EXHIBIT 10.27
LOAN AGREEMENT dated as of September 30, 2002 among STRONGHOLD
TECHNOLOGIES, INC., A NEW JERSEY CORPORATION ("Stronghold
NJ"), STRONGHOLD TECHNOLOGIES, INC., A NEVADA CORPORATION
("Stronghold Nevada")(Stronghold NJ and Stronghold Nevada
individually referred to as a "Borrower" and together referred
to as the "Borrowers"), both having an address at 000 Xxxxxxx
Xxxxxx, Xxxxxxxxx Xxxxxxx, Xxx Xxxxxx 00000, AC TRUST FUND,
located at 000 Xxxxxxxxx Xxxx, Xxxxxxxxxxxxx, Xxx Xxxxxx 00000
(the "Lender") and XXXXXXXXXXX XXXXX, residing at 000
Xxxxxxxxx Xxxx, Xxxxxxxxxxxxx, Xxx Xxxxxx 00000 ("the
Guarantor").
The Borrowers, the Lender and the Guarantor hereby agree as follows:
ARTICLE 1. THE LOAN.
1.01. THE TERM LOAN. Subject to the terms of this Agreement, the Lender
shall make a twelve-month (12) term loan (the "Loan") available to the Borrowers
on the date of this Agreement in the principal amount of up to Three Hundred
Seventy Five Thousand Four Hundred and Four Dollars ($375,404), to be drawn as
requested by the Borrowers.
1.02. INTEREST RATE AND PAYMENTS; DEFAULT RATE; LATE CHARGE.
(a) INTEREST RATE. The Borrowers shall pay interest to the Lender on the
unpaid principal amount due under the Loan at an interest rate of 12.5%.
Interest on the Loan shall be calculated on the basis of the actual amount of
principle borrowed and the number of days elapsed over a year of 360 days.
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(b) PAYMENTS. The Borrowers shall pay monthly payments of interest only
under the Loan in the amounts and in the manner set forth in the Note.
(c) DEFAULT RATE. Upon default, or after the maturity of the Note, the
unpaid principal of the Loan shall, at the option of Lender, bear interest at a
rate which is five percent (5%) per annum greater than that which would
otherwise be applicable.
(d) LATE CHARGE. If the entire amount of any required principal and/or
interest is not paid in full within ten (10) days after the same is due,
Borrowers shall pay to Lender a late fee equal to five percent (5%) of the
required payment. Any such late charge accrued is immediately due and payable.
1.03. PREPAYMENT OF LOAN. The Borrowers may prepay the Loan in whole or in
part at any time upon prior notice to the Lender, without fee or penalty. In
addition, the Borrowers shall also pay to the Lender any accrued and unpaid
interest and all other sums due under the terms of the Loan at the time of such
payment.
1.04. COLLATERAL. Repayment of the Loan shall be secured by the granting of
a second lien security interest after the primary Senior Lender, in all of the
assets of the Borrowers (the "Collateral). The foregoing assets and property
securing the Loan shall be referred to herein as the "Collateral".
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1.05. CONTINUING PERFECTION. The Borrowers will perform any and all steps
requested by Bank to create and maintain in the Bank's favor a first and valid
and exclusive lien on or security interest in the Collateral or pledges of
Collateral, including, without limitation, the execution and delivery of
financing statements and continuation statements, supplemental security
agreements, mortgages, notes and any other documents necessary, in the opinion
of the Bank, to protect its interest in the Collateral, the Bank having the
responsibility to file any such financing statements and continuation
statements. The Bank and its designated officer are hereby appointed each
Borrower's attorney-in-fact to do all acts and things which the Bank may deem
necessary to perfect and continue perfected the security interests and liens
provided for in this Agreement, including but not limited to, executing
financing statements on behalf of any Borrower if a Borrower fails to do so upon
the request of the Bank.
1.06. GUARANTY. Repayment of the Loan shall be supported by the execution
of an absolute and unconditional guaranty by Xxxxxxxxxxx Xxxxx, the Guarantor.
1.07. WARRANTS. The Lender shall receive five (5) year Warrants to purchase
25,000 shares of the common stock of the Borrower for $1.50 per share.
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ARTICLE 2. REPRESENTATIONS AND WARRANTIES.
The Borrowers and the Guarantor hereby represents and warrants to the
Lender that:
2.01. ORGANIZATION. Stronghold NJ is duly organized and validly existing as
a corporation under the laws of the State of New Jersey, is in good standing
therein, and duly qualified to transact business in all places where such
qualification is necessary or advisable. Stronghold Nevada is duly organized and
validly existing as a corporation under the laws of the State of Nevada, is in
good standing therein, and duly qualified to transact business in all places
where such qualification is necessary or advisable. Stronghold (Nevada) is the
parent holding company and owns 100% of the outstanding stock of its operating
subsidiary, Stronghold (NJ).
2.02. AUTHORIZATION, NO CONFLICT. The execution and delivery by the
Borrowers and the Guarantor of this Agreement, the Note and all other documents
contemplated hereunder, and the performance of the transactions contemplated by
the Loan Documents, are within the Borrowers' powers, have been duly authorized
by all necessary action and do not and will not violate any provision of law or
of the Borrowers' Certificates of Incorporation or By-laws or result in the
breach of, or constitute a default or require any consent under any indenture or
other agreement or instrument to which the Borrowers are parties or by which the
Borrowers or their property may be bound or affected, or cause any of such
property to become subject to any lien, claim or encumbrance. Each of the Loan
Documents constitutes the legal, valid and binding obligation of the Borrowers
(or the Guarantor as to the Guaranty), enforceable in accordance with its terms.
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2.03. FINANCIAL CONDITION. The financial statements of the Borrowers
heretofore furnished to the Lender (together, the "Financial Statements"), are
complete and correct, were prepared in accordance with generally accepted
accounting principles consistently applied and accurately present the financial
condition of the Borrowers as of the dates of such statements and the results of
its operations for the periods then ended. Since June 30, 2002, there has been
no material adverse change in the Borrowers' business, condition or prospects,
financial or otherwise.
2.04. LITIGATION. There are no judgments or orders outstanding against the
Borrowers or the Guarantor and there are no suits, investigations or proceedings
pending, or, to the knowledge of the Borrowers and Guarantor, threatened,
against or affecting the Borrowers or Guarantor which, if adversely determined,
would by itself or in the aggregate have a material adverse effect on the
financial condition, business or properties of the Borrowers or the Guarantor.
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2.05. PURPOSE. The proceeds of the Loan only will be used solely to finance
the working capital needs of the Borrower. No part of the proceeds of the Loan
will be used to purchase or carry margin stock as such terms are defined in
Regulation U of the Board of Governors of the Federal Reserve System or to
extend credit to others for the purpose of purchasing or carrying margin stock,
and the use of such proceeds shall not result in any violation of Regulations G,
T, U or X of said Board.
2.06. PROPERTIES. The Borrowers have good and marketable title to all of
the assets reflected in the Financial Statements, including the Collateral, free
and clear of all liens, claims, encumbrances, and security interests (as defined
in the Uniform Commercial Code), except as permitted hereunder or as disclosed
in such statements.
2.07. TAXES. The Borrowers and the Guarantor have filed all tax returns
required to be filed and paid all taxes due or assessed, including interest and
penalties, except as specifically disclosed to the Lender, in writing, with
respect to taxes being contested in good faith and by appropriate proceedings,
provided adequate reserves have been made.
2.08. CONSENTS. No consent or approval from, or notice to or filing with,
any federal, state or other regulatory authority is required in connection with
the execution of, or performance under, the Loan Documents by the Borrowers.
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2.09. ERISA. Each employee pension benefit plan ("Plan"), as defined in the
Employee Retirement Income Security Act of 1974, as amended from time to time,
including its rules and regulations ("ERISA"), is in compliance with the
applicable provisions of ERISA, the Internal Revenue Code of 1986 (as amended,
from time to time) and any other applicable Federal or state law, and no event
or condition is occurring or exists with respect to any such Plan concerning
which the Borrowers would be under an obligation to furnish a report to the Bank
in accordance with Article 4 hereof.
2.10. TRADEMARKS, PATENTS, LICENSES, ETC. The Borrowers possess all
trademarks, patents, licenses, permits, trade names, copyrights, proprietary
rights and approvals required to conduct its business as now constituted without
conflict with the rights or claimed rights of others.
2.11. NO MISREPRESENTATIONS OR MATERIAL NONDISCLOSURE. The Borrowers have
not made and will not make to the Lender, in this Agreement or otherwise, an
untrue statement of a material fact, nor has omitted to state a material fact
necessary to make any statement made not misleading.
2.12. PERMITS. The Borrowers represent that they have, and will continue to
have, all necessary federal, state, and local licenses, certificates, and
permits relating to the Borrowers and their facilities, business, operations,
premises, and leaseholds, and they are in compliance with all applicable
federal, state, and local laws, rules, and regulations relating to air
emissions, water discharges, noise emissions, solid or liquid storage disposal,
hazardous or toxic waste or substances and other environmental, health, and
safety matters.
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ARTICLE 3. AFFIRMATIVE COVENANTS.
The Borrowers and the Guarantor agree that, while any amount is outstanding
under the Loan, they shall comply with the following covenants:
3.01. FINANCIAL STATEMENTS. The Borrowers and/or the Guarantor shall
furnish to the Lender:
(a) As requested by the Lender, an aging report, in form satisfactory to
the Lender in its sole discretion, of all accounts receivable of the Borrowers;
(b) Within ninety (90) days after the end of each fiscal year of the
Borrowers, supply financial statements of the Borrowers prepared in accordance
with generally accepted principles and practices of accounting consistently
applied, audited by and with the opinion of an independent certified public
accountant;
(c) Within 45 days after the end of each calendar quarter, supply the
Lender with quarterly financial statements of the Borrowers, prepared and
Certified by the chief executive officer of the Borrowers.
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(d) Within 15 days after filing thereof, and if requested by Lender, supply
complete signed copies of federal and state tax returns of the Borrowers and the
Guarantor.
(e) Within 30 days after the end of each calendar year, and if requested by
Lender, supply the Lender with annual personal financial statements of the
Guarantor.
(f) Promptly, such further information regarding the business affairs and
financial condition of the Borrowers or the Guarantor as the Lender may require.
(g) Promptly after preparation or receipt: (1) upon the request of the
Lender, copies of all reports and notices which the Borrowers filed with or
received under ERISA or any occupational safety, pension or retirement, or
environmental statute or regulation, and (2) copies of all proxy statements,
financial statements, and reports which the Borrowers send to shareholders and
copies of all reports and registration statements which it files with, or
receives from, any national securities exchange or Federal regulatory agency.
3.02. INSURANCE. The Borrowers shall keep the following insurance in
effect:
(a) All insurance policies required hereby which shall be (i) issued by
companies which shall have an A.M. Best Rating Guide Stability Rating of A- or
better, and a Financial Rating of VI or better, (ii) on forms, in amounts, and
with deductibles, all of which are acceptable to the Lender and (iii) maintained
throughout the term of the Loan, without cost to the Lender.
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(b) Commercial General Liability insurance insuring the Borrowers in the
minimum amounts of $1 million per occurrence and $2 million in the aggregate.
(c) The Borrowers shall maintain Workers' Compensation/ Employer Liability
Coverage as required by applicable law.
3.03. MAINTAIN BUSINESS. Each Borrower shall continue to engage in the same
type of business as it is presently engaged in, and shall preserve its existence
and good standing and all the material rights, privileges, franchises and other
properties necessary and desirable in the normal conduct of its business.
Neither Borrower will change its name without furnishing the Lender with at
least thirty days (30) prior written notice thereof. The Borrowers will notify
the Lender in writing prior to utilizing any trade name not previously submitted
to the Lender.
3.04. TAXES AND OBLIGATIONS. Each Borrower shall pay and discharge (a) all
taxes, assessments and governmental charges or levies imposed on it or its
income or profits or any of its properties prior to the date on which penalties
attach thereto and (b) all lawful obligations and claims which, if unpaid, might
cause a lien or charge to be created against any of its properties, except any
such tax, assessment, charge or levy, the payment of which is being contested in
good faith by proper proceedings, provided escrows, satisfactory to the Lender,
have been established by a Borrower.
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3.05. COMPLIANCE WITH LAWS. The Borrowers shall comply with all applicable
laws, regulations and orders of any governmental authority.
3.06. NOTICES. The Borrowers shall furnish to the Lender, promptly after
they learn thereof:
(a) Written notice of (i) any threatened or pending litigation or
governmental or administrative proceeding concerning it or its properties or
assets, (ii) any default under any other agreement to which any Borrower is a
party, (iii) any default or Event of Default hereunder together with a statement
by a responsible officer of the Borrowers describing the action, if any, which
the Borrowers propose to take with respect thereto, (iv) any material adverse
change in its business, prospects or financial condition;
(b) Written notice of any "reportable event" or "prohibited transaction"
(as such terms are defined in ERISA), in connection with any Plan, and a
statement of the action, if any, which the Borrowers propose to take with
respect thereto, and when known, any action taken by the Internal Revenue
Service or Department of Labor with respect thereto. In addition, the Borrowers
shall provide the Lender promptly after filing or receiving thereof, with copies
of all reports and notices which the Borrowers file under ERISA with the Pension
Benefit Guaranty Corporation or the United States Department of Labor or which
any Borrower receives from them;
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(c) Any notice of (i) the happening of any event involving the use, spill,
discharge, or cleanup of any hazardous or toxic substance or waste or any oil,
petroleum distillate or pesticide on any property owned or operated by any
Borrower (a "Hazardous Discharge"); or (ii) any complaint, order, citation, or
notice with regard to air emissions, water discharges, noise emissions, or any
other environmental, health, or safety matter affecting any Borrower (an
"Environmental Complaint") from any person or entity, including, without
limitation, the New Jersey Department of Environmental Protection, any similar
governmental agency of any other state or the United States Environmental
Protection Agency, then the Borrowers agree to give oral AND written notice of
same to the Lender within twenty-four (24) hours of its receipt of such notice;
(d) Any change in the name or trade name of any Borrower or Guarantor;
(e) Any material adverse change with respect to the business or financial
condition of any Borrower or any Guarantor;
(f) Any default under this Agreement or any other Loan Document;
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(g) Any change in the location of the Collateral; and
(h) Promptly, such additional notices as the Lender may request.
3.07. INSPECTION. The Borrowers shall permit the Lender to inspect their
books, records and premises during business hours and make abstracts and copies
of documents.
ARTICLE 4. NEGATIVE COVENANTS.
The Borrowers each agree that, while any amount is outstanding under the
Loan, they shall not:
4.01. SALE OF INTEREST. Sell, assign, transfer or otherwise dispose of any
shares of any class of the stock or other interest in Stronghold (NJ).
4.02. LIMITATION ON MERGERS AND SALE OF ASSETS. Enter into any transaction
of merger, consolidation or amalgamation, or liquidate, wind up or dissolve
itself (or suffer any liquidation or dissolution), convey, sell, lease, transfer
or otherwise dispose of, in one transaction or a series of transactions, all or
a substantial part of its business or assets or acquire all or substantially all
of the business or assets of another person.
4.03. LEASE OBLIGATIONS. Become liable for aggregate lease obligations of
more than $100,000.00 for any 12-month period.
4.04. INVESTMENTS. Make any loan or advance to any person or purchase or
otherwise acquire any capital stock, assets, obligations or other securities of,
make any capital contribution to, or otherwise invest or acquire any interest
in, any person in excess of $10,000.00 for any 12 month period, except: (a)
direct obligations of the United States of America or any agency thereof with
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maturities of one year or less from the date of acquisition, (b) commercial
paper of a domestic issuer rated at least A-1 by Standard & Poor's Corporation
or P-1 by Xxxxx'x Inventors Service, Inc., (c) certificates of deposit with
maturities of one year or less from the date of acquisition issued by any
commercial bank, and (d) for stock, obligations or securities received in
settlement of debts (created in the ordinary course of business) owing to any
Borrower or any subsidiary.
4.05. LIMITATIONS ON LIENS. Create or suffer, or permit any lien, or
security interest on its properties, except:
(a) Liens existing on the date hereof and reflected in the financial
statements referred to in Section 4.01 hereof;
(b) Liens for taxes not yet due or which are being contested in good faith
and by appropriate proceedings if adequate escrows, satisfactory to the Lender,
have been established by the Borrowers;
(c) Carriers', warehousemen's, mechanics', material men's, repairmen's or
other like liens arising as a matter of law in the ordinary course of business
securing amounts which are not due for a period of more than 30 days; or
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(d) Purchase money liens on personal property acquired by the Borrowers in
an amount not in excess of $25,000.00 to secure the purchase price of such
property, provided that such lien shall apply and attach only to the property
originally subject thereto.
4.06. DEBT. Create or suffer, any: (a) indebtedness for borrowed money; (b)
obligations under leases which shall have been or should be, in accordance with
generally accepted accounting principles, recorded as capital leases; and (c)
unfunded vested benefits under plans maintained for employees of the Borrowers
covered by ERISA.
4.07. LIMITATION ON DISTRIBUTIONS. Declare or pay any dividends on any
shares of its stock or apply any of its funds, property or assets to, or set
apart any funds, property or assets for, the purchase, redemption or other
retirement of, or make any other distribution, by reduction of capital or
otherwise, in respect of any shares of its stock.
4.08. ERISA COMPLIANCE. Engage in any "prohibited transaction" or incur any
"accumulated funding deficiency" whether or not waived (as such terms are
defined in ERISA) or terminate any Plan in a manner which could result in the
imposition of a lien on any property of the Borrowers pursuant to ERISA.
4.09. USE OF PROPERTY. Engage (or permit any other party to engage in) any
operations which involve the generation, manufacture, refining, transportation,
treatment, storage, or handling of hazardous substances or waste, above or below
the ground, as provided in ISRA, and the regulations adopted pursuant to ISRA,
at any property owned or operated by the Borrowers or Operator (or permit the
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operation of) any "Industrial Establishment" as defined in ISRA, on any such
property.
4.10. ISRA TENANTS. Permit any portion of any property owned by it to be
occupied by or leased to any person or business that has a major group Standard
Industrial Classification code number between 22 through 39 inclusive, 46
through 49 inclusive, 51 or 76, or by any Industrial Establishment as defined in
ISRA. ARTICLE 5. DEFAULT.
5.01. EVENTS OF DEFAULT. Each of the following is an event of default
("Event of Default") under this Agreement:
(a) Failure by the Borrowers to pay any principal, interest or fee amount
on its due date; or
(b) Any representation, warranty or statement contained in this Agreement
(or any document or instrument furnished in connection with this Agreement)
shall prove to have been false or misleading in any material respect, when made
or deemed made; or
(c) Failure by any Borrower to observe any covenant or agreement contained
in Article 5 hereof; or
(d) Failure by any Borrower to observe any other covenant or agreement
contained in this Agreement and such failure shall continue unremedied for a
period of fifteen (15) days from the occurrence thereof; or
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(e) Default by any Borrower or the Guarantor under any other obligation to
the Lender, or any third party, now existing or hereafter arising; or
(f) Default under any other Loan Document which is not cured within any
applicable grace or notice period; or
(g) Entry of a judgment or judgments for an aggregate amount in excess of
$5,000.00 against any Borrower or the Guarantor without satisfaction or stay of
execution, for any period of 30 consecutive days; or
(h) Any Borrower or the Guarantor shall admit its inability to pay its
debts, or shall make a general assignment for the benefit of creditors; or any
proceeding shall be instituted by or against any Borrower or the Guarantor
seeking relief as to a Borrower or Guarantor under the federal Bankruptcy Code
(or its successors) (the "Bankruptcy Code") or to adjudicate it insolvent, or
seeking reorganization, arrangement, adjustment, or composition of it or its
debts or property under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors, or seeking appointment of a receiver,
trustee, or other similar official for it or for any substantial part of its
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property; or any Borrower or any Guarantor shall take any corporate action to
authorize any of the actions set forth above in this subsection; or
(i) All or any substantial part of the properties or assets of any Borrower
or the Guarantor shall have been condemned, seized or otherwise appropriated; or
(j) There shall be any material adverse change in the business or financial
condition of any Borrower or the Guarantor; or
(k) The Guarantor shall cease to be chief executive officer of the
Borrowers involved directly in the day-to-day management of the business of the
Borrowers; or
(l) The death of the Guarantor; or
(m) Any change shall occur in the ownership of Stronghold (NJ); or
(n) The loss of any necessary license or permit for the operation of the
business operated or to be operated by the Borrowers; or
(o) Transfer of title to any portion of, or interest in, the Collateral.
5.02. REMEDIES. If there is an Event of Default, the Lender may, without
presentment, demand, protest, notice or other formality (all of which are waived
by the Borrowers and the Guarantor):
(a) Declare the full unpaid principal amount outstanding hereunder and
accrued interest thereon to be immediately due and payable, whereupon such
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amounts shall be immediately due and payable; or
(b) Foreclose or exercise any of its rights with respect to any Collateral
without waiving its rights to proceed against any other Collateral or other
entities or individuals directly or indirectly responsible for payment of the
Loan; or
(c) Exercise any other remedies under applicable law, or under this
Agreement or any other Loan Document, including but not limited to proceeding to
enforce its right by suit in equity, action at law or other appropriate
proceeding, whether for payment or the specific performance of the covenants or
agreements contained in this Agreement or any other Loan Document.
All remedies of the Lender provided for herein are cumulative and shall be
in addition to all other rights or remedies of the Lender. The Borrowers and the
Guarantor shall be liable for all costs, charges and expenses, and other sums
incurred or advanced by the Lender (including reasonable attorney's fees and
disbursements) to preserve the Collateral, collect on the Loan, protect the
Lender's interests in or realize on the Collateral or to enforce the Lender's
rights against the Borrowers or the Guarantor.
5.03. RIGHT OF SET-OFF; SECURITY INTEREST. Borrowers and the Guarantor
hereby grant to Lender, a continuing second lien, security interest and right of
setoff as security for all liabilities and obligations to Lender, whether now
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existing or hereafter arising, upon and against all deposits, credits,
collateral and property, now or hereafter in the possession, custody,
safekeeping or control of the Lender or its successors and assigns or in transit
to any of them. At any time after an Event of Default, without demand or notice
(any such notice being expressly waived by Borrowers and the Guarantor), Lender
may setoff the same or any part thereof and apply the same to any liability or
obligation of Borrowers and any Guarantor even though unmatured and regardless
of the adequacy of any other collateral securing the Loan. ANY AND ALL RIGHTS TO
REQUIRE LENDER TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER
COLLATERAL WHICH SECURES THE LOAN, PRIOR TO EXERCISING ITS RIGHT OF SETOFF WITH
RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF BORROWERS OR ANY
GUARANTOR, ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED.
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ARTICLE 6. MISCELLANEOUS.
6.01. INDEMNIFICATION. At all times the Borrowers and the Guarantor shall
defend and indemnify and hold the Lender (which for the purposes of this
paragraph shall include the present or future shareholder, officers, directors,
employees, representatives, agents, licensees and assigns of the Lender)
harmless from and against any and all liabilities, claims, demands, suits,
proceedings, actions, causes of action, losses, damages, settlements, judgments,
recoveries, costs and expenses (including reasonable fees and actual
disbursements of counsel) resulting from any breach of the representations,
warranties, agreements or covenants made by any Borrower or any Guarantor in
this Agreement or any other Loan Document, arising from or connected with the
transactions contemplated by this Agreement or any other Loan Document, or any
of the rights and properties assigned or pledged to the Lender, except to the
extent arising from the gross negligence or willful misconduct of the Lender.
6.02. AMENDMENTS, WAIVERS, ETC. No amendment or waiver of any provision in
the Loan Documents or consent to any departure by the Borrowers there from,
shall be effective unless the same shall be in writing and signed by the Lender,
and then such waiver or consent shall be effective only in the specific instance
and for the specific purpose for which it was given. No failure by the Lender to
exercise in whole or part, and no delay in so exercising, any right hereunder
shall operate as a waiver thereof or preclude any other or further exercise
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thereof or the exercise of any other right. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law.
6.03. SURVIVAL. All representations and warranties made herein or pursuant
hereto shall survive the making of the Loan hereunder.
6.04. USURY. If, at any time, the rate of interest, together with all
amounts which constitute interest and which are reserved, charged or taken by
Lender as compensation for fees, services or expenses incidental to the making,
negotiating or collection of the loan evidenced hereby, shall be deemed by any
competent court of law, governmental agency or tribunal to exceed the maximum
rate of interest permitted to be charged by Lender to Borrowers under applicable
law, then, during such time as such rate of interest would be deemed excessive,
that portion of each sum paid attributable to that portion of such interest rate
that exceeds the maximum rate of interest so permitted shall be deemed a
voluntary prepayment of principal. As used herein, the term "applicable law"
shall mean the law in effect as of the date hereof; provided, however, that in
the event there is a change in the law which results in a higher permissible
rate of interest, then this Agreement shall be governed by such new law as of
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its effective date.
6.05. PAYMENT OF FEES AND EXPENSES. Borrowers and the Guarantor shall pay
on demand all expenses of Lender in connection with the administration, default,
collection, waiver or amendment of loan terms, or in connection with Lender's
exercise, preservation or enforcement of any of its rights, remedies or options
hereunder, including, without limitation, fees of outside legal counsel or the
allocated costs of in-house legal counsel, accounting, consulting, brokerage or
other similar professional fees or expenses, and any fees or expenses associated
with travel or other costs relating to any appraisals or examinations conducted
in connection with the loan or any collateral therefore, and the amount of all
such expenses shall, until paid, bear interest at the rate applicable to
principal hereunder (including any default rate) and be an obligation secured by
any Collateral.
6.06. GOVERNING LAW. This Agreement shall be deemed to have been made
under, governed by and construed in accordance with, the laws of the State of
New Jersey (excluding the laws applicable to conflicts or choice of law);
provided that the foregoing is not intended to limit the maximum rate of
interest which may be charged or collected by the Lender hereunder if, under the
laws applicable to it, the Lender may charge or collect such interest at a
higher rate than is permissible under the laws of said State.
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6.07. BINDING EFFECT. This Agreement shall be binding upon, and shall inure
to the benefit of, the Borrowers, the Lender and their respective successors and
assigns except that the Borrowers may not assign or transfer their rights or
obligations hereunder.
6.08. NOTICES. Notices under this Agreement shall be delivered personally
or by registered mail to the address shown on the signature page hereof. Notice
personally delivered shall be effective as of delivery or, if sent by registered
mail, on the third business day after the date of mailing.
6.9. SUBSIDIARIES. If any Borrower has any subsidiaries (defined as
corporations in which a Borrower owns or controls the majority of the capital
stock with ordinary voting power) all representations, covenants and conditions
referring to a Borrower shall also apply to its subsidiaries, and, all financial
statements and tests shall apply to the Borrowers and their subsidiaries on a
consolidated and consolidating basis.
6.10. CAPTIONS. The captions and headings hereunder are for convenience
only and shall not affect the interpretation or construction of this Agreement.
6.11. SEVERABILITY. The provisions of this Agreement shall be severable; if
any provision shall be held invalid or unenforceable in whole or in part the
determination shall not affect the remaining provisions of the Agreement in any
manner.
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6.12. DISCLOSURE. The Lender is hereby authorized to disclose any financial
or other information it may have about the Borrowers or the Guarantor to any
present or future participant or prospective participant, any regulatory body or
agency having jurisdiction over the Lender, or to any successor to all or any
part of the Lender's interest herein.
6.13. WAIVER OF TRIAL BY JURY. BORROWERS, THE GUARANTOR AND LENDER MUTUALLY
HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT TO A TRIAL BY
JURY IN RESPECT OF ANY CLAIM BASED HEREON, ARISING OUT OF, UNDER OR IN
CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN DOCUMENTS CONTEMPLATED TO BE
EXECUTED IN CONNECTION HEREWITH OR ANY COURSE OF CONDUCT, COURSE OF DEALINGS,
STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY, INCLUDING,
WITHOUT LIMITATION, ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS OR
ACTIONS OF LENDER RELATING TO THE ADMINISTRATION OF THE LOAN OR ENFORCEMENT OF
THE LOAN DOCUMENTS, AND AGREE THAT NEITHER PARTY WILL SEEK TO CONSOLIDATE ANY
SUCH ACTION WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT
BEEN WAIVED. EXCEPT AS PROHIBITED BY LAW, BORROWERS HEREBY WAIVE ANY RIGHT IT
MAY HAVE TO CLAIM OR RECOVER IN ANY LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE
OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL
DAMAGES. EACH BORROWER AND THE GUARANTOR CERTIFIES THAT NO REPRESENTATIVE, AGENT
OR ATTORNEY OF LENDER HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT LENDER WOULD
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NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER. THIS
WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR LENDER TO ENTER INTO THIS AGREEMENT
AND MAKE THE LOAN.
26
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
Attested by: Stronghold Technologies, Inc., a New
Jersey Corporation, Borrower
/s/ Xxxxxx X. Xxxxxx By: /s/ Xxxxxxxxxxx X. Xxxxx
------------------------- --------------------------------------
Xxxxxx Xxxxxx, Secretary Xxxxxxxxxxx X. Xxxxx, President
Attested by: Stronghold Technologies, Inc., a
Nevada Corporation, Borrower
/s/ Xxxxxx X. Xxxxxx By: /s/ Xxxxxxxxxxx X. Xxxxx
------------------------- ---------------------------------------
Xxxxxx Xxxxxx, Secretary Xxxxxxxxxxx X. Xxxxx, President
Witnessed by:
/s/ Xxxxxx X. Xxxxxx /s/ Xxxxxxxxxxx X. Xxxxx
------------------------- ----------------------------------------
Xxxxxx Xxxxxx Xxxxxxxxxxx X. Xxxxx, Guarantor
Attested by: AC Trust Fund
/s/ Xxxxxxxxxxx X. Xxxxx By: /s/ Xxxx X. Xxxxx
-------------------------- ---------------------------------------
Xxxxxxxxxxx X Xxxxx Xxxx X. Xxxxx, Trustee
27
