EXHIBIT A

 

Note

 

This Note is issued pursuant to, and subject to the terms and provisions of,
that certain Financing and Security Agreement, by and between Issuer and Holder,
dated as of March 28, 2012 (as amended, restated, amended and restated,
supplemented, modified or replaced from time to time, the “Financing
Agreement”). Capitalized terms used herein without definition shall have the
meanings assigned to such terms under the Financing Agreement.

 

THIS NOTE AND THE COMMON STOCK ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”). THIS NOTE AND THE COMMON STOCK ISSUABLE UPON CONVERSION OF THIS NOTE MAY
NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT.

 

6% SENIOR SECURED CONVERTIBLE NOTE DUE 2017

 

$1,250,000 March 28, 2012

 

FOR VALUE RECEIVED, SaveDaily, Inc., a Nevada corporation (“SDINC”), and
SaveDaily.com, Inc., a California corporation (together with SDINC and their
respective successors and assigns, the “Issuer”), hereby jointly and severally
promise to pay to the order of SaveDaily Partners, L.P., a Delaware limited
partnership, or its applicable assigns (“Holder”), the principal amount of One
Million Two Hundred Fifty Thousand U.S. Dollars ($1,250,000) plus the aggregate
amount of all Capitalized Interest Payments (as defined below) (such sum being
the “Adjusted Principal Amount”) on or before the Due Date for this Note,
together with interest thereon at a rate per annum equal to six percent (6.0%)
per annum (or, if applicable, the Default Rate or the rate payable upon and
during the continuance of a Financial Covenant Failure, as provided below or in
the Financing Agreement); provided, that the Adjusted Principal Amount under
this Note may not be prepaid prior to the third anniversary of the date hereof
except on the terms and subject to the conditions set forth in the Financing
Agreement.

 

Interest shall be payable on this Note quarterly in arrears on the first
business day of the following quarter, commencing July 2, 2012, and on the Due
Date (each such date, an “Interest Accrual Date”) and shall accrue for the
period from the prior Interest Accrual Date (or in the case of the initial
interest period, from the Initial Closing Date) to but excluding the
then-current Interest Accrual Date. On each Interest Accrual Date all accrued
and unpaid interest then outstanding shall be (x) capitalized and added to the
Adjusted Principal Amount (each such capitalization and addition, a “Capitalized
Interest Payment”) or (y) at Holder’s election, paid in cash. Following the
occurrence and during the continuation of a Default, Issuer shall pay interest
on the Adjusted Principal Amount at a rate of interest equal to fifteen percent
(15%) per annum, or if less, the maximum rate then permissible under applicable
law (the “Default Rate,” and such interest at the Default Rate being the
“Default Interest”), which amount shall accrue from the date of such Default
until the earlier of the date on which all amounts due under this Note shall
have been paid in full or the date on which such Default is cured (if such
default is a Non-Payment Default and is susceptible to cure under the terms of
the Financing Documents pursuant to which this Note was issued) or waived, in
Holder’s sole discretion, and shall be paid in kind or, at Holder’s election, in
cash, in accordance with the terms hereof and the Financing Agreement. Following
the occurrence and during the continuation of a Financial Covenant Failure,
Issuer shall pay interest on the Adjusted Principal Amount at a rate equal to
nine percent (9.0%) per annum, or if less, the maximum rate then permissible
under applicable law (the “Financial Covenant Failure Rate,” and such interest
at the Financial Covenant Failure Rate being, the “Financial Covenant Failure
Interest”), which amount shall accrue from the date of such Financial Covenant
Failure until the earlier of the date on which all amounts due under this Note
shall have been paid in full or the date on which the Financial Covenant Failure
no longer exists or has been waived, in Holder’s sole discretion, and shall be
paid-in-kind or, at Holder’s election, in cash, in accordance with the terms
hereof and the Financing Agreement.

 

 

 

 

Subject to acceleration as provided herein, the Adjusted Principal Amount and
all accrued interest hereunder that has not previously been paid in cash or
capitalized and added to the Adjusted Principal Amount shall be paid in a single
payment, which shall be due and payable on the Due Date. Such payment on the Due
Date shall be applied in accordance with Section 4.1 of the Financing Agreement

 

Interest that is paid in kind and added to the outstanding principal amount of
this Note, together with any Default Interest accruing hereunder from time to
time, is collectively referred to herein as “Additional PIK Principal.”
Additional PIK Principal shall be considered part of the principal amount
outstanding for all purposes of this Note. Payments of principal, interest and
all other sums due under this Note shall be paid in lawful money of the United
States of America in immediately available funds to such account of Holder as
Holder from time to time may designate in writing to Issuer.

 

Issuer may prepay this Note upon the terms and subject to the conditions set
forth in the Financing Agreement. Any such prepayment shall be applied in
accordance with Section 4.1 of the Financing Agreement.

 

Upon a Default, the entire amount outstanding under this Note shall be
immediately due and payable, without notice or demand except as otherwise
provided herein, by Holder, in addition to such other rights or remedies as
Holder may have under this Note, the Financing Documents, at law or in equity,
subject only to Issuer’s limited rights to cure a Non-Payment Default under the
Financing Agreement, to the extent applicable. The failure of or any delay by
Holder at any time in exercising the foregoing rights shall not be deemed a
waiver thereof or a consent to any such Default. If this Note is not paid by
Issuer on or prior to the Due Date hereof, whether by acceleration or otherwise,
Issuer hereby promises to pay all costs of enforcement and collection, including
but not limited to all fees and expenses of counsel to Holder and all court
costs, in addition to the full amount due hereunder and any other amounts
provided under or pursuant to the Financing Documents related to this Note.

 

 

 

 

Upon a Default, interest shall be due and payable under this Note at the Default
Rate, as provided above, both before and after demand and judgment,
notwithstanding any applicable statutory judgment rate of interest. If any
interest payment or other charge or fee payable hereunder exceeds the maximum
amount then permitted by applicable law, then Issuer shall pay the maximum
amount then permitted by applicable law as from time to time in effect.

 

HOLDER ENTITLED TO CERTAIN BENEFITS. This Note is a “Note” referred to in, and
Holder is entitled to the rights and benefits under, the Financing Agreement,
including, without limitation, the right to accelerate the outstanding principal
balance of, accrued and unpaid interest on, and all other amounts owing under
this Note upon the occurrence of a Default. Further, this Note is secured by a
first priority, fully perfected security interest in and lien upon the
“Collateral” granted by Issuer to secure the Obligations under the Financing
Documents. This Note also is convertible into Common Stock of SDINC pursuant to,
and in accordance with the terms of, the Financing Agreement, which terms hereby
are incorporated by this reference as if fully set forth herein. The Holder of
the Note is also entitled to certain anti-dilution protections that are provided
under the Financing Agreement. To the extent this Note is converted into Common
Stock of SDINC, the Conversion Shares issued to Holder in connection therewith
also will be entitled to the registration rights provided under the Financing
Agreement.

 

Issuer waives demand and notice of demand, presentment for payment, protest and
notice of protest, notice of dishonor, nonpayment and notice of nonpayment,
diligence and all other notices of any kind except as otherwise provided herein
and, to the full extent permitted by law, the right to plead any statute of
limitations as a defense, in collecting or bringing suit under this Note. No
single or partial exercise by Holder of any power, right or remedy hereunder
shall preclude any other or further exercise thereof or the exercise of any
other right, power or remedy. The acceptance by Holder of any payment due
hereunder which is less than the total of all amounts due and payable at the
time of such payment shall not constitute a waiver of the right to exercise any
other remedies or options of Holder at that time or at any subsequent time, or
nullify any prior exercise of such remedy or option. No failure, delay or
omission on the part of Holder in exercising any rights under this Note shall
operate as a waiver of such right or any other rights of Holder.

 

Whenever possible, each provision of this Note shall be interpreted in such a
manner as to be effective and valid under applicable law, but if any provision
of this Note shall be prohibited by or invalid under applicable law or in a
specific jurisdiction, such provision shall be ineffective to the extent of such
prohibition or invalidity (or solely with respect to the jurisdiction in which
it is deemed ineffective or invalid), without invalidating the remainder of such
provision or the remaining provisions of this Note. This Note and the
Obligations of Issuer hereunder and under the Financing Documents may not be
assigned or delegated by Issuer without the prior written consent of Holder,
which Holder may grant, condition or withhold in its sole discretion. This Note
and Holder’s rights hereunder may be freely assigned by Holder or its assigns
without Issuer’s consent, subject only to notice of such assignment. Whenever in
this Note reference is made to Holder or Issuer, such reference shall be deemed
to include, as applicable, a reference to their respective successors and
permitted assigns. The provisions of this Note shall be binding upon and shall
inure to the benefit of Holder, Issuer, and their respective successors and
permitted assigns. Issuer’s successors and assigns shall include, without
limitation, a receiver, trustee or debtor in possession of or for Issuer.

 

 

 

  

This Note shall be construed in accordance with and governed by the laws of the
State of New York. Issuer and, by accepting this Note, Holder hereby irrevocably
consents to the exclusive jurisdiction of the United States District Court for
the Southern District of New York or any New York State court sitting in New
York City (and of the appropriate appellate courts therefrom) in any suit,
action or proceeding seeking to enforce any provision of, or based on any suit,
action or proceeding arising out of or in connection with, this Note or the
transactions contemplated hereby or by the Financing Documents and irrevocably
waives, to the fullest extent permitted by law, any objection that it may now or
hereafter have to the laying of the venue of any such suit, action or proceeding
in any such court or that any such suit, action or proceeding which is brought
in any such court has been brought in an inconvenient forum. Process in any such
suit, action or proceeding may be served on any party anywhere in the world,
whether within or without the jurisdiction of any such court. Without limiting
the foregoing, each party agrees that service of process on such party in the
manner provided in the Financing Agreement shall be deemed effective service of
process on such party. EACH OF ISSUER AND, BY ACCEPTING THIS NOTE, HOLDER HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATED TO THIS NOTE.

 

[Reminder of page intentionally left blank; signature page to follow]

 

 

 

 

IN WITNESS WHEREOF, the undersigned have executed this Note as of the date first
set forth above.

 

  ISSUER:       SAVEDAILY, INC.         By:       Name:     Title:      
SAVEDAILY.COM, INC.       By:       Name:     Title:

 

 

 

 

Quail Bend Draft

03/14/2012

 

EXHIBIT B

 

INTELLECTUAL PROPERTY SECURITY AGREEMENT

 

This INTELLECTUAL PROPERTY SECURITY AGREEMENT (this “Agreement”), dated as of
March 30, 2012, is made by SAVEDAILY, INC., a Nevada corporation, and
SAVEDAILY.COM, INC., a California corporation (collectively, “Grantor”), in
favor of SAVEDAILY PARTNERS, L.P., a Delaware limited partnership (the
“Purchaser”).

 

WITNESSETH:

 

WHEREAS, Grantor and the Purchaser are parties to the Financing and Security
Agreement, dated as of March 30, 2012 (as amended, restated, supplemented or
otherwise modified from time to time, the “Financing Agreement”), pursuant to
which Purchaser has agreed to purchase, and Grantor has agreed to sell to
Purchaser, senior secured convertible promissory notes on the date hereof and
(in Purchaser’s discretion) from time to time hereafter (the “Notes,” and the
indebtedness evidenced thereby, the “Loans”) in accordance with the terms and
conditions thereof; and

 

WHEREAS, pursuant to the Financing Agreement, Grantor is required to execute and
deliver this Agreement as a condition to the Initial Closing (as defined in the
Financing Agreement).

 

NOW, THEREFORE, in consideration of the premises and mutual covenants herein
contained and to induce the Purchaser to purchase the Notes and make the Loans
to Grantor under the Financing Agreement, Grantor hereby agrees with the
Purchasers and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, as follows:

 

Section 1.          Defined Terms. Capitalized terms used herein without
definition are used as defined in the Financing Agreement.

 

Section 2.          Grant of Security Interest in Intellectual Property
Collateral. Grantor, as collateral security for the prompt and complete payment
and performance when due (whether at stated maturity, by acceleration or
otherwise) of the Obligations hereby mortgages, pledges and hypothecates to the
Purchaser and grants to the Purchaser, a lien on and security interest in, all
of Grantor’s and its applicable subsidiaries’ right, title and interest in, to
and under the following Collateral of Grantor and such subsidiaries (the
“Intellectual Property Collateral”):

 

(a)        all trade secrets and rights under any written agreement granting any
right to use trade secrets;

 

(b)        all copyrights and rights under any written agreement granting any
right to use copyrights, including, without limitation, those referred to on
Schedule 1 hereto, together with all renewals, reversions and extensions of the
foregoing;

 

(c)        all trademarks and rights under any written agreement granting any
right to use trademarks, including, without limitation, those referred to on
Schedule 2 hereto, together with all renewals, reversions and extensions of the
foregoing;

 

(d)        all goodwill of the business connected with the use of, and
symbolized by, each such trademark described in subparagraph (c) above;

 

(e)        all U.S. patents and rights under any written agreement granting any
right to use U.S. patents, including, without limitation, those owned by Grantor
or its subsidiaries referred to on Schedule 3 hereto, together with all
reissues, reexaminations, continuations, continuations-in-part, divisionals,
renewals and extensions of the foregoing;

 

 

 

 

(f)        all U.S. patent applications and rights under any written agreement
granting any right to use U.S. patent applications, including, without
limitation, those owned by Grantor or its subsidiaries referred to on Schedule 4
hereto, together with all reissues, reexaminations, continuations,
continuations-in-part, divisionals, renewals and extensions of the foregoing;

 

(g)        all PCT patent applications and rights under any written agreement
granting any right to use PCT patent applications, including, without
limitation, those owned by Grantor or its subsidiaries referred to on Schedule 5
hereto, together with all reissues, reexaminations, continuations,
continuations-in-part, divisionals, renewals and extensions of the foregoing;

 

(h)        all foreign patents and patent applications, and rights under any
written agreement granting any right to use foreign patents and patent
applications, including, without limitation, those owned by Grantor or its
subsidiaries referred to on Schedule 6 hereto, together with all reissues,
reexaminations, continuations, continuations-in-part, divisionals, renewals and
extensions of the foregoing;

 

(i)        all applications, registrations, claims, awards, judgments,
amendments, improvements and insurance claims related thereto now or hereafter
owned or licensed by Grantor, or any claims for damages by way of any past,
present, or future infringement of any of the foregoing, together with all
accessions and additions thereto, proceeds and products thereof (including,
without limitation, any proceeds resulting under insurance policies); provided,
that the Intellectual Property Collateral shall include, without limitation, all
cash, royalty fees, other proceeds, accounts and general intangibles that
consist of rights of payment to or on behalf of Grantor or its subsidiaries or
proceeds from the sale, licensing or other disposition of all or any part of, or
rights in, the Intellectual Property Collateral by or on behalf of Grantor or
its subsidiaries; and

 

(j)        all income, royalties, proceeds and liabilities at any time due or
payable or asserted under and with respect to any of the foregoing, including,
without limitation, all rights to sue and recover at law or in equity for any
past, present and future infringement, misappropriation, dilution, violation or
other impairment thereof.

 

Section 3.           Financing Agreement, Financing Document and Additional
Financing Documents. The security interest granted pursuant to this Agreement is
granted in conjunction with, and is in no way limiting, the security interest
granted to the Purchaser pursuant to the Financing Agreement or any other
security documents or filings executed or made in connection therewith, and
Grantor hereby acknowledges and agrees that the rights and remedies of the
Purchasers with respect to the security interest in the Intellectual Property
Collateral made and granted hereby are more fully set forth in the Financing
Agreement, the Financing Documents, and Additional Financing Documents (if any)
and any such other applicable related documents, the terms and provisions of
which are incorporated by reference herein as if fully set forth herein.

 

Section 4.          Grantor Remains Liable. Grantor (on behalf of itself and
each of its applicable subsidiaries) hereby agrees that, anything herein to the
contrary notwithstanding, Grantor and its applicable subsidiaries shall retain
full and complete responsibility for the prosecution, defense, enforcement or
any other necessary or desirable actions in connection with its intellectual
property subject to a security interest hereunder, and Grantor shall (and shall
cause its applicable subsidiaries to) take all appropriate actions necessary to
preserve its rights, title and interest in such intellectual property and
otherwise to ensure the availability of the Intellectual Property Collateral as
security for the payment and other obligations under the Notes and the Loans
evidenced thereby.

 

-2-

 

 

Section 5.           Counterparts. This Agreement may be executed by original,
facsimile or PDF signature and in any number of counterparts and by different
parties in separate counterparts, each of which when so executed shall be deemed
to be an original and all of which taken together shall constitute one and the
same agreement. Signature pages may be detached from multiple separate
counterparts and attached to a single counterpart.

 

Section 6.           Governing Law. This Agreement and the rights and
obligations of the parties hereto shall be governed by, and construed and
interpreted in accordance with, the law of the State of New York.

 

[Signature Pages Follow]

 

-3-

 

 

IN WITNESS WHEREOF, Grantor has caused this Intellectual Property Security
Agreement to be executed and delivered by its duly authorized officer as of the
date first set forth above.

 

  GRANTOR:       SAVEDAILY, INC.         By:     Name:     Title:          
SAVEDAILY.COM, INC.         By:     Name:     Title:  

 

INTELLECTUAL PROPERTY SECURITY AGREEMENT

 

SIGNATURE PAGE

 

 

 

 

ACCEPTED AND AGREED
as of the date first above written:

 

  SAVEDAILY PARTNERS, L.P.       By Quail Bend, LLC, its General Partner      
By:       Steven Durbin, Jr.       Notice Address:       323 S. Anita Avenue  
Los Angeles, California  90049   Attn:  Steven Durbin, Jr.

  

ACKNOWLEDGEMENT OF GRANTOR

 

INTELLECTUAL PROPERTY SECURITY AGREEMENT

 

 

 

 

EXHIBIT C

 

Capital Structure

 

as of March 28, 2012             Cash and Equivalents      Cash  $106,245 
Marketable Securities   4,095  Total Cash and Equivalents  $110,340        
Debt      EQ Partners, LLC Note  $750,000  Silver Cross Note   215,837  Total
Debt  $965,837         Shares Outstanding      Total Preferred Stock Shares
Outstanding1   -  Total Common Stock Shares Outstanding2   44,346,864        
Options and Warranted Granted      Warrants on Common Stock Granted   2,069,192 
Options on Common Stock Granted   1,586,666 

 

(1)5,000,000 shares authorized

(2)50,000,000 shares authorized

 

ACKNOWLEDGEMENT OF GRANTOR

 

INTELLECTUAL PROPERTY SECURITY AGREEMENT

 

 

 

 

EXHIBIT D

 

Material Assets*

 

        Purchase   Purchase     Accumulated     Remaining   COMPANY  
DESCRIPTION   Date   Amount     Depreciation     Book Value                    
          Computer Hardware                                 NORDEX   COMPUTERS  
09/30/99   $ 11,859     $ 11,859       -   NORDEX   2 DESKTOPS   12/15/99    
4,083       4,083       -   NORDEX   MISC COMP EQUIP   01/05/00     1,479      
1,479       -   NORDEX   COMPAQ RACK   01/15/00     4,642       4,642       -  
NORDEX   COMPAQ HARDWARE   02/23/00     2,650       2,650       -   NORDEX   2
COMPUTERS   03/03/00     5,763       5,763       -   CDW   CISCO ETHERNET  
04/25/00     1,916       1,916       -   CDW   CISCO 24 PT 10/100 SWITCH  
04/26/00     1,537       1,537       -   CDW   COMPUTER EQUIP   05/01/00    
19,224       19,224       -   CDW   HP DESKJET   05/02/00     313       313    
  -   CDW   COMPAQ COMPUTER EQUIP   05/03/00     105,489       105,489       -  
NORDEX   MS 2000 UPGRADE   05/05/00     20,547       20,547       -   CDW  
COMPAQ SPEAKERS & S710   05/17/00     15,565       15,565       -   CDW   COMPAQ
COMPUTER EQUIP   05/31/00     1,662       1,662       -   CDW   COMPAQ MINI
TOWER COMPUTER   06/13/00     5,730       5,730       -   CDW   COMPAQ COMPUTER
EQUIP (7)   06/29/00     10,697       10,697       -   CDW   COMPAQ EQUIP +
WINDOWS UPGRD   07/03/00     6,531       6,531       -   CDW   COMPAQ SPEAKERS &
S710   07/05/00     4,275       4,275       -   CDW   DESKTOP & COMP EQUIP  
10/01/00     2,316       2,316       -   DELL   LAPTOP + ACCESSORIES FOR JEFF  
01/08/07     4,834       4,834       -   CRUCIAL TECHNOLOGY   RAM - DATABASE
SERVER   01/08/07     755       755       -   DELL   LATITUDE D620 - Jeff Mahony
  05/08/07     2,741       2,741       -   MONROE CONSULTING   SERVERS &
HARDWARE   01/03/08     65,391       65,391       -   MONROE CONSULTING   SERVER
SOFTWARE LICENSES   01/03/08     15,879       15,879       -   CAPTURE
TECHNOLOGIES   TELEPHONE SYSTEM   01/03/08     31,712       31,712       -  
MONROE CONSULTING   FIREWALL   01/07/08     6,260       6,260       -   MONROE
CONSULTING   DEVELOPER WORKSTATIONS & LAPTOP   01/07/08     9,600       9,600  
    -   MONROE CONSULTING   SERVERS & HARDWARE   01/07/08     20,757      
20,757       -   MONROE CONSULTING   SOFTWARE   01/07/08     10,480       10,480
      -   MONROE CONSULTING   NETWORKING HARDWARE   01/07/08     24,254      
24,254       -   MONROE CONSULTING   HP 4250N PRINTER   01/07/08     1,320      
1,320       -   MONROE CONSULTING   SERVERS & HARDWARE   01/14/08     6,853    
  6,853       -   MONROE CONSULTING   LCD MONITORS   01/28/08     647       647
      -   STOUT & BERG Electrical   Labor to Install electrical needed for new
Servers   01/15/08     2,485       2,485       -   ROYAL DISCOUNT TECHNOLOGIES  
MS OFFICE 2007   04/01/08     792       792       -   RemitPro   CHECK SCANNER  
05/31/08     825       825       -   DELL   (2) OPLTIPLEX 530 DESKTOPS W/ LCD
MONITORS   06/03/08     2,240       2,240       -   DELL   Precision T3400 375W
  07/01/08     1,998       1,998       -   MONROE CONSULTING   DOMAIN CONTROLLER
- ProLiant DL320G5p   07/08/08     3,623       3,623       -   MONROE CONSULTING
  Domain Controller Installation   07/31/08     1,450       1,450       -   DELL
  DELL DEMO PC / Monitor for Conference Room   02/14/11     1,809       628    
  1,181     DELL OptiPlex 790 and Monitor for Jeff    06/20/11     1,943      
450       1,493   VERISON TELEPRODUCTS   Dual T1 Interface Module- Netvanta 3430
Chassis / Installation   08/30/11     2,839       478       2,361   DELL   Dell
Precision T3500 - Shane Oh   11/10/11     2,592       264       2,328   DELL  
Adobe Creative Studio 5.5 for Shane's Dell Precision   11/10/11     916       93
      823   CRUCIAL TECHNOLOGY   RAM for Dell Precision T3500 4GB   11/10/11    
63       6       56   APPLE COMPUTER   Ibook for Matt Nunez   12/10/11     3,795
      282       3,513   DELL   DELL PRecision T3500   02/24/12     2,546      
12       2,534   Total Computer Hardware           $ 457,676.40     $ 443,387.61
    $ 14,288.79                                     Furniture and Office
Equipment                                 BKM   32 OFFICE CHAIRS   04/15/00   $
10,613     $ 10,613       -   BKM   CONFERENCE TABLE   04/26/00     7,239      
7,239       -   BKM   FIRE FILE   04/28/00     485       485       -   BKM  
FURNITURE   06/05/00     17,671       17,671       -   125West.com   Shelving
Set   09/08/06     409       409       -   Officedepot.com   Shelving Set  
11/07/06     388       388       -   TWA Com   Heavy Duty Shelving for Servers  
01/09/08     787       652       135   ednashworld / Amazon.com   Sharp Aquos
52" TV and Mount for Conference Room   10/08/10     1,049       293       756  
Atlas Sales & Rentals   Air Conditioning Unit - Server Room   12/20/10     3,864
      924       2,939     DryErase Boards (3) - Small Conference Room   
04/21/11     745       136       609   Total Furniture and Office Equipment    
      $ 43,250     $ 38,810     $ 4,440                                      
Total Fixed Assets        $ 500,926     $ 482,198     $ 18,728  

 

* Intangible assets are disclosed on the IP Security Agreement (Exhibit B)

 

ACKNOWLEDGEMENT OF GRANTOR

 

INTELLECTUAL PROPERTY SECURITY AGREEMENT

 

 

 

 

EXHIBIT E

  

Material Liabilities

 

Accounts Payable   Current    1 - 30    31 - 60    61 - 90    > 90   Total 
American Express   -   $15,905   $5,001    -    -   $20,907  Austin Legal Group 
 5,000    -    -    -    -    5,000  Capital Market Relations   -    3,500  
 7,000    -    -    10,500  Complete Office   -    521    268    -    -    789 
HJ & Associates, LLC   7,500    7,819    -    -    -    15,319  Leonard E.
Nielson   -    -    -    -    2,500    2,500  Michael F. Cronin   -    2,910  
 -    -    -    2,910  Mitchell Reed Sussman & Associates   8,160    7,880  
 -    -    -    16,040  PR Newswire   2,095    2,090    420    1,000    1,145  
 6,750  Sprint   -    180    -    -    -    180  UMB BANK   -    -    36,919  
 -    39,382    76,301  UPS Security Systems   42    -    -    -    -    42 
Verizon   909    -    -    -    -    909  Verizon Business   -    1,072    -  
 -    -    1,072  Total Accounts Payable  $23,706   $41,877   $49,609   $1,000  
$43,027   $159,219 

 

Accrued Expenses   Amount   Date     Memo   Law Offices of Aaron Grunfeld   $ 
15,000     12/31/11     Aaron Grunfeld $5k per month flat fee October-December
2011 per Matt Nunez     Law Offices of Aaron Grunfeld     5,000     1/31/12    
Accrue Aaron Grunfeld Monthly retainer January 2012     Ken Carroll     2,077  
  2/29/12     Ken personal amex charges 2/11 to 2/29/12     Ken Carroll     892
    2/29/12     February charges on Ken's card - March Bill office expenses    
Law Offices of Aaron Grunfeld     5,000     2/29/12     Accrue Aaron Grunfeld
Monthly retainer February 2012     Standard Registrar and Transfer Co. Inc.    
85     2/29/12     February services billed in March     Jennifer Mahoney
expense report     3,264     2/29/12     Jennifer Mahony 3/7/12 expense report -
February charges     Franz Staal expense report     7     2/29/12     accrue
February expense - Franz Staal expense report 3/12/2012     Gregory D Vacca    
1,055     2/29/12     Feb 2012 expenses on 3/8/12 expense report - Greg Vacca  
  Jeffrey W Mahony     220     2/29/12     January and Feb 2012 expenses from
March 14, 2012 expense report     Jeffrey W Mahony     2,355     2/29/12    
Jeff Mahony Feb 2012 amex charges on March bill     Matthew D Nunez     6,218  
  2/29/12     Matt - February expenses on March amex bill     Total Accrued
Expenses   $  41,175              

 

Debt  Date   Amount  Silver Cross Note   2/29/2012   $215,837  EQ Partners, LLC
Note   3/31/2012   $365,242 

 

ACKNOWLEDGEMENT OF GRANTOR

 

INTELLECTUAL PROPERTY SECURITY AGREEMENT

 

 

 

  

EXHIBIT F

 

Secured Interests

 

Monroe Consulting   Servers & Hardware  01/03/08  $65,391  Monroe Consulting  
Server Software Licenses  01/03/08   15,879  Capture Technologies   Telephone
System  01/03/08   31,712  Monroe Consulting   Firewall  01/07/08   6,260 
Monroe Consulting   Developer Workstations & Laptop  01/07/08   9,600  Monroe
Consulting   Servers & Hardware  01/07/08   20,757  Monroe Consulting  
Software  01/07/08   10,480  Monroe Consulting   Networking Hardware  01/07/08 
 24,254  Monroe Consulting   Hp 4250N Printer  01/07/08   1,320  Monroe
Consulting   Servers & Hardware  01/14/08   6,853  Monroe Consulting   Lcd
Monitors  01/28/08   647  Stout & Berg Electrical   Labor To Install Electrical
Needed For New Servers  01/15/08   2,485  Royal Discount Technologies   Ms
Office 2007  04/01/08   792  TWA Com   Heavy Duty Shelving For Servers 
01/09/08   787         $197,217

 

ACKNOWLEDGEMENT OF GRANTOR

 

INTELLECTUAL PROPERTY SECURITY AGREEMENT

 

 

 

  

EXHIBIT G

 

Litigation

 

Qualified Investors LP Lawsuit.

 

On September 7, 2011, Qualified Investors LP (“QILP”), filed a complaint in
Superior Court for Orange County, California entitled “Qualified Investors, LP,
a California Limited Partnership, vs. SaveDaily.com, Inc., a California
Corporation” (the “QILP Complaint”) against SaveDaily.Com, Inc., the Company’s
wholly-owned subsidiary (the “Subsidiary”) alleging that the Subsidiary had
breached its payment obligations under a marketing agreement between QILP and
the Subsidiary, and claiming an amount of $644,500.30. The Subsidiary filed a
demurrer to the QILP Complaint, asserting that the terms of the marketing
agreement required that any dispute arising in connection with the marketing
agreement be submitted to binding arbitration. On November 8, 2011, QILP filed
an amended complaint acknowledging and agreeing that the dispute be referred to
first to mediation and thereafter to binding arbitration should mediation not be
successful. By letter dated November 1, 2011 Gregory D. Vacca, President of the
Company, gave notice to QILP that said marketing agreement (as it may have been
amended from time to time to the date hereof) was being terminated by the
Company for cause pursuant to the provisions of the marketing agreement, with
said termination effective immediately.

 

On September 13, 2011, QILP filed an application for a pre-judgment writ of
attachment against the Subsidiary’s assets. Following a hearing held on November
15, 2011 the court granted QILP a provisional remedy of attachment described in
a minute order delivered to counsel on November 17, 2011, Representatives of the
Company by conference telephone discussed the amount and nature of the
attachment amount and provided a copy of the minute order to Lender on November
17, 2011. Although the application for writ of attachment was granted, the
Company intends vigorously and aggressively to defend this matter in arbitration
and the Company continues to believe that a material loss in this dispute is not
probable. This writ of attachment has not attached to the Borrowers’ assets as
of the date of this Agreement, and shall not attach to the Borrowers’ assets
prior to November 22, 2011. The Company has made a contingeny accrual in its
financial statements. Because the matter is in its early stages and is subject
to arbitration (and awards made pursuant to which in California are ordinarily
not appealable), no assurance as to the outcome can be given. The Company has
previously disclosed to the Lenders that Jeffrey Mahony, the Company’s Chief
Executive Officer and a director of the Company, and Ken Carroll, a director of
the Company, each own 20% of QILP. However, they do not exercise any control
over QILP or the maintenance of the QILP Complaint against the Subsidiary and
would not receive any monies from any outcome of the QILP Complaint. Further,
Mr. Mahony and Mr. Carroll shall remit and/or forfeit to Borrowers any funds
received from QILP with respect to the foregoing litigation, arbitration, or
mediation, and have assigned or shall assign within thirty (30) days of closing
the Financing, their interest in QILP to Borrowers. Borrowers shall provide
satisfactory evidence of the foregoing to Lender within thirty (30) days of
closing the Financing. As of March 28,2012 , QLIP arbitration hearing is
scheduled currently on July 10, 2012 and trial is not yet set. Document
production as of yet has not been set. We still believe that this claim is
completely baseless as QLIP has not procurred any new client customers since its
entering into agreement with SaveDaily.

 

McGaughy Lawsuit

 

On September 7, 2011, Melvin McGaughy (“McGaughy”) filed a complaint in United
States District Court, Central District of California entitled “Melvin H.
McGaughy, an individual, Melvin H. McGaughy, as Trustee of the Melvin H.
McGaughy Irrevocable Trust; and Patricia G. Ericson, an individual, vs. Harry S.
Dent, Jr., an individual” (the “McGaughy Complaint”) against Harry S. Dent, Jr.
(“Mr. Dent”) for breach of personal guaranty, claiming an amount of
$1,027,915.84. The basis of the claim is $75,000 in unpaid principal, plus
interest and penalties incurred over approximately ten (10) years. Mr. Dent is a
director of the Company, the chairman of the Board of Directors of the Company
and a beneficially a principal shareholder in the Company. In the McGaughy
Complaint, McGaughy alleges that Mr. Dent has failed to make payments under a
guaranty of certain Company indebtedness that Mr. Dent provided to McGaughy on
or before February 1, 2006. Neither the Company nor its subsidiary is a party to
the McGaughy Complaint because a lawsuit against the Company is barred by the
statute of limitations, as the Company believes the entire lawsuit should be. A
motion to dismiss the McGaughy Complaint was filed by Mr. Dent on October 14,
2011, which motion is scheduled to be heard on November 21, 2011.

 

ACKNOWLEDGEMENT OF GRANTOR

 

INTELLECTUAL PROPERTY SECURITY AGREEMENT

 

 

 

 

The Company is currently paying the costs of the defense of the McGaughy
Complaint and the Company may incur further obligations to Mr. Dent in the event
of an adverse outcome or settlement of this matter. The Company believes that
there that there are meritorious defenses including but not limited to Complaint
being barred by the statute of limitations. Mr. Dent has indicated that he
intends to vigorously defend against the McGaughy Complaint. However, the matter
is in the very early stages of the litigation process and no assurance can be
given as to the outcome.

 

The Company is subject to various contingencies, the resolutions of which,
management believes ought not have a material adverse effect on the Company or
its operations, and which are described as follows. For example, a former
employee and officer of the Company, who has not been employed by the Company
for approximately 10 or more years, has recently alleged that persons affiliated
with the Company have violated his rights to privacy in providing disclosures to
others principally in response to attempted Company share transfers. To the
knowledge of the Company, this individual has not filed any formal complaints or
initiated any actions against the Company in any court of law or with any
regulatory agency. The Company believes that the allegations of this individual
are wholly without merit. No assurance can be given that the outcome of the
foregoing matter or the outcome of any future actions or proceedings will not
have a material adverse effect on the Company or its operations. As of March 28,
2012 this litigation is set for a settlement hearing to be held on July 5th,
2012. If unsuccessful in settlement a pre trial conference is set to be held on
August 20, 2012 and a jury trial set for Sept 4, 2012.

 

ACKNOWLEDGEMENT OF GRANTOR

 

INTELLECTUAL PROPERTY SECURITY AGREEMENT