EXHIBIT 10.22
SECURITY AGREEMENT
(EQUIPMENT)
This Agreement is made as of January 30, 1997, by VeriSign, Inc., a
Delaware corporation ("Debtor") in favor of VENTURE LENDING & LEASING, INC., a
Maryland corporation ("Secured Party").
ARTICLE 1 - DEFINITIONS
The following definitions shall be applicable to both the singular and
plural forms of the defined terms:
"AGREEMENT" means this Security Agreement, as it may be amended from time
to time.
"COLLATERAL" means all Debtor's Equipment and Fixtures now owned or
hereafter acquired, wherever located, and whether held by Debtor or any third
party, and all proceeds and products thereof, including all insurance and
condemnation proceeds ("Proceeds"), and all Records relating or useful to, or
used in connection with any of the foregoing.
"EQUIPMENT" means all of Debtor's specific equipment identified and
described on Schedule 1 attached to this Agreement and incorporated herein by
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reference (as such Schedule may be amended or supplemented from time to time),
all replacements, parts, accessions and additions thereto, and all proceeds
thereof arising from the sale, lease, rental or other use or disposition
thereof, including all rights to payment with respect to insurance or
condemnation, returned premiums, or any cause of action relating to any of the
foregoing.
"EVENT OF DEFAULT" means an event described in Article 6.
"FIXTURES" means all items of Equipment that are so related to the real
property upon which they are located that an interest in them arises under real
property law, and all proceeds thereof arising from the sale, lease, rental or
other use or disposition thereof.
"INDEBTEDNESS" means all debts, obligations and liabilities of Debtor to
Secured Party currently existing or now or hereafter made, incurred or created,
whether pursuant to the Loan Documents, whether voluntary or involuntary and
however arising or evidenced, whether direct or acquired by Secured Party by
assignment or succession, whether due or not due, absolute or contingent,
liquidated or unliquidated, determined or undetermined, and whether Debtor may
be liable individually or jointly, or whether recovery upon such debt may be or
become barred by any statute of limitations or otherwise unenforceable and all
renewals, extensions and modifications thereof, and all attorneys' fees and
costs incurred by Secured Party in connection with the collection and
enforcement thereof.
"LIEN" means any voluntary or involuntary security interest, mortgage,
pledge, claim, charge, encumbrance, title retention agreement, or third party
interest covering all or any part of the property of Debtor or any other Person.
"LOAN AGREEMENT" means that certain Loan Agreement between Debtor and
Secured Party of even date herewith, as amended from time to time.
"PERSON" means any individual or entity, including without limitation
Secured Party where the context so permits and in Secured Party's sole
discretion.
"RECORDS" means all Debtor's computer programs, software, hardware, source
codes and data processing information, all written documents, books, invoices,
ledger sheets, financial information and statements, and all other writings
concerning collateral.
"UNIFORM COMMERCIAL CODE" means the California Uniform Commercial Code, as
amended from time to time.
Terms not specifically defined in this Agreement have the meanings
prescribed in the Loan Agreement, and if not defined therein then the meanings
prescribed in the Uniform Commercial Code.
ARTICLE 2 - GRANT OF SECURITY INTEREST
To secure the timely payment of the Indebtedness and performance of all
obligations of Debtor to Secured Party, Debtor grants to Secured Party a
security interest in the Collateral.
ARTICLE 3 - REPRESENTATIONS AND WARRANTIES
Debtor represents and warrants that, at all times during the term of this
Agreement:
3.1 GOVERNMENTAL ACTIONS. Debtor has obtained all consents and actions
of, and has performed all filings with, any governmental or regulatory authority
required to authorize the execution, delivery or performance of this Agreement.
Debtor has, at the time Lender makes a Loan with respect to an item of equipment
in accordance with Section 2.2 of the Loan Agreement, and at all times
thereafter while such Loan is outstanding, obtained all consents and actions of,
and has performed all filings with, any governmental or regulatory authority
required to grant and perfect Secured Party's security interest in such item of
equipment which is part of the Collateral.
3.2 TITLE. Except for the security interests created by this Agreement,
Debtor is and will be the unconditional legal and beneficial owner of the
Collateral. The Collateral is subject to no Liens, rights or defenses of
others, except Liens permitted under the Loan Agreement.
3.3 NO MISREPRESENTATION. No representation, warranty or statement by
Debtor contained in this Agreement, in any Loan Document or certificate or other
writing furnished by Debtor to Secured Party in connection with any Loan
Document contains any untrue statement of
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material fact, or omits to state a material fact necessary to make the
statements made therein not misleading in any material respect.
3.4 COLLATERAL NOT INVENTORY. Debtor is not in the business of selling
goods of the kind included within the Collateral subject to this Agreement.
3.5 CHIEF EXECUTIVE OFFICE. Debtor's chief executive office is located
at:
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3.6 RECORDS LOCATION. Other than as set forth in Section 3.5, Records
are maintained at:
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3.7 EQUIPMENT OR FIXTURES LOCATION. Other than as set forth in Section
3.5, Equipment or Fixtures are located at:
Same as below.
3.8 OTHER PLACES OF BUSINESS. In addition to the locations set forth in
Sections 3.5 through 3.7, Debtor maintains the following place(s) of business:
East Coast ▇▇▇▇▇▇
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▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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3.9 BUSINESS NAMES. Debtor has conducted business in the following names
other than as stated in the preamble to this Agreement:
Digital Certificates, Inc. or DCI
3.10 FINANCING STATEMENTS. Copies of all financing statements and all
other documents publicly recorded or filed naming Debtor as debtor or obligor
have been delivered to Secured Party, prior to the date of this Agreement.
ARTICLE 4 - AFFIRMATIVE COVENANTS
During the term of this Agreement and until payment of all the Indebtedness
and performance of all obligations to Secured Party, Debtor will, unless Secured
Party otherwise consents in writing:
4.1 USE OF PROCEEDS. Use the proceeds of any credit extended by Secured
Party to Debtor only in accordance with the terms of the Loan Documents.
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4.2 DELIVERY OF CERTAIN ITEMS. Deliver to Secured Party promptly (a)
after an Event of Default, all Proceeds; (b) such specific acknowledgments,
assignments or other agreements as Secured Party may reasonably request relating
to the Collateral; and (c) copies of such Records and other reports in such form
and detail and at such times as Secured Party may reasonably require relating to
the Collateral.
4.3 MAINTENANCE OF COLLATERAL; INSPECTION. Do all things necessary to
maintain, preserve, protect and keep all Collateral in good working order and
saleable condition, dealing with the Collateral in all ways as are considered
good practice by owners of like property, and use the Collateral lawfully and
only as permitted by Debtor's insurance policies. Debtor hereby authorizes
Secured Party's officers, employees, representatives and agents, upon reasonable
notice, at reasonable times and with reasonable frequency, to inspect the
Collateral and to discuss the Collateral and the Records relating thereto with
Debtor's officers.
4.4 MAINTENANCE OF RECORDS; INSPECTION. Maintain, or cause to be
maintained, complete and accurate Records relating to the Collateral. Secured
Party, its officers, employees, agents and representatives, upon reasonable
notice, shall have the right, from time to time, to examine the Records relating
to the Collateral and to make copies or extracts therefrom.
4.5 DEBTORES DUTY TO GIVE NOTICE. Give prompt notice to Secured Party
of: (a) any decrease in the value of any Collateral and the amount of such
decrease (other than depreciation calculated in the ordinary course of business
under applicable tax laws and regulations and in accordance with generally
accepted accounting principles); (b) any threatened or asserted dispute or claim
with respect to the Collateral; (c) any litigation or administrative or
regulatory proceeding which is reasonably likely to have a material adverse
effect on Debtor or its business; (d) any change in ownership of any property on
which any Collateral is located; and (e) the occurrence of any Event of Default
or of any other development, financial or otherwise, which is reasonably likely
to materially adversely affect the Collateral or Debtor's ability to pay the
indebtedness or perform its obligations to Secured Party.
4.6 FINANCING STATEMENTS AND OTHER ACTIONS. Execute and deliver to
Secured Party, and file or record at Debtor's expense all financing statements,
notices and other documents from time to time requested by Secured Party to
maintain a first perfected security interest in the Collateral in favor of
Secured Party, all in form and substance satisfactory to Secured Party, perform
such other acts and execute and deliver to Secured Party such additional
conveyances, assignments, agreements and instruments, as Secured Party may at
any time reasonably request in connection with the administration and
enforcement of this Agreement or Secured Party's rights, powers and remedies
hereunder.
4.7 DECALS, MARKINGS. At the request of Secured Party, firmly affix a
decal, stencil or other marking to designated items of Collateral, indicating
thereon the security interest of Secured Party.
4.8 AGREEMENT WITH REAL PROPERTY OWNER/LANDLORD. Obtain and maintain
such acknowledgments, consents, waivers and agreements from the owner,
lienholder, mortgagee and
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landlord with respect to any real property on which Collateral is located as
Secured Party may require, all in form and substance satisfactory to Secured
Party.
ARTICLE 5 - NEGATIVE COVENANTS
During the term of this Agreement and until payment of all the Indebtedness
and performance of all obligations to Secured Party, Debtor will not, without
Secured Party's prior written consent:
5.1 LIENS. Create, incur, assume or permit to exist any Lien on any
Collateral, except Liens permitted under the Loan Agreement.
5.2 DOCUMENTS OF TITLE. Sign or authorize the signing of any financing
statement or other document naming Debtor as debtor or obligor, except those
which do not relate to the Collateral or which, with respect to the Collateral
are permitted under the Loan Agreement, or acquiesce or cooperate in the
issuance of any warehouse receipt or other document of title with respect to any
Collateral, except those negotiated to Secured Party or those naming Secured
Party as secured party.
5.3 DISPOSITION OF COLLATERAL. Sell, transfer, lease or otherwise
dispose of any Collateral.
5.4 CHANGE IN LOCATION, NAME, LEGAL STRUCTURE. If and to the extent the
same would in any manner impair the creation, perfection or priority of Secured
Party's security interest in the Collateral, (a) maintain Records, its chief
executive office or residence, or a place of business at a location other than
as specified in Article 3; or (b) change its name, mailing address, the nature
of its business, or its legal structure.
ARTICLE 6 - EVENTS OF DEFAULT
6.1 EVENTS OF DEFAULT. The occurrence of any of the following shall
constitute an Event of Default:
(A) Any "Event of Defaults' as defined in the Loan Agreement.
(B) Secured Party shall not have a first perfected security interest
in any Collateral for ten (10) or more days after notice to Debtor;
(C) Secured Party reasonably determines, in good faith, that its
security interest in the Collateral is materially impaired for ten (10) or more
days after notice to Debtor;
(D) Secured Party reasonably determines, in good faith, that any or
all of the Collateral, including any proceeds, is in danger of dissipation,
loss, theft, damage or destruction, or otherwise in jeopardy such as would
materially impair the value of the Collateral (with due consideration to
applicable insurance coverage);
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(E) Debtor shall fail to perform any of its duties or obligations
under this Agreement not specifically referenced in this Article 6 and such
failure remains uncured for ten (10) or more days after notice to Debtor;
6.2 ACCELERATION AND REMEDIES. Upon the occurrence of any Event of
Default Secured Party shall be entitled to, at Secured Party's option, without
notice or demand of any kind, (a) declare all or any part of the Indebtedness
immediately due and payable; (b) exercise any or all of the rights and remedies
available to a secured party under the Uniform Commercial Code or any other
applicable law; and (c) exercise any or all of Secured Party's rights and
remedies provided for in this Agreement and in any other Loan Document. The
obligations of Debtor under this Agreement shall continue to be effective or be
reinstated, as the case may be, if at any time any payment of any Indebtedness
is rescinded or must otherwise be returned by Secured Party upon, on account of,
or in connection with, the insolvency, bankruptcy or reorganization of Debtor,
or otherwise, all as though such payment had not been made.
6.3 SALE OF COLLATERAL. After the occurrence of an Event of Default
Secured Party may sell all or any part of the Collateral, at public or private
sales, to itself, a wholesaler, retailer or investor, for cash, upon credit or
for future delivery, and at such price or prices as Secured Party may deem
commercially reasonable. To the extent permitted by law, Debtor hereby
specifically waives all rights of redemption and any rights of stay or appraisal
which it has or may have under any applicable law in effect from time to time.
Any such public or private sales shall be held at such times and at such
place(s) as Secured Party may determine. In case of the sale of all or any part
of the Collateral on credit or for future delivery, the Collateral so sold may
be retained by Secured Party until the selling price is paid by the purchaser,
but Secured Party shall not incur any liability in case of the failure of such
purchaser to pay for the Collateral and, in case of any such failure, such
Collateral may be resold. Secured Party may, instead of exercising its power of
sale, proceed to enforce its security interest in the Collateral by seeking a
judgment or decree of a court of competent jurisdiction.
6.4 DEBTOR'S OBLIGATION UPON DEFAULT. Upon the request of Secured Party
after the occurrence of an Event of Default Debtor will:
(A) Assemble and make available to Secured Party the Collateral at
such place(s) as Secured Party shall designate, segregating all Collateral so
that each item is capable of identification; and
(B) Permit Secured Party, by Secured Party's officers, employees,
agents and representatives, to enter any premises where any Collateral is
located, to take possession of the Collateral and to remove the Collateral or to
conduct any public or private sale of the Collateral, all without any liability
of Secured Party for rent or other compensation for the use of Debtor's
premises.
ARTICLE 7 - SPECIAL COLLATERAL PROVISIONS
7.1 PERFORMANCE OF DEBTOR'S OBLIGATIONS. Without having any obligation
to do so, Secured Party may perform or pay any obligation which Debtor has
agreed to perform or pay
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under this Agreement, including, without limitation, the payment or discharge of
taxes or Liens levied or placed on or threatened against the Collateral. In so
performing or paying, Secured Party shall determine the action to be taken and
the amount necessary to discharge such obligations. Debtor shall reimburse
Secured Party on demand for any amounts paid by Secured Party pursuant to this
Section, which amounts shall constitute Indebtedness secured by the Collateral
and shall bear interest from the date of demand at the rate applicable to
overdue payments under the Loan Agreement.
7.2 POWER OF ATTORNEY. For the purpose of protecting, preserving and
enforcing the Collateral and Secured Party's rights under this Agreement, Debtor
hereby irrevocably appoints Secured Party, with full power of substitution, as
its attorney-in-fact with full power and authority to do any act which Debtor is
obligated to do, or Secured Party has the right to do, hereunder; to exercise
such rights with respect to the Collateral as Debtor might exercise; to use such
Equipment, Fixtures or other property as Debtor might use; to enter Debtor's
premises; to give notice of Secured Party's security interest in and to collect
the Collateral and the Proceeds; and to execute and file in Debtor's name any
financing statements, amendments and continuation statements necessary or
desirable to perfect or continue the perfection of Secured Party's security
interests in the Collateral. Debtor hereby ratifies all that Secured Party
shall lawfully do or cause to be done by virtue of this appointment.
7.3 AUTHORIZATION FOR SECURED PARTY TO TAKE CERTAIN ACTION. The power of
attorney created in Section 7.3 is a power coupled with an interest and shall be
irrevocable. The powers conferred on Secured Party hereunder are solely to
protect its interests in the Collateral and shall not impose any duty upon
Secured Party to exercise such powers. Secured Party shall be accountable only
for amounts that it actually receives as a result of the exercise of such powers
and in no event shall Secured Party or any of its directors, officers,
employees, agents or representatives be responsible to Debtor for any act or
failure to act, except for gross negligence or willful misconduct. Secured
Party may exercise this power of attorney without notice to or assent of Debtor,
in the name of Debtor, or in Secured Party's own name, from time to time in
Secured Party's sole discretion and at Debtor's expense. To further carry out
the terms of this Agreement, Secured Party may upon the occurrence of an Event
of Default:
(A) Execute any statements or documents to take possession of, and
endorse and collect and receive delivery or payment of, any checks, drafts,
notes, acceptances or other instruments and documents constituting the payment
of amounts due and to become due or any performance to be rendered with respect
to the Collateral;
(B) Sign and endorse any invoices, freight or express bills, bills
of lading, storage or warehouse receipts; drafts, certificates and statements
under any commercial or standby letter of credit, assignments, leases, bills of
sale, or any other documents relating to the Collateral, including without
limitation the Records;
(C) Use or operate Collateral or any other property of Debtor for
the purpose of preserving or liquidating Collateral;
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(D) File any claim or take any other action or proceeding in any
court of law or equity or as otherwise deemed appropriate by Secured Party for
the purpose of collecting any and all monies due or securing any performance to
be rendered with respect to the Collateral;
(E) Commence, prosecute or defend any suits, actions or proceedings
or as otherwise deemed appropriate by Secured Party for the purpose of
protecting or collecting the Collateral. In furtherance of this right, upon the
occurrence of an Event of Default Secured Party may apply for the appointment of
a receiver or similar official to operate Debtor's business, and, to the fullest
extent permitted by law, Debtor hereby waives any right to oppose such
appointment;
(F) Prepare, adjust, execute, deliver and receive payment under
insurance claims, and collect and receive payment of and endorse any instrument
in payment of loss or returned premiums or any other insurance refund or return,
and apply such amounts, at Secured Party's sole discretion, toward repayment of
the Indebtedness or replacement of the Collateral.
7.4 APPLICATION OF PROCEEDS. Any Proceeds and other monies or property
received by Secured Party pursuant to the terms of this Agreement or any Loan
Document may be applied by Secured Party first to the payment of expenses of
collection, including without limitation to reasonable attorneys' fees, and then
to the payment of the Indebtedness in such order of application as Secured Party
may elect. Notwithstanding the rights given to Debtor pursuant to California
Civil Code sections 1479 and 2822 or equivalent provisions in the laws of the
state specified in the governing law clause of this document (and any amendments
or successors thereto), to designate how payments will be applied, Debtor hereby
waives such rights and Secured Party shall have the right in its sole discretion
to determine the order and method of the application of payments received from
Debtor or from the sale or disposition of the Collateral and to revise such
application prospectively or retroactively at its discretion.
7.5 DEFICIENCY. If the proceeds of any sale of the Collateral are
insufficient to cover all costs and expenses of such sale and the payment in
full of all Indebtedness, plus all other sums required to be expended or
distributed by Secured Party, then Debtor shall be liable for any such
deficiency.
7.6 SECURED PARTY TRANSFER. Upon the transfer of all or any part of the
Indebtedness, Secured Party may transfer all or any part of its interest in the
Collateral and shall be fully discharged thereafter from all liability and
responsibility with respect to such interest in the Collateral so transferred,
and the transferee shall be vested with all the rights and powers of Secured
Party hereunder with respect to such interest in the Collateral so transferred.
ARTICLE 8 - GENERAL PROVISIONS
8.1 NOTICES. Any notice given by any party under this Agreement shall be
given in the manner prescribed in the Loan Agreement.
8.2 BINDING EFFECT. This Agreement shall be binding upon Debtor, its
permitted successors, representatives and assigns, and shall inure to the
benefit of Secured Party and its
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successors, representatives and assigns; provided however that Debtor may not
assign or transfer Debtor's obligations under this Agreement without Secured
Party's prior written consent. Secured Party reserves the right to sell, assign,
or transfer its rights and powers under this Agreement in whole or in part
without notice to Debtor. In that connection, Secured Party may disclose all
documents and information which Secured Party now or hereafter may have relating
to this Agreement, Debtor or Debtor's business.
8.3 NO WAIVER. Any waiver, consent or approval by Secured Party of any
Event of Default or breach of any provision, condition or covenant of this
Agreement or any Loan Document must be in writing and shall be effective only to
the extent set forth in writing. No waiver or any breach of default shall be
deemed a waiver of any later breach or default of the same or any other
provision of this Agreement or any of the Loan Documents. No failure or delay
on the part of Secured Party in exercising any power, right or privilege under
this Agreement or any Loan Document shall operate as a waiver thereof, and no
single or partial exercise of any such power, right or privilege shall preclude
any further exercise thereof, or the exercise of any further power, right or
privilege.
8.4 RIGHTS CUMULATIVE. All rights and remedies existing under this
Agreement are cumulative to, and not exclusive of, any other rights or remedies
available under contract or applicable law.
8.5 UNENFORCEABLE PROVISIONS. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall be so only as to such
jurisdiction and only to the extent of such prohibition or unenforceability, but
all the remaining provisions of this Agreement shall remain valid and
enforceable.
8.6 GOVERNING LAW, WAIVER OF NOTICE. Except as may be otherwise provided
by the Uniform Commercial Code or in any addendum hereto, this Agreement shall
be governed by and construed in accordance with the laws of the State of
California. To the fullest extent permitted by law, Debtor hereby waives
presentment, demand, protest, notice of dishonor and all other notices and
demands as well as any applicable statute of limitations.
8.7 ENTIRE AGREEMENT. This Agreement, together with the other Loan
Documents, is intended by Debtor and Secured Party as the final expression of
Debtor's obligations to Secured Party in connection with the Collateral and
supersedes all prior understandings or agreements concerning the subject matter
hereof. This Agreement may be amended only by a writing signed by Debtor and
accepted by Secured Party in writing.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
set forth in the preamble.
VeriSign, Inc. VENTURE LENDING & LEASING, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Chief Financial Officer President
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