Exhibit 10.8
LOAN AND SECURITY AGREEMENT
This LOAN AND SECURITY AGREEMENT is entered into as of May 4, 2004 by
and between Genio Group, Inc., a Delaware corporation ("Borrower"), and IIG
Capital, LLC, as agent for the IIG Trade Opportunities Fund N.V. ("Lender").
RECITALS
A. Borrower has requested that Lender provide financial accommodations to
Borrower as more fully set forth herein and in the Loan Documents.
B. As additional consideration to induce Lender to enter into this
Agreement, Borrower has agreed to issue warrants to Lender to entitle Lender to
purchase shares of the Borrower's stock, all as more fully set forth in the
warrant.
NOW, THEREFORE, in consideration of the premises, and intending to be
legally bound hereby, the Parties hereby agree as follows:
AGREEMENT
1. Certain Definitions and Index to Definitions.
1.1. Accounting Terms. Unless otherwise specified herein, all
accounting terms used herein shall be interpreted, all accounting determinations
hereunder shall be made, and all financial statements required to be delivered
hereunder shall be prepared in accordance with GAAP consistently applied.
1.2. Definitions. All other terms contained in this Agreement that are
not specifically defined herein and which are defined in the UCC, shall have the
meanings provided in the UCC to the extent the same are used herein. All
references herein to the singular or plural shall also mean the plural or the
singular, respectively. As used herein, the following terms shall have the
following meanings:
1.2.1. "Account Management Fee" - $1,500 per month.
1.2.2. "Advances" - see Section 2.1.1 hereof.
1.2.3. "Agreement" - this Loan and Security Agreement, together
with all exhibits and schedules hereto, as the same now exists or may hereafter
be amended, modified, supplemented, extended, renewed, restated, or replaced.
1.2.4. "Allowable Amount" - the lesser of (i) the Borrowing Base
less Availability Reserves and (ii) the Maximum Amount.
1.2.5. "Audit Fee" - $1,000.
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1.2.6. "Availability Reserves" - as of any date of determination,
such amounts as Lender may from time to time establish and revise reducing the
amount of Advances which would otherwise be available to Borrower hereunder:
1.2.6.1. To reflect events, conditions, contingencies or
risks which, as determined by Lender, or may affect either (i) the Collateral or
any other property which is security for the Obligations or its value, (ii) the
assets, business or prospects of Borrower or any Obligor, or (iii) the security
interest and other rights of Lender in the Collateral (including the
enforceability, perfection and priority thereof);
1.2.6.2. In the amount of any Third Party Claim, until such
time as Lender has determined in good faith that the Third Party Claim is
unlikely to be asserted;
1.2.6.3. To reflect Lender's belief that any collateral
report or financial information furnished by or on behalf of Borrower or any
Obligor to Lender is or may have been incomplete, inaccurate or misleading in
any material respect; or
1.2.6.4. In respect of any state of facts that Lender
determined constitutes an Event of Default or may, with notice or passage of
time or both, constitute an Event of Default.
1.2.7. "Average Unused Portion of Maximum Amount" - the Maximum
Amount less the average Obligations that were outstanding during the immediately
preceding month.
1.2.8. "Avoidance Claim" - any claim that any payment received by
Lender from or for the account of an Account Debtor is avoidable under the
United States Bankruptcy Code or any other state or federal debtor relief
statute.
1.2.9. "Banking Day" - A day on which a commercial bank is open
for business in the Chosen State, excluding Saturdays and Sundays.
1.2.10. "Borrower" - see Preamble hereof.
1.2.11. "Borrowing Base" - the sum of:
1.2.11.1. 75% of the Net Face Amount of Borrower's Eligible
Accounts, plus
1.2.11.2. 30% of the Net Face Amount of Borrower's Qualified
Delinquent Accounts so long as outstanding Advances against such Qualified
Delinquent Accounts do not exceed $500,000;
1.2.12. "Borrowing Base Certificate" - a request for an Advance,
in a form acceptable to Lender.
1.2.13. "Business Day" - any day which is not a Saturday, Sunday,
or other day on which national banks are authorized or required to be closed.
1.2.14. "Chosen State" - New York.
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1.2.15. "Claim" - a claim by an Account Debtor, of any defense,
dispute, offset, counterclaim, or rights of return or cancellation with respect
to any Account.
1.2.16. "Clearance Days" - (i) 3 Business Days for checks drawn
on banks located within the Chosen State, (ii) 1 Business Day and for all
electronic funds transfers, and (iii) 3 Business Days for all other payments.
1.2.17. "Collateral" - All Borrower's present and future
Accounts, Chattel Paper, Goods (including Inventory and Equipment), Instruments,
Investment Property, Documents, and General Intangibles, Letter of Credit
Rights, Commercial Tort Claims, Deposit Accounts, and the proceeds thereof.
1.2.18. "Collateral Management Fee" - 0.35% per month of average
outstanding balance of accounts receivable.
1.2.19. "Complete Termination" - Complete Termination occurs upon
satisfaction of the following conditions:
1.2.19.1. Payment in full of all Obligations;
1.2.19.2. If Lender has issued or caused to be issued
guarantees, commitments to third parties, or letters of credit on behalf of
Borrower, acknowledgement from any beneficiaries thereof that Lender or any
other issuer has no outstanding direct or contingent liability therein; and
1.2.19.3. Borrower has executed and delivered to Lender a
general release in the form of Exhibit 21 attached hereto.
1.2.20. "Contractual Termination Date" - The end of the Initial
Term or any Renewal Term, as the case may be.
1.2.21. "Credit Accommodation" - any advance or other extension
of credit by Lender to or on behalf of Borrower hereunder.
1.2.22. "Default Interest Rate Spread" - 10%.
1.2.23. "Default Waiver Fee" - $2,500.
1.2.24. "Delinquent Account" - see Section 1.2.28.1.
1.2.25. "Early Termination Date" - the date on an Early
Termination Event occurs.
1.2.26. "Early Termination Event" - the occurrence of any of the
following:
1.2.26.1. Termination of this Agreement by Borrower;
1.2.26.2. Borrower becomes a debtor in a case filed under
the United States Bankruptcy Code or any similar state proceeding;
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1.2.26.3. Borrower repays the Obligations (whether by
acceleration or otherwise, except if such repayment is due to termination of
this Agreement by Lender) prior to the next Contractual Termination Date.
1.2.27. "Early Termination Fee" - the product of (x) the number
of months (or portions thereof) between the next Contractual Termination Date
and the Early Termination Date and (y) greater of (i) the average monthly
interest for the immediately preceding three months or (ii) $75,000.
1.2.28. "Eligible Account" - an Account, excluding the following:
1.2.28.1. Any Account which remain remains uncollected for
more than 90 days from invoice date (each a "Delinquent Account");
1.2.28.2. Any Account due from an Account Debtor that is
insolvent;
1.2.28.3. Any Account due from an Account Debtor affiliated
with Borrower in any manner;
1.2.28.4. Any Account which is not unconditionally due and
owing; such as (but not limited to) a consignment transaction;
1.2.28.5. Accounts commonly known as "xxxx and hold" or a
similar arrangement;
1.2.28.6. Any Account owing by an Account Debtor which does
not have a place of business in the United States or which is not payable in US
dollars, other than an Account (i) covered by credit insurance in form and
amount, and by an insurer, satisfactory to Lender, or (ii) supported by a letter
of credit issued by a financial institution acceptable to Lender;
1.2.28.7. Any Account due from an Account Debtor who is any
national, federal state or municipal government, including, without limitation,
any instrumentality, division, agency, body or department thereof, except where
the Account Debtor is bound to make payment directly to Lender;
1.2.28.8. Accounts due from an Account Debtor as to which
25% percent or more of the aggregate dollar amount of all outstanding Accounts
owing from such Account Debtor are Delinquent Accounts;
1.2.28.9. That portion of Accounts due from an Account
Debtor which is in excess of 30% percent of Borrower's aggregate dollar amount
of all outstanding Accounts Receivable;
1.2.28.10. Accounts which are not free of all liens,
encumbrances, charges, rights and interest of any kind, except in favor of
Lender;
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1.2.28.11. Accounts which are supported or represented by a
promissory note, post-dated check or letter of credit unless Lender holds a
first perfected security interest therein;
1.2.28.12. Accounts that represent progress payments or
other advance xxxxxxxx that are due prior to the completion of performance by
Borrower of the subject contract for goods or services;
1.2.28.13. Accounts for which Borrower is or may become
indebted to the Account Debtor; and
1.2.28.14. Accounts that are unsuitable as collateral, as
determined by Lender in the exercise of its reasonable discretion.
1.2.29. "Event of Default" - see Section 13 hereof.
1.2.30. "Exposed Payments" - Payments received by Lender from an
Account Debtor that has become subject to a bankruptcy proceeding, to the extent
such payments cleared said Account Debtor's deposit account within ninety days
of the commencement of said bankruptcy case.
1.2.31. "GAAP" - means generally accepted accounting principles
set forth in the opinions and pronouncements of the Accounting Principles Board
of the American Institute of Certified Public Accountants and pronouncements of
the Financial Accounting Standards Board (or any successor authority) that are
applicable as of the date of determination.
1.2.32. "Guarantors" - all individuals and entities now, if any,
or hereafter guaranteeing the Obligations.
1.2.33. "Initial Term" - one (1) year from the date hereof.
1.2.34. "Interest Rate" - The greater of (i) 4.25% per annum in
excess of the Prime Rate or (ii) 8.75% per annum. Any change in the Interest
Rate shall be effective as of the date of any change in the Prime Rate.
1.2.35. "Key Employee" - Xxxx Xxx-Xxxx.
1.2.36. "Loan Account" - that portion of the Obligations which
accrue interest hereunder, including the sum of the unpaid balances of:
1.2.36.1. Advances;
1.2.36.2. Other payments made by Lender arising hereunder
for which Borrower is liable to Lender.
1.2.37. "Loan Documents" - this Agreement, together with any
documents, instruments and agreements, executed and/or delivered in connection
herewith, as the same now
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exist or may hereafter be amended, modified, supplemented, extended, renewed,
restated or replaced.
1.2.38. "Loan Fee" - 1.5% of the Maximum Amount at the time this
fee accrues.
1.2.39. "Maximum Amount" - $3,000,000.
1.2.40. "Minimum Monthly Income" - $20,000.
1.2.41. "Misdirected Payment Fee" -10% of the Net Face Amount.
1.2.42. "Missing Notation Fee" - 10% of the Net Face Amount.
1.2.43. "Monetary Collateral" - cash, checks or other proceeds of
Collateral in tangible form.
1.2.44. "Net Face Amount" - with respect to an Account, the gross
face amount of such Account less all trade discounts or other deductions and
claims to which the Account Debtor is contractually entitled.
1.2.45. "Obligor" - the Borrower or any Guarantor.
1.2.46. "Obligations" - all present and future obligations owing
by Borrower to Lender whether arising hereunder or otherwise, and whether
arising before, during or after the commencement of any Bankruptcy Case in which
Borrower is a Debtor.
1.2.47. "Permitted Liens" - means: (a) liens in favor of Lender,
(b) liens for taxes not delinquent or for taxes being diligently contested in
good faith by Borrower by appropriate proceedings, (c) mechanic's, xxxxxxx'x,
materialman's, landlord's, carrier's and other like liens arising in the
ordinary course of Borrower's business with respect to obligations which are not
due or which are being diligently contested in good faith by Borrower by
appropriate proceedings, provided that such liens did not arise in connection
with the borrowing of money or the obtaining of advances and do not, in Lender's
reasonable determination, have a material effect on Borrower's business or
financial condition or on the Collateral, and (d) liens relating to equipment
leases or purchase money security interests entered into in the ordinary course
of Borrower's business.
1.2.48. "Prime Rate" - The prime rate as reflected in the Wall
Street Journal from time to time. If the prime rate is reflected as a range,
then the Prime Rate as used herein shall be the highest amount in said range.
1.2.49. "Qualified Delinquent Accounts" - Accounts which (a)
would be Eligible Accounts, except that they violate Section 1.2.28.1 hereof,
(b) have not been uncollected for more than ninety-one (91) one hundred and
twenty-one (121) days from the invoice date, and (c) are either (i) insured by a
credit insurance policy acceptable to Lender or (ii) supported by one or more
letters of credit issued by a financial institution acceptable to Lender.
1.2.50. "Renewal Term" - 1 year.
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1.2.51. "Subordinating Creditor" - any creditor of the Borrower
which has executed a Subordination Agreement.
1.2.52. "Subordination Agreement" - a subordination agreement in
form and substance acceptable to Lender whereby Subordinating Creditor
subordinates, in favor of Lender, obligations owed to it by Borrower.
1.2.53. "Termination Date" - the earlier of (i) the Contractual
Termination Date or (ii) the date on which Lender elects to terminate this
Agreement pursuant to the terms herein.
1.2.54. "Third Party Claim" - claims asserted against Lender by
any person or entity relating in way to the Lender's relationship with Borrower
or any stamp or other taxes (other than transfer or F taxes) which may be
determined to be payable in connection with the execution of the Loan Documents.
1.2.55. "UCC" - The Uniform Commercial Code in effect in the
Chosen State as the same may be amended from time to time.
1.2.56. "Unused Line Fee" - 1% percent per annum of the Average
Unused Portion of the Maximum Amount.
2. Credit Facilities.
2.1. Advances. Subject to the terms and conditions of this Agreement,
from the date on which this Agreement becomes effective until the Termination
Date:
2.1.1. Lender, shall, from time to time, at the request of
Borrower, make advances ("Advances") to Borrower, less any Availability
Reserves, so long as, before and after such Advance, the Obligations do not
exceed the Allowable Amount.
2.1.2. Lender may, in its discretion, from time to time, upon not
less then five (5) days prior notice to Borrower, reduce the Borrowing Base to
the extent that Lender determines that:
2.1.2.1. The dilution with respect to the Accounts for any
period (based on the ratio of (a) the aggregate amount of reductions in Accounts
other than as a result of payments in cash to (b) the aggregate amount of total
sales) has increased in any material respect or may be reasonably anticipated to
increase in any material respect above historical levels;
2.1.2.2. The general creditworthiness of Account Debtors has
declined.
2.2. General Provisions.
2.2.1. Borrowing Base Certificate. Each request from Borrower for
a Credit Accommodation shall be accompanied by a Borrowing Base Certificate,
completed and signed by Borrower.
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2.2.2. Crediting Borrower's Account. All Credit Accommodations by
Lender may be made by deposits or transfers to any demand deposit account of
Borrower.
2.2.3. Authorization for Credit Accommodations. Subject to the
terms and conditions of this Agreement, Lender is authorized to make Credit
Accommodations:
2.2.3.1. Upon telephonic, facsimile or other instructions
received from anyone purporting to be an officer, employee or representative of
Borrower; or
2.2.3.2. At the sole discretion of Lender, and
notwithstanding any other provision in this Agreement, if necessary to meet any
Obligations, including but not limited to any interest not paid when due.
2.3. Limitations on Credit Accommodations. Notwithstanding
anything to the contrary contained herein, Lender shall not be obligated to make
a Credit Accommodation if, before or as a result thereof, the Obligations shall
exceed the Allowable Amount.
3. Payments by Borrower.
3.1. In General.
3.1.1. Place of Payments. All payments hereunder shall be made by
Borrower to Lender at Lender's address set forth herein or at such other place
as Lender may designate in writing.
3.1.2. ACH Debits. In order to satisfy any of the Obligations,
Lender is hereby authorized by Borrower to initiate electronic debit entries
through the ACH or other electronic payment system to any account maintained by
Borrower. At the Lender's request, Borrower shall execute and deliver to Lender
an authorization agreement for ACH debits.
3.2. Interest and Fees.
3.2.1. Interest.
3.2.1.1. Subject to Section 3.2.1.3 hereof, interest on the
Loan Account balance shall be payable monthly, in arrears, shall be computed at
the Interest Rate, and shall be due on the first (1st) day of each month
following the accrual thereof. Lender is authorized to debit the Loan Account on
the first day of each month for interest accrued hereunder during the preceding
month.
3.2.1.2. Minimum Monthly Income. Any amount by which the
interest, Collateral Management Fee and Account Management Fee earned in any
month (prorated for partial periods) is less than the Minimum Monthly Income,
shall be paid on the first day of the following month.
3.2.1.3. Default Interest. Immediately upon the occurrence
and during the continuance of an Event of Default, the interest rates otherwise
applicable shall be increased by the Default Interest Rate Spread.
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3.2.1.4. Calculation of Interest. All interest charged
hereunder shall be computed on the basis of a three hundred sixty (360) day year
for the actual number of days elapsed.
3.2.1.5. Application of Collections. Lender shall, for the
purpose of the computation of interest due hereunder, add the Clearance Days to
any payments, which is acknowledged by the parties to constitute an integral
aspect of the pricing of Lender's facility to Borrower, and shall apply
irrespective of the characterization of whether receipts are owned by Borrower
or Lender. Should any check or item of payment not be honored when presented for
payment, then Borrower shall be deemed not to have made such payment, and
interest shall be recalculated accordingly.
3.2.2. Fees.
3.2.2.1. Audit Fee. Borrower shall immediately pay to Lender
an Audit Fee, in addition to Lender's related out-of-pocket expenses, in
connection with each audit of Borrower that Lender performs or causes to be
performed hereunder.
3.2.2.2. Account Management Fee. Borrower shall pay the
Account Management Fee, on the first day of each month until the last to occur
of (i) payment in full of all Obligations, and (ii) termination of this
Agreement.
3.2.2.3. Collateral Management Fee. Borrower shall pay the
Collateral Management Fee to Lender monthly, in arrears, on the first (1st) day
of each month following the accrual thereof.
3.2.2.4. Default Waiver Fee. Borrower shall pay the Default
Waiver Fee to Lender, immediately upon the waiver by Lender of any Event of
Default hereunder, so long as the waiver was done at the Borrower's request.
3.2.2.5. Early Termination Fee. Borrower shall pay to Lender
the Early Termination Fee immediately upon the occurrence of an Early
Termination Event.
3.2.2.6. Loan Fee. Borrower shall pay the Loan Fee to Lender
on the date hereof and on the first day following each Contractual Termination
Date until the later of (i) termination of this Agreement, and (ii) full payment
of all Obligations.
3.2.2.7. Misdirected Payment Fee. Borrower shall pay the
Misdirected Payment Fee to Lender, immediately on its accrual, on the amount of
any payment on an Account, which has been received by Borrower and not delivered
in kind by Borrower to Lender within three (3) Business Days of receipt thereof.
3.2.2.8. Missing Notation Fee. Borrower shall immediately
pay to Lender the Missing Notation Fee on any invoice that is sent by Borrower
to an Account Debtor that does not contain the notice as required by Section
11.10 hereof.
3.2.2.9. Unused Line Fee. Borrower shall pay the Unused Line
Fee to Lender monthly, in arrears on the first (1st) day of each month following
the accrual thereof.
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4. Indemnification Protection.
4.1. Notwithstanding payment in full of the Obligations and
termination of this Agreement, in the event that (i) a Third Party Claim has
been asserted against Lender, or (ii) Lender believes in good faith that a Third
Party Claim may be asserted against Lender, Lender may retain its security
interest or any funds of Borrower in the amount of the Third Party Claim
together with Lender's good faith estimate of its costs to be incurred in the
defense thereof, until such time as the Claim is withdrawn or satisfied, unless
Lender receives Assurances (as defined below) regarding its exposure to the
Third Party Claim.
4.2. For the purposes hereof, "Assurances" shall mean collateral, a
guaranty or a letter of credit from an entity so that Lender reasonably believes
in good faith that the likelihood of loss resulting from the Third Party Claim
is remote.
5. Grant of Security Interest. To secure the performance of the
Obligations, Borrower grants to the Lender a security interest in the
Collateral, and all proceeds and products thereof.
6. Authorization to File Financing Statements.
6.1. The Borrower irrevocably authorizes the Lender to file in any
Uniform Commercial Code jurisdiction any initial financing statements and
amendments thereto that:
6.1.1. Indicate the Collateral as all assets of the Borrower or
words of similar effect, regardless of whether any particular asset comprised in
the Collateral falls within the scope of Article 9 of the UCC, or as being of an
equal or lesser scope or with greater detail;
6.1.2. Contain any other information required by part 5 of
Article 9 of the UCC for the sufficiency or filing office acceptance of any
financing statement or amendment, including (i) whether the Borrower is an
organization, the type of organization, and any organization identification
number issued to the Borrower and, (ii) in the case of a financing statement
filed as a fixture filing or indicating Collateral to be as-extracted collateral
or timber to be cut, a sufficient description of real property to which the
Collateral relates;
6.1.3. Contain a notification that the Borrower has granted a
negative pledge to the Lender, and that any subsequent lienor may be tortiously
interfering with Lender's rights;
6.1.4. Advises third parties that any notification of Borrower's
Account Debtors will interfere with Lender's collection rights;
6.2. The Borrower agrees to furnish any of the foregoing information
to the Lender promptly upon request;
6.3. The Borrower ratifies its authorization for the Lender to have
filed any like initial financing statements or amendments thereto if filed prior
to the date hereof; and
6.4. The Lender may add any supplemental language to any such
financing statement as Lender may reasonably determine to be necessary or
helpful in acquiring or preserving rights against third parties.
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7. Collection and Administration of Accounts.
7.1. Collection. Lender may notify Borrower's customers that that the
underlying Account has been assigned to Lender and that payment thereof is to be
made to the order of Lender and sent directly to Lender. Such notification may
be in the form that is annexed hereto as Exhibit 7.1.
7.2. Direction of Payments. Borrower shall direct its customers to
send the proceeds of Accounts to an address or deposit account as directed by
Lender.
7.3. Receipt of Funds by Borrower. In the event Borrower receives
proceeds of Collateral in the form of a wire transfer or other intangible funds
transfer mechanism, Borrower shall such proceeds to Lender immediately upon
receipt.
7.4. Lender's Powers. Borrower hereby authorizes Lender, at Borrower's
sole expense, to exercise at any time in Lender's discretion all or any of the
following powers, which powers are irrevocable until all of the Obligations have
been paid in full:
7.4.1. Receive, take, endorse, assign, deliver, accept and
deposit, in the name of Lender or Borrower, any and all cash, checks, commercial
paper, drafts, remittances and other instruments and documents relating to the
Collateral or the proceeds thereof;
7.4.2. Pay any sums necessary to discharge any lien or
encumbrance that is senior to Lender's security interest in the Collateral,
which sums shall be included as Obligations hereunder.
7.4.3. Send requests (which may identify the sender by a
pseudonym) for verification of any Accounts directly to the Account Debtor or
any bailee of the Collateral.
7.5. Release. Borrower hereby releases and exculpates Lender, its
officers, employees, agents, designees, attorneys, and accountants from any
liability arising from any acts under this Agreement or in furtherance thereof,
whether of omission or commission, and whether based upon any error of judgment
or mistake of law or fact, except for gross negligence or willful misconduct. In
no event shall Lender have any liability to Borrower for lost profits or other
special or consequential damages.
8. Representations and Warranties by Borrower.
8.1. All Accounts listed on any report provided by Borrower to Lender
will be:
8.1.1. Bona fide existing obligations created by the sale and
delivery of goods or the rendition of services in the ordinary course of
Borrower's business;
8.1.2. Unconditionally owed and will be paid to Lender without
the assertion of any Claim; and
8.1.3. Not sales to any entity that is affiliated with Seller or
in any way not an "arms length" transaction.
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8.2. There are no actions or proceedings pending by or against
Borrower before any court or administrative agency and Borrower does not have
knowledge or belief of any pending, threatened, or imminent litigation,
governmental investigations, or claims, complaints, actions, or prosecutions
involving Borrower or any Guarantor of the Obligations, except for ongoing
collection matters in which Borrower is the plaintiff.
8.3. All financial statements relating to Borrower that have been
delivered by Borrower to Lender have been prepared in accordance with GAAP and
fairly present Borrower's financial condition as of the date thereof and
Borrower's results of operations for the period then ended. There has not been a
material adverse change in the financial condition of Borrower since the date of
the latest financial statements submitted to Lender on or before the date
hereof.
8.4. Borrower agrees to maintain books and records and its records
pertaining to the Collateral in accordance with GAAP and in such additional
detail, form and scope, as Lender shall reasonably require.
9. Conditions Precedent to All Advances. Subject to the other terms and
conditions contained herein, Lender's obligation to make any Credit
Accommodation available to Borrower is subject to the satisfaction of, or waiver
of, immediately prior to or concurrently with the making of such Credit
Accommodation, the following conditions precedent:
9.1. Representations and Warranties. The representations and
warranties contained in the Loan Documents shall be true and correct in all
respects on and as of the date of such Credit Accommodation.
9.2. No Event of Default. No Event of Default or event that with the
giving of notice or passage of time would constitute an Event of Default shall
have occurred and be continuing on the date of such Credit Accommodation.
9.3. Payment of All Fees. Borrower shall have paid to Lender all
accrued and unpaid fees and other amounts due and payable hereunder and pursuant
to the terms hereof.
9.4. Lender's Priority Interest. Lender shall have a first priority
security interest in the Collateral except as set forth in Exhibit 9.4.
10. Authorization to Lender.
10.1. The Borrower irrevocably authorizes Lender to take any and all
appropriate action and to execute any and all documents and instruments, in the
name of Borrower, that may be necessary or desirable to accomplish the purposes
of this Agreement including the filing on behalf of Borrower with such
governmental authorities as are appropriate such documents (including, without
limitation, applications, certificates, and tax returns) as may be required for
purposes of having Borrower qualified to transact business in a particular state
or geographic location.
10.2. Borrower authorizes Lender to accept, endorse and deposit on
behalf of Borrower any checks tendered by an account debtor "in full payment" of
its obligation to Borrower. Borrower shall not assert against Lender any claim
arising therefrom, irrespective of whether
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such action by Lender effects an accord and satisfaction of Borrower's claims,
under ss.3-311 of the Uniform Commercial Code, or otherwise.
11. Affirmative Covenants. Until full payment of the Obligations and
termination of this Agreement, Borrower shall:
11.1. At such times as Lender may request and in the manner specified
by Lender, Borrower shall deliver to Lender copies of invoices, agreements,
proof of rendition of services and delivery of goods and other documents
evidencing or relating to the transactions which gave rise to any of the
Collateral, together with customer statements, schedules describing the
Collateral and confirmatory assignments to Lender thereof, in form and substance
satisfactory to Lender, and duly executed by Borrower.
11.2. Immediately advise Lender, in writing, of the assertion of any
Claim.
11.3. Furnish to Lender, in form and substance satisfactory to Lender:
11.3.1. Annual Financial Statements. As soon as possible after
the end of each fiscal year of Borrower, and in any event within 105 days
thereafter:
11.3.1.1. A complete copy of Borrower's financial
statements, including but not limited to (a) the management letter, if any, (b)
the balance sheet as of the close of the fiscal year, and (c) the income
statement for such year, together with a statement of cash flows, audited by a
firm of independent certified public accountants of recognized standing and
acceptable to Lender, and
11.3.1.2. A statement certified by the chief financial
officer of Borrower that Borrower is in compliance with all the terms,
conditions, covenants and warranties of this Agreement.
11.3.2. Other Financial Statements. No later than 30 days after
the close of each quarter (an "Accounting Period"):
11.3.2.1. Borrower's balance sheet as of the close of such
Accounting Period and its income statement for that portion of the then current
fiscal year through the end of such Accounting Period certified by Borrower's
chief financial officer as being complete, correct, and fairly representing its
financial condition and results of operations;
11.3.2.2. Borrower's accounts receivable and accounts
payable agings as of the end of such Accounting Period, as well as its month end
inventory report, and an accounts receivable collection report in a form
satisfactory to Lender, certified by Borrower's chief financial officer as being
complete and correct;
11.3.3. Tax Returns. Copies of each of Borrower's:
11.3.3.1. Federal income tax returns, and any amendments
thereto, within ten (10) days of the filing thereof with the Internal Revenue
Service; and
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11.3.3.2. Federal payroll tax returns within ten (10) days
of filing, together with proof, reasonably satisfactory to Lender, that all such
taxes have been paid.
11.4. Inspections.
11.4.1. During usual business hours, permit Lender, without
notice to Borrower, to periodically:
11.4.1.1. Have access to all premises where Collateral is
located for the purposes of inspecting (and removing, if after the occurrence of
an Event of Default) any of the Collateral, and
11.4.1.2. To inspect, audit, make copies of, and make
extracts from Borrower's records as Lender may request.
11.4.2. Without expense to Lender, Lender may use any of
Borrower's personnel, equipment, including computer equipment, programs, printed
output and computer readable media, supplies and premises for the collection of
accounts and realization on other Collateral as Lender, in its sole discretion,
deems appropriate.
11.5. Indemnification. Indemnify and save Lender harmless from any and
all liability with respect to any Third Party Claim, including the costs
incurred in the defense thereof.
11.6. Enforcement of Judgments. Reimburse Lender for all costs and
expenses, including attorneys' fees, which Lender incurs in enforcing any
judgment rendered in connection with this Agreement. This provision is severable
from all other provisions hereof and shall survive, and not be deemed merged
into, such judgment.
11.7. Taxes and Expenses Regarding Borrower's Assets.
11.7.1. Make timely payment when due without extension of all
taxes, assessments or contributions required of Borrower, unless and to the
extent that such taxes, assessments or contributions shall be contested in good
faith and by appropriate proceedings and that to the extent required by
generally accepted accounting principles, adequate book reserves are established
by Borrower. If Borrower fails to make any such payment or deposit or furnish
proof of such payment or to otherwise satisfy Borrower's obligations set forth
in the preceding sentence, Lender may, in its sole discretion and without
written notice to Borrower:
11.7.1.1. Make payment of the same or any part thereof; or
11.7.1.2. Set up such reserves against the Obligations as
Lender deems necessary to satisfy the liability therefore, or both.
11.7.2. Lender may conclusively rely on statements of the amount
owing or other official statements issued by the appropriate governmental
agency. Any payment made by Lender shall constitute neither:
11.7.2.1. An agreement by Lender to make similar payments in
the future; nor
Page 14 of 29
11.7.2.2. A waiver by Lender of any default under the Loan
Documents. Lender need not inquire into, nor contest the validity of, any
expense, tax, security interest, encumbrance or lien, and the receipt of the
usual official notice from the applicable governmental agency requiring the
payment thereof shall be conclusive evidence that the same was validly due and
owing.
11.8. Change in Name. Give Lender written notice immediately upon
forming an intention to change its name, state of organization or form of
business organization.
11.9. Maintenance of Insurance.
11.9.1. The Borrower will maintain with financially sound and
reputable insurers insurance with respect to its properties and business against
such casualties and contingencies as shall be in accordance with general
practices of businesses engaged in similar activities in similar geographic
areas. Such insurance shall be in such minimum amounts that the Borrower will
not be deemed a co-insurer under applicable insurance laws, regulations, and
policies and otherwise shall be in such amounts, contain such terms, be in such
forms and be for such periods as may be reasonably satisfactory to the Lender.
In addition, all such insurance shall be payable to the Lender under a Lender
Loss Payable Endorsement. Without limiting the foregoing, the Borrower will:
11.9.1.1. Keep all of its physical property insured with
casualty or physical hazard insurance on an "all risks" basis, with broad form
flood and earthquake coverage and electronic data processing coverage, with a
full replacement cost endorsement and an "agreed amount" clause in an amount
equal to 100% of the full replacement cost of such property;
11.9.1.2. Maintain all such workers' compensation or similar
insurance as may be required by law; and
11.9.1.3. Maintain, in amounts and with deductibles equal to
those generally maintained by businesses engaged in similar activities in
similar geographic areas, general public liability insurance against claims of
bodily injury, death, or property damage occurring, on, in or about the
properties of the Borrower; business interruption insurance; and product
liability insurance.
11.9.2. In the event that Borrower fails to maintain such
insurance, Lender may obtain such insurance at Borrower's expense, and, after an
Event of Default, to adjust or settle any claim or other matter under or arising
pursuant to such insurance or to amend or cancel such insurance.
11.10. Before sending any invoice to an Account Debtor, Borrower shall
xxxx same with a notice of assignment or remittance instructions as may be
required by Lender.
11.11. Notwithstanding that Borrower has agreed to pay the Misdirected
Payment Fee, Borrower shall pay to Lender on the next Banking Day following the
date of receipt by Borrower the amount of any proceeds of Accounts received by
Borrower.
Page 15 of 29
11.12. Access to Electronic Information. Borrower hereby permits
Lender at any time to access electronically information concerning any accounts
maintained by Borrower with any bank or other financial institution so long as
such access is in furtherance of, or to monitor compliance with, the terms of
this Agreement, and Borrower shall provide Lender with all necessary access
codes, passwords and the like to carry out the provisions hereof.
11.13. Chattel Paper. Borrower agrees that any chattel paper which is
part of the Collateral will be marked: "This chattel paper has been assigned to
IIG Capital, LLC, as agent for the IIG Trade Opportunities Fund N.V. Further
assignment of this chattel paper violates the rights of IIG Capital, LLC, as
agent for the IIG Trade Opportunities Fund N.V."
12. Negative Covenants. Borrower will not:
12.1. Modify Account Obligations. After an Event of Default, (i) grant
any extension of time for payment of any Accounts, (ii) compromise or settle any
Accounts for less than the full amount thereof, (iii) release in whole or in
part any Account Debtor; or (iv) grant any credits, discounts, allowances,
deductions, return authorizations, or the like with respect to any Accounts.
12.2. Negative Pledge. Hereafter grant any lien upon the Collateral
other than any Permitted Liens.
12.3. Mergers, etc. Enter into any acquisition, merger, consolidation,
reorganization, or recapitalization, or reclassify its capital stock, or
liquidate, wind up, or dissolve itself (or suffer any liquidation or
dissolution), or convey, sell, assign, lease, transfer, or otherwise dispose of,
in one transaction or a series of transactions, all or any substantial part of
its business, property, or assets, whether now owned or hereafter acquired, or
acquire by purchase or otherwise all or substantially all of the properties,
assets, stock, or other evidence of beneficial ownership of any entity, other
than as described in Exhibit 12.3 hereto.
12.4. Transfer of Assets. Enter into any transaction not in the
ordinary and usual course of Borrower's business, including the sale, lease, or
other disposition of, moving, relocation, or transfer, whether by sale or
otherwise, of any of Borrower's properties, assets (other than (i) sales of
Inventory to buyers in the ordinary course of Borrower's business as currently
conducted, (ii) the sale or other disposition of worn out or obsolete equipment,
and (iii) sales or other disposition of equipment having a fair market value of
not greater than $50,000 during each fiscal year).
12.5. Change of Name. Change Borrower's name, Federal Employer
Identification Number, business structure, or identity, or add any new
fictitious name.
12.6. Suspension of Business. Suspend or go out of a substantial
portion of its business.
13. Events of Default. Each of the following events or conditions shall
constitute an "Event of Default":
13.1. Borrower defaults in the performance of any payment obligation
due hereunder;
Page 16 of 29
13.2. Borrower fails to cure the breach of any Obligation other than a
payment obligation within ten (10) days after written notice thereof is sent by
Lender to Borrower;
13.3. Borrower is in default with respect to any present or future
agreement with Lender (after giving effect to any applicable grace or cure
periods contained therein);
13.4. The Obligations at any time exceed the Allowable Amount;
13.5. An order for relief is entered against any Obligor by any United
States Bankruptcy Court; or any Obligor does not generally pay its debts as they
become due (within the meaning of 11 U.S.C. 303(h) as at any time amended, or
any successor statute thereto); or any Obligor makes an assignment for the
benefit of creditors; or any Obligor applies for or consents to the appointment
of a custodian, receiver, trustee, or similar officer for it or for all or any
substantial part of its assets, or such custodian, receiver, trustee, or similar
officer is appointed without the application or consent of any Obligor; or any
Obligor institutes (by petition, application, answer, consent, or otherwise) any
bankruptcy, insolvency, reorganization, moratorium, arrangement, readjustment of
debt, dissolution, liquidation or similar proceeding relating to it under the
laws of any jurisdiction; or any such proceeding shall be instituted (by
petition, application, or otherwise) against any Obligor and the same remains
undismissed after a period of ninety (90) days; or any judgment, writ, warrant
of attachment, execution, or similar process shall be issued or levied against a
substantial portion of the property of any Obligor;
13.6. A material adverse change occurs with respect to the financial
condition or operations of Borrower which results in a material impairment of
the prospect of repayment of the Obligations;
13.7. A sale, hypothecation or other disposition is made of thirty
three (33%) percent or more of the beneficial interest in any class of voting
stock of Borrower;
13.8. Any Guarantor defaults in the performance of its obligations to
Lender (after any applicable grace or cure period) or shall notify Lender of its
intention to rescind, modify, terminate or revoke the its guaranty or it shall
cease to be in full force and effect for any reason whatever;
13.9. Any Subordinating Creditor fails to perform or observe any of
such Subordinating Creditor's obligations under any Subordination Agreement
(after any applicable grace or cure period), or notifies Lender of the
Subordinating Creditor's intention to rescind, modify, terminate or revoke the
Subordination Agreement with respect to future transactions, or the
Subordination Agreement ceases to be in full force and effect for any reason
whatsoever;
13.10. Any of the Key Employees fails to devote substantially all of
their efforts in furtherance of the business affairs of Borrower for any one
month, or ceases to be employed by Borrower in the capacity that such employee
held as of the date of this Agreement and a replacement reasonably satisfactory
to Lender is not made within sixty days.
13.11. Any provision of this Agreement or any of the Loan Documents
ceases, for any reason, to be valid and binding on Borrower.
Page 17 of 29
14. Remedies.
14.1. Upon the occurrence of any Event of Default all Obligations
shall accrue interest at the Default Rate and Lender may:
14.1.1. Declare this Agreement and all of Lender's obligations
hereunder terminated;
14.1.2. Declare all Obligations to be immediately due and
payable, without presentment, demand, protest, or notice of any kind, all of
which are hereby expressly waived by Borrower;
14.1.3. Take or bring, in the name of Lender or Borrower, all
steps, actions, suits or proceedings deemed by Lender necessary or desirable to
effect collection of or other realization upon any Collateral;
14.1.4. Change the address for delivery of Borrower's mail to
Lender and to receive and open mail addressed to Borrower;
14.1.5. Extend the time of payment of, compromise, or settle for
cash, credit, return of merchandise, any and all Monetary Collateral and
discharge or release any entity obligated with respect to any Collateral without
affecting any of the Obligations; and/or
14.1.6. Execute, file and serve, in its own name or in the name
of Borrower, mechanics lien or similar notices, or claims under any payment or
performance bond for the benefit of Borrower.
14.2. EXCEPT AS OTHERWISE PROVIDED IN THIS AGREEMENT, Borrower WAIVES
ANY REQUIREMENT THAT Lender INFORM Borrower BY AFFIRMATIVE ACT OR OTHERWISE OF
ANY ACCELERATION OF Borrower'S OBLIGATIONS HEREUNDER. FURTHER, Lender'S FAILURE
TO CHARGE OR ACCRUE INTEREST OR FEES AT ANY "DEFAULT" OR "PAST DUE" RATE SHALL
NOT BE DEEMED A WAIVER BY Lender OF ITS CLAIM THERETO.
15. Standards for Exercising Remedies. To the extent that applicable law
imposes duties on the Lender to exercise remedies in a commercially reasonable
manner, the Borrower acknowledges and agrees that it is not commercially
unreasonable for the Lender:
15.1. To not incur expenses to prepare Collateral for disposition or
otherwise to complete raw material or work in process into finished goods or
other finished products for disposition;
15.2. To fail to obtain third party consents for access to Collateral
to be disposed of, or to obtain or, if not required by other law, to fail to
obtain governmental or third party consents for the collection or disposition of
Collateral to be collected or disposed of;
15.3. To fail to exercise collection remedies against Account Debtors
or other persons obligated on Collateral or to remove liens or encumbrances on
or any adverse claims against Collateral;
Page 18 of 29
15.4. To exercise collection remedies against Account Debtors and
other persons obligated on Collateral directly or through the use of collection
agencies and other collection specialists;
15.5. To advertise dispositions of Collateral through publications or
media of general circulation, whether or not the Collateral is of a specialized
nature;
15.6. To hire one or more professional auctioneers to assist in the
disposition of Collateral, whether or not the collateral is of a specialized
nature;
15.7. To dispose of Collateral by using Internet sites that provide
for the auction of assets of the types included in the Collateral or that have
the reasonable capability of doing so, or that match buyers and sellers of
assets;
15.8. To dispose of assets in wholesale rather than retail markets;
15.9. To disclaim all disposition warranties; or
15.10. To purchase insurance or credit enhancements to insure the
Lender against risks of loss, collection or disposition of Collateral or to
provide to the Lender a guaranteed return from the collection or disposition of
Collateral.
15.11. Borrower acknowledges that the purpose of this Section 15 is to
provide non-exhaustive indications of what actions or omissions by the Lender
would not be commercially unreasonable in the Lender's exercise of remedies
against the Collateral and that other actions or omissions by the Lender shall
not be deemed commercially unreasonable solely on account of not being indicated
in this Section. Without limitation upon the foregoing, nothing contained herein
shall be construed to grant any rights to the Borrower or to impose any duties
on the Lender that would not have been granted or imposed by this Agreement or
by applicable law in the absence of this Section 15.
16. Proceeds and Expenses of Dispositions. Borrower shall pay to the Lender
on demand any and all expenses, including reasonable attorneys' fees and
disbursements, incurred or paid by the Lender in protecting, preserving, or
enforcing the Lender's rights under or in respect of any of the Obligations or
any of the Collateral. After deducting all of said expenses, the residue of any
proceeds of collection or sale of the Obligations or Collateral shall, to the
extent actually received in cash, be applied to the payment of the Obligations
in such order or preference as the Lender may determine, notwithstanding
contrary instructions received by Lender from the Borrower or any other third
party.
17. Liquidation Success Premium. If Borrower shall substantially cease
operating as a going concern, and the proceeds of Collateral created after the
occurrence of an Event of Default (the "Default") are in excess of the
Obligations at the time of Default, Borrower shall pay to Lender a liquidation
success premium of ten percent of the amount of such excess.
18. Attorneys Fees and Expenses. Borrower agrees to reimburse Lender on
demand for:
Page 19 of 29
18.1. The actual amount of all reasonable costs and expenses,
including attorneys' fees, which Lender has incurred or may incur in:
18.1.1. Negotiating, preparing, or administering this Agreement
and any documents prepared in connection herewith;
18.1.2. Any way arising out of this Agreement;
18.1.3. Protecting, preserving or enforcing any lien, security
interest or other right granted by Borrower to Lender or arising under
applicable law, whether or not suit is brought, including but not limited to the
defense of any Avoidance Claims;
18.2. The actual costs, including photocopying (which, if performed by
Lender's employees, shall be at the rate of $.10/page), travel, and attorneys'
fees and expenses incurred in complying with any subpoena or other legal process
attendant to any litigation in which Borrower is a party; or
18.3. The actual amount of all costs and expenses, including
attorneys' fees, which Lender may incur in enforcing this Agreement and any
documents prepared in connection herewith, or in connection with any federal or
state insolvency proceeding commenced by or against Borrower, including those
(i) arising out the automatic stay, (ii) seeking dismissal or conversion of the
bankruptcy proceeding or (iii) opposing confirmation of Borrower's plan
thereunder.
19. Termination.
19.1. This Agreement shall become effective upon the execution and
delivery hereof by Borrower and Lender and shall continue in full force and
effect until the end of the Initial Term.
19.2. This Agreement shall be automatically extended for successive
Renewal Terms unless (i) Borrower has given Lender at least sixty days' prior
written notice, or (ii) Lender has given Borrower at least thirty days' prior
written notice, of their respective intention to have this Agreement terminate
at the end of a Contractual Termination Date.
19.3. Upon the Termination Date, the unpaid balance of the Obligations
shall be due and payable without demand or notice.
19.4. Exposed Payments.
19.4.1. Upon termination of this Agreement, Borrower shall pay to
Lender (or Lender may retain), to hold in a non-segregated non-interest bearing
account the amount of all Exposed Payments (the "Preference Reserve").
19.4.2. Lender may charge the Preference Reserve with the amount
of any Exposed Payments that Lender pays to the bankruptcy estate of the Account
Debtor that made the Exposed Payment, on account of a claim asserted under
Section 547 of the Bankruptcy Code.
Page 20 of 29
19.4.3. Lender shall refund to Borrower from time to time that
balance of the Preference Reserve for which a claim under Section 547 of the
Bankruptcy Code can no longer be asserted due to the passage of the statute of
limitations, settlement with the bankruptcy estate of the Account Debtor or
otherwise.
20. Revocation of Borrower's Right to Sell Inventory Free and Clear of
Lender's Security Interest.
Lender may, upon the occurrence of an Event of Default, revoke
Borrower's right to sell Inventory free and clear of Lender's security interest
therein.
21. No Lien Termination without Release. In recognition of the Lender's
right to have its attorneys' fees and other expenses incurred in connection with
this Agreement secured by the Collateral, notwithstanding payment in full of all
Obligations by Borrower, Lender shall not be required to record any terminations
or satisfactions of any of Lender's liens on the Collateral unless and until
Complete Termination has occurred. Borrower understands that this provision
constitutes a waiver of its rights under ss.9-513 of the UCC.
22. Account Stated.
Lender shall render to Borrower a statement setting forth the
transactions arising hereunder. Each statement shall be considered correct and
binding upon Borrower, absent manifest error, as an account stated, except to
the extent that Lender receives, within thirty (30) days after the mailing of
such statement, written notice from Borrower of any specific exceptions by
Borrower to that statement.
23. Retention of Records. Lender shall retain any documents, schedules,
invoices or other papers delivered by Borrower only for such period as Lender,
at its sole discretion, may determine necessary, after which time Lender may
destroy such records without notice to or consent from Borrower.
24. Notices to Third Parties. Lender shall have the right at any time to
give any Guarantor or Subordinating Creditor notice of any fact or event
relating to this Agreement, as Lender may deem necessary or desirable in
Lender's sole discretion, including, without limitation, Borrower's financial
condition. Borrower shall provide to each Guarantor and Subordinating Creditor a
copy of each notice, statement or report required to be given to Lender
hereunder.
25. Information to Participants. Lender may furnish any financial or other
information concerning Borrower, or any of its subsidiaries, heretofore or
hereafter provided by Borrower to Lender, pursuant to this Agreement or
otherwise, to any prospective or actual purchaser of any participation or other
interest in any loans made by Lender to Borrower (whether under this Agreement
or otherwise), or to any prospective purchaser of any securities issued or to be
issued by Lender.
26. Entire Agreement. No promises of any kind have been made by Lender or
any third party to induce Borrower to execute this Agreement. No course of
dealing, course of performance or trade usage, and no parole evidence of any
nature, shall be used to supplement or modify any terms of this Agreement.
Page 21 of 29
27. Notice.
27.1. All notices required to be given to any party other than Lender
shall be deemed given upon the first to occur of (i) deposit thereof in a
receptacle under the control of the United States Postal Service, (ii)
transmittal by electronic means to a receiver under the control of such party,
or (iii) actual receipt by such party or an employee or agent of such party. All
notices to Lender shall be deemed given upon actual receipt by a responsible
officer of Lender.
27.2. The addresses of the parties are as set forth below or as may
otherwise be specified from time to time in a writing sent by one party to the
other in accordance with the provisions hereof:
BORROWER
Address: 1120 Avenue of the Americas, Xxxxx 0000
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxx
Fax Number: 000-000-0000
LENDER
Address: 0000 Xxxxxxxx, 00xx xxxxx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx Silver
Fax Number: 000-000-0000
27.3. Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if all
signatures were upon the same instrument. Delivery of an executed counterpart of
the signature page to this Agreement by facsimile shall be effective as delivery
of a manually executed counterpart of this Agreement, and any party delivering
such an executed counterpart of the signature page to this Agreement by
facsimile to any other party shall thereafter also promptly deliver a manually
executed counterpart of this Agreement to such other party, provided that the
failure to deliver such manually executed counterpart shall not affect the
validity, enforceability, or binding effect of this Agreement.
28. Amendment and Waiver. Only a writing signed by all parties hereto may
amend this Agreement. No failure or delay in exercising any right hereunder
shall impair any such right that Lender may have, nor shall any waiver by Lender
hereunder be deemed a waiver of any default or breach subsequently occurring.
Lender's rights and remedies herein are cumulative and not exclusive of each
other or of any rights or remedies that Lender would otherwise have.
29. Governing Law. This Agreement and all transactions contemplated
hereunder and/or evidenced hereby shall be governed by, construed under, and
enforced in accordance with the internal laws of the Chosen State.
30. Venue. Any suit, action or proceeding arising hereunder, or the
interpretation, performance or breach hereof, shall, if Lender so elects, be
instituted in any court sitting
Page 22 of 29
in the Chosen State, in the city in which Lender's chief executive office is
located, or if none, any court sitting in the Chosen State (the "Acceptable
Forums"). Borrower agrees that the Acceptable Forums are convenient to it, and
submits to the jurisdiction of the Acceptable Forums and waives any and all
objections to jurisdiction or venue. Should such proceeding be initiated in any
other forum, Borrower waives any right to oppose any motion or application made
by Lender to transfer such proceeding to an Acceptable Forum.
31. Jury Trial Waiver. IN RECOGNITION OF THE HIGHER COSTS AND DELAY WHICH
MAY RESULT FROM A JURY TRIAL, THE PARTIES HERETO WAIVE ANY RIGHT TO TRIAL BY
JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (A) ARISING HEREUNDER, OR
(B) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE
PARTIES HERETO OR ANY OF THEM WITH RESPECT HERETO, IN EACH CASE WHETHER NOW
EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR
OTHERWISE; AND EACH PARTY FURTHER WAIVES ANY RIGHT TO CONSOLIDATE ANY SUCH
ACTION IN WHICH A JURY TRIAL HAS BEEN WAIVED WITH ANY OTHER ACTION IN WHICH A
JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED; AND EACH PARTY HEREBY AGREES AND
CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED
BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY HERETO MAY FILE AN ORIGINAL
COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE
CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
32. Service Of Process. Borrower agrees that Lender may effect service of
process upon Borrower by regular mail at the address set forth in this
Agreement, or at the option of Lender if Borrower is a Registered Organization,
by service upon Borrower's agent for the service of process.
33. Assignment. Lender may assign its rights and delegate its duties
hereunder. Upon such assignment, Borrower shall be deemed to have attorned to
such assignee and shall owe the same obligations to such assignee and shall
accept performance hereunder by such assignee as if such assignee were Lender.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the date first above written.
BORROWER: Genio Group, Inc.
By: /s/ Xxxxxx X. Xxxxxxxx
-------------------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: CFO Chief Financial Officer
Page 23 of 29
LENDER: IIG Capital, LLC, as agent for the IIG Trade
Opportunities Fund N.V.
By: /s/ Xxxxxx Silver
-------------------------------------------------
Name: Xxxxxx Silver
Title:
Page 24 of 29
EXHIBIT 7.1
[Form of Notification Letter]
[Letterhead of Lender]
Date:_______
[Name and address of Account Debtor]
Re: Genio Group, Inc. (the "Client")
Ladies and Gentlemen:
We are pleased to advise that, to enable the Client to better service its
customers, the Client has assigned its present and future accounts to us.
To the extent that you are now indebted or may in the future become
indebted to the Client on an account or a general intangible, payment thereof is
to be made payable to us and not to the Client or any other entity. Payment in
any other way will not discharge this obligation.
The payments should be mailed to us at the following address: 0000
Xxxxxxxx, 00xx xxxxx Xxxxx, Xxx Xxxx, XX 00000.
This letter may only be revoked by a writing signed by one of our officers.
To assist us in applying payments please fax a copy of this letter to us
indicating your Federal Tax I.D. Number in this space:____________________
Thank you.
Very truly yours,
IIG Capital, LLC, as agent for the IIG Trade
Opportunities Fund N.V.
By:
-----------------------------------------
Title:
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ASSIGNMENT CONFIRMED:
Genio Group, Inc.
By:
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Name:
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Title:
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EXHIBIT 9.4
Exceptions to Lender's first priority interest
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EXHIBIT 12.3
1. The Borrower is currently negotiating agreements with several of its
shareholders who acquired shares of the Borrower's common stock in private
placement in July 2003 and December 2003. As part of the agreements, the
Borrower will issue to such shareholders up to 1,000,000 shares of its common
stock.
2. The Borrower is currently negotiating the acquisition of Frederator, an
independent producer and distributor of children's programming, in exchange for
up to twenty percent (20%) of the common stock of the Borrower.
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EXHIBIT 21
GENERAL RELEASE
FOR GOOD AND VALUABLE CONSIDERATION, the receipt and adequacy of which
are hereby acknowledged, the undersigned and each of them (collectively
"Releasor") hereby forever releases, discharges and acquits IIG Capital, LLC, as
agent for the IIG Trade Opportunities Fund N.V. ("Releasee"), its parent,
directors, shareholders, agents and employees, of and from any and all claims of
every type, kind, nature, description or character, and irrespective of how,
why, or by reason of what facts, whether heretofore existing, now existing or
hereafter arising, or which could, might, or may be claimed to exist, of
whatever kind or name, whether known or unknown, suspected or unsuspected,
liquidated or unliquidated, each as though fully set forth herein at length, to
the extent that they arise out of or are in any way connected to or are related
to that certain Loan and Security Agreement dated .
Releasor agrees that the matters released herein are not limited to
matters that are known or disclosed.
Releasor acknowledges that factual matters now unknown to it may have
given or may hereafter give rise to Claims which are presently unknown,
unanticipated and unsuspected, and it acknowledges that this Release has been
negotiated and agreed upon in light of that realization and that it nevertheless
hereby intends to release, discharge and acquit the Releasee from any such
unknown Claims.
Acceptance of this Release shall not be deemed or construed as an
admission of liability by any party released.
Releasor acknowledges that either (a) it has had advice of counsel of
its own choosing in negotiations for and the preparation of this release, or (b)
it has knowingly determined that such advise is not needed.
DATED:
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Individual Releasor:
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[Name of individual], individually
Entity Releasor:
By:
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Name:
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Title:
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