EX-10.3



 Exhibit 10.3 
  

 
 



 
 SECURITY AGREEMENT 

THIS SECURITY AGREEMENT (this “Agreement”) is made as of June 30, 2015, by 1328158 Ontario Inc., an
Ontario corporation (“Debtor”) in favor of NewStar Business Credit, LLC, a Delaware limited liability company, as Administrative Agent (together with its successors and assigns, the “Secured Party”) for the Lenders
under the Loan Agreement (as defined below). 
 WHEREAS, Mad Catz, Inc., (“Borrower”), Debtor, Mad
Catz Interactive, Inc. (“Parent”), Secured Party and the lenders from time to time party thereto (collectively, the “Lenders”) have entered into that certain Loan and Security Agreement of even date herewith (as
amended, restated supplemented or otherwise modified from time to time, the “Loan Agreement”), pursuant to which Lenders have agreed to make available a revolving line of credit to Borrower, all in accordance with and subject to the
terms and conditions set forth in the Loan Agreement; 
 WHEREAS, it is a condition precedent to Lenders’
obligations to make the Loans and advances under the Loan Agreement, that Debtor (i) execute and deliver a Guaranty Agreement, dated as of the date hereof, in favor of Secured Party, for the benefit of Lender Parties (the
“Guaranty”), guarantying all obligations of Borrower under the Loan Agreement and the other Loan Documents, and (ii) pledge to Secured Party, for the benefit of Lenders, the Pledged Collateral (as hereinafter defined) as
security for the Secured Obligations (as hereinafter defined); 
 WHEREAS, Debtor acknowledges and confirms that it
is wholly owned by Parent (who also, directly or indirectly, wholly owns Borrower and is an Affiliate of Borrower and further: (a) it will directly or indirectly benefit from the Loans from Lenders to Borrower, (b) the Loans constitute
valuable consideration to Debtor, (c) this Agreement is intended to be an inducement to Lenders to execute, deliver and perform the Loan Agreement and the other Loan Documents and for Lenders to extend the Loans to Borrower, and (d) each
Lender is relying upon this Agreement in making and advancing the Loans to Borrower. 
 NOW, THEREFORE, in
consideration of the foregoing and of the mutual covenants and agreements hereinafter set forth, the receipt and sufficiency of which are hereby acknowledged, and as an inducement for Secured Party and each Lender to enter into the Loan Agreement
and other Loan Documents, the parties hereto, intending to be legally bound hereby, do agree as follows: 

  

					
		 		  	MCC SECURITY AGREEMENT









 1. 

DEFINITIONS AND REFERENCES 

1.1. General Definitions.  As used herein, the terms “Agreement,”
“Borrower,” “Debtor,” “Lender,” “Loan Agreement”, “Parent” and “Secured Party” shall have the meanings indicated above, and the following terms
shall have the following meanings: 
 “Account” has the meaning prescribed for such term as defined by the
UCC, which definition is incorporated herein by reference, and includes, without limitation, a right to payment of a monetary obligation, whether or not earned by performance, for property that has been or is to be sold, leased, licensed, assigned,
or otherwise disposed of, or for services rendered or to be rendered. 
 “Chattel Paper” has the meaning
prescribed for such term as defined by the UCC, which definition is incorporated herein by reference, and includes, without limitation, a record or records that evidence both a monetary obligation and a security interest in specific goods, a
security interest in specific goods and software used in the goods, a security interest in specific goods and license of software used in the goods, a lease of specific goods, or a lease of specific goods and license of software used in the goods.
“Chattel Paper” includes, without limitation, electronic chattel paper. 
 “Commercial Tort
Claim” has the meaning prescribed for such term as defined by the UCC, which definition is incorporated herein by reference, and includes, without limitation, any tort cause of action claimed by Debtor, including those listed on
Schedule 1 hereto. 
 “Deposit Account” has the meaning prescribed for such term as defined by the
UCC, which definition is incorporated herein by reference, and includes, without limitation, a nonnegotiable certificate of deposit or a demand, time, savings, passbook, or similar account maintained with a bank. 

“Document” has the meaning prescribed for such term as defined by the UCC, which definition is incorporated
herein by reference, and includes, without limitation, any bill of lading, dock warrant, dock receipt, warehouse receipt or order for the delivery of goods, or any other document which in the regular course of business or financing is treated as
adequately evidencing that the person in possession of it is entitled to receive, hold and dispose of the document and the goods it covers, and which purports to be issued by or addressed to a bailee and purporting to cover goods in the
bailee’s possession which are either identified or are fungible portions of an identified mass. “Document” includes, without limitation, electronic documents. 

“Domestic Subsidiary” means any direct or indirect Subsidiary of Debtor that is organized under the laws of
the United States of America, any State thereof, the District of Columbia, Canada, or any Province or Territory of Canada. 

“Equipment” has the meaning prescribed for such term as defined by the UCC, which definition is incorporated
herein by reference, wherever located, and whether now or hereafter existing and all parts thereof, all accessions thereto and all replacements therefor. The 

  

					
		 	2	  	MCC SECURITY AGREEMENT









 
Equipment includes, without limitation, with respect to a Person, all personal property used or useable by such Person in its business. 

“Excluded Property” means, with respect to any Credit Party, collectively, (i) property of such Credit
Party subject to Liens permitted by clauses (c), (d) or (m) of the definition of Permitted Liens solely in the event and to the extent that a grant or perfection of a Lien in favor of Secured Party on any such property is prohibited by or
results in a breach or termination of, or constitutes a default under, the documentation governing such Liens or the obligations secured by such Liens (other than to the extent that such terms would be rendered ineffective pursuant to
Section 9.406, 9.407, 9.408 or 9.409 of the UCC (or any successor provision or provisions) of any relevant jurisdiction and other than to the extent all necessary consents to creation, attachment and perfection of the Secured Party’s Liens
thereon have been obtained) and, in any event, immediately upon the ineffectiveness, lapse or termination of such terms or the obtainment of such consents, such property shall cease to constitute Excluded Property and shall be Pledged Collateral to
the extent otherwise provided for in the Loan Documents, (ii) any personal property lease, contract, permit, license, franchise or Letter-of-Credit Right of such Credit Party solely in the event and to the extent that a grant or perfection of a
Lien on such personal property lease, contract, permit, license, franchise or Letter-of-Credit Right is prohibited by applicable law or results in a breach or termination of, or constitutes a default under, any such personal property lease,
contract, permit, license, franchise or Letter-of-Credit-Right (other than to the extent that such law or terms would be rendered ineffective pursuant to Section 9.406, 9.407, 9.408 or 9.409 of the UCC (or any successor provision or provisions)
of any relevant jurisdiction and other than to the extent all necessary consents to creation, attachment and perfection of the Secured Party’s Liens thereon have been obtained) and, in any event, immediately upon the ineffectiveness, lapse or
termination of such law or terms or the obtainment of such consents, such personal property lease, contract, permit, license, franchise or Letter-of-Credit Right shall cease to constitute Excluded Property, and shall be Pledged Collateral to the
extent otherwise provided for in the Loan Documents, (iii) the voting equity interests of any Foreign Subsidiary, and (iv) any United States intent-to-use trademark applications to the extent that, and solely during the period in which,
the grant of a security interest therein would impair the validity or enforceability of such intent-to-use trademark applications under applicable federal law, provided that upon submission and acceptance by the United States Patent and Trademark
Office of an amendment to allege use pursuant to 15 U.S.C. Section 1060(a) (or any successor provision) such intent-to-use trademark application shall cease to constitute Excluded Property and shall be pledged Collateral to the extent otherwise
provided for in the Loan Documents. 
 “Foreign Subsidiary” means a Subsidiary of Debtor that is not a
Domestic Subsidiary. 
 “General Intangibles” has the meaning prescribed for such term as defined by the
UCC, which definition is incorporated herein by reference, and in any event includes, without limitation, all intangible personal property of every kind and nature (other than Accounts, Chattel Paper, Commercial Tort Claims, Deposit Accounts,
Documents, Instruments, Investment Property, Letter of Credit Rights, letters of credit and money), including, without limitation, contract rights, business records, rights and claims against carriers and shippers, customer lists, registrations,
licenses, franchises, tax refund claims, rights to indemnification, warranty or guaranty contract, claims for any damages arising out of or for breach or default under or in 

  

					
		 	3	  	MCC SECURITY AGREEMENT









 
connection with any contract, rights to exercise or enforce remedies, powers and privileges under any contract and rights and claims to any amounts payable under any contract of insurance,
including without limitation, business interruption, property, casualty, key employee life or any other insurance. 

“Instrument” has the meaning prescribed for such term as defined by the UCC, which definition is incorporated
herein by reference, and includes, without limitation, a negotiable instrument or any other writing that evidences a right to the payment of a monetary obligation, is not itself a security agreement or lease, and is of a type that in the ordinary
course of business is transferred by delivery with any necessary endorsement or assignment. 
 “Inventory”
has the meaning prescribed for such term as defined by the UCC, which definition is incorporated herein by reference, and includes, without limitation, with respect to a Person, goods (including goods in-transit) that (a) are held or to be held
by such Person for sale or lease or to be furnished under a contract of service, (b) are leased or to be leased by such Person as lessor or (c) consist of raw materials, work in process, finished goods or materials used or consumed in such
Person’s business. 
 “Investment Property” has the meaning prescribed for such term as defined by the
UCC, which definition is incorporated herein by reference, and includes, without limitation, a security (whether certificated or uncertificated) security entitlement, securities account, commodity contract, or commodity account. 

“IP Security Agreement” means each Patent, Trademark and Copyright Security Agreement that may from time to
time be executed by Debtor in favor of Secured Party, for the benefit of Lenders. 
 “Letter-of-Credit
Rights” has the meaning prescribed for such term as defined by the UCC, which definition is incorporated herein by reference, and includes, without limitation, a right to payment or performance under a letter of credit, whether or not the
beneficiary has demanded or is at the time entitled to demand payment or performance and whether or not evidenced by a writing. 

“Lien” means any interest in property securing an obligation owed to, or a claim by, a Person other than the
owner of the property, whether such interest is based on the common law, statute, or contract, and including a security interest, collateral assignment, charge, claim, or lien arising from a security agreement, mortgage, deed of trust, encumbrance,
pledge, hypothecation, assignment, deposit arrangement, conditional sale, trust receipt, lease, consignment or bailment for security purposes or similar agreement, or any contingent or other agreement to provide any of the foregoing. 

“Machinery” refers to Pledged Collateral that would be classified within the definition of
“Equipment” but for the fact that such items have become so affixed to the related real property that an interest has arisen therein under real property law. 

“Other Liable Party” means any Person, other than Debtor, who may now or may at any time hereafter be
primarily or secondarily liable for any of the Secured Obligations or the 

  

					
		 	4	  	MCC SECURITY AGREEMENT









 
Obligations or who may now or may at any time hereafter have granted to Secured Party a Lien upon any property as security for the Secured Obligations or the Obligations. 

“Pledged Collateral” means all property, of whatever type, which is described in Section 2.1 as being at
any time subject to a security interest granted hereunder to Secured Party. 
 “Proceeds” means, with
respect to any property of any kind, all proceeds of, and all other profits, products, rentals or receipts, in whatever form, arising from any sale, exchange, collection, lease, licensing or other disposition of, distribution in respect of, or other
realization upon, such property, including all claims against third parties for loss of, damage to or destruction of, or for proceeds payable under (or unearned premiums with respect to) insurance in respect of, such property (regardless of whether
Secured Party is named a loss payee thereunder), and any payments paid or owing by any third party under any indemnity, warranty, or guaranty with respect to such property, and any condemnation or requisition payments with respect to such property,
in each case whether now existing or hereafter arising. 
 “Proprietary Rights” means inventions, designs,
blueprints, plans, specifications, licenses, permits, patents, patent rights, copyrights, works which are the subject matter of copyrights, trademarks, service marks, trade names, trade styles, patent, trademark and service mark applications, trade
secrets, good will and all licenses and rights related to any of the foregoing, and all other rights under any of the foregoing, all extensions, renewals, reissues, divisions and continuations of any of the foregoing, and all rights to sue for past,
present and future infringement of any of the foregoing. 
 “Secured Obligations” has the meaning given to
such term in Section 2.2. 
 “UCC” means the Uniform Commercial Code in effect in the State of Texas,
as amended from time to time. 
 1.2. Other Definitions.  Reference is hereby made to the Loan Agreement
for a statement of the terms thereof. All capitalized terms used in this Agreement which are defined in the Loan Agreement and not otherwise defined herein shall have the same meanings herein as set forth therein. All terms used in this Agreement
which are defined in the UCC and not otherwise defined herein or in the Loan Agreement shall have the same meanings herein as set forth therein, except where the context otherwise requires. The parties intend that the terms used herein which are
defined in the UCC have, at all times, the broadest and most inclusive meanings possible. Accordingly, if the UCC shall in the future be amended or held by a court to define any term used herein more broadly or inclusively than the UCC in effect on
the date hereof, then such term, as used herein, shall be given such broadened meaning. If the UCC shall in the future be amended or held by a court to define any term used herein more narrowly, or less inclusively, than the UCC in effect on the
date hereof, such amendment or holding shall be disregarded in defining terms used herein. 
 1.3.
Attachments.  All exhibits or schedules which may be attached to this Agreement are a part hereof for all purposes. 

1.4. Amendment of Defined Instruments.  Unless the context otherwise requires or unless otherwise provided
herein, references in this Agreement to a particular agreement, 

  

					
		 	5	  	MCC SECURITY AGREEMENT









 
instrument or document (including, but not limited to, references in Section 2.1) also refer to and include all renewals, extensions, amendments, modifications, supplements or restatements
of any such agreement, instrument or document, provided that nothing contained in this Section shall be construed to authorize any Person to execute or enter into any such renewal, extension, amendment, modification, supplement or restatement. 

1.5. References and Titles.  All references in this Agreement to Exhibits, Articles, Sections, subsections,
and other subdivisions refer to the Exhibits, Articles, Sections, subsections and other subdivisions of this Agreement unless expressly provided otherwise. Titles appearing at the beginning of any subdivision are for convenience only and do not
constitute any part of any such subdivision and shall be disregarded in construing the language contained in this Agreement. The words “this Agreement”, “herein”, “hereof”, “hereby”, “hereunder” and
words of similar import refer to this Agreement as a whole and not to any particular subdivision unless expressly so limited. The phrases “this Section” and “this subsection” and similar phrases refer only to the Sections or
subsections hereof in which the phrase occurs. The word “or” is not exclusive, and the word “including” (in all of its forms) means “including without limitation”. Pronouns in masculine, feminine and neuter gender shall
be construed to include any other gender, and words in the singular form shall be construed to include the plural and vice versa unless the context otherwise requires. 

2. 
 SECURITY INTEREST

 2.1. Grant of Security Interest.  As collateral security for all of the Secured Obligations, Debtor
hereby pledges and assigns to Secured Party and grants to Secured Party a continuing security interest, lien and collateral assignment, for the benefit of Lender Parties, in and to all right, title and interest of Debtor in and to any and all of the
following property, whether now owned or existing or hereafter acquired or arising and regardless of where located (collectively, the “Pledged Collateral”): all Accounts, Inventory, Equipment, Machinery, any other goods, General
Intangibles, Chattel Paper, Letter of Credit Rights, Proprietary Rights, Instruments, Documents and documents of title, Investment Property, Deposit Accounts, securities accounts, commodities accounts, Commercial Tort Claims, money, cash, cash
equivalents, letters of credit, securities and other personal property of any kind and at any time held directly or indirectly by Debtor, all books and records, whether in tangible or intangible form, all other assets, if any, and all accessions to,
substitutions for and replacements, products and Proceeds of any of the foregoing; provided, however, that the Pledged Collateral shall not include the Excluded Property. 

In each case, the foregoing shall be covered by this Agreement, whether Debtor’s ownership or other rights therein are presently held or
hereafter acquired and howsoever Debtor’s interests therein may arise or appear (whether by ownership, security interest, claim or otherwise). 

2.2. Secured Obligations Secured.  The security interest created hereby by Debtor in the Pledged Collateral
constitutes continuing collateral security for all of the following obligations, indebtedness and liabilities, whether now existing or hereafter incurred or arising: 

  

					
		 	6	  	MCC SECURITY AGREEMENT









 (a) Obligations.  The payment by Borrower, as and when due and
payable, of all amounts from time to time owing by Borrower to Secured Party and/or any other Lender Party under or in respect of the Loan Agreement and the other Loan Documents. 

(b) Guaranteed Indebtedness.  The payment by Debtor, when due and payable, of all amounts from time to time
owing by Debtor under or in respect of the Guaranty or any of the other Loan Documents to which Debtor is a party, and the due performance by Debtor of all of its other respective obligations under or in respect of its Guaranty and such other Loan
Documents, in each case whether now existing or hereafter incurred or arising. 
 (c) Renewals.  All
renewals, extensions, amendments, modifications, supplements, or restatements of or substitutions for any of the foregoing. 

(d) Performance.  The due performance and observance by Debtor of all of its other obligations from time to
time existing under or in respect of any of the Loan Documents. 
 As used herein, the term “Secured Obligations” refers to
all present and future indebtedness, obligations and liabilities of whatever type which are described above in this section, including any interest which accrues after the commencement of any case, proceeding, or other action relating to the
bankruptcy, insolvency, or reorganization of Debtor. Debtor hereby acknowledges that the Secured Obligations are owed to the various Lenders and that each Lender is entitled to the benefits of the Liens given under this Agreement. It is the
intention of Debtor and Secured Party that this Agreement not constitute a fraudulent transfer or fraudulent conveyance under any state or federal law that may be applied hereto. Debtor and Administrative Agent each hereby acknowledges and agrees
that, notwithstanding any other provision of this Agreement: (a) the indebtedness secured hereby shall be limited to the maximum amount of indebtedness that can be incurred or secured by Debtor without rendering this Agreement subject to
avoidance under Section 548 of the United States Bankruptcy Code or any comparable provisions of any applicable state or federal law, and (b) the Collateral pledged by Debtor hereunder shall be limited to the maximum amount of Collateral
that can be pledged by Debtor without rendering this Agreement subject to avoidance under Section 548 of the United Stated Bankruptcy Code or any comparable provisions of any applicable state or federal law. 

3. 
 REPRESENTATIONS,
WARRANTIES AND COVENANTS 
 3.1. Representations and Warranties.  Debtor hereby represents and warrants
to Secured Party and each other Lender Party that each representation and warranty made in the Loan Agreement with respect to Debtor is true and correct on and as of the date hereof (except to the extent any such representations and warranties
relate solely to an earlier date) and further represents and warrants to Secured Party and Lenders as follows: 
 (a)
Name, Place of Business and Formation.  Debtor is a corporation organized under the laws of the Province of Ontario, Canada, and Ontario is Debtor’s location pursuant to the UCC. Debtor has not conducted business under any name
except the name in 

  

					
		 	7	  	MCC SECURITY AGREEMENT









 
which it has executed this Agreement, which is the exact name as it appears in Debtor’s organizational documents, as amended, as filed with Debtor’s jurisdiction of organization.
Debtor’s principal place of business and chief executive office, and the place where Debtor keeps its books and records concerning the Pledged Collateral is located at its address referenced in Section 5.1 below. 

(b) Ownership Free of Liens.  Debtor has good and marketable title to the Pledged Collateral, free and clear
of all Liens, encumbrances or adverse claims except for any Permitted Liens. No effective financing statement or other registration or instrument similar in effect covering all or any part of the Pledged Collateral is on file in any recording office
except any which have been filed (i) in favor of Secured Party relating to this Agreement or (ii) in connection with other Permitted Liens. None of the Pledged Collateral is in the possession of any Person other than Debtor or Secured
Party, except for Pledged Collateral being transported in the ordinary course of business. 
 (c) No Conflicts or
Consents.  Neither the ownership or the intended use of the Pledged Collateral by Debtor, nor the grant of the security interest by Debtor to Secured Party herein, nor the exercise by Secured Party of its rights or remedies hereunder,
will (i) conflict with any provision of (a) any domestic or foreign law, statute, rule or regulation, (b) the articles or certificate of incorporation, charter or bylaws of Debtor, or (c) any agreement, judgment, license, order
or permit applicable to or binding upon Debtor, or (ii) result in or require the creation of any Lien upon any assets or properties of Debtor except for Permitted Liens. Except as expressly contemplated in the Loan Documents, no consent,
approval, authorization or order of, and no notice to or filing with any court, governmental authority or third party is required in connection with the grant by Debtor of the security interest herein, or the exercise by Secured Party of its rights
and remedies hereunder. 
 (d) Security Interest.  Debtor has and will have at all times full right, power
and authority to grant a security interest in the Pledged Collateral to Secured Party as provided herein, free and clear of any Lien, adverse claim, or encumbrance other than Permitted Liens. This Agreement creates a valid and binding security
interest in favor of Secured Party in the Pledged Collateral, which security interest secures all of the Secured Obligations. 

(e) Perfection.  The taking possession by Secured Party of all money constituting Pledged Collateral from
time to time will perfect, and establish the first priority of, Secured Party’s security interest hereunder in such Pledged Collateral. Secured Party’s control of all Investment Property, Deposit Accounts, and Letter of Credit Rights
constituting Pledged Collateral from time to time will perfect, and establish the first priority of, Secured Party’s security interest hereunder in such Pledged Collateral. The filing of a financing statement with the secretary of state (or
equivalent governmental official) of the state in which Debtor is organized which sufficiently indicates all Proprietary Rights included within the Pledged Collateral, together with the filing of Debtor’s IP Security Agreement, if any, with the
United States Patent and Trademark Office and/or the United States Copyright Office will perfect, and establish the first priority (subject only to Permitted Liens) of, Secured Party’s security interest hereunder in all Proprietary Rights
included within the Pledged Collateral. The filing of a financing statement with the secretary of state (or equivalent governmental official) of the state in which Debtor is organized which sufficiently indicates all other Pledged Collateral will


  

					
		 	8	  	MCC SECURITY AGREEMENT









 
perfect, and establish the first priority (subject only to Permitted Liens) of, Secured Party’s security interest hereunder in such Pledged Collateral. No further or subsequent filing,
recording, registration, other public notice or other action is necessary to perfect or otherwise continue, preserve or protect such security interest except (i) for continuation statements described in UCC §9.515(d), (ii) for filings
required to be filed in the event of a change in the name, identity, or structure of Debtor or in connection with the relocation to any jurisdiction by Debtor, or (iii) in the event any financing statement filed by Secured Party relating hereto
otherwise becomes inaccurate or incomplete. 
 (f) Accounts.  Each Account (if any) represents the valid
and legally binding indebtedness of a bona fide Account Debtor arising from the sale or lease by Debtor of goods or the rendition by Debtor of services and is not subject to contra accounts, setoffs, defenses or counterclaims by or available to the
applicable Account Debtor except as disclosed to Secured Party in writing. Goods (if any) which have been delivered to, and services which have been rendered by Debtor to the applicable Account Debtor have been accepted by such Account Debtor, and
the amount shown as to each Account on Debtor’s books is the true and undisputed amount owing and unpaid thereon, subject only to discounts, allowances, rebates, credits and adjustments to which such Account Debtor has a right and which have
been disclosed to Secured Party in writing. 
 (g) Proprietary Rights.  All Proprietary Rights included
within the Pledged Collateral which are material to Debtor’s business as of the most recent Reporting Date are listed on Schedule 7.15 to the Loan Agreement. All such Proprietary Rights are valid and enforceable and are not subject to any
claim, judgment or administrative or arbitral decision that questions their validity or enforceability, Debtor’s purported rights thereunder, or Debtor’s rights to use the same in its business. 

(h) Documents, Instruments and Chattel Paper.  All Documents, Instruments and Chattel Paper included within
the Pledged Collateral and all signatures and endorsements thereon are complete, valid and genuine. 
 3.2. General
Covenants Applicable to Pledged Collateral.  Unless Secured Party shall otherwise consent in writing, Debtor will at all times comply with the covenants contained in the Loan Agreement which are applicable to it for so long as any part
of the Secured Obligations or the Commitment is outstanding. 
 4. 

REMEDIES, POWERS AND AUTHORIZATIONS 

4.1. Normal Provisions Concerning the Pledged Collateral. 

(a) Authorization to File Financing Statements. Debtor hereby irrevocably authorizes Secured Party at any time and
from time to time to file, without the signature of Debtor, in any jurisdiction any amendments to existing financing statements and any initial financing statements and amendments thereto that (a) indicate the Pledged Collateral (i) as
“all assets” of Debtor and all proceeds thereof, and all rights and privileges with respect thereto” or 

  

					
		 	9	  	MCC SECURITY AGREEMENT









 
words of similar effect, regardless of whether any particular asset comprised in the Pledged Collateral falls within the scope of Chapter 9 of the UCC, or (ii) as being of an equal or lesser
scope or with greater detail; (b) contain any other information required by subchapter E of Chapter 9 of the UCC for the sufficiency or filing office acceptance of any financing statement or amendment, including whether Debtor is an
organization, the type of organization and any organization identification number issued to Debtor; and (c) are necessary to properly effectuate the transactions described in the Loan Documents, as determined by Secured Party in its discretion.
Debtor agrees to furnish any such information to Secured Party promptly upon request. Debtor further agrees that a carbon, photographic or other reproduction of this Agreement or any financing statement describing any Pledged Collateral is
sufficient as a financing statement and may be filed in any jurisdiction by Secured Party. 
 (b) Power of
Attorney.  Debtor hereby appoints Secured Party as Debtor’s attorney in fact and proxy, with full authority in the place and stead of Debtor and in the name of Debtor or otherwise, from time to time in Secured Party’s
discretion, to take any action and to execute any instrument which Secured Party may deem necessary or advisable to accomplish the purposes of this Agreement (and as more specifically set forth in the Loan Agreement), Debtor hereby acknowledges that
such power of attorney and proxy are coupled with an interest, are irrevocable, and are to be used by Secured Party for the sole benefit of Lender Parties. 

(c) Performance by Secured Party.  If Debtor fails to perform any agreement or obligation contained herein,
Secured Party may itself perform, or cause performance of, such agreement or obligation, and the expenses of Secured Party incurred in connection therewith shall be payable by Debtor under Section 4.5. 

(d) Bailees.  If any Pledged Collateral is at any time in the possession or control of any warehouseman,
bailee or any of Debtor’s agents or processors, Debtor shall, upon the request of Secured Party, notify such warehouseman, bailee, agent or processor of Secured Party’s rights hereunder and instruct such Person to hold all such Pledged
Collateral for Secured Party’s account subject to Secured Party’s instructions. (No such request by Secured Party shall be deemed a waiver of any provision hereof which was otherwise violated by such Pledged Collateral being held by such
Person prior to such instructions by Debtor.) 
 4.2. Event of Default Remedies.  If an Event of Default
shall have occurred and be continuing, Secured Party may from time to time in its discretion, without limitation and without notice except as expressly provided below: 

(a) exercise in respect of the Pledged Collateral, in addition to any other rights and remedies provided for herein, under
the other Loan Documents, or otherwise available to it, all the rights and remedies of a secured party on default under the UCC (whether or not the UCC applies to the affected Pledged Collateral); 

(b) require Debtor to, and Debtor hereby agrees that it will at its expense and upon request of Secured Party forthwith,
assemble all or part of the Pledged Collateral as directed by Secured Party and make it (together with all books, records and information of Debtor relating thereto) available to Secured Party at a place to be designated by Secured Party which is
reasonably convenient to both parties; 

  

					
		 	10	  	MCC SECURITY AGREEMENT









 (c) prior to the disposition of any Pledged Collateral, (i) to the extent
permitted by applicable law, enter, with or without process of law and without breach of the peace, any premises where any of the Pledged Collateral is or may be located, and without charge or liability to Secured Party seize and remove such Pledged
Collateral from such premises, (ii) have access to and use Debtor’s books, records, and information relating to the Pledged Collateral, and (iii) store or transfer any of the Pledged Collateral without charge in or by means of any
storage or transportation facility owned or leased by Debtor, process, repair or recondition any of the Pledged Collateral or otherwise prepare it for disposition in any manner and to the extent Secured Party deems appropriate and, in connection
with such preparation and disposition, use without charge any copyright, trademark, trade name, patent or technical process used by Debtor; 

(d) reduce its claim to judgment or foreclose or otherwise enforce, in whole or in part, the security interest created hereby
by any available judicial procedure; 
 (e) dispose of, at its office, on the premises of Debtor or elsewhere, all or any
part of the Pledged Collateral, as a unit or in parcels, by public or private proceedings, and by way of one or more contracts (it being agreed that the sale of any part of the Pledged Collateral shall not exhaust Secured Party’s power of sale,
but sales may be made from time to time, and at any time, until all of the Pledged Collateral has been sold or until the Secured Obligations have been paid and performed in full), and at any such sale it shall not be necessary to exhibit any of the
Pledged Collateral; 
 (f) buy (or allow one or more of Lenders to buy) the Pledged Collateral, or any part thereof, at any
public sale; 
 (g) buy (or allow one or more of Lenders to buy) the Pledged Collateral, or any part thereof, at any
private sale; and 
 (h) apply by appropriate judicial proceedings for appointment of a receiver for the Pledged
Collateral, or any part thereof, and Debtor hereby consents to any such appointment. 
 Debtor agrees that, to the extent notice of sale
shall be required by law, at least ten (10) days’ notice to Debtor of the time and place of any public sale or the time after which any private sale is to be made shall constitute reasonable notification. Secured Party shall not be
obligated to make any sale of Pledged Collateral regardless of notice of sale having been given. Secured Party may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without
further notice, be made at the time and place to which it was so adjourned. 
 4.3. Application of
Proceeds.  If any Event of Default shall have occurred and be continuing, Secured Party may in its discretion apply any cash held by Secured Party as Pledged Collateral, and any cash proceeds received by Secured Party in respect of any
sale of, collection from, or other realization upon all or any part of the Pledged Collateral, in accordance with the terms of Section 4.7 of the Loan Agreement. 

4.4. Deficiency.  In the event that the proceeds of any sale, collection or realization of or upon Pledged
Collateral by Secured Party are insufficient to pay all Secured Obligations and 

  

					
		 	11	  	MCC SECURITY AGREEMENT









 
any other amounts to which Secured Party is legally entitled, Debtor shall be liable for the deficiency, together with interest thereon as provided in the governing Loan Documents or (if no
interest is so provided) at such other rate as shall be fixed by applicable law, together with the costs of collection and the reasonable fees of any attorneys employed by Secured Party or Lenders to collect such deficiency. 

4.5. Indemnity.  DEBTOR AGREES TO DEFEND, INDEMNIFY AND HOLD EACH INDEMNIFIED PERSON HARMLESS FROM AND
AGAINST ANY AND ALL INDEMNIFIED CLAIMS INCLUDING THOSE INDEMNIFIED CLAIMS WHICH RELATE TO OR ARISE OUT OF ANY INDEMNIFIED PERSON’S OWN NEGLIGENCE, provided, that no Debtor shall have any obligation hereunder to any Indemnified
Person with respect to Indemnified Claims resulting solely and directly from the willful misconduct or gross negligence of such Indemnified Person. The agreements in this Section shall survive any termination of this Agreement or any Guaranty or the
payment and performance in full of all of Borrower’s Obligations under the Loan Agreement. 
 4.6. Non
Judicial Remedies.  In granting to Secured Party the power to enforce its rights hereunder without prior judicial process or judicial hearing, Debtor expressly waives, renounces and knowingly relinquishes any legal right which might
otherwise require Secured Party to enforce its rights by judicial process. In so providing for non judicial remedies, Debtor recognizes and concedes that such remedies are consistent with the usage of trade, are responsive to commercial necessity,
and are the result of a bargain at arm’s length. Nothing herein is intended, however, to prevent Secured Party from resorting to judicial process at its option. 

4.7. Other Recourse.  Debtor waives any right to require Secured Party or any other Lender Party to proceed
against any other Person, to exhaust any Pledged Collateral or other security for the Secured Obligations, to have any Other Liable Party joined with Debtor in any suit arising out of the Secured Obligations or this Agreement, or to pursue any other
remedy in Secured Party’s power. Debtor further waives any and all notice of acceptance of this Agreement and of the creation, modification, rearrangement, renewal or extension for any period of any of the Secured Obligations of any Other
Liable Party from time to time. Debtor further waives any defense arising by reason of any disability or other defense of any Other Liable Party or by reason of the cessation from any cause whatsoever of the liability of any Other Liable Party. This
Agreement shall continue irrespective of the fact that the liability of any Other Liable Party may have ceased and irrespective of the validity or enforceability of any other Loan Document to which Debtor or any Other Liable Party may be a party,
and notwithstanding any death, incapacity, reorganization, or bankruptcy of any Other Liable Party or any other event or proceeding affecting any Other Liable Party. Until all of the Secured Obligations shall have been paid in full, no Debtor shall
have any right to subrogation and Debtor waives the right to enforce any remedy which Secured Party or any Lender has or may hereafter have against any Other Liable Party, and waives any benefit of and any right to participate in any other security
whatsoever now or hereafter held by Secured Party. Debtor authorizes Secured Party and each other Lender Party, without notice or demand, without any reservation of rights against Debtor, and without in any way affecting Debtor’s liability
hereunder or on the Secured Obligations, from time to time to (a) take or hold any other property of any type from any other Person as security for the Secured Obligations, and exchange, enforce, waive and release any or all of such other
property, (b) apply the Pledged Collateral or such other property and direct the order or 

  

					
		 	12	  	MCC SECURITY AGREEMENT









 
manner of sale thereof as Secured Party may in its discretion determine, (c) renew, extend for any period, accelerate, modify, compromise, settle or release any of the obligations of any
Other Liable Party in respect to any or all of the Secured Obligations or other security for the Secured Obligations, (d) waive, enforce, modify, amend or supplement any of the provisions of any Loan Document with any Person other than Debtor,
and (e) release or substitute any Other Liable Party. 
 4.8. Limitation on Duty of Secured Party in Respect of
Pledged Collateral.  Beyond the exercise of reasonable care in the custody thereof, Secured Party shall have no duty as to any Pledged Collateral in its possession or control or in the possession or control of any agent or bailee or as
to the preservation of rights against prior parties or any other rights pertaining thereto. Secured Party shall be deemed to have exercised reasonable care in the custody of the Pledged Collateral in its possession if the Pledged Collateral is
accorded treatment substantially equal to that which it accords its own property, and shall not be liable or responsible for any loss or damage to any of the Pledged Collateral, or for any diminution in the value thereof, by reason of the act or
omission of any warehouseman, carrier, forwarding agency, consignee or other agent or bailee selected by Secured Party in good faith. 

4.9. Appointment of Collateral Agents.  At any time or times, in order to comply with any legal requirement
in any jurisdiction, Secured Party may appoint any bank or trust company or one or more other Persons, either to act as co-agent or co-agents, jointly with Secured Party, or to act as separate agent or agents on behalf of Lenders, with such power
and authority as may be necessary for the effectual operation of the provisions hereof and may be specified in the instrument of appointment. In so doing Secured Party may, in the name and on behalf of Debtor, give to such co-agent or separate agent
indemnities and other protections similar to those provided in Section 4.5. 
 5. 

MISCELLANEOUS 

5.1. Notices.  Any notice or request hereunder shall be given to Debtor or to Secured Party in the manner as
set forth in the Loan Agreement. 
 5.2. Amendments.  No amendment of any provision of this Agreement shall
be effective unless it is in writing and signed by Debtor and Secured Party, and no waiver of any provision of this Agreement, and no consent to any departure by Debtor therefrom, shall be effective unless it is in writing and signed by Secured
Party, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given and to the extent specified in such writing. In addition, all such amendments and waivers shall be effective only if
given with the necessary approvals of Lenders as required in the Loan Agreement. 
 5.3. Preservation of
Rights.  No failure on the part of Secured Party or any other Lender Party to exercise, and no delay in exercising, any right hereunder or under any other Loan Document shall operate as a waiver thereof; nor shall any single or partial
exercise of any such 

  

					
		 	13	  	MCC SECURITY AGREEMENT









 
right preclude any other or further exercise thereof or the exercise of any other right. Neither the execution nor the delivery of this Agreement shall in any manner impair or affect any other
security for the Secured Obligations. The rights and remedies of Secured Party provided herein and in the other Loan Documents are cumulative and are in addition to, and not exclusive of, any rights or remedies provided by law or otherwise. The
rights of Secured Party under any Loan Document against any party thereto are not conditional or contingent on any attempt by Secured Party to exercise any of its rights under any other Loan Document against such party or against any other Person.

 5.4. Severability.  If any term or provision of this Agreement is adjudicated to be invalid under
applicable laws or regulations, such provision shall be inapplicable to the extent of such invalidity or unenforceability without affecting the validity or enforceability of, the remainder of this Agreement which shall be given effect so far as
possible. 
 5.5. Survival of Agreements.  It is the express intention and agreement of the parties hereto
that all obligations, covenants, agreements, representations, warranties, waivers and indemnities made by Debtor herein shall survive the execution, delivery and termination of this Agreement until all of Borrower’s Obligations under the Loan
Agreement (other than contingent indemnification obligations, to the extent no claim giving rise thereto has been asserted) are performed in full and indefeasibly paid in full in cash and the Guaranty is terminated. 

5.6. Other Liable Parties.  Neither this Agreement nor the exercise by Secured Party or the failure of
Secured Party to exercise any right, power or remedy conferred herein or by law shall be construed as relieving any Other Liable Party from liability on the Secured Obligations or any deficiency thereon. 

5.7. Assignment. 

(a) This Agreement shall inure to the benefit of Secured Party, all future holders of the Secured Obligations or any of the
Pledged Collateral and all Transferees (as defined below), and each of their respective successors and permitted assigns. No Debtor may assign, delegate or transfer this Agreement or any of its rights or obligations under this Agreement, its
Guaranty or any other Loan Document without the prior written consent of Secured Party and Required Lenders. No rights are intended to be created under this Agreement or under any other Loan Document for the benefit of any third party donee,
creditor or incidental beneficiary of Debtor. Nothing contained in this Agreement or any other Loan Document shall be construed as a delegation to Secured Party of Debtor’s duty of performance, including, without limitation, any duties under
any account or contract in which Secured Party has a security interest or Lien. This Agreement shall be binding upon Debtor and its respective heirs and assigns. 

(b) Debtor acknowledges that Secured Party and the other Lender Parties at any time and from time to time may sell, assign or
grant participating interests in or transfer all or any part of its rights or obligations under, this Agreement to one or more persons, pursuant to the terms set forth in the Loan Agreement (each such transferee, assignee or purchaser, a
“Transferee”). In such case, the Transferee shall have all of the rights and benefits with respect to the portion of the Secured Obligations, the Pledged Collateral, this Agreement, and the other


  

					
		 	14	  	MCC SECURITY AGREEMENT









 
Loan Documents held by it as fully as if such Transferee were the original holder thereof (including without limitation rights of set-off and recoupment), and shall become vested with all of the
powers and rights given to Secured Party and/or a Lender Party as applicable hereunder with respect thereto, and shall be deemed to be a “Secured Party” and/or Lender Party, as applicable for all purposes hereunder, the predecessor Secured
Party or Lender Party shall thereafter be forever released and fully discharged from any liability or responsibility hereunder with respect to the rights and interests so assigned, and either Secured Party or any Transferee may be designated as the
sole agent to manage the transactions and obligations contemplated herein. Debtor hereby grants to any Transferee or any assignee or other transferee or Secured Party a continuing security interest and Lien in the Pledged Collateral and any
deposits, accounts, instruments, moneys or other property actually or constructively held by such Transferee, assignee or transferee as security for such Person’s interest in the Secured Obligations, the Pledged Collateral, its Guaranty and/or
this Agreement and/or the other Loan Documents. 
 (c) Notwithstanding any other provision of this Agreement, any Guaranty
or any other Loan Document, Secured Party may disclose to any Transferee, all information, and may furnish to such Transferee copies of reports, financial statements, certificates, and documents obtained under any provision of this Agreement or any
Loan Document. 
 5.8. Termination.  This Agreement shall be effective on the date hereof and shall
continue in full force and effect until full performance and satisfaction and indefeasible payment in full in cash of all of the Secured Obligations (other than contingent indemnification obligations, to the extent no claim giving rise thereto has
been asserted) and termination of the Loan Agreement, Guaranty and the other Loan Documents, all in accordance with such Loan Documents, and the rights and powers and security interests and Liens granted to Secured Party hereunder and the financing
statements filed pursuant hereto shall continue in full force and effect notwithstanding the fact that the Obligations of the Borrower under the Loan Agreement may from time to time be temporarily in a zero or credit position, until all of the
Secured Obligations (other than contingent indemnification obligations, to the extent no claim giving rise thereto has been asserted) have been indefeasibly paid in full in cash and performed and satisfied in full and the Loan Documents have been
terminated in accordance with their terms. Debtor waives any rights which it may have under the UCC or otherwise to demand the filing of termination statements with respect to the Pledged Collateral, and Secured Party shall not be required to send
such termination statements to Debtor, or to file them with any filing office, unless and until this Agreement shall have been terminated in accordance with its terms. 

5.9. Governing Law. 

(a) THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF TEXAS WITHOUT REGARD TO ITS CONFLICTS OF LAW PRINCIPLES. 
 (b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO
THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF TEXAS OR IN THE UNITED STATES DISTRICT 

  

					
		 	15	  	MCC SECURITY AGREEMENT









 
COURT FOR THE NORTHERN DISTRICT OF TEXAS, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH PARTY THERETO CONSENTS TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH PARTY THERETO
IRREVOCABLY WAIVES ANY OBJECT, INCLUDING ANY OBJECTION TO VENUE ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING IN SUCH JURISDICTION. NOTHWITHSTANDING THE FOREGOING, SECURED
PARTY SHALL EACH HAVE THE RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST ANY CREDIT PARTY OR ITS PROPERTY IN THE COURTS OF ANY OTHER JURISDICITON AS SECURED PARTY DEEMS NECESSARY OR APPROPRIATE IN ORDER TO EXERCISE REMEDIES WITH RESPECT TO THE
COLLATERAL. 
 5.10. Entire Agreement.  This Agreement, each Guaranty and the other Loan Documents to
which Debtor is a party constitute the entire agreement between Debtor and Secured Party with respect to the subject matter hereof and thereof, and supersede all prior agreements and understandings, if any, relating to the subject matter hereof or
thereof, which are hereby terminated, null and void and of no further force or effect. Any promises, representations, warranties or guarantees not herein contained and hereinafter made shall have no force and effect unless in writing, signed by
Debtor and Secured Party. Neither this Agreement nor any portion hereof may be changed, modified, amended, restated, waived, supplemented, canceled or terminated orally or by any course of dealing or in any other manner other than by an agreement in
writing signed by both Secured Party and Debtor. Any waiver of this Agreement by Secured Party shall be limited solely to the express terms and provisions of such waiver. Each party to this Agreement acknowledges that it has been advised by counsel
in connection with the negotiation and execution of this Agreement, each Guaranty and the other Loan Documents and is not relying upon oral representations or statements inconsistent with the terms and/or provisions of this Agreement. 

5.11. Counterparts; Fax.  This Agreement may be separately executed in any number of counterparts, all of
which when so executed shall be deemed to constitute one and the same Agreement. This Agreement may be validly executed and delivered by facsimile or other electronic transmission. 

5.12. Waiver of Jury Trial.  DEBTOR, SECURED PARTY AND ANY OTHER LENDER PARTY EACH IRREVOCABLY WAIVES ITS
RESPECTIVE RIGHT TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, ANY GUARANTY, THE OTHER LOAN DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION, PROCEEDING OR
OTHER LITIGATION OF ANY KIND BROUGHT BY ANY OF THEM AGAINST THE OTHER, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. DEBTOR, SECURED PARTY AND EACH OTHER LENDER PARTY EACH AGREES THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE
TRIED BY A COURT WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE
OR 

  

					
		 	16	  	MCC SECURITY AGREEMENT









 
IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT, ANY GUARANTY OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT, ANY GUARANTY AND THE OTHER LOAN DOCUMENTS, WHETHER OR NOT SPECIFICALLY SET FORTH THEREIN. 

5.13. Loan Document.  This Agreement is a “Loan Document”, as defined in the Loan Agreement,
and, except as expressly provided herein to the contrary, this Agreement is subject to all provisions of the Loan Agreement governing such Loan Documents. 

5.14. No Oral Agreements.  THIS AGREEMENT, EACH GUARANTY AND THE OTHER LOAN DOCUMENTS TO WHICH DEBTOR IS A
PARTY REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. 

[The remainder of this page is intentionally left blank.] 

  

					
		 	17	  	MCC SECURITY AGREEMENT









 IN WITNESS WHEREOF, Debtor has executed and delivered this Agreement as of the
date first above written. 
  

			
	 DEBTOR:

	
	 1328158 ONTARIO INC.

		
	 By:
	 	 /s/ Darren Richardson





			
	 Name:
	 	 Darren Richardson



 

			
	 Title:
	 	 President & CEO




  

					
		 		  	MCC SECURITY AGREEMENT









 
			
	 SECURED PARTY:

	
	 NEWSTAR BUSINESS CREDIT, LLC,

as Secured Party

		
	 By:
	 	  /s/ Greg Gentry





			
	 Name:
	 	  Greg Gentry





			
	 Title:
	 	  Senior Vice President




  

					
		 	2	  	MCC SECURITY AGREEMENT









 Schedule 1 

Commercial Tort Claims 

None. 

  

					
		 		  	MCC SECURITY AGREEMENT