EXHIBIT 99.3
SECURITY AGREEMENT
THIS SECURITY AGREEMENT dated as of April 25, 2002 (this "Agreement"),
is executed by NACT TELECOMMUNICATIONS, INC., a Delaware corporation with its
chief executive office and principal place of business located at 000 Xxxxxxxx
Xxxxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxx 00000, XXXXXXXX.XXX SOFTWARE, INC., a
Georgia corporation with its chief executive office and principal place of
business located at 000 Xxxxxxxx Xxxxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxx 00000
(each a "Debtor" and collectively, the "Debtors"), and WA TELCOM PRODUCTS CO.,
INC., a Delaware corporation (the "Secured Party").
WHEREAS, pursuant to Section 1.2(c) of that certain Stock Purchase
Agreement, dated as of July 4, 2001, by and among Verso Technologies, Inc.
("Verso") and the Secured Party, as amended by that certain Closing Agreement,
dated as of July 27, 2001 (as so amended, the "Purchase Agreement"), on March
31, 2002, Verso shall pay to the Secured Party the Deferred Amount (as defined
in the Purchase Agreement);
WHEREAS, it is proposed that Verso's obligation to pay the Deferred
Amount be restructured pursuant to the terms and conditions of that certain
Convertible Secured Promissory Note, dated as of the date hereof (the "Note"),
by Verso in favor of the Secured Party;
WHEREAS, the Debtors are wholly-owned subsidiaries of Verso and would
benefit from such restructuring;
WHEREAS, pursuant to that certain Guaranty, dated as of the date
hereof (the "Guaranty"), each of the Debtors has agreed to, among other things,
guarantee the obligations of Verso under the Note; and
WHEREAS, it is a condition to the Secured Party's willingness to agree
to such restructuring that the Debtors execute and deliver this Agreement;
NOW, THEREFORE, in consideration of the above premises and for other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged by the Debtors, the Debtors hereby agree with the Secured
Party as follows:
SECTION 1. DEFINITIONS.
(a) For the purposes of this Agreement:
"APPLICABLE LAW" means all applicable provisions of constitutions,
statutes, laws, rules, regulations and orders of all governmental bodies and
all orders, rulings and decrees of all courts and arbitrators.
"BUSINESS DAY" means any day other than a Saturday, Sunday or other
day on which banks in Atlanta, Georgia are authorized or required by law to
close.
"COLLATERAL" means the following properties, assets and rights of each
Debtor, wherever located, whether now owned or hereafter acquired or arising,
and all proceeds and products thereof: all personal and fixture property of
every kind and nature, including, without limitation, all goods (including
inventory, equipment and any accessions thereto), instruments (including
promissory notes), documents, accounts (including health-care insurance
receivables), chattel paper (whether tangible or electronic), deposit accounts,
letter-of-credit rights (whether or not the letter of credit is evidenced by a
writing), commercial tort claims, securities of United States Persons and all
other investment property, supporting obligations, any other contract rights or
rights to the payment of money, insurance claims and proceeds, tort claims, and
all general intangibles (including, without limitation, all payment intangibles
and each Debtor's copyrights, copyright registrations, trademarks, registered
trademarks, trademark applications, service marks, registered service marks,
service xxxx applications, trade names, patents, and patent applications set
forth on Schedule 1 attached hereto and all goodwill associated with the
foregoing).
"DEFAULT" means any of the events specified in the definition of Event
of Default, whether or not there has been satisfied any requirement for giving
of notice, lapse of time or the happening of any other condition.
"EVENT OF DEFAULT" means (a) a breach by any Debtor of any of its
representations or warranties contained herein which has had, or would
reasonably be expected to have, a Material Adverse Effect, and such breach is
not cured within ten (10) days after such Debtor's receipt of written notice of
such breach, (b) a material breach by any Debtor of any of its covenants or
agreements contained herein or in the Guaranty, and such breach is not cured
within ten (10) days after such Debtor's receipt of written notice of such
breach or (c) the occurrence of an Event of Default under, and as defined in,
any of the other Transaction Documents.
"KNOWLEDGE OF THE DEBTORS" means, with respect to each Debtor, the
actual knowledge of the Chief Executive Officer, Chief Financial Officer or
Chief Operating Officer of such Debtor.
"LIEN", as applied to the property of any Person, means any security
interest, lien, encumbrance, mortgage, deed to secure debt, deed of trust,
pledge, charge, conditional sale or other title retention agreement, or other
encumbrance of any kind covering any property of such Person, or upon the
income or profits therefrom or any agreement to convey any of the foregoing or
any other agreement or interest covering the property of a Person which is
intended to provide collateral security for the obligation of such Person.
"MATERIAL ADVERSE EFFECT" means (i) a material impairment of any
Debtor's ability to perform any of the Obligations or on the Secured Party's
ability to enforce any of the Obligations or to realize upon the Collateral,
(ii) a material impairment of the value of the Collateral or the amount the
Secured Party would be likely to receive in a
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liquidation of such Collateral, or (iii) a material impairment of the priority
of the Liens in favor of the Secured Party created hereby.
"OBLIGATIONS" means, individually and collectively:
(i) all obligations of the Debtors owing to the Secured
Party under or with respect to this Agreement or the Guaranty; and
(ii) all renewals, substitutions, modifications,
extensions and supplements to any of the foregoing.
"PERMITTED LIENS" means:
(i) Liens securing taxes, assessments and other
governmental charges or levies not yet due and payable or the claims of, or
obligations owing to, materialmen, mechanics, carriers, warehousemen or
landlords for labor, materials, supplies or rentals incurred in the ordinary
course of business but not yet due and payable;
(ii) Liens consisting of deposits or pledges made, in the
ordinary course of business, in connection with, or to secure payment of,
obligations under workmen's compensation, unemployment insurance or similar
legislation;
(iii) Liens consisting of encumbrances in the nature of
zoning restrictions, easements, and rights or restrictions of record on the use
of real property, which in the sole judgment of the Secured Party do not
materially detract from the value of such property or impair the use thereof in
the business of any Debtor;
(iv) Liens in favor of Silicon Valley Bank created
pursuant to that certain Loan and Security Agreement, dated December 14, 2001,
between Verso, the Debtors and Silicon Valley Bank, and the other documents,
agreements and instruments executed and delivered in connection therewith;
(v) Liens in favor of the Secured Party; and
(vi) Purchase money security interests and Liens to
secure a Debtor's performance of equipment leases arising in the ordinary
course of business.
"PERSON" means an individual, corporation, partnership, limited
liability company, association, trust or unincorporated organization, or a
government or any agency or political subdivision thereof.
"SVB CONTROL AGREEMENT" means that certain Control Agreement, of even
date herewith, between Silicon Valley Bank, the Secured Party, the Debtors and
Verso.
"TRANSACTION DOCUMENTS" means (i) that certain Settlement Agreement
and General Release, dated as of March 29, 2002, between Verso and the Secured
Party, (ii) the Note, (iii) that certain Security Agreement, dated as of the
date hereof, between Verso and the Secured Party, (iv) that certain Guaranty,
dated as of the date hereof, by
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the Debtors in favor of the Secured Party, (v) this Agreement, and (vi) that
certain Pledge Agreement, dated as of the date hereof, between Verso and the
Secured Party.
"UCC" means the Uniform Commercial Code of the State of Georgia, as in
effect from time to time.
(b) Unless otherwise set forth herein to the contrary, all terms
not otherwise defined herein and which are defined in the UCC are used herein
with the meanings ascribed to them in the UCC. However, if a term is defined in
Article 9 of the UCC differently than in another Article of the UCC, the term
has the meaning specified in Article 9 of the UCC.
SECTION 2. GRANT OF SECURITY. To secure the prompt and complete payment,
observance and performance when due (whether at stated maturity, by
acceleration or otherwise) of all of the Obligations, the Debtors hereby
collaterally assign and pledge to the Secured Party, and grant to the Secured
Party a security interest and lien in and to, the Collateral. The security
interest granted herein shall be second in priority only to (i) the Lien in
favor of Silicon Valley Bank created pursuant to that certain Loan and Security
Agreement, dated December 14, 2001 (the "SVB Loan Agreement"), between Verso,
the Debtors and Silicon Valley Bank and the other agreements, documents and
instruments executed and delivered in connection therewith (the loan evidenced
by such agreements, documents and instruments, as such loan may be amended,
modified, restated, extended, increased, renewed or supplemented from time to
time, being referred to as the "SVB Loan") and (ii) the Lien in favor of a
replacement lender created pursuant to a refinancing of the SVB Loan, provided
that such refinancing is on terms substantially similar to the SVB Loan. The
Secured Party acknowledges that the attachment of its security interest in any
commercial tort claim as original collateral is subject to the Debtors'
compliance with Section 4(a).
SECTION 3. AUTHORIZATION TO FILE FINANCING STATEMENTS. Each Debtor
hereby irrevocably authorizes the Secured Party at any time and from time to
time to file in any Uniform Commercial Code jurisdiction any initial financing
statements and amendments thereto that (a) indicate the Collateral (i) as all
assets of the Debtor or words of similar effect, regardless of whether any
particular asset comprised in the Collateral falls within the scope of Article
9 of the UCC or Article 9 of the Uniform Commercial Code of such other
jurisdiction, or (ii) as being of an equal or lesser scope or with greater
detail, and (b) contain any other information required by part 5 of Article 9
of the UCC or the analogous part of Article 9 of the Uniform Commercial Code of
such other jurisdiction for the sufficiency or filing office acceptance of any
financing statement or amendment. The Debtors agree to furnish any such
information to the Secured Party promptly upon request.
SECTION 4. OTHER ACTIONS. Further to insure the attachment, perfection
and priority of, and the ability of the Secured Party to enforce, the Secured
Party's security interest in the Collateral, each Debtor agrees, in each case
at such Debtor's own expense, to take the following actions with respect to the
following Collateral:
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(a) Commercial Tort Claims. If any Debtor shall at any time hold
or acquire a commercial tort claim, such Debtor shall immediately notify the
Secured Party in a writing signed by such Debtor of the brief details thereof
and grant to the Secured Party in such writing a security interest therein and
in the proceeds thereof, all upon the terms of this Agreement, with such
writing to be in form and substance satisfactory to the Secured Party.
(b) Actions as to any and all Collateral. The Debtors agree to
take any other action reasonably requested by the Secured Party to insure the
attachment, perfection and, first priority of, and the ability of the Secured
Party to enforce, the Secured Party's security interest in any and all of the
Collateral.
SECTION 5. REPRESENTATIONS AND WARRANTIES REGARDING LEGAL STATUS. The
Debtors jointly and severally represent and warrant to the Secured Party as
follows: (a) the correct corporate name of each Debtor is set forth in the
first paragraph of this Agreement, and no Debtor conducts and, during the
five-year period immediately preceding the date of this Agreement, has not
conducted, business under any trade name other than as set forth on Schedule 5,
(b) the Internal Revenue Service taxpayer identification number, as applicable,
of each Debtor is as set forth on Schedule 5, (c) each Debtor is a Person of
the type, and is organized in the jurisdiction, set forth in the introductory
paragraph hereof, (d) each Debtor's place of business is accurately set forth
in the introductory paragraph hereof and except as set forth on Schedule 5, no
Debtor has any other place of business, (e) each Debtor has the right, power
and capacity to execute, deliver and perform this Agreement and the Guaranty
and to consummate the transactions contemplated hereby and thereby, (f) the
execution and delivery and performance by each Debtor of this Agreement and the
Guaranty and the consummation of the transactions contemplated hereby and
thereby, have been duly and validly authorized by all necessary corporate
action on the part of such Debtor, (g) this Agreement and the Guaranty have
been duly and validly executed and delivered by each Debtor and constitute each
Debtor's legal, valid and binding obligation, enforceable in accordance with
its terms and (h) the execution and delivery of this Agreement and the Guaranty
by each Debtor, the consummation by each Debtor of the transactions
contemplated herein and therein, and the performance of the covenants and
agreements of each Debtor contained herein and therein will not, with or
without the giving of notice or the lapse of time, or both (i) violate or
conflict with any of the provisions of the articles or certificate of
incorporation or bylaws of such Debtor, (ii) violate, conflict with or result
in a breach or default under or cause termination of any term or condition of
any mortgage, indenture, contract, license, permit, instrument or other
agreement to which such Debtor is a party or by which such Debtor or any of its
assets may be bound or (iii) violate any Applicable Law to which such Debtor is
a party or by which such Debtor or any of its assets may be bound.
SECTION 6. COVENANTS REGARDING LEGAL STATUS. Each Debtor covenants with
the Secured Party as follows: (a) without providing at least 15 Business Days
prior written notice to the Secured Party, such Debtor will not change its
name, its place of business or, if more than one, chief executive office, or
its mailing address or organizational identification number if it has one, and
(b) without providing at least 15 Business Days
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prior written notice to the Secured Party, such Debtor will not change its type
of organization, jurisdiction of organization or other legal structure.
SECTION 7. REPRESENTATIONS AND WARRANTIES REGARDING COLLATERAL, ETC.
Each Debtor further represents and warrants to the Secured Party as follows:
(a) such Debtor is the owner of the Collateral pledged by it, free from any
Lien, except for Permitted Liens, (b) none of the Collateral pledged by it
constitutes or is the proceeds of "farm products" as defined in ss.
9-102(a)(34) of the UCC, (c) none of the account debtors or other persons
obligated on any of the Collateral pledged by it is a governmental authority
covered by the Federal Assignment of Claims Act or like federal, state or local
statute or rule in respect of such Collateral, (d) such Debtor does not hold
any commercial tort claim, and (e) to the best of the Debtor's knowledge, such
Debtor has at all times operated its business in compliance in all material
respects with all Applicable Laws.
SECTION 8. COVENANTS REGARDING COLLATERAL GENERALLY. Each Debtor further
covenants with the Secured Party as follows: (a) the Collateral, to the extent
not delivered to the Secured Party pursuant to Section 4 and except as
permitted by Section 8(h) below, will be kept at such Debtor's place of
business as set forth in the first paragraph hereof or those locations listed
in Schedule 5 hereto, and such Debtor will not remove the Collateral from such
locations, without providing at least fifteen (15) Business Days prior written
notice to the Secured Party, (b) except for the security interest herein
granted and Permitted Liens, such Debtor shall be the owner of the Collateral
free from any Lien, and such Debtor shall defend the same against all claims
and demands of all persons at any time claiming the same or any interests
therein adverse to the Secured Party, (c) other than Permitted Liens, such
Debtor shall not pledge, mortgage or create, or suffer to exist any Lien, in
the Collateral in favor of any Person other than the Secured Party, (d) such
Debtor shall keep the Collateral in good order and repair and will not use the
same in violation of any Applicable Law or any policy of insurance thereon, (e)
such Debtor shall permit the Secured Party, or its designee, to inspect the
Collateral pledged by it at any reasonable time upon reasonable prior notice,
(f) such Debtor will promptly pay when due all taxes, assessments, governmental
charges and levies upon the Collateral or incurred in connection with the use
or operation of the Collateral or incurred in connection therewith, (g) such
Debtor shall continue to operate its business in compliance in all material
respects with all Applicable Laws, (h) such Debtor shall not sell, transfer or
otherwise dispose, or offer to sell, transfer or otherwise dispose, of the
Collateral or any interest therein except for (i) sales and leases of inventory
in the ordinary course of business; and (ii) so long as no Event of Default has
occurred and is continuing, sales or other dispositions of obsolescent items of
equipment in the ordinary course of business consistent with past practices and
(i) such Debtor shall take all actions necessary to properly maintain all
applications, registrations, patents or patent applications on its copyrights,
trademarks, service marks, patents and inventions. Each Debtor further
covenants that it shall not open or maintain any "deposit account" (as defined
in Article 9 of the UCC) with any bank or financial institution other than
Silicon Valley Bank or the banks and financial institutions set forth opposite
such Debtor's name on Schedule 8 attached hereto (any such other bank or
financial institution being referred to as an "Other Bank") unless (x) the
Secured Party consents in advance to the opening or maintenance of a deposit
account with such Other Bank or (y) prior to the opening or maintenance of a
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deposit account with such Other Bank, the Secured Party and such Other Bank
enter into a control agreement with respect to such deposit account
satisfactory in form and substance to the Secured Party. Notwithstanding the
foregoing, in the event that Silicon Valley Bank terminates the SVB Control
Agreement at any time following the maturity of the SVB Loan or the termination
of the SVB Loan Agreement, then the Debtors shall, within thirty (30) days
following the termination of the SVB Control Agreement, transfer all funds in
every deposit account maintained by Silicon Valley Bank to a bank or financial
institution which, within such thirty (30) day period, enters into a control
agreement with the Secured Party satisfactory in form and substance to the
Secured Party.
SECTION 9. INSURANCE. The Debtors shall at all times maintain insurance
on the Collateral against loss or damage by fire, theft, burglary, pilferage,
loss in transit and such other hazards and risks as the Secured Party shall
reasonably specify, shall be in such minimum amounts, contain such terms and be
issued under policies by insurers, in each case, reasonably acceptable to the
Secured Party. All premiums on such insurance shall be paid by the Debtors and
certified copies of the policies, or other evidence of insurance reasonably
acceptable to the Secured Party, shall be delivered to the Secured Party
promptly upon the Secured Party's reasonable request. All insurance policies
required under this Section shall contain standard lender's loss payable
clauses, naming the Secured Party, as loss payee, and providing that: (i) no
such insurance shall be affected by any act or neglect of the insured or owner
of the property described in such policy, subject to policy terms and
conditions; and (ii) such policies and loss payable clauses may not be
canceled, materially amended or terminated with respect to the Secured Party
unless at least thirty (30) (or in the case of a material amendment or
termination, ten (10)) days' prior written notice is given to the Secured
Party.
SECTION 10. COLLATERAL PROTECTION EXPENSES; PRESERVATION OF COLLATERAL.
(a) Expenses Incurred by the Secured Party. In the Secured
Party's reasonable discretion, if any Debtor fails to do so, the Secured Party
may discharge taxes and other encumbrances at any time levied or placed on any
of the Collateral (other than Permitted Liens), maintain any of the Collateral,
make repairs thereto and pay any necessary filing fees or insurance premiums.
The Debtors agree to reimburse the Secured Party on demand for all expenditures
so made. The Secured Party shall have no obligation to any Debtor or any other
person to make any such expenditures, nor shall the making thereof be construed
as a waiver or cure of any Default or Event of Default.
(b) Secured Party's Obligations and Duties. Anything herein to
the contrary notwithstanding, the Debtors shall remain obligated and liable
under each contract or agreement comprised in the Collateral to be observed or
performed by the Debtors thereunder. The Secured Party shall not have any
obligation or liability under any such contract or agreement by reason of or
arising out of this Agreement or the receipt by the Secured Party of any
payment relating to any of the Collateral, nor shall the Secured Party be
obligated in any manner to perform any of the obligations of any Debtor under
or pursuant to any such contract or agreement, to make inquiry as to the nature
or sufficiency of any payment received by the Secured Party in respect of the
Collateral or as to the sufficiency of any performance by any party under any
such contract or
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agreement, to present or file any claim, to take any action to enforce any
performance or to collect the payment of any amounts which may have been
assigned to the Secured Party or to which the Secured Party may be entitled at
any time or times. The Secured Party's sole duty with respect to the custody,
safe keeping and physical preservation of the Collateral in its possession,
under Section 9-207 of the UCC or otherwise, shall be to deal with such
Collateral in the same manner as the Secured Party deals with similar property
for its own account.
SECTION 11. NOTIFICATION TO ACCOUNT DEBTORS AND OTHER PERSONS OBLIGATED
ON COLLATERAL. The Debtors shall, at the request and option of the Secured
Party during a continuance of an Event of Default, notify account debtors and
other persons obligated on any of the Collateral of the security interest of
the Secured Party, in any account, chattel paper, general intangible,
instrument or other Collateral and that payment thereof is to be made directly
to the Secured Party, or to any financial institution designated by the Secured
Party as the Secured Party's agent therefor, and the Secured Party may itself,
if an Event of Default shall have occurred and be continuing, without notice to
or demand upon the Debtors, so notify account debtors and other persons
obligated on Collateral. After the making of such a request or the giving of
any such notification, each Debtor shall hold any proceeds of collection of
accounts, chattel paper, general intangibles, instruments and other Collateral
received by such Debtor as trustee for the Secured Party without commingling
the same with other funds of such Debtor and shall turn the same over to the
Secured Party in the identical form received, together with any necessary
endorsements or assignments. The Secured Party shall apply the proceeds of
collection of accounts, chattel paper, general intangibles, instruments and
other Collateral received by the Secured Party to the Obligations, such
proceeds to be immediately credited after final payment in cash or other
immediately available funds of the items giving rise to them.
SECTION 12. POWER OF ATTORNEY.
(a) Appointment and Powers of Secured Party. Each Debtor hereby
irrevocably constitutes and appoints the Secured Party, and any officer of the
Secured Party, with full power of substitution, as its true and lawful
attorney-in-fact with full irrevocable power and authority in the place and
stead of such Debtor or in such Person's own name, for the purpose of carrying
out the terms of this Agreement, to take any and all appropriate action and to
execute any and all documents and instruments that may be necessary or useful
to accomplish the purposes of this Agreement and, without limiting the
generality of the foregoing, hereby gives said attorney the power and right, on
behalf of such Debtor, without notice to or assent by such Debtor, to do the
following: (i) during the continuance of an Event of Default, generally to
sell, transfer, pledge, make any agreement with respect to or otherwise dispose
of or deal with any of the Collateral in such manner as is consistent with the
UCC and as fully and completely as though the Secured Party were the absolute
owner thereof for all purposes, and to do, at such Debtor's expense, at any
time, or from time to time, all acts and things which the Secured Party deems
necessary or advisable to protect, preserve or realize upon the Collateral and
the Secured Party's security interest therein, in order to effect the intent of
this Agreement, all no less fully and effectively as such Debtor might do,
including, without
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limitation, (A) the filing and prosecuting of registration and transfer
applications with the appropriate federal, state or local agencies or
authorities with respect to trademarks, copyrights and patentable inventions
and processes, (B) upon written notice to such Debtor, the exercise of voting
rights with respect to voting securities, which rights may be exercised, if the
Secured Party so elects, with a view to causing the liquidation of assets of
the issuer of any such securities and (C) the execution, delivery and
recording, in connection with any sale or other disposition of any Collateral,
of the endorsements, assignments or other instruments of conveyance or transfer
with respect to such Collateral; and (ii) to the extent that such Debtor's
authorization given in Section 3 is not sufficient, to file such financing
statements with respect hereto, with or without such Debtor's signature, or a
photocopy of this Agreement in substitution for a financing statement, as the
Secured Party may deem appropriate and to execute in any Debtor's name such
financing statements and amendments thereto and continuation statements which
may require such Debtor's signature.
(b) Ratification by the Debtor. To the extent permitted by
Applicable Law, the Debtors hereby ratify all that said attorney shall lawfully
do or cause to be done in accordance with the terms and by virtue hereof. This
power of attorney is a power coupled with an interest and is irrevocable.
(c) No Duty on Secured Party. The powers conferred on the Secured
Party hereunder are solely to protect the interests of the Secured Party in the
Collateral and shall not impose any duty upon the Secured Party to exercise any
such powers. The Secured Party shall be accountable only for the amounts that
it actually receives as a result of the exercise of such powers, and neither it
nor any of its officers, directors, employees of the Secured Party shall be
responsible to any Debtor for any act or failure to act, except for the such
Person's own gross negligence or willful misconduct.
SECTION 13. RIGHTS AND REMEDIES. Promptly upon Knowledge of the Debtors
of the occurrence of any Default of Event of Default, the Debtors shall notify
the Secured Party in writing thereof, which notice shall set forth the details
of such Default or Event of Default and the actions, if any, being taken or
proposed to be taken with respect thereto. During the continuance of an Event
of Default, the Secured Party, without any other notice to or demand upon the
Debtors, shall have in any jurisdiction in which enforcement hereof is sought,
in addition to all other rights and remedies, the rights and remedies of a
secured party under the UCC and any additional rights and remedies as may be
provided to a secured party in any jurisdiction in which Collateral is located
or enforcement is sought, including, without limitation, the right to take
possession of the Collateral, and for that purpose the Secured Party may, so
far as the Debtors can give authority therefor, enter upon any premises on
which the Collateral may be situated and remove the same therefrom. The Secured
Party may in its discretion require the Debtors to assemble all or any part of
the Collateral at such location or locations within the jurisdiction(s) of the
Debtors' principal office(s) or at such other locations as the Secured Party
may reasonably designate. Unless the Collateral is perishable or threatens to
decline speedily in value or is of a type customarily sold on a recognized
market, the Secured Party shall give to the Debtors at least five (5) Business
Days prior written notice of the time and place of any public sale of
Collateral or of the time after which any
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private sale or any other intended disposition is to be made. The Debtors
hereby acknowledge that five (5) Business Days prior written notice of such
sale or sales shall be reasonable notice. In addition, the Debtors waive any
and all rights that they may have to a judicial hearing in advance of the
enforcement of any of the Secured Party's rights and remedies hereunder,
including, without limitation, its right following an Event of Default to take
immediate possession of the Collateral and to exercise its rights and remedies
with respect thereto. The Secured Party acknowledges and agrees that the
exercise of its rights and remedies under this Agreement is subject to that
certain Subordination Agreement, dated as of the date hereof, by and between
Verso, the Debtors, the Secured Party and Silicon Valley Bank.
SECTION 14. NO WAIVER BY SECURED PARTY, ETC. The Secured Party shall not
be deemed to have waived any of its rights and remedies in respect of the
Obligations or the Collateral unless such waiver shall be in writing and signed
by the Secured Party. No delay or omission on the part of the Secured Party in
exercising any right or remedy shall operate as a waiver of such right or
remedy or any other right or remedy. A waiver on any one occasion shall not be
construed as a bar to or waiver of any right or remedy on any future occasion.
All rights and remedies of the Secured Party with respect to the Obligations or
the Collateral, whether evidenced hereby or by any other instrument or papers,
shall be cumulative and may be exercised singularly, alternatively,
successively or concurrently at such time or at such times as the Secured Party
deems expedient.
SECTION 15. SURETYSHIP WAIVERS BY DEBTOR. The Debtors waive demand,
notice, protest, notice of acceptance of this Agreement, notice of loans made,
credit extended, Collateral received or delivered or other action taken in
reliance hereon and all other demands and notices of each description. With
respect to both the Obligations and the Collateral, the Debtors assent to any
extension or postponement of the time of payment or any other indulgence, to
any substitution, exchange or release of or failure to perfect any security
interest in any Collateral, to the addition or release of any party or person
primarily or secondarily liable, to the acceptance of partial payment thereon
and the settlement, compromising or adjusting of any thereof, all in such
manner and at such time or times as the Secured Party may deem advisable. The
Secured Party shall not have any duty as to the collection or protection of the
Collateral or any income therefrom, the preservation of rights against prior
parties, or the preservation of any rights pertaining thereto beyond any duties
imposed by Applicable Law. The Debtors further waive any and all other
suretyship defenses.
SECTION 16. MARSHALLING. The Secured Party shall not be required to
marshal any present or future collateral security (including but not limited to
the Collateral) for, or other assurances of payment of, the Obligations or any
of them or to resort to such collateral security or other assurances of payment
in any particular order, and all of the rights and remedies of the Secured
Party hereunder and of the Secured Party in respect of such collateral security
and other assurances of payment shall be cumulative and in addition to all
other rights and remedies, however existing or arising. To the extent that they
lawfully may, the Debtors hereby agree that they will not invoke any Applicable
Law relating to the marshalling of collateral which might cause delay in or
impede the enforcement of the Secured Party's rights and remedies under this
Agreement or under
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any other instrument creating or evidencing any of the Obligations or under
which any of the Obligations is outstanding or by which any of the Obligations
is secured or payment thereof is otherwise assured, and, to the extent that
they lawfully may, the Debtors hereby irrevocably waive the benefits of all
such laws.
SECTION 17. PROCEEDS OF DISPOSITIONS; EXPENSES. The Debtors agree to pay
to the Secured Party on demand any and all expenses, including attorneys' fees
and disbursements, incurred or paid by the Secured Party in protecting,
preserving or enforcing the Secured Party's rights and remedies under or in
respect of any of the Obligations or any of the Collateral. After deducting all
of said expenses, the residue of any proceeds of collection or sale or other
disposition of Collateral shall, to the extent actually received in cash, be
applied to the payment of the Obligations in such order or preference as the
Secured Party may determine, proper allowance and provision being made for any
Obligations not then due. Upon the final payment and satisfaction in full of
all of the Obligations and after making any payments required by Sections
9-608(a)(1)(C) or 9-615(a)(3) of the UCC, any excess shall be returned to the
Debtors. In the absence of final payment and satisfaction in full of all of the
Obligations, the Debtors shall remain liable for any deficiency.
SECTION 18. OVERDUE AMOUNTS. Until paid, all amounts due and payable by
the Debtors hereunder shall be a debt secured by the Collateral and shall bear,
whether before or after judgment, interest at the rate of interest set forth in
the Note for overdue principal.
SECTION 19. GOVERNING LAW; CONSENT TO JURISDICTION. THIS AGREEMENT IS
INTENDED TO TAKE EFFECT AS A SEALED INSTRUMENT AND SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF GEORGIA WITHOUT REGARD
TO THE CONFLICT OF LAW PRINCIPLES THEREOF.
SECTION 20. AMENDMENTS, ETC. No amendment or waiver of any provision of
this Agreement or consent to any departure by the Debtors herefrom shall in any
event be effective unless the same shall be in writing and signed by the
parties hereto, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
SECTION 21. SVB LOAN AMENDMENTS. The Debtors covenant that they shall
provide the Secured Party prompt written notice of any renewal, extension or
increase of the SVB Loan or any material amendment or change to, or
modification of, the SVB Loan Agreement.
SECTION 22. NOTICES. Unless otherwise provided herein, communications
provided for hereunder shall be in writing and shall be mailed, telecopied,
couriered or delivered, as follows: if to the Debtors, to their addresses for
notices set forth in the Guaranty; if to the Secured Party, to the address for
notices of the Secured Party set forth in the Note; or, as to each party, at
such other address as shall be designated by such party in a written notice to
the other parties. All such notices and other communications to the Debtors or
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the Secured Party shall be deemed given when delivered personally, mailed by
certified mail (postage pre-paid and return receipt requested), sent by
overnight courier service or faxed (transmission confirmed), or otherwise
actually received.
SECTION 23. SEVERABILITY. Whenever possible, each provision of this
Agreement shall be interpreted in such a manner as to be effective and valid
under Applicable Law, but if any provision of this Agreement shall be
prohibited by or invalid under Applicable Law, such provisions shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provisions or the remaining provisions of
this Agreement.
SECTION 24. INDEMNIFICATION. The Debtors agree to indemnify and hold the
Secured Party harmless from and against any claim, loss, damage, action, cause
of action, liability, cost and expense or suit of any kind or nature whatsoever
(collectively, "Losses"), brought against or incurred by the Secured Party, in
any manner arising out of or, directly or indirectly, related to or connected
with any action taken by the Secured Party pursuant to the terms of this
Agreement; provided, however, the Debtors shall not be liable to the Secured
Party for any Losses to the extent such Losses result from the negligence or
willful misconduct of the Secured Party.
SECTION 25. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be an original and all of which, taken
together, shall constitute but one and the same instrument.
SECTION 26. MISCELLANEOUS. The headings of each section of this Agreement
are for convenience only and shall not define or limit the provisions thereof.
All Schedules attached hereto are incorporated herein and made a part hereof.
This Agreement and all rights and obligations hereunder shall be binding upon
the Debtors and their respective successors and assigns(including, without
limitation, trustees and liquidators), and shall inure to the benefit of the
Secured Party and its successors and assigns (including, without limitation,
trustees and liquidators). If any term of this Agreement shall be held to be
invalid, illegal or unenforceable, the validity of all other terms hereof shall
in no way be affected thereby, and this Agreement shall be construed and be
enforceable as if such invalid, illegal or unenforceable term had not been
included herein. The Debtors acknowledge receipt of a copy of this Agreement.
[SIGNATURES ON NEXT PAGE]
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IN WITNESS WHEREOF, each of the Secured Party and the Debtors has
caused this Agreement to be duly executed and delivered under seal by its duly
authorized officer as of the day first above written.
NACT TELECOMMUNICATIONS, INC.
By: /s/ Xxxxxx X. Xxxxxxx
----------------------------------------
Name: Xxxxxx X. Xxxxxxx
--------------------------------------
Title: EVP
-------------------------------------
XXXXXXXX.XXX SOFTWARE, INC.
By: /s/ Xxxxxx X. Xxxxxxx
----------------------------------------
Name: Xxxxxx X. Xxxxxxx
--------------------------------------
Title: EVP
-------------------------------------
WA TELCOM PRODUCTS CO., INC.
By: /s/ Xxxxxxx X. Xxxx
----------------------------------------
Name: Xxxxxxx X. Xxxx
--------------------------------------
Title: Vice President and Treasurer
-------------------------------------
SCHEDULE 1
NACT TELECOMMUNICATIONS, INC. ("NACT")
----------------------------------------------------------------------------------------------------------------------------------
SERIAL/APPLICATION
PATENT NUMBER FILING DATE STATUS
----------------------------------------------------------------------------------------------------------------------------------
"System, Apparatus & Method of Voice Over the Serial No. 09/821,256 3/29/01 Pending
Internet Protocol Telephone Calling Using
Enhanced Signalling Packets and Localized Time
Slot Interchanging"
----------------------------------------------------------------------------------------------------------------------------------
"System, Apparatus & Method for Dynamically Serial Number 5/16/01 Pending
Mapping Virtual Signalling System 7 Circuit 60/291,290
Identification Codes (CIC) for use between and
among VoIP Gateways on IP Networks"
----------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------------
SERIAL/APPLICATION
TRADEMARK (U.S.) NUMBER FILING DATE STATUS
----------------------------------------------------------------------------------------------------------------------------------
Serial Number
VoIP-7 76255,394 5/10/01 Pending
----------------------------------------------------------------------------------------------------------------------------------
IPAX Serial Number 5/10/01 An office action suspending
76255,395 further action on the
application has been mailed
(3/14/2002)
----------------------------------------------------------------------------------------------------------------------------------
STX Serial Number 4/8/97 Registered
2,051,537
----------------------------------------------------------------------------------------------------------------------------------
NTS 2/11/02 Pending
----------------------------------------------------------------------------------------------------------------------------------
XXXXXXXX.XXX SOFTWARE, INC. ("TELEMATE")
----------------------------------------------------------------------------------------------------------------------------------
SERIAL/APPLICATION
PATENT NUMBER FILING DATE STATUS
----------------------------------------------------------------------------------------------------------------------------------
System and Method for Managing computer and 6,292,801 9/18/01 Issued
Phone Network Resources
----------------------------------------------------------------------------------------------------------------------------------
Method and System for Monitoring and 60292502 5/21/01 Provisional
Controlling Internet Access within a Computer
Network through Adaptive Filtering
----------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------------
COPYRIGHT SERIAL/APPLICATION FILING/ STATUS
NUMBER REGISTRATION DATE
----------------------------------------------------------------------------------------------------------------------------------
TELEMATE 2/11/02 Pending
----------------------------------------------------------------------------------------------------------------------------------
NETSPECTIVE 2/11/02 Pending
----------------------------------------------------------------------------------------------------------------------------------
TELEDIRECT 2/11/02 Pending
----------------------------------------------------------------------------------------------------------------------------------
WEBFILTER 2/11/02 Pending
----------------------------------------------------------------------------------------------------------------------------------
Xxxxxxxx.xxx 2/11/02 Pending
----------------------------------------------------------------------------------------------------------------------------------
NetSpective internet abuse risk diamond VA-1-089-965 3/14/01
----------------------------------------------------------------------------------------------------------------------------------
Telemate telemanagement series: User's Manual TX-4-031-168 4/19/95
----------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------------
TRADEMARK (U.S.) SERIAL/APPLICATION FILING/ STATUS
NUMBER REGISTRATION DATE
----------------------------------------------------------------------------------------------------------------------------------
PROVIDING NETWORK INTELLIGENCE FOR THE INTERNET 75749603 7/13/99 Dead 6/20/01
ECONOMY (1707-25863)
Computer software used for monitoring and
generating accounting and usage reports of
computer and telephone network communications
- int. Class 9
----------------------------------------------------------------------------------------------------------------------------------
TELEMATE (1707-32571) 2135146 2/10/98 Active
Computer software that monitors and reports
information about telecommunications used by a
business - int. Class 9
----------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------------
TRADEMARK (U.S.) SERIAL/APPLICATION FILING/ STATUS
NUMBER REGISTRATION
DATE
----------------------------------------------------------------------------------------------------------------------------------
telecommunications used by a
business - int. Class 9
----------------------------------------------------------------------------------------------------------------------------------
NETPERSPECTIVES (1707-30143) 76064621 6/7/00 Dead 8/2/01
Computer programs and scientific apparatus for
monitoring and reporting customer contacts of a
service or product provider through various
communication media - int. Class 9
Computer services, namely, installation and
configuration of computer programs,
consultation, training, analysis and reporting
related to global communications network -
int. Class 42
----------------------------------------------------------------------------------------------------------------------------------
XXXXXXXX.XXX (1707-18147) 2196592 10/13/98 Active
Software used for monitoring and accounting of
computer network communications. -int. class 9
----------------------------------------------------------------------------------------------------------------------------------
ESPECTIVE (1707-28453) 75935991 3/3/00 Active
Computer programs for enabling network usage
monitoring, analysis, and management on a
computer network - int. Class 9
----------------------------------------------------------------------------------------------------------------------------------
VISITOR MANAGEMENT CONSOLE (1707-29049) 76064611 6/7/00 Dead 8/2/01
Computer programs and scientific apparatus for
monitoring customer activity on web sites of a
global computer network - int. Class 9
Computer services, namely, installation and
configuration of computer programs,
consultation, trainings, analysis and reporting
related to global computer network - int. Class 42
----------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------------
TRADEMARK (U.S.) SERIAL/APPLICATION FILING/ STATUS
NUMBER REGISTRATION
DATE
----------------------------------------------------------------------------------------------------------------------------------
MULTI-TOUCH POINT VIEW (1707-29410) 76064610 6/7/00 Dead 8/2/01
Computer programs and scientific apparatus for
monitoring and reporting customer contacts of a
service or product provider through various
communication media - int. Class 9
Computer services, namely, installation and
configuration of computer programs,
consultation, training, analysis and reporting
related to global communications network -
int. Class 42
----------------------------------------------------------------------------------------------------------------------------------
NETSPECTIVE INTERNET ABUSE RISK DIAMOND N/A Copyright
Concept outlining four major risks of
employee Internet usage within an organization.
----------------------------------------------------------------------------------------------------------------------------------
NETSPECTIVE WEBFILTER 78093217 11/14/01 Pending
Product and/or service for tracking Internet
destinations surfed by a WebFilter customer and/or
subscriber and categorizing requested Internet content
----------------------------------------------------------------------------------------------------------------------------------
ADAPTIVE FILTERING 78093229 11/14/01 Pending
Product and/or service for tracking Internet
destinations surfed by a WebFilter customer and/or
subscriber and categorizing requested Internet content
----------------------------------------------------------------------------------------------------------------------------------
ADAPTIVE FILTERING LAB 78093242 11/14/01 Pending
Service center for categorizing Internet
destinations surfed by WebFilter customers
and/or service subscribers
----------------------------------------------------------------------------------------------------------------------------------
SIDESCAN 78093200 11/14/01 Pending
Technology for monitoring and filtering
Internet traffic using a promiscuous networking
mode.
----------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------------
TRADEMARK (U.S.) SERIAL/APPLICATION FILING/ STATUS
NUMBER REGISTRATION DATE
----------------------------------------------------------------------------------------------------------------------------------
NETSPECTIVES (1707-28452) 75935993 3/3/00 X-Drop
Computer services, namely, installation and
configuration of computer programs,
consultation, training, analysis, and reporting
related to local computer networks. - int.
Class 42
----------------------------------------------------------------------------------------------------------------------------------
NETSPECTIVE G & S: Computer programs for 75935992 3/3/00 Pending
enabling network usage monitoring, analysis,
and management on a computer network. Class 009
----------------------------------------------------------------------------------------------------------------------------------
ESPECTIVES (1707-28453) 75935990 3/3/00 X-Drop
Computer services, namely, installation,
configuration and implementation of computer
programs; computer consultation; review and analysis
of computer configurations and architecture; software
maintenance; and software directory development
- int. Class 42
----------------------------------------------------------------------------------------------------------------------------------
XXXXXXXX.XXX SOFTWARE
Xxxxxxxx.Xxx Product Copyright Claim:
- Xxxxxxxx.Xxx product line
- NetSpective product line
- WebFilter product line
- eSpective product line
SCHEDULE 5
NACT TELECOMMUNICATIONS, INC. ("NACT")
AND
XXXXXXXX.XXX SOFTWARE, INC. ("TELEMATE")
(A) TRADE NAMES USED DURING FIVE-YEAR PERIOD PRECEDING THE DATE OF
THIS AGREEMENT:
Complementary Solutions, Inc./Telemate Software, Inc.
(B) FEDERAL EMPLOYER IDENTIFICATION NUMBER
NACT: 00-0000000
Telemate: 00-0000000
(C) PLACES OF BUSINESS:
NACT: 000 Xxxx 0000 Xxxxx
Xxxxx, XX 00000
Telemate: 0000 Xxxxxxxxx Xxxx Xxxxx, Xxxxx 000
Xxxxxxx, XX 00000
SCHEDULE 8
NACT TELECOMMUNICATIONS, INC.
Bank One Deposit Account 01003879
80W. Broadway, Suite 300 Payroll Account 901004011
Xxxx Xxxx Xxxx, XX 00000 Disbursement Account 901004003
Barclays Bank PLC UK Deposit and Operating
00 Xxxxxxx Xxxxxx Account 80438111
Xxxxxx, Xxxxxxx XX0X0XX
XXXXXXXX.XXX SOFTWARE, INC.
Regions Bank Routing/ABA 61101375
0000 Xx. Xxxxxx Xx. Parking (Savings) Account 6420025795
Xxxxxxxx, XX 00000 Checking Account 6421005536
