EXHIBIT 10(x)
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[SILICON VALLEY BANK]
SILICON VALLEY BANK
SPECIALTY FINANCE DIVISION
ACCOUNTS RECEIVABLE FINANCING AGREEMENT
This ACCOUNTS RECEIVABLE FINANCING AGREEMENT (the "Agreement"), dated as
of May 14, 2002 is between Silicon Valley Bank, Specialty Finance Division of
("Bank"), and Syntellect Inc. a Delaware corporation, ("Borrower"), whose
address is ▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ and
with a FAX number of (▇▇▇) ▇▇▇-▇▇▇▇.
1. DEFINITIONS. In this Agreement:
"ACCOUNTS" are all existing and later arising accounts, contract rights,
and other obligations owed Borrower in connection with its sale or lease of
goods (including licensing software and other technology) or provision of
services, all credit insurance, guaranties, other security and all merchandise
returned or reclaimed by Borrower and Borrower's Books relating to any of the
foregoing.
"ACCOUNT DEBTOR" is defined in the California Uniform Commercial Code and
shall include any person liable on any Financed Receivable, such as, a guarantor
of the Financed Receivable and any issuer of a letter of credit or banker's
acceptance.
"ADJUSTED QUICK RATIO". A ratio of Quick Assets to Current Liabilities
minus Deferred Maintenance Revenue of at least
"ADJUSTMENTS" are all discounts, allowances, returns, disputes,
counterclaims, offsets, defenses, rights of recoupment, rights of return,
warranty claims, or short payments, asserted by or on behalf of any Account
Debtor for any Financed Receivable.
"ADVANCE" is defined in Section 2.2.
"ADVANCE RATE" is 80%, net of deferred revenue (IF BORROWER'S ADJUSTED
QUICK RATIO IS LESS THAN 1.35 TO 1.00) and offsets related to each specific
Account Debtor, or another percentage as Bank establishes under Section 2.2.
"APPLICABLE RATE" is a rate per annum equal to the "Prime Rate" plus 3.25
percentage points.
"BORROWER'S BOOKS" are all Borrower's books and records including ledgers,
records regarding Borrower's assets or liabilities, the Collateral, business
operations or financial condition and all computer programs or discs or any
equipment containing the information.
"CODE" is the California Uniform Commercial Code.
"COLLATERAL" is attached as Exhibit "A".
"COLLATERAL HANDLING FEE" is defined in Section 3.5.
"COLLECTIONS" are all funds received by Bank from or on behalf of an
Account Debtor for Financed Receivables.
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"COMPLIANCE CERTIFICATE" is attached as Exhibit "B".
"CONTINGENT OBLIGATION" is, for any Person, any direct or indirect
liability, contingent or not, of that Person for (i) any indebtedness, lease,
dividend, letter of credit or other obligation of another such as an obligation
directly or indirectly guaranteed, endorsed, co-made, discounted or sold with
recourse by that Person, or for which that Person is directly or indirectly
liable; (ii) any obligations for undrawn letters of credit for the account of
that Person; and (iii) all obligations from any interest rate, currency or
commodity swap agreement, interest rate cap or collar agreement, or other
agreement or arrangement designated to protect a Person against fluctuation in
interest rates, currency exchange rates or commodity prices; but "Contingent
Obligation" does not include endorsements in the ordinary course of business.
The amount of a Contingent Obligation is the stated or determined amount of the
primary obligation for which the Contingent Obligation is made or, if not
determinable, the maximum reasonably anticipated liability for it determined by
the Person in good faith; but the amount may not exceed the maximum of the
obligations under the guarantee or other support arrangement.
"CURRENT LIABILITIES" are the aggregate amount of Borrower's Total
Liabilities which mature within one (1) year.
"DEFERRED MAINTENANCE REVENUE" is all amounts received in advance of
performance under maintenance contract and not yet recognized as revenue.
"EARLY TERMINATION FEE" is defined in Section 3.6.
"EVENT OF DEFAULT" is defined in Section 9.
"FACILITY" is an extension of credit by Bank to Borrower in order to
finance receivables with an aggregate Account Balance not exceeding the Facility
Amount.
"FACILITY AMOUNT" is $3,000,000.
"FACILITY FEE" is defined in Section 3.4.
"FACILITY PERIOD" is the period beginning on this date and continuing
until MAY 13, 2003, unless the period is terminated sooner by Bank with notice
to Borrower or by Borrower under Section 3.6.
"FINANCE CHARGES" is defined in Section 3.2.
"FINANCED RECEIVABLES" are all those accounts, receivables, chattel paper,
instruments, contract rights, documents, general intangibles, letters of credit,
drafts, bankers acceptances, and rights to payment, and all proceeds, including
their proceeds (collectively "receivables"), which Bank finances and make an
Advance. A Financed Receivable stops being a Financed Receivable (but remains
Collateral) when the Advance made for the Financed Receivable has been finally
paid.
"FINANCED RECEIVABLE BALANCE" is the total outstanding amount, at any
time, of all Financed Receivables.
"GOOD FAITH DEPOSIT" is described in Section 3.9.
"GUARANTOR" means any guarantor of the Obligations.
"INDEBTEDNESS" is (a) indebtedness for borrowed money or the deferred
price of property or services, such as reimbursement and other obligations for
surety bonds and letters of credit, (b) obligations evidenced by notes, bonds,
debentures or similar instruments, (c) capital lease obligations and (d)
Contingent Obligations.
"INELIGIBLE RECEIVABLE" is any accounts receivable:
(A) that is unpaid (90) calendar days after the invoice date; or
(B) that is owed by an Account Debtor that has filed, or has had filed
against it, any bankruptcy case, assignment for the benefit of
creditors, receivership, or Insolvency Proceeding or who has become
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insolvent (as defined in the United States Bankruptcy Code) or who
is generally not paying its debts as they become due; or
(C) for which there has been any breach of warranty or representation in
Section 6 or any breach of any covenant in this Agreement;
(D) for which the Account Debtor asserts any discount, allowance,
return, dispute, counterclaim, offset, defense, right of recoupment,
right of return, warranty claim, or short payment; or
(E) RESULTING FROM A MAINTENANCE CONTRACT, UNLESS BORROWER'S ADJUSTED
QUICK RATIO IS AT LEAST 1.35 TO 1.00.
"INSOLVENCY PROCEEDING" are proceedings by or against any person under the
United States Bankruptcy Code, or any other bankruptcy or insolvency law,
including assignments for the benefit of creditors, compositions, extensions
generally with its creditors, or proceedings seeking reorganization,
arrangement, or other relief.
"INVOICE TRANSMITTAL" shows accounts receivable which Bank may finance
and, for each receivable, includes the Account Debtor's, name, address, invoice
amount, invoice date and invoice number and is signed by Borrower's authorized
representative.
"LOCKBOX" is described in Section 6.2.
"MINIMUM FINANCE CHARGE" is $5,000.
"OBLIGATIONS" are all advances, liabilities, obligations, covenants and
duties owing, arising, due or payable by Borrower to Bank now or later under
this Agreement or any other document, instrument or agreement, account
(including those acquired by assignment) primary or secondary, such as all
Advances, Finance Charges, interest, fees, expenses, professional fees and
attorneys' fees or other.
"PERSON" is any individual, sole proprietorship, partnership, limited
liability company, joint venture, company, trust, unincorporated organization,
association, corporation, institution, public benefit corporation, firm, joint
stock company, estate, entity or government agency.
"PRIME RATE" is Bank's most recently announced "prime rate," even if it is
not Bank's lowest rate.
"QUICK ASSETS" is, on any date, the Borrower's consolidated, unrestricted
cash, cash equivalents, net billed accounts receivable and investments with
maturities of fewer than 12 months determined according to GAAP.
"RECONCILIATION DAY" is the last calendar day of each month.
"RECONCILIATION PERIOD" is each calendar month.
"SUBORDINATED DEBT" is debt incurred by Borrower subordinated to
Borrower's debt to Bank (and identified as subordinated by Borrower and Bank).
"TOTAL LIABILITIES" is on any day, obligations that should, under GAAP, be
classified as liabilities on Borrower's consolidated balance sheet, including
all Indebtedness, and current portion Subordinated Debt allowed to be paid, but
excluding all other Subordinated Debt.
2. FINANCING OF ACCOUNTS RECEIVABLE.
2.1. REQUEST FOR ADVANCES. During the Facility Period, Borrower may offer
accounts receivable to Bank, if there is not an Event of Default. Borrower
will deliver an Invoice Transmittal for each accounts receivable it
offers. Bank may rely on information on or with the Invoice Transmittal.
The initial Advance shall be used to payoff any and all outstanding
obligations owed by Borrower to First Community Financial Corporation.
2.2. ACCEPTANCE OF ACCOUNTS RECEIVABLE. Bank is not obligated to finance
any accounts receivable. Bank may approve any Account Debtor's credit
before financing any receivable. When Bank accepts a receivable, it will
pay Borrower the Advance Rate times the face amount of the receivable (the
"Advance"). Bank may, in its discretion, change the percentage of the
Advance Rate. When Bank makes an Advance, the receivable becomes a
"Financed Receivable." All representations and warranties in Section 6
must be true as of the date
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of the Invoice Transmittal and of the Advance and no Event of Default
exists would occur as a result of the Advance. The aggregate amount of all
Financed Receivables outstanding at any time may not exceed the Facility
Amount.
3. COLLECTIONS, FINANCE CHARGES, REMITTANCES AND FEES. The Obligations shall be
subject to the following fees and Finance Charges. Fees and Finance Charges may,
in Bank's discretion, be charged as an Advance, and shall thereafter accrue fees
and Finance Charges as described below. Bank may, in its discretion, charge fee
and Finance Charges to Borrower's deposit account maintained with Bank.
3.1. COLLECTIONS. Collections will be credited to the Financed Receivables
Balance, but if there is an Event of Default, Bank may apply Collections
to the Obligation in any order it chooses. If Bank receives a payment for
both Financed Receivable and a non Financed Receivable, the funds will
first be applied to the Financed Receivable and, if there is not an Event
of Default, the excess will be remitted to the Borrower, subject to
Section 3.10.
3.2. FINANCE CHARGES. In computing Finance Charges on the Obligations, all
Collections received by Bank shall be deemed applied by Bank on account of
the Obligations 2 Business Days after receipt of the Collections. Borrower
will pay a finance charge (the "Finance Charge"), which is the greater of
(i) the Applicable Rate times the number of days in the Reconciliation
Period times the outstanding average daily Financed Receivable Balance for
that Reconciliation Period or (ii) the Minimum Finance Charge. After an
Event of Default, Obligations accrue interest at 5 percent above the
Applicable Rate effective immediately before the Event of Default.
3.3. INTENTIONALLY LEFT BLANK.
3.4. FACILITY FEE. A fully earned, non-refundable facility fee of $30,000
is due upon execution of this Agreement.
3.5. COLLATERAL HANDLING FEE. On each Reconciliation Day, Borrower will
pay to Bank a collateral handling fee, equal to .25% per month of the
average daily Financed Receivable Balance outstanding during the
applicable Reconciliation Period. After an Event of Default, the
Collateral Handling Fee will increase an additional .50% effective
immediately before the Event of Default.
3.6. EARLY TERMINATION FEE. A fully earned, non-refundable early
termination fee of $30,000 is due upon voluntary or involuntary full
payment of the Obligations and termination of this Facility prior to MAY
13, 2003 unless the Obligations are paid in full from an initial advance
from a loan agreement with Silicon Valley Bank.
3.7. ACCOUNTING. After each Reconciliation Period, Bank will provide an
accounting of the transactions for that Reconciliation Period, including
the amount of all Financed Receivables, all Collections, Adjustments,
Finance Charges and the Collateral Handling Fee. If Borrower does not
object to the accounting in writing within 30 days it is considered
correct. All Finance Charges and other interest and fees calculated on the
basis of a 360 day year and actual days elapsed.
3.8. DEDUCTIONS. Bank may deduct fees, finance charges and other amounts
due from any Advances made or Collections received by Bank.
3.9. GOOD FAITH DEPOSIT. Borrower has paid to Bank a Good Faith Deposit of
$5,000 to initiate Banks due diligence review process. Any portion of the
deposit not utilized to pay expenses will be applied to the Facility Fee.
3.10. ACCOUNT COLLECTION SERVICES. All Borrowers' receivables are to be
paid to the same address/or party and Borrower and Bank must agree on such
address. If Bank collects all receivables and there is not an Event of
Default or an event that with notice or lapse of time will be an Event of
Default, within FIVE (5) days of receipt of those collections, Bank will
give Borrower, the receivables collections it receives for receivables
other than Financed Receivables and/or amount in excess of the amount for
which Bank has made an Advance to Borrower, less any amount due to Bank,
such as the Finance Charge, Collateral Handling Fee and expenses or
otherwise. This Section does not impose any affirmative duty on Bank to do
any act other than to turn over
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amounts. All receivables and collections are Collateral and if an Event of
Default occurs, Bank need not remit collections of Collateral and may
apply them to the Obligations.
4. REPAYMENT OF OBLIGATIONS.
4.1. REPAYMENT ON MATURITY. Borrower will repay each Advance on the
earliest of: (a) payment of the Financed Receivable in respect which the
Advance was made, (b) the Financed Receivable becomes an Ineligible
Receivable, (c) when any Adjustment is made to the Financed Receivable
(but only to the extent of the Adjustment if the Financed Receivable is
not otherwise an Ineligible Receivable, or (d) the last day of the
Facility Period (including any early termination). Each payment will also
include all accrued Finance Charges on the Advance and all other amounts
due hereunder.
4.2. REPAYMENT ON EVENT OF DEFAULT. When there is an Event of Default,
Borrower will, if Bank demands (or, in an Event of Default under Section
9(B), immediately without notice or demand from Bank) repay all of the
Advances. The demand may, at Bank's option, include the Advance for each
Financed Receivable then outstanding and all accrued Finance Charges,
attorneys and professional fees, court costs and expenses, and any other
Obligations.
5. POWER OF ATTORNEY. Borrower irrevocably appoints Bank and its successors
and assigns it attorney-in-fact and authorizes Bank, regardless of whether
there has been an Event of Default, to:
(A) sell, assign, transfer, pledge, compromise, or discharge all or any
part of the Financed Receivables:
(B) demand, collect, ▇▇▇, and give releases to any Account Debtor for
monies due and compromise, prosecute, or defend any action, claim,
case or proceeding about the Financed Receivables, including filing
a claim or voting a claim in any bankruptcy case in Bank's or
Borrower's name, as Bank chooses:
(C) prepare, file and sign Borrower's name on any notice, claim,
assignment, demand, draft, or notice of or satisfaction of lien or
mechanics' lien or similar document;
(D) notify all Account Debtors to pay Bank directly;
(E) receive, open, and dispose of mail addressed to Borrower;
(F) endorse Borrower's name on check or other instruments;
(G) execute on Borrower's behalf any instruments, documents, financing
statements to perfect Bank's interests in the Financed Receivables
and Collateral; and
(H) do all acts and things necessary or expedient.
6. REPRESENTATIONS, WARRANTIES AND COVENANTS.
6.1. REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants for
each Financed Receivable:
(A) It is the owner with legal right to sell, transfer and assign it;
(B) The correct amount is on the Invoice Transmittal and is not
disputed;
(C) Payment is not contingent on any obligation or contract and it has
fulfilled all its obligations as of the Invoice Transmittal date;
(D) It is based on an actual sale and delivery of goods and/or services
rendered, due to Borrower, it is not past due or in default, has not
been previously sold, assigned, transferred, or pledged and is free
of any liens, security interests and encumbrances;
(E) There are no defenses, offsets, counterclaims or agreements for
which the Account Debtor may claim any deduction or discount;
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(F) It reasonably believes no Account Debtor is insolvent or subject to
any Insolvency Proceedings;
(G) It has not filed or had filed against it Insolvency Proceedings and
does not anticipate any filing;
(H) Bank has the right to endorse and/ or require Borrower to endorse
all payments received on Financed Receivables and all proceeds of
Collateral.
(I) No representation, warranty or other statement of Borrower in any
certificate or written statement given to Bank contains any untrue
statement of a material fact or omits to state a material fact
necessary to make the statement contained in the certificates or
statement not misleading.
6.1.1 ADDITIONAL REPRESENTATIONS AND WARRANTIES. Borrower represents and
warrants as follows:
(A) Borrower is duly existing and in good standing in its state of
formation and qualified and licensed to do business in, and in good
standing in, any state in which the conduct of its business or its
ownership of property requires that it be qualified. The execution,
delivery and performance of this Agreement has been duly authorized,
and does not conflict with Borrower's organizational documents, nor
constitute an Event of Default under any material agreement by which
Borrower is bound. Borrower is not in default under any agreement to
which or by which it is bound.
(B) Borrower has good title to the Collateral. All inventory is in all
material respects of good and marketable quality, free from material
defects.
(C) Borrower is not an "investment company" or a company "controlled" by
an "investment company" under the Investment Company Act. Borrower
is not engaged as one of its important activities in extending
credit for margin stock (under Regulations G, T and U of the Federal
Reserve Board of Governors). Borrower has complied with the Federal
Fair Labor Standards Act. Borrower has not violated any laws,
ordinances or rules. None of Borrower's properties or assets has
been used by Borrower, to the best of Borrower's knowledge, by
previous persons, in disposing, producing, storing, treating, or
transporting any hazardous substance other than legally. Borrower
has timely filed all required tax returns and paid, or made adequate
provision to pay, all taxes. Borrower has obtained all consents,
approvals and authorizations of, made all declarations or filings
with, and given all notices to, all government authorities that are
necessary to continue its business as currently conducted.
6.2. AFFIRMATIVE COVENANTS. Borrower will do all of the following:
(A) Maintain its corporate existence and good standing in its
jurisdictions of incorporation and maintain its qualification in
each jurisdiction necessary to Borrower's business or operations.
(B) Give Bank at least 10 days prior written notice of changes to its
name, organization, chief executive office or location of records.
(C) Pay all its taxes including gross payroll, withholding and sales
taxes when due and will deliver satisfactory evidence of payment if
requested.
(D) Provide a written report within 10 days, if payment of any Financed
Receivable does not occur by its due date and include the reasons
for the delay.
(E) Give Bank copies of all Forms 10-K, 10-Q and 8-K (or equivalents)
within 5 days of filing with the Securities and Exchange Commission,
while any Financed Receivable is outstanding.
(F) Execute any further instruments and take further action as Bank
requests to perfect or continue Bank's security interest in the
Collateral or to effect the purposes of this Agreement.
(G) Provide Bank with a Compliance Certificate no later than 5 days
following each quarter end or as requested by Bank.
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(H) Provide Bank with, as soon as available, but no later than 20 days
following each Reconciliation Period, a company prepared balance
sheet and income statement, prepared under GAAP, consistently
applied, covering Borrower's operations during the period together
with an aged listing of accounts receivable and accounts payable.
(I) Immediately notify, transfer and deliver to Bank all collections
Borrower receives for Financed Receivables.
(J) Borrower will remit all payment's for Accounts to the Bank by the
close of business on each Friday along with a detailed cash receipts
journal and shall immediately notify and direct all of the
Borrower's Account Debtor's to make all payment's for Borrower's
Accounts to a lockbox account established with the Bank ("Lockbox")
or to wire transfer payments to a cash collateral account that Bank
controls. It will be considered an immediate Event of Default if the
Lockbox is not set-up and operational within 30 days from the date
of this Agreement.
(K) Borrower will allow Bank to audit Borrower's Collateral, including
but not limited to Borrower's Accounts, at Borrowers expense, no
later than 90 days of the execution of this Agreement and annually
thereafter. Provided however, if an Event of Default has occurred,
Bank may audit Borrower's Collateral, including but not limited to
Borrower's Accounts at Bank's sole discretion and without
notification and authorization from Borrower.
(L) Borrower's consolidated earnings before interest expense, income
taxes, depreciation, amortization of intangible assets and other
non-cash charges made to Borrowers' income shall not be greater than
($100,000) for the fiscal quarter ending June 30, 2002 and shall not
be less than $150,000 for the fiscal quarter ending September 30,
2002 and each fiscal quarter thereafter.
(M) Borrower will maintain its primary banking relationship with Bank,
which relationship shall include Borrower maintaining account
balances in any accounts at or through Bank representing at least
85% of all account balances of Borrower at any financial
institution.
6.3. NEGATIVE COVENANTS. Borrower will not do any of the following without
Bank's prior written consent:
(A) Assign, transfer, sell or grant, or permit any lien or security
interest in the Collateral.
(B) Convey, sell, lease, transfer or otherwise dispose of the
Collateral.
(C) Create, incur, assume, or be liable for any indebtedness.
(D) Become an "investment company" or a company controlled by an
"investment company," under the Investment Company Act of 1940 or
undertake as one of its important activities extending credit to
purchase or carry margin stock, or use the proceeds of any Advance
for that purpose; fail to meet the minimum funding requirements of
ERISA, permit a Reportable Event or Prohibited Transaction, as
defined in ERISA, to occur; fail to comply with the Federal Fair
Labor Standards Act or violate any other law or regulation, or
permit any of its subsidiaries to do so.
7. ADJUSTMENTS. If any Account Debtor asserts a discount, allowance, return,
offset, defense, warranty claim, or the like (an "Adjustment") or if Borrower
breaches any of the representations, warranties or covenants set forth in
Section 6., Borrower will promptly advise Bank. Borrower will resell any
rejected, returned, returned, or recovered personal property for Bank, at
Borrower's expense, and pay proceeds to Bank. While Borrower has returned goods
that are Borrower property, Borrower will segregate and ▇▇▇▇ them "property of
Silicon Valley Bank." Bank owns the Financed Receivables and until receipt of
payment, has the right to take possession of any rejected, returned, or
recovered personal property.
8. SECURITY INTEREST. Borrower grants to Bank a continuing security interest in
all presently and later acquired Collateral. Any security interest will be a
first priority security interest in the Collateral.
9. EVENTS OF DEFAULT. Any one or more of the following is an Event of Default.
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(A) Borrower fails to pay any amount owed to Bank when due;
(B) Borrower files or has filed against it any Insolvency Proceedings or
any assignment for the benefit of creditors, or appointment of a
receiver or custodian for any of its assets;
(C) Borrower becomes insolvent or is generally not paying its debts as
they become due or is left with unreasonably small capital;
(D) Any involuntary lien, garnishment, attachment attaches to the
Financed Receivables or any Collateral;
(E) Borrower breaches any covenant, agreement, warranty, or
representation is an immediate Event of Default;
(F) Borrower is in default under any document, instrument or agreement
evidencing any debt, obligation or liability in favor of Bank its
affiliates or vendors regardless of whether the debt, obligation or
liability is direct or indirect, primary or secondary, or fixed or
contingent;
(G) An event of default occurs under any Guaranty of the Obligations or
any material provision of any Guaranty is not valid or enforceable
or a Guaranty is repudiated or terminated;
(H) A material default or Event of Default occurs under any agreement
between Borrower and any creditor of Borrower that signed a
subordination agreement with Bank;
(I) Any creditor that has signed a subordination agreement with Bank
breaches any terms of the subordination agreement; or
(J) (i) A material impairment in the perfection or priority of the
Bank's security interest in the Collateral; (ii) a material adverse
change in the business, operations, or conditions (financial or
otherwise) of the Borrower occurs; or (iii) a material impairment of
the prospect of repayment of any portion of the Advances occurs.
10. REMEDIES.
10.1. REMEDIES UPON DEFAULT. When an Event of Default occurs, (1) Bank may
stop financing receivables or extending credit to Borrower; (2) at Banks
option and on demand, all or a portion of the Obligations or, for to an
Event of Default described in Section 9(B), automatically and without
demand, are due and payable in full; (3) apply to the Obligations any (i)
balances and deposits of Borrower it holds, or (ii) any amount held by
Bank owing to or for the credit or the account of Borrower; and (4) Bank
may exercise all rights and remedies under this Agreement and the law,
including those of a secured party under the Code, power of attorney
rights in Section 5 for the Collateral, and the right to collect, dispose
of, sell, lease, use, and realize upon all Financed Receivables and
Collateral in any commercial manner. Borrower agrees that any notice of
sale required to be given to Borrower is deemed given if at least five
days before the sale may be held.
10.2. DEMAND WAIVER. Borrower waives demand, notice of default or
dishonor, notice of payment and nonpayment, notice of any default,
nonpayment at maturity, release, compromise, settlement, extension, or
renewal of accounts, documents, instruments, chattel paper, and guaranties
held by Bank on which Borrower is liable.
10.3. DEFAULT RATE. If any amount is not paid when due, the amount bears
interest at the Applicable Rate plus five percent until the earlier of (a)
payment in good funds or (b) entry of a final judgment when the principal
amount of any money judgment will accrue interest at the highest rate
allowed by law.
11. FEES, COSTS AND EXPENSES. The Borrower will pay on demand all fees, costs
and expenses (including attorneys' and professionals fees with costs and
expenses) that Bank incurs from: (a) preparing, negotiating, administering, and
enforcing this Agreement or related agreement, including any amendments, waivers
or consents, (b) any litigation or dispute relating to the Financed Receivables,
the Collateral, this Agreement or any other agreement, (c) enforcing any rights
against Borrower or any guarantor, or any Account Debtor, (d) protecting or
enforcing its interest in the Financed Receivables or other Collateral, (e)
collecting the Financed Receivables and the Obligations, and (f) any bankruptcy
case or insolvency proceeding involving Borrower, any Financed Receivable, the
Collateral, any Account Debtor, or any Guarantor.
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12. CHOICE OF LAW, VENUE AND JURY TRIAL WAIVER. California law governs this
Agreement. Borrower and Bank each submit to the exclusive jurisdiction of the
State and Federal courts in Santa ▇▇▇▇▇ County, California.
BORROWER AND BANK EACH WAIVE THEIR RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE
OF ACTION ARISING OUT OF OR BASED UPON THIS AGREEMENT OR ANY CONTEMPLATED
TRANSACTION, INCLUDING CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER CLAIMS. THIS
WAIVER IS A MATERIAL INDUCEMENT FOR BOTH PARTIES TO ENTER INTO THIS AGREEMENT.
EACH PARTY HAS REVIEWED THIS WAIVER WITH ITS COUNSEL.
13. NOTICES. Notices or demands by either party about this Agreement must be in
writing and personally delivered or sent by an overnight delivery service, by
certified mail postage prepaid return receipt requested, or by FAX to the
addresses listed at the beginning of this Agreement. A party may change notice
address by written notice to the other party.
14. GENERAL PROVISIONS.
14.1. SUCCESSORS AND ASSIGNS. This Agreement binds and is for the benefit
of successors and permitted assigns of each party. Borrower may not assign
this Agreement or any rights under it without Bank's prior written consent
which may be granted or withheld in Bank's discretion. Bank may, without
the consent of or notice to Borrower, sell, transfer, or grant
participation in any part of Bank's obligations, rights or benefits under
this Agreement.
14.2. INDEMNIFICATION. Borrower will indemnify, defend and hold harmless
Bank and its officers, employees, and agents against: (a) obligations,
demands, claims, and liabilities asserted by any other party in connection
with the transactions contemplated by this Agreement; and (b) losses or
expenses incurred, or paid by Bank from or consequential to transactions
between Bank and Borrower (including reasonable attorneys fees and
expenses), except for losses caused by Bank's gross negligence or willful
misconduct.
14.3. TIME OF ESSENCE. Time is of the essence for performance of all
obligations in this Agreement.
14.4. SEVERABILITY OF PROVISION. Each provision of this Agreement is
severable from every other provision in determining the enforceability of
any provision.
14.5. AMENDMENTS IN WRITING, INTEGRATION. All amendments to this Agreement
must be in writing. This Agreement is the entire agreement about this
subject matter and supersedes prior negotiations or agreements.
14.6. COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by different parties on separate counterparts and when
executed and delivered are one Agreement.
14.7. SURVIVAL. All covenants, representations and warranties made in this
Agreement continue in force while any Financed Receivable amount remains
outstanding. Borrower's indemnification obligations survive until all
statutes of limitations for actions that may be brought against Bank have
run.
14.8. CONFIDENTIALITY. Bank will use the same degree of care handling
Borrower's confidential information that it uses for its own confidential
information, but may disclose information; (i) to its subsidiaries or
affiliates in connection with their business with Borrower, (ii) to
prospective transferees or purchasers of any interest in the Agreement,
(iii) as required by law, regulation, subpoena, or other order, (iv) as
required in connection with an examination or audit and (v) as it
considers appropriate exercising the remedies under this Agreement.
Confidential information does not include information that is either: (a)
in the public domain or in Bank's possession when disclosed, or becomes
part of the public domain after disclosure to Bank; or (b) disclosed to
Bank by a third party, if Bank does not know that the third party is
prohibited from disclosing the information.
14.9. OTHER AGREEMENTS. This Agreement may not adversely affect Banks
rights under any other document or agreement. If there is a conflict
between this Agreement and any agreement between Borrower and Bank, Bank
may determine in its sole discretion which provision applies. Borrower
acknowledges that any security agreements, liens and/or security interests
securing payment of Borrower's Obligations also secure Borrower's
9
Obligations under this Agreement and are not adversely affected by this
Agreement. Additionally, (a) any Collateral under other agreements or
documents between Borrower and Bank secures Borrowers Obligations under
this Agreement and (b) a default by Borrower under this Agreement is a
default under agreements between Borrower and Bank.
BORROWER: Syntellect Inc.
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------
Title Vice President & CFO
-------------------------------
BANK: SILICON VALLEY BANK
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇, ▇▇.
-------------------------------
Title Regional Market Manager
-------------------------------
10
EXHIBIT A
The Collateral consists of all of Borrower's right, title and interest in
and to the following:
All goods and equipment now owned or hereafter acquired, including,
without limitation, all machinery, fixtures, vehicles (including motor vehicles
and trailers), and any interest in any of the foregoing, and all attachments,
accessories, accessions, replacements, substitutions, additions, and
improvements to any of the foregoing, wherever located;
All inventory, now owned or hereafter acquired, including, without
limitation, all merchandise, raw materials, parts, supplies, packing and
shipping materials, work in process and finished products including such
inventory as is temporarily out of Borrower's custody or possession or in
transit and including any returns upon any accounts or other proceeds, including
insurance proceeds, resulting from the sale or disposition of any of the
foregoing and any documents of title representing any of the above;
All contract rights and general intangibles (as such definitions may be
amended from time to time according to the Code), now owned or hereafter
acquired, including, without limitation, goodwill, trademarks, servicemarks,
trade styles, trade names, patents, patent applications, leases, license
agreements, franchise agreements, blueprints, drawings, purchase orders,
customer lists, route lists, infringements, claims, computer programs, computer
discs, computer tapes, literature, reports, catalogs, design rights, income tax
refunds, payments of insurance and rights to payment of any kind;
All now existing and hereafter arising accounts, contract rights,
royalties, license rights and all other forms of obligations owing to Borrower
arising out of the sale or lease of goods, the licensing of technology or the
rendering of services by Borrower (as such definitions may be amended from time
to time according to the Code) whether or not earned by performance, and any and
all credit insurance, insurance (including refund) claims and proceeds,
guaranties, and other security therefor, as well as all merchandise returned to
or reclaimed by Borrower;
All documents, cash, deposit accounts, securities, securities
entitlements, securities accounts, investment property, financial assets,
letters of credit, letter of credit rights, certificates of deposit, instruments
and chattel paper and electronic chattel paper now owned or hereafter acquired
and Borrower's Books relating to the foregoing;
All copyright rights, copyright applications, copyright registrations and
like protections in each work of authorship and derivative work thereof, whether
published or unpublished, now owned or hereafter acquired; all trade secret
rights, including all rights to unpatented inventions, know-how, operating
manuals, license rights and agreements and confidential information, now owned
or hereafter acquired; all mask work or similar rights available for the
protection of semiconductor chips, now owned or hereafter acquired; all claims
for damages by way of any past, present and future infringement of any of the
foregoing; and
All Borrower's Books relating to the foregoing and any and all claims,
rights and interests in any of the above and all substitutions for, additions
and accessions to and proceeds thereof.
1
EXHIBIT "B"
[SILICON VALLEY BANK]
SILICON VALLEY BANK
SPECIALTY FINANCE DIVISION
Compliance Certificate
I, as authorized officer of Syntellect Inc. ("Borrower") certify under the
Accounts Receivable Financing Agreement (the "Agreement") between Borrower and
Silicon Valley Bank ("Bank") as follows.
BORROWER REPRESENTS AND WARRANTS FOR EACH FINANCED RECEIVABLE:
It is the owner with legal right to sell, transfer and assign it;
The correct amount is on the Invoice Transmittal and is not disputed;
Payment is not contingent on any obligation or contract and it has
fulfilled all its obligations as of the Invoice Transmittal date;
It is based on an actual sale and delivery of goods and/or services
rendered, due to Borrower, it is not past due or in default, has not been
previously sold, assigned, transferred, or pledged and is free of any liens,
security interests and encumbrances;
There are no defenses, offsets, counterclaims or agreements for which the
Account Debtor may claim any deduction or discount;
It reasonably believes no Account Debtor is insolvent or subject to any
Insolvency Proceedings;
It has not filed or had filed against it proceedings and does not
anticipate any filing;
Bank has the right to endorse and/ or require Borrower to endorse all
payments received on Financed Receivables and all proceeds of Collateral.
No representation, warranty or other statement of Borrower in any
certificate or written statement given to Bank contains any untrue statement of
a material fact or omits to state a material fact necessary to make the
statement contained in the certificates or statement not misleading.
ADDITIONALLY, BORROWER REPRESENTS AND WARRANTS AS FOLLOWS:
Borrower is duly existing and in good standing in its state of formation
and qualified and licensed to do business in, and in good standing in, any state
in which the conduct of its business or its ownership of property requires that
it be qualified. The execution, delivery and performance of this Agreement has
been duly authorized, and do not conflict with Borrower's formations documents,
nor constitute an Event of Default under any material agreement by which
Borrower is bound. Borrower is not in default under any agreement to which or by
which it is bound.
Borrower has good title to the Collateral. All inventory is in all
material respects of good and marketable quality, free from material defects.
Borrower is not an "investment company" or a company "controlled" by an
"investment company" under the Investment Company Act. Borrower is not engaged
as one of its important activities in extending credit for margin stock (under
Regulations G, T and U of the Federal Reserve Board of Governors). Borrower has
complied with the Federal Fair Labor Standards Act. Borrower has not violated
any laws, ordinances or rules. None of Borrower's properties or assets has been
used by Borrower, to the best of Borrower's knowledge, by previous persons, in
disposing, producing, storing, treating, or transporting any hazardous substance
other than legally. Borrower has timely filed all required tax returns and paid,
or made adequate provision to pay, all taxes. Borrower has obtained all
consents, approvals and authorizations of, made all declarations or filings
with, and given all notices to, all government authorities that are necessary to
continue its business as currently conducted.
All representations and warranties in the Agreement are true and correct
in all material respects on this date.
Sincerely,
SIGNATURE /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
TITLE Vice President & CFO
DATE May 10, 2002
2
[SILICON VALLEY BANK]
SILICON VALLEY BANK
SPECIALTY FINANCE DIVISION
SECRETARY'S CERTIFICATE OF RESOLUTION
I, as Secretary of Syntellect Inc., a Delaware corporation (the
"Corporation"), certify that at a meeting duly convened at which a quorum was
present the following resolutions were adopted by the Board of Directors of the
Corporation and that these resolutions have not been modified, amended, or
rescinded and remain effective as of today's date.
It is resolved that ANY ONE of the following officers of the Corporation, whose
name, title and signature is below:
NAME TITLE SIGNATURE
---- ----- ---------
▇▇▇▇▇▇▇ (▇▇▇▇) ▇. ▇▇▇▇▇▇▇, ▇▇. President & CEO /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
---------------------------------- ----------------------------- --------------------------------
▇▇▇▇▇▇▇ (▇▇▇) ▇. ▇▇▇▇▇▇▇ Vice President & CFO /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------- ----------------------------- --------------------------------
---------------------------------- ----------------------------- --------------------------------
---------------------------------- ----------------------------- --------------------------------
---------------------------------- ----------------------------- --------------------------------
may act for Borrower and:
Sell the corporation's accounts receivable to Bank
Grant to Bank a security interest in any of the corporation's assets
Execute and deliver certain agreements in connection with the sale
of receivables, and granting of security interests.
Designate other individuals to request advances, pay fees and costs
and execute other documents or agreements (including documents or
agreement that waive the Corporation's right to a jury trial) they
think necessary to effectuate these Resolutions.
Further resolved that all acts authorized by these Resolutions and performed
before they were adopted are ratified. These Resolutions remain in effect and
Bank may rely on them until Bank receives written notice of their revocation.
I certify that the persons listed above are the Corporation's officers with the
titles and signatures shown following their names and that these resolutions
have not been modified are currently effective.
X /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 5/10/2002
------------------------------------- -------------
*Secretary or Assistant Secretary Date
X /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, III
-----------------------------------
* If the certifying officer is designated as a signer in these resolutions
then another corporate officer must also sign.
3
LOCKBOX SERVICE SUBSCRIBER AGREEMENT
SILICON VALLEY BANK ("Bank") and the undersigned company ("Subscriber") agree as
follows:
1. Remittance Banking Service. Commencing May 10, 2002, Syntellect Inc.
("Subscriber") has requested that Silicon Valley Bank ("Bank") provide
Subscriber with the Bank's Lockbox/Remittance Banking Service facilities
(the "Service"), This Service will be provided by the Bank or its agent
("Agent"), for the deposit of its clients' remittance items.
2. Client Remittances. Clients of Subscriber will be directed to forward
their remittances to Subscriber at a post office address assigned by Bank
or its agent. Bank, or its Agent, shall have unrestricted and exclusive
access to the mail directed to this address. Subscriber agrees it will not
furnish "business reply" mail envelopes to its clients for their
remittances, and any such envelopes mailed to the Bank-designated address
may be refused or returned to sender. Subscriber agrees to notify Bank 30
days in advance of any change in Subscriber's remittance statement and/or
mailing schedule.
3. Collection of Mail. Bank, or its Agent, will collect mail from the post
office at multiple times each business day.
4. Endorsement of Items. Bank, or its Agent, will endorse, on behalf of
Subscriber, checks and other deposited items that appear to be for deposit
to the credit of Subscriber. Subscriber shall indemnify Bank and its Agent
from any liability that may arise by virtue of Bank's, or its Agent's,
endorsement and negotiation of such checks.
5. Subscriber's Account. Bank, or its Agent, will process the checks and
other deposited items and the Bank shall credit the total amount to the
account described below (the "Account"). During the term of this
Agreement, all collected funds held in the Account shall be deemed to be
Subscriber's funds for all legal purposes (e.g., attachment, execution and
other forms of legal process). The crediting and collection of items will
be handled under the same terms and conditions as apply to other
commercial deposits. Subscriber acknowledges receipt of a copy of Bank's
account rules and regulations. Subscriber will have access to funds
collected by Service when credited to Subscriber's account with Bank.
6. Processing of Items. The processing of checks and other deposited items
will be accomplished in accordance with the various services and options
recited in the attached End-User Set-up Form.
7. Record of Deposited Items. All checks and other deposited items will be
microfilmed by Bank, or its Agent, and the film will be retained by Bank,
or its Agent, for a period not less than one (1) year.
8. Restrictive Endorsements. Although Bank, or its Agent, normally forwards,
without processing, checks discovered bearing the typed or handwritten
notation "PAYMENT IN FULL" or other notations ("restrictive
endorsements"), Bank or its Agent, assumes no responsibility for its
failure to do so. Bank, or its Agent, will process in the usual manner any
checks bearing restrictive endorsements where the wording is imprinted as
part of the check or voucher, indicating a general business practice of
the payor. Subscriber will instruct their clients to send all payments
with restrictions such as "paid in full" to a separate location or person
other than the LOCKBOX address or regular payment location so that the
payee can decide whether or not to accept or reject the check, rather that
have the check possibly processed without thought to the issue. Subscriber
has reviewed and understands the California Commercial Code (Section 3311)
relating accord and satisfaction.
9. Stock Certificates. Bank, or its Agent, will not be held liable in the
event a stock certificate, bond and/or stock power is received by Bank, or
its Agent, in error; however, Bank, or its Agent, will endeavor to
identify such items and to forward them to Subscriber.
10. Returned Merchandise. Subscriber agrees to instruct its clients not to
send any returned merchandise to the post office address assigned by Bank,
and Subscriber hereby holds Bank, or its Agent, free of liability in the
event such merchandise is received at the address. Bank, or its Agent,
will make all reasonable attempts to forward merchandise received to
Subscriber, at the risk and expense of Subscriber.
11. Commingling. The Bank hereby acknowledges that, of operational necessity,
payments to a given
1
LOCKBOX under the Service must be commingled with other funds in one or
more accounts during the course of processing. Therefore, no payments
that, by virtue of a statutory, regulatory, contractual or similar
restriction, cannot be commingled with other payments or funds will be
accepted under the Service. Subscriber hereby understands that it will not
request the Service if commingling of funds is not permitted due to
regulatory, contractual, or similar restrictions. Bank, or its Agent will
not be responsible for the identification of these items nor will they
accept any responsibility or liability which may occur as a result of
processing such an item in the LOCKBOX.
12. Third Party Secured Creditor. The Subscriber hereby acknowledges that Bank
shall not be obligated to, and Bank shall not, enter into a third party
secured creditor agreement with any creditor of a LOCKBOX Subscriber with
respect to any payments or funds processed through the LOCKBOX system as
part of the Service. Subscriber agrees not to participate in the Service
if required to enter into a third party secured creditor agreement by
another party.
13. Confidentiality. Bank, or its Agent, agrees that all information
concerning the clients of the Subscriber which comes into Bank's, or its
Agent's, possession pursuant to this Agreement will be treated in the same
confidential manner as is information relating to the accounts of Bank's
depositors.
14. Fees. Unless otherwise agreed by Bank, Subscriber shall pay Bank the fees
set forth for this service in Bank's most current Fee Schedule, plus
additional fees for the performance of services beyond the terms of this
Agreement, or resulting from increased expenses incurred by the failure of
Subscriber to furnish, on demand, data in a form acceptable to Bank.
15. Limitations on Bank Liability. In addition to the limitations set forth in
paragraph 8, above, Bank's, or its Agent's, liability will be limited only
to acts resulting from Bank's, or its Agent's, gross negligence or willful
misconduct and shall not exceed Bank's fees and charges to Subscriber in
connection with the Service for the month in which damages are suffered.
Under no circumstances will Bank, or its Agent, be held liable for any
general or consequential damages or damages caused, in whole or in part,
by the action or inaction of Subscriber or any agent or employee of
Subscriber. Bank, or its Agent, will not be liable for any damage, loss,
liability or delay caused by accidents, strikes, fire, flood, war, riot,
equipment breakdown, electrical or mechanical failure, acts of God, or any
cause which is reasonably unavoidable or beyond its reasonable control.
Subscriber agrees that the fees charged by Bank for the performance of
this service shall be deemed to have been established in contemplation of
these limitations on Bank's, or its Agent's, liability.
16. Indemnification. Subscriber agrees to indemnify Bank, its parent Company,
affiliates, subsidiaries, or its Agent, against any and all damages,
losses or liabilities, including without limitation reasonable attorneys'
fees and court costs, which results, directly or indirectly, in whole or
in part, from any negligence or fraud of Subscriber, its Agent, or any
employee of Subscriber or from any performance by Bank, or its Agent, of
Bank's obligations under this Agreement.
17. Subscriber's Records. This Agreement and the performance by Bank, or its
Agent, or its services hereunder shall not relieve Subscriber of any
obligation imposed by law or contract regarding the maintenance of records
or from employing adequate audit, account and review practices as are
customarily followed by similar businesses.
18. Amendment and Termination. Bank may amend the terms of this Agreement from
time to time by giving written notice to Subscriber at the address set
forth below or by sending Subscriber a copy of the amended Agreement. If
Bank raises any fee(s) or deletes any service(s), it agrees to give
Subscriber 30 days' prior notice. Bank may immediately terminate this
Agreement in the event that Subscriber or any third party disputes the
ownership of the Account or of the funds on deposit in the Account.
Otherwise, either party may terminate this Agreement on 30 days' written
notice to the other.
19. Governing Law. This Agreement shall be governed by the laws of the State
of California. Any dispute between the parties to this contract shall be
filed in the Court having the appropriate jurisdiction in the County of
Santa Clara, California.
20. Notices. All written notices required by this Agreement shall be delivered
or mailed to the other party at the address set forth below or to such
other address as the party may specify in writing.
2
Depository Account Number: 3300363292
Dated 5/10/2002 Dated 5/11/02
Syntellect Inc. SILICON VALLEY BANK
▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 3003 Tasman Drive
Suite 100 NC 431
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇, ▇▇.
------------------------- ------------------------------
(authorized signature) (authorized signature)
Title Vice President & CFO Title Regional Market Manager
------------------------- -----------------------------
AMENDED LOCKBOX AGREEMENT
Syntellect Inc. ("Subscriber") shall hold all payments on, and proceeds of,
Receivables in trust for Silicon Valley Bank ("Bank"), and Subscriber shall
immediately deliver all such payments and proceeds to Bank in their original
form, duly endorsed in blank, to be applied to the Obligations in such order as
Bank shall determine.
Subscriber hereby agrees to accept a change in the disposition of its lockbox #
CH17123 proceeds from the current account # 3300363292 to the Bank Cash
Collateral Account # 3300363292 beginning immediately. We understand that Bank
may, in its discretion, require that all proceeds of Collateral be deposited by
Subscriber into a lockbox account, or such other "blocked account" as Bank may
specify, pursuant to a blocked account agreement in such form as Bank may
specify. Bank or its designee may, at any time, notify Account Debtors that
Receivables have been assigned to Bank.
DATED: May 14, 2002
AGREED TO AND ACKNOWLEDGED BY:
Subscriber:
Syntellect Inc.
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
-----------------------------------
President or Vice President
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
Secretary or Ass't Secretary
Bank:
SILICON VALLEY BANK
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇, ▇▇.
-----------------------------------
Title Regional Market Manager
-----------------------------------
1
INTELLECTUAL PROPERTY SECURITY AGREEMENT
This Intellectual Property Security Agreement (this "IP Agreement") is
made as of May 14, 2002 by and between Syntellect Inc. ("Grantor"), and Silicon
Valley Bank, a California banking corporation ("Bank").
RECITALS
A. Bank will make advances to Grantor ("Advances") as described in the
Accounts Receivable Financing Agreement (the "Financing Agreement"), but only if
Grantor grants Bank a security interest in its Copyrights, Trademarks, Patents,
and Mask Works. Defined terms used but not defined herein shall have the same
meanings as in the Financing Agreement.
B. Pursuant to the terms of the Financing Agreement, Grantor has
granted to Bank a security interest in all of Grantor's right title and
interest, whether presently existing or hereafter acquired in, to and under all
of the Collateral.
NOW, THEREFORE, for good and valuable consideration, receipt of which is
hereby acknowledged and intending to be legally bound, as collateral security
for the prompt and complete payment when due of Grantor's Indebtedness under the
Financing Agreement, Grantor hereby represents, warrants, covenants and agrees
as follows:
1. Grant of Security Interest. As collateral security for the prompt
and complete payment and performance of all of Grantor's present or future
Indebtedness, obligations and liabilities to Bank, Grantor hereby grants a
security interest in all of Grantor's right, title and interest in, to and under
its Intellectual Property Collateral (all of which shall collectively be called
the "Intellectual Property Collateral"), including, without limitation, the
following:
(a) Any and all copyright rights, copyright applications,
copyright registrations and like protections in each work or authorship and
derivative work thereof, whether published or unpublished and whether or not the
same also constitutes a trade secret, now or hereafter existing, created,
acquired or held, including without limitation those set forth on Exhibit A
attached hereto (collectively, the "Copyrights");
(b) Any and all trade secrets, and any and all intellectual
property rights in computer software and computer software products now or
hereafter existing, created, acquired or held;
(c) Any and all design rights which may be available to Grantor
now or hereafter existing, created, acquired or held;
(d) All patents, patent applications and like protections
including, without limitation, improvements, divisions, continuations, renewals,
reissues, extensions and continuations-in-part of the same, including without
limitation the patents and patent applications set forth on Exhibit B attached
hereto (collectively, the "Patents");
(e) Any trademark and servicemark rights, whether registered or
not, applications to register and registrations of the same and like
protections, and the entire goodwill of the business of Grantor connected with
and symbolized by such trademarks, including without limitation those set forth
on Exhibit C attached hereto (collectively, the "Trademarks")
(f) All mask works or similar rights available for the protection
of semiconductor chips, now owned or hereafter acquired, including, without
limitation those set forth on Exhibit D attached hereto (collectively, the "Mask
Works");
(g) Any and all claims for damages by way of past, present and
future infringements of any of the rights included above, with the right, but
not the obligation, to ▇▇▇ for and collect such damages for said use or
infringement of the intellectual property rights identified above;
(h) All licenses or other rights to use any of the Copyrights,
Patents, Trademarks, or Mask Works and all license fees and royalties arising
from such use to the extent permitted by such license or rights; and
(i) All amendments, extensions, renewals and extensions of any of
the Copyrights, Trademarks, Patents, or Mask Works; and
(j) All proceeds and products of the foregoing, including without
limitation all payments under insurance or any indemnity or warranty payable in
respect of any of the foregoing.
2. Authorization and Request. Grantor authorizes and requests that the
Register of Copyrights and the Commissioner of Patents and Trademarks record
this IP Agreement.
3. Covenants and Warranties. Grantor represents, warrants, covenants
and agrees as follows:
(a) Grantor is now the sole owner of the Intellectual Property
Collateral, except for non-exclusive licenses granted by Grantor to its
customers in the ordinary course of business.
(b) Performance of this IP Agreement does not conflict with or
result in a breach of any IP Agreement to which Grantor is bound, except to the
extent that certain intellectual property agreements prohibit the assignment of
the rights thereunder to a third party without the licensor's or other party's
consent and this IP Agreement constitutes a security interest.
(c) During the term of this IP Agreement, Grantor will not
transfer or otherwise encumber any interest in the Intellectual Property
Collateral, except for non-exclusive licenses granted by Grantor in the ordinary
course of business or as set forth in this IP Agreement;
(d) To its knowledge, each of the Patents is valid and
enforceable, and no part of the Intellectual Property Collateral has been judged
invalid or unenforceable, in whole or in part, and no claim has been made that
any part of the Intellectual Property Collateral violates the rights of any
third party;
(e) Grantor shall promptly advise Bank of any material adverse
change in the composition of the Collateral, including but not limited to any
subsequent ownership right of the Grantor in or to any Trademark, Patent,
Copyright, or Mask Work specified in this IP Agreement;
(f) Grantor shall (i) protect, defend and maintain the validity
and enforceability of the Trademarks, Patents, Copyrights, and Mask Works, (ii)
use its best efforts to detect infringements of the Trademarks, Patents,
Copyrights, and Mask Works and promptly advise Bank in writing of material
infringements detected and (iii) not allow any Trademarks, Patents, Copyrights,
or Mask Works to be abandoned, forfeited or dedicated to the public without the
written consent of Bank, which shall not be unreasonably withheld, unless
Grantor determines that reasonable business practices suggest that abandonment
is appropriate.
(g) Grantor shall promptly register the most recent version of any
of Grantor's Copyrights, if not so already registered, and shall, from time to
time, execute and file such other instruments, and take such further actions as
Bank may reasonably request from time to time to perfect or continue the
perfection of Bank's interest in the Intellectual Property Collateral;
(h) This IP Agreement creates, and in the case of after acquired
Intellectual Property Collateral, this IP Agreement will create at the time
Grantor first has rights in such after acquired Intellectual Property
Collateral, in favor of Bank a valid and perfected first priority security
interest in the Intellectual Property Collateral in the United States securing
the payment and performance of the obligations evidenced by the Note and the
Financing Agreement upon making the filings referred to in clause (i) below;
(i) To its knowledge, except for, and upon, the filing with the
United States Patent and Trademark office with respect to the Patents and
Trademarks and the Register of Copyrights with respect to the Copyrights and
Mask Works necessary to perfect the security interests created hereunder and
except as has been already made or obtained, no authorization, approval or other
action by, and no notice to or filing with, any U.S. governmental authority of
U.S. regulatory body is required either (i) for the grant by Grantor of the
security interest granted hereby or for the execution, delivery or performance
of this IP Agreement by
2
Grantor in the U.S. or (ii) for the perfection in the United States or the
exercise by Bank of its rights and remedies thereunder;
(j) All information heretofore, herein or hereafter supplied to
Bank by or on behalf of Grantor with respect to the Intellectual Property
Collateral is accurate and complete in all material respects.
(k) Grantor shall not enter into any agreement that would
materially impair or conflict with Grantor's obligations hereunder without
Bank's prior written consent, which consent shall not be unreasonably withheld.
Grantor shall not permit the inclusion in any material contract to which it
becomes a party of any provisions that could or might in any way prevent the
creation of a security interest in Grantor's rights and interest in any property
included within the definition of the Intellectual property Collateral acquired
under such contracts, except that certain contracts may contain anti-assignment
provisions that could in effect prohibit the creation of a security interest in
such contracts.
(l) Upon any executive officer of Grantor obtaining actual
knowledge thereof, Grantor will promptly notify Bank in writing of any event
that materially adversely affects the value of any material Intellectual
Property Collateral, the ability of Grantor to dispose of any material
Intellectual Property Collateral of the rights and remedies of Bank in relation
thereto, including the levy of any legal process against any of the Intellectual
Property Collateral.
4. Bank's Rights. Bank shall have the right, but not the obligation, to
take, at Grantor's sole expense, any actions that Grantor is required under this
IP Agreement to take but which Grantor fails to take, after fifteen (15) days'
notice to Grantor. Grantor shall reimburse and indemnify Bank for all reasonable
costs and reasonable expenses incurred in the reasonable exercise of its rights
under this section 4.
5. Inspection Rights. Grantor hereby grants to Bank and its employees,
representatives and agents the right to visit, during reasonable hours upon
prior reasonable written notice to Grantor, and any of Grantor's plants and
facilities that manufacture, install or store products (or that have done so
during the prior six-month period) that are sold utilizing any of the
Intellectual Property Collateral, and to inspect the products and quality
control records relating thereto upon reasonable written notice to Grantor and
as often as may be reasonably requested, but not more than one (1) in every six
(6) months; provided, however, nothing herein shall entitle Bank access to
Grantor's trade secrets and other proprietary information.
6. Further Assurances; Attorney in Fact.
(a) On a continuing basis, Grantor will, subject to any prior
licenses, encumbrances and restrictions and prospective licenses, make, execute,
acknowledge and deliver, and file and record in the proper filing and recording
places in the United States, all such instruments, including appropriate
financing and continuation statements and collateral agreements and filings with
the United States Patent and Trademarks Office and the Register of Copyrights,
and take all such action as may reasonably be deemed necessary or advisable, or
as requested by Bank, to perfect Bank's security interest in all Copyrights,
Patents, Trademarks, and Mask Works and otherwise to carry out the intent and
purposes of this IP Agreement, or for assuring and confirming to Bank the grant
or perfection of a security interest in all Intellectual Property Collateral.
(b) Grantor hereby irrevocably appoints Bank as Grantor's
attorney-in-fact, with full authority in the place and stead of Grantor and in
the name of Grantor, Bank or otherwise, from time to time in Bank's discretion,
upon Grantor's failure or inability to do so, to take any action and to execute
any instrument which Bank may deem necessary or advisable to accomplish the
purposes of this IP Agreement, including:
(i) To modify, in its sole discretion, this IP Agreement
without first obtaining Grantor's approval of or signature to such modification
by amending Exhibit A, Exhibit B, Exhibit C, and Exhibit D hereof, as
appropriate, to include reference to any right, title or interest in any
Copyrights, Patents, Trademarks or Mask Works acquired by Grantor after the
execution hereof or to delete any reference to any right, title or interest in
any Copyrights, Patents, Trademarks, or Mask Works in which Grantor no longer
has or claims any right, title or interest; and
(ii) To file, in its sole discretion, one or more financing
or continuation statements and
3
amendments thereto, relative to any of the Intellectual Property Collateral
without the signature of Grantor where permitted by law.
7. Events of Default. The occurrence of any of the following shall
constitute an Event of Default under this IP Agreement:
(a) An Event of Default occurs under the Financing Agreement; or
(b) Grantor breaches any warranty or agreement made by Grantor in
this IP Agreement.
8. Remedies. Upon the occurrence and continuance of an Event of
Default, Bank shall have the right to exercise all the remedies of a secured
party under the California Uniform Commercial Code, including without limitation
the right to require Grantor to assemble the Intellectual Property Collateral
and any tangible property in which Bank has a security interest and to make it
available to Bank at a place designated by Bank. Bank shall have a nonexclusive,
royalty free license to use the Copyrights, Patents, Trademarks, and Mask Works
to the extent reasonably necessary to permit Bank to exercise its rights and
remedies upon the occurrence of an Event of Default. Grantor will pay any
expenses (including reasonable attorney's fees) incurred by Bank in connection
with the exercise of any of Bank's rights hereunder, including without
limitation any expense incurred in disposing of the Intellectual Property
Collateral. All of Bank's rights and remedies with respect to the Intellectual
Property Collateral shall be cumulative.
9. Indemnity. Grantor agrees to defend, indemnify and hold harmless
Bank and its officers, employees, and agents against: (a) all obligations,
demands, claims, and liabilities claimed or asserted by any other party in
connection with the transactions contemplated by this IP Agreement, and (b) all
losses or expenses in any way suffered, incurred, or paid by Bank as a result of
or in any way arising out of, following or consequential to transactions between
Bank and Grantor, whether under this IP Agreement or otherwise (including
without limitation, reasonable attorneys fees and reasonable expenses), except
for losses arising from or out of Bank's gross negligence or willful misconduct.
10. Reassignment. At such time as Grantor shall completely satisfy all
of the obligations secured hereunder, Bank shall execute and deliver to Grantor
all deed, assignments, and other instruments as may be necessary or proper to
reinvest in Grantor full title to the property assigned hereunder, subject to
any disposition thereof which may have been made by Bank pursuant hereto.
11. Course of Dealing. No course of dealing, nor any failure to
exercise, nor any delay in exercising any right, power or privilege hereunder
shall operate as a waiver thereof.
12. Attorneys' Fees. If any action relating to this IP Agreement is
brought by either party hereto against the other party, the prevailing party
shall be entitled to recover reasonable attorneys' fees, costs and
disbursements.
13. Amendments. This IP Agreement may be amended only by a written
instrument signed by both parties hereto.
14. Counterparts. This IP Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute the same instrument.
15. Law and Jurisdiction. This IP Agreement shall be governed by and
construed in accordance with the laws of the State of California, without regard
for choice of law provisions. Grantor and Bank consent to the nonexclusive
jurisdiction of any state or federal court located in Santa ▇▇▇▇▇ County,
California.
16. Confidentiality. In handling any confidential information, Bank
shall exercise the same degree of care that it exercises with respect to its own
proprietary information of the same types to maintain the confidentiality of any
non-public information thereby received or received pursuant to this IP
Agreement except that the disclosure of this information may be made (i) to the
affiliates of the Bank, (ii) to prospective transferee or purchasers of an
interest in the obligations secured hereby, provided that they have entered into
comparable confidentiality agreement in favor of Grantor and have deliver a copy
to Grantor, (iii) as required by law, regulation, rule or order, subpoena
judicial order or similar order and (iv) as may be
4
required in connection with the examination, audit or similar investigation of
Bank.
IN WITNESS WHEREOF, the parties hereto have executed this IP Agreement on
the day and year first above written.
ADDRESS OF GRANTOR: GRANTOR:
▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ Syntellect Inc.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------
Name: ▇▇▇▇▇▇▇ (▇▇▇) ▇. ▇▇▇▇▇▇▇
-------------------------
Title: Vice President & CFO
------------------------
5
Exhibit "A" attached to that certain Intellectual Property Security Agreement
dated May 14, 2002
EXHIBIT "A"
COPYRIGHTS
( SEE ATTACHED )
SCHEDULE A - ISSUED COPYRIGHTS
COPYRIGHT REGISTRATION DATE OF
DESCRIPTION NUMBER ISSUANCE
----------- ------ --------
SCHEDULE B - PENDING COPYRIGHT APPLICATIONS
FIRST DATE
COPYRIGHT APPLICATION DATE OF OF PUBLIC
DESCRIPTION NUMBER FILING CREATION DISTRIBUTION
----------- ------ ------- -------- ------------
SCHEDULE C - UNREGISTERED COPYRIGHTS (Where No Copyright Application is Pending)
DATE AND
RECORDATION
NUMBER OF
IP AGREEMENT
TO OWNER OF
ORIGINAL GRANTOR (IF
AUTHOR OR ORIGINAL AUTHOR
OWNER OF OR OWNER OF
FIRST DATE COPYRIGHT COPYRIGHT IS
COPYRIGHT DATE OF OF (IF DIFFERENT DIFFERENT FROM
DESCRIPTION CREATION DISTRIBUTION FROM GRANTOR) GRANTOR)
6
EXHIBIT "A"
SYNTELLECT U.S. COPYRIGHT STATUS CHART
--------------------------------------------------------------------------------
TITLE REG. REG. STATUS S&W DOCKET
COPYRIGHT DESC. DATE NUMBER NO.
--------------------------------------------------------------------------------
INFOBOT RELEASE 9 7-8-88 TX ▇-▇▇▇-▇▇▇ Registered 07234.4300
INFOBOT RELEASE 9 12-19-88 TX ▇-▇▇▇-▇▇▇ Registered 07234.4313
INFOBOT RELEASE 1.1 11-23-90 TX ▇-▇▇▇-▇▇▇ Registered 07234.4317
PREMIER VER. 3.7 9-21-98 TX ▇-▇▇▇-▇▇▇ Registered 07234.8401
PREMIER 030 VER. 4.7 9-21-98 TX ▇-▇▇▇-▇▇▇ Registered 07234.8402
PREMIER 030 VER. 4.8 9-21-98 TX ▇-▇▇▇-▇▇▇ Registered 07234.8403
7
Exhibit "B" attached to that certain Intellectual Property Security Agreement
dated May 14, 2002
EXHIBIT "B"
PATENTS
PATENT
DESCRIPTION DOCKET NO. COUNTRY SERIAL NO. FILING DATE STATUS
----------- ---------- ------- ---------- ----------- ------
NONE
8
Exhibit "C" attached to that certain Intellectual Property Security Agreement
dated May 14, 2002
EXHIBIT "C"
TRADEMARKS
TRADEMARK
DESCRIPTION COUNTRY SERIAL NO. REG. NO STATUS
----------- ------- ---------- ------- ------
( SEE ATTACHED )
9
EXHIBIT "C"
SYNTELLECT TRADEMARK STATUS CHART
---------------------------------------------------------------------------------------
▇▇▇▇ COUNTRY S.N./REG. NO. STATUS S&W FILE NO.
---------------------------------------------------------------------------------------
MD U.S. 1,330,649 Registered 07234.0700
SYNTELLECT U.S. 1,465,845 Registered 07234.4900
SYNTELLECT Canada TMA 339,071 Registered 07234.4903
SYNTELLECT Denmark 0122/1989 Registered 07234.4904
SYNTELLECT France 1,398,473 Registered 07234.4906
SYNTELLECT Germany 1,116,850 Registered 07234.4907
SYNTELLECT Japan 2,242,548 Registered 07234.4910
SYNTELLECT Korea 161,576 Registered 07234.4911
SYNTELLECT Mexico 362,113 Registered 07234.4913
SYNTELLECT U.K. 1,304,028 Registered 07234.4921
SYNTELLECT Benelux 431,085 Registered 07234.4926
SYNTELLECT Norway 133,986 Registered 07234.4970
INFOBOT U.S. 1,500,243 Registered 07234.5000
INFOBOT Australia A461791 Registered 07234.5001
INFOBOT Canada TMA 349,867 Registered 07234.5003
INFOBOT France 1,398,472 Registered 07234.5006
INFOBOT Germany 1,116,851 Registered 07234.5007
INFOBOT Japan 2,242,549 Registered 07234.5010
INFOBOT Korea 161,577 Registered 07234.5011
INFOBOT Mexico 362,114 Registered 07234.5013
INFOBOT U.K. 1,304,029 Registered 07234.5021
INFOBOT Benelux 431,084 Registered 07234.5026
INFOBOT Norway 135,460 Registered 07234.5070
INFOBOT Spain 1,187,405 Registered 07234.5082
[SYNTELLECT LOGO] U.S. 1,493,935 Registered 07234.5300
[SYNTELLECT LOGO] Canada TMA 404,723 Registered 07234.5303
[SYNTELLECT LOGO] Mexico 362,115 Registered 07234.5313
[SYNTELLECT LOGO] U.K. 1,312,193 Registered 07234.5321
[SYNTELLECT LOGO] Mexico 359,263 Registered 07234.5363
10
---------------------------------------------------------------------------------------
▇▇▇▇ COUNTRY S.N./REG. NO. STATUS S&W FILE NO.
---------------------------------------------------------------------------------------
[SYNTELLECT LOGO] U.S. 1,497,468 Registered 07234.5400
[SYNTELLECT LOGO] Mexico 362,116 Registered 07234.5413
[SYNTELLECT LOGO] Mexico 359,262 Registered 07234.5463
VOCALPOINT U.S. 1,871,845 Registered 07234.5600
VOCALPOINT Hong Kong 7071/95 Registered 07234.5608
VOCALPOINT U.K. 1,548,689 Registered 07234.5621
INFOWATCH Hong Kong B9213/95 Registered 07234.5808
INFOWATCH U.K. 1,548,677 Registered 07234.5821
VOTERPOINT Sweden 300078 Registered 07234.6019
FAXPOINT Sweden 300077 Registered 07234.6119
FAXPOINT U.K. 1559116 Registered 07234.6121
SCREENRESPONSE U.S. 2,053,106 Registered 07234.6400
VOCALPAGE U.S. 1,896,856 Registered
DISPLAYVOICE U.S. 1,899,651 Registered
[SYNTELLECT LOGO] U.S. 2,136,852 Registered 07234.6800
[SYNTELLECT LOGO] Canada TMA 514,917 Registered 07234.6803
[SYNTELLECT LOGO] Germany 397 15 852 Registered 07234.6807
[SYNTELLECT LOGO] U.K. 2,128,539 Registered 07234.6821
SYNTHESIZER U.S. 2,224,831 Registered on 07234.6900
Supplemental
Register
SYNTHESIZER Germany 397 15 854.8 Registered 07234.6907
SYNTHESIZER U.K. 2,128,535 Registered 07234.6921
[SYNTELLECT LOGO] U.S. 2,132,113 Registered 07234.7100
[SYNTELLECT LOGO] U.S. 2,107,088 Registered 07234.7200
VOCALPOINT INTERACTIVE U.S. 2,182,315 Registered 07234.7400
WEB RESPONSE
VOCALPOINT INTERACTIVE Germany 397 49 673.7 Registered 07234.7407
WEB RESPONSE
11
---------------------------------------------------------------------------------------
▇▇▇▇ COUNTRY S.N./REG. NO. STATUS S&W FILE NO.
---------------------------------------------------------------------------------------
VOCALPOINT INTERACTIVE U.K. 2,148,156 Registered 07234.7421
WEB RESPONSE
WEBCALLBACK U.S. 2,276,845 Registered 07234.7500
WEBCALLBACK Canada 875,673 Allowed; Decl. of 07234.7503
Use due 5/9/02
VISTALINK U.S. 2,216,209 Registered 07234.7600
VISTALINK Canada 875,672 Pending 07234.7603
VISTALINK Germany 398 21 054 Registered 07234.7607
VISTALINK U.K. 2,164,315 Registered 07234.7621
CYBERSTATS US 2,234,194 Registered 07234.7800
VISTAGEN U.S. 2,317,219 Registered 07234.8000
VISTAVIEW U.S. 2,482,794 Registered 07234.8100
SYNTELLECT INTERACTIVE U.S. 2,516,199 Registered 07234.9300
SERVICES EASYPAY
MEDIAVOICE ON HOLD U.S. 75/771,074 Pending; 07234.9500
Statement of
Use due 4/2/02
MEDIAVOICE U.S. 2,456,786 Registered 08234.0300
HOME TICKET U.S. 2,526,558 Registered 08234.0800
12
Exhibit "D" attached to that certain Intellectual Property Security Agreement
dated May 14, 2002
EXHIBIT "D"
MASK WORKS
MASK WORK
DESCRIPTION COUNTRY SERIAL NO. REG. NO STATUS
----------- ------- ---------- ------- ------
NONE
13
