EXECUTION VERSION
COLLATERAL AGENCY
AGREEMENT
This
COLLATERAL
AGENCY AGREEMENT (this “ Agreement
”), dated as of December __ , 2007, is
entered into among each of the persons identified as a
“Buyer” on the signature pages hereof
(individually, “ Buyer
”; collectively, the “ Buyers
”), and THE BANK OF NEW YORK ,
as collateral agent for the Buyers (in such capacity, together
with its successors and assigns in such capacity, “
Collateral
Agent ”), and is acknowledged by the Company (as
defined below). For good and valuable
consideration, the receipt and adequacy of which hereby is
acknowledged by each party hereto, the parties hereto hereby
agree as follows:
1.
Definitions;
Construction .
a. Any
capitalized terms used but not defined herein shall have the
meanings ascribed to them in the “Senior Convertible
Notes” or the “Securities Purchase Agreement” (as
defined below), as applicable. As used herein, the
following terms shall have the meanings respectively set forth
after each:
“
Agreement
” has the meaning ascribed thereto in the introductory
paragraph hereto.
“
Affiliate
” means, as applied to any Person, any other Person who,
directly or indirectly, controls, is controlled by, or is
under common control with, such Person. For
purposes of this definition, “control” means the
possession, directly or indirectly, of the power to direct the
management and policies of a Person, whether through the
ownership of Stock, by contract, or otherwise.
“
Buyers
” has the meaning ascribed thereto in the introductory
paragraph to this Agreement.
“
Buyer
Claims ” means any and all “claims”
(used in its broadest sense, as contemplated by and defined in
Section 101(5) of the Bankruptcy Code, but without regard to
whether such claim would be disallowed under the Bankruptcy
Code) now or hereafter arising or existing under or relating
to the Transaction Documents in favor of any
Buyer.
“ Buyer
Expenses ” means all
(a) costs or expenses (including taxes, and insurance
premiums) required to be paid by the Company or any of its
Affiliates under any of the Transaction Documents that are paid or
incurred by the Collateral Agent or the Buyers, (b) actual fees or
charges paid or incurred by the Collateral Agent in connection with
transactions between the Collateral Agent or any Buyer, on the one
hand, and the Company or any of its Affiliates, on the other hand,
including, fees or charges for photocopying, notarization, couriers
and messengers, telecommunication, public record searches
(including tax lien, litigation, and UCC searches and including
searches with the patent and trademark office, the copyright
office), filing, recording, publication, appraisal (including
periodic Collateral appraisals), real estate surveys, real estate
title policies and endorsements, and environmental audits, (c)
actual costs and expenses incurred by the Collateral Agent in the
disbursement of funds to the Company (by wire transfer or otherwise),
(d) actual charges paid or incurred by the Collateral Agent
resulting from the dishonor of checks, (e) reasonable costs and
expenses paid or incurred by the Collateral Agent or any Buyer to
correct any default or enforce any provision of the Transaction
Documents, or in gaining possession of, maintaining, handling,
preserving, storing, shipping, selling, preparing for sale, or
advertising to sell the Collateral, or any portion thereof,
irrespective of whether a sale is consummated, (f) reasonable costs
and expenses paid or incurred by the Collateral Agent or any Buyer
in examining the Company’ Books, (g) reasonable costs and
expenses of third party claims or any other suit paid or incurred
by the Collateral Agent or any Buyer in enforcing or defending the
Transaction Documents or in connection with the transactions
contemplated by the Transaction Documents or the Collateral
Agent’s or any Buyer’s relationship with the Company or
any guarantor, and (h) the Collateral Agent’s and each of the
Buyers’ reasonable fees and expenses (including attorneys
fees) incurred in advising, structuring, drafting, reviewing,
administering, amending, terminating, enforcing (including
attorneys fees and expenses incurred in connection with a
“workout,” a “restructuring,” or an
insolvency proceeding concerning the Company or any guarantor of
any of the obligations of the Company under the Transaction Documents),
defending, or concerning the Transaction Documents, irrespective of
whether suit is brought.
“
Buyer
Obligations ” means any and all obligations of
the Company to any one or more of the Buyers with respect to
all or any part of the Buyer Claims, including obligations of
payment and performance, whether fixed or indeterminate, due
or not yet due, contingent or non-contingent, matured or
unmatured, liquidated or unliquidated, or disputed or
undisputed, and whether arising under contract, in tort, by
law, or otherwise.
“
Capital
Lease ” means a lease that is required to be
capitalized for financial reporting purposes under
GAAP.
“
Claims
” means the Collateral Agent Claims and the Buyer
Claims.
“
Collateral
” means all property (real, personal or otherwise) of
the Company now or hereafter subject to a lien or security
interest in favor of the Collateral Agent for the ratable
benefit of the Buyers, and all Proceeds of such
property.
“
Collateral
Agent ” has the meaning ascribed thereto in the
introductory paragraph to this Agreement.
“
Collateral Agent
Claims ” means any and all “claims”
(used in its broadest sense, as contemplated by and defined in
Section 101(5) of the Bankruptcy Code, but without regard to
whether such claim would be disallowed under the Bankruptcy
Code) now or hereafter arising or existing under or relating
to this Agreement or any Transaction Document in favor of the
Collateral Agent.
“
Collateral
Agent’s Liens ” means the Liens granted by
the Company to the Collateral Agent under the Security
Documents.
“
Collateral Agent
Obligations ” means any and all obligations of
the Company to the Collateral Agent with respect to all or any
part of the Collateral Agent Claims, including obligations of
payment and performance, whether fixed or indeterminate, due
or not yet due, contingent or non-contingent, matured or
unmatured, liquidated or unliquidated, or disputed or
undisputed, and whether arising under contract, in tort, by
law, or otherwise.
“
Collections
” means any collections of, on, or with respect to
Collateral, and any proceeds of any foreclosure, sale,
exchange, disposition of, or other realization upon any
Collateral, received by the Collateral Agent.
“
Company
” means EnterConnect Inc., a Nevada
corporation.
“
Company Security
Agreement ” means that certain Pledge and
Security Agreement dated as of December __, 2007, by and
between the Company and the Collateral Agent.
“
Exchange
Act ” means the Securities Exchange Act of 1934,
as in effect from time to time.
“
Event of
Default ” means any defined event of default
under any one or more of the Transaction Documents, in each
instance, after giving effect to any notice, grace, or cure
periods provided for in the applicable Transaction
Documents.
“
GAAP
” means generally accepted accounting principles as in
effect from time to time in the United States, consistently
applied.
“ Indebtedness
” means (a) all
obligations of the Company for borrowed money, (b) all
obligations of the Company evidenced by bonds, debentures,
notes, or other similar instruments and all reimbursement or other
obligations of the Company in respect of letters of credit,
bankers acceptances, interest rate swaps, or other similar
financial products, (c) all obligations of the Company
under Capital Leases,
(d) all obligations or liabilities of others secured by a Lien on
any property or asset of the Company , irrespective of whether such
obligation or liability is assumed, and (e) any obligation of the
Company guaranteeing or intended to guarantee (whether guaranteed,
endorsed, co-made, discounted, or sold with recourse to the
Company) any obligation of any other Person.
“
Indemnified
Amount(s) ” means any amount(s) payable by any
Buyer to the Collateral Agent (or recoverable by the
Collateral Agent from Collateral or Proceeds of Collateral or
Collections) pursuant to Section 8
hereof.
“
Lien
” means any interest in property securing an obligation
owed to, or a claim by, any Person other than the owner of the
property, whether such interest shall be based on the common
law, statute, or contract, whether such interest shall be
recorded or perfected, and whether such interest shall be
contingent upon the occurrence of some future event or events
or the existence of some future circumstance or circumstances,
including the lien or security interest arising from a
mortgage, deed of trust, encumbrance, pledge, hypothecation,
assignment, deposit arrangement, security agreement,
conditional sale or trust receipt, or from a lease,
consignment, or bailment for security purposes and also
including reservations, exceptions, encroachments, easements,
rights-of-way, covenants, conditions, restrictions, leases,
and other title exceptions and encumbrances affecting Real
Property.
“
Majority
Buyers ” has the meaning ascribed thereto in
Section 5
hereof.
“
Obligations
” means, collectively, the Collateral Agent Obligations
and the Buyer Obligations.
“Person ” means natural persons, corporations,
limited liability companies, limited partnerships, general
partnerships, limited liability partnerships, joint ventures,
trusts, land trusts, business trusts, or other organizations,
irrespective of whether they are legal entities, and governments
and agencies and political subdivisions thereof.
“
Proceeds
” means all present and future “proceeds”
(as defined in the UCC) of Collateral, whether or not received
by the Company, including insurance proceeds arising from or
relating to Collateral.
“
Real
Property ” means any estates or interests in real
property now owned or hereafter acquired by the
Company.
“
Record
” means information that is inscribed on a tangible
medium or which is stored in an electronic or other medium and
is retrievable in perceivable form.
“
Restricted
Account Agreement ” means the Restricted
(Non-Blocked) Account Agreement, dated as of the date hereof,
among the Collateral Agent, the Company and Sun Trust
Bank.
“
SEC
” means the United States Securities Exchange
Commission.
“
Securities
Purchase Agreement ” means that certain
Securities Purchase Agreement, dated as of the date hereof, by
and among the Company and the Buyers.
“
Security
Documents ” means the Company Security Agreement,
and any other security agreement, stock pledge agreement,
mortgage, deed of trust, assignment, pledge, and other
agreement executed and delivered by the Company in favor of
Collateral Agent for the benefit of the Buyers.
“
Senior
Convertible Notes ” means those several Senior
Secured Convertible Notes issued by the Company in favor of
the Buyers, dated December __ ,
2007.
“Stock ” means all shares, options, warrants,
interests, participations, or other equivalents (regardless of how
designated) of or in a Person, whether voting or nonvoting,
including common stock, preferred stock, or any other “equity
security” (as such term is defined in Rule 3a11-1 of the
General Rules and Regulations promulgated by the SEC under the
Exchange Act).
“
Transaction
Documents ” means the Securities Purchase
Agreement, the Senior Convertible Notes, the Security
Documents, the Restricted Account Agreement, this Agreement
and any other agreement, instrument, and other document
executed and delivered pursuant thereto or otherwise
evidencing or securing any of the Obligations or any other
Indebtedness or other obligations owing by the Company to the
Buyers or the Collateral Agent.
“
UCC
” means the Uniform Commercial Code of the State of New
York, as in effect from time to time.
b.
Construction
. Any term
used herein that is defined in the UCC shall have the meaning
ascribed to such term in the UCC, unless specifically otherwise
defined herein. Unless the context of this Agreement
clearly requires otherwise, references to the plural include the
singular, references to the singular include the plural, the part
includes the whole, the terms “includes” and
“including” are not limiting, and the term
“or” has the inclusive meaning represented by the
phrase “and/or”. The words
“hereof,” “herein,” “hereby,”
“hereunder,” and similar terms in this Agreement refer
to this Agreement as a whole and not to any particular provision of
this Agreement. Section references are to this Agreement
unless otherwise specified. Any reference in this
Agreement or in any of the other Transaction Documents to this
Agreement or any of the other Transaction Documents shall include
all alterations, amendments, restatements, changes, extensions,
modifications, renewals, replacements, substitutions, and
supplements, thereto and thereof, as
applicable.
2.
Appointment
of Collateral Agent Each Buyer hereby appoints the
Collateral Agent as the collateral agent for itself with respect to
the Collateral, the Security Documents and the other Transaction
Documents. Each Buyer agrees that all liens and security
interests in Collateral securing any of the Obligations shall be
held in the name of the Collateral Agent and administered by and
through the Collateral Agent in accordance with the provisions of
this Agreement. If, as of the date hereof, or at any
time in the future, any Buyer at any time holds a lien or security
interest on Collateral in its own name, it agrees to assign it,
without warranty or recourse, to the Collateral Agent (to be held
by the Collateral Agent as the collateral agent for each of the
Buyers).
3.
Security
Interest The
Collateral Agent shall hold its security interests in and liens on
the Collateral for the benefit of the Buyers.
4.
Distribution
of Collections Any Collections shall be
distributed pro rata among the Buyers (after recouping, offsetting,
or deducting any Indemnified Amounts due the Collateral Agent that
are entitled to be recouped, offset, or deducted, pursuant to the
Transaction Documents).
5.
Authority
of Collateral Agent to Act Each Buyer hereby appoints and
authorizes the Collateral Agent to take such action as agent on its
behalf and to exercise such powers and discretion under this
Agreement, the Security Documents and the other Transaction
Documents as are delegated to the Collateral Agent by the terms
hereof and thereof, together with such powers as are reasonably
incidental thereto. As to any matters within the scope
of the Collateral Agent’s agency and not expressly provided
for by this Agreement or such other Transaction Documents, the
Collateral Agent shall not be required to exercise any discretion
or take any action, but shall be required to act or to refrain from
acting with respect to the Collateral or with respect to the
provisions of the Transaction Documents relating to same (and shall
be fully protected in so acting or refraining from acting) upon the
instructions of the Buyers of at least 50.1% of the unpaid
principal amount of the Senior Convertible Notes then outstanding
(the “Majority Buyers”); provided, however, that the
Collateral Agent shall not be required to take any
action
