Exhibit 10.27
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[LOGO OF GREYROCK CAPITAL APPEARS HERE]
SECURITY AGREEMENT
Debtor: PRIME RESPONSE GROUP, INC.
ADDRESS: ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
DATE: OCTOBER 28, 1999
THIS SECURITY AGREEMENT is entered into as of the above date at Los Angeles,
California, between the above-named debtor (the "Debtor"), whose chief executive
office is set forth above ("Debtor's Address"), and Greyrock Capital, a Division
of Banc of America Commercial Finance Corporation ("GC"), whose address is
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
1. DEFINITIONS OF OBLIGATIONS AND COLLATERAL; GRANT OF SECURITY INTEREST.
1.1 OBLIGATIONS. The term "Obligations" as used in this Agreement shall mean
and include each and all of the following: the obligation to pay and perform
when due all indebtedness, liabilities, obligations, guarantees, covenants,
agreements, warranties and representations of Debtor to GC, whether heretofore,
now or hereafter existing, owing or arising; whether primary, secondary, direct,
absolute, contingent, fixed, secured or unsecured; joint or several, monetary or
non-monetary; and whether created pursuant to, or caused by Debtor's breach of,
this Agreement, or any other present or future agreement or instrument, or
created by operation of law or otherwise. The Obligations include without
limitation the obligations of Debtor under that certain Continuing Guaranty in
favor of GC with respect to the indebtedness of Prime Response, Inc. (the
"Borrower") delivered under the Loan and Security Agreement dated October 28,
1999 between GC and the Borrower (the "Loan Agreement"), and all extensions and
renewals thereof.
1.2 COLLATERAL. As security and collateral for all Obligations, Debtor hereby
grants to GC a continuing security interest in, and assigns to GC, all of
Debtor's interest in the following, whether now owned or hereafter acquired, and
wherever located (collectively, the "Collateral"): All Inventory, Equipment,
Receivables, Investment Property and General Intangibles, including, without
limitation, all of Debtor's Deposit Accounts, all money, all collateral in which
GC is granted a security interest pursuant to any other present or future
agreement, all property now or at any time in the future in GC's possession, and
all proceeds (including proceeds of any insurance policies, proceeds of letters
of credit, proceeds of proceeds and claims against third parties), all products
of the foregoing, and all books and records related to any of the foregoing.
Payment and performance of the Obligations are collateralized by the Collateral
and by any security interest created in any other agreement now or hereafter
existing between GC and Debtor unless such other agreement is a deed of trust or
other security instrument having real property or rents from real property as
its subject matter and expressly provides to the contrary.
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2. REPRESENTATIONS, WARRANTIES AND COVENANTS OF DEBTOR.
Debtor represents and warrants that each of the following representations and
warranties now is, and hereafter will continue to be, true and that Debtor will
at all times comply with each of the following covenants:
2.1 CORPORATE EXISTENCE AND POWER. Debtor, if a corporation, is and will
continue to be, duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation. Debtor is and will continue to
be qualified and licensed to do business in all jurisdictions in which any
failure to do so would have a material adverse effect on Debtor, and Debtor has
and will continue to have all requisite power and authority to carry on its
business as it is now, or may hereafter be, conducted.
2.2 AUTHORITY. Debtor is, and will continue to be, authorized to enter into,
to grant security interests in its property pursuant to, and to perform its
obligations under, this Agreement, and all other instruments and transactions
contemplated herein. The execution, delivery and performance by Debtor of this
Agreement, and all other documents contemplated hereby (i) have been duly and
validly authorized, (ii) are enforceable against Debtor in accordance with their
terms (except as enforcement may be limited by equitable principles and by
bankruptcy, insolvency, reorganization, moratorium or similar laws relating to
creditors' rights generally), (iii) do not violate Debtor's articles or
certificate of incorporation, or Debtor's by-laws, or any law or any material
agreement or instrument which is binding upon Debtor or its property, and
(iv) do not constitute grounds for acceleration of any material indebtedness or
obligation under any material agreement or instrument which is binding upon
Debtor or its property.
2.3 NAME; TRADE NAMES AND STYLES. The name of Debtor set forth in the heading
to this Agreement is its correct name. Listed on the Schedule are all prior
names of Debtor and all of Debtor's present and prior trade names. Debtor shall
give GC 30 days' prior written notice before changing its name or doing business
under any other name. Debtor has complied, and will in the future comply, with
all laws relating to the conduct of business under a fictitious business name.
2.4 PLACE OF BUSINESS; LOCATION OF COLLATERAL. The address set forth in the
heading to this Agreement is Debtor's chief executive office. In addition,
Debtor has places of business and Collateral is located only at the locations
set forth on the Schedule*. Debtor will give GC at least 30 days' prior written
notice before opening any additional place of business, changing its chief
executive office, or moving any of the Collateral** other than Debtor's Address
or one of the locations set forth on the Schedule.
*(EXCEPT FOR SALES OFFICES AT WHICH NOT MORE THAN $50,000 OF COLLATERAL IS
LOCATED)
** TO ANY NEW LOCATION NOT PREVIOUSLY REPORTED TO GC
2.5 TITLE TO COLLATERAL; PERMITTED LIENS. Debtor is now, and will at all times
in the future be, the sole owner of all the Collateral, except for items of
Equipment which are leased by Debtor. The Collateral now is and will remain
free and clear of any and all liens, charges, security interests, encumbrances
and adverse claims, except for Permitted Liens. GC now has, and will continue
to have, a first-priority perfected and enforceable security interest in all of
the Collateral, subject only to the Permitted Liens, and Debtor will at all
times defend GC and the Collateral against all claims of others. So long as any
Loan is outstanding which is a term loan, none of the Collateral now is or will
be affixed to any real property in such a manner, or with such intent, as to
become a fixture. Debtor is not and will not become a lessee under any real
property lease pursuant to which the lessor may obtain any rights in any of the
Collateral* and no such lease now prohibits, restrains, impairs or will
prohibit, restrain or impair Debtor's right to remove any Collateral from the
leased premises. Whenever any Collateral is located upon premises in which any
third party has an interest (whether as owner, mortgagee, beneficiary under a
deed of trust, lien or otherwise), Debtor shall, whenever requested by GC, use
its best efforts to cause such third party to execute and deliver to GC, in form
acceptable to GC, such waivers and subordinations as GC shall specify, so as to
ensure that GC's rights in the Collateral are, and will continue to be, superior
to the rights of any such third
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party. Debtor will keep in full force and effect, and will comply with all the**
terms of, any lease of real property where any of the Collateral now or in the
future may be located***.
*(UNLESS DEBTOR PROVIDES GC WITH A LANDLORD WAIVER WITH RESPECT THERETO IN
FORM AND SUBSTANCE SATISFACTORY TO GC, IF SO REQUESTED BY GC, OR UNLESS THE SAME
IS A SALES OFFICE AT WHICH NOT MORE THAN $50,000 OF COLLATERAL IS LOCATED)
**MATERIAL
***EXCEPT FOR LEASES OF SALES OFFICES AT WHICH NOT MORE THAN $50,000 OF
COLLATERAL IS LOCATED
2.6 MAINTENANCE OF COLLATERAL. Debtor will maintain the * Collateral in good
working condition, ordinary wear and tear excepted, and Debtor will not use the
Collateral for any unlawful purpose. Debtor will immediately advise GC in
writing of any material loss or damage to the Collateral. Debtor will maintain
the validity of, and otherwise maintain, preserve and protect, its patents,
trademarks, copyrights and other intellectual property in accordance with
prudent business practices.
*EQUIPMENT AND OTHER TANGIBLE
2.7 BOOKS AND RECORDS. Debtor has maintained and will maintain at Debtor's
Address complete and accurate books and records comprising an accounting system
in accordance with generally accepted accounting principles.
2.8 FINANCIAL CONDITION AND STATEMENTS. All financial statements now or in the
future delivered to GC have been, and will be, prepared in conformity with
generally accepted accounting principles and now and in the future will
completely and fairly reflect the financial condition of Debtor, at the times
and for the periods therein stated. Between the last date covered by any such
statement provided to GC and the date hereof, there has been no material adverse
change in the financial condition or business of Debtor. Debtor is now and will
continue to be solvent in both the "equity" and "bankruptcy" sense. Debtor will
deliver to GC a copy of all financial statements prepared with respect to Debtor
no later than five (5) days after the preparation or receipt thereof by Debtor.
Debtor will cause to be prepared, and will provide GC (i) within thirty (30)
days following the end of each fiscal quarter, complete quarterly financial
statements, and (ii) within ninety (90) days following the end of Debtor's
fiscal year, complete annual financial statements, certified by independent
certified public accountants acceptable to GC.
2.9 TAX RETURNS AND PAYMENTS; PENSION CONTRIBUTIONS. Debtor has timely filed,
and will timely file, all tax returns and reports required by foreign, federal,
state or local law. Debtor has timely paid, and will timely pay, all foreign,
federal, state and local taxes, assessments, deposits and contributions now or
hereafter owed by Debtor *. Debtor may defer payment of any contested taxes
provided that Debtor (i) in good faith contests Debtor's obligation to pay such
taxes by appropriate proceedings promptly and diligently instituted and
conducted, (ii) notifies GC in writing of the commencement of and any material
development in such proceedings, and (iii) posts bonds or takes any other steps
required to keep such contested taxes from becoming a lien against or charge
upon any of the Collateral. Debtor shall, at all times, maintain a separate
payroll account which shall be used exclusively for payment of payroll and
payroll taxes and other items related directly to payroll. Debtor is unaware of
any claims or adjustments proposed for any of Debtor's prior tax years which
could result in additional taxes becoming due and payable by Debtor. Debtor has
paid, and shall continue to pay, all amounts necessary to fund all present and
future pension, profit sharing and deferred compensation plans in accordance
with their terms, and Debtor has not and will not withdraw from participation
in, permit partial or complete termination of, or permit the occurrence of any
other event with respect to, any such plan which could result in any liability
of Debtor, including, without limitation, any liability to the Pension Benefit
Guaranty Corporation or its successors or any other governmental agency.
*(EXCEPT WHERE FAILURE TO DO SO WOULD NOT HAVE A MATERIAL ADVERSE EFFECT ON
DEBTOR AND WOULD NOT RESULT IN A LIEN ON ANY OF THE COLLATERAL, BUT ONLY SO LONG
AS THE DEBTOR MAINTAINS ADEQUATE RESERVES WITH RESPECT TO SUCH LIABILITIES IN
ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES CONSISTENTLY APPLIED)
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2.10 COMPLIANCE WITH LAW. Debtor has complied, and will comply, in all
material respects, with all provisions of all foreign, federal, state and local
laws and regulations relating to Debtor, including, but not limited to, those
relating to Debtor's ownership of real or personal property, the conduct and
licensing of Debtor's business and employment of Debtor's personnel and all
environmental matters.
2.11 LITIGATION. Except as disclosed in the Schedule, there is no claim, suit,
litigation, proceeding or investigation pending or (to best of Debtor's
knowledge) threatened by or against or affecting Debtor in any court or before
any governmental agency (or any basis therefor known to Debtor) which * result,
either separately or in the aggregate, in any material adverse change in the
financial condition or business of Debtor, or in any material impairment in the
ability of Debtor to carry on its business in substantially the same manner as
it is now being conducted. Debtor will promptly inform GC in writing of any
claim, proceeding, litigation or investigation in the future threatened or
instituted by or against Debtor **.
**IS REASONABLY LIKELY TO
**WHICH, IF DETERMINED ADVERSELY TO THE DEBTOR, WOULD BE REASONABLY LIKELY TO
RESULT IN (I) A JUDGMENT, LOSS OR PAYMENT OF $50,000 OR MORE, OR $100,000 OR
MORE IN THE AGGREGATE, OR (II) A MATERIAL ADVERSE CHANGE IN THE BUSINESS OR
CONDITION OF DEBTOR, OR A MATERIAL IMPAIRMENT IN THE ABILITY OF DEBTOR TO CARRY
ON ITS BUSINESS IN SUBSTANTIALLY THE SAME MANNER AS IT IS NOW BEING CONDUCTED
2.12 YEAR 2000 COMPLIANCE. The Debtor has (i) initiated a review and
assessment of all areas within its and each of its subsidiaries' business and
operations (including those affected by suppliers and vendors) that could be
adversely affected by the "Year 2000 Problem" (that is, the risk that computer
applications used by the Debtor or any of its subsidiaries (or its suppliers and
vendors) may be unable to recognize and perform properly date-sensitive
functions involving certain dates prior to and any date after December 31,
1999), (ii) developed a plan and timeline for addressing the Year 2000 Problem
on a timely basis, and (iii) to date, implemented that plan in accordance with
that timetable. The Debtor reasonably believes that all computer applications
(including those of its suppliers and vendors) that are material to its or any
of its subsidiaries' business and operations will on a timely basis be able to
perform properly date-sensitive functions for all dates before and after
January 1, 2000 (that is, be "Year 2000 compliant"), except to the extent that a
failure to do so could not reasonably be expected to have material adverse
effect. The Debtor will promptly notify GC in the event the Debtor discovers or
determines that any computer application (including those of its suppliers and
vendors) that is material to its or any of its subsidiaries' business and
operations will not be Year 2000 compliant on a timely basis, except to the
extent that such failure could not reasonably be expected to have a material
adverse effect.
2.13 REPRESENTATIONS RELATING TO RECEIVABLES. Debtor represents and warrants
to GC that each of its Receivables represents an undisputed, bona fide,
existing, unconditional obligation of the Account Debtor created by the sale,
delivery, and acceptance of goods* or the rendition of services, in the ordinary
course of Debtor's business business**.
*, THE LICENSING OF SOFTWARE,
**(EXCEPT AS DISCLOSED TO AND APPROVED BY GC)
2.14 REPRESENTATIONS RELATING TO DOCUMENTS AND LEGAL COMPLIANCE. Debtor
represents and warrants to GC as follows: All statements made and all unpaid
balances appearing in all invoices, instruments and other documents evidencing
the Receivables are and shall be true and correct and all such invoices,
instruments and other documents and all of Debtor's books and records are and
shall be genuine and in all respects what they purport to be, and all
signatories and endorsers* have the capacity to contract. All sales and other
transactions underlying or giving rise to each Receivable shall comply with all
applicable laws and governmental rules and regulations. All signatures and
indorsements on all documents, instruments, and agreements relating to all
Receivables* are and shall be genuine, and all such documents, instruments and
agreements are and shall be legally enforceable in accordance with their terms.
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*(TO THE BEST OF DEBTOR'S KNOWLEDGE, FOR PARTIES OTHER THAN DEBTOR)
2.15 SCHEDULES AND DOCUMENTS RELATING TO RECEIVABLES AND INVESTMENT PROPERTY.
Debtor shall deliver to GC transaction reports and loan requests, schedules and
assignments of all Receivables, and schedules of collections, all on GC's
standard forms*; provided, however, that Debtor's failure to execute and deliver
the same shall not affect or limit GC's security interest and other rights in
all of Debtor's Receivables, nor shall GC's failure to advance or lend against a
specific Receivable affect or limit GC's security interest and other rights
therein. Together with each such schedule and assignment, or later if requested
by GC, Debtor shall furnish GC with copies (or, at GC's request, originals) of
all contracts, orders, invoices, and other similar documents, and all original
shipping instructions, delivery receipts, bills of lading, and other evidence of
delivery, for any goods the sale or disposition of which gave rise to such
Receivables, and Debtor warrants the genuineness of all of the foregoing.
Debtor shall also furnish to GC an aged accounts receivable trial balance in
such form and at such intervals as GC shall request. In addition, Debtor shall
deliver to GC the originals of all instruments, chattel paper, security
agreements, guarantees and other documents and property evidencing or securing
any Receivables, immediately upon receipt thereof and in the same form as
received, with all necessary indorsements, and, upon the request of GC, Debtor
shall deliver to GC all letters of credit and also all certificated securities
with respect to any Investment Property, with all necessary indorsements, and
obtain such account control agreements with securities intermediaries and take
such other action with respect to any Investment Property, as GC shall request,
in form and substance satisfactory to GC. Upon request of GC Debtor additionally
shall obtain consents from any letter of credit issuers with respect to the
assignment to GC of any letter of credit proceeds.
*, AS GC SHALL REASONABLY REQUEST
2.16 COLLECTION OF RECEIVABLES AND INVESTMENT PROPERTY INCOME. Debtor shall
have the right to collect all Receivables and retain all Investment Property
payments and distributions, unless and until a Default or an Event of Default
has occurred. Except as otherwise provided in the Schedule to the Loan
Agreement, Debtor shall hold all payments on, and proceeds of, and distributions
with respect to, Receivables and Investment Property in trust for GC, and Debtor
shall deliver all such payments, proceeds and distributions to GC, within one
business day after receipt of the same, in their original form, duly endorsed,
to be applied to the Obligations in such order as GC shall determine. Upon the
occurrence of a Default or an Event of Default, any such distributions and
payments with respect to any Investment Property held in any securities account
shall be held and retained in such securities account as part of the Collateral.
2.17 DISPUTES. Debtor shall notify GC promptly of all disputes * or claims
relating to Receivables, as requested by GC. Debtor shall not forgive, or
settle any Receivable for less than payment in full, or agree to do any of the
foregoing, except that Debtor may do so, provided that: (i) Debtor does so in
good faith, in a commercially reasonable manner, in the ordinary course of
business, and in arm's length transactions, which are reported to GC on in any
reports requested by to GC hereunder; and (ii) no Default or Event of Default
has occurred and is continuing.
* IN EXCESS OF $50,000
2.18 RETURNS. Provided no Event of Default has occurred and is continuing, if
any Account Debtor returns any Inventory to Debtor in the ordinary course of its
business, Debtor shall promptly determine the reason for such return and
promptly issue a credit memorandum to the Account Debtor in the appropriate
amount (and, if requested by GC with respect to such returns, sending a copy to
GC). In the event any attempted return occurs after the occurrence of any Event
of Default, Debtor shall (i) not accept any return without GC's prior written
consent, (ii) hold the returned Inventory in trust for GC, (iii) segregate all
returned Inventory from all of Debtor's other property, (iv) conspicuously label
the returned Inventory as GC's property, and (v) immediately notify GC of the
return of any Inventory, specifying the reason for such return, the location and
condition of the returned Inventory, and on GC's request deliver such returned
Inventory to GC.
2.19 VERIFICATION. GC may, from time to time, verify directly with the
respective Account Debtors
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the validity, amount and other matters relating to the Receivables, by means of
mail, telephone or otherwise, either in the name of Debtor or GC or such other
name as GC may choose, and GC or its designee may, at any time, notify Account
Debtors that it has a security interest in the Receivables.
2.20 NO LIABILITY. GC shall not under any circumstances be responsible or
liable for any shortage or discrepancy in, damage to, or loss or destruction of,
any goods, the sale or other disposition of which gives rise to a Receivable, or
for any error, act, omission, or delay of any kind occurring in the settlement,
failure to settle, collection or failure to collect any Receivable, or for
settling any Receivable in good faith for less than the full amount thereof, nor
shall GC be deemed to be responsible for any of Debtor's obligations under any
contract or agreement giving rise to a Receivable. Nothing herein shall,
however, relieve GC from liability for its own gross negligence or willful
misconduct.
2.21 CONTINUING EFFECT. All representations, warranties and covenants of
Debtor contained in this Agreement and any other agreement with GC shall be true
and correct at the time of the effective date of each such agreement and shall
be deemed continuing and shall remain true, correct and in full force and effect
until payment and satisfaction in full of all of the Obligations, and Debtor
acknowledges that GC is and will be expressly relying on such representations,
warranties and covenants.
3. ADDITIONAL DUTIES OF DEBTOR.
3.1 INSURANCE. Debtor shall, at all times, insure all of the tangible personal
property Collateral and carry such other business insurance, with insurers
reasonably acceptable to GC, in such form and amounts as GC may reasonably
require, and Debtor shall provide evidence of such insurance to GC, so that GC
is satisfied that such insurance is, at all times, in full force and effect.
All such insurance policies shall name GC as an additional loss payee, and shall
contain a lenders loss payee endorsement in form reasonably acceptable to GC.
Upon receipt of the proceeds of any such insurance, GC shall apply such proceeds
in reduction of the Obligations as GC shall determine in its sole discretion,
except that, provided no Default or Event of Default has occurred and is
continuing, GC shall release to Debtor* insurance proceeds with respect to
Equipment totaling less than $100,000, which shall be utilized by Debtor for the
replacement of the Equipment with respect to which the insurance proceeds were
paid**. GC may require reasonable assurance that the insurance proceeds so
released will be so used. If Debtor fails to provide or pay for any insurance,
GC may, but is not obligated to, obtain the same at Debtor's expense. Debtor
shall promptly deliver to GC copies of all*** reports made to insurance
companies.
*(I)
**AND (II) INSURANCE PROCEEDS WITH RESPECT TO INVENTORY TOTALING LESS THAN
$100,000, WHICH SHALL BE UTILIZED BY DEBTOR FOR THE REPLACEMENT OF THE INVENTORY
WITH RESPECT TO WHICH THE INSURANCE PROCEEDS WERE PAID.
*** MATERIAL
3.2 REPORTS. At its expense, Debtor shall report, in form satisfactory to GC,
such information as GC may from time to time reasonably specify regarding Debtor
or the Collateral; such reports shall be rendered with such frequency as GC may
reasonably specify. All reports furnished GC shall be complete and accurate in
all respects.
3.3 ACCESS TO COLLATERAL, BOOKS AND RECORDS. At reasonable times, and on one
business day's notice, GC, or its agents, shall have the right to inspect the
Collateral, and the right to audit and copy Debtor's books and records. GC
shall take reasonable steps to keep confidential all information obtained in any
such inspection or audit, but GC shall have the right to disclose any such
information to its auditors, regulatory agencies, and attorneys, and pursuant to
any subpoena or other legal process. The foregoing inspections and audits shall
be at Debtor's expense. Debtor will not enter into any agreement with any
accounting firm, service bureau or third party to store Debtor's books or
records at any location other than Debtor's Address, without first obtaining
GC's written consent, which may be conditioned upon such accounting firm,
service bureau or other third party agreeing to give GC the same rights with
respect to access to books and records and related rights as GC has under this
Agreement.
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3.4 REMITTANCE OF PROCEEDS. Except as otherwise provided in the Schedule to
the Loan Agreement, all proceeds arising from the sale or other disposition of
any Collateral shall be delivered, in kind, by Debtor to GC* in the original
form in which received by Debtor not later than the following business day after
receipt by Debtor**, to be applied to the Obligations in such order as GC shall
determine; provided that, if no Default or Event of Default has occurred and is
continuing, and if no term loan is outstanding hereunder, then Debtor shall not
be obligated to remit to GC the proceeds of the sale of Equipment which is sold
in the ordinary course of business, in a good-faith arm's-length transaction***.
Except for the proceeds of the sale of Equipment as set forth above and except
as provided in the Schedule to the Loan Agreement, Debtor shall not commingle
proceeds of Collateral with any of Debtor's other funds or property, and shall
hold such proceeds separate and apart from such other funds and property and in
an express trust for GC. Nothing in this Section limits the restrictions on
disposition of Collateral set forth elsewhere in this Agreement.
*(OR, AT GC'S REQUEST, INTO A LOCKBOX ACCOUNT, OR OTHER BLOCKED ACCOUNT,
ESTABLISHED PURSUANT TO AN AGREEMENT ACCEPTABLE TO GC, AND WITH A BANK SELECTED
BY DEBTOR WHICH IS ACCEPTABLE TO GC)
**(EXCEPT WIRE TRANSFER REMITTANCES RECEIVED BY DEBTOR SHALL BE TRANSMITTED TO
GC IN TOTAL THE DAY FOLLOWING POSTING TO DEBTOR'S BANK ACCOUNT)
***NOR SHALL DEBTOR BE OBLIGATED TO REMIT TO GC ANY SUCH PROCEEDS UNLESS THE
AGGREGATE AMOUNT THEREOF RECEIVED AND HELD BY THE DEBTOR EQUALS OR EXCEEDS
$25,000
3.5 PROHIBITED TRANSACTIONS. Debtor shall not without GC's prior written
consent *: merge, consolidate, dissolve, or acquire any other corporation or
entity; guarantee or otherwise become in any way liable with respect to the
obligations of another party or entity (except by endorsements of instruments or
items of payment for deposit to the general account of Debtor or which are
transmitted or turned over to GC on account of the Obligations); pay or declare
any dividends upon Debtor's stock; redeem, retire, purchase or otherwise
acquire, directly or indirectly, any of Debtor's stock; make any change in
Debtor's capital structure which would have a material adverse effect on Debtor
or on the prospect of payment of the Obligations; sell or transfer any
Collateral, except for the sale of finished Inventory or Equipment in the
ordinary course of Debtor's business, and licenses and sublicenses of
intellectual property on a non-exclusive basis in the ordinary course of
Debtor's business, in good-faith arm's length transactions, provided that, in
each case, no Event of Default has occurred and is continuing; lend or
distribute any of Debtor's property or assets, or incur any debts, outside of
the ordinary course of Debtor's business.
* EXCEPT AS PERMITTED BY THE LOAN AGREEMENT
3.6 LITIGATION COOPERATION. Should any third-party suit or proceeding be
instituted by or against GC with respect to any Collateral or in any manner
relating to Debtor, Debtor shall, without expense to GC, make available Debtor
and its officers, employees and agents, and Debtor's books and records to the
extent that GC may deem them reasonably necessary in order to prosecute or
defend any such suit or proceeding.
3.7 NOTIFICATION OF CHANGES. Debtor will promptly notify GC in writing of any
change in its *, the opening of any new bank account or other deposit account,
the opening of any new securities account, and any material adverse change in
the business or financial affairs of Debtor.
*EXECUTIVE OFFICERS
3.8 FURTHER ASSURANCES. Debtor agrees, at its expense, on request by GC, to
execute all documents and take all actions, as GC may deem reasonably necessary
or useful in order to perfect and maintain GC's perfected security interest in
the Collateral, and in order to fully consummate the transactions contemplated
by this Agreement.
3.9 INDEMNITY. Debtor hereby agrees to indemnify GC and hold GC harmless from
and against any and all claims, debts, liabilities, demands, obligations,
actions, causes of action, penalties, costs and expenses (including attorneys'
fees), of every nature, character and description, which GC may sustain or incur
based upon or arising out of any of the Obligations, any actual or alleged
failure to collect and pay over any withholding or other tax relating to Debtor
or its employees, any relationship or
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agreement between GC and Debtor, any actual or alleged failure of GC to comply
with any writ of attachment or other legal process relating to Debtor or any of
its property, or any other matter, cause or thing whatsoever occurred, done,
omitted or suffered to be done by GC relating to Debtor or the Obligations
(except any such amounts sustained or incurred as the result of the gross
negligence or willful misconduct of GC or any of its directors, officers,
employees, agents, attorneys, or any other person affiliated with or
representing GC). Notwithstanding any provision in this Agreement to the
contrary, the indemnity agreement set forth in this Section shall survive any
termination of this Agreement and shall for all purposes continue in full force
and effect.
4. EVENTS OF DEFAULT AND REMEDIES.
4.1 EVENTS OF DEFAULT. If any of the following events shall occur, such an
occurrence shall constitute an "Event of Default" and Debtor shall provide GC
with immediate written notice thereof: (a) Debtor shall fail to perform when
due any term or condition contained in this Agreement or any other agreement
between GC and Debtor; or (b) any levy, assessment, attachment, seizure, lien or
encumbrance (other than a Permitted Lien) for any cause or reason whatsoever,
upon all or any part of the Collateral (unless discharged by payment, release or
fully bonded against not more than * days after such event has occurred); or
(c) the occurrence of any "Event of Default" as defined in that certain Loan and
Security Agreement dated October 28, 1999, between GC and Borrower.
* THIRTY (30)
4.2 REMEDIES. Upon the occurrence of any Event of Default, and at any time
thereafter, GC, at its option, and without notice or demand of any kind (all of
which are hereby expressly waived by Debtor), may do any one or more of the
following: (a) Accelerate and declare all or any part of the Obligations to be
immediately due, payable, and performable notwithstanding any deferred or
installment payments allowed by any instrument evidencing or relating to any
Obligation; (b) Take possession of any or all of the Collateral wherever it may
be found, and for that purpose Debtor hereby authorizes GC without judicial
process to enter onto any of the Debtor's premises without hindrance to search
for, take possession of, keep, store, or remove any of the Collateral and remain
on such premises or cause a custodian to remain thereon in exclusive control
thereof without charge for so long as ▇▇ ▇▇▇▇▇ necessary in order to complete
the enforcement of its rights under this Agreement or any other agreement;
provided, however, that should GC seek to take possession of any or all of the
Collateral by Court process, Debtor hereby irrevocably waives: (i) any bond and
any surety or security relating thereto required by any statute, court rule or
otherwise as an incident to such possession; (ii) any demand for possession
prior to the commencement of any suit or action to recover possession thereof;
and (iii) any requirement that GC retain possession of and not dispose of any
such Collateral until after trial or final judgment; (c) Require Debtor to
assemble any or all of the Collateral and make it available to GC at a place or
places to be designated by GC which are reasonably convenient to GC and Debtor,
and to remove the Collateral to such locations as GC may deem advisable; (d)
Complete processing, manufacturing or repair of all or any portion of the
Collateral prior to a disposition thereof and, for such purpose and for the
purpose of removal, GC shall have the right to use Debtor's premises, vehicles,
hoists, lifts, cranes, equipment and all other property without charge. Without
limiting any security interest granted GC in other provisions of this Agreement
or any other agreement, for the purpose of completing manufacturing, processing
or repair of Collateral and the disposition thereof, GC is hereby granted a
security interest in, and GC and any purchaser from GC may use without charge,
all of the Debtor's plant, machinery, equipment, labels, licenses, processes,
patents, patent applications, copyrights, names, trade names, trademarks, trade
secrets, logos, advertising material and all other assets, and may also utilize
all of Debtor's rights under any license or franchise agreement; (e) Sell, ship,
reclaim, lease or otherwise dispose of all or any portion of the Collateral in
its condition at the time GC obtains possession or after further manufacturing,
processing or repair, at any one or more public and/or private sales (including
execution sales), in lots or in bulk, for cash, exchange or other property or on
credit and to adjourn any such sale from time to time without notice other than
oral announcement at the time scheduled for sale. GC shall have the right to
conduct such disposition on Debtor's premises without charge for such time or
times as ▇▇ ▇▇▇▇▇ fit, or on GC's premises, or
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elsewhere and the Collateral need not be located at the place of disposition. GC
may directly or through any affiliated company purchase or lease any Collateral
at any such public disposition and, if permissible under applicable law, at any
private disposition. Any sale or other disposition of Collateral shall not
relieve Debtor of any liability Debtor may have if any Collateral is defective
as to title or physical condition or otherwise at the time of sale; (f) Demand
payment of, and collect any Receivables and General Intangibles comprising part
or all of the Collateral and, in connection therewith, Debtor irrevocably
authorizes GC to endorse or sign Debtor's name on all collections, receipts,
instruments and other documents, to take possession of and open mail addressed
to Debtor and remove therefrom payments made with respect to any item of the
Collateral or proceeds thereof, and, in GC's sole discretion, to grant
extensions of time to pay, compromise claims and settle Receivables, General
Intangibles and the like for less than face value; (g) Collect, receive, dispose
of and realize upon any Investment Property, including withdrawal of any and all
funds from any securities accounts; and (h) Demand and receive possession of any
of Debtor's federal and state income tax returns and the Records utilized in the
preparation thereof or referring thereto. All reasonable attorneys' fees,
expenses, costs, liabilities and obligations incurred by GC with respect to the
foregoing shall be added to and become part of the Obligations, shall be due on
demand, and shall bear interest at a rate equal to the highest interest rate
applicable to any of the Obligations.
4.3 STANDARDS FOR DETERMINING COMMERCIAL REASONABLENESS. Debtor and GC agree
that a sale or other disposition (collectively, "sale") of any Collateral which
complies with the following standards will conclusively be deemed to be
commercially reasonable: (i) Notice of the sale is given to Debtor at least
seven days prior to the sale, and, in the case of a public sale, notice of the
sale is published at least seven days before the sale in a newspaper of general
circulation in the county where the sale is to be conducted; (ii) Notice of the
sale describes the collateral in general, non-specific terms; (iii) The sale is
conducted at a place designated by GC, with or without the Collateral being
present; (iv) The sale commences at any time between 8:00 a.m. and 6:00 p.m;
(v) Payment of the purchase price in cash or by cashier's check or wire transfer
is required; (vi) With respect to any sale of any of the Collateral, GC may (but
is not obligated to) direct any prospective purchaser to ascertain directly from
Debtor any and all information concerning the same. GC shall be free to employ
other methods of noticing and selling the Collateral, in its discretion, if they
are commercially reasonable. Without limiting the generality of the foregoing,
Debtor recognizes that GC may be unable to make a public sale of any or all of
the Investment Property, by reason of prohibitions contained in applicable
securities laws or otherwise, and expressly agrees that a private sale to a
restricted group of purchasers for investment and not with a view to any
distribution thereof shall be considered a commercially reasonable sale.
4.4 APPLICATION OF PROCEEDS. All proceeds realized as the result of any sale
or other disposition of the Collateral shall be applied by GC first to the
reasonable costs, expenses, liabilities, obligations and attorneys' fees
incurred by GC in the exercise of its rights under this Agreement, second to the
interest due upon any of the Obligations, and third to the principal of the
Obligations, in such order as GC shall determine in its sole discretion. Any
surplus shall be paid to Debtor or other persons legally entitled thereto;
Debtor shall remain liable to GC for any deficiency. If GC, in its sole
discretion, directly or indirectly enters into a deferred payment or other
credit transaction with any purchaser at any sale of Collateral, GC shall have
the option, exercisable at any time, in its sole discretion, of either reducing
the Obligations by the principal amount of purchase price or deferring the
reduction of the Obligations until the actual receipt by GC of the cash
therefor.
4.5 REMEDIES CUMULATIVE. In addition to the rights and remedies set forth in
this Agreement, GC shall have all the other rights and remedies accorded a
secured party under the Code and under any and all other applicable laws and in
any other instrument or agreement now or hereafter entered into between GC and
Debtor and all of such rights and remedies are cumulative and none is exclusive.
Exercise or partial exercise by GC of one or more of its rights or remedies
shall not be deemed an election, nor bar GC from subsequent exercise or partial
exercise of any other rights or remedies. The failure or delay of GC to
exercise any rights or remedies shall not operate as a waiver thereof, but all
rights and remedies shall continue in full force and effect until all of the
Obligations have been fully paid and performed.
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5. POWER OF ATTORNEY.
Upon the occurrence of any Event of Default, without limiting GC's other
rights and remedies, Debtor grants to GC an irrevocable power of attorney
coupled with an interest, authorizing and permitting GC (acting through any of
its employees, attorneys or agents) at any time*, at its option, but without
obligation, with or without notice to Debtor, and at Debtor's expense, to do any
or all of the following, in Debtor's name or otherwise, but GC agrees to
exercise the following powers in a commercially reasonable manner: (a) Execute
on behalf of Debtor any documents that GC may, in its sole discretion, deem
advisable in order to perfect and maintain GC's security interest in the
Collateral, or in order to exercise a right of Debtor or GC, or in order to
fully consummate all the transactions contemplated under this Agreement, and all
other present and future agreements; (b) Execute on behalf of Debtor any
document exercising, transferring or assigning any option to purchase, sell or
otherwise dispose of or to lease (as lessor or lessee) any real or personal
property which is part of GC's Collateral or in which GC has an interest; (c)
Execute on behalf of Debtor, any invoices relating to any Receivables, any draft
against any Account Debtor and any notice to any Account Debtor, any proof of
claim in bankruptcy, any Notice of Lien, claim of mechanic's, materialman's or
other lien, or assignment or satisfaction of mechanic's, materialman's or other
lien; (d) Take control in any manner of any cash or non-cash items of payment or
proceeds of Collateral; endorse the name of Debtor upon any instruments, or
documents, evidence of payment or Collateral that may come into GC's possession;
(e) Endorse all checks and other forms of remittances received by GC; (f) Pay,
contest or settle any lien, charge, encumbrance, security interest and adverse
claim in or to any of the Collateral, or any judgment based thereon, or
otherwise take any action to terminate or discharge the same; (g) Grant
extensions of time to pay, compromise claims and settle Receivables and General
Intangibles for less than face value and execute all releases and other
documents in connection therewith; (h) Pay any sums required on account of
Debtor's taxes or to secure the release of any liens therefor, or both; (i)
Settle and adjust, and give releases of, any insurance claim that relates to any
of the Collateral and obtain payment therefor; (j) Instruct any third party
having custody or control of any books or records belonging to, or relating to,
Debtor to give GC the same rights of access and other rights with respect
thereto as GC has under this Agreement; and (k) Execute and deliver to any
securities intermediary or other Person any entitlement order, account control
agreement or other notice, document or instrument with respect to any Investment
Property; and (l) Take any action or pay any sum required of Debtor pursuant to
this Agreement and any other present or future agreements. Any and all
reasonable sums paid and any and all reasonable costs, expenses, liabilities,
obligations and reasonable attorneys' fees incurred by GC with respect to the
foregoing shall be added to and become part of the Obligations, shall be payable
on demand, and shall bear interest at a rate equal to the highest interest rate
applicable to any of the Obligations. In no event shall GC's rights under the
foregoing power of attorney or any of GC's other rights under this Agreement be
deemed to indicate that GC is in control of the business, management or
properties of Debtor.
*DURING THE CONTINUANCE OF SUCH EVENT OF DEFAULT
6. TERM.
This Agreement shall continue in effect until all of the Obligations have been
paid and performed in full and all agreements between GC and Debtor have been
terminated.
7. GENERAL WAIVERS.
The failure of GC at any time or times hereafter to require Debtor to strictly
comply with any of the provisions of this Agreement or any other present or
future agreement between Debtor and GC shall not waive or diminish any right of
GC thereafter to demand and receive strict compliance therewith. Any waiver of
any default shall not waive or affect any other default, whether prior or
subsequent thereto. None of the provisions of this Agreement or other agreement
now or hereafter executed by Debtor and delivered to GC shall be deemed to have
been waived by any act or knowledge of GC or its agents or employees, but only
by a specific written waiver signed by an officer of GC and delivered to Debtor.
Debtor waives the benefit of all statute(s) of limitations in any action or
proceeding based upon or arising out of this Agreement or any other present or
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future instrument or agreement between GC and Debtor. Debtor waives any and all
notices or demands which Debtor might be entitled to receive with respect to
this Agreement, or any other agreement by virtue of any applicable law*. Debtor
hereby waives demand, protest, notice of protest and notice of default or
dishonor, notice of payment and nonpayment, release, compromise, settlement,
extension or renewal of any commercial paper, instrument, Receivables, General
Intangible, document or guaranty at any time held by GC on which Debtor is or
may in any way be liable, and notice of any action taken by GC unless expressly
required by this Agreement.
*(EXCEPT THAT, PRIOR TO OR CONCURRENTLY WITH THE TAKING OF THE FIRST OF ANY OF
THE FOLLOWING ACTIONS, GC SHALL GIVE DEBTOR ONE GENERAL WRITTEN NOTICE STATING
THAT GC IS "PROCEEDING TO EXERCISE ITS RIGHTS AND REMEDIES" OR WORDS TO THAT
EFFECT)
8. ATTACHMENT WAIVERS.
To the extent that GC, in its sole and absolute discretion, determines, prior
to the disposition of all of the Collateral, that the amount to be realized by
GC from the disposition of all of the Collateral may be less than the amount of
the Obligations, and to the full extent of any such anticipated deficiency,
Debtor waives the benefit of Section 483.010(b) of the California Code of Civil
Procedure and of any and all other statutes requiring GC to first resort to and
exhaust all of the Collateral before seeking or obtaining any attachment remedy
against Debtor, and Debtor expressly agrees that, to the extent of such
anticipated deficiency, GC shall have all of the rights of an unsecured
creditor, including, but not limited to, the right of GC, prior to the
disposition of all of the Collateral, to obtain a temporary protective order and
writ of attachment or other available remedy. GC shall have no liability to
Debtor if the actual deficiency realized by GC is less than the anticipated
deficiency on the basis of which GC obtained a temporary protective order or
writ of attachment. In the event GC should seek a temporary protective order,
or writ of attachment, or both, Debtor hereby irrevocably waives any bond and
any surety or security relating thereto required by any statute, court rule or
otherwise as an incident or condition precedent to the issuance of any temporary
protective order or writ of attachment.
9. DEFINITIONS
As used in this Agreement, the following terms have the following meanings:
"Account Debtor" means the obligor on a Receivable.
--------------
"Agreement" and "this Agreement" means this Security Agreement and all
--------- --------------
modifications and amendments thereto, extensions thereof, and replacements
therefor.
"Code" means the Uniform Commercial Code as adopted and in effect in the State
----
of California from time to time.
"Collateral" has the meaning set forth in Section 1.2 of this Agreement.
----------
"Default" means any event which with notice or passage of time or both, would
-------
constitute an Event of Default.
"Deposit Account" has the meaning set forth in Section 9105 of the Code.
---------------
"Equipment" means all of Debtor's present and hereafter acquired machinery,
---------
molds, machine tools, motors, furniture, equipment, furnishings, fixtures, trade
fixtures, motor vehicles, tools, parts, dyes, jigs, goods and other tangible
personal property (other than Inventory) of every kind and description used in
Debtor's operations or owned by Debtor and any interest in any of the foregoing,
and all attachments, accessories, accessions, replacements, substitutions,
additions or improvements to any of the foregoing, wherever located.
"Event of Default" means any of the events set forth in Section 4.1 of this
----------------
Agreement.
"General Intangibles" means all general intangibles of Debtor, whether now
-------------------
owned or hereafter created or acquired by Debtor, including, without limitation,
all choses in action, causes of action, corporate or other business records,
Deposit Accounts, inventions, designs, drawings, blueprints, patents, patent
applications, trademarks and the goodwill of the business symbolized thereby,
names, trade names, trade secrets, goodwill, copyrights,
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registrations, licenses, franchises, customer lists, security and other
deposits, rights in all litigation presently or hereafter pending for any cause
or claim (whether in contract, tort or otherwise), and all judgments now or
hereafter arising therefrom, all claims of Debtor against GC, rights to purchase
or sell real or personal property, rights as a licensor or licensee of any kind,
royalties, telephone numbers, proprietary information, purchase orders, and all
insurance policies and claims (including life insurance, key man insurance,
credit insurance, liability insurance, property insurance and other insurance),
tax refunds and claims, computer programs, discs, tapes and tape files, claims
under guaranties, security interests or other security held by or granted to
Debtor, all rights to indemnification and all other intangible property of every
kind and nature (other than Receivables).
"Inventory" means all of Debtor's now owned and hereafter acquired goods,
---------
merchandise or other personal property, wherever located, to be furnished under
any contract of service or held for sale or lease (including all raw materials,
work in process, finished goods and goods in transit), and all materials and
supplies of every kind, nature and description which are or might be used or
consumed in Debtor's business or used in connection with the manufacture,
packing, shipping, advertising, selling or finishing of such goods, merchandise
or other personal property, and all warehouse receipts, documents of title and
other documents representing any of the foregoing.
"Investment Property" means any and all investment property of Debtor,
-------------------
including all securities, whether certificated or uncertificated, security
entitlements, securities accounts, commodity contracts and commodity accounts,
and all financial assets held in any securities account or otherwise, wherever
located, and whether now existing or hereafter acquired or arising.
"Obligations" has the meaning set forth in Section 1.1 of this Agreement.
-----------
"Permitted Liens" means the following: (i) purchase money security interests
---------------
in specific items of Equipment; (ii) leases of specific items of Equipment;
(iii) liens for taxes *; (iv) additional security interests and liens which are
subordinate to the security interest in favor of GC and are consented to in
writing by GC (which consent shall not be unreasonably withheld); (v) security
interests being terminated substantially concurrently with this Agreement;
(vi) liens of materialmen, mechanics, warehousemen, carriers, or other similar
liens arising in the ordinary course of business and securing obligations which
are not delinquent**; (vii) liens incurred in connection with the extension,
renewal or refinancing of the indebtedness secured by liens of the type
described above in clauses (i) or (ii) above, provided that any extension,
renewal or replacement lien is limited to the property encumbered by the
existing lien and the principal amount of the indebtedness being extended,
renewed or refinanced does not increase; (viii) Liens in favor of customs and
revenue authorities which secure payment of customs duties in connection with
the importation of goods***. GC will have the right to require, as a condition
to its consent under subparagraph (iv) above, that the holder of the additional
security interest or lien sign an intercreditor agreement on GC's then standard
form, acknowledge that the security interest is subordinate to the security
interest in favor of GC, and agree not to take any action to enforce its
subordinate security interest so long as any Obligations remain outstanding, and
that Debtor agree that any uncured default in any obligation secured by the
subordinate security interest shall also constitute an Event of Default under
this Agreement.
*, OR GOVERNMENTAL FEES, ASSESSMENTS OR OTHER GOVERNMENTAL CHARGES OR LEVIES,
EITHER NOT DELINQUENT OR BEING CONTESTED IN GOOD FAITH BY APPROPRIATE
PROCEEDINGS, PROVIDED THE SAME HAVE NO PRIORITY OVER ANY OF GC'S SECURITY
INTERESTS AND THE DEBTOR MAINTAINS ADEQUATE RESERVES THEREFOR IN ACCORDANCE WITH
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES, CONSISTENTLY APPLIED.
**MORE THAN 45 DAYS, OR ARE BEING CONTESTED IN GOOD FAITH (PROVIDED SUCH LIEN
IS NOT FORECLOSED)
***;(IX) ANY JUDGMENT, ATTACHMENT OR SIMILAR LIEN, UNLESS THE JUDGMENT IT
SECURES IS NOT FULLY COVERED BY INSURANCE AND HAS NOT BEEN DISCHARGED OR
EXECUTION THEREOF EFFECTIVELY STAYED AND BONDED AGAINST PENDING APPEAL WITHIN 45
DAYS OF THE ENTRY THEREOF PROVIDED THAT, IF THE JUDGMENT IS NOT FULLY COVERED BY
INSURANCE OR EXECUTION THEREOF HAS NOT BEEN SO STAYED AND BONDED, GC SHALL NOT
BE REQUIRED TO MAKE ANY LOANS OR OTHERWISE EXTEND
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CREDIT TO OR FOR THE BENEFIT OF DEBTOR; (X) LICENSES OR SUBLICENSES GRANTED TO
OTHERS NOT INTERFERING IN ANY MATERIAL RESPECT WITH THE BUSINESS OF DEBTOR; AND
(XI) LIENS WHICH CONSTITUTE RIGHTS OF SET-OFF OF A CUSTOMARY NATURE OR BANKER'S
LIENS ON AMOUNTS ON DEPOSIT, WHETHER ARISING BY CONTRACT OR BY OPERATION OF LAW,
IN CONNECTION WITH ARRANGEMENTS ENTERED INTO WITH DEPOSITORY INSTITUTIONS IN THE
ORDINARY COURSE OF BUSINESS
"Person" means any individual, sole proprietorship, partnership, joint
------
venture, trust, unincorporated organization, association, corporation,
government, or any agency or political division thereof, or any other entity.
"Receivables" means all of Debtor's now owned and hereafter acquired accounts
-----------
(whether or not earned by performance), letters of credit, contract rights,
chattel paper, instruments, documents and all other forms of obligations at any
time owing to Debtor, all guaranties and other security therefor, all
merchandise returned to or repossessed by Debtor, and all rights of stoppage in
transit and all other rights or remedies of an unpaid vendor, lienor or secured
party.
Other Terms. All accounting terms used in this Agreement, unless otherwise
-----------
indicated, shall have the meanings given to such terms in accordance with
generally accepted accounting principles, consistently applied. All other terms
contained in this Agreement, unless otherwise indicated, shall have the meanings
provided by the Code, to the extent such terms are defined therein.
10. GENERAL PROVISIONS.
10.1 NOTICES. All notices to be given under this Agreement shall be in writing
and shall be given either personally or by reputable private delivery service,
or by facsimile, or by regular first-class mail, or certified mail return
receipt requested, addressed to GC or Debtor at the addresses shown in the
heading to this Agreement, or at any other address designated in writing by one
party to the other party. All notices shall be deemed to have been given upon
delivery in the case of notices personally delivered, or at the expiration of
one business day following delivery to the private delivery service, or one day
after the date sent by facsimile, or two business days following the deposit
thereof in the United States mail, with postage prepaid.
10.2 SEVERABILITY. Should any provision, clause or condition of this Agreement
be held by any court of competent jurisdiction to be void or unenforceable, such
defect shall not affect the remainder of this Agreement.
10.3 INTEGRATION. This Agreement and such other written agreements, documents
and instruments as may be executed in connection herewith shall be construed as
the entire and complete agreement between Debtor and GC and shall supersede all
prior negotiations, all of which are merged and integrated herein. There are no
------------
oral understandings, representations or agreements between the parties which are
--------------------------------------------------------------------------------
not set forth in this Agreement or in other written agreements signed by the
----------------------------------------------------------------------------
parties in connection herewith.
------------------------------
10.4 AMENDMENT. The terms and provisions of this Agreement may not be waived
or amended except in a writing executed by Debtor and a duly authorized officer
of GC.
10.5 TIME OF ESSENCE. Time is of the essence in the performance by Debtor of
each and every obligation under this Agreement.
10.6 ATTORNEYS' FEES AND COSTS. Debtor shall reimburse GC for all reasonable
attorneys' fees and all filing, recording, search, title insurance, appraisal,
audit, and other reasonable costs incurred by GC, pursuant to, or in connection
with, or relating to this Agreement (whether or not a lawsuit is filed),
including, but not limited to, any reasonable attorneys' fees and costs GC
incurs in order to do the following: prepare and negotiate this Agreement and
the documents relating to this Agreement; obtain legal advice in connection with
this Agreement or Debtor; enforce, or seek to enforce, any of its rights;
prosecute actions against, or defend actions by, Account Debtors; commence,
intervene in, or defend any action or proceeding; initiate any complaint to be
relieved of the automatic stay in bankruptcy; file or prosecute any probate
claim, bankruptcy claim, third-party claim, or other claim; examine, audit,
copy, and inspect any of the Collateral or any of Debtor's books and records;
protect, obtain possession of, lease, dispose of, or otherwise enforce GC's
security interest
-13-
in, the Collateral; and otherwise represent GC in any litigation relating to
Debtor. If either GC or Debtor files any lawsuit against the other predicated on
a breach of this Agreement, the prevailing party in such action shall be
entitled to recover its reasonable costs and attorneys' fees, including (but not
limited to) reasonable attorneys' fees and costs incurred in the enforcement of,
execution upon or defense of any order, decree, award or judgment. All
attorneys' fees and costs to which GC may be entitled pursuant to this Paragraph
shall immediately become part of Debtor's Obligations, shall be due on demand,
and shall bear interest at a rate equal to the highest interest rate applicable
to any of the Obligations.
10.7 BENEFIT OF AGREEMENT. The provisions of this Agreement shall be binding
upon and inure to the benefit of the respective successors, assigns, heirs,
beneficiaries and representatives of the parties hereto; provided, however, that
Debtor may not assign or transfer any of its rights under this Agreement without
the prior written consent of GC, and any prohibited assignment shall be void.
No consent by GC to any assignment shall relieve Debtor or any guarantor from
its liability for the Obligations.
10.8 JOINT AND SEVERAL LIABILITY. If Debtor consists of more than one Person,
the liability of each Debtor shall be joint and several and the compromise of
any claim with, or the release of, any Debtor shall not constitute a compromise
with, or a release of, any other Debtor.
10.9 LIMITATION OF ACTIONS. Any claim or cause of action by Debtor against GC,
its directors, officers, employees, agents, accountants or attorneys, based
upon, arising from, or relating to this Agreement, or any other present or
future document or agreement, or any other transaction contemplated hereby or
thereby or relating hereto or thereto, or any other matter, cause or thing
whatsoever, occurred, done, omitted or suffered to be done by GC, its directors,
officers, employees, agents, accountants or attorneys, shall be barred unless
asserted by Debtor by the commencement of an action or proceeding in a court of
competent jurisdiction by the filing of a complaint within one year after* the
act, occurrence or omission upon which such claim or cause of action, or any
part thereof, is based, and the service of a summons and complaint on an officer
of GC, or on any other person authorized to accept service on behalf of GC,
within thirty (30) days thereafter. Debtor agrees that such one-year period is a
reasonable and sufficient time for Debtor to investigate and act upon any such
claim or cause of action. The one-year period provided herein shall not be
waived, tolled, or extended except by the written consent of GC in its sole
discretion. This provision shall survive any termination of this Agreement or
any other present or future agreement.
*DEBTOR LEARNS OF, OR IN THE EXERCISE OF REASONABLE DILIGENCE SHOULD HAVE
LEARNED OF,
10.10 PARAGRAPH HEADINGS; CONSTRUCTION. Paragraph headings are used herein for
convenience only. Debtor acknowledges that the same may not describe completely
the subject matter of the applicable paragraph, and the same shall not be used
in any manner to construe, limit, define or interpret any term or provision
hereof. This Agreement has been fully reviewed and negotiated between the
parties and no uncertainty or ambiguity in any term or provision of this
Agreement shall be construed strictly against GC or Debtor under any rule of
construction or otherwise.
10.11 GOVERNING LAW; JURISDICTION; VENUE. This Agreement and all acts and
transactions hereunder and all rights and obligations of GC and Debtor shall be
governed by and in accordance with the laws of the State of California. As a
material part of the consideration to GC to enter into this Agreement, Debtor
(i) agrees that all actions and proceedings relating directly or indirectly
hereto shall, at GC's option, be litigated in courts located within California,
and that the exclusive venue therefor shall be Los Angeles County; (ii) consents
to the jurisdiction and venue of any such court and consents to service of
process in any such action or proceeding by personal delivery or any other
method permitted by law; and (iii) waives any and all rights Debtor may have to
object to the jurisdiction of any such court, or to transfer or change the venue
of any such action or proceeding.
10.12 MUTUAL WAIVER OF JURY TRIAL. DEBTOR AND GC EACH HEREBY WAIVE THE RIGHT
TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, ARISING OUT OF, OR IN
ANY WAY RELATING TO, THIS AGREEMENT OR ANY
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OTHER PRESENT OR FUTURE INSTRUMENT OR AGREEMENT BETWEEN GC AND DEBTOR, OR ANY
CONDUCT, ACTS OR OMISSIONS OF GC OR DEBTOR, ANY OF THEIR DIRECTORS, OFFICERS,
EMPLOYEES, AGENTS, ATTORNEYS OR ANY OTHER PERSONS AFFILIATED WITH GC OR DEBTOR,
IN ALL OF THE FOREGOING CASES, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE.
(remainder of page intentionally left blank)
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DEBTOR:
Prime Response Group, Inc.
By: /s/ ▇▇▇▇▇ ▇▇▇▇
---------------------------------
Title: Vice President
------------------------------
GC:
GREYROCK CAPITAL,
A DIVISION OF BANC OF AMERICA
COMMERCIAL FINANCE CORPORATION
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
---------------------------------
Title: Senior Vice President
------------------------------
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