Exhibit 10.31
 
FIRST ADDENDUM TO
FORBEARANCE AND NOTE AMENDMENT AGREEMENT
 
This First Addendum to Forbearance and Note Amendment Agreement (this
“Agreement”) is entered into by and among Generation Zero Group, Inc., a Nevada
corporation (“Generation Zero” or the “Company”), Phoenix Restructuring Inc., a
Delaware corporation (“Phoenix” or “Collateral Agent”), on behalf of and as
Collateral Agent for holders of the GZ Notes (as defined below), and Find.com
URL Holding, LLC, a Georgia limited liability company (“URL Holding”), each a
“Party” and collectively the “Parties”.

Recitals
 

 
A.
On June 30, 2010 Generation Zero issued secured promissory notes (the “GZ
Notes”) having an aggregate outstanding principal balance of approximately
$2,920,250.

 

 
B.
The GZ Notes are secured (i) by a security interest in the personal property of
Generation Zero, under a Security Agreement dated June 30, 2010 between
Generation Zero and the Collateral Agent, and (ii) by a security interest in the
personal property of URL Holding, under a Security Agreement dated June 30, 2010
between URL Holding and the Collateral Agent (collectively, the “Security
Agreements”).

 

 
C.
The Parties previously entered into a Forbearance and Note Amendment Agreement
on or around November 20, 2010, to: (i) evidence and document the then amount
outstanding under the GZ Notes; (ii) effect a forbearance of the GZ Notes
through March 15, 2011; (iii) provide for the payment of certain principal
reduction payments under the GZ Notes; (iv) provide for the issuance of shares
of Generation Zero common stock to the GZ Note holders; (v) provide for the
payment of certain cure payments to the GZ Note holders; (vi) effect certain
amendments to the GZ Notes and URL Holding’s Operating Agreement, which reduced
the percentage of GZ Note holders required to amend the GZ Notes; and (vii)
effect the cancellation of Generation Zero’s previously outstanding forbearance
agreement (the “Forbearance Agreement”, a copy of which is attached hereto as
Exhibit A).

 
D.
As of the date of this Agreement, the GZ Notes are in default for failure of
Generation Zero to make scheduled payments under such GZ Notes and to repay such
GZ Notes on the maturity date of such notes (the “Payment Default”) and more
than 60 days have passed without the cure of the GZ Notes as of March 15, 2012,
$2,920,250 of principal and approximately $700,160 of accrued interest is owed
and due on the GZ Notes and as such, an aggregate of approximately $3,620,410 is
currently due on the GZ Notes (the “Outstanding Amount”).

 
 
 
 
 
 
 
 
 
 
 
 
First Addendum to Forbearance and Note Amendment Agreement
 
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E.
This Agreement is to be executed by Collateral Agent and URL Holding upon
approval by holders of at least a majority of the outstanding principal of the
GZ Notes, which majority includes Cross Hill Georgetown Capital, L.P. (the
“Approval”).

   
In consideration of the above recitals and other good and valuable
consideration, the receipt and sufficiency is acknowledged, the parties agree as
follows:
 
1.  
Existence of Default under GZ Notes.  Generation Zero acknowledges and agrees
that (i) the GZ Notes are in default and that an Event of Default under the GZ
Notes has occurred, (ii) the full unpaid principal and accrued but unpaid
interest of the GZ Notes is due and payable, and (iii) the 60 day period
referenced in Section 6.11 of the operating agreement of URL Holding has passed,
entitling the Directors of URL Holding to cancel Generation Zero’s shares in URL
Holding, issue shares to Collateral Agent and conduct a non- consensual
foreclosure.

 
2.  
Agreement to Forbear.  During the period (the “Forbearance Period”) commencing
on June 30, 2010 (the “Effective Date”) and ending on the earlier to occur of
January 2, 2014 (subject to the Extension and Termination, described below) or
the date that any Forbearance Default occurs, the Collateral Agent shall forbear
in the exercise of its rights and remedies under the GZ Notes, Security
Agreements, the operating agreement of URL Holding and applicable law.  During
the Forbearance Period, Generation Zero is not required to make any payments
under the GZ Notes, except under Section 4 of this Agreement.  Further, during
the Forbearance Period, Interest, late fees and other charges, if any, under the
GZ Notes, shall not accrue or be assessed.  The term “Forbearance Default” means
(i) any default under the Security Agreements (other than the Payment Default
described in Recital D above or any failure to make a payment due under the GZ
Notes), (ii) any default under the GZ Notes (other than the Payment Default
described in Recital D above or any failure to make a payment due under the GZ
Notes), and/or (iii) any failure to perform any obligation set forth in this
Agreement.

 
3.  
Forbearance Fee.  Upon approval of this Agreement by holders of at least a
majority of the outstanding principal of the GZ Notes including in all cases,
the approval of Cross Hill Georgetown Capital, L.P. and the execution of this
Agreement by the Collateral Agent, Generation Zero shall pay the holders of GZ
Notes, pro rata with the outstanding principal amount of the GZ Notes held by
each holder, 1,460,125 shares of restricted common stock of Generation Zero (the
“GZ Shares”), upon such holders making required representations to Generation
Zero in order for Generation Zero to confirm that a valid exemption from
registration exists under the Securities Act of 1933, as amended (“Securities
Act”) for such issuances.  The GZ Shares are a fee and do not reduce the amount
of the GZ Notes.  Additionally, to the extent the shares of common stock issued
by Generation Zero to holders of GZ Notes become eligible for resale by such
holders under Rule 144, at the earliest date legally permissible, Generation
Zero shall cause its counsel (or such other counsel engaged by Generation Zero)
to issue one opinion of such counsel necessary to remove restrictive legends.
The GZ Shares and the other shares of Generation Zero’s common stock previously
issued to the GZ Note holders by Generation Zero (collectively the “Shares”)
shall have piggy-back registration rights.  Generation Zero covenants and agrees
that if, at any time prior to the date that all of the GZ Shares can be sold,
without restriction by the GZ Note holders pursuant to Rule 144 of the
Securities Act, it proposes to file a registration statement with respect to any
class of equity or equity-related securities (other than in connection with an
offering to Generation Zero’s employees or in connection with an acquisition,
merger or similar transaction) under the Securities Act in a primary
registration on behalf of Generation Zero and/or in a secondary registration on
behalf of holders of securities, and the registration form to be used may be
used for the issuance or resale of the Shares, Generation Zero will include the
Shares in such registration statement (the “Piggyback Registration
Rights”).  The GZ Note holders also agree that Generation Zero may be limited in
its ability to register all of the Shares on a single registration statement
pursuant to Rule 415 of the Securities Act and consents and agrees to Generation
Zero registering less than all of the Shares in the event Generation Zero is
precluded from registering all of the Shares pursuant to Rule 415 (or any other
rule or regulation promulgated by the Securities and Exchange Commission).

 
 
 
 
 
 
 
 
 
 
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4.  
Pre-Payment Obligation.  During the Forbearance Period and thereafter, if
Generation Zero’s cash flow from Find.com joint venture operations in any fiscal
year exceeds $1,000,000 excluding any sale of equity, the Bridge Loan and
Funding Amount , and provided the Bridge Loan and the Funding Amount have been
repaid in full, Generation Zero may pay up to 25% of such cash flow (in the
discretion of Generation Zero’s Board of Directors) to reduce the balance of the
GZ Notes.  The Forbearance Period shall be automatically extended in the event
Generation Zero has complied with the preceding sentence and provided that
following January 1, 2014, Generation Zero uses the maximum portion of its free
cash flow as its Board of Directors may establish in their reasonable discretion
to reduce the balance of the GZ Notes, after the repayment in full of the Bridge
Loan and Funding Amount and any other subsequent funding approved GZ Note
holders holding at least a majority of the principal amount of the GZ Notes (the
“Extension”).  The Extension shall automatically extend the Forbearance Period
so long as the requirements of this Section 4 are met and compiled with by
Generation Zero.

5.  
Generation Zero Funding.  The following GZ Note holders CrossHill Georgetown
Capital LP, G. Thomas Lovelace, James A. Hendrickson, Hoyt G. Lowder, and
Cynthia S. White (collectively the “Funding Holders”) have agreed to advance
Generation Zero an aggregate of $50,000 for due diligence and legal expenses
(the “Funding Amount” and the “Funding”).  The Funding Amount shall be evidenced
by the form of Promissory Note attached hereto as Exhibit B. The Funding and the
other terms and conditions of this Section 5 shall be approved by the GZ Note
holders in connection with the Approval.  In consideration for the Funding,
Generation Zero shall issue the Funding Holders an aggregate of 500,000 shares
of Generation Zero’s restricted common stock, upon such Funding Holders making
required representations to Generation Zero in order for Generation Zero to
confirm that a valid exemption from registration exists under the Securities Act
(the “Funding Shares”).  The Funding Shares shall have the Piggy-Back
Registration Rights described above.  Following the execution of this Agreement,
Generation Zero shall have the right to undertake an offering to certain or all
of the GZ Note holders (pro rata with their ownership of the GZ Notes) to
purchase up to 1,000,000 shares of Generation Zero common stock in a private
offering for up to $50,000 in aggregate funding, subject to such offering and
such investors meeting valid exemptions from registration under the Securities
Act and otherwise complying with federal securities laws (the “Subsequent
Funding”).  The Funding Amount shall be reimbursed from the first funds, if any,
raised in the Subsequent Funding and/or through funds raised from the Bridge
Loan (described below).  

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
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6.  
Bridge Loan. Subsequent to the execution of this Agreement, Generation Zero
shall have the right to borrow up to $1,000,000 in the form of a bridge loan,
with such terms and conditions as Generation Zero’s Board of Directors shall
determine reasonable in its sole and reasonable discretion, subject in all cases
to the first priority security interests of the GZ Note holders and the GZ Notes
(the “Bridge Loan”).  The Approval shall constitute approval from the GZ Note
holders of Generation Zero’s ability to undertake and enter into agreements and
other documents in connection with and evidencing the Bridge Loan.

7.  
Transfer of Preferred Stock.  This Agreement and the terms and conditions hereof
shall become null and void and the Forbearance Period shall be deemed to have
automatically expired (the “Termination”) if Matthew Krieg, the holder of the
Company’s Series A Preferred Stock, which has super majority voting rights (the
“Preferred Stock”), shall not transfer the ownership of such Preferred Stock to
Cynthia S. White and Ronald L. Attkisson or their assigns, upon written request
to Mr. Krieg by both Cynthia S. White and Ronald L. Attkisson  (the “Transfer
Request”), within ten (10) days of the date such Transfer Request is received by
Mr. Krieg.

8.  
No Waiver by Collateral Agent or Holders of GZ Notes.  Except for the agreement
to forbear the exercise of rights during the Forbearance Period, as described in
Section 2 of this Agreement and any Extension, neither the Collateral Agent, nor
any holder of GZ Notes, nor URL Holding nor any Director of URL Holding has
waived any right against Generation Zero under the GZ Notes, any security
agreement executed in connection therewith or under any other agreement(s)
between the parties.  Neither the failure nor delay on the part of the
Collateral Agent to exercise any right, remedy, power, or privilege under any of
the GZ Notes, the Security Agreements executed in connection with the notes, the
operating agreement of URL Holding, or any other document relating to the GZ
Notes shall operate as a waiver thereof.  No single or partial exercise of any
right, power, or privilege hereunder shall preclude any other or further
exercise thereof or the exercise of any other right, power, or privilege.   All
of the rights, remedies, powers, and privileges of the holders of the GZ Notes,
and the Collateral Agent, shall be cumulative and may be exercised singularly,
alternatively, successively or concurrently.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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9.  
Forbearance Agreement to Continue in Full Force and Effect.  Except as
specifically amended hereby, the Forbearance Agreement and the terms and
conditions thereof shall remain in full force and effect.

10.  
Amendment. No amendment, modification, rescission, waiver or release of any
provision of this Agreement shall be effective unless the same shall be in
writing and signed by each party hereto.

 
11.  
Integration.  This Agreement constitutes the entire agreement and understanding
among the parties relating to the subject matter hereof, and supersedes all
prior proposals, negotiations, agreements and understandings relating to such
subject matter.  In entering into this Agreement, Generation Zero acknowledges
that it is relying on no statements, representation, warranty, covenant or
agreement of any kind made by Scientigo or URL Holding or any employee or agent
of Scientigo or URL Holding, except for the agreements of Scientigo and URL
Holding set forth herein.

 
12.  
Time is of the Essence.  The parties agree that time is of the essence in each
provision hereof.

 
13.  
Severability.  If any provision of this Agreement shall be held invalid or
unenforceable in whole or in part, such provision shall be ineffective to the
extent of such invalidity or unenforceability without in any manner affecting
the validity or enforceability of the remaining provisions of this Agreement.

 
14.  
Waiver of Right to Certain Damages.  Except as prohibited by law, Generation
Zero absolutely, irrevocably and unconditionally waives any right which it may
have to claim or recover against the holders of the GZ Notes, the Collateral
Agent, Scientigo, or any of their agents, representatives, consultants,
attorneys, employees, officers, or directors in any litigation or otherwise any
special, exemplary, punitive or consequential damages other than or in addition
to actual damages.

  
15.  
Effect of Facsimile and Photocopied Signatures. This Agreement may be executed
in several counterparts, each of which is an original.  It shall not be
necessary in making proof of this Agreement or any counterpart hereof to produce
or account for any of the other counterparts.  A copy of this Agreement signed
by one Party and faxed or scanned and emailed to another Party (as a PDF or
similar image file) shall be deemed to have been executed and delivered by the
signing Party as though an original.  A photocopy or PDF of this Agreement shall
be effective as an original for all purposes.

 
[Remainder of page left intentionally blank. Signature page follows.]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date and year written below, to be effective as of the Effective Date.
 
Dated: April 18, 2012
 

 
Generation Zero Group, Inc.
     
By: /s/ Matthew Krieg
 
Matthew Krieg
 
President
     
Phoenix Restructuring Inc., on behalf of
 
itself and as Collateral Agent for the
 
Holders of GZ Notes
     
By: /s/ Cynthia S. White
 
Cynthia S. White
 
Director
     
By: /s/ Ronald L. Attkisson
 
Ronald L. Attkisson
 
Director
     
Find.com URL Holding, LLC
     
By: /s/ Cynthia S. White
 
Cynthia S. White
 
Secretary
   

[Signature page of Majority Note Holders follows.]
 
 
 
 
 
 
 
 
 
 
 
 
 
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MAJORITY NOTE HOLDERS
     
Cross Hill Georgetown Capital, L.P. 
% of GNZR Note Obligation:  20.294
   
By: ___________________________
     
Its ____________________________
             
G. Thomas Lovelace
% of GNZR Note Obligation:    7.739
   
_______________________________
             
James A. Hendrickson
% of GNZR Note Obligation:    7.739
   
_______________________________
             
Hoyt G. Lowder
% of GNZR Note Obligation:    5.052
   
_______________________________
             
Ronald L. Attkisson
% of GNZR Note Obligation:    4.382
   
/s/ Ronald L. Attkisson                              
             
Cynthia S. White
% of GNZR Note Obligation:    3.382
   
/s/ Cynthia S. White                                   
             
Charles H. Waldo
% of GNZR Note Obligation:    1.968
   
______________________________
 

 
 
 
 
 

 
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