Exhibit 4
LOAN AND SECURITY AGREEMENT
This LOAN AND SECURITY AGREEMENT ("LOAN AGREEMENT") is entered into as
of May 18, 2000, by and between XXXXXXXXX.XXX, INC., a Nevada corporation
("BORROWER"), in favor of INTELLECT CAPITAL GROUP, LLC, a Delaware limited
liability company ("LENDER").
ARTICLE I
DEFINITIONS
This Loan Agreement is the "Loan Agreement" referred to in that certain
Promissory Note of even date herewith between Borrower and Lender (the
"PROMISSORY NOTE"), and is delivered pursuant to the terms thereof. Terms
defined in the Promissory Note and not otherwise defined in this Loan Agreement
shall have the meanings defined for those terms in the Promissory Note. Terms
defined in the California Uniform Commercial Code ("UCC") and not otherwise
defined in this Loan Agreement or in the Promissory Note shall have the meanings
defined for those terms in the UCC. As used in this Loan Agreement, the
following terms shall apply to the Borrower and have the meanings respectively
set forth:
"ACCOUNTS" of any Person means all of such Person's presently existing
and hereafter arising or acquired accounts, accounts receivable, margin
accounts, futures positions, book debts, notes, drafts, acceptances, chattel
paper, and other forms of obligations now or hereafter owned or held by or
payable to such Person relating in any way to Inventory or arising from the sale
of Inventory or the rendering of services by such Person or howsoever otherwise
arising, including the right to payment of any interest or finance charges with
respect thereto, together with all merchandise represented by any of the
accounts; all such merchandise that may be reclaimed or repossessed or returned
to such Person; all of such Person's rights as an unpaid vendor, including
stoppage in transit, reclamation, replevin, and sequestration; all pledged
assets and all letters of credit, guaranty claims, liens, and security interests
held by or granted to such Person to secure payment of any of the foregoing; all
proceeds and products of all of the foregoing; and all proceeds of insurance
with respect thereto, including the proceeds of any applicable credit insurance
or fidelity bond, whether payable in cash or in kind; and all customer lists,
ledgers, books of account, records, computer programs, computer disks or tape
files, computer printouts, computer runs, and other computer prepared
information relating to any of the foregoing.
"CHATTEL PAPER" of any Person means any of such Person's "chattel
paper," as such term is defined in Section 9105(1) (b) of the UCC, and shall
include, without limitation, all writings owned or held by such Person which
evidence both a monetary obligation and a security interest in or a lease of
specific goods; when a transaction is evidenced both by a security agreement or
a lease and by an Instrument or a series of Instruments, the group of writings
taken together constitutes Chattel Paper.
"COLLATERAL" is defined in SECTION 3.1.
"COMPUTER PROGRAM" shall mean any computer software program created by
or on behalf of Borrower, or to which Borrower obtained any rights of ownership
or exploitation, at any time before or after the date of this Loan Agreement,
whether for internal use, for commercial distribution or other exploitation, or
for any other use whatsoever.
"CONTRACTS" of any Person means all contracts, undertakings, or other
agreements (other than rights evidenced by Chattel Paper, Documents or
Instruments) in or under which such Person may now or hereafter have any right,
title or interest, including, but not limited to, with respect to an Account,
any agreement relating to the terms of payment or the terms of performance
thereof.
"DISTRIBUTION" means dividends, distributions, redemption payments,
liquidation payments, or other monies payable to Borrower on account of the
Collateral and all rights to any of the foregoing.
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"DOCUMENT" means, with respect to any Person, any "document," of such
Person, as such term is defined in Section 9105(1)(f) of the UCC, and shall
include, without limitation, any xxxx of lading, dock warrant, dock receipt,
warehouse receipt or order for the delivery of Inventory owned or held by such
Person, together with any other document or receipt which in the regular course
of business or financing is treated as adequately evidencing that the person in
possession of it is entitled to receive, hold and dispose of the document and
the goods it covers.
"EQUIPMENT" of any Person means all of such Person's now owned and
hereafter acquired equipment (as defined in Section 9109(2) of the UCC) and
shall include, without limitation, all machinery, office equipment, furniture,
furnishings, fixtures, computers, office equipment and other tangible personal
Property, as well as purchase options with respect to all of such types of
Property leased by such Person; together with all present and future additions
and accessions thereto, replacements therefor, component and auxiliary parts and
supplies used or to be used in connection therewith, and all substitutes for any
of the foregoing, and all manuals, drawings, instructions, warranties and rights
with respect thereto, wherever any of the foregoing is located.
"GENERAL INTANGIBLES" of any Person means all "general intangibles" of
such Person, as such term is defined in Section 9106 of the UCC, and shall
include, without limitation, chooses in action, causes of action and all other
kinds of intangible personal property of every kind or nature owned by such
Person, including, but not limited to, contract rights, corporate or other
business records, inventions, designs, patents, patent applications, service
marks, trademarks, trademark applications, trade names, trade secrets,
engineering drawings, goodwill, registrations, copyrights, copyright
applications, licenses, franchises, leasehold interests in personal property,
customer lists, tax refund claims, business interruption insurance and proceeds
thereof, property, casualty or any similar type of insurance and any proceeds
thereof, royalty, licensing and product rights (including licenses consisting of
the right to occupy seats at the exhibition of theatrical motion pictures),
rights to the retrieval from third parties of electronically processed and
recorded data pertaining to any Collateral and all rights to payment under any
judgment; and all customer lists, ledgers, books of account, records, computer
programs, computer disks or tape files, computer printouts, computer runs, and
other computer prepared information relating to any of the foregoing.
"INSTRUMENT" of any Person means any "instrument" of such Person, as
such term is defined in Section 9105(1) (i) of the UCC, and shall include,
without limitation, any draft, check, certificate of deposit, note, xxxx of
exchange, security (including equity securities) or any other writing owned or
held by such person which evidences a right to the payment of money and is not
itself a security agreement or lease and is of a type which is transferred in
the ordinary course of business by delivery with any necessary endorsement or
assignment.
"INTELLECTUAL PROPERTY" shall mean, without limiting the generality of
the definition of "General Intangibles" set forth herein, all Computer Programs,
whether created on or before the date of this Agreement or after the date of
this Agreement, and all know-how, processes, designs, techniques, plans,
artwork, packaging, documentation, advertising material, specifications, models,
data, inventions and similar types of property related to, or used by Borrower
in connection with its business including, without limitation, concerning, any
Computer Programs, and all underlying works of any of the foregoing and all
derivative works of the foregoing whenever created, and all rights of Borrower
therein and thereto of every kind and nature, including, but not limited to, any
and all copyrights, copyright applications, rights in copyright, interests in
copyrights and renewals and extensions of copyrights, domestic and foreign,
heretofore or hereafter obtained thereupon, and all trademarks, trade names
(including, but not limited to, the names "Photoloft", "XxxxxXxxx.xxx" [XXXX --
ANY OTHERS?]), service marks and logos, and variants thereof and rights therein,
and all registrations thereof and applications to register any of the foregoing,
trade secret rights, patents, patent applications, industrial property and other
rights.
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"INVENTORY" of any Person means any "inventory" of such Person, as such
term is defined in Section 9109 (4) of the UCC, and shall include, without
limitation, any and all goods owned or held by or for the account of such
Person, for sale or lease, or for furnishing under a contract of service, or as
raw materials, work in process, materials incorporated in or consumed in the
production, packaging, delivery or shipping of any of the foregoing, supplies,
and all property the sale, lease or other disposition of which has given rise to
Accounts and which has been returned to such Person or repossessed by such
Person or stopped in transit, all substitutions and replacements therefor and
all additions and accessions thereto; and all customer lists, ledgers, books of
account, records, computer programs, computer disks or tape files, computer
printouts, computer runs, and other computer prepared information relating to
any of the foregoing.
"SECURED OBLIGATIONS" means, with respect to Borrower, any and all
present and future obligations of any type or nature of Borrower to Lender
arising under or relating to this Loan Agreement or the Promissory Note, whether
due or to become due, liquidated or unliquidated, or contingent or
noncontingent, including obligations of performance as well as obligations of
payment, and including interest that accrues after the commencement of any
bankruptcy or insolvency proceeding by or against Borrower.
ARTICLE II
LOAN
In accordance with the terms of the Promissory Note, Borrower shall pay
to the order of Lender the principal sum of Two Hundred Seventy-Five Thousand
and No/100 dollars ($275,000.00) at an interest rate of 10.0% per annum,
calculated quarterly, with the entire outstanding principal balance on such
Promissory Note and all interest accrued thereon being due and payable in a
balloon payment at such time that Lender delivers written demand to Borrower, in
accordance with the terms and provisions of the Promissory Note. The Promissory
Note is a senior obligation of the Borrower, ranking in greater priority over
any general creditors of the Borrower, and secured in accordance with the terms
of this Loan Agreement.
ARTICLE III
SECURITY INTEREST
Section 3.1 GRANT OF SECURITY. As security for the repayment and full
and prompt performance of its obligations under the Promissory Note, Borrower
hereby assigns, transfers, pledges and sets over to Lender and hereby grants to
Lender a continuing first priority security interest in, all of Borrower's
right, title and interest (whether now owned or existing or hereafter arising or
acquired) in and to the following property and interests in property
(collectively, the "COLLATERAL"):
(a) all Inventory;
(b) all Accounts;
(c) all Chattel Paper and Instruments;
(d) all Documents;
(e) all Equipment;
(f) all General Intangibles;
(g) all Intellectual Property;
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(h) any and all balances, credits, deposits, accounts or
moneys of or in its name in the possession or control of, or in transit
to, Lender or any financial institution and all securities, instruments
and accounts in which such sums are invested from time to time;
(i) all other rights to the payment of money, including, but
not limited to, amounts due from any Person, amounts due from any
shareholder, tax refunds, insurance proceeds and all indebtedness and
other sums owed to such Person by any of its subsidiaries or affiliates;
(j) all other goods and personal property of Borrower
whether tangible or intangible or whether now owned or hereafter
acquired by Borrower and wherever located;
(k) all books, correspondence, credit files, records,
invoices, bills of lading and other documents relating to any of the
foregoing, including, but not limited to, all tapes, cards, computer
runs, ledgers and other papers and documents in the possession or
control of Borrower or any computer bureau from time to time acting for
Borrower; and
(l) all accessions to, substitutions for, and replacements,
proceeds and products of any of the foregoing, including, but not
limited to, all rights in, to and under all policies of insurance,
including, but not limited to, claims or rights to payments thereunder
and proceeds therefrom, and any credit insurance.
Section 3.2 CONTINUING SECURITY INTEREST; TRANSFER. This Loan Agreement
shall create a continuing security interest in the Collateral, notwithstanding
the bankruptcy of Borrower or other Person or any other event or proceeding
affecting any Person, and shall:
(a) remain in full force and effect until payment in full of
all Secured Obligations and the termination of the commitments of Lender
pursuant to the Promissory Note; (b) be binding upon Borrower and its
successors; and (c) inure, together with the rights and remedies of
Lender hereunder, to the benefit of Lender and its successors,
transferees and assigns.
Upon the payment in full of all Secured Obligations and the termination of the
commitments of Borrower to Lender pursuant to this Loan Agreement and the
Promissory Note, the security interests granted herein shall terminate and all
rights to the Collateral shall revert to Borrower. Upon any such termination,
Lender shall, at Borrower's sole expense, execute and deliver to Borrower such
documents as Borrower may reasonably request to evidence such termination.
Section 3.3 BORROWER REMAINS LIABLE. Notwithstanding anything herein to
the contrary,
(a) Borrower shall remain liable under the contracts and
agreements included in the Collateral to the extent set forth therein,
and shall perform all of its duties and obligations under such contracts
and agreements to the same extent as if this Loan Agreement had not been
executed;
(b) the exercise by Lender of any of its rights hereunder
shall not release Borrower from any of its duties or obligations under
any such contracts or agreements included in the Collateral; and
(c) Lender shall not have any obligation or liability under
any such contracts or agreements included in the Collateral by reason of
this Loan Agreement, nor shall Lender be
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obligated to perform any of the obligations or duties of Borrower
thereunder or to take any action to collect or enforce any claim for
payment assigned hereunder.
Section 3.4 SUBSEQUENT CHANGES AFFECTING COLLATERAL. Borrower represents
to Lender that it has made its own arrangements for keeping informed of changes
or potential changes affecting the Collateral, and Borrower agrees that Lender
shall not have any responsibility or liability for informing Borrower of any
such changes or potential changes or for taking any action or omitting to take
any action with respect thereto.
ARTICLE IV
LENDER'S RIGHTS REGARDING COLLATERAL
At any time (whether or not an Event of Default has occurred), and at
the expense of Borrower, Lender may, to the extent it may be necessary or
desirable to protect the security hereunder, but Lender shall not be obligated
to, at all reasonable times on reasonable notice, enter upon any premises on
which Collateral is situated and examine the same. At any time (whether or not
an Event of Default has occurred) and from time to time, at the expense of
Borrower, Lender may, to the extent it may be necessary or desirable to protect
the security hereunder, require Borrower to: (i) notify obligors of the
Collateral that the Collateral has been assigned to Lender as collateral for the
Secured Obligations; and (ii) at any time and from time to time, reasonably
request from obligors on the Collateral, in the name of Borrower (if an Event of
Default shall have occurred) or in the name of Lender, information concerning
the Collateral owned by Borrower and the amounts owing thereon. Borrower shall
maintain books and records pertaining to the Collateral owned by Borrower in
such detail, form and scope as Lender shall reasonably require consistent with
Lender's interests hereunder. Borrower shall at any time, at Lender's request,
xxxx the Collateral and Borrower`s ledger cards, books of account and other
records relating to the such Collateral with appropriate notations satisfactory
to Lender disclosing that they are subject to Lender's security interests.
Lender shall at all reasonable times on reasonable notice have full access to
and the right to audit any and all of Borrower's books and records pertaining to
the Collateral, and to confirm and verify the value of the Collateral and to do
whatever else Lender reasonably may deem necessary or desirable to protect its
interests. Lender shall be under no duty or obligation whatsoever to take any
action to preserve any rights of or against any prior or other parties in
connection with the Collateral, to exercise any managerial rights with respect
to any Collateral, whether or not an Event of Default shall have occurred, or to
make or give any presentments, demands for performance, notices of
non-performance, protests, notices of protests, notices of dishonor or notices
of any other nature whatsoever in connection with the Collateral or the Secured
Obligations. Lender shall be under no duty or obligation whatsoever to take any
action to protect or preserve the Collateral or any rights of Borrower therein,
or to make collections or enforce payment thereon, or to participate in any
foreclosure or other proceeding in connection therewith. Concurrently with the
execution and delivery of this Agreement, Borrower shall deliver to Lender all
certificates representing the Collateral, together with stock powers or other
appropriate instruments of assignment duly executed by Borrower in blank. In the
event that Borrower receives additional investments that constitute or represent
Collateral, Borrower will promptly deliver them to Lender to be held in pledge
by Lender pursuant to the terms of this Agreement, together with stock powers or
other appropriate instruments of transfer duly executed by Borrower in blank.
ARTICLE V
BORROWER'S REPRESENTATIONS AND WARRANTIES
Borrower represents, warrants and agrees that: (a) Borrower owns the
sole, full and clear title to all of its respective existing Collateral free and
clear of any lien, security interest, charge or encumbrance except for the
security interest created by this Agreement and except as permitted by the
Promissory Note, and no effective financing statement or other instrument
similar in effect covering all or any part of the Collateral is on file in any
recording office, except such as may have been filed in favor of Lender relating
to this Agreement; (b) Borrower has the right and power to grant the security
interests granted
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hereunder; (c) Borrower will pay, prior to delinquency, all taxes, charges,
Liens and assessments against the portion of the Collateral owned by it; (d) the
Collateral will not be used for any unlawful purpose or in violation of any law,
regulation or ordinance, nor used in any way that will void or impair any
insurance required to be carried in connection therewith; (e) Borrower will, to
the extent consistent with good business practice, keep the Collateral owned by
it in reasonably good repair, working order and condition, and from time to time
make all needful and proper repairs, renewals, replacements, additions and
improvements thereto and, as appropriate and applicable, will otherwise deal
with the Collateral in all such ways as are considered good practice by owners
of like Property; (f) Borrower will take all reasonable steps to preserve and
protect the Collateral; (g) Borrower will maintain, with responsible insurance
companies, adequate and customary insurance covering the Collateral; (h)
Borrower will promptly notify Lender in writing in the event of any substantial
or material damage to the Collateral (considered as a whole) from any source
whatsoever, and, except for the disposition of collections and other proceeds of
the Collateral permitted by Article VII, Borrower will not remove or permit to
be removed any part of the Collateral from its place of business without the
prior written consent of Lender, except for such items of the Collateral as are
removed in the ordinary course of business or in connection with any transaction
or disposition otherwise permitted herein; and (i) in the event Borrower changes
its name or its address as either are set forth herein, Borrower will notify
Lender of such name and/or address change promptly, but in any event, within ten
(10) days of such occurrence.
ARTICLE VI
COVENANTS OF BORROWER
Borrower agrees that, from time to time at its own expense, it will
promptly execute and deliver all further instruments and documents, and take all
further action, that may be necessary or desirable, or that Lender may request,
in order to perfect, preserve and protect any security interest granted or
purported to be granted hereby or to enable Lender to exercise and enforce its
rights and remedies hereunder with respect to any Collateral. Without limiting
the generality of the foregoing, Borrower agrees that after the date of this
Loan Agreement, it will, on a basis consistent with its prior practices,
promptly upon publication of any new Computer Program (any of the foregoing, a
"NEW WORK") or adoption of a new trademark or service xxxx (either of the
foregoing, a "NEW XXXX"): (i) register the copyright in such New Work with the
U.S. Copyright Office, or register such New Xxxx in the U.S. Patent and
Trademark Offices and in appropriate foreign jurisdictions (except to the extent
Borrower believes reasonably and in good faith that any New Xxxx or New Work is
not registrable under applicable law); (ii) execute and deliver additional
copyright mortgages and trademark assignments and such other instruments as
Lender may reasonably request in order to perfect Lender's security interest in
such New Work or New Xxxx; and (iii) send notice of such New Work to Lender. In
addition, in the event that after the date of this Loan Agreement Borrower
adopts any new trademark, trade name, service xxxx, product name or service
name, Borrower will promptly notify Lender of such new trademark, trade name,
service xxxx, product name or service name and will seek registration of such
new trademark, trade name, service xxxx, product name or service name in
appropriate circumstances and with appropriate authorities in the United States
and elsewhere. With respect to the foregoing and the grant of the security
interest hereunder, Borrower hereby authorizes Lender to file one or more
financing or continuation statements, and amendments thereto, relative to all or
any part of the Collateral without the signature of Borrower where and as
permitted by law. A carbon, photographic or other reproduction of this Loan
Agreement or any financing statement covering the Collateral or any part thereof
shall be sufficient as a financing statement where permitted by law. Borrower
shall furnish Lender with a fully executed copy of each agreement now existing
or hereafter entered into concerning the Intellectual Property.
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ARTICLE VII
COLLECTIONS ON THE COLLATERAL
Except as otherwise provided herein, Borrower shall have the right to
use and to continue to make collections on and receive Distributions and other
proceeds of all of the Collateral in the ordinary course of business so long as
no Event of Default shall have occurred. Upon the occurrence of an Event of
Default, at the option of Lender, Borrower's right to make collections on and
receive Distributions and other proceeds of the Collateral and to use or dispose
of such collections and proceeds shall be suspended until such time, if any,
that such Event of Default has been cured, and any and all Distributions,
proceeds and collections, including all partial or total prepayments, then held
or thereafter received on or on account of the Collateral will be held or
received by Borrower in trust for Lender and immediately delivered in kind to
Lender for so long as such suspension remains in effect. Any remittance received
by Borrower from any Person shall be presumed to relate to the Collateral and to
be subject to Lender's security interests. Upon the occurrence of an Event of
Default, Lender shall have the right at all times to receive, receipt for,
endorse, assign, deposit and deliver, in the name of Lender (on behalf of
Lender) or in the name of Borrower, any and all checks, notes, drafts and other
instruments for the payment of money constituting proceeds of or otherwise
relating to the Collateral; and Borrower hereby authorizes Lender to affix, by
facsimile signature or otherwise, the general or special endorsement of it, in
such manner as Lender shall deem advisable, to any such instrument in the event
the same has been delivered to or obtained by Lender without appropriate
endorsement, and Lender and any collecting agent are hereby authorized to
consider such endorsement to be a sufficient, valid and effective endorsement by
Borrower, to the same extent as though it were manually executed by a duly
authorized officer of Borrower, regardless of by whom or under what
circumstances or by what authority such facsimile signature or other endorsement
actually is affixed, without duty of inquiry or responsibility as to such
matters, and Borrower hereby expressly waives demand, presentment, protest and
notice of protest or dishonor and all other notices of every kind and nature
with respect to any such instrument.
ARTICLE VIII
EVENT OF DEFAULT
The failure by Borrower to make the balloon payment as required by the
Promissory Note and Article II of this Loan Agreement shall constitute an Event
of Default hereunder immediately upon such failure.
ARTICLE IX
RIGHTS UPON EVENT OF DEFAULT
Section 9.1 RIGHTS UPON EVENT OF DEFAULT. Upon the occurrence of an
Event of Default, Lender shall have, in any jurisdiction where enforcement
hereof is sought, in addition to all other rights and remedies that Lender may
have under applicable law or in equity or under this Loan Agreement (including,
but not limited to, all rights set forth in Article VII hereof) or under the
Promissory Note, all rights and remedies of a secured party under the UCC as
enacted in any jurisdiction, and, in addition, the following rights and
remedies, all of which may be exercised with or without notice to Borrower and
without affecting the Secured Obligations, or the enforceability of the Liens
and security interests created hereby: (a) to foreclose the Liens and security
interests created hereunder or under any other agreement relating to any
Collateral by any available judicial procedure or without judicial process; (b)
to enter any premises where any Collateral may be located for the purpose of
securing, protecting, inventorying, appraising, inspecting, repairing,
preserving, storing, preparing, processing, taking possession of or removing the
same; (c) to sell, assign, lease or otherwise dispose of any Collateral or any
part thereof, either at public or private sale or at any broker's board, in lot
or in bulk, for cash, on credit or otherwise, with or without representations or
warranties and upon such terms as shall be acceptable to Lender; (d) to notify
obligors on the Collateral that the Collateral has been assigned to Lender and
that all payments thereon are to be made directly and exclusively to Lender, for
the benefit of Lender; (e) to
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collect by legal proceedings or otherwise all Distributions, interest, principal
or other sums now or hereafter payable upon or on account of the Collateral; (f)
to cause the Collateral to be registered in the name of Lender, as legal owner;
(g) to enter into any extension, reorganization, deposit, merger or
consolidation agreement, or any other agreement relating to or affecting the
Collateral, and in connection therewith Lender may deposit or surrender control
of the Collateral or accept other Property in exchange for the Collateral; (h)
to settle, compromise or release, on terms acceptable to Lender, in whole or in
part, any amounts owing on the Collateral or any disputes with respect thereto;
(i) to extend the time of payment, make allowances and adjustments and issue
credits in connection with the Collateral in the name of Lender or in the name
of Borrower; (j) to enforce payment and prosecute any action or proceeding with
respect to any or all of the Collateral and take or bring, in the name of Lender
or in the name of Borrower, any and all steps, actions, suits or proceedings
deemed by Lender necessary or desirable to effect collection of or to realize
upon the Collateral, including any judicial or nonjudicial foreclosure thereof
or thereon, and Borrower specifically consents to any nonjudicial foreclosure of
any or all of the Collateral or any other action taken by Lender which may
release any obligor from personal liability on any of the Collateral, and
Borrower waives any right not expressly provided for in this Loan Agreement to
receive notice of any public or private judicial or nonjudicial sale or
foreclosure of any security or any of the Collateral; and any money or other
property received by Lender in exchange for or on account of the Collateral,
whether representing collections or proceeds of Collateral, and whether
resulting from voluntary payments or foreclosure proceedings or other legal
action taken by Lender or Borrower may be applied by Lender without notice to
Borrower to the Secured Obligations in such order and manner as Lender in its
sole discretion shall determine; (k) to insure, process and preserve the
Collateral; (l) to exercise all rights, remedies, powers or privileges provided
under this Loan Agreement or the Promissory Note; (m) to remove, from any
premises where the same may be located, the Collateral and any and all
documents, instruments, files and records, and any receptacles and cabinets
containing the same, relating to the Collateral, and Lender may, at the cost and
expense of Borrower, use such of its supplies, equipment, facilities and space
at its places of business as may be necessary or appropriate to properly
administer, process, store, control, prepare for sale or disposition and/or sell
or dispose of the portion of the Collateral owned by Borrower or to properly
administer and control the handling of collections and realizations thereon, and
Lender shall be deemed to have a rent-free tenancy of any premises of Borrower
for such purposes and for such periods of time as reasonably required by Lender;
(n) to receive, open and dispose of all mail addressed to Borrower and notify
postal authorities to change the address for delivery thereof to such address as
Lender may designate; provided that Lender agrees that it will promptly deliver
over to Borrower such opened mail as does not relate to the Collateral; and (o)
to exercise all other rights, powers, privileges and remedies of an owner of the
Collateral; all at Lender's sole option and as Lender in its sole discretion may
deem advisable. Borrower shall, at Lender's request, assemble the Collateral and
make it available to Lender at places that Lender may reasonably designate,
whether at the premises of Borrower or elsewhere, and will make available to
Lender, free of cost, all premises, equipment and facilities of Borrower for the
purpose of Lender's taking possession of the Collateral or storing same or
removing or putting the Collateral in salable form or selling or disposing of
same.
Section 9.2 RIGHT TO TAKE POSSESSION OF COLLATERAL. Upon the occurrence
of an Event of Default, Lender also shall have the right, without notice or
demand, either in person, by agent or by a receiver to be appointed by a court,
and without regard to the adequacy of any security for the Secured Obligations,
to take possession of the Collateral or any part thereof and to collect and
receive the rents, issues, profits, income and proceeds thereof. Taking
possession of the Collateral shall not cure or waive any Event of Default or
notice thereof or invalidate any act done pursuant to such notice. The rights,
remedies and powers of any receiver appointed by a court shall be as ordered by
said court.
Section 9.3 SALE OR DISPOSAL OF COLLATERAL. Any public or private sale
or other disposition of the Collateral may be held at any office of Lender, or
at Borrower's places of business, or at any other place permitted by applicable
law, and without the necessity of the Collateral's being within the view of
prospective purchasers. Lender may direct the order and manner of sale of the
Collateral, or portions
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thereof, as it in its sole and absolute discretion may determine, and Borrower
expressly waives any right to direct the order and manner of sale of any
Collateral. Lender or any Person on Lender's behalf may bid and purchase at any
such sale or other disposition. The net cash proceeds resulting from the
collection, liquidation, sale, lease or other disposition of the Collateral
shall be applied, first, to the expenses (including reasonable attorneys' fees
and disbursements) of retaking, holding, storing, processing and preparing for
sale or lease, selling, leasing, collecting, liquidating and the like, and then
to the satisfaction of the Secured Obligations in such order as shall be
determined by Lender in its sole and absolute discretion. Borrower and any other
Person then obligated therefor shall pay to Lender on demand any deficiency with
regard thereto which may remain after such sale, disposition, collection or
liquidation of the Collateral.
Section 9.4 NOTICE TO BORROWER OF SALE. Unless the Collateral is
perishable or threatens to decline speedily in value or is of a type customarily
sold on a recognized market, Lender will send or otherwise make available to
Borrower, as agent for Borrower, reasonable notice of the time and place of any
public sale thereof or of the time on or after which any private sale thereof is
to be made. The requirement of sending reasonable notice conclusively shall be
met if such notice is mailed, first class mail, postage prepaid, to Borrower at
its address set forth herein or otherwise sent to Borrower at least five (5)
days before the date of the sale. Borrower expressly waives any right to receive
notice of any public or private sale of any Collateral or other security for the
Secured Obligations except as expressly provided for in this paragraph.
Section 9.5 TRANSFER AFTER SALE. Upon consummation of any sale of
Collateral hereunder, Lender shall have the right to assign, transfer and
deliver to the purchaser or purchasers thereof the Collateral so sold. Each such
purchaser at any such sale shall hold the Collateral so sold absolutely free
from any claim or right upon the part of Borrower or any other Person, and
Borrower hereby waives (to the extent permitted by applicable laws) all rights
of redemption, stay and appraisal which it now has or may at any time in the
future have under any rule of law or statute now existing or hereafter enacted.
If the sale of all or any part of the Collateral is made on credit or for future
delivery, Lender shall not be required to apply any portion of the sale price to
the Secured Obligations until such amount actually is received by Lender, and
any Collateral so sold may be retained by Lender until the sale price is paid in
full by the purchaser or purchasers thereof. Lender shall not incur any
liability in case any such purchaser or purchasers shall fail to pay for the
Collateral so sold, and, in case of any such failure, the Collateral may be sold
again.
ARTICLE X
MISCELLANEOUS PROVISIONS
Section 10.1 ENTIRE AGREEMENT. This Loan Agreement together with the
Promissory Note executed concurrently herewith constitutes the entire agreement
between the parties with respect to the subject matter covered by this Loan
Agreement, and supersedes all previous discussions, negotiations, oral or
written, representations, statements, arrangements, agreements and
understandings, if any, by and between the parties with respect to the subject
matter covered by this Loan Agreement other than those herein, and any such
discussions, negotiations, oral or written, representations, statements,
arrangements, agreements and understandings are hereby canceled and terminated
in all respects. This Loan Agreement may not be amended, changed or modified
except by a writing duly executed by the parties hereto or their duly authorized
representatives. The parties have made no representations or warranties not
expressly set forth in this Loan Agreement.
Section 10.2 SEVERABILITY. In the event any provision of this Loan
Agreement or the application thereof to any circumstance shall be held by a
court of competent jurisdiction to be invalid, illegal or unenforceable, or to
be excessively broad as to time, duration, geographical scope, activity or
subject, it shall be construed to be limited or reduced so as to be enforceable
to the maximum extent allowed by applicable law as it shall then be in force,
and if such construction shall not be feasible, then
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such provision shall be deemed to be deleted herefrom in any action before that
court, and all other provisions of this Loan Agreement shall remain in full
force and effect.
Section 10.3 REMEDIES. All rights and remedies of the parties are
separate and cumulative, and no one of them, whether exercised or not, shall be
deemed to be to the exclusion of or to limit or prejudice any other legal or
equitable rights or remedies which the parties may have. The parties shall not
be deemed to waive any of their rights or remedies under this Loan Agreement,
unless such waiver is in writing and signed by the party to be bound. No delay
or omission on the part of any party in exercising any right or remedy shall
operate as a waiver of such right or remedy or any other right or remedy. A
waiver on any one occasion shall not be construed as a bar to or waiver of any
right or remedy on any future occasion.
Section 10.4 OTHER AGREEMENTS. Nothing herein shall in any way modify or
limit the effect of terms or conditions set forth in any other document executed
by Borrower or in connection with the Secured Obligations, but each and every
term and condition hereof shall be in addition thereto. All provisions contained
in the Promissory Note are fully applicable to this Loan Agreement and are
incorporated herein by this reference as though set forth herein in full.
Section 10.5 CONTINUING EFFECT. This Loan Agreement shall remain in full
force and effect and continue to be effective should any petition be filed by or
against Borrower for liquidation or reorganization, should Borrower become
insolvent or make an assignment for the benefit of creditors or should a
receiver or trustee be appointed for all or any significant part of Borrower's
assets, and shall continue to be effective or be reinstated, as the case may be,
if at any time payment and performance of the Secured Obligations, or any part
thereof, is, pursuant to applicable law, rescinded or reduced in amount, or must
otherwise be restored or returned by Lender or any Lender, whether as a
"voidable preference," "fraudulent conveyance," or otherwise, all as though such
payment or performance had not been made. In the event that any payment or any
part thereof is rescinded, reduced, restored or returned, the Secured
Obligations shall be reinstated and deemed reduced only by such amount paid and
not so rescinded, reduced, restored or returned.
Section 10.6 RELEASE OF BORROWER. This Loan Agreement and all Secured
Obligations of Borrower hereunder shall be released when all Secured Obligations
have been paid in full in cash or otherwise performed in full. Upon such release
of Borrower's Secured Obligations hereunder, Lender shall return any pledged
Collateral to Borrower, and shall endorse, execute, deliver, record and file all
instruments and documents, and do all other acts and things, reasonably required
for the return of the Collateral to Borrower, or to the Person or Persons
legally entitled thereto, and to evidence or document the release of Lender's
interests arising under this Loan Agreement, all as reasonably requested by, and
at the sole expense of, Borrower.
Section 10.7 ASSIGNMENT. Borrower's rights, duties and responsibilities
under this Loan Agreement may not be assigned, delegated, or otherwise
transferred in any manner.
Section 10.8 NOTICES. All communications provided for hereunder shall be
in writing and delivered by hand or sent by first class mail or overnight
courier delivery, sent (i) if to Lender, to:
Intellect Capital Group, LLC
00000 Xxxxx Xxxxxx Xxxx.
Xxxxx 000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx
Facsimile: (000) 000-0000
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with a copy (which will not constitute notice) to:
Manatt, Xxxxxx & Xxxxxxxx, LLP
00000 Xxxx Xxxxxxx Xxxx.
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx Xxxxx, Esq.
Facsimile: (000) 000-0000
or to such other address as Lender may most recently have designated to Borrower
in writing; and (ii) if to Borrower, to:
XxxxxXxxx.xxx, Inc.
000 Xxxxxxx Xxxx Xxxxx
Xxxxx 000
Xxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxx Xxxxxxxx
Facsimile: (000) 000-0000
with a copy (which will not constitute notice) to:
Silicon Valley Law Group
000 Xxxxx 0xx Xxxxxx
Xxxxx 000
Xxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx, Esq.
Facsimile: (000) 000-0000
or to such other address or addresses as Borrower may most recently have
designated in writing to Lender. All such communications shall be deemed to have
been given or made when so delivered by hand, or three business days after being
so mailed or the business day following deposit with an overnight courier
service.
Section 10.9 COUNTERPARTS. This Loan Agreement may be executed in two or
more counterparts, each of which shall be deemed an original and all of which,
taken together, shall constitute one and the same agreement.
Section 10.11 COSTS AND EXPENSES. Borrower agrees to pay Lender all
costs and expenses including, without limitation, reasonable attorneys' fees and
disbursements) incurred by Lender in the enforcement or attempted enforcement of
this Loan Agreement, whether or not an action is filed in connection therewith,
and in connection with any waiver or amendment of any term or provision hereof.
All advances, charges, costs and expenses, including reasonable attorneys' fees
and disbursements, incurred or paid by Lender in exercising any right,
privilege, power or remedy conferred by this Loan Agreement (including, without
limitation, the right to perform any Secured Obligation of Borrower under the
Promissory Note), or in the enforcement or attempted enforcement thereof, shall
be secured hereby and shall become a part of the Secured Obligations and shall
be paid to Lender by Borrower, immediately upon demand, together with interest
thereon at the rate provided for under the Promissory Note.
Section 10.12 STATUTE OF LIMITATIONS AND OTHER LAWS. Until the Secured
Obligations shall have been paid and performed in full, the power of sale and
all other rights, privileges, powers and remedies granted to Lender hereunder
shall continue to exist and may be exercised by Lender at any time and from time
to time irrespective of the fact that any of the Secured Obligations may have
become barred by
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any statute of limitations. Borrower expressly waives the benefit of any and all
statutes of limitation, and any and all laws providing for exemption of property
from execution or for valuation and appraisal upon foreclosure, to the maximum
extent permitted by applicable law.
Section 10.13 GOVERNING LAW. THIS LOAN AGREEMENT SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF CALIFORNIA.
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IN WITNESS WHEREOF, Borrower and Lender have executed this Loan and
Security Agreement by their respective duly authorized officers as of the date
first written above.
BORROWER: XXXXXXXXX.XXX, INC.
a Nevada corporation
By:___________________________________
Name:_________________________________
Title:________________________________
LENDER: INTELLECT CAPITAL GROUP, LLC
as Delaware limited liability company
By:___________________________________
Name:_________________________________
Title:________________________________
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