EXECUTION COPY
EXHIBIT 10.19
COLLATERAL RELEASE AGREEMENT
THIS COLLATERAL RELEASE AGREEMENT (this "Agreement") is dated as
of September ___, by and between MAI SYSTEMS CORPORATION., a Delaware
corporation ("MAI") on the one hand and CPI SECURITIES LP, a California limited
liability company, THE VALUE REALIZATION FUND, L.P., a Delaware limited
partnership, THE CANYON VALUE REALIZATION FUND (CAYMAN), LTD., a Cayman Islands
corporation, and GRS PARTNERS II (collectively, the "Lenders") on the other
hand.
R E C I T A L S
WHEREAS, MAI and Lenders are party to that certain Note Purchase
Agreement dated as of March 3, 1997 (including all annexes, exhibits and
schedules thereto, as from time to time amended, restated, supplemented or
otherwise modified, the "Note Purchase Agreement") pursuant to which MAI has
issued to individual Lenders certain 11% Subordinated Notes due 2003 in the
aggregate principal amount of $6,000,000.00 (the "Notes");
WHEREAS, MAI and Lenders have executed a Security Agreement dated
October 28, 1999 granting Lenders a security interest in various MAI assets (the
"Security Agreement"); and
WHEREAS, MAI has executed an Asset Purchase Agreement ("Optimal
Asset Purchase Agreement") dated September ___, 2001 with Optimal Robotics, Inc.
("Optimal") whereby MAI has agreed to sell certain of its Legacy assets,
principally its hardware maintenance contracts (excluding software maintenance)
and related inventory and equipment, as listed on Schedules 1.1.1, 1.1.2 and
1.1.3, (the "Assets") which are attached hereto and incorporated herein by this
reference; and
WHEREAS, Section 2.1.2 of the Optimal Asset Purchase Agreement
requires that MAI secure release of all outstanding liens affecting the Assets
duly executed by the secured parties, including the Lenders,
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
A G R E E M E N T
1. Incorporation of Recitals; Acknowledgments. The recitals
set forth above by this reference thereto are hereby incorporated into this
Agreement.
2. Agreement to Release Certain Collateral. On the Effective
Date, Lenders agree to release their lien on the Assets as provided for in the
Security Agreement, and to execute any and all related documentation to
effectuate said release.
3. Representations and Warranties. MAI hereby represents and
warrants to Lenders that, as of the Effective Date:
3.1 All of MAI's representations and warranties
contained in this Agreement are true and correct on and as of the
Effective Date, as if then made (other than representations and
warranties which expressly related to an earlier date);
3.2 The execution and delivery of this Agreement by MAI
and the performance of the transactions contemplated thereby, (a) are
within MAI's corporate power, (b) have been duly authorized by all
necessary or proper corporate action, and (c) when duly executed and
delivered by MAI, this Agreement shall constitute a legal, valid and
binding obligation of MAI enforceable against MAI in accordance with its
terms.
4. Effective Date. This Agreement shall become effective as
of the date first written above (the "Effective Date") upon Lender's receipt of
(i) counterparts hereof executed by MAI and Lenders, and (ii) mutual execution
and delivery of the Optimal Asset Purchase Agreement and the exhibits and
schedules thereto.
5. Reference to and Effect on the Loan Documents.
5.1 This Agreement shall be limited solely to the
matters expressly set forth herein and shall not (i) constitute an
amendment or waiver of any term or condition of the Note Purchase
Agreement, the Notes or the Security Agreement, (ii) prejudice any right
or rights which Lenders may now have or may have in the future under or
in connection with the Note Purchase Agreement, the Notes or the
Security Agreement, (iii) require Lenders to agree to a similar
transaction on a future occasion or (iv) create any rights herein to
another person, entity or other beneficiary or otherwise, except to the
extent specifically provided herein.
5.2 Except to the extent specifically provided in
Section 2 above, the respective provisions of the Note Purchase
Agreement, the Notes and the Security Agreement, shall not be amended,
modified, waived, impaired or otherwise affected hereby, and such
documents and the Obligations under each of them are hereby confirmed as
being in full force and effect.
6. Miscellaneous. The headings herein are for convenience of
reference only and shall not alter or otherwise affect the meaning hereof. No
amendment, modification,
termination or waiver of any provision of this Agreement, or any consent to any
departure by MAI therefrom, shall in any event be effective unless the same
shall be in writing and signed by all of the Lenders. Any waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which it was given.
7. Sole Benefit of Parties. This Agreement is solely for the
benefit of the parties hereto and their respective successors and assigns, and
no other person or entity shall have any right, benefit or interest under or
because of the existence of this Agreement.
8. Further Assurances. MAI and Lenders shall execute such
documents and perform such further acts as may be reasonably required or
desirable to carry out the provisions of this Agreement.
9. Counterparts. This Agreement may be executed in any number
of separate counterparts, each of which shall collectively and separately
constitute one agreement.
10. GOVERNING LAW. THIS AGREEMENT, AND ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE HEREOF, SHALL BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA
APPLICABLE TO CONTRACTS MADE AND PERFORMED IN THAT STATE AND ANY APPLICABLE LAWS
OF THE UNITED STATES OF AMERICA.
* * *
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
MAI SYSTEMS CORPORATION
By:______________________________
Name:
Title:
GRS PARTNERS II
By: Grosvenor Capital Management, L.P.,
its Administrator
By: GCM, L.L.C.,
its general partner
By: Grosvenor Holdings, L.L.C.
By:______________________________
Name:
Title:
THE VALUE REALIZATION FUND, L.P.
By: Canpartners Investments III, L.P.,
its general partner
By: Canyon Capital Advisors LLC,
its general partner
By:______________________________
Name:
Title: Managing Director
THE CANYON VALUE REALIZATION FUND (CAYMAN), LTD.
By: MeesPierson (Cayman) Limited,
its Administrator
By:______________________________
Name:
Title:
CPI SECURITIES LP
By: Canpartners Incorporated,
its general partner
By:______________________________
Name:
Title:
