Document:

ex10c.htm

Exhibit 10(c)

CHANGE IN CONTROL SEVERANCE PROTECTION AGREEMENT

 

This Agreement (the “Agreement”) is dated as of January 18, 2012 by and between Hovnanian Enterprises, Inc., a Delaware corporation (the “Company”), and [name] (the “Executive”).

 

WHEREAS, the Company’s Board of Directors (the “Board”) considers the continued services of key executives of the Company to be in the best interests of the Company and its stockholders; and

 

WHEREAS, the Board desires to assure, and has determined that it is appropriate and in the best interests of the Company and its stockholders to reinforce and encourage the continued attention and dedication of key executives of the Company to their duties of employment without personal distraction or conflict of interest in circumstances which could arise from the occurrence of a change in control of the Company; and

 

WHEREAS, the Board has authorized the Company to enter into severance protection agreements with certain key executives of the Company, such agreements to set forth the severance compensation which the Company agrees to pay such executives under certain circumstances in connection with a change in control of the Company; and

 

WHEREAS, references herein to the Executive’s employment with the Company shall also be deemed to refer to the Executive’s employment with any of the Company’s affiliates, including without limitation, K. Hovnanian Companies, LLC; and

 

WHEREAS, the Executive is a key executive of the Company and has been designated by the Compensation Committee of the Board (the “Committee”) as an executive to be offered such a severance protection agreement with the Company.

 

NOW, THEREFORE, in consideration of the promises and the mutual covenants and agreements contained herein and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Company and the Executive agree as follows:

 

1.           Term.  This Agreement shall become effective on the date hereof and, subject to the Executive’s continued employment by the Company, remain in effect until December 31, 2012; provided, however, that, on December 31, 2012 and on each successive one-year anniversary thereof (each, a “Renewal Date”), this Agreement shall automatically renew for a one-year term, unless the Company provides to the Executive, in writing, at least 180 days prior to any Renewal Date, notice that this Agreement shall not be renewed.  Notwithstanding the foregoing, in the event that a Change in Control (as hereinafter defined) occurs at any time prior to the termination or expiration of this Agreement in accordance with the preceding sentence, this Agreement shall not terminate until the second anniversary of the Change in Control.

 

2.           Change in Control.  No compensation or other benefit shall be payable pursuant to Section 4 of this Agreement unless and until a Change in Control shall have occurred while the Executive is an employee of the Company and the Executive’s employment by the Company thereafter shall have terminated in accordance with Section 3(a) hereof.  For purposes of this Agreement, a “Change in Control” shall have the meaning assigned to such term under the Company’s Amended and Restated 2008 Stock Incentive Plan, as amended from time to time, or under any successor plan thereto (the “Stock Plan”).

 

  

  

  

 

3.           Termination of Employment; Definitions.

 

(a)           The Executive shall be entitled to the compensation provided for in Section 4 of this Agreement if within two years following a Change in Control, (i) the Executive’s employment is involuntarily terminated by the Company other than for Cause or (ii) the Executive terminates his or her employment for Good Reason after providing the Company with a Notice of Termination at least 60 days prior to such termination of employment.

 

(b)           Cause. For purposes of this Agreement, “Cause” shall mean the occurrence, during the term of this Agreement, of any of the following:

 

(i)           the willful and continued failure of the Executive to perform substantially all of his or her duties with the Company (other than any such failure resulting from incapacity due to physical or mental illness) for a period of 10 days following a written demand for substantial performance that is delivered to such Executive by the Board, which specifically identifies the manner in which the Board believes the Executive has not substantially performed his or her duties;

 

(ii)           dishonesty in the performance of the Executive’s duties with the Company;

 

(iii)           the Executive’s conviction of, or plea of guilty or nolocontendere to, a crime under the laws of the United States or any state thereof constituting (x) a felony or (y) a misdemeanor involving moral turpitude;

 

(iv)           the Executive’s willful malfeasance or willful misconduct in connection with the Executive’s duties with the Company or any act or omission which is injurious to the financial condition or business reputation of the Company or its affiliates; or

 

(v)           the Executive’s breach of the provisions of Section 11 of this Agreement.

 

(c)           Good Reason. For purposes of this Agreement, “Good Reason” shall mean the occurrence, during the term of this Agreement, of any of the following, without the Executive’s express written consent:

 

(i)           any material diminution in the Executive’s duties, titles or responsibilities with the Company from those in effect immediately prior to a Change in Control; provided, however, that no such material diminution shall be deemed to exist solely because of changes in the Executive’s duties, titles or responsibilities as a consequence of the Company ceasing to be a company with publicly traded securities or becoming a wholly owned subsidiary of another entity; or

 

(ii)           any reduction in the Executive’s annual base salary from the Executive’s annual base salary in effect immediately prior to a Change in Control.

 

  

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Notwithstanding the foregoing, in the event that the Executive provides the Company with a Notice of Termination (as defined below) referencing this Section 3(c) within 60 days after the occurrence of an event giving rise to Good Reason, the Company shall have 30 days thereafter in which to cure or resolve the behavior otherwise constituting Good Reason.

 

(d)           Notice of Termination. Any purported termination of the Executive’s employment shall be communicated by a Notice of Termination to the Executive, if such termination is by the Company, or to the Company, if such termination is by the Executive.  For purposes of this Agreement, “Notice of Termination” shall mean a written notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive’s employment under the provisions so indicated.  For purposes of this Agreement, no purported termination of Executive’s employment with the Company shall be effective without such a Notice of Termination having been given.

 

4.           Compensation Upon Qualifying Termination of Employment.  If the Executive’s employment with the Company shall be terminated in accordance with and under the circumstances described under Section 3(a) (a “Qualifying Termination”), the Executive shall be entitled to the following payments and benefits:

 

(a)           Severance Payments and Benefits.  Subject to the Executive’s execution, delivery and non-revocation of a general release of claims in favor of the Company and its affiliates in the form attached hereto as Exhibit A within 45 days following the date of the Executive’s Qualifying Termination, the Company shall pay, or cause to be paid, or provide the Executive with the following:

 

(i)            a cash severance payment in an amount equal to the sum of (x) one times the Executive’s annual base salary on the date of the Change in Control (or, if higher, the annual base salary in effect immediately prior to the giving of the Notice of Termination) plus (y) the average amount earned by the Executive as an annual bonus with respect to the three most recent completed fiscal years preceding the date of the Change in Control.  This cash severance amount shall be payable in a lump sum within 60 days after the Executive’s date of Qualifying Termination; provided, however, that if such 60 day period begins in one calendar year and ends in a second calendar year, then the cash severance payment shall not be paid until the second of such two calendar years (regardless of whether the Executive delivers the required general release of claims in the first calendar year or in the second calendar year);

 

(ii)           other than with respect to awards described under clause (iii) below, immediate 100% vesting (and settlement in the case of restricted stock units, subject to any delay required pursuant to Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”)) of all outstanding stock options, stock appreciation rights, restricted stock units and restricted stock granted or issued by the Company prior to, on or upon the Change in Control (to the extent not previously vested on or following the Change in Control); and

 

  

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(iii)           with respect to any outstanding awards held by the Executive immediately prior to the Qualifying Termination pursuant to the Company’s 2010 Long Term Incentive Program (the “LTIP”), the Executive shall be entitled to the same rights and payments, if any, thereunder as Executive would have been entitled to receive in the event that the Executive’s Qualifying Termination constituted a “Retirement” for purposes of the LTIP (regardless of the Executive’s actual age or years of service at the time of such Qualifying Termination).

 

(b)           Additional Payments and Benefits.  The Executive shall also be entitled to:

 

(i)           a lump sum cash payment payable within 10 business days following the date of the Executive’s termination of employment equal to the sum of (A) the Executive’s accrued but unpaid base salary through the date of employment termination and (B) an amount representing the Executive’s accrued but unused vacation days, if any, in each case, in full satisfaction of the Executive’s rights thereto; and

 

(ii)           all other accrued or vested benefits in accordance with the terms of any applicable Company plan (the “Accrued Benefits”).

 

(c)           Legal Expenses.  The Company shall pay or reimburse the Executive for reasonable legal fees (including without limitation, any and all court costs and attorneys’ fees and expenses) incurred by the Executive in connection with or as a result of any claim, action or proceeding brought by the Company or the Executive with respect to or arising out of this Agreement or any provision hereof; provided, however, that the Company shall have no obligation to pay or reimburse any such legal fees if (i) in the case of an action brought by the Executive, the Company is successful in establishing with the court that the Executive’s action was taken in bad faith or was frivolous or otherwise without a reasonable legal or factual basis, or (ii) in the case of any action, the action is materially decided in favor of the Company.

 

5.           Compensation Upon Termination for Death, Disability, Voluntary Resignation or Termination by the Company for Cause.  If the Executive’s employment is terminated by reason of the Executive’s death, Disability (as defined under the Stock Plan), the Executive’s voluntary resignation (other than for Good Reason) or due to a termination by the Company for Cause, the Executive will receive:

 

(a)           a lump sum cash payment payable within 10 business days following the date of the Executive’s termination of employment equal to the sum of (i) the Executive’s accrued but unpaid base salary through the date of employment termination and (ii) an amount representing the Executive’s accrued but unused vacation days, if any, in each case, in full satisfaction of the Executive’s rights thereto; and

 

(b)           the Accrued Benefits.

 

6.           Excess Parachute Excise Tax.  Notwithstanding any other provision of this Agreement,

 

  

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(a)           In the event that part or all of the consideration, compensation or benefits to be paid to the Executive under this Agreement together with the aggregate present value of payments, consideration, compensation and benefits under all other plans, arrangements and agreements applicable to the Executive, constitute “excess parachute payments” under Section 280G(b) of the Code subject to an excise tax under Section 4999 of the Code (collectively, the “Parachute Amount”) the amount of excess parachute payments which would otherwise be payable to the Executive or for the Executive’s benefit under this Agreement shall be reduced to the extent necessary so that no amount of the Parachute Amount is subject to an excise tax under Section 4999 (the “Reduced Amount”); provided that such amounts shall not be so reduced if, without such reduction, the Executive would be entitled to receive and retain, on a net after tax basis (including, without limitation, after any excise taxes payable under Section 4999), an amount of the Parachute Amount which is greater than the amount, on a net after tax basis, that the Executive would be entitled to retain upon receipt of the Reduced Amount.

 

(b)           If the determination made pursuant to Section 6(a) results in a reduction of the payments that would otherwise be paid to the Executive except for the application of Section 6(a), such reduction in payments due under this Agreement shall be first applied to reduce any cash severance payments that the Executive would otherwise be entitled to receive hereunder and shall thereafter be applied to reduce other payments and benefits in a manner that would not result in subjecting the Executive to additional taxation under Section 409A of the Code.  Within ten days following such determination, but not later than thirty days following the date of the event under Section 280G(b)(2)(A)(i), the Company shall pay or distribute to the Executive or for the Executive’s benefit such amounts as are then due to the Executive under this Agreement and shall promptly pay or distribute to the Executive or for his benefit in the future such amounts as become due to the Executive under this Agreement.

 

7.           Obligations Absolute; Non-Exclusivity of Rights; Joint and Several Liability.

 

(a)           The obligations of the Company to make the payment to the Executive, and to make the arrangements, provided for herein shall be absolute and unconditional and shall not be reduced by any circumstances, including without limitation any set-off, counterclaim, recoupment, defense or other right which the Company may have against the Executive or any third party at any time.

 

(b)           Nothing in this Agreement shall prevent or limit the Executive’s continuing or future participation in any benefit, bonus, incentive or other plan or program provided by the Company and for which the Executive may qualify (other than any change in control or other severance plan or policy), nor shall anything herein limit or reduce such rights as the Executive may have under any agreements with the Company.  Amounts which are vested benefits or which the Executive is otherwise entitled to receive under any plan or program of the Company shall be payable in accordance with such plan or program, except as explicitly modified by this Agreement.

 

(c)           Any successors or assigns of the Company shall be joint and severally liable with the Company under this Agreement.

 

  

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8.           Entire Agreement; Not an Employment Agreement; No Duplication of Payments or Benefits.

 

(a)           This Agreement constitutes the entire agreement of the parties hereto and supersedes all prior and contemporaneous agreements and understandings (including term sheets), both written and oral, between the parties hereto, or either of them, with respect to the subject matter hereof.  No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not expressly set forth in this Agreement.

 

(b)           This Agreement is not, and nothing herein shall be deemed to create, a contract of employment between the Executive and the Company.  The Company may terminate the employment of the Executive by the Company at any time, subject to the terms of this Agreement and/or any employment agreement or arrangement between the Company and the Executive that may then be in effect.

 

(c)           To the extent, and only to the extent, a payment or benefit that is paid or provided under Section 4 would also be paid or provided under the terms of another Company plan, program or arrangement (a “Company Plan”), (i) in the event that such payment or benefit is first paid or provided under the terms of a Company Plan prior to the date such payment or benefit is paid or provided under Section 4, such payment or benefit shall offset any corresponding payment or benefit that is paid or provided under Section 4, and (ii) in the event that such payment or benefit is first paid or provided under Section 4, such Company Plan will be deemed to have been satisfied by the corresponding payment or benefit made or provided under Section 4, in each case, in a manner that would not result in duplication of benefits or the imposition of additional taxation under Section 409A of the Code.

 

(d)           If any payments or benefits that the Company would otherwise be required to provide under this Agreement or any Company Plan cannot be provided in the manner contemplated herein or under the applicable plan without subjecting the Executive to income tax under Section 409A of the Code, the Company shall provide such intended payments or benefits to the Executive in an alternative manner that conveys an equivalent economic benefit to the Executive (without materially increasing the aggregate cost to the Company).  Notwithstanding anything herein to the contrary, if at the time of the Executive’s termination of employment with the Company the Executive is a “specified employee” as defined in Section 409A of the Code and the deferral of the commencement of any payments or benefits otherwise payable hereunder as a result of such termination of employment is necessary in order to prevent any accelerated or additional tax under Section 409A of the Code, then the Company will defer the commencement of the payment of any such payments or benefits hereunder (without any reduction in such payments or benefits ultimately paid or provided to the Executive) until the date that is six months following the Executive’s termination of employment with the Company (or the earliest date as is permitted under Section 409A of the Code without any accelerated or additional tax).  For purposes of Section 409A of the Code, each payment made under this Agreement shall be designated as a “separate payment” within the meaning of the Section 409A of the Code, and references herein to the Executive’s “termination of employment” shall refer to the Executive’s separation from service with the Company within the meaning of Section 409A.  To the extent any reimbursements or in-kind benefits due to Executive under this Agreement constitute “deferred compensation” under Section 409A of the Code, any such reimbursements or in-kind benefits shall be paid to Executive in a manner consistent with Treas. Reg. Section 1.409A-3(i)(1)(iv).  Additionally, to the extent that the Executive's receipt of any in-kind benefits from the Company or its affiliates must be delayed pursuant to this Section 8(d) due to Executive’s status as a “specified employee,” the Executive may elect to instead purchase and receive such benefits during the period in which the provision of benefits would otherwise be delayed by paying the Company (or its affiliates) for the fair market value of such benefits (as determined by the Company in good faith) during such period.  Any amounts paid by the Executive pursuant to the preceding sentence shall be reimbursed to the Executive as described above on the date that is six months following the Executive’s separation from service.  The Company shall consult with Executive in good faith regarding the implementation of the provisions of this Section 8(d); provided that neither the Company nor any of its employees or representatives shall have any liability to Executive with respect thereto.

 

  

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9.           Successors; Binding Agreement, Assignment.

 

(a)           The Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business of the Company, by agreement to expressly, absolutely and unconditionally assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place.  As used in this Agreement, “Company” shall mean (i) the Company as hereinbefore defined, and (ii) any successor to all the stock of the Company or to all or substantially all of the Company’s business or assets which executes and delivers an agreement provided for in this Section 9(a) or which otherwise becomes bound by all the terms and provisions of this Agreement by operation of law, including any parent or subsidiary of such a successor.

 

(b)           This Agreement shall inure to the benefit of and be enforceable by the Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.  If the Executive should die while any amount would be payable to the Executive hereunder if the Executive had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to the Executive’s estate or designated beneficiary.  Neither this Agreement nor any right arising hereunder may be assigned or pledged by the Executive.

 

10.           Notice.  For purpose of this Agreement, notices and all other communications provided for in this Agreement or contemplated hereby shall be in writing and shall be deemed to have been duly given when personally delivered, delivered by a nationally recognized overnight delivery service or when mailed United States certified or registered mail, return receipt requested, postage prepaid, and addressed, in the case of the Company, to the Company at:

 

Hovnanian Enterprises, Inc.

110 West Front Street

Red Bank, NJ  07701

Attention: Board of Directors

 

and in the case of the Executive, to the Executive at the address set forth on the Company’s books and records.

 

  

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Either party may designate a different address by giving notice of change of address in the manner provided above, except that notices of change of address shall be effective only upon receipt.

 

11.           Confidentiality.  The Executive shall retain in confidence any and all confidential information concerning the Company, its shareholders, officers, directors and customers and its respective business which is now known or hereafter becomes known to the Executive, except as otherwise required by law and except information (i) ascertainable or obtained from public information, (ii) received by the Executive at any time after the Executive’s employment by the Company shall have terminated, from a third party not employed by or otherwise affiliated with the Company or (iii) which is or becomes known to the public by any means other than a breach of this Section 11. Upon the Executive’s termination of employment, the Executive will not take or keep any proprietary or confidential information or documentation belonging to the Company.

 

12.           Miscellaneous.

 

(a)           Amendments. No provision of this Agreement may be amended, altered, modified, waived or discharged unless such amendment, alteration, modification, waiver or discharge is agreed to in writing signed by the Executive and such officer of the Company as shall be specifically designated by the Committee or by the Board.

 

(b)           Waivers.  No waiver by either party, at any time, of any breach by the other party of, or of compliance by the other party with, any condition or provision of this Agreement to be performed or complied with by such other party shall be deemed a waiver of any similar or dissimilar provision or condition of this Agreement or any other breach of or failure to comply with the same condition or provision at the same time or at any prior or subsequent time.  No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not expressly set forth in this Agreement.

 

13.           Severability.  If any one or more of the provisions of this Agreement shall be held to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions of this Agreement shall not be affected thereby.  To the extent permitted by applicable law, each party hereto waives any provision of law that renders any provision of this Agreement invalid, illegal or unenforceable in any respect.

 

14.           Governing Law; Venue.  The validity, interpretation, construction and performance of this Agreement shall be governed on a non-exclusive basis by the laws of the State of New Jersey without giving effect to its conflict of laws rules.  For purposes of jurisdiction and venue, the Company hereby consents to jurisdiction and venue in any suit, action or proceeding with respect to this Agreement in any court of competent jurisdiction in the state in which the Executive resides at the commencement of such suit, action or proceeding and waives any objection, challenge or dispute as to such jurisdiction or venue being proper.

 

  

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15.           Counterparts.  This Agreement may be executed in two or more counterparts, each of which shall be an original and all of which shall be deemed to constitute one and the same instrument.

 

[Signatures on next page.]

 

  

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

 

	 	 
HOVNANIAN ENTERPRISES, INC.

	 
	 	 	 
	 	 	 	 
	
 

	
By: 

	 	 
	 	Name:	J. Larry Sorsby	 
	 	Title:	EVP, Chief Financial Officer	 

 

 

	 
EXECUTIVE:

	 	 	 
	 	 	 	 
	 	 	 	 
	 
[name]

	 	 	 

 

  

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Exhibit A

AGREEMENT AND GENERAL RELEASE1

Original Issue Date:  [insert date]

Hovnanian Enterprises, Inc., on behalf of itself, K. Hovnanian Companies, LLC and its other affiliates (referred to collectively throughout this Agreement as "Employer" or "Hovnanian"), and [___________] (referred to throughout this Agreement as "Employee"), agree that:

1.           Last Day of Employment.  Employee's last day of employment with Employer is [insert date].  Employee understands, however, that Employer, in its sole discretion, may request Employee to immediately cease performing work duties if Employer deems it is in its best interest to do so.  Employee will, nonetheless, be paid until this last day of employment.

 

2.           Consideration.  In consideration for Employee's execution of this Agreement and the fulfillment of the promises contained herein, Employer agrees to make the payments described under Employee’s Change in Control Severance Protection Agreement with the Company dated as of [insert date].

 

3.           Revocation.  Employee may revoke this Agreement for a period of seven (7) calendar days following the day Employee executes this Agreement.  Any revocation within this period must be submitted, in writing, to [insert name] and state, "I hereby revoke my acceptance of our Agreement and General Release."  The revocation must be personally delivered or mailed to [insert name], [insert title] at [insert address], and delivered or postmarked within seven (7) calendar days of execution of this Agreement.  This Agreement shall not become effective or enforceable until the revocation period has expired.  If the last day of the revocation period is a Saturday, Sunday, or legal holiday, then the revocation period shall not expire until the next following day which is not a Saturday, Sunday, or legal holiday.

 

4.           General Release of Claim.  Employee, Employee's heirs, executors, administrators, fiduciaries, successors and/or assigns, knowingly and voluntarily release and forever give up, to the full extent permitted by law, Employer, Employer's past, present and future direct or indirect parent organizations, subsidiaries, divisions, affiliated entities, and their partners, officers, directors, trustees, administrators, fiduciaries, employment benefit plans and/or pension plans or funds, executors, attorneys, employees, insurers, reinsurers and/or agents and their successors and assigns individually and in their official capacities (collectively referred to herein as "Released Parties" or "Released Party"), jointly and severally, of and from all claims, known or unknown, that Employee has or may have against Released Parties as of the date of execution of this Agreement including, but not limited to, any alleged violation of:

	
  

	
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The National Labor Relations Act;

	
  

	
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Title VII of the Civil Rights Act;

 

1 This Agreement and General Release shall be referred to herein as "Agreement".

 

  

 

  

 

	
  

	
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Civil Rights Act of 1991;

	
  

	
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Sections 1981 through 1988 of Title 42 of the United States Code;

	
  

	
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The Employee Retirement Income Security Act;

	
  

	
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The Fair Credit Reporting Act;

	
  

	
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The Immigration Reform Control Act;

	
  

	
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The Americans with Disabilities Act;

	
  

	
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The Rehabilitation Act;

	
  

	
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The Age Discrimination in Employment Act, as amended;

	
  

	
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The Occupational Safety and Health Act;

	
  

	
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The Family and Medical Leave Act;

	
  

	
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The Equal Pay Act;

	
  

	
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The Uniformed Services Employment and Reemployment Rights Act;

	
  

	
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Worker Adjustment and Retraining Notification Act;

	
  

	
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Employee Polygraph Protection Act;

	
  

	
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any other federal, state or local law or ordinance of similar effect, to the maximum extent permitted by law;

	
  

	
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any public policy, contract (oral, written or implied), tort, constitution or common law;

	
  

	
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any claims for vacation, sick or personal leave pay, short term or long term disability benefits, or payment pursuant to any practice, policy, handbook or manual; or

	
  

	
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any basis for costs, fees, or other expenses including attorneys' fees.

Employee hereby releases Released Parties from any and all claims, whether sounding in contract, tort, statute or constitution, and covenants not to sue Released Parties for any and all claims. Employee understands this Release includes all claims related in any manner to Employee's employment or the cessation of that employment.  Employee further understands that Employee is hereby releasing any known or unknown claim for or alleged right to discovery of information or documents of Released Parties.

5.           Affirmations.

 

a.           Employee affirms that Employee is not a party to, and that Employee has not filed or caused to be filed, any claim, complaint, charge or action against Released Parties in any forum or form.

 

b.           Employee acknowledges and agrees that Employee has been paid all compensation due, except the following: (i) final paycheck for the period from [insert date] to [insert date], which will also include all vacation pay due; and (ii) any pro-rata Cash Award to which the Employee is entitled under Employer's Incentive Profit Sharing Program and Corporate Policy HR055, which will be paid as soon as administratively possible, generally at the same time as other Associates in Employee's former business unit.

 

c.           Employee affirms that Employee has received all leave (paid or unpaid), to which Employee may be entitled and that no other leave (paid or unpaid), is due to Employee except as provided in this Agreement.

 

d.           Employee furthermore affirms that Employee has no known workplace injuries or occupational diseases, other than those that are already the subject of an existing workers compensation claim.

 

  

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6.           Confidentiality.  To the extent permitted by law, Employee agrees not to disclose any information regarding the existence or substance of this Agreement, except to Employee's spouse, tax advisor, or an attorney with whom Employee chooses to consult regarding Employee's consideration of this Agreement, each of whom shall likewise agree to keep the information confidential.   Employee acknowledges that, as an officer of the Company, Employee was privy to confidential, proprietary, and/or commercially sensitive information, the disclosure of which could substantially harm the Company's interests.  Employee hereby agrees to maintain the confidentiality of such information and not to disclose same except as required to comply with court or regulatory action.  In the event Employee or Employee's counsel believe either is compelled to provide or disclose information described in this paragraph, they will provide written notice of such belief, via facsimile and mail, to [insert name], [insert title], at [insert address], fax [insert fax], no later than seven (7) business days prior to said production or disclosure.

 

7.           Non-Disparagement.  Employee agrees not to defame, disparage or demean Employer in any manner whatsoever.

 

8.           Non-Solicitation of Other Employees.  To the extent permitted by law, Employee agrees not to solicit, directly or indirectly, any other employee of Employer to terminate or otherwise modify or alter his or her employment with the Company for two (2) years following the Employee's Last Day of Employment (see paragraph 1 above).

 

9.           Cooperation.  Subject to Employee's other personal and professional obligations and on reasonable notice and at reasonable times, Employee will cooperate with Employer and its counsel in connection with any investigation, administrative or regulatory proceeding or litigation relating to any matter in which Employee was involved or of which Employee has knowledge as a result of Employee's employment with Employer and/or any Released Party or Released Parties.

 

10.           Return of Property.  Employee has returned any and all property belonging to Released Parties, including, but not limited to, cellular phones, beepers, computers, laptops, passwords for electronic access and/or to access protected documents regarding Company business, equipment, tools, materials, Company related manuals, training materials, written files, electronic files, keys, security cards, documents, supplies, customer lists, customer information, confidential documents, etc.

 

11.           Governing Law and Interpretation.  This Agreement shall be governed and conformed in accordance with the laws of the State of New Jersey without regard to its conflict of laws provision.  In the event Employee or Employer breaches any provision of this Agreement, Employee and Employer affirm that either may institute an action against the other to specifically enforce any term or terms of this Agreement, in addition to any other legal or equitable relief permitted by law.  In the event that any provision of this Agreement is declared illegal or unenforceable by a court of competent jurisdiction and cannot be modified to be enforceable, excluding the general release language, it shall be stricken, leaving the remainder of this Agreement in full force and effect.

 

  

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12.           Nonadmission of Wrongdoing.  Employee agrees that neither this Agreement nor the furnishing of the consideration for this Agreement shall be deemed or construed at anytime for any purpose as an admission by Employer of any liability or unlawful conduct of any kind.

 

13.           Amendment.  This Agreement may not be modified, altered or changed except upon express written consent of both parties wherein specific reference is made to this Agreement.

 

14.           Entire Agreement.  This Agreement sets forth the entire agreement between the Employee and Released Parties hereto, and fully supersedes any prior or contemporaneous agreements or understandings between Employee and Released Parties; provided, however, that this Agreement does not supersede or affect any confidentiality, non-disclosure, non-compete, invention, assignment of proprietary rights, or non-solicitation agreement(s) signed by Employee.  The obligations of such agreements remain in full force and effect and Employee expressly acknowledges Employee's intent to adhere to the promises contained in those agreements.  Employee also acknowledges that Employee has not relied on any representation, promises, or agreements of any kind made in connection with the decision to sign this Agreement, except for those set forth in this Agreement.

 

EMPLOYEE IS ADVISED THAT EMPLOYEE HAS UP TO FORTY-FIVE (45) CALENDAR DAYS TO CONSIDER THIS AGREEMENT AND GENERAL RELEASE AND IS HEREBY ADVISED TO CONSULT WITH AN ATTORNEY PRIOR TO EXECUTION OF THIS AGREEMENT AND GENERAL RELEASE.

 

EMPLOYEE IS ADVISED THAT ANY MODIFICATIONS, MATERIAL OR OTHERWISE, MADE TO THIS AGREEMENT AND GENERAL RELEASE DO NOT RESTART OR AFFECT IN ANY MANNER THE ORIGINAL FORTY-FIVE (45) CALENDAR DAY CONSIDERATION PERIOD.

 

HAVING ELECTED TO EXECUTE THIS AGREEMENT AND GENERAL RELEASE, TO FULFILL THE PROMISES SET FORTH HEREIN, AND TO RECEIVE THEREBY THE SUMS AND BENEFITS SET FORTH IN PARAGRAPH "2" ABOVE, EMPLOYEE FREELY AND KNOWINGLY, AND AFTER DUE CONSIDERATION, ENTERS INTO THIS AGREEMENT AND GENERAL RELEASE INTENDING TO WAIVE, SETTLE AND RELEASE ALL CLAIMS EMPLOYEE HAS OR MIGHT HAVE AGAINST RELEASED PARTIES AS OF THE DATE OF THE EXECUTION OF THIS AGREEMENT.

 

  

- 4 -

  

 

IN WITNESS WHEREOF, the parties hereto knowingly and voluntarily executed this Agreement and General Release as of the date set forth below:

 

 

	  	  	
ON BEHALF OF EMPLOYER

	  	  	  
	
[Employee]

	  	
[insert behalf of name]

	  	  	
[insert behalf of title]

	  	  	  
	  	  	  
	  	  	  
	
Employee's Signature

	  	
Signature

	  	  	  
	  	  	  
	
Date

	  	
Date

	  	  	  

- 5 -ex10-21.htm

EXHIBIT 10.21

 

**Confidential portions have been omitted pursuant to a request for confidential treatment and have been filed separately with the Securities and Exchange Commission (the “Commission”)**

 

 

 

 

 

 

 

 

 

LOAN AGREEMENT

 

Dated as of January 3, 2011

 

by and between

 

AGILITY CAPITAL II, LLC

as Agility

 

and

 

ACCELERIZE NEW MEDIA, INC.

as Borrower

 

TOTAL CREDIT AMOUNT:  Up to $500,000

 

 

	
Maturity Date:

	
March 31, 2012

	
Formula:

	
None.

	
Facility Origination Fee:

	
$10,000

	
Interest:

	
12% per annum, fixed

	
Warrants:

	
See Warrant for coverage

The information set forth above is subject to the terms and conditions set forth in the balance of this Agreement.  The parties agree as follows:

 

  

  

  

 

1.           Advance and Payments.

 

(a)           Borrower may request one or more advances (each, an “Advance” and collectively, the “Advances”), up to the following maximum outstanding amounts:

 

(i)           Advance in the principal amount of up to $350,000 upon the execution of all loan documents.

 

(ii)          Additional Advance of $150,000 upon completion of Section 4(c) to the satisfaction of Agility.

 

 Agility’s obligation to make these Advances are subject to (i) Agility’s determination, in its sole discretion, that there has not occurred a circumstance or circumstances that have a Material Adverse Effect, and (ii) the execution, delivery and filing of such instruments and agreements as Agility deems appropriate, including but not limited to (i) execution of a Deposit Account Control Agreement with Silicon Valley Bank, (ii) completion of Subordination Agreements with existing note holders, (iii) execution of a Validity Indemnification by the Chief Executive Officer of Borrower, (iv) Authorization Agreement for Pre-Authorized Payments (Debit), and (v) execution of a Corporate Resolution to Borrow.

 

(b)           Interest; Payments.  Borrower shall pay interest on the outstanding principal balance of the Advances at a fixed rate per annum equal to Twelve Percent (12.0%).  Interest shall be calculated on the basis of a 360-day year for the actual number of days elapsed, shall accrue from the date of the Advance and continue until the Advances have been repaid, and shall be payable in arrears on the first day of each month until the Advances have been repaid.  Beginning January 1, 2011, and on the first day of each month thereafter, Borrower shall pay to Agility, all accrued but unpaid interest.  Beginning April 1, 2011, and on the first day of each month thereafter, Borrower shall pay to Agility, $20,000 on account of principal, plus accrued but unpaid interest.  On the Maturity Date, all amounts outstanding under this Agreement shall be due and payable.  Any partial month shall be prorated on the basis of a 30-day month based on the actual number of days outstanding.   All payments made to Agility shall be made via a bank electronic funds transfer (EFT) or automated clearing house (ACH) transfer.

 

(c)           Fee.  On the Closing Date, Borrower shall pay to Agility an origination fee of $10,000. The fee under this section has been earned in full as of the Closing Date.

 

(d)           Warrant.  Borrower will on the Closing Date issue to Agility, a Warrant to Purchase Stock on the terms and conditions set forth therein (the “Warrant”).

 

(e)           Maturity Date.  All amounts outstanding hereunder are due and payable on March 31, 2012 (the “Maturity Date”).  Borrower may prepay all or any part of the Advance without penalty or premium, but may not reborrow any amount repaid.

 

(f)           Late Payment.  After the occurrence of an Event of Default under this Agreement as defined in Section 5, the Obligations shall bear interest at a rate equal to 18%.  In addition, upon the occurrence of such Event of Default, Borrower shall pay Agility a default fee of $5,000 and the number of shares issued to Agility under the Warrant shall increase by the amount indicated in the Warrant. For each additional 30 day period in which the Event of Default remains outstanding and uncured, Borrower shall pay Agility an additional default of fee of $5,000 and the number of shares issued to Agility under the Warrant shall increase by the amount indicated therein.  The terms of this paragraph shall not be construed as Agility’s consent to Borrower’s failure to pay any amounts in strict accordance with this Agreement, and Agility’s charging any such fees and/or acceptance of any such payments shall not restrict Agility’s exercise of any remedies arising out of any such failure.

 

  

2

  

 

2.           Security Interest.  As security for all present and future indebtedness, guarantees, liabilities, and other obligations of Borrower to Agility under this Agreement, including all fees specified in Section 1 (collectively, the “Obligations”), Borrower grants Agility a security interest in all of Borrower’s personal property, whether now owned or hereafter acquired, including without limitation the property described on Exhibit A attached hereto, and all products, proceeds and insurance proceeds of the foregoing (collectively, the “Collateral”).  Borrower authorizes Agility to execute such documents and take such actions as Agility reasonably deems appropriate from time to time to perfect or continue the security interest granted hereunder.

 

3.           Representations, Warranties and Covenants.  Borrower represents to Agility as follows (which shall be deemed continuing throughout the term of this Agreement):

 

(a)           Authorization. The execution, delivery and performance by Borrower of this Agreement, and all other documents contemplated hereby have been duly and validly authorized by all necessary corporate action, and do not violate Borrower’s Certificate of Incorporation or by-laws, or any law or any material agreement or instrument binding upon Borrower or its property.

 

(b)           State of Incorporation; Places of Business; Locations of Collateral.  Borrower is and will continue to be, duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation. Borrower is and will continue to be qualified and licensed to do business in all jurisdictions in which it is required to do so.  The address set forth in this Agreement under Borrower’s signature is Borrower’s chief executive office.  Other than the chief executive office, the Collateral is located at the address(es) set forth on Exhibit B.

 

(c)           Title to Collateral; Permitted Liens.  Borrower is now, and will at all times in the future be, the sole owner of all the Collateral.  The Collateral now is and will remain free and clear of any and all liens, security interests, encumbrances and adverse claims, except for (i) purchase money security interests in specific items of Equipment; (ii) leases of specific items of Equipment; (iii) liens for taxes, fees, assessments or other governmental charges or levies, either not delinquent or being contested in good faith by appropriate proceedings, provided the same have no priority over any of Agility’s security interests; (iv) liens of materialmen, mechanics, warehousemen, carriers, or other similar liens arising in the ordinary course of business and securing obligations that are not delinquent; and (v) the liens set forth on Exhibit B.

 

(d)           Financial Condition, Statements and Reports.  The financial statements provided to Agility by Borrower have been prepared in accordance with generally accepted accounting principles, consistently applied (“GAAP”).  All financial statements now or in the future delivered to Agility will fairly reflect the financial condition of Borrower, at the times and for the periods therein stated.  Between the last date covered by any such statement provided to Agility and the date hereof, there has been no circumstance that could constitute or give rise to a Material Adverse Effect.  Borrower has timely filed, and will timely file, all tax returns and reports required by applicable law, and Borrower has timely paid, and will timely pay, all applicable taxes, assessments, deposits and contributions now or in the future owed by Borrower.

 

(e)           Tax Returns and Payments.  Borrower has timely filed, and will timely file (subject to obtaining extensions as required in compliance with applicable laws), all tax returns and reports required by applicable law, and Borrower has timely paid, and will timely pay, all applicable taxes, assessments, deposits and contributions now or in the future owed by Borrower.

 

(f)           Compliance with Law.  Borrower has complied, and will comply, in all material respects, with all provisions of all applicable laws and regulations.

 

(g)           Information.  All information provided to Agility by or on behalf of Borrower on or prior to the date of this Agreement is true and correct in all material respects, and no representation or other statement made by Borrower to Agility contains any untrue statement of a material fact or omits to state a material fact necessary to make any statements made to Agility not misleading at the time made.

 

(h)           Litigation.  Except as disclosed on Exhibit B, there is no claim or litigation pending or (to best of Borrower’s knowledge) threatened against Borrower.  Borrower will promptly inform Agility in writing of any claim or litigation in the future.

 

  

3

  

 

(i)           Subsidiaries; Investments.  Except as disclosed on Exhibit B, Borrower has no wholly-owned or partially owned subsidiaries, and Exhibit B sets forth all loans by Borrower to, and all investments by Borrower in, any person, entity, corporation partnership or joint venture.

 

4.           Other Covenants.

 

(a)           Reports.  Borrower will provide to Agility in form and substance acceptable to Agility (i)  within thirty (30) days after the last day of each month, monthly unaudited financial statements, prepared in accordance with GAAP, consistently applied; (ii) within fifteen (15) days after the last day of each month, copies of all reports and statements received by Borrower from any of its banks or other financial institutions (in lieu of such requirement, Borrower may grant Agility on-line “view only” access to all of its accounts on terms acceptable to Agility); (iii) annual audited financial statements prepared in accordance with GAAP, consistently applied, together with an opinion thereon of an independent certified public accountant, and copies of Borrower’s tax returns for such year, within one hundred twenty (120) days of the last day of such year; (iv) within five (5) days of month end, a borrowing base certificate and accounts receivables and accounts payable reports, each in form acceptable to Agility, and (v) upon request, such other information relating to Borrower’s operations and condition as Agility may reasonably request from time to time.  Agility may review and copy Borrower’s books and records and audit and inspect the Collateral, from time to time, upon reasonable notice to Borrower.  Agility or its officers, employees, or agents may visit Borrower’s premises and interview Borrower’s officers.

 

(b)           Insurance.  Borrower will maintain insurance on the Collateral and Borrower’s business, in amounts and of a type that are customary to businesses similar to Borrower’s, and Agility will be named in a lender’s loss payable endorsement in favor of Agility, in form reasonably acceptable to Agility.

 

(c)           Deposit Accounts.  Borrower maintains only the operating, savings, deposit, securities and investment accounts listed on Exhibit B.  By the date of this Agreement, Borrower shall establish deposit and operational accounts with Silicon Valley Bank (“SVB Accounts”) on terms acceptable to Agility. Within 45 days of the date hereof, Borrower shall have notified all account debtors to make payments to Borrower through the SVB Accounts.  Within 90 days of the date hereof, Borrower shall cause substantially all amounts owing to Borrower to be paid directly into the SVB Accounts.  The amount maintained at Borrower’s account with Bank of America and Glacier Bank of Montana shall at no time exceed $45,000 each.  Within 120 days of the Closing Date, Borrower shall cause all its operating and depository accounts to be maintained at Silicon Valley Bank and from that point forward, Borrower shall not maintain any bank accounts unless such accounts are subject to an account control agreement on terms acceptable to Agility.  Notwithstanding anything written above, Section 4(c) will be considered completed when both the Bank of America and Glacier Bank of Montana accounts have been closed, and Borrower has received over $150,000 of Accounts Receivable into the SVB Accounts. Until the occurrence of an Event of Default, Borrower shall have access to the SVB Accounts, and may transfer amounts from the SVB Account.  After the occurrence of an Event of Default, Agility shall have sole and exclusive control over the SVB Accounts.  Borrower shall execute such documents, and take such other actions, as Agility requests from time to time to effect the provisions of this Section.

 

(d)           Negative Covenants.  Without Agility’s prior written consent, Borrower shall not do any of the following:  (i) permit or suffer a merger, change of control, or acquisition of all or substantially all of Borrower’s assets other than in a transaction, the terms of which provide for immediate payment of all amounts outstanding under this Agreement; (ii) acquire any assets outside the ordinary course of business; (iii)  sell, lease, license, encumber or transfer any of its property except for sales in the ordinary course of business, with the exception of the Uniform Resource Locator (URL) or Domain Name: News.TV, which if sold, 25% of the gross proceeds of the sale shall be used to pay down the Advances; (iv) pay or declare any dividends on Borrower’s stock; (v) redeem, purchase or otherwise acquire, any of Borrower’s stock, with the exception of the Series A and Series B dividends, provided however that these dividends are paid only in stock of Borrower; (vi) make any investments in, or loans or advances to, any person, including without limitation any investments in, or downstreaming of funds to, any subsidiary or affiliate of Borrower; (vii)  incur any indebtedness,, other than trade debt, equipment purchase money financings and capital lease obligations incurred in the ordinary course of business; (viii) make any payment on any of Borrower’s indebtedness that is subordinate to the Obligations, other than in accordance with the subordination agreement, if any, in favor of Agility relating thereto; (ix) make any deposits or investments into any investment or depository accounts unless they are subject to an account control agreement acceptable to Agility; or (x) agree to do any of the foregoing.

 

  

4

  

 

(e)           Board Meetings and Materials.  Borrower shall give Agility copies of all notices, minutes, consents and other materials the Borrower provides to its directors in connection with such meetings at the same time and in the same manner as it gives to its directors.

 

(f)           Financial Covenants.  Borrower shall achieve revenue in each quarter beginning the quarter end March 31, 2011, at least equal to 75% of the revenue set forth on the plan attached hereto (Exhibit C).

 

5.           Events of Default.  Any one or more of the following shall constitute an Event of Default under this Agreement:

 

(a)           Borrower shall fail to pay any principal or interest due hereunder  when due, provided that any amounts due on the Maturity Date shall be paid on that date, with no grace period; or

 

(b)           Borrower shall fail to comply with any other provision of this Agreement, which failure is not cured within ten days after the sooner of (i) the date that Borrower has knowledge of that failure or (ii) Borrower’s receipt of notice from Agility; or

 

(c)           Any warranty, representation, statement, report or certificate made or delivered to Agility by Borrower or on Borrower’s behalf shall be untrue or misleading in a material respect as of the date given or made, or shall become untrue or misleading in a material respect after the date hereof which cannot be corrected after notice to the satisfaction of Agility, acting reasonably; or

 

(d)           A default or event of default occurs in any other agreement to which Borrower is subject or by which Borrower is bound (i) resulting in a right by the other party or parties, whether or not exercised, to accelerate the maturity of any indebtedness or (ii) that could have a Material Adverse Effect, as defined below; or

 

(e)           Any portion of Borrower’s assets is attached, seized or levied upon, or a judgment for more than $50,000 is awarded against Borrower and is not stayed within ten days; or

 

(f)           Dissolution or termination of existence of Borrower; or appointment of a receiver, trustee or custodian, for all or any material part of the property of, assignment for the benefit of creditors by, or the commencement of any proceeding by or against Borrower under any reorganization, bankruptcy, insolvency, arrangement, readjustment of debt, dissolution or liquidation law or statute of any jurisdiction, now or in the future in effect (except that, in the case of a proceeding commenced against Borrower, Borrower shall have 60 days after the date such proceeding was commenced to have it dismissed, provided Agility shall have no obligation to make any Loans during such period); or

 

(g)           The occurrence of a “Material Adverse Effect”, which shall mean (i) a material adverse change in the business, prospects, operations, results of operations, assets, liabilities or financial or other condition of Borrower, (ii) the material impairment of Borrower’s ability to perform its Obligations or of Agility’s ability to enforce the Obligations or realize upon the Collateral, or (iii) a material adverse change in the value of the Collateral.

 

6.           Remedies.

 

(a)           Remedies.  Upon the occurrence of any Event of Default, Agility, at its option, subject in all cases to the Subordination Agreement, may do any one or more of the following:  (a) Accelerate and declare the Obligations to be immediately due, payable, and performable; (b) Take possession of any or all of the Collateral wherever it may be found, and for that purpose Borrower hereby authorizes Agility to enter Borrower’s premises without interference to search for, take possession of, keep, store, or remove any of the Collateral, and remain on the premises or cause a custodian to remain on the premises in exclusive control thereof, without charge by Borrower for so long as Agility reasonably deems it necessary in order to complete the enforcement of its rights under this Agreement or any other agreement; provided, however, that should Agility seek to take possession of any of the Collateral by Court process, Borrower hereby waives:  (i) any bond and any surety or security relating thereto; (ii) any demand for possession prior to the commencement of any suit or action to recover possession thereof; and (iii) any requirement that Agility retain possession of, and not dispose of, any such Collateral until after trial or final judgment; (c) Require Borrower to assemble any or all of the Collateral and make it available to Agility at places designated by Agility; (d) Complete the processing of any Collateral prior to a disposition thereof and, for such purpose and for the purpose of removal, Agility shall have the right to use Borrower’s premises, equipment and all other property without charge by Borrower; (e) Collect and dispose of and realize upon any investment property, including withdrawal of any and all funds from any deposit or securities accounts; (f) Dispose of any of the Collateral, at one or more public or private sales, in lots or in bulk, for cash, exchange or other property, or on credit, and to adjourn any such sale from time to time without notice other than oral announcement at the time scheduled for sale; and (g) Demand payment of, and collect any accounts, general intangibles or other Collateral and, in connection therewith, Borrower irrevocably authorizes Agility to endorse or sign Borrower’s name on all collections, receipts, instruments and other documents, and, in Agility’s good faith business judgment, to grant extensions of time to pay, compromise claims and settle accounts, general intangibles and the like for less than face value; Borrower grants Agility a license, exercisable from and after an Event of Default has occurred, to use and copy any trademarks, service marks and other intellectual property in which Borrower has an interest to effect any of the foregoing remedies.  All reasonable attorneys’ fees, expenses, costs, liabilities and obligations incurred by Agility with respect to the foregoing shall be added to and become part of the Obligations, and shall be due on demand.

 

  

5

  

 

(b)           Application of Proceeds.  All proceeds realized as the result of any sale or other disposition of the Collateral shall be applied by Agility first to the reasonable costs, expenses, liabilities, obligations and attorneys’ fees incurred by Agility in the exercise of its rights under this Agreement, second to any fees and Obligations other than interest and principal, third to the interest due upon any of the Obligations, and fourth to the principal of the Obligations, in such order as Agility shall determine in its sole discretion.  Any surplus shall be paid to Borrower or other persons legally entitled thereto; Borrower shall remain liable to Agility for any deficiency.

 

(c)           Remedies Cumulative.  In addition to the rights and remedies set forth in this Agreement, Agility shall have all the other rights and remedies accorded a secured party under the California Uniform Commercial Code and under all other applicable laws, and under any other instrument or agreement now or in the future entered into between Agility and Borrower, and all of such rights and remedies are cumulative and none is exclusive.  Exercise or partial exercise by Agility of one or more of its rights or remedies shall not be deemed an election, nor bar Agility from subsequent exercise or partial exercise of any other rights or remedies.  The failure or delay of Agility to exercise any rights or remedies shall not operate as a waiver thereof, but all rights and remedies shall continue in full force and effect until all of the Obligations have been fully paid and performed.

 

(d)           Power of Attorney.  After the occurrence and during the continuance of an Event of Default and if Agility elects to exercise any remedies, Borrower irrevocably appoints Agility (and any of Agility’s designated employees or agents) as Borrower’s true and lawful attorney in fact to:  endorse Borrower’s name on any checks or other forms of payment; make, settle and adjust all claims under and decisions with respect to Borrower’s policies of insurance; settle and adjust disputes and claims respecting accounts, general intangibles and other Collateral; execute and deliver all notices, instruments and agreements in connection with the perfection of the security interest granted in this Agreement; sell, lease or otherwise dispose of all or any part of the Collateral; and take any other action or sign any other documents required to be taken or signed by Borrower, or reasonably necessary to enforce Agility’s rights or remedies or otherwise carry out the purposes of this Agreement.  The appointment of Agility as Borrower’s attorney in fact, and each of Agility’s rights and powers, being coupled with an interest, are irrevocable until all Obligations owing to Agility have been paid and performed in full.

 

7.           Waivers.  The failure of Agility at any time or times to require Borrower to strictly comply with any of the provisions of this Agreement or any other present or future agreement between Borrower and Agility shall not waive or diminish any right of Agility later to demand and receive strict compliance therewith.  Any waiver of any default shall not waive or affect any other default, whether prior or subsequent, and whether or not similar.  None of the provisions of this Agreement or any other agreement shall be deemed to have been waived except by a specific written waiver signed by an authorized officer of Agility.  Borrower waives demand, protest, notice of protest and notice of default or dishonor, notice of payment and nonpayment, release, compromise, settlement, extension or renewal of any commercial paper, instrument, account, general intangible, document or guaranty at any time held by Agility on which Borrower is or may in any way be liable, and notice of any action taken by Agility, unless expressly required by this Agreement.

 

  

6

  

 

8.           Indemnity.  Borrower shall indemnify Agility for any costs or liabilities, including reasonable attorneys’ fees, incurred by Agility in connection with this Agreement, with the exception of any indemnification obligations that are the result of any gross negligence on the part of Agility.

 

9.           Confidentiality.  In handling any confidential non-public information provided to Agility by Borrower, Agility shall exercise the same degree of care that it exercises with respect to its own proprietary information of the same types to maintain the confidentiality of the same, except that disclosure of such information may be made (i) to subsidiaries or affiliates of Agility in connection with their present or prospective business relations with Borrower, (ii) to prospective transferees or purchasers of any interest in the Obligations, provided that they have entered into a comparable confidentiality agreement with respect thereto, (iii) as required by law, regulations, rule or order, subpoena, judicial order or similar order, (iv) as may be required in connection with the examination, audit or similar investigation of Agility, and (v) as Agility may deem appropriate in connection with the exercise of any remedies hereunder.  Confidential information shall not include information that either:  (a) is in the public domain, or becomes part of the public domain, after disclosure to Agility through no fault of Agility; or (b) is disclosed to Agility by a third party, provided Agility does not have actual knowledge that such third party is prohibited from disclosing such information.

 

10.         Governing Law; Jurisdiction; Venue.  This Agreement and all acts and transactions hereunder and all rights and obligations of Agility and Borrower shall be governed by the internal laws (and not the conflict of laws rules) of the State of California.  As a material part of the consideration to Agility to enter into this Agreement, Borrower (i) agrees that all actions and proceedings relating directly or indirectly to this Agreement shall, at Agility’s option, be litigated in courts located within California, and that the exclusive venue therefor shall be Santa Barbara County; (ii) consents to the jurisdiction and venue of any such court and consents to service of process in any such action or proceeding by personal delivery or any other method permitted by law; and (iii) waives any and all rights Borrower may have to object to the jurisdiction of any such court, or to transfer or change the venue of any such action or proceeding.

 

11.         MUTUAL WAIVER OF JURY TRIAL.  BORROWER AND AGILITY EACH WAIVE THE RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, ARISING OUT OF, OR IN ANY WAY RELATING TO, THIS AGREEMENT OR ANY OTHER PRESENT OR FUTURE INSTRUMENT OR AGREEMENT BETWEEN AGILITY AND BORROWER, OR ANY CONDUCT, ACTS OR OMISSIONS OF AGILITY OR BORROWER OR ANY OF THEIR DIRECTORS, OFFICERS, EMPLOYEES, AGENTS, ATTORNEYS OR ANY OTHER PERSONS AFFILIATED WITH AGILITY OR BORROWER, IN ALL OF THE FOREGOING CASES, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE. IF THIS JURY WAIVER IS FOR ANY REASON UNENFORCEABLE, THE PARTIES AGREE TO RESOLVE ALL CLAIMS, CAUSES AND DISPUTES THROUGH JUDICIAL REFERENCE PURSUANT TO CODE OF CIVIL PROCEDURE SECTION 638 ET SEQ BEFORE A MUTUALLY ACCEPTABLE REFEREE SITTING WITHOUT A JURY OR, IF NO AGREEMENT ON THE REFEREE IS REACHED, BEFORE A REFEREE SELECTED BY THE PRESIDING JUDGE OF THE CALIFORNIA SUPERIOR COURT FOR SANTA BARBARA COUNTY.  THIS PROVISION SHALL NOT RESTRICT A PARTY FROM EXERCISING NONJUDICIAL REMEDIES UNDER THE CODE.

 

12.         General.  This Agreement and such other written agreements, documents and instruments as may be executed in connection herewith are the final, entire and complete agreement between Borrower and Agility and supersede all prior and contemporaneous negotiations and oral representations and agreements, all of which are merged and integrated in this Agreement.  There are no oral understandings, representations or agreements between the parties which are not set forth in this Agreement or in other written agreements signed by the parties in connection herewith.  The terms and provisions of this Agreement may not be waived or amended, except in a writing executed by Borrower and a duly authorized officer of Agility.  Agility may assign all or any part of its interest in this Agreement and the Obligations to any person or entity, or grant a participation in, or security interest in, any interest in this Agreement, with notice to, but without consent of, Borrower, provided that, unless an Event of Default is continuing, that person or entity is not a competitor of Borrower’s.  Borrower may not assign any rights under or interest in this Agreement without Agility’s prior written consent.  This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which shall constitute one agreement.

 

  

7

  

 

13.         Publicity. Borrower authorizes Agility to use Borrower’s tradenames and logos in Agility’s marketing materials in respect of the transactions evidenced by this Agreement

 

	
AGILITY CAPITAL II, LLC

	
ACCELERIZE NEW MEDIA, INC.

 

 

	
By:  /s/ Jeff Carmody                                           

	
By:  /s/ Brian Ross                                 

	
Title: Partner                                                         

	
Title: President                                        

	 	 
	  	  
	
Address for notices:

 

	
Address for notices:

 

	
Agility Capital II, LLC

812 Anacapa Street, Suite A

Santa Barbara, CA  93101

Attn:  Jeff Carmody

Fax:  805-568-0427

	
Accelerize New Media, Inc.

204 Riverside Ave.

Newport Beach, CA 92663

Attn: Brian Ross

Fax:

 

  

8

  

EXHIBIT A

 

COLLATERAL DESCRIPTION ATTACHMENT

TO LOAN AND SECURITY AGREEMENT

All personal property of Borrower (herein referred to as “Borrower” or “Debtor”) whether presently existing or hereafter created or acquired, and wherever located, including, but not limited to:

(a)           all accounts (including health-care insurance receivables), chattel paper (including tangible and electronic chattel paper), deposit accounts, documents (including negotiable documents), equipment (including all accessions and additions thereto), general intangibles (including copyrights, patents, trademarks, goodwill and all intellectual property, payment intangibles and software), goods (including fixtures), instruments (including promissory notes), inventory (including all goods held for sale or lease or to be furnished under a contract of service, and including returns and repossessions), investment property (including securities and securities entitlements), letter of credit rights, money, and all of Debtor’s books and records with respect to any of the foregoing, and the computers and equipment containing said books and records; and any commercial tort claims.

 

(b)           any and all cash proceeds and/or noncash proceeds of any of the foregoing, including, without limitation, insurance proceeds, and all supporting obligations and the security therefor or for any right to payment.  All terms above have the meanings given to them in the California Uniform Commercial Code, as amended or supplemented from time to time.

 

  

9

  

EXHIBIT B

 

Places of Business and Locations of Collateral (Section 3(b)):

 

- 204 Riverside Ave, Newport Beach, CA 92663

 

- 1431 7th Street Suite 203, Santa Monica, CA 90401

 

- 913 Wisconsin Ave. Suite 204 & 205, Whitefish, MT 59937

 

Permitted Liens (Section 3(c))

 

 

Litigation (Section 3(g)):

 

 

Subsidiaries and partnerships and joint ventures (Section 3(h)):

 

 

Accounts (Section 3(i))

 

Glacier Bank of Montana – Account # 129655925

 

Silicon Valley Bank – Account # 3300756668

 

  

10

  

 

EXHIBIT C

 

Accelerize New Media, Inc.

Unaudited Projections

 

The contents of Exhibit C have been omitted pursuant to a request for confidential treatment and have been filed separately with the Commission.  Exhibit C contains unaudited projected revenues for each of the fiscal quarters in the period starting with the quarter ended March 31, 2011 through the quarter ending June 30, 2012.  The quarterly projections range from a low of $732,000 to a high of $1,632,000.

 

 

 

11

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