PERVASIP CORP. AND CERTAIN OF ITS SUBSIDIARIES MASTER SECURITY AGREEMENT
Exhibit
10.12
PERVASIP
CORP. AND CERTAIN OF ITS SUBSIDIARIES
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To:
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LV
Administrative Services, Inc., as
Agent
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c/o
Valens Capital Management, LLC
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000
Xxxxxxx Xxxxxx, 00xx
Xxxxx
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Xxx
Xxxx, XX 00000
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Date: May
28, 2008
To Whom
It May Concern:
1. To secure
the payment of all Obligations (as hereafter defined), PERVASIP CORP.
(f/k/a eLEC Communications Corp.), a New York corporation (the “Company”), each of
the other undersigned parties (other than the Agent as defined below) and each
other entity that is required to enter into this Master Security Agreement (each
an “Assignor”
and, collectively, the “Assignors”) hereby
assigns and grants to the Agent, for the ratable benefit of the Creditor Parties
(as defined in the Securities Purchase Agreement referred to below), 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 has or
at any time in the future may acquire any right, title or interest (the “Collateral”): all
cash, cash equivalents, accounts, accounts receivable, deposit accounts,
(including, without limitation, the Restricted Account (the “Restricted Account”)
maintained at North Fork Bank (Account Name: Pervasip Corp.
(f/k/a eLEC Communications Corp.) Restricted - LV, Account Number:
270-405-7914)), inventory, equipment, goods, fixtures, documents, instruments
(including, without limitation, promissory notes and marketable equity
securities), 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 any Assignor’s affiliates),
chattel paper, supporting obligations, 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 has 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 therefor. In the event any Assignor wishes
to finance the 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, Agent 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 that
certain Securities Purchase Agreement dated as of the date hereof (as amended,
restated, modified and/or supplemented from time to time, the “Securities Purchase Agreement”)
by and among the Company, the Purchasers party thereto and LV Administrative
Services, Inc., as administrative and collateral agent for the Purchasers (the
“Agent”). All
items of Collateral which are defined in the UCC shall have the meanings set
forth in the UCC. For purposes hereof, the term “UCC” means the
Uniform Commercial Code as the same may, from time to time, be in effect in the
State of New York; provided, that in the event that, by reason of mandatory
provisions of law, any or all of the attachment, perfection or priority of, or
remedies with respect to, the Agent’s 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, the term “UCC” shall mean the
Uniform Commercial Code as in effect in such other jurisdiction for purposes of
the provisions of this Agreement relating to such attachment, perfection,
priority or remedies and for purposes of definitions related to such provisions;
provided further, that to the extent that the UCC is used to define any term
herein and such term is defined differently in different Articles or Divisions
of the UCC, the definition of such term contained in Article or Division 9 shall
govern.
2. The term
“Obligations”
as used herein shall mean and include all debts, liabilities and obligations
owing by each Assignor to any Creditor Party arising under, out of, or in
connection with: (i) the Securities Purchase Agreement and (ii) the
Related Agreements referred to in the Securities Purchase Agreement (the
Securities Purchase Agreement and each Related Agreement, as each may be
amended, modified, restated or supplemented from time to time, 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 each such Assignor to any Creditor Party, 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,
including, without limitation, obligations and liabilities of each Assignor for
post-petition interest, fees, costs and charges that accrue after the
commencement of any case by or against such Assignor under any bankruptcy,
insolvency, reorganization or like proceeding (collectively, the “Debtor Relief Laws”)
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, including, without limitation, obligations
or indebtedness of 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.
3. Each
Assignor hereby jointly and severally represents, warrants and covenants to
Agent, for the benefit of the Creditor Parties, that:
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(a)
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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 the Agent thirty (30) days’ prior written
notice of any change in any of its respective jurisdiction of
organization;
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(b)
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its
legal name is as set forth in its Certificate of Incorporation or other
organizational document (as applicable) as amended through the date hereof
and as set forth on Schedule A
attached hereto, and it will provide the Agent thirty (30) days’ prior
written notice of any change in its legal
name;
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(c)
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its
organizational identification number (if applicable) is as set forth on
Schedule
A hereto, and it will provide the Agent thirty (30) days’ prior
written notice of any change in any of its organizational identification
number;
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(d)
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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;
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(e)
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other
than permitted liens identified in Schedule 4.9 of the Securities Purchase
Agreement, it will keep its Collateral free and clear of all attachments,
levies, taxes, liens, security interests and encumbrances of every kind
and nature (“Encumbrances”),
except Permitted Encumbrances;
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(f)
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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;
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(g)
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it
will not, without the Agent’s prior written consent, sell, exchange, lease
or otherwise dispose of the Collateral, whether by sale, lease or
otherwise, except for the sale of inventory in the ordinary course of
business and except 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, having an aggregate
fair market value of not more than $100,000 and only to the extent
that:
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(i)
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the
proceeds of any such disposition are used to acquire replacement
Collateral which is subject to the Agent’s first priority perfected
security interest, or are used to repay the Obligations or to pay general
corporate expenses; and
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(ii)
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following
the occurrence of an Event of Default which continues to exist the
proceeds of which are remitted to the Agent to be held as cash collateral
for the Obligations;
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(h)
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it
will insure or cause the Collateral to be insured in the Agent’s name
against loss or damage by fire, theft, burglary, pilferage, loss in
transit and such other hazards in amounts and coverage consistent and in
accordance with industry practice under policies by insurers reasonably
acceptable to the Agent and all premiums thereon shall be paid by such
Assignor and the policies delivered to the Agent. If any such
Assignor fails to do so, the Agent may procure such insurance and the cost
thereof shall be promptly reimbursed by the Assignors, jointly and
severally, and shall constitute
Obligations;
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(i)
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it
will at all reasonable times and upon at least (1) day’s prior notice
allow the Creditor Parties or their respective representatives free access
to and the right of inspection of the Collateral;
and
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(j)
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such
Assignor (jointly and severally with each other Assignor) hereby
indemnifies and saves the Agent and each other Creditor Party harmless
from all loss, costs, damage, liability and/or expense, including
reasonable attorneys’ fees, that the Agent and each other Creditor Party
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 the Agent, any other Creditor Party 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 the Agent’s or any Creditor
Party’s own gross negligence or willful misconduct (as determined by a
court of competent jurisdiction in a final and non-appealable
decision).
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4. The
occurrence of any of the following events or conditions shall constitute an
“Event of
Default” under this Master Security Agreement:
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(a)
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an
Event of Default shall have occurred under and as defined in any
Document;
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(b)
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the
loss, theft, substantial damage, destruction, sale or encumbrance to or of
any of the Collateral or the making of any levy, seizure or attachment
thereof or thereon except to the
extent:
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(i)
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such
loss is covered by insurance proceeds which are used to replace the item
or repay the Agent; or
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(ii)
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said
levy, seizure or attachment does not secure indebtedness in excess of
$100,000 and such levy, seizure or attachment has been removed or
otherwise released within ten (10) days of the creation or the assertion
thereof.
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5. Upon the
occurrence of any Event of Default and at any time thereafter, the Agent may
declare all Obligations immediately due and payable and the Agent shall have the
remedies of a secured party provided in the UCC, this Agreement and other
applicable law. Upon the occurrence of any Event of Default and at
any time thereafter, the Agent will have the right to take possession of the
Collateral and to maintain such possession on its premises or to remove the
Collateral or any part thereof to such other premises as the Agent may
desire. Upon the Agent’s request, each Assignor shall assemble or
cause the Collateral to be assembled and make it available to the Agent at a
place reasonably designated by the Agent. 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) business days before such disposition, postage prepaid, addressed to the
applicable Assignor either at any Assignor’s address shown herein or at any
address appearing on the Agent’s records for such Assignor. Any
proceeds of any disposition of any of the Collateral shall be applied by the
Agent 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 expenses of retaking, holding, preparing for
sale, selling, and the like, and any balance of such proceeds may be applied by
the Agent toward the payment of the Obligations in such order of application as
the Agent may elect, and each Assignor shall be liable for any
deficiency. For the avoidance of doubt, following the occurrence and
during the continuance of an Event of Default, the Agent shall have the
immediate right to withdraw any and all monies contained in any deposit account
in the name of any Assignor and controlled by the Agent and apply same to the
repayment of the Obligations (in such order of application as the Agent may
elect). 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, under the Securities Purchase Agreement or under any other
Related Agreement shall not constitute confidential information and no party
shall have any duty to the other party to maintain such information as
confidential.
6. 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, the Agent 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 attorneys’ fees) shall be
added to the Obligations and shall be payable on demand with interest thereon at
the highest rate permitted by law, or, at the Agent’s option during the
continuance of an Event of Default, debited by the Agent from any other deposit
accounts in the name of any Assignor and controlled by the Agent.
7. Each
Assignor appoints the Agent, any of the Agent’s officers, employees or any other
person or entity whom the Agent may designate as its attorney, with power to
execute such documents on such Assignor’s behalf and to supply any omitted
information and correct patent errors in any documents executed by such Assignor
or on such Assignor’s behalf; to file financing statements against such Assignor
covering the Collateral (and, in connection with the filing of any such
financing 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 the Agent deems necessary to carry out this Master
Security Agreement. Each Assignor hereby ratifies and approves all
acts of the attorney and neither the Agent, any Creditor Party 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.
8. No delay
or failure on the Agent’s 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 the Agent and then only to the extent therein set forth, and no waiver
by the Agent of any default shall operate as a waiver of any other default or of
the same default on a future occasion. The Creditor Parties’ 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 (absent
manifest error) and shall constitute prima facie proof
thereof. The Agent shall have the right to enforce any one or more of
the remedies available to the Agent, successively, alternately or
concurrently. Each Assignor agrees to join with the Agent in
executing such documents or other instruments to the extent required by the UCC
in form satisfactory to the Agent and in executing such other documents or
instruments as may be required or deemed necessary by the Agent for purposes of
affecting or continuing the Agent’s security interest in the
Collateral.
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9. This
Master Security Agreement shall be governed and construed in accordance with the
laws of the State of New York and cannot be terminated orally. All of
the rights, remedies, options, privileges and elections given to the Agent
hereunder shall inure to the benefit of the Agent’s successors and
assigns. The term “Agent” as herein used
shall include the Agent, any parent of the Agent’s, any of the Agent’s
subsidiaries and any co-subsidiaries of the Agent’s parent, whether now existing
or hereafter created or acquired, and shall bind the representatives, successors
and assigns of each Assignor. The Agent 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 the Agent or each Assignor may
have as to the bringing or maintaining of such action with any such
court.
10. This
Master Security Agreement may be executed in any number of counterparts, each of
which shall be an original, but all of which shall constitute one
instrument. Any signature delivered by a party by facsimile or
electronic transmission shall be deemed to be an original signature
hereto.
11. 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 the Agent, (y) delivering
supplements to such exhibits and annexes to such Documents as the Agent shall
reasonably request and (z) taking all actions as specified in this Master
Security Agreement as would have been taken by such Assignor had it been an
original party to this Master Security Agreement, in each case with all
documents required above to be delivered to the Agent and with all documents and
actions required above to be taken to the reasonable satisfaction of the
Agent.
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12. All
notices from the Agent to any Assignor shall be sufficiently given if mailed or
delivered to such Assignor’s address set forth below, with a copy to Xxxxx
Xxxxxxx LLP, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxx X.
Xxxxxxx, Esq.
Very
truly yours,
PERVASIP
CORP. (f/k/a eLEC Communications Corp.)
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By:
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/s/ Xxxx X.
Xxxx
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Name:
Xxxx X. Xxxx
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Title:
Chief Executive Officer
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Address:
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Xxxxx Xxxxxxxx, Xxxxx 000
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Xxxxx
Xxxxxx, XX 00000
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Facsimile:000-000-0000
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VOX
COMMUNICATIONS CORP.
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By:
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/s/ Xxxx X.
Xxxx
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Name:
Xxxx X. Xxxx
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Title:
Chief Executive Officer
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Address:
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00
Xxxxx Xxxxxxxx, Xxxxx 000
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Xxxxx
Xxxxxx, XX 00000
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Facsimile:000-000-0000
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AVI
HOLDING CORP.
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By:
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/s/ Xxxx X.
Xxxx
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Name:
Xxxx X. Xxxx
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Title:
Chief Executive Officer
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Address:
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00
Xxxxx Xxxxxxxx, Xxxxx 000
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Xxxxx
Xxxxxx, XX 00000
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Facsimile:000-000-0000
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XXXXXXXXXXXXX.XXX
CORP.
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By:
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/s/ Xxxx X.
Xxxx
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Name:
Xxxx X. Xxxx
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Title:
Chief Executive Officer
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Address:
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00
Xxxxx Xxxxxxxx, Xxxxx 000
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Xxxxx
Xxxxxx, XX 00000
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Facsimile:000-000-0000
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LINE ONE,
INC.
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By:
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/s/ Xxxx X.
Xxxx
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Name:
Xxxx X. Xxxx
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Title:
Chief Executive Officer
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Address:
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00
Xxxxx Xxxxxxxx, Xxxxx 000
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Xxxxx
Xxxxxx, XX 00000
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Facsimile:000-000-0000
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ACKNOWLEDGED:
LV
ADMINISTRATIVE SERVICES, INC.,
as
Agent
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Name:
Xxxxxxx Xxxxx
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Title
Authorized Signatory
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