Exhibit 5
SECURITY AGREEMENT
This Security Agreement, (as amended, modified or otherwise supplemented
from time to time, this "Agreement"), is made and entered into as of May 7, 2001
by and between _____ , a Delaware corporation, with principal offices at 000
Xxxx Xxxxxx Xxxxxx, Xxxx, Xxxx 00000 ("Debtor"), and The Santa Xxxx Operation,
Inc., a California corporation with principal offices at 000 Xxxxxxx, Xxxxx
Xxxx, Xxxxxxxxxx 00000 ("Secured Party").
R E C I T A L
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In connection with the execution of the Secured Promissory Note of even
date herewith (the "Note") and as security for its obligations under the Note,
Debtor has agreed, among other things, to grant Secured Party a security
interest in the Collateral (as defined below) on the terms set forth in this
Agreement.
A G R E E M E N T
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NOW, THEREFORE, in consideration of the foregoing recitals, and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
1. Defined Terms. All capitalized terms used in this Agreement that are
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listed on Exhibit A attached hereto (which is incorporated by this reference)
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will have the meanings indicated thereon. Unless otherwise defined herein, all
other capitalized terms used in this Agreement will have the same meanings given
to such terms in the Note and/or in that certain Agreement and Plan of
Reorganization, dated August 1, 2000, among the Secured Party, the Debtor and
_________________ (as amended, the "Reorganization Agreement").
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2. Grant of Security Interest; Collateral Assignment. As collateral
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security for the prompt and complete payment and performance when due (whether
at the stated maturity, by acceleration or otherwise) of the Obligations, and
subject to Prior Liens, Debtor hereby grants to Secured Party a first priority
security interest in the following assets of Debtor relating to the OpenServer
Business, which assets are collectively referred to herein as the "Collateral":
(a) General Intangibles. All of Debtor's General Intangibles directly
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relating to the OpenServer Business, now existing or hereafter arising or
acquired, together with the proceeds therefrom. As used herein, the term
"General Intangibles" means all personal property (including things in action)
other than goods, accounts, chattel paper, documents, instruments, and money,
and includes, but is not limited to, business records, deposit accounts,
inventions, Intellectual Property, designs, patents, patent applications, patent
rights, trademarks, trademark applications, trademark registrations, service
marks, service xxxx applications, service registrations, trade names, goodwill,
technology, know-how, confidential information, trade secrets, customer lists,
supplier lists, copyrights, copyright applications, copyright registrations,
licenses, permits, franchises, tax refund claims, and any letters of credit,
guarantee claims,
security interests, or other security held by Debtor to secure any "Accounts"
(as hereinafter defined).
(b) Accounts (including Accounts Receivable). All of Debtor's
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Accounts directly relating to the OpenServer Business, whether now existing or
hereafter arising or acquired, together with the proceeds therefrom. As used
herein, the term "Accounts" means any right of Debtor to receive payment from
another person or entity, including payment for goods sold or leased, or for
services rendered, no matter how evidenced or arising, and regardless of whether
yet earned by performance. It includes, but is not limited to, accounts,
accounts receivable, contract rights, contracts receivable, purchase orders,
notes, drafts, acceptances, all rights to payment earned or unearned under a
charter or other contract involving the use or hire of a vessel and all rights
incident to the charter or contract, and other forms of obligations and
receivables.
(c) Inventory. All of Debtor's Inventory directly relating to the
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OpenServer Business, whether now owned or hereafter acquired, together with the
products and proceeds there from and all packaging, manuals, and instructions
related thereto. As used herein, the term "Inventory" means all goods,
merchandise, and personal property held for sale or lease or furnished or to be
furnished under contracts of service, and all raw materials, work in process, or
materials used or consumed in Debtor's business, wherever located and whether in
the possession of Debtor, a warehouseman, a bailee, or any other person.
(d) Chattel Paper, Documents and Instruments. All of Debtor's right,
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title, and interest in any chattel paper, documents, or instruments, now owned
or hereafter acquired or arising, or now or hereafter coming into the
possession, control, or custody of either Debtor or Secured Party, in each case
directly relating to or arising from the OpenServer Business, together with all
proceeds there from. The terms "chattel paper," "documents," and "instruments"
shall have those meanings ascribed to them in the California Uniform Commercial
Code.
(e) Excluded Assets. Notwithstanding the foregoing, in no event shall
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Collateral include, and Secured Party shall not be deemed to have an interest
in, any of Debtor's right, title or interest (a) in any Intellectual Property if
the grant of such interest shall constitute or result in the abandonment,
invalidation or rendering unenforceable any right, title or interest of Debtor
therein, (b) in any license, contract or agreement to which Debtor is a party or
any of its rights or interests thereunder to the extent, but only to the extent,
that such a grant would, under the terms of such license, contract or agreement,
or otherwise, result in a breach or termination of the terms or, constitute a
default under or termination of, any such license, agreement or contract (other
than to the extent that any such term would be rendered ineffective pursuant to
the Uniform Commercial Code of any relevant jurisdiction, and any other
applicable law or principles of equity); provided that immediately upon the
ineffectiveness, lapse or termination of any such provision, the Collateral
shall include, and Debtor shall be deemed to have granted a security interest
in, all such rights and interests as if such provision had never been in effect,
and (c) in any of the outstanding capital stock of a controlled foreign
corporation, as such term is
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defined in the Internal Revenue Code of 1986, as amended, in excess of 65% of
the voting power of all classes of capital stock of such controlled foreign
corporation entitled to vote.
3. Representations and Warranties. Debtor hereby represents and warrants
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to Secured Party that:
(a) Title; No Other Liens. Except for (i) the liens granted to
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Secured Party pursuant to this Agreement, (ii) the Prior Liens and (iii) the
Permitted Liens, Debtor owns (and, in the case of after-acquired Collateral,
will own at the time it is acquired) all right, title and interest in and to
each item of the Collateral free and clear of any and all liens, claims,
security interests, encumbrances and restrictions of any kind. No security
agreement, financing statement or other public notice with respect to all or any
part of the Collateral is on file or of record in any public office, except such
as may have been filed in favor of Secured Party pursuant to this Agreement, and
except such as may have been filed with respect to the Prior Liens or the
Permitted Liens.
(b) No Consents. Debtor has all right, power and authority necessary
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to grant Secured Party the security interest granted in Section 2 above, without
the need for the consent or approval of any third party other than consents or
approvals that have been obtained.
(c) Location of Collateral. The Collateral (other than the
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Intellectual Property) is located and will at all times be kept at Debtor's
office at the address indicated above, and such other premises owned or leased
by Debtor.
4. Covenants. Debtor covenants and agrees with Secured Party that, from
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and after the date of this Agreement until all Obligations are paid in full and
satisfied:
(a) Further Documentation. Upon Secured Party's written request and
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at Debtor's sole expense, Debtor will promptly and duly execute and deliver such
further instruments and documents and take such further action as Secured Party
may reasonably request for the purpose of obtaining, giving notice of,
protecting, preserving and perfecting the security interests granted under this
Agreement, including, without limitation, the filing of any financing or
continuation statements under the Code in effect in any jurisdiction with
respect to the security interests created hereby and the recording of the
security interests granted hereunder in any Intellectual Property with the
appropriate governmental or other authorities in any jurisdiction. Debtor agrees
that a carbon, photographic or other reproduction of this Agreement (or, if
appropriate, any other Security Document) will be sufficient as a financing
statement for filing in any jurisdiction, if permitted by such jurisdiction.
(b) Maintenance of Records. Debtor will keep and maintain complete
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records of the Collateral as it does in the ordinary course of business. For
Secured Party's further security, Secured Party will have a security interest in
all of the books and records of Debtor pertaining to the Collateral.
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(c) No Liens on Collateral. Debtor will not create, incur or permit
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to exist, will defend the Collateral against, and will take such other action as
is necessary to remove, any lien, claim, security interest or encumbrance on or
to any of the Collateral, other than the liens granted to Secured Party under
this Agreement and Permitted Liens.
(d) Limitation on Dispositions of Collateral. Debtor will use all
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commercially reasonable efforts to preserve the Collateral without material
impairment while conducting its business in the ordinary course in a manner that
is consistent with Debtor's past business practices or Lender's past business
practices as historical owner and operator of the OpenServer Business. Debtor
will not, through any license, encumbrance, assignment, transfer or disposition
of any of the Collateral, any creation of obligations of Debtor, any issuance of
securities, or any other action, (i) avoid or seek to avoid the observation or
performance of any of the terms to be observed or performed by Debtor under this
Agreement, (ii) materially impair the benefit of this Agreement or the
Collateral to Secured Party, or (iii) materially and adversely affect Secured
Party's ability to operate, or obtain the financial or economic benefit of, the
Collateral in accordance with the terms of this Agreement; provided, however,
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that Debtor may enter into Licenses with third parties in the ordinary course of
its business and consistent with past licensing practice of Intellectual
Property owned or licensed by Debtor or by Lender as historical owner and
operator of the OpenServer Business. Debtor will at all times in good faith
take, and assist in taking, all such action as may be necessary or appropriate
to protect Secured Party's rights under this Agreement from impairment and to
preserve for Secured Party's benefit the value of the Collateral.
(e) No Change in Location, Name, etc. Except upon thirty (30) days
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prior written notice to Secured Party, Debtor will not move the Collateral
(other than the Intellectual Property) from the location specified in Section
3(c) above or change Debtor's name, identity or structure to such an extent that
any financing statement or other Security Documents filed by Secured Party would
become misleading.
(f) Payment of Taxes and Assessments. Debtor will pay prior to
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delinquency all taxes and assessments assessed against, levied upon or placed
against the Collateral, other than taxes and assessments being contested in good
faith and by appropriate proceedings, and for which adequate reserves are
maintained on the books of the Debtor in accordance with GAAP.
5. Secrecy and Assignment of Intellectual Property. Debtor will use
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commercially reasonable efforts to ensure that each current and future employee
and contractor hired or engaged by Debtor who receives trade secrets or other
confidential and proprietary information of Debtor and/or who in the course of
his/her employment or engagement with Debtor is involved in any way whatsoever
with the Intellectual Property executes and delivers to Debtor a Debtor's
employee or contractor invention assignment and confidentiality agreement, in
Debtor's customary form, imposing invention and intellectual property rights
assignment obligations and confidentiality obligations on the part of such
employee or contractor to Debtor. Debtor will further take reasonable steps and
procedures to preserve and protect the secrecy of Debtor's trade secrets and
other confidential or proprietary information.
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6. Appointment of Secured Party as Attorney-in-Fact.
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(a) Powers. Debtor hereby irrevocably constitutes and appoints
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Secured Party, and any agent of 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 Debtor and in the name of Debtor or in the
name of Secured Party, from time to time in Secured Party's discretion, for the
purpose of carrying out the terms of this Agreement, to take any and all
appropriate actions and to execute any and all documents which may be necessary
or desirable to accomplish the purposes of this Agreement, including (without
limiting the generality of the foregoing) to execute, in connection with any
sale or other disposition of Collateral pursuant to Section 7 hereof, any
endorsements, assignments, bills of sale, licenses or other instruments of
conveyance or transfer with respect to the Collateral. This power of attorney
is a power coupled with an interest and is irrevocable.
(b) No Duty on Secured Party's Part. The powers conferred on Secured
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Party hereunder are solely to protect Secured Party's interests in the
Collateral and will not impose any duty upon it to exercise any such powers.
Secured Party and its agents will not be responsible to Debtor for any act or
failure to act hereunder, except for Secured Party's own gross negligence or
willful misconduct. It is further agreed and understood between the parties
hereto that such care as Secured Party gives to the safekeeping of its own
property of like kind shall constitute reasonable care of the Collateral when in
Secured Party's possession.
7. Secured Party's Rights and Remedies; Release.
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(a) General Remedies. If an Event of Default occurs, then in addition
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to exercising any other right or remedies Secured Party may have under the Note,
at law or in equity, or pursuant to the provisions of the Code, Secured Party
may, at its sole option and without demand first made, exercise any one, some or
all of the following rights and remedies:
(i) Collect the Collateral and its Proceeds;
(ii) Take possession of the Collateral and its Proceeds
wherever such may be found or require Debtor to assemble the Collateral and its
Proceeds and make it available to Secured Party at a place designated by Secured
Party which is reasonably convenient to Debtor and Secured Party;
(iii) Proceed with the foreclosure of the security interest in
the Collateral or any part thereof granted herein and the sale or endorsement
and collection of the Proceeds of such Collateral in any manner permitted by law
or provided for herein;
(iv) Sell, lease, license or otherwise dispose of the
Collateral or any part thereof at public or private sale, with or without having
the Collateral at the place of sale, after giving Debtor ten (10) days prior
written notice of such sale, lease, license or other disposition of Collateral;
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(v) Institute a suit or other action against Debtor for
recovery on the Note;
(vi) Exercise any rights and remedies of a secured party under
the Code; and/or
(vii) With respect to any Software, Inventions, Documentation,
Intellectual Property and Licenses, in the exercise of the rights of a secured
party under applicable law with respect thereto, and subject to the rights of
any licensor of any such property not owned by Debtor, use, exercise, practice,
reproduce, perform, display, distribute, create derivative works, make, have
made, sell, license, sublicense, transfer, assign and commercialize.
(b) No Election of Remedies. The election by Secured Party of any
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right or remedy will not prevent Secured Party from exercising any other right
or remedy against Debtor.
(c) Proceeds. If an Event of Default occurs, all proceeds and
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payments with respect to the Collateral will be retained by Secured Party (or,
if received by Debtor, will be held in trust and will be delivered by Debtor to
Secured Party in the original form received, endorsed in blank) and held by
Secured Party as part of the Collateral or applied by Secured Party to the
payment of the Obligations.
(d) Sale of Collateral. Any item of Collateral may be sold, leased or
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licensed or otherwise disposed of for cash or other value at public or private
sale or other disposition and the Proceeds thereof collected by or for Secured
Party. Debtor agrees to promptly execute and deliver, or promptly cause to be
executed and delivered, such instruments, documents, assignments, waivers,
certificates and affidavits and supply or cause to be supplied such further
information and take such further action as Secured Party may require in
connection with any such sale or disposition. Secured Party shall have the
right upon any such public sale or sales, and, to the extent permitted by law,
upon any such private sale or sales, to purchase the whole or any part of the
Collateral so sold, free of any right or equity of redemption in Debtor, which
right or equity is hereby waived or released. If any notice of a proposed sale,
lease, license or other disposition of Collateral shall be required by law, such
notice shall be deemed reasonable and proper if given at least ten (10) days
before such sale, lease, license or other disposition. Secured Party agrees to
give Debtor ten (10) days prior written notice of any sale, lease, license or
other disposition of Collateral (or any part thereof) by Secured Party.
(e) Application of Proceeds. The proceeds of all sales and
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collections in respect of the Collateral, the application of which is not
otherwise specifically herein provided for, will be applied as follows:
(i) First, to the payment of the costs and expenses of such
sale or sales and collections and the attorneys' fees and out-of-pocket expenses
incurred by Secured Party relating to costs of collection;
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(ii) Second, any surplus then remaining will be applied first,
to the payment of all unpaid interest accrued under the Note, next to the
payment of unpaid principal under the Note, and next to the satisfaction of any
remaining Obligations; and
(iii) Third, any surplus then remaining will be paid to Debtor.
(f) Liability for Deficiency. Debtor will remain liable for any
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deficiency if the Proceeds of any sale or other disposition of the Collateral
are insufficient to pay the Obligations and the fees and disbursements of any
attorneys or agents employed by Secured Party to collect such deficiency.
(g) Limitation on Duties Regarding Collateral. Secured Party's sole
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duty with respect to the custody, safekeeping and physical preservation of the
Collateral in its possession, under the Code or otherwise, shall be to deal with
it in the same manner as Secured Party deals with similar property for its own
account. Secured Party and its agents will not be liable for failure to demand,
collect or realize upon all or any part of the Collateral or for any delay in
doing so nor will any of them be under any obligation to sell or otherwise
dispose of any Collateral upon the request of Debtor or otherwise.
(h) Recourse. If, after Secured Party has exercised its rights and
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remedies against the Collateral, any deficiencies remain with respect to the
payment of the Obligations, Secured Party shall have the rights and remedies of
an unsecured creditor with respect to all other assets of Debtor.
(i) Release. Upon the full and complete payment and performance when
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due of the Obligations, upon Debtor's written request and at Debtor's sole
expense, Secured Party will promptly and duly execute and deliver such further
instruments and documents and take such further action as Debtor may reasonably
request for the purpose of releasing or terminating the security interests
granted under this Agreement.
8. Governing Law; Venue.
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(i) This Agreement shall be governed by and construed under the laws
of the State of California as applied to agreements among California residents
entered into and to be performed entirely within California, without reference
to principles of conflict of laws or choice of laws (except to the extent
governed by the Code).
(ii) The parties agree that any dispute regarding the interpretation
or validity of, or otherwise arising out of this Agreement, shall be subject to
the exclusive jurisdiction of the California State Courts in and for Santa Xxxxx
County, California, or, in the event of federal jurisdiction, the United States
District Court for the Northern District of California sitting in Santa Xxxxx
County, California, and each party hereby agrees to submit to the personal and
exclusive jurisdiction and venue of such courts and not to seek the transfer of
any case or proceeding out of such courts.
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9. No Waiver. Secured Party will not by any act (except by a written
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instrument pursuant to Section 11 hereof), delay, indulgence, omission or
otherwise be deemed to have waived any right or remedy hereunder or to have
acquiesced in any Event of Default or in any breach of any of the terms and
conditions hereof. No failure to exercise, nor any delay in exercising, on the
part of Secured Party, any right, power or privilege hereunder will operate as a
waiver thereof. No single or partial exercise of any right, power or privilege
hereunder will preclude any other or further exercise thereof or the exercise of
any other right, power or privilege. A waiver by Secured Party of any right or
remedy hereunder on any one occasion shall not be construed as a bar to any
right or remedy which Secured Party would otherwise have on any future occasion.
The rights and remedies of Secured Party herein provided are cumulative, may be
exercised singly or concurrently and are not exclusive of any other rights or
remedies provided by law.
10. Successors and Assigns. The terms and conditions of this Agreement
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shall inure to the benefit of and be binding upon the successors and permitted
assigns of the parties; provided, however, that Debtor may not assign or
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delegate any of its rights or obligations hereunder without Secured Party's
prior written consent, and any assignment or7 delegation without such consent
shall be void. Nothing herein shall be interpreted to prevent, limit or
otherwise restrain Debtor's grant of licenses to customers and other third
parties in the ordinary course of its business.
11. Amendments and Waivers. Any term of this Agreement may be amended and
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the observance of any term of this Agreement may be waived (either generally or
in a particular instance and either retroactively or prospectively), only with
the written consent of both Debtor and Secured Party.
12. Rights and Remedies Cumulative. The rights and remedies herein
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provided will be cumulative and not exclusive of any other rights or remedies
provided by law or otherwise.
13. Severability. If any provision of this Agreement, or the application
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thereof, will for any reason and to any extent be invalid or unenforceable, the
remainder of this Agreement and application of such provision to other persons
or circumstances will be interpreted so as reasonably to effect the intent of
the parties hereto. The parties further agree to replace such void or
unenforceable provision of this Agreement with a valid and enforceable provision
that will achieve, to the extent possible, the economic, business and other
purposes of the void or unenforceable provision.
14. Notices. Any notice or other communication required or permitted to
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be given under this Agreement shall be in writing, shall be delivered by hand or
overnight courier service, by certified mail, postage prepaid, or by facsimile,
and will be deemed given upon delivery, if delivered personally, one business
day after deposit with a national courier service for overnight delivery, or one
business day after transmission by facsimile with confirmation of receipt, and
three days after deposit in the mails, if mailed, to the following addresses:
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(i) If to Debtor:
Name
Address
Attention: President and CEO
With a copy (which shall not constitute notice) to:
Xxxxxxx Xxxxxxx & Xxxxxxxx LLP
000 Xxxxxxxxxxx Xxxx., Xxxxx 000
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxx X. Xxxxx, III
(ii) If to Secured Party:
The Santa Xxxx Operation, Inc.
000 Xxxxxxx
Xxxxx Xxxx, Xxxxxxxxxx 00000
Attention: Chief Executive Officer and Law and Corporate
Affairs
With a copy (which shall not constitute notice) to:
Wilson, Sonsini, Xxxxxxxx & Xxxxxx
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx Xxxxxxx
or to such other address as a party may have furnished to the other parties in
writing pursuant to this Section 14, except that notices of change of address
shall only be effective upon receipt.
15. Attorneys' Fees. If any action at law or in equity is necessary to
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enforce or interpret the terms of this Agreement, the prevailing party shall be
entitled to recover, as an element of the costs of suit and not as damages,
reasonable attorneys' fees, costs and necessary disbursements in addition to any
other relief to which such party may be entitled. The prevailing party will be
entitled to recover its costs of suit, regardless of whether such suit proceeds
to final judgment.
16. Entire Agreement. This Agreement, the Note and the Reorganization
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Agreement and all exhibits and schedules hereto and thereto, when taken
together, constitute the entire understanding and agreement of the parties
hereto with respect to the subject matter hereof and supersede all prior and
contemporaneous agreements or understandings, inducements or conditions, express
or implied, written or oral, between the parties with respect hereto.
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17. Construction of Agreement. This Agreement has been negotiated by the
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respective parties hereto and their attorneys and the language hereof will not
be construed for or against either party. Unless otherwise explicitly set
forth, a reference to a Section or an Exhibit will mean a Section in, or Exhibit
to, this Agreement, all of which Exhibits are incorporated herein by this
reference. The titles and headings herein are for reference purposes only and
will not in any manner limit the construction of this Agreement, which will be
considered as a whole.
18. Counterparts. This Agreement may be executed in two or more
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counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. This Agreement will
become binding when one or more counterparts hereof, individually or taken
together, will bear the signatures of all parties reflected hereon as
signatories.
[Signature page to follow]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered as of the date first above written.
Secured Party: Debtor:
THE SANTA XXXX OPERATION, INC. ( )
By: By:
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Name: Name:
----------------------------- ------------------------------
Title: Title:
---------------------------- -----------------------------
[Signature Page to Security Agreement between
The Santa Xxxx Operation, Inc. and______.]
Attachments:
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Exhibit A - Definitions
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EXHIBIT A
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DEFINITIONS
As used in the Security Agreement to which this Exhibit A is attached, the
following terms will have the following meanings:
(a) "Capitalized Lease Obligations" shall mean any and all lease
obligations that, in accordance with GAAP, are required to be capitalized on the
books of a lessee.
(b) "Code" means the Uniform Commercial Code (or successor law) as from
time to time in effect in the State of California.
(c) "Collateral" will have the meaning assigned to such term in Section 2
of the Security Agreement.
(d) "Copyrights" means all past, present and future copyrights, copyright
applications and copyright registrations in the United States and in any and all
other countries and jurisdictions, including, without limitation, all of the
exclusive rights afforded a copyright owner in the United States under 17 U.S.C.
(S)106 and any rights relating to copyrights which may in the future arise by
act of Congress or any foreign governmental entity, and any rights given to a
copyright owner or registrant in or under any copyright conventions, treaties or
foreign laws, and further including, without limitation, all renewals
extensions, and modifications thereof, all income, royalties, damages and
payments now or hereafter due and/or payable under or with respect thereto, the
right to xxx for, and to recover damages and receive remedies for, all past,
present and future infringements thereof, and all other rights of any kind
whatsoever accruing thereunder or pertaining thereto anywhere in the world.
(e) "Documentation" means, collectively: (i) all documentation, manuals,
drawings, designs, plans, blueprints, specifications, schematics, layouts, flow
charts, logic diagrams, engineering and test reports, components lists, customer
lists, suppliers lists, user, installation or repair manuals, programmers'
notes, programming documentation, any recorded information regarding any
Invention, and any other works of authorship; (ii) all documentation regarding
the design, development, testing or manufacture of any products or any equipment
used to design, develop, test, or manufacture any such products or components of
such products; (iii) all field repair data, sales data and other information
relating to sales or service of any products; and (iv) all media in which or on
which any of the are recorded or stored or from which they can be read or
retrieved.
(f) "Event of Default" Ten (10) days after written notice from Secured
Party to Debtor for monetary defaults and thirty (30) days after written notice
from Secured Party to Debtor for non-monetary defaults, if such defaults are not
cured within such ten (10) day or thirty day (30) periods, respectively, each of
the following shall constitute an event of default ("Event of Default") under
this Agreement:
(i) Default in Payment. If Debtor fails to make any payment due
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and payable under the terms of the Note or this Agreement.
(ii) Representations and Warranties. If any of the representations
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and warranties made by Borrower shall be false or misleading in any material
respect when made.
(iii) Covenants. If Borrower shall be in material default under any
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of the material terms, covenants, conditions, or obligations under any Loan
Document.
(iv) Dissolution. If Borrower is dissolved.
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(v) Receiver. If a receiver, trustee, or custodian is appointed
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for any part of the Collateral, or any part of the Collateral is assigned for
the benefit of creditors.
(vi) Impairment to Lien. If at any time any lien created under the
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Note or this Agreement on any of the Collateral may be impaired by any material
lien, encumbrance or other defect other than the Prior Liens or the Permitted
Liens.
(vii) Bankruptcy. If a petition in bankruptcy is filed against
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Debtor, and such petition is not dismissed within ninety (90) days of filing, a
petition in bankruptcy is filed by Borrower or a receiver, trustee or custodian
of any part of the Collateral is appointed; or if Borrower files a petition for
reorganization under any of the provisions of the Bankruptcy Act or any law,
State or Federal, or makes an assignment for the benefit of creditors or is
adjudged insolvent by any State or Federal Court of competent jurisdiction.
(viii) Judgment or Attachment. If any writ, attachment, citation,
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judgment, lien or distress warrant being issued against or levied on the
Collateral for an amount in excess of $100,000.00 and such judgment or
attachment is not vacated, discharged, stayed or bonded pending appeal, or paid
or otherwise fully satisfied within thirty (30) days of the date it is entered.
(ix) Diminished Value. If the Collateral is subject to any
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uninsured loss, theft, damage or destruction to the Collateral which materially
and substantially diminishes the value of the Collateral.
(g) "General Intangibles" has the meaning as set forth in Section 2(a) of
this Agreement.
(h) "Governmental Authority" shall mean any domestic or foreign national,
state or local government, any political subdivision thereof, any department,
agency, authority or bureau
of any of the foregoing, or any other entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government.
(i) "Governmental Charges" shall mean all taxes, levies, assessments, fees,
claims or other charges imposed by any Governmental Authority upon or relating
to (i) Debtor, (ii) the Note, (iii) employees, payroll, income or gross receipts
of Debtor, (iv) the ownership or use of any of its assets by Debtor, or (v) any
other aspect of the business of Debtor.
(j) "Intellectual Property" means, any, some or all of the following: (i)
Copyrights, Patents, Mask Works, Trademarks, know-how, trade secrets,
proprietary information, Moral Rights and any and all other forms of
intellectual property; (ii) all Licenses and similar rights granted to or held
by Debtor with respect to any Copyrights, Patents, Mask Works, Trademarks,
Inventions, Software, Documentation, know-how, trade secrets, proprietary
information, Moral Rights or other form of intellectual property, (iii) all
licenses, consents, permits, variances, certifications and approvals of
governmental agencies; and (iv) all causes of action, claims and warranties in
respect of any of the items listed above.
(k) "Inventions" means all past, present and future inventions,
improvements, enhancements, processes, production or manufacturing methods,
compositions of matter, formulas, Software, works of authorship, data, and other
proprietary information, whether or not protected or protectable by copyright,
patent, mask work, trade secret or other laws regarding intellectual property.
(l) "Licenses" means all past, present and future licenses, sublicenses,
covenants-not-to-xxx, consents and authorizations relating to any Intellectual
Property, Documentation, Software or Inventions.
(m) "Loan Documents" means the Note and this Agreement together with all
schedules and exhibits attached thereto.
(n) "Mask Work" means mask work as defined in the Semiconductor Chip
Protection Act of 1984 and all registrations of claims of protection for such
mask work under the laws of the United States of America or any other
jurisdiction.
(o) "Moral Rights" means any right to claim authorship to or to object to
any distortion, mutilation, or other modification or other derogatory action in
relation to a work, whether or not such would be prejudicial to the author's
reputation, and any similar right, existing under common or statutory law of any
country in the world or under any treaty, regardless of whether or not such
right is denominated or generally referred to as a "moral right." "Moral Rights"
include, without limitation, anything designated as a moral right under any law,
statute, treaty or convention.
(p) "Obligations" means all obligations, liabilities and indebtedness of
Debtor to Secured Party and/or its assigns, whether direct or indirect, absolute
or contingent, due or to become due, now existing or hereafter incurred, which
may arise under or out of the Loan Documents, whether for obligations with
respect to principal, interest, costs, expenses (including,
without limitation, all reasonable fees and disbursements of counsel to Secured
Party) or otherwise.
(q) "Patents" means all past, present and future patents and patent
applications in the United States and in all other countries and jurisdictions,
including, without limitation, the inventions and improvements described or
claimed therein, together with the reissues, divisions, continuations, renewals,
extensions and continuations-in-part thereof, and all rights given to a patent
owner in or under any patent conventions, treaties and foreign laws, and further
including, without limitation, all income, royalties, damages and payments now
or hereafter due and/or payable under or with respect thereto, the right to xxx
for, and to recover damages and receive remedies for, all past, present and
future infringements thereof, and all rights of any kind accruing thereunder or
pertaining thereto anywhere in the world.
(r) "Permitted Liens" shall mean and include:
(i) Liens securing obligations of less than $50,000 each, and
that are:
(A) Liens for taxes or other Governmental Charges not at the
time delinquent or thereafter payable without penalty or being contested in good
faith, provided provision is made to the reasonable satisfaction of Secured
Party for the eventual payment thereof if subsequently found payable, (adequate
reserves maintained on the books of the Debtor in accordance with GAAP shall be
deemed reasonably satisfactory to Secured Party);
(B) Liens of carriers, warehousemen, mechanics, materialmen,
vendors, and landlords incurred in the ordinary course of business for sums not
overdue or being contested in good faith, provided provision is made to the
reasonable satisfaction of Secured Party for the eventual payment thereof if
subsequently found payable;
(C) Deposits under workers' compensation, unemployment
insurance and social security laws or to secure the performance of bids,
tenders, contracts (other than for the repayment of borrowed money) or leases,
or to secure statutory obligations of surety or appeal bonds or to secure
indemnity, performance or other similar bonds in the ordinary course of
business;
(D) Liens securing obligations under a Capitalized Lease
Obligation or operating lease and if such Liens do not extend to property other
than the property leased under such Capitalized Lease Obligation or operating
lease; and
(E) Liens upon any equipment acquired or held by Debtor to
secure the purchase price of such equipment or indebtedness incurred solely for
the purpose of financing the acquisition of such equipment;
(F) Easements, reservations, rights of way, restrictions,
minor defects or irregularities in title and other similar charges or
encumbrances affecting real property in a manner not materially or adversely
affecting the value or use of such property;
(G) Liens on insurance proceeds in favor of insurance
companies to secure the financing of insurance premiums;
(H) Liens which constitute rights of setoff of a customary
nature or bankers' Liens with respect to amounts on deposit, whether arising by
operation of law or by contract, in connection with arrangements entered into
with banks in the ordinary course of business not relating to a financing
transaction;
(ii) Liens arising out of a judgment or award in circumstances not
constituting an Event of Default;
(iii) Leases, subleases, licenses and sublicenses entered into by
Debtor in the ordinary course of business;
(iv) Liens in favor of Secured Party, or;
(v) Liens that have been approved in writing by Secured Party.
(vi) Liens incurred in connection with the extension, renewal or
refinancing of the indebtedness secured by liens of the type described in
clauses (i) through (v) above, provided that any extension, renewal or
replacement lien shall be limited to the property encumbered by the existing
lien and the principal amount of the indebtedness being extended, renewed or
refinanced does not increase.
(s) "Prior Liens" means any lien(s) pertaining to the Collateral in effect
prior to the close of the Reorganization Agreement, which is/are assumed by
Debtor in connection with the transfer of the Collateral to Debtor.
(s) "Proceeds" means whatever is received upon the sale, exchange,
collection, licensing or other disposition of Collateral or proceeds of
Collateral, including, without limitation, insurance proceeds.
(t) "Software" means all past, present and future computer programs, in any
and all forms including source code, object code, executable code, binary code
and machine readable code, and including applications, system software,
communications software, development tools, software utilities, development
environments, interfaces, and other computer code, and further including the
graphics, sounds, data and other content in or generated by the foregoing
computer programs.
(u) "Trademarks" means all past, present and future trade names,
trademarks, trademark applications, trademark registrations, service marks,
service xxxx applications, and service xxxx registrations in the United States
and any and all other countries and jurisdictions, including, without
limitation, all renewals of trademark and service xxxx registrations, and all
rights given to a trademark or service xxxx owner or registrant in or under any
trademark or service xxxx conventions, treaties and foreign laws, and further
including, without limitation, all income, royalties, damages and payments now
or hereafter due and/or payable under or with
respect thereto, the right to xxx for, and to recover damages and receive
remedies for, all past, present and future infringements thereof, and all rights
of any kind accruing thereunder or pertaining thereto anywhere in the world.
