LOAN AGREEMENT
This
LOAN
AGREEMENT is entered into as of October 20, 2008 between Sea Change Group,
LLC,
a New York limited liability company (“LENDER”) with its chief executive office
located at 00 Xxxx 00xx
Xxxxxx
Xxx Xxxx, XX 00000 and Innopump, Inc., a Nevada corporation
(Borrower),
with its
chief executive office located at 00 Xxxx 00xx
Xxxxxx
Xxx Xxxx, XX 00000.
STATEMENT
OF FACTS
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1)
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The
LENDER, at the request and for the benefit of Borrower has entered
into on
the date hereof, a Loan and Security Agreement with JBCP-24 LLC (“Funding
Source”) pursuant to which LENDER will obtain from the Funding Source a
loan in the principal amount of
$3,445,750.
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2)
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In
order to obtain the consent of Xxxxxxx Xxxxxxx to certain of the
transactions contemplated by the above Loan and Security Agreement,
the
LENDER has entered into a Cash Collateral Agreement with the Funding
Source pursuant to which $895,750 of the proceeds of the loan from
the
Funding Source will be held in a Cash Collateral Account. The Cash
Collateral Account will secure certain payment obligations of LENDER
to
Xxxxxxx Xxxxxxx pursuant to the License Agreement dated as of January
1,
2003 between LENDER and Xxxxxxx
Xxxxxxx.
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3)
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This
Loan Agreement between Borrower and LENDER is entered into to provide
to
Borrower funds to enable Borrower to continue to exploit its agreement
with LENDER and pursue its business plan acknowledging that the amounts
being paid hereunder provide no excess to LENDER but only such funds
as
will enable LENDER to fully discharge its obligations (including
expenses)
under the Loan and Security
Agreement.
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The
parties agree as follows
1.
DEFINITIONS AND CONSTRUCTION
1.1.
Statement
of Facts.
The
Statement of Facts set forth above is incorporated in and is hereby made a
part
of this Agreement.
1.2.
Terms.
As used
in this Agreement, the following terms shall have the following
meanings:
(a)
Advances
means
all loans, advances and other financial accommodations by LENDER to or on
account of the Borrower, including those under this Agreement.
(b)
Agreement
means
collectively this Loan Agreement, any concurrent or subsequent rider to this
Loan Agreement, and any extensions, supplements, amendments, addenda or
modifications to or in connection with this Loan Agreement or any such
rider.
(c)
Authorized
Officer means
any
officer or other representative of Borrower authorized in a writing delivered
to
LENDER by an authorized representative of the Borrower to transact business
with
LENDER.
(d)
LENDER
has
the
meaning set forth in the first paragraph above and includes Lender’s successors
and assigns.
(e)
LENDER
Expenses
means
all of the following: costs and expenses (whether taxes, assessments, insurance
premiums or otherwise) required to be paid by Borrower under any of the Loan
Documents which are paid or advanced by LENDER; filing, recording, publication,
appraisal and search fees paid or incurred by LENDER in connection with LENDER's
transactions with Borrower; actual costs and expenses incurred by LENDER in
the
disbursement or collection of funds to or from Borrower or its account debtors;
charges resulting from the dishonor of checks; actual reasonable costs and
reasonable expenses incurred by LENDER to correct any default or enforce any
provision of the Loan Documents, and actual reasonable costs and reasonable
expenses incurred by LENDER in enforcing or defending the Loan Documents or
otherwise exercising its rights and remedies upon the existence of an Event
of
Default, including, but not limited to, actual reasonable costs and reasonable
expenses incurred in connection with any proceeding, suit, enforcement of
judgment, or appeal; and LENDER's reasonable attorneys' fees and expenses,
incurred in advising, structuring, drafting, reviewing, administering, amending,
modifying, terminating, enforcing, defending, or otherwise representing LENDER
concerning the Loan Documents or the Obligations; and all costs, expenses and
obligations (exclusive of any facility, closing and collateral monitoring fees
which are being replaced by the facility, monitoring and commitment fees payable
by Borrower hereunder) of LENDER incurred in obtaining from JBCP-24 LLC the
funds it is advancing to Borrower pursuant to this Agreement.
(f)
Business
Day
means
any day which is not a Saturday, Sunday, or other day on which banks in the
State of New York are authorized or required to close.
(g)
Code
means
the
New York Uniform Commercial Code, as amended or revised from time to
time.
(h)
Daily
Balance
means
the amount of the Obligations owed at the end of a given day.
(i)
Deposit
Account
shall
have the meaning ascribed to such term in the Code.
(j)
Documents
shall
have the meaning ascribed to such term in the Code.
(k)
ERISA
means
the
Employee Retirement Income Security Act of 1974, as amended, and the regulations
thereunder.
(l)
ERISA
Affiliate
means
each trade or business (whether or not incorporated and whether or not foreign)
which is or may hereafter become a member of a group of which Borrower is a
member and which is treated as a single employer under ERISA Section 4001(b)
(1), or IRC Section 414.
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(m)
Event
of Default
means
the events specified in Section 8, below.
(n)
Insolvency
Proceeding
means
any proceeding commenced by or against any person or entity under any provision
of the federal Bankruptcy Code, as amended, or under any other state or federal
insolvency law, including assignments for the benefit of creditors, formal
or
informal moratoria, compositions, or extensions generally with its
creditors.
(o)
Instruments
shall
have the meaning ascribed to such term in the Code.
(p)
IRC
means
the
Internal Revenue Code of 1986, as amended, and the regulations
thereunder.
(q)
Loan
Documents
means,
collectively, this Agreement, any Note and any other agreement entered into
between Borrower and LENDER or by Borrower in favor of LENDER relating to or
in
connection with this Agreement or the Obligations, as each of same may be
amended, modified, renewed, extended or substituted from time to
time.
(r)
Multiemployer
Plan means
a
multiemployer
plan as
defined in ERISA Sections 3(37) or 4001(a) (3) or IRC Section
414(f).
(s)
Note
means
the promissory note made by Borrower to the order of LENDER concurrently
herewith in the original principal amount of Three
Million Four Hundred Forty Five Thousand Seven Hundred Fifty Dollars
($3,445,750).
(t)
Obligations
means
all loans, Advances, debts, liabilities (including all interest and amounts
and
fees charged to the Obligations pursuant to any agreement authorizing LENDER
to
charge the Obligations), obligations, lease payments, guaranties, covenants,
and
duties owing by Borrower to LENDER of any kind and description (whether pursuant
to or evidenced by the Loan Documents or by any other agreement between LENDER
and Borrower, and irrespective of whether for the payment of money), whether
made or incurred prior to, on, or after the Termination Date, direct or
indirect, absolute or contingent, due or to become due, now existing or
hereafter arising, including any debt, liability or obligation owing from
Borrower to others which LENDER may obtain by assignment or otherwise, and
all
interest thereon and all reasonable actual expenses of LENDER.
(u)
Plan
means
any plan described in ERISA Section 3(2) maintained for employees of Borrower
or
any ERISA Affiliate, other than a Multiemployer Plan.
(v)
Term
means
the period from the date of the execution and delivery by LENDER of this
Agreement through and including the later of (a) the Termination Date and (b)
the payment and performance in full of the Obligations.
(w)
Termination
Date
means
(a) June 29, 2009 or (b) if earlier terminated by LENDER pursuant to section
9.1
hereof, the date of such termination.
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1.3.
Construction.
Unless
the context of this Agreement clearly requires otherwise, references to the
plural include the singular and to the singular include the plural. The words
hereof,
herein, hereby, hereunder,
and
similar terms in this Agreement refer to this Agreement as a whole and not
to
any particular provision of this Agreement. Section, subsection, clause and
exhibit references are to this Agreement unless otherwise specified. Words
importing a particular gender mean and include every other gender.
1.4.
Accounting
Terms. All
accounting terms not specifically defined herein shall be construed in
accordance with generally accepted accounting principles (GAAP) as consistently
applied. When used herein, the term financial statements shall include the
notes
and schedules thereto.
1.5.
Exhibits.
All
of
the exhibits, addenda or riders attached to this Agreement shall be deemed
incorporated herein by reference.
1.6.
Code.
Any
terms used in this Agreement which are defined in the Code shall be construed
and defined as set forth in the Code, unless otherwise defined
herein.
1.7.
Materially.
Material
and materially
shall
mean an amount in excess of Fifty Thousand Dollars ($50,000.00) to the extent
it
can be monetarily quantified.
2.
ADVANCES AND TERMS OF PAYMENT
2.1.
Term
Loan.
LENDER
has on the date hereof extended a Term Loan Advance in the principal amount
of
Three Million Four Hundred Forty Five Thousand Seven Hundred Fifty Dollars
($3,445,750), as evidenced by the Note. Such Advance shall be repayable in
accordance with the provisions of the Note. All principal and any and all
accrued and unpaid interest, fees charges and expenses shall be due and payable
upon the Termination Date. Unless otherwise expressly permitted by LENDER in
writing there shall be no prepayments permitted of the principal balance of
the
term loan.
2.2.
Interest.
(a)
Except
where specified to the contrary in the Loan Documents interest shall accrue
on
the Daily Balance of the Obligations at the monthly rate (calculated on the
basis of a thirty day month) of One and Eighty Three Hundredths of One Percent
(1.83%) per month. Interest shall be paid to LENDER in arrears on the first
day
of each month by cash check or wire transfer or at the option of the Borrower
may be paid in kind (“PIK”) on the first day of each month (if no cash interest
payment is received by the LENDER from the Borrower on the first day of any
month, other than on the Termination Date LENDER shall presume that the
Borrower’s interest payment shall be a PIK payment and shall be added to the
principal amount of the Note at the first day of each month when interest is
to
be paid). Interest as provided for herein shall continue to accrue until the
Obligations are paid in full.
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(b)
In no
event shall interest on the Obligations exceed the highest lawful rate in effect
from time to time. It is not the intention of the parties hereto to make an
agreement which violates any applicable state or federal usury laws. In no
event
shall Borrower pay or LENDER accept or charge any interest which, together
with
any other charges upon the principal or any portion thereof, exceeds the maximum
lawful rate of interest allowable under any applicable state or federal usury
laws. Should any provision of this Agreement or any existing or future Notes
or
Loan Documents between the parties be construed to require the payment of
interest or any other fees or charges which could be construed as interest
which, together with any other charges upon the principal or any portion thereof
and any other fees or charges which could be construed as interest, exceeds
the
maximum lawful rate of interest, then any such excess shall be applied to the
remaining principal balance of the Obligations, if any, and the remainder
refunded to Borrower.
(c)
Notwithstanding the foregoing, for purposes of this Agreement, it is the
intention of Borrower and LENDER that “interest” shall mean, and be limited to,
any payment to LENDER which compensates it for extending credit to Borrower,
for
making available to Borrower the credit facility under the Note during the
term
of this Agreement and for any default or breach by Borrower of a condition
upon
which credit was extended. Borrower and LENDER agree that, for the sole purpose
of calculating the “interest” paid by Borrower to LENDER, it is the intention of
Borrower and LENDER that interest shall mean and include, and be expressly
limited to, any interest accrued on the aggregate outstanding balance of the
Obligations during the term hereof pursuant to Sections 2.2(A) and 2.2(B);
and
any Facility Fee and Closing Fee, and other fees charged to Borrower during
the
term hereof. Borrower and LENDER further agree that it is their intention that
the following fees shall not constitute “interest”: any servicing fees, any
examination fees, any attorney fees incurred by LENDER, any premiums or
commissions attributable to insurance guaranteeing repayment, finders’ fees,
credit report fees, appraisal fees or fees for document preparation or
notarization.
2.3.
Crediting
Payments. Notwithstanding
anything to the contrary contained herein, payments received by LENDER after
11:00 a.m. Eastern time shall be deemed to have been received by LENDER as
of
the opening of business on the immediately following Business Day.
2.4.
Facility
Fee. In
consideration of LENDER’s entering into this Agreement, Borrower shall pay
LENDER a facility fee (the Facility
Fee)
of
$400,000,
which
shall be payable by the Borrower upon the Termination Date. The Facility Fee
shall be deemed to have been fully earned upon the execution hereof for the
entire Initial Term, but which shall not bear interest unless payment thereof
is
past due.
2.5.
Commitment
Fee. Borrower
shall pay LENDER fee of $250,000
(the
Commitment
Fee)
which
shall be payable by the Borrower on the Termination Date. The Commitment Fee
shall be deemed to have been fully earned upon the execution hereof for the
entire Initial Term, but
which
shall not bear interest unless payment thereof is past due and which fee shall
be payable as follows: One Hundred Twenty Five Thousand Dollars ($125,000)
shall be payable within one week following the execution of this Agreement
and
One Hundred Twenty Five Thousand Dollars ($125,000) shall be payable within
two
weeks following the execution of this Agreement.
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2.6.
Monitoring
Fee. Borrower
shall pay lender in kind a Monitoring Fee in the amount of One
Hundred Thousand Dollars ($100,000)
per
month for 5 consecutive months on the first day of each month commencing
November 1, 2008 and ending on March 1, 2009. The fee shall be charged to the
principal balance out standing to LENDER from Borrower and shall be paid in
cash
on the Termination Date. Such fees shall not bear interest unless payment
thereof is past due.
3.
TERM
3.1.
Term.
This
Agreement shall become effective upon execution by LENDER and continue in full
force through the Term. The Note and this Agreement may not be prepaid or
terminated by the Borrower prior to March 31, 2009 after which date the Note
may, at the option of the Borrower, be prepaid by the Borrower in whole or
in
part without penalty. In addition, LENDER shall have the right to terminate
this
Agreement and demand repayment of the Note, immediately at any time upon the
occurrence of an Event of Default. No such termination shall relieve or
discharge Borrower of its duties, Obligations and covenants hereunder until
all
Obligations have been paid and performed in full. On the Termination Date of
this Agreement, the Obligations shall be immediately due and payable in full.
4.
REPRESENTATIONS
AND WARRANTIES AND COVENANTS
Borrower
represents and warrants to LENDER, and covenants, the following and
acknowledges:
4.1.
Relocation
of Chief Executive Office. The
chief
executive office of Borrower and the location of all books and records of
Borrower is at the address indicated on the first page of this Agreement and
Borrower will not, without thirty (30) days' prior written notice to LENDER
relocate such office.
4.2.
Due
Organization and Qualification. Borrower
is, and shall at
all
times hereafter, be a corporation duly incorporated and existing under the
laws
of the state of its incorporation as set forth on the first page hereof, and
Borrower is, and shall at all times hereafter be, qualified and licensed to
do
business and is in good standing in any state in which the conduct of its
business or its ownership of assets requires that it be so qualified.
4.3.
Actual
and Fictitious Name. Borrower’s
exact name is set forth on the first page hereof and Borrower has not changed
its name within the last five (5) years. Borrower is conducting its business
under the trade or fictitious name(s) “Versadial”, and no others. Borrower has
complied with the fictitious name laws of all jurisdictions in which compliance
is required in connection with its use of such name(s).
4.4.
Permits
and Licenses. Borrower
holds all licenses, permits, franchises, approvals and consents required for
the
conduct of its business and the ownership and operation of its assets. There
has
been and there is no claim, suit or other action disputing Borrower’s interests
in any of the foregoing or in the case of licenses any underlying patents or
trademarks which are the subject of any such license.
4.5.
Due
Authorization. Borrower
has the right and power and is duly authorized to enter into the Loan Documents
to which it is a party.
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4.6.
Compliance
with Organizational Documents. The execution
by Borrower of the Loan Documents to which it is a party does not constitute
a
breach of any provision contained in Borrower's articles of incorporation and
by-laws, nor does it constitute an event of default under any material agreement
to which Borrower is now or may hereafter become a party.
4.7.
Litigation.
There
are
no actions, proceedings or claims pending by or against Borrower, whether or
not
before any court or administrative agency and Borrower has no knowledge or
notice of any pending, threatened or imminent litigation, governmental
investigations, or claims, complaints, actions, or prosecutions involving
Borrower. If any such actions, proceedings or claims presently exist or arise
during the Term, Borrower shall promptly notify LENDER in writing and shall,
from time to time, notify LENDER of all material events relating
thereto.
4.8.
Accuracy
of Information and No Material Adverse Change in Financial Statements.
All
information furnished by Borrower to LENDER, and all statements made by Borrower
to LENDER, including, without limitation, information set forth in any loan
application and client profile are true, accurate and complete in all respects
and do not contain any material misstatement of fact or omit to state any
material facts necessary to make the statements or information contained therein
not materially misleading. All financial statements relating to
Borrower which have been or may hereafter be delivered to LENDER (i) have been
prepared in accordance with GAAP; (ii) fairly present Borrower's financial
condition as of the date thereof and Borrower's results of operations for the
period then ended; and (iii) disclose all contingent obligations of Borrower.
In
addition no material adverse change in the financial condition of Borrower
has
occurred since the date of the most recent of such financial
statements.
4.9.
Solvency.
Excluding
obligations which may be owed by the Borrower under that certain sublicense
agreement between Lender and the Borrower, the Borrower is now, and shall be
at
all times through the Term, solvent and able to pay its debts (including trade
debts) as they mature.
4.10.
ERISA.
Neither
Borrower or any ERISA Affiliate, nor any Plan is or has been in violation of
any
of the provisions of ERISA, any of the qualification requirements of IRC Section
401(a), or any of the published interpretations thereof. No lien upon the assets
of Borrower has arisen with respect to any Plan. No prohibited
transaction within
the meaning of ERISA Section 406 or IRC Section 4975(c) has occurred with
respect to any Plan. Neither Borrower nor any ERISA Affiliate has incurred
any
withdrawal liability with respect to any Multiemployer Plan. Borrower and each
ERISA Affiliate have made all contributions required to be made by them to
any
Plan or Multiemployer Plan when due. There is no accumulated funding deficiency
in any Plan, whether or not waived.
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4.11.
Environmental
Laws and Hazardous Materials. Borrower
has complied, and at all times through the Term will comply, with all
Environmental Laws. Borrower has not and will not cause or permit any Hazardous
Materials to be located, incorporated, generated, stored, manufactured,
transported to or from, released, disposed of, or used at, upon, under, or
within any premises at which Borrower conducts its business, or in connection
with Borrower's business. To the best of Borrower's knowledge, no prior owner
or
operator of any premises at which Borrower conducts its business has caused
or
permitted any of the above to occur at, upon, under, or within any of the
premises. Borrower will not permit any lien to be filed against its assets
under
any Environmental Law, and will promptly notify LENDER of any proceeding,
inquiry or claim relating to any alleged violation of any Environmental Law,
or
any alleged loss, damage or injury resulting from any Hazardous Material. LENDER
shall have the right to join and participate in, as a party if it so elects,
any
legal or administrative proceeding initiated with respect to any Hazardous
Material or in connection with any Environmental Law. "Hazardous Material"
includes without limitation any substance, material, emission, or waste which
is
or hereafter becomes regulated or classified as a hazardous substance, hazardous
material, toxic substance or solid waste under any Environmental Law, asbestos,
petroleum products, urea formaldehyde, polychlorinated biphenyls (PCBs), radon,
and any other hazardous or toxic substance, material, emission or waste.
Environmental Law means the Comprehensive Environmental Response, Compensation,
and Liability Act of 1980, as amended, the Resource Conservation and Recovery
Act of 1976, the Hazardous Materials Transportation Act, the Toxic Substances
Control Act, the regulations pertaining to such statutes, and any other safety,
health or environmental statutes, laws, regulations or ordinances of the United
States or of any state, county or municipality in which Borrower conducts its
business.
4.12.
Tax
Compliance. Borrower
has filed all tax returns required to be filed by it and has paid all taxes
due
and payable on said returns and on any assessment made against it or its
assets.
4.13.
Reliance
by LENDER; Cumulative. Each
warranty, representation and agreement contained in this Agreement shall be
conclusively presumed to have been relied on by LENDER regardless of any
investigation made or information possessed by LENDER. The warranties,
representations and agreements set forth herein shall be cumulative and in
addition to any and all other warranties, representations and agreements which
Borrower shall now or hereafter give, or cause to be given, to
LENDER.
4.14.
Use
of Proceeds. The
proceeds of the Advance will be used by Borrower for the purposes set forth
on
Schedule 4.14 annexed hereto and use thereof shall be deemed to be in compliance
with this Agreement.
4.15.
Borrower’s
Deposit Account. The
deposit account listed on Schedule 4.15 hereof is a deposit account belonging
to
the Borrower.
5.
AFFIRMATIVE COVENANTS: Borrower
covenants and acknowledges that during the Term Borrower shall comply with
all
of the following:
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5.1.
Financial
Statements, Reports, Certificates. Borrower shall
deliver to LENDER: (a) as soon as available, but in any event within thirty
(30)
days after the end of each month during the Term, a balance sheet and profit
and
loss statement prepared by Borrower covering Borrower's operations during such
period; and (b) as soon as available, but in any event within one hundred twenty
(120) days after the end of each of Borrower's fiscal years, financial
statements of Borrower for each such fiscal period, prepared on a review basis
by independent certified public accountants acceptable to LENDER (Borrower’s
present accounting firm being presently acceptable to LENDER). Such financial
statements shall include a balance sheet and profit and loss statement, and
the
accountants' management letter, if any, and shall be prepared in accordance
with
GAAP. Together with the above, Borrower shall also deliver any other report
reasonably requested by LENDER relating to the financial condition of Borrower
and a certificate signed by its chief executive or chief financial officer
on
behalf of the Borrower, to the effect that all reports, statements or computer
prepared information of any kind or nature delivered or caused to be delivered
to LENDER under this Section fairly present its financial condition in all
material respects and that to the best of his knowledge there exists on the
date
of delivery of such certificate to LENDER no condition or event which
constitutes an Event of Default.
5.2.
Tax
Returns, Receipts. Borrower
shall deliver to LENDER copies of each of its future federal income tax returns,
and any amendments thereto, within thirty (30) days of the filing thereof.
Borrower further shall promptly deliver to LENDER, upon request, satisfactory
evidence of Borrower's payment of all withholding and other taxes required
to be
paid by it.
5.3.
Taxes.
All
Federal, state and local assessments and taxes, whether real, personal or
otherwise, due or payable by, or imposed, levied or assessed against Borrower
or
any of its assets or in connection with Borrower's business shall hereafter
be
paid in full, before they become delinquent or before the expiration of any
extension period, unless contested in good faith and properly reserved for
and
any lien resulting therefrom is subordinate to the LENDER’s liens hereunder or
secured by a bond issued for the LENDER’s benefit by an insurer acceptable to
the LENDER in its good faith discretion. Borrower shall make due and timely
payment or deposit of all federal, state and local taxes, assessments or
contributions required of it by law, and will execute and deliver to LENDER,
on
demand, appropriate certificates attesting to the payment or deposit
thereof.
5.4.
LENDER
Expenses. Borrower shall
immediately and without demand reimburse LENDER for all LENDER Expenses and
Borrower hereby authorizes the payment of such LENDER Expenses.
5.5.
Compliance
With Law. Borrower
shall comply, in all material respects, with the requirements of all applicable
laws, rules, regulations and orders of governmental authorities relating to
Borrower and the conduct of its business.
5.6.
Accounting
System. Borrower
at all times hereafter shall maintain a standard and modern system of accounting
in accordance with GAAP with ledger and account cards or computer tapes, disks,
printouts and records pertaining to its business containing such information
as
may from time to time be requested by LENDER.
6.
NEGATIVE COVENANTS
Borrower
covenants and acknowledges that other than as may be expressly set forth to
the
contrary on the schedule 4.14 for the use of proceeds, during the Term Borrower
shall not undertake any of the following:
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6.1.
Extraordinary
Transactions and Disposal of Assets. (A) Enter
into any transaction not in the ordinary and
usual
course of its business as conducted on the date hereof, including but not
limited to the sale, lease, disposal, movement, relocation or transfer, whether
by sale or otherwise, of any of its assets; (B) consent to any amendment or
modification or termination of the License Agreement (C) grant any new
sublicense with respect to, the intellectual property which is the subject
of
the Sublicense Agreement between LENDER and Borrower, (D) incur (i) any
indebtedness for borrowed money or purchase money indebtedness for Equipment,
or
(ii) any other indebtedness outside the ordinary and usual course of its
business as conducted on the date hereof; (D) make any advance or loan to any
third party; or (D) xxxxx x xxxx on any of its assets except in favor of
LENDER.
6.2.
Change
Name, etc. Change
its name, business structure, jurisdiction of incorporation or formation as
applicable, or identity, or add any new fictitious name.
6.3.
Merge,
Acquire.
Merge,
acquire, or consolidate with or into any other business
organization.
6.4.
Guaranty.
Guaranty
or otherwise become in any way liable with respect to the obligations of any
third party, except by endorsement of instruments or items of payment for
deposit to the account of Borrower for negotiation and delivery to
LENDER.
6.5.
Restructure.
Make
any
material change in its financial structure or business operations.
6.6.
Prepayments.
Prepay
any existing indebtedness owing to any third party other than trade
payables.
6.7.
Loans
and Advances. Other
than as may be otherwise expressly set forth in Schedule 6.7 hereof,
make any
loans, advances or extensions of credit to any officer, director, executive
employee or shareholder of Borrower (or any relative of any of the foregoing),
or to any entity which is a subsidiary of, related to, affiliated with or has
common shareholders, officers or directors with Borrower.
6.8.
Accounting
Methods. Modify
or
change its method of accounting or enter into, modify or terminate any agreement
presently existing or at any time hereafter entered into with any third party
for the preparation or storage of Borrower's records of Accounts and financial
condition without said party agreeing to provide LENDER with information
regarding Borrower’s business or Borrower's financial condition. Other than with
respect to Borrower’s attorneys, Borrower waives the right to assert a
confidential relationship, if any, it may have with any such third party in
connection with any information requested by LENDER hereunder, and agrees that
LENDER may contact any such party directly in order to obtain such
information.
6.9.
Business
Suspension.
Suspend
or go out of business.
7.
EVENTS OF DEFAULT
The
occurrence and continuance of any one or more of the following events shall
constitute an Event of Default by Borrower hereunder:
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7.1.
Failure
to Pay. Borrower's
failure to pay when due and payable, or when declared due and payable, any
portion of the Obligations (whether principal, interest, taxes, LENDER Expenses,
or otherwise);
7.2.
Failure
to Perform.
Borrower's failure in any material manner to perform, keep or observe any term,
provision, condition, representation, warranty, covenant or agreement contained
in this Agreement, in any of the Loan Documents or in any other present or
future agreement between Borrower and LENDER;
7.3.
Misrepresentation.
Any
misstatement or misrepresentation of a nature now or hereafter exists in any
warranty, representation, statement, aging or report made to LENDER by, Borrower
or any officer, employee, agent or director thereof which is of a material
nature or which otherwise adversely affects Lender’s interests, rights or
remedies, or if any such warranty, representation, statement, aging or report
is
withdrawn by such person;
7.4.
Material
Adverse Change. There
is
a material adverse change in Borrower's business or financial
condition;
7.5.
Material
Impairment. There
is
a material impairment of the prospect of repayment of the
Obligations;
7.6.
Levy
or Attachment. Any
material portion of Borrower's assets is attached, seized, subjected to a writ
or distress warrant or is levied upon, or comes into the possession of any
judicial officer or assignee;
7.7.
Insolvency
by Borrower. An
Insolvency Proceeding is commenced by Borrower;
7.8.
Insolvency
Against Borrower. (A) An
Insolvency Proceeding is commenced against Borrower or (B) an order for relief
under the Bankruptcy Code, or similar order in any other Insolvency proceeding
is entered against Borrower;
7.9.
Injunction
Against Borrower. Borrower
is enjoined, restrained or in any way prevented
by court order from continuing to conduct all or any material part of its
business;
7.10.
Government
Lien. A
notice
of lien, levy or assessment is filed of record with respect to any of Borrower's
assets by the United States Government, or any department, agency or
instrumentality thereof, or by any state, county, municipal or other
governmental agency, or any taxes or debts owing at any time hereafter to any
one or more of such entities becomes a lien, whether xxxxxx or otherwise, upon
any of Borrower's assets and the same is not paid on the payment date
thereof;
7.11.
Judgment.
Judgments
in the aggregate at any time out standing in excess of $100,000 are entered
against Borrower;
7.12.
Default
to Third Party. There
is
a default which continues beyond any applicable grace period in any agreement
to
which Borrower is a party or by which binds Borrower or any of their assets,
the
cancellation of which would have a material adverse effect upon the business
or
prospects of the Borrower;
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7.13.
ERISA
Violation. A
prohibited
transaction within
the meaning of ERISA Section 406 or IRC Section 1975(c) shall occur with respect
to a Plan which could have a material adverse effect on the financial condition
of Borrower; any lien upon the assets of Borrower in connection with any Plan
shall arise; Borrower or any ERISA Affiliate shall completely or partially
withdraw from a Multiemployer Plan and such withdrawal could, in the opinion
of
LENDER, have a material adverse effect on the financial condition of Borrower.
Borrower or any of its ERISA Affiliates shall fail to make full payment when
due
of all amounts which Borrower or any of its ERISA Affiliates may be required
to
pay to any Plan or any Multiemployer Plan as one or more contributions thereto;
Borrower or any of its ERISA Affiliates creates or permits the creation of
any
accumulated funding deficiency, whether or not waived; the voluntary or
involuntary termination of any Plan which termination could, in the opinion
of
LENDER, have a material adverse effect on the financial condition of Borrower
or
Borrower shall fail to notify LENDER promptly and in any event within ten (l0)
days of the occurrence of an event which constitutes an Event of Default under
this clause or would constitute an Event of Default upon the exercise of
LENDER's judgment; or
7.14.
The
occurrence of any event which constitutes a default of, or breach under, any
agreements between Fursa Master Global Event Driven Fund, L.P. and/or Versadial,
Inc. or Borrower. that, in and of itself, or through the passage of time or
the
giving of notice or both, would give rise to the right of Fursa Master Global
Event Driven Fund, L.P. to exercise any rights or remedies against any of the
assets of Versadial, Inc. and/or Borrower.
7.15.
Notwithstanding anything contained in this Section to the contrary, LENDER
shall
refrain from exercising its rights and remedies and an Event of Default shall
not be deemed to have occurred by reason of (A) the occurrence of any of the
events set forth in Sections 7.6, 7.10, 7.11 or 7.13 hereof if, within fifteen
(15) days from the date thereof, the same is released, discharged, dismissed,
bonded against or satisfied; or (B) the occurrence of an event under section
7.8(A) hereof if it is discharged within thirty (30) days; or (C) the occurrence
of an event under section 7.9 hereof if it is discharged within fifteen (15)
days.
8.
LENDER'S RIGHTS AND REMEDIES
8.1.
Rights
and Remedies. Upon
the
occurrence and existence of an Event of Default, LENDER may, at its election,
without notice of such election and without demand, do any one or more of the
following:
(a)
Declare all Obligations, whether evidenced by the Loan Documents or otherwise,
immediately due and payable in full (except that upon the occurrence of an
Event
of Default under Section 7.8B) all Obligations shall automatically become
due).
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(b)
Cease
advancing money or extending credit to or for the benefit of Borrower under
the
Loan Documents or under any other agreement between Borrower and
LENDER;
(c)
Terminate this Agreement as to any future liability or obligation of LENDER,
but
without affecting LENDER's rights and without affecting the
Obligations;
8.2.
Cumulative
Rights and Remedies.
In
addition to the foregoing, LENDER shall have all rights and remedies provided
by
law (including those set forth in the Code) and any rights and remedies
contained in any Loan Documents and all such rights and remedies shall be
cumulative.
8.3.
No
Waiver.
No delay
on the part of LENDER in exercising any right, power or privilege under any
Loan
Document shall operate as a waiver, nor shall any single or partial exercise
of
any right, power or privilege under such Loan Documents or otherwise, preclude
other or further exercise of any such right, power or privilege.
9.
WAIVERS
9.1.
Demand,
Protest. Borrower
waives demand, protest, notice of protest, notice of default or dishonor, notice
of payment and nonpayment, notice of any default, notice of intention to
accelerate, notice of acceleration, and notice of nonpayment at maturity.
Borrower hereby consents to any extensions of time of payment or partial payment
at, before or after the Termination Date.
9.2.
Limitation
of Damages. In
any
action or other proceeding against LENDER under this Agreement or relating
to
the transactions between LENDER and Borrower, Borrower waives the right to
seek
any consequential or punitive damages.
10.
NOTICES
10.1.
Unless otherwise provided herein, all consents, waivers, notices or demands
by
any party relating to the Loan Documents shall be in writing and (except for
financial statements and other informational documents which may be sent by
first-class mail, postage prepaid) shall be telecopied (followed up by a
mailing), personally delivered or sent by registered or certified mail, postage
prepaid, return receipt requested, or by receipted overnight delivery service
to
Borrower or to LENDER, as the case may be, at their addresses set forth
below
If to Borrower: Innopump,
Inc.
00
Xxxx
00xx
Xxxxxx
Xxx
Xxxx,
XX 00000
Attention:
Xxxxxxxx Xxxxxxxxx
Phone#
000-000-0000
Fax#
000-000-0000
If
to
Lender: Sea
Change Group, LLC
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-
00
Xxxx
00xx
Xxxxxx
Xxx
Xxxx,
XX 00000
Attention:
Xxxxxxxx Xxxxxxxxx
Phone#
000-000-0000
Fax#
000-000-0000
With
a copy to (which shall
not
constitute notice)
Xxxxxx
Xxxxxxxx, Esq.
Xxxxxxx,
Xxxxxxxxx & Xxxxxxxx LLP
000
Xxxx
Xxxxxx, Xxxxx 0000
Xxx
Xxxx,
XX 00000
Phone :
(000) 000-0000
Fax :
(000) 000-0000
Email :
xxxxxxxxx@xxxxxx.xxx
10.2.
Any
party may change the address at which it is to receive notices hereunder by
notice in writing in the foregoing manner given to the other. All notices or
demands sent in accordance with this Section shall be deemed received on the
earlier of the date of actual receipt or five (5) calendar days after the
deposit thereof in the mail or on the date telecommunicated if
telecopied.
11.
DESTRUCTION OF BORROWER'S DOCUMENTS
11.1.
All
documents, schedules, invoices, agings or other papers delivered to LENDER
may
be destroyed or otherwise disposed of by LENDER four (4) months after they
are
delivered to or received by LENDER, unless Borrower requests, in writing, the
return of the said documents, schedules. invoices or other papers and makes
arrangements, at Borrower's expense, for their return.
12.
GENERAL PROVISIONS
12.1.
Effectiveness.
This
Agreement shall be binding and deemed effective when executed by Borrower and
executed and delivered by LENDER.
12.2.
Successors
and Assigns. This
Agreement shall bind and inure to the benefit of the respective successors
and
assigns of each of the parties; provided,
however, that
Borrower may not assign this Agreement or any rights hereunder and any
prohibited assignment shall be absolutely void. No consent to an assignment
by
LENDER shall release Borrower from its Obligations. Without notice to or the
consent of Borrower, LENDER may assign this Agreement and its rights and duties
hereunder and LENDER reserves the right to sell, assign, transfer, negotiate
or
grant participations in all or any part of, or any interest in LENDER's rights
and benefits hereunder. In connection therewith, LENDER may disclose all
documents and information which LENDER now or hereafter may have relating to
Borrower or Borrower's business. Borrower hereby consents to, and authorizes
LENDER to, prepare and distribute a "tombstone", to issue a press release,
or
otherwise disseminate information to newspapers, trade journals, and other
sources, describing the nature of, and closing of the credit facilities provided
for herein, which may include Borrower's name as well as other general
information about Borrower and the credit facilities. Borrower
and LENDER do not intend any of the benefits of the Loan Documents to inure
to
any third party, and no third party shall be a third party beneficiary hereof
or
thereof.
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12.3.
Section
Headings. Headings
and numbers have been set forth herein for convenience only.
12.4.
Interpretation.
Neither
this Agreement nor any uncertainty or ambiguity herein shall be construed or
resolved against LENDER or Borrower, whether under any rule of construction
or
otherwise. On the contrary, this Agreement has been reviewed by each party
and
shall be construed and interpreted according to the ordinary meaning of the
words used so as to fairly accomplish the purposes and intentions of the parties
hereto.
12.5.
Severability
of Provisions. Each
provision of this Agreement shall be severable from every other provision of
this Agreement for the purpose of determining the legal enforceability of such
provision.
12.6.
Amendments in Writing. This
Agreement cannot be changed or terminated orally. This Agreement supersedes
all
prior agreements, understandings and negotiations, if any, all of which are
merged into this Agreement. THIS
AGREEMENT, TOGETHER WITH THE OTHER LOAN DOCUMENTS, REPRESENTS THE FINAL
AGREEMENT BETWEEN THE PARTIES REGARDING THE SUBJECT MATTER HEREIN AND THEREIN,
AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT
ORAL AGREEMENTS OF THE PARTIES HERETO. THERE ARE NO UNWRITTEN ORAL AGREEMENTS
BETWEEN THE PARTIES.
12.7.
Counterparts
and Facsimile Signatures. This
Agreement may be executed in any number of counterparts each of which, when
executed and delivered, shall be deemed to be an original and all of which,
when
taken together, shall constitute but one and the same Agreement. Any signature
to a Loan Document delivered by a party via telecopy transmission or other
electronic means shall be deemed to be an original signature.
12.8.
Indemnification.
Borrower
hereby indemnifies, protects, defends and saves harmless LENDER and any member,
officer, director, official, agent, employee and attorney of LENDER, and their
respective heirs, successors and assigns (collectively, the "Indemnified
Parties"), from and against any and all losses, damages, expenses or liabilities
of any kind or nature other than arising from their gross negligence of willful
misconduct and from any suits, claims or demands, including reasonable counsel
fees incurred in investigating or defending such claim, suffered by any of
them
and caused by, relating to, arising out of, resulting from, or in any way
connected with the Loan Documents and the transactions contemplated therein
(unless caused by the gross negligence or willful misconduct of the Indemnified
Parties) including, without limitation: (a) losses, damages, expenses or
liabilities sustained by LENDER in connection with any environmental cleanup
or
other remedy required or mandated by any Environmental Law pertaining to the
Borrower’s premises; (b) any untrue statement of a material fact contained in
information submitted to LENDER by Borrower or the omission of any material
fact
necessary to be stated therein in order to make such statement not misleading
or
incomplete in any material manner; (c) the failure of Borrower to perform any
obligations required to be performed by Borrower under the Loan Documents;
and
(d) the ownership, construction, occupancy, operations, use and maintenance
of
any of Borrower's assets. The provisions of this Section shall survive
termination of this Agreement and the other Loan Documents.
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13.
CHOICE OF LAW, VENUE AND JURY TRIAL WAIVER
13.1.
THE
VALIDITY OF THE LOAN DOCUMENTS, THEIR CONSTRUCTION, INTERPRETATION, AND
ENFORCEMENT AND THE RIGHTS OF THE PARTIES HERETO SHALL BE DETERMINED UNDER,
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE
OF
NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. THE PARTIES AGREE
THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH THE LOAN DOCUMENTS
SHALL BE TRIED AND LITIGATED ONLY IN THE STATE COURTS LOCATED IN THE COUNTY
OF
NEW YORK, STATE OF NEW YORK, THE FEDERAL COURTS LOCATED IN THE SOUTHERN DISTRICT
OF NEW YORK, OR AT THE SOLE OPTION OF LENDER, IN ANY OTHER COURT IN WHICH LENDER
SHALL INITIATE LEGAL OR EQUITABLE PROCEEDINGS AND WHICH HAS SUBJECT MATTER
JURISDICTION OVER THE MATTER IN CONTROVERSY. BORROWER
AND LENDER EACH WAIVES, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, THE RIGHT
TO A TRIAL BY JURY
IN ANY
PROCEEDING UNDER THE LOAN DOCUMENTS OR RELATING TO THE DEALINGS OF BORROWER
AND
LENDER AND ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF "FORUM NON
CONVENIENS" OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN
ACCORDANCE WITH THIS SECTION.
REMAINDER
OF THIS PAGE INTENTIONALLY LEFT BLANK
Borrower
and LENDER have executed and delivered this Agreement at New York as of the
date
first above written.
|
INNOPUMP,
INC.
|
|
|
a
Nevada corporation
|
|
|
Signed by:
|
/s/ Xxxxxxxx Xxxxxxxxx
|
|
Print Name:Xxxxxxxx Xxxxxxxxx
|
|
|
Title/Capacity:President
|
|
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|
a
New York limited liability company
|
|
|
Signed by:
|
/s/ Xxxxxxxx Xxxxxxxxx
|
|
Print Name:
Xxxxxxxx Xxxxxxxxx
|
|
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Schedule
5.16
USE
OF
PROCEEDS OF LOAN ADVANCE
Per
approved transmissions and payment instructions
with
balance applied to general overhead and working capital
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-
Schedule
5.20
Deposit
Account of Borrower
Innopump,
Inc. d/b/a/ Versadial
000
Xxxxxxx Xxxxxx, Xxxxx 0000
Xxx
Xxxx,
XX 00000
Account
# 00000000
Bank
Name, address, and Wire Transfer Instructions:
|
Citibank
|
|
000
Xxxx Xxxxxx
|
|
Xxx
Xxxx, Xxx Xxxx 00000
|
ABA
#
000000000
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