SECURITY AGREEMENT
SECURITY AGREEMENT (as amended, restated, supplemented or otherwise
modified from time to time in accordance herewith and including all attachments,
exhibits and schedules hereto, the "Agreement"), dated as of November 30, 2006,
made by Remote Dynamics, Inc., a Delaware corporation (the "Grantor"), in favor
of the secured parties listed on Exhibit A to this Agreement and their permitted
successors and assigns (collectively, the "Secured Parties").
WHEREAS, the Grantor has issued or will issue separate series B
subordinated secured convertible promissory notes and separate original issue
discount series B subordinated secured convertible promissory notes (the
"Notes") to the Secured Parties pursuant to a Note and Warrant Purchase
Agreement, dated as of November 30, 2006 (the "Purchase Agreement"), by and
among the Grantor and the Secured Parties; and
WHEREAS, the Secured Parties and the Grantor agree that the Grantor
execute and deliver to the Secured Parties a security agreement providing for
the grant to the Secured Parties of a continuing security interest in all
personal property and assets of the Grantor, all in substantially the form
hereof to secure all Obligations (hereinafter defined).
NOW, THEREFORE, the parties agree as follows:
ARTICLE I. Definitions
Section 1.1. Definition of Terms Used Herein. All capitalized terms used
herein and not defined herein have the respective meanings provided therefor in
the Purchase Agreement or the Notes, as applicable. All terms defined in the
Uniform Commercial Code (hereinafter defined) as in effect from time to time and
used herein and not otherwise defined herein (whether or not such terms are
capitalized) have the same definitions herein as specified therein.
Section 1.2. Definition of Certain Terms Used Herein. As used herein, the
following terms have the following meanings:
"Collateral" means all accounts receivable of the Grantor and all personal
and fixed property of every kind and nature, including, without limitation, all
furniture, fixtures, equipment, raw materials, inventory, as extracted
collateral, or other goods, accounts, contract rights, rights to the payment of
money, insurance refund claims and all other insurance claims and proceeds, tort
claims, chattel paper, documents, instruments, securities and other investment
property, deposit accounts, rights to proceeds of letters of credit and all
general intangibles including, without limitation, all tax refund claims,
license fees, patents, patent licenses, patent applications, trademarks,
trademark licenses, trademark applications, trade names, copyrights, copyright
licenses, copyright applications, rights to ▇▇▇ and recover for past
infringement of patents, trademarks and copyrights, computer programs, computer
software, engineering drawings, service marks, customer lists, goodwill, and all
licenses, permits, agreements of any kind or nature pursuant to which the
Grantor possesses, uses or has authority to possess or use property (whether
tangible or intangible) of others or others possess, use or have authority to
possess or use property (whether tangible or intangible) of the Grantor, and all
recorded data of any kind or nature, regardless of the medium of recording
including, without limitation, all books and records, software, writings, plans,
specifications and schematics, whether now owned or hereinafter acquired by the
Grantor; and all proceeds and products of each of the foregoing.
"Default" means any event or circumstance which, with the giving of
notice, the lapse of time, or both, would (if not cured, waived, or otherwise
remedied during such time) constitute an Event of Default.
"Event of Default" has the meaning specified in the Notes.
"Indemnitees" has the meaning specified in Section 7.5(b).
"Lien" means: (i) any interest in property securing an obligation owed to,
or a claim by, a Person other than the owner of the property, whether such
interest is based on the common law, statute, or contract, and including a
security interest, charge, claim, or lien arising from a mortgage, deed of
trust, encumbrance, pledge, hypothecation, assignment, deposit arrangement,
agreement, security agreement, conditional sale or trust receipt or a lease,
consignment or bailment for security purposes; (ii) to the extent not included
under clause (i), any reservation, exception, encroachment, easement,
right-of-way, covenant, condition, restriction, lease or other title exception
or encumbrance affecting property; and (iii) any contingent or other agreement
to provide any of the foregoing.
"Notes" has the meaning assigned to such term in the first recital of this
Agreement.
"Obligations" means all indebtedness, liabilities, obligations, covenants
and duties of the Grantor to the Secured Parties of every kind, nature and
description, direct or indirect, absolute or contingent, due or not due,
contractual or tortious, liquidated or unliquidated, arising by operation of law
or otherwise, now existing of hereafter arising under or in connection with the
Notes, this Agreement or the other Transaction Documents.
"Registered Organization" means an entity formed by filing a registration
document with a United States Governmental Authority, such as a corporation,
limited partnership or limited liability company.
"Security Interest" has the meaning specified in Section 2.1 of this
Agreement.
"Uniform Commercial Code" means the Uniform Commercial Code from time to
time in effect in the State of New York.
ARTICLE II. Security Interest
Section 2.1. Security Interest. As security for the payment and
performance, in full of the Obligations, and any extensions, renewals,
modifications or refinancings of the Obligations, the Grantor hereby bargains,
sells, conveys, assigns, sets over, mortgages, pledges, hypothecates and
transfers to the Secured Parties, and hereby grants to the Secured Parties,
their successors and assigns, a security interest in, all of such Grantor's
right, title and interest in, to and under the Collateral and all hereinafter
acquired Collateral (the "Security Interest").
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Section 2.2. No Assumption of Liability. The Security Interest is granted
as security only and shall not subject the Secured Parties to, or in any way
alter or modify, any obligation or liability of the Grantor with respect to or
arising out of the Collateral.
ARTICLE III. Representations and Warranties
The Grantor represents and warrants to the Secured Parties that:
Section 3.1. Title and Authority. The Grantor has good and valid rights in
and title to the Collateral with respect to which it has purported to grant a
security interest hereunder and has full power and authority to grant to the
Secured Parties the Security Interest and to execute, deliver and perform its
obligations in accordance with the terms of this Agreement, without the consent
or approval of any other Person other than any consent or approval which has
been obtained.
Section 3.2. Filings; Actions to Achieve Perfection. Fully executed
Uniform Commercial Code financing statements (including fixture filings, as
applicable) or other appropriate filings, recordings or registrations containing
a description of the Collateral have been delivered to the Secured Parties for
filing in each United States governmental, municipal or other office specified
in Schedule A, which are all the filings, recordings and registrations that are
necessary to publish notice of and protect the validity of and to establish a
legal, valid and perfected security interest in favor of the Secured Parties in
respect of all Collateral in which the Security Interest may be perfected by
filing, recording or registration in the United States (or any political
subdivision thereof) and its territories and possessions, and no further or
subsequent filing, refiling, recording, rerecording, registration or
reregistration is necessary in any such jurisdiction, except as provided under
applicable law with respect to the filing of continuation statements or with
respect to the filing of amendments or new filings to reflect the change of the
Grantor's name, location, identity or corporate structure. The Grantor's name is
listed in the preamble of this Agreement identically to how it appears on its
certificate of incorporation or other organizational documents.
Section 3.3. Validity and Priority of Security Interest. The Security
Interest constitutes (a) a legal and valid security interest in all the
Collateral securing the payment and performance of the Obligations, (b) subject
only to the filings described in Section 3.2 above and other previously
perfected security interests in the Collateral listed on Schedule 3.3 to this
Agreement ("Existing Liens"), a perfected security interest in all Collateral in
which a security interest may be perfected by filing, recording or registration
in the United States pursuant to the Uniform Commercial Code or other applicable
law in the United States (or any political subdivision thereof) and its
territories and possessions or any other country, state or nation (or any
political subdivision thereof). The Security Interest is and shall be
subordinate to any other Existing Lien on any of the Collateral.
Section 3.4. Absence of Other Liens. The Grantor's Collateral is owned by
the Grantor free and clear of any Lien other than Existing Liens. Without
limiting the foregoing and except as set forth on Schedule 3.4 to this
Agreement, the Grantor has not filed or consented to any filing of any financing
statement or similar filing in favor of any Person other than the Secured
Parties, nor permitted the granting or assignment of a security interest or
permitted perfection of any security interest in the Collateral in favor of any
Person other than the Secured Parties. The Grantor's having possession of all
instruments, certificates and cash constituting Collateral from time to time and
the filing of financing statements in the offices referred to in Schedule A
hereto results in the perfection of such security interest. Such Security
Interest is, or in the case of Collateral in which the Grantor obtain rights
after the date hereof, will be, a perfected security interest. Such notices,
filings and all other action necessary or desirable to perfect and protect such
security interest have been duly taken.
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Section 3.5. Valid and Binding Obligation. This Agreement constitutes the
legal, valid and binding obligation of the Grantor, enforceable against the
Grantor in accordance with its terms, except (i) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium, and other laws of general
application affecting enforcement of creditors' rights generally, (ii) as
limited by laws relating to the availability of specific performance, injunctive
relief, or other equitable remedies, and (iii) to the extent the indemnification
provisions contained in this Agreement may be limited by applicable federal or
state securities laws.
ARTICLE IV. Covenants
Section 4.1. Change of Name; Location of Collateral; Place of Business,
State of Formation or Organization.
(a) The Grantor shall notify the Secured Parties in writing at least
eleven (11) days prior to any change (i) in its corporate name or in any
trade name used to identify it in the conduct of its business or in the
ownership of its properties, (ii) in the location of its chief executive
office, its principal place of business, any office in which it maintains
books or records relating to Collateral owned by it (including the
establishment of any such new office or facility), (iii) in its identity
or corporate structure such that a filed filing made under the Uniform
Commercial Code becomes misleading or (iv) in its Federal Taxpayer
Identification Number. Furthermore, the Grantor shall not effect or permit
any change referred to in the preceding sentence unless all filings have
been made under the Uniform Commercial Code or otherwise that are required
in order for the Secured Parties to continue at all times following such
change to have a valid, legal and perfected security interest in all the
Collateral subject to the Existing Liens.
(b) Without limiting Section 4.1(a), without the prior written
consent of the Secured Parties in each instance, the Grantor shall not
change its (i) principal residence, if it is an individual, (ii) place of
business, if it has only one place of business and is not a Registered
Organization, (iii) principal place of business, if it has more than one
place of business and is not a Registered Organization, or (iv) state of
incorporation, formation or organization, if it is a Registered
Organization.
Section 4.2. Records. The Grantor shall maintain, at its own cost and
expense, such complete and accurate records with respect to the Collateral owned
by it as is consistent with its current practices and in accordance with such
prudent and standard practices used in industries that are the same as or
similar to those in which the Grantor is engaged, but in any event to include
complete accounting records indicating all payments and proceeds received with
respect to any part of the Collateral, and, at such time or times as the Secured
Parties may reasonably request, promptly to prepare and deliver to the Secured
Parties a duly certified schedule or schedules in form and detail satisfactory
to the Secured Parties showing the identity, amount and location of any and all
Collateral.
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Section 4.3. Periodic Certification; Notice of Changes. In the event there
should at any time be any change in the information represented and warranted
herein or in the documents and instruments executed and delivered in connection
herewith, the Grantor shall immediately notify the Secured Parties in writing of
such change (this notice requirement shall be in extension of and shall not
limit or relieve the Grantor of any other covenants hereunder).
Section 4.4. Protection of Security. The Grantor shall, at its own cost
and expense, take any and all actions reasonably necessary to defend title to
the Collateral against all persons and to defend the Security Interest of the
Secured Parties in the Collateral and the priority thereof against any Lien
other than the Existing Liens.
Section 4.5. Inspection and Verification. The Secured Parties and such
persons as the Secured Parties may reasonably designate shall, upon reasonable
advanced notice and during normal business hours, have the right to inspect the
Collateral, all records related thereto (and to make extracts and copies from
such records) and the premises upon which any of the Collateral is located, to
discuss the Grantor's affairs with the officers of the Grantor and its
independent accountants and to verify under reasonable procedures the validity,
amount, quality, quantity, value, condition and status of, or any other matter
relating to, the Collateral, including, in the case of collateral in the
possession of any third Person, by contacting any account debtor or third Person
possessing such Collateral for the purpose of making such a verification.
Out-of-pocket expenses in connection with any inspections by representatives of
the Secured Parties shall be (a) the obligations of the Grantor with respect to
any inspection after the Secured Parties' demand payment of the Notes or (b) the
obligation of the Secured Parties in any other case.
Section 4.6. Taxes; Encumbrances. At their option, the Secured Parties may
discharge, Liens other than Existing Liens at any time levied or placed on the
Collateral and may pay for the maintenance and preservation of the Collateral to
the extent the Grantor fails to do so and the Grantor shall reimburse the
Secured Parties on demand for any payment made or any expense incurred by the
Secured Parties pursuant to the foregoing authorization; provided, however, that
nothing in this Section shall be interpreted as excusing the Grantor from the
performance of, or imposing any obligation on the Secured Parties to cure or
perform, any covenants or other obligation of the Grantor with respect to any
Lien or maintenance or preservation of Collateral as set forth herein.
Section 4.7. Use and Disposition of Collateral. The Grantor shall not make
or permit to be made an assignment, pledge or hypothecation of any Collateral or
shall grant any other Lien in respect of the Collateral without the prior
written consent of the Secured Parties. The Grantor shall not make or permit to
be made any transfer of any Collateral other than with respect to Existing Liens
and other liens approved by the Secured Parties and the Grantor shall remain at
all times in possession of the Collateral owned by it except in the ordinary
course of business.
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Section 4.8. Insurance/Notice of Loss. Within a reasonable period of time
following the date of this Agreement, Grantor, at its own expense, shall
maintain or cause to be maintained insurance covering physical loss or damage to
the Collateral as described on Schedule 4.8 to this Agreement. In extension of
the foregoing and without limitation, such insurance shall be payable to the
Secured Parties as loss payee under a "standard" loss payee clause, and the
Secured Parties shall be listed as an "additional insured" on Grantor's general
liability insurance. Such insurance shall not be terminated, cancelled or not
renewed for any reason, including non-payment of insurance premiums, unless the
insurer shall have provided the Secured Parties at least 30 days prior written
notice. Grantor irrevocably makes, constitutes and appoints the Secured Parties
(and all officers, employees or agents designated by the Secured Parties) as its
true and lawful agent and attorney-in-fact for the purpose, at any time
following the Secured Parties' demand for payment of the Notes during the
continuance of an Event of Default, of making, settling and adjusting claims in
respect of Collateral under policies of insurance, endorsing the name of Grantor
on any check, draft, instrument or other item of payment for the proceeds of
such policies of insurance and for making all determinations and decisions with
respect thereto. In the event that Grantor at any time or times shall fail to
obtain or maintain any of the policies of insurance required hereby or to pay
any premium in whole or part relating thereto, the Secured Parties may, without
waiving or releasing any obligation or liability of Grantor hereunder, in their
sole discretion, obtain and maintain such policies of insurance and pay such
premium and take any other actions with respect thereto as the Secured Parties
reasonably deem advisable. All sums disbursed by the Secured Parties in
connection and in accordance with this Section, including reasonable attorneys'
fees, court costs, expenses and other charges relating thereto, shall be payable
upon demand, by Grantor to the Secured Parties and shall be additional
Obligations secured hereby. Grantor shall promptly notify the Secured Parties if
any material portion of the Collateral owned or held by Grantor is damaged or
destroyed. The proceeds of any casualty insurance in respect of any casualty
loss of any of the Collateral shall (i) so long as the Secured Parties have not
demanded payment of the Notes during the continuance of an Event of Default, be
disbursed to Grantor for direct application by Grantor solely to the repair or
replacement of Grantor's property so damaged or destroyed, and (ii) in all other
circumstances, be held by the Secured Parties as cash collateral for the
Obligations. The Secured Parties may, at their sole option, disburse from time
to time all or any part of such proceeds so held as cash collateral, upon such
terms and conditions as the Secured Parties may reasonably prescribe, for direct
application by the Secured Parties solely to the repair or replacement of
Grantor's property so damaged or destroyed, or Grantor may apply all or any part
of such proceeds to the Obligations.
Section 4.9. Legend. Grantor shall legend, in form and manner satisfactory
to the Secured Parties, its accounts and its books, records and documents
evidencing or pertaining thereto with an appropriate reference to the fact that
such accounts have been assigned to the Secured Parties and that the Secured
Parties have a security interest therein.
ARTICLE V. Further Assurances; Power of Attorney
Section 5.1. Further Assurances. Grantor shall, at its own expense,
execute, acknowledge, deliver and cause to be duly filed all such further
instruments and documents and take all such actions as the Secured Parties may
from time to time reasonably request to better assure, preserve, protect and
perfect the Security Interest and the rights and remedies created hereby,
including the payment of any fees and taxes required in connection with the
execution and delivery of this Agreement, the granting of the Security Interest
and the filing of any financing statements (including fixture filings) or other
documents in connection herewith or therewith. If any amount payable under or in
connection with any of the Collateral shall be or become evidenced by any
promissory note or other instrument, such note or instrument shall be
immediately pledged and delivered to the Secured Parties, duly endorsed in a
manner satisfactory to the Secured Parties.
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Section 5.2. Power of Attorney.
(a) Grantor hereby irrevocably (as a power coupled with an interest)
constitutes and appoints the Collateral Agent (as defined in Section 7.14
hereof) and all officers, employees or agents designated by the Collateral
Agent, its attorney-in-fact with full power of substitution, for the benefit of
the Secured Parties,
(i) to take all appropriate action and to execute all documents and
instruments that may be necessary or desirable to accomplish the purposes
of this Agreement, and without limiting the generality of the foregoing,
Grantor hereby grants the power to file one or more financing statements
(including fixture filings), continuation statements, filings with the
United States Patent and Trademark Office or United States Copyright
Office (or any successor office or any similar office in any other
country) or other documents for the purpose of perfecting, confirming,
continuing, enforcing or protecting the Security Interest granted by
Grantor, without the signature of Grantor, and naming Grantor as debtor
and the Collateral Agent and/or the Secured Parties as secured party; and
(ii) at any time following the Secured Parties' demand for payment
of the Notes during the continuance of an Event of Default (i) to receive,
endorse, assign and/or deliver any and all notes, acceptances, checks,
drafts, money orders or other evidences of payment relating to the
Collateral or any part thereof; (ii) to demand, collect, receive payment
of, give receipt for and give discharges and releases of all or any of the
Collateral; (iii) to sign the name of Grantor on any invoice or ▇▇▇▇ of
lading relating to any of the Collateral; (iv) to send verifications of
accounts to any account debtor or any other Person liable for an account;
(v) to commence and prosecute any and all suits, actions or proceedings at
law or in equity in any court of competent jurisdiction to collect or
otherwise realize on all or any of the Collateral or to enforce any rights
in respect of any Collateral; (vi) to settle, compromise, compound, adjust
or defend any actions, suits or proceeding relating to all or any of the
Collateral; and (vii) to use, sell, assign, transfer, pledge, make any
agreement with respect to or otherwise deal with all or any of the
Collateral, and to do all other acts and things necessary to carry out the
purposes of this Agreement, as fully and completely as though the Secured
Parties were the absolute owner of the Collateral for all purposes;
provided, however, that nothing herein contained shall be construed as
requiring or obligating the Secured Parties to make any commitment or to
make any inquiry as to the nature or sufficiency of any payment received
by the Secured Parties, or to present or file any claim or notice, or to
take any action with respect to the Collateral or any part thereof or the
moneys due or to become due in respect thereof or any property covered
thereby, and no action taken or omitted to be taken by the Secured Parties
with respect to the Collateral or any part thereof shall give rise to any
defense, counterclaim or offset in favor of Grantor or to any claim or
action against the Secured Parties.
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(b) The provisions of this Article shall in no event relieve Grantor
of any of its obligations hereunder with respect to the Collateral or any part
thereof or impose any obligation on the Secured Parties to proceed in any
particular manner with respect to the Collateral or any part thereof, or in any
way limit the exercise by the Secured Parties of any other or further right
which it may have on the date of this Agreement or hereafter, whether hereunder,
by law or otherwise.
ARTICLE VI. Remedies
Section 6.1. Remedies upon Default.
(a) Upon the occurrence and during the continuance of an Event of
Default, Grantor agrees to deliver each item of its Collateral to the
Secured Parties on demand, and it is agreed that the Secured Parties shall
have the right to take any of or all the following actions at the same or
different times (but at all times subject to any Existing Liens): with or
without legal process and with or without prior notice or demand for
performance, to take possession of the Collateral and without liability
for trespass to enter any premises where the Collateral may be located for
the purpose of taking possession of or removing the Collateral, exercise
Grantor's right to ▇▇▇▇ and receive payment for completed work and,
generally, to exercise any and all rights afforded to a secured party
under the Uniform Commercial Code or other applicable law. Without
limiting the generality of the foregoing, Grantor agrees that the Secured
Parties shall have the right, subject to the mandatory requirements of
applicable law, to sell or otherwise dispose of all or any part of the
Collateral, at public or private sale or at any broker's board or on any
securities exchange, for cash, upon credit or for future delivery as the
Secured Parties shall deem appropriate. The Secured Parties shall be
authorized at any such sale (if it deems it advisable to do so) to
restrict the prospective bidders or purchasers to persons who will
represent and agree that they are purchasing the Collateral for their own
account for investment and not with a view to the distribution or sale
thereof, and upon consummation of any such sale the Secured Parties shall
have the right to assign, transfer and deliver to the purchaser or
purchasers thereof the Collateral so sold. Each such purchaser at any such
sale shall hold the property sold absolutely, free from any claim or right
on the part of Grantor, and Grantor hereby waives (to the extent permitted
by law) all rights of redemption, stay and appraisal which Grantor now has
or may at any time in the future have under any rule of law or statute now
existing or hereafter enacted.
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(b) The Secured Parties shall give Grantor ten (10) days' written
notice (which Grantor agrees is reasonable notice within the meaning of
Section 9-504(3) of the Uniform Commercial Code) of the Secured Parties'
intention to make any sale of Collateral. Such notice, in the case of a
public sale, shall state the time and place for such sale and, in the case
of a sale at a broker's board or on a securities exchange, shall state the
board or exchange at which such sale is to be made and the day on which
the Collateral, or portion thereof, will first be offered for sale at such
board or exchange. Any such public sale shall be held at such time or
times within ordinary business hours and at such place or places as the
Secured Parties may fix and state in the notice (if any) of such sale. At
any such sale, the Collateral, or portion thereof, to be sold may be sold
in one lot as an entirety or in separate parcels, as the Secured Parties
may (in their sole and absolute discretion) determine. The Secured Parties
shall not be obligated to make any sale of any Collateral if it shall
determine not to do so, regardless of the fact that notice of sale of such
Collateral shall have been given. The Secured Parties may, without notice
or publication, adjourn any public or private sale or cause the same to be
adjourned from time to time by announcement at the time and place fixed
for sale, and such sale may, without further notice, be made at the time
and place to which the same was so adjourned. In case any sale of all or
any part of the Collateral is made on credit or for future delivery, the
Collateral so sold may be retained by the Secured Parties until the sale
price is paid by the purchaser or purchasers thereof, but the Secured
Parties shall not incur any liability in case any such purchaser or
purchasers shall fail to take up and pay for the Collateral so sold and,
in case of any such failure, such Collateral may be sold again upon like
notice. At any public (or, to the extent permitted by law, private) sale
made pursuant to this Section, the Secured Parties may bid for or
purchase, free (to the extent permitted by law) from any right of
redemption, stay, valuation or appraisal on the part of Grantor (all said
rights being also hereby waived and released to the extent permitted by
law), the Collateral or any part thereof offered for sale and may make
payment on account thereof by using any claim then due and payable to the
Secured Parties from Grantor as a credit against the purchase price, and
the Secured Parties may, upon compliance with the terms of sale, hold,
retain and dispose of such property without further accountability to
Grantor therefor. For purposes hereof, a written agreement to purchase the
Collateral or any portion thereof shall be treated as a sale thereof; the
Secured Parties shall be free to carry out such sale pursuant to such
agreement and Grantor shall not be entitled to the return of the
Collateral or any portion thereof subject thereto, notwithstanding the
fact that after the Secured Parties shall have entered into such an
agreement all Obligations have been paid in full. As an alternative to
exercising the power of sale herein conferred upon it, the Secured Parties
may proceed by a suit or suits at law or in equity to foreclose this
Agreement and to sell the Collateral or any portion thereof pursuant to a
judgment or decree of a court or courts having competent jurisdiction or
pursuant to a proceeding by a court-appointed receiver.
Section 6.2. Application of Proceeds. The Secured Parties shall apply the
proceeds of any collection or sale of the Collateral, as well as any Collateral
consisting of cash, as follows:
(a) FIRST, to the payment of all reasonable costs and expenses
incurred by the Secured Parties in connection with such collection or sale or
otherwise in connection with this Agreement or any of the Obligations, including
all court costs and the fees and expenses of its agents and legal counsel, and
any other costs or expenses incurred in connection with the exercise of any
right or remedy hereunder, under the Purchase Agreement, the Notes and the other
Transaction Documents;
(b) SECOND, to the payment in full of the Obligations; and
(c) THIRD, to Grantor, its successors or assigns, or to whomsoever
may be lawfully entitled to receive the same, or as a court of competent
jurisdiction may otherwise direct.
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Subject to the foregoing, the Secured Parties shall have absolute
discretion as to the time of application of such proceeds, moneys or balances in
accordance with this Agreement. Upon any sale of the Collateral by the Secured
Parties (including pursuant to a power of sale granted by statute or under a
judicial proceeding), the receipt of any such proceeds, moneys or balances by
the Secured Parties or of the officer making the sale shall be a sufficient
discharge to the purchaser or purchasers of the Collateral so sold and such
purchaser or purchasers shall not be obligated to see to the application of any
part of the purchase money paid over to the Secured Parties or such officer or
be answerable in any way for the misapplication thereof.
Section 6.3. Grant of License to Use Intellectual Property. For the
purpose of enabling the Secured Parties to exercise rights and remedies under
this Article at such time as the Secured Parties shall be lawfully entitled to
exercise such rights and remedies, Grantor hereby grants to the Secured Parties
an irrevocable, non-exclusive license (exercisable without payment of royalty or
other compensation to Grantor) to use, license or sub-license any of the
Collateral consisting of intellectual property now owned or hereafter acquired
by Grantor, and wherever the same may be located, and including in such license
reasonable access to all media in which any of the licensed items may be
recorded or stored and to all computer software and programs used for the
compilation or printout thereof. The use of such license by the Secured Parties
may be exercised, at the option of the Secured Parties, only following the
Secured Parties' demand for payment of the Notes during the continuance of an
Event of Default.
ARTICLE VII. Miscellaneous
Section 7.1. Notices. All communications and notices hereunder to the
Grantor and to the Secured Parties shall (except as otherwise expressly
permitted herein) be in writing and delivered to the Grantor or the Secured
Parties, as the case may be, as provided in the Purchase Agreement.
Section 7.2. Security Interest Absolute. All rights of the Secured Parties
hereunder, the Security Interest and all obligations of Grantor hereunder shall
be absolute and unconditional irrespective of (a) any lack of validity or
enforceability of the Purchase Agreement, the Notes, any Transaction Document or
any agreement with respect to any of the Obligations or any other agreement or
instrument relating to any of the foregoing, (b) any change in the time, manner
or place of payment of, or in any other term of, all or any of the Obligations,
or any other amendment or waiver of or any consent to any departure from the
Purchase Agreement, the Notes, any Transaction Document or any other agreement
or instrument, (c) any exchange, release or non-perfection of any Lien on other
collateral, or any release or amendment or waiver of or consent under or
departure from any guarantee, securing or guaranteeing all or any of the
Obligations, or (d) any other circumstance that might otherwise constitute a
defense available to, or a discharge of, Grantor in respect of the Obligations
or this Agreement.
Section 7.3. Survival of Agreement. All covenants, agreements,
representations and warranties made by Grantor herein and in the certificates or
other instruments prepared or delivered in connection with or pursuant to this
Agreement shall be considered to have been relied upon by the Secured Parties
and shall survive the making of the loan and the execution and delivery to the
Secured Parties of the Notes, regardless of any investigation made by the
Secured Parties or on their behalf; and shall continue in full force and effect
until this Agreement shall terminate.
10
Section 7.4. Binding Effect; Several Agreement; Successors and Assigns.
This Agreement shall become effective as to Grantor when a counterpart hereof
executed on behalf of Grantor shall have been delivered to the Secured Parties
and a counterpart hereof shall have been executed on behalf of the Secured
Parties, and thereafter shall be binding upon Grantor and the Secured Parties
and their respective successors and assigns, and shall inure to the benefit of
Grantor, the Secured Parties and their respective successors and assigns, except
that Grantor shall not have the right to assign or transfer its rights or
obligations hereunder or any interest herein or in the Collateral (and any such
assignment or transfer shall be void) except as expressly contemplated by this
Agreement, the Purchase Agreement, the Notes or the other Transaction Documents.
Section 7.5. Secured Parties' Fees and Expense; Indemnification.
(a) Grantor agrees to pay upon demand to the Secured Parties the
amount of any and all reasonable expenses, including all reasonable fees,
disbursements and other charges of its counsel and of any experts or
agents, which the Secured Parties may incur in connection with (i) the
administration of this Agreement (including the customary fees and charges
of the Secured Parties for any audits conducted by them or on their behalf
with respect to the accounts inventory), (ii) the custody or preservation
of, or the sale of, collection from or other realization upon any of the
Collateral, (iii) the exercise, enforcement or protection of any of the
rights of the Secured Parties hereunder or (iv) the failure of Grantor to
perform or observe any of the provisions hereof.
(b) Grantor agrees to indemnify the Secured Parties and the agent,
contractors and employees of the Secured Parties (collectively, the
"Indemnitees") against, and hold each of them harmless from, any and all
losses, claims, damages, liabilities and related expenses, including
reasonable fees, disbursements and other charges of counsel, incurred by
or asserted against any of them arising out of, in any way connected with,
or as a result of, the execution, delivery, or performance of this
Agreement or any agreement or instrument contemplated hereby or any claim,
litigation, investigation or proceeding relating hereto or to the
Collateral, whether or not any Indemnitee is a party thereto; provided
that such indemnity shall not, as to any Indemnitee, be available to the
extent that such losses, claims, damages, liabilities or related expenses
are determined by a court of competent jurisdiction by final and
nonappealable judgment to have resulted from the gross negligence or
willful misconduct of such Indemnitee.
(c) Any such amounts payable as provided hereunder shall be
additional Obligations secured hereby. The provisions of this Section
shall remain operative and in full force and effect regardless of the
termination of this Agreement, the Purchase Agreement, the Notes or the
other Transaction Documents, the consummation of the transactions
contemplated hereby, the repayment of any of the Obligations, the
invalidity or unenforceability of any term or provision of this Agreement,
the Purchase Agreement, the Notes or the other Transaction Documents, or
any investigation made by or on behalf of the Secured Parties. All amounts
due under this Section shall be payable on written demand therefor.
Section 7.6. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT
GIVING EFFECT TO ANY OF THE CONFLICTS OF LAW PRINCIPLES WHICH WOULD RESULT IN
THE APPLICATION OF THE SUBSTANTIVE LAW OF ANOTHER JURISDICTION. THIS AGREEMENT
SHALL NOT BE INTERPRETED OR CONSTRUED WITH ANY PRESUMPTION AGAINST THE PARTY
CAUSING THIS AGREEMENT TO BE DRAFTED.
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Section 7.7. Waivers; Amendment.
(a) No failure or delay of the Secured Parties in exercising any
power or right hereunder shall operate as a waiver thereof, nor shall any single
or partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any other or
further exercise thereof or the exercise of any other right or power. The rights
and remedies of the Secured Parties hereunder and under the Purchase Agreement
are cumulative and are not exclusive of any rights or remedies that they would
otherwise have. No waiver of any provisions of this Agreement, the Purchase
Agreement, the Notes or the other Transaction Documents or consent to any
departure by Grantor therefrom shall in any event be effective unless the same
shall be permitted by paragraph (b) below, 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 Grantor in any case shall entitle Grantor to any other
or further notice or demand in similar or other circumstances.
(b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to an agreement or agreements, in writing
entered into by the Secured Parties and Grantor.
Section 7.8. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER
OR IN CONNECTION WITH THIS AGREEMENT, THE PURCHASE AGREEMENT OR THE NOTES. EACH
PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT, THE PURCHASE AGREEMENT AND THE NOTES, AS APPLICABLE, BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
Section 7.9. Severability. In the event any one or more of the provisions
contained in this Agreement should be held 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
(it being understood that the invalidity of a particular provision in a
particular jurisdiction shall not in and of itself affect the validity of such
provision in any other jurisdiction). The parties shall endeavor in good-faith
negotiations to replace the invalid, illegal or unenforceable provisions with
valid provisions the economic effect of which comes as close as possible to that
of the invalid, illegal or unenforceable provisions.
Section 7.10. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original but all of which when
taken together shall constitute but one contract. Each party shall be entitled
to rely on a facsimile signature of any other party hereunder as if it were an
original.
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Section 7.11. Jurisdiction; Consent to Service of Process.
(a) Grantor hereby irrevocably and unconditionally submits, for
itself and its property, to the nonexclusive jurisdiction of any New York
State court or Federal court of the United States of America sitting in
New York City, and any appellate court from any thereof, in any action or
proceeding arising out of or relating to this Agreement, the Purchase
Agreement or the Notes, or for recognition or enforcement of any judgment,
and each of the parties hereto hereby irrevocably and unconditionally
agrees that all claims in respect of any such action or proceeding may be
heard and determined in such New York State or, to the extent permitted by
law, in such Federal court. Each of the parties hereto agrees that a final
judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other
manner provided by law. Nothing in this Agreement shall affect any right
that the Secured Parties may otherwise have to bring any action or
proceeding relating to this Agreement, the Purchase Agreement, the Notes
or the other Transaction Documents against Grantor or its properties in
the courts of any jurisdiction.
(b) Grantor hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection which
it may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement, the Purchase
Agreement, the Notes or the other Transaction Documents in any New York
State or Federal court. Each of the parties hereto hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an
inconvenient forum to the maintenance of such action or proceeding in any
such court.
(c) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 7.1. Nothing in this
Agreement will affect the right of any party to this Agreement to process
in any other manner permitted by law.
Section 7.12. Termination. This Agreement and the Security Interest shall
terminate when all the Obligations have been paid in full, at which time the
Secured Parties shall execute and deliver to Grantor, at Grantor's expense, all
Uniform Commercial Code termination statements and similar documents which
Grantor shall reasonably request to evidence such termination. Any execution and
delivery of termination statements or documents pursuant to this Section shall
be without recourse to or warranty by the Secured Parties.
Section 7.13. Prejudgment Remedy Waiver. Grantor acknowledges that this
Agreement, the Purchase Agreement, the Notes and the other Transaction Documents
evidence a commercial transaction and that it could, under certain circumstances
have the right, to notice of and hearing on the right of the Secured Parties to
obtain a prejudgment remedy, such as attachment, garnishment and/or replevin,
upon commencing any litigation against Grantor. Notwithstanding, Grantor hereby
waives all rights to notice, judicial hearing or prior court order to which it
might otherwise have the right under any state or federal statute or
constitution in connection with the obtaining by the Secured Parties of any
prejudgment remedy by reason of this Agreement, the Purchase Agreement, the
Notes, the other Transaction Documents or by reason of the Obligations or any
renewals or extensions of the same. Grantor also waives any and all objection
which it might otherwise assert, now or in the future, to the exercise or use by
the Secured Parties of any right of setoff, repossession or self help as may
presently exist under statute or common law.
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Section 7.14. Collateral Agent.
(a) Each Secured Party hereby appoints ▇▇▇▇ ▇▇▇▇, P.A. (the
"Collateral Agent") as the Collateral Agent hereunder and each Secured Party
authorizes the Collateral Agent to take such action as agent on its behalf and
to exercise such powers under this Agreement and the other Transaction Documents
as are delegated to the Collateral Agent under such agreements and to exercise
such powers as are reasonably incidental thereto. Without limiting the
foregoing, each Secured Party hereby authorizes the Collateral Agent to execute
and deliver, and to perform its obligations under, each of the documents to
which the Collateral Agent is a party relating to security for the obligations
under the Notes, to exercise all rights, powers and remedies that the Collateral
Agent may have under such Transaction Documents and, in the case of the
Transaction Documents, to act as agent for the Secured Parties under such
Transaction Documents.
(b) As to any matters not expressly provided for by this Agreement
and the other document relating thereto (including enforcement or collection),
the Collateral Agent shall not be required to exercise any discretion or take
any action, but shall be required to act or to refrain from acting (and shall be
fully protected in so acting or refraining from acting) upon the instructions of
the Secured Parties, and such instructions shall be binding upon all Secured
Parties; provided, however, that the Collateral Agent shall not be required to
take any action that (i) the Collateral Agent in good faith believes exposes it
to personal liability unless the Collateral Agent receives an indemnification
satisfactory to it from the Secured Parties with respect to such action or (ii)
is contrary to this Agreement or applicable law. The Collateral Agent agrees to
give to each Secured Party prompt notice of each notice given to it by the
Company pursuant to the terms of this Agreement or the other Transaction
Documents. If the Collateral Agent receives conflicting instructions from the
Secured Parties it will not be required to act until it receives instructions
from the Secured Parties holding a majority of the Notes (calculated in dollar
amounts rather than noteholders).
(c) In performing its functions and duties hereunder and under the
Transaction Documents and the other documents required to be executed or
delivered in connection therewith, the Collateral Agent is acting solely on
behalf of the Secured Parties and its duties are entirely administrative in
nature. The Collateral Agent does not assume and shall not be deemed to have
assumed any obligation other than as expressly set forth herein, in the
Transaction Documents and any other documents required to be executed or
delivered in connection therewith related hereto or any other relationship as
the agent, fiduciary or trustee of or for any Secured Party or holder of any
other obligation under this Agreement or the Notes. The Collateral Agent may
perform any of its duties under any Transaction Document by or through its
agents or employees.
(d) None of the Collateral Agent, any of its affiliates or any of
their respective directors, officers, agents or employees shall be liable for
any action taken or omitted to be taken by it, him, her or them under or in
connection with this Agreement or the other Transaction Documents, except for
its, his, her or their own gross negligence or willful misconduct.
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(e) Each Secured Party acknowledges that it shall, independently and
without reliance upon the Collateral Agent or any other Secured Party conduct
its own independent investigation of the financial condition and affairs of the
Company and its Subsidiaries in connection with the issuance of the Securities.
Each Secured Party also acknowledges that it shall, independently and without
reliance upon the Collateral Agent or any other Secured Party and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under this
Agreement and other Transaction Documents. For avoidance of doubt, each Secured
Party represents that it has had no contact with the Collateral Agent; that the
Collateral Agent has had no role in the negotiation or preparation of the
Transaction Documents and was contacted after such negotiations and documents
were finalized for the purpose of serving solely in the administrative role of
Collateral Agent under this Agreement.
(f) Each Secured Party agrees to indemnify the Collateral Agent and
each of its affiliates, and each of their respective directors, officers,
employees, agents and advisors (to the extent not reimbursed by the Borrower),
from any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses and disbursements (including fees, expenses
and disbursements of financial and legal advisors) of any kind or nature
whatsoever that may be imposed on, incurred by, or asserted against, the
Collateral Agent or any of its affiliates, directors, officers, employees,
agents and advisors in any way relating to or arising out of this Agreement or
the other Transaction Documents or any action taken or omitted by the Collateral
Agent under this Agreement or the document related thereto; provided, however,
that no Secured Party shall be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from the Collateral Agent's or such
Affiliate's gross negligence or willful misconduct.
(g) The Collateral Agent may resign at any time by giving written
notice thereof to the Secured Parties and the Company. Upon any such
resignation, the Secured Parties shall have the right to appoint a successor
Collateral Agent. If no successor Collateral Agent shall have been so appointed
by the Secured Parties, and shall have accepted such appointment, within 30 days
after the retiring Collateral Agent's giving of notice of resignation, then the
retiring Collateral Agent may, on behalf of the Secured Parties, appoint a
successor Collateral Agent, selected from among the Secured Parties. Upon the
acceptance of any appointment as Collateral Agent by a successor Collateral
Agent, such successor Collateral Agent shall succeed to, and become vested with,
all the rights, powers, privileges and duties of the retiring Collateral Agent,
and the retiring Collateral Agent shall be discharged from its duties and
obligations under this Agreement, the Transaction Documents and any other
documents required to be executed or delivered in connection therewith. Prior to
any retiring Collateral Agent's resignation hereunder as Collateral Agent, the
retiring Collateral Agent shall take such action as may be reasonably necessary
to assign to the successor Collateral Agent its rights as Collateral Agent under
the Transaction Documents. After such resignation, the retiring Collateral Agent
shall continue to have the benefit of this Agreement as to any actions taken or
omitted to be taken by it while it was Collateral Agent under this Agreement,
the Transaction Documents and any other documents required to be executed or
delivered in connection therewith.
15
(h) Each Secured Party agrees that any action taken by the
Collateral Agent in accordance with the provisions of this Agreement or of the
other document relating thereto, and the exercise by the Collateral Agent or the
Secured Parties of the powers set forth herein or therein, together with such
other powers as are reasonably incidental thereto, shall be authorized and
binding upon all of the Secured Parties.
(i) Each of the Secured Parties hereby directs, in accordance with
the terms hereof, the Collateral Agent to release (or in the case of clause (ii)
below, release or subordinate) any Lien held by the Collateral Agent for the
benefit of the Secured Parties against any of the following: (i) all of the
Collateral upon payment and satisfaction in full of all obligations under the
Notes and all other obligations under the Transaction Documents that the
Collateral Agent has been notified in writing are then due and payable; (ii) any
assets that are subject to a Lien permitted by Section 3.2); and (iii) any part
of the Collateral sold or disposed of by the Company or any Subsidiary if such
sale or disposition is permitted by this Agreement and the Notes (or permitted
pursuant to a waiver or consent of a transaction otherwise prohibited by this
Agreement and the Notes). Each of the Secured Parties hereby directs the
Collateral Agent to execute and deliver or file such termination and partial
release statements and do such other things as are necessary to release Liens to
be released pursuant to this Section 7.14 promptly upon the effectiveness of any
such release.
(j) The contact information for the Collateral Agent is: ▇▇▇▇ ▇▇▇▇,
P.A., ▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇. The fax
number for ▇▇▇▇ ▇▇▇▇, P.A. is (▇▇▇) ▇▇▇-▇▇▇▇ and the E-mail address is
▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇.▇▇▇. The telephone number for ▇▇▇▇ ▇▇▇▇, P.A. is (813)
224-9255.
(k) The Collateral Agent:
(i) shall not be responsible in any manner for the validity,
correctness or sufficiency of any document or instrument received by
or made available to it, in its capacity as Collateral Agent
hereunder.
(ii) shall be entitled to act upon any written certificate,
statement, notice, demand, request, consent, agreement or other
instrument whatever, not only in reliance upon its due execution and
the validity and effectiveness of its provisions, but also as to the
accuracy and completeness of any information therein contained,
which the Collateral Agent shall in good faith believe to be genuine
and to have been signed or presented by any authorized person.
(iii) shall be entitled to request and receive from any party
hereto such documents in addition to those provided for herein as
the Collateral Agent may deem necessary to resolve any questions of
fact involved in the administration of its duties hereunder.
(iv) may, at the expense of the remaining parties, consult
independent counsel of its choice in respect to any question
relating to its duties or responsibilities under this Agreement, and
shall not be liable for any action taken or omitted in good faith on
advice of such counsel.
16
(v) shall be under no obligation to advance any monetary sum
in connection with the maintenance or administration of this
Agreement, to institute or defend any action, suit or legal
proceeding in connection herewith, or to take any other action
likely to involve the Collateral Agent in expense, unless first
indemnified by the remaining parties to the Collateral Agent's
satisfaction.
(vi) shall not be bound by any amendment to this Agreement or
by any other such amendment or agreement unless the same shall have
been executed by the Collateral Agent.
(vii) shall have only such duties and responsibilities as are
expressly set forth in this Agreement in the performance of its
obligations hereunder.
(viii) shall be indemnified and held harmless by the remaining
parties against any and all liabilities incurred by it hereunder
(including all costs, expenses and fees incurred in defending any
legal action or administrative proceeding or in resisting any
claim), except for those resulting from its own willful misconduct
or gross negligence.
(ix) may, if it becomes uncertain concerning its rights and
responsibilities with respect to its duties or if it receives
instructions with respect to the Collateral that it believes to be
in conflict with this Agreement or is advised that a dispute has
arisen with respect to its duties under this Agreement, without
liability, refrain from taking any action until it is directed
otherwise in a writing signed by all of the Secured Parties or by an
order of a court of competent jurisdiction. The Collateral Agent is
not obligated to institute or defend any legal proceedings, although
it may, in its sole discretion and at the remaining parties'
expense, institute or defend such proceedings (including proceedings
seeking a declaratory judgment) and join interested parties.
(x) The Collateral Agent will be paid a fee of $3,000 for its
agreement to serve as the Collateral Agent. This fee is payable upon
the execution of this Agreement.
[SIGNATURE PAGES FOLLOW]
17
IN WITNESS WHEREOF, the parties have duly executed this Security Agreement
as of the day and year first written above.
REMOTE DYNAMICS, INC.
By:_________________________________
Name:
Title:
SECURED PARTY:
By:_________________________________
Name:
Title:
Acknowledged and agreed:
Collateral Agent:
By:_____________________
Name:
Title:
18
EXHIBIT A
Secured Parties
19
SCHEDULE A
State of Incorporation; Chief Executive Office; Filing Locations
State of Incorporation:
-----------------------
Delaware
Chief Executive Office:
-----------------------
▇▇▇▇ ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Filing Locations:
-----------------
Secretary of State of the State of Delaware
20
SCHEDULE 3.3
Existing Liens
21
SCHEDULE 3.4
Absence of Other Liens
22
SCHEDULE 4.8
Insurance
23
