EXIBIT 10.70 Form of Security Agreement dated September 24, 2007
EXIBIT
10.70
Form
of
Security Agreement dated September 24, 2007
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Execution
Copy
AMENDED
AND RESTATED
THIS
AMENDED AND RESTATED SECURITY
AGREEMENT, dated as of September 24, 2007 (this “Agreement”),
is by
and among MANARIS CORPORATION, a Nevada corporation (the “Company”),
and
each of the direct or indirect subsidiaries of the Company
(whether
now or hereafter existing, such subsidiaries,
the
“Subsidiaries”
and,
collectively with the Company, the “Debtors”),
and
Imperium Advisers, LLC, in its capacity as collateral agent (in such capacity,
the “Collateral
Agent”),
for
the benefit of Imperium
Master Fund, Ltd. (“Imperium”
and
collectively with its permitted successors and assigns, the “Holders”)
of the
6% Original Issue Discount Senior Secured Convertible Notes (the “Convertible
Notes”)
and
the Senior Secured Working Capital Notes (the “Working
Capital Notes”
and,
collectively with the Convertible Notes, the “Notes”),
issued by the Company on or after the date hereof pursuant to the Securities
Purchase and Loan Agreement, dated as of the date hereof (the “Loan
Agreement”),
by
and between the Company and Imperium. Capitalized terms used herein and not
otherwise defined shall have the respective meanings specified in the Loan
Agreement. (The Holders, Collateral Agent and their endorsees, transferees
and
assigns are sometimes collectively referred to herein as
the
“Secured
Parties”).
RECITALS
A. The
Company, certain Subsidiaries and Imperium are party to a Security Agreement,
dated as of July 24, 2007 (the “Existing
Agreement”),
pursuant to which the Company and such Subsidiaries have granted to the
Collateral Agent a security interest in their assets to secure the obligations
of the Company under (i)
the
Demand Note, dated as of July 24, 2007, issued by the Company to Imperium and
having a principal face amount of $2,274,053; (ii) the Demand Note, dated as
of
July 27, 2007, issued by the Company to Imperium and having a principal face
amount of $237,028; (iii) the Demand Note, dated as of August 3, 2007, issued
by
the Company to Imperium and having a principal face amount of $385,000; and
(iv)
the Demand Note, dated as of August 29, 2007, issued by the Company to Imperium
and having a principal face amount of $44,340.56 (collectively, the
“Demand
Notes”).
B. Pursuant
to the Loan Agreement, the Company (i) will issue to Imperium a 6% Original
Issue Discount Senior Secured Convertible Note (the “Convertible
Note”)
in
exchange for the Demand Notes, cash and other consideration; and (ii) may sell
to the Holders one or more Working Capital Notes from time to time to finance
its working capital needs.
C. It
is a
condition precedent to the transactions contemplated by the Loan Agreement
that
the parties hereto amend and restate the Existing Agreement as contemplated
by
this Agreement.
D. Each
Debtor that is a Subsidiary will directly or indirectly benefit from the
extension of credit to the Company represented by the issuance of the Notes
and
the other transactions contemplated by the Loan Agreement and the other
agreements contemplated therein.
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NOW,
THEREFORE, in consideration of the agreements herein contained and for other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree that the Existing Agreement is hereby
amended and restated to read in its entirety as follows:
1. DEFINITIONS.
(a) Terms
Defined in the Uniform Commercial Code.
Terms
used herein that are defined in Article 9 of the UCC but not otherwise defined
in this Agreement (such as “account”,
“chattel
paper”,
“commercial
tort claim”,
“deposit
account”,
“document”,
“equipment”,
“fixtures”,
“general
intangibles”,
“goods”,
“instruments”,
“inventory”,
“investment
property”,
“letter-of-credit
rights”,
“proceeds”
and
“supporting
obligations”)
shall
have the respective meanings given such terms in Article 9 of the UCC.
(b) Defined
Terms.
The
following terms shall apply to this Agreement:
“Collateral”
means
the collateral in which the Secured Parties are granted a security interest
by
this Agreement and which shall include all present and after-acquired personal
property of the Debtors, including the following personal property presently
owned or hereafter acquired by the Debtors,
wherever situated, and all additions and accessions thereto and all
substitutions and replacements thereof, and all proceeds, products and accounts
thereof, including, without limitation, all proceeds from the sale or transfer
of the Collateral and of insurance covering the same and of any tort claims
in
connection therewith, and all dividends, interest, cash, notes, securities,
equity interest or other property at any time and from time to time acquired,
receivable or otherwise distributed in respect of, or in exchange for, any
or
all of the Pledged Securities:
(i) All
goods, including, without limitation, (A) all machinery, equipment, computers,
motor vehicles, trucks, tanks, boats, ships, appliances, furniture, special
and
general tools, fixtures, test and quality control devices and other equipment
of
every kind and nature and wherever situated, together with all documents of
title and documents representing the same, all additions and accessions thereto,
replacements therefore, all parts therefore, and all substitutes for any of
the
foregoing and all other items used and useful in connection with any Debtor’s
businesses and all improvements thereto; and (B) all inventory;
(ii) All
contract rights and other general intangibles, including, without limitation,
all partnership interests, membership interests, stock or other securities,
rights
under any of the Organizational Documents, agreements related to the Pledged
Securities, licenses,
distribution and other agreements, computer software (whether “off-the-shelf”,
licensed from any third party or developed by any Debtor), computer software
development rights, leases, franchises, customer lists, quality control
procedures, grants and rights, goodwill, trademarks, service marks, trade
styles, trade names, patents, patent applications, copyrights, Intellectual
Property and income tax refunds;
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(iii) All
accounts, together with all instruments, all documents of title representing
any
of the foregoing, all rights in any merchandising, goods, equipment, motor
vehicles and trucks which any of the same may represent, and all right, title,
security and guaranties with respect to each account, including any right of
stoppage in transit;
(iv) All
documents, letter-of-credit rights, instruments and chattel paper;
(v) All
commercial tort claims;
(vi) All
deposit accounts and all cash (whether or not deposited in such deposit
accounts);
(vii) All
investment property;
(viii) All
supporting obligations;
(ix) All
files, records, books of account, business papers and computer programs;
and
(x) All
products and proceeds of all of the foregoing Collateral set forth in
clauses
(i)-(ix)
above.
“Event
of Default”
means
the occurrence of either of the following: (i) an Event of Default (as defined
in the Notes); or (ii) any provision of this Agreement shall at any time for
any
reason be declared to be null and void, or the validity or enforceability
thereof shall be contested by a Debtor, or a proceeding shall be commenced
by a
Debtor, or by any governmental authority having jurisdiction over a Debtor,
seeking to establish the invalidity or unenforceability thereof, or a Debtor
shall deny that such Debtor has any liability or obligation purported to be
created under this Agreement.
“Intellectual
Property”
means
the collective reference to all existing rights, priorities and privileges
relating to intellectual property, whether arising under United States,
multinational or foreign laws or otherwise, including, without limitation,
(i)
all copyrights arising under the laws of the United States, any other country
or
any political subdivision thereof, whether registered or unregistered and
whether published or unpublished, all registrations and recordings thereof,
and
all applications in connection therewith; (ii) all letters patent of the United
States, any other country or any political subdivision thereof, all reissues
and
extensions thereof, and all applications for letters patent of the United States
or any other country and all divisions, continuations and continuations-in-part
thereof; (iii) all trademarks, trade names, corporate names, company names,
business names, fictitious business names, trade dress, service marks, logos,
domain names and other source or business identifiers, and all goodwill
associated therewith, now
existing or hereafter adopted or acquired, all
registrations and recordings thereof, and all applications in connection
therewith, whether in the United States Patent and Trademark Office or in any
similar office or agency of the United States, any State thereof or any other
country or any political subdivision thereof, or otherwise, and all common
law
rights related thereto; (iv) all trade secrets arising under the laws of the
United States, any other country or any political subdivision thereof; (v)
all
rights to obtain any reissues, renewals or extensions of the foregoing; (vi)
all
licenses for any of the foregoing; and (vii) all causes of action for
infringement of the foregoing.
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“Majority
in Interest”
shall
mean, at any time of determination, the majority in interest (based on
then-outstanding principal amounts of Notes at the time of such determination)
of the Secured Parties.
“Necessary
Endorsement”
shall
mean undated stock powers endorsed in blank or other proper instruments of
assignment duly executed and such other instruments or documents as the Secured
Parties may reasonably request.
“Obligations”
means
all of the Debtors’ obligations under the Notes, this Agreement and the other
Transaction Documents, in each case, whether now or hereafter existing,
voluntary or involuntary, direct or indirect, absolute or contingent, liquidated
or unliquidated, whether or not jointly owed with others, and whether or not
from time to time decreased or extinguished and later increased, created or
incurred, and all or any portion of such obligations or liabilities that are
paid, to the extent all or any part of such payment is avoided or recovered
directly or indirectly from any of the Secured Parties as a preference,
fraudulent transfer or otherwise as such obligations may be amended,
supplemented, converted, extended or modified from time to time. Without
limiting the generality of the foregoing, the term “Obligations”
shall
include, without limitation: (i) principal of, and interest on the Notes and
the
loans extended pursuant thereto; (ii) any and all other fees, indemnities,
costs, obligations and liabilities of the Debtors from time to time under or
in
connection with this Agreement, the Notes or the other Transaction Documents;
and (iii) all amounts (including but not limited to post-petition interest)
in
respect of the foregoing that would be payable but for the fact that the
obligations to pay such amounts are unenforceable or not allowable due to the
existence of a bankruptcy, reorganization or similar proceeding involving any
Debtor.
“Organizational
Documents”
means
with respect to an entity, the documents by which such entity
was
organized (such as a certificate of incorporation, certificate of limited
partnership or articles of organization, and including, without limitation,
any
certificates of designation for preferred stock or other forms of preferred
equity) and which relate to the internal governance of such entity
(such as
bylaws, a partnership agreement or an operating, limited liability or members
agreement).
“Pledged
Securities”
means
all investment property and general intangibles respecting ownership and/or
other equity interests in each Subsidiary, including, without limitation, the
shares of capital stock and the other equity interests listed on Schedule
I
(as the
same may be modified from time to time pursuant to the terms hereof),
and
any
other shares of capital stock and/or other equity interests of any other direct
or indirect subsidiary of any Debtor obtained in the future,
in each
case, all certificates representing such shares and/or equity interests and,
in
each case, all rights, options, warrants, stock, other securities and/or equity
interests that may hereafter be received, receivable or distributed in respect
of, or exchanged for, any of the foregoing, and all rights arising under or
in
connection with the foregoing, including, but not limited to, all dividends,
interest and cash.
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“UCC”
means
the Uniform Commercial Code of the State of New York and or any other applicable
laws of the United States, Canada or any state, province or other political
subdivision thereof, which has jurisdiction with respect to all, or any portion
of, the Collateral or this Agreement, from time to time. It is the intent of
the
parties that defined terms in the UCC should be construed in their broadest
sense so that the term “Collateral”
will
be
construed in its broadest sense. Accordingly, if there are, from time to time,
changes to defined terms in the UCC that broaden the definitions, they are
incorporated herein and if existing definitions in the UCC are broader than
the
amended definitions, the existing ones shall be controlling.
(c) Terms
Defined in the Loan Agreement.
Any
capitalized term used but not defined herein has the meaning specified in the
Loan Agreement.
(d) Usage.
All
definitions contained in this Agreement are equally applicable to the singular
and plural forms of the terms defined. The words “hereof”, “herein” and
“hereunder” and words of similar import refer to this Agreement as a whole and
not to any particular provision of this Agreement.
2. GUARANTY;
GRANT OF SECURITY INTEREST.
2.1 Guaranty.
Each of
the Debtors (other than Avensys, Inc.) hereby guarantees that the Obligations
of
the other Debtors will be paid or otherwise satisfied in full strictly in
accordance with the terms of the Transaction Documents. Avensys Inc. hereby
guarantees that the Obligations of the Debtors (other than the Company) will
be
paid or otherwise satisfied in full strictly in accordance with the terms of
the
Transaction Documents to the extent permitted by applicable law. The liability
of each Debtor is absolute and unconditional and such Debtor hereby waives
any
defense it may have in connection therewith. This guaranty is a guaranty of
payment, and not merely of collection.
2.2 Security
Interest.
As an
inducement for the Secured Parties to extend the loans as evidenced by the
Notes
and (i) in the case of the Debtors (other than Avensys Inc.), to secure the
complete and timely payment, performance and discharge in full, as the case
may
be, of all of the Obligations or (ii) in the case of Avensys Inc., to secure
the
complete and timely payment, performance and discharge in full of its
obligations under the Guaranty provided for in Section
2.1
above,
each
Debtor
hereby unconditionally and irrevocably pledges, grants and hypothecates to
the
Collateral
Agent, for the benefit of each Secured Party pari
passu with
each
of the other Secured
Parties,
a
continuing security interest in and to, a lien upon and a right of set-off
against all of their respective right, title and interest of whatsoever kind
and
nature in and to, the Collateral (the “Security
Interest”).
The
Security Interest granted hereunder is a first priority lien and security
interest except with respect to the Permitted Liens. Notwithstanding the
foregoing, nothing herein shall be deemed to constitute an assignment of any
asset which, in the event of an assignment, becomes void by operation of
applicable law or the assignment of which is otherwise prohibited by applicable
law (in each case to the extent that such applicable law is not overridden
by
Sections 9-406, 9-407 and/or 9-408 of the UCC or other similar applicable law);
provided,
however,
that to
the extent permitted by applicable law, this Agreement shall create a valid
security interest in such asset and, to the extent permitted by applicable
law,
this Agreement shall create a valid security interest in the proceeds of such
asset.
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3. DELIVERY
OF CERTAIN COLLATERAL.
Contemporaneously
or prior to the execution of this Agreement, each Debtor shall deliver or cause
to be delivered to the Collateral
Agent, for the benefit of the Secured
Parties (a) any and all certificates and other instruments representing or
evidencing the Pledged Securities; and (b) any and all certificates and other
instruments or documents representing any of the other Collateral, in each
case,
together with all Necessary Endorsements. The Debtors are, contemporaneously
with the execution hereof, delivering to the Collateral
Agent, for the benefit of the Secured
Parties, or have previously delivered to
the
Secured Parties,
a true
and correct copy of each Organizational Document governing any of the Pledged
Securities.
4.
REPRESENTATIONS,
WARRANTIES, COVENANTS AND AGREEMENTS OF THE DEBTORS.
Except
as
set forth in the Schedules provided as part of, and incorporated into, this
Agreement, each Debtor represents and warrants to, and covenants and agrees
with, the Collateral
Agent, for the benefit of the Secured
Parties,
as
follows:
4.1 Good
Standing; Due Authorization; Enforceability.
(a) Each
Debtor is duly organized and in good standing in the jurisdiction of its
formation. Each Debtor shall at all times preserve and keep in full force and
effect its valid existence and good standing and any rights and franchises
material to its business.
(b) Each
Debtor
has the requisite corporate,
partnership, limited liability company or other power
and
authority to enter into this Agreement and otherwise to carry out its
obligations hereunder. The execution, delivery and performance by each
Debtor
of this Agreement and the filings contemplated therein have been duly authorized
by all necessary action on the part of such
Debtor
and no further action is required by such
Debtor.
This Agreement has been duly executed and delivered by each
Debtor.
(c) This
Agreement constitutes the legal, valid and binding obligation of each
Debtor,
enforceable against each
Debtor
in accordance with its terms except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization and similar laws of general
application relating to or affecting the rights and remedies of creditors and
by
general principles of equity.
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4.2 No
Conflicts.
The
execution, delivery and performance of this Agreement by the Debtors do not
(i)
violate any of the provisions of any Organizational Documents of any
Debtor
or any judgment, decree, order or award of any court, governmental body or
arbitrator or any applicable law, rule or regulation applicable to any
Debtor;
or (ii) conflict with, or constitute a default (or an event that with notice
or
lapse of time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation (with or without
notice, lapse of time or both) of, any agreement, credit facility, debt or
other
instrument (evidencing any Debtor’s debt or otherwise) or other understanding to
which any
Debtor
is a party or by which any property or asset of any
Debtor
is bound or affected. No consent (including, without limitation, from
stockholders or creditors of any
Debtor)
is required for any
Debtor
to enter into and perform its obligations hereunder.
4.3 Debtor
Information; Validity, Perfection and Maintenance of Security
Interests.
(a) All
of
the information set forth on Schedule
II,
including, without limitation, each Debtor’s name, jurisdiction of organization
and location of Collateral, are true, correct and complete in all respects.
No
Debtor shall change its name, type of organization, jurisdiction of
organization, organizational identification number (if it has one), legal or
corporate structure, or identity, or add any new fictitious name unless it
provides at least thirty (30) days’ prior written notice to the Secured Parties
of such change and, at the time of such written notification, such Debtor
provides any financing statements or fixture filings necessary to perfect and
continue perfected the perfected Security Interest granted and evidenced by
this
Agreement.
(b) This
Agreement creates in favor of the Secured Parties a valid security interest
in
the Collateral, securing the payment and performance of the Obligations. With
respect to each Debtor that is organized in the United States, upon filing
of
UCC-1 financing statements with the secretary of state’s office of the state in
which such Debtor is organized (collectively,
the “Financing
Statements”),
and
payment of the applicable filing fees, all security interests created hereunder
in any Collateral owned by such Debtor which may be perfected by filing UCC-1
financing statements shall have been duly perfected. No
consent of any third parties and no authorization, approval or other action
by,
and no notice to or filing with, any governmental authority or regulatory body
is required for (i) the execution, delivery and performance of this Agreement;
(ii) the creation or perfection of the Security Interests created hereunder
in
the Collateral; or (iii) the enforcement of the rights of the Secured Parties
hereunder.
(c) Each
Debtor
hereby authorizes the Secured Parties, or any of them, to file the Financing
Statements and any other financing statements or other similar filings under
the
UCC with respect to the Security Interest with the proper filing and recording
agencies in any jurisdiction deemed proper by them. The Debtors shall, at the
Debtors’ sole cost and expense, promptly execute and/or deliver to the Secured
Parties such further deeds, mortgages, assignments, security agreements,
financing statements or other instruments, documents, certificates and
assurances and take such further action as the Secured Parties may from time
to
time request and may in their sole discretion deem necessary to perfect, protect
or enforce its security interest in the Collateral including, without
limitation, if applicable, the execution and delivery of a separate security
agreement with respect to the Debtors’ Intellectual Property in which the
Secured Parties have been granted a security interest hereunder, substantially
in a form acceptable to the Secured Parties.
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(d) The
Debtors shall at all times maintain the liens and Security Interest provided
for
hereunder as valid and perfected liens and security interests in the Collateral
in favor of the Secured Parties until this Agreement and the Security Interest
hereunder shall be terminated pursuant to Section
13.
The
Debtors hereby agree to defend the same against the claims of any and all
persons and entities. The Debtors shall obtain and furnish to the Secured
Parties from time to time, upon demand, such releases and/or subordinations
of
claims and liens which may be required to maintain the priority of the Security
Interest hereunder.
4.4 Collateral.
(a) The
Debtors are the sole owner of the Collateral (except for non-exclusive licenses
granted by any Debtor in the ordinary course of business), free and clear of
any
Liens (other than Permitted Liens), and are fully authorized to grant the
Security Interest. There has been no adverse decision to any
Debtor’s
claim of ownership rights in or exclusive rights to use the Collateral in any
jurisdiction or to any
Debtor’s
right to keep and maintain such Collateral in full force and effect, and there
is no proceeding involving said rights pending or, to the best knowledge of
any
Debtor,
threatened before any court, judicial body, administrative or regulatory agency,
arbitrator or other governmental authority.
(b) The
Debtors shall keep and preserve their equipment, inventory and other tangible
Collateral in good condition, repair and order. Each Debtor shall take all
steps
reasonably necessary to diligently pursue and seek to preserve, enforce and
collect any rights, claims, causes of action and accounts receivable in respect
of the Collateral.
(c) Each
Debtor
shall at all times maintain its tangible Collateral at the locations set forth
under its name on Schedule
II
and may
not relocate such Collateral unless it delivers to the Secured Parties at least
thirty (30) days prior to such relocation (i) written notice of such relocation
and the new location thereof (which must be within the United States); and
(ii)
evidence that appropriate financing statements under the UCC and other necessary
documents have been filed and recorded and other steps have been taken to
perfect the Security Interest to create in favor of the Secured Parties a valid,
perfected and continuing perfected first priority lien in the Collateral. The
Debtors shall not transfer, pledge, hypothecate, encumber, license, sell or
otherwise dispose of any of the Collateral (except for non-exclusive licenses
granted by a Debtor in its ordinary course of business and sales of inventory
by
such Debtor in its ordinary course of business) without the prior written
consent of a Majority in Interest. The Debtors shall not operate or locate
any
such Collateral (or cause to be operated or located) in any area excluded from
insurance coverage.
(d) Except
as
set forth on Schedule 5.22 of the Loan Agreement, there is not on file in any
governmental or regulatory authority, agency or recording office an effective
financing statement, security agreement, license or transfer or any notice
of
any of the foregoing (other than those that will be filed in favor of the
Secured Parties pursuant to this Agreement) covering or affecting any of the
Collateral. So long as this Agreement shall be in effect, the Debtors shall
not
execute and shall not knowingly permit to be on file in any such office or
agency any such financing statement or other document or instrument (except
to
the extent filed or recorded in favor of the Secured Parties pursuant to the
terms of this Agreement).
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(e) The
capital stock and other equity interests listed on Schedule
I
represent all of the capital stock and other equity interests of the Company
Subsidiaries (as defined in the Loan Agreement), and represent all capital
stock
and other equity interests owned, directly or indirectly, by the Debtors. All
of
the Pledged Securities are validly issued, fully paid and nonassessable, and
the
Debtors are the legal and beneficial owner of the Pledged Securities, free
and
clear of any lien, security interest or other encumbrance except for the
security interests created by this Agreement. The
ownership and other equity interests in partnerships and limited liability
companies (if any)
included
in the Pledged Securities
(the
“Pledged
Interests”)
by
their express terms do not provide that they are securities governed by Article
8 of the UCC and are not held in a securities account or by any financial
intermediary. Each Debtor shall vote the Pledged Securities to comply with
the
covenants and agreements set forth herein and the other Transaction
Documents.
(f) Each
Debtor shall, within ten (10) days of obtaining knowledge thereof, advise the
Secured Parties promptly, in sufficient detail, of any substantial change in
the
Collateral, and of the occurrence of any event which would have a material
adverse effect on the value of the Collateral or on the Secured Parties’
security interest therein. Each Debtor shall permit the Secured Parties and
their representatives and agents to inspect the Collateral at any time, and
to
make copies of records pertaining to the Collateral as may be requested by
a
Secured Party from time to time.
(g) All
information heretofore, herein or hereafter supplied to the Secured Parties
by
or on behalf of the Debtors with respect to the Collateral is accurate and
complete in all material respects as of the date furnished.
4.5 Insurance.
Each
Debtor shall maintain with financially sound and reputable insurers, insurance
with respect to the Collateral against loss or damage of the kinds and in the
amounts customarily insured against by entities of established reputation having
similar properties similarly situated and otherwise as is prudent for entities
engaged in similar businesses but in any event sufficient to cover the full
replacement cost thereof. Each Debtor shall cause each insurance policy issued
in connection herewith to provide, and the insurer issuing such policy to
certify to the Secured Parties that (a) the Secured Parties will be named as
lender loss payee and additional insured under each such insurance policy;
(b)
if such insurance be proposed to be cancelled or materially changed for any
reason whatsoever, such insurer will promptly notify the Secured Parties and
such cancellation or change shall not be effective as to the Secured Parties
for
at least thirty (30) days after receipt by the Secured Parties of such notice,
unless the effect of such change is to extend or increase coverage under the
policy; and (c) the Secured Parties will have the right (but no obligation)
at
its election to remedy any default in the payment of premiums within thirty
(30)
days of notice from the insurer of such default. If no Event of Default (as
defined in the Notes) exists and if the proceeds arising out of any claim or
series of related claims do not exceed $200,000, loss payments in each instance
will be applied by the applicable Debtor
to
the repair and/or replacement of property with respect to which the loss was
incurred to the extent reasonably feasible, and any loss payments or the balance
thereof remaining, to the extent not so applied, shall be payable to the
applicable Debtor; provided,
however,
that
payments received by any Debtor after an Event of Default occurs and is
continuing or in excess of $200,000 for any occurrence or series of related
occurrences shall be paid to the Secured Parties, on a pari
passu
basis
with each of the other Secured Parties, and, if received by such Debtor, shall
be held in trust for and immediately paid over to the Secured Parties unless
otherwise directed in writing by the Secured Parties. Copies of such policies
or
the related certificates, in each case, naming the Secured Parties as lender
loss payee and additional insured shall be delivered to the Secured Parties
at
least annually and at the time any new policy of insurance is
issued.
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4.6 Additional
Debtors.
If a
Debtor creates or acquires any new Subsidiary, then such Debtor shall cause
such
new Subsidiary to become party to this Agreement for all purposes of this
Agreement by executing and delivering an Assumption Agreement in the form of
Annex A hereto.
5. EFFECT
OF PLEDGE ON CERTAIN RIGHTS.
If
any of
the Collateral subject to this Agreement consists of nonvoting equity or
ownership interests (regardless of class, designation, preference or rights)
that may be converted into voting equity or ownership interests upon the
occurrence of certain events (including, without limitation, upon the transfer
of all or any of the other stock or assets of the issuer), it is agreed that
the
pledge of such equity or ownership interests pursuant to this Agreement or
the
enforcement of any of the Secured Parties’ rights hereunder shall not be deemed
to be the type of event which would trigger such conversion rights
notwithstanding any provisions in the Organizational Documents or agreements
to
which the Debtors or any of the Collateral is subject or to which the Debtors
are party.
6. DUTY
TO HOLD IN TRUST.
6.1 Cash
and Payment Obligations.
Upon
the occurrence of an Event of Default and at any time thereafter, each Debtor
shall, upon receipt of any revenue, income, dividend, interest or other sums
subject to the Security Interest, whether payable pursuant to the Notes or
otherwise, or of any check, draft, note, trade acceptance or other instrument
evidencing an obligation to pay any such sum, hold the same in trust for and
on
behalf of and for the benefit of the Secured Parties, and shall forthwith
endorse and transfer any such sums or instruments, or both (to the extent
permitted by law), to the Collateral Agent for distribution to the Secured
Parties, pro
rata
in
proportion to their initial purchases of Notes for application to the
satisfaction of the Obligations (and if any Note is not outstanding,
pro
rata
in
proportion to the initial purchases of the remaining Notes).
6.2 Securities
and Other Assets.
If a
Debtor shall become entitled to receive or shall receive any securities or
other
property (including, without limitation, shares of Pledged Securities or
instruments representing Pledged Securities acquired after the date hereof,
or
any options, warrants, rights or other similar property or certificates
representing a dividend, or any distribution in connection with any
recapitalization, reclassification or increase or reduction of capital, or
issued in connection with any reorganization of any of its direct or indirect
subsidiaries) in respect of the Pledged Securities (whether as an addition
to,
in substitution of, or in exchange for, such Pledged Securities or otherwise),
such Debtor agrees to (i) accept the same as the agent of the Secured Parties;
(ii) hold the same in trust on behalf of and for the benefit of the Secured
Parties; and (iii) deliver any and all certificates or instruments evidencing
the same to the Collateral Agent, for the benefit of the Secured Parties, on
or
before the close of business on the fifth business day following the receipt
thereof by such Debtor, in the exact form received together with the Necessary
Endorsements, to be held by the Collateral Agent subject to the terms of this
Agreement as Collateral.
-11-
7. RIGHTS
AND REMEDIES UPON DEFAULT.
7.1 Scope
of Rights and Remedies.
Upon
the occurrence of any Event of Default and at any time thereafter, the
Collateral Agent, for the benefit of the Secured Parties, acting through any
agent appointed by it for such purpose, shall have the right to exercise all
of
the remedies conferred hereunder and under the Notes, and the Collateral Agent,
for the benefit of the Secured Parties, shall have all the rights and remedies
of a secured party under the UCC. Without limitation, the Collateral Agent
shall
have the following rights and powers:
(a) The
Collateral Agent shall have the right to take possession of the Collateral
and,
for that purpose, enter, with the aid and assistance of any person, any premises
where the Collateral, or any part thereof, is or may be placed and remove the
same, and the Debtors shall assemble the Collateral and make it available to
the
Collateral Agent at places which the Collateral Agent shall reasonably select,
whether at the Debtors’ premises or elsewhere, and make available to the
Collateral Agent, without rent, all of the Debtors’ premises and facilities for
the purpose of the Collateral Agent taking possession of, removing or putting
the Collateral in saleable or disposable form.
(b) Upon
reasonable notice to the Debtors by the Collateral Agent, all rights of the
Debtors to exercise the voting and other consensual rights which it would
otherwise be entitled to exercise and all rights of the Debtors to receive
the
dividends and interest which it would otherwise be authorized to receive and
retain, shall cease. Upon such reasonable notice, the Collateral Agent shall
have the right to receive any interest, cash dividends or other payments on
the
Collateral and, at the option of the Collateral Agent, to exercise in the
Collateral Agent’s discretion all voting rights pertaining thereto. Without
limiting the generality of the foregoing, the Collateral Agent shall have the
right (but not the obligation) to exercise all rights with respect to the
Collateral as if it were the sole and absolute owner thereof, including, without
limitation, to vote and/or to exchange, at its sole discretion, any or all
of
the Collateral in connection with a merger, reorganization, consolidation,
recapitalization or other readjustment concerning or involving the Collateral
or
a Debtor or any of its direct or indirect subsidiaries.
(c) The
Collateral Agent shall have the right to operate the business of the Debtors
using the Collateral and shall have the right to assign, sell, lease or
otherwise dispose of and deliver all or any part of the Collateral, at public
or
private sale or otherwise, either with or without special conditions or
stipulations, for cash or on credit or for future delivery, in such parcel
or
parcels and at such time or times and at such place or places, and upon such
terms and conditions as the Collateral Agent may deem commercially reasonable,
all without (except as shall be required by applicable statute and cannot be
waived) advertisement or demand upon or notice to the Debtors or right of
redemption of the Debtors, which are hereby expressly waived. Upon each such
sale, lease, assignment or other transfer of Collateral, the Collateral
Agent
may,
unless prohibited by applicable law which cannot be waived, purchase all or
any
part of the Collateral being sold, free from and discharged of all trusts,
claims, right of redemption and equities of any
Debtor,
which are hereby waived and released.
-12-
(d) The
Collateral Agent
shall
have the right (but not the obligation) to notify any account debtors and any
obligors under instruments or accounts to make payments directly to the
Collateral Agent
and to
enforce the Debtors’ rights against such account debtors and
obligors.
(e) The
Collateral
Agent
may (but
is not obligated to) direct any financial intermediary or any other person
or
entity holding any investment property to transfer the same to the Collateral
Agent
or its
designee.
(f) The
Collateral
Agent
may (but
is not obligated to) transfer any or all Intellectual Property registered in
the
name of any
Debtor
at the United States Patent and Trademark Office and/or Copyright Office into
the name of the Collateral
Agent
or any
designee or any purchaser of any Collateral.
7.2 Disposition
of Collateral.
The
Collateral
Agent
may
comply with any applicable law in connection with a disposition of Collateral
and such compliance will not be considered to adversely affect the commercial
reasonableness of any sale of the Collateral. The Collateral
Agent
may sell
the Collateral without giving any warranties and may specifically disclaim
such
warranties. If the Collateral
Agent
sells
any of the Collateral on credit, the Debtors will only be credited with payments
actually made by the purchaser. In addition, each Debtor waives any and all
rights that it may have to a judicial hearing in advance of the enforcement
of
any of the Collateral
Agent’s rights and remedies hereunder, including, without limitation, its right
following an Event of Default to take immediate possession of the Collateral
and
to exercise its rights and remedies with respect thereto.
7.3 License
to Use Intellectual Property.
For the
purpose of enabling the
Collateral
Agent to further exercise rights and remedies under this Section
7
or
elsewhere provided by agreement or applicable law, each Debtor hereby grants
to
the Collateral
Agent
an
irrevocable, nonexclusive license (exercisable without payment of royalty or
other compensation to such Debtor) to use, license or sublicense following
an
Event of Default, any Intellectual Property now owned or hereafter acquired
by
such Debtor, and wherever the same may be located, and including in such license
access to all media in which any of the licensed items may be recorded or stored
and to all computer software and programs used for the compilation or printout
thereof.
8. APPLICATIONS
OF PROCEEDS.
The
proceeds of any such sale, lease or other disposition of the Collateral
hereunder shall be applied first, to the expenses of retaking, holding, storing,
processing and preparing for sale, selling and the like (including, without
limitation, any taxes, fees and other costs incurred in connection therewith)
of
the Collateral, to the reasonable attorneys’ fees and expenses incurred by the
Collateral Agent and Secured Parties in enforcing their rights hereunder and
in
connection with collecting, storing and disposing of the Collateral, and then
to
satisfaction of the Obligations pro
rata
among
the Secured Parties (based on then-outstanding principal amounts of Notes at
the
time of any such determination), and to the payment of any other amounts
required by applicable law, after which the Secured Parties shall pay to the
Debtors any surplus proceeds. If, upon the sale, license or other disposition
of
the Collateral, the proceeds thereof are insufficient to pay all amounts to
which the Secured Parties are legally entitled, the Debtors will be liable
for
the deficiency, together with interest thereon, at an interest rate equal to
the
lower of eighteen percent (18%) and the maximum rate permitted by applicable
law
(the “Default
Rate”),
and
the reasonable fees of any attorneys employed by the Collateral Agent and the
Secured Parties to collect such deficiency. To the extent permitted by
applicable law, each Debtor waives all claims, damages and demands against
the
Collateral Agent and the Secured Parties arising out of the repossession,
removal, retention or sale of the Collateral, unless due solely to the gross
negligence or willful misconduct of the Collateral Agent or the Secured Parties
as determined by a final judgment (not subject to further appeal) of a court
of
competent jurisdiction.
-13-
9. SECURITIES
LAW PROVISION.
Each
Debtor recognizes that the Collateral
Agent
may be
limited in its ability to effect a sale to the public of all or part of the
Pledged Securities by reason of certain prohibitions in the Securities Act
of
1933, as amended, or other federal or state securities laws (collectively,
the
“Securities
Laws”),
and
may be compelled to resort to one or more sales to a restricted group of
purchasers who may be required to agree to acquire the Pledged Securities for
their own account, for investment and not with a view to the distribution or
resale thereof. Each Debtor agrees that sales so made may be at prices and
on
terms less favorable than if the Pledged Securities were sold to the public,
and
that the Secured Parties have no obligation to delay the sale of any Pledged
Securities for the period of time necessary to register the Pledged Securities
for sale to the public under the Securities Laws. Each Debtor shall cooperate
with the Collateral
Agent
in its
attempt to satisfy any requirements under the Securities Laws (including,
without limitation, registration thereunder if requested by the Collateral
Agent) applicable to the sale of the Pledged Securities by the Collateral
Agent.
10. COSTS
AND EXPENSES.
Each
Debtor agrees to pay all reasonable out-of-pocket fees, costs and expenses
incurred in connection with any filing required hereunder, including, without
limitation, any financing statements pursuant to the UCC, continuation
statements, partial releases and/or termination statements related thereto
or
any expenses of any searches reasonably required by the Secured Parties, which
in aggregate shall not exceed $2,000. The Debtors shall also pay all other
claims and charges which in the reasonable opinion of the Secured Parties might
prejudice, imperil or otherwise affect the Collateral or the Security Interest
therein. The Debtors will also, upon demand, pay to the Collateral
Agent, for the benefit of the Secured
Parties,
the
amount of any and all reasonable expenses, including the reasonable fees and
expenses of its counsel and of any experts and agents, which the Secured Parties
may incur in connection with (i) the enforcement of this Agreement; (ii) the
custody or preservation of, or the sale of, collection from, or other
realization upon, any of the Collateral; or (iii) the exercise or enforcement
of
any of the rights of the Secured Parties under the Notes or this Agreement.
Until so paid, any fees payable hereunder shall be added to the principal amount
of the Notes and shall bear interest in accordance with the terms of the
Notes.
-14-
11. RESPONSIBILITY
FOR COLLATERAL.
The
Debtors assume all liabilities and responsibility in connection with all
Collateral, and the Obligations shall in no way be affected or diminished by
reason of the loss, destruction, damage or theft of any of the Collateral or
its
unavailability for any reason. The Collateral
Agent
agrees
to act in accordance with commercially reasonable standards and the UCC. Without
limiting the generality of the foregoing, (a) no Secured Party (i) has any
duty
(either before or after an Event of Default) to collect any amounts in respect
of the Collateral or to preserve any rights relating to the Collateral, or
(ii)
has any obligation to clean-up or otherwise prepare the Collateral for sale;
and
(b) each Debtor shall remain obligated and liable under each contract or
agreement included in the Collateral to be observed or performed by such Debtor
thereunder. No Secured Party shall have any obligation or liability under any
such contract or agreement by reason of or arising out of this Agreement or
the
receipt by any Secured Party of any payment relating to any of the Collateral,
nor shall any Secured Party be obligated in any manner to perform any of the
obligations of any Debtor under or pursuant to any such contract or agreement,
to make inquiry as to the nature or sufficiency of any payment received by
any
Secured Party in respect of the Collateral or as to the sufficiency of any
performance by any party under any such contract or agreement, to present or
file any claim, to take any action to enforce any performance or to collect
the
payment of any amounts which may have been assigned to any Secured Party or
to
which it may be entitled at any time or times.
12. SECURITY
INTEREST ABSOLUTE.
All
rights of the Collateral
Agent and the Secured
Parties and all obligations of the Debtors hereunder, shall be absolute and
unconditional, irrespective of: (a) any lack of validity or enforceability
of
this Agreement, the Notes or any agreement entered into in connection with
the
foregoing, or any portion hereof or thereof; (b) any change in the time, manner
or place of payment or performance of, or in any other term of, all or any
of
the Obligations, or any other amendment or waiver of or any consent to any
departure from the Notes or any other agreement entered into in connection
with
the foregoing; (c) any exchange, release or nonperfection of any of the
Collateral, or any release or amendment or waiver of or consent to departure
from any other collateral for, or any guaranty, or any other security, for
all
or any of the Obligations; (d) any action by
any
of
the
Secured Parties to obtain, adjust, settle and cancel in its sole discretion
any
insurance claims or matters made or arising in connection with the Collateral;
or (e) any other circumstance which might otherwise constitute any legal or
equitable defense available to a
Debtor,
or a discharge of all or any part of the Security Interest granted hereby.
Until
the Obligations shall have been paid and performed in full, the rights of the
Secured Parties shall continue even if the Obligations are barred for any
reason, including, without limitation, the running of the statute of limitations
or bankruptcy. Each Debtor expressly waives presentment, protest, notice of
protest, demand, notice of nonpayment and demand for performance. In the event
that at any time any transfer of any Collateral or any payment received by
the
Collateral
Agent for the benefit of any Secured
Party
hereunder shall be deemed by final order of a court of competent jurisdiction
to
have been a voidable preference or fraudulent conveyance under the bankruptcy
or
insolvency laws of the United States, or shall be deemed to be otherwise due
to
any party other than the Secured Parties, then, in any such event, each Debtor’s
obligations hereunder shall survive cancellation of this Agreement, and shall
not be discharged or satisfied by any prior payment thereof and/or cancellation
of this Agreement, but shall remain a valid and binding obligation enforceable
in accordance with the terms and provisions hereof. Each Debtor waives all
right
to require any
Secured
Party
to
proceed against any other person or entity
or
to
apply
any Collateral which the
Collateral Agent or any
Secured
Parties may hold at any time, or to marshal assets, or to pursue any other
remedy. Each Debtor waives any defense arising by reason of the application
of
the statute of limitations to any obligation secured hereby.
-15-
13. TERM
OF AGREEMENT.
This
Agreement and the Security Interest shall terminate on the date on which all
payments under the Notes have been indefeasibly paid in full; provided,
however,
that
all indemnities of the Debtors contained in this Agreement shall survive and
remain operative and in full force and effect regardless of the termination
of
this Agreement.
14.
POWER
OF ATTORNEY.
Each
Debtor
authorizes the Collateral
Agent,
and
does hereby make, constitute and appoint the Collateral Agent
and
its
officers, agents, successors or assigns with full power of substitution, as
such
Debtor’s
true and lawful attorney-in-fact, with power, in the name of the various Secured
Parties or such
Debtor,
to, after the occurrence and during the continuance of an Event of Default,
(i)
endorse any note, checks, drafts, money orders or other instruments of payment
(including payments payable under or in respect of any policy of insurance)
in
respect of the Collateral that may come into possession of the Secured Parties;
(ii) sign and endorse any financing statement pursuant to the UCC or any
invoice, freight or express ▇▇▇▇, ▇▇▇▇ of lading, storage or warehouse receipts,
drafts against debtors, assignments, verifications and notices in connection
with accounts, and other documents relating to the Collateral; (iii) pay or
discharge taxes, liens, security interests or other encumbrances at any time
levied or placed on or threatened against the Collateral; (iv) demand, collect,
receipt for, compromise, settle and ▇▇▇ for monies due in respect of the
Collateral; (v) transfer any Intellectual Property or provide licenses
respecting any Intellectual Property; and (vi) generally, at the option of
the
Collateral
Agent,
and at
the expense of the Debtors, at any time, or from time to time, execute and
deliver any and all documents and instruments and do all acts and things which
the Collateral
Agent deems
necessary to protect, preserve and realize upon the Collateral and the Security
Interest granted therein in order to effect the intent of this Agreement and
the
Notes all as fully and effectually as the Debtors might or could do. Each Debtor
hereby ratifies all that said attorney shall lawfully do or cause to be done
by
virtue of the foregoing sentence. This power of attorney is coupled with an
interest and shall be irrevocable for the term of this Agreement and thereafter
as long as any of the Obligations shall be outstanding. The
designation set forth herein shall be deemed to amend and supersede any
inconsistent provision in the Organizational Documents or other documents or
agreements to which any
Debtor
or any of the Pledged Securities is subject or to which any
Debtor
is a party. Without
limiting the generality of the foregoing, after the occurrence and during the
continuance of an Event of Default, the
Collateral Agent
is
specifically authorized to execute and file any applications for or instruments
of transfer and assignment of any patents, trademarks, copyrights or other
Intellectual Property with the United States Patent and Trademark Office and
the
United States Copyright Office. This power of attorney is coupled with an
interest and shall be irrevocable for the term of this Agreement and thereafter
as long as any of the Obligations shall be outstanding.
-16-
15. OTHER
SECURITY.
To
the
extent that the Obligations are now or hereafter secured by property other
than
the Collateral or by the guarantee, endorsement or property of any other person,
firm, corporation or other entity, then the Collateral
Agent
shall
have the right, in its sole discretion, to pursue, relinquish, subordinate,
modify or take any other action with respect thereto, without in any way
modifying or affecting any of the Secured Parties’ rights and remedies
hereunder.
16. COLLATERAL
AGENT.
16.1 Appointment,
Resignation and Removal.
The
Secured Parties hereby appoint Imperium Advisers, LLC to act as the Collateral
Agent for purposes of exercising any and all rights and remedies of the Secured
Parties hereunder. Any
person or entity serving as the Collateral Agent may resign as Collateral Agent
hereunder at any time by giving written notice thereof to each Secured Party,
and such resignation shall become effective upon the effectiveness of the
appointment of a successor agent in accordance with Section
16.2.
Any
person or entity serving as Collateral Agent may be removed at any time or
from
time to time by the affirmative vote of a Majority in Interest.
16.2 Successor
Agent.
Upon
the
resignation or removal of a Collateral Agent, a successor agent may be appointed
by the Secured Parties by a Majority in Interest, and such appointment shall
become effective upon such successor agent accepting such appointment in
writing. If no successor agent shall have been so appointed by the Secured
Parties within thirty (30) days after receipt of a resignation notice from
the
Collateral Agent, then the Collateral Agent shall have the right to appoint
a
successor agent in its sole and absolute discretion, and such successor agent
shall commence serving as the Collateral Agent hereunder upon such successor
agent’s acceptance of such appointment in writing.
16.3 Exculpation;
Limitation and Delegation of Duties.
Neither
the Collateral Agent nor any of its directors, officers, partners, agents,
representatives, advisors or employees (collectively, the “Collateral
Agent Parties”)
shall
be liable to any Secured Party for any action taken or omitted to be taken
by
any of them hereunder, except for their own gross negligence or willful
misconduct.
None of
Collateral Agent Parties shall be responsible for, or have any duty to ascertain
the veracity, performance or satisfaction of, any representation, warranty,
covenant, agreement or condition made or contained in this Agreement or any
other Transaction Document. The
Collateral Agent may undertake any of its duties as Collateral Agent hereunder
by or through employees, agents and attorneys-in-fact and shall not be liable
to
any Secured Party for the negligence or misconduct of any such agents or
attorneys-in-fact selected in good faith by the Collateral Agent.
16.4 Indemnification
by Secured Parties.
The
Secured Parties hereby indemnify each of the Collateral Agent Parties for
any losses, obligations, damages, penalties, actions, judgments, suits, costs,
expenses, disbursements and other liabilities of any kind and nature whatsoever
which may be imposed on, incurred by or asserted against the Collateral Agent
in
any way relating to or arising out of the Collateral Agent’s performance of its
obligations under this Agreement, except for (i) those costs that are actually
reimbursed by the Debtors under this Agreement; and (ii) liabilities directly
attributable to the gross negligence or willful misconduct of any Collateral
Agent Party.
The
payment of any indemnification obligation hereunder
shall be
made by each Secured Party on a pro
rata
basis,
based on the principal amount of the Notes then owned by such Secured Party
as
compared to the aggregate principal amount of the Notes then outstanding.
-17-
17. INDEMNIFICATION.
The
Debtors shall jointly and severally indemnify, reimburse and hold harmless
the
Collateral Agent and each of the Secured Parties and their respective partners,
members, shareholders, officers, directors, employees and agents (collectively,
“Indemnitees”)
from
and against any and all losses, claims, liabilities, damages, penalties, suits,
costs and expenses, of any kind or nature, (including fees relating to the
cost
of investigating and defending any of the foregoing) imposed on, incurred by
or
asserted against such Indemnitee in any way related to or arising from or
alleged to arise from this Agreement or the Collateral, except any such losses,
claims, liabilities, damages, penalties, suits, costs and expenses which result
from the gross negligence or willful misconduct of the Indemnitee as determined
by a final, nonappealable decision of a court of competent jurisdiction. This
indemnification provision is in addition to, and not in limitation of, any
other
indemnification provision in the Notes, the Loan Agreement or any other
Transaction Document.
18. MISCELLANEOUS.
18.1 Severability.
In the
event that any provision of this Agreement becomes or is declared by a court
of
competent jurisdiction to be illegal, unenforceable or void, this Agreement
shall continue in full force and effect without said provision; provided,
however
that in
such case the parties shall negotiate in good faith to replace such provision
with a new provision which is not illegal, unenforceable or void, as long as
such new provision does not materially change the economic benefits of this
Agreement to the parties.
18.2 Successors
and Assigns.
The
terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and permitted assigns of the parties.
Nothing in this Agreement, express or implied, is intended to confer upon any
party other than the parties hereto or their respective successors and permitted
assigns any rights, remedies, obligations or liabilities under or by reason
of
this Agreement, except as expressly provided in this Agreement. A Secured Party
may assign its rights hereunder in connection with any private sale or transfer
of its Notes in accordance with the terms thereof and of the other Transaction
Documents, as long as, as a condition precedent to such transfer, the transferee
executes an acknowledgment agreeing to be bound by the applicable provisions
of
this Agreement, in which case the term “Secured Party” shall be deemed to refer
to such transferee as though such transferee were an original signatory hereto.
No Debtor may assign its rights or obligations under this
Agreement.
18.3 Injunctive
Relief.
Each
Debtor acknowledges and agrees that a breach by it of its obligations hereunder
will cause irreparable harm to each Secured Party and that the remedy or
remedies at law for any such breach will be inadequate and agrees, in the event
of any such breach, in addition to all other available remedies, such Secured
Party shall be entitled to an injunction restraining any breach and requiring
immediate and specific performance of such obligations without the necessity
of
showing economic loss or the posting of any bond.
-18-
18.4 Governing
Law; Jurisdiction.
This
Agreement shall be governed by and construed under the laws of the State of
New
York applicable to contracts made and to be performed entirely within the State
of New York. Each party hereby irrevocably submits to the exclusive jurisdiction
of the state and federal courts sitting in the City and County of New York
for
the adjudication of any dispute hereunder or in connection herewith or with
any
transaction contemplated hereby and hereby irrevocably waives, and agrees not
to
assert in any suit, action or proceeding, any claim that it is not personally
subject to the jurisdiction of any such court, that such suit, action or
proceeding is brought in an inconvenient forum or that the venue of such suit,
action or proceeding is improper. Each party hereby irrevocably waives personal
service of process and consents to process being served in any such suit, action
or proceeding by mailing a copy thereof to such party at the address in effect
for notices to it under this Agreement and agrees that such service shall
constitute good and sufficient service of process and notice thereof. Nothing
contained herein shall be deemed to limit in any way any right to serve process
in any manner permitted by law.
18.5 Counterparts.
This
Agreement may be executed in any number of counterparts, each of which shall
be
deemed an original, and all of which together shall constitute one and the
same
instrument. This Agreement may be executed and delivered by facsimile
transmission.
18.6 Headings.
The
headings used in this Agreement are used for convenience only and are not to
be
considered in construing or interpreting this Agreement.
18.7 Notices.
Any
notice, demand or request required or permitted to be given by the Debtor,
Collateral Agent or a Secured Party pursuant to the terms of this Agreement
shall be in writing and shall be deemed delivered (i) when delivered personally
or by verifiable facsimile transmission, unless such delivery is made on a
day
that is not a Business Day, in which case such delivery will be deemed to be
made on the next succeeding Business Day; (ii) on the next Business Day after
timely delivery to an overnight courier; and (iii) on the Business Day actually
received if deposited in the U.S. mail (certified or registered mail, return
receipt requested, postage prepaid), addressed as follows:
If
to
any Debtor:
c/o Manaris
Corporation
▇▇▇
▇▇▇▇.
▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇
▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attn:
▇▇▇▇
▇▇▇▇▇▇, Chief Executive Officer
Tel:
▇▇▇-▇▇▇-▇▇▇▇
Fax:
▇▇▇-▇▇▇-▇▇▇▇
-19-
With
a copy (which
shall not constitute notice) to:
Sichenzia
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ LLP
▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇
▇▇▇
▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇
▇▇▇▇▇▇, Esq.
Tel: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
If
to
the Collateral Agent:
Imperium
Advisers, LLC
▇▇▇
▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇
▇▇▇
▇▇▇▇,
▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, Esq.
Tel:
(▇▇▇)
▇▇▇-▇▇▇▇
Fax: (▇▇▇)
▇▇▇-▇▇▇▇
and
if to
any Secured
Party,
to such
address for such party as shall appear on the signature page of the Loan
Agreement executed by such party, or as shall be designated by such party in
writing to the other parties hereto in accordance with this Section
18.7.
18.8 Entire
Agreement; Amendments.
This
Agreement and the other Transaction Documents constitute the entire agreement
between the parties with regard to the subject matter hereof and thereof,
superseding all prior agreements or understandings, whether written or oral,
between or among the parties. No (i) amendment to this Agreement or (ii) waiver
of any agreement or other obligation of a Debtor under this Agreement may be
made or given except pursuant to a written instrument executed by the Debtors,
the Collateral Agent and a Majority in Interest of the Secured Parties. Any
waiver or consent shall be effective only in the specific instance and for
the
specific purpose for which given.
[SIGNATURE
PAGES FOLLOW]
-20-
IN
WITNESS WHEREOF, the parties hereto have caused this Amended and Restated
Security
Agreement to be duly executed on the day and year first above
written.
| MANARIS CORPORATION, AS DEBTOR | ||
| |
|
|
| By: | ||
|
▇▇▇▇ ▇. ▇▇▇▇▇▇
Chief Executive
Officer
|
||
| C-CHIP TECHNOLOGIES CORPORATION (NORTH AMERICA), AS DEBTOR | ||
| |
|
|
| By: | ||
|
Name:
Title:
|
||
| AVENSYS, INC., AS DEBTOR | ||
| |
|
|
| By: | ||
|
Name:
Title:
|
||
-21-
IN
WITNESS WHEREOF, the parties hereto have caused this Amended and Restated
Security Agreement to be duly executed on the day and year first above
written.
| IMPERIUM ADVISERS, LLC, AS COLLATERAL AGENT | ||
| |
|
|
| By: | ||
|
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
General Counsel
|
||
| IMPERIUM MASTER FUND, LTD., AS SECURED PARTY | ||
| |
|
|
| By: | ||
|
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
General Counsel
|
||
-22-
DISCLOSURE
SCHEDULES
TO
THE
AMENDED
AND RESTATED SECURITY AGREEMENT
Dated
as of
September
21, 2007
By
and Among
MANARIS
CORPORATION and each of its Subsidiaries, and
Imperium
Advisers, LLC, in its capacity as collateral agent,
for
the benefit of the Holders of the 6% Original Issue Discount Senior Secured
Convertible
Notes
and the Senior Secured Working Capital Notes
-23-
INTRODUCTION
Reference
is made to the Amended and Restated Security Agreement entered into and dated
as
of September 21, 2007 (the “Agreement”), by and among Manaris Corporation, a
Nevada corporation (the “Company”), each Subsidiary of the Company, and Imperium
Advisers, LLC in its capacity as collateral agent, for the benefit of the
Holders of the 6% Original Issue Discount Senior Secured Convertible Notes
and
the Senior Secured Working Capital Notes (the “Secured Parties”). Capitalized
terms used herein shall have the respective meanings ascribed to such terms
in
the Agreement.
The
Disclosure Schedules are qualified in their entirety by reference to specific
provisions in the Agreement, and are provided as part of, and incorporated
into,
the Agreement. Except as and to the extent provided in the Agreement, the
Disclosure Schedules are not intended to constitute, and shall not be construed
as constituting, representations or warranties of the Company or any of their
respective Affiliates.
Headings
have been inserted on the sections of the Disclosure Schedules for convenience
of reference only and shall not have the effect of amending or changing the
express description of the sections as set forth in the Agreement.
-24-
SCHEDULE
I
PLEDGED
SECURITIES
|
Issuer
|
Shares/Interests
Pledged
|
|
|
C-CHIP
Corporation
|
One
hundred percent (100%) of the issued and outstanding capital stock
of such
entity
|
|
|
Avensys,
Inc.
|
One
hundred percent (100%) of the issued and outstanding capital stock
of such
entity
|
-25-
SCHEDULE
II
DEBTOR
INFORMATION
|
Name
of the Debtor:
|
Manaris
Corporation
|
|
|
Jurisdiction
of Organization:
|
Nevada
|
|
|
Organizational
Identification Number:
|
980471285
|
|
|
Trade
names and other names used by the Debtor during the past five (5)
years:
|
Keystone
Mines Limited (June 26, 2000 - date of incorporation)
C-Chip
Technologies Corporation (January 7, 2003)
Manaris
Corporation (July 18, 2005)
|
|
|
Principal
Place of Business:
|
▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇▇
|
|
|
Location
of Collateral:
|
▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇▇
|
|
|
Name
of the Debtor:
|
C-CHIP
Corporation
|
|
|
Jurisdiction
of Organization:
|
Incorporated
under the laws of Canada.
|
|
|
Organizational
Identification Number:
|
854816634
|
|
|
Trade
names and other names used by the Debtor during the past five (5)
years:
|
None
|
|
|
Principal
Place of Business:
|
▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇▇
|
|
|
Location
of Collateral:
|
▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇▇
|
|
|
Name
of the Debtor:
|
Avensys
Inc.
|
|
|
Jurisdiction
of Organization:
|
Incorporated
under the laws of the Province of Quebec
|
|
|
Organizational
Identification Number:
|
||
|
Trade
names and other names used by the Debtor during the past five (5)
years:
|
None
|
|
|
Principal
Place of Business:
|
▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇▇
|
|
|
Location
of Collateral:
|
▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇▇
|
-26-
ANNEX
A
ASSUMPTION
AGREEMENT, dated as of the __ day of ________, 20__, made by __________________,
a __________ corporation (the “Additional
Debtor”),
in
favor of the Collateral Agent and Secured Parties pursuant to the Security
Agreement referred to below. All capitalized terms not defined herein shall
have
the meaning ascribed to them in the Security Agreement.
WITNESSETH:
WHEREAS,
Manaris Corporation and its subsidiaries entered into an Amended and Restated
Security Agreement, dated as of September 21, 2007 (as further amended,
supplemented or otherwise modified from time to time, the “Security
Agreement”)
in
favor of the Collateral Agent and Secured Parties;
WHEREAS,
the Security Agreement requires the Additional Debtor to become a party to
the
Security Agreement; and
WHEREAS,
the Additional Debtor has agreed to execute and deliver this Assumption
Agreement in order to become a party to the Security Agreement;
NOW,
THEREFORE, IT IS AGREED:
1. Assumption.
By
executing and delivering this Assumption Agreement, the Additional Debtor hereby
becomes a party to the Security Agreement as a Debtor thereunder with the same
force and effect as if originally named therein as a Debtor and, without
limiting the generality of the foregoing, hereby expressly assumes all
obligations and liabilities of a Debtor thereunder. The Additional Debtor hereby
represents and warrants that each of the representations and warranties
contained in Section
4
of the
Security Agreement is true and correct on and as the date hereof as to such
Additional Debtor (after giving effect to this Assumption Agreement) as if
made
on and as of such date.
2. GOVERNING
LAW.
THIS
ASSUMPTION AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE
AND TO BE PERFORMED ENTIRELY WITHIN THE STATE OF NEW YORK.
IN
WITNESS WHEREOF, the undersigned has caused this Assumption Agreement to be
duly
executed and delivered as of the date first above written.
| [ADDITIONAL DEBTOR] | ||
| |
|
|
| By: | ||
|
Name:
Title:
|
||