EXHIBIT D3 SECURITY AGREEMENT
EXHIBIT
D3
THIS
SECURITY
AGREEMENT (this “Agreement”), ”) is made and executed
on the 1st day of April, 2008, by and among Radcom Equipment, Inc.
(the “Grantor”), a company organized under the laws of the
State of New Jersey with offices located at ▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, a wholly owned subsidiary of Radcom Ltd., a company organized under
the
laws of the State of Israeli (Company No. 52-004356)
(“Radcom”), and the entities identified on Schedule A attached
hereto (collectively, the “Lender”), each with offices located
at ▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇.
On
April
1, 2008, Radcom and the Lender entered into that certain Loan Agreement (the
“Loan
Agreement”)
to
which the form of this Agreement is attached
as
Exhibit D3, pursuant to which Lender will make a loan to Radcom (the
“Loan”).
On
the
date hereof, the Grantor executed a Subsidiary Guaranty pursuant to which the
Grantor guarantees the obligations of Radcom under the Loan Agreement and the
other documents evidencing and securing the Loan (the “Guaranty”).
As
an
inducement to the Lender’s agreement to enter into the Loan Agreement with
Radcom and to make the Loan under the terms thereof, the Lender desires to
obtain, and the Grantor desires to grant the Lender, security for all of the
Obligations (as hereinafter defined).
NOW,
THEREFORE,
the
parties hereto, intending to be legally bound, hereby agree as
follows:
1.
Definitions.
1
(b)
“Customary
Permitted Liens”
means
any of the following liens: (i) liens with respect to the payment of taxes,
assessments, or governmental charges in each case that are not yet due or that
are being contested in good faith by appropriate proceedings and with respect
to
which adequate reserves or other appropriate provisions are being maintained
to
the extent required by GAAP; (ii) liens of landlords arising by statute and
liens of suppliers, mechanics, carriers, materialmen, warehousemen or workmen
and other liens imposed by law or arising in the ordinary course of business
for
amounts not yet due or that are being contested in good faith by appropriate
proceedings and with respect to which adequate reserves or other appropriate
provisions are being maintained to the extent required by GAAP; (iii) deposits
made in the ordinary course of business in connection with workers’
compensation, unemployment insurance or other types of social security benefits
or to secure the performance of bids, tenders, sales contracts (other than
for
repayment of borrowed money) and surety, appeal, customs or performance bonds;
(iv) encumbrances arising by reason of zoning restrictions, easements, licenses,
reservations, covenants, rights-of-way, utility easements, building restrictions
and other similar encumbrances on the use of real property not materially
detracting from the value of such real property or not materially interfering
with the ordinary conduct of the business conducted and proposed to be conducted
at such real property; (v) encumbrances arising under leases or subleases of
real property that do not, in the aggregate, materially detract from the value
of such real property or interfere with the ordinary conduct of the business
conducted and proposed to be conducted at such real property; and (vi) financing
statements with respect to a lessor’s rights in and to personal property leased
in the ordinary course of business.
(c)
“Obligations” shall include all loans, advances, debts,
liabilities, obligations, covenants and duties owing to the Lender pursuant
to
the Subsidiary Guaranty, of any kind or nature, present or future (including
any
interest accruing thereon after maturity, or after the filing of any petition
in
bankruptcy, or the commencement of any insolvency, reorganization or like
proceeding relating to Radcom or the Grantor, whether or not a claim for
post-filing or post-petition interest is allowed in such proceeding), whether
direct or indirect (including those acquired by assignment or participation),
absolute or contingent, joint or several, due or to become due, now existing
or
hereafter arising, whether or not (i) evidenced by any note, guaranty or other
instrument, (ii) arising under any agreement, instrument or document, (iii)
for
the payment of money and (iv) arising by reason of an extension of credit,
opening of a letter of credit, loan, equipment lease or guarantee; and any
amendments, extensions, renewals and increases of or to any of the foregoing,
and all costs and expenses of the Lender incurred in the documentation,
negotiation, modification, enforcement, collection and otherwise in connection
with any of the foregoing, including reasonable attorneys’ fees and
expenses.
(d)“UCC”
means
the Uniform Commercial Code, as adopted and enacted and as in effect from time
to time in the State whose law governs pursuant to the Section of this Agreement
entitled “Governing Law and Jurisdiction.” Terms used herein which are defined
in the UCC and not otherwise defined herein shall have the respective meanings
ascribed to such terms in the UCC. To the extent the definition of any category
or type of collateral is modified by any amendment, modification or revision
to
the UCC, such modified definition will apply automatically as of the date of
such amendment, modification or revision.
2.
Grant
of Security Interest.
To
secure the Obligations, the Grantor (inter alia, as debtor), hereby assigns
and
grants to the Lender, as secured party, a continuing lien on and security
interest in the Collateral.
3.
Change
in Name or Locations.
The
Grantor hereby agrees that if
it
changes its name, its type of organization, its state of organization or
establishes a name in which it may do business that is not listed as a tradename
on Exhibit
A
hereto,
the Grantor will immediately notify the Lender in writing of the additions
or
changes.
2
4.
Representations
and Warranties.
Without
violating the provisions of the Loan Agreement, the Grantor represents, warrants
and covenants to the Lender that: (a) all information, including its type of
organization, jurisdiction of organization and chief executive office are as
set
forth on Exhibit
A
hereto
and are true and correct on the date hereof; (b) the Grantor has good,
marketable and indefeasible title to the Collateral, has not made any prior
sale, pledge, encumbrance, assignment or other disposition of any of the
Collateral, and the Collateral is free from all encumbrances and rights of
setoff of any kind except the lien in favor of the Lender created by this
Agreement and Customary
Permitted Liens;
(c)
except as herein provided, the Grantor will not hereafter without the Lender’s
prior written consent sell, pledge, encumber, assign or otherwise dispose of
any
of the Collateral or permit any right of setoff, lien or security interest
to
exist thereon except to the Lender and except in the ordinary course of
business, all subject to the provisions of the Loan Agreement; (d) the Grantor
will take such actions deemed by it to be reasonably required in order to defend
the Collateral against all claims and demands of all persons at any time
claiming the same or any interest therein, as it deems appropriate in its
reasonable judgment; and (e) each account and general intangible, if included
in
the definition of Collateral, is genuine and enforceable in accordance with
its
terms and the Grantor will defend the same against all claims, demands and
counterclaims at any time asserted.
Grantor
represents that as of the date hereof (i) it has no subsidiaries; and (ii)
other
than as set forth in Exhibit B hereto, no intellectual
property is registered under its name or applications for the registration
of
intellectual property under its name, and (iii) there are no agreements deemed
by Grantor to which Grantor is a party to be material to the business of Radcom,
its parent or any subsidiary, taken as a whole (a "Material
Agreement"), other than those that are listed in Exhibit
C attached hereto.
5.
Grantor’s
Covenants.
The
Grantor covenants that without violating and subject to the provisions of the
Loan Agreement, it shall:
(a)
from
time to time and at all reasonable times allow the Lender, by or through any
of
its officers, agents, attorneys, or accountants, to examine or inspect the
Collateral. The Grantor shall do, obtain, make, execute and deliver all such
additional and further acts, things, deeds, assurances and instruments as the
Lender may require to vest in and assure to the Lender its rights hereunder
and
in or to the Collateral, and the proceeds thereof. At any time upon an Event
of
Acceleration (as defined in Section 3 of the Loan Agreement), the Grantor agrees
to notify (on invoices or otherwise) account debtors and other obligors or
payors on any Collateral of its assignment to the Lender, and that all payments
thereon should be made directly to the Lender, and that the Lender has full
power and authority to collect, compromise, endorse, sell or otherwise deal
with
the Collateral in its own name or that of the Grantor at any time upon an Event
of Acceleration;
(b)
keep
the Collateral in good order and repair at all times, subject to normal wear
and
tear, and promptly notify the Lender of any event causing a material loss or
decline in value of the Collateral, whether or not covered by insurance, and
the
amount of such loss or depreciation;
(c)
only
use or permit the Collateral to be used in accordance with all applicable
federal, state, county and municipal laws and regulations; and
(d)
have
and maintain at
all
times insurance policies with reputable insurance companies, which are customary
for a company of the size, the stage of development and the industry in which
the Grantor operates.
(e) not,
through any reorganization, recapitalization, transfer of assets, consolidation,
merger, dissolution, or any other voluntary action, avoid or seek to avoid
the
observance or performance of any of the terms to be observed or performed
hereunder by the Grantor.
3
6.
Negative
Pledge; No Transfer.
The
Grantor hereby agrees that the covenants as set forth in Section 7.3 of the
Loan
Agreement will apply (other than with respect to distributions to Borrower),
mutatis mutandis, to the Grantor, and such provisions are, by this reference,
incorporated into this Agreement.Without derogating from such provisions and
unless expressly permitted thereunder, the Grantor will not sell or offer to
sell or otherwise transfer or grant or allow the imposition of a lien or
security interest upon the Collateral, will not allow any third party to gain
control of all or any part of the Collateral, and will not use any portion
thereof in any manner inconsistent with this Agreement or with the terms and
conditions of any policy of insurance thereon.
7.
Covenants
for Accounts.
Without
violating, and subject to, the provisions of the Loan Agreement:
(a)
The
Grantor will, on the Lender’s reasonable demand, make notations on its books and
records showing the Lender’s security interest.
(b)
From
time to time with such frequency as the Lender may reasonably request, the
Grantor will report to the Lender all credits given to account debtors on all
accounts.
(c)
At
any time after the occurrence of an Event of Acceleration, and without notice
to
the Grantor, the Lender may direct any persons who are indebted to the Grantor
on any Collateral consisting of accounts or general intangibles to make payment
directly to the Lender of the amounts due. The Lender is authorized to collect,
compromise, endorse and sell any such Collateral in its own name or in the
Grantor’s name and to give receipts to such account debtors for any such
payments and the account debtors will be protected in making such payments
to
the Lender.
8.
Further
Assurances.
8.1.
The
Grantor hereby irrevocably authorizes the Lender to execute (on behalf of the
Grantor), as applicable, and file against the Grantor one or more financing,
continuation or amendment statements pursuant to the UCC in form satisfactory
to
the Lender, and the Grantor will pay the cost of preparing and filing the same
in all jurisdictions in which such filing is deemed by the Lender to be
necessary or desirable in order to perfect, preserve and protect its security
interests. If required by the Lender, (i) the Grantor will execute all
documentation necessary for the Lender to obtain and maintain perfection of
its
security interests in the Collateral and (ii) will file and pay the cost of
all financing, continuation or amendment statements pursuant to the UCC in
form
satisfactory to the Lender.
8.2. The Grantor
shall promptly inform the Lender in writing of any filings made by it for
the purpose of registration of intellectual property
rights and will promptly make such filings, if required, in order to ensure
that
the security interest created pursuant to this Agreement covers such issued
intellectual property rights.
8.3.
The
Grantor will (and, to the extent applicable, will cause its subsidiaries to)
execute, in form satisfactory to the Lender, a Rider to Security Agreement
-
Copyrights (if any Collateral consists of registered or unregistered material
copyrights), update the Rider to Security Agreement - Patents (to include
additional Collateral consisting of material patents registered or patent
applications filed following the date hereof), a Rider to Security Agreement
-
Trademarks (if any Collateral consists of material trademarks, tradenames,
tradestyles or trademark applications) for recording with the U.S. Patent and
Trademark Office, the U.S. Copyright Office and other governmental authorities.
All such filings and recordings shall be made by the Grantor prior to the
registration of any intellectual property right and all expenses related thereto
shall be borne by the Grantor.
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8.4.
If
any Collateral consists of letter of credit rights, electronic chattel paper,
deposit accounts or supporting obligations not maintained with the Lender or
one
of its affiliates, or any securities entitlement, securities account,
commodities account, commodities contract or other investment property, then
at
the Lender’s request the Grantor will execute, and will use reasonable
commercial efforts to cause the depository institution or securities
intermediary upon whose books and records the ownership interest of the Grantor
in such Collateral appears, to execute such Pledge Agreements, Notification
and
Control Agreements or other agreements as the Lender reasonably deems necessary
in order to perfect, prioritize and protect its security interest in such
Collateral, in each case in a form reasonably satisfactory to the
Lender.
9.
Events of Acceleration. The
Grantor hereby agrees that the provisions contained in Section 3 of the Loan
Agreement (Events of Acceleration) will apply, mutatis mutandis, to the Grantor,
and such provisions are, by this reference, incorporated into this Agreement.
The occurrence of an Event of Acceleration under Section 3 of the Loan Agreement
shall constitute a default under this Agreement.
10.
Remedies.
Upon the
occurrence of any Event of Acceleration described
in paragraphs 3(i), 3(v), 3(vi) or 3(vii) of the Loan Agreement that is
continuing following any cure period set forth in such provisions (if any),
the
Lender may, by notice in writing sent to the Grantor,
declare
all amounts due to the Lender on account of the Loan due and payable and in
the
event that an Event of Acceleration described in paragraphs 3(ii), 3(iii) or
3(iv) of the Loan Agreement has happened and is continuing following any cure
period set forth in such provisions (if any), all amounts due to the Lenders
on
account of the Loan shall become due and payable without notice. In
such
events, the Lender shall have, in addition to any remedies provided herein
or by
any applicable law or in equity, all the remedies of a secured party under
the
UCC. The Lender’s remedies include, but are not limited to, the right to (a)
peaceably by its own means or with judicial assistance enter the Grantor’s
premises and take possession of the Collateral without prior notice to the
Grantor or the opportunity for a hearing, (b) render the Collateral unusable,
and (c) dispose of the Collateral on the Grantor’s premises, (d) require the
Grantor to assemble the Collateral and make it available to the Lender at a
place designated by the Lender, and Unless the Collateral is perishable or
threatens to decline speedily in value or is of a type customarily sold on
a
recognized market, the Lender will give the Grantor reasonable notice of the
time and place of any public sale thereof or of the time after which any private
sale or any other intended disposition thereof is to be made. The requirements
of commercially reasonable notice shall be met if such notice is sent to the
Grantor at least seven (7) days before the time of the intended sale or
disposition. Expenses of retaking, holding, preparing for disposition, disposing
or the like shall include the Lender’s reasonable attorneys’ fees and legal
expenses, incurred or expended by the Lender to enforce any payment due it
under
this Agreement either as against the Grantor, or in the prosecution or defense
of any action, or concerning any matter growing out of or connection with the
subject matter of this Agreement and the Collateral pledged hereunder. The
Grantor waives all relief from all appraisement or exemption laws now in force
or hereafter enacted.
11.
Power
of Attorney.
The
Grantor does hereby make, constitute and appoint any officer or agent of the
Lender, as of the date on which an Event of Acceleration had taken palce, as
the
Grantor’s true and lawful attorney-in-fact, with power to (a) endorse the name
of the Grantor or any of the Grantor’s officers or agents upon any notes,
checks, drafts, money orders, or other instruments of payment or Collateral
that
may come into the Lender’s possession in full or part payment of any
Obligations; (b) ▇▇▇ for, compromise, settle and release all claims and disputes
with respect to, the Collateral; and (c) sign, for the Grantor, such
documentation required by the UCC, or supplemental intellectual property
security agreements; granting to the Grantor’s said attorney full power to do
any and all things necessary to be done in and about the premises as fully
and
effectually as the Grantor might or could do; provided,
however,
that
such appointment shall only be effective after and during the continuation
of an
Event of Acceleration.
The
Grantor hereby ratifies all that said attorney shall lawfully do or cause to
be
done by virtue hereof. This power of attorney is coupled with an interest,
and
is irrevocable. The
Lender shall notify the Grantor
in
writing of any action taken by it in accordance with this Section
11.
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12.
Payment of Expenses. The
Grantor shall pay, upon demand, all reasonable costs, charges and expenses
(including reasonable attorney's fees), incurred by the Lender in enforcing
its
rights and remedies hereunder.
13.
Notices. All notices, demands,
requests, consents, approvals and other communications required or permitted
hereunder (“Notices”) must be in writing and will be effective
upon receipt. Notices may be given in any manner to which the parties may
separately agree, including electronic mail. Without limiting the foregoing,
first-class mail, facsimile transmission and commercial courier service are
hereby agreed to as acceptable methods for giving Notices. Regardless of the
manner in which provided, Notices may be sent to a party’s address as set forth
above or to such other address as any party may give to the other for such
purpose in accordance with this section.
14.
Preservation
of Rights.
No
delay
or omission on the Lender’s part to exercise any right or power arising
hereunder will impair any such right or power or be considered a waiver of
any
such right or power, nor will the Lender’s action or inaction impair any such
right or power. The Lender’s rights and remedies hereunder are cumulative and
not exclusive of any other rights or remedies which the Lender may have under
other agreements, at law or in equity.
15.
Illegality.
If any
provision contained in this Agreement should be invalid, illegal or
unenforceable in any respect, it shall not affect or impair the validity,
legality and enforceability of the remaining provisions of this
Agreement.
16.
Changes
in Writing.
No
modification, amendment or waiver of, or consent to any departure by the Grantor
from, any provision of this Agreement will be effective unless made in a writing
signed by the Lender, 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 the Grantor will entitle the Grantor to any other or further notice
or
demand in the same, similar or other circumstance.
17.
Entire
Agreement.
This
Agreement (including the documents and instruments referred to herein) and
the
Guaranty constitute the entire agreement and supersedes all other prior
agreements and understandings, both written and oral, between the parties with
respect to the subject matter hereof.
18.
Counterparts.
This
Agreement may be signed in any number of counterpart copies and by the parties
hereto on separate counterparts, but all such copies shall constitute one and
the same instrument. Delivery of an executed counterpart of signature page
to
this Agreement by facsimile transmission shall be effective as delivery of
a
manually executed counterpart. Any party so executing this Agreement by
facsimile transmission shall promptly deliver a manually executed counterpart,
provided that any failure to do so shall not affect the validity of the
counterpart executed by facsimile transmission.
19.
Successors
and Assigns.
This
Agreement will be binding upon and inure to the benefit of the Grantor and
the
Lender and their respective heirs, executors, administrators, successors and
assigns; provided,
however,
that
the Grantor may not assign this Agreement in whole or in part without the
Lender’s prior written consent and the Lender at any time may assign this
Agreement in whole or in part in accordance with the Loan
Agreement.
20.
Interpretation.
In this
Agreement, unless the Lender and the Grantor otherwise agree in writing, the
singular includes the plural and the plural the singular; words importing any
gender include the other genders; references to statutes are to be construed
as
including all statutory provisions consolidating, amending or replacing the
statute referred to; the word “or” shall be deemed to include “and/or”, the
words “including”, “includes” and “include” shall be deemed to be followed by
the words “without limitation”; references to articles, sections (or
subdivisions of sections) or exhibits are to those of this Agreement; and
references to agreements and other contractual instruments shall be deemed
to
include all subsequent amendments and other modifications to such instruments,
but only to the extent such amendments and other modifications are not
prohibited by the terms of this Agreement. Section headings in this Agreement
are included for convenience of reference only and shall not constitute a part
of this Agreement for any other purpose. Unless otherwise specified in this
Agreement, all accounting terms shall be interpreted and all accounting
determinations shall be made in accordance with US GAAP. If this Agreement
is
executed by more than one Grantor, the obligations of such persons or entities
will be joint and several.
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21.
Indemnity.
The
Grantor agrees to indemnify each of the Lender, each legal entity, if any,
who
controls the Lender and each of their respective directors, officers and
employees (the “Indemnified
Parties”)
and to
hold each Indemnified Party harmless from and against any and all claims,
damages, losses, liabilities and expenses (including all fees and charges of
internal or external counsel with whom any Indemnified Party may consult and
all
expenses of litigation and preparation therefor) which any Indemnified Party
may
incur or which may be asserted against any Indemnified Party by any person,
entity or governmental authority (including any person or entity claiming
derivatively on behalf of the Grantor), in connection with or arising out of
or
relating to the matters referred to in this Agreement or the Obligations,
whether (a) arising from or incurred in connection with any breach of a
representation, warranty or covenant by the Grantor, or (b) arising out of
or
resulting from any suit, action, claim, proceeding or governmental
investigation, pending or threatened, whether based on statute, regulation
or
order, or tort, or contract or otherwise, before any court or governmental
authority; provided,
however,
that
the foregoing indemnity agreement shall not apply to any claims, damages,
losses, liabilities and expenses solely attributable to an Indemnified Party’s
gross negligence or willful misconduct. The Grantor may participate at its
expense in the defense of any such claim.
22.
Governing
Law and Jurisdiction.
This
Agreement has been delivered to and accepted by the Lender and will be deemed
to
be made in the State of New York. This
Agreement will be interpreted and the rights and liabilities of the parties
hereto determined in accordance with the laws of the State of New York, except
that the laws of the State where any Collateral is located (if different from
the State of New Jersey) shall govern the creation, perfection and foreclosure
of the liens created hereunder on such property or any interest
therein.
The
Grantor hereby irrevocably consents to the exclusive jurisdiction of any state
or federal court in any county or judicial district in the State of New Jersey;
provided that nothing contained in this Agreement will prevent the Lender from
bringing any action, enforcing any award or judgment or exercising any rights
against the Grantor individually, against any security or against any property
of the Grantor within any other county, state or other foreign or domestic
jurisdiction. The Lender and the Grantor agree that the venue provided above
is
the most convenient forum for both the Lender and the Grantor. The Grantor
waives any objection to venue and any objection based on a more convenient
forum
in any action instituted under this Agreement.
23.
Deleted.
24.
Authority
to Act.
The
parties hereto acknowledge that Plenus
Management (2004) Ltd. and Plenus Management III (2007), each an Israeli
corporation, have the authority to take any and all actions on behalf of the
Lender in connection with this Agreement and the Collateral, including, but
not
limited to, exercising all rights and remedies of the Lender
hereunder. No
Lender
shall have any claim whatsoever against the Grantor in respect of any actions
taken by the Grantor in compliance with instructions or demands given to it
by
Plenus Management (2004) Ltd. and/or Plenus Management III (2007).
25.
Termination
of Security Interests.
Upon
the indefeasible payment in full of the obligations under the Loan Agreement,
and if the Grantor has no further obligations under the Guaranty, the security
interests granted hereby shall terminate and all rights to the Collateral shall
revert to the Grantor. Upon any such termination, the Lender shall, at the
Grantor's expense, promptly execute and deliver to Grantor such documents as
Grantor shall reasonably request to evidence such termination.
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The
Grantor acknowledges that it has read and understood all the provisions of
this
Agreement, including the waiver of jury trial, and has been advised by counsel
as necessary or appropriate.
WITNESS
the due
execution hereof, with the intent to be legally bound, as of the date first
written above.
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Radcom
Equipment, Inc.
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By:
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By:
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Name:
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Name:
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Title:
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Title:
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Attest
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Attest
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By:
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By:
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Name:
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Name:
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Title:
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Title:
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Plenus
II, Limited Partnership
By:
PLENUS MANAGEMENT (2004) LTD.
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Plenus
II (D.C.M), Limited Partnership
By:
PLENUS MANAGEMENT (2004) LTD.
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By:
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By:
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Name:
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Name:
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Title:
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Title:
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Plenus
III, Limited Partnership
By:
PLENUS MANAGEMENT III 2007 LTD.
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Plenus
III (D.C.M), Limited Partnership
By:
PLENUS MANAGEMENT III 2007 LTD.
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By:
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By:
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Name:
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Name:
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Title:
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Title:
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Plenus
III (2), Limited Partnership
By:
PLENUS MANAGEMENT III 2007 LTD.
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Plenus
III (C.I), L.P.
By:
PLENUS MANAGEMENT III 2007 LTD.
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By:
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By
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Name:
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Name:
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Title:
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Title:
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SCHEDULE
A
TO
SECURITY AGREEMENT
Lenders
Plenus
II, Limited Partnership
Plenus
II
(D.C.M), Limited Partnership
Plenus
III, Limited Partnership
Plenus
III (D.C.M), Limited Partnership
Plenus
III(2), Limited Partnership
Plenus
III (C.I.), L.P.
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