LOAN AGREEMENT
EXHIBIT
10.1
THIS
LOAN
AGREEMENT (“Agreement”)
is
entered into effective as of the 15th day of July, 2008 (the “Effective
Date”),
by
and between XXXX XXXX (“Lender”)
and
ZVUE CORPORATION (“Borrower”).
The
parties refer to the following facts:
RECITALS
A. Borrower
is engaged in the business of, among other things, designing, manufacturing,
distributing and selling hand-held electronic music players, as set forth on
Schedule
1
attached
hereto and incorporated herein, which Schedule may be amended from time to
time
by Lender and Borrower for any products in all its forms that are the subject
of
an Approved Purchase Order defined below (collectively, the “Products”).
B. The
manufacturing of the Products is sub-contracted by Borrower to one or more
overseas manufacturers (individually or collectively the “Manufacturer”).
C. Borrower
sells the manufactured Products wholesale to retailers including but not limited
to Walmart, pursuant to purchase orders issued to Borrower by the Retailer
(the
“Purchase
Orders”).
D. Buyer
desires to obtain from Lender and Lender desires to provide to Borrower a credit
facility in the aggregate principal amount of $1,000,000 (the “Loan”)
to be
evidenced by that certain Secured Promissory Note dated as of the date hereof
made by Borrower in favor of Lender in the aggregate principal amount of
$1,000,000 in the form of Exhibit A attached hereto and incorporated herein(as
the same may from time to time be amended, modified or supplemented or restated,
the “Secured
Promissory Note”),
secured against the Collateral (“Collateral”)
as
defined in that certain Security Agreement dated as of even date herewith made
by Borrower in favor of Lender in the form of Exhibit B attached hereto and
incorporated herein (as the same may from time to time be amended, modified
or
supplemented or restated, the “Security
Agreement”),
from
which Borrower may draw advances against Purchase Orders to finance the
development and manufacturing of the Products, in accordance with the terms
and
conditions set forth in this Agreement.
AGREEMENT
NOW,
THEREFORE, in consideration of the premises and the mutual covenants hereinafter
contained, and for other good and valuable consideration, the parties hereto
agree as follows:
|
1.
|
LOAN.
|
1.1 Loan.
Subject
to the terms and conditions contained herein and in the other documents,
instruments and agreements executed in connection with the Loan, including
but
not limited to this Agreement, the Secured Promissory Note and the Security
Agreement, the Subordination Agreement, any Warrant issued to Lender by Borrower
in connection with the Loan, and all UCC Financing Statements (collectively
the
“Loan
Documents”),
Lender agrees to make advances (“Advances”)
in an
aggregate principal amount of $1,000,000 (the “Credit
Limit”)
from
time to time to Borrower from the date hereof to and not including the
Termination Date for the purpose of financing the development and manufacturing
of the Products. Subject to the terms hereof, Borrower shall have the right
to
obtain Advances up to the Credit Limit. Advances borrowed under this Agreement
may be repaid but not reborrowed. The outstanding principal balance of the
Loan,
plus all accrued unpaid interest thereon, plus all Transaction Fees (defined
below) and other Obligations (defined below) shall be due and payable on the
earlier to occur of (i) September 30, 2008 or (ii) when the Loan is accelerated
pursuant to Section 6.2 (the “Maturity
Date”);
provided,
however,
that in
the event the term of this Agreement is renewed pursuant to Section 1.8, below,
the Maturity Date shall be extended accordingly. “Obligations”
means
Borrower’s obligation to repay to Lender the Loan and all Advances (whether or
not evidenced by any note), together with all principal, interest, Transaction
Fees, other fees, costs, professional fees and expenses, or other liabilities
or
obligations for monetary amounts owed by Borrower to Lender however arising,
including the indemnity and insurance obligations, and including such amounts
as
may accrue or be incurred before or after default or workout or the commencement
of any liquidation, dissolution, bankruptcy, receivership or reorganization
by
or against Borrower, whether due or to become due, matured or unmatured,
liquidated or unliquidated, contingent or non-contingent, and all covenants
and
duties of any kind or nature, present or future, in each case, arising under
this Agreement, the Secured Promissory Note, the Security Agreement or any
of
the other Loan Documents, as the same may from time to time be amended,
modified, supplemented or restated, whether or not such obligations are
partially or fully secured by the value of Collateral, and any future
indebtedness incurred by Borrower to Lender.
1.2 Advances.
Advances
will be made upon presentation by Borrower to Lender and acceptance by Lender
of
bona fide Purchase Orders issued to Borrower by Walmart (together with any
other
Retailer specifically approved in writing by Lender, the “Retailer”),
with
selling terms not to exceed net forty-five (45) days after shipment and other
terms and conditions acceptable to Lender (an “Approved
Purchase Order”).
Borrower shall update Schedule
1
attached
hereto to list any Products subject of an Approved Purchase Order prior to
the
date of the associated Advance. Advances will be made in amounts not to exceed
seventy-five percent (75%) of the aggregate dollar amount of the Approved
Purchase Orders presented; provided,
however,
that
any requested Advance will not, when added to the outstanding balance of all
previous Advances, exceed the Credit Limit. Subject to the provisions of this
Section 1.2 and Section 2.1, below, upon acceptance of the Approved Purchase
Orders by Borrower, Lender shall promptly advance the funds requested by
Borrower in accordance with such wiring, direct deposit or other instructions
as
may be provided by Borrower. As of the Effective Date of this Agreement, Lender
has already accepted the Approved Purchase Orders for the Products listed in
Schedule
1
attached
hereto, copies of which have been provided to Lender. Lender will make Advances
against these Purchase Orders according to the following schedule, with no
other
Advances required that relate to these Purchase Orders:
|
Advance
#1 to Borrower on Effective Date:
|
$250,000.00
|
|
Advance
#2 to Borrower on July 15, 2008:
|
$250,000.00
|
|
Advance
#3 to Borrower on July 21, 2008:
|
$250,000.00
|
-
2 -
1.3 Loan
Documents.
In
connection herewith, Borrower shall execute and deliver to Lender the Loan
Documents. All Advances shall become part of the outstanding principal balance
of the Secured Promissory Note.
1.4 Interest.
All
Advances shall bear interest from the date the Advance is made until paid in
full at the prime rate published in the Wall Street Journal Western Edition
on
the date the Advance is made plus seven percent (the “Interest”),
based
on a year consisting of 360 days, with interest computed daily based on the
actual number of days in each month.
1.5 Transaction
Fee.
In
addition to Interest, there shall be assessed on each Advance a transaction
fee
equal to one percent of the amount of the Advance (the “Transaction
Fee”),
which
shall be secured pursuant to the terms of the Security Agreement. The
Transaction Fee shall be non-refundable to Borrower and shall not be offset
against any payments due under the Secured Promissory Note.
1.6 Payment.
Borrower
may from time to time prepay all or part of the outstanding principal balance
of
the Loan. If for any reason the aggregate principal amount of the Loan
outstanding at any time shall exceed the Credit Limit, Borrower, shall
immediately make a principal payment to Lender in an amount equal to such excess
plus accrued and unpaid interest thereon. All proceeds from the sale of the
Products shall be deposited by Retailer and Borrower to the Remittance Account
described in Section 1.7 below and shall be applied by Lender as set forth
in
Section 3 of the Security Agreement to repay all Obligations. Notwithstanding
the foregoing to the contrary, the entire unpaid principal balance of the Loan,
together with all accrued and unpaid interest thereon, plus all Transaction
Fees
and other Obligations associated therewith, shall be due and payable on or
before the Maturity Date.
1.7 Remittance
Account.
Borrower
shall and Borrower shall instruct Retailer to deposit all proceeds from the
sale
of the Products to a remittance account (the “Remittance
Account”)
identified by Lender and controlled by Lender. Funds in the Remittance Account
shall be applied to the payment of the Obligations in accordance with Section
3
of the Security Agreement.
1.8 Term
of Agreement.
This
Agreement shall terminate on September 30, 2008 (the “Termination
Date”);
provided,
however,
that
Borrower may give written notice to Lender no later than thirty (30) days prior
to the Termination Date, and subject to Lender’s approval, the term of this
Agreement shall be renewed for a one-month period, and the Termination Date
shall be extended accordingly.
|
2.
|
ADVANCES
|
2.1 Conditions
Precedent to Advances.
Lender
shall have no obligation to make any Advance until the conditions set forth
in
the following subparagraphs and elsewhere in this Agreement have been satisfied
at the expense of Borrower, or waived by Lender:
(a) Delivery
of Loan Documents.
Borrower
shall have delivered to Lender the Loan Documents, each duly executed by
Borrower, and such other documents, instruments, financing statements,
certificates and agreements as Lender may reasonably request;
-
3 -
(b) Board
Approval.
Borrower
shall have delivered to Lender, in form and substance satisfactory to Lender,
copies of resolutions of Borrower’s board of directors authorizing Borrower to
execute, deliver, honor and perform the Loan Documents and to grant a
first-priority security interest in the Collateral as provided in the Security
Agreement and certifying the names and signatures of the officers of Borrower
authorized to sign the Loan Documents;
(c) Perfection
of Security Interest.
All of
Lender’s liens and security interests in the Collateral shall have been validly
perfected and Senior Lender shall have delivered to Lender an amendment to
its
UCC-1 financing statement releasing its lien on the Collateral or entered into
a
subordination or intercreditor Agreement in form and substance satisfactory
to
Lender subordinating its lien in the Collateral to Lender’s lien
thereon;
(d) No
Material Adverse Effect.
No event
that has had or would reasonably be expected to have a Material Adverse Effect
(defined hereafter) has occurred and is continuing, and Borrower is not aware
of
any event likely to occur that would reasonably expected to result in a Material
Adverse Effect. “Material
Adverse Effect”
means
a
material adverse effect upon: (i) the business, operations, properties, assets,
prospects or condition (financial or otherwise) of Borrower; or (ii) the ability
of Borrower to perform the Obligations in accordance with the terms of the
Loan
Documents in all material respects, or the ability of Lender to enforce its
rights or remedies with respect to the Obligations in all material respects;
or
(iii) the Collateral or Lender’s liens on the Collateral or the priority of such
liens.
(e) Representations
and Warranties.
Each of
the representations and warranties made by Borrower in the Loan Documents shall
be true and correct as of the date of the Advance; and
(f) No
Defaults.
Borrower
shall have kept and performed the various covenants, obligations and agreements
on its part to be kept and performed under the Loan Documents and no Event
of
Default, or act or event which with the giving of notice or the passage of
time,
or both, would constitute an Event of Default hereunder or under any of the
other Loan Documents shall have occurred and be continuing or no Event of
Default would exist after giving effect to such Advance.
(g) Warrant.
Borrower
shall execute and deliver a warrant for the purchase of 350,000 of Borrower’s
shares of capital stock at a per share price equal to $0.1621 on Lender’s form
attached hereto as Exhibit C and incorporated herein. The Warrant shall expire
in 5 years, have standard anti-dilution protections, be freely transferable
to
affiliates of Lender.
(h) Updated
Schedule 1.
Borrower
shall deliver an updated Schedule
1
listing
the Products that are subject of an Approved Purchase Order prior to any further
Advances.
-
4 -
(i) Subordination
Agreement.
Borrower shall deliver a fully executed Subordination Agreement dated as of
the
date hereof by and between Lender and YA Global Investments, L.P., consented
to
by Borrower (the “Subordination Agreement”).
2.2 Request
for Advances.
Advances
will be made upon acceptance by Lender of Approved Purchase Orders issued to
Borrower by Retailer, with selling terms not to exceed net forty-five (45)
days
after shipment. Subject to the foregoing, Advances shall be made by Lender
at
the written request of the persons named below, either one acting alone, who
are
authorized to request Advances and direct disposition of any such Advances
until
written notice of the revocation of such authority is received from Borrower
by
Lender. Each request by Borrower for an Advance shall constitute a
reaffirmation, as of the date of such request, of all of the representations
and
warranties of Borrower contained in this Agreement and in the other Loan
Documents. As of the Effective Date of this Agreement, Lender has already
accepted the Approved Purchase Orders for the Products listed in Schedule
1
attached
hereto, copies of which have been provided to Lender.
The
persons authorized to request Advances on behalf of Borrower are Xxxxxx Xxxxx
and Xxxx Oscodar.
2.3 No
Waiver.
No
Advance shall constitute a waiver of any of the conditions to any further
Advances.
|
3.
|
REPRESENTATIONS
AND WARRANTIES
|
To
induce
Lender to enter into this Agreement and to make the Advances provided for
herein, Borrower represents and warrants to Lender as follows:
3.1 Corporate
Existence.
Borrower: (a) is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of formation, and (b) has the
requisite power and authority and the legal right to own, pledge, mortgage
or
otherwise encumber and operate its properties, to lease the property it operates
under lease and to conduct its business as now, heretofore and proposed to
be
conducted.
3.2 Power,
Authorization, Enforceable Obligations.
The
execution, delivery and performance by Borrower of the Loan Documents and the
creation of all security interests provided for therein: (a) are within the
corporate power of Borrower; (b) have been duly authorized by all necessary
or
proper corporate action; (c) do not contravene any provision of Borrower’s
charter or bylaws; (d) do not violate any law or regulation, or any order or
decree of any court or governmental authority; (e) do not conflict with or
result in the breach or termination of, constitute a default under or accelerate
or permit the acceleration of any performance required by, any indenture,
mortgage, deed of trust, lease, agreement or other instrument to which Borrower
is a party or by which Borrower or any of its properties are bound; (f) do
not
result in the creation or imposition of any lien upon any of the property of
Borrower other than those in favor of Lender pursuant to the Loan Documents;
and
(g) do not require the consent or approval of any governmental authority or
any
other person or entity. Each of the Loan Documents shall have been duly executed
and delivered by Borrower, and each such Loan Document shall then constitute
a
legal, valid and binding obligation of Borrower, enforceable against it in
accordance with its terms.
-
5 -
3.3 Financial
Statements.
All
financial statements provided by Borrower to Lender in connection with the
negotiation and performance of the Loan Documents are complete and accurate,
in
all material respects, as of the date provided.
3.4 Purchase
Orders.
Each
Purchase Order presented by Borrower to Lender represents a bona fide obligation
of Retailer owing to Borrower and arising in the ordinary course of its
business, and Borrower will use its best efforts to fulfill each Approved
Purchase Order as promptly as practicable.
3.5 No
Litigation.
Except
to the extent expressly disclosed by Borrower to Lender and set forth on
Schedule
3.5
attached
hereto and made a part hereof, no action, claim, lawsuit, demand, governmental
investigation, or proceeding is now pending or, to the knowledge of Borrower,
threatened against Borrower, before any governmental authority or before any
arbitrator or panel of arbitrators (collectively, “Litigation”).
3.6 Senior
Lender.
Pursuant
to a Security Agreement entered into in October 31, 2007 (the “Senior
Security Agreement”),
YA
Global Investments, L.P. (“Senior
Lender”)
has
been granted a blanket lien against Borrower’s assets (the “Blanket
Lien”).
As of
July 1, 2008, Borrower and Senior Lender entered into an Agreement which, among
other things, amends the Senior Security Agreement to (a) permit purchase order
financing of inventory secured solely against the Collateral as defined in
the
Security Agreement (the “Permitted
Indebtedness”),
and
(b) subordinate the Blanket Lien to any security interest granted to Lender
against the Collateral. Borrower shall deliver to Lender either an amendment
to
Senior Lender’s UCC-1 filing to delete its security interest in the Collateral
or an intercreditor agreement or a subordination agreement in form and substance
satisfactory to Lender by which Senior Lender shall subordinate its security
interest in the Collateral.
3.7 Full
Disclosure; First Priority Liens.
No
information contained in this Agreement or any of the other Loan Documents
nor
any written statement furnished by or on behalf of Borrower to Lender pursuant
to the terms of this Agreement contains or will contain any untrue statement
of
a material fact or omits or will omit to state a material fact necessary to
make
the statements contained herein or therein not misleading in light of the
circumstances under which they were made. Upon filing of the UCC-1 amendment
referred to in the last sentence of Section 3.6 (or, in the alternative,
delivery by Borrower of the intercreditor or subordination agreements described
therein), the liens granted to Lender pursuant to the Loan Documents will at
all
times be fully perfected first priority liens in and to the Collateral described
therein. Upon filing of the UCC-1 amendment referred to in the last sentence
of
Section 3.6, Borrower shall have good title to the Collateral, free of all
liens.
|
4.
|
FINANCIAL
STATEMENTS AND INFORMATION
|
4.1 Financial
Statements.
Borrower
hereby agrees that until all the Obligations are paid in full, it shall deliver
to Lender the following financial statements, prepared in accordance with
generally accepted accounting principles:
-
6 -
(a) Upon
execution of this Agreement, Borrower’s most recent quarterly and fiscal
year-end annual profit and loss statement, balance sheet, and statement of
cash
flow, certified as complete and accurate by an officer of Borrower.
(b) No
later
than 60 days after the end of each fiscal quarter, quarterly financial
statements of Borrower, including profit and loss statement, balance sheet,
and
statement of cash flow, certified as complete and accurate by an officer of
Borrower.
(c) No
later
than 120 days after the close of Borrower’s fiscal year, year-end financial
statements of Borrower, including profit and loss statement, balance sheet,
and
statement of cash flow, audited or reviewed by an independent CPA firm to the
extent available, otherwise certified as complete and accurate by an officer
of
Borrower.
(d) No
later
than 30 days after the end of each month, a complete and detailed description
of
all Product inventory; and
(e) No
later
than 30 days after the end of each month, an aging and listing of all
Product-derived accounts receivable.
|
5.
|
AFFIRMATIVE
COVENANTS
|
Borrower
hereby agrees that until the Obligations are paid in full:
5.1 Supplemental
Disclosure.
From
time to time as may be requested by Lender (which request will not be made
more
frequently than once each month absent the occurrence and continuance of an
Event of Default), Borrower shall supplement each representation herein or
in
any other Loan Document, with respect to any matter hereafter arising that,
if
existing or occurring at the date of this Agreement, would have been necessary
to correct any information in such representation that has been rendered
inaccurate thereby; provided,
that no
such supplement to any such representation shall be or be deemed a waiver of
any
Event of Default resulting from the matters disclosed therein, except as
consented to by Lender in writing.
5.2 Further
Assurances.
Borrower
agrees that it shall, at its expense and upon request of Lender, duly execute
and deliver, or cause to be duly executed and delivered, to Lender such further
instruments and do and cause to be done such further acts as may be necessary
or
proper in the opinion of Lender to carry out more effectually the provisions
and
purposes of this Agreement or any other Loan Document.
5.3 Use
of
Proceeds.
Borrower
agrees that it shall only use the Advances to finance the development and
manufacturing of the Products, or to reimburse expenditures previously made
toward the development and manufacturing of Products.
5.4 Compliance
with laws.
Borrower
will comply with all laws, ordinances and regulations to which it is subject,
noncompliance with which could have a Material Adverse Effect.
5.5 Inventory;
Returns.
Borrower
will keep all Products in good and marketable condition, free from material
defects. Returns and allowances between Borrower and its account debtors will
follow Borrower’s customary practices as they exist at execution of this
Agreement.
-
7 -
5.6 Taxes.
Borrower
will make timely payment of all material federal, state, and local taxes or
assessments (except for taxes or assessments being contested in good faith
with
adequate reserves under GAAP and which do not result in any tax lien on any
of
the Collateral) and will deliver to Lender, on demand, appropriate certificates
attesting to the payment.
|
6.
|
EVENTS
OF DEFAULT; REMEDIES
|
6.1 Events
of Default.
The
occurrence of any one or more of the following events shall constitute an
“Event
of Default”
hereunder:
(a) Borrower
(i) fails to make any payment of principal of, or interest on, or fees owing
in
respect of, the Secured Promissory Note when due and payable, or (ii) fails
to
pay any Transaction Fee or any other Obligation when due and
payable.
(b) Borrower
fails or neglects to perform, keep or observe any other provision of this
Agreement or of any of the other Loan Documents and, except as otherwise
provided herein, the same shall remain unremedied for ten (10) days or more
after written notice of such event.
(c) Any
representation or warranty herein or in any other Loan Document or in any
written statement, report, financial statement or certificate made or delivered
to Lender by Borrower is untrue or incorrect in any material respect as of
the
date when made or deemed made.
(d) Any
of
the Collateral is attached, seized, levied upon or subjected to a writ or
distress warrant, or comes within the possession of any receiver, trustee,
custodian or assignee for the benefit of creditors of Borrower and such
condition continues for ten (10) days or more.
(e) A
case or
proceeding is commenced against Borrower seeking a decree or order in respect
of
Borrower (i) under Title 11 of the United States Code, as now constituted or
hereafter amended or any other applicable federal, state or foreign bankruptcy
or other similar law, (ii) appointing a custodian, receiver, liquidator,
assignee, trustee or sequestrator (or similar official) for Borrower or of
for
any substantial part of its assets, or (iii) ordering the winding up or
liquidation of the affairs of Borrower, and such case or proceeding remains
undismissed or unstayed for thirty (30) days or more or a decree or order
granting the relief sought in such case or proceeding is entered by a court
of
competent jurisdiction over such case or proceeding.
(f) Borrower
(i) files a petition seeking relief under Title 11 of the United States Code,
as
now constituted or hereafter amended, or any other applicable federal, state
or
foreign bankruptcy or other similar law, (ii) consents or fails to contest
in a
timely and appropriate manner to the institution of proceedings thereunder
or to
the filing of any such petition or to the appointment of or taking possession
by
a custodian, receiver, liquidator, assignee, trustee or sequestrator (or similar
official) for Borrower or for any substantial part of its assets, (iii) makes
an
assignment for the benefit of creditors, or (iv) takes any action in furtherance
of any of the foregoing, or (v) admits in writing its inability to, or is
generally unable to, pay its debts as such debts become due.
-
8 -
(g) If
there
is a default in any agreement between Borrower and a third party that gives
the
third party the right to accelerate any Indebtedness exceeding
$50,000.
(h) If
a
money judgment(s) in the aggregate of at least $50,000 is rendered against
Borrower and is unsatisfied and unstayed for ten (10) days.
(i) Any
subordination provision in any document or in the Subordination Agreement shall
cease to be in full force and effect, or any Person shall contest in any matter
the validity, binding nature or enforceability of any such
provision.
6.2 Remedies-General.
Upon and
during the continuance of any one or more Events of Default, (i) Lender may,
at
its option, accelerate and demand payment of all or any part of the Obligations
and declare them to be immediately due and payable (provided, that
upon
the occurrence of an Event of Default of the type described in Section 6.1(e),
(f) or (g), the Secured Promissory Note and all of the Obligations shall
automatically be accelerated and made due and payable, in each case without
any
further notice or act), and (ii) Lender may notify any of Borrower’s account
debtors to make payment directly to Lender, compromise the amount of any such
account on Borrower’s behalf and endorse Lender’s name without recourse on any
such payment for deposit directly to Lender’s account. Lender may exercise all
rights and remedies with respect to the Collateral under the Loan Documents
or
otherwise available to it under the UCC and other applicable law, including
the
right to release, hold, sell, lease, liquidate, collect, realize upon, or
otherwise dispose of all or any part of the Collateral and the right to occupy,
utilize, process and commingle the Collateral. All Lender’s rights and remedies
shall be cumulative and not exclusive.
6.3 Lender
Expenses.
If
Borrower fails to obtain the insurance called for by the Security Agreement
or
fails to pay any premium thereon or fails to pay any other amount, which
Borrower is obligated to pay under this Agreement or any other Loan Document,
Lender may obtain such insurance or make such payment, and all amounts so paid
by Lender are Lender expenses and immediately due and payable, bearing interest
at the then applicable rate and secured by the Collateral. No payments by Lender
shall be deemed an agreement to make similar payments in the future or Lender’s
waiver of any Event of Default.
6.4 Demand
Waiver.
Borrower
waives demand, notice of default or dishonor, notice of payment and nonpayment,
notice of any default, nonpayment at maturity, release, compromise, settlement,
extension, or renewal of accounts, documents, instruments, chattel paper, and
guarantees held by Lender on which Borrower is liable.
|
7.
|
SUCCESSORS
AND ASSIGNS
|
This
Agreement and the other Loan Documents shall be binding on and shall inure
to
the benefit of Borrower, Lender, and their respective successors and assigns
(including, in the case of Borrower, a trustee or debtor in possession on behalf
of Borrower), except as otherwise provided herein or therein. Borrower may
not
assign, transfer, hypothecate or otherwise convey its rights, benefits,
obligations or duties hereunder or under any of the other Loan Documents without
the prior express written consent of Lender. Any such purported assignment,
transfer, hypothecation or other conveyance by Borrower without the prior
express written consent of Lender shall be void. The terms and provisions of
this Agreement are for the purpose of defining the relative rights and
obligations of Borrower and Lender with respect to the transactions contemplated
hereby and no person or entity shall be a third party beneficiary of any of
the
terms and provisions of this Agreement or any of the other Loan
Documents.
-
9 -
|
8.
|
MISCELLANEOUS
|
8.1 Complete
Agreement; Modification of Agreement.
The Loan
Documents constitute the complete agreement between the parties with respect
to
the subject matter hereof and thereof and may not be modified, altered or
amended except as set forth in Section 8.2. Any letter of interest, commitment
letter, fee letter and/or confidentiality agreement between Borrower and Lender
or any of their respective affiliates, predating this Agreement and relating
to
a financing of substantially similar form, purpose or effect shall be superseded
by this Agreement.
8.2 Amendments,
Waivers, and Termination Statements.
No
amendment, modification, termination or waiver of any provision of this
Agreement or any of the other Loan Documents, or any consent to any departure
by
Borrower therefrom, shall in any event be effective unless the same shall be
in
writing and signed by the original parties thereto. Upon indefeasible payment
in
full in cash and performance of all of the Obligations, Lender shall deliver
to
Borrower termination statements, mortgage releases and other documents necessary
or appropriate to evidence the termination of the liens securing payment of
the
obligations under the Loan Documents.
8.3 Payment
Of Expenses, Indemnification, Etc.;
Right
of Set Off.
(a) Borrower
promises to pay Lender’s fees and expenses necessary to finalize the loan
documentation, including but not limited to reasonable attorneys fees, UCC
searches, filing costs, and other miscellaneous expenses. In addition, Borrower
promises to pay any and all reasonable attorneys’ and other professionals’ fees
and expenses incurred by Lender after the date hereof in connection with or
related to: (a) the collection or enforcement of the Loan; (b) the amendment
or
modification of the Loan Documents; (c) any waiver, consent, release, or
termination under the Loan Documents; (d) the protection, preservation, sale,
lease, liquidation, or disposition of Collateral or the exercise of remedies
with respect to the Collateral; (e) any legal, litigation, administrative,
arbitration, or out of court proceeding in connection with or related to
Borrower or the Collateral, and any appeal or review thereof; and (f) any
bankruptcy, restructuring, reorganization, assignment for the benefit of
creditors, workout, foreclosure, or other action related to Borrower, the
Collateral, the Loan Documents, including representing Lender in any adversary
proceeding or contested matter commenced or continued by or on behalf of
Borrower’s estate, and any appeal or review thereof.
(b) Borrower
shall and does hereby indemnify and hold Lender, its officers, directors,
employees, agents, in-house attorneys, representatives and shareholders harmless
from and against any and all claims, costs, expenses, damages and liabilities
(including such claims, costs, expenses, damages and liabilities based on
liability in tort, including strict liability in tort), including reasonable
attorneys’ fees and disbursements and other costs of investigation or defense
(including those incurred upon any appeal), that may be instituted or asserted
against or incurred by Lender or any such Person as the result of credit having
been extended, suspended or terminated under this Agreement and the other Loan
Documents or the administration of such credit, or in connection with or arising
out of the transactions contemplated hereunder and thereunder, or any actions
or
failures to act in connection therewith, or arising out of the disposition
or
utilization of the Collateral, excluding in all cases claims resulting solely
from Lender’s gross negligence or willful misconduct. Borrower agrees to pay,
and to save Lender harmless from, any and all liabilities with respect to,
or
resulting from any delay in paying, any and all excise, sales or other similar
taxes (excluding taxes imposed on or measured by the net income of Lender)
that
may be payable or determined to be payable with respect to any of the Collateral
or this Agreement.
-
10 -
(c) In
addition to any rights now or hereafter granted under applicable law or
otherwise, and not by way of limitation of any such rights, if an Event of
Default then exists, Lender is hereby authorized, at any time or from time
to
time, without presentment, demand, protest or other notice of any kind to
Borrower or to any other Person, any such notice being hereby expressly waived,
to set off and to appropriate and apply any and all deposits (general or special
but other than payroll accounts) and any other indebtedness at any time held
or
owing by Lender to or for the credit or the account of Borrower against and
on
account of the Obligations and liabilities of Borrower to Lender under this
Agreement, irrespective of whether or not Lender shall have made any demand
hereunder.
8.4 No
Waiver.
Lender’s
failure, at any time or times, to require strict performance by Borrower of
any
provision of this Agreement or any of the other Loan Documents shall not waive,
affect or diminish any right of Lender thereafter to demand strict compliance
and performance herewith or therewith. Any suspension or waiver of an Event
of
Default shall not suspend, waive or affect any other Event of Default whether
the same is prior or subsequent thereto and whether the same or of a different
type. Subject to the provisions of Section 8.2, none of the undertakings,
agreements, warranties, covenants and representations of Borrower contained
in
this Agreement or any of the other Loan Documents and no Event of Default shall
be deemed to have been suspended or waived by Lender, unless such waiver or
suspension is by an instrument in writing signed by an officer of or other
duly
authorized signatory of Lender and directed to Borrower specifying such
suspension or waiver.
8.5 Remedies.
Lender’s
rights and remedies under this Agreement shall be cumulative and nonexclusive
of
any other rights and remedies that Lender may have under any other agreement,
including the other Loan Documents, by operation of law or otherwise. Recourse
to any collateral shall not be required.
8.6 Severability.
Wherever
possible, each provision of this Agreement and the other Loan Documents shall
be
interpreted in such a manner as to be effective and valid under applicable
law,
but if any provision of this Agreement or any other Loan Document shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of
this
Agreement or such other Loan Document.
-
11 -
8.7 JURY
TRIAL WAIVER.
BECAUSE
DISPUTES ARISING IN CONNECTION WITH COMPLEX FINANCIAL TRANSACTIONS ARE MOST
QUICKLY AND ECONOMICALLY RESOLVED BY AN EXPERIENCED AND EXPERT PERSON AND THE
PARTIES WISH APPLICABLE STATE AND FEDERAL LAWS TO APPLY (RATHER THAN ARBITRATION
RULES), THE PARTIES DESIRE THAT THEIR DISPUTES BE RESOLVED BY A JUDGE APPLYING
SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS
OF THE JUDICIAL SYSTEM AND OF ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHT
TO
TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE,
WHETHER ARISING IN CONTRACT, TORT OR OTHERWISE, BETWEEN LENDER AND BORROWER
ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP
ESTABLISHED AMONG THEM IN CONNECTION WITH, THIS AGREEMENT OR ANY OF THE OTHER
LOAN DOCUMENTS OR THE TRANSACTIONS RELATED THERETO.
8.8 Conflict
of Terms.
Except
as otherwise provided in this Agreement or any of the other Loan Documents
by
specific reference to the applicable provisions of this Agreement, if any
provision contained in this Agreement is in conflict with, or inconsistent
with,
any provision in any of the other Loan Documents, the provision contained in
this Agreement shall govern and control.
8.9 Confidentiality.
Lender
agrees to use commercially reasonable efforts (equivalent to the efforts Lender
applies to maintain the confidentiality of its own confidential information)
to
maintain as confidential all confidential information provided to it by Borrower
and designated as confidential for a period ending two (2) years following
Lender’s receipt thereof; provided,
that
Lender may disclose such information (a) to persons or entities employed or
engaged by Lender in evaluating, approving, structuring or administering the
Loans; (b) as, in the opinion of Lender’s counsel, required by law; (c) in
connection with the exercise of any right or remedy under the Loan Documents;
or
(d) which ceases to be confidential through no fault of Lender.
8.10 Governing
Law.
Except
as otherwise expressly provided in any of the Loan Documents, in all respects,
including all matters of construction, validity and performance, this Agreement
and the other Loan Documents shall be governed by, and construed and enforced
in
accordance with, the laws of the state of California applicable to contracts
made and performed in that state and any applicable laws of the United States
of
America.
8.11 Jurisdiction.
Each of
the parties hereto hereby expressly and irrevocably submits to the jurisdiction
of any competent court of the State of California located in the City and County
of San Francisco (the “California
Courts”).
Each
party hereby waives the right to any other jurisdiction or venue for any
litigation arising out of or in connection with this Agreement or the
transactions contemplated hereby to which any of them may be entitled by reason
of its present or future domicile. Each party hereby waives, to the fullest
extent it may legally and effectively do so (i) any objection which it may
now
or hereafter have to the laying of venue of any action or proceeding arising
out
of or relating to this Agreement or any related matter in any California Court,
as applicable, and (ii) the defense of an inconvenient forum to the maintenance
of such action or proceeding in any California Court, as applicable.
Notwithstanding the foregoing, each of the parties hereto agrees that each
of
the other parties shall have the right to bring any action or proceeding for
enforcement of a judgment entered by the California Courts, as applicable,
in
any other court or jurisdiction.
-
12 -
8.12 Notices.
All
notices, requests, demands, and other communications under this Agreement must
be in writing and will be considered to have been duly given on the date of
service if served personally on the party to whom notice is to be given, or
on
the day after facsimile or email transmission if served in such manner to the
party to whom notice is to be given, or three (3) days after mailing if mailed
to the party to whom notice is to be given, by first class mail, registered
or
certified, postage prepaid, and properly addressed as follows:
|
To
Lender:
|
Xxxx
Xxxx
|
|
Attn:
Xxxx Xxxx
|
|
|
0000X
Xxxxxxx Xxxxxxx Xxxx., #000
|
|
|
Xxx
Xxxxxxxxx, XX 00000
|
|
|
Fax:
___________________
|
|
|
email:
xxxxx-xxxxx@xxxxxxxx.xxx
|
|
|
To
Borrower:
|
ZVUE
Corporation
|
|
Attn:
Xxx Xxxxxxx
|
|
|
000
Xxxxxx Xxxxxx, Xxxxx 000
|
|
|
Xxx
Xxxxxxxxx, XX 00000
|
|
|
Fax:
___________________
|
|
|
email:
xxxx@xxxx.xxx
|
8.13 Section
Titles.
The
Section titles contained in this Agreement are and shall be without substantive
meaning or content of any kind whatsoever and are not a part of the agreement
between the parties hereto.
8.14 Counterparts.
This
Agreement may be executed in any number of separate counterparts, each of which
shall collectively and separately constitute one agreement.
8.15 No
Strict Construction.
The
parties hereto have participated jointly in the negotiation and drafting of
this
Agreement and the other Loan Documents. Each party has had the opportunity
to
review the Loan Documents with its own legal counsel. In the event an ambiguity
or question of intent or interpretation arises, this Agreement and the other
Loan Documents shall be construed as if drafted jointly by the parties hereto
and no presumption or burden of proof shall arise favoring or disfavoring any
party by virtue of the authorship of any provisions of this Agreement of the
other Loan Documents.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
-
13 -
IN
WITNESS WHEREOF,
this
Agreement has been duly executed as of the date first written
above.
| “Borrower” | |
| ZVUE CORPORATION | |
|
By:
|
/s/
Xxxx Oscodar
|
| Its: |
President
& CEO
|
| “Lender” | |
| /s/ Xxxx Xxxx | |
| XXXX XXXX | |
-
14 -
