Document:

exv10w4

 

EXHIBIT 10.4

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR IN ANY OTHER
JURISDICTION. THE SECURITIES REPRESENTED HEREBY MAY NOT BE OFFERED, SOLD OR TRANSFERRED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER APPLICABLE SECURITIES LAWS
UNLESS OFFERED, SOLD OR TRANSFERRED PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THOSE LAWS.

SECURED PROMISSORY NOTE

Date: May 31, 2005 $1,750,000.00

          FOR VALUE RECEIVED, REMOTE DYNAMICS, INC., a corporation organized under the laws of the State
of Delaware (hereinafter called the “Borrower” or the “Corporation”), hereby promises to pay to the
order of SDS CAPITAL GROUP SPC, LTD., or registered assigns (individually, the “Holder”, and
collectively with the holders of any and all other notes of same like and tenor, the “Holders”),
the sum of One Million Seven Hundred Fifty Thousand Dollars ($1,750,000.00) on September 30, 2005
(the “Scheduled Maturity Date”), and to pay interest on the unpaid principal balance hereof at the
rate of eight percent (8%) per annum; provided, however, that the Scheduled Maturity Date shall be
extended in the event that the SEC elects to review the preliminary proxy statement relating to
obtaining Stockholder Approval (as described in Article V hereof) by the number of days, not
exceeding 60, between the tenth calendar day after filing such preliminary proxy statement and the
date of filing of the definitive proxy statement with the SEC. The principal amount hereof,
together with all accrued and unpaid interest thereon, shall be due and payable on the Scheduled
Maturity Date. Interest shall accrue on the unpaid principal balance hereof from the date hereof
(the “Issue Date”) until the same becomes due and payable, whether at maturity, or upon prepayment,
repayment, or otherwise. Interest shall be calculated based on a 365-day year and shall be payable
in arrears. All payments of principal and interest shall be made in, and all references herein to
monetary denominations shall refer to, lawful money of the United States of America. All payments
shall be made at such address as the Holder shall have given or shall hereafter give to the
Borrower by written notice made in accordance with the provisions of this Note.

     The term “Note” and all references thereto, as used throughout this instrument, shall mean
this instrument as originally executed, or if later amended or supplemented, then as so amended or
supplemented. The obligations of the Borrower under this Note are secured as provided in a
Security Agreement, dated as of the date hereof, by the Borrower in favor of SDS Capital Group SPC,
Ltd., (the “Security Agreement”). This Note, the Security Agreement, and the related Registration
Rights Agreement, dated as of the date hereof, between the Holder and

 

 

the Borrower (the “Registration Rights Agreement”) are collectively referred to herein as the “Note
Transaction Documents.”

ARTICLE I

PREPAYMENT

     A. Mandatory Prepayment. Upon the occurrence of an Event of Default (as defined
below), this Note shall be prepaid by the Borrower in accordance with the provisions of Article VI
hereof.

     B. Prepayment at Borrower’s Option. This Note may not be prepaid at the option of
Borrower without the prior written consent of the Holder.

ARTICLE II

CERTAIN DEFINITIONS

     The following terms shall have the following meanings:

     “Common Stock” means the shares of common stock, $.01 par value per share, of the Borrower.

     “Exchange Date” and “Exchange Trigger Date” mean the date on which Stockholder Approval (as
defined in Article V) is obtained.

     “Series B Certificate of Designations” means the Corporation’s Certificate of Designation,
Preferences and Rights of Series B Preferred Stock, as in effect from time to time.

     "Series B Preferred Stock” means shares of the Corporation’s Series B Convertible Preferred
Stock.

     “Series C-1 Warrant” means a warrant to acquire shares of Common Stock substantially in the
form of the warrant attached hereto as Exhibit A.

     “Series C-2 Warrant” means a warrant to acquire shares of Common Stock substantially in the
form of the warrant attached hereto as Exhibit B.

     “Warrants” means the Series C-1 Warrants and Series C-2 Warrants issuable upon exchange of
this Note as described in Article IV.

ARTICLE III

[INTENTIONALLY OMITTED]

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ARTICLE IV

MANDATORY EXCHANGE

     A. Automatic Exchange. If Stockholder Approval (as defined in Article V) is obtained
on or prior to the Scheduled Maturity Date, then the Note shall be automatically exchanged for a
Series C-1 Warrant and a Series C-2 Warrant to purchase such number of shares of Common Stock as
are determined in accordance with the formula set forth in Article IV.B, and (ii) all accrued and
unpaid interest shall immediately become due and payable. The Corporation shall provide immediate
written notice to the holder upon obtaining Stockholder Approval and the Corporation and the Holder
shall follow the applicable exchange procedures set forth in Article IV.C.

     B. Exchange Formula. The number and kind of warrants issuable upon exchange of the
Note shall be determined as follows:

          Series C-1 Warrants. In exchange for the Note, the Borrower shall issue to the Holder
the Series C-1 Warrant.

          Series C-2 Warrants. The Borrower shall also issue to the Holder the C-2 Warrant.

     C. Mechanics of Exchange. Following receipt by the Holder of written notice of the
Stockholder Approval, the Holder shall surrender or cause to be surrendered this Note, duly
endorsed, as soon as practicable thereafter to the Corporation or the transfer agent. Upon receipt
by the Corporation of a facsimile copy of this Note from the Holder, the Corporation shall
immediately send, via facsimile, a confirmation to the Holder stating that this Note has been
received, the date upon which the Corporation expects to deliver the Series C-1 Warrants and the
Series C-2 Warrants (the “Warrants”) issuable upon such exchange and the name and telephone number
of a contact person at the Corporation regarding the conversion. The Corporation shall not be
obligated to issue Warrants upon an exchange unless either this Note is delivered to the
Corporation or the transfer agent as provided above, or the Holder notifies the Corporation or the
transfer agent that such certificates have been lost, stolen or destroyed and delivers the
documentation to the Corporation required by Article IX.H hereof.

          (i) Delivery of Warrants Upon Exchange. Upon the surrender of this Note pursuant to
paragraph C above, the Corporation shall, no later than the later of (a) the second business day
following the Exchange Trigger Date and (b) the business day following the date of such surrender
(or, in the case of lost, stolen or destroyed certificates, after provision of indemnity pursuant
to Article IX.H), issue and deliver to the holder or its nominee the number of Warrants issuable
upon exchange of the Note.

          (ii) Taxes. The Corporation shall pay any and all taxes which may be imposed upon it
with respect to the issuance and delivery of the Warrants.

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ARTICLE V

CERTAIN AGREEMENTS OF THE CORPORATION

     A. [Intentionally omitted].

     B. Reservation of Shares. Until the Scheduled Maturity Date or earlier cancellation
of this Note, the Corporation shall at all times have authorized, and reserved for issuance as
contemplated by this Note, a sufficient number of shares of Common Stock to provide for the
exercise in full of the Warrants.

     C. [Intentionally omitted].

     D. Certain Actions Prohibited. The Corporation shall not, by amendment of its charter
or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or
sale of securities, or any other voluntary action, avoid or seek to avoid the observance or
performance of any of the terms to be observed or performed by it hereunder, but will at all times
in good faith assist in the carrying out of all the provisions of this Note and in the taking of
all such action as may reasonably be requested by the holder of this Note in order to protect the
economic benefit inuring to the holder hereof and the exchange privileges of the holder of this
Note against impairment, consistent with the tenor and purpose of this Note.

     E. Successors and Assigns. This Note shall be binding upon any entity succeeding to
the Corporation by merger, consolidation, or acquisition of all or substantially all of the
Corporation’s assets.

     F. Stockholder Approval; Special Meeting of Stockholders. Promptly following the
Issue Date, the Corporation and its Board of Directors shall (i) prepare proxy materials and
solicit proxies requesting Stockholder Approval, (ii) call a special meeting (the “Special
Meeting”) of the Corporation’s stockholders (which shall be held no later than August 1, 2005,
subject to any delay caused solely by the SEC’s review of the preliminary proxy statement relating
thereto) for the purpose of obtaining Stockholder Approval, (iii) recommend that the Corporation’s
stockholders vote in favor of such approval, and (iv) otherwise use commercially reasonable best
efforts to obtain Stockholder Approval. If Stockholder Approval is not obtained at the Special
Meeting, the Corporation and its Board of Directors shall continue to use commercially reasonable
best efforts to obtain Stockholder Approval until Stockholder Approval is obtained. A request for
Stockholder Approval, unless the Board of Directors receives an opinion of counsel advising that
such recommendation would constitute a breach of the Directors’ fiduciary duties imposed by
applicable law, shall include a recommendation that the Corporation’s stockholders vote in favor of
such approval. All expenses related to the solicitation of proxies with respect to, or otherwise
incurred in connection with, obtaining Stockholder Approval shall be borne by the Corporation.
“Stockholder Approval” means the affirmative vote by the holders of the requisite number of votes
cast at a meeting of stockholders to duly and validly approve (i) the issuance of Series C-1
Warrants and Series C-2 Warrants upon exchange of this Note in accordance with the terms hereof and
(ii) any other matter that the Borrower and Holder shall agree in writing to submit to the
stockholders for approval in connection with the issuance of this Note and related transactions.

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ARTICLE VI

EVENTS OF DEFAULT

     A. Events of Default. In the event (each of the events described in clauses (i)-(vii)
below after expiration of the applicable cure period (if any) being an “Event of Default”):

          (i) the Corporation fails to pay the principal hereof, and/or the accrued and unpaid interest
thereon, when due, whether at maturity, upon acceleration or otherwise;

          (ii) except with respect to matters covered by subparagraph (i) above, as to which such
subparagraph shall apply, the Corporation otherwise shall breach any material term hereunder or
under the other Note Transaction Documents, including, without limitation, the representations and
warranties contained therein (i.e., in the event of a material breach as of the date such
representation and warranty was made) and if such breach is curable, shall fail to cure such breach
within 10 business days after the Corporation has been notified thereof in writing by the Holder;

          (iii) the Corporation shall:

               (a) sell, convey or dispose of all or substantially all of its assets (the presentation of any
such transaction for stockholder approval being conclusive evidence that such transaction involves
the sale of all or substantially all of the assets of the Corporation);

               (b) merge, consolidate or engage in any other business combination with any other entity
(other than pursuant to a migratory merger effected solely for the purpose of changing the
jurisdiction of incorporation of the Corporation and other than pursuant to a merger in which the
Corporation is the surviving or continuing entity and its capital stock is unchanged) provided that
such merger, consolidation or business combination is required to be reported by the Corporation on
a Current Report pursuant to Item 1 of Form 8-K, or any successor form;

               (c) either (i) fail to pay, when due, or within any applicable grace period, any payment with
respect to any indebtedness of the Corporation in excess of $250,000 due to any third party, other
than payments contested by the Corporation in good faith, or otherwise breach or violate any
agreement for monies owed or owing in an amount in excess of $250,000 which breach or violation
permits the other party thereto to declare a default or otherwise accelerate amounts due
thereunder, or (ii) suffer to exist any other default or event of default under any agreement
binding the Corporation which default or event of default would or is likely to have a material
adverse effect on the business, operations, properties, prospects or financial condition of the
Corporation;

               (d) on or prior to the second anniversary of the Issue Date, issue or agree to issue any
future equity or equity-linked securities or debt which is convertible into equity or in which
there is an equity component, except for any Excluded Issuance (as such term is defined in the
Series B Certificate of Designations);

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               (e) fail to issue the Warrants in exchange for this Note as required hereunder;

          (iv) the Corporation or any subsidiary of the Corporation shall make an assignment for the
benefit of creditors, or apply for or consent to the appointment of a receiver or trustee for it or
for a substantial part of its property or business; or such a receiver or trustee shall otherwise
be appointed;

          (v) bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings for
relief under any bankruptcy law or any law for the relief of debtors shall be instituted by or
against the Corporation or any subsidiary of the Corporation, and if instituted against the
Corporation or any subsidiary of the Corporation by a third party, shall not be dismissed within 60
days of their initiation, or

          (vi) a Redemption Event (as such term is defined in the Series B Certificate of Designations)
shall occur and be continuing under the Series B Certificate of Designations,

          (vii) an Event of Default (as such term is defined in the applicable Note Transaction
Document) shall occur and be continuing under any other Note Transaction Document,

then, upon the occurrence of any such Event of Default, at the option of each Holder, exercisable
in whole or in part at any time and from time to time by delivery of a Default Notice (as defined
in paragraph C below) to the Corporation while such Event of Default continues, the Corporation
shall pay the Holders (and upon the occurrence of an Event of Default specified in subparagraphs
(iv) and (v) of this paragraph A, the Corporation shall be required to pay the Holders), in
satisfaction of its obligation to pay the outstanding principal amount of the Notes and accrued and
unpaid interest thereon, an amount equal to the Default Amount (as defined in paragraph B below)
and such Default Amount, together with all other ancillary amounts payable hereunder, shall
immediately become due and payable, all without demand, presentment or notice, all of which are
hereby expressly waived, together with all costs, including, without limitation, legal fees and
expenses of collection, and the Holder shall be entitled to exercise all other rights and remedies
available at law or in equity. For the avoidance of doubt, the occurrence of any event described
in clauses (i), (iii), (iv), (v), (vi) and (vii) above shall immediately constitute an Event of
Default and there shall be no cure period. Upon the Corporation’s receipt of any Default Notice
hereunder, the Corporation shall immediately (and in any event within one business day following
such receipt) deliver a written notice (a “Default Announcement”) to all Holders of the Notes
stating the date upon which the Corporation received such Default Notice and the amount of the
Notes covered thereby. Following the delivery of a Default Announcement hereunder, at any time and
from time to time, each Holder of the Notes may request (either orally or in writing) information
from the Corporation with respect to the instant default (including, but not limited to, the
aggregate principal amount outstanding of Notes covered by Default Notices received by the
Corporation) and the Corporation shall furnish (either orally or in writing) as soon as practicable
such requested information to such requesting Holder.

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     B. Definition of Default Amount. The “Default Amount” with respect to a Note means an
amount equal to the aggregate principal amount outstanding of the Notes being paid plus all accrued
and unpaid interest thereon through the payment date.

     C. Failure to Pay Default Amounts. If the Corporation fails to pay any Holder the
Default Amount with respect to any Note within five business days after its receipt of a notice
requiring such repayment (a “Default Notice”), then the Holder of any Note delivering such Default
Notice shall be entitled to interest on the Default Amount at a per annum rate equal to the lower
of twenty-four percent (24%) and the highest interest rate permitted by applicable law from the
date on which the Corporation receives the Default Notice until the date of payment of the Default
Amount hereunder. In the event the Corporation is not able to repay all of the outstanding Notes
subject to Default Notices delivered prior to the date upon which such repayment is to be effected,
the Corporation shall repay the outstanding Notes from each Holder pro rata, based on the total
amounts due on the Notes at the time of repayment included by such Holder in all Default Notices
delivered prior to the date upon which such repayment is to be effected relative to the total
amounts due under the Notes at the time of repayment included in all of the Default Notices
delivered prior to the date upon which such repayment is to be effected.

ARTICLE VII

[INTENTIONALLY OMITTED]

ARTICLE VIII

CONSENT RIGHTS

     Until the Scheduled Maturity Date or earlier cancellation of this Note, the Corporation shall
not, in each case without first obtaining the written consent of the holder of this Note:

     A. redeem, or declare or pay any dividends (whether in cash or stock), or otherwise make any
distributions with respect to any class or series of capital stock of the Corporation, except for
dividends and distributions payable solely in the capital stock of the Corporation, (ii) prepay any
outstanding indebtedness of the Corporation, or (iii) create or sell any securities that rank
senior to or pari passu with the Note.

     B. amend its certificate of incorporation or bylaws;

     C. sell all or substantially all of its assets or stock, or consolidate or merge with another
entity;

     D. enter into or permit to occur any Corporate Change transaction;

     E. sell, transfer or encumber technology, other than licenses granted in the ordinary course
of business;

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     F. liquidate, dissolve, recapitalize or reorganize;

     G. make any Dilutive Issuance (as defined in the Company’s Certificate of Designation,
Preferences and Rights of Series A Convertible Preferred Stock or the Company’s Certificate of
Designation, Preferences and Rights of Series B Convertible Preferred Stock);

     H. enter into any agreement, commitment, understanding or other arrangement to take any of the
foregoing actions; or

     I. cause or authorize any subsidiary of the Corporation to engage in any of the foregoing
actions.

ARTICLE IX

EXCHANGE RIGHT IN FUTURE FINANCINGS

     If and when the Company completes an offering of (i) equity or equity-linked securities, or
(ii) debt that is convertible into equity or in which there is an equity component (“Additional
Securities”), the Company shall offer a number of such Additional Securities to the holder in
accordance with the following provisions:

     A. Prior to the closing of the offering, the Company shall deliver a notice (the “Notice”) to
the holder stating (A) its bona fide intention to offer such Additional Securities, (B) the number
of such Additional Securities to be offered, (C) the price and terms, if any, upon which it
proposes to offer such Additional Securities, and (D) the anticipated closing date of the sale of
such Additional Securities.

     B. By written notification received by the Company within five (5) trading days after giving
of the Notice, the holder may elect to purchase or obtain, at the price and on the terms specified
in the Notice, up to that portion of such Additional Securities that have a total purchase price
equal to the principal amount of the Note; provided, however, that any holder of this Note who
elects to purchase Additional Securities pursuant to this Article IX shall be required to surrender
to the Company the Note, plus all accrued interest hereon, and the Company shall accept such Note
as payment in full for such Additional Securities.

     C. The rights set forth in this Article IX shall not be applicable to (A) the issuance or sale
of shares of Common Stock (or options therefor) to employees, officers, directors, or consultants
of the Company for the primary purpose of soliciting or retaining their employment or service
pursuant to a stock option plan (or similar equity incentive plan) approved in good faith by the
Board of Directors, (B) the issuance of Common Stock in connection with a bona fide underwritten
public offering at an offering price per share (prior to underwriter’s commissions and discounts)
of not less than 200% of the Conversion Price of the Series A Preferred Stock (if outstanding) or
the Series B Preferred Stock (if outstanding) (as adjusted to reflect any stock dividends,
distributions, combinations, reclassifications and other similar transactions effected by the
Company in respect to its Common Stock) that results in total

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proceeds to the Company of at least $25,000,000, (C) the issuance or sale of the Series B
Preferred Stock, the Warrants, or the shares of Common Stock issuable upon conversion and exercise
thereof, (D) the issuance of securities in connection with mergers, acquisitions, strategic
business partnerships or joint ventures approved by the Board of Directors and the primary purpose
of which, in the reasonable judgment of the Board of Directors, is not to raise additional capital
or (E) any issuance of securities as to which the holder shall have executed a written waiver of
the rights contained in this Article IX.

     D. The rights set forth in this Article IX may not be assigned or transferred.

     E. The provisions of this Article IX shall be of no further force or effect upon the
consummation of any transaction (other than those transactions contemplated by the Securities
Purchase Agreement entered into as of the date hereof by and among the Company and the initial
holders of the Series B Preferred Stock) resulting in the issuance of the Company’s Common Stock in
connection with a bona fide offering at an offering price per share (prior to any underwriter’s
commissions and discounts) of not less than $3.10 (as adjusted to reflect any stock dividends,
distributions, combinations, reclassifications and other similar transactions effected by the
Company in respect to its Common Stock) that results in total net proceeds to the Company of at
least $25,000,000.

ARTICLE X

MISCELLANEOUS

     A. Failure or Indulgency Not Waiver. No failure or delay on the part of any Holder in
the exercise of any power, right or privilege hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any such power, right or privilege preclude other or
further exercise thereof or of any other right, power or privilege.

     B. Notices. Any notices required or permitted to be given under the terms of this
Note shall be sent by certified or registered mail (return receipt requested) or delivered
personally or by courier or by confirmed telecopy, and shall be effective five days after being
placed in the mail, if mailed, or upon receipt or refusal of receipt, if delivered personally or by
courier or confirmed telecopy, in each case addressed to a party. The addresses for such
communications shall be:

If to the Corporation:

Remote Dynamics, Inc.

1155 Kas Drive, Suite 100

Richardson, TX 75081-1999

Telephone: (972) 301-2733

Facsimile: (972) 301-2263

Attention: J. Raymond Bilbao, Esquire

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with a copy simultaneously transmitted by like means (which transmittal

shall not constitute notice hereunder) to:

Locke Liddell & Sapp LLP

2200 Ross Avenue, Suite 2200

Dallas, TX 75201-6776

Telephone: (214) 740-8570

Facsimile: (214) 756-8570

Attention: Stephen L. Sapp, Esquire

     If to the Holder, to the address set forth under such Holder’s name on the signature page to
the Exchange Agreement executed by such Holder. Each party shall provide notice to the other
parties of any change in address or the address of any transferee of the Note.

     C. Amendment Provision. This Note and any provision hereof may be amended only by an
instrument in writing signed by the Corporation and the Holders of a majority of the then
outstanding principal amount of the Notes.

     D. Assignability. This Note shall be binding upon the Corporation and its successors
and assigns and shall inure to the benefit of the Holder and its successors and assigns.
Notwithstanding anything to the contrary contained in this Note or the Note Transaction Documents,
this Note may be pledged and all rights of the Holder under this Note may be assigned to any
affiliate or to any other person or entity without the consent of the Corporation.

     E. Cost of Collection. If an Event of Default occurs hereunder, the Corporation shall
pay the Holder hereof costs of collection, including reasonable attorneys’ fees.

     F. Governing Law; Jurisdiction. This Note shall be governed by and construed in
accordance with the laws of the State of Delaware applicable to contracts made and to be performed
in the State of Delaware. The Corporation irrevocably consents to the jurisdiction of the United
States federal courts and the state courts located in the State of Delaware in any suit or
proceeding based on or arising under this Note and irrevocably agrees that all claims in respect of
such suit or proceeding may be determined in such courts. The Corporation irrevocably waives the
defense of an inconvenient forum to the maintenance of such suit or proceeding. The Corporation
further agrees that service of process upon the Corporation mailed by first class mail shall be
deemed in every respect effective service of process upon the Corporation in any such suit or
proceeding. Nothing herein shall affect the right of any Holder to serve process in any other
manner permitted by law. The Corporation agrees that a final non-appealable judgment in any such
suit or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on such
judgment or in any other lawful manner.

     G. Denominations. At the request of the Holder, upon surrender of this Note, the
Corporation shall promptly issue new Notes in the aggregate outstanding principal amount hereof, in
the form hereof, in such denominations of at least $25,000 as the Holder shall request.

     H. Lost or Stolen Notes. Upon receipt by the Corporation of (i) evidence of the loss,
theft, destruction or mutilation of any Note and (ii) (y) in the case of loss, theft or
destruction, of

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indemnity (without any bond or other security) reasonably satisfactory to the Corporation, or
(z) in the case of mutilation, upon surrender and cancellation of any Note, the Corporation shall
execute and deliver a new Note of like tenor and date.

     I. Payment of Cash; Defaults. Whenever the Corporation is required to make any cash
payment to a Holder under the Notes (whether a Default Amount or upon prepayment, repayment or
otherwise), such cash payment shall be made in U.S. dollars to the Holder within five business days
after delivery by such Holder of a notice specifying that the Holder elects to receive such payment
in cash and the method (e.g., by check, wire transfer) in which such payment should be made. If
such payment is not delivered within such five business day period, such Holder shall thereafter be
entitled to interest on the unpaid amount at a per annum rate equal to the lower of twenty-four
percent (24%) and the highest interest rate permitted by applicable law until such amount is paid
in full to the Holder.

     J. Status as Note Holder. Upon an exchange of this Note for Warrants, (i) the
principal amount of the Notes (but none of the accrued and unpaid interest thereon) shall be deemed
converted into Warrants as of the Exchange Date and (ii) the Holder’s rights as a Holder of such
Notes shall cease and terminate, excepting only the right (A) to receive the Warrants and (B) to
exercise any remedies provided herein or otherwise available at law or in equity to such Holder
because of a failure by the Corporation to comply with the terms of the Notes.

     K. Remedies Cumulative. The remedies provided in this Note shall be cumulative and in
addition to all other remedies available under this Note, at law or in equity (including a decree
of specific performance and/or other injunctive relief), and nothing herein shall limit a Holder’s
right to pursue actual damages for any failure by the Corporation to comply with the terms of this
Note. The Corporation acknowledges that a breach by it of its obligations hereunder will cause
irreparable harm to the Holders of the Notes and that the remedy at law for any such breach may be
inadequate. The Corporation therefore agrees, in the event of any such breach or threatened
breach, that the Holders of the Notes shall be entitled, in addition to all other available
remedies, to an injunction restraining any breach, without the necessity of showing economic loss
and without any bond or other security being required.

     L. Business Day. For purposes of this Note, the term “business day” means any day,
other than a Saturday or Sunday or a day on which banking institutions in the State of Delaware are
authorized or obligated by law, regulation or executive order to close. If any payment to be made
hereunder shall be stated to be or become due on a day which is not a business day, such payment
shall be made on the next following business day and such extension of time shall be included in
computing interest in connection with such payment.

     M. Certain Waivers. Borrower and each endorser hereby waive presentment, notice of
nonpayment or dishonor, protest, notice of protest and all other notices in connection with the
delivery, acceptance, performance, default or enforcement of payment of this Note, and hereby waive
all notice or right of approval of any extensions, renewals, modifications or forbearances which
may be allowed.

     N. JURY TRIAL WAIVER. BORROWER HEREBY WAIVES, AND HOLDER BY ITS ACCEPTANCE HEREOF
THEREBY WAIVES, TRIAL BY JURY IN ANY LEGAL

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PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT
OR OTHERWISE) IN ANY WAY ARISING OUT OF OR RELATED TO THIS NOTE OR THE RELATIONSHIP EVIDENCED
HEREBY. THIS PROVISION IS A MATERIAL INDUCEMENT FOR HOLDER TO ACCEPT AND RELY UPON THIS NOTE.

     O. Severability. If any provision of this Note shall be prohibited or invalid, under
applicable law, it shall be ineffective only to such extent, without invalidating the remainder of
this Note.

     P. Maximum Interest Rate. If the effective interest rate on this Note would otherwise
violate any applicable usury law, then the interest rate shall be reduced to the maximum
permissible rate and any payment received by the Holder in excess of the maximum permissible rate
shall be treated as a prepayment of the principal of this Note.

[Remainder of this page intentionally left blank.]

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     IN WITNESS WHEREOF, Borrower has caused this Note to be executed by its duly authorized
officer as of the date first written above.

	 	 	 	 	 
	 	REMOTE DYNAMICS, INC.

 	 
	 	By:  	/s/ W. Michael Smith
 	 
	 	 	Name:  	W. Michael Smith 	 
	 	 	Title:  	Chief Operating Officer 	 
	 

[Signature page to Secured Promissory Note.]

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EXHIBIT A

Form of Series C-1 Warrant

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EXHIBIT B

Form of Series C-2 Warrant

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Exhibit 10.5

Execution Copy

SECURITY AGREEMENT

     THIS SECURITY AGREEMENT (this “Agreement”) is made as of May 31, 2005, by and among SDS
CAPITAL GROUP SPC, LTD. ( “Secured Party”), REMOTE DYNAMICS, INC., a Delaware corporation (together
with its successors and permitted assigns, “Borrower”), HIGHWAYMASTER OF CANADA LLC, a Delaware
limited liability company (“Highway”), and RD TECHNOLOGIES, INC., a Delaware corporation (“RD,”
and, together with Highway and their respective successors and permitted assigns, collectively and
jointly and severally, the “Subsidiaries”, and together with the Borrower, collectively and jointly
and severally, the “Grantors”).

Background

     A. Borrower and Secured Party entered into that certain Securities Purchase Agreement (as the
same may be amended, restated, modified, supplemented and/or replaced from time to time, the
“Purchase Agreement”) pursuant to which Borrower issued its 8% Convertible Secured Note in the
original principal amount of $1,750,000 to Secured Party (as the same may be amended, restated,
modified, supplemented and/or replaced from time to time, the “Note”).

     B. In order to induce Secured Party to extend the loans evidenced by the Note, each Grantor
has agreed to execute and deliver to Secured Party this Agreement and to grant Secured Party a
perfected first priority security interest in certain property of such Grantor to secure the prompt
payment, performance and discharge in full of all of Borrower’s obligations under the Note.

     Accordingly, each Grantor, intending to be legally bound, hereby agrees with Secured Party as
follows:

     1. DEFINITIONS. Capitalized terms used but not otherwise defined herein shall have
the meanings assigned to such terms in the Purchase Agreement. The following terms, as used
herein, shall have the following meanings:

          “Account” shall be used herein as defined in the Uniform Commercial Code.

          “Additional Grantor” shall have the meaning ascribed to such term in Section 4(q).

          “Chattel Paper” shall be used herein as defined in the Uniform Commercial Code.

          “Collateral” shall have the meaning ascribed to such term in Section 2.

          “Commercial Tort Claims” shall be used herein as defined in the Uniform Commercial
Code and shall include those claims listed (including plaintiff, defendant and a description of the
claim) on Schedule 5 attached hereto.

          “Deposit Account” shall be used herein as defined in the Uniform Commercial Code.

 

 

          “Document” shall be used herein as defined in the Uniform Commercial Code.

          “Equipment” shall be used herein as defined in the Uniform Commercial Code.

          “Event of Default” shall be used herein as defined in the Note, but in any event shall
include, but not be limited to, the following:

               (a) any payment default under, or any occurrence of an Event of Default as defined in the
Note, the other Transaction Documents or any agreement, document or instrument incidental to or
executed pursuant to any of the foregoing, or as an amendment or modification to, or in
substitution for, any of the foregoing;

               (b) if any representation or warranty made by any Grantor in this Agreement or any document,
certificate or statement furnished pursuant to this Agreement or in connection herewith or
therewith, shall be false or misleading in any material respect; or

               (c) an occurrence of a default in the due performance or observance of any term, covenant or
agreement required to be performed or observed pursuant hereto.

          “Fixtures” shall be used herein as defined in the Uniform Commercial Code.

          “General Intangibles” shall be used herein as defined in the Uniform Commercial Code.

          “Goods” shall be used herein as defined in the Uniform Commercial Code.

          “Instruments” shall be used herein as defined in the Uniform Commercial Code.

          “Inventory” shall be used herein as defined in the Uniform Commercial Code.

          “Investment Property” shall be used herein as defined in the Uniform Commercial Code.

          “Letter-of-Credit Right” shall be used herein as defined in the Uniform Commercial
Code.

          “Organizational Documents” mean, with respect to any Person other than a natural
person, the documents by which such Person was organized (such as a certificate of incorporation,
certificate of limited partnership or articles of organization, and including, without limitation,
any certificates of designation for preferred stock or other forms of preferred equity) and which
relate to the internal governance of such Person (such as bylaws, a partnership agreement or an
operating, limited liability or members agreement).

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          “Person” means any individual, corporation, partnership, limited liability company,
trust, unincorporated association, business, or other legal entity, and any government or any
governmental agency or political subdivision thereof.

          “Proceeds” shall be used herein as defined in the Uniform Commercial Code.

          “Secured Obligations” means all of the Grantors’ obligations under this Agreement and
the Note, in each case, whether now or hereafter existing, voluntary or involuntary, direct or
indirect, absolute or contingent, liquidated or unliquidated, whether or not jointly owed with
others, and whether or not from time to time decreased or extinguished and later increased, created
or incurred, and all or any portion of such obligations or liabilities that are paid, to the extent
all or any part of such payment is avoided or recovered directly or indirectly from Secured Party
as a preference, fraudulent transfer or otherwise as such obligations may be amended, supplemented,
converted, extended or modified from time to time. Without limiting the generality of the
foregoing, the term “Secured Obligations” shall include, without limitation: (i) principal of, and
interest on the Note and the loans extended pursuant thereto; (ii) any and all other fees,
indemnities, costs, obligations and liabilities of the Grantors from time to time under or in
connection with this Agreement or the Note; and (iii) all amounts (including but not limited to
post-petition interest) in respect of the foregoing that would be payable but for the fact that the
obligations to pay such amounts are unenforceable or not allowable due to the existence of a
bankruptcy, reorganization or similar proceeding involving any Grantor.

          “Supporting Obligations” shall be used herein as defined in the Uniform Commercial
Code.

          “Uniform Commercial Code” shall mean the Uniform Commercial Code in effect on the date
hereof and as amended from time to time, and as enacted in the State of Delaware or in any state or
states which, pursuant to the Uniform Commercial Code as enacted in the State of Delaware, has
jurisdiction with respect to all, or any portion of, the Collateral or this Agreement, from time to
time. It is the intent of the parties that the definitions set forth above should be construed in
their broadest sense so that Collateral will be construed in its broadest sense. Accordingly if
there are, from time to time, changes to defined terms in the Uniform Commercial Code that broaden
the definitions, they are incorporated herein and if existing definitions in the Uniform Commercial
Code are broader than the amended definitions, the existing ones shall be controlling.

     2. GRANT OF SECURITY INTEREST. As security for the payment and performance of the
Secured Obligations, each Grantor hereby pledges, hypothecates, delivers and assigns to Secured
Party, and creates in favor of Secured Party, a security interest in and to, all of such Grantor’s
right, title and interest in and to all the following property, in all its forms, in each case
whether now or hereafter existing, whether now owned or hereafter acquired, created or arising, and
wherever located (collectively, but without duplication, the “Collateral”):

          (a) All Goods, including, without limitation, all Equipment, Inventory and Fixtures;

          (b) All Accounts;

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          (c) All General Intangibles, including, without limitation, the patents and patent
applications, the trademarks and trademark applications,the registered copyrights, the
domain names, and the licenses for the use of any patents, trademarks, copyrights and domain
names listed on Section 3(l) of the Disclosure Schedule to the Purchase Agreement;

          (d) All Documents, Letter-of-Credit Rights, and Chattel Paper;

          (e) All Deposit Accounts and all cash (whether or not deposited in such Deposit
Accounts);

          (f) All Instruments;

          (g) All Investment Property;

          (g) All Commercial Tort Claims;

          (h) All Supporting Obligations; and

          (i) All Proceeds of any and all of the foregoing.

Notwithstanding the foregoing, nothing herein shall be deemed to constitute an assignment of any
asset which, in the event of an assignment, becomes void by operation of applicable Law or the
assignment of which is otherwise prohibited by applicable Law (in each case to the extent that such
applicable Law is not overridden by Sections 9-406, 9-407 and/or 9-408 of the Uniform Commercial
Code or other similar applicable Law); provided, however, that to the extent permitted by
applicable Law, this Agreement shall create a valid security interest in such asset and, to the
extent permitted by applicable Law, this Agreement shall create a valid security interest in the
Proceeds of such asset.

     3. REPRESENTATIONS AND WARRANTIES OF GRANTOR. Each Grantor represents and warrants to
the Secured Party as follows. The following representations and warranties shall survive execution
of this Agreement and shall not be affected or waived by any examination or inspection made by
Secured Party:

          (a) Accuracy of Information. All information heretofore, herein or hereafter supplied
to Secured Party by or on behalf of any Grantor with respect to the Collateral is true and correct
in all material respects.

          (b) Enforceability. This Agreement and the other Transaction Documents constitute
legal, valid and binding obligations of each Grantor, enforceable against it in accordance with
their respective terms, except as limited by bankruptcy, insolvency or similar laws of general
application relating to the enforcement of creditors’ rights and except to the extent specific
remedies may generally be limited by equitable principles.

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          (c) Ownership and Liens. Except for tax liens for taxes not yet due and payable, each
Grantor has good and marketable title to the Collateral free and clear of all liens, security
interests, encumbrances or adverse claims, except for the security interest created by this
Agreement. No dispute, right of setoff, counterclaim or defense exists with respect to all or any
part of the Collateral. No Grantor has executed any other security agreement currently affecting
the Collateral, and no effective financing statement or other instrument similar in effect covering
all or any part of the Collateral is on file in any recording office except as may have been
executed or filed in favor of Secured Party.

          (d) Security Interest. Each Grantor has and will have at all times full right, power
and authority to grant a security interest in the Collateral to Secured Party in the manner
provided herein, free and clear of any lien, security interest or other charge or encumbrance.
This Agreement creates a legal, valid and binding first priority security interest in favor of
Secured Party in the Collateral securing the Secured Obligations. Upon the filing of the Uniform
Commercial Code financing statements in the office of the Secretary of State of the State of
Delaware and the recordation of this Agreement (or a short form hereof) at the U.S. Copyright
Office, all security interests which may be perfected by filing shall have been duly perfected.
Except for the filings and recordings referred to in the preceding sentence and the delivery of the
certificates referred to in paragraph (i) below, no action is necessary to create, perfect or
protect such security interest. Without limiting the generality of the foregoing, except for such
filings and recordings, no consent of any third parties and no authorization, approval or other
action by, and no notice to or filing with any Governmental Authority or regulatory body is
required for (i) the execution, delivery and performance of this Agreement, (ii) the creation or
perfection of the security interest in the Collateral or (iii) the enforcement of Secured Party’s
rights hereunder.

          (e) Status. Each Grantor is duly organized and validly existing as the type of entity
and in the state of formation set forth in the preamble hereto.

          (f) Authority to Execute Agreement. Each Grantor has the corporate or other power to
execute, deliver and perform its obligations under this Agreement and each Transaction Document to
which it is, or is to be, a party and has taken all necessary corporate and other action to
authorize the execution, delivery and performance of this Agreement and each Transaction Document
to which it is, or is to be, a party. This Agreement has been duly executed by each Grantor.

          (g) Certificates. All certificates representing securities that are included in the
Collateral, together with all necessary endorsements, have been delivered to the Secured Party.

          (h) Names Used by Grantor. The actual name of each Grantor is the name set forth in
the preamble above.

          (i) Absence of Conflicts with Other Agreements, Etc. Neither the pledge of the
Collateral hereunder nor any of the provisions hereof (including, without limitation, the remedies
provided hereunder) violates any of the provisions of any Organizational Documents of any Grantor,
or any other agreement to which Grantor or any of its property is a party or is subject, or any
judgment, decree, order or award of any court, governmental body or arbitrator or any applicable
law, rule or regulation applicable to the same.

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          (j) Intellectual Property. All material patents and trademarks of each Grantor have
been duly recorded at the U.S. Patent and Trademark Office and all material copyrights of each
Grantor have been duly recorded at the U.S. Copyright Office.

     4. COVENANTS OF GRANTOR. Each Grantor covenants that:

          (a) Ownership and Liens. Each Grantor will maintain good and marketable title to all
Collateral free and clear of all liens (except for tax liens for taxes not yet due), security
interests, encumbrances or adverse claims, except for the security interest created by this
Agreement and the security interests and other encumbrances expressly permitted herein or by the
other Transaction Documents.

          (b) Inspection of Collateral. Each Grantor will keep adequate records concerning the
Collateral and will permit Secured Party and all representatives and agents appointed by Secured
Party to inspect any of the Collateral and the books and records of or relating to the Collateral
at any time upon reasonable advance notice during normal business hours, to make and take away
photocopies, photographs and printouts thereof and to write down and record any such information.

          (c) Payment of Taxes. Each Grantor (i) will timely pay all property and other taxes,
assessments and governmental charges or levies imposed upon the Collateral or any part thereof, and
(ii) will maintain appropriate accruals and reserves for all such liabilities in a timely fashion
in accordance with generally accepted accounting principles. Each Grantor may, however, delay
paying or discharging any such taxes, assessments, charges, claims or liabilities so long as the
validity thereof is contested in good faith by proper proceedings and provided such Grantor has set
aside on such Grantor’s books adequate reserves therefor.

          (d) Accounts and General Intangibles. Each Grantor will collect, at such Grantor’s
own expense, all amounts due or to become due under each of its accounts and general intangibles.
In connection with such collections, each Grantor may take such action not otherwise forbidden
hereby as such Grantor may deem necessary or advisable to enforce collection or performance of each
of its accounts and general intangibles.

          (e) Chattel Paper, Documents and Instruments. Each Grantor will take such action as
may be requested by Secured Party in order to cause any chattel paper, documents or instruments to
be valid and enforceable.

          (f) Transfer or Encumbrance. No Grantor will, unless otherwise done in the ordinary
course of business, sell, assign (by operation of law or otherwise), transfer, exchange, lease or
otherwise dispose of any of the Collateral. For purposes of this provision, “dispose of any
Collateral” shall include, without limitation, the creation of a security interest or other
encumbrance (whether voluntary or involuntary) on such Collateral.

          (g) Impairment of Security Interest. No Grantor will take or fail to take any action
which would in any manner materially impair the value or enforceability of Secured Party’s security
interest in any Collateral.

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          (h) Possession of Collateral. No Grantor will cause or permit the removal of any
Collateral from its possession, control and risk of loss, nor will any Grantor cause or permit the
removal of any Collateral from 1155 Kas Drive, Suite 100, Richardson, Texas 75081 other than (i) as
permitted by paragraph (f) above or (ii) in connection with the possession of any Collateral by
Secured Party or by its bailee.

          (i) Filing of Financing Statements and Preservation of Interests. Immediately upon
execution hereof, each Grantor shall cause to be duly filed in the office of the Secretary of State
of the State of Delaware Uniform Commercial Code financing statements and all filings with the U.S.
Copyright Office and the U.S. Patent and Trademark Office, in each case in form and substance
satisfactory to Secured Party. Without limiting the obligation of the Grantors set forth in the
preceding sentence, each Grantor hereby authorizes Secured Party, and appoints Secured Party as its
attorney-in-fact, to file in such office or offices as Secured Party deems necessary or desirable
such financing and continuation statements and amendments and supplements thereto (including,
without limitation, an “all assets” filing), and such other documents as Secured Party may require
to perfect, preserve and protect the security interests granted herein and ratifies all such
actions taken by Secured Party.

          (j) Notice of Changes in Representations. Each Grantor shall notify Secured Party in
advance of any event or condition which could cause any representations set forth in Section 3
above applicable to such Grantor to fail to be true, correct and complete. Without limiting the
generality of the foregoing:

               (i) without providing at least five (5) days prior written notice to Secured Party, no Grantor
will change its name in any respect, its place of business or, if more than one, chief executive
office, or its mailing address or organizational identification number (if it has one);

               (ii) if any Grantor does not have an organizational identification number and obtains one
after the date of this Agreement, such Grantor will forthwith notify Secured Party in writing of
such organizational identification number; and

               (iii) no Grantor will change its type of organization, jurisdiction of organization or other
legal structure without providing at least five (5) days prior written notice to Secured Party.

          (k) Insurance. Each Grantor shall maintain with financially sound and reputable
insurers, insurance with respect to the Collateral against loss or damage of the kinds and in the
amounts customarily insured against by entities of established reputation having similar properties
similarly situated and in such amounts as are customarily carried under similar circumstances by
other such Persons and otherwise as is prudent for Persons engaged in similar businesses but in any
event sufficient to cover the full replacement cost thereof. Each Grantor shall cause each
insurance policy issued in connection herewith to provide, and the insurer issuing such policy to
certify to Secured Party that (a) Secured Party will be named as lender loss payee and additional
insured under each such insurance policy; (b) if such insurance be proposed to be cancelled or
materially changed for any reason whatsoever, such insurer will promptly notify Secured Party and
such cancellation or change shall not be effective as to Secured Party

- 7 -

 

for at least thirty (30) days after receipt by Secured Party of such notice, unless the effect
of such change is to extend or increase coverage under the policy; and (c) Secured Party will have
the right (but no obligation) at its election to remedy any default in the payment of premiums
within thirty (30) days of notice from the insurer of such default. If no Event of Default exists
and if the proceeds arising out of any claim or series of related claims do not exceed $100,000,
loss payments in each instance will be applied by the applicable Grantor to the repair and/or
replacement of property with respect to which the loss was incurred to the extent reasonably
feasible, and any loss payments or the balance thereof remaining, to the extent not so applied,
shall be payable to the applicable Grantor, provided, however, that payments received by
such Grantor after an Event of Default occurs and is continuing or in excess of $100,000 for any
occurrence or series of related occurrences shall be paid to Secured Party and, if received by
Grantor, shall be held in trust for and immediately paid over to Secured Party unless otherwise
directed in writing by Secured Party. Copies of such policies or the related certificates, in each
case, naming Secured Party as lender loss payee and additional insured shall be delivered to
Secured Party at least annually and at the time any new policy of insurance is issued.

          (l) Additional Grantor. Each Grantor shall cause each Subsidiary of such Grantor
including any Person that shall at any time become a Subsidiary of such Grantor to immediately
become a party hereto (an “Additional Grantor”) or to a similar security agreement, as appropriate,
by executing and delivering an Additional Grantor Joinder in substantially the form of Annex
A attached hereto and comply with the provisions hereof applicable to the Grantors or by
signing a similar security agreement. If the Additional Grantor becomes a party hereto, concurrent
therewith, the Additional Grantor shall deliver replacement schedules for, or supplements to all
other Schedules to (or referred to in) this Agreement, as applicable, which replacement schedules
shall supersede, or supplements shall modify, the Schedules then in effect. The Additional Grantor
shall also deliver such opinions of counsel, authorizing resolutions, good standing certificates
incumbency certificates, organizational documents, financing statements and other information and
documentation as Secured Party may reasonably request. Upon delivery of the foregoing to Secured
Party, the Additional Grantor shall be and become a party to this Agreement with the same rights
and obligations as the Grantors, for all purposes hereof as fully and to the same extent as if it
were an original signatory hereto and shall be deemed to have made the representations, warranties
and covenants set forth herein as of the date of execution and delivery of such Additional Grantor
Joinder and thereafter at any time that such representations and covenants must be restated
pursuant to the terms of the Transaction Documents, and all references herein to the “Grantors”
shall be deemed to include each Additional Grantor.

          (m) Intellectual Property. Without limiting the generality of the other obligations
of the Grantors hereunder, each Grantor shall promptly (i) cause the security interest contemplated
hereby with respect to all other Intangibles registered at the United States Copyright Office or
United States Patent and Trademark Office to be duly recorded at the applicable office, and (ii)
give Secured Party notice whenever it acquires (whether absolutely or by license) or creates any
additional material Intangibles.

          (n) Power of Attorney. Each Grantor has duly executed and delivered to Secured Party
a power of attorney (a “Power of Attorney”) in substantially the form attached hereto as
Annex B. The power of attorney granted pursuant to the Power of Attorney is a power

- 8 -

 

coupled with an interest and shall be irrevocable until full and indefeasible payment of the
Secured Obligations. The powers conferred on Secured Party under the Power of Attorney are solely
to protect Secured Party’s interests in the Collateral and shall not impose any duty upon Secured
Party to exercise any such powers. Secured Party agrees that (i) except for the powers granted in
clause (i) of the Power of Attorney, it shall not exercise any power or authority granted under the
Power of Attorney unless an Event of Default has occurred and is continuing, and (ii) Secured Party
shall account for any moneys received by Secured Party in respect of any foreclosure on or
disposition of Collateral pursuant to the Power of Attorney provided that Secured Party shall not
have any duty as to any Collateral, and Secured Party shall be accountable only for amounts that it
actually receives as a result of the exercise of such powers. NEITHER SECURED PARTY NOR ITS
AFFILIATES, PARTNERS, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR REPRESENTATIVES SHALL BE
RESPONSIBLE TO ANY GRANTOR FOR ANY ACT OR FAILURE TO ACT UNDER ANY POWER OF ATTORNEY OR OTHERWISE,
EXCEPT IN RESPECT OF DAMAGES ATTRIBUTABLE SOLELY TO THEIR OWN GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT AS FINALLY DETERMINED BY A COURT OF COMPETENT JURISDICTION, NOR FOR ANY PUNITIVE,
EXEMPLARY, INDIRECT OR CONSEQUENTIAL DAMAGES.

          (o) Further Assurances. Each Grantor will from time to time at its expense promptly
execute and deliver all further instruments and documents and take all further action necessary or
appropriate or that Secured Party may reasonably request in order (i) to perfect and protect the
security interest created or purported to be created hereby and the first priority of such security
interest, (ii) to enable Secured Party to exercise and enforce its rights and remedies hereunder in
respect of the Collateral, and (iii) to otherwise effect the purposes of this Agreement, including,
without limitation: (A) filing such financing or continuation statements, or amendments thereto;
and (B) furnishing to Secured Party from time to time statements and schedules further identifying
and describing the Collateral and such other reports in connection with the Collateral, all in
reasonable detail satisfactory to Secured Party.

     5. REMEDIES UPON DEFAULT.

          (a) Upon the occurrence and during the continuation of an Event of Default, Secured Party may
exercise, in addition to any other rights and remedies provided herein, under other contracts and
under law, all the rights and remedies of a secured party under the Uniform Commercial Code.
Without limiting the generality of the foregoing, upon the occurrence and during the continuation
of an Event of Default, (i) at the request of Secured Party, each Grantor shall, at its cost and
expense, assemble the Collateral owned or used by it as directed by Secured Party; (ii) Secured
Party shall have the right (but not the obligation) to notify any account debtors and any obligors
under Instruments or Accounts to make payments directly to Secured Party and to enforce each
Grantor’ rights against account debtors and obligors; (iii) Secured Party may (but is not obligated
to), without notice except as provided below, sell the Collateral at public or private sale, on
such terms as Secured Party deems to be commercially reasonable; (iv) Secured Party may (but is not
obligated to) direct any financial intermediary or any other Person holding Investment Property to
transfer the same to Secured Party or its designee; and (v) Secured Party may (but is not obligated
to) transfer any or all Intellectual Property registered in the name of any Grantor at the U.S.
Patent and Trademark Office and/or Copyright Office into the name of

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Secured Party or any designee or any purchaser of any Collateral. Each Grantor agrees that
ten (10) days notice of any sale referred to in clause (iii) above shall constitute sufficient
notice. Secured Party may purchase Collateral at any such sale. The Grantors shall be liable to
Secured Party for any deficiency amount.

          (b) Secured Party may comply with any applicable Law in connection with a disposition of
Collateral and compliance will not be considered adversely to affect the commercial reasonableness
of any sale of the Collateral. Secured Party may sell the Collateral without giving any warranties
and may specifically disclaim such warranties. If Secured Party sells any of the Collateral on
credit, the Borrower will only be credited with payments actually made by the purchaser. Any
Secured Party may purchase Collateral at any such sale. In addition, each Grantor waives any and
all rights that it may have to a judicial hearing in advance of the enforcement of any of Secured
Party’s rights and remedies hereunder, including, without limitation, its right following an Event
of Default to take immediate possession of the Collateral and to exercise its rights and remedies
with respect thereto.

          (c) For the purpose of enabling Secured Party to further exercise rights and remedies under
this Section 5 or elsewhere provided by agreement or applicable Law, each Grantor hereby grants to
Secured Party an irrevocable, nonexclusive license (exercisable without payment of royalty or other
compensation to any Grantor) to use, license or sublicense following an Event of Default, any
Intellectual Property now owned or hereafter acquired by such Grantor, and wherever the same may be
located, and including in such license 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.

          (d) The parties understand and agree that the security interest granted to Secured Party with
respect to the Intellectual Property, together with the other Collateral, will and is intended to
permit Secured Party and its successors and assigns, during the continuance of an Event of Default
as provided herein, to take title to and make use of all rights to the Intellectual Property in
conjunction with the other Collateral, all of which will permit Secured Party to manufacture and
sell the products and/or provide the services with which the Collateral is associated and maintain
substantially the same product specifications and quality and/or quality of services as maintained
by Grantor.

          (e) During the continuance of an Event of Default, Secured Party shall have the right, but
shall in no way be obligated, to bring suit in its own or in any Grantor’s name to enforce and
protect rights to the Intellectual Property in which event such Grantor shall, at the request of
Secured Party, do any and all lawful acts and execute any and all proper documents reasonably
required by Secured Party in aid of such enforcement and such Grantor shall promptly, upon demand,
reimburse and indemnify Secured Party for all reasonable costs and expenses incurred by Secured
Party in the exercise of its rights under this subsection.

     6. OBLIGATIONS ABSOLUTE.

          (a) Change of Circumstance. THE RIGHTS OF THE AGENT HEREUNDER AND THE OBLIGATIONS OF
THE GRANTORS HEREUNDER SHALL BE ABSOLUTE AND UNCONDITIONAL, SHALL NOT BE SUBJECT TO ANY

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COUNTERCLAIM, SETOFF, RECOUPMENT OR DEFENSE BASED UPON ANY CLAIM THAT ANY GRANTOR OR ANY OTHER
PERSON MAY HAVE AGAINST ANY SECURED PARTY AND SHALL REMAIN IN FULL FORCE AND EFFECT UNTIL FULL AND
INDEFEASIBLE SATISFACTION OF THE SECURED OBLIGATIONS.

          (b) No Duty To Marshal Assets. Secured Party shall have no obligation to marshal any
assets in favor of any Grantor or any other Person or against or in payment of any or all of the
Secured Obligations.

          (c) Waiver of Right of Subrogation, Etc. Each Grantor hereby waives any and all
rights of subrogation, reimbursement, or indemnity whatsoever in respect of such Grantor arising
out of remedies exercised by Secured Party hereunder until full and indefeasible payment of the
Secured Obligations.

          (d) Other Waivers. Each Grantor hereby waives promptness, diligence and notice of
acceptance of this Agreement. In connection with any sale or other disposition of Collateral, to
the extent permitted by applicable Law, each Grantor waives any right of redemption or equity of
redemption in the Collateral. Each Grantor further waives presentment and demand for payment of
any of the Secured Obligations, protest and notice of protest, dishonor and notice of dishonor or
notice of default or any other similar notice with respect to any of the Secured Obligations, and
all other similar notices to which such Grantor might otherwise be entitled, except as otherwise
expressly provided in the Transaction Documents. Secured Party is under no obligation to pursue
any rights against third parties with respect to the Secured Obligations and each Grantor hereby
waives any right it may have to require otherwise. Each Grantor (to the extent that it may
lawfully do so) covenants that it shall not at any time insist upon or plead, or in any manner
claim or take the benefit of, any stay, valuation, appraisal or redemption now or at any time
hereafter in force that, but for this waiver, might be applicable to any sale made under any
judgment, order or decree based on this Agreement; and each Grantor (to the extent that it may
lawfully do so) hereby expressly waives and relinquishes all benefit of any and all such laws and
hereby covenants that it will not hinder, delay or impede the execution of any power in this
Agreement delegated to Secured Party, but that it will suffer and permit the execution of every
such power as though no such law or laws had been made or enacted.

          (e) Each Grantor further waives to the fullest extent permitted by law any right it may have
under the constitution of the State of Delaware (or under the constitution of any other state in
which any of the Collateral or Grantor may be located), or under the Constitution of the United
States of America, to notice (except for notice specifically required hereby) or to a judicial
hearing prior to the exercise of any right or remedy provided by this Agreement to Secured Party,
and waives its rights, if any, to set aside or invalidate any sale duly consummated in accordance
with the foregoing provisions hereof on the grounds (if such be the case) that the sale was
consummated without a prior judicial hearing.

          (f) EACH GRANTOR’S WAIVERS UNDER THIS SECTION 6 HAVE BEEN MADE VOLUNTARILY, INTELLIGENTLY AND
KNOWINGLY AND AFTER SUCH GRANTOR HAS BEEN APPRISED AND COUNSELED BY ITS ATTORNEY AS TO THE NATURE
THEREOF AND ITS POSSIBLE ALTERNATIVE RIGHTS.

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     7. NO IMPLIED WAIVERS. No failure or delay on the part of Secured Party in exercising
any right, power or privilege under this Agreement or the other Transaction Documents and no course
of dealing between Grantor, on the one hand, and Secured Party, on the other hand, shall operate as
a waiver of any such right, power or privilege. No single or partial exercise of any right, power
or privilege under this Agreement or the other Transaction Documents precludes any other or further
exercise of any such right, power or privilege or the exercise of any other right, power or
privilege. The rights and remedies expressly provided in this Agreement and the other Transaction
Documents are cumulative and not exclusive of any rights or remedies which Secured Party would
otherwise have. 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 or shall constitute a waiver of the
right of Secured Party to take any other or further action in any circumstances without notice or
demand. Any waiver that is given shall be effective only if in writing and only for the limited
purposes expressly stated in the applicable waiver.

     8. STANDARD OF CARE.

          (a) In General. No act or omission of Secured Party (or agent or employee of any
thereof) shall give rise to any defense, counterclaim or offset in favor of any Grantor or any
claim or action against Secured Party (or agent or employee thereof), in the absence of gross
negligence or willful misconduct of Secured Party (or agent or employee thereof) as determined in
a final, nonappealable judgment of a court of competent jurisdiction. Secured Party shall be
deemed to have exercised reasonable care in the custody and preservation of the Collateral in its
possession if the Collateral is accorded treatment substantially equal to that which Secured Party
accords to other Collateral it holds, it being understood that it has no duty to take any action
with respect to calls, conversions, exchanges, maturities, tenders or other matters relative to any
Collateral or to preserve any rights of any parties and shall only be liable for losses which are a
result of it gross negligence or willful misconduct as determined in a final, nonappealable
judgment of a court of competent jurisdiction.

          (b) No Duty to Preserve Rights. Without limiting the generality of the foregoing,
Secured Party has no duty (either before or after an Event of Default) to collect any amounts in
respect of the Collateral or to preserve any rights relating to the Collateral.

          (c) No Duty to Prepare for Sale. Without limiting the generality of the foregoing,
Secured Party has no obligation to clean-up or otherwise prepare the Collateral for sale.

          (d) Duties Relative to Contracts. Without limiting the generality of the foregoing,
each Grantor shall remain obligated and liable under each contract or agreement included in the
Collateral to be observed or performed by such Grantor thereunder. Secured Party shall not have
any obligation or liability under any such contract or agreement by reason of or arising out of
this Agreement or the receipt by Secured Party of any payment relating to any of the Collateral,
nor shall Secured Party be obligated in any manner to perform any of the obligations of any Grantor
under or pursuant to any such contract or agreement, to make inquiry as to the nature or
sufficiency of any payment received by Secured Party in respect of the Collateral or as to the
sufficiency of any performance by any party under any such contract or

- 12 -

 

agreement, to present or file any claim, to take any action to enforce any performance or to
collect the payment of any amounts which may have been assigned to Secured Party or to which
Secured Party may be entitled at any time or times.

          (e) Reliance on Advice of Counsel. In taking any action under this Agreement or any
other Transaction Document, Secured Party shall be entitled to rely upon the advice of counsel of
Secured Party’s choice and shall be fully protected in acting on such advice whether or not the
advice rendered is ultimately determined to have been accurate.

     9. MISCELLANEOUS.

          (a) Assignment. Secured Party may assign or transfer this Agreement and any or all
rights or obligations hereunder without the consent of any Grantor and without prior notice to any
party to which Secured Party may transfer the Note or any portion thereof. No Grantor shall assign
or transfer this Agreement or any rights or obligations hereunder without the prior written consent
of Secured Party. Notwithstanding the foregoing, if there should be any assignment of any rights
or obligations by operation of law or in contravention of the terms of this Agreement or otherwise
then all covenants, agreements, representations and warranties made herein or pursuant hereto by or
on behalf of Grantor shall bind the successors and assigns of Grantor, together with the
preexisting Grantor, whether or not such new or additional Persons execute a joinder hereto or
assumption hereof. The rights and privileges of Secured Party under this Agreement shall inure to
the benefit of its successors and assigns.

          (b) Joint and Several Liability. Each Grantor and any additional Grantor shall
jointly and severally be liable for the obligations of the Grantors to Secured Party hereunder.

          (c) Notices. Any notice contemplated herein or required or permitted to be given
hereunder shall be made in the manner set forth in the Purchase Agreement and delivered, in the
case of Borrower and Secured Party, at the addresses set forth on the signature pages to the
Purchase Agreement, and, in the case of the Subsidiary Guarantors, at the addresses set forth on
the signature pages to the Guaranty, or to such other address as any party hereto may have last
specified by written notice to the other party or parties.

          (d) Severability. Every provision of this Agreement is intended to be severable. If
any term or provision of this Agreement shall be invalid, illegal or unenforceable for any reason,
the validity, legality and enforceability of the remaining provisions shall not be affected or
impaired thereby. Any invalidity, illegality or unenforceability in any jurisdiction shall not
affect the validity, legality or enforceability of any such term or provision in any other
jurisdiction.

          (e) Costs and Expenses. Without limiting any other cost reimbursement provisions in
the Transaction Documents, upon demand, each Grantor shall pay to Secured Party the amount of any
and all reasonable expenses incurred by Secured Party hereunder or in connection herewith,
including, without limitation those that may be incurred in connection with (i) the administration
of this Agreement, (ii) the custody or preservation of, or the sale of, collection from, or other
realization upon, any of the Collateral, (iii) the exercise or enforcement

- 13 -

 

of any of the rights of Secured Party hereunder or (iv) the failure of any Grantor to perform
or observe any of the provisions hereof.

          (f) Indemnification by Grantor. Each Grantor shall indemnify, reimburse and hold
harmless Secured Party and its affiliates, and all of their partners, members, shareholders,
officers, directors, employees, agents and advisors and any successors, assigns and participants
thereof (each, an “Indemnitee”), from and against any and all losses, claims, liabilities, damages,
penalties, suits, costs and expenses, of any kind or nature (including fees relating to the cost of
investigating and defending any of the foregoing) imposed on, incurred by or asserted against such
Indemnitee in any way related to or arising from or alleged to arise from this Agreement or the
Collateral, except any such losses, claims, liabilities, damages, penalties, suits, costs and
expenses which result from the gross negligence or willful misconduct of the Indemnitee as
determined by a final nonappealable decision of a court of competent jurisdiction. This
indemnification provision is in addition to, and not in limitation of, any other indemnification
provision in any other Transaction Document.

          (g) Counterparts; Integration. This Agreement may be executed in counterparts (and by
different parties hereto in different counterparts), each of which shall constitute an original,
but all of which when taken together shall constitute a single contract. This Agreement and the
other Transaction Documents constitute the entire contract among the parties relating to the
subject matter hereof and supersede any and all previous agreements and understandings, oral or
written, relating to the subject matter hereof. Delivery of an executed counterpart of a signature
page of this Agreement by telecopy shall be effective as delivery of a manually executed
counterpart of this Agreement.

          (h) Amendments and Waivers. The terms of this Agreement may be waived, altered or
amended only by an instrument in writing duly executed by each Grantor and Secured Party.

          (i) Headings. Headings to this Agreement are for purposes of reference only and shall
not limit or otherwise affect the meaning hereof.

     10. SPECIFIC PERFORMANCE. Each Grantor hereby authorizes Secured Party to demand
specific performance of this Agreement at any time when any Grantor shall have failed to comply
with any provision hereof, and each Grantor hereby irrevocably waives any defense based on the
adequacy of a remedy at law which might be asserted as a bar to the remedy of specific performance
hereof in any action brought therefor.

     11. TERMINATION. At such time as the principal amount of the Note and all accrued
interest thereon have been indefeasibly paid and performed in full, then the security provided for
herein shall terminate, provided, however, that all indemnities of the Borrower and each
other Grantor contained in this Agreement or any other Transaction Document shall survive and
remain operative and in full force and effect regardless of the termination of this Agreement.

     12. GOVERNING LAW; JURISDICTION; WAIVER OF JURY TRIAL.

- 14 -

 

          (a) Governing Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware applicable to contracts made and to be performed in the
State of Delaware.

          (b) Jurisdiction. Each Grantor irrevocably consents to the jurisdiction of the United
States federal courts and the state courts located in the County of New Castle, Delaware, in any
suit or proceeding based on or arising under this Agreement and irrevocably agree that all claims
in respect of such suit or proceeding may be determined in such courts. Each Grantor irrevocably
waives the defense of an inconvenient forum to the maintenance of such suit or proceeding in such
forum. Each Grantor further agrees that service of process upon such Grantor mailed by first class
mail shall be deemed in every respect effective service of process upon such Grantor in any such
suit or proceeding. Nothing herein shall affect the right of the Secured Party to serve process in
any other manner permitted by law. The Grantors and Secured Party agree that a final
non-appealable judgment in any such suit or proceeding shall be conclusive and may be enforced in
other jurisdictions by suit on such judgment or in any other lawful manner.

          (c) Waiver of Venue. Each Grantor irrevocably and unconditionally waives, to the
fullest extent permitted by applicable law, any objection that it may now or hereafter have to the
laying of venue of any action or proceeding arising out of or relating to this Agreement or any
other Transaction Document in any court referred to in paragraph (b) above. Each of the parties
hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, the defense of
an inconvenient forum to the maintenance of such action or proceeding in any such court. Each
Grantor irrevocably waives, to the fullest extent permitted by applicable law, any right to bring
any action or proceeding against Secured Party in any court outside the county of New Castle,
Delaware.

          (d) Waiver of Jury Trial. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL
PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER
TRANSACTION DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT,
TORT OR ANY OTHER THEORY). EACH PARTY HERETO (I) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (II) ACKNOWLEDGES THAT IT
AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER
TRANSACTION DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION.

- 15 -

 

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed in the name
and on behalf of the parties hereto as of the date first above written.

	 	 	 	 	 
	 	 	GRANTORS
	 
	 	 	 	 
	 	 	REMOTE DYNAMICS, INC.
	 
	 	 	 	 
	 

	 	By:
	 	/s/ W. Michael Smith
	 

	 	 	 	 
	 	 	Name: W. Michael Smith
	 	 	Title: Chief Operating Officer
	 
	 	 	 	 
	 	 	HIGHWAYMASTER OF CANADA LLC
	 
	 	 	 	 
	 	 	By: Remote Dynamics, Inc., as Sole
	 	 	Managing Director
	 
	 	 	 	 
	 

	 	By:
	 	/s/ W. Michael Smith
	 

	 	 	 	 
	 	 	Name: W. Michael Smith
	 	 	Title: Chief Operating Officer
	 
	 	 	 	 
	 	 	RD TECHNOLOGIES, INC.,
	 
	 	 	 	 
	 

	 	By:
	 	/s/ W. Michael Smith
	 

	 	 	 	 
	 	 	Name: W. Michael Smith
	 	 	Title: Chief Operating Officer
	 
	 	 	 	 
	 	 	SECURED PARTY
	 
	 	 	 	 
	 	 	SDS CAPITAL PARTNERS SPC, LTD.
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Kevin Johnson
	 

	 	 	 	 
	 	 	Name: Kevin Johnson
	 	 	Title: Managing Director

[Signature Page to Security Agreement]

 

 

Annex A

FORM OF ADDITIONAL GRANTOR JOINDER

Security
Agreement dated as of June ____ 2005 made by

Remote Dynamics, Inc.

and its subsidiaries party thereto from time to time, as Grantors

to and in favor of

SDS Capital Partners SPC, Ltd., as Secured Party (the “Security Agreement”)

     Reference is made to the Security Agreement as defined above; capitalized terms used herein
and not otherwise defined herein shall have the meanings given to such terms in, or by reference
in, the Security Agreement.

     The undersigned hereby agrees that upon delivery of this Additional Grantor Joinder to Secured
Party referred to above or its successor, the undersigned shall (a) be an Additional Grantor under
the Security Agreement, (b) have all the rights and obligations of Grantor under the Security
Agreement as fully and to the same extent as if the undersigned was an original signatory thereto
and (c) be deemed to have made the representations and warranties set forth in Section 3 therein as
of the date of execution and delivery of this Additional Grantor Joinder and at any future dates
that such representations must be restated pursuant to the terms of the Transaction Documents.
WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, THE UNDERSIGNED SPECIFICALLY GRANTS TO THE AGENT,
FOR THE BENEFIT OF THE SECURED PARTY, A SECURITY INTEREST IN THE COLLATERAL AS MORE FULLY SET FORTH
IN THE SECURITY AGREEMENT AND ACKNOWLEDGES AND AGREES TO THE WAIVER OF JURY TRIAL PROVISIONS SET
FORTH THEREIN.

     Attached hereto are supplemental and/or replacement Schedules to the Security Agreement, as
applicable.

     The undersigned hereby acknowledges receipt from Grantor of a correct and complete copy of the
Purchase Agreement and Note and consents to all of the provisions of the Purchase Agreement and
Note as in effect on the date hereof and agrees that its consent is not required for any
amendments, modifications, restatements or waivers of it or any of the provisions thereof.

     An executed copy of this Joinder shall be delivered to Secured Party, and Secured Party and
Secured Party may rely on the matters set forth herein on or after the date hereof. This Joinder
shall not be modified, amended or terminated without the prior written consent of Secured Party.

 

 

     IN WITNESS WHEREOF, the undersigned has caused this Joinder to be executed in the name and on
behalf of the undersigned.

	 	 	 
	 

	[Name of Additional Grantor]	 
	 
	 	 
	 

	By:	 
	 

	 	 
	 

	Name:	 
	 

	Title:	 
	 
	 	 
	 

	Address:	 

Dated:                                        

- 2 -

 

Annex B

FORM OF POWER OF ATTORNEY

     This Power of Attorney is executed and delivered by                     , a
                    , (“Grantor”), to                      as Secured Party
(“Attorney”). This Power of Attorney is delivered in connection with and pursuant to a
certain Note dated [as of even date herewith] (as the same may be amended, modified, restated
and/or supplemented from time to time, the “Note”) and that certain Security Agreement
delivered in connection therewith (the “Security Agreement”). Capitalized terms used but
not otherwise defined herein shall have the meanings assigned to such terms in the Security
Agreement. No person or entity to whom this Power of Attorney is presented, as authority for
Attorney to take any action or actions contemplated hereby, shall be required to inquire into or
seek confirmation from Grantor as to the authority of Attorney to take any action described below,
or as to the existence of or fulfillment of any condition to this Power of Attorney, which is
intended to grant to Attorney unconditionally the authority to take and perform the actions
contemplated herein, and Grantor irrevocably waives any right to commence any suit or action, in
law or equity, against any person or entity which acts in reliance upon or acknowledges the
authority granted under this Power of Attorney. The power of attorney granted hereby is coupled
with an interest, and may not be revoked or canceled by Grantor without Attorney’ s written
consent.

     Grantor hereby irrevocably constitutes and appoints Attorney (and all officers, employees or
agents designated by Attorney), with full power of substitution, as Grantor’s true and lawful
attorney-in-fact with full irrevocable power and authority in the place and stead of Grantor and in
the name of Grantor or in its own name, from time to time in Attorney’s discretion, to take any and
all appropriate action and to execute and deliver any and all documents and instruments which may
be necessary or desirable to accomplish the purposes of the Note, the Security Agreement and any
and all agreements, documents and instruments executed, delivered or filed in connection therewith
from time to time (collectively, the “Transaction Documents”) and, without limiting the
generality of the foregoing, Grantor hereby grants to Attorney the power and right, on behalf of
Grantor, without notice to or assent by Grantor, and at any time, to do the following:

          (a) change the mailing address of Grantor, open a post office box on behalf of Grantor, open
mail for Grantor, and ask, demand, collect, give acquittances and receipts for, take possession of,
endorse any invoices, freight or express bills, bills of lading, storage or warehouse receipts,
drafts against debtors, assignments, verifications, and notices in connection with any property of
Grantor;

          (b) receive, endorse Grantor’s name on, and collect, any checks, notes, acceptances, money
orders, drafts and any other forms of payment or security payable to Grantor, and hold all amounts
or proceeds so received or collected as cash collateral in a restricted account for the benefit of
Secured Party, or apply such amounts or proceeds to the Secured Obligations in accordance with the
terms of the Note;

          (c) effect any repairs to any asset of Grantor, or continue or obtain any insurance and pay
all or any part of the premiums therefor and costs thereof, and make, settle and

 

 

adjust all claims under such policies of insurance, and make all determinations and decisions
with respect to such policies;

          (d) pay or discharge any taxes, liens, security interests, or other encumbrances levied or
placed on or threatened against Grantor or its property;

          (e) defend any suit, action or proceeding brought against Grantor if Grantor does not defend
such suit, action or proceeding or if Attorney believes that Grantor is not pursuing such defense
in a manner that will maximize the recovery to Attorney, and settle, compromise or adjust any suit,
action, or proceeding described above and, in connection therewith, give such discharges or
releases as Attorney may deem appropriate;

          (f) file or prosecute any claim, litigation, suit or proceeding in any court of competent
jurisdiction or before any arbitrator, or take any other action otherwise deemed appropriate by
Attorney for the purpose of collecting any and all such moneys due to Grantor whenever payable and
to enforce any other right in respect of Grantor’s property;

          (g) cause the certified public accountants then engaged by Grantor to prepare and deliver to
Attorney at any time and from time to time, promptly upon Attorney’s request, the following
reports: (i) a reconciliation of all accounts, (ii) an aging of all accounts, (iii) trial
balances, (iv) test verifications of such accounts as Attorney may request, and (v) the results of
each physical verification of inventory;

          (h) communicate in its own name with any party to any contract with regard to the assignment
of the right, title and interest of Grantor in and under the contracts and other matters relating
thereto;

          (i) to the extent that Grantor’s authorization given in the Security Agreement is not
sufficient, to file such financing statements with respect to the Security Agreement as Attorney
may deem appropriate and to execute in Grantor’s name such financing statements and amendments
thereto and continuation statements which may require Grantor’s signature;

          (j) to transfer any Intellectual Property or provide licenses respecting any Intellectual
Property; and

          (k) execute, deliver and/or record, as applicable, in connection with any sale or other remedy
provided for in any Transaction Document, any endorsements, assignments or other applications for
or instruments of conveyance or transfer with respect to the Collateral and to otherwise direct
such sale or resale, all as though Attorney were the absolute owner of the property of Grantor for
all purposes, and to do, at Attorney’s option and Grantor’s expense, at any time or from time to
time, all acts and other things that Attorney reasonably deems necessary to perfect, preserve, or
realize upon Grantor’s property or assets and Attorney’s liens thereon, all as fully and
effectively as Grantor might do. Grantor hereby ratifies, to the extent permitted by law, all that
Attorney shall lawfully do or cause to be done by virtue hereof. Without limiting the generality
of the foregoing, Attorney is specifically authorized to execute and file any applications for or
instruments of transfer and assignment of any patents, trademarks, copyrights or other Intellectual
Property with the U.S. Patent and Trademark Office and the U.S. Copyright Office.

- 2 -

 

     IN
WITNESS WHEREOF, this Power of Attorney is duly executed on behalf of Grantor this ___ day
of                     , 20___.

	 	 	 	 	 
	 	 	[                                                            ]
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	 	 	 
	 

	 	Title:	 	 
	 

	 	 	 	 

NOTARY PUBLIC CERTIFICATE

     On
this ___ day of ___, 20___, [officer’s name] who is personally known to me appeared
before me in his/her capacity as the [title] of [name of Grantor] (“Grantor”) and executed
on behalf of Grantor the Power of Attorney in favor of ___, as Secured Party, to which
this Certificate is attached.

	 	 	 
	 

	 	 
	 

	 	Notary Public

- 3 -

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