EXHIBIT 10.40
SECURITY AGREEMENT [LOGO OF PNCBANK]
THIS SECURITY AGREEMENT (this "AGREEMENT"), dated as of this 3rd day
of July, 2002, is made by ▇▇▇▇▇▇▇ COMPUTER ASSOCIATES, INC. ▇▇▇▇▇▇▇ SOFTWARE
LTD., ▇▇▇▇▇▇▇ COMPUTER ASSOCIATES INTERNATIONAL, INC., ▇▇▇▇▇▇▇ DATA SYSTEMS,
INC. and ePROFILE HOLDINGS, INC. (individually and collectively, the "GRANTOR"),
in favor of PNC BANK, NATIONAL ASSOCIATION (the "BANK"), with an address at ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
Under the terms hereof, the Bank desires to obtain and the Grantor
desires to grant the Bank security for all of the Obligations (as hereinafter
defined).
NOW, THEREFORE, the Grantor and the Bank, intending to be legally
bound, hereby agree as follows:
1. DEFINITIONS.
(a) "COLLATERAL" shall mean all of the following of the Grantor, all
whether now owned or hereafter acquired or arising, but excluding the Excluded
Assets (hereinafter defined): (i) accounts (including health-care-insurance
receivables and credit card receivables); (ii) securities entitlements,
securities accounts, commodity accounts, commodity contracts and investment
property; (iii) deposit accounts; (iv) instruments (including promissory notes);
(v) documents (including warehouse receipts); (vi) chattel paper (including
electronic chattel paper and tangible chattel paper); (vii) inventory located in
the United States, including raw materials, work in process, or materials used
or consumed in Grantor's business, items held for sale or lease or furnished or
to be furnished under contracts of service, sale or lease, goods that are
returned, reclaimed or repossessed; (viii) goods of every nature located in the
United States, including stock-in-trade, goods on consignment, standing timber
that is to be cut and removed under a conveyance or contract for sale, the
unborn young of animals, crops grown, growing, or to be grown, manufactured
homes, computer programs embedded in such goods and farm products; (ix)
equipment located in the United States, including machinery, vehicles and
furniture; (x) fixtures located in the United States; (xi) agricultural liens on
goods located in the United States; (xii) as-extracted collateral located in the
United States; (xiii) commercial tort claims, if any, described on Exhibit "A"
hereto; (xiv) letter of credit rights; (xv) general intangibles of every kind
and description other than those intangible assets that are Excluded Assets,
including payment intangibles, chooses in action, claims (including claims for
indemnification or breach of warranty), books, records, goodwill, contracts,
licenses, license agreements, tax and any other types of refunds, returned and
1
unearned insurance premiums, rights and claims under insurance policies; (xvi)
all supporting obligations of all of the foregoing property; (xvii) all property
of the Grantor located in the United States now or hereafter in the Bank's
possession or in transit to or from, or under the custody or control of, the
Bank or any affiliate thereof; (xviii) all cash and cash equivalents thereof;
and (xix) all cash and noncash proceeds (including insurance proceeds) of all of
the foregoing property, all products thereof and all additions and accessions
thereto, substitutions therefor and replacements thereof.
(b) "EXCLUDED ASSETS" means present and future software programs
which are copyrighted or copyrightable under the Federal Copyright Law, (i)
software, computer information, source codes, object codes, records and data,
all existing and future customer lists, patents and patent applications,
copyrights, trademarks, tradenames, tradestyles, trademark applications,
blueprints, drawings, designs and plans, trade secrets and formulae and any
personal property subject to a purchase money lien that is a Permitted Lien the
terms of which prohibit further liens or encumbrances, but not including (i.e.
the following WILL constitute Collateral) licenses of, and contracts for
services in the performance of which Grantor makes use of, such software, source
codes and any of the other aforesaid excluded assets, and (ii) all proceeds,
including accounts receivable, from the sale or other disposition, including
licensing, thereof.
(c) "OBLIGATIONS" shall include all loans, advances, debts,
liabilities, obligations, covenants and duties owing by the Grantor to the Bank
of any kind or nature, present or future (including any interest accruing
thereon after maturity, or after the filing of any petition in bankruptcy, or
the commencement of any insolvency, reorganization or like proceeding relating
to the Grantor, whether or not a claim for post-filing or post-petition interest
is allowed in such proceeding), whether direct or indirect (including those
acquired by assignment or participation), absolute or contingent, joint or
several, due or to become due, now existing or hereafter arising, under (i) the
letter agreement between Grantor and Bank dated the date hereof and Committed
Line of Credit Note dated the date hereof in the principal amount of $20 million
(collectively, the "Loan Documents") and any amendments, extensions, renewals
and increases of or to any of the foregoing, and/or (ii) by reason of any
foreign currency transaction, forward, option or other similar transaction
providing for the purchase of one currency in exchange for the sale of another
currency, or in any other manner; and all costs and expenses of the Bank
incurred in the modification, enforcement, collection and otherwise in
connection with any of the foregoing, including reasonable attorneys' fees and
expenses.
(d) "UCC" means the Uniform Commercial Code, as adopted and
enacted and as in effect from time to time in the State whose law governs
pursuant to the Section of this Agreement entitled "Governing Law and
Jurisdiction." Terms used herein which are defined in the UCC and not otherwise
defined herein shall have the respective meanings ascribed to such terms in the
2
UCC. To the extent the definition of any category or type of collateral is
modified by any amendment, modification or revision to the UCC, such modified
definition will apply automatically as of the date of such amendment,
modification or revision.
2. GRANT OF SECURITY INTEREST. To secure the Obligations, the Grantor, as
debtor, hereby assigns and grants to the Bank, as secured party, a continuing
lien on and security interest in the Collateral.
3. CHANGE IN NAME OR LOCATIONS. The Grantor hereby agrees that if the location
of the Collateral changes from the locations listed on Exhibit "A" hereto and
made a part hereof, or if the Grantor changes its name, its type of
organization, its state of organization (if Grantor is a registered
organization), its principal residence (if Grantor is an individual), its chief
executive office (if Grantor is a general partnership or non-registered
organization) or establishes a name in which it may do business that is not
listed as a tradename on Exhibit "A" hereto, the Grantor will immediately notify
the Bank in writing of the additions or changes.
4. REPRESENTATIONS AND WARRANTIES. The Grantor represents, warrants and
covenants to the Bank that: (a) all information, including its type of
organization, jurisdiction of organization, chief executive office, and (for
individuals only) principal residence are as set forth on Exhibit "A" hereto and
are true and correct on the date hereof; (b) the Grantor has good, marketable
and indefeasible title to the Collateral which it owns, has not made any prior
sale, pledge, encumbrance, assignment or other disposition of any of the
Collateral except for Permitted Liens (as defined in the Loan Documents) and
except in the ordinary course of business, and the Collateral is free from all
encumbrances and rights of setoff of any kind except the lien in favor of the
Bank created by this Agreement and except for Permitted Liens; (c) except as
herein provided or as provided in the Loan Documents, the Grantor will not
hereafter without the Bank's prior written consent sell, pledge, encumber,
assign or otherwise dispose of any of the Collateral or permit any right of
setoff, lien or security interest to exist thereon except to the Bank; (d) the
Grantor will defend the Collateral against all claims and demands of all persons
at any time claiming the same or any interest therein; (e) each account and
general intangible, if included in the definition of Collateral, is genuine and
enforceable in accordance with its terms except in the ordinary course of
business and the Grantor will defend the same against all claims, demands,
setoffs and counterclaims at any time asserted except in the ordinary course of
business; and (f) at the time any account or general intangible becomes subject
to this Agreement, such account or general intangible will be a valid account
except in the ordinary course of business representing a bona fide sale of goods
or services by the Grantor and such goods will have been shipped to the
respective account debtors or the services will have been performed for the
respective account debtors, and no such account or general intangible will be
subject to any claim for credit, allowance or
3
adjustment by any account debtor or any setoff, defense or counterclaim except
in the ordinary course of business.
5. GRANTOR'S COVENANTS. The Grantor covenants that it shall:
(a) from time to time and at all reasonable times allow the Bank, by
or through any of its officers, agents, attorneys, or accountants, to examine or
inspect the Collateral, and obtain valuations and audits of the Collateral, at
the Bank's (or, during the continuance of an Event of Default, at Grantor's)
expense. The Grantor shall do, obtain, make, execute and deliver all such
additional and further acts, things, deeds, assurances and instruments as the
Bank may reasonably require to vest in and assure to the Bank its rights
hereunder and in or to the Collateral, and the proceeds thereof, including
waivers from landlords, warehousemen and mortgagees. The Grantor agrees that
upon the occurrence of an Event of Default and during the continuance thereof
the Bank has the right to notify (on invoices or otherwise) account debtors and
other obligors or payers on any Collateral of its assignment to the Bank, and
that all payments thereon should be made directly to the Bank, and that the Bank
has full power and authority to collect, compromise, endorse, sell or otherwise
deal with the Collateral in its own name or that of the Grantor;
(b) keep the Collateral in good order and repair at all times
(reasonable wear and tear excepted) and immediately notify the Bank of any event
causing a material loss or decline in value of the Collateral, and the amount of
such loss or depreciation;
(c) only use or permit the Collateral to be used in all material
respects in accordance with applicable federal, state, county and municipal laws
and regulations; and
(d) have and maintain insurance at all times with respect to all
Collateral against risks of fire (including so-called extended coverage), theft,
sprinkler leakage, and other risks (including risk of flood if any Collateral is
maintained at a location in a flood hazard zone) as the Bank may reasonably
require, in such form, in such amount, for such period and written by such
companies as may be satisfactory to the Bank in its reasonable discretion. Such
policies shall expressly provide that the requisite insurance cannot be altered
or canceled without at least thirty (30) days prior written notice to the Bank
and shall insure the Bank notwithstanding the act or neglect of the Grantor.
Upon the Bank's demand, the Grantor shall furnish the Bank with duplicate
original policies of insurance or such other evidence of insurance as the Bank
may require. In the event of failure to provide insurance as herein provided,
the Bank may, at its option, obtain such insurance and the Grantor shall pay to
the Bank, on demand, the cost thereof. Proceeds of insurance may be applied by
the Bank, upon the occurrence and during the continuance of an Event of Default,
to reduce the Obligations or to repair or replace Collateral, all in the Bank's
sole discretion.
4
6. [INTENTIONALLY OMITTED].
7. [INTENTIONALLY OMITTED].
8. FURTHER ASSURANCES. By its signature hereon, the Grantor hereby irrevocably
authorizes the Bank to execute (on behalf of the Grantor) and file against the
Grantor one or more financing, continuation or amendment statements pursuant to
the UCC in form satisfactory to the Bank, and the Grantor will pay the cost of
preparing and filing the same in all jurisdictions in which such filing is
deemed by the Bank to be necessary or desirable in order to perfect, preserve
and protect its security interests. If required by the Bank, the Grantor will
execute all documentation necessary for the Bank to obtain and maintain
perfection of its security interests in the Collateral. If any Collateral
consists of letter of credit rights, electronic chattel paper, deposit accounts
or supporting obligations not maintained with the Bank or one of its affiliates,
or any securities entitlement, securities account, commodities account,
commodities contract or other investment property, then at the Bank's request
the Grantor will execute, and will cause the depository institution or
securities intermediary upon whose books and records the ownership interest of
the Grantor in such Collateral appears, to execute such Pledge Agreements,
Notification and Control Agreements or other agreements as the Bank deems
necessary in order to perfect, prioritize and protect its security interest in
such Collateral, in each case in a form satisfactory to the Bank.
9. EVENTS OF DEFAULT. The Grantor shall, at the Bank's option, be in default
under this Agreement upon the happening of any Event of Default as defined in
any of the Obligations.
10. REMEDIES. Upon the occurrence of any such Event of Default and at any time
thereafter during its continuance, the Bank may declare all Obligations secured
hereby immediately due and payable and shall have, in addition to any remedies
provided herein or by any applicable law or in equity, all the remedies of a
secured party under the UCC. The Bank's remedies in those circumstances include,
but are not limited to, the right to (a) peaceably by its own means or with
judicial assistance enter the Grantor's premises and take possession of the
Collateral without prior notice to the Grantor or the opportunity for a hearing,
(b) render the Collateral unusable, (c) dispose of the Collateral on the
Grantor's premises, (d) require the Grantor to assemble the Collateral and make
it available to the Bank at a place designated by the Bank, and (e) notify the
United States Postal Service to send the Grantor's mail to the Bank. Unless the
Collateral is perishable or threatens to decline speedily in value or is of a
type customarily sold on a recognized market, the Bank will give the Grantor
reasonable notice of the time and place of any public sale thereof or of the
time after which any private sale or any other intended disposition thereof is
to be made. The requirements of commercially reasonable notice shall be met if
such notice is sent to the Grantor at least thirty (30) days before the time of
the intended sale or disposition. Expenses of retaking, holding, preparing for
disposition,
5
disposing or the like shall include the Bank's reasonable attorneys' fees and
legal expenses, incurred or expended by the Bank to enforce any payment due it
under this Agreement either as against the Grantor, or in the prosecution or
defense of any action, or concerning any matter growing out of or connection
with the subject matter of this Agreement and the Collateral pledged hereunder.
The Grantor waives all relief from all appraisement or exemption laws now in
force or hereafter enacted.
11. POWER OF ATTORNEY. The Grantor does hereby make, constitute and appoint any
officer or agent of the Bank as the Grantor's true and lawful attorney-in-fact,
with power upon the occurrence and during the continuance of an Event of Default
to (a) endorse the name of the Grantor or any of the Grantor's officers or
agents upon any notes, checks, drafts, money orders, or other instruments of
payment of Grantor or Collateral that may come into the Bank's possession in
full or part payment of any Obligations; (b) ▇▇▇ for, compromise, settle and
release all claims and disputes with respect to, the Collateral; and (c) sign,
for the Grantor, such documentation required by the UCC granting to the
Grantor's said attorney full power to do any and all things necessary to be done
in and about the premises as fully and effectually as the Grantor might or could
do. The Grantor hereby ratifies all that said attorney shall lawfully do or
cause to be done by virtue hereof. This power of attorney is coupled with an
interest, and is irrevocable.
12. PAYMENT OF EXPENSES. At its option, the Bank, if not paid for by the
Grantor, may discharge taxes, liens, security interests or such other
encumbrances as may attach to the Collateral (that are not Permitted Liens), may
pay for required insurance on the Collateral and may pay for the maintenance and
preservation of the Collateral, as determined by the Bank to be necessary. The
Grantor will reimburse the Bank on demand for any payment so made or any expense
incurred by the Bank pursuant to the foregoing authorization, and the Collateral
also will secure any advances or payments so made or expenses so incurred by the
Bank.
13. NOTICES. All notices, demands, requests, consents, approvals and other
communications required or permitted hereunder ("NOTICES") must be in writing
and will be effective upon receipt. Notices may be given in any manner to which
the parties may separately agree, including electronic mail. Without limiting
the foregoing, first-class mail, facsimile transmission and commercial courier
service are hereby agreed to as acceptable methods for giving Notices.
Regardless of the manner in which provided, Notices may be sent to such address
as any party may give to the other for such purpose in accordance with this
section.
14. PRESERVATION OF RIGHTS. No delay or omission on the Bank's part to exercise
any right or power arising hereunder will impair any such right or power or be
considered a waiver of any such right or power, nor will the Bank's action or
inaction impair any such right or power. The Bank's rights and remedies
hereunder are cumulative and not exclusive of any other rights or remedies,
6
which the Bank may have under other agreements, at law or in equity.
15. ILLEGALITY. If any provision contained in this Agreement should be invalid,
illegal or unenforceable in any respect, it shall not affect or impair the
validity, legality and enforceability of the remaining provisions of this
Agreement.
16. CHANGES IN WRITING. No modification, amendment or waiver of, or consent to
any departure by the Grantor from, any provision of this Agreement will be
effective unless made in a writing signed by the Bank and the Grantor, and then
such waiver or consent shall be effective only in the specific instance and for
the purpose for which given. No notice to or demand on the Grantor will entitle
the Grantor to any other or further notice or demand in the same, similar or
other circumstance unless otherwise required by this Agreement or applicable
law.
17. ENTIRE AGREEMENT. This Agreement (including the documents and instruments
referred to herein) constitutes the entire agreement and supersedes all other
prior agreements and understandings, both written and oral, between the parties
with respect to the subject matter hereof.
18. COUNTERPARTS. This Agreement may be signed in any number of counterpart
copies and by the parties hereto on separate counterparts, but all such copies
shall constitute one and the same instrument. Delivery of an executed
counterpart of signature page to this Agreement by facsimile transmission shall
be effective as delivery of a manually executed counterpart. Any party so
executing this Agreement by facsimile transmission shall promptly deliver a
manually executed counterpart, provided that any failure to do so shall not
affect the validity of the counterpart executed by facsimile transmission.
19. SUCCESSORS AND ASSIGNS. This Agreement will be binding upon and inure to
the benefit of the Grantor and the Bank and their respective heirs, executors,
administrators, successors and assigns; PROVIDED, HOWEVER, that the Grantor may
not assign this Agreement in whole or in part without the Bank's prior written
consent and the Bank at any time may assign this Agreement in whole or in part.
20. INTERPRETATION. In this Agreement, unless the Bank and the Grantor
otherwise agree in writing, the singular includes the plural and the plural the
singular; words importing any gender include the other genders; references to
statutes are to be construed as including all statutory provisions
consolidating, amending or replacing the statute referred to; the word "or"
shall be deemed to include "and/or", the words "including", "includes" and
"include" shall be deemed to be followed by the words "without limitation";
references to articles, sections (or subdivisions of sections) or exhibits are
to those of this Agreement; and references to agreements and other contractual
instruments shall be deemed to include all subsequent amendments and other
modifications to such instruments, but only to the extent such amendments and
other modifications are not prohibited
7
by the terms of this Agreement. Section headings in this Agreement are included
for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose. Unless otherwise specified in this Agreement,
all accounting terms shall be interpreted and all accounting determinations
shall be made in accordance with GAAP. If this Agreement is executed by more
than one Grantor, the obligations of such persons or entities will be joint and
several.
21. INDEMNITY. The Grantor agrees to indemnify each of the Bank, each legal
entity, if any, who controls the Bank and each of their respective directors,
officers and employees (the "INDEMNIFIED PARTIES") and to hold each Indemnified
Party harmless from and against any and all claims, damages, losses, liabilities
and expenses (including all fees and charges of external counsel with whom any
Indemnified Party may consult and all expenses of litigation and preparation
therefor) which any Indemnified Party may incur or which may be asserted against
any Indemnified Party by any person, entity or governmental authority (including
any person or entity claiming derivatively on behalf of the Grantor), in
connection with or arising out of or relating to the matters referred to in this
Agreement or the Obligations or the use of the proceeds of the Loan, whether (a)
arising from or incurred in connection with any breach of a representation,
warranty or covenant by the Grantor, or (b) arising out of or resulting from any
suit, action, claim, proceeding or governmental investigation, pending or
threatened, whether based on statute, regulation or order, or tort, or contract
or otherwise, before any court or governmental authority; PROVIDED, HOWEVER,
that the foregoing indemnity agreement shall not apply to any claims, damages,
losses, liabilities and expenses to the extent attributable to an Indemnified
Party's gross negligence or willful misconduct. Each Indemnified Party shall
give the Grantor prompt written notice of any claim or litigation for which such
Indemnified Party intends to seek indemnity from Grantor. Upon receipt of such
notice, Grantor may assume control of the defense of any such claim or
litigation. Once Grantor has assumed the defense of any such claim or
litigation, Grantor shall not be obligated to indemnify any Indemnified Party
for any legal fees or expenses thereafter incurred. The indemnity agreement
contained in this Section shall survive the termination of this Agreement,
payment of the Obligations and assignment of any rights hereunder. The
Indemnified Party may participate at its expense in the defense of any such
claim for which the Grantor has assumed the defense.
22. GOVERNING LAW AND JURISDICTION. This Agreement has been delivered to and
accepted by the Bank and will be deemed to be made in the State where the Bank's
office indicated above is located. THIS AGREEMENT WILL BE INTERPRETED AND THE
RIGHTS AND LIABILITIES OF THE PARTIES HERETO DETERMINED IN ACCORDANCE WITH THE
LAWS OF THE STATE WHERE THE BANK'S OFFICE INDICATED ABOVE IS LOCATED, EXCEPT
THAT THE LAWS OF THE STATE WHERE ANY COLLATERAL IS LOCATED (IF DIFFERENT FROM
THE STATE WHERE SUCH OFFICE OF THE BANK IS LOCATED) SHALL GOVERN THE CREATION,
PERFECTION AND FORECLOSURE OF THE LIENS CREATED HEREUNDER ON SUCH PROPERTY OR
ANY INTEREST THEREIN. The Grantor hereby irrevocably consents to the exclusive
jurisdiction of any state or federal court in the county or
8
judicial district where the Bank's office indicated above is located; provided
that nothing contained in this Agreement will prevent the Bank from enforcing
any award or judgment against the Grantor or against any security or against any
property of the Grantor within any other county, state or other foreign or
domestic jurisdiction. The Bank and the Grantor agree that the venue provided
above is the most convenient forum for both the Bank and the Grantor. The
Grantor waives any objection to venue and any objection based on a more
convenient forum in any action instituted under this Agreement.
23. WAIVER OF JURY TRIAL. EACH OF THE GRANTOR AND THE BANK IRREVOCABLY WAIVES
ANY AND ALL RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
CLAIM OF ANY NATURE RELATING TO THIS AGREEMENT, ANY DOCUMENTS EXECUTED IN
CONNECTION WITH THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED IN ANY OF SUCH
DOCUMENTS. THE GRANTOR AND THE BANK ACKNOWLEDGE THAT THE FOREGOING WAIVER IS
KNOWING AND VOLUNTARY.
9
THE GRANTOR ACKNOWLEDGES THAT IT HAS READ AND UNDERSTOOD ALL THE PROVISIONS OF
THIS AGREEMENT, INCLUDING THE WAIVER OF JURY TRIAL, AND HAS BEEN ADVISED BY
COUNSEL AS NECESSARY OR APPROPRIATE.
24. TERMINATION. Whenever there are no outstanding Obligations and Bank's
lending commitment thereunder has terminated, the Grantor may terminate this
Agreement upon five (5) days prior written notice to the Bank.
WITNESS the due execution hereof as a document under seal, as of the date first
written above.
PNC BANK, NATIONAL
ASSOCIATION
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇ III
-----------------------
▇▇▇▇▇▇▇ COMPUTER
ASSOCIATES, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------
▇▇▇▇▇▇▇ SOFTWARE LTD.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------
▇▇▇▇▇▇▇ COMPUTER
ASSOCIATES INTERNATIONAL
INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------
ePROFILE HOLDINGS, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
---------------------
▇▇▇▇▇▇▇ DATA
SYSTEMS, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------
10