MASTER SECURITY AGREEMENT
EXHIBIT
10.7
|
To:
|
Laurus
Master Fund, Ltd.
|
c/o
M&C Corporate Services Limited
X.X.
Xxx
000 XX
Xxxxxx
House
South
Church Street
Xxxxxx
Town
Grand
Cayman, Cayman Islands
| Date: |
December
31, 2005
|
To
Whom
It May Concern:
1. Defined
Terms:
Any
reference herein to “Collateral”
shall,
unless the context otherwise requires, be deemed a reference to “Collateral or
any part thereof”. As pertaining only to each company party hereto organized
under the laws of a State of the United States, all items of Collateral which
are defined in the Uniform Commercial Code as the same may, from time to time,
be in effect in the State of organization of such company shall have the
meanings set forth in such Uniform Commercial Code. The term “Proceeds”,
whenever used herein shall, by way of example, include trade-ins, equipment,
money, bank accounts, notes, chattel paper, goods, contracts rights, accounts
and any other personal property or obligation received when such Collateral
or
Proceeds are sold, exchanged, collected or otherwise disposed of or dealt
with.
2. To
secure
the payment of all Obligations (as hereafter defined), Creative Vistas, Inc.,
an
Arizona Corporation, Iview Digital Video Solutions Inc., a Canadian corporation,
Cancable Holding Corp., a Delaware corporation, Cancable Inc., an Ontario
corporation, Cancable, Inc., a Nevada corporation, A.C. Technical Systems Ltd.,
an Ontario Corporation, Creative Vistas Acquisition Corp., an Ontario
Corporation, and each other entity (other than Laurus Master Fund, Ltd.
(“Laurus”))
that
is required to enter into this Master Security Agreement (each an “Assignor”
and,
collectively, the “Assignors”)
hereby
assigns and grants to Laurus a continuing security interest in all of the
following property now owned or at any time hereafter acquired by any Assignor,
or in which any Assignor now have or at any time in the future may acquire
any
right, title or interest (the “Collateral”):
all
cash, cash equivalents, accounts (including, for greater certainty, all blocked
accounts, collection accounts, lockboxes and other restricted accounts),
accounts receivable, deposit accounts, inventory, equipment, goods, documents
of
title, instruments (including, without limitation, promissory notes), contract
rights, commercial tort claims set forth on Schedule B to this Master Security
Agreement, general intangibles (including, without limitation, payment
intangibles and an absolute right to license on terms no less favorable than
those current in effect among Assignors’ affiliates), supporting obligations,
chattel paper, investment property (including, without limitation, all
partnership interests, limited liability company membership interests and all
other equity interests owned by any Assignor), letter of credit rights,
trademarks, trademark applications, tradestyles, patents, patent applications,
copyrights, copyright applications and other intellectual property in which
any
Assignor now have or hereafter may acquire any right, title or
interest, all
Proceeds and products thereof (including, without limitation, proceeds of
insurance) and all additions, accessions and substitutions thereto or therefore.
In the event any Assignor wishes to finance an acquisition in the ordinary
course of business of any hereafter acquired equipment and have obtained a
commitment from a financing source to finance such equipment from an unrelated
third party, Laurus agrees to release its security interest on such hereafter
acquired equipment so financed by such third party financing source. Except
as
otherwise defined herein, all capitalized terms used herein shall have the
meaning provided such terms in the Securities Purchase Agreement referred to
below.
3. The
term
“Obligations”
as
used
herein shall mean and include all debts, liabilities and obligations owing
by
each Assignor to Laurus arising under, out of, or in connection with:
(i) that certain Securities Purchase Agreement dated as of the date hereof
by and between Cancable Holding Corp., Cancable Inc. and Laurus (the
“Securities
Purchase Agreement”)
and
(ii) the Related Agreements referred to in the Securities Purchase
Agreement, (as each may be amended, modified, restated or supplemented from
time
to time, are collectively referred to herein as the “Documents”)
and in
connection with any documents, instruments or agreements relating to or executed
in connection with the Documents or any documents, instruments or agreements
referred to therein or otherwise, and in connection with any other indebtedness,
obligations or liabilities of any Assignor to Laurus, whether now existing
or
hereafter arising, direct or indirect, liquidated or unliquidated, absolute
or
contingent, due or not due and whether under, pursuant to or evidenced by a
note, agreement, guaranty, instrument or otherwise, in each case, irrespective
of the genuineness, validity, regularity or enforceability of such Obligations,
or of any instrument evidencing any of the Obligations or of any collateral
therefor or of the existence or extent of such collateral, and irrespective
of
the allowability, allowance or disallowance of any or all of the Obligations,
in
any case commenced by or against any Assignor under Xxxxx 00, Xxxxxx Xxxxxx
Code, the Bankruptcy
and Insolvency Act
(Canada)
and the Companies’
Creditors Arrangement Act,
including, without limitation, obligations or indebtedness of the Company and
each Assignor for post-petition interest, fees, costs and charges that would
have accrued or been added to the Obligations but for the commencement of such
case.
4. The
Assignors acknowledge and agree that: (i) value has been given, or will be
given upon the making of payment under the Securities Purchase Agreement by
Laurus; (ii) the Assignors have rights in the Collateral; and
(iii) the Assignors and Laurus have not agreed to postpone the time for
attachment of the security interest granted hereunder which shall attach upon
the execution of this Master Security Agreement and, in the case of Collateral
acquired after the date hereof, when such Assignor has rights
therein.
5. Each
Assignor hereby jointly and severally represents, warrants and covenants to
Laurus that:
(a) it
is a
corporation, partnership or limited liability company, as the case may be,
validly existing, in good standing and organized under the respective laws
of
its jurisdiction of organization set forth on Schedule A, and each Assignor
will
provide Laurus thirty (30) days’ prior written notice of any change in any of
its respective jurisdiction of organization;
-2-
(b) its
legal
name is as set forth in its respective Certificate of Incorporation or other
organizational document (as applicable) as amended through the date hereof
and
as set forth on Schedule A, and it will provide Laurus thirty (30) days’ prior
written notice of any change in its legal name;
(c) its
organizational corporate identification number (if applicable) is as set forth
on Schedule A hereto, and it will provide Laurus thirty (30) days’ prior written
notice of any change in any of its organizational identification
number;
(d) it
is the
lawful owner of its respective Collateral and it has the sole right to grant
a
security interest therein and will defend the Collateral against all claims
and
demands of all persons and entities;
(e) it
will
keep its respective Collateral free and clear of all attachments, levies, taxes,
liens, security interests and encumbrances of every kind and nature
(“Encumbrances”),
except (i) Encumbrances securing the Obligations, (ii) to the extent
said Encumbrance does not secure indebtedness in excess of US$250,000 and such
Encumbrance is removed or otherwise released within ten (10) days of the
creation thereof, and (iii) Encumbrances set forth on Schedule 4.9 of the
Securities Purchase Agreement;
(f) it
will,
at its and the other Assignors joint and several cost and expense keep the
Collateral in good state of repair (ordinary wear and tear excepted) and will
not waste or destroy the same or any part thereof other than ordinary course
discarding of items no longer used or useful in its or such other Assignors’
business;
(g) it
will
not without Laurus’ prior written consent, sell, exchange, lease or otherwise
dispose of the Collateral, whether by sale, lease or otherwise, except in the
ordinary course of business and for the disposition or transfer in the ordinary
course of business during any fiscal year of obsolete and worn-out equipment
or
equipment no longer necessary for its ongoing needs, or equipment that is
replaced by more economical or functional equipment having an aggregate fair
market value of not more than US$400,000 and only to the extent
that:
(i) the
Proceeds of any such disposition are used to acquire replacement Collateral
which is subject to Laurus’ first priority perfected security interest, or are
used to repay Obligations or to pay general corporate expenses; and
(ii) following
the occurrence of an Event of Default which continues to exist the proceeds
of
which are remitted to Laurus to be held as cash collateral for the
Obligations;
(h) it
will
insure or cause the Collateral to be insured 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.
Laurus shall either be named as loss payee or additional insured as its interest
may appear in all of the Assignors’ policies of insurance. Each insurance policy
shall include an endorsement whereby the insurers agree to give Laurus not
less
than thirty (30) days notice of the cancellation of the policy of insurance
and
permit Laurus to cure any default which may exist under the policy. All premiums
on each Assignor’s insurance policies shall be paid by such Assignor and the
policies shall be delivered to Laurus. If any such Assignor fails to do so,
Laurus may procure such insurance and the cost thereof shall be promptly
reimbursed by the Assignors, jointly and severally, and shall constitute
Obligations;
-3-
(i) it
will,
acting reasonably prior to an Event of Default, at all reasonable times allow
Laurus or Laurus’ representatives free access to and the right of inspection of
the Collateral upon 24 hours notice; and
(j) such
Assignor (jointly and severally with each other Assignor) hereby indemnifies
and
saves Laurus harmless from all loss, costs, damage, liability and/or expense,
including reasonable legal 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 Master Security Agreement or in the prosecution or defense
of any action or proceeding either against Laurus or any Assignor concerning
any
matter growing out of or in connection with this Master Security Agreement,
and/or any of the Obligations and/or any of the Collateral except to the extent
caused by Laurus’ own gross negligence or willful misconduct (as determined by a
court of competent jurisdiction in a final and nonappealable decision);
and
(k) all
commercial tort claims (as defined in the Uniform Commercial Code as in effect
in the State of New York) held by any Assignor are set forth on Schedule B
to
this Master Security Agreement; each Assignor hereby agrees that it shall
promptly, and in any event within five (5) Business Days after the same is
acquired by it, notify Laurus of any commercial tort claim acquired by it and
unless otherwise consented to in writing by Laurus, it shall enter into a
supplement to this Master Security Agreement granting to Laurus a security
interest in such commercial tort claim, securing the Obligations.
6. The
occurrence of any “Event
of Default”
under
and as defined in the Note which shall have occurred and be continuing beyond
any applicable cure period, shall constitute an Event of Default under this
Master Security Agreement.
7. Upon
the
occurrence of any Event of Default and at any time thereafter, Laurus may
declare all Obligations immediately due and payable. To the extent applicable,
both before and after the occurrence of an Event of Default, Laurus shall have
all rights and remedies of a secured party under the Personal
Property Security Act
(Ontario) (as amended from time to time, which Act, including amendments thereto
and any Act substituted therefore and amendment thereto, is herein referred
to
as the “PPSA”),
the
Uniform Commercial Code (as in effect in the State of New York, or, if by reason
of mandatory provisions of law, any or all of the rights and remedies with
respect to, Laurus' security interest in any Collateral is governed by the
Uniform Commercial Code as in effect in a jurisdiction other than the State
of
New York, as in effect in such other jurisdiction) 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, collect, demand,
xxx on, enforce, recover and receive the Collateral and give valid and binding
receipts and discharges therefore and in respect thereof. Laurus will also
have
the right to maintain possession of the Collateral on each Assignor’s premises
or to remove the Collateral or any part thereof to such other premises as Laurus
may desire. Upon Laurus’ request, after the occurrence of any Event of Default,
each of the Assignors shall assemble or cause the Collateral to be assembled
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 commercially reasonable if mailed at least ten (10)
days before such disposition, postage prepaid, addressed to any Assignor either
at such Assignor’s address shown herein or at any address appearing on Laurus’
records for such Assignor. 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 operating any Assignor’s
accounts, preparing and enforcing this Agreement, taking and maintaining custody
of, preserving, repairing, possessing, preparing for disposition and disposing
of Collateral and in enforcing or collecting indebtedness and all such costs,
charges and expenses, including reasonable legal fees, expenses and
disbursements 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 Assignor shall be liable for any deficiency. The parties hereto each
hereby agree that the exercise by any party hereto of any right granted to
it or
the exercise by any party hereto of any remedy available to it (including,
without limitation, the issuance of a notice of redemption, a borrowing request
and/or a notice of default), in each case, hereunder and under each Document
which has been publicly filed with the SEC shall not constitute confidential
information and no party shall have any duty to the other party to maintain
such
information as confidential.
-4-
8. Upon
the
occurrence of and during the continuance of any Event of Default, Laurus may
appoint or reappoint by instrument in writing, any person or persons, whether
an
officer or officers or an employee or employees of Laurus or not, to be an
interim receiver, receiver or receivers (hereinafter called a “Receiver”,
which
term when used herein shall include a receiver and manager) of any Collateral
of
Cancable Inc., A.C. Technical Systems Ltd., Creative Vistas Acquisition Corp.
and Iview Digital Video Solutions Inc. (collectively, the “Canadian
Companies”)
(including any interest, income or profits therefrom) and may remove any
Receiver so appointed and appoint another in his/her/its stead. Any such
Receiver shall, so far as concerns responsibility for his/her/its acts, be
deemed the agent of each Canadian Company and not Laurus, and Laurus shall
not
be in any way responsible for any misconduct, negligence or non-feasance on
the
part of any such Receiver or his/her/its servants, agents or employees. Subject
to the provisions of the instrument appointing him/her/it, any such Receiver
shall have power to take possession of Collateral, to preserve Collateral or
its
value, to carry on or concur in carrying on all or any part of the business
of
each Canadian Company and to sell, lease, license or otherwise dispose of or
concur in selling, leasing, licensing or otherwise disposing of Collateral.
To
facilitate the foregoing powers, any such Receiver may, to the exclusion of
all
others, including any Canadian Company, enter upon, use and occupy all premises
owned or occupied by each Canadian Company wherein Collateral may be situate,
maintain Collateral upon such premises, borrow money on a secured or unsecured
basis and use Collateral directly in carrying on each Canadian Company’s
business or as security for loans or advances to enable the Receiver to carry
on
each Canadian Company’s business or otherwise, as such Receiver shall, in its
discretion, determine. Except as may be otherwise directed by Laurus, all money
received from time to time by such Receiver in carrying out his/her/its
appointment shall be received in trust for and be paid over to Laurus. Every
such Receiver may, in the discretion of Laurus, be vested with all or any of
the
rights and powers of Laurus.
9. Upon
and
during the continuance of any Event of Default, Laurus may, either directly
or
through its agents or nominees, exercise any or all of the powers and rights
given to a Receiver by virtue of Section 8.
-5-
10. Laurus
shall use reasonable care with respect to the Collateral in its possession
or
under its control. Laurus shall not have any other duty as to any collateral
in
its possession or control or in the possession or control of any agent or
nominee of Laurus, or any income thereon or as to the preservation of rights
against prior parties or any other rights pertaining thereto.
11. If
any
Assignor defaults in the performance or fulfillment of any of the terms,
conditions, promises, covenants, provisions or warranties on such Assignor’s
part to be performed or fulfilled under or pursuant to this Master Security
Agreement, Laurus may, at its option without waiving its right to enforce this
Master Security Agreement according to its terms, immediately or at any time
thereafter and without notice to any Assignor, perform or fulfill the same
or
cause the performance or fulfillment of the same for each Assignor’s joint and
several account and at each Assignor’s joint and several cost and expense, and
the cost and expense thereof (including reasonable legal fees) shall be added
to
the Obligations and shall be payable on demand with interest thereon at the
highest rate permitted by law.
12. Each
Assignor appoints Laurus, any of Laurus’ officers, employees or any other person
or entity whom Laurus may designate as such Assignor’s attorney, with power to
execute such documents on each of such Assignor’s behalf and to supply any
omitted information and correct patent errors in any documents executed by
any
Assignor or on any Assignor’s behalf; to file financing statements against such
Assignor covering the Collateral (and, in connection with the filing of any
such
financing statements or financing change statements, describe the Collateral
as
“all assets and all personal property, whether now owned and/or hereafter
acquired” (or any substantially similar variation thereof)); to sign such
Assignor’s name on public records; and to do all other things Laurus deems
necessary to carry out this Master Security Agreement. Each Assignor hereby
ratifies and approves all acts of the attorney and neither Laurus nor the
attorney will be liable for any acts of commission or omission, nor for any
error of judgment or mistake of fact or law other than gross negligence or
willful misconduct (as determined by a court of competent jurisdiction in a
final and non-appealable decision). This power being coupled with an interest,
is irrevocable so long as any Obligations remains unpaid.
13. 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 each Assignor 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. However, Laurus shall
not
be liable or accountable for any failure to exercise its remedies, take
possession of, collect, enforce, realize, sell, lease,
license
or otherwise dispose of Collateral or to institute any proceeding for such
purposes. Each Assignor agrees to join with Laurus in executing financing
statements or other instruments to the extent required by the Uniform Commercial
Code or the PPSA 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.
-6-
14. This
Master Security Agreement shall be governed by and construed in accordance
with
the laws of the Province of Ontario and the federal laws of Canada, and cannot
be terminated orally. All of the rights, remedies, options, privileges and
elections given to Laurus hereunder shall inure to the benefit of Laurus’
successors and assigns. The term “Laurus” as herein used shall include Laurus,
any parent of Laurus’, any of Laurus’ subsidiaries and any co-subsidiaries of
Laurus’ parent, whether now existing or hereafter created or acquired, and all
of the terms, conditions, promises, covenants, provisions and warranties of
this
Agreement shall inure to the benefit of each of the foregoing, and shall bind
the representatives, successors and assigns of each Assignor. Laurus and each
Assignor hereby (a) waive any and all right to trial by jury in litigation
relating to this Agreement and the transactions contemplated hereby and each
Assignor agrees 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 Laurus or each Assignor may have as to the bringing or maintaining
of such action with any such court.
15. Each
Assignor hereby acknowledges receipt of a copy of this Master Security
Agreement.
16. This
Master Security Agreement may be executed in any number of counterparts which
shall, collectively and separately constitute one agreement. Any signature
delivered by a party by facsimile transmission or by sending a scanned copy
by
electronic mail shall be deemed an original signature hereto.
17. It
is
understood and agreed that any person or entity that desires to become an
Assignor hereunder, or is required to execute a counterpart of this Master
Security Agreement after the date hereof pursuant to the requirements of any
Document, shall become an Assignor hereunder by (x) executing a joinder
agreement in form and substance satisfactory to Laurus, (y) delivering
supplements to such exhibits and annexes to such Documents as Laurus shall
reasonably request and (z) taking all actions as specified in this
Agreement as would have been taken by such Assignor had it been an original
party to this Agreement, in each case with all documents required above to
be
delivered to Laurus and with all documents and actions required above to be
taken to the reasonable satisfaction of Laurus.
18. All
notices from Laurus to any Assignor shall be sufficiently given if mailed or
delivered to such Assignor’s address set forth below.
19. If
there
is any inconsistency between the provisions hereof and the provisions of the
Note, the provisions of the Note shall prevail.
-7-
Very
truly yours,
CREATIVE
VISTAS, INC. (Arizona)
By:
/s/
Xxxxxxx Xxxxx
Name:
Xxxxxxx Xxxxx
Title:
President
Address:
IVIEW
DIGITAL VIDEO SOLUTIONS INC. (Canada)
By:
/s/
Xxxxx
Xxxxxxxxxx
Name:
Xxxxx
Xxxxxxxxxx
Title:
President
Address:
CANCABLE
INC. (Ontario)
By:
/s/
Xxxx
Xxxxxx
Name:
Xxxx Xxxxxx
Title:
President
Address:
CANCABLE,
INC. (Nevada)
By:
/s/
Xxxx
Xxxxxx
Name:
Xxxx Xxxxxx
Title:
President and Secretary
Address:
CANCABLE
HOLDING CORP. (Delaware)
By:
/s/
Xxxxx
Xxxxxxxxxx
Name:
Xxxxx
Xxxxxxxxxx
Title: Chairman
and CEO
Address
-8-
A.C.
TECHNICAL SYSTEMS LTD. (Ontario)
By:
/s/
Xxxxxxx Xxxxx
Name:
Xxxxxxx Xxxxx
Title:
President and Secretary
Address:
CREATIVE
VISTAS ACQUISITION CORP. (Ontario)
By:
/s/
Xxxxx
Xxxxxxxxxx
Name:
Xxxxx
Xxxxxxxxxx
Title:
President and Secretary
Address:
ACKNOWLEDGED:
LAURUS
MASTER FUND, LTD.
By:
/s/
Xxxxx
Grin
Name:
Xxxxx Grin
Title:
Director
Address:
[Signature
Page to the Master Security Agreement]
-9-
SCHEDULE
“A”
|
Entity
|
Jurisdiction
of Organization
|
Organization
Identification Number
|
|
Iview
Digital Video Solutions Inc.
|
Canada
|
6450539
|
|
Cancable
Inc.
|
Ontario
|
1226184
|
|
Cancable,
Inc.
|
Nevada
|
C18766-99
|
|
Cancable
Holding Corp.
|
Delaware
|
51039105
|
|
A.C.
Technical Systems Ltd.
|
Ontario
|
1314831
|
|
Creative
Vistas Acquisition Corp.
|
Ontario
|
1632625
|
|
Creative
Vistas, Inc.
|
Arizona
|
01574843
|
SCHEDULE
“B”
COMMERCIAL
TORT CLAIM
None.
