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 December 4, 2006,
made by Remote Dynamics, Inc., a Delaware corporation (the "Grantor"), in favor
of Bounce Mobile Systems, Inc., a Nevada corporation, and its permitted
successors and assigns (the "Secured Party").
WHEREAS, the Grantor has issued or will issue a series B subordinated
secured convertible promissory notes and an original issue discount series B
subordinated secured convertible promissory notes (the "Notes") to the Secured
Party pursuant to a Share Exchange Agreement, dated as of November 30, 2006 (the
"Share Exchange Agreement"), by and among the Grantor and the Secured Party; and
WHEREAS, the Secured Party and the Grantor agree that the Grantor execute
and deliver to the Secured Party a security agreement providing for the grant to
the Secured Party 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 Share Exchange 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 xxx 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
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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 Party, and hereby grants to the Secured Party, their
successors and
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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").
Section 2.2. No Assumption of Liability. The Security Interest is granted
as security only and shall not subject the Secured Party 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 Party 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 Party 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 Party 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 Party 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
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Party, 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 Party. 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.
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 Party 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 Party 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 Party 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
Party may reasonably
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request, promptly to prepare and deliver to the Secured Party a duly certified
schedule or schedules in form and detail satisfactory to the Secured Party
showing the identity, amount and location of any and all Collateral.
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 Party 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 Party in the Collateral and the priority thereof against any Lien other
than the Existing Liens.
Section 4.5. Inspection and Verification. The Secured Party and such
persons as the Secured Party 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 Party shall be (a) the obligations of the Grantor with respect to
any inspection after the Secured Party's demand payment of the Notes or (b) the
obligation of the Secured Party in any other case.
Section 4.6. Taxes; Encumbrances. At their option, the Secured Party 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 Party on demand for any payment made or any expense incurred by the
Secured Party 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 Party 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 Party. 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 Party and the Grantor shall remain at
all times in possession of the Collateral owned by it except in the ordinary
course of business.
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
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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 Party as loss payee
under a "standard" loss payee clause, and the Secured Party 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 Party at least 30 days prior written notice. Grantor irrevocably makes,
constitutes and appoints the Secured Party (and all officers, employees or
agents designated by the Secured Party) as its true and lawful agent and
attorney-in-fact for the purpose, at any time following the Secured Party's
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 Party 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 Party reasonably deems advisable.
All sums disbursed by the Secured Party 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 Party and shall be additional Obligations secured hereby. Grantor shall
promptly notify the Secured Party 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 Party has 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 Party as cash collateral for the Obligations. The Secured Party may, at
its 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 Party may
reasonably prescribe, for direct application by the Secured Party 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 Party, 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 Party and that the Secured Party
has 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 Party 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
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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 Party, duly endorsed in a manner satisfactory to the Secured
Party.
Section 5.2. Power of Attorney.
(a) Grantor hereby irrevocably (as a power coupled with an interest)
constitutes and appoints the Secured Party and all officers, employees or
agents designated by the Secured Party, its attorney-in-fact with full
power of substitution, for the benefit of the Secured Party,
(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 Party as secured party; and
(ii) at any time following the Secured Party's 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 xxxx 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 Party was the absolute
owner of the Collateral for all purposes; provided, however, that
nothing herein contained shall be construed as requiring or
obligating the Secured Party to make any commitment or to make any
inquiry as to the nature or sufficiency of any payment received by
the Secured Party, 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 Party 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
Party.
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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 Party 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 Party 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 Party on demand, and it is agreed that the Secured Party 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 xxxx 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
Party 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 Party shall deem appropriate. The Secured Party 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 Party 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.
(b) The Secured Party 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 Party's
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 Party 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 Party may
(in its sole and absolute discretion) determine. The Secured Party shall
not be obligated to make any
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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 Party 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 Party until the sale price is paid by the
purchaser or purchasers thereof, but the Secured Party 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 Party 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 Party from Grantor as a credit against the
purchase price, and the Secured Party 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 Party 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 Party 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 Party 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 Party 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 Party 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 Share Exchange 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.
Subject to the foregoing, the Secured Party 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 Party
(including pursuant to a power of sale granted by
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statute or under a judicial proceeding), the receipt of any such proceeds,
moneys or balances by the Secured Party 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 Party 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 Party to exercise rights and remedies under this
Article at such time as the Secured Party shall be lawfully entitled to exercise
such rights and remedies, Grantor hereby grants to the Secured Party 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 Party
may be exercised, at the option of the Secured Party, only following the Secured
Party's 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 Party shall (except as otherwise expressly permitted
herein) be in writing and delivered to the Grantor or the Secured Party, as the
case may be, as provided in the Share Exchange Agreement.
Section 7.2. Security Interest Absolute. All rights of the Secured Party
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 Share Exchange 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 Share Exchange 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 Party and
shall survive the making of the loan and the execution and delivery to the
Secured Party of the Notes, regardless of any investigation made by the Secured
Party or on their behalf; and shall continue in full force and effect until this
Agreement shall terminate.
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
11
Grantor shall have been delivered to the Secured Party and a counterpart hereof
shall have been executed on behalf of the Secured Party, and thereafter shall be
binding upon Grantor and the Secured Party and their respective successors and
assigns, and shall inure to the benefit of Grantor, the Secured Party 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 Share Exchange Agreement, the
Notes or the other Transaction Documents.
Section 7.5. Secured Party's Fees and Expense; Indemnification.
(a) Grantor agrees to pay upon demand to the Secured Party 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 Party may incur in connection with (i) the
administration of this Agreement (including the customary fees and charges
of the Secured Party 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 Party hereunder or (iv) the failure of Grantor to
perform or observe any of the provisions hereof.
(b) Grantor agrees to indemnify the Secured Party and the agents,
contractors and employees of the Secured Partiy (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 Share Exchange 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 Share Exchange Agreement, the Notes or the other Transaction
Documents, or any investigation made by or on behalf of the Secured Party.
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
12
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.
Section 7.7. Waivers; Amendment.
(a) No failure or delay of the Secured Party 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 Party hereunder and under the Share Exchange
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
Share Exchange 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 Partu 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
13
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.
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 Party may otherwise have to bring any action or
proceeding relating to this Agreement, the Share Exchange 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 Share
Exchange 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 Party 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 Party.
Section 7.13. Prejudgment Remedy Waiver. Grantor acknowledges that this
Agreement, the Share 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 Party 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 Party of any
prejudgment remedy by reason of this Agreement, the Share Exchange Agreement,
the Notes, the other Transaction Documents or by reason of the
14
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 Party of any right of setoff, repossession or
self help as may presently exist under statute or common law.
[SIGNATURE PAGES FOLLOW]
15
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:
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SCHEDULE A
STATE OF INCORPORATION; CHIEF EXECUTIVE OFFICE; FILING LOCATIONS
State of Incorporation:
Delaware
Chief Executive Office:
0000 Xxx Xxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxx 00000
Filing Locations:
Secretary of State of the State of Delaware
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SCHEDULE 3.3
EXISTING LIENS
18
SCHEDULE 3.4
ABSENCE OF OTHER LIENS
19
SCHEDULE 4.8
INSURANCE
