EXECUTION COPY AMENDED AND RESTATED SECURITY AGREEMENT
EXHIBIT
10.4
EXECUTION
COPY
AMENDED
AND RESTATED
SECURITY AGREEMENT
This
Amended and Restated Security Agreement (this “Agreement”) is executed as of
January 31, 2008, between Enterprise Informatics Inc., f/k/a Altris Software,
Inc., a California corporation (“Debtor”), and ERP2 Holdings, LLC, a Delaware
limited liability company (the “Secured Party”).
WHEREAS,
on ▇▇▇▇▇ ▇▇, ▇▇▇▇, ▇▇▇▇▇▇ executed and delivered a Secured Promissory Note
to
Spescom Ltd., a United Kingdom corporation (“Parent”) in the original principal
amount of $400,000 (the “March Note”);
WHEREAS,
concurrently therewith, in order to provide security for Debtor’s payment
obligations under the March Note, and subsequent notes executed by the Debtor
in
favor of the Parent and its successors and assigns, Debtor entered into a
Security Agreement (the “Original Security Agreement”) with Spescom Ltd., a
United Kingdom corporation (“Parent”), pursuant to which Debtor granted a
security interest in all its assets;
WHEREAS,
on April 19, 2002, Debtor executed and delivered a Secured Promissory Note
to
Parent in the original principal amount of $500,000 (the “April Note” and,
together with the March Note, the “Old Notes”);
WHEREAS,
Parent assigned the Old Notes and the Original Security Agreement to the
Secured
Party pursuant to the Securities Purchase Agreement, dated as of September
30,
2007, by and between the Secured Party and Parent (the “Securities Purchase
Agreement”);
WHEREAS,
concurrently herewith, Debtor executed and delivered a Secured Promissory
Note
to the Secured Party, in the principal amount of up to $1,500,000 (the “New
Note”); and
WHEREAS,
Debtor and the Secured Party desire to amend the Original Security Agreement
in
order to reflect the assignment of the Old Notes to the Secured Party and
the
execution of the New Note.
NOW
THEREFORE, in consideration of the agreements and obligations set forth herein,
and for other good and valuable consideration, the receipt and sufficiency
of
which are hereby acknowledged, the parties hereby amend and restate the Original
Security Agreement to read in its entirety as follows:
1.
Definitions. For
purposes of this Agreement, the following definitions shall apply:
1.1
“Accounts”
shall mean all “accounts” as defined in the UCC now owned or hereafter acquired
by Debtor, including without limitation (a) all accounts receivable,
contract
1
rights,
notes, drafts and other obligations or indebtedness owing to Debtor and arising
from whatever source; (b) all present and future monies, securities, credit
balances, deposits, deposit accounts and other property of Debtor now or
hereafter held or received by or in transit to the Secured Party or their
affiliates or at any other depository or other institution from or for the
account of Debtor, whether for safekeeping, pledge, custody, transmission,
collection or otherwise, and all present and future liens, security interests,
rights, remedies, title and interest in, to and in respect of Accounts and
other
Collateral, including (i) rights and remedies under or relating to guaranties,
contracts of suretyship, letters of credit and credit and other insurance
related to the Collateral, (ii) rights of stoppage in transit, replevin,
repossession, reclamation and other rights and remedies of an unpaid vendor,
lien holder or secured party, (iii) goods described in invoices, documents,
contracts or instruments with respect to, or otherwise representing or
evidencing, Accounts or other Collateral, including returned, repossessed
and
reclaimed goods, and (iv) deposits by and property of account debtors or
other
Persons securing the obligations of account debtors; (c) all of the rights
of
Debtor in, to and under all purchase orders for goods, services or other
property; (d) all monies due to or to become due to Debtor under all contracts
for the sale, ease or exchange of goods or other property and/or the performance
of services by it (whether or not yet earned by performance on the part of
Debtor) and (e) all of the rights of Debtor to any goods, services or other
property represented by any of the foregoing, in each case whether now in
existence or hereafter arising or acquired including, without limitation,
the
right to receive the proceeds of said purchase orders and contracts and all
collateral security and guarantees of any kind given by any Person with respect
to any of the foregoing.
1.2
“Collateral”
has the meaning set forth in Section 3 of this Agreement, entitled “Security
Interests.”
1.3
“Default”
shall mean any Event of Default and any event which with the passing of time
or
the giving of notice would, unless cured or waived, constitute an Event of
Default.
1.4
“Depository
Account” shall mean each bank account (and the related lockbox, if any) of
Debtor.
1.5
“Depository
Account Control Agreement” shall mean any three-party agreement, in form and
substance reasonably satisfactory to the Secured Party, among Debtor, the
Secured Party and the bank maintaining a Depository Account (a) pursuant
to
which such bank agrees that, except in connection with chargebacks and payment
of such bank’s usual and customary fees chargeable in connection with its
administration of the applicable Depository Account, such bank has no Lien
upon,
or right of set off against, the Depository Account or any cash, checks,
wires
and other items from time to time on deposit therein and (b) which provides
the
Secured Party with control of the Depository Account.
1.6
“Documents”
shall mean all “documents” as defined in the UCC or other receipts covering,
evidencing or representing goods, now owned or hereafter acquired by
Debtor.
1.7
“Equipment”
shall mean all “equipment” as defined in the UCC (excluding motor vehicles, and
railway rolling stock), now or hereafter used or acquired for use
2
in
the
business or otherwise of Debtor (together with all accessions thereto and
all
substitutions and replacements thereof and parts therefor), whether or not
the
same shall be deemed affixed to real property, and all rights under or arising
out of present or future contracts relating to the acquisition or use of
the
above.
1.8
“Event
of
Default” shall mean any default by Debtor in the full and punctual performance
of its obligations under this Agreement or the Loan.
1.9
“General
Intangibles” shall mean all “general intangibles” as defined in the UCC now
owned or hereafter acquired by Debtor, including without limitation (a) all
obligations or indebtedness owing to Debtor (other than Accounts) from whatever
source arising, (b) all registered and unregistered (i) patent licenses.
(ii)
patents, (iii) trademark licenses, (iv) trademarks, (v) rights in intellectual
property, (vi) trade names, (vii) service marks, (viii) trade secrets, (ix)
copyrights, (x) permits, (xi) licenses, and (xii) applications for the
foregoing, (c) goodwill, processes, drawings, blueprints and customer lists,
(d)
all rights or claims in respect of refunds for taxes paid, (e) all rights
in
respect of any pension plan or similar arrangement maintained for employees
of
Debtor or any of its Subsidiaries, and (f) the Subsidiary Interests.
1.10
“Instruments”
shall mean (a) all “instruments”, “chattel paper” or letters of credit”, each as
defined in the UCC, evidencing, representing, arising from or existing in
respect of, relating to, securing or otherwise supporting the payment of,
any of
the Accounts, including without limitation promissory notes, drafts, bills
of
exchange and trade acceptances, and (b) notes or other obligations or
indebtedness owing to a Debtor (including without limitation obligations
of
Debtor to any other Debtor) from whatever source arising, in each case now
owned
or hereafter acquired by Debtor.
1.11
“Inventory”
shall mean all “inventory” as defined in the UCC, now owned or hereafter
acquired by Debtor, wherever located, including without limitation all raw
materials and other materials and supplies, work-in-process and finished
goods
and any products made or processed therefrom and all substances, if any,
commingled therewith or added thereto.
1.12
“Lien”
shall
mean, with respect to any asset, any mortgage, lien, pledge, charge, security
interest or encumbrance of any kind in respect of such asset, including the
interest of a vendor or lessor under any conditional sale agreement, capital
lease or other title retention agreement.
1.13
“Loan”
shall
mean collectively, all loans made by the Secured Party to Debtor on March
15,
2002 or subsequent thereto, including without limitation the loans evidenced
by
the Old Notes and the New Note.
1.14
“Note”
shall
mean, collectively, all promissory notes executed by Debtor in favor of the
Secured Party on March 15, 2002 or subsequent thereto, including without
limitation the Old Notes and the New Note.
1.15
“Proceeds”
shall mean all products and proceeds of, and all other profits, rentals or
receipts, in whatever form, arising from the collection, sale, lease, exchange,
assignment, licensing or other disposition of, or realization upon, any item
or
portion of the Collateral, including without limitation all claims of Debtor
against third parties for loss of,
3
damage
to. destruction of, or for proceeds payable under, or unearned premiums with
respect to, policies of insurance in respect of, any Collateral and any
condemnation or requisition payments with respect to any Collateral, in each
case whether now existing or hereafter arising.
1.16
“Security
Interests” shall mean the security interests securing the Secured Obligations,
including without limitation the Security Interests granted pursuant to this
Agreement.
1.17
“Secured
Obligations” shall mean the Note and all obligations, liabilities and
indebtedness pursuant to the Loan, including, without limitation principal,
interest, charges, fees, costs and expenses, however evidenced, whenever
arising
(including without limitation arising after the commencement of any case
with
respect to Debtor under the United States Bankruptcy Code or any similar
statute
and including the payment of interest and other amounts which would accrue
and
become due but for the commencement of such case, whether or not such amounts
are allowed or allowable in whole or in part in such case).
1.18
“Site”
shall
mean Debtor’s principal place of business located at the address set forth in
the Paragraph in this Agreement titled “Notices”.
1.19
“Software”
shall mean all computer software, programs and databases (including, without
limitation, all related applications and data files), firmware and documentation
and materials relating thereto, together with any substitutions, replacements,
improvements, error corrections, updates and new versions of any of the
foregoing, developed, marketed or supported by Debtor.
1.20
“Subsidiary”
shall mean, with respect to any Person, any corporation or other entity of
which
securities or other ownership interests having ordinary voting power to elect
a
majority of the board of directors or other Person performing similar functions
are at the time directly or indirectly owned by such Person.
1.21
“Subsidiary
Interests” shall mean any and all of Debtor’s interest in any Person, as a
member, partner, shareholder or otherwise.
1.22
“UCC”
shall
mean the Uniform Commercial Code as in effect on the date hereof in the State
of
New York; provided that if by reason of mandatory provisions of law, the
perfection or the effect of perfection or non-perfection of the Security
Interest in any item or portion of the Collateral is governed by the Uniform
Commercial Code as in effect in a jurisdiction other than the State of New
York,
then “UCC” shall mean the Uniform Commercial Code as in effect in such other
jurisdiction for purposes of the provisions hereof relating to such perfection
or effect of perfection or non-perfection.
2.
Representations
and
Warranties. Except as set forth in writing to the Secured
Party on even date herewith, Debtor represents and warrants to the Secured
Party
as follows (which shall survive the execution and delivery of this
Agreement):
4
2.1
Debtor
has
good and marketable title to all of the Collateral owned by it, free and
clear
of any Liens other than the Security Interests and Permitted Liens (as defined
in the New Note).
2.2
Debtor
has
not performed any acts which might prevent the Secured Party from enforcing
any
of the terms and conditions of this Agreement or which would limit the Secured
Party in any such enforcement. Other than financing statements or other similar
or equivalent documents or instruments with respect to the Security Interests
and Permitted Liens (as defined in the New Note), as of the date hereof and
thereafter no financing statement, mortgage, security agreement or other
similar
or equivalent document or instrument covering all or any part of the Collateral
is or will be on file or of record in any government office in any jurisdiction
in which such filing or recording would be effective to perfect a Lien on
such
Collateral. No Collateral is in the possession of any Person or entity
whatsoever (other than Debtor) which has taken action to assert any claim
thereto or security interest therein, except that the Secured Party or their
designee may have possession of Collateral as contemplated hereby.
2.3
The
Security
Interests constitute valid security interests under the UCC securing the
Secured
Obligations.
2.4
This
Agreement has been duly authorized, executed and delivered by Debtor and
constitutes a valid and binding agreement of Debtor. The execution, delivery
and
performance by Debtor of this Agreement, each filing, statement, supplementary
assignment, pledge agreement or other document related to this Agreement
to
which Debtor is a party do not and will not contravene, or constitute (with
or
without the giving of notice or lapse of time or both) a default under, any
provision of applicable law or regulation or of the charter or by-laws of
Debtor
or of any agreement, judgment, injunction, order, decree or other instrument
binding upon it or result in the creation of any Lien (other than the Security
Interests) on any asset of Debtor or any of its Subsidiaries.
2.5
Debtor
has
filed, or caused to be filed, in a timely manner all tax returns, reports
and
declarations which are required to be filed by it. All information in such
tax
returns, reports and declarations is complete and accurate in all material
respects. Debtor has paid or caused to be paid all taxes due and payable
or
claimed due and payable in any assessment received by it, except taxes the
validity of which are being contested in good faith by appropriate proceedings
diligently pursued and available to Debtor and with respect to which adequate
reserves have been set aside on its books. Adequate provision has been made
for
the payment of all accrued and unpaid Federal, State, county, local, foreign
and
other taxes whether or not yet due and payable and whether or not
disputed.
2.6
There
is no
known present investigation by any governmental agency pending, or to the
best
of Debtor’s knowledge threatened, against or affecting Debtor, its assets or
business and there is no action, suit, proceeding or claim by any Person
or
entity pending, or to the best of Debtor’s knowledge threatened, against Debtor
or its assets or goodwill, or against or affecting any transactions contemplated
by this Agreement, which would reasonably be expected to result in any material
adverse change in the assets, business or prospects of Debtor or would impair
the ability of Debtor to perform its obligations hereunder or under the Note
or
the Loan or of the Secured Party to enforce any Secured Obligations or realize
upon any Collateral.
5
2.7
Debtor
is not
in default in any material respect under, or in violation in any material
respect of any of the terms of, any material agreement, contract, instrument,
lease or other commitment to which it is a party or by which it or any of
its
assets are bound and Debtor is in compliance in all material respects with
all
applicable provisions of laws, rules, regulations, licenses, permits, approvals
and orders of any foreign, Federal, Slate or local governmental
authority.
2.8
All
representations and warranties contained in this Agreement or any of the
agreements concerning the Note or the Loan shall survive the execution and
delivery of this Agreement and shall be deemed to have been made again to
the
Secured Party on the date of each additional borrowing or other credit
accommodation hereunder and shall be conclusively presumed to have been relied
on by the Secured Party regardless of any investigation made or information
possessed by the Secured Party. The representations and warranties set forth
herein shall be cumulative and in addition to any other representations or
warranties which Debtor shall now or hereafter give, or cause to be given,
to
the Secured Party.
3.
Security
Interests. In order to secure the full and punctual payment
and performance of the Secured Obligations in accordance with the terms thereof,
Debtor hereby grants to the Secured Party a continuing security interest
in and
to all of the following property of Debtor, whether now owned or existing
or
hereafter acquired or arising and regardless of where located (collectively,
“Collateral”):
3.1
Accounts;
3.2
Documents;
3.3
Equipment,
3.4
General
Intangibles;
3.5
Instruments;
3.6
Inventory;
3.7
Subsidiary
Interests;
3.8
Software;
3.9
All
other
personal property and assets of Debtor;
3.10
All
books and
records (including, without limitation, customer lists, supplier lists, credit
files, computer programs, printouts and other computer materials and records)
of
such Debtor pertaining to any of the Collateral; and
3.11
All
Proceeds
of any of the Collateral described in the preceding clauses of this Paragraph,
in any form, including without limitation insurance proceeds and all claims
against third parties for loss or damage to or destruction of any or all
of the
foregoing.
6
4.
Further
Assurances;
Covenants.
4.1
Debtor
shall
not change the location of (a) its chief executive office or chief place
of
business or (b) the locations where it keeps or holds any Collateral, or
any
records relating to such Collateral, from the Site unless it shall have given
the Secured Party at least 45 days’ prior written notice. Debtor shall not in
any event change the location of any Collateral if such change would cause
the
Security Interests in such Collateral to lapse or cease to be perfected.
4.2
Debtor
shall
maintain Inventory only at (a) the Site, (b) at a location in the United
States
of which the Secured Party have received at least 45 days’ prior written notice,
or (c) in transit to a location specified in the preceding clauses.
4.3
Debtor
shall
not change its name, identity, any tradename used by it or its corporate
structure in any manner unless it shall have given the Secured Party at least
45
days prior written notice.
4.4
Debtor
shall
cause the Secured Party to be named as an insured party and loss payee on
each
insurance policy covering risks relating to any of its Collateral. Such
insurance shall be maintained against such risks as are insured against by
companies of established repute in the same or similar lines of business
as
Debtor, in amounts, under policies, and with insurers reasonably acceptable
to
the Secured Party. Debtor will deliver to the Secured Party, upon request
of the
Secured Party the insurance policies for such insurance. Each such insurance
policy shall include effective waivers by the insurer of all claims for
insurance premiums against the Secured Party, shall provide that, for so
long as
any Event of Default shall have occurred and be continuing and the insurer
shall
have received notice thereof from the Secured Party, all insurance proceeds
shall be adjusted with, and payable to the Secured Party and shall provide
that
no cancellation or termination thereof shall be effective until at least
30 days
after receipt by the Secured Party of written notice thereof.
4.5
Debtor
will,
promptly upon request, provide to the Secured Party all information and evidence
it may reasonably request concerning the Collateral to enable the Secured
Party
to enforce the provisions of this Agreement.
4.6
At
the
request of the Secured Party, Debtor will join with the Secured Party in
executing one or more (1) Financing Statements, (2) Copyright Registration
Applications, and/or (3) Notices of Assignment of Copyright pursuant to any
applicable law, in form satisfactory to the Secured Party.
4.7
Except
in the
ordinary course of business or otherwise in accordance with the New Note,
Debtor
shall not, without the prior written approval of the Secured Party sell,
encumber or otherwise transfer any Collateral, or agree or attempt to do
so.
4.8
(a)
Debtor
shall
notify the Secured Party promptly of: (i) any material delay in Debtor’s
performance of any of its obligations to any account debtor or the assertion
of
any class, offsets, defenses or counterclaims by any account debtor, or any
disputes with account
7
debtors,
or any settlement, adjustment or compromise thereof, (ii) all material adverse
information relating to the financial condition of any account debtor and
(iii)
any event or circumstance which, to Debtor’s knowledge would cause any then
existing Accounts to no longer be collected pursuant to their original terms.
No
credit, discount, allowance or extension or agreement for any of the foregoing
shall be granted to any account debtor without the Secured Party’s consent,
except in the ordinary course of Debtor’s business in accordance with practices
and policies previously disclosed in writing to Debtor. So long as no Event
of
Default exists or has occurred and is continuing, Debtor shall settle, adjustor
compromise any claim, offset, counterclaim or dispute with any account debtor.
At any time that an Event of Default exists or has occurred and is continuing,
the Secured Party shall, at their option, have the exclusive right to settle,
adjust or compromise any claim, offset, counterclaim or dispute with account
debtors or grant any credits, discounts or allowances.
(b)
The
Secured
Party shall have the right at any time or times, in the Secured Party’s name or
in the name of a nominee of the Secured Party, to verify the validity, amount
or
any other matter relating to any Account or other Collateral, by mail,
telephone, facsimile transmission or otherwise.
(c)
The
Secured
Party may, at any time or times that an Event of Default exists or has occurred
and is continuing, (i) notify any or all account debtors that the Accounts
have
been assigned to the Secured Party and that the Secured Party has a security
interest therein and the Secured Party may direct any or all accounts debtors
to
make payment of Accounts directly to the Secured Party, (ii) extend the time
of
payment of, compromise settle or adjust for cash, credit, return of merchandise
or otherwise, and upon any terms or conditions, any and all Accounts or other
obligations included in the Collateral and thereby discharge or release the
account debtor or any other party or parties in any way liable for payment
thereof without affecting any of the Obligations, (iii) demand, collect or
enforce payment of any Accounts or such other obligations, but without any
duty
to do so, and the Secured Party shall not be liable for its failure to collector
enforce the payment thereof nor for the negligence of its agents or attorneys
with respect thereto and (iv) take whatever other action the Secured Party
may
deem necessary or desirable for the protection of its interests. At any time
that an Event of Default exists or has occurred and is continuing, at the
Secured Party’s request, all invoices and statements sent to any account debtor
shall state that the Accounts and such other obligations have been assigned
to
the Secured Party and are payable directly and only to the Secured Party
and
Debtor shall deliver to the Secured Party such originals of documents evidencing
the sale and delivery of goods or the performance of services giving rise
to any
Accounts as the Secured Party may require.
4.9
With
respect
to the Equipment:
(a)
upon
the
Secured Party’s request, Debtor shall, at its expense, at any time or times as
the Secured Party may request on or after an Event of Default, deliver or
cause
to be delivered to the Secured Party written reports or appraisals as to
the
Equipment in form, scope and methodology acceptable to the Secured Party
and by
an appraiser acceptable to the Secured Party;
8
(b)
Debtor
shall
keep the Equipment in good order, repair, naming and marketable condition
(ordinary wear and tear excepted);
(c)
Debtor
shall
use the Equipment with all reasonable care and caution and in accordance
with
applicable standards of any insurance and in conformity with all material
applicable laws;
(d)
the
Equipment
is and shall be used in Debtor’s business and not for personal, family,
household or farming use;
(e)
the
Equipment
is now and shall remain personal property and Debtor shall use commercially
reasonable efforts to not permit any of the Equipment to be or become a part
of
or affixed to real property; and
(f)
Debtor
assumes all responsibility and liability arising from the use of the Equipment
unless in the Secured Party’s possession.
4.10
With
respect
to the Inventory:
(a)
upon
the
Secured Party’s request, Debtor shall, at its expense, no more than once in any
twelve (12) month period, but at any time or times as the Secured Party may
request on or after an Event of Default, deliver or cause to be delivered
to the
Secured Party written reports or appraisals as to the Inventory in form,
scope
and methodology acceptable to the Secured Party and by an appraiser acceptable
to the Secured Party, addressed to the Secured Party, upon which the Secured
Party are expressly permitted to rely;
(b)
Debtor
shall
produce, use, store and maintain the Inventory with all reasonable care and
caution and in accordance with applicable standards of any insurance and
in
conformity with applicable laws (including the requirements of the Federal
Fair
Labor Standards Act of 1938, as amended and all rules, regulations and orders
related thereto);
(c)
Debtor
assumes all responsibility and liability arising from or relating to the
production, use, sale or other disposition of the Inventory; and
(d)
Debtor
shall
keep the Inventory in good and marketable condition.
4.11
Debtor
shall
duly pay and discharge all taxes, assessments contributions and governmental
charges upon or against it or its properties or assets, except for taxes
the
validity of which are being contested in good faith by appropriate proceedings
diligently pursued and available to Debtor and with respect to which adequate
reserves have been set aside on its books. Debtor shall be liable for any
tax or
penalties (other than income taxes, franchise taxes and any penalties related
thereto) imposed on the Secured Party as a result of the financing arrangements
provided for herein and Debtor agrees to indemnify and hold the Secured Party
harmless with respect to the foregoing, and to repay to the Secured Party
on
demand the amount thereof, and until paid by Debtor such amount shall be
added
and deemed part of the Loan. The foregoing indemnity shall survive the payment
of the Secured Obligations and the termination or non-renewal of this
Agreement.
9
4.12
Except
in the
ordinary course of business or as otherwise permitted by the New Note, other
than the Secured Obligations, Debtor shall not incur, create, assume, become
liable in any manner with respect to, or permit to exist, any obligations
or
indebtedness.
4.13
As
soon as
practicable, but no later than thirty (30) days after the date hereof, Debtor
shall deliver to the Secured Party evidence that the source code for the
most
recent versions, as of the date hereof, of all Software commercially released
by
Debtor has been delivered to an escrow agent (“Escrowed Source Code”) reasonably
satisfactory to the Secured Party pursuant to an escrow agreement in form
and
substance reasonably satisfactory to the Secured Party. Debtor shall,
as soon as practicable following the date of delivery by Secured Party to
Debtor
of a written request that the source code escrow contemplated by this Section
4.13 be updated, but in each case no later than thirty (30) days following
such
date, deliver to such escrow agent such additional source code as is necessary
to ensure that any source code so delivered, together with all source code
previously delivered to such escrow agent pursuant to this Section 4.13,
includes the source code for the most recent versions, as of the date of
delivery of such request, of all Software commercially released by Debtor;
provided, however, that Debtor shall have no obligation under this sentence
arising from any such request delivered to Debtor within ninety (90) days
of the
date hereof or within ninety (90) days of the most recent date on which any
other such request has been delivered to Debtor. Debtor shall not
change such source code at any time that a Default or Event of Default has
occurred and is continuing without furnishing to such escrow agent the new
source code within sixty (60) days following the date of such change, once
such
source code has been delivered to such escrow agent pursuant to this Section
4.13.
5.
General
Authority. Debtor hereby irrevocably appoints the Secured
Party as its true and lawful attorney, with full power of substitution, in
the
name of Debtor, the Secured Party or otherwise, for the sole use and benefit
of
the Secured Party, but at such Debtor’s expense, to the extent permitted by law
to exercise, at any time and from time to time while an Event of Default
has
occurred and is continuing all or any of the following powers with respect
to
all or any of the Collateral owned by Debtor, (a) to settle, compromise,
compound, prosecute or defend any action or proceeding with respect to the
Collateral, (b) to sell, transfer, assign otherwise deal in or with the same
or
the proceeds or avails thereof, as fully and effectually as if the Secured
Party
were the absolute owner of the Collateral; provided, that
the
Secured Party shall give Debtor not less than 10 days’ prior written notice of
the time and place of any sale or other intended disposition of any of the
Collateral except any Collateral which is perishable or threatens to decline
speedily in value or is of a type customarily sold on a recognized market.
Debtor agrees that such notice constitutes “reasonable notification” within the
meaning of Section 9-504(3) of the UCC.
6.
Remedies
Upon Event of
Default.
6.1
If
any Event
of Default has occurred and is continuing, the Secured Party may exercise
all
other rights of a secured party under the UCC (whether or not in effect in
the
jurisdiction where such rights are exercised) and, in addition, the Secured
Party may, without being required to give any notice, except as herein provided
or as may be required by mandatory provisions of law sell the Collateral
or any
part thereof at public or private sale or at any broker’s board or on any
securities exchange, for cash, upon credit or for future delivery and at
such
price
10
or
prices
as the Secured Party may deem satisfactory. The Secured Party may be the
purchaser of any or all of the Collateral so sold at any public sale (or,
if the
Collateral is of a type customarily sold in a recognized market or is of
a type
which is the subject of widely distributed standard price quotations, at
any
private sale) and thereafter hold the same, absolutely, free from any right
or
claim of whatsoever kind. Debtor agrees to execute and deliver such documents
and take such other action as the Secured Party deems necessary or advisable
in
order that any such sale may be made in compliance with law. Upon any such
sale,
the Secured Party shall have the right to deliver, assign and transfer to
the
purchaser thereof the Collateral so sold. Each purchaser at any such sale
shall
hold the Collateral so sold to it absolutely, free from any claim or right
of
whatsoever kind, including any equity or right of redemption of Debtor which
may
be waived and Debtor, to the extent permitted by law, hereby specifically
waives
all rights of redemption, stay or appraisal which it has or may have under
any
law now existing or hereafter adopted. The notice of sale shall, (1) in vase
of
a public sale, state the time and place fixed for such sale, and (2) in the
case
of a private sale, state the day after which such sale may be consummated.
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 in the notice
of
such sate. At any such sale the Collateral may be sold in one lot as an entirety
or in separate parcels, as the Secured Party may determine. The Secured Party
shall not be obligated to make any such sale pursuant to any such notice.
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 the sale, and such sale may be made at any time
or
place to which the same may be so adjourned, In case of any sale of all or
any
part of the Collateral on credit or for future delivery, the Collateral so
sold
may be retained by the Secured Party until the selling price is paid by the
purchaser thereof, but the Secured Party shall not incur any liability in
case
of the failure of such purchaser to take up and pay for the Collateral so
sold
and, in case of any such failure, such Collateral may again he sold upon
like
notice. The Secured Party, instead of exercising the power of sale herein
conferred upon them, may proceed by a suit or suits at law or in equity to
foreclose the Security Interests and sell the Collateral, or any portion
thereof
under a judgment or decree of a court or courts of competent
jurisdiction.
6.2
In
addition
to the other rights of the Secured Party described herein, if an Event of
Default has occurred and is continuing, Debtor shall use commercially reasonable
efforts to cause such depository institution to execute and deliver to the
Secured Party a Depository Account Control Agreement with regard to each
of the
Depository Accounts of the Debtor.
6.3
For
the
purpose of enforcing any and all rights and remedies under this Agreement,
if
any Event of Default has occurred and is continuing, then the Secured Party
may
(a) require Debtor to, and Debtor agrees that it will, at its own expense,
forthwith assemble all or any part of the Collateral as directed by the Secured
Party and make it available at a place designated by the Secured Party which
is,
in its opinion, reasonably convenient to the Secured Party and Debtor, whether
at the premises of Debtor or otherwise, (b) to the extent permitted by
applicable law, enter, with or without process of law and without breach
of the
peace, any premise where any of the Collateral is or may be located, and
without
charge or liability to it seize and remove such Collateral from such premises,
(c) have access to and use any of Debtor’s books and records relating to the
Collateral and (d) prior to the disposition of the Collateral, process, repair
or recondition it or otherwise prepare it for disposition in any manner and
to
the
11
extent
the Secured Party deems appropriate and, in connection with such preparation
and
disposition, use without charge any trademark, trade name, copyright, patent
or
technical process used by Debtor.
6.4
Any
laboratory which has possession of any of the Collateral is hereby constituted
and appointed by Debtor as pledgeholder for the Secured Party and the Secured
Party may authorize each such pledgeholder to sell all or any portion of
the
Collateral upon the order and direction of the Secured Party, and Debtor
hereby
waives any and all claims for damages, or otherwise, for any action taken
by
such pledgeholder.
7.
Application
of
Proceeds. Upon the occurrence and during the continuance of an
Event of Default, the proceeds of any sale of, or other realization upon,
all or
any part of the Collateral shall be applied by the Secured Party in the
following order of priorities:
7.1
First,
to
payment of the expenses of such sale or other realization, including, on
a pari passu basis, reasonable
compensation to agents and counsel for the Secured Party and all expenses,
liabilities and advances incurred or made by the Secured Party in connection
therewith, and any other unreimbursed expenses for which the Secured Party
is to
be reimbursed under any other agreement or instrument entered into in connection
with the Loan or this Agreement and unpaid fees owing to the Secured
Party.
7.2
Next
to the
payment of the Secured Obligations, on a pari passu basis, in
accordance with the provisions of the Loan, until all such amounts have been
paid in fill.
7.3
Finally,
to
Debtor or its successors or assigns, or as a court of competent jurisdiction
may
direct, of any surplus then remaining from such proceeds.
The
Secured Party may make distributions hereunder in cash or in kind or in any
combination thereof.
8.
Termination
of Security
Interest; Release of Collateral. Upon the repayment in full of
all Secured Obligations, the Security Interests shall terminate and all rights
to the Collateral shall revert to Debtor. At any time and from time to time
prior to such termination of the Security Interests, the Secured Party may
release any of the Collateral or release Debtor of its obligations hereunder
with the prior written consent of the Secured Party.
9.
Governing
Law. This Agreement is governed by and construed in accordance
with the laws of the State of New York, irrespective of New York’s choice-of-law
principles.
10.
Further
Assurances. Each party to this Agreement shall execute and
deliver all instruments and documents and take all actions as may be reasonably
required or appropriate to carry out the purposes of this Agreement.
11.
Counterparts
and
Exhibits. This Agreement may be executed in counterparts, each
of which is deemed an original and all of which together constitute one
document. All exhibits attached to and referenced in this Agreement are
incorporated into this Agreement.
12
12.
Time
of
Essence. Time and strict and punctual performance are of the
essence with respect to each provision of this Agreement.
13.
Attorney’s
Fees. The prevailing party(ies) in any litigation,
arbitration, mediation, bankruptcy insolvency or other proceeding (“Proceeding”)
relating to the enforcement or interpretation of this Agreement may cover
from
the unsuccessful party(ies) all costs, expenses, and actual attorneys fees
(including expert witness and other consultants’ fees and costs) relating to or
arising out of (a) the Proceeding (whether or not the Proceeding proceeds
to
judgment), and (b) any post-judgment or post-award proceeding including,
without
limitation, one to enforce or collect any judgment or award resulting from
the
Proceeding. All such judgments and awards shall contain a specific provision
for
the recovery of all such subsequently incurred costs, expenses, and actual
attorney’s fees.
14.
Modification. This
Agreement may be modified only by a contract in writing executed by the party
to
this Agreement against whom enforcement of the modification is sought.
15.
Headings. The
paragraph headings in this Agreement; (a) are included only for convenience,
(b)
do not in any manner modify or limit any of the provisions of this Agreement,
and (c) may not be used in the interpretation of this Agreement.
16.
Prior
Understandings. This Agreement and all documents specifically
referred to and executed in connection with this Agreement: (a) contain the
entire and final agreement of the parties to this Agreement with respect
to the
subject matter of this Agreement, and (b) supersede all negotiations,
stipulations, understandings, agreements representations and warranties if
any,
with respect to such subject matter, which precede or accompany the execution
of
this Agreement.
17.
Interpretation. Whenever
the context so requires in this Agreement, all words used in the singular
may
include the plural (and vice versa) and the word ‘Person’ includes a natural
person, a corporation, a firm, a partnership, a joint venture, a trust, an
estate or any other entity. The terms “includes” and “including” do not imply
any limitation. For purposes of this Agreement, the term “day means any calendar
day and the term “business day” means any calendar day other than a Saturday,
Sunday or any other day designated as a holiday under California Government
Code
Sections 6700-6701. Any act permitted or required to be performed under this
Agreement upon a particular day which is not a business day may be performed
on
the next business day with the same effect as if it bad been performed upon
the
day appointed. No remedy or election under this Agreement is exclusive, but
rather, to the extent permitted by applicable law, each such remedy and election
is cumulative with all other remedies at law or inequity.
18.
Partial
Invalidity. Each provision of this Agreement is valid and
enforceable to the fullest extent permitted by law. If any provision of this
Agreement (or the application of such provision to any Person or circumstance)
is or becomes invalid or unenforceable, the remainder of this Agreement,
and the
application of such provision to Persons or circumstances other than those
as to
which it is held invalid or unenforceable, are not affected by such invalidity
or unenforceability.
13
19.
Successors-in-Interest
and
Assigns. Debtor may not voluntarily or by operation of law
assign, hypothecate, delegate or otherwise transfer or encumber all or any
part
of its rights, duties or other interests in this Agreement without the prior
written consent of the Secured Party, which consent may be withheld in the
Secured Party’s sole and absolute discretion. Any such transfer in violation of
this paragraph is void. Subject to the foregoing and any other restrictions
on
transferability contained in this Agreement, this Agreement is binding upon
and
inures to the benefit of the successors-in-interest and assigns of each party
to
this Agreement.
20.
Notices. All
notices or other communications required or permitted to be given to a party
to
this Agreement shall be in writing and shall be personally delivered, sent
by
facsimile or electronic mail, sent by certified mail, postage prepaid, return
receipt requested, or sent by an overnight express courier service that provides
written confirmation of delivery, to such party at the following respective
address:
|
Secured
Party:
|
ERP2
Holdings, LLC
c/o
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇
▇▇▇▇ ▇▇▇▇▇▇
▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Board
of Managers
Fax: (▇▇▇)
▇▇▇-▇▇▇▇
Email: ▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
|
|
with
a copy to:
|
Stroock
& Stroock & ▇▇▇▇▇ LLP
▇▇▇
▇▇▇▇▇▇ ▇▇▇▇
▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇
▇▇▇▇▇▇▇▇
Fax: (▇▇▇)
▇▇▇-▇▇▇▇
Email: ▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇.▇▇▇
|
|
Debtor:
|
▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇
▇▇▇
Fax: (▇▇▇)
▇▇▇-▇▇▇▇
Email: ▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
|
|
with
a copy to:
|
▇▇▇▇▇▇,
▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Fax: (▇▇▇)
▇▇▇-▇▇▇▇
Email:
▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇.▇▇▇
|
Each
such
notice or other communication shall be deemed given, delivered and received
upon
its actual receipt, except that if it is sent by mail in accordance with
this
paragraph, then it shall be deemed given, delivered and received three days
after the date such notice or other communication is deposited with the United
States Postal Service in accordance with this
14
paragraph.
Any party to this Agreement may give a notice of a change of its address
to the
other party(ies) to this Agreement.
21.
Waiver. Any
waiver of a default or provision under this Agreement must be in writing.
No
such waiver constitutes a waiver of any other default or provision concerning
the same or any other provision of this Agreement. No delay or omission by
a
party in the exercise of any of its rights or remedies constitutes a waiver
of
(or otherwise impairs) such right or remedy. A consent to or approval of
an act
does not waive or render unnecessary the consent to or approval of any other
or
subsequent act.
22.
Drafting
Ambiguities. Each party to this Agreement has reviewed and
revised this Agreement and has had the opportunity to have such party’s legal
counsel review and revise this Agreement. Each party to this
Agreement acknowledges that this Agreement has been prepared by Stroock &
Stroock & ▇▇▇▇▇ LLP (“Stroock”) which represents only the Secured Party,
that Debtor is not being represented by Stroock in relation to this Agreement
and that Debtor has been advised to retain its own legal counsel. The rule
of
construction that ambiguities are to be resolved against the drafting party
or
in favor of the party receiving a particular benefit under an agreement may
not
be employed in the interpretation of this Agreement or any amendment to this
Agreement.
23.
Third
Party
Beneficiaries. Nothing in this Agreement is intended to confer
any rights or remedies or any Person or entity other than the parties to
this
Agreement and their respective successors-in-interest and permitted assignees,
unless such rights are expressly granted in this Agreement to another Person
specifically identified as a “Third Party Beneficiary.”
24.
JURISDICTION. WITHOUT
LIMITING IN ANY WAY THE SECURED PARTY’S RIGHT TO ENFORCE ANY REMEDY AVAILABLE
UNDER THE UCC WITHOUT FORMAL LEGAL OR JUDICIAL ACTION, BORROWER AND SECURED
PARTY SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE FEDERAL DISTRICT COURTS
LOCATED IN THE STATE OF NEW YORK.
25.
Fees
and
Expenses. The Debtor shall pay all reasonable fees and
expenses of the Secured Party in connection with the negotiation, execution
and
delivery of this Agreement.
[Signature
Page Follows]
15
IN
WITNESS WHEREOF, Debtor and the Secured Party have each caused this Agreement
to
be executed by its duly authorized representative as of the day and year
first
written above.
|
DEBTOR:
|
||
|
By:
|
/s/ ▇▇▇▇
▇. Low
|
|
|
Name: ▇▇▇▇
▇. Low
|
||
|
Title: Chief
Financial Officer
|
||
|
SECURED
PARTY:
|
ERP2
HOLDINGS, LLC
|
|
|
By:
|
/s/
▇▇▇▇▇ ▇▇▇▇▇
|
|
|
Name: ▇▇▇▇▇
▇▇▇▇▇
|
||
|
Title: Majority
Manager
|
||