LOAN AND SECURITY AGREEMENT
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This LOAN AND SECURITY AGREEMENT ("Loan Agreement") is entered into as of
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May 18, 2000, by and between ▇▇▇▇▇▇▇▇▇.▇▇▇, INC., a Nevada corporation
("Borrower"), in favor of INTELLECT CAPITAL GROUP, LLC, a Delaware limited
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liability company ("Lender").
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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
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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
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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
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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
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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.
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"Computer Program" shall mean any computer software program created by or on
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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
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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
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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
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such term is defined in Section 9105(1)(f) of the UCC, and shall include,
without limitation, any ▇▇▇▇ 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
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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
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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
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is defined in Section 9105(1) (i) of the UCC, and shall include, without
limitation, any draft, check, certificate of deposit, note, ▇▇▇▇ 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
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definition of "GeneralIntangibles" 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", "▇▇▇▇▇▇▇▇▇.▇▇▇" [▇▇▇▇ --
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
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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
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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
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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"):
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(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
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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
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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
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Agreement, nor shall Lender be 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
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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,
▇▇▇▇ 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 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)
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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 ▇▇▇▇ (either of the
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foregoing, a "New ▇▇▇▇"): (i) register the copyright in such New Work with the
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U.S. Copyright Office, or register such New ▇▇▇▇ 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 ▇▇▇▇ 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 ▇▇▇▇; 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 ▇▇▇▇, product name or service
name, Borrower will promptly notify Lender of such new trademark, trade name,
service ▇▇▇▇, product name or service name and will seek registration of such
new trademark, trade name, service ▇▇▇▇, 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
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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 collect by legal proceedings or otherwise all
Distributions, interest, principal or other sums now or hereafter payable upon
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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
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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
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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 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
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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,
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and if such construction shall not be feasible, then 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
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
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with a copy (which will not constitute notice) to:
Manatt, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, LLP
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as Lender may most recently have designated to Borrower
in writing; and (ii) if to Borrower, to:
▇▇▇▇▇▇▇▇▇.▇▇▇, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy (which will not constitute notice) to:
Silicon Valley Law Group
▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
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 any statute of limitations. Borrower expressly waives the
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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: ▇▇▇▇▇▇▇▇▇.▇▇▇, INC.
a Nevada corporation
By: /S/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------------------------
Title: CEO
--------------------------------------------
LENDER: INTELLECT CAPITAL GROUP, LLC
as Delaware limited liability company
By: /S/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------------
Title: Chairman & CEO
--------------------------------------------
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