Exhibit
10.3
SECURITY AGREEMENT
This Security Agreement
(together with all amendments, supplements, and other
modifications; (“Agreement”) is executed in Kalamazoo,
Michigan, effective March 25, 2009, by Softech, Inc. (together with
its permitted successors and assigns; “Grantor”) whose
address is 59 Composite Way, Suite 401, Lowell, Massachusetts 01851
and Greenleaf Capital, Inc. (“Secured Party”), whose
address is 100 West Michigan Avenue, Suite 300, Kalamazoo, Michigan
49007.
1.
Grant of
Interest. Grantor grants to Secured Party a
security interest in all of Grantor’s right, title, and
interest in the following property of Grantor (excluding Consumer
Goods) wherever located and whether now existing or later acquired
or created (collectively, the “Collateral”), including,
without limitation:
a.
all Accounts, Chattel
Paper (both tangible and electronic), Equipment (excepting leased
equipment), Inventory, General Intangibles, Deposit Accounts,
Documents, Instruments, Goods, Fixtures, Investment Property, and
Letter-of-Credit Rights;
b.
all property, tangible
or intangible, including all patents, trademarks and copyrights in
which Grantor now has or later acquires any rights including,
without limitation, all property that now or later is in Secured
Party’s control (by document of title or otherwise) or
possession or is owed by Secured Party to Grantor;
c.
together with all books
and records, attachments, accessories, replacements, additions, and
substitutions therefore (whether now or later installed therein or
affixed thereto), and all Proceeds and Products of all of the
foregoing Collateral.
This Collateral secures
the full and prompt performance and payment to Secured Party of all
obligations of Grantor to Secured Party, whether incurred directly
or acquired by purchase, pledge, or otherwise, and whether
participated in in whole or in part, including, without limitation,
(i) every such obligation to Secured Party, whether in a joint,
several, or joint and several capacity, whether now owing or
existing or later arising or created, owed absolutely, or
contingently, created by loan, overdraft, guaranty, or other
contract, quasi-contract, tort, statute, or otherwise, whether for
principal, interest, fees, expenses, or otherwise and (ii) any and
all obligations of Grantor to Secured Party or to any affiliate of
Secured Party, whether now owing or existing or later arising or
created, owed absolutely or contingently, whether evidenced or
acquired (including all renewals, extensions, and modifications
thereof or substitutions) (collectively the “Subject
Debt”).
2.
Representations
and Warranties. Grantor represents and warrants to
Secured Party as follows:
a.
Existence.
Grantor’s legal
name is exactly as set forth in the first paragraph of this
Agreement. Grantor is a corporation organized and in good standing
under Massachusetts law.
Grantor’s federal
taxpayer identification number is 04-2453033 and its state
organizational or registration identification number is
042453033.
b.
Location.
Grantor’s chief
executive office is located at 59 Composite Way, Suite 401, Lowell,
Massachusetts 01851. All Goods in which Grantor has any rights are,
and for the past five (5) years have been, kept at (1)
Grantor’s current chief executive office; (2) Grantor’s
prior executive office located at 2 Highwood Drive, Tewksbury,
Massachusetts 01876; (3) Grantor’s Michigan office located at
3001 West Big Beaver Road, Suite 522 Troy, MI 48084; and (4) at
Grantor’s U.S. field offices and European offices. Upon
request, Grantor shall provide details concerning the locations and
assets at the U.S. field offices and European offices.
c.
Ownership.
Grantor owns all of the
presently existing Collateral free and clear of any and all adverse
claims, assignments, attachments, leases, mortgages, security
interests or other liens of any kind or nature except presently
perfected security interests (“Encumbrances”) and those
in favor of Secured Party and those consented to in writing by
Secured Party (collectively, the “Permitted
Encumbrances”). Each Encumbrance granted by this Agreement,
when properly perfected, will be a first priority security interest
in the Collateral, prior to all Encumbrances except for Permitted
Encumbrances and will secure the payment of the Subject Debt. There
exists no default under any Collateral consisting of Instruments or
contracts by any party to this Agreement.
d.
Authority; No
Consent. Grantor has all right, power, and
authority to enter into and deliver this Agreement and grant to
Secured Party the Encumbrances on the Collateral. This Agreement is
a valid obligation of Grantor, enforceable in accordance with its
terms. No consent, authorization, approval, or other action of any
third party is required for the grant by Grantor of the
Encumbrances under this Agreement.
3.
Covenants.
a.
No Transfer or
Encumbrance. Grantor agrees that, except in the
normal course of business, it will not, without in each case
obtaining Secured Party’s prior written consent, (i)
sell, lease, transfer, or otherwise dispose of all or any part of
the Collateral or license any of the Collateral except as otherwise
permitted in this Agreement, or (ii) grant any Encumbrances
in or permit any Collateral to be or become subject to any
Encumbrance except for Permitted Encumbrances. Grantor shall comply
with all applicable laws, rules, and regulations related to the
Collateral. Grantor agrees to join Secured Party to take all steps
necessary to preserve, protect, and defend Secured Party’s
security interest in the Collateral, at Grantor’s expense, as
Secured Party may from time to time require.
b.
Insurance.
Grantor will keep the
Collateral consisting of Inventory, Equipment, Goods, and Fixtures
insured with such insurers, in such amounts and against all risks
to which they may be exposed, as each shall be reasonably
acceptable to Secured Party. These policies shall name Secured
Party as an additional insured and shall contain satisfactory loss
payable clauses in favor of Secured Party and contain
insurer’s agreement that any loss thereunder shall be payable
to Secured Party, notwithstanding any action, inaction, or breach
of representation or warranty by Grantor. Annually and on Secured
Party’s request, Grantor will deliver to Secured Party
certificates evidencing such policies and, on request, include
copies of such policies. Grantor assigns to Secured Party any
returned or unearned premium due on cancellation of any such
insurance and directs any insurer to pay to Secured Party all
amounts so due. Each policy for liability insurance shall provide
for all losses to be paid on behalf of Grantor and Secured Party as
their interests may appear, and each policy for property damage
shall provide for losses to be paid to Secured Party. All amounts
received by Secured Party in payment of insurance losses or
returned or unearned premiums may, at Secured Party’s option,
be applied either to the Subject Debt (with such allocation as to
item and maturity as Secured Party may deem advisable) or to the
repair, replacement, or restoration of the Collateral or a
combination thereof.
c.
Inspection.
Grantor will at all
times keep accurate and complete records of the Collateral. Secured
Party and its agents shall have the right at all reasonable times
to examine and inspect the Collateral and to make extracts from the
books and records related to the Collateral, and to examine,
appraise, and protect the Collateral.
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d.
Preservation of
Collateral; Risk of Loss. The Collateral shall remain personal
property at all times and shall not be affixed. Grantor will
maintain the Collateral in good condition and repair, except for
ordinary wear and tear. Grantor will pay promptly all taxes,
levies, and all costs of repair, maintenance, and preservation.
Grantor bears the risk of loss of the Collateral.
e.
Merger;
Consolidation. Grantor will preserve its existence
and will not, in one transaction or in a series of related
transactions, merge into or consolidate with any other
entity.
f.
Notice. Grantor agrees to give Secured
Party:
i.
not less than thirty
(30) days’ prior written notice of any change in
Grantor’s name, in the location of its chief executive office
or personal residence, or any other information provided under
subsection 2(a) of this Agreement or of any other change in
circumstances that affects or may affect the continuing efficacy of
any financing statement filed by Grantor and Secured Party, or the
continuing status of Secured Party’s security interest as the
first and prior lien on the Collateral,
ii.
immediate written notice
if any third party claims any Encumbrance on any of the Collateral
or claims that Grantor’s use thereof infringes or unlawfully
conflicts with any rights of such party, and
iii.
from time to time, on
Secured Party’s request, statements and schedules further
identifying and describing the Collateral, in form and substance
satisfactory to Secured Party.
g.
Further
Assurances. Grantor agrees to execute and
deliver from time to time on request of Secured Party such other
instruments of assignment, conveyance, and transfer, and take such
other action as Secured Party may reasonably request for the
purpose of perfecting, continuing, amending, protecting, or further
evidencing the arrangements contemplated or to enable Secured Party
to exercise and enforce its rights and remedies under this
Agreement. At Grantor’s expense Grantor will on each request
of Secured Party (i) file and authorize Secured Party to
file, from time to time, financing statements or other Records in
such public offices as Secured Party may require, containing, among
other things, (A) a collateral description of “all
personal property and assets” of Grantor or such other
description of the Collateral as Secured Party may require, whether
expanded or reduced, (B) an indication of any Agricultural
Liens or other statutory liens held by Secured Party, and
(C) Grantor’s federal taxpayer identification number,
social security number, and/or state organizational number, if any,
and any other identifying information that Secured Party may
require, (ii) place a legend on all Chattel Paper indicating
that Secured Party has a security interest in such Chattel Paper,
(iii) where the Collateral is in the possession of a third
party, join with Secured Party in notifying the third party of
Secured Party’s security interest and obtaining an
acknowledgment from the third party that it is holding the
Collateral for the benefit of Secured Party, (iv) if the
Collateral is an Instrument or Chattel Paper, deliver such
Collateral to Secured Party, and (v) comply with every other
requirement deemed necessary by Secured Party for the perfection of
its security interest in the Collateral. Without diminishing or
impairing any of Grantor’s obligations under this Agreement,
a photographic, electronic, or other reproduction of this Agreement
shall be sufficient as a financing statement.
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4.
Provisions
Applicable to Accounts.
a.
Unless and until Secured
Party shall have made demand pursuant to Section 4(d) below on
Account Debtors to make their payments directly to Secured Party,
Grantor shall have the right in the ordinary course of business to
collect the Accounts and to grant such waivers and consents to, and
to enter into such compromises with, and otherwise deal with
Account Debtors with respect to the Accounts as Grantor in good
faith may
