Revolving Loan Agreement - E-Sport Inc., Athlete Direct Inc., Pro Sports Xchange and NMSS Partners LLC
REVOLVING LOAN AGREEMENT
THIS LOAN AGREEMENT (this "Agreement") is made and entered into as of this
27th day of February, 1998 (the "Effective Date,"), by and between E-Sport,
Inc., a Delaware corporation (the "Borrower"), Athlete Direct Inc., a
corporation and wholly owned subsidiary of Borrower ("AD"), Pro Sports Xchange,
a Delaware corporation and wholly owned subsidiary of Borrower ("PSX," and
collectively with, AD, the "Subsidiaries"), and NMSS Partners, LLC, a Delaware
limited liability company (the "Lender").
RECITALS
A. WHEREAS, Borrower desires to borrow up to Four Million Five Hundred
Thousand Dollars ($4,500,000) for working capital purposes of Borrower and its
Subsidiaries from Lender; and
B. WHEREAS, Lender has agreed to make a loan in the principal amount of up
to Four Million Five Hundred Thousand Dollars ($4,500,000) to Borrower in
accordance with the terms and conditions provided herein.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants, agreements, representation and warranties hereinafter set forth, the
parties hereto agree as follows:
1. DEFINITIONS.
1.1 Business Day. The term "Business Day" means a day other than a
Saturday, Sunday or other day on which commercial banks in the United States are
required by law to close.
1.2 Maturity Date. The term "Maturity Date" means the earlier of (a)
___________________ (b) the date on which any of the following transactions are
consummated: (i) any acquisition of the Borrower by means of merger or other
form of corporate reorganization in which outstanding shares of the Borrower are
exchanged for securities or other consideration issued, or caused to be issued,
by the acquiring corporation or its subsidiary (other than a mere
reincorporation transaction or a transaction in which, upon consummation, more
than 60% of the outstanding voting securities of the acquiring corporation are
owned by the common stockholders of the Borrower as in existence immediately
prior to the consummation of such transaction), (ii) a sale of all or
substantially all of the assets or stock of the Borrower to any entity in which
more than 60% of the equity interests in such entity are not held by the common
stockholders of the Borrower as in existence immediately prior to the
consummation of such transaction, or (iii) an underwritten public offering of
the Common Stock of the
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Borrower pursuant to the Securities Act of 1933 which results in net proceeds to
the Borrower of at least $10 million.
2. AMOUNT AND TERMS OF THE LOAN.
2.1 Loan. Subject to, and upon the terms and conditions herein set
forth (including, without limitation, the restrictions contained in Section 5.7
hereof), Lender agrees to make a loan to Borrower in the principal amount of up
to Four Million Five Hundred Thousand Dollars ($4,500,000) (the "Loan").
Borrower may request disbursements of all or a portion of the Loan, subject to
the restrictions set forth in Section 5.7 hereof, at any time prior to the
Maturity Date upon the terms and limitations contained herein; provided;
however, that the principal balance outstanding at any time shall not exceed
$4,500,000.
2.2 Interest. Interest shall accrue on the unpaid principal balance
of the Loan at the Loan Rate. The "Loan Rate" shall be the lesser of the prime
rate plus one percent (1%) or the maximum rate allowable by law. The prime rate
as. of any date shall be determined by reference to the prime rate as published
in the Wall Street Journal (the base rate on corporate loans posted by at least
75% of the thirty largest U.S. banks). Interest shall be payable monthly on the
last day of the month, provided that should such date not be a Business Day,
interest shall be payable on the next Business Day. Any amount of principal and
accrued interest which is not paid when due shall bear interest from the date on
which such amount is due until such amount is paid in full, payable on demand,
at the Loan Rate or the maximum rate allowable by law. Interest shall be
computed daily at the Loan Rate on the basis of the actual number of days in
which all or any portion of the principal amount hereof is outstanding computed
on the basis of a 360 day year.
Principal and interest shall be payable in lawful money of the United
States at Lender's offices located at the address set forth below.
2.3 Disbursements. Borrower may borrow any amount up to an aggregate
amount of Four Million Five Hundred Thousand Dollars ($4,500,000) by providing
written notice to Lender ___________________ which notice shall include the
amount of such borrowing, the date of such borrowing and certification as to the
satisfaction of the conditions set forth in Section 5 hereof; provided
_______________________________ _____________________________________________.
Within the limits set forth in this Agreement, Borrower may borrow, repay and
reborrow amounts under this Agreement, provide that the aggregate principal
balance outstanding under this Agreement at any given time shall not exceed Four
Million Five Hundred Thousand Dollars ($4,500,000).
2.4 Recordings of Disbursements. All disbursements of the Loan made
by Lender and all repayments of the principal thereof shall be recorded by
Lender and endorsed by an officer of Borrower on Schedule A attached hereto, or
on a continuation of
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such schedule attached to and made a part hereof; provided that the failure of
Lender to make any such recordation or of Borrower to make any such endorsement
shall not affect the obligations of Borrower hereunder.
3. REPRESENTATIONS AND WARRANTIES OF BORROWER.
Each of the Borrower and the Subsidiaries represent and wan-ant to Lender
that:
3.1 Organization and Standing; Charter Documents. It is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware, and has all requisite corporate power and authority to
own, lease and operate its property and to conduct its business as such is
presently conducted and as proposed to be conducted. It is duly qualified to do
business as a foreign corporation in any state or jurisdiction in the United
States in which the failure to be so qualified would have a material adverse
effect on its financial condition or its ability to perform its obligations
hereunder. True and accurate copies of the Certificate of Incorporation and
Bylaws of it, each as currently in effect, have been made available to Lender
and its counsel.
3.2 Authorization. All corporate action on the part of it and its
officers, directors and shareholders that is necessary for the authorization,
execution, delivery and performance of this Agreement and any other documents or
certificates related thereto (collectively, the "Loan Documents") by it has been
taken; and the Loan Documents, when executed and delivered, will constitute
valid and legally binding obligations of it, enforceable against it in
accordance with their terms.
3.3 Consents. All consents, approvals, orders, waivers of
authorizations of, or registrations, qualifications, designations, declarations
or filings with, any court or any federal or state governmental authority or
third party required on the part of it in connection with the consummation of
the transactions contemplated by this Agreement and the other Loan Documents
will have been obtained prior to and be effective as of the Effective Date.
3.4 Compliance with Other Instruments. It is not in violation of or
default under any provision of its Certificate of Incorporation or Bylaws. It is
not in violation of or default in any material respect under any provision of
any material instrument or contract to which it is a party or by which it is
bound, or, to its knowledge, of any provision of any federal or state statute,
rule, governmental regulation, order or decree, applicable to it.
3.5 Conduct of Business. The conduct of its business, as now
conducted and as proposed to be conducted, will not conflict with or result in a
breach of any material terms, conditions or provisions of, or constitute a
default under, any material contract, covenant or instrument under which it is
now obligated.
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3.6 Title to Property and Assets. It owns all of its property and
assets free and clear of all mortgages, liens, claims, loans and encumbrances,
other than any mortgages, liens, claims, loans or encumbrances created
hereunder.
3.7 Information: Misleading Statements. No representation, warranty
or statement by it in this Agreement or the other Loan Documents, or in any
written statement or certificate furnished or to be furnished to Lender pursuant
thereto contains or will contain any untrue statement of a material fact or,
when taken together, omits or will omit to state a material fact necessary to
make the statements made herein or therein, in light of the circumstances in
which made, not misleading.
4. REPRESENTATIONS AND WARRANTIES OF LENDER.
Lender represents and warrants to each of the Borrower and the Subsidiaries
that:
4.1 Organization and Standing; Charter Documents. Lender is duly
formed, validly existing and in good standing under the laws of the State of
Delaware, and has the requisite power and authority to own, lease and operate
its property and to conduct its business as such is presently conducted and is
proposed to be conducted.
4.2 Authorization. All action on the part of Lender and its members
that is necessary for the authorization, execution, delivery and performance of
the Loan Documents by Lender has been taken; and the Loan Documents, when
executed and delivered, will constitute a valid and legally binding obligations
of Lender, enforceable in accordance with their terms.
5. CONDITIONS PRECEDENT TO LOAN.
The obligation of Lender to make each disbursement of the Loan is subject
to the satisfaction (or written waiver by Lender) of all the flowing conditions
precedent:
5.1 Representations True. All representations and warranties
contained in this Agreement and all other Loan Documents will be true, correct
and complete in all respects with the same effect as though such representations
and warranties had been made on and as of each disbursement of the Loan.
5.2 Corporate Documents. Lender will have received, in form and
substance satisfactory to Lender and its counsel, a copy of the records of all
actions taken by Borrower and the Subsidiaries, including all corporate
resolutions of Borrower and the Subsidiaries authorizing or relating to the
execution, delivery and performance of the Loan Documents and the consummation
of the transactions contemplated thereby, and a certified copy of the
Certificates of Incorporation and Bylaws of Borrower and the Subsidiaries.
5.3 Qualifications and Consents. All authorizations, approvals,
permits, consents or waivers if any, of (i) governmental authority or regulatory
body of
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the United States or of any state or (ii) any third party that are required on
the part of Borrower or the Subsidiaries in connection with the receipt of the
Loan or the execution of this Agreement will have been duly obtained and will be
effective on and as of the Effective Date.
5.4 Proceedings and Documents. All corporate and other proceedings in
connection with the transaction contemplated by this Agreement and all documents
incident to such transaction will be in form and substance satisfactory to
Lender and its counsel, and Lender will have received all counterpart originals
or certified or other copies of such documents as it may reasonably request.
5.5 Performance. Borrower and the Subsidiaries shall have performed
and complied with all agreements and conditions contained herein required to be
performed or complied with by them prior to or at each disbursement of the Loan.
5.6 Absence of Litigation. No suit, action, proceeding or
investigation shall have occurred, be pending or threatened which would or seeks
to prevent or delay beyond the Effective Date the consummation of the
transactions contemplated by this Agreement and there shall be no other pending
or threatened material litigation.
5.7 Loan in Compliance with Annual Budget. Lender will have
received, in form and substance satisfactory to Lender and its counsel, a
certificate signed by at least two of the Company's officers stating that the
amount of the Loan disbursement requested by the Company does not exceed the
amount permitted to be drawn during that calendar year under the Company's
annual budget, which budget has been approved by the affirmative vote of at
least four of the five authorized directors of the Company.
6. SECURITY INTEREST.
As security for the payment of principal and accrued interest under this
Agreement, each of the Borrower and the Subsidiaries hereby grants to the Lender
a security interest in all of the their respective assets listed on Schedule B
attached hereto (the "Collateral"). Borrower and the Subsidiaries shall not and
nothing in this Section 6 shall constitute, or be deemed to constitute, a grant
of authority to Borrower or the Subsidiaries to, sell, lease, or otherwise
dispose of or encumber the Collateral, or any part of the Collateral, without
the prior written consent of Lender, except in the ordinary course of business
or as otherwise provided herein. The security interest hereby created shall
attach immediately upon execution of this Agreement and concurrently herewith,
Borrower and the Subsidiaries shall execute any financing statement or financing
statements requested by Lender to perfect the security interest created hereby.
Such financing statement or statements shall be on a form or forms approved by
the California Secretary of State and Borrower and the Subsidiaries shall
forthwith pay to Lender the filing fees required to file such statement or
statements in the manner required by the Uniform Commercial Code of California.
In addition, Borrower and the Subsidiaries shall pay from their own funds, as
they become due, all taxes and assessments levied or
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assessed against the Collateral, or any part of the Collateral, prior to the
final termination of this Agreement. Upon any event of default hereunder, the
Lender shall be entitled to all the rights and remedies of a secured creditor
with respect to such Collateral as provided for in the Uniform Commercial Code
of California.
7. COVENANTS OF BORROWER.
Each of Borrower and the Subsidiaries hereby covenants and agrees with
Lender that each shall:
7.1 Corporate Rights; Facilities; Conduct of Business.
(a) Maintain and preserve in full force and effect its corporate
existence and all rights, licenses, leases, qualifications, privileges,
franchisee and other authority adequate for the conduct of its business;
(b) Maintain, preserve and protect all its properties, assets,
equipment and facilities in good order and working repair and condition
(taking into consideration ordinary wear and tear) and from time to time
make, or cause to be made, all needful and proper repairs, renewals and
replacements thereto;
(c) Maintain, preserve and protect all of its rights to enjoy and
use patents, copyrights, trademarks, trade names, service marks, licenses,
leases, and franchises;
(d) Promptly pay and discharge all taxes when due and payable,
except such as may be contested in good faith by appropriate proceedings
and for which an adequate reserve has been established and is maintained in
accordance with generally accepted accounting principles (and it will
promptly notify Lender of any challenge, contest or proceeding pending by
or against it before any taxing authority);
(e) Maintain all banking accounts at FDIC or FSLIC insured banks
or other savings institutions acceptable to Lender, and
(f) From time to time as may be necessary, disclose to Lender in
writing any material matter hereafter arising which, if existing or
occurring at the date of this Agreement, would have been required to be set
forth or described by it in this Agreement or any of the other Loan
Documents (including all schedules and exhibits hereto or thereto) or which
is necessary to correct any information set forth or described by it
hereunder or thereunder which has been rendered inaccurate thereby.
7.2 Negative Covenants. So long as any portion of the Loan remains
outstanding, neither Borrower nor the Subsidiaries will, without first obtaining
Lender's prior written consent:
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(a) declare or pay any dividend on or declare or make any
distribution on account of, any shares of any class of stock now or
hereafter outstanding (except for dividends or distributions from a
Subsidiary to the Borrower), or set apart any sum for such purpose, except
for shares of Common Stock issued to its employees pursuant to stock option
agreements or debentures.
(b) issue or enter into any agreement that restricts the
Company's ability to repay the Loan or subordinates the repayment of the
Loan by more than Four Million Five Hundred Thousand Dollars ($4,500,000).
(c) Use any portion of the Loan for purposes other than those
directly related to the conduct of Borrower's or the Subsidiaries'
businesses.
7.3 Further Assurances. In addition to the obligations and documents
which this Agreement expressly requires Borrower and the Subsidiaries to
execute, deliver and perform, Borrower and the Subsidiaries will execute,
deliver and perform, any and all further acts or documents which Lender may
reasonably require to effectuate the purposes of this Agreement or any of the
other Loan Documents.
8. PREPAYMENT OF THE LOAN.
Borrower may prepay the Loan at any time without penalty.
9. EVENTS OF DEFAULT OF BORROWER.
9.1 Events of Default. Each of the following shall constitute an
event of default ("Event of Default") under this Agreement:
(a) Borrower shall fail to pay when due (whether by acceleration
or otherwise) principal under this Agreement;
(b) Borrower shall fail to pay when due (whether by acceleration
or otherwise) interest under this Agreement, and such default unless
otherwise cured shall have continued for a period of five (5) days after
receipt of notice from Lender,
(c) Any representation or warranty made by or on behalf of
Borrower in this Agreement, in any other Loan Document or in any statement
or certificate given in writing pursuant thereto or in connection therewith
is false, misleading or incomplete in any material respect when made (or
deemed to have been made);
(d) Borrower or the Subsidiaries fails or neglects to perform,
keep or observe any covenant set forth in this Agreement and the same has
not been cured within ten (10) calendar days after Borrower or the
Subsidiaries receives notice thereof from Lender;
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(e) Borrower or the Subsidiaries shall commence a voluntary case
or other proceeding seeking liquidation, reorganization or other relief
with respect to itself or its debts under any bankruptcy, insolvency or
other similar law now or hereafter in effect or seeking the appointment of
a trustee, receiver, liquidator, custodian or other similar official of it
or any substantial part of its property, or shall consent to any such
relief or to the appointment of or taking possession by any such official
in an involuntary case or other proceeding commenced against it, or shall
make a general assignment for the benefit of creditors, or shall fail
generally to pay its debts as they become due, or shall take any corporate
action to authorize any of the foregoing; provided, however, that any of
the foregoing acts by or with respect to a Subsidiary shall not be an Event
of Default if, and only if, such act will not adversely affect, impair or
subordinate the Borrower's ability to repay the Loan;
(f) An involuntary case or other proceeding shall be commenced
against the Borrower or the Subsidiaries seeking liquidation,
reorganization or other relief with respect to it or its debts under any
bankruptcy, insolvency or other similar law now or hereafter in effect or
seeking the appointment of a trustee, receiver, liquidator, custodian or
other similar official of it or any substantial part of its property, and
such involuntary case or other proceeding shall remain undismissed and
unstayed for a period of 60 days; or an order for relief shall be entered
against the Borrower or the Subsidiaries under the federal bankruptcy laws
as now or hereafter in effect; provided, however, that any of the foregoing
acts by or with respect to a Subsidiary shall not be an Event of Default
if, and only if, such act will not adversely affect, impair or subordinate
the Borrower's ability to repay the Loan; or
(g) This Agreement, for any reason (other than the satisfaction
in full of all amounts owing in connection with the Loan) ceases to be, or
is asserted by Borrower or the Subsidiaries not to be, a legal, valid and
binding obligation of Borrower or the Subsidiaries, enforceable in
accordance with its terms, and such occurrence has not been cured to
Lender's satisfaction within five (5) calendar days after Borrower or the
Subsidiaries receives notice thereof from Lender.
9.2 Remedies of Lender. If an Event of Default shall occur and be
continuing or shall exist, the principal amount outstanding of the Loan and
interest accrued thereon shall be immediately due and payable without
presentment demand, protest or further notice of any kind, all of which are
hereby expressly waived, and an action therefor shall immediately accrue.
10. RESTRICTIONS ON TRANSFER OF LOAN
10.1 Right to Transfer. Lender shall not have the right or power to
sell, exchange, transfer (with or without consideration), assign or otherwise
dispose of (such
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actions being collectively referred to in this Agreement as "Transfers") the
Loan, or any interest therein, except:
(a) Transfers pursuant to a firmly underwritten public offering
of the Borrower's common stock on a Form S- 1, Form SB- I or Form SB-2
Registration Statement filed with the Securities and Exchange Commission
under the Securities Act with respect to which the Borrower receives net
proceeds of at least $10,000,000 (a "Qualified Public Offering") or
Transfers to any member or other equity owner of Lender or any person or
entity dud, directly or indirectly, through one or more intermediaries,
controls, or is controlled by, or is under common control with the Lender
(an "Affiliated Entity"); provided, however, that any such Affiliated
Entity shall agree in a writing deposited with the Borrower prior to such
Transfer to be bound by all of the terms of this Agreement as the "Lender"
hereunder.
(b) Transfers in accordance with the provisions of Section 10.2
below.
10.2 Transfer of Loan.
(a) Except for Transfers permitted by the provisions of Section
10.1 (a) above, the Lender shall not Transfer the Loan unless the
consideration for such Transfer consists solely of cash and unless the
Lender has first given each of the common stockholders of the Borrower the
right to purchase the Loan by delivering to the common stockholders a
written offer (the "Offer") to sell the Loan to each and every one of the
other common stockholders, which Offer (i) shall remain open for at least
thirty (30) days from the date of its transmittal (the "Offer Period"),
(ii) shall state its exact termination date, and (iii) shall state the
identity of the proposed transferee, the price, closing date and all other
material terms and conditions of the proposed Transfer. The Offer shall be
on the same terms and conditions as the proposed Transfer.
(b) The Offer may be accepted by any of the common stockholders,
(any stockholder so accepting shall be referred to herein as a "Subscribing
Stockholder") only by giving written notice of acceptance delivered to the
Lender prior to the expiration of the Offer Period, provided that the
Subscribing Stockholders collectively shall have accepted the Offer to
purchase all (but not less than all) of the Loan. Each Subscribing
Stockholder shall be entitled to purchase that fraction of the Loan equal
to the fraction obtained by dividing the sum of the number of shares of
common stock which such Subscribing Stockholder owns by the aggregate
number of shares of common stock then issued and outstanding. Following the
foregoing allocation, if any fraction of the Loan remains unallocated and
all Subscribing Stockholders' subscriptions have not been filled, the
balance of the Loan shall be iteratively allocated by the Borrower among
the Subscribing Stockholders whose
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subscriptions have not been filled, pro rata based upon the foregoing
fractions or as mutually agreed to between Subscribing Stockholders, until
either the entire balance of the Loan has been allocated, or all
subscriptions have been filled.
(c) Upon termination of the Offer Period, provided that the
Subscribing Stockholders collectively shall have accepted the Offer to
purchase all (but not less than all) of the Loan, the Borrower shall give
written notice to that effect to all Subscribing Stockholders, stating the
fraction of the Loan allocated to each Subscribing Stockholder, and the
Transfer of the Loan shall thereafter be effected between the Lender and
the Subscribing Stockholders upon all of the applicable terms and
conditions set forth in the Offer.
(d) To the extent the entire balance of the Loan has not been
fully subscribed by the common stockholders, pursuant to the terms and
conditions of Section 11.2(b) above, prior to the expiration of the Offer
Period, the Lender shall be free for a period of ninety (90) days beginning
the day immediately following the day on which the Offer Period expires to
sell to the proposed transferee identified in the Offer the Loan, provided
that such sale must be at the same price, and upon the other terms and
conditions specified in the Offer.
(e) Notwithstanding anything to the contrary set forth herein,
Lender shall not be permitted to Transfer the Loan to a person (or a person
which is controlled by, under common control with, or controls such person)
that competes directly with one or more of the lines of business of the
Borrower or the Subsidiaries as conducted at the time of such Transfer,
unless such Transfer has been approved by at least four of the five
authorized directors of the Borrower.
11. MISCELLANEOUS.
11.1 Survival of Representations and Warranties. The representations
and warranties contained herein or made pursuant to this Agreement and all other
Loan Documents shall survive until the termination of this Agreement.
11.2 Notices. All notices and other communications hereunder shall
be in writing and shall be deemed given upon personal delivery, facsimile
transmission (with written or facsimile confirmation of receipt), telex or
delivery by a reputable overnight commercial delivery service (delivery, postage
or freight charges prepaid), or on the fourth day following deposit in the
United States mail (if sent by registered or certified mail, return receipt
requested, delivery, postage or freight charges prepaid), addressed to the
parties at the following addresses (or at such other address for a party as
shall be specified by like notice):
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(a) if to Lender, to: (b) If to Borrower or the Subsidiaries,
to:
NMSS Partners, LLC
11 West Del Mar Boulevard E-Sport, Inc.
Pasadena, CA 91105 _______________________
Attention: Ahmed O. Alfi _____________, CA 92
FAX: (818) 405-9708 Attention:______________
FAX: (714) ______________
11.3 Interpretation. When a reference is made in this Agreement to
an Article, Section, Exhibit or Schedule, such reference shall be to an Article,
Section, Exhibit or Schedule to this Agreement unless otherwise indicated. The
words "include," "includes" and "including" when used herein shall be deemed in
each case to be followed by the words "without limitation."
11.4 Counterparts. This Agreement may be executed by one or more of
the parties hereto on any number of separate counterparts and all of said
counterparts taken together shall be deemed to constitute one and the same
agreement and shall become effective when all counterparts have been signed by
each of the parties and delivered to the other parties, it being understood that
all parties need not sign the same counterpart.
11.5 Integration. This Agreement, the exhibits and schedules
attached hereto and thereto constitute the entire agreement among the parties
with respect to the subject matter set forth herein or therein and supersede all
prior agreements and understandings, both written and oral, among the parties
with respect to the subject matter hereof or thereof.
11.6 Amendment. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto.
11.7 Governing Law. This Agreement and the rights and obligations of
the parties hereunder shall be governed in all respects, including validity,
interpretation and effect, by the laws of the State of California, excluding its
rules of conflicts of law or choice of law.
11.8 Assignment. Borrower shall not assign or transfer or permit the
assignment or transfer of any of its rights or obligations under this Agreement
without the prior written consent of Lender.
11.9 Severability. Any portion or provision of the Agreement which
is invalid, illegal or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability, without affecting in any way the remaining portions or
provisions hereof in such jurisdiction or, to the
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extent permitted by law, rendering that or any other portion or provision of
the Agreement invalid, illegal or unenforceable in any other jurisdiction.
11.10 Attorneys' Fees. If any party to this Agreement shall bring
any action, suit, counterclaim or appeal for any relief against any other party,
declaratory or otherwise, to enforce the terms hereof or to declare rights
hereunder (collectively, an "Action"), the prevailing party shall be entitled to
recover as part of any such Action its reasonable attorneys' fees and costs,
including any fees and costs incurred in bringing and prosecuting such Action
and/or enforcing any order, judgment, ruling or award granted as part of such
Action. "Prevailing party" within' the meaning of this section includes, without
limitation, a party who agrees to dismiss an Action upon the other party's
payment of all or a portion of the sums allegedly due or performance of the
covenants allegedly breached, or who obtains substantially the relief sought by
it.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
BORROWER: LENDER:
E-SPORT, INC. NMSS PARTNERS, LLC
By: /s/ Tyler Goldman By: M&K Financial Capital Corp.
-------------------------- Manager
Tyler Goldman
President By: /s/ Ahmed O. Alfi
----------------------
Ahmed O. Alfi
President
By: /s/ Ross Schaufelberger
--------------------------
Ross Schaufelberger
Treasurer and Secretary
ATHLETE DIRECT, INC. PRO SPORTS EXCHANGE
By: /s/ Ross Schaufelberger By: /s/ Tyler Goldman
-------------------------- -----------------------
Ross Schaufelberger Tyler Goldman
President President
By: /s/ Michael Scharnagi By: /s/ Ross Schaufelberger
-------------------------- ------------------------
Michael Scharnagi Ross Schaufelberger
Treasurer and Secretary Treasurer and Secretary
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SCHEDULE A
Revolving Promissory Note
LOANS AND PAYMENTS OF PRINCIPAL
<CAPTION>
----------------------------------------------------------------------------------------------------------
Unpaid Lender
Amount of Amount of Principal Recordation Borrower
Date Loan Principal Repaid Balance by Endorsement By
----------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------
Feb 27, 98 $450,000 AA RS
----------------------------------------------------------------------------------------------------------
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SCHEDULE B
ASSET OF BORROWER
AND THE SUBSIDIARIES.
(A) all accounts receivable and other rights to payment of money, together
with all rights, claims, titles, securities, security interests, liens and
guaranties evidencing, securing, guaranteeing payment of, relating to or
otherwise with respect to such accounts receivable and rights, including,
without limitation, any rights to stoppage in transit, replevin, reclamation and
resale and all interest, finance charges or other amounts payable in respect of
the foregoing;
(B) all notes receivable;
(C) all inventory;
(D) all equipment;
(E) all documents and documents of title, including, without limitation,
bills of lading, warehouse receipts, trust receipts and the like;
(F) all chattel paper, documents, instruments, money, notes and drafts;
(G) all licenses, licensing agreements, contracts, agreements, rights to
payment, royalties, license fees, leases of personal property, undertakings,
surety bonds, all forms of obligations owing to the Borrower or the Subsidiaries
or in which the Borrower or the Subsidiaries may have an interest, however
arising or created, all present and future chooses and things in action,
goodwill, governmental approvals, tax refunds, all other general intangibles of
every kind and nature to which the Borrower or the Subsidiaries may now or
hereafter become entitled and however arising, all other refunds of any kind and
nature and all rights, remedies, powers and privileges of the Borrower or the
Subsidiaries with respect to any of the foregoing;
(H) all deposit accounts, including, without limitation, any collection
accounts and concentration accounts and any other demand, time savings, passbook
or like account maintained by the Borrower or the Subsidiaries with any bank,
savings and loan association, credit union or other person, all money, cash and
checks, drafts, notes, bills, bills of exchange and bonds deposited therein or
credited thereto, any increases, renewals, extensions, substitutions and
replacements thereof, all interest accruing thereon or any other property of the
Borrower or the Subsidiaries received or receivable by the Borrower or the
Subsidiaries in respect thereof, whether or not deposited in any such deposit
account and all statements, certificates, passbooks and instruments representing
any such deposit account;
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(I) all intellectual property rights (including, without limitation, any
and all rights of the Borrower or the Subsidiaries to sue and collect damages
for past, present or feature infringements of any intellectual property rights
or for any injury to the goodwill associated with any intellectual property
right), trade secrets, catalogs, computer programs, purchase orders, computer
software (including, without limitation, all source codes and object codes, all
media of any type or nature on which such source codes or object codes are
reproduced, copies, stored or maintained at any time and from time to time, and
all licenses or other rights entitling the Borrower or the Subsidiaries to use,
copy and reproduce such object codes and source codes and all licenses and other
rights granted by the Borrower or the Subsidiaries to any other person or entity
to copy, use, sell, market or reproduce computer software and such source codes
and object codes), technology processes, drawings, blueprints, proprietary
information, customer lists, mailing lists;
(J) all stocks, bonds, debentures, securities, subscription rights,
options, warrants, puts, calls, certificates, partnership interests, joint
venture interests, investments and/or brokerage accounts and all rights,
preferences, privileges, dividends, distributions, redemption payments or
liquidation payments with respect thereto;
(K) all rights and claims of the Borrower or the Subsidiaries in or under
all policies of insurance owned by the Borrower or the Subsidiaries or covering
all or any part of the Collateral, including, but not limited to, insurance for
life, fire, damage, loss, and casualty, whether covering life, personal
property, real property or tangible rights, together with the proceeds,
products, renewals, and replacements thereof, including prepaid or unearned
premiums;
(L) all books and records (including, without limitation, all books of
account and ledgers of every kind and nature, customer lists, credit files,
computer programs, computer software, computer tapes, other computer materials
and records and electronically recorded data) pertaining to the Borrower or the
Subsidiaries or any of the Collateral and all equipment, receptacles, containers
and cabinets for such books and records, and all files and correspondence
relating thereto; and
(M) all proceeds of any of the foregoing, whether derived from voluntary or
involuntary disposition or otherwise, and all products of the foregoing, whether
now owned and existing or hereafter acquired or arising and all renewals,
replacements, substitutions, additions, accessions, appurtenances, components,
repairs, repair parts, spare parts, rents, issues, royalties and profits of, to
or from any such property. "Proceed" hereunder shall include (i) whatever is now
or hereafter received by the Borrower or the Subsidiaries upon the sale,
exchange, collection or other disposition of any item of Collateral, whether
such proceeds constitute inventory, accounts receivable, general intangible,
instruments, securities, credits, documents, letters of credit, chattel paper,
documents of title, warehouse receipts, leases, deposit accounts, money,
contract rights, goods, equipment or other personal property, (ii) any such
items that are now or hereafter acquired by the Borrower or the Subsidiaries
with any proceeds of Collateral
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hereunder, (iii) any insurance now or hereafter payable by reason of any loss or
damage to any Collateral and any proceeds thereof, and (iv) the right to further
transfer, including to pledge, mortgage, license, assign or sell, any of the
aforementioned property or rights.
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