AMENDED AND RESTATED SECURITY AGREEMENT
EXHIBIT
10.39
AMENDED
AND RESTATED SECURITY AGREEMENT
This
Amended and Restated Security Agreement, dated as of September 1, 2005
(the “Security
Agreement”),
by
and among Axeda Systems, Inc., a Delaware corporation (the “Company”),
Axeda
Systems Operating Company, Inc., a Massachusetts corporation and an indirect
wholly owned subsidiary of the Company (“ASOC”),
and
Axeda IP, Inc., a Nevada corporation and an indirect wholly owned subsidiary
of
the Company (“AIP”
and
together with ASOC and AIP, the “Guarantors”)
(the
Guarantors together with the Company, the “Obligors”),
and
the purchasers named in Schedule
1
hereto
(the “Purchasers”):
WITNESSETH:
WHEREAS,
the Obligors and the Purchasers are parties to the Senior Secured Bridge Note
Purchase Agreement, dated as of July 8, 2005 (as may be hereafter amended,
modified, substituted, extended or restated from time to time, including any
replacement agreement therefor, the “Senior
Purchase Agreement”),
pursuant to which the Company issued to the Purchasers its 7% Senior Secured
Bridge Notes with an aggregate principal amount of $600,000 (the “Senior
Notes”);
WHEREAS,
in connection with the Senior Purchase Agreement, the Obligors granted a first
priority security interest in collateral to the Purchasers pursuant to the
Security Agreement dated as of July 8, 2005 (the “Original
Security Agreement”);
WHEREAS,
the Obligors and the Purchasers have entered into the Senior Subordinated
Secured Bridge Note Purchase Agreement, dated as of the date hereof (as may
be
hereafter amended, modified, substituted, extended or restated from time to
time, including any replacement agreement therefor, the “Senior
Subordinated Purchase Agreement”
and
together with the Senior Purchase Agreement, the “Purchase
Agreements”),
pursuant to which the Company will issue to the Purchasers its 7% Senior
Subordinated Secured Bridge Notes with an aggregate principal amount of up
to
$900,000 (the “Senior
Subordinated Notes”
and
together with the Senior Notes, the “Notes”);
and
WHEREAS,
the Obligors, as an inducement to the Purchasers to purchase the Senior
Subordinated Notes pursuant to the Senior Subordinated Purchase Agreement,
desire to amend and restate the Original Security Agreement to grant the
Purchasers a priority security interest in the Collateral (as defined below)
to
secure the obligations under the Notes;
NOW,
THEREFORE, in consideration of the premises and the mutual covenants hereinafter
set forth, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the Obligors, the Obligors
hereby agree with the Purchasers as follows:
1. Certain
Definitions.
The
following terms used herein shall have the meanings ascribed to them under
the
Uniform Commercial Code in effect in the Commonwealth of Massachusetts on the
date hereof: Accounts, Chattel Paper, Documents, Equipment, Fixtures, General
Intangibles, Goods, Instruments, Inventory, Investment Property and Proceeds.
Terms not otherwise defined herein shall have the meaning assigned such terms
in
the Purchase Agreements.
2. Security
Agreement.
Each
Obligor hereby grants to the Purchasers a first and second priority security
interest in all of the following property now owned or at any time hereafter
acquired by the Obligor or in which the Obligor now has or at any time in the
future may acquire any right, title or interest: (i) Accounts;
(ii) Chattel Paper; (iii) Deposit Accounts; (iv) Documents;
(v) Equipment; (vi) Fixtures; (vii) General Intangibles (including without
limitation patents, letters patent, patent applications, trademarks, service
marks, trade names and copyrights and any applications therefor or
registrations, recordings, divisions, continuations, continuations-in-part,
renewals, reissues or extensions thereof); (viii) Investment Property; (ix)
Goods; (x) Instruments; (xi) Inventory; (xii) insurance
claims
and proceeds; (xiii) books and records, computer programs, databases
and
other computer materials of the Obligor pertaining to any and all of the
foregoing; and (xiv) to the extent not otherwise included, Proceeds
and
products of any and all of the foregoing (all such property described above
being referred to hereinafter collectively as the “Collateral”).
3. Obligations
Secured.
The
security interest granted hereby secures payment of all amounts owed pursuant
to
the Notes issued pursuant to the Purchase Agreements and all other obligations
of the Obligors to the Purchasers under the Bridge Loan Documents.
4. Obligors’
Representations, Warranties and Covenants.
The
Obligors represent, warrant and covenant that:
(a) Each
of
the Obligors’ principal place of business is 00 Xxxxxx Xxxx, Xxxxxxxxx,
Xxxxxxxxxxxxx 00000 and the Obligors keep their records concerning accounts,
contract rights and other property at that location. The Obligors will promptly
notify the Purchasers in writing of the establishment of any new place of
business where any of their Inventory or records, or any of the Collateral,
are
kept.
(b) The
Obligors will at all times keep in a manner reasonably satisfactory to the
Purchasers accurate and complete records of the Obligors’ Inventory and Accounts
and will keep such Inventory insured. The Purchasers shall be entitled, at
reasonable times and intervals after reasonable notice to the Company, and
without undue disruption to the Company’s business to enter any of the Obligors’
premises for purposes of inspecting the Collateral and the Obligors’ books and
records relating thereto.
(c) The
Obligors will not create, incur, assume or suffer to exist, or permit any
subsidiary to create, incur, assume or suffer to exist, any mortgage, deed
of
trust, pledge, lien, security interest or other charge or encumbrance (including
the lien or retained security title of a conditional vendor) of any nature,
upon
or with respect to any of their properties, now owned or hereinafter acquired,
or assign or otherwise convey any right to receive income, except that the
foregoing restrictions shall not apply to liens, security interests or other
charges or encumbrances (i) for taxes, assessments or governmental charges
or
levies on property of the Obligors or any subsidiary if the same shall not
at
the time be delinquent or thereafter can be paid without penalty, or are being
contested in good faith and by appropriate proceedings, (ii) imposed by law,
such as carriers’, warehousemen’s and mechanics’ liens and other similar liens
arising in the ordinary course of business or (iii) granted prior to the date
hereof to Laurus Master Fund, Ltd. pursuant to that certain Master Security
Agreement, dated as of October 4, 2004, and those other security and pledge
agreements related to the Laurus Debt.
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(d) The
Obligors shall not use the Collateral in violation of any applicable statute,
ordinance, law or regulation or in violation of any insurance policy maintained
by the Obligors with respect to the Collateral.
5. Financing
Statements.
The
Obligors shall execute any financing statements, or other notices appropriate
under applicable law (including without limitation the filing of notices with
the Patent and Trademark Office), in respect of any security interest created
pursuant to this Security Agreement which may at any time be required or which,
in the reasonable opinion of the Purchasers, may at any time be desirable.
In
the event that any recording or filing thereof (or the filing of any statements
of continuation or assignment of any financing statement) is required to protect
and preserve such lien or security interest, the Obligors shall execute the
same
at the time and in the manner requested by the Purchasers.
6. Obligors’
Rights Until Default.
In the
absence of any Event of Default (as defined in the Purchase Agreements), the
Obligors shall have the right to possess the Collateral, manage their property
and sell their inventory in the ordinary course of business.
7. Purchasers’
Rights Upon Default.
Upon an
Event of Default and at any time thereafter, the Purchasers of at least a
majority of the aggregate principal amount of the Notes then outstanding may
exercise any of the remedies available to them, including without limitation,
those available to a secured party under the Uniform Commercial Code as from
time to time in effect in the Commonwealth of Massachusetts. The Obligors shall
pay to the Purchasers of at least a majority of the aggregate principal amount
of the Notes then outstanding on demand any and all reasonable counsel fees
and
other expenses incurred by the Purchasers in exercising their available remedies
upon an Event of Default hereunder.
8. Amendment.
Any
provision in this Security Agreement or the Purchase Agreements to the contrary
notwithstanding, amendments to this Security Agreement may be made, and
compliance with any covenant or provision set forth herein may be omitted or
waived, only with the prior written consent thereto of the Purchasers of at
least a majority of the aggregate principal amount of all Notes then outstanding
and, in the case of amendments only, the Company. Any waiver or consent may
be
given subject to satisfaction of conditions stated therein and any waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given. No failure or delay on the part of any of the
Purchasers, or any other holder of any Note, in exercising any right, power
or
remedy hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right, power or remedy preclude any other or
further exercise thereof or the exercise of any other right, power or remedy
hereunder. Written notice of any waiver or consent effected under this Section
8
shall promptly be delivered by the Company to any Purchasers who did not execute
the same.
-3-
9. Notices.
All
notices and other communications required or permitted hereunder shall be in
writing and shall be given as provided in Section 15 of the Purchase
Agreements.
10. Cumulation
of Remedies.
The
rights and remedies under this Security Agreement are cumulative and not
exclusive of any rights, remedies, powers and privileges that may otherwise
be
available to the Purchasers.
11. Binding
Effect.
This
Security Agreement shall be binding upon and inure to the benefit of the
successors and assigns of the parties hereto, including without limitation,
all
future holders of the Notes. This Security Agreement constitutes the entire
agreement with respect to the matter set forth herein and supersedes the
Original Security Agreement and any prior agreements or understandings with
respect thereto.
12. Governing
Law.
This
Security Agreement shall be governed by, and construed in accordance with the
laws of the Commonwealth of Massachusetts, without giving effect to the
principles of conflict of laws thereof.
13. Counterparts.
This
Security Agreement may be executed and delivered (including by facsimile
transmission) in more than one counterpart, each of which shall be deemed to
be
an original and which, together, shall constitute one and the same
instrument.
14. Severability.
If any
provision of this Security Agreement shall be held to be illegal, invalid or
unenforceable, such illegality, invalidity or unenforceability shall attach
only
to such provision and shall not in any manner affect or render illegal, invalid
or unenforceable any other provision of this Security Agreement, and this
Security Agreement shall be carried out as if any such illegal, invalid or
unenforceable provision were not contained herein.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
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IN
WITNESS WHEREOF, this Security Agreement has been executed by the parties hereto
as of the date first above written.
THE
COMPANY:
AXEDA
SYSTEMS, INC.
By:
/s/
Xxxxxx X. Xxxxxxx Xx.
Name: Xxxxxx
X.
Xxxxxxx Xx.
Title:
Chief Executive Officer
THE
GUARANTORS:
AXEDA
SYSTEMS OPERATING COMPANY, INC.
By:
/s/
Xxxxx
X. Xxxxxxxxxx
Name:
Xxxxx X. Xxxxxxxxxx
Title:
Chief Financial Officer
AXEDA
IP,
INC.
By:
/s/
Xxxx
Xxxxxxx
Name:
Xxxx Xxxxxxx
Title:
Secretary
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THE
PURCHASERS:
JMI
EQUITY
FUND V, L.P.
By:
JMI Associates V, L.L.C.
its
General Partner
By:
Name:
Xxxxxxxx X. Xxxxxxx
Title:
Managing Member
JMI
EQUITY
FUND V (AI), L.P.
By:
JMI Associates V, L.L.C.
its
General Partner
By:
Name:
Xxxxxxxx X. Xxxxxxx
Title:
Managing Member
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Schedule
1
PURCHASERS:
|
JMI
EQUITY
FUND V, L.P.
0000
Xx.
Xxxx Xxxxxx
Xxxxxxxxx,
XX 00000
|
|
JMI
EQUITY
FUND V (AI), L.P.
0000
Xx.
Xxxx Xxxxxx
Xxxxxxxxx,
XX 00000
|
