Exhibit 10.66
SUBSIDIARY SECURITY AGREEMENT
NOVEMBER 20, 2003
To: Laurus Master Fund, Ltd.
c/o Onshore Corporate Services, Ltd.
▇.▇. ▇▇▇ ▇▇▇▇ G.T
Queensgate House
South Church Street
Grand Cayman, Cayman Islands
Gentlemen:
1. To secure the payment of all Obligations (as hereafter defined),
each of the undersigned hereby grants to Laurus Master Fund, Ltd. ("Laurus") a
continuing security interest in all of the following property now owned or at
any time hereafter acquired, or in which each of the undersigned now has or at
any time in the future may acquire any right, title or interest (the
"Collateral"): all accounts, inventory, equipment, goods, documents, instruments
(including, without limitation, promissory notes), contract rights, general
intangibles (including, without limitation, payment intangibles and an absolute
right to license on terms no less favorable than those current in effect among
our affiliates, but not own intellectual property), chattel paper, supporting
obligations, investment property, letter-of-credit rights, trademarks and
tradestyles] in which we now have or hereafter may acquire any right, title or
interest, all proceeds and products thereof (including, without limitation,
proceeds of insurance with respect thereto) and all additions, accessions and
substitutions thereto or therefor.
2. The term "Obligations" as used herein shall mean and include all
debts, liabilities and obligations owing by (a) each of the undersigned to
Laurus hereunder and under the Subsidiary Guaranty (as amended, modified and
supplemented from time to time, the "Guaranty") dated as of the date hereof made
by each of the undersigned in favor of Laurus pursuant to which each of the
undersigned guarantied to Laurus all of Ventures-National Incorporated d/b/a
Titan General Holdings, Inc. ("TTGH") obligations to Laurus whether arising
under, out of, or in connection with that certain Securities Purchase Agreement
dated as of the date hereof by and between TTGH and Laurus (the "Securities
Purchase Agreement"), that certain Secured Convertible Note dated as of the date
hereof made by Debtor in favor of Laurus (the "Term Note"), the Warrant dated as
of the date hereof made by TTGH in favor of Laurus in connection with the Term
Note (the "Term Note Warrant"), that certain Registration Rights Agreement dated
as of the date hereof by and between TTGH and Laurus in connection with the Term
Note (the "Term Note Registration Rights Agreement"), that certain Security
Agreement dated as of the date hereof by and between TTGH and Laurus (the
"Security Agreement"), that certain Secured Revolving Note dated as of the date
hereof made by TTGH in favor of Laurus (the "Revolving Note"), that certain
Secured Convertible Minimum Borrowing Note dated as of the date hereof made by
TTGH in favor of Laurus (the "MB Note"), the Warrant dated as of the date hereof
made by TTGH in favor of Laurus in connection with the MB Note (the "MB
Warrant"), or that certain Registration Rights Agreement dated as of the date
hereof by and between TTGH and Laurus in connection with the MB Note (the "MB
Registration Rights Agreement") (the Securities Purchase Agreement, the Term
Note, the Term Note Warrant, the Term Note Registration Rights
Agreement, the Security Agreement, the Revolving Note, the MB Note, the MB
Warrant and the MB Registration Rights Agreement as each may be amended,
modified, restated or supplemented from time to time, are collectively referred
to herein as the "Documents") .
3. Each of the undersigned hereby jointly and severally represents,
warrants and covenants to Laurus that each of the undersigned: (a) is company
validly existing, in good standing under the law of the jurisdiction of its
incorporation and will provide Laurus thirty days prior written notice of any
change in our jurisdiction of formation; (b) legal name is "Titan PCB East,
Inc." and "Titan PCB West, Inc.", respectively, each as set forth in its
respective certificate of incorporation as amended through the date hereof; (c)
is the lawful owner of the Collateral and have the sole right to grant a
security interest therein and will defend the Collateral against all claims and
demands of all persons and entities; (d) each of the undersigned will keep the
Collateral free and clear of all attachments, levies, taxes, liens, security
interests and encumbrances of every kind and nature ("Encumbrances") except to
the extent said Encumbrance does not secure indebtedness in excess of $50,000
and such Encumbrance is removed or otherwise released within fifteen (15) days
of the creation thereof; (e) each of the undersigned will at its own respective
cost and expense keep the Collateral in good state of repair (ordinary wear and
tear excepted) and will not waste or destroy (obsolete, worn out, or equipment
no longer necessary to our respective needs excepted) the same or any part
thereof; (f) each of the undersigned will not without Laurus' prior written
consent, sell, exchange, lease or otherwise dispose of any part of the
Collateral (except for sales in the ordinary course of business) or any of our
rights therein; (g) each of the undersigned will insure the Collateral in
Laurus' name against loss or damage by fire, theft, burglary, pilferage, loss in
transit and such other hazards as Laurus shall specify in amounts and under
policies by insurers acceptable to Laurus and all premiums thereon shall be paid
by each of the undersigned and the policies delivered to Laurus. If any of the
undersigned fails to do so, Laurus may procure such insurance and the cost
thereof shall constitute Obligations; (h) each of the undersigned will at all
reasonable times allow Laurus or its representatives free access to and the
right of inspection of the Collateral; (i) each of the undersigned hereby
indemnifies and saves Laurus harmless from all loss, costs, damage, liability
and/or expense, including reasonable attorneys' fees, that Laurus may sustain or
incur to enforce payment, performance or fulfillment of any of the Obligations
and/or in the enforcement of this Agreement or the Guaranty or in the
prosecution or defense of any action or proceeding either against Laurus or each
of the undersigned concerning any matter growing out of or in connection with
this Agreement, the Guaranty and/or any of the Obligations and/or any of the
Collateral.
4. Following the occurrence and during the continuance of an Event of
Default, Laurus shall have the right to instruct all of our account debtors to
remit payments on all accounts in accordance with Laurus' express written
instructions. If, despite such instructions, any of the undersigned shall
receive any payments with respect to accounts, such undersigned shall receive
such payments in trust for Laurus' benefit, shall segregate such payments from
its other funds and shall deliver or cause to be delivered to Laurus, in the
same form as so received with all necessary endorsements, all such payments as
soon as practicable, but in no event later than two (2) business days after its
receipt thereof. Laurus shall have full power and authority to collect each
account, through legal action or otherwise, and may settle, compromise, or
assign (in whole or in part) the claim for any account, or otherwise exercise
any other right now existing or hereafter arising with respect to any account if
such action will facilitate collection.
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5. Each of the undersigned shall be in default under this Agreement
upon the happening of any of the following events or conditions, each such event
or condition an "Event of Default" (a) any of the undersigned shall fail to pay
when due or punctually perform any of the Obligations; (b) any covenant,
warranty, representation or statement made or furnished to Laurus by any of the
undersigned or on our behalf was false in any material respect when made or
furnished; (c) the loss, theft, substantial damage or, destruction, or a sale or
encumbrance not permitted hereunder to or of any of the Collateral or the making
of any levy, seizure or attachment thereof or thereon except to the extent said
levy, seizure or attachment does not secure indebtedness in excess of $50,000
and such loss, theft, substantial damage or destruction is covered by insurance
proceeds which are used to replace the item ( but only if no Event of Default
has occurred or is continuing hereunder) or repay us or such levy, seizure or
attachment has not been removed or otherwise released within fifteen (15) days
after the undersigned receive notice of the creation or the assertion thereof;
(d) any of the undersigned shall become insolvent, cease operations, dissolve,
terminate our business existence, make an assignment for the benefit of
creditors, suffer the appointment of a receiver, trustee, liquidator or
custodian of all or any part of our property; (e) any proceedings under any
bankruptcy or insolvency law shall be commenced by or against any of the
undersigned and if commenced against any of the undersigned shall not be
dismissed within 30 days after the commencement thereof; (f) any of the
undersigned shall repudiate, purport to revoke or fail to perform any of its
obligations under the Guaranty or hereunder; or (g) an Event of Default shall
have occurred under and as defined in the TTGH Security Agreement, the Note or
the Related Agreements.
6. Upon the occurrence of any Event of Default and at any time
thereafter, Laurus may declare all Obligations immediately due and payable and
Laurus shall have the remedies of a secured party provided in the Uniform
Commercial Code as in effect in the State of New York, this Agreement and other
applicable law. Upon the occurrence of any Event of Default and at any time
thereafter, Laurus will have the right to take possession of the Collateral and
to maintain such possession on our premises or to remove the Collateral or any
part thereof to such other premises as Laurus may desire. Upon Laurus' request,
each of the undersigned shall assemble the Collateral and make it available to
Laurus at a place designated by Laurus. If any notification of intended
disposition of any Collateral is required by law, such notification, if mailed,
shall be deemed properly and reasonably given if mailed at least ten (10) days
before such disposition, postage prepaid, addressed to each of the undersigned
either at our address shown herein or at any address appearing on Laurus'
records for each of the undersigned. Any proceeds of any disposition of any of
the Collateral shall be applied by Laurus to the payment of all expenses in
connection with the sale of the Collateral, including reasonable attorneys' fees
and other legal expenses and disbursements and the reasonable expense of
retaking, holding, preparing for sale, selling, and the like, and any balance of
such proceeds may be applied by Laurus toward the payment of the Obligations in
such order of application as Laurus may elect, and each of the undersigned shall
be liable for any deficiency.
7. If any of the undersigned default in any material respect in the
performance or fulfillment of any of the terms, conditions, promises, covenants,
provisions or warranties on our part to be performed or fulfilled under or
pursuant to this Agreement, Laurus may, at Laurus' option without waiving
Laurus' right to enforce this Agreement according to its terms, immediately or
at any time thereafter and without notice to any of the undersigned, perform or
fulfill the same or cause the performance or fulfillment of the same for our
account and at our
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sole cost and expense, and the cost and expense thereof (including reasonable
attorneys' fees) shall be added to the Obligations and shall be payable on
demand with interest thereon at the highest rate permitted by law .
8. Each of the undersigned appoints Laurus, any of its officers,
employees or any other person or entity whom Laurus may designate as our
attorney-in-fact, with power to execute such documents in our behalf and to
supply any omitted information and correct patent errors in any documents
executed by us or on our behalf; to file financing statements against us
covering the Collateral; to sign our name on public records; and to do all other
things Laurus deem necessary to carry out this Agreement. Each of the
undersigned hereby ratifies and approves all acts of the attorney-in-fact and
neither Laurus nor the attorney-in-fact will be liable for any acts of
commission or omission, nor for any error of judgment or mistake of fact or law.
This power being coupled with an interest, is irrevocable so long as any
Obligations remain unpaid.
9. No delay or failure on Laurus' part in exercising any right,
privilege or option hereunder shall operate as a waiver of such or of any other
right, privilege, remedy or option, and no waiver whatever shall be valid unless
in writing, signed by Laurus and then only to the extent therein set forth, and
no waiver by Laurus of any default shall operate as a waiver of any other
default or of the same default on a future occasion. Laurus' books and records
containing entries with respect to the Obligations shall be admissible in
evidence in any action or proceeding, shall be binding upon us for the purpose
of establishing the items therein set forth and shall constitute prima facie
proof thereof. Laurus shall have the right to enforce any one or more of the
remedies available to Laurus, successively, alternately or concurrently. Each of
the undersigned agree to join with Laurus in executing financing statements or
other instruments to the extent required by the Uniform Commercial Code in form
satisfactory to Laurus and in executing such other documents or instruments as
may be required or deemed necessary by Laurus for purposes of affecting or
continuing Laurus' security interest in the Collateral.
10. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York without reference to its conflict of laws
provisions and cannot be terminated orally. All of the rights, remedies,
options, privileges and elections given to Laurus hereunder shall enure to the
benefit of Laurus' successors and assigns. The term "Laurus" as herein used
shall include Laurus, any subsidiaries and any co-subsidiaries of Laurus,
whether now existing or hereafter created or acquired, and all of the terms,
conditions, promises, covenants, provisions and warranties of this Agreement
shall enure to the benefit of and shall bind the representatives, successors and
assigns of each of each of the undersigned and them. You and each of the
undersigned hereby (a) waive any and all right to trial by jury in litigation
relating to this Agreement and the transactions contemplated hereby and each of
the undersigned agree not to assert any counterclaim in such litigation, (b)
submit to the nonexclusive jurisdiction of any New York State court sitting in
the borough of Manhattan, the city of New York and (c) waive any objection you
or each of the undersigned may have as to the bringing or maintaining of such
action with any such court.
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11. All notices from you to each of the undersigned shall be
sufficiently given if mailed or delivered to us at our address set forth below.
TITAN PCB EAST, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇▇▇▇
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Title: President
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Address: ▇&▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone No.: ▇▇▇-▇▇▇-▇▇▇▇
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Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
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TITAN PCB WEST, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇▇▇▇
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Title: President
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Address: ▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone No.: ▇▇▇-▇▇▇-▇▇▇▇
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Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
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ACKNOWLEDGED:
LAURUS MASTER FUND, LTD.
By: /s/ ▇▇▇▇▇ Grin
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Name: ▇▇▇▇▇ Grin
Title:
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