower will furnish upon ACI's
request), statements and schedules further identifying and
describing the Copyrights Collateral, the Patents Collateral
and the Trademarks Collateral and such other reports in
connection with the Copyrights Collateral, the Patents
Collateral and the Trademarks Collateral, as ACI may
reasonably request;
4.2 REMOVALS. Without at least 30 days prior written notice to ACI,
Borrower shall not (i) maintain any of its books and records with respect to the
Collateral at any office or maintain its principal place of business at any
place, or permit any Inventory or Equipment to be located anywhere, other than
at the address initially indicated for notices to it under section 6, or (ii)
change its corporate name, or the name under which it does business, from the
name shown on the signature pages to this Agreement.
4.3 SALES AND OTHER LIENS. In accordance with Section 2.06 and without
the prior written consent (or deemed consent) of ACI, Borrower shall not dispose
of any Collateral, create, incur, assume or suffer to exist at any Lien upon any
Collateral or file or suffer to be on file or authorize to be filed, in any
jurisdiction, any financing statement or instrument of recordation with respect
to all or any part of the Collateral in which ACI is not named as the secured
party for ACI's benefit alone.
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4.4 INTELLECTUAL PROPERTY.
(a) Borrower (either itself or to the extent it may lawfully
control the actions of its licensees) will, for each
Trademark, (i) to the extent consistent with past practice and
good business judgment, continue to use such Trademark on each
and every trademark class of goods applicable to its current
line as reflected in its current catalogs, brochures and price
lists in order to maintain such Trademark in full force and
effect free from any claim of abandonment for nonuse, (ii)
maintain as in the past the quality of products and services
offered under such Trademark, (iii) employ such Trademark with
the appropriate notice of registration and (iv) not do any act
or knowingly omit to do any act whereby any Trademark material
to the conduct of its business may become invalidated.
(b) Borrower (and to the extent it may lawfully control the
actions of its licensees) will not do any act or knowingly
omit to do any act whereby any Patent material to the conduct
of its business may become abandoned or invalidated.
(c) Borrower shall notify ACI immediately if it knows, or has
reason to know, that any Intellectual Property material to the
conduct of its business may become abandoned, invalidated, or,
as a result of any proceeding before a governmental agency,
materially adversely effected so as to abrogate or impair
Borrower's right to own, use and maintain the same.
(d) Borrower will take all reasonable steps that are
consistent with good business practices in any proceeding
before a governmental agency to maintain its registrations of
the Collateral, including payment of maintenance fees, filing
of applications for renewal, affidavits of use, affidavits of
incontestability and opposition, interference and cancellation
proceedings.
(e) In the event that any Collateral material to the conduct
of its business is infringed, misappropriated or materially
adversely effected by a third party, Borrower shall notify ACI
within ten (10) days after it learns of such event and shall,
if consistent with Borrower's ordinary business practice, take
whatever appropriate legal actions to protect the Collateral
as Borrower, in its sole discretion, deems appropriate.
(f) ACI shall have the right, but shall in no way be
obligated, to bring suit against any third party, in ACI's own
name, or the name(s) of its designee(s), to enforce any of its
rights in the Collateral and Borrower shall do any lawful acts
and execute and deliver any documentation as reasonably
required by ACI.
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SECTION 5. REMEDIES.
5.1 EVENT OF DEFAULT. In the event that Borrower acts (or fails to act)
in such a way so as to cause a breach of a material term or condition of the
Basic Documents, ACI shall give Borrower written notice describing the material
breach ("Notice of Breach"). For purposes of this Agreement, any non-payment
under the New ACI Promissory Note that Borrower fails to make on or before the
corresponding "Monthly Due Date" or "Maturity Date" (as these terms are defined
in the New ACI Promissory Note) shall be deemed a material breach. Borrower
shall have thirty (30) days from the date of its receipt of the Notice of Breach
to cure the described material breach. Should Borrower fail to cure the material
breach within the 30-day period, such failure shall be deemed to be an "Event of
Default" and shall continue to be deemed an Event of Default until such material
breach is cured or this Agreement is terminated.
5.2 REMEDIES. Upon the occurrence and continuation of an Event of
Default:
(a) ACI, in its discretion, may require Borrower to, and
Borrower shall, assemble the Collateral at such place or
places, reasonably convenient to both the ACI and Borrower, as
agreed by the Parties;
(b) ACI, in its discretion, may make any reasonable compromise
or settlement of the Secured Obligations and may extend the
time of payment, arrange for payment in installments, or
otherwise modify the terms of any part of the Basic Documents,
provided such modification is acceptable to Borrower;
(c) ACI, in its discretion may, in its name or in the name of
Borrower, demand, xxx for, collect or receive any money or
property at any time payable or receivable on account of, or
in exchange for, all or any part of the Collateral, but shall
be under no obligation to do so;
(d) With respect to all or any part of the Collateral which
shall then be or shall thereafter come into the possession,
custody or control of ACI or any of its agents pursuant to any
right hereunder, and upon ten (10) business days' prior
written notice to Borrower describing the time and place of
such event, ACI may sell, lease, or otherwise dispose of all
or any part of such Collateral, in accordance with the
applicable law.
(e) ACI shall have, and in its discretion may exercise, all of
the rights, remedies, powers and privileges with respect to
the Collateral of a secured party under the Uniform Commercial
Code (whether or not the Uniform Commercial Code is in effect
in the jurisdiction where such rights, remedies, powers and
privilege are asserted); provided, however, that such rights,
remedies, powers and privileges shall be subordinated to the
rights, remedies, powers and privileges of any Senior Secured
Party.
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5.3 DEFICIENCY. If the proceeds of, or other realization upon, the
Collateral by virtue of the exercise of remedies under Section 5.2 and of the
exercise of the license granted by ACI in Section 2.2 are insufficient to cover
the costs and expenses of such exercise and the payment in full of the Secured
Obligations, Borrower shall remain liable for any deficiency
5.4 APPLICATION OF PROCEEDS. Except as otherwise provided in this
Agreement and except as provided below in this Section 5.4, the proceeds of, or
other realization upon, all or any part of the Collateral by virtue of the
exercise of remedies under Section 5.2 or of the exercise of the license granted
in Section 2.2, and any other cash at the time held by ACI under this Section 5,
shall be applied by ACI:
(a) first, to the payment of the costs and expenses of such
exercise of remedies, including reasonable out-of-pocket costs and expenses of
the ACI, the fees and expenses of its agents and counsel and all other expenses
incurred and advances made by ACI in that connection;
(b) next, to the payment in full of the remaining Secured
Obligations in such manner as ACI may determine; and
(c) finally, to the payment to Borrower, or its respective
successors or assigns, or as a court of competent jurisdiction may direct, of
any of the Collateral.
As used in this Section 5.4, "proceeds" of the Collateral shall mean
cash, securities and other property realized in respect of, and distributed in
kind of, Collateral, including any property received under any bankruptcy,
reorganization or other similar proceedings as to Borrower or any of the
Collateral.
SECTION 6. MISCELLANEOUS.
6.1 PAYMENTS TO ACI. The Parties hereto acknowledge and agree that
Borrower shall make payments to ACI, for the benefit of ACI and its affiliates,
as provided in the Amended Settlement Agreement, in order to settle the matters
noted therein and that Borrower will make all such payments to ACI as a matter
of convenience and ACI shall be responsible for distributing amounts due to ACI
and/or such affiliates pursuant to the Settlement Agreement. Borrower shall have
no responsibility or liability to monitor such distributions by ACI.
6.2 WAIVER. No failure on the part of ACI to exercise and no delay in
exercising, and no course of dealing with respect to, any right, remedy, power
or privilege under this Agreement shall operate as a waiver of such right,
remedy, power or privilege, nor shall any single or partial exercise of any
right, power or privilege under this Agreement preclude any other or further
exercise of any such right, remedy , power or privilege or the exercise of any
other right, remedy, power or privilege. The rights, remedies, powers and
privileges provided in this Agreement are cumulative and not exclusive of any
rights, remedies, powers and privileges provided by law.
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6.3 NOTICES. All notices and communications to be given under this
Agreement shall be given or made in writing to the intended recipient at the
address specified below or, as to any Party, at such other address as shall be
designated by such Party in a notice to each other Party. Except as otherwise
provided in this Agreement, all such communications shall be deemed to have been
duly given when transmitted by facsimile or telecopier, delivered to the
telegraph or cable office, personally delivered or, in the case of mailed
notice, upon receipt.
TO BORROWER: US DATAWORKS, INC.
0000 Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Fax: (000) 000-0000
ATTN: Xxxxxxx Xxxxx
with a copy (which shall not constitute Notice) to:
Pillsbury Winthrop LLP
0000 Xxxxxxx Xxxxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Fax: (000) 000-0000
ATTN: Xxxx X. Xxxxxx Esq.
TO ACI: Allstate Communications
00000 Xxxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Fax: (000) 000-0000
ATTN: Xxxxx Xxxxxxxxxx and
General Counsel
6.4 EXPENSES. Borrower agrees to pay or to reimburse ACI and for all
costs and expenses (including reasonable attorney's fees and expenses) that may
be incurred by ACI in any effort to enforce any of the provisions of this
Agreement.
6.5 AMENDMENTS. Any provision of this Agreement may be modified,
supplemented or waived only by an instrument in writing duly executed by
Borrower and ACI. Any such modification, supplement or waiver shall be for such
period and subject to such conditions as shall be specified in the instrument
effecting the same and shall be binding upon ACI and Borrower, effective only in
the specific instance and purpose for which given.
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6.6 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of Borrower, ACI and their respective successors and
assigns. Borrower shall not assign or transfer its rights under this Agreement
without the prior written consent of ACI. Any purported assignment not complying
with this paragraph shall be void.
6.7 SURVIVAL. All representations warranties and covenants made in this
Agreement (or in any certificate or other document delivered pursuant to or in
connection with this Agreement) shall survive the execution and delivery of this
Agreement and shall expire immediately upon the termination of this Agreement.
The foregoing sentence notwithstanding, the responsibilities and obligations of
ACI as set forth in Section 2.10 shall survive the termination of this
Agreement.
6.8 AGREEMENT SUPERSEDED. This Agreement supersedes all prior
agreements and understandings, written or oral, among the Parties with respect
to the subject matter of this Agreement. In the event that any terms or
conditions among the Basic Documents should conflict, the Amended Settlement
Agreement shall govern.
6.9 SEVERABILITY. Any provision of this Agreement that 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 of the Agreement, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
6.10 CAPTIONS. The captions and section headings appearing in this
Agreement are included solely for convenience of reference and are not intended
to affect the interpretation of any provision of this Agreement.
6.11 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument and any of the Parties to this Agreement may execute this Agreement
by signing any such counterpart. This Agreement may be executed and delivered by
facsimile and upon such delivery the facsimile signature will be deemed to have
the same effect as if the original signature had been delivered to the other
Party. The original signature copy shall be delivered to the other Party by
express overnight delivery. The failure to deliver the original signature copy
and/or the nonreceipt of the original signature copy shall have no effect upon
the binding and enforceable nature of this Agreement.
6.12 FURTHER ASSURANCE. Each Party agrees that upon the written request
of the other Party, such Party will execute and deliver any necessary documents
and do such other acts and things as the other Party may reasonably request in
order to fully effect the purposes of the Agreement.
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6.12 GOVERNING LAW; SUBMISSION TO JURISDICTION. This Agreement shall be
governed by, and construed in accordance with, the laws of California. Borrower
hereby submits to the nonexclusive jurisdiction of any California state court
sitting in Los Angeles, California for the purpose of all legal proceedings
arising out of or relating to this agreement or the transactions contemplated by
this Agreement. Borrower irrevocably waives, to the fullest extent permitted by
applicable law, any objection which it may now or hereafter raise if the venue
of any such proceeding brought in such a court has been brought in an
inconvenient forum.
6.13 RESOLUTION OF DISPUTES.
(a) The Parties agree that any and all disputes arising out
of, or relating to, this Agreement shall first be addressed by direct
negotiation, in good faith, between the Parties. The disputing Party shall
provide the other Party with written notice of the dispute ("Notice of
Dispute"), containing a detailed description of the matter in controversy. The
Parties agree to exercise commercially reasonable efforts to resolve the dispute
as soon as practicable. In the event that the Parties cannot agree on the
resolution of the dispute through direct negotiations, but in no event sooner
than ten (10) business days following the other Party's receipt of the Notice of
Dispute (unless otherwise agreed by the Parties), the matter shall be resolved
by final and binding arbitration. The arbitration procedure can be initiated by
either Party and shall be before the American Arbitration Association in Los
Angeles, California. Arbitration proceedings hereby shall be governed by the
American Arbitration Association ("AAA") guidelines.
(b) The Parties shall endeavor to mutually select an
arbitrator who shall hear and determine the controversy or dispute. In the event
the Parties are unable to agree upon a mutually acceptable arbitrator within
three (3) business days, the Parties shall be assigned a panel of seven (7)
arbitrators provided by AAA (or its designee) from which the Parties shall
select the arbitrator by alternatively striking panelists until one remains. The
Parties shall, by random lot, determine who shall make the first strike.
(c) The arbitrator shall have full authority to decide any
matters in controversy or dispute between the Parties relating to this
Agreement. Any remedies awarded shall be awarded for the purpose of making the
injured Party whole and shall be limited to actual damages proximately caused by
the event giving rise to liability, and shall, where applicable, be limited by
the terms of this Agreement. No punitive damages or damages in the nature of a
penalty shall be awarded. The cost of any arbitration proceedings shall be borne
equally by the Parties, except that the arbitrator may award to the successful
or prevailing Party such Party's legal fees and costs in connection with such
arbitration. Each Party shall, however, bear its own costs for the preparation
and presentations of its contentions notwithstanding and irrespective of any
other provision or rule of law pertaining to the matter to be arbitrated. The
arbitrator's decision shall be final and binding upon the Parties. The
arbitration proceeding provided for herein is a private proceeding. Neither
Party shall disclose or publicize the decision of the arbitrator other than as
required by law.
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6.13 WAIVER OF JURY TRIAL. BORROWER AND ACI HEREBY IRREVOCABLY
WAIVE, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO
TRIAL BY JURY IN ANY LEGAL PROCEEDING
IN WITNESS WHEREOF, THE PARTIES HERETO HAVE CAUSED THIS SECURITY
AGREEMENT TO BE EXECUTED AND DELIVERED BY THEIR DULY AUTHORIZED REPRESENTATIVES
AS OF THE DATE FIRST SET FORTH HEREINABOVE.
ACI COMMUNICATIONS HOLDINGS, INC., US DATAWORKS, INC.,
A California Corporation A Nevada Corporation
By: _______________________ By: _______________________
Name: _______________________ Name: _______________________
Its: _______________________ Its: _______________________
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EXHIBIT A
Amended Settlement Agreement
ANNEX 1
ANNEX 2
ANNEX 3
ANNEX 4
SCHEDULE 3.1
Prior Lien Interest Granted in the Collateral
To Borrower's knowledge, there are no prior lien interests granted in the
Collateral.
SCHEDULE 3.2
Infringement Actions
To Borrower's knowledge: (i) there is no violation by others of any right of
Borrower with respect to any Copyright, Patent or Trademark listed in Annex 1, 2
or 3 and (ii) Borrower is not infringing in any respect upon any Copyright,
Patent or Trademark of any other person or entity; and no proceedings have been
instituted are pending against Borrower or have been threatened against, and no
claim has been received by, Borrower, alleging any such violation.
