EXHIBIT 10.3
INVENTORY CREDIT LINE AGREEMENT
This Inventory Credit Line Agreement is entered into between Swan
Magnetics, Inc. ("Swan") and Internet Venture Group, Inc., a Florida corporation
("IVG"), effective as of January 22, 2001.
RECITALS:
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WHEREAS, IVG desires to increase its existing lines of credit utilized
by its XxxXxxx.xxx division ("GeeWhiz");
WHEREAS, Swan agrees to act as an accommodation party on behalf of IVG
by making available a certificate of deposit in the principal amount of
$100,000 to serve as collateral for an increase inventory line of
credit for GeeWhiz;
TERMS OF AGREEMENT
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1. Swan agrees to purchase a sixty (60) day certificate of
deposit ("CD") from the Citizens Bank N.A. (Houston, Texas) or
other acceptable, federally insured financial institution
("Bank"). Swan further agrees to pledge the CD as collateral
to secure repayment of a temporary inventory line of credit to
be established by Bank in favor of IVG. The undersigned
officer of Swan shall execute all such documents that Bank
deems reasonably necessary to document the pledge of the CD to
secure the inventory line of credit.
2. IVG and GeeWhiz agree to use the above-noted line of credit
only for short term inventory financing purposes.
3. IVG and GeeWhIZ agree to establish a lock box account in the
name of Swan at Bank and to deposit all receivables of Gee Whiz
directly into the lockbox account until all monies drawn
against the inventory line of credit are repaid. IVG and
GeeWhiz agree that the outstanding principal balance of the
inventory line of credit shall be paid in full no later than
April 1, 2001.
4. All proceeds from the CD, including interest, are the property
of Swan and will be provided to Swan on or before April 1,
2001.
5. IVG agrees to pay Swan a fee of $10,000 in consideration for
Swan's acting as an accommodation party pursuant to the terms
of this Agreement. The fee shall be paid on or before April 1,
2001.
6. IVG represents and warrants to Swan that it has obtained the
necessary corporate authorization to enter into this agreement
and that this agreement does not violate its articles of
incorporation, its by-laws, or the laws of any state in which
it operates.
7. Swan and IVG agree that the CD will be the only source of
collateral provided by Swan with respect to the inventory line
of credit and that Swan has no other obligation or risk of loss
with respect to the loan. IVG hereby indemnifies Swan and
agrees to hold Swan harmless from any loss relating to the
inventory line of credit and/or the CD. In the event that Bank
offsets all or any part of the proceeds of the CD to pay
amounts outstanding under the inventory line of credit, IVG
agrees that it shall pay all such amounts to Swan (which
amounts shall be fully due and owing as of April 1, 2001), plus
interest in the amount of 8% per annum from the date that such
amount becomes due and owing until paid in full.
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8. This agreement shall be governed by and enforced in accordance
with the laws of the State of California.
9. Any disputes arising from or relating to this agreement shall
be resolved in state or federal court in Santa Xxxxx County,
California.
10. Both parties agree to execute and complete any additional
documentation reasonably necessary to implement the terms of
this agreement.
SWAN MAGNETICS, INC.
Xxxx Xxx
President
/S/ XXXXXXX XXXXXXX
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Internet Venture Group, Inc.
Xxxxxxx Xxxxxxx
Chief Executive Officer
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