Sample Business Contracts

Collateral Loan Agreement - Interauditing Srl and Internet Advisory Corp.

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                            COLLATERAL LOAN AGREEMENT

This Collateral Loan agreement (the "Agreement"), dated this 1st day of April,
2002, is entered into between Interauditing Srl, an Italian Corporation with a
principal address at Piazza Duca D'Aosta 6, 20124 Milano, Italy (the "Lender"),
and The Internet Advisory Corporation, a Utah corporation with a principal
address at 150 East 58th Street, New York, NY 10022 (the "Borrower").

In consideration of the mutual covenants herein contained, and intending to be
legally bound hereby, the parties agree as follows:


      a.    Subject to the terms and conditions hereinafter set forth, the
            Lender agrees to provide to Borrower a line of credit in an amount
            of up to 20% ("the Loan Market Value Percentage") of the Final
            Market Value, as such term is defined in Section 3 hereof (the "Loan
            Amount" or the "Loan") of certain restricted shares of Borrower's
            common stock (the "Stock"). The Lender will pay the Loan Amount to
            Borrower in no more than two (2) installments. 50% or more of the
            Loan Amount (the "Initial Payment") will be paid to Borrower not
            more than five (5) days after Borrower shall have delivered the
            Stock and all other documents required by this Agreement to Lender.
            The balance of the Loan Amount will be paid to Borrower not more
            than ten (10) day after the Initial Payment. The Borrower's
            obligation to repay the Loan Amount shall be evidenced by one or
            more promissory notes issued in the form of "Exhibit A" attached
            hereto (the "Promissory Notes.)" The Promissory Notes shall be
            executed by Borrower and delivered to the Lender via courier upon
            Borrower receiving notification by Lender that funds are available
            to advance the Loan Amount.

      b.    To secure its obligations under the Loan, Borrower will issue the
            Stock in the name of Lender. The Stock will serve to collateralize
            the Loan and will contain restrictions on assignment and transfer.
            In connection with such restrictions, the Stock will contain the
            following legends:

                  "The securities represented by this certificate have not been
                  registered under the Securities Act of 1933, as amended, and
                  may not be sold, transferred, pledged, hypothecated or
                  otherwise disposed of in the absence of (i) an effective
                  registration statement for such securities under said Act or
                  (ii) an opinion of company counsel that such registration is
                  not required."

            Concurrently with the execution of this Agreement, Borrower shall
            deliver the Stock (in physical certificate form) to the branch
            office of Credito Italiano Bank (the "Bank") in New York, located at
            375 Park Avenue, New York, New York, 10152, for final credit to the
            Lender's account number 999647 0 at Credito Italiano Milano Cordusio
            Branch 200 NDG N 13372852. The Stock shall be free and clear from
            all liens and encumbrances at the time it is deposited, and shall
            not be subject to other restrictions or limitations, (i.e.,
            shareholder rights, etc.) other than the restrictions related to its
            status as restricted stock and any other restrictions imposed by
            this Agreement.

      c.    This Agreement, the Promissory Notes, and the other documents
            specified above constitute the "Loan Documents".


      a.    All Loan Amounts payable to Borrower shall be wired directly to
            Borrower based on wire instructions provided by Borrower, without
            deduction for any charges, expenses or commissions, except for a 2%
            engagement service fee (the "Engagement Service Fee") payable to the
            Lender. Net Loan proceeds shall be immediately available to the

      b.    Delivery of the Promissory Notes to Lender shall be a Condition
            Precedent to delivery of the Loan Amount by the Lender, which will
            also be subject to confirmation by outside counsel of the Lender as
            to availability of funds.

      c.    In the event the Lender does not advance to the Borrower the Loan
            Amount, the Borrower's sole and exclusive remedy shall be to demand
            an immediate return of the Stock and the Promissory Notes. Lender
            shall comply within five (5) business days of receipt of said demand
            in hard copy written form. In the event Lender does not comply in
            accordance with the time frame set forth above, or any extended time
            frame granted by Borrower, this Section 2.c. will be deemed null and
            void and Borrower will be free to seek alternative remedies.


      Upon the execution of this Agreement (said "execution" being deemed to
      include delivery of a signed copy of this Agreement to the Lender),
      receipt of the Stock and all Loan Documents required by the Lender, the
      "Final Market Value" shall be used as the value to determine the Loan
      Amount. The Loan Amount shall be calculated by multiplying the Final
      Market Value by the Loan Market Value Percentage specified in Section 1.a.
      The Final Market Value shall be calculated based on the average closing
      price for Borrower's common stock as traded on the OTC Bulletin Board, for
      the ten (10) trading days immediately preceding the date the Stock and the
      Loan Documents are delivered. However, if the closing share price on the
      last trading date of this ten-day trading period is less than the ten day
      average closing price, the closing share price on that last trading date
      shall be used to determine Final Market Value. Final Market Value is equal
      to the closing price indicated above multiplied by the number of shares of
      the Stock delivered to the Lender as specified above.


      Ninety calendar days after the date (the "Issue Date") of the first
      Promissory Note provided by Borrower to Lender, the Final Market Value and
      Loan Amount will be recalculated. The formula used for the recalculation
      will be the same as that used in Section 3 above, except that the average
      price will be calculated using the twenty trading days immediately
      preceding the ninetieth calendar day to calculate the share price. The
      resulting "Final Market Value" calculated in this manner will be
      multiplied by the Loan Market Value Percentage noted in Section 1.a.
      above, and, if the recalculated Loan Amount is 10% or more greater than
      the original Loan Amount calculated under Section 3, then the difference
      between the two Loan Amounts will be advanced as a new loan within five
      (5) business days of the ninetieth calendar day following the Issue Date
      as noted. However, if the recalculated Loan Amount is not 10% or more
      greater than the original Loan Amount, no adjustment will be made.


      Except as otherwise provided in this Agreement, the Stock pledged under
      this Agreement shall be held as collateral as long as there is any
      principal or interest outstanding under the Promissory Notes. Upon
      satisfaction of all principal and interest under the Promissory Notes, the
      Lender shall promptly deliver to the Borrower the Stock and the Loan
      Documents, other than the Lender's copy of the Loan Documents. The Lender
      shall give written notice of any default on the Loan to the Borrower in
      accordance herewith and Borrower may thereafter have ten (10) business
      days (the "Cure Period") to cure such default. In the event Borrower fails
      to cure such default within the Cure Period, Lender may then sell, assign,
      hypothecate, or otherwise dispose of the Stock as herein provided. The
      Lender accepts no responsibility for the amount of proceeds obtained
      through the disposition of the Stock under any lawful means. However,
      proceeds obtained in excess of the total of the default amount plus
      reasonable attorney's fees, if any, and costs of disposing of the Stock
      shall be returned to the Borrower.

      The Stock shall constitute the entire collateral used to procure the Loan,
      and the Lender shall be limited to liquidation of the Stock upon an Event
      of Default as defined in the Promissory Notes. The Lender shall have no
      recourse to other assets of the Borrower (i.e., this Loan is
      "non-recourse" as to any other assets of the Borrower.)


      The closing shall take place on the later of the delivery of the
      Promissory Notes or the Stock to the Lender.


      The Lender accepts full responsibility for the control, handing and return
      of such Stock to the Borrower. Accordingly, the Lender hereby warrants the
      following: i) the Stock will not be hypothecated, assigned, transferred,
      or otherwise encumbered (other than as specified in this document); ii)
      the Stock will not be used to short sell the Stock while the Stock is on
      deposit with the Bank; iii) the Stock shall remain on deposit with the
      Bank in a designated account for the entire period of the Loan; and iv)
      the Stock will not be used in any manner that is not prescribed other than
      as provided for in this agreement or the Promissory Note(s).


      The Lender shall use the Stock to arrange for a credit facility ("the
      Investment Credit Facility") in the amount of up to 70% of the Final
      Market Value of the Stock. In establishing this credit facility, the
      Lender will use the Stock as collateral but will not remove the Stock from
      the account into which the Borrower originally deposited it, nor will the
      Lender allow a change in control of the Stock. The Lender hereby warrants
      that upon repayment of the Loan Amount, the Stock will be immediately
      returned to the Borrower without liens or encumbrances. It is thereby
      intended by both parties that all risks associated with investments made
      by the Lender utilizing the Investment Credit Facility remain with the
      Lender and are not passed on to the Borrower.

      Regarding investments to be made utilizing the Investment Credit Facility,
      the Lender will make investments deemed by the Lender to possess strong
      profit potential with minimal risk. It is hereby agreed between the
      Borrower and the Lender that profits created from the investments made by
      the Lender shall be shared 70% to the Lender and 30% to the Borrower. It
      is understood that the Borrower's portion of accumulated profits from
      these investments will be applied first to the interest

      owed on the Loan to the Borrower from the Lender and second to the
      principal outstanding on the Loan. All proceeds due to the benefit of the
      Borrower will be deposited in an account to be established for the
      Borrower at Credito Italiano, Milano, Italy.

      On the first anniversary of this Agreement, the Borrower and the Lender
      will use their best efforts to agree to an annual payment to be made to
      the Lender to reduce the outstanding principal on the Loan. At such
      anniversary date, the Borrower and Lender will renegotiate this Agreement
      with respect to investment goals and the Lender's investment authority for
      the second year of this Agreement. This Agreement shall be similarly
      renegotiated on each anniversary date during the overall term of this


      Absent an uncured default, Lender agrees that it shall have no right to
      vote the stock on any matters put before the shareholders of Borrower for
      a vote. In connection therewith, Lender agrees that it shall execute and
      deliver a voting proxy with respect to the Stock in favor of a designee of


      In order to induce the Lender to provide the Loan according to Promissory
      Notes in the form of the attached Exhibit A, Borrower makes the following
      representations and warranties to the Lender; such representations and
      warranties shall be unaffected by any separate inquiries, credit and/or
      security investigation made by the Lender prior to or after execution of
      this Agreement and shall survive the closing of the transactions
      contemplated hereby:

      a.    Borrower has all requisite power and authority to enter into this
            Agreement and all other Loan Documents, including, without
            limitation, the Promissory Notes, and to carry out the transactions
            contemplated hereby.

      b.    Borrower warrants and represents that it is not now insolvent,
            bankrupt, or contemplating bankruptcy, that there are no legal
            claims filed or to its knowledge threatened against Borrower,
            whether judged with or without merit by the Borrower, and that there
            are no other impediments to the sale or transfer of the Stock.

      c.    The execution and delivery of this Agreement, the Promissory Notes,
            and the other Loan Documents and instruments to be executed and
            delivered by the Borrower are not subject to recall, restriction on
            voting, use, or other limitations.

      d.    This Agreement, the Promissory Notes, and other Loan Documents, when
            executed and delivered, will constitute valid binding agreements of
            the Borrower, enforceable in accordance with their respective terms,
            except such as may be limited by bankruptcy, insolvency,
            reorganization, or other laws affecting creditor's rights generally.

      e.    Neither the execution and delivery of this Agreement, the Promissory
            Notes, or the other Loan Documents and instruments to be executed
            and delivered by Borrower pursuant hereto, nor the consummation by
            Borrower of the transaction contemplated hereby, will require any
            authorization, consent, approval, exemption or any other action by,
            or notice to, any governmental entity except as specifically
            provided herein.

      f.    Borrower does not have material tax deficiencies, federal, state,
            foreign, county, local, or other, that would or could affect the
            solvency, final status of, or otherwise compromise Borrower in its
            ability to transfer the Stock.

      g.    To the best of Borrower's knowledge, the information supplied by
            Borrower to Lender (verbally and in writing) contains no untrue
            statement of material fact or omits or shall omit a material fact,
            which would make such statements misleading. All statements and
            information contained in any certificate, instrument, schedule or
            document delivered by Borrower shall be deemed representations and
            warranties made by borrower.

      h.    In connection with the Loan and the issuance of the Stock, Borrower
            agrees to make all required disclosures to the Securities and
            Exchange Commission ("SEC") and any other applicable regulatory
            authorities. Borrower shall indemnify Lender against any penalties,
            fees, fines, or lawsuites that may arise from Borrower's failure to
            make proper regulatory disclosures related to the issuance of the

      i.    In the event of an uncured default on the Loan, as described in
            Section 5 of this document, Lender will have the immediate right to
            sell the Shares. In such event, Borrower agrees that it will, as
            soon thereafter as is practicable, take all reasonable steps to
            register the Stock for resale by Lender.


      The obligation of the Lender to consummate the transactions contemplated
      herein is subject to the satisfaction of the following conditions (any one
      or more of which may be waived by the Lender):

      a.    Borrower will have performed all obligations and complied with all
            conditions required to be performed or complied with by Borrower at
            or prior to the Closing.

      b.    The representation and warranties of Borrower made herein shall be
            true and correct as of the Closing.

      If any of the conditions contained in this paragraph have not been
      satisfied (or waived), Lender may cancel and terminate this Agreement.


      This Agreement may be amended, or the terms hereof waived, only in writing
      and having been executed by all of the parties to this Agreement.


      All notices and other communications hereunder shall be delivered in
      writing and shall be deemed to have been given if delivered by hand or
      facsimile transmission or if deposited with a recognized overnight
      delivery service, with receipt, addressed as follows:

           If to Borrower at:      The Internet Advisory Corporation
                                   150 East 58th Street
                                   New York, NY 10002
                                   Attn: Richard Goldring, President

            With a copy to:        Kaplan Gottbetter & Levenson, LLP
                                   630 Third Avenue
                                   New York, NY 10017
                                   Attn: Adam S. Gottbetter

            If to the Lender at:   Interauditing Srl
                                   Piazza Duca D'Aosta, 6
                                   20124 Milano, Italy
                                   Tel: + 39 02 67078369
                                   Fax: + 39 02 66982065

      Or, at such other address as may hereafter be designated by either party
      by written notice given hereunder. Notices sent by facsimile transmission
      must show the sender's time of transmission information ("TTI") on such


      This Agreement shall be governed by the laws of the State of New York
      without regard to any provisions or conflict of law. The parties agree
      that any differences shall be filed and adjudicated in this Governing


      This Agreement binds, and shall inure to the benefit of, the parties and
      their respective successor and assigns.


      This Agreement may be signed in any number of counterparts, and such shall
      be deemed an original together as one and the same document. The parties
      agree that facsimile signatures which copy shall show the sender's TTI
      shall be deemed an original.


      This Agreement and related Loan Documents constitute the entire agreement
      of the parties with respect to the subject matter hereto and supersede any
      prior or contemporaneous understandings or agreements.


      Time is specifically declared to be of the essence in the performance by
      Borrower and the Lender of their respective duties and responsibilities
      under this Agreement.


      Whereas the Lender has developed a number of important and sensitive
      business contacts and relationships, either directly or indirectly, such
      contacts and relationships are limited to the Lender and/or its designees.
      Any intentional contact by any executive officer or director of the
      Borrower, either directly or indirectly, without specific, written, prior
      permission of the Lender or unless otherwise required in furtherance of
      this Agreement, shall be viewed as a violation of this Agreement

      if such contact was initiated for the specific purpose of circumventing
      this Agreement, and render this Agreement null and void from inception. A
      minimum of five business days prior to declaring this Agreement null and
      void pursuant to this Section 19, Lender must supply Borrower with written
      notice thereof including detailed, incontrovertible proof that supports
      the assertion being made. Following a termination of this Agreement
      pursuant to this Section 19, any monies due to the Lender shall be
      immediately due and payable along with any accrued interest. Failure by
      the Borrower to make such repayment within five (5) business days shall
      give the Lender the right, but not the obligation, to liquidate any and
      all collateral in order to obtain satisfaction of the Promissory Notes.
      After payment of these outstanding amounts by the Borrower, the Lender's
      obligation will be limited solely to the return of the Stock along with a
      notice of cancellation of the Promissory Notes. Should the Lender fail to
      meet its obligation(s) under this Agreement, this section shall not apply
      and the Borrower may communicate with any party required in order to
      secure the return of the Stock.


      See Appendix "A", Terms and Conditions Pursuant to Loan.

IN WITNESS WHEREOF, and intending to be legally bound hereby, the parties have
executed this Agreement as of the day and year first above written.


By:    /s/ Stefano Cevolo
       Dott. Stefano Cevolo

Title: Chief Executive Officer

Date:  April 1, 2002


By:    /s/ Richard Goldring
       (Authorized Signature)

Title: President

Date:  April 1, 2002

                                  APPENDIX "A"


      Term - The initial term of the Loan will be 1 year. However, Borrower
      shall have the option to extend the Loan, in whole or in part, for up to
      three additional 1 year periods. Accordingly, the maximum Loan term, as
      extended, shall be 4 years. Borrower shall exercise its right to extend
      the Loan by advising Lender in writing not less than 30 days prior to the
      Loan termination date then in effect (the "Loan Extension Notice"). Each
      extension will be for an additional 1 year period. The Loan Extension
      Notice delivered by Borrower to Lender may, at Borrower's option, provide
      for Borrower's replacement of the Stock with one or more new certificates
      representing the same number or restricted shares of Borrower's common
      stock as the Stock being replaced. In connection therewith, the parties
      acknowledge that a simultaneous exchange is contemplated and that they
      will fully cooperate with on another to effect said exchange. Following
      replacement, the new certificates shall be treated in the same manner as
      the Stock. Borrower can further extend the Loan under the same procedures
      to a maximum period of 4 years.

      Right to Terminate - The Lender shall reserve the right to terminate as
      provided in the Loan Agreement.

      Interest Rate - The interest rate on the Loan will be set in accordance
      with LIBOR (six month rate) plus one full percentage point (1%). The
      interest rate may be adjusted once during each 12 month Loan Agreement

      Payments - The provision of interest payments shall be made quarterly in

      Late Payments - The Lender shall have the right to charge additional
      interest on late scheduled quarterly interest payments. Payments shall be
      deemed late if the agreed quarterly interest is not paid on the due date
      as stated in the interest payment schedule which shall be issued upon
      acceptance and draw down of funds by the Borrower. The interest charge on
      late payments will be calculated at 5% until said interest is paid. This
      charge shall be invoiced separately. If the Borrower fails to make a
      scheduled interest payment or separately invoiced late payment within
      thirty days of the due date, it will be deemed as a default under the Loan


      The Stock schedule sheet will define the allocated Stock to be used as
      collateral against the issuance of the Loan.

      In the event of an application for a Loan to be increased in capital, such
      application would require a separate or amended Stock schedule sheet.

                                    EXHIBIT A

                             SECURED PROMISSORY NOTE

USD$ ____________________ (Amount)                              DATE: __________

FOR VALUABLE CONSIDERATION, receipt of which is hereby acknowledged,
__________________ ("Borrower"), promises to pay to ____________________
("Lender") at _______________________________________________ (Address) or any
other place as Lender may from time to time designate in writing, the principal
sum of _______________________________________ (USD$__________) (the "Principal
Amount"), hereof until this Note is paid in full at the rate of ________________
(__%) per annum.

This Note is secured by "Restricted Shares of Stock" of
_________________________, (Borrower) on deposit with Credito Italiano Bank at
their office in New York, located at 375 Park Avenue, New York, New York, 10152,
for final credit to the Lender Account number _____________.

Borrower is to pay interest quarterly in arrears, and principal is due
___________ (Date) as stated in the Collateral Loan Agreement. All further terms
and conditions of this note are governed by the Collateral Loan Agreement
executed by Borrower and Lender on ________________ (Date)

The payments shall be made in lawful money of the United States and shall be
free from set off, deduction, or counterclaim of any kind. Borrower may prepay
this Note in whole or in part on the anniversary date of the note without
premium or penalty. Unless Lender shall elect otherwise, any partial pre-payment
shall be credited first to accrued interest and then to the Principal Amount
outstanding and shall not extend or postpone the due date of any subsequent
payment or change the amount of such payment.

This Note shall be governed by and construed in accordance with the laws of the
State of New York. Should any collection or any other legal actions be taken by
Lender to collect on this Note or any portion hereof, Borrower will pay all
reasonable costs of collection, including attorneys' fees.

By: ____________________________________ (Borrower)


Date: __________________________________