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Exhibit 10.10
SECURITY AGREEMENT
(Caminus)
THIS SECURITY AGREEMENT, dated as of June 23, 1999 (the
"Agreement" or the "Security Agreement"), is between Caminus LLC, a Delaware
limited liability company, as debtor (the "Debtor"), and Fleet Bank, N.A., a
national banking association organized under the laws of the United States, as
lender (hereinafter, in such capacity, together with its successors in such
capacity, the "Lender") under, the Credit Agreement referred to below.
Concurrently herewith, the Debtor and the Lender are entering
into a Credit Agreement dated as of June 23, 1999 (such Credit Agreement, as the
same may be amended or supplemented from time to time is referred to herein as
the "Credit Agreement") providing, subject to the terms and conditions thereof,
for extensions of credit to be made by the Lenders to the Company in an
aggregate principal amount not exceeding $5,000,000.00 (the "Loans"). The Loans
made or to be made by the Lender to the Debtor shall be evidenced by certain
promissory notes (as exchanged, replaced, amended, supplemented or modified from
time to time, the "Notes") in substantially the form of Exhibits A-1 and A-2
attached to the Credit Agreement.
For other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Debtor has agreed to execute
and deliver this Agreement.
As used herein, "UCC" shall mean the Uniform Commercial Code of
the State of New York (except as otherwise defined in Section 7 hereof) as
amended and in effect as of the date hereof. All other capitalized terms, unless
defined herein or in the Schedules attached hereto and made a part hereof, shall
have the meanings set forth in the Credit Agreement.
SECTION 1. Security Interest.
1(a) As security for the prompt and complete payment, performance
and observance of all indebtedness, obligations, liabilities and agreements of
the Debtor to the Lender pursuant to, under or arising out of the Credit
Agreement, the Notes, the other Loan Documents and any amendments, extensions,
renewals, increases, refundings or modifications thereto or of any part thereof,
whether now existing or hereafter incurred, matured or unmatured, direct or
contingent, together with interest and costs of enforcement and collection
thereof and of this Security Agreement, including all reasonable actual
attorneys' fees and disbursements incurred by the Lenders (collectively, the
"Liabilities"), the Debtor hereby grants to the Lender, a continuing security
interest of first priority in, and the Debtor hereby assigns and pledges to the
Lender, all of the Debtor's right, title and interest in the property described
on Schedule A-1 attached hereto, whether now owned by the Debtor or hereafter
coming into existence, and wherever located (all being collectively referred to
herein as the "Collateral").
1(b) The Debtor irrevocably appoints the Lender as its lawful
attorney and agent to execute financing statements and amendments thereto (to
the extent permitted by applicable law), notices of any assignments of any of
the Collateral on the Debtor's behalf, and
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on its behalf to file financing statements and amendments thereto in any
appropriate public office.
1(c) This Security Agreement is in addition to and without
limitation of any right of the Lender and/or any of the other Lender under any
other security agreement, pledge or leasehold assignment, mortgage or guarantee
granted by the Debtor or any third party to the Lender.
1(d) Except as otherwise herein provided, this Security Agreement
is absolute and without any conditions. The Lender can enforce its rights in the
Collateral immediately upon an Event of Default without having first to attempt
any collection from the Debtor.
SECTION 2. Collection.
Upon the occurrence and continuation of an Event of Default
pursuant to Section 9(a) hereof, the Lender shall have the following rights and
powers in addition to those specified in Section 9(b) hereof:
2(a) The Lender shall have the right to notify the parties
obligated on any or all of the Debtor's Accounts, Contracts, Chattel Paper,
Instruments, Insurance, Documents or General Intangibles to make payment thereof
directly to the Lender, and the Lender may take control of all proceeds of any
of the Accounts, Contracts, Chattel Paper, Instruments, Insurance or General
Intangibles. The costs of collection and enforcement, including reasonable
attorney's fees and reasonable out-of-pocket expenses, shall be borne solely by
the Debtor, whether the same are incurred by the Lender or the Debtor. The
Debtor will not thereafter without the Lender's written consent make any
adjustment, extend or renew, compromise, compound or settle any of the Accounts,
Contracts, Chattel Paper, Instruments, Insurance or General Intangibles, or
release, wholly or partly, any person liable for payment thereof.
2(b) The Debtor hereby irrevocably appoints the Lender to be the
Debtor's true and lawful attorney, with full power of substitution, in the
Lender's name or the Debtor's name or otherwise for the Lender's sole use and
benefit, but at the Debtor's cost and expense, to exercise at any time all or
any of the following powers with respect to all or any of the Collateral:
(i) to demand, ▇▇▇ for, collect, receive and give acquittance
for any and all moneys due or to become due upon or by
virtue thereof;
(ii) to receive, take, sign, endorse, assign and deliver any
and all checks, notes, drafts, acceptances, invoices,
freight or express bills, bills of lading, storage or
warehouse receipts, drafts against debtors, assignments,
verifications, notices and other negotiable and
non-negotiable instruments and documents taken or received
by the Lender in connection therewith;
(iii) to receive, open and dispose of all mail addressed to the
Debtor and to notify the post office authorities to change
the address for delivery of mail addressed to the Debtor
to such address as the Lender may designate;
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(iv) to sign the name of the Debtor on any Document, on
invoices relating to any Account or Contract, drafts
against and notices to account debtors or obligors of the
Debtor, on financing statements and other public records
and on notices to customers;
(v) to execute endorsements, assignments or other instruments
of conveyance or transfer and proofs of claim and loss and
to adjust and compromise any claims under insurance
policies or otherwise;
(vi) to settle, compromise, compound, prosecute or defend any
action or proceeding with respect thereto;
(vii) to sell, transfer, assign or otherwise deal in or with the
same or the proceeds thereof and to apply for and obtain
any required consents of governmental authority for any
sale or other disposition of the Collateral, as full and
effectually as if the Lender were the absolute owner
thereof; and
(viii) to apply any or all amounts then in, or thereafter
deposited in, the Company Account in the manner provided
in Section 9(b)(iii) hereof; and
(ix) to make any allowances and other adjustments with
reference thereto and to take all other actions necessary
or advisable in the sole discretion of the Lender to carry
out and enforce this Security Agreement or the
Liabilities.
All acts done under the foregoing authorization are hereby
ratified and approved by the Debtor and neither the Lender nor any designee or
agent of the Lender shall be liable for any acts of commission or omission
(other than acts committed or omitted through gross negligence or willful
misconduct), for any error of judgment or for any mistake of fact or law. The
foregoing power of attorney being coupled with an interest is irrevocable while
any Liabilities shall remain unpaid. The foregoing authorization shall not be
construed in limitation of any other similar authorization to the Lender under
the Credit Agreement or otherwise.
2(c) The Debtor will immediately deliver to the Lender all
proceeds of the Collateral and all original evidence of Accounts, Contracts,
Chattel Paper, Instruments, Insurance, Documents, Patents, Trademarks, Records
or General Intangibles, including without limitation all notes or other
instruments or contracts for the payment of money, appropriately endorsed to the
Lender's order and, regardless of the form of such endorsement, the Debtor
hereby waives presentment, demand, notice of dishonor, protest and notice of
protest and all other notices with respect thereto; and the Debtor hereby
appoints the Lender as the Debtor's agent and attorney-in-fact to make such
endorsement on behalf of and in the name of the Debtor.
2(d) The exercise by the Lender of or failure to so exercise any
authority granted hereinabove shall in no manner affect the Debtor's liability
to the Lender, and provided, further, that the Lender shall be under no
obligation or duty to exercise any of the powers hereby conferred upon it and it
shall be without liability for any act or failure to act in connection with the
collection of, or the preservation of any rights under any of, the Collateral.
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SECTION 3. General Representations and Warranties.
In addition to the Debtor's representations made in the other
Loan Documents, the Debtor represents and warrants to the Lender, which
representations and warranties shall survive execution and delivery of this
Agreement, as follows:
3(a) All filings, registrations and recordings necessary or
appropriate to create, preserve, protect and perfect the security interest
granted by the Debtor to the Lender hereby in respect to the Collateral have
been accomplished and the security interest granted to the Lender pursuant to
this Agreement in and to the Collateral constitutes a perfected security
interest therein superior and prior to the rights of all other Persons therein
(except for Liens permitted under the Credit Agreement) and subject to no other
Liens (except for Liens permitted under the Credit Agreement), and is entitled
to all the rights, priorities and benefits afforded by the UCC or other relevant
laws as enacted in any relevant jurisdiction to perfected security interests.
3(b) The Debtor is, and as to Collateral acquired by it from time
to time after the date hereof the Debtor will be, the owner of all Collateral
free from any Lien, security interest, encumbrance or other right, title or
interest of any Person (other than Liens permitted under the Credit Agreement),
and the Debtor shall defend its Collateral against all claims and demands of all
Persons at any time claiming the same or any interest therein adverse to the
Lender.
3(c) There is no financing statement (or similar statement or
instrument of registration under the law of any jurisdiction) covering or
purporting to cover any interest of any kind in the Collateral except for
filings and recordings permitted under the Credit Agreement and filings and
recordings in favor of the Lender created or provided for herein, and so long as
any of the Liabilities remain unpaid the Debtor will not execute or authorize to
be filed in any public office any financing statement (or similar statement or
instrument of registration under the law of any jurisdiction) or statements
relating to the Collateral, except (i) financing statements filed or to be filed
in respect of and covering the security interests granted hereby by the Debtor,
and (ii) financing statements to be filed in connection with the creation of
Liens permitted under the Credit Agreement.
3(d) The office location(s) of the Debtor set forth on Schedule B
attached hereto as the Debtor's principal place of business and chief executive
office and all other places of business are true and correct.
3(e) Schedule B attached hereto contains a true and complete
listing of all of the locations of all the Collateral. In the case of Inventory,
Schedule B also sets forth each Warehouseman (as defined in the Uniform
Commercial Code as in effect in the state in which the warehouse owned or
operated by such Person is located) that from time to time holds Inventory of
the Debtor and the Permitted Inventory Location (as defined herein) at which
such Inventory is so held. In the case of such Inventory, the Debtor further
represents and warrants that none of the Inventory is subject to a negotiable
warehouse receipt (as defined in the Uniform Commercial Code as in effect in the
state in which such Inventory is located).
3(f) The Debtor further represents and warrants, as to any
Inventory, that all such Inventory, other than Inventory in transit in the
normal course of business, is held at a
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Permitted Inventory Location (as defined herein). "Permitted Inventory Location"
is defined herein to mean (i) a warehouse or other storage facility owned or
leased by the Debtor, or (ii) a warehouse or other storage facility owned,
leased or operated by a Warehouseman from whom the Lender has received a
warehouse bailment agreement in form and substance satisfactory to the Lender
with respect to Inventory there held, and, in either case, in jurisdictions
where appropriate UCC financing statements shall have liens filed against the
Debtor for the benefit of the Lender and the other Lender.
SECTION 4. Special Provisions Concerning Accounts.
4(a) As of the time when each of its Accounts arises, the Debtor
shall be deemed to have represented and warranted that such Accounts and all
records, papers and documents relating thereto (if any) are genuine and in all
respects what they purport to be, and that all papers and documents (if any)
relating thereto (i) will represent the genuine, legal, valid and binding
obligation of the account debtor evidencing indebtedness unpaid and owed by such
account debtor arising out of the performance of labor or services or the sale
or lease and delivery of the merchandise listed therein, or both, (ii) will be
the only original writings evidencing and embodying such obligation of the
account debtor named therein (other than copies created for purposes other than
general accounting purposes), (iii) will evidence true and valid obligations,
enforceable in accordance with their respective terms, not subject to the
fulfillment of any contract or condition whatsoever or to any defenses, set offs
or counterclaims (except with respect to refunds, returns and allowances in the
ordinary course of business), or stamp or other taxes, and (iv) will be in
compliance and will conform with all applicable federal, state and local laws
and applicable laws of any relevant foreign jurisdiction.
4(b) The Debtor will keep and maintain at its own cost and
expense satisfactory and complete records of its Accounts, including, but not
limited to, records of all payments received, credits granted thereon, all
merchandise returned and all other dealings therewith, and the Debtor will make
the same available to the Lender for inspection, at the Debtor's own cost and
expense, at any and all reasonable times upon demand.
4(c) The Debtor shall endeavor to cause to be collected from the
account debtor named in each of its Accounts, as and when due (including,
without limitation, Accounts which are delinquent, such Accounts to be collected
in accordance with generally accepted lawful collection procedures), any and all
amounts owing under or on account of such Accounts, and apply forthwith upon
receipt thereof all such amounts as are so collected to the outstanding balance
of such Accounts, except that, so long as no Event of Default exists and is
continuing, the Debtor may allow in the ordinary course of business as
adjustments to amounts owing under its Accounts an extension or renewal of the
time or times of payment, or settlement for less than the total unpaid balance,
which the Debtor finds appropriate in accordance with sound business judgment.
The costs and expenses (including, without limitation, attorneys' fees and
expenses) of collection, whether incurred by the Debtor or the Lender, shall be
borne by the Debtor.
4(d) If any of the Accounts becomes evidenced by an Instrument,
the Debtor will within ten (10) days notify the Lender thereof, and upon request
by the Lender promptly deliver such Instrument to the Lender appropriately
endorsed to the order of the Lender as further security hereunder.
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4(e) The Debtor will, at its own expense, make, execute, endorse,
acknowledge, file and/or deliver to the Lender from time to time such vouchers,
invoices, schedules, confirmatory assignments, conveyances, financing
statements, transfer endorsements, powers of attorney, certificates, reports and
other assurances or instruments and take such further steps relating to its
Accounts and other property or rights covered by the security interest hereby
granted, as the Lender may reasonably require which are consistent with the
terms hereunder.
SECTION 5. Special Provisions Concerning Contracts.
5(a) The Debtor represents and warrants that no consent of any
party (other than the Debtor) to any Contract is required, or purports to be
required, in connection with the execution, delivery and performance of this
Security Agreement. Each Contract is in full force and effect and is enforceable
in accordance with its respective terms and there is no default under any of the
terms thereof. The Debtor does hereby further represent and warrant that it has
not assigned or pledged, and hereby covenants that it will not assign or pledge,
except as permitted under the Credit Agreement, the whole or any part of the
rights hereby assigned to anyone other than the Lender, its successors or
assigns so long as this Security Agreement shall remain in effect. The Debtor
also covenants and agrees that it will not take any action or fail to take any
action or institute any proceedings the taking or omission of which might result
in the material alteration or impairment of this Security Agreement or any of
the material rights created by any of the Contracts or this Security Agreement.
Except as specified by a detailed notation corresponding to the applicable
Contract on Schedule A-2, the Debtor hereby further represents and warrants that
no consent or authorization of, filing with or other act by or in respect of any
Governmental Authority is required in connection with the execution, delivery,
performance, validity or enforceability of any of the Contracts by any party
thereto other than those which have been duly obtained, made or performed, are
in full force and effect and do not subject the scope of any such Contract to
any material adverse limitations, either specific or general in nature. The
right, title and interest of the Debtor in, to and under each Contract are not
subject to any defense, offset, counterclaim or claim which could reasonably be
expected to have a Material Adverse Effect, nor, as of the date of this Security
Agreement and to the best of the Debtor's knowledge, have any of the foregoing
been asserted or alleged against the Debtor as to any Contract. The Debtor has
delivered to the Lender a complete and correct copy of each Contract, including
all amendments, supplements and other modifications thereto. No amount payable
to the Debtor under or in connection with any Contract is evidenced by any
Instrument or Chattel Paper which has not been delivered to the Lender.
The Debtor agrees that, so long as this Security Agreement is in
effect, it will not, without the prior written consent of the Lender, amend,
modify or permit to be amended or modified any of the Contracts or waive or
permit to be waived any material provisions of any of the Contracts, or exercise
any right to terminate or cancel any of the Contracts or consent or agree to, or
suffer or permit, the termination thereof whether or not on account of any
default therein specified if any such amendment, modification or waiver,
termination or cancellation could have a Material Adverse Effect.
SECTION 6. Rights and Obligations Concerning Accounts and
Contracts.
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6(a) Anything herein to the contrary notwithstanding, the Debtor
shall remain liable under each of the Accounts and Contracts to observe and
perform all the conditions and obligations to be observed and performed by it
thereunder, all in accordance with the terms of any agreement giving rise to
each such Account and in accordance with and pursuant to the terms and
provisions of each such Contract. The Lender shall have no obligation or
liability under any Account (or any agreement giving rise thereto) or under any
Contract by reason of or arising out of this Security Agreement or the receipt
by the Lender of any payment relating to such Account or Contract pursuant
hereto, nor shall the Lender be obligated in any manner to perform any of the
obligations of the Debtor under or pursuant to any Account (or any agreement
giving rise thereto) or under or pursuant to any Contract, to make any payment,
to make any inquiry as to the nature or the sufficiency of any payment received
by it or as to the sufficiency of any performance by any party under any Account
(or any agreement giving rise thereto) or under any Contract, to present or file
any claim, to take any action to enforce any performance or to collect the
payment of any amounts which may have been assigned to it or to which it may be
entitled at any time or times.
6(b) The Debtor hereby agrees that no liability shall be asserted
or enforced against the Lender in the exercise of the rights and powers granted
to the Lender hereunder, all such liability being hereby expressly waived and
released by the Debtor. Without limiting the application of Section 11(a)
hereof, the Debtor hereby agrees to indemnify and hold the Lender harmless for
and against any and all liability, expense, cost, loss or damage which the
Lender may incur by reason of any act or omission of the Debtor under any of the
Contracts ("Losses"), except to such extent such Losses arise by reason of the
gross negligence or willful misconduct of the Lender. Should the Lender incur
any liability, expense, cost, loss, or damage, (i) under the Contracts for which
it is to be indemnified by the Debtor as aforesaid, or (ii) by reason of the
exercise of the Lender's rights hereunder, the amount thereof, including costs,
expenses and reasonable actual attorney's fees and expenses, shall be secured
hereby and shall be immediately due and payable by the Debtor to the Lender.
6(c) The Lender has the right to make test verifications of the
Accounts in any manner and through any medium that it reasonably considers
advisable, and the Debtor shall furnish all such assistance and information as
the Lender may require in connection therewith. At any time and from time to
time, upon the Lender's request and at the expense of the Debtor, the Debtor
shall cause independent public accountants or others satisfactory to the Lender
to furnish to the Lender reports showing reconciliations, aging and test
verifications of, and trial balances, for, the Accounts. The Lender may in its
own name or in the name of others communicate with account debtors on the
Accounts and parties to the Contracts to verify with them to its satisfaction
the existence, amount and terms of any Accounts or Contracts, provided that, so
long as no Event of Default has occurred and is continuing, the Lender agrees to
provide the Debtor notice prior to initiating such verification.
6(d) The Debtor shall promptly notify the Lender of, and provide
to the Lender copies of, any default notices under any of the Contracts.
SECTION 7. Special Provisions Concerning Patents and Trademarks.
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7(a) The Debtor represents and warrants that it is the true and
lawful exclusive owner of the entire and unencumbered right, title and interest
in and to each of the Trademarks listed on Schedule A-3 and the Patents listed
on Schedule A-4 attached hereto, free and clear of all liens and encumbrances
(including, without limitation, any covenant not to ▇▇▇ a third party); that the
Trademarks and Patents are subsisting, valid, enforceable, and have not been
adjudged invalid or unenforceable, in whole or in part; and that the Trademarks
and the Patents constitute all the registered trademarks and patents,
respectively, in the United States Patent and Trademark Office and
non-registered trademarks that the Debtor now owns or uses in connection with
its business.
7(b) The Debtor represents and warrants that it has made all
necessary filings and recordations to protect its interest in the Trademarks,
Patents, and its other intellectual property; that it has and will continue to
pay all required taxes, fees, and costs to maintain all of its rights in the
Trademarks, Patents, and its other intellectual property; and that it has
received no notice or claim that its use of any of the Trademarks, Patents, or
other intellectual property infringes the rights of any third party.
7(c) Prior to licensing or assigning any of the Trademarks,
Patents, or its other intellectual property, the Debtor will give the Lender
written notice of any such license or assignment plus a copy of the draft
license agreement or assignment, and, upon execution, a copy of any final
agreement or assignment.
7(d) The Debtor shall, promptly upon learning thereof, notify the
Lender in writing of the name and address of, and furnish such pertinent
information that may be available with respect to, any party who may be
infringing or otherwise violating any of the Debtor's rights in and to any
Trademarks, Patents, or other intellectual property or of any party who makes a
claim that the use of any of the Trademarks, Patents, or other intellectual
property otherwise violates any property of any nature of that party or any
third party. Unless the Debtor shall reasonably determine that such Trademark,
Patents, or other intellectual property is not of material economic value to the
Debtor, the Debtor further shall diligently prosecute any and all persons who
infringe any of its Trademarks, Patents, or other intellectual property to
recover any and all damages and take such other actions as the Debtor shall deem
appropriate under the circumstances to protect such Trademarks, Patents, or
other intellectual property. The Lender shall have the option, but not the
obligation, to participate in any such action at Debtor's expense and to
maintain suits against parties for infringement or misappropriation if Lender
believes the Debtor is not diligently and vigorously proceeding in such
action(s).
7(e) If any trademark or service ▇▇▇▇ registration or patent
registration is issued hereafter to the Debtor as a result of any application or
registration now or hereafter pending before the United States Patent and
Trademark Office or foreign equivalent thereof, the Debtor shall forthwith
execute and deliver a copy of the certificate of registration within thirty (30)
days of receipt of such certificate and a grant of security in such trademark,
service ▇▇▇▇ or patent to the Lender confirming the grant thereof hereunder, the
form of such confirmatory grant to be substantially the same as the form hereof.
7(f) The Debtor will perform all acts and execute all documents
including, without limitation, documents in form suitable for filing with the
United States Patent and
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Trademark Office, other governmental office, and any foreign equivalent thereof,
as reasonably requested by the Lender at any time to evidence, perfect,
maintain, record and enforce the Lender's interest in the Trademarks, Patents,
and the Debtor's other intellectual property or otherwise in furtherance of the
provisions of this Agreement. In the event of foreclosure hereunder upon all or
any part of the Collateral, the Debtor shall, and hereby does, constitute the
Lender as the Debtor's attorney-in-fact to transfer, in the Debtor's name, the
Trademarks (including all goodwill associated with the Trademarks), the Patents,
and the Debtor's other intellectual property to a third party capable, in the
Lender's judgment, of using and maintaining the nature and quality of the
Trademarks, the Patents, and the Debtor's other intellectual property. Such
power-of-attorney shall include, without limitation, the right to execute all
documents and to do all acts as the Lender considers necessary to effect any of
the foregoing, and all acts of such attorney are hereby ratified and confirmed;
such power being coupled with an interest which is irrevocable until the
Liabilities are paid in full.
7(g) Except to the extent that the Lender shall consent in
writing, the Debtor will, unless the Debtor shall reasonably determine that a
Trademark is not of material economic value to the Debtor, (i) continue to use
each Trademark in order to maintain each Trademark in full force free from any
claim of abandonment for non-use, (ii) employ each Trademark with the
appropriate notice of application or registration, (iii) not adopt or use any
▇▇▇▇ which is confusingly similar or a colorable imitation of any Trademark,
(iv) not use any Trademark except for the uses for which registration or
application for registration of such Trademark has been made, (v) not (and not
permit any licensee or sublicensee thereof, if any, to) do any act or knowingly
omit to do any act whereby any Trademark may be subject to dilution,
misappropriation, or invalidation, and (vi) ensure and warrant that the quality
of the goods and services bearing each applicable Trademark will be maintained
at not less than the quality level thereof as exists as of the date of this
Agreement, and in that regard, during normal business hours the Lender and its
representatives may inspect the Debtor's books, records, and facilities which
manufacture, inspect, or store products to ensure that quality of the applicable
goods and services are being maintained.
7(h) The Debtor shall notify the Lender immediately if it knows,
or has reason to know, of any reason that any application or registration
relating to any Trademark, Patent, or other intellectual property of the Debtor
may become abandoned or of any adverse determination or development (including,
without limitation, the institution of, or any such determination or development
in, any proceeding in the United States Patent and Trademark Office or any
court) regarding the Debtor's ownership of any Trademark, Patent, other
intellectual property, its right to register or use the same, or to keep and
maintain the same.
7(i) In no event shall the Debtor, either itself or through any
agent, employee, licensee or designee, file an application for the registration
of any Trademark, Patent, or other intellectual property with the United States
Patent and Trademark Office, other governmental office, or any similar office or
agency in any other country or any political subdivision thereof, unless it
promptly informs the Lender, and, upon request of the Lender, executes and
delivers any and all agreements, instruments, documents and papers as the Lender
may request to evidence the Lender's security interest in such Trademark,
Patent, or other intellectual property and the goodwill and general intangibles
of the Debtor relating thereto or represented thereby, and the Debtor hereby
constitutes the Lender its attorney-in-fact to execute and file all such
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writings for the foregoing purposes, including without limitation to modify this
Agreement by amending Schedule A-3 and/or Schedule A-4 (as the case may be) to
include any future Trademarks, Patents, and other intellectual property, all
acts of such attorney being hereby ratified and confirmed; such power being
coupled with an interest which is irrevocable until the Liabilities are paid in
full.
7(j) The Debtor will take all commercially reasonable steps,
including, without limitation, in any proceeding before the United States Patent
and Trademark Office, any other governmental office, or any other office or
agency in any other country or any political subdivision thereof, to maintain
and pursue each application (and to obtain the relevant registration) and to
maintain each registration of the Trademarks and Patents, except to the extent
permitted under Section 7(g), including but not limited to the appropriate and
timely payment of any required fees and the appropriate and timely filing of any
documents or declarations necessary to maintain and renew such Trademarks and
Patents which may be necessary or appropriate under applicable federal, state,
and foreign law.
7(k) Upon the occurrence and during the existence of an Event of
Default, the Lender may, by written notice to the Debtor, take any or all of the
following actions: (i) declare the entire right, title and interest of the
Debtor in and to each of the Trademarks, Patents, and other intellectual
property, together with all related rights and rights of protection to the same,
vested, in which event such rights, title and interest shall immediately vest,
in the Lender, in which case the Debtor agrees to execute assignments in form
and substance satisfactory to the Lender, of all its rights, title and interest
in and to the Trademarks, Patents, and other intellectual property to the
Lender; (ii) take and use or sell the Trademarks, Patents, and other
intellectual property and the goodwill of the Debtor's business symbolized by
the Trademarks and the right to carry on the business of such Debtor in
connection with which the Trademarks have been used; and (iii) direct the Debtor
to refrain, in which event the Debtor shall refrain, from using the Trademarks,
Patents, and its other intellectual property in any manner whatsoever, directly
or indirectly, and, if requested by the Lender, change the Debtor's corporate
name to eliminate therefrom any use of any Trademarks and execute such other and
further documents that the Lender may request to further confirm this and to
transfer ownership of the Trademarks, Patents, and other intellectual property,
and any pending trademark and patent application(s) for trademarks, patents, and
other intellectual property in the United States Patent and Trademark Office,
any other governmental office, and in any similar foreign office to the Lender.
After any Event of Default, the Debtor shall cooperate and use its best efforts
to obtain any consents, waivers, or agreements necessary to enable the Lender to
exercise its rights and remedies with respect to any Trademark, Patent, and
other intellectual property of the Debtor.
SECTION 8. Covenants of Debtor.
In addition to the Debtor's covenants contained in the Credit
Agreement, the Debtor covenants that:
8(a) Subject to Section 3(e) and Section 3(f) hereof, the
Collateral is and will be located at the Debtor's chief executive office and
such other places of business and Permitted Inventory Locations as indicated on
Schedule B attached hereto. The Debtor's records of the Collateral will be
located at the Debtor's chief executive office. The chief executive office of
the
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11
Debtor is located at the address shown on Schedule B attached hereto. The Debtor
will not move its chief executive office, the location of the Collateral or any
Records Office (as defined below) except to such new location as the Debtor may
establish in accordance with the last sentence of this Section 8(a) and with
respect to Inventory, to Permitted Inventory Locations. The originals of all
documents and all electronically stored data and information evidencing all
Accounts and Contracts of the Debtor and the only original books of account and
records of the Debtor relating thereto are, and will continue to be, kept at its
chief executive office shown on Schedule B attached hereto (each, a "Records
Office"), or at such new Records Office as the Debtor may establish in
accordance with the last sentence of this Section 8(a). All Accounts, Contracts
and records of the Debtor are, and will continue to be, maintained at, and
controlled and directed (including, without limitation, for general accounting
purposes) from, such Records Office location shown above, or such new location
as the Debtor may establish in accordance with the last sentence of this Section
8(a). The Debtor shall not establish a new location for its chief executive
office, the location of the Collateral or any Records Office until (i) it shall
have given to the Lender not less than 45 days' prior written notice of its
intention so to do, clearly describing such new location and providing such
other information in connection therewith as the Lender may reasonably request,
and (ii) with respect to such new location, it shall have taken all action,
satisfactory to the Lender, to maintain the security interest of the Lender in
the Collateral intended to be granted hereby at all times fully perfected and in
full force and effect.
8(b) The Collateral used or useful in its business, in
whomsoever's possession they may be, shall be kept in good repair, working order
and condition, and that from time to time there will be made to such Collateral
all needful and proper repairs, renewals, replacements, extensions, additions,
betterments and improvements thereto, to the extent and in the manner customary
for companies in similar lines of business under similar circumstances. The
Debtor will not encumber, sell, erase, transfer, assign, abandon or otherwise
dispose of the Collateral except for: (i) collection, discharge, discount,
compromise or expiration of the Accounts, Chattel Paper, Instruments or General
Intangibles in the ordinary course of the Debtor's business, (ii) sale or
transfer of Inventory in the ordinary course of business, (iii) dispositions of
items of Equipment no longer needed by the Debtor in the ordinary course of
business, (iv) Liens as permitted under the Credit Agreement and (v) trade-ins,
replacements or exchanges of items of Equipment for other items of Equipment to
the extent the same shall promptly be replaced by Equipment having an equal or
greater value (in excess of purchase money liens on such items) and useful in
the Debtor's business. The inclusion of "products" and "proceeds" of the
Collateral under the security interest granted herein shall not be deemed a
consent by the Lender to any sale or other disposition of the Collateral except
as expressly permitted herein or in the Credit Agreement.
8(c) The Debtor will have and maintain insurance at its expense
as required of the Company pursuant to Section 6.04 of the Credit Agreement. The
Lender is authorized by the Debtor to act as its attorney in collecting,
adjusting, settling or cancelling such insurance and endorsing any drafts drawn
by insurers. The Lender may apply any insurance proceeds received by it to the
Liabilities, whether due or not; provided, however, that the Lender will hold
such proceeds as a special deposit for use by the Debtor in replacing any
damaged Equipment which gave rise to such proceeds, so long as the Debtor is
taking steps to replace such Equipment with due diligence and in good faith and
so long as no Event of Default has occurred and is continuing hereunder. The
Debtor will immediately notify the Lender of any damage to or loss of the
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12
Collateral in excess of $50,000. Not later than the expiration date of each
insurance policy then in effect, the Debtor shall deliver to the Lender a
certificate of insurance certifying as to (i) the extension of such policy or
the issuance of a renewal policy therefor, describing the same in reasonable
detail satisfactory to the Lender and (ii) the payment in full of the portion of
the premium therefor then due and payable (or accompanied by other proof of such
payment satisfactory to the Lender). The Debtor shall be required forthwith to
notify the Lender if the Debtor shall determine at any time not to, or at any
time be unable to, extend or renew any such insurance policy then in effect.
8(d) The Debtor will use the Collateral for business purposes and
not for personal, family, household or farming purposes and not in violation of
any statute or ordinance.
8(e) The Debtor will pay promptly when due all taxes,
contributions, charges or levies and assessments upon the Collateral owned by
the Debtor or upon its use or sale (other than those the amount or validity of
which is currently being contested in good faith by appropriate proceeding and
with respect to which appropriate reserves are maintained on the books of the
Debtor in accordance with GAAP). At its option the Lender may discharge taxes,
liens or other encumbrances at any time levied against or placed on the
Collateral which have not been stayed as to execution and contested with due
diligence in appropriate legal proceedings, and the Lender may pay for insurance
on the Collateral and maintenance and preservation of the Collateral if the
Debtor fails to do so. The Debtor shall reimburse the Lender on demand for any
such expense incurred by the Lender pursuant to the foregoing authorization,
together with interest thereon, from the date paid by the Lender until payment
in full by the Debtor, at the per annum rate of the Base Rate plus four percent
(4%).
8(f) The Debtor will at all times and in all material respects
keep accurate and complete records of the Collateral. Subject to such notice
required pursuant to the Credit Agreement (if any), the Lender, or any of its
agents, shall have the right (in addition to the rights granted to the Lender
pursuant to Section 6(c) hereof) to call at the Debtor's place or places of
business during normal business hours, at intervals to be determined by the
Lender, to examine and inspect the Collateral and to inspect, audit, make test
verifications and otherwise check and make extracts from the books, records,
journals, orders, receipts, correspondence and other data relating to the
Collateral or to any other transactions between the parties hereto.
8(g) The Debtor agrees to stamp its books and records pertaining
to Accounts, Contracts, Chattel Paper, Instruments, Documents, Trademarks and
General Intangibles to evidence the Lender's security interest therein in form
satisfactory to the Lender immediately upon the Lender's written demand.
8(h) The Debtor will obtain the consent of any Governmental
Authority or other Person to the assignment hereunder of any of the Collateral
if such consent may be required by the terms of any contract or statute.
8(i) If any action or proceeding shall be commenced, other than
any action to collect the Liabilities, to which action or proceeding the Lender
or any Lender is made a party and in which it becomes necessary to defend or
uphold the Lender's security interest hereunder, all costs incurred by the
Lender for the expenses of such litigation (including reasonable actual
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13
attorney fees and expenses) shall be deemed part of the Liabilities secured
hereby, which the Debtor agrees to pay or cause to be paid.
8(j) The Debtor agrees that if any warehouse receipt or receipt
in the nature of a warehouse receipt is issued with respect to any of its
Inventory, such warehouse receipt or receipt in the nature thereof shall not be
"negotiable" (as such term is used in Section 7-104 of the UCC).
8(k) The Debtor will, at its own expense, make, execute, endorse,
acknowledge, file and/or deliver to the Lender from time to time such lists,
descriptions and designations of its Collateral, warehouse receipts, receipts in
the nature of warehouse receipts, bills of lading, documents of title, vouchers,
invoices, schedules, confirmatory assignments, conveyances, financing
statements, transfer endorsements, powers of attorney, certificates, reports and
other assurances or instruments and take such further steps relating to the
Collateral and other property or rights covered by the security interest hereby
granted, which the Lender deems appropriate or advisable to perfect, preserve or
protect its security interest in the Collateral consistent with the terms
hereunder, and the Debtor hereby authorizes the Lender to execute and file at
any time and from time to time one or more financing statements or copies
thereof or of this Security Agreement with respect to the Collateral signed only
by the Lender.
8(l) If the Debtor is not the owner of any premises where any
Equipment is located, the Debtor will use its reasonable best efforts to furnish
such consents and waivers executed by the owners of such premises as the Lender
shall request.
SECTION 9. Events of Default.
9(a) An Event of Default ("Event of Default") shall have occurred
under this Agreement upon (i) the failure by the Debtor to pay when due any
Liabilities, whether by acceleration or otherwise, (ii) the occurrence of any
event, condition or act which is defined or described as an Event of Default in
any Loan Document, or (iii) the occurrence of any event, condition or act which
pursuant to the terms of any Loan Document gives the Lender, for the benefit of
the Lender, the right to accelerate the payment of any Liabilities, regardless
of whether the Lender exercises such right.
9(b) Upon the occurrence and during the existence of an Event of
Default, the Lender shall have all of the rights, powers and remedies set forth
in the Credit Agreement, the Notes, this Agreement, the other Loan Documents and
any other instrument or other evidence of any of the Liabilities secured hereby,
together with the rights and remedies of a secured party under the Uniform
Commercial Code of the jurisdictions where the Collateral is located, and,
without limiting the foregoing, the Lender may:
(i) personally, or by agents or attorneys,
immediately retake possession of the Collateral or any part
thereof, from the Debtor or any other Person who then has
possession of any part thereof with or without notice or process
of law, and for that purpose may enter upon the Debtor's premises
where any of the Collateral is located and remove the same and
use in connection with
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14
such removal any and all services, supplies, aids and other
facilities of the Debtor; and
(ii) instruct the obligor or obligors on any
agreement, instrument or other obligation (including, without
limitation, the Accounts and the Contracts) constituting the
Collateral to make any payment required by the terms of such
instrument or agreement directly to the Lender; and
(iii) withdraw all monies, securities and
instruments in the Company Account or any other account for
application to the Liabilities; and
(iv) sell or otherwise liquidate, or direct the
Debtor to sell or otherwise liquidate, any or all investments
made in whole or in part with the Collateral or any part thereof,
and take possession of the proceeds of any such sale or
liquidation; and
(v) take possession of the Collateral or any part
thereof, by directing the Debtor in writing to deliver the same
to the Lender at any place or places designated by the Lender, in
which event the Debtor shall at its own expense
(A) forthwith cause the same to be moved to
the place or places so designated by the Lender and there
delivered to the Lender,
(B) store and keep any Collateral so
delivered to the Lender at such place or places pending
further action by the Lender as provided in Section 9(c)
hereof, and
(C) while the Collateral shall be so stored
and kept, provide such guards and maintenance services as
shall be necessary to protect the same and to preserve and
maintain them in good condition;
it being understood that the Debtor's obligation so to deliver
the Collateral is of the essence of this Agreement and that,
accordingly, upon application to a court of equity having
jurisdiction, the Lender shall be entitled to a decree requiring
specific performance by the Debtor of said obligation.
9(c) Any Collateral repossessed by the Lender under or pursuant
to Section 7(k) or 9(b) and any other Collateral whether or not so repossessed
by the Lender, may be sold, leased or otherwise disposed of under one or more
contracts or as an entirety, and without the necessity of gathering at the place
of sale the property to be sold, and in general in such manner, at such time or
times, at such place or places and on such terms as the Lender may, in
compliance with any mandatory requirements of applicable law, determine to be
commercially
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15
reasonable. Any of the Collateral may be sold, leased or otherwise disposed of,
in the condition in which the same existed when taken by the Lender or after any
overhaul or repair which the Lender shall determine to be commercially
reasonable at a public or private sale or proceeding, or otherwise, by one or
more contracts, in one or more parcels, at the same or different times, for cash
and/or credit and upon any terms, at such places and times and to such persons
as the Lender deems best, and for that purpose the Lender may enter peaceably
any premises on which the Collateral or any part thereof may be situated and
remove the same therefrom and the Debtor will not resist or interfere with such
action. If an Event of Default shall have occurred and be continuing, the Lender
may require the Debtor to assemble and/or remove the Collateral and make it
available to the Lender at a place to be designated by the Lender which is
reasonably convenient to both parties. The Debtor hereby agrees that its address
and the place or places of location of the Collateral are places reasonably
convenient to it to assemble the Collateral. Unless the Collateral is perishable
or threatens to decline speedily in value or is of a type customarily sold on a
recognized market, if an applicable statute requires reasonable notice of sale
or other disposition, the Lender will send to the Debtor reasonable notice of
the time and place of any public sale or reasonable notice of the time after
which any private sale or any other disposition thereof is to be made. The
Debtor agrees that requirement of sending reasonable notice shall be met if such
notice is mailed, postage prepaid, to the Debtor at least ten (10) days before
the time of the sale or disposition. If an Event of Default shall have occurred
and be continuing, the Lender may at any time in its discretion transfer any
property constituting Collateral into its own name or that of its nominee and
receive the income thereon and hold the same as security for the Liabilities. To
the extent permitted by any law, the Lender may itself bid for and purchase the
Collateral or any item thereof offered for sale in accordance with this Section
without accountability to the Company (except to the extent of surplus money
received as provided in Section 9(f)).
9(d) The Debtor recognizes that the Collateral may not be readily
marketable and may not be marketable at all if an Event of Default has occurred.
Therefore, in order to enable the Lender to use such means as it may determine
necessary or advisable to realize upon the Collateral from time to time, the
Debtor consents that the Lender may use whatever means it may reasonably
consider necessary or advisable to sell any or all of the Collateral at any time
or times after default thereunder, including but not restricted to the giving of
an option to purchase any or all of the Collateral to any party and the
extending of credit to any purchaser of such Collateral. The Lender may sell any
or all of the Collateral or commit itself to sale without limiting the amount
sold to the amount of indebtedness secured thereby, plus costs and expenses of
collection.
9(e) The Lender may appropriate, set off and apply to the payment
of the Liabilities, any Collateral in or coming into the possession of the
Lender or its agents, without notice to the Debtor and in such manner as the
Lender may in its discretion determine.
9(f) The proceeds of any Collateral obtained pursuant to Section
2(a), 7(k) or 9(b) or disposed of pursuant to Section 9(c) shall be applied as
follows:
(i) to the payment of any and all expenses and fees
(including reasonable actual attorneys' fees and expenses)
incurred by the Lender in obtaining, taking possession of,
removing,
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insuring, repairing, storing and disposing of Collateral and any
and all amounts incurred by the Lender in connection therewith;
(ii) next, any surplus then remaining to the
payment of the Liabilities in such order as the Lender may
determine (subject to any statutory requirements), and the Debtor
shall remain liable for, and shall pay on demand, any deficiency;
and
(iii) after payment in full of all amounts due
under subparagraphs 9(f)(i) and 9(f)(ii) above, any surplus then
remaining shall be paid to the Debtor, subject, however, to the
rights of the holder of any then existing Lien of which the
Lender has actual notice (without investigation).
9(g) Each and every right, power and remedy hereby specifically
given to the Lender shall be in addition to every other right, power and remedy
specifically given under this Agreement or under the other Security Documents or
now or hereafter existing at law or in equity, or by statute and each and every
right, power and remedy whether specifically herein given or otherwise existing
may be exercised from time to time or simultaneously and as often and in such
order as may be deemed expedient by the Lender. All such rights, powers and
remedies shall be cumulative and the exercise or the beginning of exercise of
one shall not be deemed a waiver of the right to exercise of any other or
others. The Lender may exercise its rights with respect to Collateral without
resorting to or regard to other Collateral or sources of reimbursement for any
of the Liabilities. No delay or omission of the Lender in the exercise of any
such right, power or remedy and no renewal or extension of any of the
Liabilities shall impair any such right, power or remedy or shall be construed
to be a waiver of any Default or Event of Default or an acquiescence therein. In
the event that the Lender shall bring any suit to enforce any of its rights
hereunder and shall be entitled to judgment, then in such suit the Lender may
recover reasonable expenses, including attorneys' fees, and the amounts thereof
shall be included in such judgment.
9(h) In case the Lender shall have instituted any proceeding to
enforce any right, power or remedy under this Agreement by foreclosure, sale,
entry or otherwise, and such proceeding shall have been discontinued or
abandoned for any reason or shall have been determined adversely to the Lender,
then and in every such case the Debtor, the Lender and each holder of any of the
obligations shall be restored to their former positions and rights hereunder
with respect to the Collateral subject to the security interest created under
this Agreement, and all rights, remedies and powers of the Lender shall continue
as if no such proceeding had been instituted.
SECTION 10. Waivers.
10(a) Except as otherwise provided in this Agreement, THE DEBTOR
HEREBY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, NOTICE OR JUDICIAL
HEARING IN CONNECTION WITH THE LENDER'S TAKING POSSESSION OR THE LENDER'S
DISPOSITION OF ANY OF THE COLLATERAL, INCLUDING, WITHOUT LIMITATION, ANY AND ALL
PRIOR NOTICE AND
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HEARING FOR ANY PREJUDGMENT REMEDY OR REMEDIES AND ANY SUCH RIGHT WHICH THE
DEBTOR WOULD OTHERWISE HAVE UNDER THE CONSTITUTION OR ANY STATUTE OF THE UNITED
STATES OR OF ANY STATE, and the Debtor hereby further waives:
(i) all damages occasioned by such taking of
possession except any damages which are the direct result of the
Lender's gross negligence or willful misconduct;
(ii) all other requirements as to the time, place
and terms of sale or other requirements with respect to the
enforcement of the Lender's rights hereunder; and
(iii) all rights of redemption, appraisement,
valuation, stay, extension or moratorium now or hereafter in
force under any applicable law in order to prevent or delay the
enforcement of this Agreement or the absolute sale of the
Collateral or any portion thereof, and the Debtor, for itself and
all who may claim under insofar as it or they, now or hereafter,
lawfully may, hereby waives the benefit of all such laws.
Any sale of, or the grant of options to purchase, or any other realization upon,
any Collateral shall operate to divest all right, title, interest, claim and
demand, either at law or in equity, of the Debtor therein and thereto, and shall
be a perpetual bar both at law and in equity against the Debtor and against any
and all Persons claiming or attempting to claim the Collateral so sold, optioned
or realized upon, or any part thereof, from, through and under the Debtor.
10(b) The Debtor waives demand, notice, protest, notice of
acceptance of this Agreement, notice of loans made, credit extended, Collateral
received or delivered or other action taken in reliance hereon and all other
demands and notices of any description except as hereinbefore provided. With
respect to Liabilities and Collateral, the Debtor assents to any extension or
postponement of the time of payment or any other indulgence, to any
substitution, exchange or release of Collateral, to the addition or release of
any party or person primarily or secondarily liable, to the acceptance of
partial payments thereon and the settlement, compromising or adjusting of any
thereof, all in such time or times as the Lender may deem advisable. The Debtor
waives all rules of suretyship law and any other law whatsoever which is legally
permitted to be waived and which would, if not waived, impair the Lender's
enforcement of its security interests hereunder. By way of example, but not in
limitation of the Lender's rights under this Security Agreement, subject to the
terms and conditions of this Security Agreement and the Credit Agreement, the
Lender may do any of the following without notice to the Debtor (unless such
notice or other action is otherwise required pursuant to any of the Loan
Documents to which the Debtor is a party):
(i) change, renew or extend the time for payment of all
or any part of the Liabilities;
(ii) change any provision with respect to all or any part
of the Liabilities;
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(iii) release, surrender, sell or otherwise dispose
of any money or property which is in the Lender's possession as
collateral security for the Liabilities;
(iv) fail to perfect a security interest in any
property which is pledged or mortgaged as security for payment of
the Liabilities;
(v) release or discharge any party liable to the
Lender in whole or in part for the Liabilities, or accept any
additional parties or guarantors;
(vi) delay or refrain from exercising any of the
Lender's rights;
(vii) settle or compromise any and all claims
pertaining to the Liabilities and the Collateral; and
(viii) apply any money or property of the Debtor or
that of any other party liable to the Lender for any part of the
Liabilities in any order the Debtor chooses.
10(c) The Lender shall have no duty as to the collection or
protection of Collateral not in the Lender's possession, and the Lender's duty
with reference to Collateral in its possession shall be to use reasonable care
in the custody and preservation of such Collateral, but such duty shall not
require the Lender to do any of the following (although the Lender is authorized
to reasonably undertake any such action if the Lender deems such action
appropriate):
(i) exercise any rights under the Collateral or
act upon any request made by the Debtor;
(ii) collect any sums due on the Collateral;
(iii) notify the Debtor of any maturities or other
similar matters concerning the Collateral; or
(iv) preserve or protect the Debtor's rights in the
Collateral or take any action to protect any of the Collateral
against claims of others or to preserve rights against prior
parties.
SECTION 11. Indemnity and Costs and Expenses.
11(a) The Debtor agrees to pay, or reimburse the Lender for any
and all fees, costs and expenses of whatever kind or nature incurred in
connection with (i) the enforcement or attempted enforcement of the Lender's
rights under this Security Agreement, and (ii) the creation, preservation or
protection of the Lender's Liens on, and security interest in, the Collateral,
including, without limitation, all fees and taxes in connection with the
recording or filing of instruments and documents in public offices, payment or
discharge of any taxes or Liens upon or in respect of the Collateral, premiums
for insurance with respect to the Collateral and all
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other fees, costs and expenses in connection with protecting, maintaining or
preserving the Collateral and the Lender's interest therein, whether through
judicial proceedings or otherwise, or in defending or prosecuting any actions,
suits or proceedings arising out of or relating to the Collateral.
11(b) Without limiting the application of Section 11(a) hereof,
the Debtor agrees to pay, indemnify and hold the Lender (herein, the
"Indemnitee") harmless from and against any loss, costs, damages and expenses
which any such Indemnitee may suffer, expend or incur in consequence of or
growing out of any misrepresentation by the Debtor in this Agreement or any of
the other Loan Documents or in any statement or writing contemplated by or made
or delivered pursuant to or in connection with this Agreement or any of the
other Security Documents or any breach by the Debtor of this Agreement or any of
the other Loan Documents.
11(c) If and to the extent that the obligations of the Debtor
under this Section 11 are unenforceable for any reason, the Debtor hereby agrees
to make the maximum contribution to the payment and satisfaction of such
obligations which is permissible under applicable law.
11(d) Any amounts paid by any Indemnitee as to which such
Indemnitee has the right to reimbursement shall constitute Liabilities secured
by the Collateral. The indemnity obligations of the Debtor contained in this
Section 11 shall continue in full force and effect notwithstanding the full
payment of all Liabilities and notwithstanding the discharge thereof.
SECTION 12. [Intentionally Omitted]
SECTION 13. Successors and Assigns. The covenants,
representations, warranties and agreements herein set forth shall be binding
upon the Debtor, its legal representatives, successors and assigns, and shall
inure to the benefit of the Lender and its successors and assigns. The successor
of the Lender hereunder shall forthwith become vested with and shall be entitled
to exercise all the powers and rights given by this Agreement to the Lender, as
if said successor were originally named as secured party herein.
SECTION 14. Lender May Perform. If Debtor fails to perform any
agreement contained herein, the Lender may itself perform, or cause performance
of, such agreement, and the expenses of the Lender incurred in connection
therewith shall be payable by Debtor on demand.
SECTION 15. No Waiver; Remedies. No failure on the part of the
Lender to exercise, and no delay in exercising, and no course of dealing with
respect to, any right, power, or remedy under this Agreement shall operate as a
waiver thereof; nor shall any single or partial exercise of any right hereunder
and under any of the other Loan Documents preclude any other or further exercise
thereof or the exercise of any other right, power, or privilege. The remedies
provided herein and in the other Loan Documents are cumulative and not exclusive
of any remedies provided by law.
SECTION 16. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT
REGARD TO ANY CHOICE OF LAW RULES WHICH WOULD REQUIRE THE APPLICATION OF THE
LAWS OF ANY OTHER
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JURISDICTION EXCEPT TO THE EXTENT THAT THE LAWS OF THE JURISDICTIONS WHERE THE
COLLATERAL IS LOCATED APPLY TO THE CREATION, ATTACHMENT, PERFECTION, PRIORITY
AND ENFORCEMENT OF LIENS ON AND SECURITY INTERESTS IN THE COLLATERAL.
SECTION 17. Severability. If any provision hereof shall be held
to be invalid, illegal or unenforceable in any jurisdiction, then, to the
fullest extent permitted by law, (i) the other provisions hereof shall remain in
full force and effect in such jurisdiction, and (ii) the invalidity or
unenforceability of any provision hereof in any jurisdiction shall not affect
the validity or enforceability of such provision in any other jurisdiction.
SECTION 18. Amendments. None of the terms or provisions of this
Security Agreement may be waived, altered, modified, or amended except by an
agreement in writing signed by the Lender and the Debtor.
SECTION 19. Notices. All notices, statements, requests and
demands herein provided for shall be in writing and shall be deemed to have been
given or made when delivered to the respective addresses and in the manner
specified in Section 9.01 of the Credit Agreement.
SECTION 20. Counterparts. This Agreement may be executed in any
number of counterparts, all of which, when taken together shall constitute one
and the same instrument, and any party hereto may execute this Agreement by
signing any such counterpart.
SECTION 21. Termination. When all Liabilities shall have been
paid in full and the Guarantee has expired or been terminated, this Agreement
shall terminate, and the Lender shall cause to be assigned, transferred and
delivered, against receipt but without any recourse, warranty or representation
whatsoever, any remaining Collateral and money received in respect thereof, to
or for the account of the Debtor. The Lender shall also execute and deliver to
the Debtor upon such termination such UCC termination statements and such other
documentation as shall be reasonably requested as necessary by the Debtor to
effect the termination and release of the Liens on the Collateral, all at the
expense of the Debtor.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their respective duly authorized officers as of the date and
year first above written.
CAMINUS LLC
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇
Title: Chief Financial Officer
FLEET BANK, N.A.,
as Lender
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
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SCHEDULE A-1
to
Security Agreement and UCC-1 Financing Statement
in favor of
Fleet Bank, N.A.
as the Lender
granted by Caminus LLC
as Debtor
(i) All equipment (as defined in the UCC) in all of its forms, wherever located,
now existing or hereafter acquired, including, without limitation, all machinery
and other goods, furniture, furnishings, trade fixtures, office supplies, motor
vehicles, tools, computers (including hardware and software), other office
equipment, all equipment and other goods and property more particularly
described in capital leases and any subleases or assignments thereof, and all
other tangible personal property used in connection with or related to the
operation of the Debtor's business, together with all parts, fittings, special
tools, alterations, attachments, additions, accessories, improvements,
substitutions, replacements and accessions thereto, and all proceeds and
products arising therefrom (the "Equipment");
(ii) All inventory (as defined in the UCC) and merchandise in all of its forms,
wherever located, now existing or hereafter acquired including, but not limited
to, (i) all raw materials and work in process therefor, finished goods thereof,
and materials used or consumed in the manufacture or production thereof, (ii)
goods in which the Debtor has an interest in mass or a joint or other interest
or right of any kind (including, without limitation, goods in which the Debtor
has an interest or right as consignee), and (iii) goods which are returned to or
repossessed by the Debtor, and all accessions thereto and products and proceeds
thereof and general intangibles arising therefrom (the "Inventory");
(iii) All of the Debtor's accounts (as defined in the UCC), whether now existing
or hereafter acquired, including without limitation any and all rights evidenced
by an account, note, contract, security agreement, chattel paper, or other
evidence of indebtedness or security, together with (a) all security pledged,
assigned, hypothecated or granted to or held by the Company to secure the
foregoing, (b) all of the Company's right, title and interest in and to any
goods, the sale of which gave rise thereto, (c) all guarantees, endorsements and
indemnifications on, or of, any of the foregoing, (d) all powers of attorney for
the execution of any evidence of indebtedness or security or other writing in
connection therewith, (e) all books, records, ledger cards, and invoices
relating thereto, (f) all evidences of the filing of financing statements and
other statements and the registration of other instruments in connection
therewith and amendments thereto, notices to other creditors or secured parties,
and certificates from filing or other registration officers, (g) all credit
information, reports and memoranda relating thereto, and (h) all other writings
related in any way to the foregoing, and all proceeds and general intangibles
arising therefrom (the "Accounts");
(iv) All of the contracts and agreements of the Debtor listed on Schedule A-2
attached hereto, together with all schedules, exhibits, documents and
certificates referred to therein, as amended,
23
supplemented or otherwise modified from time to time, including without
limitation, all rights of the Debtor to (a) receive moneys due and to become due
to it thereunder or in connection therewith, (b) damages arising out of, or for,
breach or default in respect thereof, (c) compel performance of the terms
thereof, (d) benefits and claims under all warranty and indemnity provisions
contained therein, (e) all insurance payments provided therein and (f) any other
moneys due and to become due to the Debtor thereunder or in connection therewith
(the "Contracts");
(v) All chattel paper (as defined in the UCC), now owned or hereafter acquired,
and all proceeds and general intangibles arising therefrom (the "Chattel
Paper");
(vi) All instruments (as defined in the UCC) of the Debtor, now owned or
hereafter acquired, and all proceeds and general intangibles arising therefrom
(the "Instruments");
(vii) All of the Debtor's now existing and hereafter acquired general
intangibles (as defined in the UCC), including without limitation all of the
Debtor's rights and interest in any contracts, franchises, licenses, leases,
easements, customer lists, methods of doing business, copyrights (including,
without limitation, the Zai*Net Foreign Exchange (fx) Trading System User Guide,
with a Registration Number of TX - 2382109), the Trademarks, the Patents,
non-compete agreements, distribution agreements, and all other general
intangibles, and intellectual, proprietary and intangible property and the
proceeds of any of the foregoing (the "General Intangibles");
(viii) All of the Debtor's right, title and interest in, to and under any now
existing or hereafter created or acquired United States (or individual State
thereof) and foreign servicemarks and trademarks (including without limitation
the trademarks listed on Schedule A-3 attached hereto), trade names, trade
styles, logos and/or designs, and trade dress, including, without limitation,
the goodwill of the business to which each of the foregoing relates, all
registrations, recordings, and applications with respect to the foregoing, all
affidavits of use and incontestability, all renewals thereof, all licenses,
royalties, income, claims, damages, payments, and proceeds of suit now or
hereafter payable or due for past or future infringements of any of the
foregoing; the right (but not the obligation) to ▇▇▇ for past, present, and
future infringements of any of the foregoing; all rights corresponding to the
foregoing throughout the world; and all proceeds and general intangibles arising
therefrom (the "Trademarks");
(ix) All of the Debtor's right, title and interest in, to and under any now
existing or hereafter created or acquired United States and foreign patents,
patent applications, and patentable inventions, including, but not limited to,
each patent and patent application referred to in Schedule A-4 attached hereto;
all reissues, divisions, continuations, continuations-in-part, extensions,
renewals and reexaminations of any of the foregoing; all licenses, royalties,
income, claims, damages, payments, and proceeds of suit now or hereafter payable
or due for past or future infringements of any of the foregoing; the right (but
not the obligation) to ▇▇▇ for past, present, and future infringements of any of
the foregoing; all rights corresponding to the foregoing throughout the world;
and all proceeds and general intangibles arising therefrom (the "Patents");
- 2 -
24
(x) All of the Debtor's books, records and other property relating to or
referring to any of the foregoing, including without limitation, all books,
records, ledger cards and other property and general intangibles at any time
evidencing or relating to the Accounts, Inventory, Instruments, Chattel Paper,
Documents, Trademarks, Patents and General Intangibles, and the proceeds thereof
(the "Records");
(xi) All insurance policies held by the Debtor or naming the Debtor as loss
payee (including, without limitation, casualty insurance, key-man life
insurance, property insurance and business interruption insurance), and all such
insurance policies entered into after the date hereof, and all proceeds and
general intangibles arising therefrom (the "Insurance");
(xii) All documents of title (as defined in the UCC) or other receipts of the
Debtor covering, evidencing or representing any Inventory or Equipment wherever
located, now owned or hereafter acquired, and all proceeds and general
intangibles arising therefrom (the "Documents");
(xiii) All of the Debtor's rights as a seller of goods under Article 2 of the
UCC or otherwise with respect to Inventory, and all goods represented by or
securing any of the Accounts, all of the Debtor's rights therein, including,
without limitation, rights as an unpaid vendor or lienor and including rights of
stoppage in transit, replevin and reclamation ("Other Rights");
(xiv) All guarantees, mortgages or security interests on real or personal
property, leases or other agreements or property now or hereafter securing or
relating to any of the items referred to above in favor of the Debtor, or now or
hereafter acquired for the purpose of securing and enforcing any of such items
in favor of the Debtor, and the proceeds thereof (the "Debtor's Security"); and
(xv) All sums at any time standing to Debtor's credit on the books of Lenders
and all moneys, securities, and other property of the Debtor at any time in the
Lender's possession, including, without limitation, all monies, securities and
instruments deposited or required to be deposited in the Company Account and any
other account, whether now existing or hereafter from time to time acquired, and
all proceeds and general intangibles arising therefrom ("Other Property").
- 3 -
25
SCHEDULE A-2
to
Security Agreement and UCC-1 Financing Statement
in favor of
Fleet Bank, N.A.
as the Lender
granted by Caminus LLC
as Debtor
List of Contracts
Limited Liability Company Agreement of Debtor dated as of May 12, 1998,
including Appendix B attached thereto.
Service Agreement dated September 1, 1998 with ▇▇▇▇▇▇▇▇ ▇.▇. ▇▇▇▇▇.
Employment Agreement dated October 21, 1998 with ▇▇▇▇▇ ▇▇▇▇▇▇.
Service Agreements dated May 12, 1998 between Caminus Energy Ltd. and each of
▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇, Dr. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and Dr. Serena K. B. Hesmondhalgh.
Employment Agreement dated May 12, 1998 with ▇▇▇▇▇ ▇▇▇▇▇▇▇.
Employment Agreement dated May 12, 1998 with ▇▇▇▇▇ ▇▇▇▇▇.
Employment Agreement dated November 13, 1998 with ▇▇▇▇▇▇ ▇▇▇.
Letter agreement dated November 13, 1998 with ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇.
Employee Equity Ownership Agreement dated November 13, 1998 with ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇.
Letter agreement dated November 13, 1998 with ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇.
Employee Equity Ownership Agreement dated November 13, 1998 with ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇.
Purchase and Option Agreement dated as of December 31, 1998 with SS&C
Technologies, Inc. (as amended by letter agreement dated March 29, 1999).
Distributor Agreements dated as of May 12, 1998 between SS&C Technologies, Inc.
and the Debtor, as amended by letter amendment dated March 29, 1999.
Purchase Agreement dated May 12, 1998 among Zai*Net Software, Inc. GFI Caminus
LLC (now the Debtor) and the other parties thereto (together with ancillary
documents).
Stock Purchase Agreement dated May 12, 1998 among GFI Caminus LLC (now the
Debtor), Caminus Energy Ltd. and the other parties thereto (together with
ancillary documents).
26
Purchase Agreement dated November 13, 1998 between ZAI*NET Software, L.P. (now
the Debtor) and ▇▇▇▇▇▇ ▇▇▇, dba Positron Energy Consulting (together with
ancillary documents).
Conversion Agreement and Amendment of Purchase Agreement dated December 31, 1998
among Caminus Energy Ventures LLC (now the Debtor), Rooney Software, L.L.C. and
the other parties thereto.
- 2 -
27
SCHEDULE A-3
to
Security Agreement and UCC-1 Financing Statement
in favor of
Fleet Bank, N.A.
as the Lender
granted by Caminus LLC
as Debtor
Description of Trademarks
REG. NO. DESCRIPTION TITLE HOLDER ISSUED
-------- ----------- ------------ ------
1. 2,094,226 Zai*Net Design Only Caminus LLC 9/9/97
2. 2,076,995 Zai*Net and Design Caminus LLC 7/8/97
3. 1,782,466 Zai*Net Caminus LLC 7/20/93
4. pending Weather Delta Caminus LLC pending
28
SCHEDULE A-4
to
Security Agreement and UCC-1 Financing Statement
in favor of
Fleet Bank, N.A.
as the Lender
granted by Caminus LLC
as Debtor
Description of Patents
PATENT NO. DESCRIPTION TITLE HOLDER EXPIRATION
---------- ----------- ------------ ----------
None.
29
Schedule B
to
Security Agreement
in favor of
Fleet Bank, N.A.
as the Lender
granted Caminus LLC
as Debtor
Principal Place of Business of Debtor:
1. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
2. ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Chief Executive Office of Debtor (if different
from the Principal Place of Business):
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
All Other Places of Business of Debtor:
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
All Locations of Collateral (including Permitted Inventory Locations):
1. See above.
2. ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇ ▇▇▇
3. ▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
4. ▇▇-▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇