SUBSIDIARY SECURITY AGREEMENT
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March 30, 2004 |
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To: Laurus Master Fund, Ltd. |
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c/o Onshore Corporate Services, Ltd. |
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X.X. Xxx 0000 G.T |
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Queensgate House |
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South Church Street |
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Grand Cayman, Cayman Islands |
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Gentlemen: |
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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.
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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"), (the Securities
Purchase Agreement, the Term Note, the Term Note Warrant, the Term Note
Registration Rights Agreement as each may be amended, modified, restated
or supplemented from time to time, are collectively referred to herein as
the "Documents").
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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.
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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.
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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.
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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 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.
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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.
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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.
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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. |
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TITAN PCB EAST, INC. By:
/s/ Xxxxxx X. Xxxxxxx By:
/s/ Xxxxxx X. Xxxxxxx ACKNOWLEDGED: LAURUS MASTER FUND, LTD. |
