ARISEAN CAPITAL LTD.
EXHIBIT
10.1
ARISEAN
CAPITAL LTD.
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May
31,
2007
Debt
Resolve, Inc.
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Gentlemen:
This
letter agreement sets forth the terms and conditions under which Arisean Capital
Ltd., a New York corporation ("Arisean"), agrees to provide a $500,000 line
of
credit to Debt Resolve, Inc., a Delaware corporation ("Debt
Resolve").
1. Line
of Credit.
(a) Subject
to the terms and conditions hereof, the Security Agreement of even date herewith
between Arisean and Debt Resolve (the “Security Agreement”) and the
Non-Negotiable Promissory Note of even date herewith made by Debt Resolve in
favor of Arisean (the "Note"), Arisean agrees from time to time to make loans
(each, a "Loan") to Debt Resolve up to a maximum aggregate amount of $500,000.
Debt Resolve shall use the proceeds of each Loan for its working capital needs,
including to support the operations of Debt Resolve’s debt-collection
subsidiary, First Performance Corporation. Interest on the outstanding principal
amount of the Note shall be at a rate of twelve percent (12%) per annum, as
more
fully set forth in the Note. Debt Resolve’s obligations under the Note shall be
secured by a lien and security interest in the Collateral, as more fully set
forth in the Security Agreement.
(b) By
written request to Arisean, accompanied by a description of the use(s) of such
loan proceeds, Debt Resolve may from time to time request that Arisean make
a
Loan in the amount specified therein and Arisean will make such Loan. Subject
to
Arisean's review and approval of the written request, Arisean shall disburse
the
amount of the Loan requested by wire transfer in immediately available funds
to
an account or accounts designated in writing by Debt Resolve, or by check if
mutually agreed, within two (2) business days following Debt Resolve's written
request. Each such request for a Loan shall constitute Debt Resolve's
representation and warranty to Arisean that no Event of Default (as such term
is
defined in the Note) exists at such time, or would occur after giving effect
to
any such Loan.
(c) Except
as
otherwise provided in Section 2 below, by not less than thirty (30) days’
written notice to Debt Resolve, Arisean may demand that payment of the entire
principal balance then outstanding of the Note, together with accrued interest,
be made on any date after the date hereof, and Debt Resolve will pay the entire
amount thereof in cash on such date. The Note may, at the option of Debt
Resolve, be prepaid at any time in whole or in part, without premium or penalty.
(d) Debt
Resolve shall pay to Arisean a 1% origination fee in connection with arranging
the Loans, upon funding.
2. Mandatory
Payments.
During
the term of the Note, Debt Resolve will pay, in whole or in part, the principal
balance then outstanding of the Note, together with accrued interest, with
the
cash proceeds from the issuance of any note, bond, debenture, evidence of
indebtedness, share of capital stock or any other security ("securities"),
other
than working capital financing or secured financing of assets in the ordinary
course of business, issued by Debt Resolve after the date hereof (a
"Financing"). The obligation of Debt Resolve to pay the outstanding balance
under the Note pursuant to the preceding sentence shall be superior and first
in
priority to any other use of the proceeds of a Financing, and, without Arisean’s
prior written consent, Debt Resolve agrees not to enter into any agreement
or
instrument during the term of the Note which would modify or alter the foregoing
priority.
3. Change
in Control.
A
Change in Control (as defined below) during the term of the Note shall be
considered an Event of Default, in which case Debt Resolve shall be required,
unless waived by Arisean in whole or in part, to pay the entire principal
balance then outstanding of the Note, together with accrued interest, on or
within ten (10) days following the Change in Control. A "Change in Control"
shall be deemed to have occurred when (a) a third person, including a "group,"
as such term is defined in Section 13(d)(3) of the Securities Exchange Act
of
1934, other than Arisean or its affiliates, becomes (other than as a result
of a
purchase from Debt Resolve) the beneficial owner of shares of Debt Resolve
having 50% or more of the total number of votes that may be cast for the
election of directors of Debt Resolve and such beneficial owner continues for
five consecutive days, or (b) as a result of, or in connection with, any cash
tender or exchange offer, merger or other business combination, sale of assets
or contested election or any combination of the foregoing transactions, the
persons who were directors of Debt Resolve before such transaction shall cease
for any reason to constitute at least a majority of the Board of Directors
of
Debt Resolve or any successor.
4. Representations.
Each of
the parties hereto represents severally and as to itself only that this letter
agreement has been duly authorized, executed and delivered by it and, assuming
the due authorization, execution and delivery of this letter agreement by the
other party hereto, constitutes its legal, valid and binding obligation,
enforceable against it in accordance with its terms, except to the extent that
enforceability (x) may be limited by bankruptcy, insolvency or other similar
laws affecting or relating to the enforcement of creditors' rights generally
and
(y) is subject to general principles of equity (whether such enforceability
is
considered in a proceeding in equity or at law).
5. Notices.
All
notices, requests and demands to or upon Debt Resolve or Arisean to be effective
shall be in writing and shall be deemed to have been duly given or made when
delivered by hand, or when sent by certified mail, postage prepaid, addressed
as
follows or to such other address as may hereafter be notified by the respective
parties hereto:
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Debt
Resolve:
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Attn:
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Co-Chairman and Chief Executive Officer
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Arisean:
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Arisean
Capital Ltd.
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Attn:
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President
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6. Miscellaneous.
This
letter agreement, the Security Agreement and the Note represent the entire
agreement and understanding between Arisean and Debt Resolve with respect to
the
subject matter hereof. This letter agreement, the Security Agreement and the
Note may not be amended except by an instrument in writing executed by Arisean
and Debt Resolve. This letter agreement shall be governed by and construed
in
accordance with the laws of the State of New York, without giving effect to
its
choice of law rules. This letter agreement may be executed in
counterparts.
If
the
foregoing correctly sets forth our agreement, please acknowledge your acceptance
of the terms of this letter agreement by signing and returning a copy of this
letter agreement, the Security Agreement and the Note to the undersigned.
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Very
truly yours,
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ARISEAN
CAPITAL LTD.
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By:
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/s/
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President
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Agreed
and Accepted
this
May
31, 2007
By:
/s/
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Co-Chairman
and Chief Executive Officer
NON-NEGOTIABLE
PROMISSORY NOTE
Dated:
May 31, 2007
FOR
VALUE
RECEIVED, the undersigned, DEBT RESOLVE, INC., a Delaware corporation ("Debt
Resolve"), promises to pay to ARISEAN CAPITAL LTD, a New York corporation
("Arisean"), at the offices of Arisean, ▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇, or at such commercial bank within the United States of America as Arisean
may designate to Debt Resolve from time to time, in lawful money of the United
States of America and in immediately available funds, the outstanding amount
of
all loans made by Arisean to Debt Resolve from time to time in accordance with
the provisions hereof. Debt Resolve further agrees to pay interest in like
money
at such office or commercial bank on the unpaid aggregate principal amount
hereof at a rate equal to twelve percent (12%) per annum.
1. Principal
and interest shall be due and payable in the manner set forth
below:
(a) Accrued
interest on the unpaid principal amount hereof shall be paid monthly in cash;
(b) Debt
Resolve will pay, in whole or in part, the principal balance then outstanding
of
this Note, together with accrued interest, on or within two (2) days after
each
date Debt Resolve receives cash proceeds of a Financing, as such term is defined
in the letter agreement of even date herewith between Debt Resolve and Arisean
(the "Letter Agreement").
(c) By
not
less than thirty (30) days’ written notice to Debt Resolve, Arisean may demand
that payment of the entire principal balance then outstanding of this Note,
together with accrued interest, be made on any date after the date hereof,
and
Debt Resolve will pay the entire amount thereof in cash on such date.
(d) All
payments (including prepayments) made hereunder shall be applied first to the
payment of accrued and unpaid interest, with the balance remaining applied
to
the payment of the unpaid principal balance of this Note.
(e) This
Note
may, at the option of Debt Resolve, be prepaid at any time in whole or in part,
without premium or penalty.
2. Debt
Resolve is borrowing the principal sum of this Note pursuant to the Letter
Agreement, the terms of which are incorporated herein by reference and supersede
the terms of this Note in the event of any conflict. This Note shall be
non-negotiable.
3. Payment
of this Note is secured by certain collateral (the “Collateral”) under the terms
of the Security Agreement of even date herewith between Debt Resolve and Arisean
(the “Security Agreement”).
4. Arisean
is authorized to record the date and amount of each loan made by it and the
date
and amount of each payment, prepayment or reduction of the principal amount
hereof on the schedule annexed hereto and made a part hereof, and any such
recordation shall constitute prima
facie
evidence
of the accuracy of the information so recorded.
5. Notwithstanding
any provision to the contrary contained in this Note, it is expressly agreed
that the entire principal amount outstanding at any time under this Note, and
all accrued and unpaid interest, shall immediately become due and payable
(without demand for payment, notice of non-payment, presentment, notice of
dishonor, protest, notice of protest or any other notice, all of which are
hereby expressly waived by Debt Resolve):
(a) upon
the
default in the payment of any interest or principal due under this Note, which
default continues uncured for a period of ten (10) days;
(b) if
Debt
Resolve shall make an assignment for the benefit of creditors; or shall admit
in
writing its inability to pay its debts; or if a receiver or trustee shall be
appointed for Debt Resolve or for substantially all of its assets and, if
appointed without its consent, such appointment is not discharged or stayed
within thirty (30) days; or if proceedings under any law relating to bankruptcy,
insolvency or the reorganization or relief of debtors are instituted by or
against the Debt Resolve and, if contested by it, are not dismissed or stayed
within thirty (30) days; or if any writ of attachment or execution or any
similar process is issued or levied against Debt Resolve or any significant
part
of its property and is not released, stayed, bonded or vacated within thirty
(30) days after its issue or levy; or if Debt Resolve takes corporate action
in
furtherance of any of the foregoing;
(c) in
the
event of any default or event of default under the Security Agreement, which
default is not cured following the giving of notice and within five (5)
days;
(d) after
a
Change in Control, as provided, and as such term is defined, in the Letter
Agreement (each, an "Event of Default"); or
(e) any
event
of default which results in the acceleration of indebtedness of Debt Resolve
to
any other person under any note, indenture, agreement or undertaking and that
is
not cured within thirty (30) days.
5. All
notices, requests and demands to or upon Debt Resolve or Arisean to be effective
shall be in writing and shall be deemed to have been duly given or made when
delivered by hand, or when sent by certified mail, postage prepaid, addressed
as
follows or to such other address as may hereafter be notified by the respective
parties hereto:
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Debt
Resolve:
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Debt
Resolve, Inc.
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Attn:
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Co-Chairman and Chief Executive Officer
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Arisean:
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Arisean
Capital Ltd.
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Attn:
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President
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6. No
failure or delay on the part of Arisean in exercising any of its rights, powers
or privileges hereunder shall operate as a waiver thereof, nor shall a single
or
partial exercise thereof preclude any other or further exercise of any right,
power or privilege. Debt Resolve hereby waives demand for payment, notice of
non-payment, presentment, notice of dishonor, protest, notice of protest or
any
other notice in connection with the delivery, acceptance, performance or
enforcement of this Note.
7. In
case
any one or more Events of Default shall occur and be continuing, Arisean may
proceed to protect and enforce its rights by an action at law, suit in equity
or
other appropriate proceeding. Debt Resolve shall pay all reasonable costs of
collection when incurred, including reasonable attorneys' fees.
8. This
Note
shall be governed by and construed in accordance with the laws of the State
of
New York, without giving effect to its choice of law rules.
IN
WITNESS WHEREOF, Debt Resolve has executed this Non-Negotiable Promissory Note
as of the date first above written.
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DEBT
RESOLVE, INC.
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By:
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Co-Chairman
and Chief Executive Officer
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GRID
PROMISSORY NOTE SCHEDULE
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Date
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Amount
of
Loan
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Amount
of
Principal
Paid
or
Prepaid
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Unpaid
Principal
Amount
of
Note
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Available
Line
of
Credit
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Notation
Made
By
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SECURITY
AGREEMENT
SECURITY
AGREEMENT, dated as of May 31, 2007, by and between ARISEAN CAPITAL LTD., a
New
York corporation ("Arisean"), having its offices located at ▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, and DEBT RESOLVE, INC., a Delaware corporation ("Debt
Resolve"), having its principal executive offices at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇.
1. Definitions
of Terms.
As used
herein, (a) "Obligations" shall mean (i) all indebtedness of Debt Resolve to
Arisean arising on or after the date hereof under the Non-Negotiable Promissory
Note of even date herewith made by Debt Resolve in favor of Arisean (the
"Note"), pursuant to the Letter Agreement of even date herewith (the "Letter
Agreement"), between Debt Resolve and Arisean, and any extensions or
substitutions thereof, (ii) all costs incurred by Arisean to obtain, preserve
and enforce the security interest granted hereby, collect all amounts due under
the Note and this Security Agreement, and maintain and preserve the Collateral
(as such term is defined below), including, but not limited to, taxes,
assessments, insurance premiums, repairs, reasonable attorneys' fees and
expenses, rent, storage costs and expenses of sale, and (iii) interest on the
above amounts as provided in the Note; and (b) "Collateral" shall mean all
of
Debt Resolve's present and future right, title and interest in the Debt
Resolve's assets of every kind and description, including, but not limited
to,
all right, title and interest of the Debt Resolve in, to and under the following
property, whether now owned or hereafter created or acquired: (i) all of the
Debt Resolve's accounts receivable and all proceeds, renewals, substitutions
for, and replacements thereof (collectively, the "Accounts Receivable"), (ii)
all promissory notes, chattel paper, documents and other instruments, whether
now or hereafter existing or acquired, evidencing any obligation to Debt Resolve
under the Accounts Receivable, (iii) all interest of Debt Resolve in any goods,
including but not limited to returned goods, the sale or lease of which shall
have given rise to any of the foregoing, (iv) any and all contract rights of
the
Debt Resolve, and (v) all cash or non-cash products and proceeds of any of
the
foregoing, including insurance proceeds.
2. Security
Interest.
As
security for the full and timely payment of the Obligations in accordance with
the terms thereof and of the respective instruments or agreements now or
hereafter evidencing the Obligations or pursuant to which the Obligations arise,
Debt Resolve agrees that Arisean shall have, and Debt Resolve hereby grants
to
and creates in favor of Arisean, a security interest in and to all now-owned
and
hereafter acquired Collateral.
3. Fixtures.
If the
Collateral is or is about to become affixed to realty, Debt Resolve will, at
Arisean's request, furnish Arisean a writing executed by the owner and/or
mortgagee of the realty whereby the owner and/or mortgagee subordinates its
rights and priorities to Arisean's security interest in the Collateral. If
the
Collateral is or may become subject to a landlord's lien, the Debt Resolve
will,
at Arisean's request, furnish Arisean with a landlord's waiver satisfactory
in
form to Arisean.
4. Insurance.
Until
this Agreement is terminated, Debt Resolve will have and maintain insurance
on
the Collateral against all customarily insured risks to which it is exposed,
such insurance to be payable to Arisean and Debt Resolve as their interests
may
appear; all policies shall provide for ten (10) days' written minimum
cancellation notice to Arisean. Arisean may act as attorney for Debt Resolve
in
obtaining, adjusting, settling and canceling such insurance.
5. Default.
Upon
the occurrence of any Default (as such term is defined in the Note), Debt
Resolve agrees upon demand to deliver the Collateral to Arisean, or Arisean
may,
with or without legal process, and with or without previous notice or demand
for
performance, enter any premises wherein the Collateral may be located, and
take
possession of the same, together with anything therein; and Arisean may collect
upon and/or make disposition of the Collateral subject to any and all applicable
provisions of the law. If the Collateral is sold at public sale, Arisean may
purchase the Collateral at such sale. Arisean, provided it has sent the
statutory notice of default, may retain from the proceeds of such sale all
reasonable costs incurred in the said taking and sale and also, all other sums
then owing by Debt Resolve to Arisean, and any surplus of any such sale shall
be
paid to Debt Resolve or as otherwise directed by court order. In the case of
any
deficiency, Arisean may collect such deficiency from Debt Resolve.
6. General
Agreements.
Debt
Resolve agrees (a) to pay the costs of filing financing statements and of
conducting searches in connection with this Agreement; (b) to allow Arisean
through any of its officers or agents, at all reasonable times, to examine
or
inspect any of the Collateral and to examine, inspect and make extracts from
Debt Resolve's books and records relating to the Collateral; (c) to promptly
pay
when due all taxes and assessments upon the Collateral or for its use or
operation or upon the proceeds thereof or upon this Agreement or upon any
instrument or instruments evidencing the Obligations; and (d) that Arisean
is
authorized to file appropriate financing statements and any amendments thereto
without the signature of Debt Resolve, such authorization being limited to
the
security interest granted by this Agreement. At its option, Arisean may
discharge taxes, liens or security interests or other encumbrances at any time
levied or placed on the Collateral, and may pay for the maintenance,
preservation and/or insurance of the Collateral, and Debt Resolve agrees to
reimburse Arisean on demand for any payment made or any expense incurred by
Arisean pursuant to the foregoing authorization, including attorneys’ fees and
disbursements incurred or expended by Arisean in connection with this Agreement.
Arisean shall not be deemed to have waived any of its rights hereunder or under
any other agreement, instrument or paper signed by Debt Resolve by reason of
Arisean's performance of any of Debt Resolve's obligations as aforesaid, or
in
any other manner unless such waiver is in writing and signed by Arisean. No
delay or omission on the part of Arisean in exercising any right shall operate
as a waiver thereof or of any other right. A waiver upon any one occasion shall
not be construed as a bar or a waiver of any right or remedy on any future
occasion. All of the rights and remedies of Arisean, whether evidenced hereby
or
by any other agreement, instrument or paper, shall be cumulative and may be
exercised singly or concurrently. This Agreement shall be construed in
accordance with the laws of the State of New York, without giving effect to
its
choice of law rules.
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DEBT
RESOLVE, INC.
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By:
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Co-Chairman
and Chief Executive Officer
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ARISEAN
CAPITAL LTD.
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By:
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President
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