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EXHIBIT 10.14
EXECUTION COPY
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (this "AGREEMENT") is made as of July 22,
1999 by and between OTG SOFTWARE, INC., a Delaware corporation and ONLINE
TECHNOLOGIES GROUP, INC., a Delaware corporation, as the grantors (all
references herein to the "GRANTOR" means each of them, jointly and severally,
individually and collectively) and PNC BANK, NATIONAL ASSOCIATION (the
"BANK"), with an address at USX Tower, 600 Grant Street, 29th Floor,
Pittsburgh, PA 15219. All terms capitalized but not otherwise defined herein
shall have the meanings ascribed to them in the Loan Agreement (as defined
below).
Under the terms hereof, the Bank desires to obtain and the Grantor
desires to grant the Bank security for all of the Obligations (as hereinafter
defined).
NOW, THEREFORE, the Grantor and the Bank, intending to be legally
bound, hereby agree as follows:
1. DEFINITIONS.
(a) "COLLATERAL" shall include all personal property of the
Grantor, including without limitation the following, all whether now owned or
hereafter acquired or arising: (i) accounts, accounts receivable, contract
rights, chattel paper, notes receivable, instruments and documents (including
warehouse receipts), and Grantor's accounts with the Bank; (ii) goods of
every nature, including without limitation, inventory, stock-in-trade, raw
materials, work in process, items held for sale or lease or furnished or to
be furnished under contracts of sale or lease, goods that are returned,
reclaimed or repossessed, together with materials used or consumed in the
Grantor's business; (iii) equipment, including, without limitation,
machinery, vehicles, furniture and fixtures; (iv) general intangibles, of
every kind and description, including, but not limited to, all existing and
future customer lists, choses in action, claims (including without limitation
claims for indemnification or breach of warranty), books, records, patents
and patent applications, copyrights, trademarks, tradestyles, trademark
applications, goodwill, blueprints, drawings, designs and plans, trade
secrets, contracts, licenses, license agreements, formulae, tax and any other
types of refunds, returned and unearned insurance premiums, rights and claims
under insurance policies, and computer information, software, source codes,
object codes, records and data; (v) all property of the Grantor now or
hereafter in the Bank's possession or in transit to or from, under the
custody or control of or on deposit with, the Bank or any affiliate thereof,
including deposit and other accounts; (vi) all cash and cash equivalents; and
(vii) all cash and non-cash proceeds (including without limitation, insurance
proceeds) of all of the foregoing property, all products thereof and all
additions and accessions thereto, substitutions therefor and replacements
thereof.
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(b) "LOAN AGREEMENT" means the Loan Agreement dated the date
hereof by and between the Grantor and the Bank.
(c) "LOAN DOCUMENTS" means this Agreement, any and all notes
evidencing the Obligations and all related documents, instruments and
agreements.
(d) "OBLIGATIONS" shall include, without limitation, all
loans, advances, debts, liabilities, obligations, covenants and duties owing to
the Bank from the Grantor under the Loan Documents and any amendments,
extensions, renewals or increases and, to the extent permitted under the Loan
Agreement, all reasonable and necessary costs and expenses of the Bank incurred
in the documentation, negotiation, modification, enforcement, collection or
otherwise in connection with any of the foregoing, including but not limited to
reasonable attorneys' fees and expenses.
2. GRANT OF SECURITY INTEREST. To secure the Obligations, the Grantor,
as debtor, hereby assigns and grants to the Bank, as secured party, a continuing
lien on and security interest in the Collateral.
3. CHANGE IN NAME OR LOCATIONS. The Grantor hereby agrees that if the
location of the Collateral changes from the locations listed on EXHIBIT A hereto
and made part hereof, or if the Grantor changes its name or form of
organization, or establishes a name in which it may do business that is not
listed as a tradename on EXHIBIT A hereto, the Grantor will as promptly as
practicable notify the Bank in writing of the additions or changes. The
Grantor's chief executive office is also shown on EXHIBIT A hereto.
4. REPRESENTATIONS AND WARRANTIES. Except as disclosed in or pursuant
to the Loan Agreement, the Grantor represents, warrants and covenants to the
Bank that: (a) the Grantor has not made any prior pledge, encumbrance,
assignment or other disposition of any of the Collateral and the same are free
from all encumbrances and rights of setoff of any kind; (b) the Grantor will
defend the Collateral against all claims and demands of all persons at any time
claiming the same or any interest therein; (c) each account and general
intangible, if included in the definition of Collateral, is genuine and
enforceable in accordance with its terms; and (d) at the time any account or
general intangible becomes subject to this Agreement, such account or general
intangible will be a good and valid account representing a bona fide sale of
goods or services by the Grantor and the services will have been performed for
the respective account debtors.
5. GRANTOR'S COVENANTS. The Grantor covenants that it shall:
(a) from time to time and at all reasonable times allow the
Bank, with reasonable prior notice, by or through any of its officers, agents,
attorneys, or accountants, to examine or inspect the Collateral and obtain not
more than once annually valuations and audits of the Collateral at the Grantor's
expense, which expense shall not exceed $5,000 per audit. The Grantor shall do,
obtain, make, execute and deliver all such additional and further acts, things,
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deeds, assurances and instruments as the Bank may reasonably require to vest in
and assure to the Bank its rights hereunder and in or to the Collateral, and the
proceeds thereof, including, but not limited to, waivers from landlords,
warehousemen and mortgagees if the Grantor is able to obtain such waivers
through the Grantor's reasonable efforts;
(b) keep the Collateral in good order and repair at all times;
(c) only use or permit the Collateral to be used in accordance
with all applicable federal, state, county and municipal laws and regulations;
and
(d) have and maintain insurance at all times with respect to
all Collateral against risks of fire (including so-called extended coverage),
theft, sprinkler leakage, and other risks (including risk of flood if any
Collateral is maintained at a location in a flood hazard zone) as is customary
with companies in the same or similar businesses. The policies of all such
casualty insurance shall contain standard Lender's Loss Payable Clauses issued
in favor of the Bank under which all losses thereunder shall be paid to the Bank
as the Bank's interest may appear. Such policies shall expressly provide that
the requisite insurance cannot be materially altered or canceled without at
least thirty (30) days prior written notice to the Bank and shall insure the
Bank notwithstanding the act or neglect of the Grantor. Upon demand of the Bank,
the Grantor shall furnish the Bank with duplicate original policies of insurance
or such other evidence of insurance as the Bank may require. In the event of
failure to obtain insurance as herein provided, the Bank may, at its option,
obtain such insurance and the Grantor shall pay to the Bank, on demand, the cost
thereof. Proceeds of insurance may be applied by the Bank to reduce the
Obligations or to repair or replace Collateral, all in the Bank's sole
discretion.
6. NEGATIVE PLEDGE; NO TRANSFER. The Grantor will not sell or offer to
sell or otherwise transfer or grant or suffer the imposition of a lien or
security interest upon the Collateral (except for sales of inventory and
obsolete or unusable equipment and collections of accounts in the Grantor's
ordinary course of business or as expressly permitted in the Loan Agreement) or
use any portion thereof in any manner inconsistent with this Agreement or with
the terms and conditions of any policy of insurance thereon.
7. COVENANTS FOR ACCOUNTS. If accounts are included in the definition
of Collateral:
(a) The Grantor will, on reasonable demand of the Bank, make
available to the Bank completion certificates or other proof of the satisfactory
performance of services that gave rise to an account, a copy of the invoice for
each account and copies of any written contract or order from which an account
arose.
(b) Upon the occurrence, and during the continuance of an
Event of Default (as defined in Section 9 hereof) for a period of at least sixty
(60) days, the Bank may notify any persons who are indebted to the Grantor on
any Collateral consisting of accounts or general intangibles of the assignment
thereof to the Bank and may direct such account debtors to make
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payment directly to the Bank of the amounts due. Upon the occurrence, and
during the continuance of an Event of Default, at the request of the Bank,
the Grantor will direct any persons who are indebted to the Grantor on any
Collateral consisting of accounts or general intangibles to make payment
directly to the Bank. The Bank is authorized to give receipts to such account
debtors for any such payments and the account debtors will be protected in
making such payments to the Bank. If an Event of Default has occurred and
remains uncured for more than sixty (60) days thereafter, upon the written
request of the Bank, the Grantor will establish with the Bank and maintain a
lockbox account ("LOCKBOX") with the Bank and a depository account(s) ("CASH
COLLATERAL ACCOUNT") with the Bank subject to the provisions of this
subparagraph and such other agreements related thereto as the Bank may
require, whereupon all collections of accounts shall be paid directly from
account debtors into the Lockbox from which funds shall be transferred to the
Cash Collateral Account, and from which funds shall be applied by the Bank,
daily, to reduce the outstanding Obligations.
(c) The Grantor will notify the Bank on a monthly basis of any
accounts which arise out of contracts with the United States or any department,
agency or instrumentality thereof which have been added to the Borrowing Base
(as defined in the Loan Agreement), and will execute any instruments and take
any steps required by the Bank so that all monies due and to become due under
such contract shall be assigned to the Bank and notice thereof given to and
acknowledged by the appropriate government agency or authority under the Federal
Assignment of Claims Act.
8. FURTHER ASSURANCES. At the request of the Bank, the Grantor will
join with the Bank in executing one or more financing, continuation or amendment
statements pursuant to the Uniform Commercial Code in form satisfactory to the
Bank and will pay the cost of preparing and filing the same in all jurisdictions
in which such filing is deemed by the Bank to be necessary or desirable.
9. EVENTS OF DEFAULT. The Grantor shall, at the option of the Bank, be
in default under this Agreement upon the happening of any of the following
events or conditions (each, an "EVENT OF DEFAULT"): (a) any Event of Default (as
defined in any of the Loan Documents) which has not been cured within any time
period applicable thereto; (b) failure to satisfy within five (5) business days
after demand any demand by the Bank under any of the Obligations that have a
demand feature; (c) the failure by the Grantor to perform any of its obligations
under this Agreement which failure has not been cured within ten days' after
written notice to the Grantor; (d) material falsity, material inaccuracy or
material breach by the Grantor of any written warranty, representation or
statement made or furnished to the Bank by or on behalf of the Grantor, which
has a material adverse affect on the business of the Grantor; (e) an uninsured
material loss, theft, damage, or destruction to any of the Collateral, or the
entry of any judgment against the Grantor or any lien against or the making of
any levy, seizure or attachment of or on the Collateral, which has a material
adverse affect on the business of the Grantor; (f) except as disclosed in the
Addendum to the Loan Agreement, the failure of the Bank to have a perfected
first priority security interest in the Collateral, unless such failure results
from the negligence of
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the Bank; or (g) any indication or evidence received by the Bank that the
Grantor may have directly or indirectly been engaged in any type of activity
which, in the Bank's reasonable and good faith discretion, might result in
the forfeiture of any property of the Grantor to any governmental entity,
federal, state or local and which will have a material adverse affect on the
business of the Grantor.
10. REMEDIES. Upon the occurrence of any such Event of Default and at
any time thereafter, the Bank may declare all Obligations secured hereby
immediately due and payable upon written notice to Grantor and shall have, in
addition to any remedies provided herein or by any applicable law or in equity,
all the remedies of a secured party under the Uniform Commercial Code.
11. POWER OF ATTORNEY. The Grantor does hereby make, constitute and
appoint any officer or agent of the Bank as the Grantor's true and lawful
attorney-in-fact, with power to endorse the name of the Grantor or any of the
Grantor's officers or agents upon any notes, checks, drafts, money orders, or
other instruments of payment or Collateral that may come into the possession of
the Bank in full or part payment of any amounts owing to the Bank; granting to
the Grantor's said attorney full power to do any and all things necessary to be
done in and about the premises as fully and with the same effect as the Grantor
might or could do, including the right to sign, for the Grantor, UCC-1 financing
statements and to sue for, compromise, settle and release all claims and
disputes with respect to, the Collateral. The Grantor hereby ratifies all that
said attorney shall lawfully do or cause to be done by virtue hereof. This power
of attorney is coupled with an interest, and is irrevocable for the life of this
Security Agreement and the Loan Documents, and until all the Obligations are
satisfied in full.
12. PAYMENT OF EXPENSES. In the event that the Grantor fails to do so
on a timely basis, the Bank may, at its option, unless the Borrower is
contesting the same in good faith and has made such reserves therefor as are
appropriate and adequate, discharge taxes, liens, security interests or such
other encumbrances as may attach to the Collateral, may pay for required
insurance on the Collateral and may pay for the maintenance, appraisal or
reappraisal, and preservation of the Collateral, as reasonably determined by the
Bank to be necessary. The Grantor will reimburse the Bank on demand for any
payment so made or any expense incurred by the Bank pursuant to the foregoing
authorization, and the Collateral also will secure any advances or payments so
made or expenses so incurred by the Bank.
13. NOTICES. All notices, demands, requests, consents, approvals and
other communications required or permitted hereunder must be in writing and will
be effective upon receipt if delivered personally to such party, or if sent by
facsimile transmission with confirmation of delivery, or by nationally
recognized overnight courier service, to the address set forth above or to such
other address as any party may give to the other in writing for such purpose.
14. PRESERVATION OF RIGHTS. No delay or omission on the part of the
Bank to exercise
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any right or power arising hereunder will impair any such right or power or
be considered a waiver of any such right or power or any acquiescence
therein, nor will the action or inaction of the Bank impair any right or
power arising hereunder. The Bank's rights and remedies hereunder are
cumulative and not exclusive of any other rights or remedies which the Bank
may have under other agreements, at law or in equity.
15. ILLEGALITY. In case any one or more of the provisions contained in
this Agreement should be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby.
16. CHANGES IN WRITING. No modification, amendment or waiver of any
provision of this Agreement nor consent to any departure by the Grantor
therefrom, will in any event be effective unless the same is in writing and
signed by the Bank, and then such waiver or consent shall be effective only in
the specific instance and for the purpose for which given. No notice to or
demand on the Grantor in any case will entitle the Grantor to any other or
further notice or demand in the same, similar or other circumstance.
17. ENTIRE AGREEMENT. This Agreement (including the documents and
instruments referred to herein) constitutes the entire agreement and supersedes
all other prior agreements and understandings, both written and oral, between
the parties with respect to the subject matter hereof.
18. COUNTERPARTS. This Agreement may be signed in any number of
counterpart copies and by the parties hereto on separate counterparts, but all
such copies shall constitute one and the same instrument.
19. SUCCESSORS AND ASSIGNS. This Agreement will be binding upon and
inure to the benefit of the Grantor and the Bank and their respective heirs,
executors, administrators, successors and assigns; PROVIDED, HOWEVER, that the
Grantor may not assign this Agreement in whole or in part without the prior
written consent of the Bank and, to the extent provided in the Loan Agreement,
the Bank at any time may assign this Agreement in whole or in part upon written
notice to Grantor.
20. INTERPRETATION. In this Agreement, unless the Bank and the Grantor
otherwise agree in writing, the singular includes the plural and the plural the
singular; words importing any gender include the other genders; references to
statutes are to be construed as including all statutory provisions
consolidating, amending or replacing the statute referred to; the word "or"
shall be deemed to include "and/or", the words "including", "includes" and
"include" shall be deemed to be followed by the words "without limitation";
references to articles, sections (or subdivisions of sections) or exhibits are
to those of this Agreement unless otherwise indicated. Section headings in this
Agreement are included for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose. If this Agreement is
executed by more
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than one Grantor, the obligations of such persons or entities will be joint
and several.
21. INDEMNITY. The Grantor agrees to indemnify each of the Bank, its
directors, officers and employees and each legal entity, if any, which controls
the Bank (the "INDEMNIFIED PARTIES") and to hold each Indemnified Party harmless
from and against any and all claims, damages, losses, liabilities and expenses
(including, without limitation, all reasonable fees of counsel with whom any
Indemnified Party may consult and all expenses of litigation or preparation
therefor) which any Indemnified Party may incur or which may be asserted against
any Indemnified Party as a result of the execution of or performance under this
Agreement; PROVIDED, HOWEVER, that the foregoing indemnity agreement shall not
apply to claims, damages, losses, liabilities and expenses to the extent
attributable to an Indemnified Party's fraud, gross negligence or willful
misconduct. The indemnity agreement contained in this Section shall survive the
termination of this Agreement. The Grantor may participate at its expense in the
defense of any such claim.
22. GOVERNING LAW AND JURISDICTION. This Agreement has been delivered
to and accepted by the Bank and will be deemed to be made in the Commonwealth of
Pennsylvania. THIS AGREEMENT WILL BE INTERPRETED AND THE RIGHTS AND LIABILITIES
OF THE PARTIES HERETO DETERMINED IN ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH
OF PENNSYLVANIA, EXCEPT THAT THE LAWS OF THE STATE WHERE ANY COLLATERAL IS
LOCATED (IF DIFFERENT FROM THE COMMONWEALTH OF PENNSYLVANIA) SHALL GOVERN THE
CREATION, PERFECTION AND FORECLOSURE OF THE LIENS CREATED HEREUNDER ON SUCH
PROPERTY OR ANY INTEREST THEREIN. The Grantor hereby irrevocably consents to the
exclusive jurisdiction of any state or federal court for Allegheny County or the
Western District of Pennsylvania, as the case may be, and consents that all
service of process be sent by nationally recognized overnight courier service
directed to the Grantor at the Grantor's address set forth herein and service so
made will be deemed to be completed on the business day after deposit with such
courier; provided that nothing contained in this Agreement will prevent the Bank
from bringing any action, enforcing any award or judgment or exercising any
rights against the Grantor individually, against any security or against any
property of the Grantor within any other county, state or other foreign or
domestic jurisdiction. The Bank and the Grantor agree that the venue provided
above is the most convenient forum for both the Bank and the Grantor. The
Grantor waives any objection to venue and any objection based on a more
convenient forum in any action instituted under this Agreement.
23. WAIVER OF JURY TRIAL. EACH OF THE GRANTOR AND THE BANK IRREVOCABLY
WAIVES ANY AND ALL RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR CLAIM OF ANY NATURE RELATING TO THIS AGREEMENT, ANY DOCUMENTS
EXECUTED IN CONNECTION WITH THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED IN
ANY OF SUCH DOCUMENTS. THE GRANTOR AND THE BANK ACKNOWLEDGE THAT THE FOREGOING
WAIVER IS KNOWING AND VOLUNTARY.
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[Signature Page to Follow]
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WITNESS the due execution of this Security Agreement as a
document under seal, as of the date first written above.
ATTEST: ONLINE TECHNOLOGIES GROUP, INC.
By: /s/ F. William Caple By: /s/ Richard Kay (SEAL)
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Print Name: F. William Caple Print Name: Richard Kay
-------------------------- ---------------------
Title: Secretary Title: President
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ATTEST: OTG SOFTWARE, INC.
By: /s/ F. William Caple By: /s/ Richard Kay (SEAL)
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Print Name: F. William Caple Print Name: Richard Kay
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Title: Secretary Title: President
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PNC BANK, NATIONAL ASSOCIATION
By: /s/ Katharine Kappler
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Print Name: Katharine Kappler
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Title: Vice President
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EXHIBIT A
TO SECURITY AGREEMENT
Address of chief executive office, including the County, for each Grantor:
One Democracy Plaza
6701 Democracy Boulevard
Suite 805
Bethesda, MD 20817
Address for books and records, if different:
Addresses of other Collateral locations, including Counties and name and address
of landlord or owner if location is not owned by each Grantor:
Name and Address of Landlord(s):
Other names or tradenames now or formerly used by either Grantor:
Optical Technology Group, Inc.
Charles E. Smith Commercial Realty
6707 Democracy Blvd., Suite 207
Bethesda, MD 20817
Contact: Bernie, 301-394-6873
D.B.S., Inc.
4695 MacArthur Court
Suite 470
Newport Beach, CA 92660
Contact: Jeannie Franks, 949-622-5408
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EXECUTION COPY
RIDER TO SECURITY AGREEMENT -
TRADEMARKS
THIS RIDER TO SECURITY AGREEMENT ("RIDER") is executed as of
July 22, 1999 by and between OTG SOFTWARE, INC., a Delaware corporation, and
ONLINE TECHNOLOGIES GROUP, INC., a Delaware corporation, as the grantors (all
references herein to the "GRANTOR" means each of them, jointly and severally,
individually and collectively) and PNC BANK, NATIONAL ASSOCIATION (the "BANK").
This Rider is incorporated into and made part of that certain Security Agreement
("SECURITY AGREEMENT") between the Grantor and the Bank of even date herewith,
and also into certain other related financing documents and security agreements
executed by and between the Grantor and the Bank or by and between the Borrower
(as defined in the Security Agreement) and the Bank (all such documents
including this Rider being collectively referred to as "LOAN DOCUMENTS"). All
capitalized terms not otherwise defined in this Rider shall have the same
meanings ascribed to such terms in the other Loan Documents.
The Grantor has adopted, used and is using (or has filed
applications for the registration of) the trademarks, servicemarks and
tradenames listed on Schedule "A" attached hereto and made part hereof (all such
marks or names hereinafter referred to as the "TRADEMARKS")
The Bank desires to acquire a lien and security interest on
the Trademarks and the registration thereof, together with all the goodwill of
the Grantor associated therewith and represented thereby, as security for all of
the Obligations (as defined in the Security Agreement) to the Bank, and the Bank
desires to have its security interest in such Trademarks confirmed by a document
identifying same and in such form that it may be recorded in the United States
Patent and Trademark Office.
NOW, THEREFORE, with the foregoing background deemed
incorporated by reference and made part hereof, the parties hereto, intending to
be legally bound hereby, covenant and agree as follows:
1. GRANT OF SECURITY INTEREST. In consideration of and
pursuant to the terms of the Loan Documents, and for other good, valuable and
sufficient consideration, the receipt of which is hereby acknowledged, and to
secure the Obligations, the Grantor grants a lien and security interest to the
Bank in all its present and future right, title and interest in and to the
Trademarks, together with all the goodwill of the Grantor associated with and
represented by the Trademarks and the registration thereof, and the right (but
not the obligation) to sue for past, present and future infringements, and the
proceeds thereof, including, without limitation, license royalties and proceeds
of infringement suits.
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2. REPRESENTATIONS AND WARRANTIES. Subject to the
disclosures set forth pursuant to the Loan Agreement of even date by and
between the Grantor and the Bank, the Grantor represents, warrants and
covenants that: (a) it has the right to use the Trademarks; (b) the Grantor
is the sole and exclusive owner of the entire and unencumbered (except for
encumbrances created pursuant to the Loan Documents and this Rider) right,
title and interest in and to each of the Trademarks, and each of the
Trademarks is free and clear of any liens, charges, and encumbrances,
including, without limitation, pledges, assignments, licenses and covenants
by the Grantor not to sue third persons; (c) the Grantor has the unqualified
right to enter into this Rider and perform its terms; (d) the Grantor has
used, and will continue to use for the duration of this Rider, proper notice,
as required by 15 U.S.C. Sections 1051-1127 in connection with its use of the
Trademarks; and (e) the Grantor has used, and will continuE to use for the
duration of this Rider, consistent standards of quality in products leased or
sold under the Trademarks and hereby grants to the Bank and its employees and
agents the right to visit the Grantor's locations which lease, sell, or store
products under any of the Trademarks and to inspect the products and quality
control records relating thereto at reasonable times and upon reasonable
notice during regular business hours to ensure the Grantor's compliance with
this paragraph 2.
3. COVENANTS. The Grantor further covenants that: (a) Until
all of the Obligations have been satisfied in full, the Grantor will not enter
into any agreement, including without limitation, any license agreement, which
is inconsistent with the Grantor's obligations under this Rider; and (b) If the
Grantor acquires rights to any new Trademarks, the provisions of this Rider
shall automatically apply thereto and the Grantor shall give the Bank prompt
written notice thereof along with an amended Schedule "A"; provided, however,
that notwithstanding anything to the contrary contained in this Agreement, the
Grantor shall have the right to enter into agreements in the ordinary course of
business with respect to the Trademarks.
4. EXCLUSIVE USE OF TRADEMARKS. So long as this Rider is in
effect and so long as the Grantor has not received notice from the Bank that an
Event of Default has occurred under the Loan Documents and that the Bank has
elected to exercise its rights hereunder, the Grantor shall continue to have the
exclusive right to use the Trademarks and the Bank shall have no right to use
the Trademarks or issue any exclusive or non-exclusive license with respect
thereto, or assign, pledge or otherwise transfer title in the Trademarks to
anyone else. In addition, as long as this Rider is in effect, Bank agrees that
it shall not assign or otherwise transfer the Trademarks in a manner that causes
abandonment of the Trademarks.
5. NEGATIVE PLEDGE. The Grantor agrees not to sell, assign or
further encumber its rights and interest in the Trademarks without prior written
consent of the Bank.
6. REMEDIES UPON DEFAULT. (a) If and while the Grantor shall
be in default hereunder or an Event of Default exists under the Loan Documents,
the Grantor hereby covenants and agrees that the Bank, as the holder of a
security interest under the Uniform Commercial Code, as now or hereafter in
effect in Pennsylvania, may take such action permitted under the
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Loan Documents or permitted by law, in its exclusive discretion, to foreclose
upon the Trademarks covered hereby.
(b) For such purposes, and in the event of the Grantor's
default hereunder or an Event of Default under the Loan Documents and while such
default or Event of Default exists, the Grantor hereby authorizes and empowers
the Bank to make, constitute and appoint any officer or agent of the Bank as the
Bank may select, in its exclusive discretion, as the Grantor's true and lawful
attorney-in-fact, with the power to endorse the Grantor's name on all
applications, documents, papers and instruments necessary for the Bank to use
the Trademarks or to grant or issue any exclusive or non-exclusive license under
the Trademarks to anyone else, or necessary for the Bank to assign, pledge,
convey or otherwise transfer title in or dispose of the Trademarks to anyone
else. The Grantor hereby ratifies all that such attorney shall lawfully do or
cause to be done by virtue hereof, except for the gross negligence or willful
misconduct of such attorney. This power of attorney shall be irrevocable for the
life of this Rider and the Loan Documents, and until all the Obligations are
satisfied in full.
(c) The Grantor expressly acknowledges that this Rider shall
be recorded with the Patent and Trademark Office. Contemporaneously herewith,
the Grantor shall also execute and deliver to the Bank such documents as the
Bank shall reasonably request to permanently assign all rights in the Trademarks
to the Bank, which documents shall be held by the Bank until the occurrence of
an Event of Default hereunder or under the Loan Documents, subject to applicable
law. After such occurrence, the Bank may, at its sole option, record such
escrowed documents with the Patent and Trademark Office and exercise all other
remedies available to a secured creditor with respect to the Trademarks.
8. SUBJECT TO SECURITY AGREEMENT. This Rider shall be subject
to the terms, provisions, and conditions set forth in the Security Agreement and
may not be modified without the written consent of the party against whom
enforcement is being sought.
9. INCONSISTENT WITH SECURITY AGREEMENT. All rights and
remedies herein granted to the Bank shall be in addition to any rights and
remedies granted to the Bank under the Loan Documents. In the event of an
inconsistency between this Rider and the Security Agreement, the language of the
Security Agreement shall control. The terms and conditions of the Security
Agreement are hereby incorporated herein by reference.
10. TERMINATION OF AGREEMENT. Upon payment and performance
of all Obligations under the Loan Documents, the Bank shall immediately execute
and deliver to the Grantor all documents and take any and all actions necessary
to terminate the Bank's security interest in the Trademarks.
11. FEES AND EXPENSES. Any and all reasonable fees, costs and
expenses, of whatever kind or nature, including the reasonable attorneys' fees
and legal expenses incurred by the Bank in connection with the preparation of
this Rider and all other documents relating hereto
-3-
<PAGE>
and the consummation of this transaction, the filing or recording of any
documents (including all taxes in connection therewith) in public offices, the
payment or discharge of any taxes, reasonable counsel fees, maintenance fees,
encumbrances or costs otherwise incurred in protecting, maintaining, preserving
the Trademarks, or in defending or prosecuting any actions or proceedings
arising out of or related to the Trademarks, in each case in accordance with the
terms of this Rider, shall be borne and paid by the Grantor on demand by the
Bank and until so paid shall be added to the principal amount of the Obligations
to the Bank and shall bear interest at the contract rate therefor.
12. PROSECUTION OF TRADEMARK APPLICATIONS. (a) Subject to the
terms of the Security Agreement, the Grantor shall have the duty to prosecute
diligently any trademark application with respect to the Trademarks pending as
of the date of this Rider or thereafter, until the Obligations shall have been
satisfied in full, to preserve and maintain all rights in the Trademarks, and
upon reasonable request of the Bank, the Grantor shall make federal application
on registrable but unregistered trademarks belonging to the Grantor. Any
reasonable expenses incurred in connection with such applications shall be borne
by the Grantor. Unless the Grantor discontinues the sale of the goods offered in
connection with a Trademark, the Grantor shall not abandon any Trademark without
the written consent of the Bank. Notwithstanding the foregoing, the Grantor
shall not be required to take any action with respect to any Trademark that the
Grantor, in its reasonable judgment determines is not in the best interest of
Grantor. Grantor shall notify the Bank of any decision that will result in
abandonment of a Trademark, or a registration of a Trademark or an application
to register a trademark prior to such abandonment.
(b) The Grantor shall have the right to bring suit in its own
name to enforce the Trademarks, in which event the Bank may, if the Grantor
deems it necessary or after an Event of Default under the Loan Documents, be
joined as a nominal party to such suit if the Bank shall have been satisfied
that it is not thereby incurring any risk of liability because of such joinder.
The Grantor shall promptly, upon demand, reimburse and indemnify the Bank for
all damages, reasonable costs and reasonable expenses, including attorneys'
fees, incurred by the Bank in the fulfillment of the provisions of this
paragraph.
13. ADDITIONAL REMEDIES. Upon the occurrence of an Event of
Default under the Loan Documents, the Bank may, without any obligation to do so,
complete any obligation of the Grantor hereunder, in the Grantor's name or in
the Bank's name, but at the Grantor's expense, and the Grantor hereby agrees to
reimburse the Bank in full for all reasonable expenses, including reasonable
attorney's fees, incurred by the Bank in protecting, defending and maintaining
the Trademarks.
14. GOVERNING LAW. THIS RIDER WILL BE INTERPRETED AND THE
RIGHTS AND LIABILITIES OF THE PARTIES HERETO DETERMINED IN ACCORDANCE WITH THE
LAWS OF THE COMMONWEALTH OF PENNSYLVANIA, EXCLUDING ITS CONFLICT OF LAW RULES,
EXCEPT THAT THE FEDERAL LAWS OF THE UNITED STATES OF AMERICA SHALL GOVERN TO THE
EXTENT APPLICABLE.
-4-
<PAGE>
15. COUNTERPARTS. This Rider may be signed in any number of counterpart copies
and by the parties hereto on separate counterparts, but all such copies shall
constitute one and the same instrument.
WITNESS the due execution of this Rider to Security Agreement
- Trademarks as a document under seal, as of the date first written above, with
the intent to be legally bound hereby.
ATTEST: ONLINE TECHNOLOGIES
GROUP, INC.
By: /s/ F. William Caple By: /s/ Richard Kay (SEAL)
------------------------------- --------------------------
Print Name: F. William Caple Print Name: Richard Kay
---------------------- -------------------
Title: Secretary Title: President
--------------------------- -----------------------
ATTEST: OTG SOFTWARE, INC.
By: /s/ F. William Caple By: /s/ Richard Kay (SEAL)
------------------------------- --------------------------
Print Name: F. William Caple Print Name: Richard Kay
---------------------- -------------------
Title: Secretary Title: President
--------------------------- -----------------------
PNC BANK,
NATIONAL ASSOCIATION
By: /s/ Katharine Kappler
--------------------------
Print Name: Katharine Kappler
-------------------
Title: Vice President
----------------------
-5-
<PAGE>
SCHEDULE A TO RIDER TO SECURITY AGREEMENT - TRADEMARKS
<TABLE>
<CAPTION>
APPLICATION OR
TRADEMARK REGISTRATION NO. COUNTRY
--------- ---------------- -------
<S> <C> <C>
APPLICATION EXTENDER 1953822 UNITED STATES
APPLICATIONXTENDER 75/642525 UNITED STATES
CDEXTENDER 2035716 UNITED STATES
CDXTENDER Not yet assigned UNITED STATES
COLDEXTENDER 1957268 UNITED STATES
COLDXTENDER 75/642529 UNITED STATES
DISKEXTENDER 1957267 UNITED STATES
DISKXTENDER 75/642526 UNITED STATES
DISKXTENDER 2000 Not yet assigned UNITED STATES
JUKEMEISTER 2037183 UNITED STATES
NETXTENDER 75/547588 UNITED STATES
OBJECTUTILITIES 1964771 UNITED STATES
OPTICAL TECHNOLOGY GROUP, INCORPORATED 1953823 UNITED STATES
OTG 2010068 UNITED STATES
OTG OPTICAL TECHNOLOGY 1972299 UNITED STATES
GROUP, INC. and Design
REPORTEXTENDER 75/366478 UNITED STATES
REPORTXTENDER 75/642530 UNITED STATES
SANXTENDER 75/593951 UNITED STATES
SCANXTENDER 75/628344 UNITED STATES
WEBEXTENDER 75/193229 UNITED STATES
WEBXTENDER Not yet assigned UNITED STATES
WFX 75/540441 UNITED STATES
WORKFLOW EXTENDER 75/421572 UNITED STATES
WORKFLOWXTENDER Not yet assigned UNITED STATES
XTENDER 75/487714 UNITED STATES
EXTENDER SOLUTIONS 75/421573 UNITED STATES
XTENDER SOLUTIONS 75/630197 UNITED STATES
</TABLE>
<PAGE>
TRADEMARK ASSIGNMENT
WHEREAS, OTG SOFTWARE, INC. (the "GRANTOR") is the owner of the entire
right, title and interest in and to the United States trademarks, tradenames and
registrations listed on SCHEDULE A attached hereto and made a part hereof, and
all rights associated therewith (collectively, the "TRADEMARKS"), which are
registered in the United States Patent and Trademark Office or which are the
subject of pending applications in the United States Patent and Trademark
Office;
WHEREAS, PNC BANK, NATIONAL ASSOCIATION, having a place of business at
USX Tower, 600 Grant Street, 29th Floor, MS# P6-PUSX-29-4, Pittsburgh, PA,
15219, identified as the "BANK" under that certain Rider to Security Agreement -
Trademarks (the "RIDER") of even date herewith (the "GRANTEE") is desirous of
acquiring said Trademarks;
WHEREAS, the Grantee has a security interest in the assets of the
Grantor adequate to carry on the business of the Grantor; and
WHEREAS, the Rider provides that this Assignment shall become effective
upon the occurrence of an Event of Default as defined in the Security Agreement
of even date herewith by and between the Grantor and the Grantee.
NOW, THEREFORE, for good and valuable consideration, receipt of which
is hereby acknowledged, and intending to be legally bound hereby, the Grantor,
its successors and assigns does hereby collaterally transfer, assign and set
over unto Grantee, its successors, transferees and assigns, all of its present
and future right, title and interest in and to the Trademarks, the goodwill of
the business associated with such Trademarks and all proceeds thereof and all
rights and proceeds associated therewith.
IN WITNESS WHEREOF, the undersigned has caused this Trademark
Assignment to be executed by its duly authorized officer on this 22nd day of
July 1999.
ATTEST: OTG SOFTWARE, INC.
By: /s/ F. William Caple /s/ Richard Kay
---------------------------- ---------------------------------------
(SEAL)
Print Name: F. William Caple Print Name: Richard Kay
-------------------- ---------------------------------------
Title: Secretary Title: President
------------------------- -------------------------------
<PAGE>
SCHEDULE A TO RIDER TO ASSIGNMENT OF TRADEMARKS
<TABLE>
<CAPTION>
APPLICATION OR
TRADEMARK REGISTRATION NO. COUNTRY
--------- ----------------- -------
<S> <C> <C>
APPLICATION EXTENDER 1953822 UNITED STATES
APPLICATIONXTENDER 75/642525 UNITED STATES
CDEXTENDER 2035716 UNITED STATES
CDXTENDER Not yet assigned UNITED STATES
COLDEXTENDER 1957268 UNITED STATES
COLDXTENDER 75/642529 UNITED STATES
DISKEXTENDER 1957267 UNITED STATES
DISKXTENDER 75/642526 UNITED STATES
DISKXTENDER 2000 Not yet assigned UNITED STATES
JUKEMEISTER 2037183 UNITED STATES
NETXTENDER 75/547588 UNITED STATES
OBJECTUTILITIES 1964771 UNITED STATES
OPTICAL TECHNOLOGY GROUP, INCORPORATED 1953823 UNITED STATES
OTG 2010068 UNITED STATES
OTG OPTICAL TECHNOLOGY 1972299 UNITED STATES
GROUP, INC. and Design
REPORTEXTENDER 75/366478 UNITED STATES
REPORTXTENDER 75/642530 UNITED STATES
SANXTENDER 75/593951 UNITED STATES
SCANXTENDER 75/628344 UNITED STATES
WEBEXTENDER 75/193229 UNITED STATES
WEBXTENDER Not yet assigned UNITED STATES
WFX 75/540441 UNITED STATES
WORKFLOW EXTENDER 75/421572 UNITED STATES
WORKFLOWXTENDER Not yet assigned UNITED STATES
XTENDER 75/487714 UNITED STATES
EXTENDER SOLUTIONS 75/421573 UNITED STATES
XTENDER SOLUTIONS 75/630197 UNITED STATES
</TABLE>
<PAGE>
TRADEMARK ASSIGNMENT
WHEREAS, ONLINE TECHNOLOGIES GROUP, INC. (the "GRANTOR") is the owner
of the entire right, title and interest in and to the United States trademarks,
tradenames and registrations listed on SCHEDULE A attached hereto and made a
part hereof, and all rights associated therewith (collectively, the
"TRADEMARKS"), which are registered in the United States Patent and Trademark
Office or which are the subject of pending applications in the United States
Patent and Trademark Office;
WHEREAS, PNC BANK, NATIONAL ASSOCIATION, having a place of business at
USX Tower, 600 Grant Street, 29th Floor, MS# P6-PUSX-29-4, Pittsburgh, PA,
15219, identified as the "BANK" under that certain Rider to Security Agreement -
Trademarks (the "RIDER") of even date herewith (the "GRANTEE") is desirous of
acquiring said Trademarks;
WHEREAS, the Grantee has a security interest in the assets of the
Grantor adequate to carry on the business of the Grantor; and
WHEREAS, the Rider provides that this Assignment shall become effective
upon the occurrence of an Event of Default as defined in the Security Agreement
of even date herewith by and between the Grantor and the Grantee.
NOW, THEREFORE, for good and valuable consideration, receipt of which
is hereby acknowledged, and intending to be legally bound hereby, the Grantor,
its successors and assigns does hereby collaterally transfer, assign and set
over unto Grantee, its successors, transferees and assigns, all of its present
and future right, title and interest in and to the Trademarks, the goodwill of
the business associated with such Trademarks and all proceeds thereof and all
rights and proceeds associated therewith.
IN WITNESS WHEREOF, the undersigned has caused this Trademark
Assignment to be executed by its duly authorized officer on this 22nd day of
July 1999.
ATTEST: ONLINE TECHNOLOGIES
GROUP, INC.
By: /s/ F. William Caple /s/ Richard Kay
---------------------------------- --------------------------------------
(SEAL)
Print Name: F. William Caple Print Name: Richard Kay
-------------------------- --------------------------
Title: Secretary Title: President
-------------------------------- -------------------------------
<PAGE>
SCHEDULE A TO RIDER TO ASSIGNMENT OF TRADEMARKS
<TABLE>
<CAPTION>
APPLICATION OR
TRADEMARK REGISTRATION NO. COUNTRY
--------- ---------------- -------
<S> <C> <C>
APPLICATION EXTENDER 1953822 UNITED STATES
APPLICATIONXTENDER 75/642525 UNITED STATES
CDEXTENDER 2035716 UNITED STATES
CDXTENDER Not yet assigned UNITED STATES
COLDEXTENDER 1957268 UNITED STATES
COLDXTENDER 75/642529 UNITED STATES
DISKEXTENDER 1957267 UNITED STATES
DISKXTENDER 75/642526 UNITED STATES
DISKXTENDER 2000 Not yet assigned UNITED STATES
JUKEMEISTER 2037183 UNITED STATES
NETXTENDER 75/547588 UNITED STATES
OBJECTUTILITIES 1964771 UNITED STATES
OPTICAL TECHNOLOGY GROUP, INCORPORATED 1953823 UNITED STATES
OTG 2010068 UNITED STATES
OTG OPTICAL TECHNOLOGY 1972299 UNITED STATES
GROUP, INC. and Design
REPORTEXTENDER 75/366478 UNITED STATES
REPORTXTENDER 75/642530 UNITED STATES
SANXTENDER 75/593951 UNITED STATES
SCANXTENDER 75/628344 UNITED STATES
WEBEXTENDER 75/193229 UNITED STATES
WEBXTENDER Not yet assigned UNITED STATES
WFX 75/540441 UNITED STATES
WORKFLOW EXTENDER 75/421572 UNITED STATES
WORKFLOWXTENDER Not yet assigned UNITED STATES
XTENDER 75/487714 UNITED STATES
EXTENDER SOLUTIONS 75/421573 UNITED STATES
XTENDER SOLUTIONS 75/630197 UNITED STATES
</TABLE>
<PAGE>
AFFIRMATION AND PARTIAL RELEASE
OF SECURITY AGREEMENT
This Affirmation and Partial Release of Security Agreement (this
"AFFIRMATION") dated October 30, 2000 is made by and among OTG SOFTWARE, INC., a
Delaware corporation (the "GRANTOR") and PNC BANK, NATIONAL ASSOCIATION (the
"BANK"), with an address at USX Tower, 600 Grant Street, 29th Floor, Pittsburgh,
PA 15219.
WHEREAS, the Grantor and the Bank have entered into that certain Loan
Agreement, dated as of July 22, 1999 (the "ORIGINAL LOAN AGREEMENT"), pursuant
to which the Bank agreed to extend to the Grantor, upon the terms and subject to
the conditions set forth therein, a secured revolving credit facility in an
aggregate principal amount not to exceed $5,000,000;
WHEREAS, by Amendment No. 1 to Loan Agreement dated March 17, 2000 (the
"AMENDMENT NO. 1") between the Grantor and the Bank, (the Original Loan
Agreement, as amended by Amendment No. 1, is referred to as the "LOAN
AGREEMENT"), the Bank agreed to modify certain covenant compliance and reporting
requirements;
WHEREAS, the Grantor and the Bank entered into an Amended and
Restated Loan Agreement of even date herewith (the "AMENDED AND RESTATED LOAN
AGREEMENT") whereby the Bank agreed to (i) increase the maximum availability
under the Revolving Credit to $10,000,000 with a $5,000,000 subline for letters
of credit; (ii) extend the maturity date for the Revolving Credit; (iii) modify
the interest rate for the Revolving Credit; and (iv) modify certain covenant
compliance and reporting requirements set forth in the Loan Agreement, subject
to the terms and conditions of the Amended and Restated Loan Agreement;
WHEREAS, the Grantor executed and delivered to the Bank a
Security Agreement dated July 22, 1999 (the "SECURITY AGREEMENT") to secure
their respective obligations as provided therein;
WHEREAS, the Grantor has agreed to enter into this Affirmation
for the purpose of affirming the Grantor's respective obligations under the
Security Agreement; and
WHEREAS, in reliance on the representations, warranties and
covenants of the Borrower in the Loan Agreement, the Bank is willing to release
certain guaranties and terminate its security interest in certain Collateral.
NOW, THEREFORE, for good and valuable consideration, the
receipt of which is hereby acknowledged, the parties hereto, intending to be
legally bound, agree as follows:
1. CAPITALIZED TERMS. All defined terms used herein, unless
modified herein, shall have the meaning given such terms in
the Security Agreement. The definition of "COLLATERAL" is
amended to read in its entirety as follows:
<PAGE>
"COLLATERAL" shall include the following personal
property of the Grantor whether now owned or
hereafter acquired or arising: (i) accounts, accounts
receivable, contract rights, chattel paper, notes
receivable, instruments and documents (including
warehouse receipts), and Grantor's accounts with the
Bank; (ii) all property of the Grantor now or
hereafter in the Bank's possession or in transit to
or from, under the custody or control of or on
deposit with, the Bank or any affiliate thereof,
including deposit and other accounts; and (iii) all
cash and non-cash proceeds (including without
limitation, insurance proceeds) of all of the
foregoing property, all products thereof and all
additions and accessions thereto, substitutions
therefor and replacements thereof.
2. ACKNOWLEDGEMENT. The Grantor acknowledges and agrees that the
execution of this Affirmation, and the carrying out of the
provisions thereof, shall not, except as otherwise provided
for herein, affect or in any way diminish or modify the
obligations of the Grantor under the Security Agreement.
3. PARTIAL RELEASE. The Bank hereby releases its security
interest in all existing and after-acquired personal property
of the Borrower EXCEPT the Collateral. The Bank agrees to
file, at the Borrower's expense, partial termination
statements necessary to record evidence of this partial
release.
4. LOAN AGREEMENT. The definition of "Loan Agreement" as used in
the Security Agreement shall from and after the date hereof
mean the Amended and Restated Loan Agreement (as the same may
be amended, restated or otherwise modified from time to time).
5. AFFIRMATION. The Grantor hereby expressly affirms all its
obligations under the Loan Agreement and the other Loan
Documents are Obligations secured by the Security Agreement
and the other Security Documents. Except as expressly modified
hereby, all terms, covenants and conditions set forth in the
Security Agreement, together with all representations,
warranties and covenants made therein, shall remain valid,
effective, accurate and in full force and effect and are
hereby ratified and affirmed in all respects.
2
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this
Affirmation and Partial Release of Security Agreement by their duly authorized
officers with the intention that it constitute a sealed instrument.
WITNESS: OTG SOFTWARE, INC.
By: /s/ Andrea Cleary By: /s/ Ronald W. Kaiser (SEAL)
--------------------------- ---------------------
Print Name: Andrea Cleary Print Name: Ronald W. Kaiser
----------------------- ----------------
Title: Executive Assistant Title: Chief Financial Officer
--------------------------- -----------------------
PNC BANK,
NATIONAL ASSOCIATION
By: /s/ Katharine S. Kappler
------------------------
Print Name: Katharine S. Kappler
--------------------
Title: Managing Director
-----------------
3
