EXHIBIT 10.39
AMENDMENT NO. 1
TO
SUBORDINATED BRIDGE NOTE PURCHASE AGREEMENT
THIS AMENDMENT NO. 1 dated as of February 22, 2001 (this "Amendment")
to the Subordinated Bridge Note Purchase Agreement dated as of October 4, 2001
(the "Agreement") is made and entered into by and between iNTELEFILM
Corporation, a Minnesota corporation (the "Borrower"), the lenders who are
parties to the Agreement or their successors and assigns (individually referred
to as a "Lender" or collectively as the "Lenders"), and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, a
person, as agent for the Lenders (in such capacity, the "Agent").
WHEREAS, pursuant to the Agreement, Curious Pictures Corporation and
Chelsea Pictures, Inc., both subsidiaries of Borrower (collectively the
"Debtors"), granted security interests in certain of their assets pursuant to
the security agreement dated October 4, 2001 (the "Debtors Security Agreement");
WHEREAS, Borrower has requested that the Agent release the security
interests granted under the Debtor Security Agreement to facilitate the sale of
the Curious Pictures Corporation;
WHEREAS, the net proceeds to Borrower from the sale of Curious Pictures
Corporation will be substantially less than anticipated by Borrower at the time
the Agreement was entered into and Borrower needs to use such proceeds in its
continued operations;
WHEREAS, Borrower has requested that the definition of the "Repayment
Event" that accelerates maturity of the subordinated bridge notes issued to the
Lenders pursuant to the Agreement (the "Bridge Notes") be modified as provided
in this Amendment;
WHEREAS, the Lenders and Agent are willing to grant Borrower's requests
on the terms and conditions set forth in this Amendment; and
WHEREAS, Borrower is in the process of raising $4 million of gross cash
proceeds in a private placement of its securities (the "Private Placement"); and
WHEREAS, Borrower is willing to permit the Lenders to convert all or
part of their Bridge Notes into Borrower's securities offered in the Private
Placement by increasing the amount of securities offered in the Private
Placement to effect such conversion;
NOW, THEREFORE, in consideration of these premises and One Dollar and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties agree as follows:
1. Substitution of Collateral. The Lenders hereby consent to the
termination of the security interests under the Debtors Security Agreement and
substitution of collateral under the terms of the substitution of collateral
agreement attached hereto as Exhibit 1 (the "Collateral
Substitution Agreement") and direct the Agent to execute and deliver the
Collateral Substitution Agreement.
2. Definition of Repayment Event. Section 3.3 of the Agreement is
amended in its entirety to read as follows:
"Section 3.3 Repayment Events. The principal amount of each
Note, together with interest thereon shall also be paid (together with
the Payoff Fee then applicable) within thirty (30) days following any
of the following events (each a "Repayment Event"):
(a) the receipt by Borrower of an amount of at least
$2,550,000, net of attorneys fees and lawsuit costs related
thereto, by way of settlement or judgment in connection with
Borrower's lawsuit against The ▇▇▇▇ Disney Company and ABC
Radio Networks Inc., or
(b) the receipt by Borrower of gross cash proceeds
from the sale of its securities after February 22, 2002 of at
least $4,000,000.
3. Right of Lenders to Participate in Private Placement. Borrower
hereby agrees to afford the Lenders an opportunity to participate in the Private
Placement by either purchasing the securities offered in the Private Placement
for cash or converting the Bridge Notes in whole or part into the securities
offered in the Private Placement and surrendering the warrants relating to the
converted Bridge Notes. For the purpose of such conversion of a Bridge Note, the
principal amount of the Bridge Note that the Lender elects to convert, plus the
accrued and unpaid interest thereon to the date of conversion and the Payoff Fee
(as defined in the Bridge Note) in respect thereof shall be treated as the
amount of cash used purchase the securities offered in the Private Placement.
Each Lender shall have ten (10) business days after receipt of the offering
memorandum for the Private Placement to notify Borrower in writing the amount of
the Bridge Notes held by such Lender that the Lender elects to convert into the
securities offered in the Private Placement. Borrower agrees to provide the
offering memorandum for the Private Placement promptly after the offering
memorandum has been completed. In the event any of the Lenders elect to convert
all or part of the Bridge Notes, the amount of securities offered in the Private
Placement will be increased by the amount converted so that the gross cash
proceeds from the Private Placement are at least $4,000,000.
4. Lenders' Fees and Expenses. Borrower shall reimburse Lenders and the
Agent for all fees and expenses incurred in connection with this Amendment,
including, but not limited to, reasonable attorneys' fees.
5. Full Force and Effect. The Agreement and the Bridge Notes shall
continue in full force and effect in accordance with their terms except as
amended by this Amendment.
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IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Amendment as of the day and year first above written.
BORROWER:
INTELEFILM CORPORATION
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇
-------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇, Chief Executive Officer
AGENT:
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, as agent for the lenders
named in the Subordinated Bridge Note
Purchase Agreement
LENDERS:
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Trustee
----------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, trustee u/a dtd 6/14/78
FBO ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇. ▇▇▇, Officer
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, Officer
----------------------------------------------
Industricorp & Co., Inc FBO Twin City
Carpenters Pension Fund
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
----------------------------------------------
Roitenberg Investments, Inc.
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ attorney-in-fact
----------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, trustee u/a dtd.
4/13/92 FBO ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
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ADDITIONAL SIGNATURE PAGE TO AMENDMENT NO. 1 TO SUBORDINATED BRIDGE NOTE
PURCHASE AGREEMENT
/s/ ▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
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CTD Consultants Defined Benefit Plan for
▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
/s/ ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
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▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
/s/ ▇▇▇▇ ▇. ▇▇▇▇
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▇▇▇▇ ▇. ▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President of PCM,
General Partner
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Pyramid Partners, LP
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Exhibit 1
SUBSTITUTION OF COLLATERAL AGREEMENT
THIS AGREEMENT is made and entered into on February ___, 2002 by and
between iNTELEFILM Corporation, a Minnesota corporation ("Borrower"), and ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇, as agent (the "Agent") for the lenders named in the Subordinated
Bridge Note Purchase Agreement (defined below).
WHEREAS, Borrower, Agent and certain lenders named therein (the
"Lenders") have entered into the subordinated bridge note purchase agreement
dated October 4, 2001 (the "Subordinated Bridge Note Purchase Agreement");
WHEREAS, pursuant to the Subordinated Bridge Note Purchase Agreement,
Curious Pictures Corporation and Chelsea Pictures, Inc., both subsidiaries of
Borrower (collectively the "Debtors"), granted security interests in certain of
their assets pursuant to the security agreement dated October 4, 2001 (the
"Debtors Security Agreement"); and
WHEREAS, in connection with the sale of the Curious Pictures
Corporation (the "Curious Sale"), Borrower has requested that Agent release the
security interest granted under the Debtors Security Agreement in exchange for
the grant of a security interest in Borrower's assets pursuant to the security
agreement in the form of Exhibit A attached hereto (the "Borrower Security
Agreement");
NOW, THEREFORE, in consideration of these premises and One Dollar and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties agree as follows:
1. Substitution of Collateral. Agent agrees to release the
security interests granted under the Debtors Security Agreement upon receipt of
the following (the "Substitution Documents"):
(a) Borrower Security Agreement. The Borrower Security
Agreement executed by Borrower;
(b) Financing Statement. A UCC-1 Financing Statement of
Borrower covering the Collateral as defined in the Borrower Security
Agreement; and
(c) Officer's Certificate. An officer's certificate of
Borrower executed by the Chief Executive Officer or Chief Financial
Officer of Borrower certifying the Curious Sale is ready to close.
Upon receipt of the Substitution Documents by Agent's attorney, Agent agrees
that the security interests granted under the Debtor Security Agreement are
released and the Agent hereby authorizes Borrower and the Debtors to execute and
file Uniform Commercial Code financing
terminations as may be necessary in order to evidence or otherwise give public
notice of such collateral terminations.
2. Miscellaneous. This Agreement shall be governed by the laws of
the State of Minnesota. This Agreement shall be binding and inure to the benefit
of the parties thereto, the Lenders and their respective successor and assigns.
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement as of the day and year first above written.
iNTELEFILM CORPORATION
By: ___________________________________________
▇▇▇▇ ▇. ▇▇▇▇, Chief Executive Officer
_______________________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, as agent for the lenders
named in the Subordinated Bridge Note
Purchase Agreement
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Exhibit A
SECURITY AGREEMENT
Date: February ___, 2002
Debtor: iNTELEFILM Corporation Secured
Party: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, as agent for
Address: ▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇, the lenders named in the
Suite 290 Subordinated Bridge Note Purchase
▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ Agreement (defined below)
This Agreement is entered into by and between Debtor and the Secured
Party as of the date indicated above in consideration of the release of the
Secured Party's security interest in the assets of Curious Pictures Corporation
and Chelsea Pictures, Inc. (collectively referred to as the "Prior Debtors")
pursuant to that certain Security Agreement dated October 4, 2001 that secures
indebtedness of Debtor pursuant to a Subordinated Bridge Note Purchase Agreement
dated October 4, 2001 by and between the Secured Party and Debtor (the "Bridge
Note Purchase Agreement"), and for other good and valuable consideration, the
sufficiency, adequacy and receipt of which the parties hereby acknowledge. The
Bridge Note Purchase Agreement is hereby incorporated into this Agreement by
reference, and the terms of this Agreement shall be at all times subject to and
conditioned on the terms of the Bridge Note Purchase Agreement.
1. OBLIGATIONS SECURED. This Agreement secures all debts, liabilities and
obligations in favor of the Secured Party under the Bridge Note
Purchase Agreement, including but not limited to all principal,
interest, and other charges, fees, expenses and amounts, and all
amendments, extensions, renewals and replacements provided for by the
Bridge Note Purchase Agreement (collectively, the "Obligations").
2. SECURITY INTEREST. To secure the payment and performance of the
Obligations, Debtor grants the Secured Party a security interest (the
"Security Interest") in the property of Debtor set forth in Sections
2(a) and 2(b) (the "Collateral"):
a. All accounts receivable of Debtor, together with all good will
related to such accounts and all rights, liens, security
interests and other interests which Debtor may at any time
have by law or agreement against any account debtor or obligor
obligated to make any such payment or against any of the
property of such account debtor or obligor, and all supporting
obligations relating to the foregoing, whether now existing or
hereafter arising, whether now owned or hereafter acquired;
b. All personal property, real property leases, inventory and
equipment of Debtor together with all accessions, accessories,
attachments, fittings, increases, parts,
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repairs, returns, renewals and substitutions of all or any
part thereof, and all warehouse receipts, bills of lading and
other documents covering such equipment, whether now existing
or hereafter arising, whether now owned or hereafter acquired;
c. All promissory notes received by Debtor in connection with the
sale of Curious Pictures Corporation and Chelsea Pictures,
Inc. (the "Sale Notes") together with any collateral securing
the Sale Notes, including investment property;
and all products and proceeds of the foregoing property, including
without limitation all rights to payment related to the foregoing
property and all refunds of insurance premiums due or to become due
under all insurance policies covering the foregoing property.
3. SUBORDINATION OF SECURITY INTEREST TO SENIOR DEBT. The interest of the
Secured Party is in all events subordinate and junior to the interests
of the holders of any Senior Debt as described in the Bridge Note
Purchase Agreement (the "Permitted Encumbrances").
4. REPRESENTATIONS, WARRANTIES AND AGREEMENTS. Debtor represents and warrants
to the Secured Party and agrees as follows:
a. Debtor is a Minnesota corporation, and the address of Debtor's
chief executive office is shown at the beginning of this
Agreement. Debtor has authority to execute and perform this
Agreement.
b. Except as set forth in any existing or future agreement
executed by the Secured Party: Debtor is the owner of the
Collateral, or will be the owner of the Collateral hereafter
acquired, free of all security interests, liens and
encumbrances other than the Security Interest and the
Permitted Encumbrances; Debtor shall not permit any security
interest, lien or encumbrance, other than the Security
Interest and Permitted Encumbrances, to attach to any
Collateral without the prior written consent of the Secured
Party; Debtor shall defend the Collateral against the claims
and demands of all persons and entities other than the Secured
Party and parties owning the Permitted Encumbrances, and shall
promptly pay all taxes, assessments and other government
charges upon or against Debtor, any Collateral and the
Security Interest; and no financing statement covering any
Collateral is on file in any public office other than filings
relating to the Permitted Encumbrances. If any Collateral is
or will become a fixture, Debtor, at the request of the
Secured Party, shall furnish the Secured Party with a
statement or statements executed by all persons and entities
who have or claim an interest in the real estate, in form
acceptable to the Secured Party, which statement or statements
shall provide that such persons and entities consent to the
Security Interest.
c. Debtor shall not sell or otherwise dispose of any Collateral
or any interest therein without the prior written consent of
the Secured Party, except that, until the occurrence of an
Event of Default or the revocation by the Secured Party of
Debtor's right to do so, Debtor may (i) sell or lease any
Collateral constituting inventory in the ordinary course of
business at prices constituting the fair market
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value thereof, and (ii) receive and use as working capital all
payments made on the Sale Notes.
d. Each account constituting Collateral is, or will be when
acquired, the valid, genuine and legally enforceable
obligation of the account debtor or other obligor named
therein or in Debtor's records pertaining thereto as being
obligated to pay such obligation, subject to no defense,
setoff or counterclaim. Debtor shall not, without the prior
written consent of the Secured Party, agree to any material
modification or amendment of any such obligation or agree to
any subordination or cancellation of any such obligation.
e. Debtor shall: (i) keep all tangible Collateral in good
condition and repair, normal depreciation excepted; (ii)
promptly notify the Secured Party of any loss of or material
damage to any Collateral or of any adverse change in the
prospect of payment of any account constituting Collateral;
(iii) not permit any Collateral to be used or kept for any
unlawful purpose or in violation of any federal, state or
local law; (iv) keep all tangible Collateral insured to the
extent insured on the date of this Agreement; (v) at each
Debtor's chief executive office, keep accurate and complete
records pertaining to the Collateral and Debtor's financial
condition, business and property, and provide the Secured
Party such periodic reports concerning the Collateral and
Debtor's financial condition, business and property as the
Secured Party may from time to time request; (vi) at all
reasonable times permit the Secured Party and their
representatives to examine and inspect any Collateral, and to
examine, inspect and copy Debtor's records pertaining to the
Collateral and Debtor's financial condition, business and
property; and (vii) at the Secured Party's request, promptly
execute, endorse and deliver such financing statements and
other instruments, documents, chattel paper and writings and
take such other actions deemed by the Secured Party to be
necessary or desirable to establish, protect, perfect or
enforce the Security Interest and the rights of the Secured
Party under this Agreement and applicable law, and pay all
costs of filing financing statements and other writings in all
public offices where filing is deemed by the Secured Party to
be necessary or desirable.
f. Debtor authorizes the Secured Party to file all of the Secured
Party's financing statements and amendments to financing
statements, and all terminations of the filings of other
secured parties except with respect to the Permitted
Encumbrances, all with respect to the Collateral, in such form
and substance as the Secured Party, in its sole discretion,
may determine.
5. COLLECTION RIGHTS. At any time after an Event of Default (as defined
below), the Secured Party may, and at the request of the Secured Party
Debtor shall, promptly notify any account debtor or obligor of any
account constituting Collateral that the same has been assigned to the
Secured Party and direct such account debtor or obligor to make all
future payments to the Secured Party. In addition, following an Event
of Default and only at the request of the Secured Party, Debtor shall
deposit in a collateral account designated by the Secured Party all
proceeds constituting Collateral, in their original form received (with
any necessary endorsement), within three business days after receipt of
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such proceeds by Debtor. Until Debtor make each such deposit, Debtor
will hold all such proceeds separately in trust for the Secured Party
for deposit in such collateral account, and will not commingle any such
proceeds with any other property. Debtor shall have no right to
withdraw any funds from such collateral account, and Debtor shall have
no control over such collateral account. Such collateral account and
all funds at any time therein shall constitute Collateral under this
Agreement. Before or upon final collection of any funds in such
collateral account, the Secured Party, at its discretion, may release
any such funds to Debtor or any account of Debtor or apply any such
funds to the Obligations whether or not then due. Any release of funds
to Debtor or any account of Debtor shall not prevent the Secured Party
from subsequently applying any funds to the Obligations. All items
credited to such collateral account and subsequently returned and all
other costs, fees and charges of the Secured Party in connection with
such collateral account may be charged by the Secured Party to any
account of Debtor, and Debtor shall pay the Secured Party its pro rata
share of all such amounts on demand.
6. LIMITED POWER OF ATTORNEY. Upon the occurrence of an Event of Default
under the Bridge Note Purchase Agreement, the Secured Party, in the
name and on behalf of Debtor or, at their option, in their own names,
may perform or observe such agreement and take any action which the
Secured Party may deem necessary or desirable to cure or correct such
failure, and Debtor irrevocably authorize the Secured Party and grant
the Secured Party a limited power of attorney in the name and on behalf
of Debtor or, at its option, in its own name, to collect, receive,
receipt for, create, prepare, complete, execute, endorse, deliver and
file any and all financing statements, insurance applications,
remittances, instruments, documents, chattel paper and other writings,
to grant any extension to, compromise, settle, waive, notify, amend,
adjust, change and release any obligation of any account debtor,
obligor, insurer or other person or entity pertaining to any
Collateral, to demand terminations of other security interests in any
of the Collateral, and to take any other action deemed by the Secured
Party to be necessary or desirable to establish, perfect, protect or
enforce the Security Interest, excepted with respect to the Permitted
Encumbrances. All of the Secured Party's advances, fees, charges, costs
and expenses, including but not limited to audit fees and expenses and
reasonable attorneys' fees and legal expenses, in connection with the
Obligations and in the protection and exercise of any rights or
remedies hereunder, together with interest thereon at the highest rate
then applicable to any of the Obligations, shall be secured hereunder
and shall be paid by Debtor to the Secured Party within three business
days of demand.
7. EVENTS OF DEFAULT. The occurrence of any of the following events shall
constitute an "Event of Default":
a. any Event of Default under Section 10 of the Bridge Note
Purchase Agreement or
b. any breach or default under the terms of this Agreement.
8. REMEDIES. Upon the commencement of any proceeding under any bankruptcy
law by or against Debtor or any maker, endorser, guarantor or surety of
any of the Obligations, all Obligations automatically shall become
immediately due and payable in full, within ten business days of
declaration, presentment, and written notice and demand by the Secured
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Party. In addition, upon the occurrence of any Event of Default and at
any time thereafter, the Secured Party may exercise any one or more of
the following rights and remedies, subject to any limitations set forth
in the Bridge Note Purchase Agreement:
a. declare all Obligations to be immediately due and payable in
full, and the same shall thereupon be immediately due and
payable in full, without presentment or other notice or
demand, all of which are hereby waived by Debtor;
b. require Debtor to assemble all or any part of the Collateral
and make it available to the Secured Party at a place to be
designated by the Secured Party which is reasonably convenient
to both parties;
c. exercise and enforce any and all rights and remedies available
upon default under this Agreement, the Uniform Commercial
Code, and any other applicable agreements and laws.
Debtor consent to the personal jurisdiction of the state and federal
courts located in the State of Minnesota in connection with any
controversy related to this Agreement, the Collateral, the Security
Interest or any of the Obligations, waive any argument that venue in
such forums is not convenient, and agree that any litigation initiated
by Debtor against the Secured Party in connection with this Agreement,
the Collateral, the Security Interest or any of the Obligations shall
be venued in either the District Court of Hennepin County, Minnesota,
or the United States District Court, District of Minnesota.
9. DELIVERY OF NOTICE. Where notice to either party is required, such
notice shall be deemed reasonably and properly given if mailed by
regular or certified mail, postage prepaid, to Debtor at the address
stated at the beginning of this Agreement and to the Secured Party at
the address stated in the Bridge Note Purchase Agreement, or at the
most recent address shown in the other party's records. Each party
shall be deemed to have received such notice three business days
following the other party's deposit of such notice in the mails.
10. MISCELLANEOUS. All terms in this Agreement that are defined in the
Minnesota Uniform Commercial Code, as amended from time to time (the
"UCC") shall have the meanings set forth in the UCC, and such meanings
shall automatically change at the time that any amendment to the UCC,
which changes such meanings, shall become effective. A carbon,
photographic or other reproduction of this Agreement is sufficient as a
financing statement. No provision of this Agreement can be waived,
modified, amended, abridged, supplemented, terminated or discharged and
the Security Interest cannot be released or terminated, except by a
writing duly executed by all parties. A waiver shall be effective only
in the specific instance and for the specific purpose given. No delay
or failure to act shall preclude the exercise or enforcement of the
Secured Party's rights or remedies, except where the Secured Party is
required to give notice to Debtor prior to taking any action. All
rights and remedies of the Secured Party shall be cumulative and may be
exercised singularly, concurrently or successively at the Secured
Party's option, and the exercise or enforcement of any one such right
or remedy shall not be a condition to or bar the exercise or
enforcement of any other. This Agreement shall bind and benefit
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Debtor and the Secured Party and their respective heirs,
representatives, successors and assigns and shall take effect when
executed by both parties. If any provision or application of this
Agreement is held unlawful or unenforceable in any respect, such
illegality or unenforceability shall not affect other provisions or
applications which can be given effect, and this Agreement shall be
construed as if the unlawful or unenforceable provision or application
had never been contained herein or prescribed hereby. All
representations and warranties contained in this Agreement shall
survive the execution, delivery and performance of this Agreement and
the creation, payment and performance of the Obligations. This
Agreement and the rights and duties of the parties shall be governed by
and construed in accordance with the internal laws of the State of
Minnesota (excluding conflict of law rules).
DEBTOR REPRESENTS AND WARRANTS TO THE SECURED PARTY AND AGREES THAT DEBTOR HAS
READ ALL OF THIS AGREEMENT AND UNDERSTANDS ALL OF THE PROVISIONS OF THIS
AGREEMENT.
iNTELEFILM CORPORATION
By: ________________________________________
▇▇▇▇ ▇. ▇▇▇▇, Chief Executive Officer
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