SECURITY
AGREEMENT
(Junior)
THIS SECURITY AGREEMENT dated as of August 21,
2008 (this "Agreement"), is by and between REMOTE KNOWLEDGE, INC.,
a Delaware corporation ("Borrower"), and MURAGAI LLC, a Delaware
limited liability company, as Lender Representative (as defined in
the Credit Agreement (hereinafter defined) for the Lenders (as
defined in the Credit Agreement) described below (the
“Secured Party”).
A. Debtor,
each of the lenders party thereto as Lenders and Secured Party as
Lender or Representative for the Lenders have entered into that
certain Credit Agreement dated as of even date herewith (such
Credit Agreement, as the same may be amended or modified from time
to time, is referred to herein as the "Credit
Agreement").
B. Debtor
and SLW INTERNATIONAL, LLC, a Texas limited liability company
(“SLWI”), have executed that certain Security Agreement
dated as of even date herewith (“Senior Security
Agreement”), which Security Agreement secures the obligations
of Debtor arising under that certain promissory note in the
original principal amount of $800,000.00 dated of even date
herewith executed by Debtor and payable to the order of
SLWI.
C. Secured
Party has conditioned its obligations under the Credit Agreement
upon, among other things, the execution and delivery of this
Agreement by Debtor.
NOW THEREFORE, in consideration of the premises
and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I.
Security Interest
Section 1.1
Security Interest . Debtor hereby grants to
Secured Party a second priority security interest (junior and
subordinate only to the Senior Security Agreement) in the following
property, whether now owned or existing or hereafter arising or
acquired and wherever arising or located (such property being
hereinafter sometimes called the "Collateral"):
(a) all
of its accounts, accounts receivable, contract rights, general
intangibles, chattel paper, instruments, documents, promissory
notes, deposit accounts, funds on deposit with Secured Party,
investment property, investment securities, financial assets,
letter of credit rights, electronic chattel paper, software,
supporting obligations, payment intangibles, commercial tort claims
and all other personal property, whether now owned or hereafter
acquired, including without limitation, all lease receivables and
note receivables, all cash, notes, drafts and acceptances arising
therefrom, all returned and repossessed goods arising from or
relating to any such accounts, or other proceeds of any sale, lease
or other disposition of inventory, all tradenames, trademarks,
patents and other licenses, and all proceeds (including insurance
proceeds) and products thereof;
(b) all
of its inventory, whether now owned or hereafter acquired,
including, without limitation, all raw materials, goods in process,
finished goods and other tangible personal property held for sale
or lease or furnished or to be furnished under contracts for
service or used or consumed in Debtor's trade or business and all
additions, accessions, substitutions, attachments and replacements
thereto and all contracts with respect thereto and all documents of
title evidencing or representing any part thereof and all products
and proceeds (including insurance proceeds) thereof; and
(c) all
of its machinery, equipment, rolling stock, furniture, fixtures and
personalty of every nature and description, whether now owned or
hereafter acquired, and all appurtenances, accessions and additions
thereto and substitutions and replacements therefor, wheresoever
located, including all tools, parts and accessories used in
connection therewith, and all products and proceeds thereof
(including insurance proceeds).
All terms used
herein that are defined in the Uniform Commercial Code as adopted
in the State of Texas shall have the meanings specified in the
Uniform Commercial Code as adopted by the State of Texas as in
effect from time to time (the "UCC").
Section 1.2
Obligations . The Collateral shall secure the
following obligations, indebtedness, and liabilities (all such
obligations, indebtedness, and liabilities being hereinafter
sometimes called the "Obligations"):
(a) the
obligations and indebtedness of Debtor to Secured Party evidenced
by that certain promissory note in the original principal amount of
$4,000,000.00 dated of even date herewith, executed by Debtor and
payable to the order of Secured Party;
(b) the
obligations and indebtedness of Debtor to Secured Party evidenced
by the Credit Agreement;
(c) all
future advances by Secured Party to Debtor;
(d) the
Obligations (as defined in the Credit Agreement);
(e) all
costs and expenses, including, without limitation, all attorneys'
fees and legal expenses, incurred by Secured Party to preserve and
maintain the Collateral, collect the obligations herein described,
and enforce this Agreement;
(f) all
other obligations, indebtedness, and liabilities of Debtor to
Secured Party, now existing or hereafter arising, regardless of
whether such obligations, indebtedness, and liabilities are
similar, dissimilar, related, unrelated, direct, indirect, fixed,
contingent, primary, secondary, joint, several, or joint and
several; and
(g) all
extensions, renewals, and modifications of any of the foregoing and
all promissory notes given in extension, renewal or modification of
any of the foregoing.
ARTICLE II.
Representations and
Warranties
To induce Secured Party to enter into this
Agreement and the Credit Agreement, Debtor represents and warrants
to Secured Party that:
Section 2.1
Title . Debtor owns, and with respect to
Collateral acquired after the date hereof Debtor will own, the
Collateral free and clear of any lien, security interest, or other
encumbrance other than in favor of Secured Party (pursuant to the
terms of this Agreement) and SLWI (pursuant to the Senior Security
Agreement). Secured Party, by its acceptance hereof,
acknowledges that SLWI has a first priority security interest and
liens in the Collateral pursuant to the Senior Security
Agreement.
Section 2.2
Accounts . Unless Debtor has given Secured Party
written notice to the contrary, whenever the security interest
granted hereunder attaches to an account, Debtor shall be deemed to
have represented and warranted to Secured Party as to each and all
of its accounts that (a) each account is genuine and is in all
respects what it purports to be, (b) each account represents the
legal, valid, and binding obligation of the account debtor
evidencing indebtedness unpaid and owed by such account debtor
arising out of the performance of labor or services by Debtor or
the sale or lease of goods by Debtor, (c) the amount of each
account represented as owing is the correct amount actually and
unconditionally owing except for normal trade discounts granted in
the ordinary course of business, and (d) no account is subject to
any offset, counterclaim, or other defense.
Section 2.3
Financing Statements . Except for those in favor
of Subordinated Lenders, no financing statement, security
agreement, or other lien instrument covering all or any part of the
Collateral is on file in any public office, except as may have been
filed in favor of Secured Party or SLWI.
Section 2.4
Jurisdiction of Organization; Legal Name . Debtor
is a Delaware corporation. Debtor's legal name set forth
in its Certificate of Incorporation filed with the Delaware
Secretary of State, as amended to date is: Remote Knowledge,
Inc. Debtor's organizational ID is 3679746.
Section 2.5
Principal Place of Business . The principal place
of business and chief executive office of Debtor, and the office
where Debtor keeps its books and records, is located at the address
of Debtor listed in the Credit Agreement.
Section 2.6
Location of Collateral . All inventory,
machinery, and equipment of Debtor are located at the address of
Debtor listed in the Credit Agreement.
Section 2.7
Business Purpose . The Collateral is used,
acquired and held exclusively for business purposes and no portion
of the Collateral is consumer goods. The Obligations
were incurred solely for business purposes and not as a
consumer-goods transaction or a consumer transaction.
ARTICLE III.
Covenants
Debtor covenants and agrees with Secured Party
that until the Obligations are paid and performed in
full:
Section 3.1
Maintenance . Debtor shall maintain the
Collateral in good operating condition and repair and shall not
permit any waste or destruction of the Collateral or any part
thereof. Debtor shall not use or permit the Collateral
to be used in violation of any law or inconsistently with the terms
of any policy of insurance. Debtor shall not use or
permit the Collateral to be used in any manner or for any purpose
that would impair the value of the Collateral or expose the
Collateral to unusual risk.
Section 3.2
Encumbrances . Debtor shall not create, permit,
or suffer to exist, and shall defend the Collateral, against any
lien, security interest, or other encumbrance on the Collateral
except the security interest of Secured Party hereunder and the
security interest of SLWI, and shall defend Debtor's rights in the
Collateral and Secured Party's security interest in the Collateral
against the claims of all persons and entities.
Section 3.3
Modification of Collateral . Debtor shall do
nothing to impair the rights of Secured Party in the
Collateral. Without the prior written consent of Secured
Party, Debtor shall not grant any extension of time for any payment
with respect to the Collateral, or compromise, compound, or settle
any of the Collateral, or release in whole or in part any person or
entity liable for payment with respect to the Collateral, or allow
any credit or discount for payment with respect to the Collateral
other than normal trade discounts granted in the ordinary course of
business, or release any lien, security interest, or assignment
securing the Collateral, or otherwise amend or modify any of the
Collateral.
Section 3.4
Disposition of Collateral . Debtor shall not
sell, lease, or otherwise dispose of the Collateral or any part
thereof without the prior written consent of Secured Party, except
Debtor may sell inventory in the ordinary course of
business.
Section
3.5
Further Assurances . At any time and from time to
time, upon the request of Secured Party, and at the sole expense of
Debtor, Debtor shall promptly execute and deliver all such further
instruments and documents and take such further action as Secured
Party may deem necessary or desirable to preserve and perfect its
security interest in the Collateral and carry out the provisions
and purposes of this Agreement. Debtor shall promptly
endorse and deliver to Secured Party all documents, instruments,
and chattel paper that it now owns or may hereafter acquire which
constitute Collateral or relate to the Collateral.
Section
3.6
Risk of Loss; Insurance . Debtor shall be
responsible for any loss of or damage to the
Collateral. Debtor shall maintain insurance on the
Collateral as provided in the Credit Agreement.
Section
3.7
Inspection . Debtor shall permit Secured Party
and its representatives to examine or inspect the Collateral
wherever located and to examine, inspect, and copy Debtor's books
and records at any reasonable time and as often as Secured Party
may desire all as further provided in the Credit
Agreement.
Section
3.8
Notification . Debtor shall promptly notify
Secured Party of (a) any lien, security interest, encumbrance, or
claim made or threatened against the Collateral, and (b) any
material change in the Collateral, including, without limitation,
any material damage to or loss of the Collateral.
Section
3.9
Organizational Changes . Debtor shall not,
without th
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