EXHIBIT 10.69
MOVABLE HYPOTHEC
1. DEFINITION AND INTERPRETATION
1.1 In the Agreement, the following words shall, unless otherwise
provided, have the meanings set out below:
1.1.1 "AGREEMENT" the expression "Agreement" shall include
this Agreement, as it may hereafter be amended,
supplemented, modified, extended, renewed, replaced
or restated from time to time;
1.1.2 "CONTINUING" when used with reference to a Default or
an Event of Default means that the Default or Event
of Default has occurred and has not been either
waived in writing by the Holder or cured within any
applicable cure period;
1.1.3 "DEFAULT" or "DEFAULT" means any event or
circumstance which constitutes an Event of Default or
which, with the giving of notice of lapse of time or
both would, unless cured or waived, constitute an
Event of Default;
1.1.4 "EVENT OF DEFAULT" shall have the meaning set forth
in Section 7.1 hereof;
1.1.5 "EXIM LOAN AGREEMENT" means the Loan and Security
Agreement dated February 12, 2003 between, among
others, the Grantor, as co-borrower, and the Holder,
as lender, as amended, supplemented, modified,
extended, renewed, replaced or restated from time to
time;
1.1.6 "EXIM OBLIGATIONS" means the "Obligations" as defined
under the Exim Loan Agreement;
1.1.7 "GRANTOR" means Verso Technologies, Inc. and any
Person resulting from the amalgamation, merger,
consolidation, reorganization, continuation or other
transformation thereof;
1.1.8 "HOLDER" means Silicon Valley Bank;
1.1.9 "HYPOTHECATED PROPERTY" means all property, assets
and undertaking of the Grantor charged pursuant to
Section 2.1 of this Agreement and shall include all
or any part thereof;
1.1.10 "INTELLECTUAL PROPERTY COLLATERAL" means all present
and future intellectual property (whether registered
or unregistered) including
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without limitation all computer programs, application
software, hardware/software maintenance support
agreements and all other documents related thereto,
licenses of software, copyrights, patents and
inventions, trademarks, trade names, business names,
trade styles and other business identifiers,
industrial designs, integrated circuit topographies,
trade secrets and other confidential information and
all know-how obtained, developed or used by the
Grantor or contemplated at any time for use by the
Grantor;
1.1.11 "LIEN" shall mean any mortgage, charge, pledge,
hypothec, lien (statutory or otherwise), prior claim,
priority, legal hypothec, trust, deemed trust, title
retention, deposit, right to distrain, landlord's
liens, security interest, assignment or other
encumbrance of any nature however arising, or any
other security agreement, hypothecation or
arrangement creating in favour of any creditor a
right in respect of any particular property that is
prior to the right of any other creditor in respect
of such property, and includes the right of a lessor
relative to a lease of movable property, or a leasing
contract and the right of a vendor under a
conditional (installment) sale agreement;
1.1.12 "LOAN AGREEMENT" means collectively the Exim Loan
Agreement and the Non-Exim Loan Agreement;
1.1.13 "NON-EXIM LOAN AGREEMENT" means the Loan and Security
Agreement dated December 14, 2001, between, among
others, the Grantor, as co-borrower, and the Holder,
as lender, as amended on July 31, 2002, November 11,
2002, December 13, 2002 and February 12, 2003, as
same may be further supplemented, modified, extended,
renewed, replaced or restated from time to time;
1.1.14 "NON-EXIM OBLIGATIONS" means the "Obligations" as
defined under the Non-Exim Loan Agreement;
1.1.15 "PLEDGE AGREEMENT" means the Pledge Agreement
governed by the laws of the State of California
executed by the Grantor in favour of the Holder on
February 12, 2003 in respect of the Specific
Securities;
1.1.16 "PROPERTY" the expression "property" shall include
property, titles and rights;
1.1.17 "SECURED OBLIGATIONS" means collectively the Exim
Obligations and the Non-Exim Obligations, and all
interest, commissions, legal and other costs
(including legal fees as between a solicitor and its
own client), charges and expenses accruing or
incurred under or in connection with this Agreement;
1.1.18 "SECURITIES" the expression "Securities" shall
include shares in the capital stock of a legal
person, bonds, warrants, debentures, bills of
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exchange, promissory notes, negotiable instruments
and other evidences of indebtedness, options or
rights in respect of the foregoing, and any other
instrument or title generally called or included as a
security and the expression "SECURITIES" shall mean
any or all Securities and shall include the Specific
Securities; and
1.1.19 "SPECIFIC SECURITIES" means 100 common shares of
Clarent Canada Ltd., being all of the issued and
outstanding shares of Clarent Canada Ltd.
1.2 Other capitalized terms used herein which are not defined
herein shall have the meanings ascribed to such terms in the
Loan Agreement.
1.3 References to a section shall refer to sections in this
Agreement and references to dollar amounts herein are, unless
expressly otherwise provided, expressed in terms of Canadian
Dollars.
1.4 The headings in the Agreement are included for convenience of
reference only, and shall not constitute a part of this
Agreement for any other purpose.
1.5 The words "GRANTOR" and "HOLDER", the personal pronoun "it" or
"its" and any verb relating thereto and used therewith shall
be read and construed as required by and in accordance with
the context in which such words are used. The term
"successors" shall include, without limiting its meaning, any
corporation resulting from the amalgamation of a corporation
with another corporation.
1.6 If one or more of the provisions contained herein shall be
invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining
provisions contained herein shall not in any way be affected
or impaired thereby.
1.7 If the event that any day, on or before which any action is
required to be taken hereunder, is not a Business Day, then
such action shall be required to be taken on or before the
specified time on the first Business Day thereafter.
1.8 This Agreement shall be construed in accordance with and be
governed by the laws of the Province of Quebec and the federal
laws of Canada applicable therein. For the purpose of legal
proceedings, this Agreement shall be deemed to have been made
in the said Province and to be performed therein and the
courts of that Province shall have jurisdiction over all
disputes which may arise under this Agreement. The Grantor
hereby irrevocably and unconditionally submits to the
non-exclusive jurisdiction of such courts, provided always
that nothing herein contained shall prevent the Holder from
proceeding at its election against the Grantor in the courts
of any other province, country or jurisdiction.
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2. HYPOTHEC
2.1 For good and valuable consideration, and as continuing and
collateral security for the payment and performance when due
of all of the Secured Obligations, the Grantor hereby
hypothecates in favour of the Holder (and with respect to
incorporeal or intangible property, and corporeal movable
property located outside of the Province of Quebec, hereby
charges , assigns, and mortgages and creates a security
interest in favour of the Holder in), the universality of all
present and future movable property of the Grantor, both
corporeal and incorporeal, now owned or hereafter acquired by
the Grantor, including without limitation the following:
2.1.1 all present and future machinery and equipment of the
Grantor, including tools, implements, furniture,
rolling stock, vehicles, spare parts and additions;
2.1.2 all present and future property in stock and
inventory of the Grantor whether in its possession,
in transit or held on its behalf, including, without
limitation, all movable property in reserve, raw
materials, goods in process, finished products,
packaging materials, property held by third parties
pursuant to a rental, leasing, franchise, licence or
other agreement entered into with or on behalf of the
Grantor, property evidenced by xxxx of lading,
animals, wares, as well as any other property held
for sale, lease or processing in the manufacture or
transformation of property intended for sale, for
lease, or for use in providing a service by the
Grantor in the ordinary course of operation of its
enterprise;
2.1.3 all present and future claims of the Grantor of any
nature or kind, whatever their cause, whether or not
evidenced by any title, and whether or not such title
is negotiable, xxxx of exchange or draft; and whether
or not they constitute book debts or trade accounts
receivable, including, without limitation, all
customer accounts, accounts receivable, rights of
action, demands, judgements, contract rights,
options, permits, licenses, consents, approvals,
orders, rulings, quotas, subsidies, franchises,
immunities, amounts on deposit, proceeds of sale,
assignment or lease of any property, rights or
titles, any indemnities payable under any contract of
insurance whether or not such insurance is on
property forming part of the Hypothecated Property
and any indemnity or proceeds of expropriation, the
whole which are now due or which may become due to
the Grantor, together with all judgments and all
other rights, benefits, guarantees and securities for
the said claims which now or may hereafter exist in
favour of the Grantor, and together with all books
and accounts, titles, letters, invoices, papers and
documents in any way evidencing or relating to all or
any of the claims;
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2.1.4 all present and future Securities, including, without
limitation, all other Securities issued or received
in substitution, renewal, addition or replacement of
Securities, or issued or received on the purchase,
redemption, conversion, cancellation or other
transformation of Securities or issued or received by
way of dividend or otherwise to holders of
Securities, and all present and future instruments,
bills of lading, warehouse receipts, documents or
other evidences of title of the Grantor, and all
interests of the Grantor in any partnership;
2.1.5 all present and future Intellectual Property
Collateral, goodwill, other intangible property,
monies, agreements and rights under agreements of the
Grantor, as well as all rights in any action
pertaining to the protection, in Canada or abroad, of
any such Intellectual Property Collateral or rights,
and all its present and future undertaking;
2.1.6 the proceeds of any sale, assignment, lease or other
disposition of the Hypothecated Property any claim
resulting from such a sale, assignment, lease or
other disposition, as well as any property acquired
in replacement thereof;
2.1.7 any present and future rights attached to the
Hypothecated Property as well as the fruits and
revenues thereof; and
2.1.8 all present and future titles, documents, records,
receipts, invoices, accounts and data of the Grantor
evidencing or relating to any of the Hypothecated
Property including, without limitation, computer
disks, tapes and related electronic data processing
media, rights of the Grantor to retrieve the same
from third parties, delivery receipts, catalogs,
insurance certificates and the like;
(all such present and future property being herein called the "HYPOTHECATED
PROPERTY").
2.2 The amount for which the hypothec in Section 2.1 is granted is
TWENTY-FOUR MILLION Canadian dollars ($24,000,000), with
interest from the date hereof at the rate of TWENTY-FIVE
PERCENT (25%) per annum.
2.3 The hypothec which is granted in this Agreement constitutes a
pledge of such of the Hypothecated Property which is delivered
to or now in possession of the Holder, including the Specific
Securities, as well as a pledge of any of the Hypothecated
Property which may in the future be delivered to or held by
the Holder to be initially held at the Holder's office at 0000
Xxxxxx Xxxxx, Xxxxx Xxxxx, Xxxxxxxxxx, the Holder to advise
the Grantor in writing of any change of location.
2.4 The hypothec and security interest hereby created and granted
do not and shall not extend to, and the Hypothecated Property
shall not include, any contract, agreement, right, franchise,
licence, lease or permit (each, a "CONTRACTUAL RIGHT") to
which the Grantor is a party or of which the Grantor has the
benefit, to the
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extent that the creation and granting of the hypothec and
security interest herein would constitute a breach of the
terms of or permit any Person to terminate one or more
contractual rights, and the foregoing hypothec and security
interest is constituted under the suspensive condition of
obtaining the required authorizations or consents. The Grantor
shall hold such contractual rights as mandatary of the Holder
until such time as the suspensive condition is fulfilled in
respect of such contractual right. The Grantor agrees that it
shall, upon the request of the Holder and whether before or
after a default by the Grantor has occurred and the security
herein has become enforceable, use all commercially reasonable
efforts to obtain any consent required to permit any material
contractual rights to be subjected to the hypothec and
security interest hereby created and granted.
3. REPRESENTATIONS
In addition to the representations and warranties of the Grantor under
the Loan Agreement which shall apply mutatis mutandis hereto, the
Grantor represents to the Holder as follows:
3.1 The Grantor is carrying on an enterprise and its head office
is situated at 000 Xxxxxxxx Xxxxxxx, Xxxxx 000, Xxxxxxx,
Xxxxxxx (XXX).
3.2 The Grantor uses no business or trade name other than those
set forth in Schedule "A".
3.3 This Agreement has been properly authorized and constitutes a
legally valid and binding obligation of the Grantor
enforceable in accordance with its terms.
4. COVENANTS
In addition to the covenants of the Grantor under the Loan Agreement
which shall apply mutatis mutandis hereto, the Grantor agrees with the
Holder as follows:
4.1 The Grantor shall, at its expense, insure the Hypothecated
Property and shall keep the Hypothecated Property at all times
insured in accordance with the terms of the Loan Agreement. If
the Grantor fails to procure or maintain any such insurance,
the Holder shall have the right, but not the obligation, to
effect such insurance in its name or in the Grantor's name,
and any premiums or other expenses paid or incurred by the
Holder in so doing shall forthwith be due and payable by the
Grantor to the Holder with interest as provided in Section
4.5.
4.2 The Grantor shall defend title to the Hypothecated Property
and shall not create or permit to exist any Lien in favour of
a third party on or which may affect the Hypothecated
Property, other than Permitted Liens and those which the
Holder shall have previously agreed to in writing prior to
their creation or assumption.
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4.3 Except with the prior written consent of the Holder, the
Grantor will not change the use, destination or nature of the
Hypothecated Property, nor will the Grantor move the
Hypothecated Property to a jurisdiction in which the hypothec
and security interest hereby created or any other security
interest in favour of the Holder has not been registered and
perfected; nor will it permit the Hypothecated Property to be
incorporated in an immovable property or to be permanently
physically attached or joined to an immovable property, unless
such Hypothecated Property does not lose its individuality and
unless such Hypothecated Property is and will continue to be
used for the operation of the Grantor's enterprise or the
pursuit of the Grantor's activities.
4.4 The Grantor will furnish to the Holder any information which
the Holder may reasonably request in respect of the Grantor's
operations or the Hypothecated Property or to verify if the
Grantor is in compliance with its covenants and obligations
contained in this Agreement.
4.5 The Grantor will reimburse the Holder promptly on demand all
out-of-pocket fees, costs and expenses, including reasonable
legal fees and expenses, incurred by the Holder relating to or
in connection with the execution, publication, performance,
interpretation, administration, enforcement and realization of
or in respect of this Agreement, the exercise of all rights of
the Holder and the preservation and protection of its
interests under this Agreement and the rendering of the rights
of the Holder opposable to all third parties, including,
without limitation, any fees, costs and expenses of
consultants, professionals, legal counsel or agents retained
by the Holder in connection with its rights hereunder,
including those for and in respect of any appraisal or
valuation of the Hypothecated Property whether in connection
with the sale of an enterprise or otherwise. The Grantor will
pay interest on all such amounts from the date the Holder
demands payment thereof from the Grantor at an annual rate
equal to the highest rate of interest prescribed under the
Loan Agreement, including Section 7.2 thereof. All such costs,
fees, expenses and charges owing by the Grantor to the Holder,
with interest thereon, shall form part of the Secured
Obligations.
4.6 The Grantor will duly perform and comply with all its
obligations to the Holder, whether under this Agreement or any
other agreement, instrument or other document, including under
the Loan Agreement and the Pledge Agreement.
5. CERTAIN RIGHTS OF THE HOLDER
5.1 In the event the Grantor fails to observe or perform any of
its obligations or undertakings under this Agreement, the
Holder may, but shall not be obliged to, perform the same,
without waiving any rights to enforce this Agreement, and any
fees, costs or expenses incurred in so doing shall be
forthwith due and payable by the Grantor to the Holder, with
interest as provided in Section 4.5, and shall form part of
the Secured Obligations.
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5.2 The Holder may, but shall not be obliged to, cause the Holder,
or its nominee, to be registered as holder of Securities, in
which case the Holder may exercise all rights in respect of
such Securities, including any right to vote, any right of
conversion or any right of redemption, and shall be entitled
to receive all revenues, dividends and capital distributions
(but the Holder shall not be responsible for any loss
occasioned by the exercise of any of such rights or by failure
to exercise the same within the time prescribed); provided
however that until an Event of Default shall have occurred
which is continuing hereunder, the Holder hereby grants the
Grantor a proxy, revocable at any time, authorizing the
Grantor to exercise any voting rights (subject to the prior
written consent of the Holder) and other rights attached to
such Securities (subject to the prior written consent of the
Holder) and to receive such revenues, dividends and capital
distributions.
5.3 The Grantor hereby irrevocably constitutes the Holder or any
officer, or representative of the Holder, its agent, with the
power of substitution, in order to perform any act and sign
any document, including any transfer or endorsement of
Securities, necessary or useful to the exercise of the rights
conferred on the Holder pursuant to this Agreement.
5.4 The Holder may grant extensions of time and other indulgences,
take and give up security, accept compositions, grant releases
and discharges and otherwise deal with the Grantor, debtors of
the Grantor, sureties and others and with the Hypothecated
Property or other security as the Holder may see fit without
prejudice to the liability of the Grantor and the rights of
the Holder under this Agreement.
5.5 The exercise by the Holder of any of its rights shall not
prevent it from exercising any other rights it may have
arising from this Agreement the Loan Agreement, the Pledge
Agreement or by law; the rights of the Holder are cumulative
and not alternative. The Holder may waive any provision hereof
or any default, however the non-exercise by the Holder of any
of its rights or any such waiver shall not constitute a
renunciation of the exercise thereafter of such right or a
renunciation of any other provision or of any other default.
The Holder may exercise the rights arising from this Agreement
without having exercised its rights against any other Person
liable for the payment of the Secured Obligations, or any of
them, and without having realized any other security securing
the Secured Obligations.
5.6 All rights of the Holder under this Agreement shall be
assignable and in any action brought by an assignee to enforce
such rights, the Grantor shall not assert against the assignee
any claim or defence which the Grantor now has or may
hereafter have against the Holder.
5.7 The Holder is only required to exercise reasonable prudence
and diligence in the exercise of its rights or the fulfilment
of its obligations and, in any event, the Holder is only
responsible for its intentional or gross fault. The Grantor
shall
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indemnify the Holder for any losses or expenses incurred by
the Holder, or damages claimed against the Holder, for which
the Holder is not so responsible.
5.8 The Holder may delegate to any other Person, or be represented
by any other Person in, the exercise of its rights or the
fulfilment of its obligations resulting from this Agreement;
the Holder may furnish to such Person any information which
the Holder may have concerning the Grantor or the Hypothecated
Property.
6. PROVISIONS APPLICABLE TO CLAIMS
6.1 In addition to the other provisions of this Agreement, the
following provisions shall apply in respect of all claims
forming part of the Hypothecated Property:
6.1.1 The Holder shall, subject to the terms of the Loan
Agreement, have the right to collect (i) the capital
falling due of, and any revenues of, any such claim
which is or represents the indemnity payable under
any insurance policy in respect of loss or damage to
the Hypothecated Property or which is or represents
the indemnity payable in respect of any expropriation
of the Hypothecated Property and (ii) the capital and
revenues of any proceeds of any sale or other
disposition of any Hypothecated Property made outside
the ordinary course of business of the Grantor;
6.1.2 The Holder authorizes the Grantor to collect when due
the capital falling due of, and any revenues of, any
other claim until the Holder shall have given the
Grantor a notice withdrawing such authorization,
whereupon the Holder shall immediately have the right
to collect all such capital and revenues. This notice
of withdrawal may be given and/or registered at any
time after an Event of Default shall have occurred
which is continuing, and may be given and/or
registered from time to time in respect of all or any
part or parts of the claims;
6.1.3 Upon notice by the Holder to the Grantor, which may
be given after an Event of Default shall have
occurred which is continuing or before or after the
notice of withdrawal referred to in Section 6.1.2,
the Holder may require the Grantor to immediately
remit to the Holder all or a specified part of
capital and revenues of claims received by the
Grantor or to deposit the same in one or more
designated bank accounts or otherwise to hold, deal
with or deliver such capital and revenues, all on
such terms and conditions as the Holder may specify
in such notice;
6.1.4 The Holder shall have no obligation to exercise any
rights in respect of any claims nor to enforce or to
see to payment of the same, whether by legal action
or otherwise. The Holder may give acquittances for
any sums it collects and may, but shall not be
obligated to, realize any of the claims, grant
extensions, grant releases, accept compositions,
renounce and generally deal with the claims, and any
guarantees or security
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therefor, and take any action to preserve, protect or
secure such claims, at such times and in such manner
as it deems advisable in its sole discretion, without
notice to or the consent of the Grantor, and without
incurring any liability therefor and without any
obligation to render any account in respect thereof
or in respect of moneys collected, other than to
remit to the Grantor any amounts collected over and
above the Secured Obligations;
6.1.5 Any amounts collected by the Grantor or by the Holder
or deposited in a designated bank account shall form
part of the Hypothecated Property and be subject to
the hypothec and security hereof. The Holder may
apply any amounts received by it towards payment of
all or part of the Secured Obligations, including any
fees, costs or other expenses incurred by the Holder
and secured hereunder and may impute and apply such
amounts towards payment of any part or parts of the
Secured Obligations as the Holder in its sole
discretion shall decide, and may change any
imputation or application as it sees fit;
6.1.6 The Grantor waives any obligation the Holder may have
to inform the Grantor of any irregularity in the
payment of any sums exigible on any claims or rights;
6.1.7 The Grantor shall from time to time on request of the
Holder deliver to the Holder, or permit the Holder or
its officers or agents access to its premises, in
accordance with the terms of the Loan Agreement, for
the purpose of examining and making copies of, all
books and accounts, letters, invoices, papers,
agreements, negotiable instruments, documents of
title, hypothecs and other documents in any way
evidencing or relating to all or any of the claims
forming part of the Hypothecated Property and shall
otherwise assist the Holder and furnish the Holder
with all information which may assist the Holder in
the collection thereof;
6.1.8 The hypothec in Section 2 on claims extends also to
any claim under any insurance contract on the other
property of the Grantor;
6.1.9 The Grantor represents that none of the claims which
now exist is itself secured by a hypothec or
guaranteed by a third party in favour of the Grantor,
and the Grantor undertakes to notify the Holder
immediately of any claim, present or future, which
hereafter is or becomes secured by a hypothec or
guaranteed by a third party in favour of the Grantor
and to deliver to the Holder the agreements or other
documents now or hereafter constituting or evidencing
the same;
6.1.10 If any claims arises out of a contract with the
federal government of Canada or the government of the
Province of Quebec, or any of their departments,
agencies or instrumentalities, the Grantor agrees to,
at the
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request of the Holder, execute whatever instruments
and documents are required by the Holder in order
that such claims shall be assigned to the Holder and
the proper notice of such assignment shall be given
under any statute relating to the assignment of such
claims.
7. DEFAULTS AND RECOURSES
7.1 The Grantor will be in default under this Agreement
immediately upon the occurrence of any of the following events
(each an "EVENT OF DEFAULT"):
7.1.1 if the Grantor is in default under this Agreement; or
7.1.2 if an "Event of Default" (as defined in each of the
Exim Loan Agreement and the Non-Exim Loan Agreement)
has occurred.
7.2 If an Event of Default shall have occurred which is
continuing, the Holder may exercise any and all of the rights
and recourses it may have hereunder or by law and it may
enforce and realize its hypothec, including the exercise of
the hypothecary rights in virtue of the Civil Code of Quebec.
The Holder may exercise its hypothecary rights against all or
any part of the Hypothecated Property and shall not be bound
to exercise the same hypothecary right against all the
Hypothecated Property. If the Holder gives the Grantor a prior
notice of its intention to exercise a hypothecary right the
Grantor shall, and shall cause any other Person in possession
of Hypothecated Property to, immediately voluntarily surrender
it to the Holder.
7.3 If an Event of Default shall have occurred which is
continuing, whichever hypothecary right or rights or other
recourses the Holder may decide to exercise, the following
provisions shall apply:
7.3.1 if the Hypothecated Property has been surrendered to
the Holder or its agent or if the Holder or its agent
has possession of the Hypothecated Property, neither
the Holder nor its agent shall have any obligation to
continue to carry on the Grantor's enterprise or the
use, operation or exploitation of the Hypothecated
Property or to continue the use for which it is
ordinarily destined or to exercise the rights
pertaining to the Hypothecated Property or to make it
productive; and the Grantor agrees that the Holder or
its agent may do such acts and things, or refrain
from doing such acts and things, as the Holder or its
agent, in its sole discretion, deems appropriate for
the exercise of its rights and the realization and
enforcement of its hypothec and security;
7.3.2 in order to protect or to realize the value of the
Hypothecated Property, the Holder, at the Grantor's
expense, may, but shall not be obliged to:
7.3.2.1 continue and complete the processing,
manufacture and transformation of the
Hypothecated Property or any work
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in process or unfinished goods comprised in
the Hypothecated Property as well as take
any other action necessary or useful in
order to prepare such property for sale;
7.3.2.2 alienate or dispose of any Hypothecated
Property which may be obsolete, may perish
or is likely to deteriorate rapidly;
7.3.2.3 use for its benefit all information obtained
in the course of the exercise of its rights;
7.3.2.4 perform any obligation or covenant of the
Grantor and any right with respect to the
Hypothecated Property;
7.3.2.5 take physical possession of any and all of
the Hypothecated Property and anything found
therein, with the right for that purpose to
enter without legal process upon any
premises where the Hypothecated Property may
be found, and to exclude the Grantor, its
employees and agents therefrom, and the
right to use such premises and to maintain
such possession on the Grantor's premises or
to remove the Hypothecated Property or any
part thereof to such other places as the
Holder may desire;
7.3.2.6 the Holder may, directly or indirectly,
purchase or acquire the Hypothecated
Property;
7.3.3 the Holder may, in the course of exercising its
rights, renounce or waive any right of the Grantor,
with or without consideration therefor;
7.3.4 the Holder shall not be bound to make an inventory,
to take out insurance or to furnish any bond or other
security;
7.3.5 the Grantor shall, at the request of the Holder,
assemble the Hypothecated Property and make same
available at any place designated by the Holder
which, in its opinion, is reasonably convenient.
7.4 Where the Holder sells the Hypothecated Property itself, it
shall not be required to obtain any prior appraisal or
evaluation by a third party.
7.5 The Holder may choose to sell the Hypothecated Property with
legal warranty given by the Grantor or with complete or
partial exclusion of such warranty.
7.6 The Grantor agrees that with respect to any sale by the Holder
of any of the Hypothecated Property in the exercise of its
rights, it will be commercially reasonable to sell such
Hypothecated Property:
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7.6.1 together or separately;
7.6.2 by auction or by call for tenders by advertising such
sale or call for tenders once in a local daily
newspaper at least ten (10) days prior to such sale
or close of call for tenders; and
7.6.3 by sale by agreement after receipt by the Holder of
at least two (2) offers from prospective purchasers,
who may include Persons related to or affiliated with
the Grantor or other customers of the Holder.
Any such sale may be on such terms as to credit or otherwise
and as to upset price or reserve bid or price as the Holder in
its sole discretion may deem advantageous, and the Grantor
agrees that the price received at any such sale shall
constitute a commercial reasonable price.
The foregoing shall not preclude the Holder from agreeing to
or making any sale in any other manner not prohibited by law
nor shall it be interpreted to mean that only a sale made in
conformity with the foregoing is commercially reasonable or
that only the price received at a sale made in conformity with
the foregoing shall constitute a commercially reasonable
price.
8. GENERAL PROVISIONS
8.1 The hypothec and security interest constituted by this
Agreement is in addition to and not in substitution for any
other hypothec or security held by the Holder, including any
security granted pursuant to the Loan Agreement and the Pledge
Agreement.
8.2 This hypothec constitutes continuing security which shall
continue in effect notwithstanding any payment from time to
time in whole or in part of the Secured Obligations and shall
subsist until cancelled by the Holder. This hypothec may, by
agreement between the Holder and the Grantor from time to
time, secure obligations in addition to or in substitution of
the Secured Obligations.
8.3 The mere lapse of the time provided for the Grantor to perform
any obligation or the arrival of any term shall automatically
put the Grantor in default, without any notice putting the
Grantor in default being required, except as may be required
under applicable law and the Loan Agreement.
8.4 The rights conferred on the Holder by this Agreement shall
inure to the benefit of each successor of the Holder. The
Holder shall have the right to assign all or any part of the
Secured Obligations to any other Person and this Agreement
shall inure to the benefit of any such assignee in respect of
all, or such part, of the Secured Obligations which have been
so assigned. This Agreement shall bind any successor and
permitted assigns of the Grantor.
14
8.5 Should any provision of this Agreement be held by any court of
competent jurisdiction to be void or unenforceable, such
defect shall not affect the remainder of this Agreement, which
shall continue in full force and effect.
8.6 The terms and provisions of this Agreement may not be waived
or amended, except in a writing executed by Grantor and a duly
authorized officer of Holder.
8.7 All notices, demands and other communications to the Grantor
may be given to it in accordance with the terms of the Loan
Agreement.
8.8 The amount of the hypothec and rate of interest specified in
Section 2.2 is the amount with the rate of interest for which
the Hypothecated Property is hypothecated. The amount of
credit which the Grantor is entitled to obtain from the Holder
is determined by the applicable separate agreements and not by
the amount of the hypothec specified in Section 2.2 of this
Agreement.
8.9 If the Grantor amalgamates with any corporation or
corporations, the Secured Obligations and the hypothec and
security interest created hereby shall continue and shall
extend to the present and future undertaking, property and
assets of the amalgamated corporation, as if the amalgamated
corporation had executed this Agreement as the Grantor.
8.10 The Grantor shall sign, acknowledge or deliver all such
further instruments and shall do such other things as the
Holder may reasonably require to give effect to or to confirm
or protect the hypothec hereby constituted, including
necessary inscriptions for the registration, renewal, carrying
over or conservation of the hypothec and notices to third
parties.
8.11 In the event of a conflict between any of the provisions of
this Agreement and the Loan Agreement, the provisions of the
Loan Agreement shall prevail to the extent of such conflict
provided that no such conflict shall invalidate the hypothecs
and security interest created hereunder and the absence of a
provision shall not be deemed to be a conflict.
8.12 The parties hereby confirm their express wish that this
Agreement and all documents, agreements or notices directly or
indirectly related hereto be drawn up in the English language.
Les parties reconnaissent leur volonte expresse que le present
contrat ainsi que tous les documents, conventions ou avis s'y
rattachant directement ou indirectement soient rediges en
langue anglaise.
SIGNED AT Atlanta, Georgia this twentieth (20th) day of February 2003
Grantor: VERSO TECHNOLOGIES, INC.
by: /s/ Xxxxxx X. Xxxxxxx
--------------------------------------
by: /s/ Xxxxxx X. Xxxx
--------------------------------------
Accepted and agreed, as of the
date above-written
Holder: SILICON VALLEY BANK
by: /s/ Xxxxx X. Xxxxxxxx
-------------------------------
SCHEDULE "A"
TRADE NAMES
Verso Technologies,
NACT Telecommunications,
Clarent
Xxxxxxxx.Xxx Software
