Document:

Exhibit 10.3

 

EXECUTION COPY

 

SECURITY AGREEMENT

 

January 19, 2006

 

CGI
Holding Corporation

5
Revere Drive

Suite 510

Northbrook,
Illinois 60062

(“Borrower”,
and collectively with the Guarantors party hereto, “Debtor”)

 

Wachovia
Bank, National Association

301
South Tryon Street

Charlotte,
North Carolina 28202

(Hereinafter
referred to as “Bank”)

 

For
value received and to secure payment and performance of any and all obligations
of (i) Guarantors under the Guaranty Agreement of even date herewith and (ii) Borrower
to Bank however created, arising or evidenced, whether direct or indirect,
absolute or contingent, now existing or hereafter arising or acquired,
including swap agreements (as defined in 11 U.S.C. § 101, as in effect
from time to time), future advances, and all costs and expenses incurred by
Bank to obtain, preserve, perfect and enforce the security interest granted
herein and to maintain, preserve and collect the property subject to the
security interest (collectively, “Obligations”), Debtor hereby grants to Bank a
continuing security interest in and first
priority lien upon, and
for security purposes assigns and transfers to Bank until all of the
Obligations are repaid in full and Bank’s obligation to make Advances has
expired, the following described property, whether now owned or hereafter
acquired, and any additions, replacements, accessions, or substitutions thereof
and all cash and non-cash proceeds and products thereof (collectively, “Collateral”):

 

All of Debtor’s rights, title and interest in and to the
following described property, now owned or hereafter acquired, any additions,
accessions, replacements or substitutions thereof and thereto,
and all cash and non-cash proceeds, profits and products thereof, wherever
located and all books and records in whatever form maintained: all of
the personal property and fixtures of Debtor of every kind and nature
including, without limitation, all accounts, chattel paper, instruments,
general intangibles, equipment, accessions, fixtures, inventory, documents,
letter-of-credit rights, deposits, goods, money and securities.

 

Debtor
hereby represents and agrees that:

 

OWNERSHIP.  Debtor owns the Collateral.  The Collateral is free and clear of all
liens, security interests, and claims except those previously reported in
writing to and approved by Bank, and Debtor will keep the Collateral free and
clear from all liens, security interests and claims, other than as permitted
under the Loan Documents and any liens created by the Loan Documents.  All securities and security entitlements
pledged as Collateral are fully paid and non-assessable and if certificated,
have been delivered to Bank with unrestricted endorsements.  All income, dividends, earnings and profits
with respect to the Collateral shall be reported for state and federal income
tax purposes as attributable to the Debtor and not Bank, and Bank or

 

 

any
other person authorized to report income distributions, is authorized to issue
IRS Forms 1099 indicating Debtor as the recipient of such income, earnings and
profits.

 

NAME AND OFFICES; JURISDICTION OF ORGANIZATION.  The name and address of Debtor, as set
forth on Schedule 1, are
Debtor’s exact legal name and the address of its chief executive office.  There has been no change in the name of
Debtor, or the name under which Debtor conducts business, within the five years
preceding the date hereof except as previously reported in writing to
Bank.  Debtor has not moved its chief
executive office within the five years preceding the date hereof except as
previously reported in writing to Bank. 
Debtor has not changed the jurisdiction of its organization within the
five years preceding the date hereof except as previously reported in writing
to Bank.

 

TITLE/TAXES.  Debtor has good and marketable title to
Collateral and will warrant and defend same against all claims.  Debtor will not transfer, sell, or lease
Collateral (except as permitted herein). 
Debtor agrees to pay promptly all taxes and assessments upon or for the
use of Collateral and on this Security Agreement.  At its option, Bank may discharge taxes,
liens, security interests or other encumbrances at any time levied or placed on
Collateral.  Debtor agrees to reimburse
Bank, on demand, for any such payment made by Bank.  Any amounts so paid shall be added to the
Obligations.

 

WAIVERS.  Debtor agrees not to assert against Bank as a
defense (legal or equitable), as a set-off, as a counterclaim, or otherwise,
any claims Debtor may have against any seller or lessor that provided personal
property or services relating to any part of the Collateral or against any
other party liable to Bank for all or any part of the Obligations.  Debtor waives all exemptions and homestead
rights with regard to the Collateral. 
Debtor waives any and all rights to any bond or security which might be
required by applicable law prior to the exercise of any of Bank’s remedies
against any Collateral.  All rights of
Bank and security interests hereunder, and all obligations of Debtor hereunder,
shall be absolute and unconditional, not discharged or impaired irrespective of
(and regardless of whether Debtor receives any notice of):  (i) any lack of validity or
enforceability of any Loan Document; (ii) any change in the time, manner
or place of payment or performance, or in any term, of all or any of the
Obligations or the Loan Documents or any other amendment or waiver of or any
consent to any departure from any Loan Document; (iii) any exchange,
insufficiency, unenforceability, enforcement, release, impairment or non-perfection
of any collateral, or (iv) any amendment or waiver of or consent to
departure from any Loan Document or other agreement.  To the extent permitted by law, Debtor hereby
waives any rights under any valuation, stay, appraisement, extension or redemption
laws now existing or which may hereafter exist and which, but for this
provision, might be applicable to any sale or disposition of the Collateral by
Bank; and any other circumstance which might otherwise constitute a defense
available to, or a discharge of any party with respect to the Obligations.

 

NOTIFICATIONS; LOCATION OF COLLATERAL. 
Debtor will notify Bank in writing at least 30 days prior to any change
in:  (i) Debtor’s chief place of
business and/or residence; (ii) Debtor’s name or identity; (iii) Debtor’s
corporate/organizational structure; provided that the prior written notice
requirement set forth above shall not be applicable with respect to
acquisitions constituting Permitted Acquisitions (as defined in the Loan
Agreement) or (iv) the

 

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jurisdiction
in which Debtor is organized.  In
addition, Debtor shall promptly notify Bank of any claims or alleged claims of
any other person or entity to the Collateral or the institution of any
litigation, arbitration, governmental investigation or administrative
proceedings against or affecting the Collateral.  Debtor will keep Collateral at the
location(s) specified on Schedule 1 hereto under such Debtor’s
name.  Debtor will bear the cost of
preparing and filing any documents necessary to protect Bank’s liens.

 

COLLATERAL CONDITION AND LAWFUL USE. 
Debtor represents that the Collateral is in good repair and condition
and that Debtor shall use reasonable care to prevent Collateral from being
damaged or depreciating, normal wear and tear excepted.  Debtor shall immediately notify Bank of any
material loss or damage to Collateral. 
Debtor shall not permit any item of Collateral to become an accession to
other property unless such property is also Collateral hereunder.

 

FINANCING STATEMENTS, CERTIFICATES OF TITLE, POWER OF ATTORNEY.  No
financing statement (other than any filed or approved by Bank) covering any
Collateral is on file in any public filing office.  Debtor authorizes the filing of one or more financing
statements covering the Collateral in form satisfactory to Bank, and without
Debtor’s signature where authorized by law, agrees to deliver certificates of
title on which Bank’s lien has been indicated covering any Collateral subject
to a certificate of title statute, and will pay all costs and expenses of
filing or applying for the same or of filing this Security Agreement in all
public filing offices, where filing is deemed by Bank to be desirable.  Debtor hereby constitutes and appoints Bank
the true and lawful attorney of Debtor with full power of substitution to take
any and all appropriate action and to execute any and all documents,
instruments or applications that may be necessary or desirable to accomplish
the purpose and carry out the terms of this Security Agreement.  The foregoing power of attorney is coupled
with an interest and shall be irrevocable until all of the Obligations have
been paid in full.  Neither Bank nor
anyone acting on its behalf shall be liable for acts, omissions, errors in
judgment, or mistakes in fact in such capacity as attorney-in-fact, except to the extent such liability arises from
Bank’s gross negligence or willful misconduct.  Debtor ratifies all acts of
Bank as attorney-in-fact.  Debtor agrees
to take such other actions, at Debtor’s expense, as might be requested for the
perfection, continuation and assignment, in whole or in part, of the security
interests granted herein and to assure and preserve Bank’s intended priority
position.  If certificates, passbooks, or
other documentation or evidence is/are issued or outstanding as to any of the
Collateral, Debtor will cause the security interests of Bank to be properly
protected, including perfection by notation thereon or delivery thereof to
Bank.  Upon Bank’s request, Debtor will,
at its own expense:  (i) do all
things determined by Bank to be desirable to register such Collateral or
qualify for an exemption from registration, under the provisions of all
applicable securities laws, and (ii) otherwise do or cause to be done all
other acts and things as may be necessary to make the sale of the Collateral
valid, binding and in compliance with applicable law.

 

STOCK, DIVIDENDS.  If, with respect to any
securities pledged hereunder, a stock dividend is declared, any stock split
made or right to subscribe is issued, all the certificates for the shares
representing such stock dividend, stock split or right to subscribe will be
immediately delivered, duly endorsed, to the Bank as additional Collateral, and
any cash or non-cash proceeds and products thereof, including investment
property and security entitlements will be immediately delivered to Bank; provided
that, so long as no Default has occurred and is continuing under any

 

3

 

Loan
Document, any subsidiary of Borrower or Guarantor may make dividends or
distributions to Borrower or such Guarantor. 
Debtor acknowledges that such grant includes all investment property and
security entitlements, now existing or hereafter arising, relating to such
securities.  In addition, Debtor agrees
to execute such notices and instructions to securities intermediaries as Bank
may reasonably request.

 

NO TRADING OF COLLATERAL.  Until a Default occurs, Debtor
shall have the right to vote the securities pledged hereunder and to collect and receive all cash
dividends and interest distributed periodically in the ordinary course by the
obligor or issuer of such Collateral or part thereof; provided, however, Debtor
may not sell, transfer, exchange for other property or cash (“Trade”) or
otherwise exercise rights with respect to such Collateral or receive any
distributions or proceeds from Trades of such Collateral without the prior
written consent of Bank, and any such distributions or proceeds received by
Debtor shall be held in trust for, and immediately delivered to, Bank.  Any consent pursuant to this paragraph shall
be in Bank’s sole discretion.

 

CONTROL.  Debtor will cooperate with Bank
in obtaining control with respect to Collateral consisting of electronic
chattel paper.

 

CHATTEL PAPER, ACCOUNTS, GENERAL INTANGIBLES. 
Debtor warrants that Collateral consisting of chattel paper, accounts,
or general intangibles is (i) genuine and enforceable in accordance with
its terms; (ii) not subject to any defense, set-off, claim or counterclaim
of a material nature against Debtor except as to which Debtor has notified Bank
in writing; and (iii) not subject to any other circumstances that would
impair the validity, enforceability, value, or amount of such Collateral except
as to which Debtor has notified Bank in writing.  Debtor shall not amend, modify or supplement
any lease, contract or agreement contained in Collateral or waive any provision
therein, without prior written consent of Bank.  Debtor will not create any
tangible chattel paper without placing a legend on the chattel paper acceptable
to Bank indicating that Bank has a security interest in the chattel paper.  Following the date hereof, debtor will not
create any electronic chattel paper without taking all steps deemed necessary
by Bank to confer control of the electronic chattel paper upon Bank in
accordance with the UCC.

 

ACCOUNT INFORMATION.  From time to time, at Bank’s
request, Debtor shall provide Bank with schedules describing all accounts,
including customers’ addresses, created or acquired by Debtor.  Together with each schedule, Debtor shall, if
requested by Bank, furnish Bank with copies of Debtor’s sales journals,
invoices, customer purchase orders or the equivalent, and original shipping or
delivery receipts for all goods sold.

 

ACCOUNT DEBTORS.  If a Default that is not cured within the
time period set forth in the revolving credit promissory note in the
original amount of $15,000,000.00 dated as of the date hereof (the “Revolving
Note”) or the term promissory note in the original amount of $2,500,000.00
dated as of the date hereof (the “Term Note” and, collectively with the
Revolving Note, the “Notes”) should
occur, Bank shall have the right to notify the account debtors obligated on any
or all of the Collateral to make payment thereof directly to Bank and Bank may
take control of all proceeds of any such Collateral, which rights Bank may
exercise at any time.  The cost of such
collection and enforcement, including attorneys’ fees and expenses, shall be

 

4

 

borne
solely by Debtor whether the same is incurred by Bank or Debtor.  If a Default should occur or upon demand of
Bank, Debtor will, upon receipt of all checks, drafts, cash and other
remittances in payment on Collateral, deposit the same in a special bank
account maintained with Bank, over which Bank also has the power of withdrawal.

 

If
a Default should occur, no discount, credit, or allowance shall be granted by
Debtor to any account debtor and no return of merchandise shall be accepted by
Debtor without Bank’s consent.  Bank may,
after Default, settle or adjust disputes and claims directly with account
debtors for amounts and upon terms that Bank considers advisable, and in such
cases Bank will credit the Obligations with the net amounts received by Bank,
after deducting all of the expenses incurred by Bank.  Debtor agrees to indemnify and defend Bank
and hold it harmless with respect to any claim or proceeding arising out of any
matter related to collection of Collateral except to the extent any such claim
or proceeding results solely from the gross negligence or willful misconduct,
as determined by a final and nonappealable judgment by a court of competent
jurisdiction, of Bank.

 

GOVERNMENT CONTRACTS.  If any Collateral covered
hereby arises from obligations due to Debtor from any governmental unit or
organization, Debtor shall immediately notify Bank in writing and execute all
documents and take all actions deemed necessary by Bank to ensure recognition
by such governmental unit or organization of the rights of Bank in the
Collateral.

 

INVENTORY.  So long as no Default has occurred, Debtor
shall have the right in the regular course of business, to process and sell
Debtor’s inventory.  If a Default should
occur or upon demand of Bank, Debtor will, upon receipt of all checks, drafts,
cash and other remittances, in payment of Collateral sold, deposit the same in
a special bank account maintained with Bank, over which Bank also has the power
of withdrawal.  Debtor agrees to notify
Bank immediately in the event that any inventory purchased by or delivered to
Debtor is evidenced by a bill of lading, dock warrant, dock receipt, warehouse
receipt or other document of title and to deliver such document to Bank upon
request.

 

INSTRUMENTS, CHATTEL PAPER, DOCUMENTS.  Any
Collateral that is, or is evidenced
by, instruments, chattel paper or negotiable documents will be properly
delivered to and the originals of any such Collateral in tangible form
deposited with and held by Bank, unless Bank shall hereafter otherwise direct
or consent in writing.  Bank may,  upon a Default under the Loan Documents that
is not cured within the time period set forth in the Notes and without notice,
before or after maturity of the Obligations, exercise any or all rights of
collection, conversion, or exchange and other similar rights, privileges and
options pertaining to such Collateral, but shall have no duty to do so.

 

COLLATERAL DUTIES.  Bank shall have no custodial or
ministerial duties to perform with respect to Collateral pledged except as set
forth herein; and by way of explanation and not by way of limitation, Bank
shall incur no liability for any of the following:  (i) loss or depreciation of Collateral
(unless caused by its willful misconduct or gross negligence), (ii) failure
to present any paper for payment or protest, to protest or give notice of
nonpayment, or any other notice with respect to any paper or Collateral, (iii) failure
to ascertain, notify Debtor of, or take any action in connection with any
conversion, call, redemption, retirement or any other event relating

 

5

 

to
any of the Collateral, or failure to notify any party hereto that Collateral
should be presented or surrendered for any such reason.  Debtor acknowledges that Bank is not an
investment advisor or insurer with respect to the Collateral; and Bank has no
duty to advise Debtor of any actual or anticipated changes in the value of the
Collateral.

 

TRANSFER OF COLLATERAL.  Bank may assign its rights in
Collateral or any part thereof to any assignee who shall thereupon become
vested with all the powers and rights herein given to Bank with respect to the
property so transferred and delivered, and Bank shall thereafter be forever relieved
and fully discharged from any liability with respect to such property so
transferred, but with respect to any property not so transferred, Bank shall
retain all rights and powers hereby given.

 

REGULATION U.  None
of the proceeds of the credit secured hereby shall be used directly or
indirectly for the purpose of purchasing or carrying any margin stock in
violation of any of the provisions of Regulation U of the Board of Governors of
the Federal Reserve System (“Regulation U”), or for the purpose of reducing or
retiring any indebtedness which was originally incurred to purchase or carry
margin stock or for any other purchase which might render the Loan a “Purpose
Credit” within the meaning of Regulation U.

 

CROSS COLLATERALIZATION LIMITATION.  As to
any other existing or future consumer purpose loan made by Bank to Debtor,
within the meaning of the Federal Consumer Credit Protection Act, Bank
expressly waives any security interest granted herein in Collateral that Debtor
uses as a principal dwelling and household goods.

 

ATTORNEYS’ FEES AND OTHER COSTS OF COLLECTION. 
Debtor shall pay all of Bank’s reasonable expenses incurred in enforcing
this Security Agreement and in preserving and liquidating Collateral, including
but not limited to, reasonable arbitration, paralegals’, attorneys’ and experts’
fees and expenses, whether incurred with or without the commencement of a suit,
trial, arbitration, or administrative proceeding, or in any appellate or
bankruptcy proceeding.

 

DEFAULT.  If any of the following occurs, a default (“Default”)
under this Security Agreement shall exist: 
Loan Document Default.  A default under any Loan Document.  Breach.  Any
breach of any agreement contained or referred to in this Security Agreement or
other Loan Document.  False Warranty.  A
warranty or representation made in the Loan Documents or furnished to Bank in
connection with the loans evidenced by the Notes is materially false when made.
Collateral Loss or Destruction.  Any loss, theft, substantial damage, or
destruction of Collateral not fully covered by insurance, or as to which
insurance proceeds are not remitted to Bank within 30 days of the loss.  Collateral Sale, Lease or
Encumbrance.  Any sale, lease,
or encumbrance of any Collateral not specifically permitted herein without
prior written consent of Bank.  Levy, Seizure or Attachment. 
The making of any levy, seizure, or attachment on or of Collateral which
is not removed within 10 days.  Unauthorized Collection of Collateral.  Any attempt to collect, cash in or otherwise
recover deposits that are Collateral.  Third Party Breach. 
Any default or breach by a Third Party of any provision contained in any
agreement executed in connection with any of the Collateral.  Unauthorized Termination.  Any attempt to terminate, revoke, rescind,
modify, or violate the terms of this Security Agreement or any Control
Agreement without the prior written consent of Bank.

 

6

 

REMEDIES ON DEFAULT (INCLUDING POWER OF SALE).  If a
Default occurs Bank shall have all the rights and remedies of a secured party
under the Uniform Commercial Code. 
Without limitation thereto, Bank shall have the following rights and
remedies:  (i) to take immediate
possession of Collateral, without notice or resort to legal process, and for
such purpose, to enter upon any premises on which Collateral or any part
thereof may be situated and to remove the same therefrom, or, at its option, to
render Collateral unusable or dispose of said Collateral on Debtor’s premises; (ii) to
exercise its right of set-off or bank lien as to any monies of Debtor deposited
in accounts of any nature maintained by Debtor with Bank or affiliates of Bank,
without advance notice, regardless of whether such accounts are general or
special; and (iii) to dispose of Collateral, as a unit or in parcels,
separately or with any real property interests also securing the Obligations,
in any county or place to be selected by Bank, at either private or public sale
(at which public sale Bank may be the purchaser) with or without having the
Collateral physically present at said sale. 
In addition to the foregoing, Bank shall be authorized to:  transfer into Bank’s name or the name of its
nominee, all or any part of the Collateral; receive all interest, dividends,
and other proceeds of the Collateral; notify any person obligated on any
Collateral of the security interest of Bank therein and require such person to
make payment directly to Bank; demand, sue for, collect or receive the
Collateral and any proceeds thereof, and/or make any settlement or compromise
as Bank deems desirable with respect to any Collateral; and exercise any
voting, conversion, registration, purchase or other rights of an owner, holder
or entitlement holder of the Collateral. 
Debtor agrees that Bank may exercise its rights under this Security
Agreement without regard for the actual or potential tax consequences to Debtor
under federal or state law and without regard to any instructions or directives
given Bank by Debtor.

 

Any
notice of sale, disposition or other action by Bank required by law and sent to
Debtor at Debtor’s address shown above, or at such other address of Debtor as
may from time to time be shown on the records of Bank, at least 10 days prior
to such action, shall constitute reasonable notice to Debtor.  Notice shall be deemed given or sent when
mailed postage prepaid to Debtor’s address as provided herein via recognized overnight courier service
or certified mail.  Bank shall be
entitled to apply the proceeds of any sale or other disposition of the
Collateral, and the payments received by Bank with respect to any of the
Collateral, to Obligations in such order and manner as Bank may determine.  Collateral that is subject to rapid declines
in value and is customarily sold in recognized markets may be disposed of by
Bank in a recognized market for such collateral without providing notice of
sale.  Debtor waives any and all
requirements that the Bank sell or dispose of all or any part of the Collateral
at any particular time, regardless of whether Debtor has requested such sale or
disposition.

 

REMEDIES ARE CUMULATIVE.  No failure on the part of Bank
to exercise, and no delay in exercising, any right, power or remedy hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise by
Bank or any right, power or remedy hereunder preclude any other or further
exercise thereof or the exercise of any right, power or remedy.  The remedies herein provided are cumulative
and are not exclusive of any remedies provided by law, in equity, or in other
Loan Documents.

 

7

 

INDEMNIFICATION. 
Debtor shall protect, indemnify and save harmless Bank from and against
all losses, liabilities, obligations, claims, damages, penalties, causes of
action, costs and expenses (including, without limitation, reasonable attorneys’
fees and expenses) (collectively, “Damages”) imposed upon, incurred by or
asserted against Bank on account of (i) the Loan Documents or any failure
of Debtor to comply with any of the terms or representations of this Agreement;
(ii) any claim of loss or material damage to the Collateral or any injury
or claim of injury to, or death of, any person or property that may be
occasioned by any cause whatsoever pertaining to the Collateral or the use,
occupancy or operation thereof, (iii) any failure of Debtor to comply with
any law, rule or regulation applicable to the Collateral or the use,
occupancy or operation of the Collateral (including, without limitation, the
failure to pay any taxes, fees or other charges), (iv) any Damages
whatsoever by reason of any alleged action, obligation or undertaking of Bank
relating in any way to or any matter contemplated by the Loan Documents, or (v) any
claim for brokerage fees or such other commissions relating to the Collateral
or any other Obligations; provided that such indemnity shall be effective only
to the extent of any Damages that may be sustained by Bank in excess of any net
proceeds received by it from any insurance of Debtor (other than
self-insurance) with respect to such Damages. 
Nothing contained herein shall require Debtor to indemnify Bank for any
Damages resulting from Bank’s gross negligence or its willful misconduct.  The indemnity provided for herein shall
survive payment of the Obligations and shall extend to the officers, directors,
employees and duly authorized agents of Bank. 
In the event Bank incurs any Damages arising out of or in any way
relating to the transaction contemplated by the Loan Documents (including any
of the matters referred to in this section), the amounts of such Damages shall
be added to the Obligations, shall bear interest, to the extent permitted by
law, at the interest rate borne by the Obligations from the date incurred until
paid and shall be payable on demand.

 

MISCELLANEOUS.  (i) Amendments and Waivers.  No waiver, amendment or modification of any
provision of this Security Agreement shall be valid unless in writing and
signed by Debtor and an officer of Bank. 
No waiver by Bank of any Default shall operate as a waiver of any other
Default or of the same Default on a future occasion.  (ii) Assignment.  All rights of Bank hereunder are freely
assignable, in whole or in part, and shall inure to the benefit of and be
enforceable by Bank, its successors, assigns and affiliates.  Debtor shall not assign its rights and
interest hereunder without the prior written consent of Bank, and any attempt
by Debtor to assign without Bank’s prior written consent is null and void.  Any assignment shall not release Debtor from
the Obligations.  This Security Agreement
shall be binding upon Debtor, and the heirs, personal representatives,
successors, and assigns of Debtor.  (iii) Applicable Law; Conflict Between Documents.  This Security Agreement shall be governed by
and construed under the law of the jurisdiction named in the address of the
Bank shown on the first page hereof (the “Jurisdiction”) without regard to
that Jurisdiction’s conflict of laws principles, except to the extent that the
UCC requires the application of the law of a different jurisdiction.  If any terms of this Security Agreement
conflict with the terms of any commitment letter or loan proposal, the terms of
this Security Agreement shall control.  (iv) Jurisdiction.  Debtor
irrevocably agrees to non-exclusive personal jurisdiction in the state
identified as the Jurisdiction above.  (v) Severability.  If any
provision of this Security Agreement shall be prohibited by 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 Security Agreement.  (vi) Notices.  Any notices to Debtor shall be sufficiently

 

8

 

given,
if in writing and mailed, hand
delivered or sent via telecopy (or other facsimile device), recognized
overnight courier service or certified mail to the address of Debtor shown above or such other address as provided
hereunder; and to Bank, if in writing and mailed or delivered to Wachovia Bank,
National Association, Mail Code VA7628, P. O. Box 13327, Roanoke, VA 24040 or
Wachovia Bank, National Association, Mail Code VA7628, 10 South Jefferson
Street, Roanoke, VA 24011 or such other address as Bank may specify in writing
from time to time.  Notices to Bank must
include the mail code.  In the event that
Debtor changes Debtor’s mailing address at any time prior to the date the
Obligations are paid in full, Debtor agrees to promptly give written notice of
said change of address by registered or certified mail, return receipt
requested, all charges prepaid.  (vii) Captions.  The
captions contained herein are inserted for convenience only and shall not
affect the meaning or interpretation of this Security Agreement or any
provision hereof.  The use of the plural
shall also mean the singular, and vice versa. 
(viii) Joint and Several
Liability.  If more than one
party has signed this Security Agreement, such parties are jointly and
severally obligated hereunder.  (ix) Binding Contract. 
Debtor by execution and Bank by acceptance of this Security Agreement,
agree that each party is bound by all terms and provisions of this Security
Agreement.  (x) Final Agreement. 
This Agreement and the other Loan Documents represent the
final agreement between the parties and may not be contradicted by evidence of
prior, contemporaneous or subsequent oral agreements of the parties.  There are no unwritten oral agreements between
the parties.

 

DEFINITIONS.  Loan Documents.  The term “Loan Documents” refers to all
documents, including this Agreement, whether now or hereafter existing,
executed in connection with or related to the Obligations, and may include,
without limitation and whether executed by Debtor or others, commitment letters
that survive closing, loan agreements, promissory notes, guaranty agreements,
deposit or other similar agreements, other security agreements, letters of
credit and applications for letters of credit, security instruments, financing statements,
mortgage instruments, any renewals or modifications, whenever any of the
foregoing are executed, but does not include swap agreements (as defined in 11
U.S.C. § 101, as in effect from time to time).  Third
Party.  The term “Third Party”
means any Broker, Collateral Agent, Securities Intermediary and/or bank which
from time to time maintains a securities account, and is acting in such
capacity, for Debtor or maintains a deposit account for Debtor with respect to
any part of the Collateral.  UCC.  “UCC”
means the Uniform Commercial Code as presently and hereafter enacted in the
Jurisdiction.  Terms defined in the UCC. 
Any term used in this Agreement and in any financing statement filed in
connection herewith which is defined in the UCC and not otherwise defined in
this Agreement or any other Loan Document has the meaning given to the term in
the UCC.

 

RELEASES.  At such time as the Obligations are
repaid in full and Bank’s obligation to make Advances has expired, the
Collateral shall be released from the liens created hereby, and this Agreement
and all obligations (other than those expressly stated to survive such
termination) of Bank and Debtor hereunder shall terminate, all without delivery
of any instrument or performance of any act by any party, and all rights to the
Collateral shall revert to Debtor.  At
the request and sole expense of Debtor following any such termination, Bank
shall deliver to Debtor any Collateral held by Bank hereunder, and execute and
deliver to Debtor such documents as Debtor shall reasonably request to evidence
such termination.

 

9

 

IN WITNESS WHEREOF, Debtor, on the day and year first written above, has caused this
Security Agreement to be executed under seal.

 

 

	
  [CORPORATE SEAL]

  	
  CGI HOLDING CORPORATION, a Nevada corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Gerard M. Jacobs

  
	
   

  	
   

  	
  Name:

  	
  Gerard M. Jacobs

  
	
   

  	
   

  	
  Title:

  	
  CEO

  
	
   

  	
   

  
	
   

  	
   

  
	
  [CORPORATE SEAL]

  	
  MARKETSMART INTERACTIVE, INC.,
  a North Carolina corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Gerard M. Jacobs

  
	
   

  	
   

  	
  Name:

  	
  Gerard M. Jacobs

  
	
   

  	
   

  	
  Title:

  	
  Director and Authorized Representative

  
	
   

  	
   

  
	
   

  	
   

  
	
  [CORPORATE SEAL]

  	
  CHERISH, INC. (F/K/A WEBCAPADES, INC.), a Florida corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Gerard M. Jacobs

  
	
   

  	
   

  	
  Name:

  	
  Gerard M. Jacobs

  
	
   

  	
   

  	
  Title:

  	
  Director and Authorized Representative

  
	
   

  	
   

  
	
   

  	
   

  
	
  [CORPORATE SEAL]

  	
  CHECKUP MARKETING, INC., a North Carolina corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Gerard M. Jacobs

  
	
   

  	
   

  	
  Name:

  	
  Gerard M. Jacobs

  
	
   

  	
   

  	
  Title:

  	
  Director and Authorized Representative

  

 

 

[Security Agreement – CGI Holding Corporation

 

 

	
  [CORPORATE SEAL]

  	
  RIGHTSTUFF, INC., a North Carolina corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Gerard M. Jacobs

  
	
   

  	
   

  	
  Name:

  	
  Gerard M. Jacobs

  
	
   

  	
   

  	
  Title:

  	
  Director and Authorized Representative

  
	
   

  	
   

  
	
   

  	
   

  
	
  [CORPORATE SEAL]

  	
  MARKETSMART ADVERTISING, INC., a North Carolina corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Gerard M. Jacobs

  
	
   

  	
   

  	
  Name:

  	
  Gerard M. Jacobs

  
	
   

  	
   

  	
  Title:

  	
  Director and Authorized Representative

  
	
   

  	
   

  
	
   

  	
   

  
	
  [CORPORATE SEAL]

  	
  OZONA ONLINE NETWORK, INC., a Florida corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Gerard M. Jacobs

  
	
   

  	
   

  	
  Name:

  	
  Gerard M. Jacobs

  
	
   

  	
   

  	
  Title:

  	
  Director and Authorized Representative

  
	
   

  	
   

  
	
   

  	
   

  
	
  [CORPORATE SEAL]

  	
  PERSONALS PLUS, INC., a Florida corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Gerard M. Jacobs

  
	
   

  	
   

  	
  Name:

  	
  Gerard M. Jacobs

  
	
   

  	
   

  	
  Title:

  	
  Director and Authorized Representative

  
	
   

  	
   

  
	
   

  	
   

  
	
  [CORPORATE SEAL]

  	
  KOWABUNGA! MARKETING, INC., a Michigan corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Gerard M. Jacobs

  
	
   

  	
   

  	
  Name:

  	
  Gerard M. Jacobs

  
	
   

  	
   

  	
  Title:

  	
  Director and Authorized Representative

  

 

 

	
  [CORPORATE SEAL]

  	
  PRIMARYADS, INC., a New Jersey corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Gerard M. Jacobs

  
	
   

  	
   

  	
  Name:

  	
  Gerard M. Jacobs

  
	
   

  	
   

  	
  Title:

  	
  Director and Authorized Representative

  
	
   

  	
   

  
	
   

  	
   

  
	
  [CORPORATE SEAL]

  	
  REAL ESTATE SCHOOL ONLINE, INC., a Florida corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Gerard M. Jacobs

  
	
   

  	
   

  	
  Name:

  	
  Gerard M. Jacobs

  
	
   

  	
   

  	
  Title:

  	
  Director and Authorized Representative

  
	
   

  	
   

  
	
   

  	
   

  
	
  [CORPORATE SEAL]

  	
  VINTACOM FLORIDA, INC., a Florida corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Gerard M. Jacobs

  
	
   

  	
   

  	
  Name:

  	
  Gerard M. Jacobs

  
	
   

  	
   

  	
  Title:

  	
  PresidentExhibit 10.4

 

EXECUTION COPY

 

PROMISSORY NOTE

 

$15,000,000.00

 

January 19, 2006

 

CGI Holding Corporation

5 Revere Drive

Suite 510

Northbrook, Illinois 60062

(Hereinafter
referred to as “Borrower”)

 

Wachovia Bank, National Association

301 South Tryon Street

Charlotte, North Carolina 28202

(Hereinafter referred
to as “Bank”)

 

Borrower promises to
pay to the order of Bank, in lawful money of the United States of America, at
its office indicated above or wherever else Bank may specify, the sum of
Fifteen Million and No/100 Dollars ($15,000,000.00) or such sum as may
be advanced and outstanding from time to time, with interest on the unpaid
principal balance at the rate and on the terms provided in this Promissory Note
(including all renewals, extensions or modifications hereof, this “Note”).

 

LOAN AGREEMENT.  This
Note is subject to the provisions of that certain Loan Agreement between Bank
and Borrower of even date herewith, as modified from time to time.

 

LINE OF
CREDIT.  Borrower may borrow, repay and
reborrow, and, upon the request of Borrower, Bank shall advance and readvance
under this Note from time to time until the maturity hereof (each an “Advance”
and together the “Advances”), so long as the total principal balance
outstanding under this Note,
plus the aggregate undrawn and
unexpired amount of the then outstanding Letters of Credit, plus the aggregate
amount of of unreimbursed drawings under all Letters of Credit at any one time
does not exceed the principal amount stated on the face of this Note, at any one time
does not exceed the principal amount stated on the face of this Note, subject to the limitations described in any loan
agreement to which this Note is subject. 
Bank’s obligation to make Advances under this Note
shall terminate if Borrower is in Default.

 

Borrower shall
subscribe to Bank’s cash management services and the terms of such service
shall control the manner in which funds are transferred between the applicable
demand deposit account and the line of credit for credit or debit to the line
of credit.

 

AVAILABILITY.  The aggregate principal of Advances under
this Note shall not exceed 1.75 times the 12 month trailing EBITDA of Borrower,
as calculated quarterly by Bank for the preceding Calculation Period (as
defined in the Loan Agreement), and with respect to any Partial Term Subsidiary
(as defined in the Loan Agreement), shall include EBITDA generated by the
Partial Term Subsidiary, including its predecessor entity (if any), during the
entirety of the Calculation Period; provided that (i) Bank shall
have received: (a) audited financial statements

 

 

for such Partial Term
Subsidiary for each fiscal quarter during the applicable Calculation Period, (b) audited
financial statements as
of the end of a prior fiscal year that
include such Partial Term Subsidiary’s operations for the applicable
Calculation Period or (c) unaudited financial statements reflecting such
Partial Term Subsidiary’s operations for the applicable Calculation Period
that: (i) are certified as true and accurate by the Borrower and (ii) have been reviewed and approved by Bank in
its reasonable discretion.

 

USE OF
PROCEEDS.  Borrower shall use the proceeds of the
loan(s) evidenced by this Note for the commercial purposes of Borrower, solely
as follows: (a) for working capital purposes, (b) Permitted
Acquisitions (as defined in the Loan Agreement) and (c) to retire the
existing line of credit between Bank and
Borrower dated as of February 4, 2005 in the principal amount of
$3,000,000.00 (as modified on December 1, 2005 to increase the current
principal amount of such existing line of credit to $7,500,000.00) and

 

SECURITY. 
Borrower and Guarantors have granted Bank a security interest in the collateral
described in the Loan Documents, including, but not limited to, personal
property collateral described in that certain Security Agreement of even date
herewith.

 

INTEREST
RATE.  Interest shall accrue on the
unpaid principal balance of this Note from the date hereof at the LIBOR Market
Index Rate plus 2.10%, as that rate may change from day to day in accordance
with changes in the LIBOR Market Index Rate (“Interest Rate”).  “LIBOR Market Index Rate”, for any day, means
the rate for 1 month U.S. dollar deposits as reported on Telerate page 3750
as of 11:00 a.m., London time, the second London business day before the
relevant interest period begins, or if such day is not a London business day,
then the immediately preceding London business day (or if not so reported, then
as determined by Bank from another recognized source or interbank quotation).

 

DEFAULT
RATE.  In addition to all other rights
contained in this Note, if a Default (as defined herein) occurs and as long as
a Default continues, all outstanding Obligations, other than Obligations under any swap agreements (as defined in 11
U.S.C. § 101, as in effect from time to time) between Borrower and Bank or
its affiliates, shall bear interest at the
Interest Rate plus 3% (“Default Rate”). 
The Default Rate shall also apply from acceleration until the
Obligations or any judgment thereon is paid in full.

 

INTEREST
AND FEE(S) COMPUTATION (ACTUAL/360).  Interest and fees, if any, shall be computed
on the basis of a 360-day year for the actual number of days in the applicable
period (“Actual/360 Computation”).  The
Actual/360 Computation determines the annual effective interest yield by taking
the stated (nominal) rate for a year’s period and then dividing said rate by
360 to determine the daily periodic rate to be applied for each day in the
applicable period.  Application of the
Actual/360 Computation produces an annualized effective rate exceeding the
nominal rate.

 

REPAYMENT
TERMS.  This Note shall be due and payable
in consecutive monthly payments of
accrued interest only, commencing on February 19, 2006, and continuing on the same day of each month thereafter until
fully paid.  In any event, all principal
and accrued interest shall be due and payable on January 19, 2009.

 

2

 

AVAILABILITY FEE.  Borrower shall pay to Bank quarterly an
availability fee equal to 0.15% per annum on the difference between (i) the
face amount of this Note and (ii) the outstanding principal balance of
this Note, for each day during the preceding calendar quarter or portion
thereof, commencing on March 31, 2006 and continuing on the same day of
each quarter thereafter, with a final payment due and payable on the date that
all principal and accrued interest is paid in full.

 

APPLICATION
OF PAYMENTS.  Monies received
by Bank from any source for application toward payment of the Obligations shall
be applied to accrued interest and then to principal.  If a Default occurs, monies
may be applied to the Obligations in any manner or order deemed appropriate by
Bank.

 

If any payment received
by Bank under this Note or other Loan Documents is rescinded, avoided or for
any reason returned by Bank because of any adverse claim or threatened action,
the returned payment shall remain payable as an obligation of all persons
liable under this Note or other Loan Documents as though such payment had not
been made.

 

DEFINITIONS.  Loan Documents.  The term “Loan Documents,” as used in this
Note and the other Loan Documents, refers to all documents executed in
connection with or related to the loan evidenced by this Note, the $2,500,000
term promissory note executed on the date hereof (the “Term Note”) and any
prior notes which evidence all or any portion of the loan evidenced by this
Note, and any letters of credit issued pursuant to any loan agreement to which
this Note is subject, any applications for such letters of credit and any other
documents executed in connection therewith or related thereto, and may include, without limitation, a loan agreement, this
Note, the Term Note, guaranty agreements, security agreements, security
instruments, financing statements, mortgage instruments, any renewals or
modifications, whenever any of the foregoing are executed, but does not include
swap agreements (as defined in 11 U.S.C. § 101, as in effect from time to
time).  Obligations.  The term “Obligations”, as used in this Note
and the other Loan Documents, refers to any and all indebtedness and other
obligations under this Note, the Term Note, all other obligations under any
other Loan Documents, and all obligations under any swap agreements (as defined
in 11 U.S.C. § 101, as in effect from time to time) between Borrower
and Bank, or its affiliates, whenever executed.  Certain Other Terms.  All terms that are used but not otherwise
defined in any of the Loan Documents shall have the definitions provided in the
Uniform Commercial Code.

 

LATE
CHARGE.  If any payments are not timely
made, Borrower shall also pay to Bank a late charge equal to 4% of each payment past due for 15 or more
days.

 

Acceptance by Bank of
any late payment without an accompanying late charge shall not be deemed a
waiver of Bank’s right to collect such late charge or to collect a late charge
for any subsequent late payment received.

 

ATTORNEYS’
FEES AND OTHER COLLECTION COSTS.  Borrower
shall pay all of Bank’s reasonable expenses incurred to enforce or collect any
of the Obligations including, without limitation, reasonable arbitration,
paralegals’, attorneys’ and experts’ fees and expenses,

 

3

 

whether incurred
without the commencement of a suit, in any trial, arbitration, or
administrative proceeding, or in any appellate or bankruptcy proceeding.

 

USURY.  If at any time the effective interest rate
under this Note would, but for this paragraph, exceed the maximum lawful rate,
the effective interest rate under this Note shall be the maximum lawful rate,
and any amount received by Bank in excess of such rate shall be applied to
principal and then to fees and expenses, or, if no such amounts are owing,
returned to Borrower.

 

GRACE/CURE
PERIOD.  Grace Period.  The failure of timely payment of the
Obligations shall not be a Default until 5 days after such payment is due.  Cure Period.  Except as provided below, any Default, other
than non-payment, may be cured within 30 days after written notice thereof is
mailed to Borrower by Bank. Borrower’s right to cure shall be applicable only
to curable defaults and shall not apply, without limitation, to Defaults based
upon False Warranty or Cessation; Bankruptcy set forth below.  Borrower shall have the right to cure a
Default only once during any 12 month period. 
Bank shall not exercise its remedies to collect the Obligations except
as Bank reasonably deems necessary to protect its interest in collateral
securing the Obligations during a cure period.

 

DEFAULT.  If any of the following occurs and is not
cured within the applicable cure period, a default (“Default”) under this Note
shall exist:  Nonpayment;
Nonperformance.  The failure
of timely payment or performance of the Obligations or Default under this Note
or any other Loan Documents.  Loan Document Default.  A
default under any Loan Document.  Breach.  Any
breach of any agreement contained or referred to in this Note or any other Loan
Document.  False Warranty.  A warranty or representation made in the Loan
Documents or furnished to Bank in connection with the loan evidenced by this
Note is materially false when made.  Cross Default. At Bank’s option, any default in payment or
performance of any obligation under any other loans, contracts or agreements of
Borrower or any Guarantor, any general partner of or the holder(s) of the
majority ownership interests of Borrower with Bank or its affiliates which
default is not cured within any applicable cure period, unless, but only as
long as, the existence of any such default is being contested by the Borrower or such Guarantor in good faith by
appropriate proceedings and adequate reserves in respect thereof have been
established on the books of the Borrower or such Guarantor to the extent
required by GAAP.  Cessation; Bankruptcy.  The death of, appointment of a guardian for,
dissolution or termination of existence of (subject to the provisions set forth in
clause (iv) of the subparagraph entitled “Material Capital Structure or Business Alteration” below), loss of good standing status by (unless such loss would not have a material
adverse effect upon the operations or financial condition of the Borrower), appointment of a
receiver for, assignment for the benefit of creditors of, or commencement of
any bankruptcy or insolvency proceeding by or against Borrower or any
Guarantor, or any general partner of or the holder(s) of the majority ownership
interests of Borrower, or any party to the Loan Documents.  Material Capital Structure or Business
Alteration.  Without prior
written consent of Bank, (i) a material alteration in the kind or type of
Borrower’s business or that of any Guarantor; (ii) the sale of
substantially all of the business or assets of Borrower or any Guarantor, or a
material portion (10% or more) of such business or assets if such a sale is
outside the ordinary course of business of Borrower or any Guarantor, or more
than 50% of the outstanding stock or voting power of or in any such entity in a
single

 

4

 

transaction or a series
of transactions; (iii) any acquisition that does not constitute a
Permitted Acquisition or (iv) should any Guarantor enter into any merger
or consolidation; provided that any Guarantor may merge with any other
Guarantor so long as the surviving entity is a Guarantor.

 

REMEDIES UPON DEFAULT.  If a
Default occurs under this Note or any Loan Documents, Bank may at any time
thereafter, take the following actions:  Bank Lien.  Foreclose its security interest or lien
against Borrower’s and Guarantors’ accounts without notice.  Acceleration Upon Default.  Accelerate the maturity of this Note and, at
Bank’s option, any or all other Obligations, other than Obligations under any
swap agreements (as defined in 11 U.S.C. § 101, as in effect from time to
time) between Borrower and Bank, or its affiliates, which shall be due in
accordance with and governed by the provisions of said swap agreements;
whereupon this Note and the accelerated Obligations shall be immediately due
and payable; provided, however, if the Default is based upon a bankruptcy or
insolvency proceeding commenced by or against Borrower or endorser of this
Note, all Obligations (other than Obligations under any swap agreement as
referenced above) shall automatically and immediately be due and payable.  Cumulative.  Exercise any rights and remedies as provided
under the Note and other Loan Documents, or as provided by law or equity.

 

WAIVERS AND
AMENDMENTS.  No waivers, amendments or
modifications of this Note and other Loan Documents shall be valid unless in
writing and signed by an officer of Bank. 
No waiver by Bank of any Default shall operate as a waiver of any
other Default or the same Default on a future occasion.  Neither the failure nor any delay on the part
of Bank in exercising any right, power, or remedy under this Note and other
Loan Documents 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.

 

Except to the extent otherwise provided by
the Loan Documents or prohibited by law, each Borrower and each other person
liable under this Note 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, each agrees that Bank may
(i) extend, modify or renew
this Note or make a novation of the loan evidenced by this Note, and/or (ii) grant
releases, compromises or indulgences with respect to any collateral securing
this Note, or with respect to Borrower or other person liable under this Note
or any other Loan Documents, all without notice to or consent of Borrower and
other such person, and without affecting the liability of Borrower and other
such person; provided, Bank may not extend, modify or renew this Note or make a
novation of the loan evidenced by this Note without the consent of Borrower
which increases the burdens of Borrower without the consent of Borrower.

 

MISCELLANEOUS
PROVISIONS.  Assignment.  This Note and the other Loan Documents shall
inure to the benefit of and be binding upon the parties and their respective
heirs, legal representatives, successors and assigns.  Bank’s interests in and rights under this
Note and the other Loan Documents are freely assignable, in whole or in part,
by Bank.  In addition, nothing in this
Note or any of the other Loan Documents shall prohibit Bank from pledging or
assigning this Note or any of the other Loan Documents or any interest therein
to any Federal Reserve Bank.  Borrower
shall not assign its rights and interest hereunder without the prior written

 

5

 

consent of Bank, and
any attempt by Borrower to assign without Bank’s prior written consent is null
and void.  Any assignment shall not
release Borrower from the Obligations.  Applicable Law; Conflict Between Documents.  This Note
and, unless otherwise provided in any other Loan Document, the other Loan
Documents shall be governed by and construed  under the laws of the state named in Bank’s address on the first page hereof without regard to that state’s conflict of laws
principles.  If the terms of this Note
should conflict with the terms of any loan agreement, the terms of this Note
shall control.  Security
Interest.  Except as
prohibited by law, Borrower and Guarantors grant Bank a security interest in
the collateral described in the Security Agreement of even date herewith.  Swap Agreements.  All
swap agreements (as defined in 11 U.S.C. § 101, as in effect from time to time), if any, between Borrower and Bank
or its affiliates are independent agreements governed by the written provisions
of said swap agreements, which will remain in full force and effect, unaffected
by any repayment, prepayment, acceleration, reduction, increase or change in
the terms of this Note, except as otherwise expressly provided in said written
swap agreements, and any payoff statement from Bank relating to this Note shall
not apply to said swap agreements unless expressly referred to in such payoff
statement.  Jurisdiction.  Borrower irrevocably agrees to non-exclusive
personal jurisdiction in the state named in Bank’s address on the first page hereof.  Severability.  If any
provision of this Note or of the other Loan Documents 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 Note or other
such document.  Notices.  Any notices to Borrower shall be sufficiently
given, if in writing and mailed, hand delivered or sent via telecopy (or
other facsimile device), recognized overnight courier service or certified mail to the Borrower’s address shown above or such
other address as provided hereunder, and to Bank, if in writing and, hand
delivered or sent via telecopy (or other facsimile device), recognized
overnight courier service or certified mail
to Bank’s office address shown above or
such other address as Bank may specify in writing from time to time.  Notices to Bank must include the mail
code.  In the event that Borrower changes Borrower’s address at any time prior
to the date the Obligations are paid in full, Borrower agrees to promptly give
written notice of said change of address by registered or certified mail,
return receipt requested, all charges prepaid.

 

Plural;
Captions.  All references in the Loan
Documents to Borrower, person, document or other nouns of reference mean both
the singular and plural form, as the case may be, and the term “person” shall
mean any individual, person or entity. 
The captions contained in the Loan Documents are inserted for
convenience only and shall not affect the meaning or interpretation of the Loan
Documents.  Advances.  Bank may, in its sole discretion and if
requested by Borrower, make other advances which shall be deemed to be advances
under this Note, even though the stated principal amount of this Note may be
exceeded as a result thereof.  Posting of Payments. 
All payments received during normal banking hours after 2:00 p.m.
local time at the office of Bank first shown above shall be deemed received at
the opening of the next banking day.  Joint and Several Obligations.  Each
entity executing this Note is jointly and severally obligated.  Fees and Taxes. 
Borrower shall promptly pay all documentary, intangible recordation
and/or similar taxes on this transaction whether assessed at closing or arising
from time to time.  LIMITATION ON LIABILITY; WAIVER OF PUNITIVE DAMAGES. EACH
OF THE PARTIES HERETO, INCLUDING BANK BY ACCEPTANCE HEREOF, AGREES THAT IN ANY
JUDICIAL, MEDIATION OR ARBITRATION PROCEEDING OR ANY CLAIM OR

 

6

 

CONTROVERSY BETWEEN OR AMONG THEM THAT MAY ARISE
OUT OF OR BE IN ANY WAY CONNECTED WITH THIS AGREEMENT, THE LOAN DOCUMENTS OR
ANY OTHER AGREEMENT OR DOCUMENT BETWEEN OR AMONG THEM OR THE OBLIGATIONS
EVIDENCED HEREBY OR RELATED HERETO, IN NO EVENT SHALL ANY PARTY HAVE A REMEDY
OF, OR BE LIABLE TO THE OTHER FOR, (1) INDIRECT, SPECIAL OR CONSEQUENTIAL
DAMAGES OR (2) PUNITIVE OR EXEMPLARY DAMAGES.   EACH OF THE PARTIES HEREBY EXPRESSLY WAIVES
ANY RIGHT OR CLAIM TO PUNITIVE OR EXEMPLARY DAMAGES THEY MAY HAVE OR WHICH
MAY ARISE IN THE FUTURE IN CONNECTION WITH ANY SUCH PROCEEDING, CLAIM OR
CONTROVERSY, WHETHER THE SAME IS RESOLVED BY ARBITRATION, MEDIATION, JUDICIALLY
OR OTHERWISE.  Patriot Act Notice.  To
help fight the funding of terrorism and money laundering activities, Federal
law requires all financial institutions to obtain, verify, and record
information that identifies each person who opens an account.  For purposes of this section, account shall
be understood to include loan accounts.  Final Agreement. 
This Note and the other Loan Documents represent the final
agreement between the parties and may not be contradicted by evidence of prior,
contemporaneous or subsequent oral agreements of the parties.  There are no unwritten oral agreements
between the parties.

 

ARBITRATION.  Upon demand of any party hereto, whether made
before or after institution of any judicial proceeding, any claim or
controversy arising out of or relating to the Loan Documents between parties
hereto (a “Dispute”) shall be resolved by binding arbitration conducted under
and governed by the Commercial Financial Disputes Arbitration Rules (the “Arbitration
Rules”) of the American Arbitration Association (the “AAA”) and the Federal
Arbitration Act.  Disputes may include,
without limitation, tort claims, counterclaims, a dispute as to whether a
matter is subject to arbitration, claims brought as class actions, or claims
arising from documents executed in the future. 
A judgment upon the award may be entered in any court having
jurisdiction. Notwithstanding the foregoing, this arbitration provision does
not apply to disputes under or related to swap agreements.  Special Rules.  All arbitration hearings shall be conducted
in the city named in the address of Bank first stated above.  A hearing shall begin within 90 days of
demand for arbitration and all hearings shall conclude within 120 days of
demand for arbitration.  These time
limitations may not be extended unless a party shows cause for extension and
then for no more than a total of 60 days. 
The expedited procedures set forth in Rule 51 et seq. of the
Arbitration Rules shall be applicable to claims of less than
$1,000,000.00.  Arbitrators shall be
licensed attorneys selected from the Commercial Financial Dispute Arbitration
Panel of the AAA.  The parties do not
waive applicable Federal or state substantive law except as provided
herein.  Preservation
and Limitation of Remedies. 
Notwithstanding the preceding binding arbitration provisions, the
parties agree to preserve, without diminution, certain remedies that any party
may exercise before or after an arbitration proceeding is brought.  The parties shall have the right to proceed
in any court of proper jurisdiction or by self-help to exercise or prosecute
the following remedies, as applicable: (i) all rights to foreclose against
any real or personal property or other security by exercising a power of sale
or under applicable law by judicial foreclosure including a proceeding to
confirm the sale; (ii) all rights of self-help including peaceful
occupation of real property and collection of rents, set-off, and peaceful
possession of personal property; (iii) obtaining provisional or ancillary
remedies including injunctive relief, sequestration, garnishment, attachment,
appointment of receiver and filing an

 

7

 

involuntary bankruptcy
proceeding; and (iv) when applicable, a judgment by confession of
judgment.  Any claim or controversy with
regard to any party’s entitlement to such remedies is a Dispute.  Waiver of Jury Trial.  THE PARTIES ACKNOWLEDGE THAT BY AGREEING TO
BINDING ARBITRATION THEY HAVE IRREVOCABLY WAIVED ANY RIGHT THEY MAY HAVE
TO JURY TRIAL WITH REGARD TO A DISPUTE AS TO WHICH BINDING ARBITRATION HAS BEEN
DEMANDED.

 

DISCLOSURE OF INFORMATION;
CONFIDENTIALITY.  Bank shall hold all non-public information
with respect to Borrower and its subsidiaries obtained pursuant to the Loan
Documents in accordance with its customary procedures for handling confidential
information; provided, that Bank may disclose any such information to
the extent such disclosure is (i) required by law or requested or required
pursuant to any legal process, (ii) requested by, or required to be
disclosed to, any regulatory agency or authority, (iii) used in any suit,
action or proceeding for the purpose of defending itself, reducing its
liability or protecting any of its claims, rights, remedies or interests under
or in connection with the Loan Documents or (iv) which had been publicly
disclosed other than as a result of a disclosure by Bank prohibited by this
Agreement; provided  futher, Bank shall notify Borrower of any
potential disclosure pursuant to (i), (ii) or (iii) above and
Borrower may defend against the disclosures set forth in (i), (ii) or (iii) above.

 

 

[Signature Page Follows]

 

8

 

IN WITNESS
WHEREOF, Borrower, on the day and year first above written, has caused this Note
to be executed under seal.

 

 

	
  [CORPORATE SEAL]

  	
  CGI HOLDING CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Gerard M. Jacobs

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Gerard M. Jacobs

  	
   

  
	
   

  	
   

  	
  Title:

  	
  CEO

  	
   

  

 

 

[Promissory Note – CGI Holding Corporation]

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