EXHBIIT 10.1
LOAN AGREEMENT
LOAN AGREEMENT, dated as of December 20, 2006 (this "Agreement"),
between ONE VOICE TECHNOLOGIES INC., a Nevada corporation ("Borrower"), and
ALPHA CAPITAL ANSTALT and WHALEHAVEN CAPITAL FUND LIMITED (together with its
successors and assigns, each a "Lender" and collectively, "Lenders")
IN CONSIDERATION of the mutual covenants herein contained, Borrower and
Lender agree as follows:
I. DEFINITIONS.
1.1 GENERAL TERMS. For purposes of this Agreement the following terms
shall have the following meanings:
"Account Debtor" means the Customers or any other person or entity who
is or may become obligated upon a Receivable.
"Accounts" means all amounts due and to become due to Borrower from the
Customers and other accounts, contract rights, chattel paper, instruments and
documents, whether now owned or to be acquired by Borrower, provided that the
same arise in connection with the sale of Inventory.
"Advances" shall have the meaning set forth in Section 2.1.
"Affiliate" of any Person shall mean (a) any Person which, directly or
indirectly, is in control of, is controlled by, or is under common control with
such Person, or (b) any Person who is a director or officer (i) of such Person.
For purposes of this definition, control of a Person shall mean the power,
direct or indirect, (x) to vote 20% or more of the securities having ordinary
voting power for the election of directors or, in the case of a Person other
than a corporation, individuals who perform similar functions.
"Agreement" shall mean this Loan Agreement, as amended, restated,
modified and supplemented from time to time.
"Borrower's Account" shall have the meaning set forth in Section 2.5.
"Borrowing Base Certificate" shall mean such certificate from Borrower
as Lender shall require from time to time to permit Lender to have the
information required to effect Advances pursuant to the provisions of this
Agreement.
"Business Day" shall mean any day other than a day on which commercial
banks in New York are authorized or required by law to close.
"Closing Date" shall mean the date hereof.
"Default" shall mean an event which, with the giving of notice or
passage of time or both, would constitute an Event of Default.
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"Dollar" and the sign "$" shall mean lawful money of the United States
of America.
"Event of Default" shall mean the occurrence of any of the events set
forth in Article X.
"Governmental Body" shall mean any nation or government, any state or
other political subdivision thereof or any entity exercising the legislative,
judicial, regulatory or administrative functions of or pertaining to a
government.
"Interest Rate" shall have the meaning set forth in Section 3.1.
"Lender" shall have the meaning ascribed to such term in the preamble
to this Agreement and shall include each Person which becomes a transferee,
successor or assign of Lender.
"Lock Box Account" means account with Depository Bank, or such other
account designated by Lender.
"Material Adverse Effect" shall mean a material adverse effect on (a)
the condition, operations, assets, business or prospects of Borrower (b)
Borrower's ability to pay the Obligations in accordance with the terms thereof,
(c) the value of the Accounts, or Lender's lien on the Accounts or the priority
of any such lien or (d) the practical realization of the benefits of Lender's
rights and remedies under this Agreement and the Transaction Documents.
"Obligations" shall mean and include any and all of Borrower's
indebtedness and/or liabilities to Lender of every kind, nature and description,
direct or indirect, secured or unsecured, joint, several, joint and several,
absolute or contingent, due or to become due, now existing or hereafter arising,
contractual or tortious, liquidated or unliquidated, regardless of how such
indebtedness or liabilities arise or by what agreement or instrument they may be
evidenced or whether evidenced by any agreement or instrument (including all
interest accruing after the commencement of any bankruptcy or similar proceeding
whether or not enforceable in such proceeding), and all obligations of Borrower
to Lender to perform acts or refrain from taking any action.
"Payment Office" shall mean initially c/o Grushko & Mittman, P.C., 551
Fifth Avenue, Suite 1601, New York, NY 10176, or such other office of Lender,
which it may designate by notice to Borrower to be the Payment Office.
"Person" shall mean any individual, sole proprietorship, partnership,
corporation, business trust, joint stock company, trust, unincorporated
organization, association, limited liability company, institution, public
benefit corporation, joint venture, entity or government (whether Federal,
state, county, city, municipal or otherwise, including any instrumentality,
division, agency, body or department thereof).
"Receivables" means all rights to the payment of money now owned or
hereafter acquired by Borrower, whether due or to become due and whether or not
earned by performance including, but not limited to, Accounts, chattel paper,
instruments, general intangibles, and all guaranties and security therefor and
all contracts relating thereto and all returned and repossessed goods; provided
that the same arise in connection with the extension of credit provided to
Borrower by Lender pursuant to this Agreement.
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"Revolving Credit Note" shall mean the promissory note referred to in
Section 2.1.
"Securities" shall have the meaning set forth in Section 15.1 herein.
"Term" shall have the meaning set forth in Section 13.1.
"Termination Date" shall have the meaning set forth in Section 13.1.
"Transaction Documents" shall mean the Revolving Credit Note, the
Security Agreement, between Borrower and Lender and any and all other
agreements, instruments and documents now or hereafter executed by Borrower
delivered to Lender in respect of the transactions contemplated by this
Agreement.
"UCC" shall mean the Uniform Commercial Code as in effect in the State
of New York from time to time.
1.2 CERTAIN MATTERS OF CONSTRUCTION. The terms "herein", "hereof" and
"hereunder" and other words of similar import refer to this Agreement as a whole
and not to any particular section, paragraph or subdivision. Each reference to a
Section, an Exhibit or a Schedule shall be deemed to refer to a Section, an
Exhibit or a Schedule, as applicable, of this Agreement unless otherwise
specified. Any pronoun used shall be deemed to cover all genders. Wherever
appropriate in the context, terms used herein in the singular also include the
plural and vice versa. Unless otherwise provided, all references to any
agreements to which Lender is a party, shall include any and all modifications
or amendments thereto and any and all extensions or renewals thereof.
II. ADVANCES.
2.1 MAXIMUM ADVANCES. Under this Agreement, the maximum borrowings
shall be up to $640,000.00. Lender shall advance ("Advance or Advances") to
Borrower up to 75% of the face value of current and future invoices
("Receivables") submitted for borrowing. Receivables shall not include
receivables arising from goods sold on consignment ("Formula Amount"). Only
funds due to for irrevocable sales may be deemed Receivables. As of the date of
this Agreement, Borrower will provide to Lender with a listing of all
Receivables to be financed by Lender (Schedule 2.3).
2.2 INTEREST. The cost of funds ("Interest") payable to Lender for the
Borrower's borrowings against Receivables shall be determined pursuant to a
Revolving Credit Note issued by Borrower to Lender ("Note"). Interest shall be
calculated daily on all outstanding Receivables.
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2.3 REPAYMENT. As repayment of Borrower's borrowings and Interest and
any sum due to Lender arising under the Note, this Agreement, or Security
Agreement dated February 16, 2006, as amended ("Other Security Agreement"), and
any other agreement to which Borrower and Lender are parties ("Obligations"),
all remittances and proceeds of Receivables obtained or received by the Borrower
will be received in trust for Lender, and the Borrower will remit to Lender's
designated bank account such remittances and proceeds within three (3) Banking
Days from the date of receipt.
2.4 SECURITY INTEREST. For the payment and performance of the
Obligation, Borrower hereby assigns to Lender, the Borrower's a continuing
interest in the Receivables, together with all security thereof and all of the
Borrower's right, title and interest in and to the merchandise represented by
such Receivables, including, without limitation, all of the Borrower's rights to
stoppage in transit, replevin and reclamation and as an unpaid vendor as
provided in the UCC and the Bankruptcy Code. This Agreement represents a
Security Agreement under the UCC and, together with all attendant documentation,
constitutes the full agreement between Lender and the Borrower. The security
interest described herein is in addition to the security interest granted to
Lender pursuant to the Other Security Agreement.
2.5 BORROWER'S WIRE INSTRUCTIONS. Lender shall wire Advances to
Borrower's bank as follows:
[INTENTIONALLY OMITTED]
2.6 WEEKLY STATEMENT OF ACCOUNT AND MONTHLY SETTLEMENT. At the end of
each week Borrower shall send Lender a Statement of Account in the form of
Exhibit A hereto reflecting all transactions under this Agreement for such week.
The Statement of Account shall include the following:
(i) Date and amount of Receivables financed.
(ii) Date and amount of Advances against Receivables.
(iii) Date and amount of customer payments received by Borrower.
(iv) Date and amount of customer remittances paid pro-rata to Lender by
Borrower.
(v) Balance of outstanding Receivables financed.
(vi) Balance of outstanding Advances against Receivables
(vii) Amount and balance of Interest earned by Lender.
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At the end of each month the parties to this Agreement shall determine
and agree on the amount of any surplus funds which may be available and payable
to Borrower arising from the full payment of a customer's Receivable after
accounting for Interest and any adjustments.
III. INTEREST, FEES AND OTHER MATTERS.
3.1 INTEREST. Interest on each Advance shall be computed at a rate of
8% per annum, payable monthly in arrears on the 1st day of each calendar month
(the "Interest Rate"). Upon and after the occurrence of an Event of Default, the
Obligations shall bear interest at the Interest Rate plus seven percent (7%) per
annum.
3.2 FEE FOR OVERADVANCE. If the principal amount outstanding of the
Revolving Credit Note exceeds the Formula Amount, such excess shall bear
interest at the Interest Rate plus seven percent (7%) per annum.
3.3 COMPUTATION OF INTEREST AND FEES. Interest and fees hereunder shall
be computed on the basis of a year of 365 days and for the actual number of days
elapsed. If any payment to be made hereunder becomes due and payable on a day
other than a Business Day, the due date thereof shall be extended to the next
succeeding Business Day and interest thereon shall be payable at the Interest
Rate.
3.4 MAXIMUM CHARGES. In no event whatsoever shall interest and other
charges hereunder exceed the highest rate permissible under law. If such
interest and other charges would otherwise exceed such rate, such excess amount
shall be first applied pro-rata to any unpaid principal balance of the Revolving
Credit Note, and if the then remaining excess amount is greater than the
previously unpaid principal balance, Lender shall promptly refund such excess
amount to Borrower and the provisions hereof shall be deemed amended to provide
for such permissible rate.
3.5 EXCULPATION OF LIABILITY. Nothing herein contained shall be
construed to constitute Lender as Borrower's agent for any purpose whatsoever,
nor shall Lender be responsible or liable for any payments with respect to the
Accounts.
IV. DISTRIBUTION OF ACCOUNTS RECEIVABLE.
4.1 DEPOSITS.
(a) Borrower will cause the Account Debtor's deposit of all
remittances and proceeds with respect to the sale or transfer of the Inventory,
whether by wire, cash or check, into the Lock Box Account with the Depository
Bank. Borrower and any Affiliates, shareholders, directors, officers, employees,
agents of Borrower and all Persons acting for or in concert with Borrower shall,
acting as trustee for Lender, receive, as the sole and exclusive property of
Lender, any monies, checks, notes, drafts or any other payments relating to or
proceeds of Accounts or Collateral which come into their possession or under
their control and immediately upon receipt, shall remit the same or cause the
same to be remitted, in kind, to the Lock Box Account.
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(b) Borrower agrees that all payments made to such Lock Box Account
or otherwise received by Lender as proceeds of the Inventory or Receivables,
constitutes Collateral and will be applied on account of the Indebtedness.
(c) Borrower agrees to pay to Lender any and all fees, costs and
expenses (if any) which Lender incurs in connection with opening and maintaining
the Lock Box Account and depositing for collection by Lender any check or item
of payment received or delivered to Depository Bank or Lender on account of the
Indebtedness and Borrower further agrees to reimburse Lender for any claims
asserted by Depository Bank in connection with the Lock Box Account or any
returned or uncollected checks received by Depository Bank for deposit in the
Lock Box Account.
4.2 APPLICATION OF COLLECTED RECEIVABLES. Within five (5) Business Days
of Lender's receipt of any Receivables in the Lock Box arising from the sale of
Inventory financed by a Loan, such Receivables will be applied in the following
manner and priority:
(a) 100% of each dollar of Receivable will be paid and retained by
Lender until payment in full of the following:
(i) The aggregate amount of the respective Loan Interest;
(ii) Any other fees and charges due to Lender with respect to
the Loan; and
(iii) The aggregate amount of Indebtedness under this
Agreement.
(b) All remaining proceeds will be paid to the Borrower.
V. REPRESENTATIONS AND WARRANTIES. BORROWER HEREBY REPRESENTS AND WARRANTS TO
LENDER AS FOLLOWS:
5.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION. Borrower is a
corporation duly organized, validly existing and in good standing under the laws
of Nevada. Borrower has the power and authority to own and operate its
properties and assets, to execute and deliver this Agreement and the Transaction
Documents and to carry on its business as presently conducted. Borrower is duly
qualified and is authorized to do business and is in good standing as a foreign
corporation in all jurisdictions in which the nature of its activities and of
its properties (both owned and leased) makes such qualification necessary.
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5.2 AUTHORIZATION; BINDING OBLIGATIONS. All corporate action on the
part of Borrower (including the respective officers and directors) necessary for
the authorization of this Agreement and the Transaction Documents, the
performance of all obligations of Borrower hereunder and thereunder and the
authorization, sale, issuance and delivery of the Revolving Credit Note has been
taken or will be taken. This Agreement and the Transaction Documents, when
executed and delivered, will be valid and binding obligations of Borrower,
enforceable against each such person in accordance with their terms, except:
(a) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws of general application affecting
enforcement of creditors' rights; and
(b) general principles of equity that restrict the availability of
equitable or legal remedies.
5.3 LIABILITIES. Borrower does not have any contingent liabilities,
except current liabilities incurred in the ordinary course of business.
5.4 TITLE TO PROPERTIES AND ASSETS; LIENS, ETC. Borrower has good and
marketable title to its properties and assets, and good title to its leasehold
estates, in each case subject to no mortgage, pledge, lien, lease, encumbrance
or charge. Borrower is in compliance with all material terms of each lease to
which it is a party or is otherwise bound.
5.5 COMPLIANCE WITH OTHER INSTRUMENTS. Borrower is not in violation or
default of (x) any term of its certificate of incorporation or bylaws, or (y)
any provision of any agreement to which it is party or by which it is bound or
of any judgment, decree, order or writ. The execution, delivery and performance
of and compliance with this Agreement and the Transactions Documents will not,
with or without the passage of time or giving of notice, be in conflict with or
constitute a default under any such term or provision, or result in the creation
of any mortgage, pledge, lien, encumbrance or charge upon any of the properties
or assets of Borrower or the suspension, revocation, impairment, forfeiture or
nonrenewal of any permit, license, authorization or approval applicable to
Borrower, its business or operations or any of its assets or properties.
5.6 LITIGATION. Except as disclosed in Borrower's Form 10-KSB for the
year ended December 31, 2005 as filed with the Securities and Exchange
Commission (the "Commission"), together with all subsequently filed Forms
10-QSB, 8-K, and filings made with the Commission available at the EDGAR website
(collectively, the "Reports"), there is no action, suit, proceeding or
investigation pending or, to Borrower's knowledge, currently threatened against
Borrower; nor is there is any basis to assert any of the foregoing. Borrower is
not a party nor subject to the provisions of any order, writ, injunction,
judgment or decree of any Governmental Body or instrumentality. There is no
action, suit, proceeding or investigation by Borrower currently pending or which
Borrower intends to initiate.
5.7 TAX RETURNS AND PAYMENTS. Borrower has timely filed all tax returns
(federal, state and local) required to be filed by it. All taxes shown to be due
and payable on such returns, any assessments imposed, and all other taxes due
and payable by Borrower on or before the Closing Date, have been paid or will be
paid prior to the time they become delinquent. Borrower has not been advised:
(a) that any of its returns, federal, state or other, have been or
are being audited as of the date hereof; or
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(b) of any deficiency in assessment or proposed judgment to its
federal, state or other taxes.
There is no tax to be imposed upon its properties or assets of Borrower
as of the date of this Agreement that is not adequately provided for.
5.8 COMPLIANCE WITH LAWS; PERMITS. Borrower is not in violation of any
applicable statute, rule, regulation, order or restriction of any Governmental
Body in respect of the conduct of its business or the ownership of its
properties. No governmental orders, permissions, consents, approvals or
authorizations are required to be obtained and no registrations or declarations
are required to be filed in connection with the execution and delivery of this
Agreement or any Transaction Documents. Borrower has all material franchises,
permits, licenses and any similar authority necessary for the conduct of its
business as now being conducted by it.
5.9 ENVIRONMENTAL AND SAFETY LAWS. Borrower is not in violation of any
applicable statute, law or regulation relating to the environment or
occupational health and safety, and no material expenditures are or will be
required in order to comply with any such existing statute, law or regulation.
No hazardous materials are used or have been used, stored, or disposed of by
Borrower or, to Borrower's knowledge, by any other Person on any property owned,
leased or used by Borrower.
5.10 FULL DISCLOSURE. Borrower has provided Lender with all information
requested by Lender in connection with its decision to purchase the Revolving
Credit Note, including all information Borrower believe is reasonably necessary
to make such investment decision. Neither this Agreement nor the Transaction
Documents contain any untrue statement of a material fact nor omit to state a
material fact necessary in order to make the statements contained herein or
therein, in light of the circumstances in which they are made, not misleading.
Any financial projections and other estimates provided to Lender by Borrower
were based on Borrower's experience in the industry and on assumptions of fact
and opinion as to future events which Borrower, at the date of the issuance of
such projections or estimates, believed to be reasonable.
5.11 PATRIOT ACT. Borrower certifies that, to the best of Borrower's
knowledge, Borrower has not been designated, and is not owned or controlled, by
a "suspected terrorist" as defined in Executive Order 13224. Borrower hereby
acknowledges that Lender seeks to comply with all applicable laws concerning
money laundering and related activities. In furtherance of those efforts,
Borrower hereby represents, warrants and agrees that: (i) none of the cash or
property that Borrower will pay or will contribute to Lender has been or shall
be derived from, or related to, any activity that is deemed criminal under
United States law; and (ii) no contribution or payment by Borrower to Lender, to
the extent that they are within Borrower's control shall cause Lender to be in
violation of the United States Bank Secrecy Act, the United States International
Money Laundering Control Act of 1986 or the United States International Money
Laundering Abatement and Anti-Terrorist Financing Act of 2001. Borrower shall
promptly notify Lender if any of these representations ceases to be true and
accurate. Borrower shall provide Lender any additional information regarding
Borrower that Lender deem necessary or convenient to ensure compliance with all
applicable laws concerning money laundering and similar activities. Borrower
understands and agrees that if at any time it is discovered that any of the
foregoing representations are incorrect, or if otherwise required by applicable
law or regulation related to money laundering similar activities, Lender may
undertake appropriate actions to ensure compliance with applicable law or
regulation, including but not limited to segregation and/or redemption of
Lender' investment in Borrower. Borrower further understands that Lender may
release confidential information about Borrower and, if applicable, any
underlying beneficial owners, to proper authorities if Lender, in its sole
discretion, determines that it is in the best interests of Lender in light of
relevant rules and regulations under the laws set forth in subsection (ii)
above.
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VI. COVENANTS OF BORROWER. Borrower covenants with Lender as follows:
6.1 ACCESS TO FACILITIES. Borrower will permit any representatives
designated by Lender upon 24-hours written notice and during normal business
hours, at such person's expense and accompanied by a representative of Borrower,
to:
(a) visit and inspect any of the properties of Borrower;
(b) examine the corporate and financial records of Borrower make
copies thereof or extracts therefrom; and
(c) discuss the affairs, finances and accounts of Borrower with the
directors, officers and independent accountants of Borrower.
6.2 TAXES. Borrower will promptly pay and discharge, or cause to be
paid and discharged, when due and payable, all lawful taxes, assessments and
governmental charges or levies imposed upon the income, profits, property or
business of Borrower; provided, however, that any such tax, assessment, charge
or levy need not be paid if the validity thereof shall currently be contested in
good faith by appropriate proceedings and if Borrower shall have set aside on
its books adequate reserves with respect thereto, and provided, further, that
Borrower will pay all such taxes, assessments, charges or levies forthwith upon
the commencement of
6.3 CONFIDENTIALITY. Borrower will not disclose, and will not include
in any public announcement, the name of Lender, unless expressly agreed to by
Lender or unless and until such disclosure is required by law or applicable
regulation, and then only to the extent of such requirement.
VII. INDEMNIFICATION.
7.1 Borrower shall indemnify, hold harmless, reimburse and defend
Lender, and each of Lender's officers, directors, agents, Affiliates, control
persons, and shareholders, against any claim, cost, expense, liability,
obligation, loss or damage (including reasonable legal fees) of any nature
(collectively, "Losses") incurred by or imposed on Lender that results, arises
out of or is based upon, directly or indirectly, (i) breach of any
representation by Borrower or breach of any warranty by Borrower in this
Agreement or the Transaction Documents, (ii) breach or default in performance by
Borrower of any covenant by Borrower hereunder or under the Transaction
Documents or (iii) any action taken by any Governmental Body that has or may
have an adverse effect on the ability of Borrower to conduct its business in the
ordinary course.
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7.2 Lender agrees to indemnify, hold harmless, reimburse and defend
Borrower and each of Borrower's officers, directors, agents, Affiliates, control
persons against any claim, cost, expense, liability, obligation, loss or damage
(including reasonable legal fees) of any nature, incurred by or imposed upon
Borrower or any such person which results, arises out of or is based upon (i)
any material misrepresentation by Lender in this Agreement or the Transaction
Documents; or (ii) after any applicable notice and/or cure periods, any breach
or default in performance by Lender of any covenant or undertaking to be
performed by Lender hereunder, or any other agreement entered into by Borrower
and Lender, relating hereto.
VIII. CONDITIONS TO EACH ADVANCE. The agreement of Lender to make any Advance is
subject to the satisfaction of the following conditions precedent as of the date
such Advance is made:
(a) Representations and Warranties. Each of the representations and
warranties made by Borrower to this Agreement and the Transaction Documents, and
each of the representations and warranties contained in any certificate,
document or financial or other statement furnished at any time under or in
connection with this Agreement or the Transaction Documents shall be true and
correct in all material respects on and as of such date as if made on and as of
such date;
(b) No Default. No Event of Default or Default shall have occurred
and be continuing on such date, or would exist after giving effect to the
Advances requested to be made on such date; provided, however, that Lender, in
its sole discretion, may continue to make Advances notwithstanding the existence
of an Event of Default or Default and that any Advances so made shall not be
deemed a waiver of any such Event of Default or Default;
(c) Maximum Advances. The aggregate Advances outstanding shall not
exceed the maximum amount of Advances permitted under Section 2.1.
(d) Confirming Representations and Warranties. Each request for an
Advance hereunder shall constitute a representation and warranty by Borrower as
of the date of such Advance that the conditions contained in this Section have
been satisfied.
(e) Approval of Collateral for Each Advance: Each Advance will
require additional collateral. No Advance will be given until and unless Lender
has approved such collateral in writing.
IX. INFORMATION AS TO BORROWER.
Borrower shall, until satisfaction in full of the Obligations and the
termination of this Agreement:
9.1 LITIGATION. Promptly notify Lender in writing of the commencement
of any litigation, suit or administrative proceeding affecting Borrower, whether
or not the claim is covered by insurance.
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9.2 MATERIAL OCCURRENCES. Promptly notify Lender in writing upon the
occurrence of (a) any Event of Default or Default; and (b) any other development
in the business or affairs of Borrower which could reasonably be expected to
have a Material Adverse Effect; in each case describing the nature thereof and
the action Borrower proposes to take with respect thereto.
9.3 ADDITIONAL INFORMATION. Furnish Lender with such additional
information as Lender shall reasonably request in order to enable Lender to
determine whether the covenants and conditions of this Agreement and the
Revolving Credit Note have been complied with by Borrower.
9.4 NOTICES OF ADVERSE EVENTS. Furnish Lender with prompt notice of (a)
any lapse or other termination of any consent, license or permit issued to
Borrower by any Governmental Body or any other Person that is material to the
operation of Borrower's business, (b) any refusal by any Governmental Body or
any other Person to renew or extend any such consent, license or permit; and (c)
copies of any periodic or special reports filed by Borrower with any
Governmental Body or Person, if such reports indicate any material change in the
business, operations, affairs or condition of any Borrower, or if copies thereof
are requested by Lender or any Lender, and (d) copies of any notices and other
communications from any Governmental Body which relate to Borrower.
9.5 ADDITIONAL DOCUMENTS. Execute and deliver to Lender, upon request,
such documents and agreements as Lender may, from time to time, reasonably
request to carry out the
X. EVENTS OF DEFAULT.
The occurrence of any one or more of the following events shall
constitute an "Event of Default":
10.1 failure by Borrower to pay any principal or interest on the
Obligations when due, whether at maturity or by reason of acceleration pursuant
to the terms of this Agreement or by notice of intention to prepay, or by
required prepayment or failure to pay any other liabilities or make any other
payment, fee or charge provided for herein when due or in any Transaction
Document;
10.2 issuance of a notice of lien, levy assessment, injunction
attachment or service against any portion of any Borrower's property which is
not stayed or lifted within fifteen (15) days or bonded pending appeal;
10.3 failure or neglect of Borrower to perform, keep or observe any
term, provision, condition, covenant herein contained herein or in any
Transaction Document (to the extent such breach is not otherwise embodied in any
other provision of this Article IX for which a different grace or cure period is
specified or which constitute an immediate Event of Default, which is not cured
within fifteen (15) Business Days after the occurrence of such Event of Default;
10.4 any judgment or judgments are rendered or judgment liens filed
against Borrower for an aggregate amount in excess of $10,000 which within
thirty (30) days of such rendering or filing is not either satisfied, stayed or
discharged of record;
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10.5 Borrower or any Affiliate of Borrower shall (a) apply for, consent
to or suffer the appointment of, or the taking of possession by, a receiver,
custodian, trustee, liquidator or similar fiduciary of itself or of all or a
substantial part of its property, (b) make a general assignment for the benefit
of creditors, (c) commence a voluntary case under any state or federal
bankruptcy laws (as now or hereafter in effect), (d) be adjudicated a bankrupt
or insolvent, (e) file a petition seeking to take advantage of any other law
providing for the relief of debtors, (f) acquiesce to, or fail to have
dismissed, within thirty (30) days, any petition filed against it in any
involuntary case under such bankruptcy laws, or (g) take any action for the
purpose of effecting any of the foregoing;
10.6 Borrower shall admit in writing its inability, or be generally
unable, to pay its debts as they become due or cease operations of its present
business;
10.7 any change in the condition or affairs of Borrower (financial or
otherwise) which could have a Material Adverse Effect;
10.8 any provision of this Agreement shall, for any reason, cease to be
valid and binding on Borrower, or Borrower shall so claim in writing to Lender;
and
10.9 any Governmental Body shall (i) revoke, terminate, suspend or
adversely modify any license or permit of Borrower or (ii) commence proceedings
to suspend, revoke, terminate or adversely modify any such license or permit and
such proceedings shall not be dismissed or discharged within forty-five (45)
days, or (iii) schedule a hearing on the renewal of, or the necessity to obtain,
any license or permit necessary for the continuation of Borrower's business.
XI. LENDER' RIGHTS AND REMEDIES AFTER DEFAULT.
11.1 RIGHTS AND REMEDIES. Upon the occurrence of (a) an Event of
Default pursuant to Section 10.5 all Obligations shall be immediately due and
payable and this Agreement and the obligation of Lender to make Advances shall
be deemed terminated; and (b) any of the other Events of Default and at any time
thereafter at the option of Lender all Obligations shall be immediately due and
payable and Lender shall have the right to terminate this Agreement and to
terminate the obligation of Lender to make Advances. Upon the occurrence of any
Event of Default, Lender shall have the right to exercise any and all other
rights and remedies provided for herein, under the UCC and at law or equity
generally.
11.2 APPLICATION OF PROCEEDS. The proceeds realized from the sale of
any Accounts shall be applied as follows: first, to the reasonable costs,
expenses and attorneys' fees and expenses incurred by Lender for collection and
for acquisition, completion, protection, removal, sale and delivery of the
Accounts; second, pro-rata to interest due upon any of the Advances; third, to
fees payable in connection with this Agreement; fifth, to the pro-rata principal
of the Advances and all other fees, costs, expenses and indemnities due under
this Agreement and, sixth, to all other Obligations. If any deficiency shall
arise, Borrower shall remain liable to Lender. If it is determined by an
authority of competent jurisdiction that a disposition by Lender did not occur
in a commercially reasonably manner, Lender may obtain a deficiency judgment for
the difference between the amount of the Obligation and the amount that a
commercially reasonable sale would have yielded. Lender will not be considered
to have offered to retain the Accounts in satisfaction of the Obligations unless
Lender has entered into a written agreement with Borrower to that effect.
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11.3 LENDER'S DISCRETION. Except as otherwise provided herein, Lender
shall have the right in its sole discretion to determine which rights, liens,
security interests or remedies Lender may at any time pursue, relinquish,
subordinate, or modify or to take any other action with respect thereto and such
determination will not in any way modify or affect any of Lender's or Lender's
rights hereunder.
11.4 SETOFF. In addition to any other rights which Lender may have
under applicable law, upon the occurrence of an Event of Default, Lender shall
have a right to apply Borrower property held by such Lender to reduce the
Obligations.
11.5 RIGHTS AND REMEDIES NOT EXCLUSIVE. The enumeration of the
foregoing rights and remedies is not intended to be exhaustive and the exercise
of any right or remedy shall not preclude the exercise of any other right or
remedy provided for herein or otherwise provided by law, all of which shall be
cumulative and not alternative.
XII. WAIVERS AND JUDICIAL PROCEEDINGS.
12.1 WAIVER OF NOTICE. Borrower hereby waives notice of non-payment of
any of the Accounts, demand, presentment, protest and notice thereof with
respect to any and all instruments, notice of acceptance hereof, notice of loans
or advances made, credit extended, Accounts received or delivered, or any other
action taken in reliance hereon, and all other demands and notices of any
description, except such as are expressly provided for herein.
12.2 DELAY. No delay or omission on Lender's part in exercising any
right, remedy or option shall operate as a waiver of such or any other right,
remedy or option or of any default.
12.3 JURY WAIVER. EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES
ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION (A) ARISING UNDER
THIS AGREEMENT OR ANY TRANSACTION, DOCUMENT OR (B) IN ANY WAY CONNECTED WITH OR
RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH
RESPECT TO THIS AGREEMENT OR ANY TRANSACTION DOCUMENT OR THE TRANSACTIONS
RELATED HERETO OR THERETO IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER
ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE AND EACH PARTY TO
THIS AGREEMENT HEREBY CONSENTS THAT ANY SUCH CLAIM, OR CAUSE OF ACTION SHALL BE
DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY
FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENTS OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO
TRIAL BY JURY.
XIII. EFFECTIVE DATE AND TERMINATION.
13.1 TERM. This Agreement, which shall inure to the benefit of and
shall be binding upon the respective successors and permitted assigns of
Borrower and Lender, shall become effective on the date hereof and shall
continue in full force and effect until the earliest to occur of (a) 12-months
from the date hereof, (b) a date not less than thirty (30) days after Lender
gives notice of such date to Borrower of termination, or (c) the date on which
this Agreement shall be terminated in accordance with the provisions hereof;
(the "Termination Date"; such period referred to herein as the "Term").
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13.2 TERMINATION. The termination of this Agreement shall not affect
Lender's rights, or any of the Obligations having their inception prior to the
effective date of such termination, and the provisions hereof shall continue to
be fully operative until all transactions entered into, rights or interests
created or Obligations have been fully disposed of, concluded or liquidated. The
rights granted to Lender hereunder shall continue in full force and effect,
notwithstanding the termination of this Agreement or the fact that Borrower's
Account may from time to time be temporarily in a zero or credit position, until
all of the Obligations of Borrower have been paid or performed in full.
Accordingly, Borrower waives any rights which it may have under Section 9-513 of
the UCC to demand the filing of termination statements with respect to the
Accounts, and Lender shall not be required to send such termination statements
to Borrower, or to file them with any filing office, unless and until this
Agreement shall have been terminated in accordance with its terms and all
Obligations paid in full in immediately available funds. All representations,
warranties, waivers and agreements contained herein shall survive termination
hereof until all Obligations are paid or performed in full.
XIV. WAIVER OF SUBROGATION.
14.1 WAIVER OF SUBROGATION. Borrower expressly waives any and all
rights of subrogation, reimbursement, indemnity, exoneration, contribution of
any other claim which Borrower may now or hereafter have against any Person
directly or contingently liable for the Obligations hereunder, or against or
with respect to Borrower's property (including, without limitation, any property
which is collateral for the Obligations), arising from the existence or
performance of this Agreement, until termination of this Agreement and repayment
in full of the Obligations.
XV. SECURITIES.
15.1 Contemporaneously with the execution of this Agreement, Borrower
shall deliver to Lender, pro-rata, an aggregate of 20,000,000 shares of
Borrower's $.001 par value common stock ("Securities").
15.2 The registration rights granted by Borrower to Lender pursuant to
Section 11.1(ii) of a Subscription Agreement dated August 29, 2006 are hereby
granted to Lender for the registration of the Securities.
15.3 In connection with the issuance of the Securities to Lenders,
Borrower hereby makes and renews all of the representations and warranties
contained in the Subscription Agreement dated August 29, 2006 and all agreements
delivered in connection therewith, as if made on the date hereof.
XVI. MISCELLANEOUS.
16.1 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York applied to contracts to be
performed wholly within the State of New York, without giving effect to rules
regarding conflicts of law. Any judicial proceeding by involving, directly or
indirectly, any matter or claim in any way arising out of, related to or
connected with this Agreement or any Transaction Document shall be brought only
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in a federal or state court located in the State of New York and in no other
court. By execution and delivery of this Agreement, Borrower and Lender accept
for itself and in connection with its properties, generally and unconditionally,
the exclusive jurisdiction of such court, and irrevocably agrees to be bound by
any judgment rendered thereby in connection with this Agreement. Borrower hereby
waives personal service of any and all process upon it and consents that all
such service of process may be made by registered mail (return receipt
requested) directed to Borrower at its address set forth in Section 14.4 and
service so made shall be deemed completed five (5) days after the same shall
have been so deposited in the mails of the United States of America, or, at
Lender's option, by service upon Borrower. Nothing herein shall affect the right
to serve process in any manner permitted by law. Borrower and Lender waive any
objection to jurisdiction and venue of any action instituted hereunder and shall
not assert any defense based on lack of jurisdiction or venue or based upon
forum non conveniens.
16.2 ENTIRE UNDERSTANDING. This Agreement and the Transaction Documents
contain the entire understanding between Borrower and Lender and supersedes all
prior agreements and understandings, if any, relating to the subject matter
hereof. Neither this Agreement nor any portion or provisions hereof may be
changed, modified, amended, waived, supplemented, discharged, cancelled or
terminated orally or by any course of dealing, or in any manner other than by an
agreement in writing, signed by the party to be charged. Borrower acknowledges
that it has been advised by counsel in connection with the execution of this
Agreement and the Transaction Documents and is not relying upon oral
representations or statements inconsistent with the terms and provisions of this
Agreement.
16.3 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of Borrower and Lender and their respective successors and
assigns, except that Borrower may not assign or transfer any of its rights or
obligations under this Agreement without the prior written consent of Lender.
16.4 NOTICE. Any notice or request hereunder may be given to Borrower
and Lender at their respective addresses set forth below or at such other
address as may hereafter be specified in a notice designated as a notice of
change of address under this Section. Any notice or request hereunder shall be
given by (a) hand delivery, (b) overnight courier, (c) registered or certified
mail, return receipt requested, or (d) telecopy to the number set out below (or
such other number as may hereafter be specified in a notice designated as a
notice of change of address) with electronic confirmation of its receipt. Any
notice or other communication required or permitted pursuant to this Agreement
shall be deemed given (a) when personally delivered to any officer of the party
to whom it is addressed, (b) on the earlier of actual receipt thereof or three
(3) days following posting thereof by certified or registered mail, postage
prepaid, or (c) upon actual receipt thereof when sent by a recognized overnight
delivery service or (d) upon actual receipt thereof when sent by telecopier to
the number set forth below with electronic confirmation of its receipt, in each
case addressed to each party at its address set forth below or at such other
address as has been furnished in writing by a party to the other by like notice:
(A) If to Lender at: Alpha Capital Anstalt
Pradafant 7
9490 Furstentums
Vaduz, Lichtenstein
Fax: 011-42-32323196
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Whalehaven Capital Fund Limited
3rd Floor, 14 Par-Laville Road
Hamilton, Bermuda HM08
Fax: (441) 292-1373
With a copy to: Grushko & Mittman, P.C.
551 Fifth Avenue, Suite 1601
New York, NY 10176
Fax: (212) 697-3575
(B) If to Borrower at: One Voice Technologies Inc.
4275 Executive Square, Suite 200
La Jolla, CA 92037
Fax: (858) 552-4474
With a copy by telecopier Sichenzia, Ross, Friedman &
only to: Ference LLP
1065 Avenue of the Americas
New York, NY 10018
Attn: Darrin Ocasio, Esq.
Fax: (212) 930-9725
16.5 SEVERABILITY. If any part of this Agreement is contrary to,
prohibited by, or deemed invalid under applicable laws or regulations, such
provision shall be inapplicable and deemed omitted to the extent so contrary,
prohibited or invalid, but the remainder hereof shall not be invalidated thereby
and shall be given effect so far as possible.
16.6 EXPENSES. All costs and expenses including, without limitation,
(i) reasonable attorneys' fees and disbursements incurred by Lender (a) in all
efforts made to enforce payment of any of the Obligations or effect collection
of any Accounts, or (b) in connection with the entering into, modification,
amendment, administration and enforcement of this Agreement or the Transaction
Documents or any consents or waivers hereunder or thereunder, or (c) in
instituting, maintaining, preserving, enforcing and foreclosing on Lender's
security interest in any of the Accounts, whether through judicial proceedings
or otherwise, or (d) in defending or prosecuting any actions or proceedings
arising out of or relating to Lender's transactions with Borrower and (ii)
reasonable fees and disbursements incurred by Lender in connection with any
appraisals of the Accounts, field examinations, collateral analysis or
monitoring or other business analysis conducted by outside Persons in connection
with this Agreement and the Transaction Documents, may be charged to Borrower's
Account and shall be part of the Obligations.
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16.7 LEGAL FEES. A legal fee of $15,000 shall be payable by Borrower in
connection with this transaction which fee shall be deducted and forwarded to
Grushko & Mittman, P.C. from the proceeds of the first advance to the Borrower.
16.8 LOCKBOX FEES. In connection with this transaction, borrower shall
pay to Grushko & Mittman, P.C., which fees shall be deducted and forwarded to
Grushko & Mittman, P.C. from the proceeds of the first advance to Borrower the
following fees: setup fee - $150; and an aggregate of $1,500 representing four
monthly maintenance fees of $350 each. Additional fees, including but not
limited to deposit fees and transfer fees will be paid when billed. Failure to
pay any fees within five (5) days of demand is an Event of Default hereunder.
16.9 INJUNCTIVE RELIEF. Borrower recognizes that if Borrower fails to
perform, observe or discharge any of its obligations under this Agreement, any
remedy at law may prove to be inadequate relief to Lender; therefore, Lender, if
Lender so requests, shall be entitled to temporary and permanent injunctive
relief in any such case without the necessity of proving that actual damages are
not an adequate remedy.
16.10 CONSEQUENTIAL DAMAGES. Lender shall not be liable to Borrower for
consequential damages arising from any breach of contract, tort or other wrong
relating to the establishment, administration or collection of the Obligations.
16.11 CAPTIONS. The captions at various places in this Agreement are
intended for convenience only and do not constitute and shall not be interpreted
as part of this Agreement.
16.12 COUNTERPARTS; TELECOPIED SIGNATURES. This Agreement may be
executed in any number of and by different parties hereto on separate
counterparts, all of which, when so executed, shall be deemed an original, but
all such counterparts shall constitute one and the same agreement. Any signature
delivered by a party by facsimile transmission shall be deemed to be an original
signature hereto.
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16.13 CONSTRUCTION. The parties acknowledge that each party and its
counsel have reviewed this Agreement and that the normal rule of construction to
the effect that any ambiguities are to be resolved against the drafting party
shall not be employed in the interpretation of this Agreement or any amendments,
schedules or exhibits thereto.
ONE VOICE TECHNOLOGIES INC.
By: /s/ Dean Weber
------------------------------------
Name: Dean Weber
Title: Chief Executive Officer
ALPHA CAPITAL ANSTALT
By: /s/ Howard Ackermann
------------------------------------
Name: Howard Ackermann
Title: Director
WHALEHAVEN CAPITAL FUND LIMITED
By: /s/ Evan Schemenauer
------------------------------------
Name: Evan Schemenauer
Title: Chief Financial Officer
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