EX-10.1
4
v162981_ex10-1.htm
Exhibit
10.1
INTERIM
LOAN AGREEMENT
THIS
INTERIM LOAN AGREEMENT (this
“Agreement”) is
entered into as of the 9th day of October, 2009, by and between ENABLE HOLDINGS,
INC., a Delaware corporation (“Borrower”) and HDIBU
LLC, XXXXXXXX XXXXXX, an individual, and TALOS PARTNERS LLC, a Delaware
limited liability company (collectively, “Lenders”).
Premises
A. Borrower
and Lenders have on this date executed a Confidential Summary of Principal Terms
and Conditions for a proposed investment by Lenders in Borrower, under which
Lenders would purchase $5,000,000 of newly created preferred stock of Borrower,
subject to the negotiation of binding agreements, which the parties are now
discussing (the “Investment”).
B. Borrower
requires funds for paying ongoing expenses and costs associated with the
ordinary course of its business.
C. Borrower
wishes to establish a line of credit with Lenders for the foregoing purposes,
the principal sum of not to exceed $500,000.
D. Lenders
are willing to make the foregoing line of credit available, but only on the
terms and conditions set forth in this Agreement.
Agreement
NOW, THEREFORE, upon these premises,
which are incorporated herein, and for and in consideration of the terms and
conditions set forth below, Borrower and each of the Lenders, severally and not
jointly, agree as follows:
Article
I
Definitions
and Interpretation
1.01 Capitalized
Terms. Unless otherwise indicated in this Agreement,
capitalized terms used herein have the meanings given below:
(a) “Borrower’s Knowledge”
means the knowledge of any director or officer of Borrower, including facts of
which directors and officers, in the reasonably prudent exercise of their
duties, should be aware.
(b) “Commitment” means an
aggregate principal amount of $500,000 as more fully described in Section
2.01.
(c) “Confidential
Information” means trade secrets, confidential information, and know-how
(including ideas, formulae, compositions, processes, procedures and techniques,
research and development information, computer program code, performance
specifications, support documentation, drawings, specifications, designs,
business and marketing plans, and customer and supplier lists and related
information).
(d) “Default” has the
meaning assigned in Section 6.01 of this
Agreement.
(e)
“Disclosure
Schedules” has the meaning specified in the preamble to Article
IV.
(f) “Environmental Laws”
has the meaning set forth in Section 4.16 of this
Agreement.
(g) “Exchange Act” means
the Securities Exchange Act of 1934, any amendments thereto, any successor
statutes, and any regulations promulgated thereunder.
(h) “Infringe” has the
meaning set forth in Section 4.15(d) of
this Agreement.
(i) “Intellectual
Property” means all of the following: (i) patents, patent applications,
patent disclosures, and inventions (whether or not patentable and whether or not
reduced to practice); (ii) trademarks, service marks, trade dress, trade names,
corporate names, logos, slogans, and Internet domain names, together with all
goodwill associated with each of the foregoing; (iii) copyrights and
copyrightable works; (iv) registrations, applications, and renewals for any of
the foregoing; and (v) proprietary computer software (including data, data
bases, and documentation).
(j) “Investment” has the
meaning assigned in the premises of this Agreement.
(k)
“Investment
Date” has the meaning assigned in Section 2.05 of this
Agreement.
(l) “License Agreement”
has the meaning assigned in Section 4.15(b) of
this Agreement.
(m)
“Line of
Credit” means the line of credit provided for in this
Agreement.
(n) “Material Adverse
Effect” as used in this Agreement shall mean any change or effect that,
individually or when taken together with all such other changes or effects,
would be reasonably likely to be materially adverse to the assets, liabilities,
financial condition, results of operations, or current or future business of
such entity.
(o) “Note” means that
certain Convertible Promissory Note of Borrower evidencing the obligation of
Borrower to repay the Line of Credit in the principal amount not to exceed the
Commitment and otherwise in form and substance satisfactory to
Lenders.
(p) “Note Rate” has the
meaning specified in Section 2.04 of this
Agreement.
(q) “Person” means an
individual, corporation, partnership, limited liability company, association,
trust, unincorporated organization, other entity, or group (as defined in
Section 13(d) of the Exchange Act).
(r) “Principal Advance”
shall mean such sum as requested, in writing, by Borrower to
Lender. In the event of Default, Lender shall not make any additional
Principal Advances.
(s)
“SEC
Filings” has the meaning specified in Section 4.06 of this
Agreement.
(t) “Securities Act” means
the Securities Act of 1933, as amended, or any successor federal statute, and
the rules and regulations of the Securities and Exchange Commission thereunder,
all as the same shall be in effect at the time.
(u) “Series A Preferred
Stock” shall mean shares of Borrower’s stock designated Series A
Preferred Stock.
(v)
“Subsidiaries”
shall have the meaning set forth in Section
4.01.
(w)
“Transaction
Documents” shall have the meaning set forth in Section
2.07.
1.02 Miscellaneous
Terms. All terms not specifically defined have the meanings
assigned to such terms by generally accepted definitions.
1.03 Interpretation. Section
headings contained in this Agreement are for reference purposes only and shall
not affect the meaning or interpretation of this Agreement. Except
when the context clearly requires to the contrary: (a) all
references in this Agreement to designated “Sections” are to the designated
Sections and other subdivisions of this Agreement; (b) instances of gender
or entity-specific usage (e.g., “his,” “her,” “its,” or “individual”) shall not
be interpreted to preclude the application of any provision of this Agreement to
any individual or entity; (c) the word “or” shall not be applied in its
exclusive sense, unless the context otherwise requires; (d) “including”
shall mean that the items listed are illustrative and not exclusive or limiting;
(e) references to laws, regulations, and other governmental rules
(collectively, “rules”), as well as to contracts, agreements, and other
instruments (collectively, “instruments”), shall mean such rules and instruments
as in effect at the time of determination (taking into account any amendments
thereto effective at such time without regard to whether such amendments were
enacted or adopted after the effective date of this Agreement) and shall include
all successor rules and instruments thereto; (f) references to “$,” “cash,”
or “dollars” shall mean the lawful currency of the United States;
(g) references to “federal” shall be to laws, agencies, or other attributes
of the United States (and not to any state or locality thereof); (h) the
meaning of the terms “domestic” and “foreign” shall be determined by reference
to the United States; (i) references to “days” shall mean calendar days;
references to “business days” shall mean all days other than Saturdays, Sundays,
and days that are legal holidays in the state of New York; (j) references
to monthly or annual anniversaries shall be to the actual calendar months or
years at issue (taking into account the actual number of days in any such month
or year); (k) days, business days, and times of day shall be determined by
reference to local time in New York; (l) the English language version of
this Agreement shall govern all questions of interpretation relating to this
Agreement, notwithstanding that this Agreement may have been translated into,
and executed in, other languages; (m) whenever in this Agreement a Person
or group is permitted or required to make a decision in its “discretion” or
under a grant of similar authority or latitude, such Person or group shall be
entitled to consider only such interests and factors as it deems appropriate, in
its absolute discretion; and (n) whenever in this Agreement a Person or
group is permitted or required to make a decision in its “good faith” or under
another express standard, the Person shall act under such express standard and
shall not be subject to any other or different standard imposed by this
Agreement or other applicable law.
Article
II
Line
of Credit
2.01 The
Commitment. So long as Borrower is not in Default, and subject
to the restrictions set forth in Section 2.02, Lenders
agree to make Principal Advances to Borrower from time to time in amounts not to
exceed in the aggregate $500,000 pursuant to the terms and conditions of this
Agreement.
2.02 Advances. Principal
Advances under the Line of Credit shall be in amounts of $250,000 each
transmitted on the next business day after the execution and delivery of this
Agreement and thereafter, subject to Lenders’ continuing satisfaction of the
term and conditions set forth in this Agreement, on the one-week and two-week
anniversaries of the first Principal Advance.
2.03 Restrictions. Principal
Advances made from time to time under the Line of Credit may be used solely for
the purposes set forth on Exhibit
A. At the request of Lenders, special disbursal arrangements
through escrow or similar third parties will be implemented to Lenders’
reasonable satisfaction to provide for disbursal of Line of Credit proceeds
directly to creditors of Borrower. Evidence of such permissible use
and amount satisfactory to Lenders in the exercise of their reasonable judgment
shall be supplied to Lenders prior to a Principal Advance.
2.04 Interest
Rate. Amounts owing on the Line of Credit shall accrue
interest monthly at an annual interest rate equivalent to the U.S. Prime Rate,
which is the base rate on corporate loans posted by at least 70% of the 10
largest U.S. banks, (as quoted in the Wall Street Journal) on the last day of
each month or the date of each payment, plus 500 basis points (the “Note
Rate”).
2.05 Repayment. The
full amount of principal borrowed under this Line of Credit and all accrued
interest shall be due and payable on the earlier of: (a) if the Investment
is not completed by November 30, 2009 (the “Investment Date”),
within 60 days after demand by Lenders; (b) if the Investment is completed
on or before the Investment Date, on the Investment Date with proceeds from such
Investment; or (c) at the election of Lenders, by conversion into
Series A Preferred Stock if the Investment is not completed by the
Investment Date.
2.06 Documentation. The
obligation of Borrower to repay the Line of Credit shall be evidenced by the
Note, this Agreement, and such other documents, instruments, and agreements as
Lenders may deem necessary (the “Transaction
Documents”).
Article
III
Conditions
Precedent
The execution and performance of this
Agreement by Lenders, including each and every Principal Advance under the Line
of Credit, are subject to the following conditions precedent, unless waived by
Lenders:
3.01 Documents. Borrower
shall execute and deliver to Lenders this Agreement, a Note in favor of each of
the Lenders in the amount to be advanced by such Lender and all other documents
deemed necessary or desirable by Lenders.
3.02 Permissible Use and
Amount. Borrower shall supply evidence of permissible use (as
defined in Section
2.03 above) and amount to Lenders prior to a Principal Advance, which
shall be satisfactory to Lenders in the exercise of their reasonable
judgment.
3.03 Amendment of
Charter. Borrower shall approve an amendment to its
certificate of incorporation setting forth the rights, privileges and
preferences of its preferred stock and shall use its best efforts to file such
amendment within five business days of the Effective Date.
3.04 Acquisition of
Warrants. Borrower shall use its best efforts to obtain an
agreement, in a form acceptable to Lenders, to cancel an aggregate of 38,000,000
issued and outstanding common stock purchase warrants issued to certain
investors, including Xxxx Xxxxx, Xxxxx Xxxxx, Xxxxxxxx Xxxxxx and others, which
are exercisable at exercise prices of $0.10 or $0.25 per share.
Article
IV
Borrower’s
Representations and Warranties
In connection with this Agreement and
the transactions contemplated hereby, Borrower shall deliver disclosure
schedules that shall be correspondingly numbered to the sections of this Article
IV (the “Disclosure
Schedules”). The Disclosure Schedules shall contain complete
and correct copies, as presently in effect, of all documents, agreements,
instruments, arrangements, contracts, commitments, or writings of any nature
(including any amendments thereto) that in any way relate to the items listed,
described, or disclosed therein.
As an inducement to and to obtain the
reliance of Lenders, Borrower hereby represents and warrants that, except as set
forth in the Disclosure Schedules delivered herewith:
4.01 Organization, Good Standing,
and Qualification. Each of Borrower and its Subsidiaries is an
entity duly organized, validly existing, and in good standing under the laws of
the jurisdiction of its organization and has all requisite power and authority
to carry on its business as now conducted and to own its
properties. Each of Borrower and its Subsidiaries is duly qualified
to do business as a foreign corporation and is in good standing in each
jurisdiction in which the conduct of its business or its ownership or leasing of
property makes such qualification or leasing necessary unless the failure to so
qualify has not and could not reasonably be expected to have a Material Adverse
Effect. Borrower’s Subsidiaries are reflected in the Borrower’s SEC
Filings (as defined below).
4.02 Authorization. Borrower
has full power and authority and has taken all requisite action on the part of
the company and its officers, directors, and stockholders necessary for:
(a) the authorization, execution, and delivery of the Transaction
Documents; (b) authorization of Borrower’s performance of all obligations
hereunder or thereunder; and (c) the authorization, issuance (or
reservation for issuance), and delivery of the Investment. The
Transaction Documents constitute the legal, valid, and binding obligations of
Borrower, enforceable against Borrower in accordance with their terms, subject
to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium, and
similar laws of general applicability relating to or affecting creditors’ rights
generally.
4.03 Capitalization.
(a) Borrower
is authorized to issue: (i) 200,000,000 shares of common stock, $0.001 par
value, of which 19,726,678 shares are issued and outstanding as of the date of
this Agreement, 70,943,527 shares are reserved for issuance on the exercise of
outstanding options and warrants; and (ii) 25,000,000 shares of preferred
stock, $0.001 par value per share. The common stock has the voting
powers, designations, preferences, rights, qualifications, limitations, and
restrictions set forth in Borrower’s Certificate of Incorporation and amendments
thereto. All of the issued and outstanding shares of Borrower’s
capital stock have been duly authorized and validly issued and are fully paid
and nonassessable and not issued in violation of the preemptive right of any
Person. The undesignated preferred stock may be issued in such series
with the voting powers, designations, preferences, rights, and qualifications,
limitations, or restrictions as may be duly approved by Borrower’s board of
directors. All of the issued and outstanding shares of Borrower’s
capital stock have been duly authorized and validly issued and are fully paid,
nonassessable and free of preemptive rights and were issued in full compliance
with applicable law and any rights of third parties. All of the
issued and outstanding shares of capital stock of each Subsidiary have been duly
authorized and validly issued and are fully paid, nonassessable, and free of
preemptive rights; were issued in full compliance with applicable law and any
rights of third parties; and are owned by Borrower, beneficially and of record,
subject to no lien, encumbrance, or other adverse claim. No Person is
entitled to preemptive or similar statutory or contractual rights with respect
to any securities of Borrower. Except as described above, there are
no outstanding warrants, options, convertible securities, or other rights,
agreements, or arrangements of any character under which Borrower or any of its
Subsidiaries is or may be obligated to issue any equity securities of any kind
and except as contemplated by this Agreement, neither Borrower nor any of its
Subsidiaries is currently in negotiations for the issuance of any equity
securities of any kind. Except as described on Schedule 4.03 and
except for the Registration Rights Agreement, there are no voting agreements,
buy-sell agreements, option or right of first purchase agreements, or other
agreements of any kind among Borrower and any of Borrower’s security holders
relating to the securities of Borrower held by them. Borrower has not
granted any Person the right to require Borrower to register any securities of
Borrower under the Securities Act, whether on a demand basis or in connection
with the registration of securities of Borrower for its own account or for the
account of any other Person.
(b) Schedule 4.03 sets
forth a true and complete table setting forth the pro forma capitalization of
Borrower on a fully diluted basis giving effect to: (i) the issuance of the
Series A Preferred Stock; (ii) any adjustments in other securities
resulting from the issuance of the Series A Preferred Stock; and
(iii) the exercise or conversion of all outstanding
securities. Except as described on Schedule 4.03, the
consummation of the Investment will not obligate Borrower to issue shares of
common stock or other securities to any other Person (other than Lenders) and
will not result in the adjustment of the exercise, conversion, exchange, or
reset price of any outstanding security.
(c) Borrower
does not have outstanding stockholder purchase rights or any similar arrangement
in effect giving any Person the right to purchase any equity interest in
Borrower upon the occurrence of certain events.
4.04 Valid
Issuance. The shares of Series A Preferred Stock have
been duly and validly authorized and, when issued and paid for pursuant to this
Agreement, will be validly issued, fully paid, and nonassessable, and shall be
free and clear of all encumbrances and restrictions, except for restrictions on
transfer set forth in the Transaction Documents or imposed by applicable
securities laws. Borrower has reserved a sufficient number of shares
of common stock for issuance upon the conversion of the Series A Preferred
Stock, free and clear of all encumbrances and restrictions, except for
restrictions on transfer set forth in the Transaction Documents or imposed by
applicable securities laws.
4.05 Consents. The
execution, delivery, and performance by Borrower of the Transaction Documents
and the offer, issuance, and sale of the Series A Preferred Stock require
no consent of, action by or in respect of, or filing with any Person,
governmental body, agency, or official other than filings that have been made
pursuant to applicable state securities laws and post-sale filings pursuant to
applicable state and federal securities laws that Borrower undertakes to file
within the applicable time periods. Borrower has taken all action
necessary to exempt the issuance and sale of the Series A Preferred Stock
and the other transactions contemplated by the Transaction Documents from the
provisions of any anti-takeover, business combination, or control share law or
statute binding on Borrower or to which Borrower or any of its assets and
properties may be subject or any provision of Borrower’s Certificate of
Incorporation, Bylaws, or any stockholder rights agreement that is or could
become applicable to Lenders as a result of the transactions contemplated
hereby, including the issuance of the Series A Preferred Stock and the
ownership, disposition, or voting of the Series A Preferred Stock by
Lenders or the exercise of any right granted to Lenders pursuant to this
Agreement or the other Transaction Documents.
4.06 Delivery of SEC Filings;
Business. Borrower has provided Lenders with copies of
Borrower’s most recent Annual Report on Form 10-K for the fiscal year ended
December 31, 2008, and all other reports filed by Borrower pursuant to the
Exchange Act since the filing of that 10-K and prior to the date hereof
(collectively, the “SEC
Filings”). The SEC Filings are the only filings required of
Borrower pursuant to the Exchange Act for such period. Borrower and
its Subsidiaries are engaged only in the business described in the SEC Filings,
and the SEC Filings contain a complete and accurate description in all material
respects of the business of Borrower and its Subsidiaries taken as a
whole.
4.07 Use of
Proceeds. The proceeds of the sale of the Series A
Preferred Stock hereunder shall be used by Borrower in accordance with Section 2.03.
4.08 No Material Adverse
Change. Since December 31, 2008, except as identified and
described in the SEC Filings or as described on Schedule 4.08,
there has not been:
(a) any
change in the consolidated assets, liabilities, financial condition, or
operating results of Borrower from that reflected in the financial statements
included in Borrower’s Quarterly Report on Form 10-Q for the quarter ended
June 30, 2009, except for changes in the ordinary course of business that
have not and could not reasonably be expected to have a Material Adverse Effect,
individually or in the aggregate;
(b) any
declaration or payment of any dividend, or any authorization or payment of any
distribution, on any of the capital stock of Borrower, or any redemption or
repurchase of any securities of Borrower;
(c) any
material damage, destruction, or loss, whether or not covered by insurance to
any assets or properties of Borrower or its Subsidiaries;
(d) any
waiver, not in the ordinary course of business, by Borrower or any Subsidiary of
a material right or of a material debt owed to it;
(e) any
satisfaction or discharge of any lien, claim, or encumbrance or payment of any
obligation by Borrower or a Subsidiary, except in the ordinary course of
business and which is not material to the assets, properties, financial
condition, operating results, or business of Borrower and its Subsidiaries taken
as a whole (as such business is presently conducted and as it is proposed to be
conducted);
(f) any
change or amendment to Borrower’s Certificate of Incorporation or Bylaws, or
material change to any material contract or arrangement by which Borrower or any
Subsidiary is bound or to which any of their respective assets or properties is
subject;
(g) any
material labor difficulties or labor union organizing activities with respect to
employees of Borrower or any Subsidiary;
(h) any
transaction entered into by Borrower or a Subsidiary other than in the ordinary
course of business;
(i) the
loss of the services of any key employee, or material change in the composition
or duties of the senior management of Borrower or any Subsidiary;
(j) the
loss or threatened loss of any customer that has had or could reasonably be
expected to have a Material Adverse Effect; or
(k) any
other event or condition of any character that has had or could reasonably be
expected to have a Material Adverse Effect.
4.09 SEC Filings; S-3
Eligibility.
(a) At
the time of filing thereof, the SEC Filings complied as to form in all material
respects with the requirements of the Exchange Act and did not contain any
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading.
(b) Each
SEC Filing and any amendment thereto filed by Borrower pursuant to the
Securities Exchange Act and the rules and regulations thereunder, as of the date
such report or amendment became effective, complied as to form in all material
respects with the Securities Act and did not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading.
4.10 No Conflict, Breach,
Violation, or Default. The execution, delivery, and
performance of the Transaction Documents by Borrower and the issuance and sale
of the Series A Preferred Stock will not conflict with or result in a
breach or violation of any of the terms and provisions of, or constitute a
default under: (a) Borrower’s Certificate of Incorporation or Bylaws, both
as in effect on the date hereof (copies of which have been provided to Lenders
before the date hereof); (b) any statute, rule, regulation, or order of any
governmental agency or body or any court, domestic or foreign, having
jurisdiction over Borrower, any Subsidiary, or any of their respective assets or
properties; or (c) any agreement or instrument to which Borrower or any
Subsidiary is a party or by which Borrower or a Subsidiary is bound or to which
any of their respective assets or properties is subject.
4.11 Tax
Matters. Borrower and each Subsidiary have timely prepared and
filed all tax returns required to have been filed by Borrower or such Subsidiary
with all appropriate governmental agencies and timely paid all taxes shown
thereon or otherwise owed by it. The charges, accruals, and reserves
on the books of Borrower in respect of taxes for all fiscal periods are adequate
in all material respects, and there are no material unpaid assessments against
Borrower or any Subsidiary nor, to Borrower’s Knowledge, any basis for the
assessment of any additional taxes, penalties, or interest for any fiscal period
or audits by any federal, state, or local taxing authority except for any
assessment that is not material to Borrower and its Subsidiaries taken as a
whole. All taxes and other assessments and levies that Borrower or
any Subsidiary is required to withhold or to collect for payment have been duly
withheld and collected and paid to the proper governmental entity or third party
when due. There are no tax liens or claims pending or, to Borrower’s
Knowledge, threatened against Borrower or any Subsidiary or any of their
respective assets or property. Except as described on Schedule 4.11, there
are no outstanding tax-sharing agreements or other such arrangements between
Borrower and any Subsidiary or other corporation or entity.
4.12 Title to
Properties. Except as disclosed in the SEC Filings, Borrower
and each Subsidiary has good and marketable title to all real properties and all
other properties and assets owned by it, in each case free from liens,
encumbrances, and defects that would materially affect the value thereof or
materially interfere with the use made or currently planned to be made thereof
by them; and except as disclosed in the SEC Filings, Borrower and each
Subsidiary holds any leased real or personal property under valid and
enforceable leases with no exceptions that would materially interfere with the
use made or currently planned to be made thereof by them.
4.13 Certificates, Authorities,
and Permits. Borrower and each Subsidiary possess adequate
certificates, authorities, or permits issued by appropriate governmental
agencies or bodies necessary to conduct the business now operated by it, and
neither Borrower nor any Subsidiary has received any notice of proceedings
relating to the revocation or modification of any such certificate, authority,
or permit that, if determined adversely to Borrower or such Subsidiary, could
reasonably be expected to have a Material Adverse Effect, individually or in the
aggregate.
4.14 No Labor
Disputes. No material labor dispute with the employees of
Borrower or any Subsidiary exists or, to Borrower’s Knowledge, is
imminent.
4.15 Intellectual
Property.
(a) All
Intellectual Property of Borrower and its Subsidiaries is currently in
compliance with all legal requirements (including timely filings, proofs, and
payments of fees) and is valid and enforceable. No Intellectual
Property of Borrower or its Subsidiaries that is necessary for the conduct of
their respective businesses, as currently conducted or as currently proposed to
be conducted, has been or is now involved in any cancellation, dispute, or
litigation and, to Borrower’s Knowledge, no such action is
threatened. No patent of Borrower or its Subsidiaries has been or is
now involved in any interference, reissue, reexamination, or opposition
proceeding.
(b) All
of the licenses and sublicenses and consent, royalty, or other agreements
concerning Intellectual Property that are necessary for the conduct of
Borrower’s and each of its Subsidiaries’ respective businesses, as currently
conducted or as currently proposed to be conducted, to which Borrower or any
Subsidiary is a party or by which any of their assets are bound (other than
generally commercially available, non-custom, off-the-shelf software application
programs having a retail acquisition price of less than $10,000 per license)
(collectively, “License Agreements”)
are valid and binding obligations of Borrower or its Subsidiaries that are
parties thereto and, to Borrower’s Knowledge, the other parties thereto,
enforceable in accordance with their terms, except to the extent that
enforcement thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance, or other similar laws affecting the
enforcement of creditors’ rights generally, and there exists no event or
condition that will result in a material violation or breach of, or constitute
(with or without due notice or lapse of time or both) a default by, Borrower or
any of its Subsidiaries under any such License Agreement.
(c) Borrower
and its Subsidiaries own or have the valid right to use all of the Intellectual
Property that is necessary for the conduct of their respective businesses, as
currently conducted or as currently proposed to be conducted, and for the
ownership, maintenance, and operation of their respective properties and assets,
free and clear of all liens, encumbrances, adverse claims, or obligations to
license all such owned Intellectual Property and Confidential Information, other
than licenses entered into in the ordinary course of
business. Borrower and its Subsidiaries have a valid and enforceable
right to use all third-party Intellectual Property and Confidential Information
used or held for use in their respective businesses.
(d) The
conduct of Borrower’s and its Subsidiaries’ businesses as currently conducted
does not infringe or otherwise impair or conflict with (collectively, “Infringe”) any
Intellectual Property rights of any third party or any confidentiality
obligation owed to a third party, and to Borrower’s Knowledge, the Intellectual
Property and Confidential Information of Borrower and its Subsidiaries that are
necessary for the conduct of Borrower’s and each of its Subsidiaries’ respective
businesses, as currently conducted or as currently proposed to be conducted, are
not being Infringed by any third party. There is no litigation or
order pending or outstanding, or to Borrower’s Knowledge, threatened or
imminent, that seeks to limit or challenge or that concerns the ownership, use,
validity, or enforceability of any Intellectual Property or Confidential
Information of Borrower and its Subsidiaries and Borrower’s and its
Subsidiaries’ use of any Intellectual Property or Confidential Information owned
by a third party, and to Borrower’s Knowledge, there is no valid basis for the
same.
(e) The
consummation of the transactions contemplated hereby will not result in the
alteration, loss, impairment of, or restriction on Borrower’s or any of its
Subsidiaries’ ownership or right to use any of the Intellectual Property or
Confidential Information that is necessary for the conduct of Borrower’s and
each of its Subsidiaries’ respective businesses as currently conducted or as
currently proposed to be conducted.
(f) All
software owned by Borrower or any of its Subsidiaries and, to Borrower’s
Knowledge, all software licensed from third parties by Borrower or any of its
Subsidiaries: (i) is free from any material defect, bug, virus, or
programming, design, or documentation error; (ii) operates and runs in a
reasonable and efficient business manner; and (iii) conforms in all
material respects to the specifications and purposes thereof.
(g) Borrower
and its Subsidiaries have taken reasonable steps to protect their rights in
their respective Intellectual Property and Confidential
Information. Each employee, consultant, and contractor who has had
access to Confidential Information that is necessary for the conduct of
Borrower’s and each of its Subsidiaries’ respective businesses, as currently
conducted or as currently proposed to be conducted, has executed an agreement to
maintain the confidentiality of such Confidential Information and has executed
appropriate agreements that are substantially consistent with Borrower’s
standard forms thereof. Except under confidentiality obligations,
there has been no material disclosure of any of Borrower’s or its Subsidiaries’
Confidential Information to any third party.
4.16 Environmental
Matters. Neither Borrower nor any Subsidiary: (a) is in
violation of any statute, rule, regulation, decision, or order of any
governmental agency or body or any court, domestic or foreign, relating to the
use, disposal, or release of hazardous or toxic substances or relating to the
protection or restoration of the environment or human exposure to hazardous or
toxic substances (collectively, “Environmental Laws”);
(b) owns or operates any real property contaminated with any substance that
is subject to any Environmental Laws; (c) is liable for any off-site
disposal or contamination pursuant to any Environmental Laws; and (d) is
subject to any claim relating to any Environmental Laws; which violation,
contamination, liability, or claim has had or could reasonably be expected to
have a Material Adverse Effect, individually or in the aggregate; and there is
no pending or, to Borrower’s Knowledge, threatened investigation that might lead
to such a claim.
4.17 Litigation. Except
as described on Schedule 4.17,
there are no pending actions, suits, or proceedings against or affecting
Borrower, its Subsidiaries, or any of its or their properties; and to Borrower’s
Knowledge, no such actions, suits, or proceedings are threatened or
contemplated.
4.18 Financial
Statements. The financial statements included in each SEC
Filing present fairly, in all material respects, the consolidated financial
position of Borrower as of the dates shown and its consolidated results of
operations and cash flows for the periods shown, and such financial statements
have been prepared in conformity with United States generally accepted
accounting principles applied on a consistent basis (except as may be disclosed
therein or in the notes thereto, and, in the case of quarterly financial
statements, as permitted by Form 10-Q under the Exchange
Act). Except as set forth in the financial statements of Borrower
included in the SEC Filings filed prior to the date hereof or as described on
Schedule 4.18,
neither Borrower nor any of its Subsidiaries has incurred any liabilities,
contingent or otherwise, except those incurred in the ordinary course of
business, consistent (as to amount and nature) with past practices since the
date of such financial statements, none of which, individually or in the
aggregate, have had or could reasonably be expected to have a Material Adverse
Effect.
4.19 Insurance
Coverage. Borrower and each Subsidiary maintains in full force
and effect insurance coverage that is customary for comparably situated
companies for the business being conducted and properties owned or leased by
Borrower and each Subsidiary, and Borrower reasonably believes such insurance
coverage to be adequate against all liabilities, claims, and risks against which
it is customary for comparably situated companies to insure.
4.20 OTCBB
Compliance. Borrower’s common stock is registered pursuant to
Section 12(g) of the Exchange Act and is listed on the Over-the-Counter
Bulletin Board (“OTCBB”), and Borrower
has taken no action designed to terminate, or likely to have the effect of
terminating, the registration of the common stock under the Exchange Act or
delisting the common stock from the OTCBB, nor has Borrower received any
notification that the SEC or FINRA is contemplating terminating such
registration or listing. Borrower is not aware of any facts or
circumstances that might reasonably be expected to give rise to any of the
foregoing.
4.21 Brokers and
Finders. No Person will have, as a result of the transactions
contemplated by this Agreement, any valid right, interest, or claim against or
upon Borrower, any Subsidiary, or Lenders for any commission, fee, or other
compensation pursuant to any agreement, arrangement, or understanding entered
into by or on behalf of Borrower, other than as described in Schedule
4.21.
4.22 No Directed Selling Efforts
or General Solicitation. Neither Borrower nor any Person
acting on its behalf has conducted any general solicitation or general
advertising (as those terms are used in Regulation D) in connection with the
offer or sale of the Investment.
4.23 No Integrated
Offering. Neither Borrower nor any of its affiliates, nor any
Person acting on its or their behalf has, directly or indirectly, made any
offers or sales of any Borrower security or solicited any offers to buy any
security, under circumstances that would adversely affect reliance by Borrower
on Section 4(2) for the exemption from registration for the transactions
contemplated hereby or would require registration of the Investment under the
Securities Act.
4.24 Private
Placement. The offer and sale of the Investment to Lenders as
contemplated hereby is exempt from the registration requirements of the
Securities Act.
4.25 Questionable
Payments. Neither Borrower nor any of its Subsidiaries nor, to
Borrower’s Knowledge, any of their respective current or former stockholders,
directors, officers, employees, agents, or other Persons acting on behalf of
Borrower or any Subsidiary, has on behalf of Borrower or any Subsidiary or in
connection with their respective businesses: (a) used any
corporate funds for unlawful contributions, gifts, entertainment, or other
unlawful expenses relating to political activity; (b) made any direct or
indirect unlawful payments to any governmental officials or employees from
corporate funds; (c) established or maintained any unlawful or unrecorded
fund of corporate monies or other assets; (d) made any false or fictitious
entries on the books and records of Borrower or any Subsidiary; or (e) made
any unlawful bribe, rebate, payoff, influence payment, kickback, or other
unlawful payment of any nature.
4.26 Transactions with
Affiliates. Except as disclosed in SEC Filings made on or
prior to the date hereof or as disclosed on Schedule 4.26,
none of the officers or directors of Borrower and, to Borrower’s Knowledge, none
of the employees of Borrower is presently a party to any transaction with
Borrower or any Subsidiary (other than as holders of stock options and/or
warrants, and for services as employees, officers, and directors), including any
contract, agreement, or other arrangement providing for the furnishing of
services to or by, providing for rental of real or personal property to or from,
or otherwise requiring payments to or from any officer, director, or such
employee or, to Borrower’s Knowledge, any entity in which any officer, director,
or any such employee has a substantial interest or is an officer, director,
trustee, or partner.
4.27 Internal
Controls. Borrower and the Subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurance that:
(a) transactions are executed in accordance with management’s general or
specific authorizations; (b) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability; (c) access to
assets is permitted only in accordance with management’s general or specific
authorization; and (d) the recorded accountability for assets is compared
with the existing assets at reasonable intervals and appropriate action is taken
with respect to any differences.
4.28 Disclosures. Borrower
confirms that neither it nor any person acting on its behalf has provided
Lenders or their respective agents or counsel with any information that Borrower
believes constitutes material, nonpublic information. Borrower
understands and confirms that Lenders will rely on the foregoing representations
and covenants in effecting transactions in securities of
Borrower. The written materials delivered to Lenders in connection
with the transactions contemplated by the Transaction Documents do not contain
any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements contained therein, in light of the
circumstances under which they were made, not misleading.
Article
V
Affirmative
Covenants
5.01 Additional
Documents. Borrower promises and agrees to execute promptly,
upon Lenders’ request, all additional documents and instruments deemed by
Lenders necessary or desirable to accomplish the transaction contemplated by
this Agreement.
5.02 Compliance with
Law. Borrower promises and agrees to comply with all statutes,
laws, and governmental rules, regulations, and orders applicable to its
businesses and properties, provided that nothing herein
shall require compliance with any statute or governmental rule, regulation, or
order if the administering governmental authority has granted a formal extension
of time for compliance therewith, or if the validity of such statute, rule,
regulation, or order, as applied to Borrower, is being contested in good faith
and by appropriate means and Borrower provides to Lenders assurances
satisfactory to Lenders that Lenders’ interest will not thereby be
jeopardized.
5.03 Notice of Material
Change. Borrower promises and agrees to promptly notify
Lenders of Borrower’s violation of any term, promise, covenant, or agreement to
or with Lenders; any material change in Borrower’s property, business, or
affairs; any change in the location of Borrower’s place of business; and any
other event or matter (including offers, requests, or demands to purchase
properties, merge, or liquidate) that may have a Material Adverse Effect on the
debts, liabilities, or obligations of Borrower to Lenders.
5.04 Use of
Proceeds. Borrower promises and agrees to use the proceeds
from the Line of Credit solely as set forth in Section
2.03.
5.05 Information. Borrower
promises and agrees to submit to Lenders such financial statements, information,
budgets, and reports regarding its financial status and business plans as
Lenders may request from time to time.
Article
VI
Negative
Covenants
6.01 Misrepresentations. Borrower
will not, directly or indirectly, furnish any document to Lenders that contain
any untrue statement of material fact or omits to state a material fact
necessary to make it not misleading in light of the circumstances under which it
was furnished.
6.02 Assignment of
Commitment. Borrower will not, directly or indirectly, unless
approved in writing by Lenders in advance, assign or attempt to assign its
rights or obligations under this Agreement or any documents executed in
connection with this Agreement.
Article
VII
Defaults
and Remedies
7.01 Default. Time
being of the essence, any of the following events shall constitute a Default by
Borrower:
(a) Borrower’s
failure to pay within five days of the due date thereof any debt, or installment
thereof, owing to Lenders, including failure to pay when due all sums advanced
under this Agreement;
(b) failure
of Borrower or members of Borrower to timely comply with any other covenant,
term, or condition in this Agreement or any other agreement with Lenders within
10 days after written notice by Lenders;
(c) any
material representation or warranty made by or on behalf of Borrower herein or
otherwise in connection with the transactions contemplated hereby shall prove to
have been false or incorrect in any material respect on the date as of which
made;
(d) entry
or filing of any judgment, levy, execution, writ or warrant of attachment, or of
any similar process against Borrower or against Borrower’s properties that for a
period of 15 days or more remains unsatisfied or as to which adequate protection
shall not be afforded by Borrower to Lenders within said 15 days by indemnity
satisfactory to Lenders;
(e) institution
of bankruptcy, reorganization, arrangement, or insolvency proceedings or other
proceedings for relief under any bankruptcy or similar laws for the relief of
debtors by or against Borrower that if instituted against Borrower,
is consented to or is not dismissed within 60 days after such
institution;
(f) Borrower’s
breach of any obligation owed to Lenders under the Note without Lenders’ prior
written consent; and
(g) the
nonacceptance by Lenders of any document, matter, or fact requiring Lenders’
approval, acceptance, or consent; provided, however, that a determination
by Lenders under Section 2.03 that an
intended expenditure by Borrower is not a permissible use or amount shall not
constitute an event of Default hereunder, but shall allow Lenders to not make
Principal Advances to Borrower with respect to the subject requested
payment.
7.02 Remedies. Upon
the occurrence of an event of Default, or at any time thereafter that an event
of Default shall be continuing, Lenders may, at their option: (a) declare
the unpaid principal balance of the Note, together with interest accrued
thereon, to be immediately due and payable, and proceed to enforce payment of
the same; (b) exercise any of the remedies provided for under this
Agreement; or (c) exercise any remedies available to Lenders under
applicable law.
7.03 Legal
Expenses. In the event of any Default under this Agreement,
Lenders shall be entitled to collect from Borrower, on demand, all fees and
expenses incurred in connection therewith, including fees of attorneys,
accountants, appraisers, consultants, expert witnesses, arbitrators, mediators,
and court reporters. Without limiting the generality of the
foregoing, in the case of an event of Default hereunder, Borrower shall pay all
such costs and expenses incurred in connection
with: (a) arbitration or other alternative dispute resolution
proceedings, trial court actions, and appeals; (b) bankruptcy or other
insolvency proceedings of Borrower or another party liable for any of the
obligations of this Agreement or the Line of Credit or any party having any
interest in any security for any of those obligations; (c) post-judgment
collection proceedings; (d) all claims, counterclaims, cross-claims, and
defenses asserted in any of the foregoing, whether or not they arise out of or
are related to this Agreement or any security for the Line of Credit;
(e) all preparation for any of the foregoing; and (f) all settlement
negotiations with respect to any of the foregoing. In the event that
any dispute arises relating to the interpretation, enforcement, or performance
of this Agreement, other than an event of Default, that is resolved by a
judicial or arbitration proceeding, the prevailing party shall be entitled to
collect from the nonprevailing party, on demand, all fees and expenses incurred
in connection therewith, including fees of attorneys, accountants, appraisers,
consultants, expert witnesses, arbitrators, mediators, and court reporters in
any of the proceedings described in the immediately preceding
sentence.
Article
VIII
Miscellaneous
8.01 Notices. Any
notice, demand, request, or other communication permitted or required under this
Agreement shall be in writing and shall be deemed to have been given as of the
date so delivered, if personally served; as of the date so sent, if transmitted
by facsimile and receipt is confirmed by the facsimile operator of the
recipient; as of the date so sent, if sent by electronic mail and receipt is
acknowledged by the recipient; and one day after the date so sent, if delivered
by overnight courier service; addressed as follows:
If to
Lenders, as
follows: Hdibu
LLC
[address
1]
[address
2]
[facsimile]
[e-mail]
Xxxxxxxx
Xxxxxx
[address
1]
[address
2]
[facsimile]
[e-mail]
Talos
Partners LLC
000
Xxxxxxx Xxxxxx
00xx
Xxxxx
Xxx Xxxx,
XX 00000
Facsimile:
000-000-0000
E-mail:
x.xxxxxxx@xxxxxxxxxxxxx.xxx
If to
Borrower, as
follows: Enable
Holdings, Inc.
0000 X.
Xxxxxxxxx Xxxxxx
Xxxxxx,
XX 00000-0000
Each
party, by notice duly given in accordance herewith, may specify a different
address for the giving of any notice hereunder.
8.02 Survival. All
covenants, representations, and warranties made by Borrower in this Agreement
shall survive the execution and delivery of this Agreement and the making of the
Line of Credit.
8.03 Governing
Law. Borrower agrees that the law of the state of New York
(exclusive of principles of conflicts of law) shall be applicable for the
purpose of construing this Agreement, determining the validity hereof, and
enforcing the same. Borrower hereby consents to the jurisdiction of
the courts of the state of New York or to any federal court setting in the state
of New York.
8.04 Payments. All
payments of principal and interest due hereunder shall be made in U.S. dollars
and shall be deemed made only when received by Lenders in immediately available
funds.
8.05 No
Waiver. No delay or omission to exercise any right, power, or
remedy accruing to Lenders upon any breach or Default of Borrower shall impair
such rights, powers, or remedies of Lenders, nor shall it be construed to be a
waiver of any such breach or Default, or an acquiescence therein, or of any
similar breach or Default thereafter occurring; nor shall any waiver of any
single breach or Default be deemed a waiver of any other breach or default
theretofore or thereafter occurring. Any waiver, permit, consent, or
approval of any kind or character on the part of Lenders of any breach or
Default must be in writing and shall be effective only to the extent
specifically set forth in such writing. All remedies shall be
cumulative and not alternative. Nothing herein shall be deemed any
waiver or prohibition of Lenders’ rights of banker’s lien or
setoff.
8.06 Assignment. Lenders
reserve the right to transfer or assign any or all of its right, title, and
interest under this Agreement, including participation in all or any part of the
Line of Credit. This Agreement may not be assigned by Borrower
without Lenders’ prior written consent.
8.07 Invalidity. If
any term, condition, or provision of this Agreement or the Transaction Documents
shall be held invalid for any reason, such offending term, condition, or
provision shall be stricken therefrom, and the remainder shall not be
affected.
8.08 Usury. If
a court of competent jurisdiction determines that the interest rate being
charged under this Agreement exceeds the lawful maximum rate of interest, then,
there shall be charged instead only the maximum rate of interest permitted by
New York law (or by agreement of the parties under New York law) during the
period when the rate herein stated is deemed excessive. Borrower
acknowledges that as of the date of this Agreement there is no maximum rate of
interest set by New York law on a loan of this type.
8.09 Entire
Agreement. This Transaction Documents constitute the complete
and final expression of the entire agreement between the parties pertaining to
the subject matter hereof and supersede all prior and contemporaneous agreements
and understandings between the parties. This Agreement may be amended
only by a written instrument signed by an authorized representative of each
Lender.
8.10 Counterparts. This
Agreement may be executed in any number of counterparts with the same effect as
if the signatures thereto and hereto were upon the same instrument.
[remainder
of page intentionally left blank]
IN WITNESS WHEREOF, this Agreement has
been executed by the parties as of the date first written above.
|
LENDERS:
|
|
|
|
|
HDIBU
LLC
|
|
|
|
|
By:
|
|
|
Name:
|
|
|
Title:
|
|
|
|
|
|
XXXXXXXX
XXXXXX
|
|
|
|
|
By:
|
|
|
Name:
|
|
|
Title:
|
|
|
|
|
|
TALOS
PARTNERS LLC
|
|
|
|
|
By:
|
|
|
Name:
|
|
|
Title:
|
|
|
|
|
|
BORROWER:
|
|
|
|
|
ENABLE
HOLDINGS, INC.
|
|
|
|
|
By:
|
|
|
Name:
|
|
|
Title:
|
|
