Exhibit 10.18
SECURITY AGREEMENT
This Security Agreement (as amended, modified or otherwise supplemented
from time to time, this "SECURITY AGREEMENT"), dated as of January 12, 2002, is
executed by Novatel Wireless, Inc. a Delaware corporation (together with its
successors and assigns, "DEBTOR"), in favor of Sanmina-SCI Corporation, as
secured party (together with its successors and assigns, "SECURED PARTY").
RECITALS
A. Debtor and Secured Party have entered into a Settlement Agreement,
dated January 12, 2002, pursuant to which, Debtor has agreed, among other
things, to purchase inventory from Secured Party (as amended, modified or
supplemented from time to time, the "SETTLEMENT Agreement").
B. In order to induce Secured Party to enter into the Settlement
Agreement, Debtor has agreed to enter into this Security Agreement and to grant
Secured Party the security interest in the Collateral described below.
AGREEMENT
NOW, THEREFORE, in consideration of the above recitals and for other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Debtor hereby agrees with Secured Party as follows:
1. Definitions and Interpretation. When used in this Security Agreement,
the following terms have the following respective meanings:
"COLLATERAL" has the meaning given to that term in Section 2
hereof.
"COVERED OBLIGATIONS" means all obligations of Debtor set forth
in Section II.A.3 and Section II.A.4 of the Settlement Agreement.
"EVENT OF DEFAULT" means the occurrence of any of the following
events:
(a) Debtor fails to pay within 5 business days of the date when
due any payment required under the terms of the Covered Obligations; or
(b) Debtor fails to observe or perform any covenant, obligation,
condition or agreement contained in any Covered Obligation or in this Security
Agreement (except as specified in clause (a) above) and such failure continues
for a period of 15 days after notice from Security Party; provided that if such
failure cannot reasonably cured during such 15-day period and Debtor is
diligently pursuing such cure, such 15-day period shall be extended for a
reasonable time to accomplish such cure, but not to exceed 90 days; or
(c) Any representation or warranty in this Security Agreement is
false, misleading, incorrect or incomplete in any material respect when made or
furnished; or
(d) Debtor shall (i) apply for or consent to the appointment of a
receiver, trustee, liquidator or custodian of itself or of all or a substantial
part of its property; (ii) fail to pay its debts generally as they
mature or admit in writing its inability to do the same; (iii) make a general
assignment for the benefit of its or any of its creditors; (iv) be dissolved or
liquidated; (v) become insolvent (as such term may be defined or interpreted
under any applicable statute); (vi) commence a voluntary case or other
proceeding seeking liquidation, reorganization or other relief with respect to
itself or its debts under any bankruptcy, insolvency or similar law now or
hereafter in effect or consent to any such relief or to the appointment of or
taking possession of its property by any official in an involuntary case or
other proceeding commenced against it; or (vii) take any action for the purpose
of effecting any of the foregoing; or
(e) Proceedings for the appointment of a receiver, trustee,
liquidator or custodian of Debtor or any of its Subsidiaries or of all or a
substantial part of the property thereof, or an involuntary case or other
proceedings seeking liquidation, reorganization or other relief with respect to
Debtor or any of its Subsidiaries or the debts thereof under any bankruptcy,
insolvency or other similar law now or hereafter in effect shall be commenced or
an order for relief entered or such proceeding shall not be dismissed or
discharged within 30 days of commencement; or
(f) either Section III.A.3 or Section III.A.4 of the Settlement
Agreement or this Security Agreement or any material term hereof shall cease to
be, or be asserted by Debtor not to be, a legal, valid and binding obligation of
Debtor enforceable in accordance with its terms or if the Liens of Secured Party
in any of the assets of Debtor shall cease to be or shall not be valid,
perfected Liens or Debtor shall assert that such Liens are not valid, perfected
Liens; or
(g) A final judgment or order for the payment of money in excess
of $5,000,000 (exclusive of amounts covered by insurance issued by an insurer
not an affiliate of Debtor) shall be rendered against Debtor or any of its
Subsidiaries and the same shall remain undischarged for a period of 30 days
during which execution shall not be effectively stayed, or any judgment, writ,
assessment, warrant of attachment, or execution or similar process shall be
issued or levied against a substantial part of the property of Debtor or any of
its Subsidiaries and such judgment, writ or similar process shall not be
released, stayed, vacated or otherwise dismissed for a period of 30 days after
issue or levy.
"INDEBTEDNESS" means (a) all obligations for borrowed money; (b)
all obligations evidenced by bonds, debentures, notes or similar instruments,
(c) all obligations to pay the deferred purchase price of property or services
(other than accounts payable incurred in the ordinary course of business); (d)
all obligations with respect to capital leases; (e) all obligations created or
arising under any conditional sale or other title retention agreement with
respect to property acquired by such Person; (f) all reimbursement and other
payment obligations, contingent or otherwise, in respect of letters of credit;
and (g) all guaranty obligations with respect to the types of Indebtedness
listed in the foregoing clauses (a) through (f).
"LIEN" means, with respect to any property, any security
interest, mortgage, pledge, lien, claim, charge or other encumbrance in, of, or
on such property or the income therefrom, including, without limitation, the
interest of a vendor or lessor under a conditional sale agreement, capital lease
or other title retention agreement, or any agreement to provide any of the
foregoing, and the filing of any financing statement or similar instrument under
the UCC or comparable law of any jurisdiction.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on (a)
the business, assets, operations, prospects or financial or other condition of
Debtor; (b) the ability of Debtor to pay or perform the Obligations in
accordance with the terms of the Covered Obligations or this Security Agreement
and to avoid an Event of Default, or an event which, with the giving of notice
or the passage of time or both, would constitute an Event of Default; or (c) the
rights and remedies of Secured Party under the Covered Obligations, this
Security Agreement or any related document, instrument or agreement (except for
the Settlement Agreement).
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"OBLIGATIONS" means all loans, advances, debts, liabilities and
obligations, howsoever arising, owed by Debtor to the Secured Party of every
kind and description (whether or not evidenced by any note or instrument and
whether or not for the payment of money), now existing or hereafter arising
under or pursuant to the terms of the Covered Obligations or this Security
Agreement, including, all interest, fees, charges, expenses, attorneys' fees and
costs and accountants' fees and costs chargeable to and payable by Debtor
thereunder, in each case, whether direct or indirect, absolute or contingent,
due or to become due, and whether or not arising after the commencement of a
proceeding under Title 11 of the United States Code (11 U.S.C. Section 101 et
seq.), as amended from time to time (including post-petition interest) and
whether or not allowed or allowable as a claim in any such proceeding; provided
that the aggregate amount of the Obligations secured hereby shall not exceed, on
any date, $4,000,000. The portion of the Obligations which are secured shall be
(a) first, the total of that portion of the Obligations paid by Debtor to
Secured Party within 91 days prior to the filing of any bankruptcy,
receivership, assignment for the benefit of creditors, or similar case, matter
or proceeding against or with respect to Debtor, any affiliate of Debtor or any
of their assets (the "BANKRUPTCY DATE"), if any, (b) second, any unpaid
Obligations existing on the Bankruptcy Date, if any, and (c) third, any
remaining Obligations.
"PERMITTED LIENS" means (a) Liens for taxes not yet delinquent or
Liens for taxes being contested in good faith and by appropriate proceedings for
which adequate reserves have been established; (b) Liens in respect of property
or assets imposed by law which were incurred in the ordinary course of business,
such as carriers', warehousemen's, materialmen's and mechanics' Liens and other
similar Liens arising in the ordinary course of business which are not
delinquent or remain payable without penalty or which are being contested in
good faith and by appropriate proceedings; (c) Liens incurred or deposits made
in the ordinary course of business in connection with workers' compensation,
unemployment insurance and other types of social security, and mechanic's Liens,
carrier's Liens and other Liens to secure the performance of tenders, statutory
obligations, contract bids, government contracts, performance and return of
money bonds and other similar obligations, incurred in the ordinary course of
business, whether pursuant to statutory requirements, common law or consensual
arrangements, (d) Liens in favor of Secured Party,(e) Liens in favor of Silicon
Valley Bank or in favor of any Refinancing Senior Lender, (f) purchase money
security interests in specific items of equipment, (g) leases of specific items
of equipment, (h) Liens incurred in connection with the extension, renewal, or
refinancing of indebtedness secured by liens of the type described in clauses
(e), (f), and (g) above; and (i) Liens permitted pursuant to the Senior Lender
Documents.
"PERSON" means an individual, a partnership, a corporation, a
business trust, a joint stock company, a limited liability company, an
unincorporated association or other entity and any domestic or foreign national,
state or local government, any political subdivision thereof, and any
department, agency, authority or bureau of any of the foregoing.
"REFINANCING SENIOR LENDER" means bank or commercial finance
company, or syndicate of lenders which make loans in the ordinary course of
business and for which a bank or commercial finance company serves as agent,
that refinances all or any portion of the obligations of the Debtor to Silicon
Valley Bank and any to any other Refinancing Senior Lender.
"SENIOR LENDER" means Silicon Valley Bank and any Refinancing
Senior Lender.
"SENIOR LENDER DOCUMENTS" means any agreements, instruments, and
documents evidencing, securing, guaranteeing or otherwise relating to the
obligations of Debtor to any Senior Lender.
"SUBSIDIARY" means (i) any corporation of which more than 50% of
the issued and outstanding equity securities having ordinary voting power to
elect a majority of the board of directors of such corporation is at the time
directly or indirectly owned or controlled by Debtor; (ii) any partnership,
joint
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venture or other association of which more than 50% of the equity interest
having the power to vote, direct or control the management of such partnership,
joint venture or other association is at the time directly or indirectly owned
or controlled by Debtor; or (iii) any other entity included in the financial
statements of Debtor on a consolidated basis.
"TRANSACTION DOCUMENTS" means the Settlement Agreement and this
Security Agreement.
"UCC" means the Uniform Commercial Code as in effect in the State
of California from time to time.
All capitalized terms not otherwise defined herein shall have the respective
meanings given in the Settlement Agreement. Terms defined in the UCC and not
otherwise defined herein shall have the respective meanings set forth in the
UCC.
2. Grant of Security Interest. As security for the Obligations, Debtor
hereby pledges to Secured Party and grants to Secured Party a security interest
in all right, title and interests of Debtor in and to the property described in
Attachment 1 hereto, whether now existing or hereafter from time to time
acquired (collectively, the "COLLATERAL").
3. Representations and Warranties. Debtor represents and warrants to
Secured Party that:
(a) Due Incorporation, Qualification, etc. Debtor (i) is a
corporation duly organized, validly existing and in good standing under the laws
of its state of incorporation; (ii) has the power and authority to own, lease
and operate its properties and carry on its business as now conducted; and (iii)
is duly qualified, licensed to do business and in good standing as a foreign
corporation in each jurisdiction where the failure to be so qualified or
licensed could reasonably be expected to have a Material Adverse Effect.
(b) Authority. The execution and delivery by Debtor of each
Transaction Document and the performance by Debtor of the Covered Obligations
and this Security Agreement and the consummation of the transactions
contemplated by this Security Agreement (i) are within the power of Debtor and
(ii) have been duly authorized by all necessary actions on the part of Debtor.
(c) Enforceability. Each Transaction Document has been duly
executed and delivered by Debtor and each of the Covered Obligations and this
Security Agreement constitutes a legal, valid and binding obligation of Debtor,
enforceable against Debtor in accordance with its terms, except as limited by
bankruptcy, insolvency or other laws of general application relating to or
affecting the enforcement of creditors' rights generally and general principles
of equity.
(d) Non-Contravention. The execution and delivery by Debtor of
the Transaction Documents and the performance and consummation of the Covered
Obligations and the transactions contemplated by this Security Agreement do not
and will not (i) violate the Certificate of Incorporation or Bylaws of the
Debtor or violate in any material respect any judgment, order, writ, decree,
statute, rule or regulation applicable to Debtor; (ii) violate any provision of,
or result in the breach or the acceleration of, or entitle any other Person to
accelerate (whether after the giving of notice or lapse of time or both), any
material mortgage, indenture, agreement, instrument or contract to which Debtor
is a party or by which it is bound; or (iii) result in the creation or
imposition of any Lien upon any property, asset or revenue of Debtor (other than
any Lien arising under this Security Agreement) or the suspension, revocation,
impairment, forfeiture, or nonrenewal of any material permit, license,
authorization or approval applicable to Debtor, its business or operations, or
any of its assets or properties.
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(e) Approvals. No consent, approval, order or authorization of,
or registration, declaration or filing with, any governmental authority or other
Person (including, without limitation, the shareholders of any Person) is
required in connection with the execution and delivery of the Transaction
Documents by Debtor and the performance of the Covered Obligations and this
Security Agreement and the consummation of the transactions contemplated by the
Security Agreement, except for filings required to perfect security interest
granted pursuant to this Security Agreement.
(f) No Violation or Default. Debtor is not in violation of or in
default with respect to (i) its Certificate of Incorporation or Bylaws or any
judgment, order, writ, decree, statute, rule or regulation applicable to Debtor;
(ii) any mortgage, indenture, agreement, instrument or contract to which Debtor
is a party or by which it is bound (nor is there any waiver in effect which, if
not in effect, would result in such a violation or default), where, in each
case, such violation or default, individually, or together with all such
violations or defaults, could reasonably be expected to have a Material Adverse
Effect.
(g) Litigation. No actions (including, without limitation,
derivative actions), suits, proceedings or investigations are pending or, to the
knowledge of Debtor, threatened against Debtor at law or in equity in any court
or before any other governmental authority which (i) could reasonably be
expected (alone or in the aggregate) to have a Material Adverse Effect or (ii)
seek to enjoin, either directly or indirectly, the execution or delivery by
Debtor of the Transaction Documents or the performance by Debtor of the Covered
Obligations or this Security Agreement or the transactions contemplated by this
Security Agreement.
(h) Collateral. (i) Debtor is the owner of the Collateral (or, in
the case of after-acquired Collateral, at the time Debtor acquires rights in the
Collateral, will be the owner thereof) free and clear of all Liens other than
Permitted Liens; (ii) upon the filing of UCC-1 financing statements in the
appropriate filing offices, Secured Party has (or in the case of after-acquired
Collateral, at the time Debtor acquires rights therein, will have) a perfected
security interest in the Collateral to the extent that a security interest in
the Collateral can be perfected by such filing, except for Permitted Liens;
(iii) all inventory has been (or, in the case of hereafter produced inventory,
will be) produced in compliance with applicable laws, including the Fair Labor
Standards Act; (iv) the accounts receivable and payment intangibles are genuine
and enforceable against the parties obligated to pay the same; (v) the originals
of all documents evidencing all accounts receivable and payment intangibles of
Debtor and the only original books of account and records of Debtor relating
thereto are, and will continue to be, kept at the chief executive office of
Debtor set forth on Schedule B or at such other locations as Debtor may
establish in accordance with Section 4(d), and (f) all information set forth in
Schedules A and B hereto is true and correct.
4. Covenants Relating to Collateral. Debtor hereby agrees (a) to perform
all acts that may be necessary to maintain, preserve, protect and perfect the
Collateral, the Lien granted to Secured Party therein and the perfection and
priority of such Lien, except for Permitted Liens; (b) not to use or permit any
Collateral to be used (i) in violation in any material respect of any applicable
law, rule or regulation, or (ii) in violation of any policy of insurance
covering the Collateral; (c) to pay promptly when due all taxes and other
governmental charges, all Liens and all other charges now or hereafter imposed
upon or affecting any Collateral; provided that Debtor may contest taxes in good
faith and by appropriate proceedings; (d) without 30 days' written notice to
Secured Party, (i) not to change Debtor's name or place of business (or, if
Debtor has more than one place of business, its chief executive office), or the
office in which Debtor's records relating to accounts receivable and payment
intangibles are kept, (ii) not to change Debtor's state of incorporation, (iii)
not to keep Collateral consisting of chattel paper at any location other than
its chief executive office set forth in item 1 of Schedule B hereto, and (iv)
not to keep Collateral consisting of equipment or inventory at any location
other than the locations set forth in item 6 of Schedule B hereto, (f) to
procure, execute and deliver from time to time any endorsements, assignments,
financing statements and other writings reasonably deemed necessary or
appropriate by Secured Party to perfect, maintain and protect its
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Lien hereunder and the priority thereof and, subject to the provisions of the
security agreement with any Senior Lender, to deliver promptly to Secured Party
all originals of Collateral consisting of instruments; (g) to appear in and
defend any action or proceeding which may affect its title to or Secured Party's
interest in the Collateral; (h) to keep separate, accurate and complete records
of the Collateral and to provide Secured Party with such records and such other
reports and information relating to the Collateral as Secured Party may
reasonably request from time to time; (i) not sell, encumber, lease, rent, or
otherwise dispose of or transfer all or substantially all of the Collateral and
to keep the Collateral free of all Liens other than Permitted Liens; (j) to
comply with all material requirements of law relating to the production,
possession, operation, maintenance and control of the Collateral (including the
Fair Labor Standards Act); (k) to permit Secured Party and its representatives
the right, at any time during normal business hours, upon reasonable prior
notice, to visit and inspect the properties of Debtor and its corporate,
financial and operating records, and make abstracts therefrom, and to discuss
Debtor's affairs, finances and accounts with its directors, officers and
independent public accountants; and (l) not to maintain any deposit account at a
bank with respect to which Secured Party has not entered into a control
agreement sufficient to perfect its security interest in such deposit account;
provided, however, that at any time when the Inventory Purchase Commitment is
equal to or less than $4,500,000, Debtor may maintain deposit accounts at any
bank so long as it has used its commercially reasonable efforts to obtain a
control agreement from such bank sufficient to perfect Secured Party's security
interest in any such deposit account. Secured Party agrees that it will not
exercise its rights under any control agreement unless an Event of Default has
occurred and is continuing.
5. Authorized Action by Secured Party. Debtor hereby irrevocably
appoints Secured Party as its attorney-in-fact (which appointment is coupled
with an interest) and agrees that Secured Party may perform (but Secured Party
shall not be obligated to and shall incur no liability to Debtor or any third
party for failure so to do) any act which Debtor is obligated by this Security
Agreement to perform but does not perform, and to exercise such rights and
powers as Debtor might exercise with respect to the Collateral, including the
right to (a) collect by legal proceedings or otherwise and endorse, receive and
receipt for all dividends, interest, payments, proceeds and other sums and
property now or hereafter payable on or on account of the Collateral; (b) enter
into any extension, reorganization, deposit, merger, consolidation or other
agreement pertaining to, or deposit, surrender, accept, hold or apply other
property in exchange for the Collateral; (c) make any compromise or settlement,
and take any action it deems advisable, with respect to the Collateral; (d)
insure, process and preserve the Collateral; (e) pay any indebtedness of Debtor
relating to the Collateral; and (f) execute UCC financing statements and other
documents, instruments and agreements required hereunder; provided, however,
that Secured Party shall not exercise any such powers granted pursuant to
subsections (a) through (e) prior to the occurrence of an Event of Default and
shall only exercise such powers during the continuance of an Event of Default.
Debtor agrees to reimburse Secured Party promptly upon demand for any reasonable
costs and expenses, including reasonable attorneys' fees, Secured Party may
incur while acting as Debtor's attorney-in-fact hereunder, all of which costs
and expenses are included in the Obligations. It is further agreed and
understood between the parties hereto that such care as Secured Party gives to
the safekeeping of its own property of like kind shall constitute reasonable
care of the Collateral when in Secured Party's possession; provided, however,
that Secured Party shall not be required to make any presentment, demand or
protest, or give any notice and need not take any action to preserve any rights
against any prior party or any other person in connection with the Obligations
or with respect to the Collateral.
6. Litigation and Other Proceedings
(a) Debtor shall have the right and obligation to commence and
diligently prosecute such suits, proceedings or other actions for infringement
or other damage, or reexamination or reissue proceedings, or opposition or
cancellation proceedings as are reasonable to protect any of the patents,
trademarks, copyrights, mask works or trade secrets. If an Event of Default has
occurred and is continuing, no such suit, proceeding or other actions shall be
settled or voluntarily dismissed, nor shall any party be released or
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excused of any claims of or liability for infringement, without the prior
written consent of Secured Party, which consent shall not be unreasonably
withheld, delayed or conditioned.
(b) Upon the occurrence and during the continuance of an Event of
Default, Secured Party shall have the right but not the obligation to bring suit
or institute proceedings in the name of Debtor or Secured Party to enforce any
rights in the Collateral, including any license thereunder, in which event
Debtor shall at the request of Secured Party do any and all lawful acts and
execute any and all documents reasonably required by Secured Party in aid of
such enforcement. If Secured Party elects not to bring suit to enforce any right
under the Collateral, including any license thereunder, Debtor agrees to use all
reasonable measures, whether by suit, proceeding or other action, to cause to
cease any infringement of any material right under the Collateral by any Person
and for that purpose agrees to diligently maintain any action, suit or
proceeding against any Person so infringing necessary to prevent such
infringement.
7. Default and Remedies.
(a) Default. Debtor shall be deemed in default under this
Security Agreement upon the occurrence and during the continuance of an Event of
Default.
(b) Remedies. Upon the occurrence and during the continuance of
any such Event of Default, Secured Party shall have the rights of a secured
creditor under the UCC, all rights granted by this Security Agreement and by
law, including the right to: (a) require Debtor to assemble the Collateral and
make it available to Secured Party at a place to be reasonably designated by
Secured Party; and (b) prior to the disposition of the Collateral, store,
process, repair or recondition it or otherwise prepare it for disposition in any
manner and to the extent Secured Party deems appropriate and in connection with
such preparation and disposition, without charge, use any trademark, trade name,
copyright, patent or technical process used by Debtor. Debtor hereby agrees that
ten (10) days' notice of any intended sale or disposition of any Collateral is
reasonable. In furtherance of Secured Party's rights hereunder, Debtor hereby
grants to Secured Party an irrevocable, non-exclusive license (exercisable
without royalty or other payment by Secured Party, but only in connection with
the exercise of remedies hereunder) to use, license or sublicense any patent,
trademark, trade name, copyright or other intellectual property in which Debtor
now or hereafter has any right, title or interest together with the right of
access to all media in which any of the foregoing may be recorded or stored.
8. Miscellaneous.
(a) Notices. Except as otherwise provided herein, all notices,
requests, demands, consents, instructions or other communications to or upon
Debtor or Secured Party under this Security Agreement shall be by telecopy or in
writing and telecopied, mailed or delivered to each party at telecopier number
or its address set forth below (or to such other telecopy number or address as
the recipient of any notice shall have notified the other in writing). All such
notices and communications shall be effective (a) when sent by Federal Express
or other overnight service of recognized standing, on the business day following
the deposit with such service; (b) when mailed, by registered or certified mail,
first class postage prepaid and addressed as aforesaid through the United States
Postal Service, upon receipt; (c) when delivered by hand, upon delivery; and (d)
when telecopied, upon confirmation of receipt.
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Secured Party: Sanmina-SCI Corporation
2700 North First Street
San Jose, CA 95134
Telephone: (408) 964-3600
Facsimile: (408) 964-3636
Attention: General Counsel
Debtor: Novatel Wireless, Inc.
9360 Towne Centre Drive
San Diego, CA 92121
Telephone: (858) 812-3415
Facsimile: (858) 812-3414
Attention: Melvin Flowers
(b) Nonwaiver. No failure or delay on Secured Party's part in
exercising any right hereunder shall operate as a waiver thereof or of any other
right nor shall any single or partial exercise of any such right preclude any
other further exercise thereof or of any other right.
(c) Amendments and Waivers. This Security Agreement may not be
amended or modified, nor may any of its terms be waived, except by written
instruments signed by Debtor and Secured Party. Each waiver or consent under any
provision hereof shall be effective only in the specific instances for the
purpose for which given.
(d) Assignments. This Security Agreement shall be binding upon
and inure to the benefit of Secured Party and Debtor and their respective
successors and assigns; provided, however, that Debtor may not sell, assign (by
operation of law or otherwise) or delegate rights and obligations hereunder
without the prior written consent of Secured Party, which consent shall not be
unreasonably withheld, delayed or conditioned; provided that Debtor may merge
with any Person so long as either (i) Debtor is the surviving Person or (ii) the
surviving Person has assumed all obligations under the Covered Obligations and
this Security Agreement.
(e) Cumulative Rights, etc. The rights, powers and remedies of
Secured Party under this Security Agreement shall be in addition to all rights,
powers and remedies given to Secured Party by virtue of any applicable law, rule
or regulation of any governmental authority, the Transaction Documents or any
other agreement, all of which rights, powers, and remedies shall be cumulative
and may be exercised successively or concurrently without impairing Secured
Party's rights hereunder. Debtor waives any right to require Secured Party to
proceed against any Person or to exhaust any Collateral or to pursue any remedy
in Secured Party's power.
(f) Payments Free of Taxes, Etc. Debtor shall pay upon demand any
stamp or other taxes, levies or charges of any jurisdiction with respect to the
execution, delivery, registration, performance and enforcement of this Security
Agreement. Upon request by Secured Party, Debtor shall furnish evidence
reasonably satisfactory to Secured Party that all requisite authorizations and
approvals by, and notices to and filings with, governmental authorities and
regulatory bodies have been obtained and made and that all requisite taxes,
levies and charges have been paid.
(g) Partial Invalidity. If at any time any provision of this
Security Agreement is or becomes illegal, invalid or unenforceable in any
respect under the law or any jurisdiction, neither the legality, validity or
enforceability of the remaining provisions of this Security Agreement nor the
legality, validity or
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enforceability of such provision under the law of any other jurisdiction shall
in any way be affected or impaired thereby.
(h) Expenses. If an Event of Default has occurred and is
continuing, Debtor shall pay on demand all reasonable fees and expenses,
including reasonable attorneys' fees and expenses, incurred by Secured Party in
connection with custody, preservation or sale of, or other realization on, any
of the Collateral or the enforcement or attempt to enforce any of the
Obligations which is not performed as and when required by this Security
Agreement.
(i) Headings. Headings in this Security Agreement are for
convenience of reference only and are not part of the substance hereof or
thereof.
(j) Plural Terms. All terms defined in this Security Agreement in
the singular form shall have comparable meanings when used in the plural form
and vice versa.
(k) Construction. This Security Agreement is the result of
negotiations among, and has been reviewed by, Debtor, Secured Party and their
respective counsel. Accordingly, this Security Agreement shall be deemed to be
the product of all parties hereto, and no ambiguity shall be construed in favor
of or against Debtor or Secured Party.
(l) Entire Agreement. This Security Agreement, the Settlement
Agreement and the other documents executed in connection with the Settlement
Agreement, taken together, constitute and contain the entire agreement of Debtor
and Secured Party and supersede any and all prior agreements, negotiations,
correspondence, understandings and communications among the parties, whether
written or oral, respecting the subject matter hereof.
(m) Other Interpretive Provisions. References in this Security
Agreement to any document, instrument or agreement (a) includes all exhibits,
schedules and other attachments thereto, (b) includes all documents, instruments
or agreements issued or executed in replacement thereof, and (c) means such
document, instrument or agreement, or replacement or predecessor thereto, as
amended, modified and supplemented from time to time and in effect at any given
time. The words "hereof," "herein" and "hereunder" and words of similar import
when used in this Security Agreement refer to this Security Agreement as a whole
and not to any particular provision of this Security Agreement. The words
"include" and "including" and words of similar import when used in this Security
Agreement shall not be construed to be limiting or exclusive.
(n) Governing Law. This Security Agreement shall be governed by
and construed in accordance with the laws of the State of California without
reference to conflicts of law rules (except to the extent governed by the UCC).
(o) Termination. This Security Agreement and all obligations of
Debtor hereunder and all security interests granted hereby shall be released and
terminated when all Covered Obligations have been indefeasibly satisfied in
full. Upon such release and termination of all Covered Obligations and the
security interest hereunder, all rights in and to the Collateral granted or
pledged by Debtor hereunder shall automatically revert to Debtor, and Secured
Party shall return any pledged Collateral in its possession to Debtor, or to the
Person or Persons legally entitled thereto, and shall endorse, execute, deliver,
record and file all instruments and documents, and do all other acts and things,
reasonably required for the return of the Collateral to Debtor, or to the Person
or Persons legally entitled thereto (and Debtor is authorized to do the same to
the extent permitted by law) and to evidence or document the release of the
interests of Secured Party arising under this Security Agreement, all as
reasonably requested by, and at the sole expense of, Debtor.
-9-
Debtor and Security Party have caused this Security Agreement to be
executed as of the day and year first above written.
Novatel Wireless, Inc.
By: /s/ Melvin L. Flowers
---------------------------
Name: Melvin L. Flowers
Title: Senior Vice President
and Chief Financial
Officer
AGREED:
Sanmina-SCI Corporation,
as Secured Party
By: /s/ Steven H. Jackman
-----------------------------------
Name: Steven H. Jackman
Title: Vice President-Corporate Counsel
-10-
ATTACHMENT 1
TO SECURITY AGREEMENT
All right, title, interest, claims and demands of Debtor in and to the
following property:
(i) All goods and equipment now owned or hereafter acquired,
including, without limitation, all laboratory equipment, computer equipment,
office equipment, machinery, fixtures, vehicles, and any interest in any of the
foregoing, and all attachments, accessories, accessions, replacements,
substitutions, additions, and improvements to any of the foregoing, wherever
located;
(ii) All inventory now owned or hereafter acquired, including,
without limitation, all merchandise, raw materials, parts, supplies, packing and
shipping materials, work in process and finished products including such
inventory as is temporarily out of Debtor's custody or possession or in transit
and including any returns upon any accounts or other proceeds, including
insurance proceeds, resulting from the sale or disposition of any of the
foregoing and any documents of title representing any of the above, and Debtor's
books relating to any of the foregoing;
(iii) All contract rights, general intangibles, health care
insurance receivables, payment intangibles and commercial tort claims, now owned
or hereafter acquired, including, without limitation, all patents, patent rights
(and applications and registrations therefor), trademarks and service marks (and
applications and registrations therefor), inventions, copyrights, mask works
(and applications and registrations therefor), trade names, trade styles,
software and computer programs, trade secrets, methods, processes, know how,
drawings, specifications, descriptions, and all memoranda, notes, and records
with respect to any research and development, goodwill, license agreements,
franchise agreements, blueprints, drawings, purchase orders, customer lists,
route lists, infringements, claims, computer programs, computer disks, computer
tapes, literature, reports, catalogs, design rights, income tax refunds,
payments of insurance and rights to payment of any kind and whether in tangible
or intangible form or contained on magnetic media readable by machine together
with all such magnetic media;
(iv) All now existing and hereafter arising accounts, contract
rights, royalties, license rights and all other forms of obligations owing to
Debtor arising out of the sale or lease of goods, the licensing of technology or
the rendering of services by Debtor (subject, in each case, to the contractual
rights of third parties to require funds received by Debtor to be expended in a
particular manner), whether or not earned by performance, and any and all credit
insurance, guaranties, and other security therefor, as well as all merchandise
returned to or reclaimed by Debtor and Debtor's books relating to any of the
foregoing;
(v) All documents, cash, deposit accounts, letters of credit,
letter of credit rights, supporting obligations, certificates of deposit,
instruments, chattel paper, electronic chattel paper, tangible chattel paper and
investment property, including, without limitation, all securities, whether
certificated or uncertificated, security entitlements, securities accounts,
commodity contracts and commodity accounts, and all financial assets held in any
securities account or otherwise, wherever located, now owned or hereafter
acquired and Debtor's books relating to the foregoing; and
(vi) Any and all claims, rights and interests in any of the above
and all substitutions for, additions and accessions to and proceeds thereof,
including, without limitation, insurance, condemnation, requisition or similar
payments and the proceeds thereof.
SCHEDULE A
TO SECURITY AGREEMENT
COPYRIGHTS
Description Registration Date Registration No.
----------- ----------------- ----------------
None.
PATENTS
Title Date Issued Patent No.
----- ----------- ----------
Multi-position PC card antenna September 18, 2001 6,292,148
assembly
Duplexing antenna for portable May 9, 2000 6,061,024
radio transceiver
Pulse width modulation pulse July 1, 1997 5,644,311
shaper
Wireline interface for cellular June 11, 1996 5,526,403
telephone
Automatic level control circuit August 1, 1995 5,438,683
for dual mode analog/digital
cellular telephone
System for securing mobile August 9, 1994 5,337,345
telephones from unauthorized
transmission
Noise-reduction system July 27, 1993 5,231,407
Radio telephone using received July 7, 1992 5,129,098
signal strength in controlling
transmission power
Bus for a cellular telephone April 28, 1992 5,109,402
Power detector utilizing bias August 27, 1991 5,043,672
voltage divider for precision
control of an amplifier
RF power-control circuit March 26, 1991 5,003,270
RF power-control circuit August 28, 1990 4,952,886
Controlled output amplifier and July 26, 1988 4,760,347
power detector thereof
PATENT APPLICATIONS
Title Application Date Application No.
----- ----------------- ---------------
Method and Apparatus for 10/11/00 09/976,703
Auto-Sleep of RF Wireless Modem
Method and Apparatus for 8/23/00; 8/23/01 09/938,357
Distributed Data Transfer over
Multiple Independent Wireless
Networks
Distributed Architecture Wireless 8/11/00; 8/13/01 09/925,566
RF Modem
Over the Air Wireless Data Modem 8/22/00; 8/22/01 09/935,376
Programming
Method and Apparatus for a 8/11/00; 8/8/01 09/925,565
Software Configurable Wireless
Modem Adaptable For Multiple
Modes of Operation
Method and Apparatus for A 8/11/00; 8/13/01 09/929,252
Frequency Agile, Variable
Bandwith Radio Transceiver
Method and Apparatus for 8/23/00; 8/23/01 09/935,484
Transmitter Noise Cancellation in
an RF Communications System
Systems and Methods for 3/5/01; 5/21/01 60/273,760
Multi-Platform Wireless Modem
System and Methods for a Wireless 3/5/01; 5/21/01 60/273,760
Modem Interface
Method and Apparatus for 9/16/01; 9/17/01 60/322,535
Pass-through Charging of PDA by
Attachable Modem
Systems and Methods for A 2/21/01 09/790,428
Wireless Modem Assembly
Systems and Methods for 5/18/01 09/858,672
Intelligent Inter-System Handoff
Multi-Mode Cradle Adapter for PDA 5/21/01
Object Oriented Software 5/21/01 09/961,508
Architecture for Software
Reconfigurable Wireless Modem
Systems and Methods for a Dialer 3/16/01 60/276,800
Function
Systems and Methods for Using a 6/8/01 09/877,886
Wireless Modem Card
Systems and Methods for An Energy 8/3/01 09/925,238
Storage Based Power Supply Circuit
Method and Apparatus for Sharing 9/17/01 60/322,535
an External Power Supply Between
a PDA and RF Wireless Modem
RF Wireless Modem - Minstrel 540 11/21/00 29/133,103
Systems and Methods for Removable 2/21/01 60/270,558
Attachment of an RF Wireless Modem
Dialer Application Display Screen 3/15/01 29/138,653
for a Portable Computing Device
Wireless Modem Sleeve 3/19/01 29/138,814
RF Wireless Modem - Minstrel S 11/21/00 29/133,108
Method and Apparatus for Low 10/11/00 60/239,776
Power Operation of RF Wireless
Modem
Method and Apparatus for a 9/11/00 60/231,675
Universal Switched Capacitor
Radio Frequency Receive Filter
Method and Apparatus for 8/24/00 60/227,723
Triggering a Mode Change in a
Software Radio
Icon for a Portable Computing 3/15/01 29/138,656
Device Screen
Icon for a Portable Computing 3/15/01 29/138,655
Device Screen
Icon for a Portable Computing 3/15/01 29/138,659
Device Screen
Systems and Methods for 9/21/01 09/961,459
Multi-Mode Wireless Communication
Wireless Modem 2/23/01 29/137,616
Display Screen for a Portable 3/15/01 29/138,654
Computing Device
Adaptive Modem Architecture for 8/11/00 60/224,727
Multiple Wireless Standards
Systems and Methods for a Dialer 3/16/01 60/276,800
Function
TRADEMARKS
Mark Registration Date Registration No.
---- ----------------- ----------------
NWIDIRECT March 2, 2001 76219167
NWIDIRECT.COM March 6, 2001 76220816
Expedite March 30, 2001 76236619
Novatel Wireless February 8, 2001 76208493
Lancer April 3, 2000 76016964
Merlin July 1, 1999 75742650
TRADEMARK APPLICATIONS
Mark Application Date Application No.
---- ---------------- ---------------
None.
MASK WORKS
Description Registration Date Registration No.
----------- ----------------- ----------------
None.
SCHEDULE B
TO SECURITY AGREEMENT
DEBTOR PROFILE
1. NAME. The legal name of Debtor is and the address of its chief
executive office is: Novatel Wireless, Inc., 9360 Towne Centre Drive, San Diego,
CA 92121.
2. ORGANIZATIONAL IDENTIFICATION NUMBER; FEDERAL EMPLOYER IDENTIFICATION
NUMBER. The Debtor's organizational identification number in its state of
incorporation is 2614230 and Debtor's federal employer identification number is
86-0824673.
3. STATE OF INCORPORATION; PRIOR NAMES. Debtor was incorporated on April
26, 1996 in the state of Delaware. Since its incorporation Debtor has had the
following legal names (other than its current legal name):
Date Debtor's Name
Prior Name Was Changed From Such Name
---------- --------------------------
None.
4. Debtor does business under the following trade names:
Trade Name Is This Name Registered? Registration No. Registration Date
---------- ------------------------ ---------------- -----------------
Novatel Wireless Yes 76208493 February 8, 2001
5. PLACE OF BUSINESS. Debtor has the following places of business:
Address Owner of Location
------- -----------------
9360 Towne Centre Drive, Suite 110 SICOR, Inc.
San Diego, CA 92121 19 Hughes
Irvine, CA 92618
6715 8th Street, N.E. Sun Life Insurance Company of Canada
Calgary, AB T2E 7H7 140 4th Avenue
Calgary AB T2P 3N3
6. ASSETS IN POSSESSION OF THIRD PARTIES. The following are names and
addresses of all persons or entities other than Debtor, such as lessees,
consignees, warehousemen or purchasers of chattel paper, which have possession
or are intended to have possession of any of the Collateral consisting of
instruments, chattel paper, inventory or equipment:
Name Mailing Address County State
---- --------------- ------ -----
A portion of Debtor's inventory, in the ordinary course of business, if
often held at third party contract manufacturers. Currently, Solectron is a
bailee for certain of our inventory, Silicon Valley Bank has a lien on the
inventory held by Solectron as further described in paragraph 8 below.
7. QUALIFICATION TO DO BUSINESS. Debtor is qualified to do business in
the following states:
o California
o Arizona
8. EXISTING SECURITY INTERESTS. Debtor's assets are subject to the
following security interest of Persons other than the Secured Party:
Assets Name of Secured Party
------ ---------------------
All assets Silicon Valley Bank
Agilient Technologies filed a UCC-1 securing approximately $350,000 in
software lease payments. The payments are secured by a purchase money security
interest in software evidenced by lease no. 90067081 entered into on October 30,
2000 and lease no. 72000333 entered into on April 27, 2000.
9. SUBSIDIARIES. Debtor has the following subsidiaries (list
jurisdiction of incorporation):
Novatel Wireless Solutions, Inc., a Delaware corporation
Novatel Wireless Technologies Ltd., incorporated in Alberta, Canada.
10. SECURITIES; INSTRUMENTS. The following is a complete list of all
stocks, bonds, debentures, notes and other securities and investment property
owned by Debtor (provide name of issuer, whether certificated or uncertificated,
certificate no. (if applicable), number of shares):
None, except for subsidiaries listed in Number 9 above.
11. BANK ACCOUNTS; SECURITIES ACCOUNTS: The following is a complete list
of all bank accounts and securities accounts maintained by Debtor (provide name
and address of depository bank (or brokerage firm), type of account and account
number):
See Schedule B-1 attached hereto.
SCHEDULE B-1
NOVATEL WIRELESS, INC.
SUMMARY OF CASH ACCOUNTS
Intentionally Omitted.