form8-k_13108.htm

EXHIBIT 10.1

EXECUTION COPY

SECURED PROMISSORY NOTE

Up to $1,500,000 January 31, 2008

FOR VALUE RECEIVED, Enterprise Informatics Inc., a California corporation (“Borrower”), promises to pay to the order of ERP2 Holdings, LLC, a Delaware limited liability company (“Lender”), on January 31, 2010 (the “Maturity Date”), or such earlier date as the indebtedness evidenced hereby shall become due and payable pursuant to the terms hereof, the principal sum of up to ONE MILLION FIVE HUNDRED THOUSAND DOLLARS ($1,500,000), pursuant to the terms hereof, in lawful money of the United States of America, in immediately available funds and at the office of the Lender as indicated from time to time in writing to the Borrower, together with interest thereon at the rate and in the amounts set forth herein (including interest capitalized from time to time as additional principal hereunder and interest accrued on such additional principal).

1.	Definitions. The following terms shall have the meanings ascribed to them below:

(a) “Additional Loan” has the meaning ascribed to such term in Section 3(b).

(b) “Additional Warrant” shall have the meaning ascribed to such term in Section 7(p).

(c) “Affiliate” means, as to any person, any other person (i) that, directly or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, such person; (ii) who is a director or officer (A) of such person; (B) of any subsidiary of such person; or (C) of any person described in clause (i) above with respect to such person; or (iii) which, directly or indirectly through one or more intermediaries, is the beneficial or record owner (as defined in Rule 13d-3 of the Exchange Act, as is in effect on the date hereof) of 10% or more of any class of the outstanding voting stock, securities or other equity or ownership interests of such person; provided that notwithstanding anything else herein to the contrary, the Lender shall be deemed not to be an Affiliate of the Borrower or any subsidiary. For purposes of this definition, the term “control” (and the correlative terms, “controlled by” and “under common control with”) shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies, whether through ownership of securities or other interests, by contract or otherwise.

(d) “Affiliate Transaction” has the meaning ascribed to such term in Section 7(j).

(e) “Asset Sale” means (i) the sale, lease, conveyance or other disposition of any assets or rights (including, without limitation, a sale/leaseback transaction) other than any sale, lease, conveyance or other disposition involving assets or rights (or a series of related sales, leases, conveyances or other dispositions) having a fair market value less than $20,000 individually and $100,000 in the aggregate during the period from the date hereof until the Repayment Date (which fair market value shall in each case be determined as of the date of such disposition), and other than sales, conveyances or transfers of inventory in the ordinary course of business consistent with past practices and, in the case of sales, transfers or conveyances of source code for Software (as defined in the Security Agreements), with the prior written consent of the Lender (which shall not be unreasonably withheld) ; and (ii) the issuance or sale by the Borrower or any of the subsidiaries of the Borrower of Equity Interests of any of the Borrower’s subsidiaries. Notwithstanding the foregoing, the following items shall not be deemed to be Asset Sales: (i) a transfer of assets by the Borrower to a subsidiary or by a subsidiary to the Borrower or to another subsidiary; (ii) an issuance or sale of Equity Interests by a subsidiary to the Borrower or to another subsidiary; (iii) a sale or other disposition of property or equipment that has become worn out, obsolete or otherwise unsuitable for its purpose; (iv) a disposition of Cash Equivalents; (v) transactions consummated in compliance with Section 7(i) or Restricted Payments made in accordance with Section 7(m); and (vi) the exercise of rights (including foreclosure) in respect of any Lien permitted by Section 7(f).

(f) “Board of Directors” means the board of directors of the Borrower.

(g) “Borrower Actions” means all actions required to be completed by the Borrower in order to effectuate a 1000-to-1 reverse split of the Common Stock and the deregistration of the Common Stock under the Exchange Act, in each case, in accordance with applicable law.

(h) “Capital Lease” means, for any person, a lease of any interest in any kind of property (whether real, personal or mixed) or asset by such person as lessee that is, should be or should have been recorded as a “capital lease” on the balance sheet of such person in accordance with GAAP.

(i) “Cash Equivalents” means (i) Dollars, including demand deposit accounts, (ii) securities issued or directly and fully guaranteed or insured by the United States government or any agency or instrumentality thereof (provided that the full faith and credit of the United States is pledged in support thereof) having maturities of not more than 6 months from the date of acquisition, (iii) certificates of deposit and eurodollar time deposits with maturities of 6 months or less from the date of acquisition, bankers’ acceptances with maturities not exceeding 6 months and overnight bank deposits, in each case with any domestic commercial bank having capital and surplus in excess of $500,000,000, (iv) repurchase obligations with a term of not more than 7 days for underlying securities of the types described in clauses (ii) and (iii) above entered into with any financial institution meeting the qualifications specified in clause (iii) above, (v) commercial paper having the highest rating obtainable from Moody’s Investors Service, Inc. or Standard & Poor’s Ratings Group and in each case maturing within 6 months after the date of acquisition and (vi) money market funds at least 95% of the assets of which constitute Cash Equivalents of the kinds described in clauses (i) - (v) of this definition.

(j) “Claim” means any civil, criminal or administrative suit, claim, proceeding, investigation, or request for relief (whether under law or equity) brought by or before any court, tribunal, administrative agency, governmental authority or regulatory or self-regulatory entity.

(k) “Code” means the Uniform Commercial Code in effect in the State of New York; provided, that in the event that, by reason of mandatory provisions of law, any or all of the attachment, perfection or priority of, or remedies with respect to the Lender’s Lien on any Collateral is governed by the Uniform Commercial Code as enacted and in effect in a jurisdiction other than the State of New York, the term “Code” shall mean the Uniform Commercial Code as enacted and in effect in such other jurisdiction solely for purposes of the provisions thereof relating to such attachment, perfection, priority or remedies and for purposes of definitions related to such provisions.

(l) “Collateral” has the meaning ascribed to such term in Section 3 of the Security Agreement.

(m) “Common Stock” has the meaning ascribed to such term in Section 8(f).

(n) “Consulting Agreements” has the meaning ascribed to such term in Section 10.

(o) “Default” means any event that, with the giving of notice or the lapse of time or both would constitute an Event of Default.

(p) “Dollars” or “$” means lawful money of the United States.

(q) “EBITDA” means, with respect to any person for any fiscal period, an amount equal to (a) consolidated net income of such person for such period, minus (b) the sum of (i) income tax credits, (ii) interest income, (iii) gain from extraordinary items for such period, (iv) any aggregate net gain (but not any aggregate net loss) during such period arising from the sale, exchange or other disposition of capital assets by such person (including any fixed assets, whether tangible or intangible, all inventory sold in conjunction with the disposition of fixed assets and all securities), and (v) any other non-cash gains which have been added in determining consolidated net income, in each case to the extent included in the calculation of consolidated net income of such person for such period in accordance with GAAP, but without duplication, plus (c) the sum of (i) any provision for income taxes, (ii) Interest Expense, (iii) fees paid by the Borrower pursuant to the Consulting Agreements (not to exceed $60,000 in any fiscal quarter); (iv) the closing fee paid by the Borrower paid pursuant to Section 11 (not to exceed $75,000); (v) the aggregate amount of legal fees, transfer agent fees, and printing and mailing costs, in each case, that are paid by Borrower in connection with Borrower’s entry into or performance of the Transaction Documents (including without limitation Borrower’s completion of the Borrower Actions) (not to exceed $200,000); (vi) depreciation and amortization for such period and (vii) any non-cash expenses or charges, including the amount of any deduction to consolidated net income as the result of (A) any grant to any officer, director, employee or consultant of such person of any stock, stock option or other stock-based award pursuant to any equity incentive plan approved by such person’s board of directors (including without limitation, with respect to the Borrower, the 2007 Stock Incentive Plan) or (B) any grant or issuance of any warrant or other right to acquire Equity Interests or any Equity Interests convertible into or exchangeable for other Equity Interests, including without limitation the Existing Warrants and the Additional Warrants, in each case to the extent included in the calculation of consolidated net income of such person for such period in accordance with GAAP, but without duplication. For purposes of this definition, the following items shall be excluded in determining consolidated net income of a person: (1) the income (or deficit) of any other person accrued prior to the date it became a subsidiary of, or was merged or consolidated into, such person or any of such person’s subsidiaries; (2) the income (or deficit) of any other person (other than a subsidiary) in which such person has an ownership interest, except to the extent any such income has actually been received by such person in the form of cash dividends or distributions; (3) any restoration to income of any contingency reserve, except to the extent that provision for such reserve was made out of income accrued during such period; (4) any write-up of any asset; (5) any net gain from the collection of the proceeds of life insurance policies; (6) any net gain arising from the acquisition of any securities, or the extinguishment, under GAAP, of any Indebtedness, of such person; (7) in the case of a successor to such person by consolidation or merger or as a transferee of its assets, any earnings of such successor prior to such consolidation, merger or transfer of assets; and (8) any deferred credit representing the excess of equity in any subsidiary of such person at the date of acquisition of such subsidiary over the cost to such person of the investment in such subsidiary.

(r) “Equity Interest” means, (i) with respect to any person that is a corporation, any and all shares, interests, participations or other equivalents (however designated and whether or not voting) of corporate stock, including each class of common stock and preferred stock of such person and all options, warrants or other rights to purchase or acquire any of the foregoing; and (ii) with respect to any person that is not a corporation, any and all partnership, membership or other equity interests of such person, and all options, warrants or other rights to purchase or acquire any of the foregoing.

(s) “Event of Default” has the meaning ascribed to such term in Section 8.

(t) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

(u) “Existing Warrant” means the Warrant to Purchase Common Stock dated as of January 14, 2008 issued by the Borrower to the Lender.

(v) “GAAP” means generally accepted accounting principles in the United States in effect from time to time as applied by nationally recognized accounting firms.

(w) “Hedge Agreement” means any and all transactions, agreements or documents now existing or hereafter entered into by the Borrower which provide for an interest rate, credit, commodity or equity swap, cap, floor, collar, forward foreign exchange transaction, currency swap, cross currency rate swap, currency option, or any combination of, or option with respect to, these or similar transactions, for the purpose of hedging exposure to fluctuations in interest or exchange rates, loan, credit exchange, security or currency valuations or commodity prices.

(x) “Indebtedness” of any person means, without duplication, (i) all obligations of such person for borrowed money; (ii) all obligations of such person evidenced by bonds, debentures, notes or other similar instruments and all reimbursement or other obligations in respect of letters of credit, bankers acceptances, interest rate swaps, hedges, derivatives or other financial products; (iii) all obligations of such person as a lessee under Capital Leases; (iv) all obligations or liabilities of others secured by a Lien on any asset of such person, irrespective of whether such obligation or liability is assumed; (v) all obligations of such person to pay the deferred purchase price of assets (other than (1) trade payables incurred in the ordinary course of business and (2) unearned compensation; (vi) all net payment obligations of such person owing under Hedge Agreements; and (vii) any obligations of such person guaranteeing or intended to guarantee (whether directly or indirectly guaranteed, endorsed, co-made, discounted, or sold with recourse) any obligation of any other person that constitutes Indebtedness of such other person under any of clauses (i) through (vi) above.

(y) “Initial Loan” shall have the meaning ascribed to such term in Section 3(a).

(z) “Intellectual Property” shall mean all rights, priorities and privileges relating to intellectual property, whether arising under United States, multinational or foreign laws or otherwise, including know-how, copyrights, copyright licenses, patents, patent licenses, technology licenses, trademarks and trademark licenses, and all rights to sue at law or in equity for any infringement or other impairment thereof, including the right to receive all proceeds and damages therefrom.

(aa) “Interest Expense” means, with respect to any person for any fiscal period, interest expense (whether cash or non-cash) of such person determined in accordance with GAAP for the relevant period ended on such date, including, in any event, interest expense with respect to any Indebtedness of such person.

(bb) “Investment” means, (i) any direct or indirect purchase or other acquisition by the Borrower or any subsidiary of any Equity Interest, or other ownership interest in, any other person, and (ii) any direct or indirect loan, advance or capital contribution by the Borrower or any subsidiary to any other person, including all indebtedness and accounts receivable from that other person that are not current assets or did not arise from sales to that other person in the ordinary course of business.

(cc) “Lien” means any mortgage or deed of trust, pledge, hypothecation, assignment, security deposit arrangement, lien, charge, claim, security interest, easement or encumbrance, or preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever (including any lease or title retention agreement, any financing lease having substantially the same economic effect as any of the foregoing, and the filing of, or agreement to give, any financing statement perfecting a security interest under the Code or comparable law of any jurisdiction).

(dd) “Loan Documents” means this Note, the Old Notes, the Security Documents and any certificates, instruments, agreements or other documents executed in connection herewith or therewith.

(ee) “Net Cash Proceeds,” with respect to any issuance or sale of Equity Interests or Indebtedness, means the cash proceeds of such issuance or sale net of all reasonable and customary attorneys’ fees, accountants’ fees, underwriters’ or placement agents’ fees, discounts or commissions and brokerage, consultant and other fees actually incurred in connection with such issuance or sale and net of taxes actually paid as a result thereof.

(ff) “Obligation” means all principal of and interest (including all interest that accrues after the commencement of any case or proceeding by or against Lender in bankruptcy, whether or not allowed in such case or proceeding) on this Note, and any penalties, fees, charges, expenses, indemnification payments, reimbursements and any other sum chargeable to the Borrower under this Note or any of the other Loan Documents.

(gg) “Old Notes” has the meaning ascribed to such term in Section 8(b).

(hh) “Original Pledge Agreement” means the Pledge Agreement, dated as of March 15, 2002, between the Borrower, Spescom Ltd. and Solomon Ward Seidenwurm & Smith, LLP.

(ii) “Original Security Agreement” means the Security Agreement, dated as of March 15, 2002, between the Borrower and Spescom Ltd.

(jj) “Permitted Liens” means the following: (i) Liens granted to secure payment of the Obligations (including pursuant to the Old Notes); (ii) Liens imposed by law for taxes (other than payroll taxes), assessments or charges of any governmental authority for claims not yet due or which are being contested in good faith by appropriate proceedings and with respect to which adequate reserves or other appropriate provisions are being maintained in accordance with GAAP to the satisfaction of the Lender, in its sole discretion; (iii) (A) statutory Liens of landlords; and (B) other Liens imposed by law or that arise by operation of law in the ordinary course of business from the date of creation thereof, in each case only for amounts not yet due or which are being contested in good faith by appropriate proceedings and with respect to which adequate reserves or other appropriate provisions are being maintained in accordance with GAAP to the satisfaction of the Lender, in its sole discretion; (iv) Liens (A) incurred or deposits made in the ordinary course of business (including, without limitation, surety bonds and appeal bonds) in connection with workers' compensation, unemployment insurance and other types of social security benefits or to secure the performance of tenders, bids, leases, contracts (other than for the repayment of Indebtedness), statutory obligations and other similar obligations; or (B) arising as a result of progress payments under government contracts; (v) purchase money Liens in connection with the purchase by the grantor of such Lien of equipment in the normal course of business; (vi) Liens subordinated in all respects to the Lien securing payment of the Obligations on terms and conditions and pursuant to an agreement in form and substance satisfactory to the Lender in its sole discretion; (vii) Liens to secure the financing of insurance premiums for insurance policies obtained pursuant to and in compliance with Section 7(g), provided, that such Liens are limited to the proceeds (including loss payments) of the insurance policies so financed, un-earned premiums on and dividends under such insurance policies, and the Borrower’s interest under any state insurance guarantee funds that may arise relating to such insurance policies; (viii) to the extent constituting a Lien, the transfer of technology licenses (including without limitation in connection with implementation of any source code escrow agreement in customary form into which Borrower enters for the benefit of any licensee of the Borrower’s Intellectual Property) in the ordinary course of business of the Borrower; (ix) Liens and Capital Leases existing on the date hereof; and (x) precautionary UCC financing statements filed in connection with operating leases for amounts which do not, individually or in the aggregate, exceed $100,000 in the aggregate.

(kk) “Repayment Date” means the date on which all Obligations are irrevocably repaid in full, in Dollars, to the Holder.

(ll) “Restricted Payment” means, with respect to the Borrower or any subsidiary: (i) the declaration or payment of any dividend or the incurrence of any liability to make any other payment or distribution of cash or other property or assets in respect of any Equity Interest of such person, other than a payment or distribution (A) of Equity Interests in connection with the exercise of any warrant, option or other right to acquire Equity Interests permitted under or issued pursuant to any Transaction Document, (B) of Equity Interests in respect of the outstanding shares of the Series F Convertible Preferred Stock of the Borrower (the “Series F Preferred Stock”), (C) of Equity Interests in connection with the 1000-to-1 reverse stock split contemplated hereby and (D) as a dividend or otherwise, made by a direct or indirect wholly owned subsidiary of Borrower to its immediate parent entity; (ii) any payment on account of the purchase, redemption, defeasance, sinking fund or other retirement of any Equity Interest of such person or any other payment or distribution made in respect thereof, either directly or indirectly, other than a payment made in Equity Interests (A) in connection with the exercise of any warrant, option or other right to acquire Equity Interests permitted under or issued pursuant to any Transaction Document, (B) in respect of the outstanding shares of Series F Preferred Stock and (C) in connection with the 1000-to-1 reverse stock split contemplated hereby; (iii) any payment made to redeem, purchase, repurchase or retire, or to obtain the surrender of, any outstanding warrants, options or other rights to acquire any Equity Interest of such person now or hereafter outstanding, other than a payment made in Equity Interests (A) in connection with the exercise of any warrant, option or other right to acquire Equity Interests permitted under or issued pursuant to any Transaction Document, (B) in respect of the outstanding shares of Series F Preferred Stock and (C) in connection with the 1000-to-1 reverse stock split contemplated hereby; (iv) any payment of a claim for the rescission of the purchase or sale of, or for material damages arising from the purchase or sale of, any Equity Interests of such person or of a claim for reimbursement, indemnification or contribution arising out of or related to any such claim for damages or rescission; (v) any payment, loan, contribution, or other transfer of funds or other property to any stockholder of such person, except as otherwise permitted hereunder or under the other Transaction Documents, and other than payment of compensation in the ordinary course of business to stockholders who are employees or directors of such person; and (vi) any payment of management fees (or other fees of a similar nature) or out-of-pocket expenses in connection therewith by such person to any stockholder, other than a payment to employees or directors of the Borrower or subsidiaries for their services, or otherwise permitted under any Transaction Document (including without limitation the Consulting Agreements).

(mm) “Securities Act” means the Securities Act of 1933, as amended.

(nn) “Security Agreements” has the meaning ascribed to such term in Section 4.

(oo) “Security Documents” means the Security Agreements and the UCC financing statements required to be filed and all other security documents hereafter delivered to the Lender in connection with granting a Lien on any of the assets of the Borrower or a subsidiary to secure the Obligations.

(pp) “Service Date Anniversary” has the meaning ascribed to such term in Section 8(h).

(qq) “Term Sheet” means the Summary of Terms, dated as of January 14, 2008, by and between the Borrower and the Lender.

(rr) “Transaction Documents” means this Note, the other Loan Documents, the Term Sheet, the Consulting Agreements, the Existing Warrant and the Additional Warrant.

Interest. The unpaid principal amount of indebtedness under this Secured Promissory Note (the “Note”) shall bear interest at a rate equal to ten percent (10%) per annum, plus, upon the occurrence and continuation of an Event of Default (as herein defined), an additional three percent (3%) per annum. Interest shall be compounded annually and be due and payable in arrears (a) on the last calendar day of March, June, September and December of each calendar year, in cash, or, at the option of the Borrower, in kind, capitalized as additional principal hereunder (and treated in all respects as principal hereunder, including without limitation with respect to the accrual of interest), and (b) on the date that any principal amount of the indebtedness hereunder is repaid, to the extent accrued and unpaid on the principal amount so repaid. Interest shall be computed for the actual number of days elapsed on the basis of a year consisting of 365 or 366 days, as applicable.

Grid.

(a) Initial Loan. On the date hereof, subject to fulfillment of all obligations of the Borrower set forth herein, Lender shall pay to the Borrower $300,000 by wire transfer of immediately available funds to an account specified by the Borrower, which amount shall become principal hereunder upon receipt of such funds by the Borrower (the “Initial Loan”).

(b) Additional Loan. On the first business day following the date that all Borrower Actions shall have been consummated, subject to fulfillment of all obligations of the Borrower set forth herein, the Lender shall pay to the Borrower $1,200,000 by wire transfer of immediately available funds to an account specified by the Borrower, which amount shall become principal hereunder upon receipt of such funds by the Borrower. (the “Additional Loan”).

(c) Grid. Lender shall be entitled to mark, from time to time, the Grid attached hereto as Schedule A, to reflect any payment of, or addition to, the principal amount of the indebtedness evidenced hereby (including without limitation in respect of capitalized payments of interest);provided, that the failure by Lender to so mark such Grid shall not affect the obligation of Borrower hereunder to pay principal of the indebtedness evidenced hereby, interest thereon, or additional principal added in payment of capitalized interest (or interest on such additional principal), which obligations shall remain in full force and effect and be fully binding on Borrower.

Security Interest. This Note and repayment of the indebtedness evidenced hereby is secured by the Amended and Restated Security Agreement, dated as of January 31, 2008, between the Lender and the Borrower (the “Security Agreement”), and the Amended and Restated Pledge Agreement, dated as of January 31, 2008, between the Lender and the Borrower (the “Pledge Agreement” and, together with the Security Agreement, each a “Security Agreement” and, together, the “Security Agreements”).

5.	Representations and Warranties of Borrower. The Borrower hereby represents and warrants to the Lender, on the date hereof and on the date of the Additional Loan, as follows:

(a) Organization; Authority. Borrower is duly organized and validly existing under the laws of the jurisdiction of its organization. Borrower has all the requisite power and authority to execute, deliver and perform the transactions contemplated by this Note. This Note constitutes the legal, valid and binding obligations of Borrower and is enforceable against it in accordance with the terms hereof.

(b) Consents; Conflicts. Except for the filing of the financing statements and any other documents necessary to effect the Liens contemplated by this Note, the execution and delivery of this Note by Borrower as contemplated hereby will not (i) require any consent, authorization, or approval of, or filing with, any governmental entity or third party, or (ii) result in any violation of, be in conflict with or constitute a default under, the charter or by-laws of Borrower, or any law, statute, regulation, ordinance, judgment, decree or order, or any material contract, agreement, or instrument to which Borrower is a party, or by which it is bound.

(c) Collateral. Except for the liens granted to the Lender pursuant to this Note and the Security Documents, Borrower is, and as to Collateral acquired after the date hereof, Borrower shall and will be at the time of acquisition, the owner and holder, or has valid rights as a lessee or licensee of, or the power to transfer or pledge with respect to, all Collateral free and clear of any claim, security interest, encumbrance, lien, charge, or other right, title or interest of any person, other than Permitted Liens, has rights in or the power to transfer each other item of Collateral in which a Lien is granted by it hereunder, free and clear of any and all Liens, other than Permitted Liens. Except for the Original Security Agreement, the Original Pledge Agreement, and any financing statement or public notice filed thereunder or in connection therewith, no security agreement, financing statement, or other public notice with respect to all or any part of the Collateral that is effective to perfect a lien or security interest on the Collateral is on file or of record in any government or public office against Borrower, and Borrower has not filed or consented to the filing of any such statement or notice.

6.	Representations and Warranties of Lender. The Lender hereby represents and warrants to the Borrower, on the date hereof and on the date of the Additional Loan, as follows:

(a) Investment Intent; Lender Status: The Lender:

(i) is acquiring the Note as a principal for investment purposes only, for its own account, and not as nominee or agent for any other person, and not with a view to resale or distribution of any part thereof in violation of the Securities Act;

(ii) is an “accredited investor”, within the meaning of Rule 501 of Regulation D under the Securities Act;

(iii) has such knowledge, sophistication and experience in financial and business matters as to be capable of evaluating the merits and risks of its purchase of the Note and investments in securities presenting an investment decision like that involved in the purchase of the Note; and

(iv) can bear the economic risk of a total loss of its investment in the Note.

(b) Restricted Securities. The Lender understands that the Note is characterized as a “restricted security” as defined under Rule 144(a)(3) under the Securities Act and that under such laws and applicable regulations such Note may not be resold unless registered pursuant to the Securities Act, or an exemption from registration is available therefrom. The Lender will not, directly or indirectly, offer, sell, pledge, transfer or otherwise dispose of (or solicit any offers to buy, purchase or otherwise acquire or take pledge of) the Note except in compliance with the Securities Act, applicable state securities laws and the respective rules and regulations promulgated thereunder.

7.	Covenants.

(a) Compliance with Laws. The Borrower shall comply in all material respects with all applicable laws, ordinances, rules, regulations, and requirements of governmental authorities.

(b) Maintenance of Existence; Lines of Business. The Borrower shall preserve, renew and keep in full force and effect its corporate existence and its rights, privileges, franchises, and licenses necessary in the normal conduct of its business except where the failure to preserve any such rights, privileges, franchises or licenses would not reasonably be expected to have a material adverse effect on the Borrower.

(c) Financial Statements; Reporting. (i) The Borrower shall furnish to the Lender, within 45 days of the close of each of the first three quarters of each fiscal year, its consolidated balance sheets as at the close of such quarter and its income statement and statement of changes in financial position for such quarter, prepared in accordance with GAAP, applied on a basis consistent with that used in preparing its audited financial statements for prior years, certified by its chief financial officer as fairly presenting the financial condition of the Borrower and its subsidiaries as at the close of that quarter and the results of its operations for such quarter, subject to changes resulting from audit and normal year-end adjustments and the absence of footnotes.

(ii) The Borrower shall furnish to the Lender, within 90 days of the close of each fiscal year, commencing with the fiscal year ending September 30, 2008, its consolidated balance sheets as at the close of such fiscal year and its income statement and statement of changes in financial position for such fiscal year, prepared in accordance with GAAP, applied on a basis consistent with that used in preparing its audited financial statements for prior years, certified by a firm of independent accountants selected by it and acceptable to the Lender as fairly presenting the financial condition of the Borrower and its subsidiaries as at the close of such fiscal year and the results of its operations for such fiscal year. Either (a) such certification shall include or be accompanied by a statement that, during the examination by that firm of those financial statements, that firm observed or discovered no Default or Event of Default (or a detailed description of any Default or Event of Default so observed or discovered) or (b) the Borrower shall furnish to the Lender, within 90 days of the close of the applicable fiscal year, a statement, certified by the chief financial officer of the Borrower, that, during such fiscal year, no Default, Event of Default or event that is reasonably likely to result in a Default or Event of Default has occurred (or a detailed description of any such Default, Event of Default or event that occurred during such fiscal year).

(iii) The Borrower shall furnish to the Lender from time to time such other statements and information as the Lender may reasonably request.

(d) Books and Records; Inspection Rights. The Borrower shall keep proper books and records in which full, true and correct entries are made of all dealings and transactions in relation to its business and activities. The Borrower shall permit the Lender and representatives of the Lender to inspect its property and records at any reasonable times, and to make copies of such records as the Lender (or its representative) shall desire.

(e) Notices of Default. The Borrower shall promptly notify the Lender of each Default or Event of Default, and each other event that has or could reasonably be expected to have a materially adverse effect on its ability to perform its obligations under this Note or the Security Documents, together with a detailed description of such Default, Event of Default or other event, and all actions taken or to be taken in response thereto.

(f) Liens and Encumbrances. The Borrower shall not create or permit to be created or exist any Lien on any of its property now owned or hereafter acquired, other than Permitted Liens.

(g) Insurance. The Borrower shall maintain, with financially sound and reputable insurance companies, insurance in such amounts and against such risks as are customarily maintained by companies engaged in the same or similar businesses operating in the same or similar locations.

(h) Consolidations, Mergers. The Borrower shall not, directly or indirectly, by operation of law or otherwise, merge with or consolidate with another person, liquidate, windup or dissolve itself, or sell, transfer or lease or otherwise dispose of all or any substantial part of its assets or acquire by purchase or otherwise the business or assets of, or stock of, another person; except (i) that any subsidiary may merge into or consolidate with any other subsidiary; and (ii) any subsidiary may merge with or consolidate into the Borrower; provided that the Borrower is the surviving organization.

(i) Asset Sales. The Borrower shall not, and shall not permit any subsidiary to, directly or indirectly, consummate any Asset Sale, other than (i) the transfer of technology licenses to third parties in the ordinary course of business consistent with past practices (including without limitation in connection with implementation of any source code escrow agreement in customary form into which Borrower enters for the benefit of any licensee of the Borrower’s Intellectual Property) or (ii) with the prior written consent of the Lender (which shall not be unreasonably withheld).

(j) Transactions With Affiliates. The Borrower shall not, and shall not permit any of its subsidiaries to, make any payment to, or sell, lease, transfer or otherwise dispose of any of its properties or assets to, or purchase any property or assets from, or enter into, make or amend any transaction, contract, agreement, understanding, loan, advance or guarantee with, or for the benefit of, any Affiliate (each of the foregoing, an “Affiliate Transaction”). Notwithstanding the foregoing, the following items shall not be deemed to be Affiliate Transactions: (A) the payment of reasonable directors’ fees to persons who are not otherwise Affiliates of the Borrower or indemnification and similar arrangements, consulting fees, employee salaries, bonuses, employment agreements, compensation or employee benefit arrangements or incentive arrangements with any officer, director or employee of the Borrower or any subsidiary (including benefits under the foregoing and agreements directly in connection with the foregoing); (B) Restricted Payments made in compliance with Section 7(m); and (C) loans or advances to employees and reimbursement of actual out-of-pocket expenses incurred by officers, directors and employees, in each case in the ordinary course of business consistent with past practices.

(k) Payment of Taxes. The Borrower shall pay all material taxes, assessments and other governmental charges of any kind imposed on or in respect of its income or any of its businesses or assets, or in respect of taxes and other amounts it is required by law to withhold from amounts paid by it to its employees, before any penalty or interest accrues on the amount payable and before any Lien or other encumbrance on any of its property exists as a result of nonpayment; provided, however, that the Borrower shall not be required by this section to pay any amount if it is diligently contesting its alleged obligation to pay that amount in good faith through appropriate proceedings and maintains appropriate reserves or other provisions in respect of the contested amount as may be required under GAAP.

(l) Limitation on Indebtedness. The Borrower and its subsidiaries, on a consolidated basis, shall not directly or indirectly incur, create, assume, guarantee, become liable, contingently or otherwise, with respect to, or otherwise become responsible for the payment of, including, without limitation, by way of assumption or acquisition in a business combination, any Indebtedness other than (i) pursuant to this Note; (ii) any Indebtedness that is by its terms expressly subordinated in all respects to the Obligations, on terms and conditions satisfactory to the Lender, in its sole discretion; (iii) Indebtedness secured by Permitted Liens; and (iv) Indebtedness outstanding as of the date hereof.

(m) Restricted Payments. The Borrower shall not, and shall not permit any subsidiary, directly or indirectly, to make a Restricted Payment.

(n) Investments. The Borrower shall not make or permit to remain outstanding any Investments except:

(i) Investments outstanding on the date hereof.

(ii) Deposit and securities accounts with banks for the purpose of holding cash or Cash Equivalents.

(iii) Investments in the Borrower or a subsidiary.

(iv) Hedging Agreements entered into in the ordinary course of the Borrower’s financial planning or business and not for speculative purposes.

(v) Advances to officers, directors and employers of such person in the ordinary course of business (provided that such advances have been approved by a majority of the disinterested members of the Board of Directors) and advances made pursuant to the Consulting Agreements.

(vi) Accounts receivable in the ordinary course of business on reasonable and customary trade terms, including notes receivable and other securities received in connection with the payment of such accounts receivable.

(o) EBITDA. The Borrower will not permit the EBITDA, on a consolidated basis, of Borrower and its subsidiaries for any period of four consecutive fiscal quarters beginning with the fiscal quarter ending December 31, 2007 or a later fiscal quarter and ending with the fiscal quarter ending December 31, 2009 or a prior fiscal quarter to be less than the sum of the amounts set forth below opposite the quarters comprising such period:

Fiscal Quarter Ending on:	Minimum EBITDA
December 31, 2007	($338,046)
March 31, 2008	($809,460)
June 30, 2008	($145,630)
September 30, 2008	($33,307)
December 31, 2008	$644,469
March 31, 2009	$717,684
June 30, 2009	$797,883
September 30, 2009	$868,600
December 31, 2009	$1,010,479

(p) Additional Warrant. On or prior to the date of the Additional Loan, the Borrower shall issue to the Lender a warrant for the purchase of shares of Common Stock in the form attached hereto as Exhibit A (the “Additional Warrant”), provided that the Additional Warrant (i) shall initially be exercisable for that number of shares of Common Stock equal to the greater of (A) 26,735,508 shares of Common Stock (subject to appropriate adjustment to reflect any stock split, subdivision, combination, reclassification or similar corporate event affecting the Common Stock, in each case, consummated prior to such issuance, including without limitation, if consummated prior to such issuance, the 1000-to-1 reverse stock split contemplated hereby), and (B) 20% of the fully diluted outstanding shares of Common Stock as of the date of such issuance (including any equity granted under management option plans), and (ii) shall have an initial exercise price of $0.08 (subject to appropriate adjustment to reflect any stock split, subdivision, combination, reclassification or similar corporate event affecting the Common Stock, in each case, consummated prior to such issuance, including without limitation, if consummated prior to such issuance, the 1000-to-1 reverse stock split contemplated hereby).

(q) Intellectual Property Claim. The Borrower shall promptly notify the Lender if any person shall have asserted or threatened in writing to assert any Claim (i) contesting the right of the Borrower to use, exercise, sell, license, transfer or dispose of any of the Borrower’s Intellectual Property or any products, processes, or materials covered thereby in any manner or (ii) challenging the ownership, validity or enforceability of any of the Borrower’s Intellectual Property (an “IP Claim”). In the event of an IP Claim, (i) the Lender shall have the right to participate at its expense in, but not control, the compromise or defense of such IP Claim; (ii) the compromise or defense of such IP Claim shall be by counsel selected by the Borrower, which counsel must be reasonably satisfactory to the Lender; and (iii) the Borrower shall obtain the prior written approval (such approval not to be unreasonably withheld or delayed) of the Lender before entering into any settlement or adjustment of or otherwise completing the compromise of such IP Claim.

(r) Maintenance of Liquidity Value. The Borrower shall maintain an amount of cash or Cash Equivalents with a value of not less than $100,000.

8.	Events of Default. Upon the occurrence of any of the following (each an “Event of Default”):

(a) The Borrower shall fail to pay any principal, interest or other amount when due and payable hereunder;

(b) The Borrower or any subsidiary thereof shall default in the payment of any indebtedness under the Secured Promissory Notes, dated March 15, 2002 and April 19, 2002, issued by the Borrower and payable to Spescom Ltd., assigned to Lender pursuant to the Securities Purchase Agreement, dated as of September 30, 2007, by and among the Lender, Spescom Ltd. and Spescom Limited (as amended on the date hereof, the “Old Notes”) or shall default in the performance of any other obligation under such Old Notes;

(c) The Borrower or any subsidiary thereof shall be dissolved or liquidated (or any judgment, order or decree therefore shall be entered), other than the liquidation of a subsidiary pursuant to the merger of such subsidiary with the Borrower or another subsidiary in accordance with Section 7(h) hereof; or if the Borrower or any such subsidiary shall have made a general assignment for the benefit of creditors or shall have been adjudicated bankrupt and if not an adjudication based on a filing by Borrower it shall not have been dismissed within sixty (60) days or shall have filed a voluntary petition in bankruptcy or for reorganization or to effect a plan or arrangement with creditors or shall fail to pay its debts generally as such debts become due in the ordinary course of business (except as contested in good faith and for which adequate reserves are made in such party’s financial statements); or shall file an answer to a creditor’s petition or other petition filed against it, admitting the material allegations thereof for an adjudication in bankruptcy or for reorganization; or shall have applied for or permitted the appointment of a receiver or trustee or custodian for any of its property or assets; or such receiver, trustee or custodian shall have been appointed for any of its property or assets (otherwise than upon application or consent of Borrower or any such subsidiary) and shall not have been removed within sixty (60) days; or if an order shall be entered approving any petition for reorganization of Borrower or any such subsidiary and shall not have been reversed or dismissed within sixty (60) days; or Borrower or any such subsidiary shall take any action (corporate or other) authorizing or in furtherance any of the actions described above in this subsection;

(d) Any material provision of any document securing or guaranteeing the indebtedness evidenced by this Note, or of any Lien or security interest purported to be granted thereby, shall at any time for any reason cease to be valid, binding and enforceable against the Borrower or any other party thereto (other than in accordance with the terms thereof), as applicable, or the validity, binding effect or enforceability thereof shall be contested by the Borrower or any other party thereto, or the Borrower or any other party thereto shall deny in writing that it has any or further liability or obligation under any such document, or any such document shall be terminated (other than in accordance with the terms thereof), invalidated, revoked or set aside or in any way cease to give or provide to the Lender the benefits purported to be created thereby;

(e) The Borrower fails to perform or observe any covenant contained in Section 7 to be performed or observed by it, and does not remedy such failure on or before the 10th day after the Borrower first becomes aware of such occurrence;

(f) The Borrower fails to complete the Borrower Actions on or prior to April 30, 2008;

(g) Any person shall have prevailed pursuant to a final adjudication in any Claim against the Borrower or its subsidiaries in an aggregate amount equal to or greater than $500,000; or

(h) Any person shall have filed a Claim (i) contesting the right of the Borrower to use, exercise, sell, license, transfer or dispose of any of the Borrower's Intellectual Property or any products, processes, or materials covered thereby in any manner having a total aggregate value greater than $250,000 or (ii) challenging the ownership, validity or enforceability of any of the Borrower's Intellectual Property having a total aggregate value greater than $250,000, and either (A) a preliminary injunction has been entered and become effective against the Company with respect to the Claim and such preliminary injunction has not been vacated within 60 days of the date of such effectiveness, (B) (i) a motion for summary judgment with respect to such Claim has not been filed by or on behalf of the Company on or before the date (the “Service Date Anniversary”) that is one year from the date on which such Claim is served on the Company and (ii) such Claim has not been dismissed, withdrawn or resolved in the Company’s favor by settlement or judgment on the merits on or before the Service Date Anniversary or (C) (i) a motion for summary judgment with respect to such Claim has been filed by or on behalf of the Company on or before the Service Date Anniversary and such motion has been denied and (ii) such Claim has not been dismissed, withdrawn or resolved in the Company’s favor by settlement or judgment on the merits on or before the date of such denial; and

(i) Any of the Borrower’s Intellectual Property having a total aggregate value greater than $250,000 shall be subject to any outstanding order, judgment, decree, stipulation or agreement related to or restricting in any manner the licensing, assignment, transfer, use or conveyance thereof by the Borrower;then, Lender may declare the entire unpaid principal indebtedness evidenced by this Note immediately due and payable, without presentment, notice or demand, all of which are hereby expressly waived by Borrower (and in the event of the occurrence of any Event of Default specified in clause (b) above, and notwithstanding the lack of any declaration by Lender hereunder, the entire unpaid principal amount of such indebtedness shall become automatically and immediately due and payable).

Waiver. Borrower and any endorser of this Note hereby waive presentment, demand, protest and notice of any kind. No failure to exercise, and no delay in exercising, any rights hereunder on the part of the holder hereof shall operate as a waiver of such rights. In addition, no action by any directors designated by Lender or actions by the Lender exercising its right as a stockholder shall operate as a waiver by the holder hereof of any rights hereunder.

10.

Consulting Agreements. Each party agrees to use its reasonable best efforts to enter into one or more agreements (each, a “Consulting Agreement” and, collectively, the “Consulting Agreements”) pursuant to which one or more designees of Lender shall provide management consulting, strategic and financial advisory services to Borrower during the period that any Indebtedness of Borrower is outstanding hereunder or under the Old Notes, on terms and conditions mutually satisfactory to the Lender and the Borrower. The aggregate fees to be paid by the Borrower provided pursuant to the Consulting Agreements shall not exceed $60,000 in any fiscal quarter.

11.

Fees and Expenses; Closing Fee. The Borrower shall pay (A) all reasonable fees and expenses of Lender in connection with the negotiation, execution and delivery of this Note and the amendments dated as of the date hereof to the Secured Promissory Notes referenced in Section 8(b) and (B) no later than three (3) business days after the date of the Initial Loan, a closing fee of $75,000 to Lender or Lender’s designee, as directed by Lender. Lender agrees that such fees paid pursuant to the previous sentence shall include and constitute all fees and expenses to be reimbursed to Lender by Borrower pursuant to the letter agreement, dated October 22, 2007, between Lender and Borrower.

12.

Withholding Tax. The Borrower shall withhold any taxes required to be withheld from interest payments made on this Note and the Old Notes. The Lender shall provide the Borrower with applicable certifications (including any applicable IRS form W-8 and W-9 from persons who hold, directly or indirectly, an interest in the Lender) and any other information and calculations necessary to ascertain any withholding obligation with respect to such interest payments. The Borrower shall be entitled to rely exclusively on such certifications, information, and calculations provided by the Lender in making such withholding, and the Lender shall indemnify the Borrower for any liability incurred by Borrower in connection with such withholding obligations. Provided that the Lender complies with the foregoing requirements, in determining Borrower’s withholding obligation, Borrower shall be treated as having actual knowledge that Lender is receiving the interest payments as an agent (within the meaning of Treasury Regulations Section 1.1441-1(b)(2)(ii)) of its non-U.S. investors, and thus, must treat the payments as being made directly to those non-U.S. investors. The parties agree that the value attributable to the Existing Warrant shall be $1,467 and the value attributable to the Additional Warrant shall be $2,283.

THIS SECURED PROMISSORY NOTE AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS SECURED PROMISSORY NOTE SHALL, PURSUANT TO NEW YORK COMMERCIAL LAW, BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

[Signature Page Follows]

IN WITNESS WHEREOF, Borrower has caused this Note to be executed and delivered by its proper and duly authorized officer as of the date set forth above.

ENTERPRISE INFORMATICS INC.

	By:	/s/ John W. Low
	Name:	John W. Low
	Title:	Chief Financial Officer

Acknowledged and Agreed:

ERP2 HOLDINGS, LLC

By:_ _/s/ Kevin Wyman_________

Name: Kevin Wyman

Title: Majority Manager

[Signature Page to New Note]

SCHEDULE A

SECURED PROMISSORY NOTE

GRID

Date	Interest Capitalized as Principal	Amount of Principal Paid This Date	Outstanding Principal Balance at This Date	Notation Made By
January 31, 2008	$0.00	$0.00	$300,000.00

EXHIBIT 10.4

EXECUTION COPY

AMENDED AND RESTATED SECURITY AGREEMENT

This Amended and Restated Security Agreement (this “Agreement”) is executed as of January 31, 2008, between Enterprise Informatics Inc., f/k/a Altris Software, Inc., a California corporation (“Debtor”), and ERP2 Holdings, LLC, a Delaware limited liability company (the “Secured Party”).

WHEREAS, on March 15, 2002, Debtor executed and delivered a Secured Promissory Note to Spescom Ltd., a United Kingdom corporation (“Parent”) in the original principal amount of $400,000 (the “March Note”);

WHEREAS, concurrently therewith, in order to provide security for Debtor’s payment obligations under the March Note, and subsequent notes executed by the Debtor in favor of the Parent and its successors and assigns, Debtor entered into a Security Agreement (the “Original Security Agreement”) with Spescom Ltd., a United Kingdom corporation (“Parent”), pursuant to which Debtor granted a security interest in all its assets;

WHEREAS, on April 19, 2002, Debtor executed and delivered a Secured Promissory Note to Parent in the original principal amount of $500,000 (the “April Note” and, together with the March Note, the “Old Notes”);

WHEREAS, Parent assigned the Old Notes and the Original Security Agreement to the Secured Party pursuant to the Securities Purchase Agreement, dated as of September 30, 2007, by and between the Secured Party and Parent (the “Securities Purchase Agreement”);

WHEREAS, concurrently herewith, Debtor executed and delivered a Secured Promissory Note to the Secured Party, in the principal amount of up to $1,500,000 (the “New Note”); and

WHEREAS, Debtor and the Secured Party desire to amend the Original Security Agreement in order to reflect the assignment of the Old Notes to the Secured Party and the execution of the New Note.

NOW THEREFORE, in consideration of the agreements and obligations set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby amend and restate the Original Security Agreement to read in its entirety as follows:

1. Definitions. For purposes of this Agreement, the following definitions shall apply:

1.1 “Accounts” shall mean all “accounts” as defined in the UCC now owned or hereafter acquired by Debtor, including without limitation (a) all accounts receivable, contract

rights, notes, drafts and other obligations or indebtedness owing to Debtor and arising from whatever source; (b) all present and future monies, securities, credit balances, deposits, deposit accounts and other property of Debtor now or hereafter held or received by or in transit to the Secured Party or their affiliates or at any other depository or other institution from or for the account of Debtor, whether for safekeeping, pledge, custody, transmission, collection or otherwise, and all present and future liens, security interests, rights, remedies, title and interest in, to and in respect of Accounts and other Collateral, including (i) rights and remedies under or relating to guaranties, contracts of suretyship, letters of credit and credit and other insurance related to the Collateral, (ii) rights of stoppage in transit, replevin, repossession, reclamation and other rights and remedies of an unpaid vendor, lien holder or secured party, (iii) goods described in invoices, documents, contracts or instruments with respect to, or otherwise representing or evidencing, Accounts or other Collateral, including returned, repossessed and reclaimed goods, and (iv) deposits by and property of account debtors or other Persons securing the obligations of account debtors; (c) all of the rights of Debtor in, to and under all purchase orders for goods, services or other property; (d) all monies due to or to become due to Debtor under all contracts for the sale, ease or exchange of goods or other property and/or the performance of services by it (whether or not yet earned by performance on the part of Debtor) and (e) all of the rights of Debtor to any goods, services or other property represented by any of the foregoing, in each case whether now in existence or hereafter arising or acquired including, without limitation, the right to receive the proceeds of said purchase orders and contracts and all collateral security and guarantees of any kind given by any Person with respect to any of the foregoing.

1.2 “Collateral” has the meaning set forth in Section 3 of this Agreement, entitled “Security Interests.”

1.3 “Default” shall mean any Event of Default and any event which with the passing of time or the giving of notice would, unless cured or waived, constitute an Event of Default.

1.4 “Depository Account” shall mean each bank account (and the related lockbox, if any) of Debtor.

1.5 “Depository Account Control Agreement” shall mean any three-party agreement, in form and substance reasonably satisfactory to the Secured Party, among Debtor, the Secured Party and the bank maintaining a Depository Account (a) pursuant to which such bank agrees that, except in connection with chargebacks and payment of such bank’s usual and customary fees chargeable in connection with its administration of the applicable Depository Account, such bank has no Lien upon, or right of set off against, the Depository Account or any cash, checks, wires and other items from time to time on deposit therein and (b) which provides the Secured Party with control of the Depository Account.

1.6 “Documents” shall mean all “documents” as defined in the UCC or other receipts covering, evidencing or representing goods, now owned or hereafter acquired by Debtor.

1.7 “Equipment” shall mean all “equipment” as defined in the UCC (excluding motor vehicles, and railway rolling stock), now or hereafter used or acquired for use

in the business or otherwise of Debtor (together with all accessions thereto and all substitutions and replacements thereof and parts therefor), whether or not the same shall be deemed affixed to real property, and all rights under or arising out of present or future contracts relating to the acquisition or use of the above.

1.8 “Event of Default” shall mean any default by Debtor in the full and punctual performance of its obligations under this Agreement or the Loan.

1.9 “General Intangibles” shall mean all “general intangibles” as defined in the UCC now owned or hereafter acquired by Debtor, including without limitation (a) all obligations or indebtedness owing to Debtor (other than Accounts) from whatever source arising, (b) all registered and unregistered (i) patent licenses. (ii) patents, (iii) trademark licenses, (iv) trademarks, (v) rights in intellectual property, (vi) trade names, (vii) service marks, (viii) trade secrets, (ix) copyrights, (x) permits, (xi) licenses, and (xii) applications for the foregoing, (c) goodwill, processes, drawings, blueprints and customer lists, (d) all rights or claims in respect of refunds for taxes paid, (e) all rights in respect of any pension plan or similar arrangement maintained for employees of Debtor or any of its Subsidiaries, and (f) the Subsidiary Interests.

1.10 “Instruments” shall mean (a) all “instruments”, “chattel paper” or letters of credit”, each as defined in the UCC, evidencing, representing, arising from or existing in respect of, relating to, securing or otherwise supporting the payment of, any of the Accounts, including without limitation promissory notes, drafts, bills of exchange and trade acceptances, and (b) notes or other obligations or indebtedness owing to a Debtor (including without limitation obligations of Debtor to any other Debtor) from whatever source arising, in each case now owned or hereafter acquired by Debtor.

1.11 “Inventory” shall mean all “inventory” as defined in the UCC, now owned or hereafter acquired by Debtor, wherever located, including without limitation all raw materials and other materials and supplies, work-in-process and finished goods and any products made or processed therefrom and all substances, if any, commingled therewith or added thereto.

1.12 “Lien” shall mean, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset, including the interest of a vendor or lessor under any conditional sale agreement, capital lease or other title retention agreement.

1.13 “Loan” shall mean collectively, all loans made by the Secured Party to Debtor on March 15, 2002 or subsequent thereto, including without limitation the loans evidenced by the Old Notes and the New Note.

1.14 “Note” shall mean, collectively, all promissory notes executed by Debtor in favor of the Secured Party on March 15, 2002 or subsequent thereto, including without limitation the Old Notes and the New Note.

1.15 “Proceeds” shall mean all products and proceeds of, and all other profits, rentals or receipts, in whatever form, arising from the collection, sale, lease, exchange, assignment, licensing or other disposition of, or realization upon, any item or portion of the Collateral, including without limitation all claims of Debtor against third parties for loss of,

damage to. destruction of, or for proceeds payable under, or unearned premiums with respect to, policies of insurance in respect of, any Collateral and any condemnation or requisition payments with respect to any Collateral, in each case whether now existing or hereafter arising.

1.16 “Security Interests” shall mean the security interests securing the Secured Obligations, including without limitation the Security Interests granted pursuant to this Agreement.

1.17 “Secured Obligations” shall mean the Note and all obligations, liabilities and indebtedness pursuant to the Loan, including, without limitation principal, interest, charges, fees, costs and expenses, however evidenced, whenever arising (including without limitation arising after the commencement of any case with respect to Debtor under the United States Bankruptcy Code or any similar statute and including the payment of interest and other amounts which would accrue and become due but for the commencement of such case, whether or not such amounts are allowed or allowable in whole or in part in such case).

1.18 “Site” shall mean Debtor’s principal place of business located at the address set forth in the Paragraph in this Agreement titled “Notices”.

1.19 “Software” shall mean all computer software, programs and databases (including, without limitation, all related applications and data files), firmware and documentation and materials relating thereto, together with any substitutions, replacements, improvements, error corrections, updates and new versions of any of the foregoing, developed, marketed or supported by Debtor.

1.20 “Subsidiary” shall mean, with respect to any Person, any corporation or other entity of which securities or other ownership interests having ordinary voting power to elect a majority of the board of directors or other Person performing similar functions are at the time directly or indirectly owned by such Person.

1.21 “Subsidiary Interests” shall mean any and all of Debtor’s interest in any Person, as a member, partner, shareholder or otherwise.

1.22 “UCC” shall mean the Uniform Commercial Code as in effect on the date hereof in the State of New York; provided that if by reason of mandatory provisions of law, the perfection or the effect of perfection or non-perfection of the Security Interest in any item or portion of the Collateral is governed by the Uniform Commercial Code as in effect in a jurisdiction other than the State of New York, then “UCC” shall mean the Uniform Commercial Code as in effect in such other jurisdiction for purposes of the provisions hereof relating to such perfection or effect of perfection or non-perfection.

2. Representations and Warranties. Except as set forth in writing to the Secured Party on even date herewith, Debtor represents and warrants to the Secured Party as follows (which shall survive the execution and delivery of this Agreement):

2.1 Debtor has good and marketable title to all of the Collateral owned by it, free and clear of any Liens other than the Security Interests and Permitted Liens (as defined in the New Note).

2.2 Debtor has not performed any acts which might prevent the Secured Party from enforcing any of the terms and conditions of this Agreement or which would limit the Secured Party in any such enforcement. Other than financing statements or other similar or equivalent documents or instruments with respect to the Security Interests and Permitted Liens (as defined in the New Note), as of the date hereof and thereafter no financing statement, mortgage, security agreement or other similar or equivalent document or instrument covering all or any part of the Collateral is or will be on file or of record in any government office in any jurisdiction in which such filing or recording would be effective to perfect a Lien on such Collateral. No Collateral is in the possession of any Person or entity whatsoever (other than Debtor) which has taken action to assert any claim thereto or security interest therein, except that the Secured Party or their designee may have possession of Collateral as contemplated hereby.

2.3 The Security Interests constitute valid security interests under the UCC securing the Secured Obligations.

2.4 This Agreement has been duly authorized, executed and delivered by Debtor and constitutes a valid and binding agreement of Debtor. The execution, delivery and performance by Debtor of this Agreement, each filing, statement, supplementary assignment, pledge agreement or other document related to this Agreement to which Debtor is a party do not and will not contravene, or constitute (with or without the giving of notice or lapse of time or both) a default under, any provision of applicable law or regulation or of the charter or by-laws of Debtor or of any agreement, judgment, injunction, order, decree or other instrument binding upon it or result in the creation of any Lien (other than the Security Interests) on any asset of Debtor or any of its Subsidiaries.

2.5 Debtor has filed, or caused to be filed, in a timely manner all tax returns, reports and declarations which are required to be filed by it. All information in such tax returns, reports and declarations is complete and accurate in all material respects. Debtor has paid or caused to be paid all taxes due and payable or claimed due and payable in any assessment received by it, except taxes the validity of which are being contested in good faith by appropriate proceedings diligently pursued and available to Debtor and with respect to which adequate reserves have been set aside on its books. Adequate provision has been made for the payment of all accrued and unpaid Federal, State, county, local, foreign and other taxes whether or not yet due and payable and whether or not disputed.

2.6 There is no known present investigation by any governmental agency pending, or to the best of Debtor’s knowledge threatened, against or affecting Debtor, its assets or business and there is no action, suit, proceeding or claim by any Person or entity pending, or to the best of Debtor’s knowledge threatened, against Debtor or its assets or goodwill, or against or affecting any transactions contemplated by this Agreement, which would reasonably be expected to result in any material adverse change in the assets, business or prospects of Debtor or would impair the ability of Debtor to perform its obligations hereunder or under the Note or the Loan or of the Secured Party to enforce any Secured Obligations or realize upon any Collateral.

2.7 Debtor is not in default in any material respect under, or in violation in any material respect of any of the terms of, any material agreement, contract, instrument, lease or other commitment to which it is a party or by which it or any of its assets are bound and Debtor is in compliance in all material respects with all applicable provisions of laws, rules, regulations, licenses, permits, approvals and orders of any foreign, Federal, Slate or local governmental authority.

2.8 All representations and warranties contained in this Agreement or any of the agreements concerning the Note or the Loan shall survive the execution and delivery of this Agreement and shall be deemed to have been made again to the Secured Party on the date of each additional borrowing or other credit accommodation hereunder and shall be conclusively presumed to have been relied on by the Secured Party regardless of any investigation made or information possessed by the Secured Party. The representations and warranties set forth herein shall be cumulative and in addition to any other representations or warranties which Debtor shall now or hereafter give, or cause to be given, to the Secured Party.

3. Security Interests. In order to secure the full and punctual payment and performance of the Secured Obligations in accordance with the terms thereof, Debtor hereby grants to the Secured Party a continuing security interest in and to all of the following property of Debtor, whether now owned or existing or hereafter acquired or arising and regardless of where located (collectively, “Collateral”):

3.1 Accounts;

3.2 Documents;

3.3 Equipment,

3.4 General Intangibles;

3.5 Instruments;

3.6 Inventory;

3.7 Subsidiary Interests;

3.8 Software;

3.9 All other personal property and assets of Debtor;

3.10 All books and records (including, without limitation, customer lists, supplier lists, credit files, computer programs, printouts and other computer materials and records) of such Debtor pertaining to any of the Collateral; and

3.11 All Proceeds of any of the Collateral described in the preceding clauses of this Paragraph, in any form, including without limitation insurance proceeds and all claims against third parties for loss or damage to or destruction of any or all of the foregoing.

4. Further Assurances; Covenants.

4.1 Debtor shall not change the location of (a) its chief executive office or chief place of business or (b) the locations where it keeps or holds any Collateral, or any records relating to such Collateral, from the Site unless it shall have given the Secured Party at least 45 days’ prior written notice. Debtor shall not in any event change the location of any Collateral if such change would cause the Security Interests in such Collateral to lapse or cease to be perfected.

4.2 Debtor shall maintain Inventory only at (a) the Site, (b) at a location in the United States of which the Secured Party have received at least 45 days’ prior written notice, or (c) in transit to a location specified in the preceding clauses.

4.3 Debtor shall not change its name, identity, any tradename used by it or its corporate structure in any manner unless it shall have given the Secured Party at least 45 days prior written notice.

4.4 Debtor shall cause the Secured Party to be named as an insured party and loss payee on each insurance policy covering risks relating to any of its Collateral. Such insurance shall be maintained against such risks as are insured against by companies of established repute in the same or similar lines of business as Debtor, in amounts, under policies, and with insurers reasonably acceptable to the Secured Party. Debtor will deliver to the Secured Party, upon request of the Secured Party the insurance policies for such insurance. Each such insurance policy shall include effective waivers by the insurer of all claims for insurance premiums against the Secured Party, shall provide that, for so long as any Event of Default shall have occurred and be continuing and the insurer shall have received notice thereof from the Secured Party, all insurance proceeds shall be adjusted with, and payable to the Secured Party and shall provide that no cancellation or termination thereof shall be effective until at least 30 days after receipt by the Secured Party of written notice thereof.

4.5 Debtor will, promptly upon request, provide to the Secured Party all information and evidence it may reasonably request concerning the Collateral to enable the Secured Party to enforce the provisions of this Agreement.

4.6 At the request of the Secured Party, Debtor will join with the Secured Party in executing one or more (1) Financing Statements, (2) Copyright Registration Applications, and/or (3) Notices of Assignment of Copyright pursuant to any applicable law, in form satisfactory to the Secured Party.

4.7 Except in the ordinary course of business or otherwise in accordance with the New Note, Debtor shall not, without the prior written approval of the Secured Party sell, encumber or otherwise transfer any Collateral, or agree or attempt to do so.

4.8

(a) Debtor shall notify the Secured Party promptly of: (i) any material delay in Debtor’s performance of any of its obligations to any account debtor or the assertion of any class, offsets, defenses or counterclaims by any account debtor, or any disputes with account

debtors, or any settlement, adjustment or compromise thereof, (ii) all material adverse information relating to the financial condition of any account debtor and (iii) any event or circumstance which, to Debtor’s knowledge would cause any then existing Accounts to no longer be collected pursuant to their original terms. No credit, discount, allowance or extension or agreement for any of the foregoing shall be granted to any account debtor without the Secured Party’s consent, except in the ordinary course of Debtor’s business in accordance with practices and policies previously disclosed in writing to Debtor. So long as no Event of Default exists or has occurred and is continuing, Debtor shall settle, adjustor compromise any claim, offset, counterclaim or dispute with any account debtor. At any time that an Event of Default exists or has occurred and is continuing, the Secured Party shall, at their option, have the exclusive right to settle, adjust or compromise any claim, offset, counterclaim or dispute with account debtors or grant any credits, discounts or allowances.

(b) The Secured Party shall have the right at any time or times, in the Secured Party’s name or in the name of a nominee of the Secured Party, to verify the validity, amount or any other matter relating to any Account or other Collateral, by mail, telephone, facsimile transmission or otherwise.

(c) The Secured Party may, at any time or times that an Event of Default exists or has occurred and is continuing, (i) notify any or all account debtors that the Accounts have been assigned to the Secured Party and that the Secured Party has a security interest therein and the Secured Party may direct any or all accounts debtors to make payment of Accounts directly to the Secured Party, (ii) extend the time of payment of, compromise settle or adjust for cash, credit, return of merchandise or otherwise, and upon any terms or conditions, any and all Accounts or other obligations included in the Collateral and thereby discharge or release the account debtor or any other party or parties in any way liable for payment thereof without affecting any of the Obligations, (iii) demand, collect or enforce payment of any Accounts or such other obligations, but without any duty to do so, and the Secured Party shall not be liable for its failure to collector enforce the payment thereof nor for the negligence of its agents or attorneys with respect thereto and (iv) take whatever other action the Secured Party may deem necessary or desirable for the protection of its interests. At any time that an Event of Default exists or has occurred and is continuing, at the Secured Party’s request, all invoices and statements sent to any account debtor shall state that the Accounts and such other obligations have been assigned to the Secured Party and are payable directly and only to the Secured Party and Debtor shall deliver to the Secured Party such originals of documents evidencing the sale and delivery of goods or the performance of services giving rise to any Accounts as the Secured Party may require.

4.9 With respect to the Equipment:

(a) upon the Secured Party’s request, Debtor shall, at its expense, at any time or times as the Secured Party may request on or after an Event of Default, deliver or cause to be delivered to the Secured Party written reports or appraisals as to the Equipment in form, scope and methodology acceptable to the Secured Party and by an appraiser acceptable to the Secured Party;

(b) Debtor shall keep the Equipment in good order, repair, naming and marketable condition (ordinary wear and tear excepted);

(c) Debtor shall use the Equipment with all reasonable care and caution and in accordance with applicable standards of any insurance and in conformity with all material applicable laws;

(d) the Equipment is and shall be used in Debtor’s business and not for personal, family, household or farming use;

(e) the Equipment is now and shall remain personal property and Debtor shall use commercially reasonable efforts to not permit any of the Equipment to be or become a part of or affixed to real property; and

(f) Debtor assumes all responsibility and liability arising from the use of the Equipment unless in the Secured Party’s possession.

4.10 With respect to the Inventory:

(a) upon the Secured Party’s request, Debtor shall, at its expense, no more than once in any twelve (12) month period, but at any time or times as the Secured Party may request on or after an Event of Default, deliver or cause to be delivered to the Secured Party written reports or appraisals as to the Inventory in form, scope and methodology acceptable to the Secured Party and by an appraiser acceptable to the Secured Party, addressed to the Secured Party, upon which the Secured Party are expressly permitted to rely;

(b) Debtor shall produce, use, store and maintain the Inventory with all reasonable care and caution and in accordance with applicable standards of any insurance and in conformity with applicable laws (including the requirements of the Federal Fair Labor Standards Act of 1938, as amended and all rules, regulations and orders related thereto);

(c) Debtor assumes all responsibility and liability arising from or relating to the production, use, sale or other disposition of the Inventory; and

(d) Debtor shall keep the Inventory in good and marketable condition.

4.11 Debtor shall duly pay and discharge all taxes, assessments contributions and governmental charges upon or against it or its properties or assets, except for taxes the validity of which are being contested in good faith by appropriate proceedings diligently pursued and available to Debtor and with respect to which adequate reserves have been set aside on its books. Debtor shall be liable for any tax or penalties (other than income taxes, franchise taxes and any penalties related thereto) imposed on the Secured Party as a result of the financing arrangements provided for herein and Debtor agrees to indemnify and hold the Secured Party harmless with respect to the foregoing, and to repay to the Secured Party on demand the amount thereof, and until paid by Debtor such amount shall be added and deemed part of the Loan. The foregoing indemnity shall survive the payment of the Secured Obligations and the termination or non-renewal of this Agreement.

4.12 Except in the ordinary course of business or as otherwise permitted by the New Note, other than the Secured Obligations, Debtor shall not incur, create, assume, become liable in any manner with respect to, or permit to exist, any obligations or indebtedness.

4.13 As soon as practicable, but no later than thirty (30) days after the date hereof, Debtor shall deliver to the Secured Party evidence that the source code for the most recent versions, as of the date hereof, of all Software commercially released by Debtor has been delivered to an escrow agent (“Escrowed Source Code”) reasonably satisfactory to the Secured Party pursuant to an escrow agreement in form and substance reasonably satisfactory to the Secured Party. Debtor shall, as soon as practicable following the date of delivery by Secured Party to Debtor of a written request that the source code escrow contemplated by this Section 4.13 be updated, but in each case no later than thirty (30) days following such date, deliver to such escrow agent such additional source code as is necessary to ensure that any source code so delivered, together with all source code previously delivered to such escrow agent pursuant to this Section 4.13, includes the source code for the most recent versions, as of the date of delivery of such request, of all Software commercially released by Debtor; provided, however, that Debtor shall have no obligation under this sentence arising from any such request delivered to Debtor within ninety (90) days of the date hereof or within ninety (90) days of the most recent date on which any other such request has been delivered to Debtor. Debtor shall not change such source code at any time that a Default or Event of Default has occurred and is continuing without furnishing to such escrow agent the new source code within sixty (60) days following the date of such change, once such source code has been delivered to such escrow agent pursuant to this Section 4.13.

5. General Authority. Debtor hereby irrevocably appoints the Secured Party as its true and lawful attorney, with full power of substitution, in the name of Debtor, the Secured Party or otherwise, for the sole use and benefit of the Secured Party, but at such Debtor’s expense, to the extent permitted by law to exercise, at any time and from time to time while an Event of Default has occurred and is continuing all or any of the following powers with respect to all or any of the Collateral owned by Debtor, (a) to settle, compromise, compound, prosecute or defend any action or proceeding with respect to the Collateral, (b) to sell, transfer, assign otherwise deal in or with the same or the proceeds or avails thereof, as fully and effectually as if the Secured Party were the absolute owner of the Collateral; provided, that the Secured Party shall give Debtor not less than 10 days’ prior written notice of the time and place of any sale or other intended disposition of any of the Collateral except any Collateral which is perishable or threatens to decline speedily in value or is of a type customarily sold on a recognized market. Debtor agrees that such notice constitutes “reasonable notification” within the meaning of Section 9-504(3) of the UCC.

6. Remedies Upon Event of Default.

6.1 If any Event of Default has occurred and is continuing, the Secured Party may exercise all other rights of a secured party under the UCC (whether or not in effect in the jurisdiction where such rights are exercised) and, in addition, the Secured Party may, without being required to give any notice, except as herein provided or as may be required by mandatory provisions of law sell the Collateral or any part thereof at public or private sale or at any broker’s board or on any securities exchange, for cash, upon credit or for future delivery and at such price

or prices as the Secured Party may deem satisfactory. The Secured Party may be the purchaser of any or all of the Collateral so sold at any public sale (or, if the Collateral is of a type customarily sold in a recognized market or is of a type which is the subject of widely distributed standard price quotations, at any private sale) and thereafter hold the same, absolutely, free from any right or claim of whatsoever kind. Debtor agrees to execute and deliver such documents and take such other action as the Secured Party deems necessary or advisable in order that any such sale may be made in compliance with law. Upon any such sale, the Secured Party shall have the right to deliver, assign and transfer to the purchaser thereof the Collateral so sold. Each purchaser at any such sale shall hold the Collateral so sold to it absolutely, free from any claim or right of whatsoever kind, including any equity or right of redemption of Debtor which may be waived and Debtor, to the extent permitted by law, hereby specifically waives all rights of redemption, stay or appraisal which it has or may have under any law now existing or hereafter adopted. The notice of sale shall, (1) in vase of a public sale, state the time and place fixed for such sale, and (2) in the case of a private sale, state the day after which such sale may be consummated. Any such public sale shall be held at such time or times within ordinary business hours and at such place or places as the Secured Party may fix in the notice of such sate. At any such sale the Collateral may be sold in one lot as an entirety or in separate parcels, as the Secured Party may determine. The Secured Party shall not be obligated to make any such sale pursuant to any such notice. The Secured Party may, without notice or publication, adjourn any public or private sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for the sale, and such sale may be made at any time or place to which the same may be so adjourned, In case of any sale of all or any part of the Collateral on credit or for future delivery, the Collateral so sold may be retained by the Secured Party until the selling price is paid by the purchaser thereof, but the Secured Party shall not incur any liability in case of the failure of such purchaser to take up and pay for the Collateral so sold and, in case of any such failure, such Collateral may again he sold upon like notice. The Secured Party, instead of exercising the power of sale herein conferred upon them, may proceed by a suit or suits at law or in equity to foreclose the Security Interests and sell the Collateral, or any portion thereof under a judgment or decree of a court or courts of competent jurisdiction.

6.2 In addition to the other rights of the Secured Party described herein, if an Event of Default has occurred and is continuing, Debtor shall use commercially reasonable efforts to cause such depository institution to execute and deliver to the Secured Party a Depository Account Control Agreement with regard to each of the Depository Accounts of the Debtor.

6.3 For the purpose of enforcing any and all rights and remedies under this Agreement, if any Event of Default has occurred and is continuing, then the Secured Party may (a) require Debtor to, and Debtor agrees that it will, at its own expense, forthwith assemble all or any part of the Collateral as directed by the Secured Party and make it available at a place designated by the Secured Party which is, in its opinion, reasonably convenient to the Secured Party and Debtor, whether at the premises of Debtor or otherwise, (b) to the extent permitted by applicable law, enter, with or without process of law and without breach of the peace, any premise where any of the Collateral is or may be located, and without charge or liability to it seize and remove such Collateral from such premises, (c) have access to and use any of Debtor’s books and records relating to the Collateral and (d) prior to the disposition of the Collateral, process, repair or recondition it or otherwise prepare it for disposition in any manner and to the

extent the Secured Party deems appropriate and, in connection with such preparation and disposition, use without charge any trademark, trade name, copyright, patent or technical process used by Debtor.

6.4 Any laboratory which has possession of any of the Collateral is hereby constituted and appointed by Debtor as pledgeholder for the Secured Party and the Secured Party may authorize each such pledgeholder to sell all or any portion of the Collateral upon the order and direction of the Secured Party, and Debtor hereby waives any and all claims for damages, or otherwise, for any action taken by such pledgeholder.

7. Application of Proceeds. Upon the occurrence and during the continuance of an Event of Default, the proceeds of any sale of, or other realization upon, all or any part of the Collateral shall be applied by the Secured Party in the following order of priorities:

7.1 First, to payment of the expenses of such sale or other realization, including, on a pari passu basis, reasonable compensation to agents and counsel for the Secured Party and all expenses, liabilities and advances incurred or made by the Secured Party in connection therewith, and any other unreimbursed expenses for which the Secured Party is to be reimbursed under any other agreement or instrument entered into in connection with the Loan or this Agreement and unpaid fees owing to the Secured Party.

7.2 Next to the payment of the Secured Obligations, on a pari passu basis, in accordance with the provisions of the Loan, until all such amounts have been paid in fill.

7.3 Finally, to Debtor or its successors or assigns, or as a court of competent jurisdiction may direct, of any surplus then remaining from such proceeds.

The Secured Party may make distributions hereunder in cash or in kind or in any combination thereof.

8. Termination of Security Interest; Release of Collateral. Upon the repayment in full of all Secured Obligations, the Security Interests shall terminate and all rights to the Collateral shall revert to Debtor. At any time and from time to time prior to such termination of the Security Interests, the Secured Party may release any of the Collateral or release Debtor of its obligations hereunder with the prior written consent of the Secured Party.

9. Governing Law. This Agreement is governed by and construed in accordance with the laws of the State of New York, irrespective of New York’s choice-of-law principles.

10. Further Assurances. Each party to this Agreement shall execute and deliver all instruments and documents and take all actions as may be reasonably required or appropriate to carry out the purposes of this Agreement.

11. Counterparts and Exhibits. This Agreement may be executed in counterparts, each of which is deemed an original and all of which together constitute one document. All exhibits attached to and referenced in this Agreement are incorporated into this Agreement.

12. Time of Essence. Time and strict and punctual performance are of the essence with respect to each provision of this Agreement.

13. Attorney’s Fees. The prevailing party(ies) in any litigation, arbitration, mediation, bankruptcy insolvency or other proceeding (“Proceeding”) relating to the enforcement or interpretation of this Agreement may cover from the unsuccessful party(ies) all costs, expenses, and actual attorneys fees (including expert witness and other consultants’ fees and costs) relating to or arising out of (a) the Proceeding (whether or not the Proceeding proceeds to judgment), and (b) any post-judgment or post-award proceeding including, without limitation, one to enforce or collect any judgment or award resulting from the Proceeding. All such judgments and awards shall contain a specific provision for the recovery of all such subsequently incurred costs, expenses, and actual attorney’s fees.

14. Modification. This Agreement may be modified only by a contract in writing executed by the party to this Agreement against whom enforcement of the modification is sought.

15. Headings. The paragraph headings in this Agreement; (a) are included only for convenience, (b) do not in any manner modify or limit any of the provisions of this Agreement, and (c) may not be used in the interpretation of this Agreement.

16. Prior Understandings. This Agreement and all documents specifically referred to and executed in connection with this Agreement: (a) contain the entire and final agreement of the parties to this Agreement with respect to the subject matter of this Agreement, and (b) supersede all negotiations, stipulations, understandings, agreements representations and warranties if any, with respect to such subject matter, which precede or accompany the execution of this Agreement.

17. Interpretation. Whenever the context so requires in this Agreement, all words used in the singular may include the plural (and vice versa) and the word ‘Person’ includes a natural person, a corporation, a firm, a partnership, a joint venture, a trust, an estate or any other entity. The terms “includes” and “including” do not imply any limitation. For purposes of this Agreement, the term “day means any calendar day and the term “business day” means any calendar day other than a Saturday, Sunday or any other day designated as a holiday under California Government Code Sections 6700-6701. Any act permitted or required to be performed under this Agreement upon a particular day which is not a business day may be performed on the next business day with the same effect as if it bad been performed upon the day appointed. No remedy or election under this Agreement is exclusive, but rather, to the extent permitted by applicable law, each such remedy and election is cumulative with all other remedies at law or inequity.

18. Partial Invalidity. Each provision of this Agreement is valid and enforceable to the fullest extent permitted by law. If any provision of this Agreement (or the application of such provision to any Person or circumstance) is or becomes invalid or unenforceable, the remainder of this Agreement, and the application of such provision to Persons or circumstances other than those as to which it is held invalid or unenforceable, are not affected by such invalidity or unenforceability.

19. Successors-in-Interest and Assigns. Debtor may not voluntarily or by operation of law assign, hypothecate, delegate or otherwise transfer or encumber all or any part of its rights, duties or other interests in this Agreement without the prior written consent of the Secured Party, which consent may be withheld in the Secured Party’s sole and absolute discretion. Any such transfer in violation of this paragraph is void. Subject to the foregoing and any other restrictions on transferability contained in this Agreement, this Agreement is binding upon and inures to the benefit of the successors-in-interest and assigns of each party to this Agreement.

20. Notices. All notices or other communications required or permitted to be given to a party to this Agreement shall be in writing and shall be personally delivered, sent by facsimile or electronic mail, sent by certified mail, postage prepaid, return receipt requested, or sent by an overnight express courier service that provides written confirmation of delivery, to such party at the following respective address:

Secured Party:	ERP2 Holdings, LLC c/o Richard Shorten 694 Weed Street New Canaan, CT 06840 Attention: Board of Managers Fax: (702) 995-4535 Email: rshorten@silverminecapital.com

with a copy to:	Stroock & Stroock & Lavan LLP 180 Maiden Lane New York, NY 10038 Attention: Brett Lawrence Fax: (212) 806-6006 Email: blawrence@stroock.com

Debtor:	Enterprise Informatics Inc. 10052 Mesa Ridge Court, Suite 100 San Diego, CA 92121 Attention: John Low Fax: (858) 625-3010 Email: jlow@enterpriseinformatics.com

with a copy to:	Gibson, Dunn & Crutcher LLP 1881 Page Mill Road Palo Alto, CA 94304 Attention: Russell C. Hansen Fax: (650) 849-5333 Email: rhansen@gibsondunn.com

Each such notice or other communication shall be deemed given, delivered and received upon its actual receipt, except that if it is sent by mail in accordance with this paragraph, then it shall be deemed given, delivered and received three days after the date such notice or other communication is deposited with the United States Postal Service in accordance with this

paragraph. Any party to this Agreement may give a notice of a change of its address to the other party(ies) to this Agreement.

21. Waiver. Any waiver of a default or provision under this Agreement must be in writing. No such waiver constitutes a waiver of any other default or provision concerning the same or any other provision of this Agreement. No delay or omission by a party in the exercise of any of its rights or remedies constitutes a waiver of (or otherwise impairs) such right or remedy. A consent to or approval of an act does not waive or render unnecessary the consent to or approval of any other or subsequent act.

22. Drafting Ambiguities. Each party to this Agreement has reviewed and revised this Agreement and has had the opportunity to have such party’s legal counsel review and revise this Agreement. Each party to this Agreement acknowledges that this Agreement has been prepared by Stroock & Stroock & Lavan LLP (“Stroock”) which represents only the Secured Party, that Debtor is not being represented by Stroock in relation to this Agreement and that Debtor has been advised to retain its own legal counsel. The rule of construction that ambiguities are to be resolved against the drafting party or in favor of the party receiving a particular benefit under an agreement may not be employed in the interpretation of this Agreement or any amendment to this Agreement.

23. Third Party Beneficiaries. Nothing in this Agreement is intended to confer any rights or remedies or any Person or entity other than the parties to this Agreement and their respective successors-in-interest and permitted assignees, unless such rights are expressly granted in this Agreement to another Person specifically identified as a “Third Party Beneficiary.”

24. JURISDICTION. WITHOUT LIMITING IN ANY WAY THE SECURED PARTY’S RIGHT TO ENFORCE ANY REMEDY AVAILABLE UNDER THE UCC WITHOUT FORMAL LEGAL OR JUDICIAL ACTION, BORROWER AND SECURED PARTY SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE FEDERAL DISTRICT COURTS LOCATED IN THE STATE OF NEW YORK.

25. Fees and Expenses. The Debtor shall pay all reasonable fees and expenses of the Secured Party in connection with the negotiation, execution and delivery of this Agreement.

[Signature Page Follows]

IN WITNESS WHEREOF, Debtor and the Secured Party have each caused this Agreement to be executed by its duly authorized representative as of the day and year first written above.

DEBTOR:	ENTERPRISE INFORMATICS INC.


	By:	/s/ John W. Low
		Name: John W. Low
		Title: Chief Financial Officer


SECURED PARTY:	ERP2 HOLDINGS, LLC


	By:	/s/ Kevin Wyman
		Name: Kevin Wyman
		Title: Majority Manager

[Signature Page to Security Agreement]

California	0-15935	95-3634089
(State or other jurisdiction	(Commission file number)	(I.R.S. Employer
of incorporation)		Identification Number)

10052 Mesa Ridge Court, Suite 100		92121
San Diego, California		(Zip Code)
(Address of principal executive offices)

To Pledgor:	Enterprise Informatics Inc. 10052 Mesa Ridge Court, Suite 100 San Diego, CA 92121 Attention: John Low Fax: (858) 625-3010 Email: jlow@enterpriseinformatics.com

Copy to:	Gibson, Dunn & Crutcher LLP 1881 Page Mill Road Palo Alto, CA 94304 Attention: Russell C. Hansen Fax: (650) 849-5333 Email: rhansen@gibsondunn.com

To Secured Party:	ERP2 Holdings, LLC c/o Richard Shorten 694 Weed Street New Canaan, CT 06840 Attention: Board of Managers Fax: (702) 995-4535 Email: rshorten@silverminecapital.com

Copy to:	Stroock & Stroock & Lavan LLP 180 Maiden Lane New York, NY 10038 Attention: Brett Lawrence Fax: (212) 806-6006 Email: blawrence@stroock.com

PLEDGOR:	ENTERPRISE INFORMATICS INC.


	By:	/s/ John W. Low
		Name: John W. Low
		Title: Chief Financial Officer


SECURED PARTY:	ERP2 HOLDINGS, LLC


	By:	/s/ Kevin Wyman
		Name: Kevin Wyman
		Title: Majority Manager