Exhibit 10.2
MASTER LOAN AGREEMENT
x THIS MASTER LOAN AGREEMENT (the "Agreement") is entered into as of July
22, 2004 (the "Effective Date"), by and among SBS INTERACTIVE, CO., a Florida
corporation (the "Company"), SBS INTERACTIVE, INC., a Nevada corporation (the
"Subsidiary"; each of the Company and the Subsidiary is referred to herein as a
"Borrower," and collectively as the "Borrowers"), and ▇▇▇▇▇▇ ▇▇▇▇ (the
"Lender").
WHEREAS, prior to the Effective Date, the Borrowers requested the Lender
to advance to the Borrowers, and the Lender advanced to the Borrowers, a loan in
the original principal amount of $100,000 (the "Current Loan") to be used by
Borrowers for working capital purposes;
WHEREAS, the Borrowers and the Lender contemplate that, in the future, the
Borrowers may make additional requests for loans from the Lender, and the Lender
may consider such requests and make such loans (each, a "Future Loan", and
collectively, the "Future Loans"); and
WHEREAS, the Borrowers and the Lender have agreed to memorialize their
agreements regarding the Current Loan and Future Loans in the manner set forth
in this Agreement.
NOW, THEREFORE, in consideration of the foregoing recitals, which are
hereby incorporated into, and made a part of, this Agreement, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally bound, hereby agree as
follows:
1. Loans; Security.
(a) Current Loan. Each Borrower has authorized, ratified and
approved the Current Loan on the terms and conditions set forth in this
Agreement and in that certain Secured Convertible Promissory Note, dated as of
the Effective Date, by the Borrowers in favor of the Lender, a copy of which is
attached hereto as Exhibit A (the "Current Loan Note"). Each Borrower is
executing and delivering the Current Loan Note to the Lender contemporaneously
with the execution and delivery of this Agreement by the Borrowers and the
Lender.
(b) Future Loans. In the event (i) upon the request of the
Borrowers, the Lender agrees to make any Future Loans to the Borrowers, and (ii)
the Borrowers and the Lender agree that such Future Loans shall be on the terms
and conditions set forth in this Agreement and the other "Financing Documents"
(as defined herein), then in such case, the Borrowers and the Lender shall
memorialize such agreement by the Borrowers executing and delivering to the
Lender a Secured Convertible Promissory Note in the form attached hereto as
Exhibit B (collectively, the "Future Loan Notes"). Nothing herein shall
constitute, or be deemed to constitute, a commitment or obligation of the Lender
to make any Future Loans to the Borrower.
(c) Security. As security for the payment and performance by the
Borrowers of all indebtedness, liabilities, obligations, covenants and duties of
the Borrowers from time to time owed to the Lender (whether absolute or
contingent, now existing, or hereafter incurred or arising) under the Financing
Documents (collectively, the "Loan Obligations"), each of the Borrowers is
granting a first priority continuing security interest in all of the
"Collateral" as defined in, and on the terms and conditions set forth in, that
certain Pledge and Security Agreement, dated as of the Effective Date, by and
among the Borrowers and the Lender, a copy of which is attached hereto as
Exhibit C (the "Security Agreement," and collectively with this Agreement, the
Current Loan Note, the Future Loan Notes, if any, and the "Warrants" (as defined
in the Current Loan Note and/or the Future Loan Notes, if any), the "Financing
Documents").
(d) Ranking. The Loan Obligations shall rank senior in right of
payment to all indebtedness, liabilities and obligations of the Company and/or
the Subsidiary, and to all classes of capital stock of the Company and/or the
Subsidiary, in each case, whether existing on the Effective Date or thereafter
created.
2. Representations by Borrowers. The Borrowers, jointly and severally,
hereby represent and warrant to the Lender as follows, as of the Effective Date
and as of the date each Future Loan Note is executed and delivered by the
Borrowers to the Lender:
(i) The Company is duly organized, validly existing and in good
standing under the laws of the State of Florida. The Subsidiary is duly
organized, validly existing and in good standing under the laws of the State of
Nevada.
(ii) Each Borrower has all requisite power and authority (corporate
or otherwise) to execute, deliver and perform this Agreement and the other
Financing Documents, and the transactions contemplated thereby, and the
execution, delivery and performance by each Borrower of this Agreement and the
other Financing Documents has been duly authorized by all requisite action by
each Borrower including, in each case, approval by each Disinterested Director,
and this Agreement and the other Financing Documents, when executed and
delivered by such Borrower, constitutes a valid and binding obligation of such
Borrower, enforceable against such Borrower in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization, fraudulent
conveyance or other similar laws affecting creditors' rights and remedies
generally, and subject, as to enforceability, to general principles of equity
(regardless of whether enforcement is sought in a proceeding at law or in
equity).
(iii) This Agreement and the other Financing Documents have been
duly executed and delivered by each Borrower.
2
(iv) The Company, the Subsidiary and their respective boards of
directors have taken all necessary steps to render any "business combination,"
"moratorium," "control share" or other state anti-takeover statute or regulation
applicable to the Company or the Subsidiary inapplicable to the Lender, this
Agreement, the other Financing Documents and the transactions contemplated
therein, including the issuance of shares of Common Stock on the terms and
conditions set forth therein.
(v) The Lender may be deemed an "interested shareholder" of the
Company as such term is defined in Section 607.0901 of the Florida Business
Corporation Act; ▇▇▇▇ ▇▇▇▇▇▇▇ has been a member of the Board of Directors since
October 29, 2002 and ▇▇▇ Ash has been a member of the Board of Directors since
September 30, 2003 and was elected to fill a vacancy on the Board of Directors
by ▇▇▇▇ ▇▇▇▇▇▇▇, who, at the time of the election of ▇▇▇ Ash to the Board of
Directors, was the sole member of the Board; and each of ▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇
Ash is a "disinterested director," as such term is defined in Section 607.0901
of the Florida Business Corporation Act (each, a "Disinterested Director"), with
respect to the Lender.
(vi) The shares of common stock of the Company ("Common Stock")
issuable upon conversion of the Current Loan Note and the Future Loan Notes, if
any, and upon exercise of the Warrants, will be duly and validly issued, fully
paid and nonassessable, and free and clear of any and all liens and
encumbrances.
(vii) The authorized capital stock of the Company, immediately prior
to the Effective Date, consists of 50,000,000 shares of Common Stock, par value
$0.001 per share, 20,279,557 shares of which are issued and outstanding. The
authorized capital stock of the Company on and immediately after the Effective
Date (taking into account all transactions occurring on and as of the Effective
Date) shall consist of 50,000,000 shares of Common Stock, par value $0.001 per
share, 27,592,890 shares of which will be issued and outstanding. Except for the
Subsidiary, the Company has no subsidiaries. The Subsidiary has no subsidiaries.
The Company owns all of the issued and outstanding shares of capital stock of
the Subsidiary, and such shares are duly authorized, validly issued, full paid
and nonassessable, and free of any liens or encumbrances. Except as set forth on
Schedule 1 hereof, neither the Company nor the Subsidiary (i) has any authorized
or outstanding subscription, warrant, option, convertible security or other
right (contingent or otherwise) to purchase or acquire any shares of capital
stock of the Company or the Subsidiary, (ii) is committed to issue any
subscription, warrant, option, convertible security or other such right or to
issue or distribute to holders of any shares of its capital stock any evidences
of indebtedness or assets of the Company or the Subsidiary, and/or (iii) has any
obligation (contingent or otherwise) to purchase, redeem or otherwise acquire
any shares of its capital stock or any interest therein or to pay any dividend
or make any other distribution in respect thereof. Except as set forth on
Schedule 1 hereof, no person or entity is entitled to any preemptive or similar
right with respect to the issuance of any capital stock of the Company or the
Subsidiary. The Borrowers have provided copies of their respective Articles of
Incorporation and Bylaws, in each case, as amended through, and in effect on,
the Effective Date.
3
(viii) The execution, delivery and performance of this Agreement and
the other Financing Documents do not and will not (with or without the passage
of time or the giving of notice): (a) violate or conflict with the articles of
incorporation or bylaws of the Company or the Subsidiary; (b) violate or
conflict with any law, regulation, judgment or order applicable to the Company
or the Subsidiary; (c) violate any rule of any self-regulatory organization
applicable to the Company or the Subsidiary; (d) violate or conflict with,
result in a breach of, constitute a default or otherwise cause any loss of
benefit under any material agreement or other material obligation to which the
Company and/or the Subsidiary is a party, or by which the Company, the
Subsidiary and/or any of their respective properties are otherwise bound; (e)
result in the creation of any encumbrance pursuant to, or give rise to any
penalty, acceleration of remedies, right of termination or otherwise cause any
alteration of any rights or obligations of any party under any contract to which
the Company and/or the Subsidiary is a party or by which the Company, the
Subsidiary and/or any of their respective properties are otherwise bound; or (f)
require any consent, notice, authorization, waiver by or filing with any
governmental agency, administrative body or other third party, other than the
filing of a Form D with the Securities and Exchange Commission (the
"Commission") and any state securities commission.
(ix) The Company's periodic reports filed pursuant to the Securities
Exchange Act of 1934, as amended (the "Periodic Reports"), comply in all
material respects with the provisions of the Securities Exchange Act of 1934 as
amended (the "Exchange Act"), and the rules promulgated thereunder and do not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
(in light of the circumstances under which they were made) not misleading. The
Periodic Reports include all certifications and statements required, if any, by
(A) the Commission's Order dated June 27, 2002 pursuant to Section 21(a)(1) of
the Exchange Act (File No. 4-460), (B) Rule 13a-14 or 15d-14 under the Exchange
Act, and (C) 18 U.S.C. ss. 1350 (Section 906 of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002),
and each of such certifications and statements contain no qualifications or
exceptions to the matters certified therein other than a knowledge
qualification, permitted under such provision, and have not been modified or
withdrawn, and neither the Company, the Subsidiary nor any of their respective
officers has received any notice from the Commission or any other governmental
body questioning or challenging the accuracy, completeness, form or manner of
filing or submission of such certifications or statements. The Company is in
material compliance with all of the provisions of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of
2002, and the provisions of such Exchange Act and the Securities Act of 1933, as
amended, relating thereto, applicable to the Company. The financial statements
(including related notes, if any) contained in the Periodic Reports: (i)
complied as to form in all material respects with the published rules and
regulations of the Commission applicable thereto; (ii) were prepared in
accordance with United States generally accepted accounting principles applied
on a consistent basis throughout the periods covered; and (iii) fairly presented
in all material respects the consolidated financial position of the Company and
the Subsidiary as of the respective dates thereof and the consolidated results
of operations and cash flows of the Company and the Subsidiary for the periods
covered thereby.
(x) The Security Agreement creates a valid security interest in
favor of the Lender in the Collateral, which security interest will, when
perfected, be and remain superior and prior in right to all claims of creditors
of the Borrowers and to all other security interests, liens and encumbrances
with respect to the Collateral.
4
(xi) As of the date of this Agreement, and as a condition of the
execution and delivery of this Agreement by the Lender, the officers of the
Company have delivered an officers' certificate (the "Officers' Certificate") to
the Lender certifying certain documents and actions of the Board of Directors
and the officer of the Subsidiary has delivered an officer's certificate (the
"Subsidiary Officers' Certificate") to the Lender certifying certain documents
and actions of the board of directors of the Subsidiary.
(xii) The Borrowers are now and shall continue to be the sole owners
of all the Collateral free and clear of any and all liens, encumbrances,
security interests and claims, except for the liens granted to the Lender or
under the Financing Documents. The Lender now has, and will continue to have a
valid, perfected, first priority continuing and enforceable security interest in
all of the Collateral. None of the Collateral now is or will be affixed to any
real property in such a manner, or with such intent, as to become a fixture.
Each Borrower is not and will not become a lessee under any real property lease
pursuant to which the lessor may obtain any rights in any of the Collateral, and
no such lease now prohibits, restrains, impairs or will prohibit, restrain or
impair each Borrower's right to remove any Collateral from the leased premises.
The Borrowers are fully authorized to sell, transfer, pledge and/or grant a
security interest in each and every item of the Collateral to the Lender. All
documents and agreements related to the Collateral are true and correct and in
all respects what they purport to be. All signatures and endorsements that
appear thereon are genuine and all signatories and endorsers have full capacity
to contract. None of the transactions underlying or giving rise to the
Collateral violate any applicable state or federal laws or regulations. All
documents relating to the Collateral are legally sufficient under such laws or
regulations and shall be legally enforceable in accordance with their terms.
(xiii) All "Copyrights," "Copyright Licenses," "Patents" and "Patent
Licenses" (each, as defined in the Security Agreement) owned by each Borrower in
its own name as of the Effective Date are listed on Schedule 2 attached hereto
and made a part hereof, which listing includes all "Trademarks" and "Trademark
Licenses" (each, as defined in the Security Agreement) owned by each Borrower in
its own name as of the Effective Date. Each Copyright, Patent and Trademark is
valid, subsisting, unexpired, enforceable, and has not been abandoned. Except as
set forth on Schedule 2, none of such Copyrights, Patents and Trademarks is the
subject of any licensing or franchise agreement. No holding, decision or
judgment has been rendered by any governmental authority which would limit,
cancel or question the validity of any Copyright, Patent or Trademark. No action
or proceeding is pending seeking to limit, cancel or question the validity of
any Copyright, Patent or Trademark.
(xiv) No representation or warranty by the Company and/or the
Subsidiary contained in this Agreement and/or any of the other Financing
Documents, or any information in any schedule, instrument, or document furnished
or to be furnished by the Company and/or the Subsidiary (or any of their
respective officers, directors, employees, agents or representatives) pursuant
hereto or thereto (including, but not limited to, the Officers' Certificate and
the Subsidiary Officer's Certificate), contains any untrue statement of a
material fact or omits or fails to state any material fact necessary in order to
make the statements contained therein, in light of the circumstances in which
made, not misleading.
5
3. Borrowers' Covenants.
(a) Affirmative Covenants. As long as any of the Loan Obligations
are outstanding, the Borrowers shall ensure that:
(1) The Company's periodic reports to be filed pursuant to the
Exchange Act (the "Periodic Reports") comply in all material respects with the
provisions of the Exchange Act and the rules promulgated thereunder and do not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
(in light of the circumstances under which they were made) not misleading.
(2) The Periodic Reports include all certifications and
statements required, if any, by (i) the Commission's Order dated June 27, 2002
pursuant to Section 21(a)(1) of the Exchange Act (File No. 4-460), (ii) Rule
13a-14 or 15d-14 under the Exchange Act, and (iii) 18 U.S.C. ss. 1350 (Section
906 of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002), and each of such certifications and
statements contain no qualifications or exceptions to the matters certified
therein other than a knowledge qualification, permitted under such provision.
(3) Each Borrower complies with all of the provisions of the
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002, and the provisions of the Exchange Act and the
Securities Act of 1933, as amended, relating thereto, applicable to such
Borrower.
(4) The financial statements (including related notes, if any)
contained in the Periodic Reports: (i) comply as to form in all material
respects with the published rules and regulations of the Commission applicable
thereto; (ii) are prepared in accordance with United States generally accepted
accounting principles applied on a consistent basis throughout the periods
covered; and (iii) fairly present in all material respects the consolidated
financial position of the Company and the Subsidiary as of the respective dates
thereof and the consolidated results of operations and cash flows of the Company
and the Subsidiary for the periods covered thereby.
(5) Each Borrower keeps adequate records and books of account
with respect to its business activities and properties, in which proper entries
are made in accordance with customary accounting practices reflecting all
financial transactions.
(6) Promptly after the sending or filing thereof, as the case
may be, of copies of any Periodic Reports, proxy or information statements,
registration statements or other documents with the Commission or any
governmental authority which may be substituted therefore, the Company shall
provide such documents to the Lender.
(7) The Borrowers comply with all statutes and government
regulations and pay all taxes (including withholdings), assessments,
governmental charges or levies, or claims for labor, supplies, rent and other
obligations made against it or its property which, if unpaid, might become a
lien or charge against the Borrowers or their properties.
6
(8) Upon reasonable notice and during normal business hours,
the Lender, by or through any of its officers, and/or accountants, is permitted
to enter the offices and plants of the Borrowers to examine or inspect any of
the properties, Collateral, books and records or extracts therefrom relating to
the Borrowers' financial or business conditions, to make copies of such books
and records or extracts therefrom, and to discuss the affairs, finances and
accounts thereof with the Borrowers all at such reasonable times and as often as
the Lender or any such representative of the Lender may reasonably request.
(9) Each Borrower maintains its corporate existence and
complies with all applicable statutes, rules and regulations, and maintains its
properties in good repair, working order and operating condition; the Borrowers
shall immediately notify the Lender of any event causing material loss to the
value of their respective properties and assets.
(10) The Borrowers defend the Lender and the Collateral
against the claims of all persons and entities other than Lender; whenever any
Collateral is located upon premises in which any third party has an interest
(whether as owner, mortgagee, beneficiary under a deed of trust, lien or
otherwise), the Borrowers shall, whenever requested by the Lender, use their
best efforts to cause such third party to execute and deliver to the Lender, in
form acceptable to the Lender, such waivers and subordinations as the Lender
shall specify, so as to ensure that the Lender's rights in the Collateral are,
and will continue to be, superior to the rights of any such third party; the
Borrowers shall keep in full force and effect, and will comply with all the
terms of, any lease of real property where any of the Collateral now or in the
future may be located.
(11) The Borrowers do whatever the Lender may request from
time to time by way of obtaining, executing, delivering and filing financing
statements, agreements, assignments, landlord's or mortgagee's waivers, and
other notices and amendments and renewals thereof; the Borrowers shall take any
and all steps and observe such formalities as the Lender may request in order to
create and maintain a valid and enforceable first lien upon, pledge of, and
first priority security interest in, any and all of the Collateral; the Lender
is authorized to file financing statements without the signature of the
Borrowers and to execute and file such financing statements on behalf of the
Borrowers as specified by the applicable Uniform Commercial Code to perfect or
maintain the Lender's security interest in all of the Collateral.
(12) The Borrowers provide to the Lender, within one business
day after becoming aware of the occurrence or existence of an Event of Default
or a condition which would constitute an Event of Default but for the giving of
notice or passage of time on both, notice in writing of such Event of Default or
condition.
7
(14) No Borrower shall file any application for the issuance
of a patent or trademark with the United States Patent and Trademark Office or
any similar office or agency in the United States or any other country, unless
the Borrowers have notified the Lender in writing of such action and, upon
request of the Lender, the Borrowers shall execute and deliver to the Lender any
and all assignments, agreements, instruments, documents and such other papers as
may be requested by the Lender to effect an assignment of such application to
the Lender; no Borrower shall do any act, nor omit to do any act, whereby any
such patents or trademarks, once granted and which remain useful, in any
material respect, to the Borrowers' businesses, may become abandoned or
unenforceable, and each of the Borrowers shall notify the Lender immediately if
it knows or has reason to know of any reason why any application, material to
the Borrowers' businesses, may become abandoned, invalidated or the subject of
any suit; each Borrower shall render any assistance reasonably necessary to the
Lender without cost to the Lender in any proceeding before the United States
Patent and Trademark Office or any similar office or agency in the United States
or any other country to maintain each application, material to the Borrowers'
businesses, for any patents, copyrights, trademarks or other intellectual
property, including, without limitation, the filing of all renewals and the
payment of all annuities.
(b) Negative Covenants. As long as any of the Loan Obligations are
outstanding, the Borrowers shall not, unless otherwise consented to in writing
by the Lender:
(1) Issue any shares of capital stock, or rights, options or
warrants to purchase capital stock, or securities convertible into capital
stock; provided, however, that, without such consent, the Company shall be
permitted to issue, in the aggregate, up to 350,000 shares of Common Stock of
the Company (subject to adjustment for stock splits, combinations and similar
transactions).
(2) Merge or consolidate with any person or entity, or convert
into any other entity; nor acquire all or any substantial part of the properties
of any person or entity; nor sell, lease or otherwise dispose of any of their
respective properties, except for sales of inventory in the ordinary course of
business.
(3) Make any loans or other advances of money to any person or
entity, other than (a) advances of salary to employees, (b) extensions of trade
credit, (c) deposits with financial institutions, and (d) prepaid expenses, in
each case, in the ordinary course of business.
(4) Create, incur, assume, or suffer to exist, any
indebtedness, except for trade credit in the ordinary course of business.
(5) Incur or permit to exist any lien or encumbrance on or
against any of the Collateral, except liens in favor of the Lender as
contemplated in the Financing Documents.
(6) Declare or make any dividends or other distributions with
respect to capital stock, or redeem or repurchase any capital stock.
8
(7) Enter into, or be a party to, any transaction with any
affiliate of the Company or the Subsidiary or any holder of any capital stock of
the Company or the Subsidiary.
(8) Create or acquire any subsidiary or joint venture
arrangement.
(9) File any UCC-3 or similar termination statement affecting
any UCC-1 or similar financing statement in favor of the Lender.
(10) Agree to, or permit to occur, any amendment, supplement
or addition to the Company's or the Subsidiary's charter, articles or
certificate of incorporation, bylaws or other organizational documents.
(c) Reservation of Shares. As long as any of the Loan
Obligations are outstanding, the Company shall, at all times, reserve and keep
available out of its authorized but unissued shares of Common Stock for the
purpose of effecting the conversion of the Current Loan Note and the Future Loan
Notes, if any, and exercise of the Warrants, such number of its duly authorized
shares of Common Stock as shall be sufficient to effect such conversion and
exercise. If, at any time, the number of authorized but unissued shares of
Common Stock shall not be sufficient to effect such conversion and exercise, the
Company shall forthwith take such action as may be necessary to increase its
authorized but unissued shares of Common Stock to such number of shares as shall
be sufficient for such purposes. The Company shall obtain any authorization,
consent, approval or other action by, or make any filing with, any court or
administrative body that may be required under applicable state securities laws
in connection with the issuance of shares of Common Stock upon such conversion
and exercise.
(d) Indemnification. The Borrowers, jointly and severally,
shall indemnify and hold harmless the Lender, his heirs, executors, personal
representatives, affiliates, successors and assigns, from and against any and
all losses, liabilities, damages, penalties, costs, fees and expenses (including
legal fees and disbursements) which may result, directly or indirectly, from the
Borrowers' misrepresentations or misstatements contained in this Agreement
and/or the other Financing Documents, or breaches thereof.
4. Events of Default. Any one or more of the following shall
constitute an "Event of Default" as such term is used herein, without regard to
the reason and whether it shall be voluntary or involuntary or effected by
operation of law or pursuant to any judgment, decree or order of any court, or
any order, rule or regulation of any administrative or governmental body:
(a) Payments. Any default in the payment of the principal of,
interest on, or liquidated damages in respect of, the Current Loan Note or the
Future Loan Notes, if any, as and when the same shall become due and payable
(whether by acceleration or otherwise) which default is not cured within five
days of notice of such default sent by the Lender.
9
(b) Covenants. Any Borrower shall fail to observe or perform any
other covenant, agreement or warranty contained in, or otherwise commit any
breach of, any of the Financing Documents.
(c) Representations and Warranties. Any representation, warranty or
statement made in this Agreement or any other Financing Document, or any other
material information furnished by the Company or the Subsidiary to the Lender,
shall have been false or misleading in any material respect at the time it was
made.
(d) Solvency, Etc. Any Borrower shall commence, or there shall be
commenced against any Borrower, a case under any applicable bankruptcy or
insolvency laws as now or hereafter in effect, or any Borrower commences any
other proceeding under any reorganization, arrangement, adjustment of debt,
relief of debtors, dissolution, insolvency or liquidation or similar law of any
jurisdiction whether now or hereafter in effect relating to any Borrower, or
there is commenced against any Borrower any such bankruptcy, insolvency or other
proceeding which remains undismissed for a period of 60 days; or any Borrower is
adjudicated insolvent or bankrupt; or any order of relief or other order
approving any such case or proceeding is entered; or any Borrower suffers any
appointment of any custodian or the like for it or any substantial part of its
property which continues undischarged or unstayed for a period of 60 days; or
any Borrower makes a general assignment for the benefit of creditors; or any
Borrower shall fail to pay, or shall state that it is unable to pay, or shall be
unable to pay, its debts generally as they become due; or any Borrower shall
call a meeting of its creditors with a view to arranging a composition,
adjustment or restructuring of its debts; or any Borrower shall by any act or
failure to act expressly indicate its consent to, approval of or acquiescence in
any of the foregoing; or any corporate or other action is taken by any Borrower
for the purpose of effecting any of the foregoing.
(e) Other Defaults. Any Borrower shall default in any of its
obligations under any other mortgage, credit agreement or other facility,
indenture agreement, factoring agreement or other instrument under which there
may be issued, or by which there may be secured or evidenced, any indebtedness
for borrowed money or money due under any long term leasing or factoring
arrangement of the Company in an amount exceeding $10,000, whether such
indebtedness now exists or shall hereafter be created, and such default shall
result in such indebtedness becoming or being declared due and payable prior to
the date on which it would otherwise become due and payable.
(f) Change of Control. The Company shall be a party to any "Change
of Control Transaction" (as defined herein). For purposes hereof, "Change of
Control Transaction" means the occurrence after the Effective Date of any of (i)
an acquisition by an individual or legal entity or "group" (as described in Rule
13d-5(b)(1) promulgated under the Exchange Act) of effective control (whether
through legal or beneficial ownership of capital stock of the Company, by
contract or otherwise) of in excess of 40% of the voting securities of the
Company, or (ii) a replacement at one time or within a three year period of more
than one-half of the members of the Company's board of directors which is not
approved by a majority of those individuals who are members of the board of
directors on the Effective Date (or by those individuals who are serving as
members of the board of directors on any date whose nomination to the board of
directors was approved by a majority of the members of the board of directors
who are members on the Effective Date), or (iii) the execution by the Company of
an agreement to which the Company is a party or by which it is bound, providing
for any of the events set forth above in (i) or (ii).
10
(g) Judgments. A final judgment for the payment of money aggregating
in excess of $10,000 shall be rendered against the Company or the Subsidiary,
and such judgment shall not be discharged within a period of sixty days.
(i) Challenge to Enforceability. The validity or enforceability of
any provision of this Agreement or the other Financing Documents shall be
contested by the Company or the Subsidiary, or by any stockholder or officer of
the Company or the Subsidiary, or the Company or the Subsidiary shall deny that
it has any further liability or obligation hereunder or thereunder.
5. Lender's Remedies Upon an Event of Default.
(a) Acceleration. Upon the occurrence of any Event of Default
hereunder, the Lender, upon written notice to the Borrower, may accelerate the
maturity of all Loan Obligations, whereupon all such Loan Obligations shall
become immediately due and payable in full without any presentment or demand and
without any further or other notice of any kind, all of which are hereby
expressly waived by the Borrowers.
(b) Other Remedies. Upon the occurrence of any Event of Default
hereunder, the Lender may exercise any and all other rights, powers or remedies
as may be provided in this Agreement or in the other Financing Documents, and/or
as may be provided at law or in equity. No right or remedy conferred upon or
reserved to the Lender under this Agreement or any other Financing Document is
intended to be exclusive of any other right or remedy, and every right and
remedy shall be cumulative and in addition to every other right or remedy given
hereunder or now or hereafter existing under any applicable law. Every right and
remedy given by this Agreement or by applicable law to the Lender may be
exercised from time to time and as often as may be deemed expedient by the
Lender. Each Borrower shall be and remain jointly, severally and unconditionally
liable, for all of the Loan Obligations remaining after crediting to the
Borrowers any net proceeds received by the Lender following exercise of any of
its rights and remedies hereunder. Nothing contained in this Agreement or any of
the other Financing Documents shall be construed as requiring the Lender to take
any particular enforcement or remedial action or combination of enforcement or
remedial actions at any time.
6. Reimbursement of Lender's Fees and Expenses. The Borrowers,
jointly and severally, shall be responsible for, and shall pay or reimburse the
Lender for, the fees and expenses of the Lender's legal counsel relating to the
preparation and negotiation of this Agreement and the other Financing Documents,
the consummation of the transactions contemplated hereby, all filings related
thereto with the Commission or any other governmental agency, any and all
disputes arising out of the Agreement, the other Financing Documents and/or such
transactions, and the collection of any and all amounts due to the Lender under,
and the enforcement of, the Financing Documents.
11
7. Entire Agreement; Amendments and Waivers. This Agreement and the
other Financing Documents constitute the entire agreement between the parties
pertaining to the subject matter hereof, and supersede all prior and
contemporaneous agreements, understandings, negotiations and discussions of the
parties, whether oral or written. The provisions of this Agreement may not be
amended, modified or supplemented, and waivers or consents to departures from
the provisions hereof may not be given, unless the same shall be in writing and
signed by the Company, the Subsidiary and the Lender.
8. Notice. Any and all notices or other communications or deliveries
to be provided by the Lender hereunder or under any of the other Financing
Documents shall be in writing and delivered personally, by facsimile or sent by
a nationally recognized overnight courier service, addressed to the Company (or
in the case of the Subsidiary, c/o of the Company) at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇, facsimile number (▇▇▇) ▇▇▇-▇▇▇▇, Attn:
▇▇▇▇ ▇▇▇▇▇▇▇ or such other address or facsimile number as the Company may
specify for such purposes by notice to the Lender delivered in accordance with
this Section. Any and all notices or other communications or deliveries to be
provided by the Company and/or the Subsidiary hereunder shall be in writing and
delivered personally, by facsimile or sent by a nationally recognized overnight
courier service addressed to the Lender c/o ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
& ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, facsimile number 410-244-7742, or
such other address or facsimile number as the Lender may specify for such
purposes by notice to the Borrowers delivered in accordance with this Section.
Any notice or other communication or deliveries hereunder shall be deemed given
and effective on the earliest of (i) the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile telephone number
specified in this Section prior to 5:30 p.m. (Baltimore, Maryland time), (ii)
the date after the date of transmission, if such notice or communication is
delivered via facsimile at the facsimile telephone number specified in this
Section later than 5:30 p.m. (Baltimore, Maryland time) on any date and earlier
than 11:59 p.m. (Baltimore, Maryland time) on such date, (iii) the second
"Business Day" (as defined herein) following the date of mailing, if sent by
nationally recognized overnight courier service, or (iv) upon actual receipt by
the party to whom such notice is required to be given. For purposes hereof,
"Business Day" shall mean any day except Saturday, Sunday and any day which
shall be a United States federal legal holiday.
9. Severability. If any term, provision, or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, illegal,
void or unenforceable, the remainder of the terms, provisions, covenants and
restrictions set forth herein shall remain in full force and effect and shall in
no way be affected, impaired or invalidated, and the parties hereto shall use
their reasonable efforts to find and employ an alternative means to achieve the
same or substantially the same result as that contemplated by such term,
provision, covenant or restriction. It is hereby stipulated and declared to be
the intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable.
12
10. Governing Law; Jurisdiction; Waiver of Jury Trial. All questions
concerning the construction, validity, enforcement and interpretation of this
Agreement and/or the other Financing Documents shall be governed by and
construed and enforced in accordance with the internal laws of the State of New
York, without regard to the principles of conflicts of law thereof. Each party
agrees that all legal proceedings concerning the interpretations, enforcement
and defense of the transactions contemplated by any of the Financing Documents
(whether brought against a party hereto or its respective affiliates, directors,
officers, shareholders, employees or agents) shall be commenced in the United
States District Court for the Northern District of Maryland or any state court
located in Baltimore, Maryland (the "Applicable Courts"). Each party hereto
hereby irrevocably submits to the exclusive jurisdiction of the Applicable
Courts for the adjudication of any dispute hereunder or in connection herewith
or with any transaction contemplated hereby or discussed herein (including with
respect to the enforcement of any of the Financing Documents), and hereby
irrevocably waives, and agrees not to assert in any suit, action or proceeding,
any claim that it is not personally subject to the jurisdiction of any such
court, or such Applicable Courts are improper or inconvenient venue for such
proceeding. Each party hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof via registered or certified mail or overnight delivery
(with evidence of delivery) to such party at the address in effect for notices
to it under this Agreement and agrees that such service shall constitute good
and sufficient service of process and notice thereof. Nothing contained herein
shall be deemed to limit in any way any right to serve process in any manner
permitted by law. Each party hereto hereby irrevocably waives, to the fullest
extent permitted by applicable law, any and all right to trial by jury in any
legal proceeding arising out of or relating to the Financing Documents or the
transactions contemplated hereby.
11. Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and permitted assigns of each of
the parties. The Borrowers may not assign any of their rights or obligations
hereunder without the prior written consent of the Lender. The Lender may assign
its respective rights hereunder and/or the other Financing Documents.
12. Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same Agreement. In
the event that any signature is delivered by facsimile transmission, such
signature shall create a valid binding obligation of the party executing (or on
whose behalf such signature is executed) the same with the same force and effect
as if such facsimile signature were the original thereof.
13. Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
[THIS SPACE INTENTIONALLY LEFT BLANK]
13
IN WITNESS WHEREOF, each party hereto has executed this Agreement, or
caused this Agreement to be executed by its duly authorized officer, as of the
Effective Date.
WITNESS BORROWERS:
SBS INTERACTIVE, CO.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
---------------------- ---------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
Title: President
SBS INTERACTIVE, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
---------------------- ---------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
Title: President
LENDER:
/s/ ▇▇▇▇▇▇ ▇▇▇▇
---------------------- ---------------------
▇▇▇▇▇▇ ▇▇▇▇
[Signature Page to Master Loan Agreement]
MASTER LOAN AGREEMENT
Schedule 1
Capitalization
MASTER LOAN AGREEMENT
Schedule 2
Copyrights, Patents and Trademarks
Patent No. Owner
------------------- -----
6,072,933 SBS Interactive, Inc.
Patent Re-issue No. Owner
------------------- -----
10/006,971 SBS Interactive, Inc.