EXHIBIT 10.33
SECURITY AGREEMENT
This
Security Agreement (this “Agreement”) is made as of July 1, 2003, between
Aptimus, Inc., a Washington corporation (“Debtor”), and the individuals
identified on the signature pages hereto (each such individual, a “Secured Party,” and
collectively, the “Secured Parties”).
Debtor
and the Secured Parties are parties to a Convertible Note Purchase Agreement, dated as of
July 1, 2003 (the Convertible Note Purchase Agreement, as it may be supplemented,
amended, restated or otherwise modified from time to time, being the “Purchase
Agreement”), providing for the purchase of secured notes in the aggregate principal
amount of $500,000.00. To induce the purchasers to enter into the Purchase Agreement and
to extend credit thereunder, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, Debtor has agreed to grant a security
interest to the purchasers under the Purchase Agreement in the Collateral (as defined
below) as security for the obligations under the Notes (as defined below).
Debtor
and Secured Parties agree as follows:
1. Certain
Definitions and Rules of Construction.
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(a) Certain
Terms Defined in the UCC-Secured Transactions. As used in this
Agreement, unless otherwise defined in this Agreement, the singular and
plural forms of the terms “accession,” “account,” “account
debtor,” “chattel paper,” “collateral,” “deposit
account,” “document,” “equipment,” “fixtures,” “general
intangible,” “goods,” “health-care-insurance receivable,” “instrument,” “inventory,” “investment
property,” “letter-of-credit right,” “payment
intangible,” “proceeds,” “promissory note,” “software” and
“supporting obligation” have the respective meanings assigned to
those terms in the UCC-Secured Transactions.
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(b) Certain
Other Defined Terms. As used in this Agreement, the following terms
have the following meanings, which are equally applicable to both the
singular and plural forms of those terms:
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“Collateral”has
the meaning assigned to that term in Section 2.
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“Debtor”has
the meaning assigned to that term in the initial paragraph in this Agreement.
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“Event
of Default” means any event listed or otherwise described in Section 5 of the
Purchase Agreement.
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“Notes”means
the convertible secured promissory notes issued in accordance with the terms of the
Purchase Agreement.
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“Obligations”means,
with respect to each Secured Party, all indebtedness,
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obligations
and liabilities of Debtor under the Notes and the Purchase Agreement, including, but not
limited to, the payment of all obligations to such Secured Party now or hereafter
existing under the Notes, whether direct, or indirect, absolute or contingent, and
whether for principal, reimbursement obligations, interest, fees, premiums, penalties,
indemnifications, contract causes of action, costs, and expenses. |
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“Person”means
an individual, a corporation, a business trust, an estate, a trust, a partnership, a
limited liability company, an association, a joint venture, a government, a governmental
subdivision, agency or instrumentality, a public corporation, or any other legal or
commercial entity.
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“Purchase
Agreement” has the meaning assigned to that term in the initial paragraphs in this
Agreement.
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“Purchaser”has
the meaning assigned to that term in the Purchase Agreement.
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“Secured
Parties” has the meaning assigned to that term in the initial paragraph in this
Agreement.
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“UCC
-Secured Transactions” means the Uniform Commercial Code-Secured Transactions in
effect in the state of Washington, as amended from time to time.
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(c) Certain
Rules of Construction. The headings of the Sections, subsections,
paragraphs and other divisions of this Agreement are included for
convenience of reference only, and are not to limit or affect in any way
the construction or interpretation of any terms, conditions or other
provisions of this Agreement. References in this Agreement to Sections are
references to the Sections of this Agreement unless otherwise specified.
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2. Creation
of Security Interest. As security for the payment and performance of the
Obligations, Debtor grants to and creates in favor of the Secured Parties a
security interest in all of Debtor’s right, title and interest in, to and
under the following personal property and fixtures (collectively, the “Collateral”),
wherever located and whether now or in the future owned, existing, arising or
acquired:
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(g) general
intangibles, including payment intangibles, software and things in action;
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(i) instruments,
including promissory notes;
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(l) letter-of-credit
rights;
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(m) supporting
obligations;
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(n) other
personal property, including without limitation, intellectual property in
the form of issued patents, provisional and nonprovisional patent
applications and trade secrets; and
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(o) proceeds
of the collateral described in this Section 2.
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3. Authorization
to File Financing Statements. Promptly and in no event more than ten (10)
business days from the date of the initial payment of funds by any Purchaser to
Debtor under a Note, Debtor shall on behalf of the Secured Parties file initial
financing statements, and amendments of financing statements, covering the
Collateral and any property that becomes collateral as identifiable proceeds of
the Collateral.
4. Inspection.
Secured Parties may inspect any of the Collateral at any time upon reasonable
notice to Debtor.
5. Risk
of Loss. Debtor has the risk of loss of the Collateral.
6. No
Collection Obligation. Secured Parties have no duty to collect any income
that accrues on any of the Collateral or to preserve any rights relating to any
of the Collateral.
7. Encumbrance
of Collateral. Except for the creation and grant of the security interest
under this Agreement, as created by law in the ordinary course of business, or
to the extent required by any bank, financial institution, or other lender and
any successors and assigns thereof providing a loan or credit to Debtor (each a
“Bank” and together the “Banks”), Debtor will not, and the
Secured Parties do not authorize Debtor to, create or grant any lien on or
security interest in, any of the Collateral. The Secured Parties shall enter
into a subordination agreement as may reasonably be requested by any such Bank
or Banks acknowledging that the
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Notes and the lien of the security
interest herein created shall be subordinate and junior in right of payment to
all such indebtedness, subject to the limitation set forth in Sections 7 and
8(c)(i) of the Purchase Agreement.
8. Representations
and Warranties. Debtor represents and warrants to Secured Parties that:
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(a) Rights
in Collateral. Debtor has rights in, and the power to transfer, the
Collateral. Debtor’s right, title and interest in and to the Collateral
is free of all adverse claims, liens, security interests and restrictions
on transfer or pledge, other than the security interests and restrictions
created under, or set forth in, this Agreement, the Purchase Agreement and
its schedules and the other Transaction Documents referred to in the
Purchase Agreement.
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(b) Location
of Collateral. All of the Collateral comprising equipment and goods is
located in the states of Washington and California.
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(c) Jurisdiction
of Organization of Debtor. Debtor’s jurisdiction of organization
is the state of Washington. Debtor is a corporation incorporated under the
laws of the state of Washington.
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(d) Name
of Debtor. The name of Debtor indicated on the public record of the
state of Washington that shows Debtor to have been organized is Aptimus,
Inc.
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(e) Mailing
Address for Debtor. A mailing address for Debtor is 00 Xxxxx Xxxxxxx
Xxxxxx, Xxxxx 000, Xxxxxxx, XX 00000.
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(f) No
Conditions. There are no conditions precedent to the effectiveness of
this Agreement that have not been satisfied or waived.
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9. Certain
Covenants. Until all of the Obligations are paid in full, Debtor:
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(a) will
not change its jurisdiction of organization from the state of Washington;
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(b) will
preserve its existence as a corporation under the laws of the state of
Washington;
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(c) will
not change its name without giving at least thirty days prior notice of the
proposed change to the Secured Parties;
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(d) will
take all actions necessary to prevent , and will take no actions to
intentionally cause, directly or indirectly, the breach of any
representation, warranty, covenant or agreement contained in the Purchase
Agreement; and
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(e) will
maintain insurance with creditworthy insurance companies covering
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the
replacement cost of the Collateral, such replacement cost being deemed to
be the amount required to replace such Collateral with equipment of like
kind and quality, equivalent to the actual cash value, minus physical
depreciation (fair wear and tear) and obsolescence of such Collateral, and
will cause the Secured Parties to be named as “additional insureds” under
such insurance. Debtor shall provide Secured Parties with evidence of such
insurance upon request. |
10. Secured
Parties’ Duties. If Debtor fails to perform any of its obligations
under this Agreement, then the Secured Parties, individually or collectively,
may (but are not obligated to) perform or cause performance of such obligations
and, pursuant to Xxxxxxx 00, Xxxxxx will pay the expenses incurred by the
Secured Parties in connection with such performance. The powers conferred on
the Secured Parties under this Agreement are solely to protect Secured Parties’ interest
in the Collateral and do not impose any duty upon Secured Parties to exercise
any such powers. Except for the safe custody of any of the Collateral in the
Secured Parties’, or any of them, possession and the accounting for moneys
actually received by the Secured Parties, or any of them, under this Agreement,
the holding of such sums in trust on behalf of all Secured Parties, and the
distribution of such sums to the Secured Parties pro rata based on each such
Secured Party’s relative principal loan amount, the Secured Parties have
no duty as to any of the Collateral or as to the taking of any necessary steps
to preserve rights against prior parties or any other rights pertaining to any
of the Collateral. A Secured Party will be deemed to have exercised reasonable
care in the custody and preservation of any of the Collateral in the possession
of such Secured Party if such Collateral is accorded treatment substantially
equal to that which such Secured Party accords its own property.
11. Events
of Default. An Event of Default shall be as defined in Section 1 hereof,
and Article 5 of the Purchase Agreement is incorporated herein by reference.
12. Certain
Remedies. Upon, and at any time after, the occurrence or existence of any
Event of Default, in addition to other rights and remedies provided for in this
Agreement and the Purchase Agreement or otherwise available to the Secured
parties by agreement, at law, in equity or otherwise, the Secured Parties may
(a) take possession of the Collateral, (b) render equipment unusable,
(c) require Debtor to, and Debtor will at its own cost and expense and
immediately upon request of the Secured Parties, assemble all or any part of
the Collateral as directed by the Secured Parties and make such Collateral
available to the Secured Parties at a place designated by the Secured Parties
which is reasonably convenient to both Debtor and the Secured Parties, (d) sell,
lease, license or otherwise dispose of any or all of the Collateral in its
present condition or following any commercially reasonable preparation or
processing, by public or private proceedings, by one or more contracts, as a
unit or in parcels, at any time and place, for cash, on credit or for future
delivery, and on any other commercially reasonable terms, and (e) exercise
in respect of the Collateral all other rights and remedies of a secured party
on default under the Uniform Commercial Code in effect in the state of
Washington, whether or not such Uniform Commercial Code applies to the affected
Collateral. Debtor agrees that, to the extent notification of disposition of
any of the Collateral is at any time required by law, a notification of
disposition is sent within a reasonable time before the disposition if the
notification is sent to Debtor after the occurrence or existence of any Event
of Default and ten days or more before the earliest time of disposition set
forth in the notification. The Secured Parties will not be obligated
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to make any sale, lease, license or
other disposition of any or all of the Collateral regardless of notification of
disposition having been given. The Secured Parties may adjourn any public or
private sale, lease or other disposition from time to time by announcement at
the time and place fixed for such sale, lease or other disposition, and such
sale, lease or other disposition, without further notice, may be made at the
time and place to which it was so adjourned. The Secured Parties have no
obligation to prepare or process any of the Collateral for sale, lease, license
or other disposition.
13. Priority;
Amendments; Waivers. No amendment or waiver of any provision of this
Agreement, and no consent to any departure by the Debtor herefrom, shall in any
event be effective unless the same shall be in writing and signed by not less
than a seventy-one percent (71%) majority of the Secured Parties, and then such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given; provided, however, that any amendment or
waiver that is not equally applicable to all Secured Parties or is in any way
discriminatory to any Secured Party shall require the agreement of such Secured
Party. No failure on the part of any Secured Party to exercise, and no delay in
exercising, any right hereunder shall operate as a waiver of such right, nor
shall any single or partial exercise of such right preclude any other or
further exercise of such right or the exercise of any other right.
14. Indemnity.
Debtor will indemnify, defend and hold harmless the Secured Parties from and
against any and all claims, losses and liabilities (including, but not limited
to, reasonable fees, costs, expenses and disbursements of attorneys) arising
from or by reason of this Agreement (including, but not limited to, enforcement
of this Agreement), except claims, losses or liabilities resulting from the
gross negligence or willful misconduct of a Secured Party .
15. Costs
and Expenses. Debtor will pay to the Secured Parties on demand the
reasonable costs and expenses (including, but not limited to, reasonable fees,
costs, expenses and disbursements of accountants, attorneys and other
professional advisors) incurred by the Secured Parties in connection with any
of (a) retaking the Collateral, holding the Collateral, preparing for
disposition of the Collateral, processing the Collateral, and disposing of the
Collateral, (b) the exercise or enforcement of any of the rights and
remedies of the Secured Parties under this Agreement and (c) any Event of
Default.
16. Counterparts.
This Agreement may be executed in any number of counterparts and by different
parties to this Agreement in separate counterparts, each of which counterparts
when so executed will be deemed to be an original and all of which counterparts
taken together will constitute one and the same agreement. Delivery of an
executed counterpart of a signature page to this Agreement via telephone
facsimile transmission will be effective as delivery of a manually executed
counterpart of this Agreement.
17. Severability.
Any term, condition or other provision of this Agreement that is prohibited or
unenforceable in any jurisdiction will be ineffective, as to such jurisdiction,
to the extent of such prohibition or unenforceability without affecting the
validity or enforceability of such term, condition or provision in any other
jurisdiction and without invalidating the remaining
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terms, conditions and other
provisions of this Agreement.
18. Continuing
Interest; Binding Effect. This Agreement shall create a continuing security
interest in the Collateral and shall (a) remain in full force and effect until
the payment in full of the Obligations, (b) be binding upon the Debtor, its
successors and assigns, and (c) inureto the benefit of, and is enforceable by,
each of the Secured Parties and their successors, transferees and assigns.
19. Governing
Law. This Agreement is governed by, and is to be construed in all respects
in accordance with, the laws of the state of Washington, without reference to
conflict-of-laws or choice-of-law rules that would direct the general
application of the laws of another jurisdiction, except to the extent that the
validity or perfection of the security interest under this Agreement, or
remedies under this Agreement, in respect of any particular Collateral are
governed by the laws of a jurisdiction other than the state of Washington.
20. Oral
Agreements Unenforceable. ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN
MONEY, EXTEND CREDIT, OR TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT ARE NOT
ENFORCEABLE UNDER WASHINGTON LAW.
22. Arbitration.
Any claim or dispute under this Agreement will be determined by arbitration in
accordance with the arbitration provisions of the Purchase Agreement..
IN
WITNESS WHEREOF, Debtor and the Secured Parties have caused this Agreement to be executed
by their respective authorized officers or representatives, as of the date first above
written.
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| APTIMUS, INC |
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| By:___________________________________ |
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| Title:________________________________ |
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| SECURED PARTY: |
SECURED PARTY: |
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| SF TECH JV |
XXXXXXX X. XXXXXX |
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| By:____________________________________ |
_____________________________________ |
| Its:___________________________________ |
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| SECURED PARTY: |
SECURED PARTY: |
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| XXXXXX X. XXXXXX |
XXXXX X'XXXXX |
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| _____________________________________ |
_____________________________________ |
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| SECURED PARTY: |
SECURED PARTY: |
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| XXXX XXXXXX XXX |
XXXX XXXXXXX |
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| _____________________________________ |
_____________________________________ |
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| SECURED PARTY: |
SECURED PARTY: |
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| XXXXXX X. XXXXXX XXX |
[name] |
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| _____________________________________ |
_____________________________________ |
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