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EXHIBIT 10.5
LOAN AGREEMENT
THIS AGREEMENT is made as of the 9th day of October 1996 by and between
CONSERVER PURCHASING CORPORATION, a corporation organized and existing under the
laws of the State of Delaware whose registered office is at 0000 Xxxxxx Xxxxxx,
Xxxxxxxxxx, Xxxxxxxx 00000 ("Borrower"), and CONSERVER CORPORATION OF AMERICA, a
corporation organized and existing under the laws of the State of Delaware
having a place of business at 0000 XxXxxxx Xxxx, Xxxxx Xxxxxx, Xxxxxxx 00000
("Lender").
1. LOAN
(a) Subject to and upon the terms and conditions set forth below,
the Lender agrees to lend to the Borrower an amount up to Two
Hundred Thousand Dollars ($200,000) (the "Loan"), such sum to
be delivered to the Borrower in accordance with this
Agreement.
(b) The Loan shall be evidenced by and payable with interest in
accordance with a promissory note or notes of the Borrower
substantially similar in form and substance to Exhibit A
attached hereto and made a part hereof (the "Note").
2. INTEREST RATES; PAYMENTS AND OPTIONAL PREPAYMENTS
(a) The Borrower agrees to pay interest on the unpaid principal
amount of the Loan from time to time at the rate of eight per
cent (8%) per annum, such interest to be added to the
principal amount of the Note(s) on a monthly basis and payable
upon demand together with the Loan.
(b) All payments under this Agreement or otherwise in respect to
the Loan shall be made in immediately available funds in
accordance with the instructions of the Lender at the time
demand for payment is made, and no payments shall be subject
to setoff, counterclaim, withholding or reduction of any kind
whatsoever.
(c) The Borrower shall have the right to prepay the Loan in whole
or in part, without premium or penalty, at any time and from
time to time, provided that at the time of the prepayment the
Borrower shall pay all interest accrued on the amount prepaid.
3. ADDITIONAL CONSIDERATION; SECURITY
(a) The Borrower and the Lender acknowledge that a primary purpose
of the Loan is to fund the Borrower's anticipated purchase of
an inventory of products from
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Conserver XXI, S.A., a Spanish company (the "lnventory"). The
Lender therefore agrees to release the Loan to the Borrower in
accordance with the Borrower's instructions after receiving
confirmation satisfactory to it that the Borrower has taken
possession of the Inventory.
(b) The Borrower agrees to grant to the Lender a security interest
in, and a lien on, all right title and interest of the
Borrower in and to all assets of the Borrower and to enter a
Security Agreement in favor of the Lender in a form
substantially similar in form and substance to Exhibit B
attached hereto and made a part hereof (the "Security
Agreement") in order to secure payment and performance of the
Borrower's obligations to the Lender under this Agreement and
the Note.
(c) The Borrower agrees to execute and deliver to the Lender upon
demand by Lender any and all documents requested by Lender
relating to the security interests and rights granted pursuant
to the Security Agreement and the perfection thereof,
including without limitation any UCC documents; all taxes,
fees and other charges in connection with the execution,
delivery and filing of this Agreement and other appropriate
documentation shall be added to the principal of the Loan.
(d) As further inducement for Lender to enter into this Agreement
and additional consideration for the Loan arising hereunder,
Borrower hereby grants to Lender (i) an option to purchase all
or any part of the Inventory at a fair market price at any
time while Borrower retains title to the Inventory, (ii) a
right of first refusal to purchase all or any part of the
Inventory at the price and upon the terms offered by an arms'
length purchaser to Borrower, such right to be exercised
within thirty (30) days of notice of such offer by Borrower to
Lender, and (iii) the right to require Borrower to assign all
of its rights and interest in the letter from Conserver XXI,
S.A. to Borrower attached hereto as Exhibit C and/or any
agreement arising thereunder or otherwise related to the
subject matter thereof.
4. CONDITIONS PRECEDENT
The Lender shall not be obligated to release the Loan to the Borrower hereunder
until the following conditions have been satisfied:
(a) This Agreement, the borrowing hereunder, the Note, the
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Security Agreement and all transactions contemplated by this
Agreement and the Security Agreement shall have been duly
authorized by the Borrower. The Borrower shall have duly
executed and delivered to the Lender this Agreement, the Note
and the Security Agreement in form and substance reasonably
satisfactory to the Lender and its counsel.
(b) On the date hereof and on the date the Loan (or any part
thereof) is released to the Borrower, all representations and
warranties made by the Borrower in paragraph 5 of this
Agreement or otherwise in writing in connection herewith shall
be true and correct in all material respects with the same
effect as though such representations and warranties had been
made on and as of today's date, except that representations
and warranties expressly limited to a certain date shall be
true and correct as of that date.
(c) On or before the date hereof, there shall have been delivered
to the Lender the following supporting documents:
(i) legal existence and corporate good standing
certificates with respect to the Borrower dated as of
a recent date issued by the Secretary of State or
other officials of its state of organization.
(ii) a certificate of the Secretary or Assistant Secretary
of the Borrower certifying as to (i) the By-Laws of
the Borrower, as in effect on the date hereof; (ii)
the incumbency and the signatures of the officers of
the Borrower who have executed any documents in
connection with the transactions contemplated by this
Agreement; and (iii) the resolutions of the Board of
Directors and, to the extent reacquired by law, the
shareholders, of the Borrower authorizing the
execution, delivery and performance of this Agreement
and the making of the Loan hereunder, and the
execution and delivery of the Note; and
(iii) all other information and documents which the Lender
or its counsel may reasonably request in connection
with the transactions contemplated by this Agreement.
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5. REPRESENTATIONS AND WARRANTIES
As further inducement to the Lender to enter into this Agreement and to make the
contemplated Loan the Borrower hereby represents and warrants as follows (except
to the extent qualified by supplemental disclosure set forth on Schedule A
hereto) and the following representations and warranties as so qualified shall
survive the execution and delivery of this Agreement and the release of the Loan
and shall continue until no portion of the Loan or interest thereon remain
outstanding:
(a) The Borrower is a duly organized and validly existing
corporation in good standing under the laws of the
jurisdiction of its incorporation and is duly qualified or
licensed as a foreign corporation in good standing in each
jurisdiction in which the failure to do so would have a
Material Adverse Effect.
(b) Neither the execution, delivery or performance of this
Agreement or any other Loan Document, nor consummation of the
contemplated transactions will contravene any law, statute,
rule or regulation to which the Borrower is subject or any
judgement, decree, franchise, order or permit applicable to
the Borrower, or will conflict or be inconsistent with or will
result in any breach of, or constitute a default under, or
result in or require the creation or imposition of any Lien
(other than the lien created by the Security Agreement) upon
any of the property or assets of the Borrower pursuant to any
Contractual Obligation of the Borrower, or violate any
provision of the corporate charter or by-laws of the Borrower.
(c) The execution, delivery and performance of this Agreement and
the other Loan Documents are within the corporate powers of
the Borrower and have been duly authorized by all necessary
corporate action.
(d) This Agreement and each other Loan Document constitutes a
valid and binding obligation of the Borrower enforceable
against the Borrower in accordance with its terms, except as
limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the enforcement of
creditors' rights generally and subject to general principles
of equity, whether applied in a court of equity or at law.
(e) No order, permission, consent, approval, license,
authorization, registration or validation of, or filing with,
or exemption by, any Governmental Authority is
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required to authorize, or is required in connection with, the
execution, delivery and performance of this Agreement or any
other Loan Document by the Borrower, or the taking of any
action contemplated hereby or thereby, except for the filing
of UCC-1 financing statements in the appropriate UCC filing
offices.
(f) There are no actions, suits or proceedings pending or
threatened against or affecting the Borrower before any
Governmental Authority, which in any one case or in the
aggregate, if determined adversely to the interests of the
Borrower, would have a Material Adverse Effect.
(g) To the best of the Borrower's knowledge, the Borrower is not
in default under any Contractual Obligation, where such
default could have a Material Adverse Effect. To the best of
the Borrower's knowledge, the Borrower is not in default and
or in violation of any applicable statute, rule, writ,
injunction, decree, order or regulation of any Governmental
Authority having jurisdiction over the Borrower which default
or violation could have a Material Adverse Effect.
(h) The Borrower has no Subsidiaries.
(i) The Borrower has good and marketable title to all of its
properties and assets, and none of such properties or assets
is subject to any Lien except for (a) Permitted Liens, or (b)
a defect in title or other claim other than defects and claims
that, in the aggregate, would have no Material Adverse Effect.
The Borrower enjoys peaceful and undisturbed possession under
all leases necessary in any material respect for the operation
of its properties and assets, none of which contains any
unusual or burdensome provision which might materially affect
or impair such properties or assets. The Borrower is not aware
of the occurrence of any event which would result in the
termination of any such leases, and the Borrower has not
received, nor has the Borrower given, a notice of termination
of any such leases.
6. AFFIRMATIVE COVENANTS
The Borrower covenants and agrees that for so long as this Agreement is in
effect and until the Note, together with all interest thereon and all other
Obligations of the Borrower to the Lender are paid or satisfied in full:
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(a) The Borrower will maintain its existence and comply with all
applicable statutes, rules and regulations and to remain duly
qualified as a foreign corporation, licensed and in good
standing in each jurisdiction where such qualification or
licensing is required by the nature of its business, the
character and location of its property, business, or the
ownership or leasing of its property, except where such
noncompliance or failure to so qualify would not have a
Material Adverse Effect.
(b) The Borrower will pay when due all taxes, assessments,
governmental charges or levies, or claims for labor, supplies,
rent and other obligations made against it which, if unpaid,
might become a Lien against the Borrower or on its property,
except liabilities being contested in good faith and by proper
proceedings, as to which adequate reserves are maintained on
the books of the Borrower, in accordance with GAAP.
(c) The Borrower will maintain insurance with financially sound
and reputable insurance companies in such amounts and against
such risks as is usually carried by owners of similar
businesses and properties in the same general areas in which
the Borrower operates, provided that in any event the Borrower
shall maintain or cause to be maintained (a) insurance against
casualty, loss or damage covering all property and
improvements of the Borrower in amounts and in respect of
perils usually carried by owners of similar businesses and
properties in the same general areas in which Borrower
operates; (b) comprehensive general liability insurance
against claims for bodily injury, death or property damage;
and (c) workers' compensation insurance to the extent required
by applicable law. In the case of policies referenced in
clauses (a) and (b) above, all such insurance shall (i) name
the Borrower and the Lender as loss payees and additional
insureds as their interest may appear; (ii) provide that no
termination, cancellation or material reduction in the amount
or material modification to the extent of coverage shall be
effective until at least 20 days after receipt by the Lender
of notice thereof; and (iii) be reasonably satisfactory in all
other respects to the Lender.
(d) The Borrower will furnish to the Lender:
(i) promptly upon delivery thereof to the shareholders of
the Borrower generally, copies of all financial
statements, reports, proxy statements and other
materials writings;
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(ii) promptly upon becoming aware of any litigation or
other proceeding against the Borrower that may have a
Material Adverse Effect, notice thereof; and
(iii) promptly following the request of the Bank, such
further information concerning the business, affairs
and financial condition or operations of the Borrower
as the Lender may reasonably request.
(e) As soon as practicable, and in any event, within three (3)
Banking Days of becoming aware of the existence of any
condition or event which constitutes a Default, the Borrower
will provide the Lender with written notice specifying the
nature and period of existence thereof and what action the
Borrower is taking or proposes to take with respect thereto.
(f) The Borrower will, upon the prior request of the Lender, at
least twenty four (24) hours in advance, permit a
representative of the Lender (including any field examiner or
auditor retained by the Lender) to inspect and make copies of
the Borrower's books and records, and to discuss its affairs,
finances and accounts with its officers and accountants, at
such reasonable times and as often as the Lender may
reasonably request, including, without limiting the foregoing,
the examination of the Borrower's accounts receivable by the
Lender or its agent (which examination, prior to any
occurrence of an Event of Default, shall occur no more
frequently than semi-annually). The Borrower shall be solely
responsible for all costs, both direct and indirect, incurred
in the course of such inspections and examinations. The Lender
will use reasonable efforts not to interfere with the ordinary
course of the Borrower's business.
(g) The Lender will endeavour in good faith to maintain the
confidentiality of any non-public information relating to the
Borrower which has been identified in writing as confidential
on the information itself or otherwise (the "Confidential
Information") and, except as provided below, will exercise the
same degree of care that the Lender exercises with respect to
its own proprietary information to prevent the unauthorized
disclosure of the Confidential Information to third parties.
Confidential Information shall not include information that
either: (a) is in the public domain or in the knowledge or
possession of the Lender when disclosed to
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the Lender, or becomes part of the public domain after
disclosure to the Lender through no fault of the Lender; or
(b) is disclosed to the Lender by a third party, provided the
Lender does not have actual knowledge that such third party is
prohibited from disclosing such information. The terms of this
sub-paragraph shall not apply to disclosure of Confidential
Information by the Lender that is, in the good faith opinion
of the Lender, compelled by laws, regulations, rules, orders
or legal process or proceedings or is disclosed to: (i) any
party, including a prospective participant, who has signed a
confidentiality agreement containing terms substantially
similar to those contained herein; (ii) legal counsel,
examiners, auditors and directors of the Lender and examiners,
auditors and investigators having regulatory authority over
the Lender; or (iii) any party in connection with the exercise
of remedies by the Lender after default in the performance of
the Borrower's obligations to the Lender.
(h) The Borrower shall use the proceeds of the Loans solely for
the purchase of the Inventory, as described in paragraph 3 of
this Agreement, and related business purposes.
(i) The Borrower will execute and deliver to the Lender any
writings and do all things necessary, effectual or reasonably
requested by the Lender to carry into effect the provisions
and intent of this Agreement or any other Loan Document.
(j) The Borrower shall immediately notify the Lender of the
organization of any foreign or domestic subsidiaries of the
Borrower. The Lender may require that any such subsidiaries
become parties to any of the Loan Documents as guarantors or
sureties and/or that the Borrower pledge the stock of any
subsidiaries as collateral for the Obligations of the
Borrower.
7. NEGATIVE COVENANTS
The Borrower covenants and agrees that for so long as this Agreement is in
effect and until the Note, together with all interest thereon and all other
Obligations of the Borrower to the Lender are paid or satisfied in full, without
the prior written consent of the Lender:
(a) The Borrower will not merge or consolidate with or into any
other Person, or make any acquisition of the
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business of any other Person unless it obtains the prior
written consent of the Lender; provided, however, that the
Borrower may enter into any such transaction as long as (a)
the other Person is in the same or a related line of business;
and (b) no Event of Default shall have occurred and be
continuing or arise as a result thereof.
(b) The Borrower will not convey, sell, lease, transfer or
otherwise dispose of any of its property, business or assets
(including, without limitation, accounts receivable and
leasehold assets), whether now owned or hereafter acquired,
except the sale of inventory in the ordinary course of
business, subject to the terms and conditions of this
Agreement.
(c) The Borrower will not create, incur, assume or suffer to exist
any indebtedness, except:
(i) indebtedness payable to the Lender; and
(ii) Subordinated Debt incurred by the Borrower after the
date hereof; provided that, after giving effect to
the incurrence of such Subordinated Debt and to the
receipt and application of the proceeds thereof, no
Default shall have occurred and be continuing.
(d) The Borrower will not, create, incur, assume, or suffer to
exist any Lien on any of its properties or assets, except the
following (collectively, "Permitted Liens"):
(i) Liens for taxes not delinquent or being contested in
good faith and by proper proceedings, as to which
adequate reserves are maintained on the books of the
Borrower in accordance with GAAP;
(ii) carriers', warehousemen's mechanics', materialmen's,
landlord's or similar liens imposed by law incurred
in the ordinary course of business in respect of
obligations not overdue, or being contested in good
faith and by proper proceedings and as to which
adequate reserves with respect thereto are maintained
on the books of the Borrower in accordance with GAAP;
(iii) pledges or deposits in connection with workers'
compensation, unemployment insurance and other types
of social security legislation;
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(iv) security deposits made to secure the performance of
leases, licenses and statutory obligations incurred
in the ordinary course of business;
(v) Liens in favor of the Lender;
(vi) existing Liens, if any, listed on Schedule A hereto;
(vii) such minor defects, irregularities, encumbrances,
easements, rights of way, zoning, restrictions,
variations from building laws and clouds on title as
normally exist with respect to similar properties and
which do not materially impair the property affected
thereby for the purpose for which it was acquired;
(viii) operating leases and subleases of property to others
entered into in the ordinary course of business;
(ix) Liens on property owned by the Borrower, which
property constitutes leasehold improvements, to the
extent that such property is affixed to real estate
in such a manner as to be subjected to Liens on the
real estate to which it is affixed; and
(x) any attachment or judgment Lien individually or in
the aggregate not in excess of $10,000 unless the
judgment it secures shall, within 30 days after the
entry thereof, not have been discharged or execution
thereof stayed pending appeal, or shall not have been
discharged within thirty (30) days after the
expiration of any such stay.
(e) The Borrower will not declare or make any Restricted Payment.
(f) The Borrower will not make, maintain or acquire any investment
in any Person other than.
(i) marketable obligations issued or guaranteed by the
United States of America having a maturity of one
year or less from the date of purchase;
(ii) certificates of deposit, eurodollar time deposits,
commercial paper, bankers acceptances or any other
obligations of any bank or trust company organized or
licensed to conduct a
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banking business under the laws of the United States
or any State thereof and which has (or which is a
Subsidiary of a bank holding company which has)
publicly traded debt securities rated A or higher by
Standard & Poor's Corporation or A-2 or higher by
Xxxxx'x Investors Service, Inc.;
(iii) stock or obligations issued to the Borrower in
settlement of claims against others by reason of an
event of bankruptcy or a composition or the
readjustment of debt or a reorganization of any
debtor of the Borrower or such Subsidiary;
(iv) commercial paper with maturities of not more than 90
days issued by U.S. corporate issuers whose senior
debt is at the time rated investment grade by Xxxxx'x
Investor Services, Inc. or Standard & Poor's
Corporation;
(v) investments existing on the date hereof and listed on
Schedule A; and
(vi) investments consisting of the purchase of instruments
evidencing interest rate protection for all or a
portion of the Obligations.
8. EVENTS OF DEFAULT
(a) The occurrence of any of the following events shall be an
"Event of Default" hereunder:
(i) the Borrower shall default in the due and punctual
payment of principal or interest on the Note, or
shall default in the payment of any other amount due
under any Loan Document; or
(ii) any representation, warranty or statement made herein
or any other Loan Document, or in any certificate or
statement furnished pursuant to or in connection
herewith or therewith, shall prove to be incorrect,
misleading or incomplete in any material respect on
the date as of which made or deemed made; or
(iii) the Borrower shall default in the performance or
observance of any term, covenant or agreement on its
part to be performed or observed pursuant to
paragraph 7(a) or 7(e); or
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(iv) the Borrower shall default in the performance or
observance of any term, covenant or agreement on its
part to be performed or observed pursuant to any of
the provisions of this Agreement or any other Loan
Document (other than those referred to in paragraphs
8(a) (i) through 8(a) (iii) above) and such default
shall continue unremedied for a period of twenty (20)
days after the occurrence of such default; provided,
however, that if the curing of such default cannot be
accomplished within such period of time, and if the
Borrower commences to cure such default promptly
within such period, and thereafter prosecutes the
curing of such default with reasonable diligence,
such period of time shall be extended to a period of
time (not to exceed any additional thirty (30) days)
necessary to cure such default with reasonable
diligence; or
(v) any obligation of the Borrower in respect of any
indebtedness, (other than the Note) or any Guarantee
shall be declared to be or shall become due and
payable prior to the stated maturity thereof, or such
indebtedness or Guarantee shall not be paid as and
when the same becomes due and payable (after the
expiration of any applicable grace period), or there
shall occur and be continuing any default under any
instrument, agreement or evidence of indebtedness
relating to any such indebtedness the effect of which
is to permit the holder or holders of such
instrument, agreement or evidence of indebtedness, or
a trustee, agent or other representative on behalf of
such holder or holders, to cause such indebtedness to
become due prior to its stated maturity; or
(vi) the Borrower shall (i) apply for or consent to the
appointment of, or the taking of possession by, a
receiver, custodian, trustee or liquidator of itself
or of all or a substantial part of its property, (ii)
make a general assignment for the benefit of its
creditors (iii) commence a voluntary case under the
Bankruptcy Code, (iv) file a petition seeking to take
advantage of any other law relating to bankruptcy,
insolvency, reorganization, winding-up, or
composition or readjustment of debts (v) fail to
controvert in a timely and appropriate manner, or
acquiesce in writing to, any petition filed against
it in an
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involuntary case under the Bankruptcy Code, or (vi)
take any corporate action for the purpose of
effecting any of the foregoing; or
(vii) a proceeding or case shall be commenced, without the
application or consent of the Borrower in any court
of competent jurisdiction, seeking (i) its
liquidation, reorganization, dissolution or
winding-up or the composition or readjustment of its
debts, (ii) the appointment of a trustee, receiver,
custodian, liquidator or the like of the Borrower of
all or any substantial part of its assets, or (iii)
similar relief in respect of the Borrower under any
law relating to the bankruptcy, insolvency,
reorganization, winding-up or composition or
adjustment of debts, and such proceeding or case
shall continue undismissed, or an order, judgment or
decree approving or ordering any of the foregoing
shall be entered and continue unstayed and in effect,
for a period of 60 days; or an order for relief
against the Borrower shall be entered in an
involuntary case under the Bankruptcy Code; or
(viii) a judgment or judgments for the payment of money in
excess of $100,000 (net of insurance proceeds) in the
aggregate shall be rendered against the Borrower and
any such judgement or judgements shall not have been
vacated, discharged, stayed or bonded pending appeal
within thirty (30) days from the entry thereof; or
(ix) the Borrower or any Subsidiary thereof shall default
in the performance or observance of any term,
covenant or agreement on its part to be performed or
observed pursuant to any of the provisions of any
agreement with the Lender or any instrument delivered
in favor of the Lender (other than, in either case, a
Loan Document), and such default shall continue
unremedied beyond the grace period (if any) provided
for therein; or
(x) the Security Agreement shall cease to be in full
force and effect or shall cease to be effective to
grant a perfected security interest in the collateral
described in the Security Agreement with the priority
stated to be granted thereby for any reason, other
than the failure of the Lender to take action within
its control; or
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(xi) Borrower shall make any payment on account of its
Subordinated Debt, except to the extent such payment
is expressly permitted hereby or under any
subordination agreement entered into with the Lender.
(b) If any Event of Default shall have occurred and be continuing,
the Lender may declare the principal amount then outstanding
of, and the accrued interest on, the Loan and all other
amounts payable hereunder and under the Note to be forthwith
due and payable, whereupon such amounts shall be and become
immediately due and payable, without notice (including,
without limitation, notice of intent to accelerate) ,
presentment, demand, protest or other formalities of any kind,
all of which are hereby expressly waived by the Borrower.
9. DEFINITIONS
For the purposes of this Agreement:
(a) "Agreement" shall mean this Loan Agreement.
(b) "Banking Day" shall mean any day, excluding Saturday and
Sunday and excluding any other day which in the State of
Delaware is a legal holiday or a day on which banking
institutions are authorized by law to close.
(c) "Contractual Obligation" means, as to any Person, any
provision of any security issued by such Person or of any
agreement, instrument or other undertaking to which such
Person is a party or by which it is or any of its property is
bound.
(d) "Default" means any condition or event that constitutes an
Event of Default or that with the giving of notice or lapse of
time or both would, unless cured or waived, become an Event of
Default.
(e) "Event of Default" has the meaning set forth in paragraph 8
(a).
(f) "GAAP" means accounting principles generally accepted in the
United States applied on a consistent basis.
(g) "Governmental Authority" shall mean any federal, state,
municipal or other governmental department, commission, board,
bureau, agency, court, tribunal or other instrumentality,
domestic or foreign, and any
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arbitrator.
(h) "Guarantee" by any Person means any obligation, contingent, or
otherwise, of such Person directly or indirectly guaranteeing
any indebtedness or other obligation at any other Person and,
without limiting the generality of the foregoing, any
obligation, direct or indirect, contingent or otherwise of
such Person (a) to purchase or pay (or advance or supply funds
for the purchase or payment of) such indebtedness or other
obligation (whether arising by virtue of partnership
arrangements, by agreement to keep-well, to purchase assets,
goods, securities or services, to take-or-pay, or to maintain
financial statement conditions or otherwise) or (b) entered
into for the purpose of assuring in any other manner the
obligee of such Indebtedness or other obligation of the
payment thereof or to protect such obligee against loss in
respect thereof (in whole or in part); provided that the term
Guarantee shall not include endorsements for collection or
deposit in the ordinary course of business. The term
"Guarantee" used as a verb has a corresponding meaning.
(i) "Indebtedness" of any Person at any date shall mean (a) all
indebtedness of such Person for borrowed money or for the
deferred purchase price of property or services (excluding
current trade liabilities incurred in the ordinary course of
business and payable in accordance with customary practices,
but including any class of capital stock of such Person with
fixed payment obligations or with redemption at the option of
the holder) which is evidenced by a note, bond, debenture or
similar instrument, (b) all obligations of such Person under
leases that should be treated as capitalized leases in
accordance with GAAP, (c) all obligations of such Person in
respect of acceptances issued or created for the account of
such Person and all reimbursement obligations (contingent or
otherwise) of such Person in respect of any letters of credit
issued for the account of such Person, and (d) all
indebtedness secured by any Lien on any property owned by such
Person even though such Person has not assumed or otherwise
become liable for the payment thereof.
(j) "Lien" means any mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or other) ,
or preference, priority or other security agreement of any
kind or nature whatsoever (including, without limitation, any
conditional sale or other title retention agreement, any lease
that should
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be capitalized in accordance with GAAP, and the filing of a
financing statement under the Uniform Commercial Code or
comparable law of any jurisdiction), together with any
renewal or extension thereof.
(k) "Loan Documents" means, collectively, this Agreement, the
Note, the Security Agreement, and all other agreements and
instruments that are from time to time executed in connection
with this Agreement, as each of such agreements and
instruments may be amended, modified, or supplemented from
time to time.
(l) "Material Adverse Effect" means a material adverse effect on
(a) the business, operations, property, condition (financial
or otherwise) or prospects of the Borrower, or of the Borrower
and its Subsidiaries taken as a whole, (b) the ability of the
Borrower to perform its obligations under this Agreement, the
Note or any of the other Loan Documents (c) the validity or
enforceability of this Agreement, the Note or any of the other
Loan Documents, or the rights or remedies of the Lender
hereunder or thereunder, or (d) the right of the Lender to
enforce the payment of accounts against account debtors in any
particular State.
(m) "Note" shall have the meaning set forth in paragraph 1(b).
(n) "Obligations" shall have the meaning given the term "Secured
Obligations" in the Security Agreement as well as the
obligations of Borrower arising under paragraph 3(d) of this
Agreement.
(o) "Permitted Liens" shall have the meaning set forth in
paragraph 7 (d).
(p) "Person" shall mean and include any individual, firm,
corporation, trust or other unincorporated organization or
association or other enterprise or any governmental or
political subdivision, agency, department or instrumentality
thereof.
(q) "Restricted Payment" means, with respect to the Borrower (a)
any dividend or other distribution on any shares of capital
stock of the Borrower (except dividends payable solely in
shares of capital stock or rights to acquire capital stock of
the Borrower, and dividends payable solely to the Borrower),
(b) any payment on account of the purchase, redemption,
retirement or acquisition of (i) any shares of the capital
stock of the Borrower or
17
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(ii) any option, warrant, convertible security or other right
to acquire shares of the capital stock of the Borrower other
than, in either case, payments made solely to the Borrower,
and (c) any required or optional payment of any principal of,
or premium or interest on, or any required or optional
purchase, redemption or other retirement or other acquisition
of any Subordinated Debt, except for payments as may be
permitted pursuant to written subordination and intercreditor
agreements to which the Lender is a party.
(r) "Security Agreement" shall have the meaning set forth in
paragraph 3 (b).
(s) "Subordinated Debt" means indebtedness of the Borrower that is
subordinated to the indebtedness of the Borrower owing to the
Lender either (a) pursuant to a subordination agreement in
form and substance satisfactory to the Lender between the
Lender and the holder(s) of such indebtedness, or (b) pursuant
to the terms thereof, where the Lender has confirmed in
writing that such terms are satisfactory to it.
(t) "Subsidiary" means, with respect to any Person, any
corporation or other entity of which securities or other
ownership interests having ordinary voting power to elect a
majority of the board of directors or other persons performing
similar function are at the time directly or indirectly owned
by such Person.
(u) "UCC" shall have the meaning given such term in the Security
Agreement.
10. MISCELLANEOUS
(a) No amendment or waiver of any provision of this Agreement or
the Note, nor consent to any departure by the Borrower
therefrom shall in any event be effective unless the same
shall be in writing and signed by the Lender and then such
waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
(b) All notices and other communications provided for hereunder
shall be in writing and shall be delivered by hand, by a
nationally recognized commercial overnight delivery service,
by first class mail, or by telecopy, delivered, addressed or
transmitted, if to the Borrower, at City Tower, Xxxxx 0, 00
Xxxxxxxxxx Xxxxxx, Xxxxxx
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- 18 -
XX0X 0XX, Facsimile No. 0171 638 8799, if to the Lender at the
address in the preamble to this Agreement, Facsimile No. 305
444 7550 or, as to each party, at such other address as shall
be designated by such party in a written notice to the other
party. All such notices and communications shall be deemed
effective (a) in the case of hand deliveries, when delivered;
(b) in the case of an overnight delivery service, on the next
Banking Day after being placed in the possession of such
delivery service, with delivery charges prepaid; (c) in the
case of mail, three days after deposit in the postal system,
first class postage prepaid; and (d) in the case of telecopy
notices, when electronic indication of receipt is received.
(c) No failure on the part of the Lender to exercise, and no delay
in exercising, any right hereunder or under the Note shall
operate as a waiver thereof; nor shall any single or partial
exercise of any right hereunder or under the Note preclude any
other or further exercise thereof or the exercise of any other
right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.
(d) The Borrower shall pay on demand, if any Event of Default
occurs, all actual and reasonable costs and expenses incurred
by the Lender, including the actual and reasonable fees and
disbursements of counsel to the Lender, and of any appraisers,
environmental engineers or consultants or investment banking
firms retained by the Lender in connection with such Event of
Default or collection, bankruptcy, insolvency and other
enforcement proceedings related thereto. The Borrower agrees
to pay, indemnify and hold the Lender harmless from, any and
all recording and filing fees, and any and all liabilities
with respect to, or resulting from any delay in paying, stamp,
excise or other taxes, if any (other than taxes based upon the
Lender's net income) , which may be payable or determined to
be payable in connection with the execution and delivery of or
the consummation or administration of any of the transactions
contemplated by, or any amendment, supplement or modification
of, or any waiver or consent under or in respect of, this
Agreement or the other Loan Documents, or any documents
delivered pursuant hereto or thereto.
(e) This Agreement shall become effective when it shall have been
executed by the Borrower and the Lender and thereafter shall
be binding upon and inure to the benefit of the Borrower and
the Lender and their
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respective successors and assigns, except that the Borrower
shall not have the right to assign its rights hereunder or any
interest herein without the prior written consent of the
Lender. The Lender may assign with prior notice to the
Borrower to any financial institution or related Person all or
any part of, or any interest (undivided or divided) in, the
Lender's rights and benefits under this Agreement or the Note,
and to the extent of that assignment such assignee shall have
the same rights and benefits against the Borrower hereunder as
it would have had if such assignee were the Lender making the
Loan hereunder, and to the extent a participation interest is
sold the only rights that will be granted to a participant
will be with respect to waivers, amendments or modifications
that would reduce the principal of or interest rate on the
Loan or any fees.
(f) Any provision of this Agreement which is prohibited,
unenforceable or not authorized in any jurisdiction shall, as
to such jurisdiction, be ineffective to the extent of such
prohibition, unenforceability or non-authorization without
invalidating the remaining provisions hereof or affecting the
validity, enforceability or legality of such provision in any
other jurisdiction.
(g) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE.
(h) THE LENDER AND THE BORROWER AGREE THAT NEITHER OF THEM NOR ANY
ASSIGNEE OR SUCCESSOR SHALL (A) SEEK A JURY TRIAL IN ANY
LAWSUIT, PROCEEDING, COUNTERCLAIM OR ANY OTHER ACTION BASED
UPON, OR ARISING OUT OF, THIS AGREEMENT, ANY RELATED
INSTRUMENTS, ANY COLLATERAL OR THE DEALINGS OR THE
RELATIONSHIP BETWEEN OR AMONG ANY OF THEM, OR (B) SEEK TO
CONSOLIDATE ANY SUCH ACTION WITH ANY OTHER ACTION IN WHICH A
JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED. THE PROVISIONS OF
THIS PARAGRAPH HAVE BEEN FULLY DISCUSSED BY THE LENDER AND THE
BORROWER, AND THESE PROVISIONS SHALL BE SUBJECT TO NO
EXCEPTIONS. NEITHER THE LENDER NOR THE BORROWER HAS AGREED
WITH OR REPRESENTED TO THE OTHER THAT THE PROVISIONS OF THIS
PARAGRAPH WILL NOT BE FULLY ENFORCED IN ALL INSTANCES.
(i) THE BORROWER ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS
PROPERTIES, GENERALLY AND UNCONDITIONALLY THE NONEXCLUSIVE
JURISDICTION OF ANY STATE OR FEDERAL COURT OF COMPETENT
JURISDICTION IN THE STATE OF DELAWARE IN ANY ACTION, SUIT, OR
PROCEEDINGS OF ANY KIND AGAINST IT.
20
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WHICH ARISES OUT OF OR BY REASON OF THIS AGREEMENT, THE NOTE,
ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY, IRREVOCABLY AGREES TO BE BOUND BY ANY FINAL
JUDGEMENT RENDERED BY ANY SUCH COURT IN ANY SUCH ACTION, SUIT
OR PROCEEDING IN WHICH IT SHALL HAVE BEEN SERVICED WITH
PROCESS IN THE MANNER PROPER IN SUCH JURISDICTION, SUBJECT TO
EXERCISE AND EXHAUSTION OF ALL RIGHTS OF APPEAL AND, TO THE
EXTENT THAT IT MAY LAWFULLY DO SO, WAIVES AND AGREES NOT TO
ASSERT, BY WAY OF MOTION, AS A DEFENSE OR OTHERWISE IN SUCH
ACTION, SUIT OR PROCEEDING ANY CLAIMS THAT IT IS NOT
PERSONALLY SUBJECT TO THE JURISDICTION OF SUCH COURT, THAT ITS
PROPERTY IS EXEMPT OR IMMUNE FROM ATTACHMENT OR EXECUTION,
THAT THE ACTION, SUIT OR PROCEEDING IS BROUGHT IN AN
INCONVENIENT FORUM OR THAT THE VENUE THEREOF IS IMPROPER.
(j) Section headings in this Agreement are included herein for
convenience of reference only and shall not constitute a part
of this Agreement for any other purpose.
(k) This Agreement may be signed in one or more counterparts each
of which shall constitute an original and all of which taken
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered by their respective officers thereunto duly authorized as
of the date first above written.
CONSERVER PURCHASING CORPORATION
By: /s/ XXXXX XXXXXXX
-----------------------------------
CONSERVER CORPORATION OF AMERICA
By: /s/ XXXXXXX X. XXXXX
-----------------------------------
21
EXHIBIT A
DEMAND NOTE
$____________________ ______________________ , 199
______________________ [City] , ___________________ [State/Country]
1. On demand, we promise to pay to the order of Conserver Corporation of
America, the sum of $_________________________ , for value received,
with interest payable at the rate of eight per cent (8%) per annum,
payable at Citibank, F.S.B., 0000 Xxxxxxxx Xxxxxx, Xxxxx Xxxxxx,
Xxxxxxx 00000.
2. The makers, indorsers, and all parties to this Note hereby waive
presentment and notice of demand, protest and notice of protest and
nonpayment of this Note.
CONSERVER PURCHASING CORPORATION
BY __________________________
22
AMENDMENT TO LOAN AGREEMENT
THIS AGREEMENT is made on the 31st day of December 1996 by and between
CONSERVER PURCHASING CORPORATION, a corporation organized and existing under
the laws of the State of Delaware whose registered office is at 0000 Xxxxxx
Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000 ("Borrower"), and CONSERVER CORPORATION OF
AMERICA, a corporation organized and existing under the laws of the State of
Delaware having a place of business at 0000 XxXxxxx Xxxx, Xxxxx Xxxxxx, Xxxxxxx
00000 ("Lender").
WHEREAS, the Borrower and the Lender entered into a Loan Agreement dated 9th
October 1996 (the "Loan Agreement");
WHEREAS, the Borrower and the Lender have agreed to increase the maximum amount
of the Loan (capitalized terms not defined herein shall be defined as in the
Loan Agreement); and
WHEREAS, the Borrower and the Lender wish to amend the Loan Agreement to
reflect such modification;
NOW, THEREFORE, in consideration of the premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto hereby agree as follows:
1. LOAN
(a) The maximum amount of the Loan, as provided in
23
-2-
paragraph 1(a) of the Loan Agreement, shall be Three Hundred
Fifty thousand dollars ($350,000).
(b) Each advance from the Lender to the Borrower under the Loan
Agreement shall be evidenced by a promissory note of the
borrower substantially similar in form and substance to Exhibit
A to the Loan Agreement. The Borrower and the Lender acknowledge
that Borrower's note attached hereto as Appendix 1 was made in
anticipation of this Agreement and satisfies the requirements
of this paragraph 1(b).
2. ADDITIONAL INVENTORY
The Borrower and the Lender acknowledge that a primary purpose for
increasing the maximum amount of the Loan is to fund the Borrower's
anticipated purchase of additional inventory of products from Conserver
XXI, S.A., and they hereby agree that such additional inventory shall be
included within the definition of Inventory in the Loan Agreement. The
Lender agrees to release such additional portions of the Loan to the
Borrower as are required to purchase such additional inventory in
accordance with the Borrower's instructions after receiving confirmation
satisfactory to it that the Borrower has taken possession of such
additional inventory.
24
-3-
3. ADDITIONAL CONSIDERATION
As further inducement for Lender to enter into this Agreement and as
additional consideration for the Loan arising under the Loan Agreement,
Borrower hereby grants to Lender the right to require Borrower to assign
all of its rights and interest in the letter from Conserver XXI, S.A. to
Borrower attached hereto as Appendix 2 and/or any agreement arising
thereunder or otherwise related to the subject matter thereof, and it is
hereby confirmed that this right and the other rights held by the Lender
under paragraph 3(d) of the Loan Agreement shall survive payment or
pre-payment of the Loan.
4. SECURITY
It is acknowledged and agreed by the parties hereto that the Loan
Agreement, as amended by this Agreement, remains subject to the Security
Agreement.
5. CONFIRMATION
The parties hereto hereby confirm that in all other respects the Loan
Agreement remains in full force and effect, and, subject only to the
specific changes to the Loan Agreement effected hereby, this Agreement
shall be construed as if it were a part of the Loan Agreement.
6. MISCELLANEOUS
(a) This Agreement shall be governed by, and construed
25
-4-
in accordance with, the laws of the State of Delaware.
(b) This Agreement may be signed in one or more counterparts each of
which shall constitute an original and all of which taken together
shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered by their respective duly authorized officers as of the
date first above written.
CONSERVER PURCHASING CORPORATION
By: /s/ XXXXX XXXXXXX
----------------------------
CONSERVER CORPORATION OF AMERICA
By: /s/ XXXXXXX X. XXXXX
-----------------------------
26
APPENDIX 2
[CONSERVER XXI, S.A. LETTERHEAD] [LOGO]
CONSERVER PURCHASING CORPORATION
0000 Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
December 30th 1996
Gentlemen:
This letter will confirm as follows
1. We hereby reaffirm our letter to you of 9th October 1996 to the effect
that you have the absolute right to use the Conserver name and trademark as
well as all related products in the United States of America and Canada
(the "Territory").
2. From the date hereof until the execution of the long term contract
referred to paragraph 3 (the "Period"), these rights shall be exclusive,
and we shall not provide any Conserver 21 products (the "Product") for any
use in the Territory during the Period other than to you.
3. Provided (i) that you offer purchase and pay for three hundred (300)
filters and seven hundred thousand (700,000) sachets of the Product prior
to 31st December 1996, such payment to be made by wire transfer at the
prices referred to in paragraph 4, fifty percent (50%) at the time of
placing the order and fifty (50%) after inspection and loading of such
filters and sachets takes place, it being warranted by us that all of this
Product will be of the standard and have the qualities previously
represented to you, and (ii) subject to our mutual agreement of reasonable
minimum orders for the Product in a long term contract, we hereby agree to
enter into a long term contract of not less than twenty (20) years with you
under which you shall have continuing exclusive rights in the Territory to
the Product as it exists today and as we further develop and improve it, as
well as other products which enhance the life of food and flowers which we
may acquire from time to time, such long term contract to be subject to the
usual commercial conditions, it being our intention that such long term
contract be agreed as soon as is practicable, but in any event before 31st
March 1997.
27
APPENDIX 1
DEMAND NOTE
$62,000 19th December 1996
London, England
1. On demand, we promise to pay to the order of Conserver Corporation
of America, the sum of $62,000, for value received, with interest
payable at the rate of eight per cent (8%) per annum, payable at
Citibank, F.S.B., 0000 Xxxxxxxx Xxxxxx, Xxxxx Xxxxxx, Xxxxxxx 00000.
2. The makers, indorsers, and all parties to this Note hereby waive
presentment and notice of demand, protest and notice of protest
and nonpayment of this Note.
CONSERVER PURCHASING CORPORATION
BY /s/ Xxxxx Xxxxxxx
-----------------------------
28
4. The agreed price for such products during the Period is Fifteen
U.S. dollars (U.S. $15.00) per filter and seventeen U.S. cents
(U.S. $0.17) per sachet, ex works.
5. During the Period you shall have the right to send your
representatives to our factory to inspect the production of the Products
you have ordered and to receive technical assistance from us related to
the Product.
6. We warrant and covenant that we have the absolute authority to
grant the rights granted hereunder and to be granted under the long term
agreement and the full corporate authority to execute this letter on
behalf of Conserver XXI, S.A.
7. Any disputes arising hereunder shall be resolved by arbitration
under the International Chamber of Commerce.
8. Your rights hereunder are freely assignable by you to an entity
deemed appropriate by you.
9. Absolute confidentiality shall be maintained with respect to
the terms of this letter and all actions arising herefrom, provided,
however, that it is agreed and understood that this letter may be shown
and discussed on a confidential basis with Conserver Corporation of
America and its potential investors.
For and on behalf of Conserver XXI, S.A.
/s/ Xxxxxxx xx Xxxxx Xxxxxx /s/ X.X. Xxxxx-Arevalillo Xxxxxxx
---------------------------------- ----------------------------------
Xxxxxxx xx Xxxxx Xxxxxx X.X. Xxxxx-Arevalillo Xxxxxxx
29
CONSERVER XXI, S.A.
Poligono El Canal
X/ Xxxxxx 0-0
00000 Xxxxxxx xxx Xxx
Xxxxxx
Conserver Purchasing Corporation
0000 Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Madrid, 9th October 1996
Gentlemen,
This letter will confirm as follows:
1. You have the absolute right to use the Conserver name and trademark as
well as all related products in the United States of America and Canada
(the Territory)
2. From the date hereof until the execution of the long term contract
referred to in paragraph 3 (the period), these rights shall be exclusive,
and we shall not provide any Conserver products (the product) for any use
in the Territory during the period other than to you.
3. Provided (i) that you offer to purchase and pay for twelve thousand
(12,000) filters and ten thousand (10,000) sachets of the Product during
the week beginning on 7th October 1996, such payment to be made transfer at
the prices referred to in paragraph 4 immediately after inspection and
loading of such filters and sachets takes place, it being warranted by us
that all this Product is of the standard and has the qualities previously
represented to you, and (ii) subject to our mutual agreement of minimum
orders for the Product in a long term contract, then we hereby agree to
enter into a long term contract (20 years) with you under which you shall
have continuing exclusive rights in the Territory to the Product as it
exists today and as we further develop and improve it, as well as other
products which enhance the life of food and flowers which we may acquire
from time to time, such long term contract to be subject to the usual
commercial considerations, it being our intention that such long term
contract be agreed as soon as is practicable, but in any event before the
end of 1996.
4. The agreed price for such products during the period is U.S $15.00
(fifteen dollars) per filter and U.S $0.13 (thirteen cents) per sachet, ex
works.
30
5. During the period you shall have the right to send your
representatives to our factory to inspect the production of the Products
you have ordered and to receive technical assistance from us related to
the product.
6. We warrant and covenant that we have the absolute authority to
grant the rights granted hereunder and to be granted under the long term
agreement and the full corporate authority to execute this letter on
behalf of Conserver XXI, S.A.
7. Any disputes arising hereunder shall be resolved by arbitration
under the International Chamber of Commerce.
8. Your rights hereunder are freely assignable by you to an entity
deemed appropriate by you.
9. Absolute confidentiality shall be maintained with respect to the
terms of this letter and all actions arising herefrom.
For and on behalf of Conserver XXI, S.A.
/s/ Xxxxxxx xx Xxxxx Xxxxxx /s/ X.X. Xxxxx-Arevalillo
----------------------------- -----------------------
Xxxxxxx xx Xxxxx Xxxxxx X.X. Xxxxx-Arevalillo
