EXHIBIT 10.40
SECURITY AGREEMENT
This Security Agreement (this "Agreement") dated as of May 30, 2003, is
made by and among MigraTEC, Inc., a Delaware corporation ("Debtor"), the persons
listed on Schedule A hereto who execute counterpart signature pages to this
Agreement (each such person referred to herein as a "Secured Party" or
"Investor" and collectively with their successors and assigns, the "Secured
Parties" or the "Investors") and Collateral Agent (as defined herein) for the
benefit of the Secured Parties.
WHEREAS, pursuant to that certain Notes and Warrant Purchase Agreement
dated as of even date herewith by and between Debtor and the Investors (the
"Purchase Agreement") and the Convertible Secured Promissory Notes dated of even
date herewith issued by Debtor to each of the Secured Parties (the "Notes"), the
Secured Parties may extend credit to Debtor; and
WHEREAS, as a condition to extending credit to Debtor under the Notes,
the Secured Parties have required the execution and delivery of this Agreement
by Debtor.
NOW, THEREFORE, BE IT RESOLVED, in consideration of the mutual
covenants contained in the Purchase Agreement, the Notes and herein, the parties
hereby agree as follows:
1. Definitions. All terms defined in the recitals hereto and the
Purchase Agreement that are not otherwise defined herein shall have the meanings
given them in the recitals and the Purchase Agreement. All terms defined in the
UCC and not otherwise defined herein have the meanings assigned to them in the
UCC. In addition, the following terms have the meanings set forth below or in
the referenced Section of this Agreement:
"Collateral" means all of Debtor's accounts, chattel paper,
deposit accounts, documents, equipment, financial assets, fixtures,
general intangibles, goods, instruments, Intellectual Property Rights,
inventory, investment property, letter-of-credit rights, letters of
credit, and all other personal property and assets, whether now owned
or hereafter acquired, together with (i) all substitutions and
replacements for and products of any of the foregoing; (ii) in the case
of all goods, all accessions; (iii) all accessories, attachments,
parts, equipment and repairs now or hereafter attached or affixed to or
used in connection with any goods; (iv) all warehouse receipts, bills
of lading and other documents of title now or hereafter covering such
goods; (v) any money, or other assets of Debtor that now or hereafter
come into the possession, custody, or control of the Secured Party; and
(vi) proceeds of any and all of the foregoing.
"Collateral Account" shall have the meaning set forth in
Subsection 7(a).
"Collateral Agent" means 0000 Xxxxx Xxxxxxx, XX, x Xxxxx
limited partnership ("1900 Cedar Springs").
"Event of Default" has that meaning set forth in the Purchase
Agreement except as otherwise provided herein.
"Intellectual Property Rights" means all actual or prospective
rights arising in connection with any intellectual property or other
proprietary rights, including all rights
arising in connection with copyrights, patents, service marks, trade
dress, trade secrets, trademarks, trade names or mask works.
"Law" means any statute, law, ordinance, regulation, rule,
order, writ, injunction or decree of any state, commonwealth, federal,
foreign, territorial or other court or government body, subdivision,
agency, department, commission, board, bureau or instrumentality of a
governmental body.
"Lien" means any security interest, mortgage, deed of trust,
pledge, lien, charge, encumbrance, title retention agreement or
analogous instrument or device, including the interest of each lessor
under any capitalized lease and the interest of any bondsman under any
payment or performance bond, in, of or on any assets or properties of a
person, whether now owned or hereafter acquired and whether arising by
agreement or operation of Law.
"Loan Documents" means (i) the Purchase Agreement; (ii) the
Notes; (iii) this Agreement and (iv) any other security agreements,
financing statements, deeds of trust or mortgages, assignments,
agreements, instruments or documents executed by Debtor in favor of
Collateral Agent, for the benefit of the Secured Parties, as the same
may be amended, restated or modified from time to time (the "Security
Documents").
"Majority Investors" means those Investors whose Sharing
Percentages total at least fifty-one percent (51%) of the aggregate
principal due under the Notes.
"Obligations" means each and every debt, liability and
obligation of every type and description which Debtor may now or at any
time hereafter owe to the Secured Parties in relation to the Notes.
"Permitted Liens" means (i) the Security Interest, (ii)
covenants, restrictions, rights, easements and minor irregularities in
title which do not materially interfere with Debtor's business or
operations as presently conducted, and (iii) Liens in existence on the
date hereof.
"Security Interest" has the meaning given in Section 2.
"Sharing Percentage" means as to any Investor, the percentage
equivalent of a fraction of which (i) the numerator is the Pro Rata
Portion of the Total Loan Amount, and (ii) the denominator is the Total
Loan Amount.
"UCC" means Uniform Commercial Code as in effect from time to
time in the State of Delaware.
2. Security Interest. Debtor hereby grants Collateral Agent, for the
benefit of the Secured Parties, a security interest (the "Security Interest") in
the Collateral to secure payment of the Obligations.
3. Representations, Warranties, Covenants and Agreements. Debtor hereby
represents, warrants, covenants and agrees as follows:
SECURITY AGREEMENT - PAGE 2
(a) Title. Debtor has absolute title to each item of
Collateral in existence on the date hereof, free and clear of all Liens
except Permitted Liens.
(b) Chief Executive Office; Identification Numbers. Debtor's
chief executive office and principal place of business is located at
the address set forth under its signature below. Debtor's federal
employer identification number and organizational identification number
are correctly set forth under its signature below.
(c) Location of Collateral. As of the date hereof, the
tangible Collateral is located at Debtor's chief executive office and
principal place of business at the address set forth under Debtor's
signature below. Debtor will not permit any tangible Collateral to be
located in any state (and, if county filing is required, in any county)
in which a financing statement covering such Collateral is required to
be, but has not in fact been, filed in order to perfect the Security
Interest.
(d) Miscellaneous Covenants. Debtor will:
(i) at all reasonable times, permit Collateral Agent
and all representatives and agents appointed by Collateral
Agent to examine or inspect any Collateral, wherever located,
and to examine, inspect and copy Debtor's books and records
pertaining to the Collateral and its business and financial
condition and to send and discuss with account debtors and
other obligors requests for verifications of amounts owed to
Debtor;
(ii) if Collateral Agent at any time so requests
(after the occurrence of an Event of Default), promptly
deliver to Collateral Agent, for the benefit of the Secured
Parties, any instrument, document or chattel paper
constituting Collateral, duly endorsed or assigned by Debtor;
(iii) from time to time execute such financing
statements as Collateral Agent, for the benefit of the Secured
Parties, may reasonably require in order to perfect the
Security Interest and, if any Collateral consists of a motor
vehicle, execute such documents as may be required to have the
Security Interest properly noted on a certificate of title;
(iv) pay when due or reimburse Collateral Agent on
demand for all costs of collection of any of the Obligations
and all other reasonable out-of-pocket expenses (including in
each case all reasonable attorneys' fees) incurred by
Collateral Agent in connection with the creation, perfection,
satisfaction, protection, defense or enforcement of the
Security Interest or the creation, continuance, protection,
defense or enforcement of this Agreement or any or all of the
Obligations, including expenses incurred in any litigation or
bankruptcy or insolvency proceedings;
(v) execute, deliver or endorse any and all
instruments, documents, assignments, security agreements and
other agreements and writings which Collateral Agent, on
behalf of the Secured Parties, may at any time reasonably
request in order to secure, protect, perfect or enforce the
Security Interest and Collateral Agent's rights under this
Agreement; and
SECURITY AGREEMENT - PAGE 3
(vi) not use or keep any Collateral, or permit it to
be used or kept, for any unlawful purpose or in violation of
any applicable Law.
(e) Collateral Agent's Right to Take Action. Debtor authorizes
Collateral Agent, on behalf of the Secured Parties, to file from time
to time where permitted by applicable Law, such financing statements
against Collateral described as "all personal property" or "all assets"
or describing specific items or categories of Collateral as Collateral
Agent deems necessary or useful to perfect the Security Interest.
Debtor will not amend any financing statements in favor of Collateral
Agent, on behalf of the Secured Parties, except as permitted by
applicable Law.
4. Continuing Liability.
(a) Debtor hereby expressly agrees that notwithstanding
anything contained herein or elsewhere to the contrary, Debtor shall
remain liable under each contract, agreement, interest and obligation
assigned to Collateral Agent and in which Collateral Agent, on behalf
of the Secured Parties, is granted a Security Interest hereunder to
observe and perform all the conditions and obligations and provisions
thereof; it being expressly agreed and understood that Collateral Agent
shall have no obligation or liability of any kind whatsoever under any
such contract, agreement, interest and/or obligation by reason of,
arising out of or otherwise in connection with this Agreement, the
assignments to Collateral Agent herein contained, the granting to
Collateral Agent of any Security Interest hereunder or the receipt by
Collateral Agent of any payment relating to any such contract,
agreement, interest and obligation pursuant hereto. Further, neither
Collateral Agent nor the Secured Parties shall be required or obligated
in any manner whatsoever to perform or fulfill any of the obligations
of Debtor thereunder or pursuant thereto, or to make any payment or to
make any inquiry as to the nature or the sufficiency of any payment
received by it or the sufficiency of any performance by any party under
any such contract, agreement, interest and/or obligation, or to present
or file any claim, or to take any action to collect or enforce any
performance or the payment of any amounts which may have been assigned
to it or in which Collateral Agent, on behalf of the Secured Parties,
may have been granted a security interest to which it may be entitled
at any time or times. Further, Debtor hereby indemnifies, and holds
harmless Collateral Agent and the Secured Parties, against and from any
and all liability, loss and damage which Collateral Agent or Secured
Parties may incur under or by reason of this Agreement or Collateral
Agent's enforcing its rights hereunder and all claims and demands
whatsoever which may be asserted against it by reason of any alleged
obligations or undertakings on its part to perform or discharge any of
the terms, covenants or agreements contained under any such contract,
agreement, interest and/or obligations. If Collateral Agent and/or
Secured Parties should incur any such liability, loss or damage and/or
if Collateral Agent and/or the Secured Parties should incur any
liabilities, costs or expenses in the defense of any such claims or
demands, the amount thereof, including cost, expenses and reasonable
attorneys' fees, shall be part of the Obligations, and Debtor shall
reimburse Collateral Agent and/or the Secured Parties therefor
immediately upon demand, and Debtor's failure to do so shall constitute
an Event of Default hereunder.
SECURITY AGREEMENT - PAGE 4
5. No Other Encumbrances. Except as otherwise agreed by Collateral
Agent, Debtor shall maintain the Collateral free from any security interest,
Lien, charge, encumbrance or other charge adverse to Collateral Agent, which is
superior to or pari passu with Collateral Agent's Security Interest, on behalf
of the Secured Parties, in the Collateral, and shall defend the Collateral
against all claims and demands of all persons at any time claiming any interest
therein adverse to Collateral Agent and/or the Secured Parties.
6. Power Of Attorney. Debtor hereby appoints Collateral Agent, and any
officer or agent thereof, as Debtor's agent and attorney-in-fact with full power
in Debtor's name and behalf to do each and every act and thing which Debtor may
or is required to do under this Agreement; however, Collateral Agent shall in no
event be required to take any action whatsoever hereunder, except with respect
to Collateral Agent's obligation to, upon disposition of the Collateral, use its
best efforts to maximize the proceeds of such disposition and to consult and
cooperate with Debtor in connection therewith, as provided in Section 8 hereof.
Without limiting the generality of the foregoing, Collateral Agent may execute,
sign, endorse, transfer or deliver in the name of Debtor or otherwise notes,
checks, drafts and/or other instruments for the payment of money and receipts,
certificates of origin, applications for certificates of title or any other
documents appropriate to evidence, perfect or realize upon the Security Interest
and obligations created by this Agreement.
7. Collateral Account; Distributions.
(a) The Collateral Account. After the occurrence of an Event
of Default, all moneys which are required by this Agreement to be
delivered to Collateral Agent or which are received by Collateral Agent
or any agent or nominee of Collateral Agent or any Secured Party in
respect of the Collateral as a result of any foreclosure or otherwise
shall be deposited in an account established at an office of Collateral
Agent or its affiliates (the "Collateral Account") and held by
Collateral Agent, for the benefit of the Secured Parties, and applied
in accordance with the terms of this Agreement.
(b) Control of Collateral Account. Subject to the terms of
this Agreement, all right, title and interest in and to the Collateral
Account shall vest in Collateral Agent and the Collateral Account shall
be subject to the exclusive dominion and control of Collateral Agent
8. Remedies upon Event of Default. Upon the occurrence and during the
continuance of an Event of Default, Collateral Agent may (or at the request of
the Majority Investors, shall) exercise and enforce any or all rights and
remedies available upon default to a Secured Party under this Agreement or the
UCC, provided, however, that with respect to any disposition of any Collateral
by Collateral Agent, for the benefit of the Secured Parties, Collateral Agent
shall use its best efforts to maximize the proceeds of such disposition and
shall consult and cooperate with Debtor in connection therewith. In accordance
with, and subject to, Section 6, so long as an Event of Default exists and so
long as Collateral Agent is so entitled under any Loan Document, Collateral
Agent may take any and all appropriate action and execute any and all documents
and instruments which may be necessary or desirable to carry out the terms of
this Agreement and accomplish the purposes hereof.
SECURITY AGREEMENT - PAGE 5
9. Collateral Agent.
(a) Appointment. Each Secured Party irrevocably designates and
appoints 0000 Xxxxx Xxxxxxx as Collateral Agent of such Secured Party
under this Agreement and the applicable Loan Documents, and each
Secured Party irrevocably authorizes 0000 Xxxxx Xxxxxxx as Collateral
Agent for such Secured Party to take such action on such Secured
Party's behalf under the provisions of this Agreement and any Security
Document and to exercise such powers and perform such duties as are
expressly delegated to Collateral Agent by the terms hereof and
thereof, together with such other powers as are reasonably incidental
thereto. Notwithstanding any provision to the contrary in this
Agreement and the Security Documents, Collateral Agent shall not have
any duties or responsibilities, except those expressly set forth in
this Agreement and the Security Documents, nor any fiduciary or trustee
relationship with any Secured Party, and no implied covenants,
functions, responsibilities, duties, obligations or liabilities shall
be read into this Agreement and the Loan Documents or otherwise exist
against Collateral Agent.
(b) Exculpatory Provisions.
(i) Collateral Agent shall not be responsible in any
manner whatsoever for the correctness of any recitals,
statements, representations or warranties herein, all of which
are made solely by Debtor. Collateral Agent makes no
representations as to the value or condition of the Collateral
or any part thereof, or as to the title of Debtor thereto or
as to the security afforded by this Agreement or any Security
Document, or as to the validity, execution, enforceability,
legality or sufficiency of the Loan Documents or the
Obligations, and Collateral Agent shall incur no liability or
responsibility in respect of any such matters. Collateral
Agent shall not be responsible for insuring the Collateral or
for the payment of taxes, charges or assessments or
discharging of Liens upon the Collateral or otherwise as to
the maintenance of the Collateral.
(ii) Collateral Agent shall not be required to
ascertain or inquire as to the performance by Debtor of any of
the covenants or agreements contained in the Security
Documents. Whenever it is necessary, or in the opinion of
Collateral Agent advisable, for Collateral Agent to ascertain
the amount of the Obligations, then held by the respective
Secured Parties, Collateral Agent may rely on a certificate of
the Secured Parties.
(iii) Collateral Agent shall be under no obligation
or duty to take any action under this Agreement or any
Security Document if taking such action (1) would subject
Collateral Agent to a tax in any jurisdiction where it is not
then subject to a tax or (2) would require Collateral Agent to
qualify to do business in any jurisdiction where it is not
then so qualified, unless Collateral Agent receives security
or indemnity satisfactory to it against such tax (or
equivalent liability), or any liability resulting from such
qualification, in each case as results from the taking of such
action under this Agreement or any Security Document.
(iv) Notwithstanding any other provision of this
Agreement, Collateral Agent shall not be liable for any action
taken or omitted to be taken by it in
SECURITY AGREEMENT - PAGE 6
accordance with this Agreement or any Security Document,
except to the extent that taking such action or omitting to
take such action constitutes gross negligence or willful
misconduct by Collateral Agent.
(v) Collateral Agent shall have the same rights with
respect to any obligation held by it as any other Secured
Party and may exercise such rights as though it were not
Collateral Agent hereunder, and may accept deposits from, lend
money to, and generally engage in any kind of business with
Debtor as if it were not Collateral Agent.
(c) Delegation of Duties. Collateral Agent may execute any of
the powers hereof and perform any duty hereunder either directly or by
or through agents or attorneys-in-fact. Collateral Agent shall be
entitled to advice of counsel concerning all matters pertaining to such
powers and duties. Collateral Agent shall not be responsible for the
negligence or misconduct of any agents or attorneys-in-fact selected by
it in good faith.
(d) Reliance by Collateral Agent.
(i) Collateral Agent may conclusively rely, and shall
be fully protected in acting, upon any resolution, statement,
certificate, instrument, opinion, report, notice, request,
consent, order, bond or other paper or document believed by it
to be genuine and to have been signed or presented by the
proper party or parties or, in the case of cables, telecopies
and telexes, to have been sent by the proper party or parties,
except to the extent that such reliance or action constitutes
gross negligence or willful misconduct of Collateral Agent.
Collateral Agent may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed
therein, upon any certificates or opinions furnished to
Collateral Agent and conforming to the requirements of this
Agreement, except to the extent that such reliance constitutes
gross negligence or willful misconduct of Collateral Agent.
(ii) Notwithstanding anything to the contrary
contained herein, Collateral Agent shall not be under any
obligation to exercise any of the rights or powers vested in
Collateral Agent by this Agreement and the Security Documents,
at the request or direction of any Secured Party pursuant to
this Agreement, or otherwise, unless Collateral Agent shall
have been provided security to its reasonable satisfaction
against the fees, costs, expenses and liabilities which may be
incurred by it, including such reasonable advances as may be
requested by Collateral Agent.
(e) Limitations on Duties of Collateral Agent.
(i) Collateral Agent shall be obligated to perform
such duties and only such duties as are specifically set forth
in this Agreement and the Security Documents, and no implied
covenants or obligations shall be read into this Agreement or
any Security Document against Collateral Agent.
SECURITY AGREEMENT - PAGE 7
(ii) Collateral Agent shall not be under any
obligation to take any action which is discretionary with
Collateral Agent under the provisions hereof or any Security
Document, except upon the written request of the Majority
Investors, and upon such written request of the Majority
Investors, Collateral Agent shall take such action (subject to
the terms and provisions hereof).
(f) Resignation or Removal of Collateral Agent.
(i) Should Collateral Agent ever resign as Collateral
Agent, then a new Collateral Agent appointed by the Majority
Investors shall forthwith become Collateral Agent, and Debtor
and Secured Parties shall execute such documents as Majority
Investors may reasonably request to reflect such change. Any
resignation of Collateral Agent shall become effective upon
the appointment by Majority Investors of a successor
Collateral Agent; provided, however, that if Majority
Investors fail for any reason to appoint a successor within
sixty (60) days after such removal or resignation, Collateral
Agent shall thereafter have no obligation to act as Collateral
Agent hereunder.
(ii) If Collateral Agent shall fail or refuse to
perform or commence performing any act set forth in written
instructions delivered pursuant to, and in accordance with the
terms and conditions of, this Agreement (other than where such
nonperformance is beyond the control of Collateral Agent or
where such performance would entail a violation of applicable
Law or conflict with the provisions of any Security Document
or other agreement where performance is not required by this
Agreement, including without limitation as provided in
Subsections 9(b)(iii) and 9(d)(ii), and such failure continues
for a period of fifteen (15) days from the date of receipt of
said written instructions, Collateral Agent may be removed by
Majority Investors. Majority Investors shall also have the
right to appoint a successor Collateral Agent.
(iii) Upon the acceptance of any appointment as
Collateral Agent hereunder by a successor Collateral Agent,
such Collateral Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of
the retiring Collateral Agent, and the retiring Collateral
Agent shall be discharged from its duties and obligations
hereunder. After any retiring Collateral Agent's resignation
or removal hereunder as Collateral Agent, (1) the provisions
of Subsection 9(j) shall continue in effect for its benefit in
respect of any actions taken or omitted to be taken by it
while it was acting as Collateral Agent, (2) any Collateral
held in possession of the retiring Collateral Agent shall be
delivered to the successor Collateral Agent, and (3) the
retiring Collateral Agent shall assign all of its rights with
respect to all of the Collateral to the successor Collateral
Agent, for the pro rata benefit of the Secured Parties.
(g) Merger of Collateral Agent. Any corporation into which
Collateral Agent may be merged, or with which it may be consolidated,
or any corporation resulting from any merger or consolidation to which
Collateral Agent shall be a party, or any corporation which is
otherwise a successor of Collateral Agent, shall be Collateral Agent
under this Agreement and the Security Documents without the execution
or filing of any
SECURITY AGREEMENT - PAGE 8
paper or any further act on the part of the parties hereto except as
required by applicable Law.
(h) Treatment of Payee or Endorsee by Collateral Agent,
Representatives of Secured Parties. Collateral Agent may treat the
registered Investor or, if none, the payee or endorsee of an interest
in such Note evidencing Obligations attributable to such Investor,
payee or endorsee as the absolute owner of such interest in such Note
for all purposes and shall not be affected by any notice to the
contrary, whether such interest in such Note shall be past due or not.
(i) Non-Reliance on Collateral Agent. Each Secured Party
expressly acknowledges that neither Collateral Agent nor any of its
officers, directors, employees, agents, attorneys-in-fact or affiliates
has made any representations or warranties to them. Except for notices,
reports and other documents expressly required to be furnished to
Secured Parties by Collateral Agent hereunder, Collateral Agent shall
not have any duty or responsibility to provide any Secured Party with
any credit or other information concerning the business, operations,
property, financial and other condition or creditworthiness of Debtor
which may come into its possession or the possession of any of its
officers, directors, employees, agents, attorneys-in-fact or
affiliates. Collateral Agent and its affiliates may exercise all
contractual and legal rights and remedies which may exist from time to
time with respect to other existing and future relationships with
Debtor without any duty to account therefor to any Secured Party.
(j) INDEMNIFICATION. THE SECURED PARTIES AGREE TO INDEMNIFY
COLLATERAL AGENT (IN ITS CAPACITY AS SUCH), WITHOUT LIMITING THE
OBLIGATION OF DEBTOR TO DO SO, RATABLY ACCORDING TO THE SHARING
PERCENTAGES OF THE SECURED PARTIES DETERMINED AT THE DATE OF ANY CLAIM
BY COLLATERAL AGENT FOR INDEMNITY UNDER THIS SUBSECTION 9(j), FROM AND
AGAINST ANY AND ALL LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES,
PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS, EXPENSES (INCLUDING,
WITHOUT LIMITATION, THE REASONABLE FEES AND EXPENSES OF COUNSEL) OR
DISBURSEMENTS OF ANY KIND WHATSOEVER WHICH MAY AT ANY TIME BE IMPOSED
ON, INCURRED BY OR ASSERTED AGAINST COLLATERAL AGENT IN ANY WAY
RELATING TO OR ARISING OUT OF THE SECURITY DOCUMENTS OR ANY DOCUMENTS
CONTEMPLATED HEREBY OR THEREBY OR REFERRED TO HEREIN OR THEREIN OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY OR ANY ACTION TAKEN OR
OMITTED BY COLLATERAL AGENT HEREUNDER OR THEREUNDER OR IN CONNECTION
THEREWITH, INCLUDING THE MERE NEGLIGENCE OF COLLATERAL AGENT, TO THE
EXTENT THAT COLLATERAL AGENT HAS NOT BEEN INDEMNIFIED BY DEBTOR BUT
EXCEPT TO THE EXTENT THAT SUCH CLAIM OR LIABILITY AROSE AS A RESULT OF
THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF COLLATERAL AGENT. SECURED
PARTIES AGREE TO REIMBURSE COLLATERAL AGENT (TO THE EXTENT NOT
REIMBURSED BY DEBTOR), RATABLY ACCORDING TO THE SHARING PERCENTAGES OF
THE SECURED PARTIES, PROMPTLY UPON DEMAND FOR ANY OUT-OF-POCKET
EXPENSES (INCLUDING REASONABLE ATTORNEYS' FEES) INCURRED BY
SECURITY AGREEMENT - PAGE 9
COLLATERAL AGENT IN CONNECTION WITH THE PREPARATION, EXECUTION,
DELIVERY, ADMINISTRATION, MODIFICATION, AMENDMENT, OR ENFORCEMENT
(WHETHER THROUGH LEGAL PROCEEDINGS OR OTHERWISE) OF, OR LEGAL ADVICE IN
RESPECT OF RIGHTS OR RESPONSIBILITIES UNDER, THE SECURITY DOCUMENTS OR
ANY OTHER DOCUMENTS CONTEMPLATED HEREBY OR THEREBY. THE AGREEMENTS IN
THIS SUBSECTION 9(j) SHALL SURVIVE THE PAYMENT OF THE OBLIGATIONS AND
THE TERMINATION OF THE OTHER PROVISIONS OF THIS AGREEMENT.
10. Priority Provisions.
(a) Agreement Regarding Priorities of Obligations. The Secured
Parties and Debtor agree that the payment and priority of each Secured
Party's portion of the Obligations are, and shall be, pari passu with
the payment and priority of any other Secured Party's and Collateral
Agent's portion of the Obligations. The Secured Parties and Debtor
agree that any and all of the rights and remedies of any Secured Party
with respect to its portion of the Obligations shall remain pari passu
with the rights and remedies of Collateral Agent and any other Secured
Party with respect thereto.
(b) Agreement Regarding Lien Priority. The Secured Parties and
Debtor agree that any security interests, pledges of stock, or other
encumbrances of any Secured Party securing its portion of the
Obligations, are and shall be pari passu with the security interests,
pledges of stock or other encumbrances of Collateral Agent or any other
Secured Party securing payment of the Obligations. The Secured Parties
and Debtor agree that any and all of the rights and remedies of any
Secured Party with respect to the Collateral shall remain pari passu
with the rights and remedies of Collateral Agent and any other Secured
Party with respect thereto. In the event that any Secured Party at any
time obtains possession of any of the Collateral, it shall promptly
deliver such Collateral to Collateral Agent, unless precluded by
applicable Law.
(c) Authority of Collateral Agent. Unless otherwise provided
in a power of attorney executed by each Secured Party in connection
with the Loan Documents, each of the Secured Parties hereby irrevocably
constitutes and appoints Collateral Agent and any officer or agent
thereof until such time as Debtor repays the Obligations in full, with
full power of substitution, as its true and lawful attorney-in-fact
with full power and authority in the name of such Secured Party or in
Collateral Agent's own name, from time to time in Collateral Agent's
discretion, to take any and all appropriate action permitted hereunder,
and to execute any and all documents and instruments which may be
necessary or desirable to carry out the terms of this Agreement and
accomplish the purposes hereof and thereof and, without limiting the
generality of the foregoing, each Secured Party hereby gives Collateral
Agent the power and rights on behalf of such Secured Party, without
notice to or further assent by any Secured Party to do the following:
(i) to ask for, demand, xxx for, collect, receive and
give acquittance for any and all moneys due or to become due
upon, or in connection with, the Collateral;
SECURITY AGREEMENT - PAGE 10
(ii) to receive, take, endorse, assign and deliver
any and all checks, notes, drafts, acceptances, documents and
other negotiable and non-negotiable instruments taken or
received by Collateral Agent as, or in connection with, the
Collateral;
(iii) to commence, prosecute, defend, settle,
compromise or adjust any claim, suit, action or proceeding
with respect to, or in connection with, the Collateral;
(iv) to sell, transfer, release, assign or otherwise
deal in or with the Collateral or any part thereof as fully
and effectively as if Collateral Agent were the absolute owner
thereof; and
(v) to do, at its option, at any time or from time to
time, all acts and things which Collateral Agent deems
necessary to protect or preserve the Collateral and to realize
upon the Collateral.
Said attorney, Collateral Agent, is hereby granted and given full power and
authority, coupled with an interest, to do and perform every act necessary and
proper to be done in the exercise of any of the foregoing powers. Understanding
that powers of attorney are strictly construed, each Secured Party declares that
it is its expressed intention that this power of attorney shall be liberally
construed to give the fullest effect to the powers granted herein.
11. Notices. Any notice or other communication required or permitted to
be given hereunder shall be in writing and shall be deemed to have been received
(a) upon hand delivery (receipt acknowledged) or delivery by telex (with correct
answer back received), telecopy or facsimile (with transmission confirmation
report) at the address or number designated below (if delivered on a Business
Day during normal business hours where such notice is to be received), or the
first Business Day following such delivery (if delivered on a Business Day after
normal business hours where such notice is to be received); or (b) on the second
Business Day following the date of mailing by express overnight courier service,
fully prepaid, addressed to such address, or upon actual receipt of such
mailing, whichever shall first occur. The addresses for such communications
shall be:
(a) if to the Debtor, to:
MigraTEC, Inc.
00000 Xxxx Xxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000-0000
Attention: X. Xxxxxx Brechbuhl
President and Chief Executive Officer
Facsimile: (000) 000-0000
with a copy to:
Xxx X. Xxxxxxxxxxxx, Esq.
Xxxxxxxx Xxxxxxxx & Xxxxxx P.C.
5400 Renaissance Tower
0000 Xxx Xxxxxx
Xxxxxx, Xxxxx 00000-0000
Facsimile: (000) 000-0000
SECURITY AGREEMENT - PAGE 11
(b) if to Collateral Agent, to:
0000 Xxxxx Xxxxxxx, LP
0000 Xxxxx Xxxxxxx Xx.
Xxxxxx, Xxxxx 00000
If to any Secured Party, to the address set forth opposite its name on Schedule
A hereto. Any party may designate by written notice a new address to which any
notice or other communication required or permitted to be given hereunder shall
thereafter be given, served or sent.
12. Termination. Upon payment in full of the Notes and execution, if
necessary, by Collateral Agent of instruments of release and delivery of all of
its interest in the Collateral to Debtor, this Agreement shall terminate with
respect to Collateral Agent and Secured Parties and all of their obligations
hereunder shall cease; and the security interests of Collateral Agent created
herein and by the Loan Documents shall be released.
13. Cooperation. Each Secured Party agrees with each of the other
Secured Parties and Collateral Agent that: (a) it will, in the case of any Event
of Default with respect to which it shall have received written notice from, or
provided written notice to, Debtor, promptly give each other Secured Party and
Collateral Agent written notice of such Event of Default (a "Notice of Event of
Default"); and (b) it will give Collateral Agent and each other Secured Party
prompt written notice of any acceleration of the maturity date of any of the
outstanding Obligations pursuant to the Notes.
14. Waivers of Rights. Except as otherwise expressly set forth herein,
so long as the Obligations remain unpaid, the Secured Parties hereby agree to
refrain from exercising any and all rights each may individually (i.e., other
than through Collateral Agent) now or hereafter have to exercise any right
pursuant to this Agreement or the applicable Loan Documents, the UCC as in
effect in any applicable jurisdiction, or under similar provisions of the Laws
of any jurisdiction or otherwise dispose of or retain any of the Collateral. The
Secured Parties hereby agree not to take any action whatsoever to enforce any
term or provision of this Agreement or the Security Documents or to enforce any
right with respect to the Collateral, in conflict with this Agreement or the
terms and provisions of the Loan Documents.
15. Permitted Action by the Secured Parties. Any Secured Party may (but
in no event shall be required to), without instruction from Collateral Agent,
take action permitted by applicable Law or in accordance with the terms of this
Agreement and the Security Documents to preserve its rights and liens in any
item of Collateral securing the payment and performance of the Obligations,
including but not limited to curing any default or alleged default under any
contract entered into by Debtor, paying any tax, fee or expense on behalf of
Debtor, exercising any offset or recoupment rights and paying insurance premiums
on behalf of Debtor so long as such action shall not impair the rights of
Collateral Agent or of any other Secured Party.
16. Right to Instruct Collateral Agent. Upon acceleration of the
maturity date of the Obligations pursuant to the Note, the Majority Lenders may
instruct Collateral Agent to liquidate the Collateral in the manner described in
this Agreement and the Security Documents.
SECURITY AGREEMENT - PAGE 12
17. Amendments, Supplements and Waivers. Except as otherwise provided
in Section 21, the provisions of this Agreement and any Security Document may
not be amended, modified or waived except by the written agreement of Debtor,
Collateral Agent and Majority Investors; provided, however, that no such
amendment, modification or waiver shall adversely affect the interests of any
Secured Party or release any Security Interest except as otherwise permitted by
this Agreement or provide that any person other than the Secured Parties and
their respective successors and assigns shall have the benefits of the Security
Interests created by this Agreement or any of the Security Documents. Any such
supplemental agreements shall be binding upon Debtor, Collateral Agent, Secured
Parties and their respective successors and assigns.
18. Miscellaneous. This Agreement has been duly and validly authorized
by all necessary corporate action. This Agreement does not contemplate a sale of
accounts, or chattel paper. All rights and remedies of Collateral Agent and/or
the Secured Parties shall be cumulative and the exercise or enforcement of any
one such right or remedy shall neither be a condition to nor bar the exercise or
enforcement of any other. This Agreement shall be binding upon and inure to the
benefit of the Debtor, Collateral Agent and each of the Secured Parties and
their respective successors and assigns. A carbon, photographic or other
reproduction of this Agreement or of any financing statement signed by Debtor
shall have the same force and effect as the original for all purposes of a
financing statement. If any provision or application of this Agreement is held
unlawful or unenforceable in any respect, such illegality or unenforceability
shall not affect other provisions or applications which can be given effect and
this Agreement shall be construed as if the unlawful or unenforceable provision
or application had never been contained herein or prescribed hereby. All
representations and warranties contained in this Agreement shall survive the
execution, delivery and performance of this Agreement and the creation and
payment of the Obligations. The parties hereto hereby (i) consent to the
personal jurisdiction of the state and federal courts located in the State of
Texas in connection with any controversy related to this Agreement; (ii) waive
any argument that venue in any such forum is not convenient, (iii) agree that
any litigation initiated by Collateral Agent or the Debtor in connection with
this Agreement or the Note may be venued in either the state or federal courts
located in Dallas County, Texas, and (iv) agree that a final judgment in any
such suit, action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
19. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS AND APPLICABLE FEDERAL LAWS,
EXCEPT TO THE EXTENT PERFECTION AND THE EFFECT OF PERFECTION OR NON-PERFECTION
OF THE SECURITY INTEREST GRANTED HEREUNDER, IN RESPECT OF ANY PARTICULAR
COLLATERAL, ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF
TEXAS.
20. Entire Agreement. THIS AGREEMENT, TOGETHER WITH THE LOAN DOCUMENTS,
REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES REGARDING THE SUBJECT MATTER
HEREIN AND THEREIN AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES HERETO. THERE ARE
NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
SECURITY AGREEMENT - PAGE 13
21. Counterparts. This Agreement may be executed in two (2) or more
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party hereto and delivered to the other party, it being understood that all
parties need not sign the same counterpart. Execution by any Additional Investor
of a counterpart signature page to the Purchase Agreement shall be deemed to
constitute execution by such Additional Investor of this Agreement. The
Collateral Agent and the Secured Parties hereby authorize Debtor to amend
Schedule A hereto for the purposes of adding additional Secured Parties pursuant
to the immediately preceding sentence, which schedule, as amended, shall be
delivered by Debtor to the Collateral Agent or any Secured Party upon request.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
SECURITY AGREEMENT - PAGE 14
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date and year first above written.
DEBTOR:
MigraTEC, Inc.
By: /s/ X. Xxxxxx Brechbuhl
--------------------------------------------
X. Xxxxxx Xxxxxxxxx
President and Chief Executive Officer
Address:
00000 Xxxx Xxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000-0000
Attention: X. Xxxxxx Xxxxxxxxx
Employer identification number: 00-0000000
Organizational identification number: 3255908
SECURITY AGREEMENT - PAGE 15
COLLATERAL AGENT:
0000 XXXXX XXXXXXX, LP
By: 0000 X. Xxxxxxxx GP LLC
Its: General Partner
By: /s/ Xxxx Xxxxxx
--------------------------------------
Name: Xxxx Xxxxxx
Its: Manager
SECURITY AGREEMENT - PAGE 16
SECURED PARTIES:
0000 XXXXX XXXXXXX, LP
By: 0000 X. Xxxxxxxx GP LLC
Its: General Partner
By: /s/ Xxxx Xxxxxx
--------------------------------------
Name: Xxxx Xxxxxx
Its: Manager
/s/ Xxxxxxx Xxxxxxxxxx
----------------------------------------------
Xxxxxxx Xxxxxxxxxx
/s/ Xxxxxx Xxxxxxxxxx
----------------------------------------------
Xxxxxx Xxxxxxxxxx
/s/ Xxxx Xxxxx
----------------------------------------------
Xxxx Xxxxx
World-Wide Iron, Inc.
By: /s/ Xxxx Xxxxx
-------------------------------------------
Name: Xxxx Xxxxx
------------------------------------
Title: President
-----------------------------------
SECURITY AGREEMENT - PAGE 17
SCHEDULE A
SECURED PARTIES
NAME ADDRESS
---- -------
1900 Cedar Springs, LP 0000 Xxxxx Xxxxxxx Xx., Xxxxxx, Xxxxx 00000
Xxxxxxx Xxxxxxxxxx 00 Xxxx Xxx., Xxxxxxxx, XX 00000
Xxxxxx Xxxxxxxxxx 00 Xxxxxx Xxxxxxx Xx., Xxxxxxx, XX 00000
Xxxx Xxxxx 00000 X. 00xx Xxxxx, Xxxxxxx, XX 00000
World-Wide Iron, Inc. 0000 Xxxxx Xxxxxx Xx., Xxxxx 000, Xxxx, XX 00000
