EXHIBIT 10.13
SECURITY AGREEMENT
(Borrower)
THIS SECURITY AGREEMENT (the "Agreement") dated as of July 10, 2000 is
made and entered into by and between Avatar Systems, Inc., a Texas corporation
("Debtor"), and Bank One, Texas, N.A. ("Lender").
WITNESSETH:
WHEREAS, Avatar Systems, Inc, a Texas corporation ("Borrower"), and
Lender are parties to an Amended and Restated Loan Agreement of even date
herewith (as the same may be amended and in effect from time to time, the "Loan
Agreement"), providing for extensions of credit to be made to Debtor by Lender;
WHEREAS, Debtor will receive direct and indirect economic benefit from
the loans contemplated under the Loan Agreement;
WHEREAS, Debtor has executed that certain Guaranty dated as of even
date herewith, in favor of Lender, and securing all obligations and liabilities
of Borrower under the Loan Agreement (the "Guaranty"); and
WHEREAS, it is a condition precedent to the making of Loans under the
Loan Agreement that Debtor shall have executed and delivered this Agreement.
NOW, THEREFORE, in consideration of the premises and in order to induce
Lender to make Loans under the Loan Agreement, Debtor hereby agrees with Lender
as follows:
SECTION 1. Definitions
1.1 Certain Defined Terms. Terms defined in the Loan Agreement and not
otherwise defined herein have the respective meanings provided for in the Loan
Agreement. The following terms, as used herein, have the meanings set forth
below:
"Accounts" means all "accounts" (as defined in the UCC) now owned or
hereafter created or acquired by Debtor including, without limitation, all of
the following now owned or hereafter created or acquired by Debtor: (a) accounts
receivable, contract rights, book debts, notes, drafts and other obligations or
indebtedness owing to Debtor arising from the sale, lease or exchange of goods
or other property and/or the performance of services; (b) Debtor's rights in, to
and under all purchase orders for goods, services or other property; (c)
Debtor's rights to any goods, services or other property represented by any of
the foregoing (including returned or repossessed goods and unpaid sellers'
rights of rescission, replevin, reclamation and rights to stoppage in transit);
(d) monies due to or to become due to Debtor under all contracts for the sale,
lease or exchange of goods or other property and/or the performance of services
(whether or not- yet earned by performance on the part of Debtor); and (e)
Proceeds (as defined below) of any of the foregoing and all collateral security
and guaranties of any kind given by any Person with respect to any of the
foregoing,
SECURITY AGREEMENT - Page 1
"Collateral" has the meaning assigned to that term in Section 2.
"Collateral Account" has the meaning assigned to that term in Section
"Copyright License" means any written agreement now or hereafter in
existence granting to Debtor any right to use any Copyright (excluding any such
agreement if and to the extent that any attempt to grant a security interest
hereunder in any such agreement without the consent of a third party would
constitute a breach thereof or such consent has not been obtained by Debtor)
including, without limitation, the agreements described in Schedule I of the
Copyright Security Agreement.
"Copyrights" means collectively all of the following: (a) all
copyrights, rights and interests in copyrights, works protectable by copyright,
copyright registrations and copyright applications now owned or hereafter
created or acquired by Debtor, including, without limitation, those listed on
Schedule I of the Copyright Security Agreement; (b) all renewals of any of the
foregoing; (c) all income, royalties, damages and payments now or hereafter due
and/or payable under any of the foregoing, including, without limitation,
damages or payments for past or future infringements of any of the foregoing;
(d) the right to xxx for past, present and future infringements of any of the
foregoing; (e) all rights corresponding to any of the foregoing throughout the
world; and (f) all goodwill associated with and symbolized by any of the
foregoing.
"Copyright Security Agreement" means the copyright security agreement
to be executed and delivered by Debtor to Lender, substantially in the form of
Exhibit A, as such agreement may hereafter be amended, supplemented or otherwise
modified from time to time.
"Documents" means all "documents" (as defined in the UCC) or other
receipts covering, evidencing or representing goods now owned or hereafter
acquired by Debtor.
"Equipment" means all "equipment" (as defined in the UCC) now owned or
hereafter acquired by Debtor including, without limitation, all computers,
computer components and other computer hardware, printers, communications
equipment, office equipment, machinery, motor vehicles, trucks, trailers,
vessels, aircraft and rolling stock and all parts thereof and all additions and
accessions thereto and replacements therefor.
"Financial Assets" means all "financial assets" (as defined in the
UCC), now owned or hereafter acquired by Debtor.
"Fixtures" means all "Fixtures" (as defined in the UCC) now owned or
hereafter acquired by Debtor including, without limitation, all plant Fixtures;
business Fixtures; other Fixtures and storage office facilities, wherever
located; and all additions and accessions thereto and replacements therefor.
"General Intangibles" means all "general intangibles" (as defined in
the UCC) now owned or hereafter acquired by Debtor, including, without
limitation, all right, title and interest of Debtor in and to: (a) all
agreements, leases, licenses and contracts to which Debtor is or may become a
party (excluding any such agreements, leases, licenses including Trademark
Licenses, Copyright Licenses and Patent Licenses and contracts to which Debtor
is a party as of the date hereof and any renewals or extension thereof (but in
any event not excluding Accounts) if and to the extent that any attempt to grant
a security interest hereunder in any such agreements, leases, licenses and
contracts without the consent of a third party would constitute a breach thereof
and such consent has not been obtained by Debtor and those agreements, leases,
licenses and contracts for which Debtor may become a party and consent to a
grant of a security interest is required and cannot be obtained); (b) all
obligations or indebtedness owing to Debtor (other than Accounts) from whatever
source arising, including, without limitation, any obligations owed to Debtor by
third parties in connection with the agreements relating to the clean up of
Hazardous Materials or compliance with Environmental Laws; (c) all tax refunds;
(d) Intellectual Property; (e) computer software, source code, object code,
manuals and instructions, together with all diskettes, tape and any other
physical representation or eminent thereof, and (f) all trade secrets and other
confidential information relating to the business of Debtor including by way of
illustration and not limitation: systems and techniques for the analysis,
diagnosis and correction of malfunctions of products used by Debtor's customers;
the names and addresses of, and credit and other business information
concerning, Debtor's past, present or future customers; the prices which Debtor
obtains for its services or at which it sells merchandise; estimating and cost
procedures; profit margins; policies and procedures pertaining to the sale and
design of equipment, components, devices and services furnished by Debtor;
information concerning suppliers of Debtor; and information concerning the
manner of operation, business plans, pledges, projections, and all other
information of any kind or character, whether or not reduced in writing, with
respect to the conduct by Debtor of its business not generally known by the
public. The term "General Intangibles" excludes any software licenses or similar
licenses that are not permitted to be pledged in accordance with the terms
thereof.
SECURITY AGREEMENT - Page 2
"Instruments" means all "instruments", "chattel paper" or "letters of
credit" (each as defined in the UCC) including, but not limited to, promissory
notes, drafts, bills of exchange and trade acceptances, now owned or hereafter
acquired by Debtor.
"Intellectual Property" shall mean collectively all of the following:
Copyrights, Copyright Licenses, Patents, Patent Licenses, Trademarks and
Trademark Licenses.
"Inventory" means all "inventory" (as defined in the UCC), now owned or
hereafter acquired by Debtor, wherever located including, without limitation,
finished goods, raw materials, work in process and other materials and supplies
(including packaging and shipping materials) used or consumed in the manufacture
or production thereof and goods which are returned to or repossessed by Debtor.
"Investment Property" means all "investment property" (as defined in
the UCC), now owned or hereafter acquired by Debtor, including, without
limitation, all securities (certificated or uncertificated), securities
accounts, securities entitlements, commodity contracts and commodity accounts.
"Patent License" means any written agreement now or hereafter in
existence granting to Debtor any right to use any invention on which a Patent is
in existence (excluding any such agreement if and to the extent that any attempt
to grant a security interest hereunder in any such agreement without the consent
of a third party would constitute a breach thereof and such consent has not been
obtained by Debtor) including, without limitation, the agreements described in
Schedule 1 of the Patent Security Agreement.
SECURITY AGREEMENT - Page 3
"Patents" means collectively all of the following: (a) all patents and
patent applications now owned or hereafter created or acquired by Debtor
including, without limitation, those listed on Schedule I of the Patent Security
Agreement and the inventions and improvements described and claimed therein, and
patentable inventions; (b) the reissues, divisions, continuations, renewals,
extensions and continuations-in-part of any of the foregoing; (c) all income,
royalties, damages or payments now and hereafter due and/or payable under any of
the foregoing with respect to any of the foregoing, including, without
limitation, damages or payments for past or future infringements of any of the
foregoing; (d) the right to xxx for past, present and future infringements of
any of the foregoing; (e) all rights corresponding to any of the foregoing
throughout the world; and (f) all goodwill associated with any of the foregoing.
"Patent Security Agreement" means a patent security agreement executed
and delivered by Debtor to Lender, substantially in the form of Exhibit B, as
such agreement may be amended, supplemented or otherwise modified from time to
time.
"Proceeds" means all proceeds of, and all other profits, rentals or
receipts, in whatever form, arising from the collection, sale, lease, exchange,
assignment, licensing or other disposition of, or realization upon, any
Collateral including, without limitation, all claims of Debtor against third
parties for loss of, damage to or destruction of, or for proceeds payable under,
or unearned premiums with respect to, policies of insurance with respect to any
Collateral, and any condemnation or requisition payments with respect to any
Collateral, in each case whether now existing or hereafter arising.
"Secured Obligations" has the meaning assigned to that term in Section
"Security Interests" means the security interests granted pursuant to
Section 2, as well as all other security interests created or assigned by Debtor
as additional security for the Secured Obligations pursuant to the provisions of
this Agreement.
"Trademark License" means any written agreement now or hereafter in
existence granting to Debtor any right to use any Trademark (excluding any such
agreement if and to the extent that any attempt to grant a security interest
hereunder in any such agreement without the consent of a third party would
constitute a breach thereof and such consent has not been obtained by Debtor),
including, without limitation, the agreements described in Schedule 1 to the
Trademark Security Agreement.
"Trademarks" means collectively all of the following now owned or
hereafter created or acquired by Debtor: (a) all trademarks, trade names,
corporate names, company names, business names, fictitious business names, trade
styles, service marks, logos, other business identifiers, prints and labels on
which any of the foregoing have appeared or appear, all registrations and
recordings thereof, and all applications in connection therewith including
registrations, recordings and applications in the United States Patent and
Trademark Office or in any similar office or agency of the United States, any
State thereof or any other country or any political subdivision thereof,
including, without limitation, those described in Schedule 1 of the Trademark
Security Agreement; (b) all reissues, extensions or renewals thereof; (c) all
income, royalties, damages and payments now or hereafter due and/or payable
under any of the foregoing or with respect to any of the foregoing including
damages or payments for past or future infringements of any of the foregoing;
(d) the right to xxx for past, present and future infringements of any of the
foregoing; (e) all rights corresponding to any of the foregoing throughout the
world; and (f) all goodwill associated with and symbolized by any of the
foregoing.
SECURITY AGREEMENT - Page 4
"Trademark Security Agreement" means the trademark security agreement
executed and delivered by Debtor to Lender substantially in the form of Exhibit
C, as such agreement may hereafter be amended, supplemented or otherwise
modified from time to time.
"UCC" means the Uniform Commercial Code as in effect on the date hereof
in the State of Texas, as amended from time to time, and any successor statute;
provided that if by reason of mandatory provisions of law, the perfection or the
effect of perfection or non-perfection of the Security Interest in any
Collateral is governed by the Uniform Commercial Code as in effect on or after
the date hereof in any other jurisdiction, "UCC" means the Uniform Commercial
Code as in effect in such other jurisdiction for purposes of the provision
hereof relating to such perfection or effect of perfection or non-perfection.
1.2 Other Definition Provisions. References to "Sections",
"subsections", "Exhibits" and "Schedules" shall be to Sections, subsections,
Exhibits and Schedules, respectively, of this Agreement unless otherwise
specifically provided. Any of the terms defined in subsection 1.1 may, unless
the context otherwise requires, be used in the singular or the plural depending
on the reference. All references to statutes and related regulations shall
include any amendments of same and any successor statutes and regulations.
SECTION 2. Grant of Security Interests
In order to secure the payment and performance of the Secured
Obligations in accordance with the terms thereof, Debtor hereby assigns and
grants to Lender a continuing security interest in and to all right, title and
interest of Debtor in the following property, whether now owned or existing or
hereafter acquired or arising and regardless of where located (all being
collectively referred to as the "Collateral"):
(A) Accounts;
(B) Inventory;
(C) General Intangibles;
(D) Documents;
(E) Instruments;
(F) Equipment;
(G) Fixtures;
(H) All deposit accounts of Debtor maintained with any bank or
financial institution;
(I) The Collateral Account, all cash deposited therein from
time to time and other monies and property of Debtor in the possession
or under the control of Lender;
(J) All Investment Property and Financial Assets;
(K) All books, records, ledger cards, files, correspondence,
computer programs, tapes, disks and related data processing software
that at any time evidence or contain information relating to any of the
property described in subparts (A) - (J) above or are otherwise
necessary or helpful in the collection thereof or realization thereon;
and
(L) Products and Proceeds of all or any of the property
described in subparts
(A) -(K) above.
SECURITY AGREEMENT - Page 5
Notwithstanding the foregoing, so long as no Event of Default has occurred and
is continuing, Debtor (a) shall have the right to transfer or grant to other
Persons licenses and sublicenses with respect to Intellectual Property in the
ordinary course of its business and (b) may otherwise dispose of Collateral in
accordance with and subject to the restrictions contained in the Loan Agreement.
SECTION 3. Security for Obligations
This Agreement secures the payment and performance of the Obligations
and all obligations of every nature of Debtor, now or hereafter existing under
this Agreement and any other Loan Documents to which Debtor is a party,
including, without limitation, the Guaranty, and all renewals, extensions,
restructurings and refinancings of any of the above (all such debts, obligations
and liabilities of Debtor being collectively called the "Secured Obligations").
SECTION 4. Debtor Remains Liable
Anything herein to the contrary notwithstanding: (a) Debtor shall
remain liable under the contracts and agreements included in the Collateral to
the extent set forth therein to perform all of its duties and obligations
thereunder to the same extent as if this Agreement had not been executed; (b)
the exercise by Lender of any of the rights hereunder shall not release Debtor
from any of its duties or obligations under the contracts and agreements
included in the Collateral; and (c) Lender shall not have any obligation or
liability under the contracts and agreements included in the Collateral by
reason of this Agreement, nor shall Lender be obligated to perform any of the
obligations or duties of Debtor thereunder or to take any action to collect or
enforce any claim for payment assigned hereunder.
SECURITY AGREEMENT - Page 6
SECTION 5. Representations and Warranties
In order to induce Lender to enter into the Loan Documents, Debtor
represents and warrants to Lender that the following statements are and will be
true, correct and complete:
5.1 Location of Equipment, Fixtures and Inventory. All of the
Equipment, Fixtures and Inventory is located at the place specified in Schedule
I. Schedule I correctly identifies the landlords or mortgagees (other than
Lender), if any, of each of Debtor's locations identified on Schedule I. None of
the Collateral has been located in any location within the past four months
other than as set forth on Schedule 1. None of the Equipment is evidenced by a
certificate of title other than Equipment with an aggregate book value not to
exceed $5,000.00.
5.2 Ownership of Collateral. Except for the matters disclosed on
Schedule II, the Permitted Encumbrances and the Security Interests, Debtor owns
the Collateral free and clear of any Lien. No effective financing statement or
other form of lien notice covering all or any part of the Collateral is on file
in any recording office, except for those in favor of Lender and as disclosed on
Schedule II.
5.3 Office Locations, Fictitious Names. The chief executive office and
the office where Debtor keeps its books and records are both located at the
place specified in Schedule I. Schedule I sets forth all locations where Debtor
has a place of business. Debtor does not do business and has not done business
during the past five years from the date hereof under any trade-name or
fictitious business name except as disclosed on Schedule III.
5.4 Perfection. This Agreement and the Trademark Security Agreement,
the Patent Security Agreement and the Copyright Security Agreement executed
pursuant hereto create a valid and enforceable security interest in the
Collateral, securing the payment of the Secured Obligations, including, without
limitation, all future Loans pursuant to the Loan Agreement and the Notes, and
all extensions, renewals and other modifications thereof. Upon the filing of
Uniform Commercial Code Financing Statements naming Debtor as debtor and Lender
as secured party in the jurisdictions set forth in Schedule IV hereto, the
delivery to Lender of all Collateral the possession of which is necessary to
perfect the security interest therein, the notation of the Lender's security
interest on all certificates of title evidencing Equipment, the release or
assignment to Lender of the security interests described on Schedule V hereto,
the filing of the Trademark Security Agreement with the United States Patent and
Trademark Office, the Filing of the Patent Security Agreement with the United
States Patent and Trademark Office and the Filing of the Copyright Security
Agreement with the United States Copyright Office, the security interests
created hereby shall constitute perfected, first priority security interests
upon all the Collateral (other than Trademarks and Trademark Licenses registered
in countries other than the United States) which shall be superior and prior to
the rights of all third Persons now existing or hereafter arising, except for
the Permitted Encumbrances and the matters disclosed on Schedule II.
5.5 Accounts. Each Eligible Account constitutes the legally valid and
binding obligation of the customer obligated to pay the same. The amount
represented by Debtor to Lender as owing by each customer is the correct amount
actually and unconditionally owing, except for normal cash discounts and
allowances where applicable. To the knowledge of the Debtor, no customer has any
defense, set-off, claim or counterclaim against Debtor that can be asserted
against Lender, whether in any proceeding to enforce Lender's rights in the
Collateral or otherwise except defenses, set-offs, claims or counterclaims that
are not, in the aggregate, material to the value of the Accounts. None of the
Accounts is evidenced by a promissory note or other Instrument other than a
check or except for such Instruments delivered to the Lender as Collateral under
the terms hereof.
SECURITY AGREEMENT - Page 7
5.6 Intellectual Property. The Copyrights, Copyright Licenses, Patents,
Patent Licenses, Trademarks and Trademark Licenses listed on the respective
schedules to each of the Copyright Security Agreement, the Trademark Security
Agreement and the Patent Security Agreement in the forms attached hereto as
exhibits constitute all of Intellectual Property owned arid currently in use by
Debtor.
5.7 Accurate Information. All information heretofore, herein or
hereafter supplied to Lender by or on behalf of Debtor with respect to the
Collateral is and will be accurate and complete in all material respects.
5.8 Loan Agreement Warranties. Each representation and warranty with
respect to Debtor or the Collateral set forth in Section 5 of the Loan Agreement
and in each of the other Loan Documents is true and correct in all material
respects and such representations and warranties are hereby incorporated herein
by this reference with the same effect as though set forth in their entirety
herein.
SECTION 6. Further Assurances: Covenants
6.1 Other Documents and Actions. Debtor will, from time to time, at its
expense, promptly execute and deliver all further instruments and documents and
take all further action that may be necessary or desirable, or that Lender may
reasonably request, in order to perfect and protect any Security Interests
granted or purported to be granted hereby or to enable Lender to exercise and
enforce its rights and remedies hereunder, or the rights and remedies of Lender,
with respect to any Collateral or to carry out the provisions and purposes
hereof. Without limiting the generality of the foregoing, Debtor will: (a)
execute and file such financing or continuation statements, or amendments
thereto, and such other instruments or notices, as may be necessary or
desirable, and as Lender may request, in order to perfect and preserve the
Security Interests granted or purported to be granted hereby; (b) at any
reasonable time, upon demand by Lender make the Collateral available for
inspection by Lender or Persons designated by Lender as provided in the Loan
Agreement; and (c) upon Lender's request, appear in and defend any action or
proceeding that may affect Debtor's title to or Lender's Security Interests in
the Collateral. Notwithstanding the foregoing, Debtor shall not be required to
execute any document or take any action to perfect the Lender's Lien in any
foreign Intellectual Property under the laws of the applicable foreign
jurisdiction unless a Default or Event of Default shall have occurred and be
continuing and the Lender reasonably requests that such Liens be so perfected.
SECURITY AGREEMENT - Page 8
6.2 Lender Authorized. Debtor hereby authorizes Lender to file one or
more financing or continuation statements, and amendments thereto (or similar
documents required by any laws of any applicable jurisdiction), relating to all
or any part of the Collateral without the signature of Debtor.
6.3 Structure or Name Change. Debtor will notify Lender in writing
thirty (30) days prior to any change in Debtor's name, identity or partnership
or corporate structure.
6.4 Business Locations. Debtor will keep the Collateral at the
locations specified on Schedule I, provided that Debtor shall not permit any
Inventory to be located on properties which are not owned or leased by Debtor.
6.5 Third Parties in Possession of Collateral. Debtor shall not permit
any Inventory to be held by third Persons.
6.6 Instruments. Debtor will deliver and pledge to Lender all
Instruments duly endorsed and/or accompanied by duly executed instruments of
transfer or assignment, all in form and substance satisfactory to Lender except
that prior to the occurrence of a Default or an Event of Default Debtor may
retain for collection and use in the ordinary course of business any checks
representing Proceeds of Accounts received in the ordinary course of business.
Debtor will xxxx conspicuously all chattel paper with a legend, in form and
substance satisfactory to Lender, indicating that such chattel paper is subject
to the Security Interests. When all the obligations of the debtor or issuer, as
applicable, under any Instrument delivered to Lender hereunder have been
satisfied or otherwise terminated, Lender agrees to return such Instrument to
Debtor, without recourse or warranty, duly endorsed and/or accompanied by duly
executed instruments of transfer or assignment.
6.7 Certificates of Title, Equipment. Debtor shall promptly deliver to
Lender any and all certificates of title, applications for title or similar
evidence of ownership of all Equipment and shall cause Lender to be named as
lienholder on any such certificate of title or other evidence of ownership.
Debtor shall promptly inform Lender of any additions to or deletions from the
Equipment and shall not permit any such items to become Fixtures to real estate
other than real estate described in the Mortgages unless Debtor has complied
with its obligations under Section 6.4; provided that Debtor shall not provide
the thirty (30) day prior written notice required by Section 6.4 if Debtor is
required to cause the Equipment in question to become a Fixture as a result of
any employee safety or other health or safety laws or regulations prior to the
expiration of such thirty (30) day period and in such event, Debtor shall give
Lender notice of the imposition of such requirement imposed by such health or
safety laws or regulations and shall thereafter otherwise comply with Section
6.4.
6.8 Account Covenants. Except as otherwise provided in this subsection
6.8, Debtor shall continue to collect, at its own expense, all amounts due or to
become due Debtor under the Accounts. In connection with such collections,
Debtor may take (and, at Lender's direction, shall take) such action as Debtor
or Lender may reasonably deem necessary or advisable to enforce collection of
the Accounts; provided, that Lender shall have the right at any time after the
occurrence and during the continuance of an Event of Default to: (a) notify the
customers or obligors under any Accounts of the assignment of such Accounts to
Lender and to direct such customers or obligors to make payment of all amounts
due or to become due directly to Lender; (b) enforce collection of any such
Accounts; and (c) adjust, settle or compromise the amount or payment of such
Accounts. After the occurrence and during the continuance of an Event of Default
(i) all amounts and Proceeds (including Instruments) received by Debtor with
respect to the Accounts shall be received in trust for the benefit of Lender,
shall be segregated from other funds of Debtor and shall be forthwith paid over
to Lender in the same form as so received (with any necessary endorsement) to be
held in the Collateral Account pursuant to Section 7 and (ii) Debtor shall not
adjust, settle or compromise the amount or payment of any Account, or release
wholly or partly any customer or obligor thereof, or allow any credit or
discount thereon (other than discounts given in the ordinary course of business)
without the prior consent of Lender, which consent shall not be unreasonably
withheld, conditioned or delayed.
SECURITY AGREEMENT - Page 9
6.9 Intellectual Property Covenants. Debtor shall concurrently herewith
deliver to Lender the Copyright Security Agreement, the Trademark Security
Agreement and the Patent Security Agreement and all other documents, instruments
and other items as may be necessary for Lender to file such agreements with the
United States Copyright Office, the United States Patent and Trademark Office
and any similar domestic or foreign office, department or agency except as
otherwise provided in Section 6.1. If, before the Secured Obligations are paid
in full, Debtor obtains any new Intellectual Property or rights thereto or
becomes entitled to the benefit of any Intellectual Property which is (a) not
listed on the schedules to the Copyright Security Agreement, the Trademark
Security Agreement or the Patent Security Agreement, as the form of such
agreements are attached hereto as Exhibits, and (b) should be listed thereon to
perfect or protect the Security Interest therein, then Debtor shall give to
Lender prompt written notice thereof, and shall amend the applicable
Intellectual Property security agreement to include any such new Intellectual
Property and shall deliver all other documentation and other items as may be
necessary for Lender to file such agreements with the United States Copyright
Office, the United States Patent and Trademark Office and/or any similar
domestic or foreign office, department or agency except as other-wise provided
in Section 6.1. Debtor shall: (a) prosecute diligently any copyright, patent,
trademark or license application at any time pending to the extent the
Intellectual Property relating to such application has a material value or is
material to the conduct of Debtor's business; (b)make application on all new
copyrights, patents and trademarks as reasonably deemed appropriate by Debtor;
(c) preserve and maintain all rights in the Intellectual Property to the extent
such Intellectual Property has a material value or is material to the conduct of
Debtor's business; and (d) upon and after the occurrence of an Event of Default,
use its best efforts to obtain any consents, waivers or agreements necessary to
enable Lender to exercise its remedies with respect to the Intellectual
Property. Debtor shall not abandon any right to file a copyright, patent or
trademark application nor shall Debtor abandon any pending copyright, patent or
trademark application, or Copyright, Copyright License, Patent, Patent License,
Trademark or Trademark License without the prior written consent of Lender
(which will not be unreasonably withheld, conditioned or delayed) or unless such
Intellectual Property has no material value and is not material to the conduct
of Debtor's business. Debtor represents and warrants to Lender that the
execution, delivery and performance of this Agreement by Debtor will not violate
or cause a default under any of the Intellectual Property or any agreement in
connection therewith.
SECURITY AGREEMENT - Page 10
6.10 Equipment Covenants. Debtor shall cause the Equipment to be
maintained and preserved in the same condition, repair and working order as
exists on the date hereof ordinary wear and tear excepted, and in accordance
with any manufacturer's manual, and shall promptly make or cause to be made all
repairs, replacements, and other improvements in connection therewith that are
necessary or desirable to such end.
6.11 Inventory Covenants. Debtor shall cause the Inventory to be
produced in substantial compliance with all applicable laws, rules, regulations
and governmental standards, including, without limitation, the minimum wage and
overtime provisions of the Fair Labor Standards Act, as amended (29 U.S.C.
xx.xx. 201-219), and the regulations promulgated thereunder.
6.12 Collateral Description. Debtor will furnish to Lender, from time
to time, statements and schedules further identifying and describing the
Collateral and such other reports in connection with the Collateral as Lender
may reasonably request, all in reasonable detail.
6.13 Use of Collateral. Debtor will not use or permit any Collateral to
be used unlawfully or in violation of any provision of this Agreement or any
applicable statute, regulation or ordinance or any policy of insurance covering
any of the Collateral.
6.14 Records of Collateral. Debtor shall keep full and accurate books
and records relating to the Collateral and shall stamp or otherwise xxxx such
books and records in such manner as Lender may reasonably request indicating
that the Collateral is subject to the Security Interests.
6.15 Other Information. Debtor will, promptly upon request, provide to
Lender all information and evidence it may reasonably request concerning the
Collateral, and in particular the Accounts, to enable Lender to enforce the
provisions of this Agreement.
SECTION 7. Collateral Account: Proceeds of Collateral
7.1 Cash Account. At the request of Lender, Debtor shall establish with
Lender or at a bank designated by Lender a cash collateral account (the
"Collateral Account") in the name and under the control of Lender into which
there shall be deposited from time to time the cash proceeds of the Collateral
required to be delivered to Lender pursuant to subsection 7.2 or any other
provision of this Agreement. Any income received by Lender with respect to the
balance from time to time standing to the credit of the Collateral Account shall
remain, or be deposited, in the Collateral Account. All right, title and
interest in and to the cash amounts on deposit from time to time in the
Collateral Account shall vest in Lender and shall constitute part of the
Collateral.
7.2 Customer Payments: Proceeds of Other Collateral. At Lender's
request, Debtor shall instruct all customers and other Persons obligated with
respect to all Accounts to make all payments either (a) directly to Lender (by
instructing that such payments be remitted to a post office box which shall be
in the name and under the control of Lender) or (b) to Lender, or to one or more
other banks in any state in the United States (by instructing that such payments
be remitted to a post office box which shall be in the name and the control of
Lender or such other bank(s)) under either a Lockbox Agreement or Lockbox Letter
duly executed by Debtor and such other bank(s), in form and substance
satisfactory to Lender, or under other arrangements, in form and substance
satisfactory to Lender, pursuant to which (in the case of a bank other than
Lender) Debtor shall have irrevocably instructed such other bank(s) (and such
other bank(s) shall have agreed) to remit all proceeds of such payments directly
to Lender for deposit into the Collateral Account or as Lender may otherwise
instruct such other bank(s). All such payments made to Lender shall be deposited
in the Collateral Account. Any Proceeds received by Debtor in violation of this
Section 7.2 shall be promptly delivered to the Lender and until so delivered,
all such Proceeds shall be held in trust by Debtor for the benefit of Lender and
shall be segregated from any other funds or property of Debtor.
SECURITY AGREEMENT - Page 11
7.3 Proceeds of Other Collateral. Debtor agrees that if the Proceeds of
any Collateral hereunder (other than the payments received in the ordinary
course of business in respect of Accounts) shall be received by it, Debtor shall
as promptly as possible deliver such Proceeds to the Lender to be held and
applied to the Secured Obligations in accordance with the terms of the Loan
Agreement. Until so delivered, all such Proceeds shall be held in trust by
Debtor for the benefit of Lender and shall be segregated from any other funds or
property of Debtor.
7.4 Direction to Pay. Debtor hereby authorizes and directs Lender to
apply the balance from time to time outstanding in the Collateral Account to the
Secured Obligations as required pursuant to the terms of the Loan Agreement.
SECTION 8. Lender Appointed Attorney-in-Fact
Debtor hereby irrevocably appoints Lender as Debtor's attorney-in-fact,
with full authority in the place and stead of Debtor and in the name of Debtor,
Lender or otherwise, from time to time after the occurrence and during the
continuation of an Event of Default, in Lender's discretion, to take any action
and to execute any instrument that Lender may deem necessary or advisable to
accomplish the purposes of this Agreement, including, without limitation:
(a) to obtain and adjust insuran6e required to be paid to
Lender;
(b) to ask, demand, collect, xxx for, recover, compound,
receive and give acquittance and receipts for moneys due and to become
due under or in respect of any of the Collateral;
(c) to receive, endorse, and collect any drafts or other
Instruments and Documents in connection with clauses (a) and (b) above;
(d) to file any claims or take any action or institute any
proce6dings that Lender may deem necessary or desirable for the
collection of any of the Collateral or otherwise to enforce the rights
of Lender with respect to any-of the Collateral;
(e) to pay or discharge taxes or Liens, levied or placed upon
or threatened against the Collateral, the legality or validity thereof
and the amounts necessary to discharge the same to be determined by
Lender in its sole discretion, and such payments made by Lender to
become obligations of Debtor to Lender, due and payable immediately
without demand;
SECURITY AGREEMENT - Page 12
(f) to sign and endorse any invoices, freight or express
bills, bills of lading, storage or warehouse receipts, assignments,
verifications and notices in connection with Accounts and other
documents relating to the Collateral; and
(g) generally to sell, transfer, pledge, make any agreement
with respect to or otherwise deal with any of the Collateral as fully
and completely as though Lender were the absolute owner thereof for all
purposes, and to do, at Lender's option and Debtor's expense, at any
time or from time to time, all acts and things that Lender deems
necessary to protect, preserve or realize upon the Collateral,
including, without limitation, to file one or more continuation or
financing statements, and amendments thereto (or similar documents
required by any laws of any applicable jurisdiction), relating to all
or any part of the Collateral without the signature of Debtor.
Debtor hereby ratifies and approves all acts of Lender made or taken pursuant to
this Section 8. Neither Lender nor any Person designated by Lender shall be
liable for any acts or omissions or for any error of judgment or mistake of fact
or law. This power, being coupled with an interest, is irrevocable so long as
this Agreement shall remain in force.
SECTION 9. Transfers and Other Liens
Except as otherwise permitted herein or by the Loan Agreement, Debtor
shall not:
(a) sell, assign (by operation of law or otherwise) or
otherwise dispose of, or grant any option with respect to, any of the
Collateral; or
(b) create or suffer to exist any lien, security interest or
other charge or encumbrance upon or with respect to any of the
Collateral to secure indebtedness of any Person except for the Security
Interest created by this Agreement or permitted under the Loan
Agreement.
SECTION 10. Remedies
If any Event of Default shall have occurred and be continuing, Lender
may exercise in respect of the Collateral, in addition to all other rights and
remedies provided for herein or otherwise available to it, all the rights and
remedies of a secured party on default under the UCC (whether or not the UCC
applies to the affected Collateral) and also may: (a) require Debtor to, and
Debtor hereby agrees that it will, at its expense and upon request of Lender
forthwith, assemble all or part of the Collateral as directed by Lender and make
it available to Lender at a place to be designated by Lender which is reasonably
convenient to both parties; (b) withdraw all cash in the Collateral Account and
apply such monies in payment of the Secured Obligations in the manner provided
in Section 13; (c) without notice or demand or legal process, enter upon any
premises of Debtor and take possession of the Collateral; and (d) without notice
except as specified below, sell the Collateral or any part thereof in one or
more parcels at public or private sale, at any of the Lender's offices or
elsewhere, at such time or times, for cash, on credit or for future delivery,
and at such price or prices and upon such other terms as Lender may deem
commercially reasonable. Debtor agrees that, to the extent notice of sale shall
be required by law, at least ten days notice to Debtor of the time and place of
any public sale or the time after which any private sale is to be made shall
constitute reasonable notification. At any sale of the Collateral, if permitted
by law, Lender may bid (which bid may be, in whole or in part, in the form of
cancellation of indebtedness) for the purchase of the Collateral or any portion
thereof for the account of Lender. Lender shall not be obligated to make any
sale of Collateral regardless of notice of sale having been given. Lender may
adjourn any public or private sale from time to time by announcement at the time
and place fixed therefor, and such sale may, without further notice, be made at
the time and place to which it was so adjourned. To the extent permitted by law,
Debtor hereby specifically waives all rights of redemption, stay or appraisal
which it has or may have under any law now existing or hereafter enacted.
SECURITY AGREEMENT - Page 13
SECTION 11. License of Intellectual Property
Debtor hereby assigns, transfers and conveys to Lender, effective upon
the occurrence of any Event of Default, the nonexclusive right and license to
use all Intellectual Property owned or used by Debtor together with any goodwill
associated therewith, all to the extent necessary to enable Lender to realize on
the Collateral and any successor or assign to enjoy the benefits of the
Collateral. This right and license shall inure to the benefit of all successors,
assigns and transferees of Lender and its successors, assigns and transferees,
whether by voluntary conveyance, operation of law, assignment, transfer,
foreclosure, deed in lieu of foreclosure or otherwise. Such right and license is
granted free of charge, without requirement that any monetary payment whatsoever
be made to Debtor by Lender.
SECTION 12. Limitation on Duty of Lender With Respect to Collateral
Beyond the safe custody thereof, Lender shall have no duty with respect
to any Collateral in its possession or control (or in the possession or control
of any bailee) or with respect to any income thereon or the preservation of
rights against prior parties or any other rights pertaining thereto. Lender
shall be deemed to have exercised reasonable care in the custody and
preservation of the Collateral in its possession if the Collateral is accorded
treatment substantially equal to that which it accords its own property. Lender
shall not be liable or responsible for any loss or damage to any of the
Collateral, or for any diminution in the value thereof, by reason of the act or
omission of any warehouseman, carrier, forwarding agency, consignee or bailee
selected by Lender in good faith.
SECTION 13. Application of Proceeds
Upon the occurrence and during the continuance of an Event of Default,
the proceeds of any sale of, or other realization upon, all or any part of the
Collateral and any cash held in the Collateral Account shall be applied or paid
as provided in the Loan Agreement.
SECTION 14. Expenses
Debtor shall pay all insurance expenses and all expenses of protecting,
storing, warehousing, appraising, insuring, handling, maintaining and shipping
the Collateral, all costs, fees and expenses of perfecting and maintaining the
Security Interests, any and all excise, property, sales and use taxes imposed by
any federal, state, local or foreign authority on any of the Collateral, or with
respect to periodic appraisals and inspections of the Collateral, or with
respect to the sale or other disposition thereof. If Debtor fails to promptly
pay any portion of the above expenses when due or to perform any other
obligation of Debtor under this Agreement, Lender may, at its option, but shall
not be required to, pay or perform the same and charge Debtor's account for all
costs and expenses incurred therefor, and Debtor agrees to reimburse Lender
therefor on demand. All sums so paid or incurred by Lender for any of the
foregoing, any and all other sums for which Debtor may become liable hereunder
and all costs and expenses (including reasonable attorneys' fees, legal expenses
and court costs) incurred by Lender in enforcing or protecting the Security
Interests or any of its rights or remedies under this Agreement shall be payable
on demand, shall constitute Obligations, shall bear interest until paid at the
highest rate provided in the Loan Agreement or other Loan Documents and shall be
secured by the Collateral.
SECURITY AGREEMENT - Page 14
SECTION 15. Termination of Security Interests: Release of Collateral
Upon payment in full of all Secured Obligations and the termination of
all commitments of Lender, the Security Interests shall terminate and all rights
to the Collateral shall revert to Debtor. Upon such termination of the Security
Interests or release of any Collateral, Lender will, at the expense of Debtor,
execute and deliver to Debtor such documents as Debtor shall reasonably request
to evidence the termination of the Security Interests or the release of such
Collateral, as the case may be.
SECTION 16. Notices
All notices, approvals, requests, demands and other communications
hereunder shall be given in accordance with the notice provision of the Loan
Agreement.
SECTION 17. Waivers: Non-Exclusive Remedies
No failure on the part of Lender to exercise, and no delay in
exercising and no course of dealing with respect to, any power, privilege or
right under the Loan Agreement or this Agreement shall operate as a waiver
thereof; nor shall any single or partial exercise by Lender of any power,
privilege or night under the Loan Agreement or this Agreement preclude any other
or further exercise thereof or the exercise of any other power, privilege or
right. The powers, privileges and rights in this Agreement and the Loan
Agreement are cumulative and are not exclusive of any other remedies provided by
law.
SECTION 18. Successors and Assigns
This Agreement is for the benefit of Lender and its successors and
assigns, and in the event of an assignment of all or any of the Secured
Obligations, the rights hereunder, to the extent applicable to the Secured
Obligations so assigned, may be transferred with such Secured Obligations, This
Agreement shall be binding on Debtor and its successors and assigns.
SECURITY AGREEMENT - Page 15
SECTION 19. Changes in Writing
No amendment, modification, termination or waiver of any provision of
this Agreement or consent to any departure by Debtor therefrom, shall in any
event be effective without the written concurrence of Lender and Debtor.
SECTION 20. Applicable Law
THIS AGREEMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF TEXAS, WITHOUT
REGARD TO CONFLICTS OF LAWS PRINCIPLES.
SECTION 21. Failure or Indulgence Not Waiver: Remedies Cumulative
No failure or delay on the part of Lender in the exercise of any power,
right or privilege hereunder shall impair such power, right or privilege or be
construed to be a waiver of any default or acquiescence therein, nor shall any
single or partial exercise of any such power, right or privilege preclude other
or further exercise thereof or any other right, power or privilege. All rights
and remedies existing under this Agreement are cumulative to, and not exclusive
of, any rights or remedies otherwise available.
SECTION 22. Headings
Section and subsection headings in this Agreement are included herein
for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose or be given any substantive effect.
SECTION 23. Counterparts
This Agreement may be executed in any number of counterparts, all of
which taken together shall constitute one and the same agreement and any of the
parties hereto may execute this Agreement by signing any such counterpart.
SECURITY AGREEMENT - Page 16
Witness the due execution hereof by the respective duly authorized
officers of the undersigned as of the day first above written.
LENDER:
------
BANK ONE, TEXAS, N.A.
By: /s/ Xxxx X. Xxxxxxxx
------------------------------
Name: Xxxx X. Xxxxxxxx
Title: Vice President
DEBTOR:
------
AVATAR SYSTEMS, INC.
By: /s/ Xxxxxx X. Xxxxxx, Xx.
------------------------------
Name: Xxxxxx X. Xxxxxx, Xx.
Title: President
SECURITY AGREEMENT - Signature page
SCHEDULE I
TO
SECURITY AGREEMENT
Locations of Equipment. Fixtures and Inventory
----------------------------------------------
Locations of Debtor Landlord/Mortgagee
------------------- ------------------
1. 0000 XXX Xxxxxxx
Xxxxx 000
Xxxxxx, Xxxxx 00000
SCHEDULE II
TO
SECURITY AGREEMENT
Other Liens, Security Interests and
Financing Statements
--------------------
Financing
Jurisdiction Secured Party Date Statement No.
------------ ------------- ---- -------------
None.
SCHEDULE III
TO
SECURITY AGREEMENT
Trade-names and Fictitious Names
(Present and Past Five Years)
-----------------------------
None.
SCHEDULE IV
TO
SECURITY AGREEMENT
UCC Filing Jurisdictions
------------------------
Texas Secretary of State
SCHEDULE V
TO
SECURITY AGREEMENT
Releases and Assignments
------------------------
None.
EXHIBIT A
COPYRIGHT SECURITY AGREEMENT
----------------------------
WHEREAS, Avatar Systems, Inc., a Texas corporation ("Grantor") owns the
Copyright registrations and Copyright applications listed on Schedule I annexed
hereto, and is a party to the Copyright Licenses listed on Schedule I annexed
hereto; and
WHEREAS, Avatar Systems, Inc, a Texas corporation ("Borrower"), and
Bank One, Texas, N.A. ("Lender") are parties to an Amended and Restated Loan
Agreement dated as of July 10, 2000 (as the same may be amended and in effect
from time to time, the "Loan Agreement"), providing for extensions of credit to
be made to Borrower by Lender; and
WHEREAS, pursuant to the terms of the Security Agreement dated as of
July 10, 2000 (as the same may be amended and in effect from time to time, the
"Security Agreement"), between Grantor and Lender (in such capacity, together
with its successors in such capacity, "Grantee"), Grantor has granted to Grantee
a security interest in substantially all the assets of Grantor including all
right, title and interest of Grantor in, to and under all now owned and
hereafter acquired Copyrights (as defined in the Security Agreement), Copyright
registrations, Copyright applications and Copyright Licenses (as defined in the
Security Agreement), together with the goodwill of the business symbolized by
Grantor's Copyrights and all proceeds thereof, to secure, inter alia, the
payment and performance of the Secured Obligations (as therein defined);
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of w1iich are hereby acknowledged, Grantor does hereby grant to
Grantee a continuing security interest in all of Grantor's right, title and
interest in, to and under the following (all of the following items or types of
property being herein collectively referred to as the "Copyright Collateral"),
whether presently existing or hereafter created or acquired:
(1) each Copyright, Copyright application and Copyright
registration, together with any reissues, extensions or renewals
thereof, including, without limitation, the Copyright, Copyright
registrations and Copyright applications referred to in Schedule 1
annexed hereto, and all of the goodwill of the business connected with
the use of, and symbolized by, each Copyright, Copyright registration
and Copyright application;
(2) each Copyright License and all of the goodwill of the
business connected with the use of, and symbolized by, each Copyright
License; and
(3) all Products and proceeds of the foregoing, including,
without limitation, any claim by Grantor against t1iird. parties for
past, present or future (a) infringement or dilution of any Copyright
or Copyright registration including, without limitation, the Copyright
and Copyright registrations referred to in Schedule 1 annexed hereto,
the Copyright registrations issued with respect to the Copyright
applications referred in Schedule 1 and the Copyright licensed under
the Copyright License, or (b) injury to the goodwill associated with
any Copyright, Copyright registration or Copyright licensed under any
Copyright License.
This security interest is granted in conjunction with the security interests
granted to Grantee pursuant to the Security Agreement. Grantor hereby
acknowledges and affirms that the rights and remedies of Grantee with respect to
the security interest in the Copyright Collateral made and granted hereby are
more fully set forth in the Security Agreement, the terms and provisions of
which are incorporated by reference herein as if fully set forth herein.
IN WITNESS WHEREOF, Grantor has caused this Copyright Security
Agreement to be duly executed by its duly authorized officer as of the ___ day
of July, 2000.
GRANTOR:
AVATAR SYSTEMS, INC.
By:_______________________
(CORPORATE SEAL) Name:_____________________
Title:____________________
Acknowledged:
BANK ONE, TEXAS, N.A.
By:_______________________
Name:_____________________
Title:____________________
ACKNOWLEDGMENT
STATE OF ___________ ss.
ss.
COUNTY OF _________ ss.
On the day of 2000, before me personally appeared ____________________,
to me personally known or proved to me on the basis of satisfactory evidence to
be the person described in and who executed the foregoing instrument as
____________________ of ___________________, who being by me duly sworn, did
depose and say that he is __________________ of ___________________, the
corporation described in and which executed the foregoing instrument; that he
knows the seal of said corporation; that the seal affixed to said instrument is
such corporate seal; that the said instrument was signed and sealed on behalf of
said corporation by order of its Board of Directors; that he signed his name
thereto by like order; and that he acknowledged said instrument to be the free
act and deed of said corporation.
(Seal) -----------------------------------
Notary Public
ACKNOWLEDGMENT
STATE OF ___________ ss.
ss.
COUNTY OF _________ ss.
On the _____ day of ______________, 2000, before me personally appeared
___________________________, to me personally known or proved to me on the basis
of satisfactory evidence to be the person described in and who executed the
foregoing instrument as Vice President of Bank One, Texas, N.A. who being by me
duly sworn, did depose and say that he is Vice President of Bank One, Texas,
N.A., the national banking association described in and which executed the
foregoing instrument; that the said instrument was signed and sealed on behalf
of said national banking association under due authority granted by such
national banking association; that he signed his name thereto by like order; and
that he acknowledged said instrument to be the free act and deed of said
national banking association.
(Seal) -----------------------------------
Notary Public
Schedule 1
to Copyright
Security Agreement
------------------
COPYRIGHTS
----------
Title Registration Nos.
----- -----------------
Accounting System TX 2,437,320
S/36 Marketing and Investor Service Program TX 2,437,321 and TX 3,145,466
Land and Lease Records System TX 2,439,324
S/36 Land and Lease Records Program TX 2,451,109 and TX 3,145,465
Payroll System TX 2,451,110
S/36 Marketing Contract Administration Program TX 2,451,136 and TX 3,145,463
Payroll System TX 2,451,137
Windfall Profits Tax TX 2,451,139
S/36 Production Program TX 2,451,140 and TX 3,145,468
S/36 Oil and Gas Accounting Program TX 2,506,209 and TX 3,145,467
S/36 Minerals Management Service Program TX 3,145,464
AS/400 Oil First Purchaser Program TX 3,145,462
Gas First Purchaser AS/400 TX 3,269,726
Marketing Contract Administration AS/400 TXu 509,540
Land and Lease Records AS/400 TXu 510,273
Production AS/400 TXu 510,784
Oil and Gas Accounting AS/400 TXu 531,280
COPYRIGHT APPLICATIONS
----------------------
None.
COPYRIGHT LICENSES
------------------
None.
EXHIBIT B
PATENT SECURITY AGREEMENT
-------------------------
WHEREAS, Avatar Systems, Inc., a Texas corporation ("Grantor") owns the
Patents and Patent Applications listed on Schedule I annexed hereto, and is a
party to the Patent Licenses listed on Schedule I annexed hereto; and
WHEREAS, Avatar Systems, Inc, a Texas corporation ("Borrower"), and
Bank One, Texas, N.A. ("Lender") are parties to a Loan Agreement dated as of
July 10, 2000 (as the same may be amended and in effect from time to time, the
"Loan Agreement"), providing for extensions of credit to be made to Borrower by
Lender; and
WHEREAS, pursuant to the terms of the Security Agreement dated as of
July 10, 2000 (as said Agreement may be amended and in effect from time to time,
the "Security Agreement"), between Grantor and Lender (in such capacity,
together with its successors in such capacity, the "Grantee"), Grantor has
granted to Grantee a security interest in substantially all the assets of
Grantor including all right, title and interest of Grantor in, to and under all
now owned and hereafter acquired Patents (as defined in the Security Agreement),
Patent applications and Patent Licenses (as defined in the Security Agreement),
and all products and proceeds thereof, to secure, inter alia, the payment and
performance of the Secured Obligations (as therein defined);
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Grantor does hereby grant to
Grantee a continuing security interest in all of Grantor's right, title and
interest in, to and under the following (all of the following items or types of
property being herein collectively referred to as the "Patent Collateral"),
whether presently existing or hereafter created or acquired:
(1) each Patent and Patent application, including, without
limitation, each Patent and Patent application referred to in Schedule
1 annexed hereto, together with any reissues, continuations or
extensions thereof,
(2) each Patent License, including, without limitation, each
Patent License listed on Schedule 1 annexed hereto; and
(3) all products and proceeds of the foregoing, including,
without limitation, any claim by Grantor against third parties for
past, present or future infringement of any Patent, including, without
limitation, any Patent referred to in Schedule 1 annexed hereto, any
Patent issued pursuant to a Patent Applications referred to in Schedule
1 and any Patent licensed under any Patent License listed on Schedule 1
annexed hereto.
This security interest is granted in conjunction with the security interests
granted to Grantee pursuant to the Security Agreement. Grantor hereby
acknowledges and affirms that the rights and remedies of Grantee with respect to
the security interest in the Patent Collateral made and granted hereby are more
fully set forth in the Security Agreement, the terms and provision of which are
incorporated by reference herein as if fully set forth herein.
IN WITNESS WHEREOF, Grantor has caused this Patent Security Agreement
to be duly executed by its duly authorized officer thereunto as of the _____ day
of July, 2000.
GRANTOR:
AVATAR SYSTEMS, INC.
By:
--------------------------------
(CORPORATE SEAL) Name:
------------------------------
Title:
-----------------------------
Acknowledged:
BANK ONE, TEXAS, N.A.
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
ACKNOWLEDGMENT
STATE OF ___________ ss.
ss.
COUNTY OF _________ ss.
On the ______ day of _________________, 2000, before me personally
appeared ______________________, to me personally known or proved to me on the
basis of satisfactory evidence to be the person described in and who executed
the foregoing instrument as _____________________ of __________________, who
being by me duly sworn, did depose and say that he is ___________________ of
___________________, the corporation described in and which executed the
foregoing instrument; that he knows the seal of said corporation; that the seal
affixed to said instrument is such corporate seal; that the said instrument was
signed and sealed on behalf of said corporation by order of its Board of
Directors; that he signed his name thereto by like order; and that he
acknowledged said instrument to be the free act and deed of said corporation.
(Seal) -----------------------------------
Notary Public
ACKNOWLEDGMENT
STATE OF ___________ ss.
ss.
COUNTY OF _________ ss.
On the _____ day of _______________, 2000, before me personally
appeared _________________________, to me personally known or proved to me on
the basis of satisfactory evidence to be the person described in and who
executed the foregoing instrument as Vice President of Bank One, Texas, N.A. who
being by me duly sworn, did depose and say that he is Vice President of Bank
One, Texas, N.A., the national banking association described in and which
executed the foregoing instrument; that the said instrument was signed and
sealed on behalf of said national banking association under due authority
granted by such national banking association; that he signed his name thereto by
like order; and that he acknowledged said instrument to be the free act and deed
of said national banking association.
(Seal) -----------------------------------
Notary Public
My commission expires:
---------------------
Schedule 1
to Patent
Security Agreement
------------------
UNITED STATES PATENTS
---------------------
Patent Issue
Country Description Number Date
------- ----------- ------ ----
None.
PATENT APPLICATIONS
-------------------
None.
PATENT LICENSES
---------------
None.
EXHIBIT C
TRADEMARK SECURITY AGREEMENT
----------------------------
WHEREAS, Avatar Systems, Inc., a Texas corporation ("Grantor"), owns
the Trademarks, Trademark registrations, and Trademark applications listed on
Schedule 1 annexed hereto, and is a party to the Trademark Licenses listed on
Schedule 1 annexed hereto; and
WHEREAS, Avatar Systems, Inc., a Texas corporation ("Borrower"), and
Bank One, Texas, N.A. ("Lender") are parties to a Loan Agreement dated as of
July 10, 2000 (as the same may be amended and in effect from time to time, the
"Loan Agreement"), providing for extensions of credit to be made to Borrower by
Lender; and
WHEREAS, pursuant to the terms of the Security Agreement dated as of
July 10, 2000 (as the same may be amended and in effect from time to time, the
"Security Agreement"), between Grantor and Lender (in such capacity, together
with its successors in such capacity, "Grantee"), Grantor has granted to Grantee
a security interest in substantially all the assets of Grantor including all
right, title and interest of Grantor in, to and under all now owned and
hereafter acquired Trademarks (as defined in the Security Agreement), Trademark
registrations, Trademark applications and Trademark Licenses (as defined in the
Security Agreement), together with the goodwill of the business symbolized by
Grantor's Trademarks, and all proceeds thereof, to secure, inter alia, the
payment and performance of the Secured Obligations (as therein defined);
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Grantor does hereby grant to
Grantee a continuing security interest in all of Grantor's right, title and
interest in, to and under the following (all of the following items or types of
property being herein collectively referred to as the "Trademark Collateral"),
whether presently existing or hereafter created or acquired:
(1) each Trademark, Trademark registration and Trademark
application, including, without limitation, the Trademarks, Trademark
registrations (together with any reissues, continuations or extensions
thereof and Trademark applications referred to in Schedule 1 annexed
hereto, and all of the goodwill of the business connected with the use
of, and symbolized by, each Trademark, Trademark registration and
Trademark application;
(2) each Trademark License and all of the goodwill of the
business connected with the use of, and symbolized by, each Trademark
License; and
(3) all products and proceeds of the foregoing, including,
without limitation, any claim by Grantor against third parties for
past, present or future (a) infringement or dilution of any Trademark
or Trademark registration including, without limitation, the Trademarks
and Trademark registrations referred to in Schedule 1 annexed hereto,
the Trademark registrations issued with respect to the Trademark
applications referred in Schedule 1 and the Trademarks licensed under
any Trademark License, or (b) injury to the goodwill associated with
any Trademark, Trademark registration or Trademark licensed under any
Trademark License.
This security interest is granted in conjunction with the security interests
granted to Grantee pursuant to the Security Agreement. Grantor hereby
acknowledges and affirms that the rights and remedies of Grantee with respect to
the security interest in the Trademark Collateral made and granted hereby are
more fully set forth in the Security Agreement, the terms and provisions of
which are incorporated by reference herein as if fully set forth herein.
IN WITNESS WHEREOF, Grantor has caused this Trademark Security
Agreement to be duly executed by its duly authorized officer thereunto as of the
_____ day of July, 2000.
GRANTOR:
AVATAR SYSTEMS, INC.
By:
--------------------------------
(CORPORATE SEAL) Name:
------------------------------
Title:
-----------------------------
Acknowledged:
BANK ONE, TEXAS, N.A.
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
ACKNOWLEDGMENT
STATE OF ___________ ss.
ss.
COUNTY OF _________ ss.
On the _____ day of ______________, 2000, before me personally appeared
_________________________, to me personally known or proved to me on the basis
of satisfactory evidence to be the person described in and who executed the
foregoing instrument as ____________________ of _________________, who being by
me duly sworn, did depose and say that he is __________________ of
__________________, the described in and which executed the foregoing
instrument; that he knows the seal of said corporation; that the seal affixed to
said instrument is such corporate seal; that the said instrument was signed and
sealed on behalf of said corporation by order of its Board of Directors; that he
signed his name thereto by like order; and that he acknowledged said instrument
to be the free act and deed of said corporation.
(Seal) -----------------------------------
Notary Public
ACKNOWLEDGMENT
STATE OF ___________ ss.
ss.
COUNTY OF _________ ss.
On the _____ day of _______________, 2000, before me personally
appeared _________________________, to me personally known or proved to me on
the basis of satisfactory evidence to be the person described in and who
executed the foregoing instrument as Vice President of Bank One, Texas, N.A. who
being by me duly sworn, did depose and say that he is Vice President of Bank
One, Texas, N.A., the national banking association described in and which
executed the foregoing instrument; that the said instrument was signed and
sealed on behalf of said national banking association under due authority
granted by such national banking association; that he signed his name thereto by
like order; and that he acknowledged said instrument to be the free act and deed
of said national banking association.
(Seal) -----------------------------------
Notary Public
Schedule 1
to Trademark
Security Agreement
UNITED STATES TRADEMARK REGISTRATIONS
Registration Registration
Grantor Xxxx Country Number Date
------- ---- ------- ------ ----
None.
UNITED STATES TRADEMARK APPLICATIONS
Xxxx Application Serial No.
---- ----------------------
AVATAR 75-614,378
PETROWARE 75-623,916
PETROWARE 2000 75-894,228
PETROWARE PLUS 75-894,236
FOREIGN TRADEMARK REGISTRATIONS
-------------------------------
None.
FOREIGN TRADEMARK APPLICATIONS
------------------------------
None.
TRADEMARK LICENSES
------------------
None.
UNREGISTERED TRADEMARKS
-----------------------
None.
