Loan Agreement
(1) Xxxxxxxx Partners LLC
(2) Tiger Telematics Inc
Dated 31, January 2006
Xxxxxxx Xxxxxx
Apex Plaza
Forbury Road
Reading
RGI IAX
Telephone x00(0)000 000 0000
Fax x00(0)000 000 0000
This Agreement is made on 31 January 2006
Between:
(1) Xxxxxxxx Partners LLC of 0 Xxxx Xxxxxxxxxx Xxxxxx, Xxxxx 0X, Xxxxx, Xxxxxxxx
XXX 00000 (the "Lender") and
(2) Tiger Telematics Inc. of 000 Xxxxx Xxxxxx, Xxxxx 000, Xxxxxxxxxxxx, Xxxxxxx
00000 (the "Borrower").
Background:
The parties wish to enter into this Agreement to record the terms upon which
the Lender is to lend to the Borrower the sum of up to US$5,000,000.
It is agreed as follows:
1. Definitions and interpretation
1.1 In this Agreement, unless the context otherwise requires, the following
definitions shall apply:
"Accounts Receivable" means all receivables of the Borrower or its
subsidiaries from time to time;
"Advance" means each advance made or to be made to the Borrower under
the Facility, as the case may be, the outstanding principal amount of
that advance;
"Agreement" means this Agreement (including any schedule or annexure to
it and any document in agreed form);
"Facility" means an on demand loan facility of up to US$5,000,000;
"Default" means a breach of clause 8 of this Agreement.
"Drawdown Date" means the date on which an Advance is made, or is
proposed to be made;
"Drawdown Notice" means a notice substantially in the form set out in
schedule1;
"Encumbrance" means any mortgage, charge, assignment by way of
security, pledge, hypothecation, lien, right of set-off, retention of
title provision, trust or flawed asset arrangement (for the purpose of,
or which has the effect of, granting security) or any other security
interest of any kind whatsoever, or any agreement, whether conditional
or otherwise, to create any of the same;
"Indebtedness" means in relation to a person, its obligation (whether
present or future, actual or contingent, as principal or surety) for
the payment or repayment of money (whether in respect of interest,
principal or otherwise) incurred in respect of:
(a) moneys borrowed or raised;
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(c) any acceptance credit, xxxx discounting, note purchase,
factoring or documentary credit facility;
(d) the supply of any goods or services which is more than 60 days
past the expiry of the period customarily allowed by the
relative supplier after the due date;
(e) any finance lease;
(f) any guarantee, bond, stand-by letter of credit or other
similar instrument issued in connection with the performance
of contracts;
(g) any interest rate or currency swap agreement or any other
hedging or derivatives instrument or agreement;
(h) any arrangement pursuant to which any asset sold or otherwise
disposed of by that person is or may be leased to or
re-acquired by a Group Company ( whether following the
exercise of an option or otherwise); or
(i) any guarantee, indemnity or similar insurance against
financial loss given in respect of the obligation of any
person;
"Loan" means the principal amount of up to US$5,000,000 as reduced from
time to time by repayment;
"Loan Commitment Period" means the period from and including the date
of this Agreement to the date falling 90 days after the date on which
completion takes place;
"Loan Limit" means the lower of US$5,000,000 or an amount not exceeding
80% of the book value of the Stock/Inventory (as determined by the
management accounts/agreement schedule);
"Stock/Inventory" means all stock, parts and accessories of the
Borrower and its subsidiaries at all locations of the Borrower plus
Scotland and China at the Flextronics factory;
"USS" of "US Dollars" means the lawful currency of the United States of
America;
"Warrant" means the right to buy common stock of $0.001 each in the
Borrower on a dollar for dollar basis with respect to the total value
of all Advances made under this Agreement, such right having an
exercise period of 3 years from the Drawdown Date of the first Advance
made under this Agreement and an exercise price of $0.30.
1.2 In this Agreement, unless the context otherwise requires:
(a) words in the singular include the plural and vice versa and
words in one gender include any other gender;
(b) "subsidiaries" shall have the meaning given to it in Section
736 of the Companies Xxx 0000; and
(c) the table of contents and headings are for convenience only
and shall not affect the interpretation of this Agreement.
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2. Purpose
To enable the Borrower to meet it's general working capital
requirements.
3. Loan
3.1 The Lender shall make the Loan and the Borrower shall borrow from the
Lender the Loan upon completion of this Agreement.
3.2 The Lender at the Borrower's request may agree to increase the amount
of the Loan from time to time in which case this Agreement shall be
deemed to have been amended from the date any additional sum is
advanced by the Lender so that the expression "the Loan" includes any
additional advances from time to time outstanding.
4. Drawdown of Loan
4.1 Drawdown of Loan
(a) Subject to the other terms of this Agreement, the Loan shall
be drawn down in one or more Advances at any time during the
Loan Commitment Period when requested by the Borrower by means
of a Drawdown Notice in accordance with sub-clause 4.3. At
close of business on the last day of the Loan Commitment
Period any part of the Loan not drawn down will be cancelled
and the Loan Limit shall be reduced accordingly.
(b) The following limitations apply to Advances:
(i) the Drawdown Date of an Advance shall be a Business
Day during the Loan Commitment Period;
(ii) each Advance shall be of a minimum amount of
US$350,000 and a multiple of $50,000; and
(iii) no Advance shall be made if the making of that
Advance would result in the Loan exceeding the Loan
Limit.
4.2 Conditions to each Advance
The obligation of the Lender to make available each Advance is subject
to the conditions that on the date on which the relevant Drawdown
Notice is given and on the relevant Drawdown Date no Default has
occurred and is continuing or would occur on the making of the Advance.
4.3 Drawdown Notice
(a) Whenever the Borrower wishes to draw down an Advance, it shall
give a duly completed Drawdown Notice to the Lender to be
received not later than 11.00 am on the second Business Day
before that Drawdown Date.
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(b) A Drawdown Notice shall be irrevocable and the Company shall
be obliged to borrow in accordance with its terms.
4.4 Advances
Subject to the terms of this Agreement, the Lender shall make available to the
Borrower on the Drawdown Date and amount equal to that Advance.
5. Interest
5.1 The Borrower shall pay to the Lender interest on the Loan at 5.5% per
annum above the base lending rate for the time being of National
Westminister Bank Plc. Interest shall accrue from day to day and shall
be payable monthly in arrears.
5.2 If the Borrower fails to pay any sum due under this Agreement on its
due date, the Borrower shall on the written demand of the Lender pay to
the Lender interest on such sum at 24% per annum, from the due date to
the date of actual payment (after as well as before judgement).
5.3 If the Borrower is required by law or any applicable tax rules or
regulations to make any deduction or withholding from a payment of
interest under this Agreement, the Borrower shall:
(a) pay the full amount required to be paid to the relevant
taxation or other authority; and
(b) furnish to the lender within 30 days of such payment an
official receipt from such authority for all amounts deducted
or withheld; and
pay to the Lender an additional amount so that the Lender receives on
the due date the full amount it would have received had no deduction or
withholding been made.
6. Warrant
In consideration of the Lender advancing the Loan, the Borrower shall grant the
Warrant by issuing a warrant instrument governed by Delaware law within 5 days
of the date of this Agreement.
7. Repayment
The Loan (together with all interest accrued and unpaid on it) shall be repaid
to the Lender by the Borrower in full within 90 days of written demand by the
Lender at any time.
8. Security
As security for the Loan and other sums from time to time due under this
Agreement, on or before the date of this Agreement, The Borrower shall enter
into a first, fixed charge on the Accounts Receivable and the Stock/Inventory in
favour of the Lender in a form satisfactory to the Lender.
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9. Negative Undertakings
The Borrower undertakes that is shall not, and shall procure that its
subsidiaries shall not, unless the Lender otherwise agrees:
(a) Negative Pledge
Create or permit to subsist any Encumbrance over any of its
assets other than in favour of the Lender (save for the
existing Smart Adds IPR Pledge dated 30 November 2005):
(b) Indebtedness
incur or permit to subsist any Indebtedness other than with
the Lender.
10. Information Undertakings
The Borrower undertakes that it shall as soon as the same become
available (and in any event within 21 days after the end of each
calendar month) deliver to the Lender the management accounts of the
Borrower in such a form as to disclose with reasonably accuracy the
financial position of the Borrower and which shall include the
following information in respect of such period:
(a) a statement of profit and loss;
(b) a balance sheet;
(c) a cashflow statement;
(d) details of the current stock count and valuation;
together with a comparison where appropriate, of all such information
with the estimates, forecasts and projections in the relevant operating
budget (or any replacement or substitution of it) in relation to each
such month period including an analysis highlighting any variation from
it and, if necessary, revised estimates, forecasts and projections.
11. Fees
The Borrower shall pay to the Lender an amount equal to 10% of each
Advance within 90 days of first drawdown of that Advance.
12. Conversion of Loan
12.1 The Borrower covenants with the Lender to convert the Loan into common
stock of US$0.001 each of the Borrower in accordance with Schedule 2.
12.2 Until all the Loan shall have been converted or repaid in accordance
with this Agreement the Borrower shall:
(a) keep available for issue sufficient authorized but unissued
common stock free of pre-emptive or other similar rights to
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satisfy in full all conversion notices deposited in accordance
with Schedule 2 which could be delivered in respect of all of
the Loan at that time but repaid or converted and all other
rights of subscription for an conversion into common stock
without the need for the prior passing of any resolution by
its shareholders to approve such issue;
(b) if any offers is made to all holders of common stock (or all
such holder other than the offeror and/or any company
controlled by, or under the same control as, the offeror
and/or persons acting in concert with the offeror) to acquire
all or a proportion of the common stock, procure that at least
20 days prior notice thereof is given to the Lender and that a
like offer is extended to the holders of any common stock
issued as a result of a conversion of loan pursuant to this
Agreement and Schedule 2 while the offer remains open for
acceptance and that such offer shall remain so open for at
least the 20 day notice period;
(c) not, without the sanction of the Lender, in any way modify the
rights attached to its existing common stock as a class or
permit the creation of any shares ranking in priority to its
existing common stock or consolidate, sub-divide cancel or
redeem any common stock or increase the authorized share
capital of the Borrower.
13. Payments
All payments of interest and principal under this Agreement shall be
made by the Borrower without set-off or deduction in cleared funds to
the Lender's account at National Westminister Bank Plc, account number
00000000, sort code 56-00-05 (reference Xxxxxxxx/0894263).
14. Default
Notwithstanding any other provisions of this Agreement, if any of the
following events occurs then the full amount of the Loan (together with
all interest accrued an unpaid thereon) will become immediately due and
payable on the Lender's first written demand:
(a) the Borrower fails to make any payment of the due date under
this Agreement;
(b) a breach of any of the Borrower's obligations under this
Agreement or any security document entered into in favour of
the Lender and if that breach is capable of remedy, it is not
remedied within 10 Business Days after notice of that breach
has been given by the Lender to the Borrower;
(c) a petition is presented, or an order is made or an effective
resolution is passed for the winding up or dissolution or for
the appointment of a liquidator of the Borrower;
(d) distress, execution or sequestration or other legal process is
levied or enforced or sued out against any of the assets of
the Borrower which is not discharged or paid out within 5
business days except where the Lender is satisfied that this
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distress, execution, sequestration or other legal process is
being contested in good faith by the Borrower (save for the
disclosed lawsuits against the Borrower by the following
claimants: NTV Europe, Ogilvy & Xxxxxx and Hand Held Games):
(e) the Borrower ceases to pay its debts or is unable to pay its
debts as they fall due or is deemed unable to or admits its
inability to do so or makes a general assignment for the
benefit of or a composition with its creditors (save for the
disclosed non-payment of professional fees in the US); or
(f) the Borrower ceases or threatens to cease to carry on its
business or a substantial part of its business.
15. Miscellaneous
15.1 The Borrower shall be responsible for all costs incurred in connection
with the preparation and execution of this Agreement. The Borrower
shall indemnify the Lender on demand for all costs and expenses
(including legal fees) and any VAT on them incurred in connection with
the enforcement of the Lender's rights under this Agreement or under
the security referred to in clause 8(Security).
15.2 Neither of the parties to this Agreement shall assign or transfer any
of its rights and/or obligations under this Agreement without the
previous written consent of the other party.
16. Governing law and jurisdiction
16.1 This Agreement shall be governed by and construed in accordance with
English law.
16.2 Each of the parties irrevocably submits for all purposes in connection
with this Agreement to the exclusive jurisdiction of the courts of
England.
This Agreement has been signed on the date appearing at the head of page 1.
Signed by )
for and on behalf of )
Xxxxxxxx Partners LLC )
In the presence of: )
Signature of witness:
Name:
Address:
Occupation:
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Signed by )
for and on behalf of )
Tiger Telematics Inc. )
In the presence of: )
Signature of witness:
Name:
Address:
Occupation:
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Schedule 1
(Drawdown Notice)
To: Lafitte Partners LLC
From: Tiger Telematics Inc.
o[date]
Dear Sirs
Loan Agreement dated o 2006("the Loan Agreement")
Terms defined in the Loan Agreement have the same meaning in this notice.
We request an Advance to be drawn down under the Loan Agreement as follows:
1. Amount of Advance;
2. Drawdown Date;
3. Duration of Interest Period.
We confirm that today and on the Drawdown Date no Default has occurred and is
continuing or will occur on the making of the Advance.
Signed
For and on behalf of Tiger Telematics Inc.
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Schedule 2
Part I
(Conversion)
The Lender may convert all or any part of the Loan into fully paid 0.001 common
stock of Tiger Telematics Inc. ("the Company") at the conversion rate of 1
common stock for every US$0.30 of the principal amount of Loan on the following
basis:
1. The Lender shall be entitled to convert all of the Loan at any time
prior to 31 January 2009;
2. The conversion rights may be exercised by deposition at the registered
office of the Company or a meeting of the board of directors of the
Company (the "Board") the conversion notice duly completed. Once
deposited the conversion notice shall be revocable at any time prior to
the conversion by service of notice of revocation upon the Company. The
Company shall within 5 business days of the date of receipt of the
conversion notice (such date being "the Conversion Date") allot and
issue to the Lender common stock in respect of the Loan converted and,
within 5 business days after the relevant Conversion Date, dispatch to
the persons entitled thereto share certificates in respect to the
common stock so allotted. Such allotment and issue shall be in full
satisfaction and discharge of the principal amount of the Loan so
converted;
3. Common stock capital issued on conversion of any part of the Loan will
be credited as fully paid up at par and will carry all rights including
rights to receive all dividends and other distribution declared, paid
or made on the common stock capital (including, without limitation, any
rights of the holders of common stock to be offered shares or other
securities or options or rights in respect thereof issues or granted by
the Company) arising on or after the relevant Conversions Date and
shall from that date rank pari passu in all respects and form one class
with the existing issued common stock;
4. On the Conversion Date the company shall pay to the Lender any default
interest payable under clause 5.2 of the Agreement (whether or not due
any Payable) and any other sums (including any accrued interest) owed
by the Company to the Lender under the Agreement;
5. The Company shall not be required to issue fractional shares upon the
exercise of the conversion rights under this Schedule and shall round
up to the nearest whole share.
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Part II
(Notice of Conversion)
To: Tiger Telematics Inc. ("the Company")
We hereby give notice of our desire to convert (pound) of the Loan into such
number of fully paid common stock of the Company, calculated in accordance with
the Conditions printed on this Certificate.
We agree to accept all the fully paid common stock of the Company issued
pursuant hereto subject to the constitution of the Company and the Conditions
(insofar as they relate to the common stock issued on conversion of such Loan).
Dated
Executed as a Deed by )
Xxxxxxxx Partners LLC )
acting by )
and )
Director
Director/Secretary
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