AGREEMENT
AGREEMENT
THIS
AGREEMENT is executed effective the ____ day of June, 2010, between and among
GROK SOFTWARE, INC., a
Delaware corporation, (“GROK”), FUTURE NOW GROUP, INC., a
Nevada corporation (“FUTR”), FUTURE NOW, INC., a Delaware
corporation (“FNI”),
INTELLECTUAL PROPERTY LICENSING
GROUP, INC., a Delaware corporation ("IPLG"), ELEMENTAL BUSINESS, INC., a
Utah corporation (“EBI”), FUTURE NOW CONSULTING, INC., a
Delaware corporation (“FNC” and together with GROK,
FUTR, FNI, IPLG and EBI, individually and collectively, jointly and severally,
the “Borrower”) with
offices at 00 Xxxxxxxx Xxxxxx Xxxx, Xxxxxxxxx, XX 00000 and PROFESSIONAL OFFSHORE OPPORTUNITY
FUND, LTD (“POOF” or the “Lender”).”
R E C I T
A L S:
WHEREAS,
on or about October 30, 2007, FUTR issued a Secured Convertible
Debenture in the original principal amount of (i) $1,666,667 to POOF and (ii)
$333,333 to Professional Traders Fund (which debenture was assigned to POOF
contemporaneously with this Agreement) (collectively, the “Debenture”), which
Debenture was secured by, amongst other things, that certain Security Agreement
dated October 30, 2007, executed by FUTR in favor of Lender (“Security
Agreement”). The Debenture, the Security Agreement and any related loan
documents may be referred to collectively as the Loan Documents.
WHEREAS,
FUTR is in default under the Security Agreement and the
Debenture. The aforesaid default consists of FUTR's failure to make
certain payments to Lender when due and FUTR's failure to repay the indebtedness
evidenced by the Debenture following Lender's acceleration thereof as set forth
in more detail in Lender’s prior letter to Debtor dated April 8,
2009.
WHEREAS,
contemporaneously with this Agreement, Lender intends to foreclose on the
following personal property collateral and retain in partial satisfaction
($100,000) of the Debenture of (i) 5,448,021 shares of capital stock issued by
Future Now, Inc., a Delaware corporation (“FNI”), in the name of Future Now
Group, Inc., a Nevada corporation, represented by certificate no. 23 (the “FNI
Stock”) and which FNI Stock represents 100% of the issued and outstanding shares
of FNI; (ii) 27,533 shares of capital stock issued by Elemental
Business, Inc., a Utah corporation (“EBI”), in the name of Future Now Group,
Inc., a Nevada corporation, represented by certificate no. 18 (the “EBI Stock”)
and which EBI Stock represents 100% of the issued and outstanding shares of EBI;
(iii) 36,681,883 shares of capital stock issued by Future Now Group, Inc., in
the name of Xxxxxxxxx Holdings, LLC and pledged to Lender under that certain
pledge agreement dated October 30, 2007 (the “FUTR Stock”) and (iv) that certain
demand note in the amount of $1,083,587 made by FNI in favor of Future Now
Group, Inc. (the “FNI Loans”, together with the FNI
Stock, the EBI Stock and the FUTR Stock, the “Foreclosed
Collateral”).
WHEREAS,
after the foreclosure in the preceding paragraph on the Foreclosed Collateral,
the outstanding amount of the Debenture (including all accrued and unpaid
interest) shall be $1,800,000;
WHEREAS, the above
described Debenture, together with all interest, penalties and fees incurred in
connection therewith, is referred to hereafter as the “Prior Debt” and all loan
agreements, notes, security agreements, guaranties, mortgages and other
documents executed in connection with the Prior Debt are hereafter referred to
as the “Prior Loan Documents.”
NOW,
THEREFORE, in consideration of the mutual agreements between the parties,
it is agreed as follows:
1. RESTRUCTURE AND NEW
LENDING. Pursuant to this Agreement, the parties agree to a
complete restructuring of the Prior Debt, all to be effectuated through the
issuance of amended and restated instruments, new instruments and common
stock. This Agreement together with all notes, security agreements,
mortgages, guaranties, securities and other documents and instruments executed
to effectuate this Agreement shall be referred to hereafter as the “Restructure
Documents.”
2. CLOSING. Subject
to all of the terms and conditions set forth in this Agreement being satisfied,
the closing of the transactions contemplated by this Agreement (the “Closing”)
shall take place at the offices of the Lender’s counsel on such date, at such
place and at such time (the “Closing Date”) within two (2) business days after
the satisfaction or waiver of the last of the conditions set forth in Section 7
and hereof as shall be determined by the mutual consent of the parties
hereto.
3. DEBENTURE. In
accordance with this Agreement, the Debenture shall be amended and restated as
set forth below.
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3.1.
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Amended
& Restated Note. At
Closing, Borrower will sign an amended and restated note in form
and substance and payable on the terms approved by Lender (the “Amended and
Restated Note”) in the amount of $1,800,000. The amended
and restated note shall amend and restate the
Debenture. Interest will accrue from the Closing and will be
paid at the Maturity Date. Beginning December 31,
2010, Borrower will make mandatory prepayments of the Amended
and Restated Note each quarter from Excess Cash Flow (as defined in
Section 17 of the Note). The Amended and Restated Note shall
mature and become due 48 months after closing, at which time, Borrower will
make a balloon payment of the entire outstanding principal balance
together with all accrued interest and other charges, if
any. The Amended and
Restated Note will be secured by a first priority security interest
covering all existing and future assets of Borrower, including but not
limited to, accounts receivable, inventory, equipment, and
intangibles.
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3.2.
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Interest. Interest
on the Amended and Restated Note will accrue at the rate of 15% per
annum. All interest on the Amended and Restated Note will be
calculated for the actual number of days elapsed at a per diem charge
based on a year consisting of 360
days.
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3.3.
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Prepayment. The
Amended and Restated Note shall be subject to mandatory prepayment as
follows: (A) the outstanding principal amount of the Loan shall
be immediately prepaid by an amount equal to 100% of all Net Cash Proceeds
(as defined in Section 17 of the Note); and (B) beginning December 31,
2010, the outstanding principal amount of the Loan shall be immediately
prepaid by an amount equal to the Excess Cash Flow (as defined in Section
17 of the Note), within forty-five (45) days after the end of such fiscal
quarter. Amounts prepaid hereunder shall be applied first to
the outstanding principal amount of the Amended and Restated
Note.
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4. COLLATERAL
SECURITY. The performance of all covenants and agreements
contained in this Agreement and in the other documents executed or delivered as
a part of this transaction and the payment of the notes and all renewals,
amendments and modifications thereof shall be secured by the following, which
shall be delivered at the Closing:
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4.1.
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Security
Agreement. Borrower will grant to the
Lender a security interest covering the
following:
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4.1.1.
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Accounts. All
of Borrower’s accounts and contracts receivable of any kind whether now
existing or hereafter arising (herein called the “Accounts”); all chattel
papers, documents and instruments relating to the Accounts; and all rights
now or hereafter existing in and to all security agreements, leases, and
other contracts securing or otherwise relating to any Accounts or any such
chattel papers, documents and
instruments;
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4.1.2.
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Furniture, Fixtures,
and Equipment. All of Borower’s furniture, fixtures and
equipment in all of its forms whether now owned or hereafter acquired and
wherever located (herein called the “Equipment”); all parts thereof and
all accessions or additions thereto, whether now owned or hereafter
acquired;
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4.1.3.
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General
Intangibles. All of Borrower’s general intangibles of
any kind whether now existing or hereafter arising (herein called the
“General Intangibles”); all chattel papers, documents and instruments
relating to the General Intangibles; and all rights now or hereafter
existing in and to all security agreements, leases, licenses, permits,
patents, distribution agreements and contracts securing or otherwise
relating to any General Intangibles or any such chattel papers,
documents and instruments and all of Borrower’s lien rights against other
persons whether statutory, contractual, or by common law with respect to
the leases, Inventory or other collateral described in this
Agreement;
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4.1.4.
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Inventory. All
of Borrower’s inventory in all of its forms whether now owned or hereafter
acquired and wherever located (herein called the “Inventory”), and all
accessions or additions thereto and products thereof, whether now owned or
hereafter acquired;
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4.1.5.
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Other. Without
in any way limiting or modifying the foregoing in any respect, all of
Borrower’s goods, chattels, business records, contracts, contract rights,
advertising agreements, tax refunds, documents of title, fixtures,
insurance policies and proceeds, patents, trademarks, service marks,
logos, trade names, copyrights and applications therefor, licenses,
licensing fees, permits, approvals, consents, certificates, stock,
surveys, engineering reports, tools, landscaping, machinery, furniture,
furnishing, business machines, appliances, vehicles, trailers, rolling
stock, deposits, security deposits, money, securities, claims, demands,
causes of action, refunds, rebates, income and all other tangible and
intangible real, personal or mixed property whether now owned or hereafter
acquired;
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4.1.6.
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Additional
Property. Any additional Property from time to time
delivered to or deposited with the Lender as security pursuant to the
terms of this Agreement; and
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4.1.7.
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Proceeds. All
proceeds, products, additions to, replacements of, substitutions for, and
accessions of any and all Property described
above.
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The
property described in this section shall be referred to hereafter as the
“Collateral.”
5. PLEDGE
AGREEMENT. GROK and any other Borrower will pledge all of
their equity interests held by them in any other entity Borrower, including
without limitation, the FNI Stock and the EBI Stock being contributed by Lender
to GROK pursuant to Section 6 below.
6. CONTRIBUTION OF COLLATERAL
FOR PREFERRED STOCK. At the Closing, Lender will
contribute the FNI Stock, the EBI Stock and the FNI Loans to GROK in
exchange for 1 share of GROK’s Series A Convertible Preferred Stock (“Series A
Preferred”), the terms of which are attached hereto as Exhibit
A.
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6.1.
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Number of Conversion
Shares. The Series A Preferred is convertible into that
shares of GROK’s common stock, par value $0.001 per shares (“Common
Stock”) as follows: (i) 12.5% of Common Stock if the Amended
and Restated Note if repaid in full on or before March 31, 2011; . (ii)
15% of Common Stock if the Amended and Restated Note if repaid in full on
or before March 31, 2012; (i) .20% of Common Stock if the Amended and
Restated Note if repaid in full anytime after March 31, 2012 (the
“Conversion Shares”).
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6.2.
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Taxes.
The
issuance of certificates for the Conversion Shares shall be made without
charge to the Lender for any documentary stamp or similar taxes that may
be payable in respect of the issue or delivery of such
certificate.
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7. CONDITIONS OF
CLOSING. The obligations of Lender to perform this Agreement
and consummate the transactions contemplated hereby, is subject to the
performance by Borrower of each of the following conditions
precedent:
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7.1.
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Restructure
Documents. The Restructure Documents and all other
instruments and documents incidental to the transactions contemplated
hereby shall have been duly executed, acknowledged (where appropriate),
and delivered to Lender by Borrower, all in form and substance
satisfactory to Lender.
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7.2.
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Bridge Note
Holders. Each of those certain note holders set forth on
Schedule 7.2 attached hereto have executed release agreements releasing
FUTR from any and all liability thereunder, in form and substance
satisfactory to Lender.
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7.3.
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Prohibitive
Orders. No order, writ or injunction of any court or
administrative agency is in effect or is being sought prohibiting the
transactions contemplated by this Agreement or the other Restructure
Documents.
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7.4.
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Authority. The
Lender shall have received a certificate of incorporation, certificate of
good standing, a certified copy of the bylaws and certified copies of
corporate resolutions and other documents reasonably required to authorize
the execution, delivery and performance of the Restructure Documents by
each Borrower, all in form and substance satisfactory to the
Lender.
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7.5.
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Representations and
Warranties. The representations and warranties set forth in this
Agreement shall be true and correct on and as of Closing, the initial
advance, and each additional advance with the same effect as if such
representations
and warranties
had been made on and as of such date and there shall have
occurred.
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7.6.
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No Default.
There shall not exist any Event of Default under this Agreement or any
event which, with the giving of notice or the lapse of time (or both)
would become an Event of Default thereunder;
and
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7.7.
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Deliveries. Borrower
shall have delivered the following to the
Lender:
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7.7.1.
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Note. The
Amended and Restated Note;
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7.7.2.
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Preferred
Stock. The Series A Preferred
Stock;
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7.7.3.
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Security
Agreements. A security agreement and a pledge agreement duly
executed by each Borrower, in form and substance satisfactory
to the Lender, granting the Lender a security interest in the
Collateral;
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7.7.4.
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Resolutions.
Copies of resolutions of the board of directors of each Borrower
authorizing the execution, delivery and performance of the Restructure
Documents by each Borrower
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7.7.5.
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Incorporation
Documents. Each Borrower shall deliver to Lender copies
of its articles/certificate of incorporation (certified by the Secretary
of State of its jurisdiction of incorporation and
bylaws;
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7.7.6.
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Good Standing
Certificates. Each Borrower shall deliver to Lender a
good standing certificate from its jurisdiction of incorporation, dated
within 5 days of the Closing;
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7.7.7.
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Release from Bridge
Note Holders. Borrower shall have delivered to Lender
executed copies of the release agreements referred to in Section 7.2
above.
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7.7.8.
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Schedules. All
collateral schedules, financing statements, security interest,
subordination agreements, releases and termination statements which the
Lender may request to assure the creation, perfection and priority of the
security interests created by the security agreement;
and
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7.7.9.
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UCC Financing
Statements. UCC financing statements describing the collateral
securing the repayment of the indebtedness and UCC financing statements
for each Borrower.
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8. REPRESENTATIONS AND
WARRANTIES. To induce the Lender to enter into this Agreement,
each Borrower jointly and severally represent and warrant to the Lender
that:
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8.1.
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Existence and
Power. Each Borrower is and will continue to
be corporations duly formed and validly existing in good
standing under the laws of their respective states of
organization and are authorized and qualified to do business in
each state where, because of the nature of the activities or assets, such
qualification is required, except those states where failure to so qualify
will not have a material adverse effect; each Borrower has adequate power,
authority, and legal right to own, operate and hold the Collateral; each
Borrower is duly authorized, qualified and licensed under all applicable
laws, regulations, ordinances or orders of public authorities to carry on
their business in the operation and ownership of the Collateral; each
Borrower has adequate authority, power and legal right to enter into,
execute, deliver and perform the terms of the Restructure Documents, to
borrow money and to give security for borrowings as contemplated by the
Restructure Documents and to consummate the transactions contemplated
thereby, and in doing so, no Borrower will violate any law or the
provisions of any articles, charter or bylaws or any other agreement or
instrument binding upon such Borrower or the Collateral. The
Restructure Documents, upon their execution and delivery, will constitute
valid, legal and binding Indebtedness of each Borrower, enforceable in
accordance with their terms, subject only to applicable bankruptcy,
insolvency or similar laws generally affecting the enforcement of
creditor’s rights.
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8.2.
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No
Usury. The transaction evidenced by this Agreement does
not violate any usury law or other law relating to the payment of interest
on loans.
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8.3.
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Regulatory
Compliance. The authorization, execution, delivery, and
performance of this Agreement and each and every Restructure Document are
not and will not be subject to the jurisdiction, approval or consent of,
or to any requirement of registration with or notification to, any
federal, state or local regulatory body or administrative agency, and any
notice filings under federal and state securities
laws;
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8.4.
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Financial
Statements. Financial statements furnished to the Lender
by Borrower were prepared in accordance with generally accepted accounting
principles consistently applied, except as expressly therein set
forth. They present fairly the financial condition of Borrower
as of the dates thereof. The annual reports disclose fully all
liabilities of Borrower whether or not contingent, with respect to any
pension plan. Since the date of the most recent financial
statement, there has been no material adverse change in the financial
condition of Borrower other than as disclosed to the
Lender;
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8.5.
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Liabilities. No
Borrower has any material liabilities, direct or contingent, except those
to Lender and those disclosed to the
Lender;
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8.6.
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Full
Disclosure. Neither this Agreement, the other
Restructure Documents nor any statement or documents referred to herein or
delivered to the Lender by any Borrower, or any other party on their
behalf contains any untrue statement or omits to state a material fact
necessary to make the statements herein or therein not
misleading;
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8.7.
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Litigation. Except
as disclosed in writing to the Lender, there is no action, suit proceeding
or investigation pending, or threatened against any Borrower which, if
adversely determined, would adversely affect any Borrower or impair the
ability of Borrower to carry on their businesses substantially as now
conducted or contemplated or result in any substantial liability not
adequately covered by insurance;
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8.8.
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No
Default. The making and performance by each Borrower of
this Agreement will not violate any provision or constitute a default
under any indenture, agreement, or instrument to which such Borrower may
be a party or by which Borrower or any of the Collateral is bound or
affected;
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8.9.
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Ownership of
Collateral. Borrower has good and marketable title to
the Collateral;
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8.10.
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No
Encumbrances. All assets of Borrower are free and clear
of all liens, security interests, and encumbrances, except those
specifically permitted by Lender;
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8.11.
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Priority. When
the financing statements delivered pursuant to this Agreement are filed in
the proper offices where Borrower is incorporated, the Lender will have a
valid and perfected first security interest in the Collateral described in
the Security Agreement, subject to no prior security interest, assignment,
lien or encumbrance except interests, if any, specifically approved by the
Lender in writing;
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8.12.
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Pledge
Agreement. The FNI Stock and the EBI Stock represent
100% of the issued and outstanding stock of FNI and EBI, respectively and
are duly and validly issued and are full paid and non-assessable shares of
FNI and EBI. When deposited with Lender pursuant to the
Pledge Agreement, the FNI Stock and the EBI Stock (the “Pledged
Securities”) will be duly and validly pledged in accordance with
applicable law, and Borrower warrants, covenants and agrees to defend
Lender’s right and title in and to the Pledged Securities against the
claims and demands of all persons and entities. Borrower is the
sole legal and equitable owner of, and has good title to tall of the
Pledged Securities, free and clear of all claims, security interests,
mortgages, pledges, liens and other encumbrances of every nature
whatsoever, but subject to any restrictions imposed by the securities
laws, except in favor of Lender. The security interest
described in the Pledge Agreement represents a valid first lien on and
security interest in the Pledged Securities superior and prior to the
rights of all third persons or
entities.
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8.13.
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Permits. Each
Borrower has, or will obtain, all governmental and private permits,
certificates, consents and franchises which are material to the
business, property, assets, operations or condition, financial or
otherwise, of such Borrower to carry on their businesses as now being
conducted. All such governmental and private permits,
certificates, consents and franchises are, or will be, valid and
subsisting, and there is no existing violation
thereof;
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8.14.
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Taxes. Except
as disclosed to the Lender, each Borrower has filed all foreign, federal,
state and local tax returns which are required to be filed and have paid
or made provisions for payment of all taxes which have or may become due
pursuant to said returns or pursuant to any assessment. No
Borrower knows of any basis for the assessment of any deficiency
taxes;
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8.15.
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Location of Business
Records. Each Borrower will give the Lender written
notice of each location of such Borrower at which inventory and records of
any such Borrower pertaining to Collateral are kept. Except as
such notice is given, all records of Borrower pertaining to the Collateral
are and will continue to be kept at Borrower’s addresses as they appear in
this Agreement, or at such other address as Borrower designate for such
purpose in a written notice to the
Lender.
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8.16.
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ERISA. Each
qualified retirement plan of each Borrower presently conforms and is
administered in a manner consistent with the Employee Retirement Income
Security Act of 1974.
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8.17.
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Survival of
Representations. All representations and warranties made
by each Borrower herein will survive the Closing, and any investigation at
any time made by or on behalf of the Lender will not diminish the Lender’s
right to rely thereon. All statements contained in any
certificate or other instrument delivered by or on behalf of a Borrower
under or pursuant to this Agreement or in connection with the transactions
contemplated hereby will constitute representations and warranties made by
each Borrower hereunder.
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9. AFFIRMATIVE
COVENANTS. Until payment in full of the Amended and Restated
Note, each Borrower jointly and severally agree that, unless the Lender
otherwise consents in writing, each Borrower will perform or cause to be
performed the following agreements:
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9.1.
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Performance of
Obligations. Each Borrower will promptly and punctually
perform all of the obligations hereunder and under the Restructure
Documents, and under all other instruments executed or delivered pursuant
thereto;
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9.2.
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Maintenance of
Collateral. Maintain their properly in good working
order and condition; make all needful and proper repairs, replacements,
additions and improvements thereto.
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9.3.
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Equipment Appraisal
Updates. Equipment appraisal update inspections will be
performed every six months.
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9.4.
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Financial Reports and
Condition. Borrower will furnish or cause to be
furnished to the Lender, prepared in accordance with generally accepted
accounting principles, and certified as to truth and accuracy by either
the chief executive officer or chief financial officer of
each Borrower, the
following:
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9.4.1.
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Quarterly Financial
Statements. Borrower will deliver quarterly financial
statements of at least compiled quality by the 45th
day following the end of each
quarter.
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9.4.2.
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Annual Financial
Statements. Borrower will furnish to the Lender their
audited annual financial statement on or before April 15th
of each year.
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9.5.
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Other
Information. At the Lender’s request from time to time,
a Borrower will provide the Lender with such other information as the
Lender may reasonably request regarding the business affairs or financial
condition of such Borrower, and each Borrower will provide access to the
Lender at all reasonable times to all agreements, purchase and sale
contracts, maintenance agreements, and all other documents and information
relating to the Collateral.
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9.6.
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Taxes. All
taxes which hereafter become due and assessments, governmental charges and
levies which are hereafter imposed on any Borrower or their respective
assets, income and profits will be paid prior to the date on which
penalties attach thereto; provided that a Borrower will not be required to
pay any such charge which is being contested in good faith by proper
proceedings as to which adequate reserves have been
established.
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9.7.
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Tax on
Indebtedness. Each Borrower hereby agrees to pay any and
all taxes which may be levied or assessed directly or indirectly on the
notes or any of the Restructure Documents, or the debt secured thereby,
without regard to any law which may be hereafter enacted imposing payment
of the whole or any part thereof upon the Lender, its successors or
assigns; and, upon violation of this Agreement, or upon the rendering by
any court of competent jurisdiction of a decision that such an agreement
by a Borrower is legally inoperative, or if the rate of said tax, when
added to the rate of interest provided for in the Note, shall exceed the
then legal rate of interest, then, and in any such event, the debt hereby
secured, without deduction, shall, at the option of the Lender, become
immediately due and payable, anything contained in the Restructure
Documents notwithstanding; provided that any Borrower’s obligation to pay
such taxes shall exclude United States franchise taxes and United States
taxes imposed on or measured by Lender’s net income or net
receipts;
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9.8.
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Access. Each
Borrower shall permit any officer, employee, attorney, or accountant for
the Lender or for any participant designated by the Lender, to inspect the
Collateral or to review, make extracts from, or copy any and all of its
corporate and financial books, records and properties of any Borrower at
all times during ordinary business
hours.
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9.9.
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Title;
Pledge. Each Borrower agrees to grant to the Lender
first perfected security interests covering all or any part of the
Collateral. Each Borrower will maintain and defend good and
marketable title to the Collateral free and clear of all claims, liens or
encumbrances except those in favor of the
Lender.
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9.10.
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Qualification;
Licenses. Each Borrower will take such actions or cause
such actions to be taken as might be required to maintain such Borrower’s
corporate existence and all governmental and private permits, licenses and
authorities of any Borrower necessary or desirable to the
continuation of their businesses and will comply with all statutes and
governmental regulations.
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9.11.
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Notices. Each
Borrower will promptly give written notice to the Lender
of: (a) any litigation commenced against or affecting a
Borrower, or the Collateral; (b) any dispute which exists between any
Borrower and any governmental regulatory body or law enforcement authority
relating to any federal or state laws that could reasonably be expected to
have a material adverse effect on (i) the financial condition or results
of operations of any Borrower, or (ii) the ability of any Borrower to
perform their obligations hereunder or under any other Restructure
Documents; (c) any event of Default; (d) any change in the senior
management of a Borrower regardless of the reason for such change (i.e.
action by stockholders, board of directors, death or retirement); and (e)
any other matter which has resulted or could be expected to result in a
material adverse change in (i) the financial condition or results of
operations of any Borrower or (ii) the ability of any Borrower to perform
under this Agreement or any of the Restructure
Documents.
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9.12.
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Additional
Documents. At any time and from time to time, upon
written request of the Lender, each Borrower agrees to furnish any
additional information and to execute any and all additional
documents, not inconsistent with the provisions of this Agreement, which
may be required by the Lender in connection with or pursuant to any
provision set forth in this Agreement or the Restructure
Documents;
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|
9.13.
|
Compliance with
Applicable Law. Each Borrower will continuously comply
with all applicable regulations, rules, ordinances or orders of the United
States of America, any state, or any other jurisdiction, or of any agency
of federal state and local taxing authority or other agency which might
materially and adversely affect the business, operations or financial
condition of Borrower;
|
10
|
9.14.
|
Books and
Records. Each Borrower will keep and maintain accurate
books and records in accordance with sound accounting practices
consistently applied;
|
|
9.15.
|
Insurance. Borrower
will maintain property, liability, xxxxxxx’x compensation and other forms
of insurance in amounts reasonably designated at any time or from time to
time by the Lender;
|
10. NEGATIVE
COVENANTS. Until payment in full of the Amended and Restated
Note, each Borrower jointly and severally agree that unless the Lender otherwise
consents in writing, which consent shall not be unreasonably withheld, no
Borrower will perform or permit to be performed any of the following
acts:
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10.1.
|
Control. There
shall be no change in the executive management of any Borrower without the
Lender’s prior written consent.
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|
10.2.
|
Other
Debt. Shall incur any additional secured debt in excess
of $50,000 without prior approval from the Lender; provided however, that
Borrower may enter into that certain proposed sales and marketing credit
facility of up to $700,000 on substantially the terms attached hereto as
Exhibit
A.
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|
10.3.
|
Insider
Debt. Permit funds to be owing to any Borrower by the
directors or stockholders of any Borrower, or members of their families,
on account of any loan, credit sale or other transaction or
event;
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|
10.4.
|
Contingent
Liabilities. No Borrower will assume, guarantee, endorse
or otherwise become contingently liable for the indebtedness of any other
person, firm or corporation, except by the endorsement of negotiable
instruments for deposit or collection or other similar transactions in the
ordinary course of their business;
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|
10.5.
|
Senior
Debt. No Borrower will take or permit to be taken any
action which would or might impair the senior position of the Lender under
the Restructure Documents;
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10.6.
|
Creation of
Liens. No Borrower shall create, assume or suffer to
exist any mortgage, pledge, lien, charge or encumbrance on any of the
Collateral excluding only encumbrances to the Lender contemplated by this
Agreement, except the security interests created by the Security
Agreement, liens for taxes or assessments not yet due or contested in good
faith by appropriate proceedings, security interests approved by the
Lender in writing, at its sole discretion, and other liens, charges and
encumbrances incidental to the conduct of their business or the ownership
of their property which were not incurred in connection with the borrowing
of money or the purchase of property on credit and which do not in the
aggregate materially detract from the value of their property or
materially impair the use thereof in their
business;
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11
|
10.7.
|
Disposition of
Collateral. No Borrower shall sell, convey, assign,
transfer or otherwise dispose of any of the Collateral or any other assets
of Borrower except for the use of inventory in the ordinary course of
business;
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|
10.8.
|
Liquidation or
Merger. No Borrower shall liquidate, dissolve, or enter
into any consolidation, merger, sale of substantially all of its assets,
or other business combination, and no Borrower shall discontinue or
substantially alter the normal operation of their respective
businesses.
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|
10.9.
|
Distribution. (a)
Declare or pay any dividends, stock bonuses or any other distributions to
any stockholder or any other person; or (b) authorize or make any other
distribution to any stockholder, subsidiary, affiliate or person of any of
the assets or business of a
Borrower;
|
|
10.10.
|
Stock
Redemption. Purchase, acquire, redeem, retire or call or
make any commitment to purchase, acquire, redeem, retire or call any of
the capital stock or other equity instruments of any
Borrower;
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|
10.11.
|
Excessive
Compensation. Pay excessive or unreasonable salaries,
bonuses, fees, commissions or other
compensation;
|
|
10.12.
|
Investments. Purchase
stock or securities of, extend credit to or make investments in, become
liable as surety for, or guarantee or endorse any obligation of, any
person, firm or corporation, except direct obligations of the United
States and commercial lender
deposits;
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|
10.13.
|
Purchase of
Property. Acquire equipment valued in excess of
$50,000 without prior Lender approval. Acquisition includes
every means of acquiring new equipment including capital leases, true
leases or any other arrangement.
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|
10.14.
|
Default. Permit
any default or event of default to occur under any note, loan agreement,
lease, mortgage, contract for deed, security agreement or other
contractual obligation binding upon a
Borrower;
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|
10.15.
|
Other
Agreements. Neither Enter into any agreement that
limits or restricts the ability of any Borrower to comply with the terms
of the Restructure Documents.
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11. EVENTS OF
DEFAULT. Unless consented to by the Lender, the occurrence of
any of the following events will constitute a “Default” under the Restructure
Documents:
|
11.1.
|
Nonpayment of
Note. Default in payment when due of any interest or
principal of any of the notes when and such failure shall continue for
five (5) calendar days.
|
|
11.2.
|
Other
Nonpayment. Default in payment when due of any other
indebtedness payable to the Lender under the terms of the Restructure
Documents and such failure shall continue for five (5) calendar
days;
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12
|
11.3.
|
Breach of
Agreement. Default by any Borrower in the performance or
observance of any covenant contained in the Restructure Documents or under
the terms of any other instrument delivered to the Lender in connection
with any of the Restructure Documents when such failure continues for a
period of ten (10) calendar days;
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|
11.4.
|
Representations and
Warranties. Any representation, statement, certificate,
schedule or report made or furnished to the Lender on behalf of a Borrower
proves to be false or erroneous in any material respect at the time of the
making thereof or any warranty ceases to be complied with in any material
respect;
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|
11.5.
|
Default on Substantial
Obligations. A Borrower shall fail to pay when due any
substantial liability or liabilities owed to persons other than the
Lender; or the maturity of any such liability or liabilities shall be
accelerated; or any breach, default or event of default shall occur under
any indenture, loan agreement, note or agreement pertaining to any such
liability, entitling a creditor or representative of creditors of
Borrower, acting with or without the consent or concurrence of other
creditors and with or without notice or a period of grace, to accelerate
the maturity of or demand payment of any such liability, whether such
breach, default or event of default is waived by the creditor so entitled.
“Substantial” for these purposes, means in excess of Twenty-Five Thousand
and No/100 Dollars ($25,000);
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|
11.6.
|
Insolvency. The
making of an assignment for the benefit of the creditors of any
Borrower;
|
|
11.7.
|
Bankruptcy. The
institution of bankruptcy, reorganization, liquidation or
receivership proceedings by or against any Borrower under the Bankruptcy
Code, as amended, or under any other laws, whether state or federal, for
the relief of a Borrower, now or hereafter
existing;
|
|
11.8.
|
Receivership. The
appointment of a receiver or trustee for any Borrower or for any
substantial part of the Collateral, or the discontinuance of business or a
material adverse change in the nature of the business of any Borrower or
in the financial condition of any
Borrower
|
|
11.9.
|
Benefit Plan
Insecurity. Any event or reportable event which the
Lender in good faith determines to constitute potential grounds for the
termination of any employee benefit plan or other plan maintained for
employees of any Borrower, or for the appointment of a trustee to
administer any such plan, shall have occurred and be continuing thirty
(30) calendar days after written notice to such effect shall have been
given by the Lender to any Borrower; or any such plan shall be terminated,
or a trustee shall be appointed to administer any such plan; or the
Pension Benefit Guaranty Corporation shall institute proceedings to
terminate any such plan or to appoint a trustee to administer any such
plan;
|
13
|
11.10.
|
Judgment. Entry
by any court of a final judgment against any Borrower or an attachment of
any portion of the Collateral;
|
|
11.11.
|
Termination of
Corporate Existence. The cessation by any Borrower to be
a validly existing corporation under the laws of their respective states
of organization; or
|
|
11.12.
|
Failure of
Liens. Failure of the Lender’s security interests
covering the Collateral to constitute first and prior liens on any of the
Collateral.
|
12. REMEDIES. On
the occurrence of an event of Default which has not been timely cured, the
Lender may terminate all Indebtedness of the Lender under the Restructure
Documents, including, without limitation, any obligation to make advances under
the Revolving Note, and may exercise any one or more of the following
options:
|
12.1.
|
Acceleration. The
Lender may declare the Indebtedness evidenced to be immediately due and
payable, and the same shall thereupon be immediately due and payable,
without notice or presentment or other demand, and the Lender thereupon
may exercise and enforce all rights and remedies available to it to
collect the Indebtedness;
|
|
12.2.
|
Selective
Enforcement. In the event the Lender elects to
selectively and successively enforce the Lender’s rights under any one or
more of the instruments securing payment of the Amended and Restated Note,
such action will not be deemed a waiver or discharge of any other lien or
encumbrance securing payment of the Amended and Restated Note until such
time as the Lender has been paid in full all sums advanced by the
Lender;
|
|
12.3.
|
Waiver of Event of
Default. The Lender may, by an instrument in writing
signed by the Lender, waive any event of Default that has occurred and any
of the consequences of such event of Default; and in such event, the
Lender, Borrower will be restored to their respective former positions,
rights under the Restructure Documents. Any event of Default so
waived will, for all purposes of this Agreement, be deemed to have been
cured and not to be continuing, but no such waiver will extend to any
subsequent or other event of Default or impair any consequence of such
subsequent or other event of Default. The rights and remedies
of the Lender shall be cumulative and the exercise or enforcement of any
one right or remedy shall neither be a condition to nor bar the exercise
and enforcement of any other;
|
|
12.4.
|
Performance by
Lender. In the event Borrower fails to cure any Default
in the time provided by the Lender, the Lender will at any time thereafter
have the right (but not the obligation) to pay any claim or lien (whether
prior or subordinate to liens held by the Lender) affecting the Collateral
and to take possession of the Collateral in such manner as the Lender
determines. Each Borrower hereby authorizes the Lender to
increase the indebtedness owing by Borrower to the Lender by the cost of
satisfying claims against the Collateral and the cost of repossession of
the Collateral and agree that the Restructure Documents will evidence and
secure payment of such costs whether or not the total funds advanced
exceed the face amount of the Restructure
Documents;
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14
|
12.5.
|
Cumulative
Remedies. No failure on the part of the Lender to
exercise and no delay in exercising any right hereunder will operate as a
waiver thereof, nor will any single or partial exercise by the Lender of
any right hereunder preclude any other or further right of exercise
thereof or the exercise of any other right. The remedies herein
provided are cumulative and not alternative;
and
|
|
12.6.
|
Setoff. Regardless
of the adequacy of any other Collateral held by the Lender, any deposits
or other sums credited by or due from the Lender to any Borrower will at
all times constitute collateral security for all of the indebtedness of
Borrower and may be set off against any and all liabilities, direct
or indirect, absolute or contingent, due or to become due, now existing or
hereafter arising, of Borrower to the Lender. The rights
granted by this paragraph will be in addition to the rights of the Lender
under any statutory lien.
|
13. MISCELLANEOUS. It
is further agreed as follows:
|
13.1.
|
Recitals. The
recitals are hereby acknowledged by the parties to be true and correct and
are adopted and incorporated herein as material terms of this
Agreement.
|
|
13.2.
|
Hold
Harmless. Each party hereby agrees to indemnify and hold
any other party to this Agreement harmless from all liability, loss,
damage or expense, including reasonable attorney’s fees, whether incurred
under retainer, salary or otherwise, that such party may incur in good
faith in compliance with or the enforcement of the terms of this Agreement
or any of the Restructure
Documents.
|
|
13.3.
|
Supersession. It
is agreed and understood between Borrower and the Lender
that: (a) except to the extent the Prior Loan Documents are
amended hereby, at and after the Closing, the Prior Loans will remain in
full force and effect; and (b) the execution of this Agreement will not
discharge, interrupt, impair, xxxxx or otherwise modify the priority or
the validity of any lien or security interest securing payment of the
indebtedness evidenced by the Prior Loan
Documents.
|
|
13.4.
|
Notices. All
notices, requests and demands will be served by first class or express
mail, postage prepaid, or sent by telex, telegram, telecopy or other
similar form of rapid transmission confirmed by mailing written
confirmation at substantially the same time as such rapid transmission, as
follows:
|
Borrower-
Grok Software, Inc.
Future Now Group, Inc.
Future Now, Inc.
Intellectual Property Licensing Group,
Inc.
15
Elemental Business, Inc.
Future Now Consulting,
Inc.
00 Xxxxxxxx Xxxxxx Xxxx
Xxxxxxxxx,
XX 00000
Attn:
Xxxxxxx Xxxxxxx
|
|
Fax:
|
(000)
000-0000
|
With a
copy to-
|
TheLender
-
|
Professional
Offshore Opportunity Fund, Ltd
|
0000 Xxx
Xxxxxxx Xxxx, Xxxxx 000
Xxxxxxxx,
XX 00000
Attn: Xxxxxx
Xxxxxx
Fax:
(000) 000-0000
|
With
a copy to -
|
Xxxx
X. Xxxxxxxx
|
Xxxxxxxx
& Xxxxxx, P.C.
0000 Xxxx
Xxxxxx, Xxxxx 000
Xxxxxx,
XX 00000
Fax: (000)
000-0000
or at
such other address as any party designates for such purpose in a written notice
to the other parties. Notices will be deemed to have been given on
the date notice is sent by rapid transmission or three business days after
notice is placed in the mail, properly addressed, postage prepaid.
|
13.5.
|
Construction. Nothing
contained in this Agreement will be construed to constitute the Lender as
a joint venturer with any Borrower or to constitute a
partnership. The descriptive headings of the paragraphs of
this Agreement are for convenience only and are not to be used in the
construction of the content of this Agreement. This Agreement
may be executed in multiple counterparts, each of which will be an
original instrument, but all of which will constitute one
agreement.
|
|
13.6.
|
Venue. This
Agreement and the documents issued hereunder are executed and delivered as
an incident to a lending transaction negotiated and to be performed in New
York, New York. The Restructure Documents are intended to
constitute a contract made under the laws of the State of New York and to
be construed in accordance with the internal laws of said
state. Borrower and Lender hereby waive all objections and
consent to the jurisdiction and venue of any state or federal court
sitting in New York, New York.
|
|
13.7.
|
Severability. In
case any one or more of the provisions contained in the Restructure
Documents should be invalid, illegal or unenforceable in any respect in
any jurisdiction, the validity, legality and enforceability of such
provision or provisions will not in any way be affected or impaired
thereby in any other jurisdiction; and the validity, legality and
enforceability of the remaining provisions contained herein and therein
will not in any way be affected or impaired
thereby.
|
16
|
13.8.
|
No Oral
Modification. This Agreement may not be amended,
altered, modified or changed verbally, but only by an agreement in writing
signed by the party against whom enforcement of any amendment, waiver,
change, modification or discharge is
sought.
|
|
13.9.
|
Extension of Loan
Term. It is understood that the Lender is under no
obligation to extend the term of this Agreement beyond the maturity of any
of the notes and that any such extension will be made at the Lender’s sole
discretion. Any such extension will be evidenced by the
acceptance by the Lender of a promissory note renewing and extending the
time of payment of any of the notes on terms acceptable to the
Lender.
|
|
13.10.
|
Exclusive
Benefit. All provisions of the Restructure Documents are
for the sole and exclusive benefit of the Lender, and Borrower and no
other person will have standing to require satisfaction of the provisions
thereof or be entitled to assume that advances thereunder will not be made
by the Lender in the absence of strict compliance with the provisions of
the Restructure Documents. Any and all provisions of the
Restructure Documents may be waived by the Lender in whole or in part at
any time if, in the sole discretion of the Lender, it is advisable to do
so.
|
|
13.11.
|
Binding
Effect. This Agreement will be binding on each Borrower
and their successors and permitted assigns and will inure to the benefit
of the Lender and the Lender’s successors and
assigns.
|
|
13.12.
|
Counterparts. This
Agreement may be executed in multiple counterparts, each of which will be
an original instrument, but all of which will constitute one
agreement. The parties to this Agreement may rely upon
original, fax, digital or scanned signatures in the execution of this
Agreement.
|
17
IN
WITNESS WHEREOF, GROK, FUTR, FNI, IPLG, EBI, FNC and the Lender have
duly executed this Agreement effective the date first above
written.
|
BORROWER:
GROK
SOFTWARE, INC.
By: _____________________________
Name: ___________________________
Title:
____________________________
FUTURE
NOW GROUP, INC.
By: _____________________________
Name: ___________________________
Title:
____________________________ FUTURE
NOW, INC.
By: _____________________________
Name: ___________________________
Title:
____________________________ INTELLECTUAL
PROPERTY LICENSING GROUP, INC.
By: _____________________________
Name: ___________________________
Title:
____________________________ ELEMENTAL
BUSINESS, INC.
By: _____________________________
Name: ___________________________
Title:
____________________________ FUTURE
NOW CONSULTING, INC.
By: _____________________________
Name: ___________________________
Title:
____________________________
|
18
|
LENDER:
PROFESSIONAL OFFSHORE
OPPORTUNITY FUND, LTD
By: _____________________________
Name: ___________________________
Title:
____________________________
|
19
