1
Exhibit 10.4
THIS LOAN AGREEMENT AND NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"). THIS LOAN AGREEMENT AND NOTE MAY NOT BE
PLEDGED, HYPOTHECATED, SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE
OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE LOAN AGREEMENT AND NOTE UNDER THE
SECURITIES ACT, OR AN OPINION OF COUNSEL, WHICH OPINION IS SATISFACTORY IN FORM
AND SUBSTANCE TO THE COMPANY, TO THE EFFECT THAT SUCH REGISTRATION IS NOT
REQUIRED UNDER THE SECURITIES ACT OR THAT SUCH TRANSACTION COMPLIES WITH RULES
PROMULGATED BY THE SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT
OR UNLESS SOLD PURSUANT TO RULE 144 OF SUCH ACT.
LOAN AGREEMENT AND NOTE
$640,000.00 Colorado Springs, Colorado, August 10, 2000
THIS LOAN AGREEMENT AND NOTE (this "Agreement and Note") is made as of
the date first written above between INTEROSA, INC., a Delaware corporation (the
"BORROWER"), and ▇▇▇▇.▇▇▇, INC., a Delaware corporation (the "LENDER").
FOR VALUE RECEIVED, the Borrower and the Lender hereby agree as
follows:
1. BORROWER'S OBLIGATION. The Borrower unconditionally promises to pay
to the order of the Lender, by no later than August 10, 2001, at the office of
the Lender, located at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, in lawful
money of the United States of America and in immediately available funds, the
amount of SIX HUNDRED FORTY THOUSAND DOLLARS ($640,000.00), together with
accrued interest from the date hereof to, but not including, the date on which
payment in full is made to the Lender. Interest shall accrue on the unpaid
principal balance hereof from time to time outstanding at the fluctuating rate
per annum equal to the Prime Rate (as defined herein) plus 2%. "PRIME RATE"
shall mean the rate of interest per annum from time to time quoted in The Wall
Street Journal as the prevailing prime rate. There will be no prepayment penalty
and Borrower shall have no obligation to repay any principal or interest until
the earlier of August 10, 2001 or an Event of Default.
2. CONSIDERATION. The consideration for this Note, is the loan to the
Borrower of an amount in cash equal to but not exceeding $640,000.00 upon the
execution of this Note, along with the terms conditions and covenants set forth
herein and in the Security Agreement, attached hereto as Exhibit A.
3. WARRANTS. Upon Lender's delivery to Borrower of $640,000, the
Borrower, regardless of whether or not the loan is repaid, will issue to the
Lender a Warrant(s) to acquire an aggregate of 183,381 shares Series C Stock at
a cost of $0.01 per share, and an exercise price of $0.01 per share.
4. DEFAULT. If any of the following events (each an "EVENT OF DEFAULT")
shall occur and be continuing:
(i) The Borrower shall commence any case, proceeding or other
action (A) under any existing or future law of any jurisdiction,
domestic or foreign, relating to bankruptcy, insolvency, reorganization
or relief of debtors, seeking to have an order for relief entered
2
with respect to it, or seeking to adjudicate it a bankrupt or
insolvent, or seeking reorganization, arrangement, adjustment,
winding-up, liquidation, dissolution, composition or other relief with
respect to it or its debts, or (B) seeking appointment of a receiver,
trustee, custodian, conservator or other similar official for it or for
all or any substantial part of its assets, or the Borrower shall make a
general assignment for the benefit of its creditors; or
(ii) There shall be commenced against the Borrower any case,
proceeding or other action of a nature referred to in clause (i) above
that (A) results in the entry of an order for relief or any such
adjudication or appointment or (B) remains undismissed, undischarged or
unbonded for a period of 60 days; or
(iii) There shall be commenced against the Borrower any case,
proceeding or other action seeking issuance of a warrant of attachment,
execution, distraint or similar process against all or any substantial
part of its assets that results in the entry of an order for any such
relief that shall not have been vacated, discharged, or stayed or
bonded pending appeal within 60 days from the entry thereof;
(iv) The Borrower shall take any action in furtherance of, or
indicating its consent to, approval of, or acquiescence in, any of the
acts set forth in clause (i), (ii), or (iii) above;
(v) The Borrower shall fail to re-pay the borrowed amount
within five (5) days of when due;
(vi) The Borrower merges with or into or consolidates with any
other corporation or sells, leases, transfers or otherwise disposes of
all or substantially all of its assets, properties or business to any
person, firm, corporation or organization; or
(vii) The Borrower closes upon an equity financing and
receives proceeds from such financing in excess of the amount of the
outstanding loan balance;
then, the unpaid outstanding principal balance hereof (with accrued interest
thereon) shall immediately become due and payable. During the period from the
occurrence of an Event of Default until the earlier of (i) the time such Event
of Default is cured by the Borrower and (ii) the time the unpaid outstanding
principal balance hereof (with accrued interest thereon) is paid in full,
interest shall accrue thereon at the Prime Rate plus 10%. If the Lender so
elects by written notice to the Borrower, no further advances will be made if an
Event of Default has occurred, even if the Borrower subsequently cures such
Event of Default. If this Agreement and Note is placed in the hands of an
attorney for collection, whether or not suit shall be brought to collect any of
the principal, interest or deficiency of this Agreement and Note, the Borrower
promises to pay reasonable attorneys' fees and all reasonable costs of
collection.
5. SECURITY. This Note is secured as provided in the Security
Agreement, dated contemporaneously (the "SECURITY AGREEMENT"), between the
Borrower and the Lender. Reference is hereby made to the Security Agreement for
a description of the properties and assets
2
3
in which a security interest has been granted, the nature and extent of the
security, the terms and conditions upon which the security interests were
granted and the rights of the holder of this Note in respect thereof. (See,
Exhibit A).
6. EXECUTION. All parties now and hereafter liable with respect to this
Agreement and Note, whether maker, principal, surety, guarantor, endorser or
otherwise, hereby waive presentment, demand, protest and all other notices of
any kind.
7. GOVERNING LAW. THIS AGREEMENT AND NOTE SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF COLORADO.
IN WITNESS WHEREOF, the Borrower and the Lender have caused this
Agreement and Note to be executed, issued and delivered as of the date first
written above.
"Borrower" "Lender"
INTEROSA, INC. ▇▇▇▇.▇▇▇, INC.
By: By:
---------------------------- ---------------------------------
Name: Name:
Title: Title:
3
4
EXHIBIT A
SECURITY AGREEMENT
SECURITY AGREEMENT, dated as of August 10, 2000, made by INTEROSA,
INC., a Delaware corporation (the "Borrower"), in favor of ▇▇▇▇.▇▇▇, Inc., a
Delaware corporation (the "LENDER").
WITNESSETH:
WHEREAS, the Lender has agreed to make loans and other
extensions of credit (such loans and other extensions of credit, collectively,
the "LOAN") to the Borrower from time to time upon the terms and subject to the
conditions set forth in the individual promissory notes (such promissory notes,
collectively, the "NOTE") issued by the Borrower to the Lender in connection
with the Loan; and
WHEREAS, the Lender has requested, as a condition precedent to
the making of the Loan, that the Borrower execute and deliver this Security
Agreement to the Lender, and the Borrower has agreed to this request;
NOW, THEREFORE, in consideration of the premises and to induce the
Lender to make the Loan to the Borrower, the Borrower hereby agrees with the
Lender, as follows:
1. DEFINED TERMS.
1.1 DEFINITIONS. (a) The following terms which are defined in
the Code are used herein as so defined: Accounts, Certificated Security, Chattel
Paper, Documents, Equipment, Farm Products, Instruments, and Investment
Property.
(b) The following terms shall have the following meanings:
"AGREEMENT": this Security Agreement, as the same may be
amended, supplemented or otherwise modified from time to time.
"BUSINESS DAY": a day other than a Saturday, Sunday or other
day on which commercial banks in New York City are authorized or
required by law to close.
"CODE": the Uniform Commercial Code as from time to time in
effect in the State of Colorado.
"COLLATERAL": as defined in Section 2.
"COLLATERAL ACCOUNT": any collateral account established by
the Lender as provided in subsection 5.4 or subsection 8.2.
"CONTRACTS": the contracts and agreements to which the
Borrower is a party (including those listed in SCHEDULE 1), as the same
may be amended, supplemented or otherwise modified from time to time,
including, without limitation, (a) all rights of the Borrower to
receive moneys due and to become due to it thereunder or in connection
therewith, (b) all rights of the Borrower to damages arising out of or
for breach or default in respect thereof and (c) all rights of the
Borrower to exercise all remedies thereunder, in each case to the
extent the terms thereof (after giving effect to any consent that has
been obtained, it being understood that the Borrower is not obligated
to obtain any such consent) do not prohibit the grant by the Borrower
of a security
5
interest pursuant to this Agreement in its right, title and interest
therein without the consent of any other party thereto and do not give
any other party thereto the right to terminate its obligations
thereunder.
"CONTRACTUAL OBLIGATION": as to any Person, any provision of
any security issued by such Person or of any agreement, instrument or
other undertaking to which such Person is a party or by which it or any
of its property is bound.
"COPYRIGHTS": (i) all copyrights arising under the laws of the
United States, any other country or any political subdivision thereof,
whether registered or unregistered and whether published or unpublished
(including, without limitation, those listed in SCHEDULE 3), all
registrations and recordings thereof, and all applications in
connection therewith, including, without limitation, all registrations,
recordings and applications in the United States Copyright Office, and
(ii) the right to obtain all renewals thereof.
"COPYRIGHT LICENSES": any written agreement naming the
Borrower as licensor or licensee (including, without limitation, those
listed in SCHEDULE 3), granting any right under any Copyright,
including, without limitation, the grant of rights to manufacture,
distribute, exploit and sell materials derived from any Copyright.
"DEPOSIT ACCOUNT": as defined in the Uniform Commercial Code
of any applicable jurisdiction and, in any event, including, without
limitation, any demand, time, savings, passbook or like account
maintained with a depositary institution.
"EVENT OF DEFAULT": as defined in the Note.
"GENERAL INTANGIBLES": all "general intangibles" as such term
is defined in Section 9-106 of the Code and, in any event, including,
without limitation, all contracts, agreements, instruments and
indentures in any form, and portions thereof, to which the Borrower is
a party or under which the Borrower has any right, title or interest or
to which the Borrower or any property of the Borrower is subject, as
the same may from time to time be amended, supplemented or otherwise
modified, including, without limitation, (i) all rights of the Borrower
to receive moneys due and to become due to it thereunder or in
connection therewith, (ii) all rights of the Borrower to damages
arising thereunder and (iii) all rights of the Borrower to perform and
to exercise all remedies thereunder, in each case to the extent the
terms thereof (after giving effect to any consent that has been
obtained, it being understood that the Borrower is not obligated to
obtain any such consent) do not prohibit the grant by the Borrower of a
security interest pursuant to this Agreement in its right, title and
interest therein without the consent of any other party thereto and do
not give any other party thereto the right to terminate its obligations
thereunder; PROVIDED, that the foregoing limitation shall not affect,
limit, restrict or impair the grant by the Borrower of a security
interest pursuant to this Agreement in any Receivable or any money or
other amounts due or to become due or other right to payment under any
such contract, agreement, instrument or indenture.
"GOVERNMENTAL AUTHORITY": any nation or government, any state
or other political subdivision thereof, any agency, authority,
instrumentality, regulatory body, court, central bank or other entity
exercising executive, legislative, judicial, taxing, regulatory or
administrative functions of or pertaining to government, any securities
exchange and any self-regulatory organization (including the National
Association of Insurance Commissioners).
"INTELLECTUAL PROPERTY": the collective reference to all
rights, priorities and privileges relating to intellectual property,
whether arising under United States, multinational or foreign laws or
otherwise, including, without limitation, the Copyrights, the Copyright
Licenses, the Patents, the Patent Licenses, the Trademarks and the
Trademark Licenses, and all rights to ▇▇▇ at
2
6
law or in equity for any infringement or other impairment thereof,
including the right to receive all proceeds and damages therefrom.
"LIEN": any mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or other), charge or
other security interest or any preference, priority or other security
agreement or preferential arrangement of any kind or nature whatsoever
(including any conditional sale or other title retention agreement and
any capital lease having substantially the same economic effect as any
of the foregoing).
"MATERIAL ADVERSE EFFECT": a material adverse effect on (a)
the business, property, operations, condition (financial or otherwise)
or prospects of the Borrower or (b) the validity or enforceability of
the Note and this Agreement or the rights or remedies of the Lender
thereunder or hereunder.
"OBLIGATION": the collective reference to the unpaid principal
of and interest on the Loan and all other obligations and liabilities
of the Borrower to the Lender, whether direct or indirect, absolute or
contingent, due or to become due, or now existing or hereafter
incurred, which may arise under, out of, or in connection with, the
Note and this Agreement, in each case whether on account of principal,
interest, fees, costs, expenses, reimbursement obligations or
otherwise.
"PATENTS": (a) all letters patent of the United States, any
other country or any political subdivision thereof, all reissues and
extensions and all goodwill associated therewith, including, without
limitation, any of the foregoing referred to in SCHEDULE 3, and (b) all
applications for letters patent of the United States or any other
country and all divisions, continuations and continuations-in-part
thereof, including, without limitation, any of the foregoing referred
to in SCHEDULE 3, and (c) all rights to obtain any reissues or
extensions of the foregoing.
"PATENT LICENSE": all agreements, whether written or oral,
providing for the grant by or to the Borrower of any right to
manufacture, use or sell any invention covered in whole or in party by
a Patent, including, without limitation, any of the foregoing referred
to in SCHEDULE 3.
"PERSON": an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust,
unincorporated association, joint venture, Governmental Authority or
other entity of whatever nature.
"PROCEEDS": all "proceeds" as such term is defined in Section
9-306(1) of the Code.
"RECEIVABLE": any right to payment for goods sold or leased or
for services rendered, whether or not such right is evidenced by an
Instrument or Chattel Paper and whether or not it has been earned by
performance (including, without limitation, any Account).
"REQUIREMENT OF LAW": as to any Person, the certificate of
incorporation and by-laws or other organizational or governing
documents of such Person, and any present or future law, treaty,
statute, rule, regulation, common law or determination of an arbitrator
or a court or other Governmental Authority and all official directives,
consents, approvals, authorizations, guidelines, restrictions and
policies of any Governmental Authority, in each case applicable to or
binding upon such Person or any of its property or to which such Person
or any of its property is subject.
"TRADEMARKS": (a) all trademarks, trade names, corporate
names, company names, business names, fictitious business names, trade
styles, service marks, logos and other source or business identifiers,
and the goodwill associated therewith, now existing or hereafter
adopted or acquired, all registrations and recordings thereof, and all
applications in connection therewith, whether in the United States
Patent and Trademark Office or in any similar office or agency of
3
7
the United States, any State thereof or any other country or any
political subdivision thereof, or otherwise, and all common-law rights
related thereto, including, without limitation, any of the foregoing
referred to in SCHEDULE 3, and (b) the right to obtain all renewals
thereof.
"TRADEMARK LICENSE" means any agreement, written or oral,
providing for the grant by or to the Borrower of any right to use any
Trademark, including, without limitation, any of the foregoing referred
to in SCHEDULE 3.
1.2 OTHER DEFINITIONAL PROVISIONS. (a) The words "hereof,"
"herein", "hereto" and "hereunder" and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not to any particular
provision of this Agreement, and Section, subsection and Schedule references are
to this Agreement unless otherwise specified.
(b) The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such terms.
2. GRANT OF SECURITY INTEREST.
As collateral security for the prompt and complete payment and
performance when due (whether at the stated maturity, by acceleration or
otherwise) of the Obligation, the Borrower hereby grants to the Lender a
security interest in all of the following property now owned or at any time
hereafter acquired by the Borrower or in which the Borrower now has or at any
time in the future may acquire any right, title or interest (collectively, the
"COLLATERAL"):
(a) all Accounts;
(b) all Chattel Paper;
(c) all Contracts;
(d) all Deposit Accounts;
(e) all Documents;
(f) all Equipment;
(g) all General Intangibles;
(h) all Instruments;
(i) all Intellectual Property;
(j) all Investment Property;
(k) all other property not otherwise described above;
(l) all books and records pertaining to the Collateral; and
(m) to the extent not otherwise included, all Proceeds and products of
any and all of the foregoing and all collateral security and guarantees given by
any Person with respect to any of the foregoing.
4
8
3. REPRESENTATIONS AND WARRANTIES.
The Borrower hereby represents and warrants to the Lender that:
3.1 TITLE; NO OTHER LIENS. Except for the security interests
(i) set forth in Schedule 5.1 and (ii) granted to the Lender pursuant to this
Agreement, the Borrower owns each item of the Collateral free and clear of any
and all Liens or claims of others. No financing statement or other public notice
with respect to all or any part of the Collateral is on file or of record in any
public office, except such as have been filed in favor of the Lender pursuant to
this Agreement.
3.2 PERFECTED FIRST PRIORITY LIENS. The security interests
granted pursuant to this Agreement (a) upon completion of the filings and other
actions specified on SCHEDULE 4 (which, in the case of all filings and other
documents referred to on said Schedule, have been delivered to the Lender in
completed and duly executed form) will constitute valid perfected security
interests in the Collateral in favor of the Lender, as collateral security for
the Obligation, enforceable in accordance with the terms hereof against all
creditors of the Borrower and any Persons purporting to purchase any Collateral
from the Borrower and (b) are prior to all other Liens on the Collateral in
existence on the date hereof, with the exception of (i) those existing Liens set
forth on Schedule 5.1 hereto and (ii) those Liens set forth on Schedule 5.2
hereto that have priority, by operation of law, over the security interests
granted pursuant to this Agreement (the "Permitted Liens").
3.3 EQUIPMENT. On the date hereof, the Equipment (other than
mobile goods) is kept at the locations listed on SCHEDULE 2.
3.4 JURISDICTION OF ORGANIZATION; CHIEF EXECUTIVE OFFICE. On
the date hereof, the Borrower's jurisdiction of organization and the location of
the Borrower's chief executive office or sole place of business is located at
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇. ▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
3.5 FARM PRODUCTS. None of the Collateral constitutes, or is
the Proceeds of, Farm Products.
4. COVENANTS. The Borrower covenants and agrees with the Lender that
from and after the date of this Agreement until the Obligation shall have been
paid in full:
4.1 DELIVERY OF INSTRUMENTS, CERTIFICATED SECURITIES AND
CHATTEL PAPER. If any amount payable under or in connection with any of the
Collateral shall be or become evidenced by any Instrument, Certificated Security
or Chattel Paper, such Instrument, Certificated Security or Chattel Paper shall
be immediately delivered to the Lender, duly indorsed in a manner satisfactory
to the Lender, to be held as Collateral pursuant to this Agreement.
4.2 MAINTENANCE OF INSURANCE. The Borrower will maintain, with
financially sound and reputable companies, insurance policies in amounts and for
risks typical for companies comparable to the Borrower. The Borrower shall
deliver to the Lender a certificate of a reputable insurance broker with respect
to such insurance and such supplemental reports with respect thereto as the
Lender may from time to time reasonably request.
4.3 MAINTENANCE OF PERFECTED SECURITY INTEREST; FURTHER
DOCUMENTATION. (a) The Borrower shall maintain the security interests created by
this Agreement as perfected security interests having at least the priority
described in subsection 3.2 and shall defend such security interests against the
claims and demands of all Persons whomsoever.
(b) The Borrower will furnish to the Lender from time to time
statements and schedules further identifying and describing the assets and
property of the Borrower and such other reports in connection therewith as the
Lender may reasonably request, all in reasonable detail.
5
9
(c) At any time and from time to time, upon the written
request of the Lender, and at the sole expense of the Borrower, the Borrower
will promptly and duly execute and deliver such further instruments and
documents and take such further actions as the Lender may reasonably request for
the purpose of obtaining or preserving the full benefits of this Agreement and
of the rights and powers herein granted, including, without limitation, (i)
filing any financing or continuation statements under the Uniform Commercial
Code (or other similar laws) in effect in any jurisdiction with respect to the
security interests created hereby and (ii) in the case of Deposit Accounts and
any other relevant collateral, taking any actions necessary to enable the Lender
to obtain "control" (within the meaning of the applicable Uniform Commercial
Code) with respect thereto.
4.4 CHANGES IN LOCATIONS, NAME, ETC. The Borrower shall not,
except upon 15 days' prior written notice to the Lender and delivery to the
Lender of (a) all additional executed financing statements and other documents
reasonably requested by the Lender to maintain the validity, perfection and
priority of the security interests provided for herein and (b) if applicable, a
written supplement to SCHEDULE 2 showing any additional location at which
Equipment shall be kept:
(a) permit any of the Equipment to be kept at a location other
than those listed on SCHEDULE 2; or
(b) change its jurisdiction of organization or the location of
its chief executive office or sole place of business from that referred to in
subsection 3.4; or
(c) change its name, identity or corporate or other
organizational structure to such an extent that any financing statement filed by
the Lender in connection with this Agreement would become misleading.
4.5 NOTICES. The Borrower will advise the Lender promptly, in
reasonable detail, at the Lender's address for notices set forth in Section 13
below of:
(a) any Lien (other than security interests created hereby) on
any of the Collateral; and
(b) of the occurrence of any other event which could
reasonably be expected to have a material adverse effect on the aggregate value
of the Collateral or on the security interests created hereby.
4.6 PAYMENT OF OBLIGATIONS. The Borrower will pay and
discharge or otherwise satisfy at or before maturity or before they become
delinquent, as the case may be, all taxes, assessments and governmental charges
or levies imposed upon the Collateral or in respect of income or profits
therefrom, as well as all claims of any kind (including, without limitation,
claims for labor, materials and supplies) against or with respect to the
Collateral, except that no such charge need be paid if the amount or validity
thereof is currently being contested in good faith by appropriate proceedings,
reserves in conformity with generally accepted accounting principles with
respect thereto have been provided on the books of the Borrower and such
proceedings could not reasonably be expected to result in the sale, forfeiture
or loss of any material portion of the Collateral or any interest therein.
5. PROVISIONS RELATING TO RECEIVABLES.
5.1 BORROWER REMAINS LIABLE UNDER RECEIVABLES. Anything herein
to the contrary notwithstanding, the Borrower shall remain liable under each of
the Receivables to observe and perform all the conditions and obligations to be
observed and performed by it thereunder, all in accordance with the terms of any
agreement giving rise to each such Receivable. The Lender shall not have any
obligation or liability under any Receivable (or any agreement giving rise
thereto) by reason of or arising out of this Agreement or the receipt by the
Lender of any payment relating to such Receivable pursuant hereto, nor shall the
Lender be obligated in any manner to perform any of the obligations of the
Borrower under or pursuant to any Receivable (or any agreement giving rise
thereto), to make any payment, to
6
10
make any inquiry as to the nature or the sufficiency of any payment received by
it or as to the sufficiency of any performance by any party under any Receivable
(or any agreement giving rise thereto), to present or file any claim, to take
any action to enforce any performance or to collect the payment of any amounts
which may have been assigned to it or to which it may be entitled at any time or
times.
5.2 COMMUNICATION WITH OBLIGORS. The Lender in its own name or
in the name of others may at any time after the occurrence and during the
continuance of an Event of Default communicate with obligors under the
Receivables and parties to the Contracts to verify with them to the Lender's
satisfaction the existence, amount and terms of any Receivables.
5.3 ANALYSIS OF RECEIVABLES. The Lender shall have the right
to make test verifications of the Receivables in any manner and through any
medium that it reasonably considers advisable, and the Borrower shall furnish
all such assistance and information as the Lender may require in connection with
such test verifications. At any time and from time to time, upon the Lender's
request and at the expense of the Borrower, the Borrower shall cause independent
public accountants or others satisfactory to the Lender to furnish to the Lender
reports showing reconciliations, aging and test verifications of, and trial
balances for, the Receivables.
5.4 COLLECTIONS ON RECEIVABLES. (a) The Lender hereby
authorizes the Borrower to collect the Receivables, subject to the Lender's
direction and control, and the Lender may curtail or terminate said authority at
any time after the occurrence and during the continuance of an Event of Default.
If required by the Lender at any time after the occurrence and during the
continuance of an Event of Default, any payments of Receivables, when collected
by the Borrower, (i) shall be forthwith (and, in any event, within two Business
Days) deposited by the Borrower in the exact form received, duly indorsed by the
Borrower to the Lender if required, in a Collateral Account maintained under the
sole dominion and control of the Lender, subject to withdrawal by the Lender
only as provided in subsection 8.3, and (ii) until so turned over, shall be held
by the Borrower in trust for the Lender, segregated from other funds of the
Borrower.
(b) Each such deposit of Proceeds of Receivables shall be
accompanied by a report identifying in reasonable detail the nature and source
of the payments included in the deposit.
(c) At the Lender's request, the Borrower shall deliver to the
Lender all original and other documents evidencing, and relating to, the
agreements and transactions which gave rise to the Receivables, including,
without limitation, all original orders, invoices and shipping receipts.
5.5 REPRESENTATIONS AND WARRANTIES. (a) No amount payable to
the Borrower under or in connection with any Receivable is evidenced by any
Instrument or Chattel Paper which has not been delivered to the Lender.
(b) None of the obligors on any Receivables is a Governmental
Authority.
(c) The amounts represented by the Borrower to the Lender as
owing to the Borrower in respect of the Receivables shall be accurate.
5.6 COVENANTS. (a) Other than in the ordinary course of
business consistent with its past practice, the Borrower shall not (i) grant any
extension of the time of payment of any Receivable, (ii) compromise or settle
any Receivable for less than the full amount thereof, (iii) release, wholly or
partially, any Person liable for the payment of any Receivable, (iv) allow any
credit or discount whatsoever on any Receivable, or (v) amend, supplement or
modify any Receivable in any manner that could adversely affect the value
thereof.
7
11
(b) The Borrower will deliver to the Lender a copy of each
material demand, notice or document received by it that questions or calls into
doubt the validity or enforceability of more than 5% of the aggregate amount of
the then outstanding Receivables.
6. PROVISIONS RELATING TO CONTRACTS.
6.1 BORROWER REMAINS LIABLE UNDER CONTRACTS. Anything herein
to the contrary notwithstanding, the Borrower shall remain liable under each of
the Contracts to observe and perform all the conditions and obligations to be
observed and performed by it thereunder, all in accordance with and pursuant to
the terms and provisions of such Contract. The Lender shall not have any
obligation or liability under any Contract by reason of or arising out of this
Agreement or the receipt by the Lender of any payment relating to such Contract
pursuant hereto, nor shall the Lender be obligated in any manner to perform any
of the obligations of the Borrower under or pursuant to any Contract, to make
any payment, to make any inquiry as to the nature or the sufficiency of any
payment received by it or as to the sufficiency of any performance by any party
under any Contract, to present or file any claim, to take any action to enforce
any performance or to collect the payment of any amounts which may have been
assigned to it or to which it may be entitled at any time or times.
6.2 COMMUNICATION WITH CONTRACTING PARTIES. The Lender in its
own name or in the name of others may communicate at any time after the
occurrence and during the continuance of an Event of Default with parties to the
Contracts to verify with them to the Lender's satisfaction the existence, amount
and terms of any Contracts.
6.3 REPRESENTATIONS AND WARRANTIES. (a) No consent of any
party (other than the Borrower) to any Contract is required, or purports to be
required, in connection with the execution, delivery and performance of this
Agreement.
(b) Each Contract is in full force and effect and constitutes
a valid and legally enforceable obligation of the Borrower, and to the best of
the Borrower's knowledge, of all other parties thereto, subject to the effects
of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws relating to or affecting creditors' rights generally, general
equitable principles (whether considered in a proceeding in equity or at law)
and an implied covenant of good faith and fair dealing.
(c) No consent or authorization of, filing with or other act
by or in respect of any Governmental Authority is required in connection with
the execution, delivery, performance, validity or enforceability of any of the
Contracts by any party thereto other than those which have been duly obtained,
made or performed, are in full force and effect and do not subject the scope of
any such Contract to any material adverse limitation, either specific or general
in nature.
(d) Neither the Borrower nor (to the best of the Borrower's
knowledge) any of the other parties to the Contracts is in default in the
performance or observance of any of the terms thereof.
(e) To the best of the Borrower's knowledge, the right, title
and interest of the Borrower in, to and under the Contracts are not subject to
any defenses, offsets, counterclaims or claims.
(f) The Borrower has delivered to the Lender a complete and
correct copy of each Contract, including all amendments, supplements and other
modifications thereto.
(g) No amount payable to the Borrower under or in connection
with any Contract is evidenced by any Instrument or Chattel Paper which has not
been delivered to the Lender.
(h) None of the parties to any Contract is a Governmental
Authority.
8
12
6.4 COVENANTS. (a) The Borrower will perform and comply in all
material respects with all its obligations under the Contracts.
(b) The Borrower will not amend, modify, terminate or waive
any provision of any Contract in any manner which could reasonably be expected
to materially adversely affect the value of such Contract as Collateral.
(c) The Borrower will exercise promptly and diligently each
and every material right which it may have under each Contract (other than any
right of termination).
(d) The Borrower will deliver to the Lender a copy of each
material demand, notice or document received by it relating in any way to any
Contract that questions the validity or enforceability of such Contract.
7. PROVISIONS RELATING TO INTELLECTUAL PROPERTY.
7.1 REPRESENTATIONS AND WARRANTIES. (a) SCHEDULE 3 lists all
Intellectual Property owned by the Borrower in its own name on the date hereof.
(b) On the date hereof, all material Intellectual Property is
valid, subsisting, unexpired, and enforceable, has not been abandoned and does
not infringe the intellectual property rights of any other Person.
(c) Except as set forth in either SCHEDULE 3, on the date
hereof, none of the Intellectual Property is the subject of any licensing or
franchise agreement pursuant to which the Borrower is the licensor or
franchisor.
(d) No holding, decision or judgment has been rendered by any
Governmental Authority which would limit, cancel or question the validity of, or
the Borrower's rights in, any Intellectual Property in any respect that could
reasonably be expected to have a Material Adverse Effect.
(e) No action or proceeding is pending, or, to the knowledge
of the Borrower, threatened, on the date hereof (1) seeking to limit, cancel or
question the validity of any Intellectual Property or the Borrower's ownership
interest therein, or (2) which, if adversely determined, would have a material
adverse effect on the value of any Intellectual Property.
7.2 COVENANTS. (a) The Borrower (either itself or through
licensees) shall (i) continue to use each material Trademark on each and every
trademark class of goods applicable to its current line as reflected in its
current catalogs, brochures and price lists in order to maintain such Trademark
in full force free from any claim of abandonment for non-use, (ii) maintain as
in the past the quality of products and services offered under such Trademark,
(iii) use such Trademark with the appropriate notice of registration and all
other notices and legends required by applicable Requirements of Law, (iv) not
adopt or use any ▇▇▇▇ which is confusingly similar or a colorable imitation of
such Trademark unless the Lender shall obtain a perfected security interest in
such ▇▇▇▇ pursuant to this Agreement, and (v) not (and not permit any licensee
or sublicensee thereof to) do any act or knowingly omit to do any act whereby
such Trademark may become invalidated or impaired in any way.
(b) The Borrower (either itself or through licensees) shall
not do any act, or omit to do any act, whereby any material Patent may become
forfeited, abandoned or dedicated to the public.
(c) The Borrower (either itself or through licensees) (i)
shall employ each material Copyright and (ii) will not (and will not permit any
licensee or sublicensee thereof to) do any act or knowingly omit to do any act
whereby any material portion of the Copyrights may become invalidated or
9
13
otherwise impaired. The Borrower shall not (either itself or through licensees)
do any act whereby any material portion of the Copyrights may fall into the
public domain.
(d) The Borrower (either itself or through licensees) will not
do any act that knowingly uses any material Intellectual Property to infringe
the intellectual property rights of any other Person.
(e) The Borrower will notify the Lender immediately if it
knows, or has reason to know, that any application or registration relating to
any material Intellectual Property may become forfeited, abandoned or dedicated
to the public, or of any adverse determination or development (including,
without limitation, the institution of, or any such determination or development
in, any proceeding in the United States Patent and Trademark Office, the United
States Copyright Office or any court or tribunal in any country) regarding the
Borrower's ownership of, or the validity of, any material Intellectual Property
or the Borrower's right to register the same or to own and maintain the same.
(f) Whenever the Borrower, either by itself or through any
agent, employee, licensee or designee, shall file an application for the
registration of any Intellectual Property with the United States Patent and
Trademark Office, the United States Copyright Office or any similar office or
agency in any other country or any political subdivision thereof, the Borrower
shall report such filing to the Lender within five Business Days after the last
day of the fiscal quarter in which such filing occurs. Upon request of the
Lender, the Borrower shall execute and deliver, and have recorded, any and all
agreements, instruments, documents, and papers as the Lender may request to
evidence the Lender's security interest in any Copyright, Patent or Trademark
and the goodwill and general intangibles of the Borrower relating thereto or
represented thereby.
(g) The Borrower will take all reasonable and necessary steps,
including, without limitation, in any proceeding before the United States Patent
and Trademark Office, the United States Copyright Office or any similar office
or agency in any other country or any political subdivision thereof, to maintain
and pursue each application (and to obtain the relevant registration) and to
maintain each registration of the material Intellectual Property, including,
without limitation, filing of applications for renewal, affidavits of use and
affidavits of incontestability.
(h) In the event that any material Intellectual Property is
infringed, misappropriated or diluted by a third party, the Borrower shall (i)
take such actions as the Borrower shall reasonably deem appropriate under the
circumstances to protect such Intellectual Property and (ii) if such
Intellectual Property is of material economic value, promptly notify the Lender
after it learns thereof and ▇▇▇ for infringement, misappropriation or dilution,
to seek injunctive relief where appropriate and to recover any and all damages
for such infringement, misappropriation or dilution.
8. REMEDIES.
8.1 NOTICE TO OBLIGORS AND CONTRACT PARTIES. Upon the request
of the Lender at any time after the occurrence and during the continuance of an
Event of Default, the Borrower shall notify obligors on the Receivables and
parties to the Contracts that the Receivables and the Contracts have been
assigned to the Lender and that payments in respect thereof shall be made
directly to the Lender.
8.2 PROCEEDS TO BE TURNED OVER TO LENDER. In addition to the
rights of the Lender specified in subsection 5.4 with respect to payments of
Receivables, if an Event of Default shall occur and be continuing, all Proceeds
received by the Borrower consisting of cash, checks and other near-cash items
shall be held by the Borrower in trust for the Lender, segregated from other
funds of the Borrower, and shall, forthwith upon receipt by the Borrower, be
turned over to the Lender in the exact form received by the Borrower (duly
indorsed by the Borrower to the Lender, if required) and held by the Lender in a
Collateral Account maintained under the sole dominion and control of the Lender.
All Proceeds while held by the Lender in a Collateral Account (or by the
Borrower in trust for the Lender)
10
14
shall continue to be held as collateral security for all the Obligation and
shall not constitute payment thereof until applied as provided in subsection
8.3.
8.3 APPLICATION OF PROCEEDS. At such intervals as may be
agreed upon by the Borrower and the Lender, or, if an Event of Default shall
have occurred and be continuing, at any time at the Lender's election, the
Lender may apply all or any part of Proceeds held in any Collateral Account, in
payment of the Obligation in such order as the Lender may elect, and any part of
such funds which the Lender elects not so to apply and deems not required as
collateral security for the Obligation shall be paid over from time to time by
the Lender to the Borrower or to whomsoever may be lawfully entitled to receive
the same. Any balance of such Proceeds remaining after the Obligation shall have
been paid in full shall be paid over to the Borrower or to whomsoever may be
lawfully entitled to receive the same.
8.4 CODE AND OTHER REMEDIES. If an Event of Default shall
occur and be continuing, the Lender may exercise, in addition to all other
rights and remedies granted to it in this Agreement and in any other instrument
or agreement securing, evidencing or relating to the Obligation, all rights and
remedies of a secured party under the Code or any other applicable law. Without
limiting the generality of the foregoing, the Lender, without demand of
performance or other demand, presentment, protest, advertisement or notice of
any kind (except any notice required by law referred to below) to or upon the
Borrower or any other Person (all and each of which demands, defenses,
advertisements and notices are hereby waived), may in such circumstances
forthwith collect, receive, appropriate and realize upon the Collateral, or any
part thereof, and/or may forthwith sell, lease, assign, give option or options
to purchase, or otherwise dispose of and deliver the Collateral or any part
thereof (or contract to do any of the foregoing), in one or more parcels at
public or private sale or sales, at any exchange, broker's board or office of
the Lender or elsewhere upon such terms and conditions as it may deem advisable
and at such prices as it may deem best, for cash or on credit or for future
delivery without assumption of any credit risk. The Lender shall have the right
upon any such public sale or sales, and, to the extent permitted by law, upon
any such private sale or sales, to purchase the whole or any part of the
Collateral so sold, free of any right or equity of redemption in the Borrower,
which right or equity is hereby waived and released. The Borrower further
agrees, at the Lender's request, to assemble the Collateral and make it
available to the Lender at places which the Lender shall reasonably select,
whether at the Borrower's premises or elsewhere. The Lender shall apply the net
proceeds of any action taken by it pursuant to this Section 8.4, after deducting
all reasonable costs and expenses of every kind incurred in connection therewith
or incidental to the care or safekeeping of any of the Collateral or in any way
relating to the Collateral or the rights of the Lender hereunder, including,
without limitation, reasonable attorneys' fees and disbursements, to the payment
in whole or in part of the Obligation, in such order as the Lender may elect,
and only after such application and after the payment by the Lender of any other
amount required by any provision of law, including, without limitation, Section
9-504(1)(c) of the Code, need the Lender account for the surplus, if any, to the
Borrower. To the extent permitted by applicable law, the Borrower waives all
claims, damages and demands it may acquire against the Lender arising out of the
exercise by them of any rights hereunder. If any notice of a proposed sale or
other disposition of Collateral shall be required by law, such notice shall be
deemed reasonable and proper if given at least 10 days before such sale or other
disposition.
8.5 WAIVER; DEFICIENCY. To the extent permitted by law, the
Borrower waives and agrees not to assert any rights or privileges which it may
acquire under Section 9-112 of the Code. The Borrower shall remain liable for
any deficiency if the proceeds of any sale or other disposition of the
Collateral are insufficient to pay its Obligation and the fees and disbursements
of any attorneys employed by the Lender to collect such deficiency.
9. LENDER'S APPOINTMENT AS ATTORNEY-IN-FACT; LENDER'S PERFORMANCE OF
BORROWER'S OBLIGATIONS.
9.1 POWERS. The Borrower hereby irrevocably constitutes and
appoints the Lender and any officer or agent thereof, with full power of
substitution, as its true and lawful attorney-in-fact with
11
15
full irrevocable power and authority in the place and stead of the Borrower and
in the name of the Borrower or in its own name, for the purpose of carrying out
the terms of this Agreement, to take any and all appropriate action and to
execute any and all documents and instruments which may be necessary or
desirable to accomplish the purposes of this Agreement, and, without limiting
the generality of the foregoing, the Borrower hereby gives the Lender the power
and right, on behalf of the Borrower, without notice to or assent by the
Borrower, to do any or all of the following:
(a) in the name of the Borrower or its own name, or otherwise,
take possession of and indorse and collect any checks, drafts, notes,
acceptances or other instruments for the payment of moneys due under
any Receivable or Contract or with respect to any other Collateral and
file any claim or take any other action or proceeding in any court of
law or equity or otherwise deemed appropriate by the Lender for the
purpose of collecting any and all such moneys due under any Receivable
or Contract or with respect to any other Collateral whenever payable;
(b) in the case of any Intellectual Property, execute and
deliver, and have recorded, any and all agreements, instruments,
documents and papers as the Lender may request to evidence the Lender's
security interests in such Intellectual Property and the goodwill and
general intangibles of the Borrower relating thereto or represented
thereby;
(c) pay or discharge taxes and Liens levied or placed on or
threatened against the Collateral, effect any repairs or any insurance
called for by the terms of this Agreement and pay all or any part of
the premiums therefor and the costs thereof;
(d) execute, in connection with any sale provided for in
subsection 8.4, any indorsements, assignments or other instruments of
conveyance or transfer with respect to the Collateral; and
(e) (1) direct any party liable for any payment under any of
the Collateral to make payment of any and all moneys due or to become
due thereunder directly to the Lender or as the Lender shall direct;
(2) ask or demand for, collect, and receive payment of and receipt for,
any and all moneys, claims and other amounts due or to become due at
any time in respect of or arising out of any Collateral; (3) sign and
indorse any invoices, freight or express bills, bills of lading,
storage or warehouse receipts, drafts against debtors, assignments,
verifications, notices and other documents in connection with any of
the Collateral; (4) commence and prosecute any suits, actions or
proceedings at law or in equity in any court of competent jurisdiction
to collect the Collateral or any portion thereof and to enforce any
other right in respect of any Collateral; (5) defend any suit, action
or proceeding brought against the Borrower with respect to any
Collateral; (6) settle, compromise or adjust any such suit, action or
proceeding and, in connection therewith, give such discharges or
releases as the Lender may deem appropriate; (7) assign any Copyright,
Patent or Trademark (along with the goodwill of the business to which
any such Copyright, Patent or Trademark pertains), throughout the world
for such term or terms, on such conditions, and in such manner, as the
Lender shall in its sole discretion determine; and (8) generally, sell,
transfer, pledge and make any agreement with respect to or otherwise
deal with any of the Collateral as fully and completely as though the
Lender were the absolute owner thereof for all purposes, and do, at the
Lender's option and the Borrower's expense, at any time, or from time
to time, all acts and things which the Lender deems necessary to
protect, preserve or realize upon the Collateral and the Lender's
security interests therein and to effect the intent of this Agreement,
all as fully and effectively as the Borrower might do.
Anything in this subsection to the contrary notwithstanding, the Lender
agrees that it will not exercise any rights under the power of attorney provided
for in this subsection unless an Event of Default shall have occurred and be
continuing.
12
16
9.2 PERFORMANCE BY LENDER OF BORROWER'S OBLIGATIONS. If the
Borrower fails to perform or comply with any of its agreements contained herein,
the Lender, at its option, but without any obligation so to do, may perform or
comply, or otherwise cause performance or compliance, with such agreement.
9.3 BORROWER'S REIMBURSEMENT OBLIGATION. The expenses of the
Lender incurred in connection with actions undertaken as provided in this
Section 9, together with interest thereon at a rate per annum equal to the Prime
Rate (as defined in the Note) plus 200 basis points from the date of payment by
the Lender to the date reimbursed by the Borrower, shall be payable by the
Borrower to the Lender on demand.
9.4 RATIFICATION; POWER COUPLED WITH AN INTEREST. The Borrower
hereby ratifies all that said attorneys shall lawfully do or cause to be done by
virtue hereof. All powers, authorizations and agencies contained in this
Agreement are coupled with an interest and are irrevocable until this Agreement
is terminated and the security interests created hereby are released.
10. DUTY OF LENDER.
The Lender's sole duty with respect to the custody, safekeeping and
physical preservation of the Collateral in its possession, under Section 9-207
of the Code or otherwise, shall be to deal with it in the same manner as the
Lender deals with similar property for its own account. Neither the Lender nor
any of its officers, directors, employees or agents shall be liable for failure
to demand, collect or realize upon any of the Collateral or for any delay in
doing so or shall be under any obligation to sell or otherwise dispose of any
Collateral upon the request of the Borrower or any other Person or to take any
other action whatsoever with regard to the Collateral or any part thereof. The
powers conferred on the Lender hereunder are solely to protect the Lender's
interests in the Collateral and shall not impose any duty upon the Lender to
exercise any such powers. The Lender shall be accountable only for amounts that
it actually received as a result of the exercise of such powers, and neither it
nor any of its officers, directors, employees or agents shall be responsible to
the Borrower for any act or failure to act hereunder, except for their own gross
negligence or willful misconduct.
11. EXECUTION OF FINANCING STATEMENTS.
Pursuant to Section 9-402 of the Code and any other applicable law, the
Borrower authorizes the Lender to file or record financing statements and other
filing or recording documents or instruments with respect to the Collateral
without the signature of the Borrower in such form and in such offices as the
Lender determines appropriate to perfect the security interests of the Lender
under this Agreement. A photographic or other reproduction of this Agreement
shall be sufficient as a financing statement or other filing or recording
document or instrument for filing or recording in any jurisdiction.
12. NOTICES.
All notices or other communications which are required or permitted
hereunder shall be in writing and sufficient if delivered personally or sent by
nationally recognized overnight courier or by registered or certified mail,
postage prepaid, return receipt requested, or by electronic mail, with a copy
thereof to be delivered or sent as provided above or by facsimile or telecopier,
as follows (or to such other address as the party to whom notice is to be given
may have furnished to the other party in writing in accordance herewith):
(a) If to the Lender:
▇▇▇▇.▇▇▇, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇.
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
13
17
(b) If to the Borrower:
InteRosa, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇. ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
All such notices or communications shall be deemed to be received (i) in the
case of personal delivery, nationally recognized overnight courier or registered
or certified mail, on the date of such delivery and (ii) in the case of
facsimile or telecopier or electronic mail, upon confirmed receipt.
13. MISCELLANEOUS.
13.1 AMENDMENTS IN WRITING. None of the terms or provisions of
this Agreement may be waived, amended, supplemented or otherwise modified except
by a written instrument executed by the Borrower and the Lender, PROVIDED that
any provision of this Agreement imposing obligations on the Borrower may be
waived by the Lender in a written instrument executed by the Lender.
13.2 NO WAIVER BY COURSE OF CONDUCT. The Lender shall not by
any act (except by a written instrument pursuant to subsection 13.1), delay,
indulgence, omission or otherwise be deemed to have waived any right or remedy
hereunder or to have acquiesced in any default or Event of Default. No failure
to exercise, nor any delay in exercising, on the part of the Lender, any right,
power or privilege hereunder shall operate as a waiver thereof. No single or
partial exercise of any right, power or privilege hereunder shall preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege. A waiver by the Lender of any right or remedy hereunder on any one
occasion shall not be construed as a bar to any right or remedy which the Lender
would otherwise have on any future occasion.
13.3 REMEDIES CUMULATIVE. The rights and remedies herein
provided are cumulative, may be exercised singly or concurrently and are not
exclusive of any other rights or remedies provided by law.
13.4 SET-OFF. The Borrower hereby irrevocably authorizes the
Lender at any time and from time to time, without notice to the Borrower, any
such notice being expressly waived by the Borrower, to set-off and appropriate
and apply any and all deposits (general or special, time or demand, provisional
or final), in any currency, and any other credits, indebtedness or claims, in
any currency, in each case whether direct or indirect, absolute or contingent,
matured or unmatured, at any time held or owing by the Lender to or for the
credit or the account of the Borrower, or any part thereof in such amounts as
the Lender may elect, against and on account of the obligations and liabilities
of the Borrower to the Lender hereunder and claims of every nature and
description of the Lender against the Borrower, in any currency, whether arising
hereunder, under the Note, this Agreement or otherwise, as the Lender may elect,
whether or not the Lender has made any demand for payment and although such
obligations, liabilities and claims may be contingent or unmatured. The Lender
shall notify the Borrower promptly of any such set-off and the application made
by the Lender of the proceeds thereof, PROVIDED that the failure to give such
notice shall not affect the validity of such set-off and application. The rights
of the Lender under this Section 13.4 are in addition to other rights and
remedies (including, without limitation, other rights of set-off) which the
Lender may have.
13.5 SEVERABILITY. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
14
18
13.6 SECTION HEADINGS. The Section and subsection headings
used in this Agreement are for convenience of reference only and are not to
affect the construction hereof or be taken into consideration in the
interpretation hereof.
13.7 INTEGRATION. This Agreement and the Note represent the
agreement of the Borrower and the Lender with respect to the subject matter
hereof and thereof, and there are no promises, undertakings, representations or
warranties by the Lender relative to subject matter hereof and thereof not
expressly set forth or referred to herein or in the Note.
13.8 SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon the successors and assigns of the Borrower and shall inure to the benefit
of the Lender and its successors and assigns; PROVIDED that the Borrower may not
assign, transfer or delegate any of its rights or obligations under this
Agreement without the prior written consent of the Lender.
13.9 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF COLORADO.
13.10 SUBMISSION TO JURISDICTION; WAIVERS. The Borrower hereby
irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the Note to which it is a party, or
for recognition and enforcement of any judgment in respect thereof, to the
non-exclusive general jurisdiction of the courts of the State of Colorado, the
courts of the United States of America in Colorado and appellate courts from any
thereof;
(b) consents that any such action or proceeding may be brought
in such courts and waives any objection that it may now or hereafter have to the
venue of any such action or proceeding in any such court or that such action or
proceeding was brought in an inconvenient court and agrees not to plead or claim
the same;
(c) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or certified
mail (or any substantially similar form of mail), postage prepaid, to such
Grantor at its address referred to in Section 12 or at such other address of
which the Lender shall have been notified pursuant thereto;
(d) agrees that nothing herein shall affect the right to
effect service of process in any other manner permitted by law or shall limit
the right to ▇▇▇ in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any
right it may have to claim or recover in any legal action or proceeding referred
to in this Section any special, exemplary, punitive or consequential damages.
13.11 WAIVER OF JURY TRIAL. THE BORROWER HEREBY IRREVOCABLY
AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING
RELATING TO THIS AGREEMENT OR THE NOTE AND FOR ANY COUNTERCLAIM THEREIN.
13.12 ACKNOWLEDGEMENTS. The Borrower hereby acknowledges that:
(a) it has been advised by counsel in the negotiation,
execution and delivery of this Agreement and the Note to which it is a party;
(b) the Lender does not have any fiduciary relationship with or duty to the
Borrower arising out of or in connection with this Agreement or the Note, and
the
15
19
relationship between the Borrower, on the one hand, and the Lender, on the other
hand, in connection herewith or therewith is solely that of debtor and creditor;
and
(c) no joint venture is created hereby or by the Note or
otherwise exists by virtue of the transactions contemplated hereby between the
Lender and the Borrower.
13.13 RELEASES. At such time as the Obligation shall have been
paid in full and the Note shall be cancelled, the Collateral shall be released
from the Liens created hereby, and this Agreement and all obligations (other
than those expressly stated to survive such termination) of the Lender and the
Borrower hereunder shall terminate, all without delivery of any instrument or
performance of any act by any party, and all rights to the Collateral shall
revert to the Borrower. At the request and sole expense of the Borrower
following any such termination, the Lender shall deliver to the Borrower any
Collateral held by the Lender hereunder, and promptly execute and deliver to the
Borrower such documents as the Borrower shall reasonably request to evidence
such termination.
IN WITNESS WHEREOF, the undersigned has caused this Security Agreement
to be duly executed and delivered as of the date first above written.
INTEROSA, INC. ▇▇▇▇.▇▇▇, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
--------------------------------- --------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Chief Executive Officer Title:
16