WAIVER
This
Waiver (the “Waiver”), dated March 21, 2008, by and among NetFabric Holdings,
Inc., a Delaware corporation its subsidiaries, [NetFabric Corporation and UCA
Services], (collectively, the “Company”)LV Administrative Services, Inc., as
administrative and collateral agent (“Agent”)
to
Laurus Master Fund, Ltd., a Cayman Islands company (“Holder”)
and
the Holder supplements that certain Security Agreement, dated February 10,
2006,
by and between the Company and Holder (as amended, modified or supplemented
from
time to time, the “Security
Agreement”).
Capitalized terms used but not defined herein shall have the meanings given
them
in the Security Agreement.
PREAMBLE
WHEREAS,
the
Holder and the Company desire to waive certain Events of Default that may have
occurred under the Security Agreement.
NOW,
THEREFORE,
in
consideration of the covenants, agreements and conditions hereinafter set forth,
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties, intending to be legally bound, hereto
agree as follows:
1. Waiver.
The
Holder hereby waives each Event of Default that may have arisen through March
31, 2008 under Section 19(c) of the Security Agreement solely as a result of
the
Company’s failure to irrevocably direct all of its present and future Account
Debtors and other Persons obligated to make payments constituting Collateral
to
make such payments directly to the lockboxes maintained by the Company for
the
benefit of the Holder and/or Agent.
2. Compliance
with Section 8(a) by March 31, 2008.
The
Company hereby agrees and acknowledges that to the extent that it is not in
full
satisfaction of its obligations under Section 8(a) of the Security Agreement
on
and after April 1, 2008, as shall be determined by the Holder in its sole
discretion, an Event of Default shall immediately arise under the Security
Agreement.
Miscellaneous
3. Additional
Shares. The
Company hereby agrees that it shall, on the date hereof, issue to the Holder
1,000,000 duly and validly issued shares of the Company’s common stock, par
value $0.01, (the “Additional
Shares”).
The
parties hereto agree that the fair market value of the Additional Shares
(as reasonably determined by the parties) received in consideration of this
Waiver hereunder is hereby designated as interest and, accordingly, shall
be
treated, on a pro rata basis, as a reduction of the remaining stated principal
amount (which reduced principal amount shall be treated as the issue price)
of
the Notes, as applicable, for U.S. federal income tax purposes under and
pursuant to Treasury Regulation Sections 1.1001-3(e)(2)(iii), 1.1273-2(g)(2)(ii)
and 1.1274-2(b)(1). The parties further agree to file all applicable tax
returns
in accordance with such characterization and shall not take a position on
any
tax return or in any judicial or administrative proceeding that is inconsistent
with such characterization. Notwithstanding the foregoing, nothing contained
in
this Section 3 shall or shall be deemed to modify or impair in any manner
whatsoever the Company’s obligations from time to time owing to Holder
under the Security Agreement and the Ancillary Agreements referred to
therein (collectively, the “Documents”).
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4.
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Representations,
Warranties and Agreement of the Company.
The
Company hereby represents, warrants and agrees
that:
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a.
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the
Company has full power and authority to enter into this Waiver and
to
issue the Additional Shares in accordance with the terms hereof.
The
execution and delivery of this Waiver by the Company and the consummation
by the Company of the transactions contemplated hereby, including,
without
limitation, the issuance of the Additional Shares have been duly
authorized by the Company’s Board of Directors and no further consent or
authorization is required by the Company, its Board of Directors
or its
stockholders. This Waiver has been duly and validly executed and
delivered
by the Company and constitutes the legal, valid and binding obligation
of
the Company, enforceable in accordance with its terms, except as
such
enforceability may be limited by applicable bankruptcy, insolvency,
moratorium, reorganization or similar laws in effect that affect
the
enforcement of creditors' rights generally and by equitable limitations
on
the availability of specific remedies. The Additional Shares are
duly
authorized and, upon issuance in accordance with the terms hereof,
shall
be validly issued and free from all taxes, liens and charges with
respect
to the issue thereof and the Additional Shares shall be fully paid
and
nonassessable with the holders being entitled to all rights accorded
to a
holder of common stock of the Company. The issuance by the Company
of the
Additional Shares is exempt from registration under the ▇▇▇▇
▇▇▇.
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b.
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the
Company acknowledges and agrees that Holder is not (i) an officer
or
director of the Company, (ii) an "affiliate" of the Company (as defined
in
Rule 144) or (iii) to the knowledge of the Company, a "beneficial
owner"
of more than 10% of the common stock of the Company (as defined for
purposes of Rule 13d-3 of the Securities Exchange Act of 1934, as
amended).
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| c. |
as
of the Waiver Effective Date, (i) no Event of Default (as defined
in the
Security Agreement) exists on the date hereof, (ii) on the date
hereof,
all representations, warranties and covenants made by the Company
in
connection with the Documents are true, correct and complete
and (iii) on
the date hereof, all of the Company’s and its Subsidiaries’ covenant
requirements have been met.
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5. The
Company understands that it has an affirmative obligation to make prompt public
disclosure of material agreements and material amendments to such agreements.
If
it is the Company’s determination that this Waiver is material, the Company
agrees to file an 8-K within 4 days of the date of the Waiver Effective Date
(hereinafter defined) and in the form otherwise prescribed by the Securities
and
Exchange Commission.
6. The
waiver set forth above shall be effective as of the date first above written
(the “Wavier
Effective Date”)
on the
date when (i) each of the Company, the Agent and the Holder shall have executed
and the Company shall have delivered to Agent its respective counterpart to
this
Waiver and (ii) the Holder (or its designee) shall have received the Additional
Shares referenced in Section 3 above.
7. Except
as
specifically set forth in this Waiver, there are no other amendments,
modifications or waivers to the Documents, and all of the other forms, terms
and
provisions of the Documents remain in full force and effect.
8. From
and
after the Wavier Effective Date, all references in the Documents shall be deemed
to be references to the Documents, as the case may be, as modified hereby.
This
Waiver shall for all purposes be deemed to be an Ancillary Agreement as defined
in the Security Agreement.
9. This
Waiver shall be binding upon the parties hereto and their respective successors
and permitted assigns and shall inure to the benefit of and be enforceable
by
each of the parties hereto and their respective successors and permitted
assigns. THIS
WAIVER SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH AND GOVERNED BY THE
LAW OF THE STATE OF NEW YORK.
This
Waiver may be executed in any number of counterparts, each of which shall be
an
original, but all of which shall constitute one instrument.
[signature
page follows]
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IN
WITNESS WHEREOF,
the
Company, each Subsidiary of the Company, the Agent and the Holder has caused
this Waiver to be signed in its name effective as of this 21 day of March
2008.
| NETFABRIC HOLDINGS, INC. | ||
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| By: | /s/ | |
| Name: | ||
| Title: | ||
| NETFABRIC CORPORATION | ||
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| By: | /s/ | |
| Name: | ||
| Title: | ||
| UCA SERVICES, INC. | ||
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| By: | /s/ | |
| Name: | ||
| Title: | ||
| LV ADMINISTRATIVE SERVICES, INC. | ||
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| By: | /s/ | |
| Name: | ||
| Title: | ||
| LAURUS MASTER FUND, LTD. | ||
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By: Laurus Capital Management, LLC, its investment manager | |
| By: | /s/ | |
| Name: | ||
| Title: | ||
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