Document:

fs12013a1ex10xxx_inter.htm

Exhibit 10.30

 

MASTER AGREEMENT

 

THIS MASTER AGREEMENT (this "Master Agreement") is entered into as of June 24, 2011 ("Effective Date") by and among Tekmark Global Solutions, LLC, a New Jersey limited liability company with a place of business at 100 Metroplex Drive, Suite 102, Edison, New Jersey 08817 ("Tekmark"), MMDGenesis LLC, a New Jersey limited liability company with a place of business at 1100 First Avenue, Spring Lake, NJ 07762 ("MMD", and together with Tekmark, the "New Lenders") and Genesis Group Holdings, Inc., and its subsidiary Digital Comm Inc., a Florida corporation with a place of business at 2500 N. Military Trail, Suite 275, Boca Raton, Florida 33431 (collectively "Digital Comm"). Tekmark, MMD and Digital Comm may be referred to individually as Party and collectively as Parties.

 

WHEREAS, Digital Comm is in the business of providing specialty construction and engineering services to the information technology industry utilizing full time and temporary staffing personnel; and

 

WHEREAS, Tekmark is in the business of providing temporary staffing and other support services to companies; and

 

WHEREAS, MMD is in the business of providing accounts receivable and other funding; and

 

WHEREAS, Digital Comm is desirous of having Tekmark, and Tekmark is willing to, provide selected payroll funding support and temporary staffing services to Digital Comm; and

 

WHEREAS, Digital Comm and Tekmark are desirous of having MMD provide selected funding to Digital Comm.

 

NOW THEREFORE, the Parties, for real and just consideration and intending to be legally bound, do hereby enter into this Master Agreement as set out herein and the Attachments set out below which are hereby incorporated by reference and made a part of this Master Agreement.

 

Attachment A — Payroll Support

Attachment B — Temporary Staffing

Attachment C — General Terms and Conditions

 

[Signatures appear on the following page]

 

  

  

  

 

	
TEKMARK GLOBAL SOLUTIONS, LLC

(Telmark):

	 	
GENESIS GROUP HOLDINGS, INC.: 

(Digital Comm)

	 
	  	 	 	  	 	 
	
By:

	 	 	
By:

	/s/ Lawrence Sands	 
	Name:	 	 	Name:	Lawrence Sands	 
	Title:	 	 	Title:	Corporate Secretary	 
	

MMDGenesis LLC (MMD):

	 	Digital Comm Inc.	 
	  	 	 	  	 	 
	By:	/s/ Mark E. Munro	 	By:	/s/ Billy Candell	 
	Name:	Mark E. Munro	 	Name:	Billy Candell	 
	Title:	Managing Member	 	Title:	President	 

 

[Signature page to Master Agreement]

 

  

  

  

 

ATTACHMENT A — PAYROLL FUNDING SUPPORT 

 

1.    Payroll Funding Support.

 

1.1         During the Term Digital Comm may, but shall not be obligated to, request payroll funding from Tekmark.

 

1.2         In order to submit a request for payroll funding Digital Comm must submit a funding request ("Funding Request") to Tekmark and MMD in writing.

 

1.3         Each Funding Request submitted by Digital Comm to Tekmark shall be irrevocable and binding on Digital Comm.

 

1.4         Each Funding Request shall:

 

1.4.1      State the amount of funding requested;

 

1.4.2      State the date on which Digital Comm requests the funding to be made (which date shall not be earlier than three (3) days after the date the Funding Request is submitted to Tekmark;

 

1.4.3      Certify that any amounts advanced by Tekmark pursuant to the Funding Request will be used by Digital Comm solely for purposes of funding Digital Comm's payroll obligations to its existing employees ("Existing Employees") who are performing specialty construction and engineering services ("Approved Services") for certain customers of Digital Comm that have been approved in advance in writing by Tekmark, in its sole discretion, as well as customers of Digital Comm for whom Tekmark is providing temporary staffing in accordance with Attachment B hereto ("Approved Customers").

 

1.5         Upon receipt of a Funding Request, Tekmark shall consider such request in good faith, but shall have no obligation to provide any funding pursuant to any Funding Request. Notwithstanding anything herein to the contrary, Tekmark shall have the right, in its sole and absolute discretion, to decide whether or not to advance funds in the amount, or any portion thereof, requested by Digital Comm.

 

1.6         If Tekmark refuses a Funding Request, Digital Comm may seek similar funding from any other source and Tekmark shall release any rights to those new accounts and receivables associated with that Funding Request (without releasing existing liens associated with prior Transferred Funds), so as to permit any alternative funding Digital Comm may obtain other than from Tekmark. It is understood and agreed that Tekmark's priority lien shall be strictly limited to those accounts and receivables associated with Transferred Funds as defined below.

 

1.7         To the extent that Tekmark provides funding to Digital Comm pursuant to a Funding Request:

 

1.7.1      Such funding shall be referred to as "Transferred Funds"; and

 

  

  

  

 

1.7.2      Digital Comm shall be obligated to repay the amount of the Transferred Funds to Tekmark in accordance with the terms of this Master Agreement and such obligation shall be evidenced by and subject to the terms of a Promissory Note in the form attached hereto as Exhibit A-2 ("Exhibit A-2") and shall be secured by a security interest in the assets of Digital Comm pursuant to a Security Agreement in the form attached hereto as Exhibit A-1 ("Exhibit A-1").

 

1.7.3      Telemark shall transfer the Transferred Funds to the account of Digital Comm in accordance with mutually agreed upon procedures.

 

1.8         In no event shall the aggregate outstanding amount of Transferred Funds exceed Two Million Dollars ($2,000,000).

 

2.            Responsibilities of Digital Comm.

 

2.1         Digital Comm shall:

 

2.1.1      On a weekly basis, present Tekmark and MMD with its payroll information for its wireless division, along with the related purchase orders, anticipated dates that invoices will be sent to Approved Customers, copies of invoices that have been sent to Approved Customers since the most recent Transferred Funds were provided to Digital Comm, proof of payment of all suppliers and any additional supporting documentation requested by Tekmark ("Payroll Information").

 

2.1.2      Promptly provide Tekmark and MMD with copies of (i) monthly financials, (ii) all board packages and (iii) responses to reasonable inquiries by Tekmark or MMD.

 

2.1.3      Only use the Transferred Funds to meet the payroll for which Payroll Information was relied upon by Tekmark in making its decision to advance the Transferred Funds (as defined in Section 1.7 above).

 

2.1.4      Comply with all federal, local and state laws and regulations that apply to its employment relationship with the Existing Employees including, without limitation, Title VII of the Civil Rights Act of 1964, as amended, the Immigration Reform and Control Act of 1986, the Fair Labor Standards Act, the Americans with Disabilities Act, the Age Discrimination in Employment Act, the Older Existing Employees Benefit Protection Act, the National Labor Relations Act, and the Occupational Safety and Health Act.

 

2.1.5      Digital Comm is responsible for compliance with all workers compensation laws and regulations and claims thereunder of all Existing Employees and Digital Comm shall indemnify and hold Tekmark and MMD harmless from all costs, expenses (including attorneys fees) and damages Tekmark or MMD incurs because of such claims.

 

2.1.6      Execute all documents which may be required by Tekmark or MMD in order for Tekmark and MMD to perform their responsibilities under this Master Agreement.

 

  

  

  

 

2.1.7      Instruct its Approved Customers, in a manner that is acceptable to Tekmark and MMD, to send its payment to a Lockbox (as defined below) so that Tekmark and/or MMD will receive said payments rather than Digital Comm.

 

2.1.8      Maintain during the Term, at Digital Comm's expense, a lockbox arrangement, as set forth in the Deposit Account Control Agreement that is attached hereto as Attachment A, Exhibit A-4 ("Lockbox") and strictly comply with the terms and conditions set. forth therein. Tekmark is hereby authorized to pay MMD all interest and principal owed to MMD out of the Lockbox.

 

2.1.9      Promptly notify MMD and Tekmark of all upcoming board meetings no later than when the Company's board members are notified and grant MMD and Tekmark board visitation rights at all times and, upon request at any time, take any and all such action as Tekmark or MMD deem necessary or desirable in order for MMD to elect a director to Digital Comm's board of directors in its sole discretion.

 

3.    Tekmark Responsibilities.

 

3.1         Tekmark shall:

 

3.1.1      On a weekly basis review the Payroll Information and determine whether Tekmark is willing to fund the payroll for that particular week.

 

3.1.2      If Digital Comm requests and if Tekmark decides, in its sole discretion, that funding is to occur, then Tekmark will advance the funds to Digital Comm by sending the Transferred Funds to the account of Digital Comm in accordance with mutually agreed upon procedures.

 

3.1.3      Maintain books and records regarding payroll, Transferred Funds and monies disbursed in accordance with the terms hereof.

 

4.    AUTHORIZATION TO ACCEPT PAYMENTS.

 

4.1         Digital Comm hereby authorizes Tekmark to receive and accept payment from Approved Customers for invoices sent to said Approved Customers by Digital Comm and to process, remit and withhold and/or deduct Transferred Funds and Fees from said payment amounts in accordance with the terms and conditions of this Master Agreement.

 

5.    FEES AND RECEIPT OF FUNDS.

 

5.1         As payment for providing the Transferred Funds to Digital Comm as set forth herein, Digital Comm shall pay to Tekmark six percent (6%) of the Transferred Funds provided said amount is collected by Tekmark from Approved Customers within thirty (30) calendar days of the Transferred Funds being originally transferred to Digital Comm ("On-Time Fee"). Any Transferred Funds that are outstanding for more than thirty (30) calendar days will result in Tekmark being entitled to deduct an additional two and one-half percent (2.5%) for each thirty (30) calendar day period, or each portion thereof on a pro rata basis, that any Transferred Funds are not repaid ("Extended Payment Fee"). By way of example, if Transferred Funds are not received by Tekmark for seventy (70) days, then Tekmark's fee will be nine and 33/100 percent (9.33%) of the Transferred Funds, which is 6% for the first 30 days, 2.5% for the second 30 day period and 0.83% for the partial 30 day period of 10 days. (On-Time Fee and Extended Payment Fee may be collectively referred to as "Fee(s)"). The Parties understand and agree that if under any applicable law the Fees set forth herein are considered to be interest, then the applicable rate shall be as forth herein or the maximum rate allowed by law, whichever is less.

 

  

  

  

 

5.2         As payments from Digital Comm Approved Customers are collected ("Receipts") in accordance with Section 4.0 above, Tekmark will:

 

5.2.1      First, deduct for its own account and the account of MMD the total amount of Fees that are due and owing;

 

5.2.2      Second, deduct for its own account and the account of MMD the total amount of Transferred Funds that have not been previously paid;

 

5.2.3      Third, remit the remaining balance of the Receipts within (2) business days to UTA Capital, LLC.("UTA"), in accordance with instructions from UTA.

 

5.3         MMD has extended a line of credit to Digital Comm in the amount of One Million Dollars ($1,000,000.00) ("Line Of Credit"). Digital Comm shall maintain the Line Of Credit during the Term of this Agreement and the unused and available amount of the Line Of Credit will, during the Term of this Agreement, be available to pay Tekmark for all Fees and Transferred Funds that are owed to Tekmark and are unpaid within sixty (60) days of the date of the related Approved Customer invoice upon which the Transferred Funds were made available to Digital Comm by Tekmark ("Transferred Funds A/R") plus any account receivable that is owed by an Approved Customer of Digital Comm, and therefore owed by Digital Comm to Tekmark, for temporary staffing services, as set out in Attachment B, that has not been paid in 60 days ("Temporary Staffing AIR"). Such payment will be made as follows:

 

5.3.1      Tekmark shall have the option to make a written demand for payment to MMD, with a copy to Digital Comm, for payment of the Transferred Funds A/R and/or the Temporary Staffing A/R that is owed to Tekmark ("Demand"). MMD shall render payment to Tekmark for the amount set out in the Demand within five (5) business days from receipt thereof in accordance with instructions from Tekmark and Digital Comm hereby authorizes and covenants to assist, co-operate and do anything necessary to enable said payment to Tekmark by MMD to occur. Tekmark shall have the right to exercise such option to demand payment any time and as often as there are Transferred Funds A/Rs and/or Temporary Staffing A/Rs.

 

5.4         Any balance outstanding to MMD ("MMD Balance") for more than thirty (30) calendar days will result in MMD being entitled to deduct an additional two and one-half percent (2.5%) for each thirty (30) calendar day period or each portion thereof, on a pro rata basis, that any MMD Balance is not repaid ("MMD Extended Payment Fee"). By way of example, if MMD Balance is not received by MMD for seventy (70) days, then MMD's fee will be five and 83/100 percent (5.83%) of the MMD Balance, which is 2.5% for the first 30 days, 2.5% for the second 30 day period and 0.83% for the partial 30 day period of 10 days (MMD On-Time Fee and MMD Extended Payment Fee may be collectively referred to as "MMD Fee(s)"). The Parties understand and agree that if under any applicable law the MMD Fees set forth herein are considered to be interest, then the applicable rate shall be as forth herein or the maximum rate allowed by law, whichever is less.

 

  

  

  

 

5.5         Digital Comm shall reimburse Tekmark and MMD for the actual and reasonable legal fees Tekmark and MMD have incurred directly or indirectly in connection with the preparation and negotiation of documents set out in or related to this Master Agreement. ("Reimbursed Amount"). It is understood and agreed that the Reimbursed Amount shall be considered to be Transferred Funds and provisions in this Master Agreement that apply to Transferred Funds shall govern the treatment of the Reimbursed Amount.

 

6.   MAXIMUM AMOUNT OF TRANSFERRED FUNDS.

 

6.1         At no time will the cumulative amount of Transferred Funds A/Rs and the Temporary Staffing A/Rs exceed Two Million dollars ($2,000,000.00), which is made up of $750,000.00 of Transferred Funds A/Rs and up to $1,250,000.00 of Temporary Staffing A/Rs, which amount shall be evidenced by and subject to the Promissory note which is attached hereto as Exhibit A-2 ("Exhibit A-2") and Exhibit A-1 (Security Agreement).

 

6.2         Notwithstanding anything to the contrary contained herein, MMD will be under no obligation at any time to lend to Digital Comm any amount greater than $1,000,000.00 (one million dollars).

 

7.   SECURITY INTEREST IN COLLATERAL.

 

7.1         Digital Comm hereby grants to Tekmark and MMD a security interest in the Collateral including without limitation, Digital Comm's accounts receivables related to Approved Services as set out in Exhibit A-1 and in a Security Agreement between MMD and Digital Comm dated on or about the date hereof. Tekmark and MMD will also file a Form UCC­1, perfecting the security interest in the Collateral (as defined in Exhibit A-1, to the extent that either Tekmark or MMD determines that such filing is appropriate to perfect their security interest in the Collateral. In the event of a breach of this Master Agreement or any monetary default by Digital Comm, Tekmark and MMD may exercise all of its rights, including, without limitation, its rights to foreclose upon the Collateral. Access to those "self-help" remedies shall not limit such other or further rights Tekmark or MMD may have hereunder or at law to enforce any of its rights or other remedies with respect to a particular circumstance.

 

8.   SUPERVISION AND SAFETY OF EXISTING EMPLOYEES.

 

8.1         Digital Comm and/or its customer shall make all employment decisions regarding the Existing Employees, including but not limited to, all decisions relating to the hiring and termination of the Existing Employees. Digital Comm and/or its customers are solely responsible for the supervision, direction and control of the means, methods and manner of all work performed by Existing Employees and for the review and approval of the Existing Employees ongoing and final work product, in accordance with Digital Comm's and/or its Customer's requirements. Tekmark assumes no responsibility for exercising any direction, control, or supervision over the Existing Employees and Digital Comm shall require its customers to, absolve Tekmark of any such responsibility.

 

  

  

  

 

8.2         Digital Comm understands and agrees that Tekmark assumes no liability for any claim or cause of action by Digital Comm or its customers arising from Existing Employees' access to personal property or valuables of Digital Comm or its customers. Digital Comm further understands and agrees that Tekmark assumes no liability for loss or damage caused by operation of a vehicle by an Existing Employee. Prior to authorizing or allowing any Existing Employee to operate a vehicle in connection with their job assignment, Digital Comm will conduct a DMV check and confirm that the Existing Employees have automobile insurance and Tekmark shall be added as an additional named insured under the policy. Digital Comm shall undertake all necessary preliminary investigations, as permitted by law, and shall not thereafter knowingly place any Existing Employee who had a prior DUI conviction or is not medically authorized to drive, on any assignment or in any staff position which requires operation of a motor vehicle.

 

8.3         Digital Comm assumes full responsibility for providing all Existing Employees with a workplace that complies with all applicable health and safety requirements. Digital Comm will not request or permit any Existing Employee to perform work involving any dangerous conditions or unusual risk of bodily injury; nor will Digital Comm, or its Customer, request or permit any Existing Employee to engage in any unsafe or illegal actions.

 

8.4         Digital Comm warrants that it is in compliance with and covenants that it will continue to comply with, all applicable local, state and federal laws, rules and regulations, including, without limitation, Title VII of the Civil Rights Act of 1964, as amended, the Immigration Reform and Control Act of 1986, the Fair Labor Standards Act, the Americans with Disabilities Act, the Age Discrimination in Employment Act, the Older Existing Employees Benefit Protection Act, the National Labor Relations Act, and the Occupational Safety and Health Act, that are applicable to Digital Comm in connection with the employment of Existing Employees. Digital Comm agrees to cooperate fully with Tekmark so that Tekmark may comply with all applicable local, state and federal laws in connection with its obligations under this Master Agreement.

 

9.    INDEMNIFICATION.

 

9.1         Digital Comm agrees to indemnify, defend, and hold harmless Tekmark and MMD and their affiliates and their respective members, officers, directors, employees, agents, parent, subsidiaries and other affiliates ("Indemnified Parties") from and against any and all claims, actions or demands and any loss, liability, cost, expense, penalty, damages and settlement amounts (collectively "Claims") suffered by an Indemnified Party, including but not limited to reasonable attorneys' fees and costs, in connection with any claim, action or demand arising out of, connected with, related to or resulting from (1) Digital Comm's failure to perform its obligations under this Master Agreement, (2) the negligence, misrepresentation, error or omission on the part of Digital Comm or its representatives; (3) any breach by Digital Comm of a representation, warranty or covenant hereunder or applicable laws in connection with Digital Comm's employment of Existing Employees, including without limitation acts and/or omissions on the part of Digital Comm or its representatives in connection with the immigration and 1-9 procedure for the registration of legally authorized Existing Employees, (4) all claims, losses or damages that may arise out of or resulting from the acts and/or omissions of Existing Employees while on assignment to a Customer, or (5) Tekmark's performance of its payroll funding services as set forth in this Master Agreement.

 

  

  

  

 

9.1.1      Digital Comm's Indemnity obligations under this Master Agreement are without monetary limit and include all reasonable attorneys' fees, court costs, out-of-pocket expenses, and damages including, but not limited to compensatory and punitive damages.

 

9.1.2      Neither Tekmark nor MMD will be obligated to defend, indemnify or hold harmless Digital Comm and neither Tekmark nor MMD shall be responsible for exemplary or punitive damages.

 

10.          LIMITATION OF LIABILITY.

 

10.1       In no event will Tekmark be liable for the cost of substitute Payroll Support services, any special, consequential, incidental or indirect damages, however caused, whether or not related to or arising out of this Master Agreement, regardless of the form of action, whether for breach of contract, tort, or otherwise (including, without limitation, damages based on loss of profits, data, files, or business opportunity), and whether or not Tekmark has been advised of the possibility of such damages. This limitation will apply notwithstanding any failure of essential purpose of any limited remedy provided herein.

 

10.2       In no event will Tekmark's or MMD's aggregate liability to Digital Comm for all claims, whether in contract, tort, negligence or any other theory of liability, exceed the total fees charged by, or total amounts paid to, Tekmark or MMD under this Master Agreement during the three (3)-months prior to the incident giving rise to such claim, or if this Master Agreement has been in effect for less than three (3) months, the amount payable during time period, annualized for three (3) months.

 

[Signatures appear on the following page]

 

  

  

  

 

ATTACHMENT A, EXHIBIT-A-1

SECURITY AGREEMENT

 

THIS SECURITY AGREEMENT (the "Security Agreement") is entered into June 24, 2011 ("Effective Date") by and between Tekmark Global Solutions, LLC., a New Jersey limited liability company with a place of business at 100 Metroplex Drive, Edison, New Jersey 08817, ("Tekmark") and Genesis Group Holdings, Inc., and its operating division, Digital Comm Inc., a Florida corporation with a place of business at 2500 N. Military Trail, Suite 275, Boca Raton, Florida 33431 ("Digital Comm"). Tekmark and Digital Comm may be referred to individually as Party and collectively as Parties.

 

WHEREAS, the Parties and MMDGenesis LLC, a New Jersey limited liability company with a place of business at 1100 First Avenue, Spring Lake, New Jersey 07762 ("MMD") are entering into a Master Agreement of even date herewith ("Master Agreement") whereby Tekmark, assuming it determines in its sole discretion to do so, is providing funding to Digital Comm for certain payroll expenses in accordance with the terms and conditions set out in said Master Agreement; and

 

WHEREAS, in accordance with the Master Agreement, Digital Comm has executed the Promissory Note (the "Tekmark Promissory Note") which is incorporated into and made a part of this Security Agreement and attached hereto as Exhibit A-2 ("Exhibit A-2"), evidencing that Digital Comm owes Tekmark an amount up to Two Million Dollars ($2,000,000.00) (the "Tekmark Amount Due"); and

 

WHEREAS, MMD and Digital Comm are entering into a Revolving Credit Agreement of even date herewith ("Credit Agreement") whereby MMD, assuming it determines in its sole discretion to do so, is providing funding to Digital Comm for certain expenses in accordance with the terms and conditions set out in said Credit Agreement and the Master Agreement; and

 

WHEREAS, in accordance with the Credit Agreement, Digital Comm has executed a Convertible Revolving Promissory Note, a copy of which is attached hereto (the "MMD Promissory Note", and together with the Tekmark Promissory Note, the "Promissory Notes"), evidencing that Digital Comm owes MMD an amount up to One Million Dollars ($1,000,000.00) (the "MMD Amount Due", and together with the Tekmark Amount Due, the "Amount Due"); and

 

WHEREAS, as security for the payment of the amount set out in the Promissory Notes, and the funding of payroll to Digital Comm Existing Employees, Digital Comm has agreed to provide Tekmark with a Security Interest in Primary Collateral and Secondary Collateral (each as defined below) (collectively referred to as "Collateral") on the terms and conditions set forth in this Security Agreement; and

 

WHEREAS, the Parties agree that, except as may be set forth in that certain Intercreditor Agreement among, inter alma, MMD and Tekmark dated on or about the date hereof (the "Intercreditor Agreement"), the Security Interest in the Primary Collateral shall be superior to all other liens and security interests; and

 

  

  

  

 

WHEREAS, the Parties further agree that, except as may be set forth the Intercreditor Agreement, the Security Interest in Secondary Collateral shall be subordinate to, and only to, the security interest granted by Digital Comm to UTA Capital, LLC, on August 6, 2010, a copy of which is attached hereto as attachment A-1-B ("Attachment A-1-B").

 

NOW, THEREFORE, in consideration of the foregoing, the mutual agreements contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:

 

1.    ARTICLE 1 - CERTAIN DEFINED TERMS

 

1.1         Capitalized terms used in this Security Agreement shall have the meanings set out in the Master Agreement unless otherwise defined below or in the text of this Security Agreement.

 

1.2          For the purposes of this Security Agreement, the following definitions shall apply to the terms set forth below:

 

1.3         The term "Account" shall mean an account (as defined in the Uniform Commercial Code).

 

1.4         The term "Business Day" shall mean any day on which banks are open for business other than a Saturday, Sunday or other day on which they are closed for a federal or any State of New Jersey declared holiday.

 

1.5         The term "Primary Collateral" shall mean any and all of Digital Comm's Accounts that arise from, are the result of, include, are associated with or are derived from Transferred Funds and/or Temporary Staffing A/Rs, whether now existing or hereafter arising, together with all proceeds thereof.

 

1.6         The term "Secondary Collateral" shall mean, all (a) Accounts that are not Primary Collateral, whether now existing or hereafter arising, with any and all such Accounts being Receivables; (b) Books; (c) Chattel Paper; (d) interest with respect to any Deposit Account, other than proceeds of Primary Collateral; (e) Equipment and Fixtures; (f) General Intangibles; (g) Intellectual Property, including, without limitation, trademarks, copyrights, and patents; (h) Inventory; (i) Investment Related Property; (j) Negotiable Collateral; (k) interest with respect to any Commercial Tort Claims; (I) money, cash equivalents, or other assets that now or hereafter come into the possession, custody, or control of Digital Comm, other than proceeds of the Primary Collateral;

 

1.7         The term "Collateral" shall mean (a) Primary Collateral; (b) Secondary Collateral; (c) all of the proceeds (as defined in the Uniform Commercial Code) and products, whether tangible or intangible, of any of the foregoing, including proceeds of insurance or commercial tort claims covering or relating to any or all of the foregoing, the proceeds of any award in condemnation with respect to any of the property of Digital Comm, any rebates or refunds, whether for taxes or otherwise, and all proceeds of any such proceeds, or any portion thereof or interest therein, and the proceeds thereof, and all proceeds of any loss of, damage to, or destruction of the above, whether insured or not insured, and, to the extent not otherwise included, any indemnity; (d) any and all other amounts from time to time paid or payable under or in connection with any of the Collateral; and (e) all rights now or hereafter existing in and to all security agreements, leases, and other contracts securing or otherwise relating to any such Collateral. Unless otherwise defined herein, each of the foregoing items of Collateral shall have the meaning ascribed to such terms in the Uniform Commercial Code.

 

  

  

  

 

1.8         The term "Default" shall mean an event or condition the occurrence of which would, with the lapse of time or the giving of notice, or both, become an Event of Default.

 

1.9         The term "Event of Default" shall mean the occurrence of an event of default as set forth in Article 7 of this Security Agreement and its continuation beyond any applicable notice and cure period that is expressly set forth in Article 7 of this Security Agreement.

 

1.10       The term "GAAP" shall mean generally accepted accounting principles in the United States of America in effect from time to time.

 

1.11       The term "Indebtedness" as applied to a Person shall mean, without duplication: (i) all items which in accordance with GAAP would be included in determining total liabilities as shown on the liability side of a balance sheet of such Person as at the date as of which Indebtedness is to be determined, including, without limitation, Capitalized Lease Obligations; (ii) all obligations of other Persons which such Person has guaranteed; (iii) all reimbursement obligations in connection with letters of credit or letter of credit guaranties for the account of such Person; and (iv) in the case of Digital Comm (without duplication), the Obligations.

 

1.12       The term "Lien" shall mean any interest in Property securing an obligation owed to, or a claim by, a Person other than the owner of the Property, whether such interest is based on common law, statute or contract. The term "Lien" shall also include reservations, exceptions, encroachments, easements, rights-of-way, covenants, conditions, restrictions, leases and other title exceptions and encumbrances affecting Property. For the purpose of the Security Agreement, Digital Comm shall be deemed to be the owner of any Property which it has acquired or holds subject to a conditional sale agreement or other arrangement pursuant to which title to the Property has been retained by or vested in some other Person for security purposes.

 

1.13       The term "Obligation" or "Obligations" shall mean all billing Fees, indebtedness, obligations and liabilities of Digital Comm to Tekmark and/or MMD pursuant to or as contemplated by this Security Agreement, the Tekmark Promissory Note, the MMD Promissory Note, the Master Agreement, as well as the UTA Security Interest, whether now existing or hereafter arising, and now or hereafter contemplated, whether in the form of refinancing, loans, interest, charges, expenses or otherwise, direct or indirect, absolute or contingent, joint or several, liquidated or unliquidated, secured or unsecured, arising by operation of law or otherwise, including without limitation any future advances, renewals, extensions or changes in form of, or substitutions for, any of said indebtedness, obligations or liabilities, all interest and late charges on any of the foregoing.

 

  

  

  

 

1.14       The term "Person" shall mean any individual, sole proprietorship, partnership, joint venture, trust, unincorporated organization, association, corporation, institution, entity, limited liability company, party or government (including any political subdivision thereof).

 

1.15       The term "Property" shall mean any interest in any kind of property or asset, whether real, personal or mixed, or tangible or intangible.

 

1.16       The term "Promissory Note" shall mean the note executed by Digital Comm in favor of Tekmark substantially in the form annexed hereto as Exhibit A-2 evidencing the indebtedness created by virtue of the Amount Due owed by Digital Comm to Tekmark, which is hereby incorporated by reference and made a part hereof.

 

1.17       The term "Solvent" as to any Person shall mean, such Person (i) owns Property whose fair saleable value is greater than the amount required to pay all of such Person's Indebtedness (including contingent debts), (ii) is able to pay all of its Indebtedness as such Indebtedness matures and (iii) has capital sufficient to carry on its business and transactions and all business and transactions in which it is about to engage.

 

1.18       The term "Termination Date" shall mean the earliest of: (a) an Event of Default or (b) April 30, 2013.

 

1.19       The term "Uniform Commercial Code" shall mean the Uniform Commercial Code as in effect in the State of New Jersey.

 

1.20       The term "UTA Security Interest" shall mean that certain security interest granted by Digital Comm to UTA pursuant to the UTA Documents.

 

1.21       The term "UTA Documents" shall mean [           ]

 

2.    RECORD KEEPING AND REPORTING

 

2.1         Books and Records. Digital Comm shall maintain detailed and separate books and records with respect to all of its billing and collection activities, with respect to the receivables, the entries to be supported by sufficient documentation that establishes that said entries are properly and accurately recorded. Such books and records shall be maintained by Digital Comm at the addresses stated in this Security Agreement, or at such other location as may be agreed to by Tekmark. IF any Promissory Note is seven (7) days or more past due, Tekmark shall have full and free access to review such books and records maintained by Digital Comm during normal business hours upon reasonable advance notice, and Tekmark and their representatives may examine the same, take extracts therefrom and make photocopies thereof, and Digital Comm agrees to render to Tekmark such clerical and other assistance as may be reasonably requested with regard thereto.

 

  

  

  

 

2.2         Reports. Digital Comm shall provide balance sheet, income statement, forecast and other information that may from time to time be reasonably requested by Tekmark. Tekmark shall provide a report of monies received and disbursed as Digital Comm may reasonably request. Tekmark shall provide information and documentation reasonably requested by Digital Comm for use in its quarterly and annual reports as prepared for its auditors' review.

 

2.3         Whether or not a Default or an Event of Default has occurred, any of Tekmark's employees or agents shall have the right, at any time or times hereafter, to verify the validity, amount or any other matter relating to any Collateral by mail, telephone or otherwise. Digital Comm shall cooperate fully with Tekmark in an effort to facilitate and promptly conclude any such verification process.

 

3.   TERM OF AGREEMENT.

 

3.1         The term of this Security Agreement shall commence upon the Effective Date and continue until the Obligations have been indefeasibly paid in full by Digital Comm.

 

4.   SECURITY INTEREST

 

4.1         Grant of Security. As security for the due and punctual payment and performance of the Obligations, Digital Comm hereby pledges, transfers, assigns, sets over and grants to Tekmark a continuing security interest in and to all Collateral, whether now existing or hereafter created and whether now owned or hereafter acquired, wherever located, and all accessions and additions thereto, replacements and substitutions therefore and proceeds and products thereof. The Parties understand and agree that said Security Interest granted in (A) the Primary Collateral shall be, as between MMD and Tekmark, as set forth in the Intercreditor Agreement, and (B) the Secondary Collateral shall be subordinate to, and only to, the security interest granted by Digital Comm to UTA Capital, LLC pursuant to hat certain Security Agreement dated August 6, 2010, a copy of which is attached hereto as Attachment B (such security interest of UTA is hereinafter referred to as the "UTA Security Interest") and (ii) be, as between Tekmark and MMD, as set forth in the Intercreditor Agreement. It is further understood and agreed by the Parties that the UTA Security Interest shall be subordinate to said security interests granted to Tekmark and MMD with respect to Primary Collateral. Digital Comm agrees to take whatever actions Tekmark deems necessary or appropriate in order to establish that said prioritization of security interests between Tekmark, MMD and UTA is established and made enforceable by Tekmark.

 

4.2         Security for Obligations. This Security Agreement and the Security Interest shall secure the payment and performance of (a) all obligations of Digital Comm to Tekmark pursuant to or as contemplated by the Master Agreement or this Security Agreement; (b) Digital Comm's obligations under the Promissory Note; (c) any and all costs and expenses incurred or paid by Tekmark to enforce its rights pursuant to this Security Agreement or under the Promissory Notes(including without limitation reasonable attorney's fees).

 

4.3         Tekmark shall be under no obligation to proceed against any or all of the Collateral before proceeding directly against Digital Comm or against any item of Collateral prior to any other item of Collateral.

 

  

  

  

 

4.4         Continuation of Security Interest. The Security Interest granted in this Security Agreement shall continue in full force and effect until Digital Comm has fully and indefeasibly paid and discharged the Obligations.

 

4.5         Further Assurances. Digital Comm hereby authorizes Tekmark to execute all documents relating to the creation, validity or perfection of the security interests provided for herein under the Uniform Commercial Code.

 

4.6         Filing of Financing Statements. Digital Comm authorizes Tekmark to prepare and file financing statements for the purpose of Tekmark perfecting and continuing any security interests or liens under any applicable law.

 

5    REPRESENTATIONS AND WARRANTIES OF Digital Comm

 

5.1         Organization and Qualification. Digital Comm hereby represents and warrants to Tekmark that Digital Comm is a corporation duly organized and validly existing under the laws of the State of Florida and is and will continue to be qualified and in good standing in all jurisdictions wherein the character of the property owned or the nature of the business transacted by Digital Comm makes licensing or qualification as a foreign entity necessary.

 

5.2         Authorization. The execution, delivery and performance of this Security Agreement has been duly authorized by all necessary actions on the part of Digital Comm; is not inconsistent with its governing documents; does not contravene any law, governmental rule, regulation or order applicable to Digital Comm; and does not contravene any contract or other instrument or any order, writ, injunction or decree to which Digital Comm is a party or by which it is bound.

 

5.3         Other Liens. Digital Comm has good and marketable title to and owns all of the Collateral free and clear of any and all liens, encumbrances or security interests, other than the UTA Security Interest, whatsoever, except those encumbrances created pursuant to this Security Agreement. None of the Collateral is subject to any prohibition against encumbering, pledging, hypothecating or assigning the same or requires notice or consent prior to Digital Comm's doing of the same, other than that set forth in Exhibit A-3 and Digital Comm represents and warrants that it has obtained the consent of UTA Capital, LLC to the granting of this Security Interest.

 

5.4         Litigation. Except as set forth on Exhibit A-5 ("Exhibit A-5"), there are no actions, suits, proceedings, orders, investigations or claims pending or, to Digital Comm's knowledge, threatened against or affecting Digital Comm, at law or in equity or before or by any federal, state, municipal or other governmental department, commission, board, bureau, agency or instrumentality, and there are no arbitration proceedings pending.

 

5.5         Solvent Financial Condition. Digital Comm is now and, after giving effect to the loans to be made pursuant to this Security Agreement and the Promissory Notes, at all times will be, Solvent.

 

  

  

  

 

5.6         Taxes. Digital Comm has filed all federal, state and local tax returns and other reports it is required by law to file and has paid, or made provision for the payment of, all taxes, assessments, fees, levies and other governmental charges upon it, its income and Property as and when such taxes, assessments, fees, levies and charges are due and payable, unless and to the extent any thereof are being actively contested in good faith and by appropriate proceedings and Digital Comm maintains reasonable reserves on its books therefore. The provision for taxes on the books of Digital Comm is adequate for all years not closed by applicable statutes, and for its current fiscal year.

 

5.7         No Defaults. No event has occurred and no condition exists which would, upon or after the execution and delivery of this Security Agreement, the Promissory Notesand the Master Agreement, as well as the UTA Security Interest, or Digital Comm's performance under either, constitute a Default or an Event of Default. Digital Comm is not in default, and no event has occurred and no condition exists which constitutes, or which with the passage of time or the giving of notice or both would constitute, a default in the payment of any Indebtedness to any Person for Money Borrowed.

 

5.8         Continuous Nature of Representations and Warranties. Each representation and warranty contained in this Security Agreement and in the Promissory Notes shall be continuous in nature and shall remain accurate, complete and not misleading at all times during the term of this Security Agreement or any applicable subsequent term which may arise by virtue of the parties entering into a written supplement, amendment or modification to this Security Agreement.

 

6.    COVENANTS

 

6.1         Affirmative Covenants. Until payment in full and satisfaction of all Obligations and the termination of this Security Agreement, Digital Comm covenants and agrees that it will:

 

6.1.1         promptly pay, when due, all indebtedness, sums and liabilities of any kind now or hereafter owing by Digital Comm to any Person however created, incurred, evidenced, acquired, arising or payable, including without limitation the Obligations, income and excise taxes and taxes with respect to any of the Collateral, or any wages or salaries paid by Digital Comm or otherwise, unless same are being contested in good faith, in an appropriate forum and adequate reserves have been set aside for same;

 

6.1.2         observe, perform and comply with the covenants, terms and conditions of this Security Agreement in all material respects;

 

6.1.3         maintain and preserve in full force and effect its existence and rights, franchises, licenses, qualifications and statuses of good standing materially necessary to continue its business;

 

6.1.4         at any time either of the Promissory Notes is sixty (60) days or more past due, and upon request by Tekmark, give representatives of Tekmark and MMD access during normal business hours to, and permit any of them to examine, audit, copy or make extracts from, any and all books, records and documents in the possession of Digital Comm and to inspect the Collateral.

 

  

  

  

 

6.1.5         comply in all material respects with the requirements of applicable laws, statutes, rules, regulations and orders of any governmental authority, compliance with which is necessary to operate, conduct or maintain its existence and business, and non compliance with which would materially and adversely affect its ability to perform its responsibilities or any security given to secure its Obligations;

 

6.1.6         cause to be maintained, in full force and effect on all property given as Collateral for all Obligations, insurance in such amounts and against such risks as is customary in Digital Comm's line of business, including, but without limitation, product liability, fire, boiler, theft, burglary, pilferage, loss in transit, and hazard insurance, in an amount to equal or exceeding the principal amount of the Promissory Notes and cause Tekmark to be named a loss payees on such policies;

 

6.1.7         at any time or from time to time upon request of Tekmark, execute and deliver such further documents and do such other acts and things as Tekmark may reasonably request in order to effectuate more fully the purposes of this Security Agreement;

 

6.2         Negative Covenants. Until payment in full and satisfaction of all Obligations and termination of this Security Agreement, Digital Comm covenants and agrees that it will not:

 

6.2.1         sell, lease, transfer, convey or otherwise dispose of any or all of the Collateral, other than in the ordinary course of business; or

 

6.2.2         incur, create or permit to exist any security interest, lien or other encumbrance on any of the Collateral, whether now owned or hereafter acquired, except (i) liens for taxes not delinquent; (ii) those liens in favor of Tekmark created by this Security Agreement; (iii) and such other liens to which both Tekmark may consent to in writing; or

 

6.2.3         change its name or jurisdiction of organization without Tekmark' prior written consent.

 

7.    DEFAULT

 

7.1         There shall be no cure period in the Event of Default, except as set forth in the Promissory Notes. The occurrence of any of the following shall constitute an Event of Default:

 

7.1.1         Digital Comm shall have failed to make any payment on any of the Promissory Notes as and when due;

 

7.1.2         Digital Comm shall have failed to pay any other Obligations when due and such failure shall continue for a period of five (5) days after Tekmark provides Digital Comm written notice of same;

 

  

  

  

 

7.1.3         Digital Comm shall have failed to have accurately made or duly observe or perform any representation and warranty or covenant, condition or agreement to be observed or performed pursuant to the terms hereof and such failure continues for a period of five (5) days, or such longer period to which Tekmark shall consent in writing if Digital Comm is diligently pursuing a cure of same;

 

7.1.4         except for the UTA Security Interest, Digital Comm shall have consented to the placing of any additional lien on the Collateral, whether such lien is prior to or subordinate to the lien granted by this Security Agreement;

 

7.1.5         Digital Comm shall have applied for or consented to the appointment of a custodian, receiver, trustee or liquidator of all or a substantial part of its assets; a custodian shall have been appointed with or without consent of Digital Comm; Digital Comm shall generally not be paying its debts as they become due in a reasonably timely manner, Digital Comm shall have made a general assignment for the benefit of creditors; Digital Comm shall have filed a voluntary petition in bankruptcy, or a petition or an answer seeking reorganization or an arrangement with its creditors, or shall have taken advantage of any insolvency law, or shall have filed an answer admitting the material allegations of a petition in bankruptcy, reorganization or insolvency proceeding; or a petition in bankruptcy shall have been filed against Digital Comm, or an order, judgment, or decree shall have been entered without the application, approval or consent of Digital Comm by any court of competent jurisdiction appointing a receiver, trustee, custodian or liquidator of Digital Comm of a substantial part of its assets and in the case of an involuntary filing or of any order, judgment or decree, same shall have continued without stay or dismissal and in effect for a period of thirty (30) consecutive days;

 

7.1.6         a writ of execution or attachment or any similar process shall be issued or levied against all or any part of or interest in any material portion of the Collateral or any judgment involving monetary damages shall be entered against Digital Comm which shall become a lien on any material portion of the Collateral and such execution, attachment or similar process is not released, bonded, satisfied, vacated or stayed within thirty (30) days after its entry or levy; or seizure or foreclosure of any material portion of the Collateral pursuant to process of law or by respect of legal self-help, unless said seizure or foreclosure is stayed or bonded within thirty (30) days after the occurrence of same;

 

7.1.7         the voluntary and permanent closing of business or ceasing of operations or dissolution of Digital Comm; or

 

7.1.8         any transaction, transfer or series of transactions or transfers (a "Change of Control") shall occur after which the holders of 51% of the equity interest of Digital Comm prior to such Change of Control do not own at least 51% of the equity interest of Digital Comm after such Change of Control, or Digital Comm transfers all or substantially all of its assets to another Person, or Digital Comm or any of its members enters into an agreement the effect of which will constitute a Change of Control.

 

7.1.9         Any default or event of default occurs under any document or agreement between UTA and Digital Comm, or any affiliate thereof, including without limitation, any document or agreement that resulted in or is associated with the UTA Security Interest set out on Attachment A, Exhibit A-3.

 

  

  

  

 

7.1.10       Any Event of Default under the Promissory Note. 

 

8.    REMEDIES/RIGHTS OF TEKMARK

 

8.1         Acceleration; Proceed Against Collateral. Upon the occurrence of an Event of Default:

 

8.1.1         Tekmark may, at its sole discretion, declare that all Obligations for principal and interest and all other sums which are unpaid under the Security Agreement and the Promissory Notesshall become and be immediately due and payable; and

 

8.1.2         With such notice from Tekmark to Digital Comm as shall be required by law, Digital Comm shall, at its expense, promptly deliver any or all Collateral to such place as Tekmark may reasonably designate, or Tekmark shall have the right to enter upon the premises where the Collateral is located and take immediate possession of and remove the Collateral without liability to Tekmark, except such as is occasioned by the gross negligence or willful misconduct of Tekmark, their employees or agents. In the event Tekmark obtains possession of the Collateral, Tekmark may sell, lease or otherwise dispose of any or all of the Collateral at public or private sale, at such price or prices as Tekmark may deem best, either for cash, on credit, or for future delivery, in bulk or in parcels and/or lease or retain the Collateral repossessed using it or keeping it idle. Notice of any sale or other disposition shall be given to Digital Comm at least ten (10) days before the time of any intended sale or disposition of the Collateral is to be made, which Digital Comm hereby agrees shall be reasonable notice of such sale or other disposition. Tekmark may also elect to retain the Collateral or any part thereof in satisfaction of Digital Comm's Obligations in accordance with the requirements of the Uniform Commercial Code. The proceeds, if any, of any such sale or leasing by Tekmark shall be applied: First, to the payment of all fees and expenses incurred by Tekmark, including without limitation any legal fees and expenses; Second, to pay the Obligations (including all interest thereon) to the extent not previously paid by Digital Comm; and Third, to pay any excess remaining thereafter to Digital Comm.

 

8.1.3         Cumulative Remedies; Waivers. No remedy referred to herein is intended to be exclusive, but each shall be cumulative and in addition to any other remedy referred to above or otherwise available to Tekmark at law or in equity. No express or implied waiver by Tekmark of any default or Event of Default hereunder shall in any way be, or be construed to be, a waiver of any future or subsequent default or Event of Default. The failure or delay of Tekmark in exercising any rights granted it hereunder upon any occurrence of any of the contingencies set forth herein shall not constitute a waiver of any such right upon the continuation or recurrence of any such contingencies or similar contingencies and any single or partial exercise of any particular right by Tekmark shall not exhaust the same or constitute a waiver of any other right provided herein. The Events of Default and remedies thereon are not restrictive of and shall be in addition to any and all other rights and remedies of Tekmark provided for by this Security Agreement and applicable law.

 

  

  

  

 

8.1.4         Power of Attorney. Digital Comm hereby irrevocably designates makes, constitutes and appoints Tekmark (and all Persons designated by Tekmark) as Digital Comm's true and lawful attorney (and agent-in-fact) and upon a Default, Tekmark, or Tekmark's agent, may, without notice to Digital Comm and in either Digital Comm's or Tekmark's name, but at the cost and expense of Digital Comm:

 

8.1.5         At such time or times upon or after the occurrence and during the continuance of a Default or an Event of Default as Tekmark or said agent, in their sole discretion, may determine, endorse Digital Comm's name on any checks, notes, acceptances, drafts, money orders or any other evidence of payment or proceeds of the Collateral which come into the possession of Tekmark or under Tekmark' control.

 

8.1.6         At such time or times upon or after the occurrence and during the continuance of an Event of Default as Tekmark or their agent in their sole discretion may determine: (i) demand payment of the Receivables from the account debtors, enforce payment of the Receivables by legal proceedings or otherwise, and generally exercise all of Digital Comet's rights and remedies with respect to the collection of the Receivables or other Collateral; (ii) settle, adjust, compromise, discharge or release any of the Receivables or other Collateral or any legal proceedings brought to collect any of the Receivables or other Collateral; (iii) sell or assign any of the Receivables and other Collateral upon such terms, for such amounts and at such time or times as Tekmark deem advisable; (iv) take control, in any manner, of any item of payment or proceeds relating to any Collateral; (v) prepare, file and sign Digital Comm's name to a proof of claim in bankruptcy or similar document against any account debtor or to any notice of lien, assignment or satisfaction of lien or similar document in connection with any of the Collateral; (vi) receive, open and dispose of all mail addressed to Digital Comm and to notify postal authorities to change the address for delivery thereof to such address as Tekmark may designate; (vii) endorse the name of Digital Comm upon any of the items of payment or proceeds relating to any Collateral and deposit the same to the account of Tekmark on account of the Obligations; (viii) endorse the name of Digital Comm upon any chattel paper, document, instrument, invoice, freight bill, bill of lading or similar document or agreement relating to the Receivables and any other Collateral; (ix) use Digital Comm's stationery and sign the name of Digital Comm to verifications of the Receivables and notices thereof to account debtors; (x) use the information recorded on or contained in any data processing equipment and computer hardware and software relating to the Receivables and any other Collateral; (xi) make and adjust claims under policies of insurance; and (xii) do all other acts and things necessary, in Tekmark' determination, to fulfill Digital Comm's Obligations under this Security Agreement or the Promissory Note.

 

9.    INDEMNIFICATION BY DIGITAL COMM

 

9.1         Digital Comm shall indemnify, defend and hold Tekmark and their agents and employees harmless from any and all claims, demands, causes of action, losses, damages, fines, penalties, liabilities, costs and expenses, including attorneys' fees and court costs sustained or incurred by or asserted against Tekmark and/or their agents or employees by reason of or arising out of or in connection with this Security Agreement, the services to be provided in connection herewith and in connection with Digital Comm's operation of its business and provision of services, except for losses arising from or out of Tekmark' gross negligence or willful misconduct.

 

  

  

  

 

10.          MISCELLANEOUS

 

10.1       No Assignment. This Security Agreement and all rights hereunder shall not be assignable by Digital Comm absent the prior written consent of Tekmark. This Security Agreement and all rights hereunder shall be freely assignable by Tekmark at any time without the consent of Digital Comm.

 

10.2       Notices. All notices and correspondence shall be sent to the parties at the following addresses:

 

If to Digital Comm:

 

Digital Comm Inc.

Attn: Lawrence Sands

Senior Vice President and Corporate Secretary 

2500 N. Military Trail, Suite 275

Boca Raton, Florida 33431

 

If to Tekmark:

 

Tekmark Global Solutions, LLC

Charles K. Miller Chief Financial Officer

100 Metroplex Drive, Suite 102

Edison, NJ 08817

 

If to MMDGensis LLC:

 

MMD Genesis LLC 

Mark Munro

1100 First Avenue

Spring Lake, NJ 07762

 

10.3       Complete Security Agreement. This Security Agreement and the Promissory Notes constitute the entire agreement between the parties hereto and supersede any and all prior understandings or agreements, both written and oral, concerning the subject matter hereof.

 

10.4       Amendments. This Security Agreement may only be amended by a writing signed by the parties hereto.

 

10.5       Governing Law. This Security Agreement shall be governed by and construed and interpreted in accordance with the laws of the State of New Jersey, without regard to any conflicts of laws provisions thereof.

 

  

  

  

 

10.6       CONSENT TO FORUM; WAIVER OF JURY TRIAL. AS PART OF THE CONSIDERATION FOR NEW VALUE RECEIVED, AND REGARDLESS OF ANY PRESENT OR FUTURE DOMICILE OR PRINCIPAL PLACE OF BUSINESS OF DIGITAL COMM OR TEKMARK, DIGITAL COMM HEREBY CONSENTS AND AGREES THAT THE SUPERIOR COURT OF NEW JERSEY SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN DIGITAL COMM AND TEKMARK PERTAINING TO THIS AGREEMENT, THE PROMISSORY NOTE OR TO ANY MATTER ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE PROMISSORY NOTE. DIGITAL COMM EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND DIGITAL COMM HEREBY WAIVES ANY OBJECTION WHICH DIGITAL COMM MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS AND HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT. DIGITAL COMM HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO DIGITAL COMM AT THE ADDRESS SET FORTH IN SECTION 12.2 OF THIS AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF DIGITAL COMM'S ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE U.S. MAILS, PROPER POSTAGE PREPAID. NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO AFFECT THE RIGHT OF TEKMARK TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW, OR TO PRECLUDE THE ENFORCEMENT BY TEKMARK OF ANY JUDGMENT OR ORDER OBTAINED IN SUCH FORUM OR THE TAKING OF ANY ACTION UNDER THIS AGREEMENT TO ENFORCE SAME IN ANY OTHER APPROPRIATE FORUM OR JURISDICTION.

 

IN WITNESS WHEREOF the Parties hereto have executed this Security Agreement the date and year first written above.

 

	
MMDGenesis LL

(MMD)::

	 	
Digital Comm Inc.

(Digital Comm)::

	 
	  	 	 	  	 	 
	
By:

	 	 	
By:

	 	 
	
(signature)

	 	
(signature)

	 
	  	 	 	  	 	 
	  	 	 	  	 	 
	
(typed)

	 	
(typed)

	 
	  	 	 	  	 	 
	
Its:               

	 	 	
Its:

	 	 
	
(title)

	 	
(title)

	 

 

	
TEKMARK GLOBAL SOLUTIONS, LLC 

(Tekrnark)::

	
GENESIS GROUP HOLDINGS, INC. 

(Digital Comm):

 

  

  

  

 

	

TEKMARK GLOBAL SOLUTIONS, LLC 

(Tekrnark)::

	 	

GENESIS GROUP HOLDINGS, INC. 

(Digital Comm):

	 
	  	 	 	  	 	 
	
By:

	/s/ Charles K. Miller	 	
By:

	/s/ Lawrence Sands	 
	
(signature)

	 	
(signature)

	 
	  	 	 	  	 	 
	  	Charles K. Miller	 	  	Lawrence Sands	 
	
(typed)

	 	
(typed)

	 
	  	 	 	  	 	 
	
Its:

	CFO	 	
Its:

	Corporate Secretary	 
	(title)	 	
(title)

 

	 
	 	 	 	 	 
	 	 	 	

Digital Comm Inc.

(Digital Comm)::

	 
	 	 	 	 	 	 
	 	 	 	

By:

	/s/ Billy Candell	 
	 	 	 	(signature)	 
	 	 	 	 	 	 
	 	 	 	 	Billy Candell	 
	 	 	 	(typed)	 
	 	 	 	 	 	 
	 	 	 	

Its:

	President	 
	 	 	 	 	 

 

  

  

  

 

ATTACHMENT A, EXHIBIT A-2 — PROMISSORY NOTE

 

PROMISSORY NOTE

 

June 24, 2011

 

$2,000,000.00

 

FOR VALUE RECEIVED, and intending to be legally bound hereby, Genesis Group Holdings, Inc., and Digital Comm Inc., its subsidiary, a Florida corporation with a place of business at 2500 N. Military Trail, Suite 275, Boca Raton, Florida 33431 ("the "Maker"), unconditionally promises to pay to the order of Tekmark Global Solutions, LLC, a New Jersey limited liability company with an address 100 Metroplex Drive, Suite 102, Edison, New Jersey 08817 (the "Holder"), the principal amount of up to TWO MILLION DOLLARS AND ZERO CENTS ($2,000,000.00), which amount is due and owing to Holder by Maker as a result of the Master Agreement between Maker by Holder of even date hereof (the "Master Agreement"), together with any unpaid costs and expenses payable hereunder, in accordance with the terms set forth in this Promissory Note (including all renewals, extensions, or modifications hereof, the "Note").

 

1.    PAYMENT.

 

1.1         Payment of this Promissory Note shall be as set forth in the Master Agreement, which is incorporated by reference and made a part of this Promissory Note, Section 5 (Fees).

 

2.    PREPAYMENT. This Promissory Note may be prepaid in full at any time or in part from time to time, together with accrued and unpaid interest, to the date of such prepayment, without premium or penalty.

 

3.    ATTORNEYS' FEES AND OTHER COSTS. The Maker shall pay all of the Holder's reasonable expenses incurred to enforce or collect any of the obligations, including, without limitation, reasonable attorneys' and experts' fees and expenses, whether incurred without the commencement of a suit, in any trial, arbitration or administrative proceeding, or in any appellate or bankruptcy proceeding.

 

4.    NO USURY. Holder and Maker intend to comply at all times with applicable usury laws. If at any time such laws would render usurious any amounts called for under this Promissory Note, then it is Maker's and Holder's express intention that such excess amount shall be immediately credited to the principal balance of this Promissory Note (or, if this Promissory Note has been fully paid, refunded by Holder to Maker), and the provisions hereof shall be immediately reformed and the amounts thereafter collectible under this Promissory Note reduced, without the necessity of the execution of any further documents, so as to comply with the then applicable law, but so as to permit the recovery of the fullest amount otherwise called for under this Promissory Note. Any such crediting or refund shall not cure or waive any default by Maker under this Promissory Note.

 

  

  

  

 

5.    DEFAULT. The Maker shall be in default under this Promissory Note upon the occurrence of any of the following events (each, an "Event of Default"):

 

5.1         Failure to make any payment required under this Promissory Note within five (5) days of the indicated date or on the due date thereof, as the case may be;

 

5.2         Failure of Holder to receive payments as set out in Section 5 of the Master Agreement (Fees And Receipt Of Funds);

 

5.3         The unpaid and outstanding balance of money owed by Maker to Holder as a result of the Master Agreement, which amount shall include but not be limited to Transferred Funds, accounts receivables for Temporary Staffing and associated Fees ("Outstanding Balance"), exceeds the amount of this Promissory Note ($2,000,000.00) and the difference between the Outstanding Balance and the amount of this Promissory Note has not been paid to Holder by Maker within three (3) business days of Maker receiving a demand from Holder for payment of said amount;

 

5.4         Any payments that are due from Approved Customers or for temporary staffing are not paid within one-hundred twenty (120) days, even if Holder has put the account receivable to Munro in accordance with the Master Agreement;

 

5.5         Maker (i) applies for or consents to the appointment of a receiver, trustee or liquidator, (ii) files a voluntary petition in bankruptcy, or admits in writing its inability to pay its debts as they come due, (iii) makes an assignment or arrangement for the benefit of creditors, (iv) files a petition or an answer seeking a reorganization or an arrangement with creditors or seeking to take advantage of any insolvency law, (iv) performs any other act of bankruptcy, or (v) files an answer admitting the material allegations of a petition filed against Maker in any bankruptcy, reorganization or insolvency proceeding; or

 

5.6         Entry of an order, judgment or decree by any court of competent jurisdiction adjudicating Maker a judgment debtor or declaring Maker insolvent or approving a receiver, trustee or liquidator of Maker or of all or a substantial part of its assets, or otherwise commences with respect to Maker or any of her assets any proceeding under any bankruptcy, reorganization, arrangement, insolvency, readjustment, receivership or like law or statute, and if such order, judgment, decree or proceeding continues unstayed for any period of thirty (30) consecutive days after the expiration of any stay thereof.

 

5.7         Any representation, warranty or covenant of Maker under this Note, the Master Agreement, the Security Agreement, or any other document or certificate executed in connection herewith or therewith is or becomes, false, misleading or incorrect in any respect.

 

6.    REMEDIES. Upon the occurrence of an Event of Default, the Holder may at any time thereafter, take any one or more of the following actions:

 

6.1         Acceleration. Upon the happening of any Event of Default, or on the Maturity Date, the entire amount of Transferred Funds, Fees, principal, amount owing for Temporary Staffing and any other sums due under this Promissory Note (collectively, the "Obligations") shall become due and payable immediately, and the rate of interest on the unpaid principal balance of the Promissory Note shall be at the rate of five percent (5%) per annum (the "Default Rate"). Maker acknowledges that: (i) such interest is a material inducement to Holder to make the Promissory Note; (ii) Holder would not have made the Promissory Note in the absence of the agreement of the Maker to pay such interest; (iii) such interest represents compensation for increased risk to Holder that the Promissory Note will not be repaid; and (iv) such interest is not a penalty and represents a reasonable estimate of (a) the cost to Holder in allocating its resources (both personnel and financial) to the on-going review, monitoring, administration and collection of the Promissory Note and (b) compensation to Holder for losses that are difficult to ascertain. It is understood and agreed that if under any applicable law the amounts set forth herein are considered to be interest, then the applicable rate shall be as forth herein or the maximum rate allowed by law, whichever is less.

 

  

  

  

 

6.2         All remedies of Holder provided for herein are cumulative and shall be in addition to all other rights or remedies including, without limitations, the rights of Holder under the Master Agreement or applicable law.

 

6.3         Holder does not give up its rights upon an Event of Default as a result of any delay in declaring or failing to declare a default or an Event of Default.

 

6.4         File a lawsuit to enforce the Obligations due under this Promissory Note and/or the Master Agreement.

 

7.    WAIVERS AND AMENDMENTS. Holder is not required to do any of the following before enforcing its rights under this Promissory Note:

 

7.1         Demand payment of amounts due;

 

7.2         Give notice that amounts due have not been paid; or

 

7.3         Obtain an official certificate of non-payment.

 

7.4         No waivers, amendments or modifications of this Promissory Note shall be valid unless in writing and signed by an authorized representative of the Holder. No waiver by the Holder of any Event of Default shall operate as a waiver of any other Event of Default or the same Event of Default on a future occasion. Neither the failure nor any delay on the part of the Holder in exercising any right, power or remedy under this Promissory Note shall operate as a waiver thereof, nor shall a single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or remedy.

 

7.5         Maker waives presentment, protest, notice of dishonor, demand for payment, notice of intention to accelerate maturity, notice of acceleration of maturity, notice of sale and all other notices of any kind. Further, Maker agrees that the Holder may extend, modify or renew this Promissory Note or make a novation of the indebtedness evidenced by this Promissory Note for any period and grant any releases, compromises or indulgences with respect to any collateral securing this Promissory Note, or with respect to any Maker or any person liable under this Promissory Note, all without notice to or consent of any Maker or any person liable under this Promissory Note and without affecting the liability of the Maker or any person who may be liable under this Promissory Note.

 

  

  

  

 

8.    SECURITY INTEREST.

 

8.1         The obligations of Maker under this Promissory Note are secured by the security interest granted to Holder by the Maker in the Collateral as evidenced by the Security Agreement between the parties dated June 24, 2011. Capitalized terms used in this Promissory Note are as defined in the Security Agreement, Master Agreement or as otherwise defined in the text of this Promissory Note.

 

9.    NOTICES.

 

9.1         Any report, demand, notice or other communication required or permitted to be given hereunder (other than service of process) shall be in writing, and shall be delivered personally, shall be delivered by a recognized overnight national carrier service (such as Federal Express) for next business day delivery, or shall be sent by certified or registered mail, return receipt requested, first-class postage prepaid to the parties at the addresses set forth below (or to such other addresses as the parties may specify by due notice to the other):

 

	
To Holder:

 

 

 

 

 

 

 

 

 

To Maker: 

	
Tekmark Global Solutions, LLC

Attn: Mr. Charles K. Miller 

100 Metroplex Drive, Suite 102 

Edison, NJ 08817

 

Copy to:       Duane Morris, LLP

Attn: Mr. Robert M. Conway 

30 South 17th Street

Philadelphia, PA 19103-4196

 

Genesis Group Holdings, Inc.

 

Digital Comm Inc.

Attn: Lawrence Sands

Senior Vice President and Corporate Secretary

2500 N. Military Trail, Suite 275

Boca Raton, Florida 33431

 

Copy to:

 

  

  

  

9.2         Any notice delivered to a party's designated address by (a) personal delivery, (b) recognized overnight national courier service, or (c) registered or certified mail, return receipt requested, shall be deemed to have been received by such party at the time the notice is delivered to such party's designated address. Confirmation by the courier delivering any notice given pursuant to this Section shall be conclusive evidence of receipt of such notice. Each party hereby agrees that it will not refuse or reject delivery of any notice given hereunder, that it will acknowledge, in writing, receipt of the same upon request by any other party and that any notice rejected or refused by it shall be deemed for all purposes of this Promissory Note to have been received by the rejecting party on the date so refused or rejected, as conclusively established by the records of the U.S. Postal Service or the courier service. Any notice given by an attorney on behalf of a party or a party shall be effective for all purposes.

 

10.        GOVERNING LAW. This Promissory Note shall be governed, interpreted, and enforceable in accordance with the laws of the State of New Jersey without regard to conflicts of law principles. The invalidity, illegality or unenforceability of any provision of this Promissory Note shall not affect or impair the validity, legality or enforceability of the remainder of this Promissory Note, and to this end, the provisions of this Promissory Note are declared to be severable.

 

11.        ACTIONS INVOLVING THIS PROMISSORY NOTE. If this Promissory Note is referred to any attorney for collection, the Maker agrees to pay all costs of collection, including court costs and reasonable attorneys' fees. THE MAKER, AFTER CONSULTING OR HAVING HAD THE OPPORTUNITY TO CONSULT WITH COUNSEL, KNOWINGLY, VOLUNTARILY AND INTENTIONALLY HEREBY IRREVOCABLY WAIVES ITS RIGHT TO A TRIAL BY JURY IN ANY ACTION ARISING OUT OF THIS PROMISSORY NOTE, THE EMPLOYMENT AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREUNDER.

 

12.         JURISDICTION. The Maker hereby unconditionally and irrevocably agrees:

 

12.1        to be subject to the jurisdiction of the courts of the State of New Jersey and any federal courts sitting in New Jersey in connection with any action, suit or proceeding under or relating to, or to enforce any of the provisions of, this Promissory Note; and

 

12.2        to waive, to the extent permitted by law, any right to obtain a change in venue from any such court in any such action, suit or proceeding.

 

12.3        Service of process may be made by registered or certified mail, postage prepaid, to Maker's address set forth above, however, nothing in the paragraph shall affect Holder's right to serve the process in any manner permitted by paw, or limit Holder's right to bring proceedings against Maker in the Courts of any other jurisdiction.

 

12.4        The provisions of this Section shall not limit or otherwise affect the right of the Holder to institute and conduct an action in any other appropriate manner, jurisdiction or court.

  

  

  

 

13.         MATERIAL ASPECTS OF THIS PROMISSORY NOTE.

 

13.1        THE MAKER ACKNOWLEDGES AND AGREES THAT SECTIONS 7 ("WAIVERS AND AMENDMENTS"), 11 ("ACTIONS INVOLVING THIS PROMISSORY NOTE") AND 12 ("JURISDICTION") ABOVE ARE SPECIFIC AND MATERIAL ASPECTS OF THIS PROMISSORY NOTE AND THAT THE HOLDER WOULD NOT EXTEND CREDIT TO THE MAKER IF THE WAIVERS SET FORTH IN SECTIONS 7, 11 AND 12 WERE NOT A PART OF THIS PROMISSORY NOTE.

 

14.          MISCELLANEOUS.

 

14.1        Assignment. This Promissory Note shall inure to the benefit of and be binding upon the Maker and Holder and their respective heirs, legal representatives, successors and assigns. The Holder's interest in and rights under this Promissory Note are freely assignable, in whole or in part, by the Holder. The Maker shall not assign its rights and interest hereunder without the prior written consent of the Holder, and any attempt by any Maker to assign without the Holder's prior written consent is null and void. Any assignment shall not release the Maker from the Obligations.

 

14.2       Severability. If any provision of this Promissory Note shall be prohibited or invalid under applicable law, such provision shall be ineffective but only to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Promissory Note.

 

14.3        Plural; Captions. All references in this Promissory Note to Maker, person, document or other nouns of reference mean both the singular and the plural form, as the case may be. The subheadings contained in this Promissory Note are inserted for convenience only and shall not affect the meaning or interpretation of the Promissory Note. (d)Promissory Note Binding On The Maker And Its Successors. All Obligations under this Promissory Note are the unconditional obligations of Maker and all who succeed to its rights and interests. Maker, by execution of, and the Holder, by acceptance of, this Promissory Note agree that each party is bound to all terms and provisions of this Promissory Note.

 

14.4        Entirety. This Promissory Note embodies the entire agreement between the parties and supersede all prior agreements and understandings relating to the subject matter hereof and thereof.

 

14.5        Business Purpose. Maker represents that the amount evidenced by this Promissory Note is being obtained for business purposes.

 

14.6        Rights Cumulative. The rights and remedies of Holder under this Promissory Note and the Agreement shall be cumulative and concurrent and at the sole discretion of Holder may be pursued singly, successively, or together and exercised as often as Holder shall desire. Time is of the essence under this Promissory Note. The failure of Holder to exercise any such right or remedy shall in no event be construed an a waiver of release thereof.

 

  

  

  

 

14.7        If any payment hereunder shall be specified to be made on a Saturday, Sunday or other day on which banks New Jersey are not authorized to be open for business, it shall be considered timely if made on the next succeeding day which is a business day, and no additional interest shall accrue for such delay.

 

14.8         Maker hereby releases Holder, its employees, Holders, officers, directors and members from any claims, known and unknown, concerning or relating to the Master Agreement or anything related thereto.

 

[Remainder of page intentionally left blank.]

 

  

  

  

 

IN WITNESS WHEREOF, the Maker has executed and delivered to the Holder this Promissory Note, as of the day and year first above written.

 

	 	

Maker: : Genesis Group Holdings, Inc.

	 
	 	
By: 

	 	 
	 	

Name:

Title:

	 	 
	 	

Dated: June 24, 2011

	 

 

  

  

  

 

IN WITNESS WHEREOF, the Maker has executed and delivered to the Holder this Promissory Note, as of the day and year first above written.

 

	 	

Maker: : Genesis Group Holdings, Inc.

	 
	 	
By: 

	/s/ Lawrence Sands	 
	 	

Name:

Title:

	
Lawrence Sands

Corporate Secretary

	 
	 	

Dated: June 24, 2011

	 

 

  

  

  

 

IN WITNESS WHEREOF, the Maker has executed and delivered to the Holder this Promissory Note, as of the day and year first above written.

 

	 	

Maker: : Genesis Group Holdings, Inc.

	 
	 	
By: 

	/s/ Lawrence M Sands	 
	 	

Name:

Title:

	
Lawrence M Sands

Corporate Secretary

	 
	 	

Dated: June 24, 2011

	 

 

  

  

  

 

ATTACHMENT A, EXHIBIT A-3 - PRIOR SECURITY INTEREST GRANT

 

  

  

  

 

ATTACHMENT A, EXHIBIT A-4

DEPOSIT ACCOUNT CONTROL AGREEMENT

 

[CURRENTLY UNDER REVIEW]

 

  

  

  

 

ATTACHMENT B — TEMPORARY STAFFING

 

The Parties understand and agree that the terms and conditions set out in this Attachment B ("Temporary Staffing Agreement") only apply to Tekmark providing Temporary Staffing Services (defined hereinafter) to Digital Comm whereas the terms and conditions set out in the other portions of the Master Agreement also apply to Tekmark providing Temporary Staffing Services to Digital Comm. If there is a conflict between any term or condition in this Attachment B and a term or condition set out elsewhere in the Master Agreement, then the term or condition in the other part of the Master Agreement shall take precedence over that term or condition that appears in this Attachment B.

 

1.   ENGAGEMENT AND TERM. Digital Comm does hereby engage Tekmark to render information technology professional services as requested by Digital Comm ("Services"); and Tekmark agrees to render such Services. The term of this Agreement shall begin on the Effective Date of the Master Agreement and continue as set forth in the Master Agreement.

 

2.   COMPENSATION. Tekmark shall receive full payment for all Services rendered to Digital Comm at rates to be specified in the Work Authorization form attached hereto as Exhibit B-1 ("Work Authorization"), to be billed by monthly invoice to Digital Comm by Tekmark, and to be paid by Digital Comm to Tekmark within 60 days of the invoice date. In the event that Digital Comm shall fail to make such payment within 60 days of the invoice date, Tekmark shall have the option to exercise its remedies against Digital Comm as set forth in the Master Agreement.

 

3.   INDEPENDENT CONTRACTOR STATUS. Tekmark agrees that it is an independent contractor and not an employee or agent of Digital Comm. Nothing herein shall be deemed to create an employer-employee relationship between Digital Comm and Tekmark.

 

4.   CONFIDENTIALITY. Tekmark agrees that it will not disclose any confidential or proprietary information of Digital Comm and its customers, including non-public information or data relating to Digital Comm's operations, procedures, policies, techniques, accounts and personnel, which it acquires or accesses in rendering Services hereunder, except as is necessary to perform its Services hereunder. Such information shall not include information that (i) is, or becomes, in the public domain, unless this occurs through a breach of Tekmark' obligations hereunder; (ii) information in Tekmark' possession from a third party source that is not in breach of any obligation owed to Digital Comm or its customers; or (iii) information required to be disclosed by law.

 

5.   INTELLECTUAL PROPERTY. All the intellectual property rights, including copyright, patent and trade secrets, in any and all work product which Tekmark creates or develops in rendering Services hereunder shall be considered work made for hire and is owned by Digital Comm.

 

6.   SOLICITATION. Digital Comm covenants during the Term and for one year thereafter thadDigital Comm and its personnel shall not, directly or indirectly hire any Tekmark personnel/consultants or influence, canvass or solicit any Tekmark personnel/consultants to terminate their relationship with Tekmark. Tekmark covenants during the Term that it will not, directly or indirectly, attempt to influence or request any Digital Comm Customer to replace Digital Comm with Tekmark to perform the same work in the same territory as is set out in a purchase order from the Approved Customer to Digital Comm.

 

  

  

  

 

7.

 

WORK AUTHORIZATION FORM — EXHIBIT B-1

 

Work Authorization between ("Digital Comm") and Tekmark Global Solutions, LLC ("Tekmark"), dated  pursuant to the Staffing Services Agreement between Digital Comm and Tekmark dated ("Agreement"):

 

1.   Tekmark shall render services for Digital Comm, by assigning to perform the services hereunder, at the bill rate of $ per . These rates shall not be renegotiated before the end of the Initial Term of this Work Authorization. The term of this Work Authorization shall begin on , and terminate on  (the "Initial Term"), unless terminated earlier by as provided for under the Agreement.

 

2.   if Tekmark continues to render services to Digital Comm after the expiration of the Initial Term of this Work Authorization, then such engagement shall be on the same terms and conditions as are herein set forth provided that Tekmark may terminate this Work Authorization upon the expiration of the Initial Term if it provides at least two (2) week's notice before the effective date of termination.

 

3.   The terms and conditions of the Agreement shall be incorporated by reference herein and are binding upon the parties. In the event of any conflict between the Agreement and this Work Authorization, the terms of the Agreement shall prevail, unless the Work Authorization expressly references a conflicting provision of the Agreement and expresses an intent to override it.

 

4.   No provision of this Work Authorization may be amended, modified, or waived except by written agreement signed by the parties.

 

	
TEKMARK GLOBAL SOLUTIONS, LLC

	 	
GENESIS GROUP HOLDINGS, INC.:

	 
	  	 	 	  	 	 
	
By:

	 	 	
By:

	 	 
	  	 	 	  	 	 
	
(signature)

	 	
(signature)

	 
	  	 	 	  	 	 
	  	 	 	  	 	 
	 	 	 	 
	
(typed)

	 	
(typed)

	 
	  	 	 	  	 	 
	
Its:               

	 	 	
Its:

	 	 
	 	 	 	 
	
(title)

	 	
(title)

	 

 

  

  

  

 

ATTACHMENT C — GENERAL TERMS AND CONDITIONS

 

1.   TERMINATION.

 

1.1        The Master Agreement may be terminated by either Party, with or without cause, for any reason or for no reason, without penalty, upon thirty (30) days' advance written notice to the other Party.

 

1.2        Notwithstanding any other provision of the Master Agreement, the Master Agreement may be immediately terminated by either New Lender if Digital Comm: (i) uses any Transferred Funds for any purpose other than to pay the Existing Employees for Approved Services to Approved Clients, subject to a one (1) business day opportunity for Digital Comm to cure after receipt of written notice from a New Lender; (ii) fails or refuses to provide requested Payroll Information; or (iii) provides false, misleading or incomplete Payroll Information.

 

1.3        Notwithstanding any other provision in the Master Agreement, either Party may immediately terminate the Master Agreement if: (A) there is a bankruptcy filing by the other Party; (B) there is a loss by the other Party of its general liability insurance coverage; (C) if the other Party breaches any provision of the Master Agreement; or (D) the within fundamental business arrangement is challenged unsuccessfully by any material governmental action by or in any legal action, is found to violate any law or regulation in a material respect.

 

2.   NO THIRD PARTY RIGHTS.

 

2.1        The Master Agreement is intended solely for the mutual benefit of the Parties hereto and does not create any rights in a third Party.

 

3. BROKER FEES.

 

3.1        Digital Comm and New Lender each represent and warrant to the other that no party has dealt with any broker, consultant, finder or like agents with respect to the transactions contemplated by this Agreement, other than Digital Comm's broker ("Broker") . Digital Comm will pay all fees to Broker pursuant to a separate agreement. Digital Comm agrees to indemnify, defend and hold harmless New Lender and its successors and assigns, against and from all claims, losses, liabilities and expenses including reasonable attorneys' fees, arising out of any claim by any brokers, consultants, finders or like agents which are based upon alleged dealings with said party or this Agreement. The provisions of this Section shall survive the execution hereof.

 

4.   CONFIDENTIALITY OBLIGATIONS.

 

4.1       As used herein, the term "Confidential Information" means information in whatever form furnished to a Party by or on behalf of the other Party that (i) the disclosing Party has labeled in writing as confidential or proprietary, or (ii) is furnished orally and is identified in writing as confidential or proprietary by the disclosing Party within ten (10) days of disclosure to the receiving Party. Confidential Information shall include, whether or not labeled as such, business, strategic planning, financial, and technical information, trade secrets, customer lists and data, provided under the Master Agreement, the terms of the Master Agreement itself, and any negotiations relating thereto, whether conducted prior to or after the Effective Date. During the Term of the Master Agreement and at all times thereafter, each Party (the "Receiving Party") shall maintain in confidence and use only for the purposes specifically authorized in the Master Agreement the Confidential Information disclosed by the other Party (the "Disclosing Party"), except that the Receiving Party may disclose or permit the disclosure of Confidential Information to its directors, officers, employees, Affiliates, consultants and agents ("Agents") who are obligated to maintain the confidential nature of such Confidential Information and who need to know such Confidential Information for the purposes of the Receiving Party's exercise of its rights and performance of its obligations under the Master Agreement. The Receiving Party shall be legally responsible for the conduct of its Agents.

 

  

  

  

 

4.2       The foregoing obligations of the Receiving Party shall not apply to the extent the Receiving Party can demonstrate that the Confidential Information at issue (i) was in the public domain prior to the time of its disclosure under the Master Agreement, (ii) entered the public domain after the time of its disclosure under the Master Agreement through means other than an unauthorized disclosure resulting from an act or omission of the Receiving Party; (iii) was independently developed or discovered by the Receiving Party without use of the Confidential Information, but only provided such independent development is evidenced by contemporaneous written documentation, (iv) is or was disclosed to the Receiving Party at any time, whether prior to or after the time of its disclosure under the Master Agreement, by a third Party having no fiduciary relationship with the Disclosing Party and having no obligation of confidentiality with respect to such Confidential Information, or (v) is required to be disclosed to comply with applicable laws or regulations, or with a court or administrative order, provided, that the Disclosing Party receives prior written notice of such disclosure and that the Receiving Party takes all reasonable and lawful actions to obtain confidential treatment for such disclosure and, if possible, to minimize the extent of the disclosure.

 

5.   ASSIGNMENT. The Master Agreement and all rights hereunder shall not be assignable by Digital Comm absent the prior written consent of the New Lenders. Any attempt to assign in violation of the foregoing is void. The Master Agreement and all rights hereunder shall be freely assignable by either New Lender at any time without the consent of Digital Comm.

 

6.   NOTICES.

 

6.1        All notices which may be required pursuant to the Master Agreement shall be: (i) in writing; (ii) addressed to the Parties at their respective addresses set forth below (or to such other person or address as either Party may so designate from time to time); (iii) mailed, postage prepaid, by registered mail or certified mail, return receipt requested, or transmitted by courier for hand delivery or by a nationally recognized overnight delivery service or by telegram; and (iv) deemed to have been given on the date of receipt if sent by mail or on the date of delivery if transmitted by courier, overnight delivery service or telegram.

 

  

  

  

 

If to Tekmark::

 

Tekmark Global Solutions, LLC 

Attn: Mr. Charles K. Miller 

Chief Financial Officer

100 Metroplex Drive, Suite 102 

Edison, New Jersey 08817

 

If to MMD::

 

MMDGenesis LLC

Attn: Mr. Mark Munro

1100 First Avenue

Spring Lake, New Jersey 07762

 

If to Digital Comm:

 

Digital Comm Inc.

Attn: Lawrence Sands

Senior Vice President and Corporate Secretary

2500 N. Military Trail, Suite 275

Boca Raton, Florida 33431

 

7.           GENERAL.

 

7.1        FORCE, MAJEURE. If the failure by one Party to fulfill its obligations hereunder is due to circumstances beyond the reasonable control of such Party (which may include strikes, governmental action and acts of God), such failure shall not be deemed a breach of the Master Agreement by such Party provided, such Party uses diligent efforts to continue to perform hereunder; provided further that if such failure shall not be remedied for one hundred twenty (120) days, the other Party may elect to terminate the Master Agreement effective upon notice of such election.

 

7.2       SECTION HEADINGS. The Section headings contained in the Master Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of the Master Agreement.

 

7.3       GOVERNING LAW. The Master Agreement shall be governed and construed in accordance with the internal laws of New Jersey without regard to any conflict of laws principles.

 

7.4       COMPLIANCE WITH LAWS. Each Party agrees to perform its respective obligations hereunder in compliance with all applicable federal, state and local laws, rules and regulations.

 

7.5       WAIVER. The failure of either Party to enforce its rights under the Master Agreement at any time for any period shall not be construed as a waiver of such rights.

 

7.6       RELATIONSHIP OF THE PARTIES. Notwithstanding any provision hereof, for all purposes of the Master Agreement, each Party shall be and act as an independent contractor and not as a partner, joint venturer, or agent of the other and shall not bind nor attempt to bind the other to any contract.

 

  

  

  

 

7.7       SEVERABILITY. In the event that any provision of the Master Agreement shall be determined to be illegal or unenforceable, such provision will be limited or eliminated to the minimum extent necessary and the Master Agreement shall otherwise remain in full force and effect and enforceable.

 

7.8        COUNTERPARTS. The Master Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same document.fs12013a1ex10xxxi_inter.htm

Exhibit 10.31

 

REVOLVING CREDIT AGREEMENT

 

This Revolving Credit Agreement (this 'AGREEMENT') is made and entered into effective as of   (the 'El-FECTIVE DATE') by and between Digital Comm Inc. a Florida corporation and Genesis Group Holdings, Inc., a Delaware corporation (collectively "Borrower"), and MMDGenesis LLC, a New Jersey limited liability company ("Lender").

 

RECITALS

 

WHEREAS, Lender desires to loan certain sums to Borrower from time to time, and Borrower wishes to borrow certain sums from Lender, on and subject to the terms and conditions contained in this Agreement;

 

NOW, THEREFORE, in consideration of the mutual promises, representations, warranties, covenants and conditions set forth in this Agreement and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, Lender and Borrower hereby, intending to be legally bound by the terms hereof, agree as follows:

 

	
1. 

	
CERTAIN DEFINITIONS. As used herein:

 

	
     1.1.

	
BUSINESS DAY. The term 'BUSINESS DAY' means any day other than a Saturday, Sunday, or other day on which commercial banks in New York, New York are authorized or required by law to close.

 

	
    1.2. 

	
CREDIT PERIOD. The term 'CREDIT PERIOD' means that period of time beginning on the Effective Date and ending on June 1, 2013.

 

	
    1.3.

	
LOAN DOCUMENTS. The term 'LOAN DOCUMENTS' means, collectively, this Agreement, the Note, Master Agreement, Security Agreement and Intercreditor Agreement (each as defined below) executed and delivered pursuant hereto, and any other documents executed or delivered by Borrower pursuant to this Agreement or in connection with any related Loan or finance document.

 

	
    1.4.

	
MATURITY DATE. The term 'MATURITY DATE' means that date which is the earlier to occur of: (a) June 1, 2013; or (b) the date on which Lender declares the entire unpaid principal amount and all accrued interest on the outstanding Note immediately due and payable in full under Section 8.2(b).

 

	
    1.5.

	
MASTER AGREEMENT. The term 'MASTER AGREEMENT' means that certain Master Agreement by and among Tekmark Global Solutions, LLC, Lender and Borrower dated on or about the date hereof.

 

	
    1.6.

	
SECURITY AGREEMENT. The term `SECURITY AGREEMENT' means that certain Security Agreement between Lender and Borrower dated on or about the date hereof.

 

	
    1.7.

	
INTERCREDITOR AGREEMENT. The term INTERCREDITOR AGREEMENT' means that certain Intercreditor Agreement dated on or about the date hereof among, inter alia, Lender, other lenders of Borrower, and Borrower.

 

	
2. 

	
AMOUNT AND TERMS OF CREDIT.

 

	
     2.1.

	
COMMITMENT TO LEND. Subject to all the terms and conditions of this Agreement, and in reliance on the representations, warranties and covenants of Borrower set forth in this Agreement, Lender agrees to make loans or advances of funds to Borrower during the Credit Period on a revolving basis (such loans being collectively hereinafter referred to as 'LOANS' and each individually as a 'LOAN'), in an aggregate cumulative total principal amount not to exceed one million Dollars (US $1,000,000). Lender's obligation to make Loans to Borrower under this Agreement is hereinafter referred to as the 'COMMITMENT.' Notwithstanding the foregoing, Lender will not be obligated to make a Loan to Borrower unless and until Borrower executes and delivers to Lender a Note (as defined in Section 2.2) for the principal amount of such Loan.

 

  

1

  

 

	
 

	
In addition, Lender will not be obligated to advance any Loan to Borrower on or after the Maturity Date, and Lender's obligation to advance any Loan to Borrower is subject to satisfaction of all relevant terms and conditions of this Agreement, including but not limited to the conditions precedent and other provisions of Sections 5 (with respect to the initial Loan) and 6 (with respect to each Loan). Notwithstanding the foregoing, Lender will not be obligated to make a Loan to Borrower unless and until a Borrower first gives Lender written notice of Borrower's request for a Loan hereunder that sets forth the principal amount to the borrowed by Borrower under such requested Loan (a 'LOAN NOTICE) and the date on which such Loan is requested to be advanced, which date shall not be sooner than two (2) Business Days following Lender's receipt of such Loan Notice.

 

In addition, Lender will not be obligated to advance any Loan to or on behalf of Borrower except as set forth in the Master Agreement.

 

	
     2.2.

	
NOTE. Borrower's indebtedness to Lender under each Loan advanced by Lender under this Agreement will be evidenced by a separate Revolving Promissory Note of Borrower in the form attached hereto as Exhibit 'A' (the 'NOTE). The Note will provide that interest on unpaid principal will accrue at a rate of 2.25% per month on the outstanding principle advanced (but in no event higher than the highest lawful rates calculated on an annual basis).

 

	
     2.3.

	
MATURITY. Unless payment thereof is accelerated or otherwise becomes due earlier under the terms of this Agreement (including but not limited to the provisions of Section 8.2) or the terms of a Note the unpaid principal amount of all Loans and all unpaid interest accrued thereon, together with any other fees, expenses or costs incurred in connection therewith, will be immediately due and payable to Lender in full on the Maturity Date.

 

	
     2.4.

	
PREPAYMENT. Borrower may at any time and from time to time on any Business Day prepay any Loan in whole or in part in increments of U.S. $1,000 on at least one (1) Business Day's prior written notice, or telephonic notice promptly confirmed in writing, received by Lender no later than 10:00 a.m., Pacific Time. Each prepayment will he applied as follows: (a) first, to the payment of interest accrued on all Loans outstanding, and (b) second, to the extent that the amount of such prepayment exceeds the amount of all such accrued interest, to the payment of principal on such Loan or Loans as Borrower may designate.

 

	
     2.5.

	
SECURITY INTEREST IN COLLATERAL. Borrower hereby grants to Lender a security interest pursuant to the terms of the Security Agreement. In the event of a breach of this Agreement or any of the Loan Documents, Lender may exercise all of its rights, including, without limitation, its rights to foreclose upon the Collateral. Access to those "self-help" remedies shall not limit such other or further rights Lender may have hereunder or at law to enforce any of its rights or other remedies with respect to a particular circumstance.

 

	
3.

	
CLOSING DATE; DELIVERY.

 

	
     3.1.

	
CLOSING DATE. The closing of the initial Loan (the 'CLOSING') will be held by mail and/or telecopy on the Effective Date (the 'CLOSING DATE'), or at such other time and place as Borrower and Lender may mutually agree.

 

	
     3.2.

	
DELIVERY. At the Closing, Borrower will execute and deliver to Lender the Note, duly executed by Borrower.

 

	
4.

	
REPRESENTATIONS AND WARRANTIES OF BORROWER. Borrower hereby represents and warrants to Lender that:

 

	
     4.1.

	
ORGANIZATION AND STANDING; CHARTER DOCUMENTS. Borrower Digital Comm Inc. is a Florida corporation duly organized, and validly existing and in good standing. Borrower Genesis Group Holdings Inc. is dully organized and existing under the laws of the State of Delaware, and each has all requisite corporate power and authority to own, lease and operate its properties and to conduct its business as such is presently conducted and as proposed to be conducted. Borrower is duly qualified to do business as a foreign corporation in good standing in any state or jurisdiction in the United States in which it is required to be qualified to do intrastate business as the Company's business is currently conducted, except for jurisdictions in which failure to so qualify could not reasonably be expected to have a material adverse effect on the business and operations of the Company taken as a whole. True and accurate copies of the Certificate of Incorporation (the 'CHARTER) and Bylaws of Borrower, each as amended and currently in effect, have been delivered to Lender and Lender's counsel.

 

  

2

  

 

	
     4.2.

	
AUTHORIZATION. All corporate action on the part of Borrower and its officers, directors and stockholders that is necessary for the authorization, execution, delivery and performance of each of the Loan Documents by Borrower has been taken; and each of the Loan Documents, when executed and delivered by Borrower, will constitute valid and legally binding obligations of Borrower, enforceable in accordance with their terms.

 

	
5.

	
CONDITIONS PRECEDENT TO INITIAL LOAN. The obligation of Lender to make any advance under the Commitment is subject to the satisfaction (or written waiver by Lender) of the following conditions precedent:

 

	
     5.1.

	
REPRESENTATIONS TRUE. All representations and warranties of Borrower contained in this Agreement and all other Loan Documents will be true, correct and complete in all respects with the same effect as though such representations and warranties had been made on and as of the Closing; and Lender will have received a certificate executed by the President or Chief Executive Officer of Borrower certifying the foregoing.

 

	
     5.2.

	
NOTE. Lender will have received the Note representing the initial Loan, executed by a duly authorized officer of Borrower.

 

	
     5,3.

	
CORPORATE DOCUMENTS. Lender will have received, in form and substance satisfactory to Lender and its counsel, a copy of the records of all actions taken by Borrower, including all corporate resolutions of Borrower authorizing or relating to the execution, delivery and performance of the Loan Documents and the consummation of the transactions contemplated thereby, and a certified copy of the Charter of Borrower.

 

	
     5.4.

	
PROCEEDINGS AND DOCUMENTS. All corporate and other proceedings in connection with the transactions contemplated by this Agreement and all documents incident to such transactions will be in form and substance satisfactory to Lender and Lender's counsel, and Lender will have received all counterpart originals or certified or other copies of such documents as it may reasonably request.

 

	
     5.5.

	
ADEQUATE COLLATERAL. Provided there is no event of default, advances up to $1 million in the aggregate may, pursuant to the terms of the Master Agreement, be drawn by the Borrower against 90% of actual billings and receivables from Verizon Wireless or other approved vendor, as approved by Lender in its sole discretion ("Approved AIR") less amounts already advanced for payroll funding by Tekmark Global Solutions, LLC ("Tekmark") if any. For example, in the event that Borrower has $1.5 million in Approved A/R (90% of which equals $1.35 million) and Tekmark is lending Borrower $.75 million, Lender's commitment to Borrower shall be limited to $0.6 million.

 

	
6.

	
CONDITIONS PRECEDENT TO ALL LOANS. The obligation of Lender to make each Loan, including but not limited to the initial Loan, will be subject to the satisfaction of all the following additional conditions precedent:

 

	
      6.1. 

	
NO EVENT OF DEFAULT. No event will have occurred and be continuing, and no event would result from the making of such Loan, that would constitute an Event of Default as defined herein.

 

	
       6.2.

	
  NOTE. Lender will have received the Note representing such additional Loan, executed by a duly authorized officer of Borrower.

 

  

3

  

 

	
      6.3. 

	
REPRESENTATIONS TRUE. All representations and warranties of Borrower contained in this Agreement or in any other Loan Documents will be true, correct and complete in all respects with the same effect as though such representations and warranties had been made on and as of the date such Loan is actually advanced (except to the extent such representations and warranties specifically relate to an earlier date, in which case they will be true, accurate and complete in all material respects as of such earlier date).

 

	
      6.4. 

	
ALL AGREEMENTS PERFORMED. All agreements, obligations, conditions and covenants set forth in this Agreement and all other Loan Documents to be performed by Borrower through the date such Loan is advanced will have been duly performed and complied with in all respects.

 

	
7.

	
OTHER COVENANTS OF BORROWER. Borrower hereby covenants and agrees with Lender as follows:

 

	
     7.1 

	
FINANCIAL AND OTHER INFORMATION AND INSPECTION. The right to visit and inspect any of the properties of Borrower or any of its subsidiaries, and to discuss its and their affairs and finances with its and their officers, all at such reasonable times and as often as may reasonably be requested by Lender. With reasonable promptness, such other information and data, including, without limitation, lists of property and accounts, budgets, agreements with insurers, forecasts, tax returns and reports, with respect to Borrower and its subsidiaries as may from time to time may be reasonably requested by Lender, and all such other information and communications (including, without limitation, notices of meetings of Borrower's shareholders) as Borrower will have supplied to its holders of any shares of its capital stock.

 

	
      7.2.

	
FURTHER ASSURANCES. In addition to the obligations and documents which this Agreement expressly requires Borrower to execute, deliver and perform, Borrower will execute, deliver and perform, and will cause its subsidiaries to execute, deliver and perform, any and all further acts or documents which Lender may reasonably require in order to carry out the purposes of this Agreement or any of the other Loan Documents.

 

	
      7.3.

	
OTHER NEGATIVE COVENANTS. During the term hereof, Borrower shall not, without the written consent of Lender, (i) increase its current SG&A in an aggregate amount greater than 10%, (ii) grant any raises or bonuses to or modify the compensation of any executive, manager, officer, director or other member of Borrower's senior management that in aggregate exceed 10% of current salary levels, (iii) sell all or a material portion of Borrower's assets, (iv) pay any dividends or cash distributions, or (v) use the proceeds of any loan proceeds financed by or capital from the sale of shares to Lender, its members or their assignees or affiliates, including but not limited to Mark Munro, Mark Durfee or Forward Investments, LLC, to repay overdue payables to insiders of Borrower.

 

	
8.

	
REGISTRATION RIGHTS. Lender and any of its assignees or members (each, a "Holder") holding any of the Common Stock of Borrower issued or issuable (either directly or upon the exercise of any warrant) which have not been (i) sold to a broker, dealer or underwriter in a public distribution or public securities transaction or (ii) sold in a transaction exempt from the registration and prospectus delivery requirements of the Securities Act of 1933, as amended (the "Act") pursuant to Rule 144 thereunder (the "Registerable Securities") shall have the following registration rights:

 

	
      8.1.

	
DEMAND RIGHTS. Each Holder of Registrable Securities (together with all other shareholders joining in such demand as provided below, the "Initial Requesting Holders"), may at any time make a written request to Borrower that Borrower file a registration statement or similar document under the Act with respect to all or any part of such Holder's or Holders' Registrable Securities (a "Demand Registration"). Within 10 business days after receipt of such request, Borrower shall give written notice of such Demand Registration request (including therein the number of Registrable Securities included in such demand and the parties making such demand) to all other Holders of Registrable Securities (the "Demand Notice"). Such other Holders will have the right to join in making such a demand by giving written notice to Borrower of such Holder's election to participate in such Demand Registration and the number of such Holder's Registrable Securities to be included therein. Borrower shall cause such registration statement or similar document to be filed with the Securities and Exchange Commission ("SEC") and shall include in such registration statement the Registrable Securities which Borrower has been requested to register by the Initial Requesting Holders and to cause all such Registrable Securities to be registered under the Act within 90 days of receipt of the Initial Requesting Holders' request.

 

  

4

  

 

	
       8.2. 

	
PIGGYBACK RIGHTS. Each time Borrower shall determine to file a registration statement under the Act (other than on Form S-4 or Form S-8 or another form not available for registering the Registerable Securities for sale to the public) in connection with the proposed offer and sale of any of its equity securities either for its own account or on behalf of any other security holder, Borrower shall give prompt written notice of its determination to all Holders (a "Piggyback Notice"). In the event a Holder or Holders, within twenty (20) days after the receipt of the Piggyback Notice, notify Borrower of their desire that such Registerable Securities be included in the registration statement, Borrower shall include in the registration statement all such Registerable Securities, all to the extent requisite to permit the sale or other disposition by the prospective Holder(s) of the Registerable Securities to be so registered; provided, however, that Borrower may at any time, in its sole discretion, withdraw or cease proceeding with any such registration if it shall at the same time withdraw or cease proceeding with the registration of all other securities originally proposed to be registered.

 

	
       8.3.

	
EXPENSES. With respect to each Demand Registration or Piggyback Registration, Borrower shall pay, and shall reimburse each Holder for paying, any expenses incurred in connection with such Demand Registration or Piggyback Registration, including, without limitation, all registration, qualification, printing and accounting fees and all fees and disbursements of counsel for Borrower and the reasonable fees and disbursements of not more than one counsel for all participating Holders and all underwriting discounts and commissions applicable to the Registrable Securities included in such registration statement.

 

	
       8.4.

	
RESTRICTIONS ON ISSUANCE. Borrower agrees not to issue any Common Stock or any securities convertible into or exchangeable or exercisable for Common Stock for the period commencing 15 days prior to the closing of the offering of securities included in any Demand Registration or Piggyback Registration and ending on the 90th day following such closing.

 

	
       8.5. 

	
UNDERWRITTEN PUBLIC OFFERING. Any Demand Registration or Piggyback Registration must be for an underwritten public offering to be managed by an underwriter or underwriters of recognized national standing selected by Borrower, provided, that such underwriter or underwriters shall be reasonably satisfactory to a majority of the participating Holders; and further provided, that the right of any Holder to registration pursuant to this Section 8 shall be conditioned upon such Holder's participation in such underwriting and the inclusion of such Holder's Registerable Securities in the underwriting.

 

	
9.

	
EVENTS OF DEFAULT OF BORROWER.

 

	
       9.1.

	
The occurrence of any of the following events will constitute an 'EVENT OF DEFAULT':

 

	
             9.1.1.

	
Borrower fails to pay any principal or any accrued interest or is in default under any Note or any Loan when the same is due and payable, or fails to pay any amount of principal or accrued interest due under any Note or any Loan on the Maturity Date therefor, and such failure to pay is not cured by Borrower within five (5) business days after Lender gives written notice of such failure to pay to Borrower;

 

	

             9.1.2.

	

any material representation or warranty made by or on behalf of Borrower in this Agreement or in any other Loan Document, or any statement or certificate that Borrower may at any time give in writing pursuant thereto or in connection therewith is false, misleading or incomplete in any material respect when made (or deemed to have been made);

 

	

             9.1.3.

	

Borrower fails or neglects to perform, keep or observe any covenant set forth in this Agreement or in any of the other Loan Documents, and the same has not been cured within ten (10) calendar days after Borrower becomes aware thereof;

 

  

5

  

 

	

             9.1.4.

	

Borrower or any of its subsidiaries becomes insolvent, or admits in writing its inability to pay its debts as they mature, or makes an assignment for the benefit of creditors, or applies for or consents to the appointment of a receiver, liquidator, custodian or trustee for it or for a substantial part of its property or business, or such a receiver, liquidator, custodian or trustee otherwise is appointed and is not discharged within thirty (30) calendar days after such appointment; or

 

	

              9.1.5.

	

bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings for relief under any bankruptcy law or any law for the relief of debtors are instituted by or against Borrower, or any order, judgment or decree is entered against Borrower decreeing its dissolution or liquidation; provided, however, with respect to an involuntary petition in bankruptcy, such petition is not have been dismissed within thirty (30) days after the filing of such petition.

 

	
             9.1.6.

	
any termination of the Borrower's financing or staffing agreements with TekMark.

 

	

       9.2.

	

REMEDIES OF LENDER. Upon and after the occurrence of any Event of Default, Lender will have no further obligation to make any Loan or Loans to Borrower, and in addition, at Lender's sole option by written notice to Borrower, Lender take any one or more of the following actions:

 

	
             9.2.1.

	
Lender may immediately terminate the Commitment and all liabilities and obligations of Lender under this Agreement, without affecting Lender's rights under this Agreement and the Note(s);

 

 

	

             9.2.2.

	

Lender may declare the entire principal amount of and all accrued interest on the Note(s) and all Loans to immediately be due and payable in full, whereupon such amounts will immediately become due and payable in full, provided that in the case of an Event of Default listed in paragraph (d) or (e) of Section 8.1, the principal and interest will immediately become due and payable without the requirement of any notice or other action by Lender; And

 

	
             9.2.3.

	
Exercise all rights and remedies granted under the Loan Documents.

 

	

10.

	

OPTION; CONVERSION. From the date hereof until a date that is two years from the date hereof (the "Option Period"), Lender or its assignees shall have the option, which option shall survive the payoff of the Loan, to purchase 10% of the Genesis Group Holdings, Inc.'s fully-diluted common equity (including giving effect to all dilution from all equity and equity convertible stock, notes, warrants or other securities on an as-converted basis) as calculated at the time of exercise of the option (the "Common Stock") for a total payment of $450,000 (the "Option"). The Option may be exercised by written notice from Lender and either (i) payment via check or wire transfer or (ii) by a conversion of Borrower's outstanding obligations hereunder and under the Note pursuant to the following terms and conditions.

 

	
       10.1.

	
Conversion Right. Lender shall have the right from time to time, and at any time during the Option Period to convert up to $450,000 of the Note for the Common Stock (each, a "Conversion").

 

	
       10.2.

	
Method of Conversion.

 

	

             10.2.1.

	

Notice of Conversion. Lender shall submit to Borrower a Notice of Conversion (by facsimile, e­mail or other reasonable means of communication dispatched on the date of the conversion prior to 6:00 p.m., New York, New York time).

 

	

             10.2.2.

	

Surrender of Note Upon Conversion. Notwithstanding anything to the contrary set forth herein, upon conversion of the Note in accordance with the terms hereof, Lender shall not be required to physically surrender the Note to Borrower unless the entire unpaid principal amount of the Note is so converted. Lender and Borrower shall maintain records showing the amount so converted and the dates of such conversions or shall use such other method, reasonably satisfactory to Lender and Borrower, so as not to require physical surrender of the Note upon each such Conversion. In the event of any dispute or discrepancy, the records of Lender shall be controlling and determinative inthe absence of manifest error. Notwithstanding the foregoing, if any portion of the Note is converted as aforesaid, Lender may not transfer the Note unless Lender first physically surrenders the Note to Borrower, whereupon Borrower will forthwith issue and deliver upon the order of Lender a new note of like tenor, registered as Lender may request, representing in the aggregate the remaining unpaid principal amount of the Note. Lender and any assignee, by acceptance of the Note, shall acknowledge and agree that, by reason of the provisions of this paragraph, following conversion of a portion of the Note, the unpaid and unconverted principal amount of the Note represented by the Note may be less than the amount stated on the face hereof.

 

  

6

  

 

	
             10.2.3.

	
Payment of Taxes. Borrower shall not be required to pay any tax which may be payable in respect of any transfer involved in the issue and delivery of shares of Common Stock or other securities or property on conversion of the Note in a name other than that of Lender, and Borrower shall not be required to issue or deliver any such shares or other securities or property unless and until the person or persons (other than Lender or the custodian in whose street name such shares are to be held for Lender's account) requesting the issuance thereof shall have paid to the Borrower the amount of any such tax or shall have established to the satisfaction of the Borrower that such tax has been paid.

 

	

             10.2.4.

	

Delivery of Common Stock Upon Conversion. Upon receipt by the Borrower from Lender of a facsimile transmission or e-mail (or other reasonable means of communication) of a Notice of Conversion meeting the requirements for conversion as provided in this Section 9, the Borrower shall issue and deliver or cause to be issued and delivered to or upon the order of Lender certificates for the Common Stock issuable upon such conversion within three (3) business days after such receipt (but in any event the fifth (5th) business day being hereinafter referred to as the "Deadline") (and, solely in the case of conversion of the entire unpaid principal amount hereof, surrender of the Note).

 

	

             10.2.5.

	

Obligation of Borrower to Deliver Common Stock. Upon receipt by the Borrower of a Notice of Conversion, Lender shall be deemed to be the holder of record of the Common Stock issuable upon such Conversion, the outstanding principal amount and the amount of accrued and unpaid interest on the Note shall be reduced to reflect such conversion, and, unless the Borrower defaults on its obligations under this Section 9, all rights with respect to the portion of the Note being so converted shall forthwith terminate except the right to receive the Common Stock or other securities, cash or other assets, as herein provided, on such Conversion. If Lender shall have given a Notice of Conversion as provided herein, the Borrower's obligation to issue and deliver the certificates for Common Stock shall be absolute and unconditional, irrespective of the absence of any action by Lender to enforce the same, any waiver or consent with respect to any provision thereof, the recovery of any judgment against any person or any action to enforce the same, any failure or delay in the enforcement of any other obligation of the Borrower to the holder of record, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by Lender of any obligation to the Borrower, and irrespective of any other circumstance which might otherwise limit such obligation of the Borrower to Lender in connection with such conversion. The date specified as the Conversion Date in the Notice of Conversion shall be the date of the Conversion so long as the Notice of Conversion is received by the Borrower on or before 6:00 p.m., New York, New York time, on such date.

 

	

             10.2.6.

	

Delivery of Common Stock by Electronic Transfer. In lieu of delivering physical certificates representing the Common Stock issuable upon conversion, provided the Borrower is participating in the Depository Trust Company ("DTC") Fast Automated Securities Transfer program, upon request of Lender and its compliance with the provisions contained in Section 9, the Borrower shall use its best efforts to cause its transfer agent to electronically transmit the Common Stock issuable upon conversion to Lender by crediting the account of Lender's prime broker with DTC through its Deposit Withdrawal Agent Commission system.

 

  

7

  

 

	

       10.3.

	

Concerning the Shares. The shares of Common Stock issuable exercise of the Option may not be sold or transferred unless (i) such shares are sold pursuant to an effective registration statement under the Act or (ii) the Borrower or its transfer agent shall have been furnished with an opinion of counsel (which opinion shall be in form, substance and scope customary for opinions of counsel in comparable transactions) to the effect that the shares to be sold or transferred may be sold or transferred pursuant to an exemption from such registration or (iii) such shares are sold or transferred pursuant to Rule 144 under the Act (or a successor rule) ("Rule 144") or (iv) such shares are transferred to an "affiliate" (as defined in Rule 144) of the Borrower who agrees to sell or otherwise transfer the shares only in accordance with this Section 1.5 and who is an Accredited Investor (as defined in the Credit Agreement). Except as otherwise provided in the Credit Agreement (and subject to the removal provisions set forth below), until such time as the shares of Common Stock issuable upon conversion of the Note have been registered under the Act or otherwise may be sold pursuant to Rule 144 without any restriction as to the number of securities as of a particular date that can then be immediately sold, each certificate for shares of Common Stock issuable upon conversion of the Note that has not been so included in an effective registration statement or that has not been sold pursuant to an effective registration statement or an exemption that permits removal of the legend, shall bear a legend substantially in the following form, as appropriate:

 

"NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OF1-ERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES."

 

The legend set forth above shall be removed and the Borrower shall issue to Lender a new certificate therefore free of any transfer legend if (1) the Borrower or its transfer agent shall have received an opinion of counsel, in form, substance and scope customary for opinions of counsel in comparable transactions, to the effect that a public sale or transfer of such Common Stock may be made without registration under the Act, which opinion shall be accepted by the Company so that the sale or transfer is effected or (ii) in the case of the Common Stock issuable upon conversion of the Note, such security is registered for sale by Lender under an effective registration statement filed under the Act or otherwise may be sold pursuant to Rule 144 without any restriction as to the number of securities as of a particular date that can then be immediately sold. In the event that the Company does not accept the opinion of counsel provided by the Buyer with respect to the transfer of Securities pursuant to an exemption from registration, such as Rule 144 or Regulation S, at the Deadline, it will be considered an Event of Default pursuant to Section 3.2 of the Note.

 

  

8

  

 

	

11.

	

ANTIDILUTION. In the event that Genesis Group Holdings, Inc. issues any shares after an exercise of the Option, it shall have the obligation to issue Lender or its assignees that number of shares so as to maintain Lender's 10% ownership therein on a fully-diluted basis. This obligation shall survive indefinitely.

 

	

12.

	

ADDITIONAL FUNDING. For a period of 18 months after the Closing, Lender shall have the option, but not the obligation, to provide Borrower up to an additional $5 million of senior secured debt (in $500,000 increments) on the same terms and conditions pursuant to which Lender has loaned Borrower up to $1 million as set forth herein. For each $500,000 expansion of the revolving credit facility approved by Lenders, Lenders shall be entitled to purchase for $45,000 warrants equal to 2.5% (calculated at each closing of such expansion of the revolving credit facility) of the fully diluted outstanding shares of the Borrower (fully diluted includes giving effect to all dilution from all equity and equity convertible stock, notes, warrants or other securities on an as converted basis). The warrant exercise price shall be that price per share which is 50% of the average trading price for the Company's common stock for the 10 trading days which preceded the expansion of the credit facility, provided that in the event the trading volume for the ten trading days preceding the expansion of the credit facility is less than an average of five hundred thousand dollars in shares sold per day (calculated without double counting shares bought and sold), the warrant exercise price shall be one penny.

 

	

13.

	

MISCELLANEOUS.

 

	

       13.1.

	

SURVIVAL. The representations and warranties of Borrower contained in or made pursuant to this Agreement and all the other Loan Documents will survive the execution and delivery of the Loan Documents.

 

	
       13.2.

	
ENTIRE AGREEMENT. This Agreement, the Note, and the exhibits and schedules attached hereto constitute the entire agreement and understanding among the parties with respect to the subject matter thereof and supersede any prior understandings or agreements of the parties with respect to such subject matter.

 

	

       13.3.

	

SUCCESSORS AND ASSIGNS. The terms and conditions of this Agreement will inure to the benefit of and be binding upon the respective successors and assigns of the parties; provided, however, that neither party may assign or delegate any of its rights or obligations hereunder or under any other Loan Document or any interest herein or therein without the other party's prior written consent.

 

	

       13.4.

	

NO THIRD PARTY BENEFICIARIES; CONSTRUCTION. Nothing in this Agreement, express or implied, is intended to confer upon any third party any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement. This Agreement and its exhibits are the result of negotiations between the parties and has been reviewed by each party hereto; accordingly, this Agreement will be deemed to be the product of the parties hereto, and no ambiguity will be construed in favor of or against any party.

 

	

       13.5.

	

GOVERNING LAW. This Agreement will be governed by and construed in accordance with the internal laws of the State of New Jersey as applied to agreements entered into solely between residents of, and to be performed entirely in, such State, without reference to that body of law relating to conflicts of law or choice of law.

 

	

       13.6.

	

COUNTERPARTS. This Agreement may be executed in two or more counterparts, each of which will be deemed in original, but all of which together will constitute one and the same instrument.

 

	

       13.7.

	

NOTICES. Any notice required or permitted under this Agreement will be given in writing and will be deemed effectively given upon personal delivery; upon confirmed fax transmission; or three (3) days following deposit with the United States Post Office, by certified or registered mail, postage prepaid, addressed:

 

  

9

  

 

To Borrower: 

Digital Comm Inc.

2500 N. Military Tr. Suite 275 

Boca Raton, Florida 33431 

Telephone: (561) 988-1988 

Fax: (561) 988-2370

Attention: Lawrence Sands

 

To Lender:

MMDGenesis LLC

1100 First Ave

Spring Lake, NJ 07762 

Telephone: (732) 682-9770 

Fax: (732) 359-6077

Attention: Mark Munro

 

or at such other address as such party may specify by written notice given in accordance with this Section.

 

	
13.8.   

	
MODIFICATION; WAIVER. This Agreement may be modified or amended only by a writing signed by both parties hereto. No waiver or consent with respect to this Agreement will be binding unless it is set forth in writing and signed by the party against whom such waiver is asserted. No course of dealing between Borrower and Lender will operate as a waiver or modification of any party's rights under this Agreement or any other Loan Document. No delay or failure on the part of either party in exercising any right or remedy under this Agreement or any other Loan Document will operate as a waiver of such right or any other right. A waiver given on one occasion will not be construed as a bar to, or as a waiver of, any right or remedy on any future occasion.

 

	

13.9.   

	

RIGHTS AND REMEDIES CUMULATIVE. The rights and remedies of Lender herein provided will be cumulative and not exclusive of any other rights or remedies provided by law or otherwise.

 

	
13.10.   

	
SEVERABILITY. Any invalidity, illegality or unenforceability of any provision of this Agreement in any jurisdiction will not invalidate or render illegal or unenforceable the remaining provisions hereof in such jurisdiction and will not invalidate or render illegal or unenforceable such provision in any other jurisdiction.

 

	
13.11.   

	
ATTORNEYS 'FEES. If any party hereto commences or maintains any action at law or in equity (including counterclaims or cross-complaints) against the other party hereto by reason of the breach or claimed breach of any term or provision of this Agreement or any other Loan Document, then the prevailing party in said action will be entitled to recover its reasonable attorney's fees and court costs incurred therein.

 

IN WITNESS WHEREOF, the parties have duly executed and delivered this Agreement

 

	
BORROWER: 

	  	
LENDER:

	 
	
GENESIS GROUP HOLDINGS, INC. 

	  	
MMDGenesis LLC

	 
	  	  	  	  	  	 
	
By:   

	  	  	
By:

	  	 
	
Name: 

	  	  	
Name:

	  	 
	
Title: 

	  	  	
Title:

	  	 

 

 

10

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