Loan and Security Agreement - CyberAds Inc., IDS Cellular Inc., Sandra L. Levinson, Lawrence S. Levinson, Four State Financial Services LLC
LOAN AND SECURITY AGREEMENT
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This LOAN AND SECURITY AGREEMENT ("Agreement"), dated as of June 22,
2001 ("Effective Date"), is entered into by and between, CYBERADS, INC., a
Florida corporation with offices located at 3350 N. W. Boca Boulevard, Suite
A-44, Boca Raton, Florida 33431 ("CyberAds"), IDS CELLULAR, INC., a Florida
corporation, with offices located at 3350 N. W. Boca Boulevard, Suite A-44, Boca
Raton, Florida 33431 ("IDS"), SANDRA L. LEVINSON, an individual with her
principal place of residence located at 899 N.E. 76th Street, Boca Raton,
Florida 33487 ("SLL"), LAWRENCE S. LEVINSON, an individual with his principal
place of residence located at 899 N.E. 76th Street, Boca Raton, Florida 33487
("LSL"), and FOUR STAR FINANCIAL SERVICES, LLC, a California limited liability
company with offices at 1000 Marina Boulevard, Suite 600, Brisbane, California,
94005 ("Lender").
RECITALS
WHEREAS, CyberAds, IDS, SLL and LJL (collectively, "Borrowers") wish to borrow
certain sums from Lender and Lender wishes to lend certain sums to Borrowers.
NOW THEREFORE, in consideration of the premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows:
ARTICLE 1
DEFINITIONS
A. Defined Terms.
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As used in this Agreement, in addition to the terms defined above, the
following terms have the definitions set forth below:
"Affiliate" means any Person controlling, controlled by or under common
control with CyberAds or IDS. For purposes of this definition, "control" means
the possession, directly or indirectly, of the power to direct or cause
direction of the management and policies of CyberAds or IDS, whether through
ownership of common or preferred stock or other equity interests, by contract or
otherwise. Without limiting the generality of the foregoing, each of the
following shall be an Affiliate: any officer, director, employee or other agent
of CyberAds or IDS, any shareholder owning more than 20 percent of the
outstanding shares of CyberAds or IDS or subsidiary of CyberAds or IDS, and any
other Person with whom or which CyberAds or IDS has common shareholders,
officers or directors.
"Business Day" means any day on which commercial banks in San
Francisco, California, are open for business.
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"Collateral" means all of CyberAds' and IDS' assets and receivables;
CyberAds' and IDS' books; all equipment and any other business related assets;
the general intangibles including but not limited to, all income, proceeds,
distribution payments, receivables and cash or other revenue generated
therefrom, and contracts with third parties, guarantees, and indemnity
agreements; the Inventory; any money or other assets of CyberAds or IDS which
now or hereafter come into the possession, custody, or control of Lender; and
the proceeds and products, whether tangible or intangible, of any of the
foregoing including proceeds of insurance covering any or all of the Collateral,
and any and all accounts, CyberAds' and IDS' books, equipment, general
intangibles, inventory, negotiable collateral, money, deposit accounts, or other
tangible or intangible property resulting from the sale, exchange, collection,
or other disposition of any of the foregoing, or any portion thereof or interest
therein, and the proceeds thereof.
"Event of Default" means any of the events set forth in Article 8 of
this Agreement.
"Guaranty" means the personal guaranty executed by LSL in the form of
Exhibit "C" attached hereto.
"Loan Documents" means, collectively, this Agreement, the Note executed
by Borrowers and payable to Lender, and any other agreement entered into in
connection with this Agreement, together with all alterations, amendments,
changes, extensions, modifications, refinancing, refunding, renewals,
replacements, restatements, or supplements, of or to any of the foregoing.
"Loan" means the advances made by Lender to Borrowers hereunder.
"Mortgage" means that the Mortgage in the form of Exhibit "B," executed
by Borrowers in favor of Lender.
"Note" means the Promissory Note in the form of Exhibit "A," executed
by Borrowers in favor of Lender to evidence all or part of the Loan and dated
the date of the first advance of such Loan, as such Note may be modified or
amended from time to time after execution and delivery thereof.
"Obligations" shall mean and include any and all indebtedness and/or
liabilities to Lender of every kind, nature and description, direct or indirect,
secured or unsecured, joint and several, absolute and contingent, due or to
become due, now existing or hereafter arising, regardless of how they arise or
were acquired or by what agreement or instrument they may be evidenced or
whether evidenced by any agreement or instrument (including but not limited to
all amounts owing by Borrowers to Lender by reason of purchases made by
Borrowers from other concerns, factored or financed by Lender),and all
obligations to perform acts or refrain from taking any action.
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"Person" means any individual, sole proprietorship, partnership, joint
venture, trust, unincorporated organization, association, corporation,
government, or any agency or political division thereof, or any other entity.
B. Accounting Terms.
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All accounting terms used in this Agreement, unless otherwise
indicated, shall have the meanings given to such terms in accordance with
generally accepted accounting principles, consistently applied. All other terms
contained in this Agreement, unless otherwise indicated, shall have the meaning
provided by the Uniform Commercial Code as adopted and in effect in the State of
California from time to time (the "Code"), to the extent such terms are defined
herein.
ARTICLE 2
A. Loan.
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Lender hereby lends to Borrowers and Borrowers hereby borrow from
Lender a sum of one hundred and fifty thousand dollars ($150,000.00). Lender has
received satisfactory evidence that:
(i) No Event of Default shall have occurred and be continuing
under the Loan Documents, or any other agreements entered into between or among
Lender and Borrowers, or Affiliates of Borrowers of the Agreement;
(ii) All of the conditions set forth in Article 6 shall have
been satisfied.
ARTICLE 3
TERM
The term of the Loan shall be for a period commencing on the Effective Date and
ending on December 17, 2001.
ARTICLE 4
INTEREST RATE, INTEREST PAYMENTS, PRINCIPAL PAYMENTS
AND OTHER CHARGES
A. Interest.
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Interest. Borrowers shall pay interest to Lender monthly, on the 22nd
day of each month, on the daily outstanding principal balance of the Loan at a
rate of thirty-three percent (33%) per annum, based upon a three hundred sixty
(360) day year, actual days elapsed. Unpaid interest shall be added to the
principal balance of the Loan and shall be compounded monthly in arrears as of
the date of each payment due.
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Receipt of Interest Payments. Borrowers shall make interest payments
directly to:
Att: Joseph A. Liberman, Partner
GRABUSH, NEWMAN & CO., P .A.
CERTIFIED PUBLIC ACCOUNTANTS
502 Washington Avenue, Suite 500
Towson, Maryland 21204
Or such substitute as the Lender may from time to time designate in
writing.
Default Interest. From and after and during the continuance of an Event
of Default, the outstanding principal balance shall bear interest until paid in
full at an increased rate per annum (computed on the basis of a three hundred
sixty (360) day year, actual days elapsed) equal to five percent (5%) above the
rate of interest hereunder.
B. Principal Payments.
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In addition to interest payments set forth herein, Borrowers shall in
full the outstanding principal balance of the Loan on Monday, December 17, 2001,
which is the end of the loan period, by paying the principal payment due
directly to Joseph A. Liberman at GRABUSH, NEWMAN & CO., P.A., at the address
indicated in A above, or such substitute as the Lender may from time to time
designate in writing. The Principal amount due may be prepaid without penalty at
any time.
C. Expenses.
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Borrowers shall reimburse Lender for all out-of-pocket costs, fees and
expenses incurred by Lender in connection with the negotiation, administration,
preparation, execution and delivery of each of the Loan Documents, including but
not limited to, lien and title search fees and filing or recording fees payable
in connection with the transactions contemplated by this Agreement. If not paid
by Borrowers, all such amounts shall be added to principal and bear interest at
the same rate.
D. Excess Interest.
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In no event whatsoever shall the interest rate and other fees charged
hereunder exceed the highest rate permissible under any law which a court of
competent jurisdiction shall, in a final determination, deem applicable hereto.
In the event that a court determines that Lender has received interest and other
charges hereunder in excess of the highest permissible rate applicable thereto,
Lender shall promptly apply such excess to the Obligations in such order as
Lender shall determine in its sole discretion or refund the amount thereof to
Borrowers, and the provisions hereof shall be deemed amended to provide for such
permissible rate.
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E. Unpaid Interest, Fees, Costs, or Expenses.
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To the extent that any interest, fees, costs, or expenses on the Loan
are not paid when due, the amount of such unpaid interest, fees, costs, or
expenses shall be deemed to be an additional advance; and the amount of such
advance shall be added to the principal balance of the Note and shall bear
interest at the interest rate set forth in the Note, which is applicable to the
principal under the Note.
ARTICLE 5
COLLATERAL
A. Security Interest in the Collateral.
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To secure performance hereunder, Borrowers hereby grant to Lender a
continuing security interest in and a right of setoff against, and Borrowers
hereby assign to Lender, the Collateral, to secure the payment, performance and
observance of all indebtedness, Obligations and liabilities of any kind of
Borrowers to Lender, including but not limited to the Loan, existing or
hereafter arising, and of all agreements, documents and instruments evidencing
any of the foregoing or under which any of the foregoing may have been issued,
created, assumed or guaranteed.
B. Perfection and Protection of Security Interest.
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Borrowers shall, at their expense, take all actions reasonably
requested by Lender at any time to perfect, maintain, protect and enforce
Lender's security interest and other rights in the Collateral and the priority
thereof from time to time, including, without limitation, executing and filing
financing or continuation statements and amendments thereof as Lender shall
require and deliver to Lender all originals of notes, stock certificates and
instruments as Lender shall require. Lender may file, without Borrowers'
signature, one or more financing statements disclosing Lender's security
interest under this Agreement. Borrowers agree that a carbon, photographic,
photostatic or other reproduction of this Agreement or of a financing statement
is sufficient as a financing statement. From time to time, Borrowers shall, upon
Lender's request, execute and deliver confirmatory written instruments pledging
the Collateral to Lender, but Borrowers' failure to do so shall not affect or
limit Lender's security interest or other rights in and to the Collateral.
Lender's security interest in the Collateral shall continue in full force and
effect until the Obligations have been fully satisfied.
ARTICLE 6
CONDITIONS PRECEDENT
Each of the items set forth below shall constitute a condition
precedent to Lender's obligation to make the Loan:
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A. Receipt of evidence satisfactory to Lender demonstrating that
CyberAds and IDS are in good standing in their state of formation and wherever
it is required to be qualified or licensed;
B. Receipt of copies of resolutions adopted by the Board of Directors
CyberAds and IDS authorizing the execution of the Loan Documents;
C. Receipt of the Note in the form of Exhibit "A" hereto executed by
authorized officers of CyberAds and IDS to evidence the Loan dated the date of
the advance pursuant to said Loan;
D. Lender shall have received satisfactory evidence that (i) no
material adverse changes have occurred in any of Borrowers' or Affiliates of
Borrowers' financial condition and (ii) no defaults have occurred under this
Agreement or any other agreement between Lender and Borrowers or any Affiliates
thereof;
E. Receipt of necessary UCC-1 Financing Statements, executed by
CyberAds and IDS, which have been filed in all necessary jurisdictions to
perfect Lender's security interest;
F. Receipt, review, and approval of detailed financials, detailed
accounts receivable, and accounts payable agings;
G. Borrowers shall provide Lender with a copy of the latest
registration statement for CyberAds;
H. CyberAds and IDS shall provide Lender with copies of all merchant
agreements and all statements for Lender to review and approve;
I. Lender shall receive (i) a fully executed personal guaranty from LSL
in the amount of one hundred and fifty thousand dollars ($150,000.00) in the
form of Exhibit C; (ii) a properly executed third mortgage on the residence of
LSL and SLL located at 899 N.E. 76th Street, Boca Raton, Florida 33487 in the
form of Exhibit B to secure such guarantee and the Loan; and (iii) copies of all
available appraisals on such property, all offers to purchase such property made
in the prior twelve months, and the results of a title search of such property
made within the prior 30 days.
J. Borrowers hereby agree to authorize Lender to conduct a credit
review on any principal of the company;
K. Borrowers must have executed and performed all steps necessary for
the perfection of the collateral.
For the sake of expediency, Lender may temporarily wave any or all of
the foregoing Conditions Precedent until a date certain chosen by Lender;
however any such Conditions
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Precedents so temporarily waived must be fulfilled by the date to be chosen by
Lender or an Event of Default will occur and the Loan will accelerate and become
immediately due and payable.
ARTICLE 7
REPRESENTATIONS, WARRANTIES AND COVENANTS
Borrowers warrant, represent and covenant that:
A. Authorization and Binding Effect. The execution, delivery and
performance of this Agreement has been duly authorized by all necessary
corporate action; this Agreement has been duly executed by the Borrowers and
constitutes the valid, binding and enforceable obligation of the Borrowers in
accordance with its terms, subject to the bankruptcy and other similar laws
affecting the enforcement of creditors' rights generally;
B. Status of Collateral. The Collateral is now, and at all times will
be, owned by Borrowers free and clear of all liens, security interests, claims
and encumbrances, except those created hereunder; the security interest of the
Lender in the Collateral hereunder is and shall at all times be a valid,
perfected, first priority security interest therein, enforceable in accordance
with the provisions hereof, subject to bankruptcy and other laws affecting the
enforcement of creditors' rights generally. With respect to any tangible
property such as the equipment which comprises any portion of the Collateral,
Borrowers shall take no action to move, disassemble, damage or alter said
property, except as to prepare them or their by products for sale;
C. Transfer of Collateral by Borrowers. Borrowers will not assign,
sell, transfer, or otherwise dispose of, nor will Borrowers suffer or permit any
of the same to occur with respect to, any Collateral, without prior written
notice to and consent of Lender;
D. Inspection of Records. Lender shall at all times have free access to
and right of inspection of the Collateral and any records pertaining thereto
(and the right to make extracts from and to receive from Borrowers originals or
true copies of such records and any papers and instruments relating to any
Collateral upon request therefor);
E. Insurance. Borrowers shall maintain and pay for insurance upon all
Collateral wherever located and with respect to Borrowers' business, covering
casualty, hazard, public liability and such other risks in such amounts and with
such insurance companies as are reasonably satisfactory to Lender. Borrowers
shall deliver the copies of such policies to Lender with satisfactory loss
payable endorsements, naming Lender as sole loss payee, assignee or additional
insured, as deemed appropriate by Lender. Each policy of insurance or
endorsement shall contain a clause requiring the insurer to give not less than
30 days prior written notice to Lender in the event of cancellation of the
policy for any reason whatsoever. If Borrowers fail to provide and pay for such
insurance, Lender may, at option, but shall not be required to, procure the same
and charge Borrowers therefor. Borrowers agrees to deliver to Lender, promptly
as rendered, true copies of all reports made in any reporting forms to insurance
companies.
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F. Enforcement of Receivables. Lender may, at any time and from time to
time upon or after any acceleration of maturity of the Obligations, demand, sue
for, collect or receive any money or property at any time payable or receivable
on account of or in exchange for, or make any compromise or settlement
reasonably deemed desirable with respect to, any Collateral, and/or extend the
time of payment, arrange for payment in installments, or otherwise modify the
terms of, or release, any Collateral or Obligations, all without notice to or
consent by Borrowers and without otherwise discharging or affecting the
Obligations, the Collateral or the security interest granted herein;
G. Reimbursement by Borrowers. Borrowers will pay Lender on demand (i)
for any sums, costs, and expenses which Lender may pay or incur pursuant to the
provisions of this Agreement or in negotiating, executing, perfecting,
defending, protecting or enforcing this Agreement or the security interest
granted herein or in enforcing payment of the Obligations or otherwise in
connection with the provisions hereof, including but not limited to court costs,
collection charges, travel expenses, and reasonable attorneys' fees, and (ii)
pay and discharge, or reimburse Lender promptly for, any taxes, assessments,
charges or levies of any foreign government or governmental authority in
connection with the pledge of receivables hereunder or the assignment thereof
from the Borrowers to Lender, which may be payable by Lender, or are paid for
Lender's account or which are required to be withheld by the obligor on a
receivable or which the obligor is otherwise required to pay and is entitled to
obtain reimbursement from such Lender, excluding, however, domestic taxes based
on income of the Lender generally; all of which, together with interest at the
highest rate then payable on any of the Obligations, shall be part of the
Obligations and be payable on demand;
H. Transfer of Collateral by Lender. In its sole discretion, Lender
may, at any time and from time to time, assign, transfer or deliver to any
transferee of any Obligations, any Collateral, whereupon in the event the
transferee is a financial institution, the Lender shall be fully discharged from
all responsibility and the transferee shall be vested with all powers and rights
of Lender hereunder with respect thereto, but the transferring Lender shall
retain all rights and powers with respect to any Collateral not assigned,
transferred or delivered.
I. Event of Default. In the Event of a Default, Borrowers shall repay
their Obligations in full before making any payments on any other indebtedness
owed to any other Person or entity;
J. Financial Reporting. Borrowers shall supply to Lender all the
financial data listed in Exhibit D.
K. Option to Acquire Stock. Borrowers shall provide Lender with the
option to acquire three hundred thousand (300,000) shares of stock of CyberAds,
at a strike price of fifty cents ($.50) per share, for a term of up to five
years from the Effective Date. These
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options shall be issued and recorded by CyberAds as indicated by Lender in
writing from time to time.
L. Registration of Shares and Options. At the request of Lender or
MaxMin, Borrowers hereby agree to register with the Securities and Exchange
Commission in Washington, D.C. at Borrowers' expense, the shares, options, and
the shares underlying such options, any time after March 1, 2002.
M. Restriction on Loans. Borrowers shall not incur any additional loans
during the term of this Loan without the prior written consent of Lender.
ARTICLE 8
DEFAULT AND REMEDIES
A. Event of Default. Anyone or more of the following events shall
constitute an Event of Default under this Agreement:
(i) Borrowers fail to pay when due and payable any portion of
the Obligations, whether at stated maturity, upon acceleration or otherwise;
(ii) Borrowers fail or neglect to perform, keep, or observe
any term, provision, condition, covenant or agreement contained in any Loan
Document;
(iii) Any material adverse change occurs in Borrowers'
business, assets, operations, prospects or condition, financial or otherwise;
(iv) The prospect of repayment of any portion of the
Obligations or the value or priority of Lender's security interest in the
Collateral is materially impaired;
(v) Any material portion of Borrowers', or their Affiliate's,
assets is seized, attached, subjected to a writ or distress warrant, is levied
upon or comes into the possession of any judicial officer;
(vi) Any bankruptcy or other insolvency proceeding is
commenced by Borrowers, or their Affiliate, or any guarantor or any such
proceeding is commenced against Borrowers and remains undischarged or unstayed
for forty-five (45) days;
(vii) Any notice of lien, levy or assessment is filed of
record with respect to any of Borrowers' assets;
(viii) Any judgment is entered against Borrowers, or their
Affiliate, in an aggregate amount exceeding ten thousand dollars ($10,000) and
not discharged within fifteen (15) days of becoming final, or, if appealed,
Borrowers have not caused adequate surety to be posted;
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(ix) Any uncured default shall occur under any material
agreement between or among Borrowers, their Affiliates and Lender or any third
party including, without limitation, any default which would result in a right
by such third party to accelerate the maturity of any Indebtedness of Borrowers
or any Affiliate to such third party;
(x) Any representation or warranty made or deemed to be made
by Borrowers or any Affiliate in any Loan Document or any other statement,
document or report made or delivered to Lender in connection therewith shall
prove to have been misleading in any material respect;
(xi) The total amount of outstanding accounts receivables of
IDS shall be less than one hundred seventy thousand dollars ($170,000.00),
valuing the American Cellular, Inc. receivable at fifty thousand ($50,000.00)
dollars, less any payments received from American Cellular, Inc., after June
15,2002;
(xii) Failure to pay timely all interest and principal
payments due under the Amended and Restated Loan Agreement dated as of May
15,2001, by and between James W. Bregman and Arthur J. Hohmann, LSL, MaxMin and
CyberAds;
(xiii) Failure to supply when due any of the documents or data
required by all attached Exhibits.
B. Remedies. Upon the occurrence of an Event of Default, Lender shall
have the following rights and remedies (to the extent permitted by applicable
law), all such rights and remedies being cumulative, not exclusive and
enforceable alternatively, successively or concurrently:
(i) Lender may, at its option and in its sole discretion and
in addition to all of its other rights under the Loan Documents, terminate this
Agreement and declare all of the Obligations to be immediately payable in full.
Lender shall also have all of its rights and remedies under applicable law,
including, without limitation, the default rights and remedies of a secured
party under the California Commercial Code, the UCC or of Lender under the
Obligations, and further, Lender may, at any time, with or without notice, take
possession of the Collateral, or Borrowers shall, upon Lender's demand, at
Borrowers' sole cost, assemble the Collateral and make it available to Lender
and Lender may sell and deliver any Collateral at public or private sales, for
cash, upon credit or otherwise, at such prices and upon such terms as Lender
deems advisable, at Lender's discretion, and may, if Lender deems it reasonable,
postpone or adjourn any sale of the Collateral by an announcement at the time
and place of sale or of such postponed or adjourned sale without giving a new
notice of sale. Borrowers agree that Lender has no obligation to preserve rights
to the Collateral or marshal any Collateral for the benefit of any Person. Any
requirement of reasonable notice shall be met if such notice is mailed postage
prepaid to Borrowers at their address set forth below at least five (5) days
before sale or other disposition. The proceeds of sale shall be applied, first,
to all expenses of sale, and second, to the Obligations in such order as Lender
shall elect, in its sole discretion. Lender
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shall return any excess to Borrowers and Borrowers shall remain liable for any
deficiency to the fullest extent permitted by law.
(ii) Lender may appropriate, set off and apply to the payment
of the Obligations, any Collateral (including, without limitation, any proceeds
or proceeds of proceeds) in or coming into the possession of Lender without
notice to Borrowers and in such manner as Lender or its agents may in its
discretion determine.
ARTICLE 9
MISCELLANEOUS
A. Power of Attorney. To effectuate the terms and provisions hereof,
Borrowers hereby designate and appoint Lender and its designees or agents as
attorney-in-fact of Borrowers, irrevocably and with power of substitution, with
authority, after the occurrence and during the continuance of a Default, to:
receive, open and dispose of all mail addressed to Borrowers and reasonably
believed by Lender to relate to the Collateral, and notify the Post Office
authorities to change the address for delivery of mail addressed to Borrowers to
such address as Lender may designate (provided that items not relating to the
Collateral shall be returned to Borrowers); endorse the name of Borrowers on any
notes, acceptances, checks, drafts, money orders, instruments or other evidences
of Collateral that may come into Lender's possession; sign the name of Borrowers
on any invoices, documents, drafts against and notices to account Borrowers or
obligors of Borrowers, assignments and requests for verification of accounts in
each case relating to the Collateral; execute proofs of claim and loss relating
to the Collateral; execute endorsements, assignments or other instruments of
conveyance or transfer relating to the Collateral; adjust and compromise any
claims relating to the Collateral under insurance policies or otherwise; execute
releases relating to the Collateral; and do all other acts and things necessary
or advisable in the sole discretion of Lender to carry out and enforce this
Agreement or the Obligations. All acts done under the foregoing authorization
are hereby ratified and approved and neither Lender nor any designee or agent
thereof shall be liable for any acts of commission or omission, for any error of
judgment or for any mistake or fact of law. This power of attorney being coupled
with an interest is irrevocable while any Obligations shall remain unpaid.
B. Release. Borrowers hereby release Lender from any claims, causes of
action and demands at anytime arising out of or with respect to this Agreement,
the Obligations, the Collateral and its use and/or any actions taken or omitted
to be taken by Lender with respect thereto, and Borrowers hereby agree to hold
Lender harmless from and with respect to any and all such claims, causes of
action and demands, except only for Lender's own gross negligence or bad faith.
C. Prior Recourse. Lender's prior recourse to any Collateral shall not
constitute a condition of any demand, suit or proceeding for payment or
collection of the Obligations.
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D. No Lender Waivers. No act, omission or delay by Lender shall
constitute a waiver of its rights and remedies hereunder or otherwise. No single
or partial waiver by Lender of any Default or right or remedy which it may have
shall operate as a waiver of any other Default, right or remedy of the same
default, right or remedy on a future occasion.
E. Attorneys' Fees and Costs. In the event of any litigation with
respect to any matter connected with this Agreement, the Obligations or the
Collateral, the prevailing party shall be entitled to its reasonable costs and
attorneys' fees.
F. Modifications. No provision hereof shall be modified, altered or
limited except by a written instrument expressly referring to this Agreement and
to such provision, and executed by the party to be charged.
G. Successors and Assigns. This Agreement and all Obligations shall be
binding upon the successors and assigns of Borrowers and shall, together with
the rights and remedies of Lender hereunder, inure to the benefit of Lender, its
successors, endorsees and assigns.
H. Invalidity. If any term of this Agreement shall be held to be
invalid, illegal or unenforceable, the validity of all other terms hereof shall
in no way be affected thereby.
I. Survival. All of the representations and warranties of Borrowers
contained in this Agreement shall survive the execution, delivery and acceptance
thereof by the parties. No termination of this Agreement shall affect or impair
the powers, obligations, duties, rights, representations, warranties or
liabilities of the parties hereto and shall survive such termination.
J. Notices. All notices required to be given under this Agreement shall
be written and sent via first class mail, postage prepaid, to the following
addresses:
CyberAds or IDS at: CyberAds, Inc., 3350 N.W. Boca Boulevard,
Suite A-44, Boca Raton, Florida 33431
SLL or LSL at: Sandra L. and Lawrence S. Levinson, 899 N.E.
76th Street, Boca Raton, Florida 33487
Four Star at: 1000 Marina Boulevard, Suite 600, Brisbane,
California, 94005
K. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which taken
together shall be considered one and the same instrument.
L. GOVERNING LAW; CONSENT TO FORUM. THIS AGREEMENT HAS BEEN NEGOTIATED,
EXECUTED AND DELIVERED AT AND SHALL BE DEEMED TO HAVE BEEN MADE IN BRISBANE,
CALIFORNIA. THIS AGREEMENT SHALL BE
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GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
CALIFORNIA; PROVIDED, HOWEVER, THAT IF ANY OF THE COLLATERAL SHALL BE LOCATED IN
ANY JURISDICTION OTHER THAN CALIFORNIA, THE LA WS OF SUCH JURISDICTION SHALL
GOVERN THE METHOD, MANNER AND PROCEDURE FOR FORECLOSURE OF LENDER'S LIEN UPON
SUCH COLLATERAL AND THE ENFORCEMENT OF LENDER'S OTHER REMEDIES IN RESPECT OF
SUCH COLLATERAL TO THE EXTENT THAT THE LAWS OF SUCH JURISDICTION ARE DIFFERENT
FROM OR INCONSISTENT WITH THE LAWS OF CALIFORNIA. AS PART OF THE CONSIDERATION
FOR NEW VALUE RECEIVED, AND REGARDLESS OF ANY PRESENT OR FUTURE DOMICILE OR
PRINCIPAL PLACE OF BUSINESS OF BORROWERS OR LENDER, BORROWERS HEREBY CONSENT AND
AGREE THAT THE SUPERIOR COURT OF SAN MATEO COUNTY, OR, AT LENDER'S OPTION, THE
UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA, SHALL HAVE
EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN
BORROWERS AND LENDER PERTAINING TO THIS AGREEMENT OR TO ANY MATTER ARISING OUT
OF OR RELATED TO THIS AGREEMENT. BORROWERS EXPRESSLY SUBMIT AND CONSENT IN
ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT,
AND BORROWERS HEREBY WAIVE ANY OBJECTION WHICH BORROWERS MAY HAVE BASED UPON
LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS AND HEREBY
CONSENT TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED
APPROPRIATE BY SUCH COURT. BORROWERS HEREBY WAIVE PERSONAL SERVICE OF THE
SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND
AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE MADE BY
REGISTERED OR CERTIFIED MAIL ADDRESSED TO BORROWERS AT THE ADDRESS SET FORTH IN
THIS AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE
EARLIER OF BORROWERS' ACTUAL RECEIPT THEREOF OR 3 DAYS AFTER DEPOSIT IN THE U.S.
MAILS, PROPER POSTAGE PREPAID. NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR
OPERATE TO AFFECT THE RIGHT OF LENDER TO SERVE LEGAL PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW, OR TO PRECLUDE THE ENFORCEMENT BY LENDER OF ANY JUDGMENT OR
ORDER OBTAINED IN SUCH FORUM OR THE TAKING OF ANY ACTION UNDER THIS AGREEMENT TO
ENFORCE SAME IN ANY OTHER APPROPRIATE FORUM OR JURISDICTION.
M. WAIVERS BY BORROWERS. BORROWERS WAIVE (i) THE RIGHT TO TRIAL BY JURY
(WHICH LENDER HEREBY ALSO WAIVES) IN ANY ACTION, SUIT, PROCEEDING OR
COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED TO ANY OF THE LOAN DOCUMENTS,
THE OBLIGATIONS OR THE COLLATERAL; (ii) PRESENTMENT, DEMAND AND PROTEST AND
NOTICE OF PRESENTMENT, PROTEST, DEFAULT, NONPAYMENT, MATURITY, RELEASE,
COMPROMISE, SETTLEMENT, EXTENSION OR RENEWAL OF ANY OR ALL COMMERCIAL PAPER,
ACCOUNTS, CONTRACT RIGHTS, DOCUMENTS, INSTRUMENTS CHATTEL PAPER AND GUARANTIES
AT ANY TIME HELD BY LENDER ON WHICH BORROWERS MAY
13
<PAGE>
IN ANY WAY BE LIABLE AND HEREBY RATIFIES AND CONFIRMS WHATEVER LENDER MAY DO IN
THIS REGARD; (iii) NOTICE PRIOR TO TAKING POSSESSION OR CONTROL OF THE
COLLATERAL OR ANY BOND OR SECURITY WHICH MIGHT BE REQUIRED BY ANY COURT PRIOR TO
ALLOWING LENDER TO EXERCISE ANY OF LENDER'S REMEDIES; (iv) THE BENEFIT OF ALL
VALUATION, APPRAISEMENT AND EXEMPTION LAWS; AND (v) NOTICE OF ACCEPTANCE HEREOF.
BORROWERS ACKNOWLEDGE THAT THE FOREGOING WAIVERS ARE A MATERIAL INDUCEMENT TO
LENDER'S ENTERING INTO THIS AGREEMENT AND THAT LENDER IS RELYING UPON THE
FOREGOING WAIVERS IN ITS FUTURE DEALINGS WITH BORROWERS. BORROWERS WARRANTS AND
REPRESENTS THAT IT HAS REVIEWED THE FOREGOING WAIVERS WITH ITS LEGAL COUNSEL AND
HAS KNOWINGLY AND VOLUNTARILY WAIVED ITS JURY TRIAL RIGHTS FOLLOWING
CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY
BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
Borrowers acknowledges receipt of a copy of this Agreement.
IN WITNESS WHEREOF, the duly authorized representatives of the parties
have executed this Agreement as of the Effective Date.
IDS CyberAds
I.D.S. Cellular, Inc. CyberAds, Inc.
In Boca Raton, Florida In Boca Raton, Florida
------------------------------------- ---------------------------------------
By: By:
---------------------------------- ------------------------------------
Title: Title:
------------------------------ ----------------------------------
SLL LSL
Sandra L. Levinson Lawrence S. Levinson
In Boca Raton, Florida In Boca Raton, Florida
By: By:
---------------------------------- ------------------------------------
Sandra L. Levinson Sandra L. Levinson
Lender
Four Star Financial Services, LLC
in Brisbane, California
-------------------------------------
By:
----------------------------------
Title:
------------------------------
14
<PAGE>
SCHEDULE FOR EXHIBITS
for
LOAN AND SECURITY AGREEMENT
EXHIBIT A PROMISSORY NOTE
EXHIBIT B MORTGAGE
EXHIBIT C GUARANTY
EXHIBIT D FINANCIAL INFORMATION
15
<PAGE>
EXHIBIT A
PROMISSORY NOTE
<PAGE>
PROMISSORY NOTE
$150,000.00 Brisbane, California
June ___, 2001
FOR VALUE RECEIVED, the undersigned CYBERADS, INC., a Florida
corporation with its executive offices located at 3350 N. W .Boca Boulevard,
Suite A-44, Boca Raton, Florida, 33431 and I.D.S. CELLULAR, INC., a Florida
corporation, with its executive offices located at 3350 N.W. Second Avenue,
Suite A44, Boca Raton, Florida, 33431 ("Borrowers"), promises to pay to the
order of FOUR STAR FINANCIAL SERVICES, LLC, ("Lender") at its office at 1000
Marina Boulevard, Suite 600, Brisbane, California, 94005, or at such other place
as the holder hereof may designate, in lawful money of the United States of
America and in immediately available funds, the principal sum equivalent to the
greater of One Hundred Fifty Thousand Dollars ($150,000.00) or so much as may be
advanced and be outstanding, with interest thereon as defined herein, to be
computed on each advance from the date of its disbursement. This Note is issued
to effectuate payment of certain debt incurred by Borrower pursuant to the Loan
And Security Agreement ("Agreement"), and the terms of the Agreement are hereby
referenced and incorporated herein:
A. LOAN:
This Note is issued to effectuate payment of certain debt incurred by
the Borrower under various arrangements including the Agreement dated June ____,
20001, by and between Borrower and Lender, and advances made thereunder
according to the terms and conditions of the Agreement.
B. INTEREST:
Interest. Borrowers shall pay to Lender interest on the daily
outstanding principal balance of the Loan at a rate of thirty-three percent
(33%) per annum, based upon a three hundred sixty (360) day year, actual days
elapsed. Unpaid interest shall be added to the principal balance of the Loan and
shall be compounded monthly in arrears as of the date of each payment due.
Receipt of Interest Payments. Borrowers shall make interest payments
directly to:
Att: Joseph A. Liberman, Partner
GRABUSH, NEWMAN & CO., P.A.
CERTIFIED PUBLIC ACCOUNTANTS
502 Washington Avenue, Suite 500
Towson Maryland 21204
<PAGE>
Or such substitute as the Lender may from time to time designate in
writing.
Default Interest. From and after and during the continuance of an Event
of Default, the outstanding principal balance shall bear interest until paid in
full at an increased rate per annum ( computed on the basis of a three hundred
sixty (360) day year, actual days elapsed) equal to five percent (5%) above the
rate of interest hereunder.
C. TERM AND REPAYMENT:
1. Term and Repayment. The term of this Note shall be six months
from the above stated date.
2. Principal Payments. In addition to interest payments set forth
herein, Borrowers shall make the principal payment in full on
Monday, December 17, 2001 which is the end of the loan period,
by paying the principal payment due directly to Joseph A.
Liberman at GRABUSH, NEWMAN & CO., P.A., at the address
indicated in Section 4A. The Principal amount due may be
prepaid without penalty at any time.
3. Application of Payments. Each payment made on this Note shall
be credited first, to any interest then due and second, to the
outstanding principal balance hereof.
4. Prepayment. Borrower may prepay principal on any portion of
this Note at any time, in any amount and without penalty.
5. Security. The outstanding principal balance and all accrued
interest of this obligation shall be secured according to the
continuing security interest set forth in the Agreement dated
as of June ____, 2001 by and between Borrower and Lender with
recourse against all Collateral described therein and the
obligations established in this Note shall be payable from the
proceeds of the Collateral described in the Agreement.
D. DEFAULT:
This Note is made in connection with the Agreement. Any default in the
payment or performance of any obligation hereunder, shall entitle Lender to
enforce such obligation according to the remedies provided in the Agreement and
at law, without limitation, including recourse to the Collateral as provided
herein. Notwithstanding Lender's right to proceed under the Agreement any
intentional or willful default by Borrower, or any intentional conversion of
security by the Borrower, shall entitle Lender to immediately enforce all the
Obligations including recourse against Collateral as provided herein. In the
event of a monetary or other default, Lender shall have the right to enforce all
remedies and execute on all Collateral.
2
<PAGE>
E. MISCELLANEOUS:
1. Remedies. Upon the sale, transfer, hypothecation, assignment
or encumbrance, whether voluntary, involuntary or by operation
of law, of all or any interest in the collateral described in
the Agreement securing this Note, or upon the occurrence of
any Event of Default, the holder of this Note, at the holder's
option, may declare all sums of principal and interest
outstanding hereunder to be immediately due and payable
without presentment, demand, protest or notice of dishonor,
all of which are expressly waived by Borrower, and the
obligation, if any, of the holder to extend any further credit
hereunder shall immediately cease and terminate. Borrower
shall pay to the holder immediately upon demand the full
amount of all payments, advances, charges, costs and expenses,
including reasonable attorneys' fees (to include outside
counsel fees and all allocated costs of the holder's in-house
counsel), incurred by the holder in connection with the
enforcement of the holder's rights and/or the collection of
any amounts which become due to the holder under this Note,
and the prosecution or defense of any action in any way
related to this Note, including without limitation, any action
for declaratory relief, and including any of the foregoing
incurred in connection with any bankruptcy proceeding relating
to Borrower provided however that recourse upon the
indebtedness evidenced by this Note shall be limited to the
Collateral described in the Agreement between Borrowers and
Lender described in Section C hereof.
3. Governing Law. This Note shall be governed by and construed in
accordance with the laws of the State of California, except to
the extent Lender has greater rights or remedies under Federal
law, in which case such choice of California law shall not be
deemed to deprive Lender of any such rights and remedies as
may be available under Federal law.
CYBERADS, INC. I.D.S. CELLULAR, INC.
Principal and Obligor Principal and Obligor
By: By:
----------------------------------- -----------------------------------
Print Name: Print Name:
--------------------------- ---------------------------
Title: Title:
-------------------------------- --------------------------------
3
<PAGE>
EXHIBIT B
MORTGAGE
<PAGE>
MORTGAGE
THIS INDENTURE, made this ____ day of June, 2001, by and between Sandra
Levinson and Larry Levinson, husband and wife (hereinafter called the
"Mortgagor") and Four Star Financial Services, LLC (hereinafter called the
"Mortgagee").
WITNESSETH: That the said Mortgagor, for and in consideration of the
extension of a loan by Mortgagee to CyberAds, Inc. (the "Borrower"), a Florida
corporation, in the principal amount of up to one hundred fifty thousand dollars
($150,000) (the "Loan"), which Loan is guaranteed by Mortgagor (the
"Guarantee"), and other good and valuable consideration, the receipt whereof is
hereby acknowledged, does grant, bargain, and sell to the said Mortgagee, its
legal representatives and assigns forever, the following described land,
together with all buildings and improvements thereon, situated, lying and being
in the County of Palm Beach, State of Florida, to wit:
See Exhibit "A" attached hereto and incorporated herein.
And the said Mortgagor does hereby fully warrant the title to said
land, together with all buildings and improvements thereon, and will defend the
same against the lawful claims of all persons whomsoever.
PROVIDED ALWAYS, That if Borrower or said Mortgagor, its legal
representatives or assigns, shall pay unto the said Mortgagee, its legal
representatives or assigns, all amounts due Mortgagee under the Loan, then this
mortgage and the estate hereby created shall cease and be null and void.
Mortgagor shall not permit, commit or suffer any waste, impairment or
deterioration of said property including the removal of soil, buildings or
improvements therefrom, and perform, comply with and abide by each and every one
of the stipulations, agreements, conditions, and covenants of said Guarantee and
of this mortgage, and shall duly pay all taxes and also insurance premiums
reasonably required and all costs and expenses including a reasonable attorney's
fee, which said Mortgagee may incur in collecting the Guarantee secured by this
mortgage, and also in enforcing this mortgage by suit or otherwise.
IN WITNESS WHEREOF, the said Mortgagor hereunto have set their hands
and seals the day and year first above written.
Signed, sealed and delivered MORTGAGOR:
in our presence:
---------------------------- -------------------------------
MARK J. BRYN SANDRA LEVINSON
899 N.E. 76th Street
Boca Raton, FL 33487
----------------------------
CHRISTINE COTTE
<PAGE>
---------------------------- -------------------------------
MARK J. BRYN LARRY LEVINSON
899 N.E. 76th Street
Boca Raton, FL 33487
----------------------------
CHRISTINE COTTE
STATE OF FLORIDA )
) ss:
COUNTY OF PALM BEACH )
BE IT KNOWN that on the ______ day of June, 2001, before me, a Notary
Public in the State of Florida, County of Palm Beach, personally came and
appeared Sandra Levinson, who is personally known to me, or who by producing her
________________________________, as identification, has been shown to be the
person described in and who executed the foregoing Mortgage and she acknowledged
before me that she executed the same for the purposes therein expressed as her
free act and deed.
IN TESTIMONY WHEREOF, I have hereunto subscribed my name and affixed my
seal of office the day and year last above written.
Print Name:
-------------------------
Notary Public, State of
Florida at Large
My Commission expires
STATE OF FLORIDA )
) ss:
COUNTY OF PALM BEACH )
BE IT KNOWN that on the ______ day of June, 2001, before me, a Notary
Public in the State of Florida, County of Palm Beach, personally came and
appeared Larry Levinson, who is personally known to me, or who by producing her
________________________________, as identification, has been shown to be the
person described in and who executed the foregoing Mortgage and she acknowledged
before me that she executed the same for the purposes therein expressed as her
free act and deed.
2
<PAGE>
IN TESTIMONY WHEREOF, I have hereunto subscribed my name and affixed my
seal of office the day and year last above written.
Print Name:
-------------------------
Notary Public, State of
Florida at Large
My Commission expires
Prepared by:
Bryn & Associates, P.A.
2 S. Biscayne Blvd.,
#2680
Miami, Florida 33131
(305) 374-0501
3
<PAGE>
EXHIBIT C
GUARANTY
<PAGE>
PERSONAL GUARANTEE OF INDEBTEDNESS
(Joint and Several)
In consideration of and as an inducement to Four Star Financial
Services, LLC ("Four Star Financial Services"), to enter into that certain loan
agreement, dated as of June 22, 2001 (the "Loan Agreement") by and between Four
Star Financial Services ("Lender") and CyberAds, Inc, ("Borrower") in reliance
upon this Personal Guarantee of Indebtedness (the "Guarantee"), Sandra Levinson
and Lawrence Levinson, ("Guarantors") jointly and severally, unconditionally
guarantee the due and punctual payment of all payment, both interest and
principal (as defined in the Loan Agreement), and all other sums due (including
interest and penalties) and to be paid by Borrower pursuant to the Loan
Agreement and the performance by Borrower of all the terms, conditions,
covenants and agreements of the Loan Agreement, and guarantors, jointly and
severally, agree to pay all of Lender's costs, expenses and reasonable
attorney's fees incurred in enforcing the covenants and agreements of Borrower
in the Loan Agreement or incurred by Lender in enforcing the Guarantee.
Guarantors waive notices of the acceptance of the Guarantee,
presentment, protest, notice of protest and any and all demands for performance
or any and all notices of non- performance which might otherwise be a condition
precedent to the liability of Guarantors under this Guarantee, and Guarantors
covenant and agree that Lender may proceed directly against Guarantors, or any
of them individually or in any combination, without first proceeding or making
claim or exhausting any remedy against Borrower or pursuant any particular
remedy or remedies available to Lender.
Guarantors, jointly and severally, covenant and agree that, without
releasing, diminishing, or otherwise affecting the liability of Guarantors under
this Guarantee or the performance of any obligation contained in this document,
and without affecting the rights of Lender, Lender may, at any time and from
time to time, and without notice to or further consent of any Guarantor: (a)
make any agreement extending or reducing the term of the Loan or otherwise
altering the terms of payment under the Loan Agreement or granting any
indulgences with respect to the Loan Agreement; and (b) exercise or refrain from
exercising or waiving any right Lender might have.
Guarantors agree that in the event of anyone of the following: (a)
Borrower shall become insolvent or shall be adjudicated a bankrupt; (b) Borrower
shall file a petition for reorganization, arrangement or similar relief under
any present or future provision of the Bankruptcy Code; (c) Such a petition
filed by creditors of Borrower shall be approved by a court; (d) Borrower shall
seek a judicial readjustment of the rights of its creditors under any present or
future federal or state law; or (e) a receiver of all or part of its property
and assets is appointed by any state or federal court, and in any such
proceeding the Loan Agreement shall be terminated or rejected or the obligations
of Borrower under it shall be modified, then Guarantors will immediately pay to
Lender, or its successors or assigns, an amount equal to all amounts due under
the Loan Agreement.
<PAGE>
Neither Guarantors' obligations to make payment in accordance with the
terms of this Guarantee nor any remedy for the enforcement of it shall be
impaired, modified, changed, released or limited in any manner whatsoever by any
impairment, modification, change , release or limitation of the liability of
Borrower or its estate in bankruptcy or of any remedy for the enforcement
thereof resulting from the operation of any present or future provision of the
national Bankruptcy Act or from the decision of any court.
This Guarantee shall be binding upon the successors and assigns of the
Guarantors and each of them and inure to the benefit of the successors and
assigns of the Lender (including any assignee of the Loan, which may be assigned
as additional security for a loan).
This Guarantee is secured by a mortgage on real estate, of even date
herewith, made by Guarantors in favor of Lender. The terms of said mortgage are,
by this reference, made a part hereof.
In witness whereof, Guarantors have caused this Guarantee to be
executed this _____ day of June, 2001.
GUARANTORS:
__________________________________
Print Name:_______________________
__________________________________
Print Name:_______________________
2
<PAGE>
EXHIBIT D
FINANCIAL INFORMATION
<PAGE>
EXHIBIT D
FINANCIAL INFORMATION
During the terms of the Loan on each Monday, by 12:00 noon eastern daylight
time, CyberAds shall furnish Lender or Lender's designate the following
information regarding IDS which shall be correct as of 5:00 PM eastern daylight
time the immediately preceding Friday:
1. The number of telephone applications received for the week
ended Friday;
2. The number of telephone applications approved for the week
ended Friday, broken down by vendor;
3. The number of telephones shipped and received for the week
ended Friday, broken down by vendor;
4. The number of charge backs for the week ended Friday, broken
down by vendor;
5. The amount of any income received for the week ended Friday,
broken down by vendor;
6. The amount of any debt incurred for the week ended Friday;
7. The amount of any expenses paid for, or incurred during, the
week ended Friday, broken down into at least the following
categories: payroll, payroll taxes and expenses, rent,
non-rent office expenses, accounting fees, loan interest and
principal payments, and other miscellaneous expenses;
8. The amount of webmaster commissions and web site maintenance
fees paid, broken down by payee;
9. Copies of all bank statements received by CyberAds or IDS
during the prior week; Copies of all statements from the
accountants to CyberAds or IDS received by CyberAds or IDS
during the prior week.