EXHIBIT 10.10
LOAN AND SECURITY AGREEMENT
BY AND BETWEEN
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
AS LENDER
AND
U.S. GAS & ELECTRIC, INC.
AS BORROWER
DATED: MAY 14, 2004
LOAN AND SECURITY AGREEMENT
This Loan and Security Agreement ("Agreement") dated May 14, 2004 is
entered into by and between ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, a Virginia resident individual
("Lender") and U.S. Gas & Electric, Inc., a Delaware corporation ("Borrower").
WITNESSETH:
WHEREAS, Borrower has requested that Lender enter into financing
arrangements with Borrower pursuant to which Lender will lend money to Borrower;
and
WHEREAS, Lender is willing to make such loans upon and subject to the terms
and conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual conditions and agreements
set forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
SECTION 1. DEFINITIONS
For purposes of this Agreement, the following terms shall have the
respective meanings given to them below:
1.1 "Accounts" shall mean all present and future rights of Borrower to
payment of a monetary obligation (which is not evidenced by chattel paper or an
instrument) for property that has been sold, assigned, or otherwise transferred
for consideration.
1.2 "Affiliate" shall mean, with respect to a specified Person, any other
Person which directly or indirectly, through one or more intermediaries,
controls or is controlled by or is under common control with such Person, and
without limiting the generality of the foregoing, includes:
(a) Any Person which beneficially owns or holds fifty (50%) percent or
more of any class of Voting Stock of a Person or other equity interests in a
Person;
(b) Any Person of which another Person beneficially owns or holds
fifty (50%) percent or more of any class of Voting Stock or in which such Person
beneficially owns or holds fifty (50%) percent or more of the equity interests;
and
(c) Any director or executive officer of any Person.
For the purposes of this definition, the term "control" (including with
correlative meanings, the terms "controlled by" and "under common control
with"), as used with respect to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of such Person, whether through the ownership of Voting Stock, by
agreement or otherwise.
1.3 "Business Day" shall mean any day other than a Saturday, Sunday, or
other day on which commercial banks are authorized or required to close under
the laws of the State of Florida.
1.4 "Capital Stock" shall mean, with respect to any Person, any and all
shares, interests, participations or other equity equivalents (however
designated) of such Person's capital stock or partnership, limited liability
company or other equity interests at any time outstanding, and any and all
rights, warrants or options exchangeable for or convertible into such capital
stock or other interests (but excluding any debt security that is exchangeable
for or convertible into such capital stock) until such time as the right to
exchange or convert same into equity is, or is deemed to be, validly exercised.
1.5 "Code" shall mean the Internal Revenue Code of 1986, as the same now
exists or may from time to time hereafter be amended, modified, recodified or
supplemented, together with all rules, regulations and judicial interpretations
thereunder or related thereto.
1.6 "Collateral" shall have the meaning set forth in Section 5 hereof.
1.7 "Default" shall mean an act, condition or event which with notice or
passage of time, or both, would constitute an Event of Default.
1.8 "Event of Default" shall mean the occurrence or existence of any event
or condition described in Section 10.1 hereof.
1.9 "Exchange Act" shall mean the Securities Exchange Act of 1934, together
with all rules, regulations and judicial interpretations thereunder or related
thereto.
1.10 "Financing Agreements" shall mean, collectively, this Agreement and
all other agreements, documents and instruments now or at any time hereafter
executed and/or delivered by Borrower in connection with this Agreement.
1.11 "GAAP" shall mean generally accepted accounting principles in the
United States of America as in effect from time to time, as set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and the statements and pronouncements
of the Financial Accounting Standards Board which are applicable to the
circumstances as of the date of determination, consistently applied.
1.12 "Governmental Authority" shall mean any nation or government; any
state, province, or other political subdivision thereof; any central bank (or
similar monetary or regulatory authority) thereof; any entity exercising
competent executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government; and any corporation or other Person
owned or controlled, through stock or capital ownership or otherwise, by any of
the foregoing.
1.13 "Interest Rate" shall mean a rate of ten percent (10%) per annum.
2
1.14 "License Agreements" shall have the meaning set forth in Section 10.10
hereof.
1.15 "Loan" shall mean the loan(s) now or hereafter made by Lender to or
for the benefit of Borrower as set forth in Section 2 hereof.
1.16 "Material Contract" shall mean:
(a) Any contract or other agreement involving monetary liability from
any Person to Borrower for property that has been sold, assigned, or otherwise
transferred for consideration for amounts in excess of $250,000.00 in any fiscal
year; and
(b) Any other contract or other agreement (other than the Financing
Agreements), to which Borrower is a party as to which the breach,
nonperformance, cancellation or failure to renew by any party thereto would have
a material adverse effect on the business, assets, or financial condition of
Borrower or any of the rights and remedies of Lender hereunder.
1.17 "Obligations" shall mean the Loans, and all other payment obligations,
liabilities and indebtedness of every kind, nature and description owing by
Borrower to Lender, including principal, interest, charges, fees, costs and
expenses, whether now existing or hereafter arising.
1.18 "Obligor" shall mean any Person who is the owner of, or debtor with
respect to, any property which is security for the Obligations, other than
Borrower.
1.19 "Person" or "person" shall mean any individual, sole proprietorship,
partnership, corporation (including any corporation which elects subchapter S
status under the Code), limited liability company, limited liability
partnership, business trust, unincorporated association, joint stock
corporation, trust, joint venture or other entity or any Governmental Authority.
1.20 "Receivables" shall mean all of the following now owned or hereafter
acquired property of Borrower:
(a) All Accounts that have been billed by invoice to an account
debtor; and
(b) All interest, fees, late charges, penalties, collection fees and
other amounts due or to become due or otherwise payable in connection with any
Account.
1.21 "Records" shall mean all of Borrower's present (to the extent they
exist) and future books of account of every kind or nature, purchase and sale
agreements, invoices, ledger cards, bills of lading and other shipping evidence,
statements, correspondence, memoranda, credit files and other data relating to
the Collateral or any account debtor, together with the tapes, disks, diskettes
and other data and software storage media and devices, file cabinets or
containers in or on which the foregoing are stored (including any rights of
Borrower with respect to the foregoing maintained with or by any other person).
1.22 "Solvent" shall mean having the ability to pay debts as they mature.
3
1.23 "UCC" shall mean the Uniform Commercial Code as in effect in the State
of Florida, and any successor statute, as in effect from time to time (except
that terms used herein which are defined in the Uniform Commercial Code as in
effect in the State of Florida on the date hereof shall continue to have the
same meaning notwithstanding any replacement or amendment of such statute except
as Lender may otherwise determine).
1.24 "Voting Stock" shall mean with respect to any Person:
(a) One (1) or more classes of Capital Stock of such Person having
general voting powers to elect at least a majority of the board of directors,
managers or trustees of such Person, irrespective of whether at the time Capital
Stock of any other class or classes have or might have voting power by reason of
the happening of any contingency, and
(b) Any Capital Stock of such Person convertible or exchangeable
without restriction at the option of the holder thereof into Capital Stock of
such Person described in clause (a) of this definition.
SECTION 2. LOAN AND CLOSING
Subject to the terms and conditions contained herein, Lender agrees to make
loans to Borrower in amounts not to exceed, in total, one hundred thousand
dollars ($100,000) (the "Loan Amount") upon the mutual execution and delivery of
this Agreement (the "Effective Date"). The closing of the Loan shall occur on
the Effective Date, and Lender shall make loans to Borrower in amounts as
requested by Borrower in writing.
SECTION 3. INTEREST AND FEES
3.1 Interest.
(a) Borrower shall pay to Lender interest on the outstanding principal
amount of the Loan at the Interest Rate.
(b) Interest from the Effective Date through the Termination Date
shall be payable by Borrower to Lender at thirty (30) day intervals beginning
thirty (30) days after the Effective Date.
(c) All interest accruing hereunder on and after the date of any Event
of Default that continues after the expiration of the Cure Period (defined
below) shall be calculated at one and one half times the Interest Rate and shall
be payable on demand.
(d) In no event shall charges constituting interest payable by
Borrower to Lender exceed the maximum amount or the rate permitted under any
applicable law or regulation, and if any such part or provision of this
Agreement is in contravention of any such law or regulation, such part or
provision shall be deemed amended to conform thereto.
4
3.2 Closing Fee.
Borrower shall pay, at closing, to Lender as a closing fee, the amount of
$5,000, which shall be fully earned and payable as of the Effective Date.
SECTION 4. CONDITIONS PRECEDENT
4.1 Conditions Precedent to Initial Loans.
Each of the following is a condition precedent to Lender making the initial
Loans hereunder:
(a) All requisite corporate action and proceedings in connection with
this Agreement and the other Financing Agreements shall be determined by the
Lender to be satisfactory in form and substance, such determination of
satisfaction not to be unreasonably withheld, and Lender shall have received all
information and copies of all documents, including records of requisite
corporate action and proceedings which Lender may have reasonably requested in
connection therewith;
(b) Lender shall have received evidence, in form and substance
reasonably satisfactory to Lender, that Lender has a valid perfected first
priority security interest in all of the Collateral;
(c) The other Financing Agreements and all instruments and documents
hereunder and thereunder shall have been duly executed and delivered to Lender,
in form and substance reasonably satisfactory to Lender; and
(d) No law, regulation, order, judgment or decree of any Governmental
Authority shall exist, and no action, suit, investigation, litigation or
proceeding shall be pending or threatened in any court or before any arbitrator
or Governmental Authority, which (i) purports to enjoin, prohibit, restrain or
otherwise affect (A) the making of the Loans, or (B) the consummation of the
transactions contemplated pursuant to the terms hereof or the other Financing
Agreements or (ii) has or could reasonably be expected to have a material
adverse effect on the assets, business or prospects of Borrower or would impair
the ability of Borrower to perform its obligations hereunder or under any of the
other Financing Agreements or of Lender to enforce any Obligations or realize
upon any of the Collateral.
SECTION 5. GRANT AND PERFECTION OF SECURITY INTEREST
5.1 Grant of Security Interest.
To secure payment and performance of all Obligations, Borrower hereby
grants to Lender a continuing security interest in, a lien upon, and a right of
set off against, all Accounts (the "Collateral") including:
(a) All supporting obligations and all present and future liens,
security interests, rights, remedies, title and interest in, to and in respect
of the Collateral, including rights and remedies under
5
or relating to guaranties, contracts of suretyship, letters of credit and credit
and other insurance related to the Collateral, and deposits by and property of
account debtors or other persons securing the obligations of account debtors;
and
(b) All products and proceeds of the foregoing, including insurance
proceeds and all claims against third parties for loss or damage to or
destruction of or other involuntary conversion of any kind or nature of any or
all of the Collateral.
5.2 Perfection of Security Interests.
(a) Borrower authorizes Lender to file at any time, and from time to
time, such financing statements with respect to the Collateral naming Lender as
the secured party and Borrower as debtor, as Lender may reasonably require, and
including any other information with respect to Borrower or otherwise required
by Part 5 of Article 9 of the Uniform Commercial Code of such jurisdiction as
Lender may determine, together with any amendment and continuations with respect
thereto.
(b) Borrower shall take any other actions reasonably requested by
Lender from time to time to cause the attachment, perfection and first priority
of, and the ability of Lender to enforce, the security interest of Lender in any
and all of the Collateral, including, without limitation:
(i) executing, delivering and, where appropriate, filing
financing statements and amendments relating thereto under the UCC or other
applicable law, to the extent, if any, that Borrower's signature thereon is
required therefor;
(ii) Complying with any provision of any statute, regulation or
treaty of the United States as to any Collateral if compliance with such
provision is a condition to attachment, perfection or priority of, or ability of
Lender to enforce, the security interest of Lender in such Collateral; and
(iii) Obtaining the consents and approvals of any Governmental
Authority (other than the U.S. Securities and Exchange Commission) or third
party, including, without limitation, any consent of any licensor, lessor or
other person obligated on Collateral, and taking all actions required by any
earlier versions of the UCC or by other law, as applicable in any relevant
jurisdiction.
SECTION 6. USE OF PROCEEDS.
Borrower shall use the proceeds of the Loan provided by Lender to
Borrower hereunder only for general operating, working capital and other proper
corporate purposes of Borrower.
SECTION 7. COLLATERAL REPORTING AND ACCOUNTS COVENANTS
7.1 Collateral Reporting.
Borrower shall provide Lender with the following documents in a form
reasonably satisfactory to Lender:
6
(a) As soon as possible after the end of each month (but in any event
within ten (10) days after the end thereof), a schedule of sales made, credits
issued and cash received for such month;
(b) As soon as possible after the end of each month (but in any event
within ten (10) days after the end thereof) agings of accounts receivable
(together with a reconciliation to the previous month's aging and general
ledger) and amounts of customer deposits received and held by Borrower as of the
last day of such month;
(c) Within six (6) business days of Lender's written request, copies
of customer statements and credit memos, remittance advices and reports, and
copies of deposit slips and bank statements; and
(d) Such other reports as to the Collateral as Lender shall reasonably
request from time to time.
7.2 Accounts Covenants.
(a) Borrower shall notify Lender promptly of:
(i) any material delay in Borrower's performance of any of its
obligations to any account debtor or the assertion of any material claims,
offsets, defenses or counterclaims by any account debtor, or any material
disputes with account debtors, or any settlement, adjustment or compromise
thereof, and
(ii) All material adverse information relating to the financial
condition of any account debtor. So long as no Event of Default exists or has
occurred and is continuing, Borrower may settle, adjust or compromise any claim,
offset, counterclaim or dispute with any account debtor or grant any credits,
discounts or allowances.
At any time that an Event of Default exists and is continuing after
the expiration of the Cure Period, Lender shall, at its option, have the right
to settle, adjust or compromise any claim, offset, counterclaim or dispute with
account debtors or grant any credits, discounts or allowances.
(b) With respect to each Account and/or Receivable:
(i) The amounts shown on any invoice delivered to Lender or
schedule thereof delivered to Lender shall be true and complete in all material
respects;
(ii) None of the transactions giving rise thereto will violate
any applicable, Federal, State or local laws or regulations, all documentation
relating thereto will be legally sufficient under such laws and regulations and
all such documentation will be legally enforceable in accordance with its terms;
7
(iii) The transactions giving rise thereto will arise from the
actual and bona fide sale and delivery of goods by Borrower in the ordinary
course of its business;
(iv) Receivables are not unpaid more than one hundred and twenty
(120) days after the original due date, unless disclosed in writing by Borrower
to Lender;
(v) Amounts do not arise from sales on consignment, guaranteed
sale, sale and return, sale on approval, or other terms under which payment by
the account debtor may be conditional or contingent;
(vi) Amounts do not consist of progress ▇▇▇▇▇▇▇▇ (such that the
obligation of the account debtors with respect to such Accounts is conditioned
upon Borrower's satisfactory completion of any further performance under the
agreement giving rise thereto), ▇▇▇▇ and hold invoices or retainage invoices;
(vii) The account debtor with respect to such Accounts has not
asserted a valid counterclaim, defense or dispute and does not have, and does
not engage in transactions which may give rise to any right of setoff or
recoupment against such Accounts, unless disclosed in writing by Borrower to
Lender;
(viii) There are no facts, events or occurrences which would
materially impair the validity, enforceability or collectability of such
Accounts or reduce the amount payable or delay payment thereunder, unless
disclosed in writing by Borrower to Lender;
(ix) Amounts are subject to a security interest of Lender and any
goods giving rise thereto are not, and were not at the time of the sale thereof,
subject to any liens except those permitted in this Agreement;
(x) Neither the account debtor nor any officer or employee of the
account debtor with respect to such Accounts is an officer, employee, agent or
other Affiliate of Borrower;
(xi) Transactions are not evidenced by or arising under any
instrument or chattel paper; and
(xii)Amounts are owed by account debtors deemed creditworthy by
Borrower in good faith.
(c) Any Accounts for which any of the forgoing covenants are not
fulfilled shall nevertheless be part of the Collateral.
(d) Lender shall have the right at any time or times, in Lender's name
or in the name of a nominee of Lender, to verify the validity, amount or any
other matter relating to any Account, by mail, telephone, facsimile transmission
or otherwise.
7.3 Power of Attorney.
8
At any time an Event of Default exists and is continuing after the
expiration of the Cure Period, Borrower hereby designates and appoints Lender as
Borrower's true and lawful attorney-in-fact, and authorizes Lender, in
Borrower's or Lender's name, to act as such but solely for the following
purposes and subject to the following conditions and limitations:
(a) Demand payment on Receivables;
(b) Enforce payment of Receivables by legal proceedings or otherwise;
(c) Exercise all of Borrower's rights and remedies to collect any
Receivable;
(d) Sell or assign any Receivable upon such terms, for such amount and
at such time or times as the Lender reasonably deems advisable;
(e) Settle, adjust, compromise, extend or renew an Account;
(f) Discharge and release any Receivable;
(g) Prepare, file and sign Borrower's name on any proof of claim in
bankruptcy or other similar document against an account debtor or other obligor
in respect of any Receivables or other Collateral;
(h) Notify the post office authorities to change the address for
delivery of remittances from account debtors or other obligors in respect of
Receivables or other proceeds of Collateral to an address designated by Lender,
and open, handle and store all mail relating to the Collateral; and
(i) Do all acts and things which are necessary, in Lender's reasonable
determination, to fulfill Borrower's obligations under this Agreement and the
other Financing Agreements.
7.4 Lender's Right to Cure. Lender may, at its option, (a) upon written
notice to Borrower, cure any default by Borrower under any material agreement
with a third party that materially and adversely affects the Collateral, its
value or the ability of Lender to collect, sell or otherwise dispose of the
Collateral or the rights and remedies of Lender therein or the ability of
Borrower to perform its obligations hereunder or under the other Financing
Agreements, (b) pay or bond on appeal any judgment entered against Borrower, (c)
discharge taxes, liens, security interests or other encumbrances at any time
levied on or existing with respect to the Collateral and (d) pay any amount,
incur any expense or perform any act which, in Lender's reasonable judgment, is
necessary or appropriate to preserve, protect, insure or maintain the Collateral
and the rights of Lender with respect thereto. Lender may add any amounts so
expended to the Obligations and charge Borrower's account therefor, such amounts
to be repayable by Borrower on demand. Lender shall be under no obligation to
effect such cure, payment or bonding and shall not, by doing so, be deemed to
have assumed any obligation or liability of Borrower. Any payment made or other
action taken by Lender
9
under this Section shall be without prejudice to any right to assert an Event of
Default hereunder and to proceed accordingly.
7.5 Access to Premises. From time to time as reasonably requested, Lender
or its designee shall have access to Borrower's premises during normal business
hours: (a) after written notice to Borrower, and (b) without notice to Borrower
if an Event of Default exists and is continuing after the expiration of the Cure
Period; for the purposes of inspecting, verifying and auditing the Collateral.
To facilitate such purposes, Borrower shall promptly furnish to Lender such
copies of such books and records, or extracts therefrom, as Lender may
reasonably request. Lender or its designee may use, during normal business
hours, such of Borrower's personnel, equipment, supplies and premises as may be
reasonably necessary for the foregoing and, if an Event of Default exists and is
continuing after the expiration of the Cure Period, for the collection of
Receivables and realization of other Collateral.
SECTION 8. REPRESENTATIONS AND WARRANTIES OF BORROWER
Borrower hereby represents and warrants to Lender the following (which
shall survive the execution and delivery of this Agreement), the truth and
accuracy of which are continuing conditions of the making of Loans by Lender to
Borrower:
8.1 Corporate Existence; Power and Authority.
(a) Borrower is a corporation duly organized and in good standing
under the laws of Delaware, its state of incorporation, and is duly qualified as
a foreign corporation and in good standing in all states or other jurisdictions
where the nature and extent of the business transacted by it or the ownership of
assets makes such qualification necessary, except for those jurisdictions in
which the failure to so qualify would not have a material adverse effect on
Borrower's financial condition, or the rights of Lender in or to any of the
Collateral.
(b) The execution, delivery and performance of this Agreement, the
other Financing Agreements and the transactions contemplated hereunder and
thereunder:
(i) Are all within Borrower's corporate powers;
(ii) Have been duly authorized;
(iii) Are not in contravention of law or the terms of Borrower's
certificate of incorporation, by-laws, or other organizational documentation, or
any indenture, agreement or undertaking to which Borrower is a party or by which
Borrower or its property are bound; and
(iv) Will not result in the creation or imposition of, or require
or give rise to any obligation to grant, any lien, security interest, charge or
other encumbrance upon any property of Borrower, except as provided in this
Agreement.
(c) This Agreement and the other Financing Agreements constitute
legal, valid and binding obligations of Borrower enforceable in accordance with
their respective terms.
10
8.2 Name; State of Organization; Chief Executive Office; Collateral
Locations.
(a) The exact legal name of Borrower is U.S. Gas & Electric, Inc.
Borrower has not, during the past five years, been known by or used any other
corporate or fictitious name; except Borrower was named "Harbortown Corp." prior
to May 15, 2002, and previously used the fictitious name "Utiligroup."
(b) Borrower is a Delaware Corporation.
(c) The Borrower's federal employer identification number is
▇▇-▇▇▇▇▇▇▇
(d) The chief executive office and mailing address of Borrower and
Borrower's Records concerning Accounts are located only at ▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇ ▇, ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇.
8.3 Liens. To the best of Borrower's knowledge, the security interests and
liens granted to Lender under this Agreement and the other Financing Agreements
constitute liens and security interests in and upon the Collateral subject only
to the liens permitted hereunder.
8.4 Compliance with Other Agreements. Borrower is not in default in any
material respect under, or in violation in any material respect of any of the
terms of, any material agreement, contract, instrument, lease or other material
commitment to which it is a party, or by which it is bound.
8.5 Accuracy of Information. All information furnished by or on behalf of
Borrower in writing to Lender in connection with this Agreement or any of the
other Financing Agreements or any transaction contemplated hereby or thereby,
including all information herein is true and correct in all material respects on
the date as of which such information is dated or certified.
8.6 Survival of Warranties. All representations and warranties contained in
this Agreement or any of the other Financing Agreements shall survive the
execution and delivery of this Agreement.
SECTION 9. REPRESENTATIONS AND WARRANTIES OF LENDER
LENDER hereby represents and warrants to Borrower the following (which
shall survive the execution and delivery of this Agreement):
9.1 State of Residence; Power and Authority.
(a) Lender is an individual residing in the State of Virginia.
(b) The execution, delivery and performance of this Agreement, the
other Financing Agreements and the transactions contemplated hereunder and
thereunder:
(i) Are all within Lender's powers;
11
(ii) Have been duly authorized;
(iii) Are not in contravention of any indenture, agreement or
undertaking to which Lender is a party or by which Lender or its property are
bound; and
(iv) Will not result in the creation or imposition of, or require
or give rise to any obligation to grant, any lien, security interest, charge or
other encumbrance upon any property of Borrower, except as provided in this
Agreement.
(c) This Agreement and the other Financing Agreements constitute
legal, valid and binding obligations of Lender enforceable in accordance with
their respective terms.
9.2 Name; SSN; Princile Residence; Collateral Locations.
(a) The exact legal name of Lender is ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇.
(c) The Lender's social security number is ###-##-####.
(d) The residence and mailing address of Lender is ▇▇▇▇ ▇▇▇▇ ▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇.
9.3 Compliance with Other Agreements. Lender is not in default in any
material respect under, or in violation in any material respect of any of the
terms of, any material agreement, contract, instrument, lease or other material
commitment to which it is a party, or by which it is bound.
9.4 Accuracy of Information. All information furnished by or on behalf of
Lender in writing to Borrower in connection with this Agreement or any of the
other Financing Agreements or any transaction contemplated hereby or thereby,
including all information herein is true and correct in all material respects on
the date as of which such information is dated or certified.
9.5 Survival of Warranties. All representations and warranties contained in
this Agreement or any of the other Financing Agreements shall survive the
execution and delivery of this Agreement.
SECTION 10. AFFIRMATIVE AND NEGATIVE COVENANTS
10.1 Maintenance of Existence.
(a) Borrower shall at all times preserve, renew and keep in full force
and effect its corporate existence and rights and franchises with respect
thereto and maintain in full force and effect all permits, licenses, trademarks,
trade names, approvals, authorizations, leases and contracts necessary to carry
on the business as presently or proposed to be conducted.
12
(b) Borrower shall not change its name unless each of the following
conditions is satisfied:
(i) Lender shall have received not less than thirty (30) days
prior written notice from Borrower of such proposed change in its corporate
name, which notice shall accurately set forth the new name; and
(ii) Lender shall have received a copy of the amendment to the
Certificate of Incorporation of Borrower providing for the name change certified
by the Secretary of State of the jurisdiction of incorporation or organization
of Borrower as soon as it is available.
(c) Borrower shall not change its chief executive office or its
mailing address or organizational identification number (or if it does not have
one, shall not acquire one) unless Lender shall have received not less than
thirty (30) days' prior written notice from Borrower of such proposed change,
which notice shall set forth such information with respect thereto as Lender may
reasonably require.
10.2 New Collateral Locations.
Borrower may only open any new location within the continental United
States provided Borrower:
(a) Gives Lender thirty (30) days prior written notice from Borrower
of the intended opening of any such new location; and
(b) Executes and delivers, or causes to be executed and delivered, to
Lender such agreements, documents, and instruments as Lender may reasonably deem
necessary to protect its interests in the Collateral at such location.
10.3 Compliance with Laws, Regulations, Etc. Borrower shall, at all times,
comply in all material respects with all laws, rules, regulations, licenses,
permits, approvals and orders applicable to it and duly observe all requirements
of any Federal, State or local Governmental Authority, except for those which
the failure to so comply with would not have a material adverse effect on
Borrower's financial condition, or the rights of Lender in or to any of the
Collateral.
10.4 Payment of Taxes and Claims. Borrower shall duly pay and discharge,
when due, all taxes, assessments, contributions and governmental charges upon or
against it or its properties or assets, except for taxes the validity of which
are being contested in good faith by appropriate proceedings diligently pursued
and available to Borrower, and with respect to which adequate reserves or
accruals have been entered on its books. Borrower shall be liable for any tax or
penalties imposed on Lender as a result of the financing arrangements provided
for herein and Borrower agrees to indemnify and hold Lender harmless with
respect to the foregoing, and to repay to Lender on demand the amount thereof,
and until paid by Borrower such amount shall be added and deemed part of the
Loans provided, that, nothing contained herein shall be construed to require
Borrower to pay any income or franchise taxes attributable to the income of
Lender from any amounts charged or
13
paid hereunder to Lender. The foregoing indemnity shall survive the payment of
the Obligations and the termination of this Agreement, but only for one (1) year
from the Effective Date and shall be limited to the Loan Amount.
10.5 Financial Information.
(a) Borrower shall keep proper books and records in which true and
complete entries shall be made of all dealings or transactions of or in relation
to the Collateral and the business of Borrower in accordance with GAAP.
(b) Borrower shall promptly notify Lender in writing of the details
of:
(i) Any material loss, damage, action, suit, or claim relating to
the Collateral or any other property which is security for the Obligations and
which would result in a material adverse change in Borrower's business,
properties, assets, goodwill or financial condition;
(ii) Any Material Contract of Borrower being terminated or
materially amended;
(iii) Any final and non-appealable order, judgment or decree,
entered by a court of competent jurisdiction, in excess of One Million Dollars
($1,000,000.00) having been entered against Borrower or any of its properties or
assets; and
(iv) The occurrence of any Event of Default.
(c) Borrower shall promptly after the sending, or filing thereof,
furnish to Lender copies of all reports which Borrower sends to its stockholders
generally and copies of all reports and registration statements which Borrower
files with the Securities and Exchange Commission, any national securities
exchange or the National Association of Securities Dealers, Inc.
10.6 Sale of Assets, Dissolution, Etc.
Borrower shall not:
(a) Sell, assign, lease, license, transfer, abandon or otherwise
dispose of any of its assets to any other Person, except for in the ordinary
course of business;
(b) Wind up, liquidate or dissolve; or
(c) Agree to do any of the foregoing; without the advance written
consent of the Lender, such consent not to be unreasonably withheld.
10.7 Encumbrances.
14
Borrower shall not create, incur, assume, suffer or permit to exist any
security interest, mortgage, pledge, lien, charge or other encumbrance of any
nature whatsoever on the Collateral, or file or permit the filing of, or permit
to remain in effect, any financing statement or other similar notice of any
security interest or lien with respect to the Collateral, except:
(a) The security interests and liens of Lender;
(b) Liens securing the payment of taxes, either not yet overdue or the
validity of which are being contested in good faith by appropriate proceedings
diligently pursued and available to Borrower or such Subsidiary, as the case may
be and with respect to which adequate reserves have been set aside on its books;
(c) Non-consensual statutory liens (other than liens securing the
payment of taxes) arising in the ordinary course of Borrower's or such
Subsidiary's business to the extent:
(i) Such liens secure indebtedness which is not overdue; or
(ii) such liens secure indebtedness relating to claims or
liabilities which are fully insured and being defended at the sole cost and
expense and at the sole risk of the insurer or being contested in good faith by
appropriate proceedings diligently pursued and available to Borrower or such
Subsidiary, in each case prior to the commencement of foreclosure or other
similar proceedings and with respect to which adequate reserves have been set
aside on its books;
(d) A first priority security interest for one hundred and fifty
thousand ($150,000); and
(d) Other security interests and liens that are subordinate to those
of the Lender.
10.8 Dividends. Borrower shall not, directly or indirectly, declare or pay
any dividends on account of any shares of class of Capital Stock of Borrower now
or hereafter outstanding.
10.9 Transactions with Affiliates.
Borrower shall not, directly or indirectly:
(a) purchase, acquire or lease any property from, or sell, transfer or
lease any property to any Affiliate, except in the ordinary course of and
pursuant to the reasonable requirements of Borrower's business and upon fair and
reasonable terms no less favorable to the Borrower than Borrower would obtain in
a comparable arm's length transaction with an unaffiliated person; or
(b) make any payments of management, consulting or other fees for
management or similar services, or of any indebtedness owing to any officer,
employee, shareholder, director or other Affiliate of Borrower except reasonable
compensation to officers, employees and directors for services rendered to
Borrower in the ordinary course of business. Remuneration under the employment
agreements among the Borrower and its Chief Executive Officer and Chief
Financial Officer, as amended May 14, 2004, shall be conclusively presumed to be
reasonable for purposes of this paragraph.
15
10.10 Licenses.
Borrower shall:
(a) Promptly and faithfully observe and perform all of the material
terms, covenants, conditions and provisions of the material License Agreements
to be observed and performed by it, at the times set forth therein, if any;
(b) Not do, permit, suffer or refrain from doing anything could
reasonably be expected to result in a material default under or material breach
of any of the terms of any material License Agreement; and
(c) Not cancel, surrender, modify, amend, waive or release any
material License Agreement in any material respect or any term, provision or
right of the licensee thereunder in any material respect, or consent to or
permit to occur any of the foregoing; except that Borrower may cancel, surrender
or release any material License Agreement in the ordinary course of the business
of Borrower; provided, that, Borrower shall give Lender not less than ten (10)
days prior written notice of its intention to so cancel, surrender and release
any such material License Agreement.
10.11 Costs and Expenses. Each party hereto shall pay its own costs,
expenses, filing fees and taxes paid or payable in connection with the
preparation, negotiation, execution, delivery, recording, and administration of
this Agreement and the transactions contemplated hereunder, including, but not
limited to, all costs and expenses of filing or recording (including Lender's
Uniform Commercial Code financing statement filing taxes and fees, documentary
taxes, intangibles taxes and mortgage recording taxes and fees, if applicable).
Borrower shall pay all costs, expenses, filing fees and taxes paid or payable in
connection with preserving and protecting the Collateral, obtaining payment of
the Receivables, and at any time an Event of Default exists and is continuing
after the expiration of the Cure Period, enforcing the security interests and
liens of Lender, selling or otherwise realizing upon the Collateral, and
otherwise enforcing the provisions of this Agreement and the other Financing
Agreements.
10.12 Further Assurances. At the reasonable request of Lender at any time,
and from time to time, Borrower shall duly execute and deliver, or cause to be
duly executed and delivered, such further agreements, documents and instruments,
and do or cause to be done such further acts as may be necessary or proper to
evidence, perfect, maintain and enforce the security interests and the priority
thereof in the Collateral and to otherwise effectuate the provisions or purposes
of this Agreement or any of the other Financing Agreements.
SECTION 11. EVENTS OF DEFAULT AND REMEDIES
11.1 Events of Default.
16
The occurrence or existence of any one or more of the following events are
referred to herein individually as an "Event of Default," and, collectively, as
"Events of Default":
(a) Borrower fails to pay when due any of the Obligations or fails to
perform any of the terms, covenants, conditions or provisions contained in this
Agreement or any of the other Financing Agreements and continues for ten (10)
Business Days after notice thereof;
(b) Any material representation, warranty or statement of fact made by
Borrower to Lender in this Agreement, the other Financing Agreements or any
other agreement, schedule, confirmatory assignment or otherwise shall, when
made, be false or misleading in any material respect;
(c) Borrower suspends or discontinues doing business for more than
sixty (600 consecutive days, or dissolves;
(d) Borrower becomes insolvent, makes an assignment for the benefit of
creditors, makes or sends notice of a bulk transfer or calls a meeting of its
creditors or principal creditors;
(e) A case or proceeding under the bankruptcy laws of the United
States of America now or hereafter in effect or under any insolvency,
reorganization, receivership, readjustment of debt, dissolution or liquidation
law or statute of any jurisdiction now or hereafter in effect (whether at law or
in equity) is filed against Borrower and such petition or application is not
dismissed within sixty (60) days after the date of its filing or Borrower shall
file any answer admitting or not contesting such petition or application or
indicates its consent to, acquiescence in or approval of, any such action or
proceeding or the relief requested is granted sooner;
(f) A case or proceeding under the bankruptcy laws of the United
States of America now or hereafter in effect or under any insolvency,
reorganization, receivership, readjustment of debt, dissolution or liquidation
law or statute of any jurisdiction now or hereafter in effect (whether at a law
or equity) is filed by Borrower; or
(g) There shall be a material adverse change in the business, assets
or prospects of Borrower after the date hereof; or
(h) There shall be an event of default under any material provision of
the other Financing Agreements.
11.2 Borrower's Right to Cure
Notwithstanding anything herein to the contrary, Borrower shall have the
right to cure, or cause to be cured, any Event of Default, and provided such
cure is effected within six (6) Business Days ("Cure Period") of Borrower
acquiring knowledge of the occurrence or existence thereof, such Event of
Default shall be deemed to have not occurred or existed, ab initio, for any and
all purposes hereunder.
17
11.3 Remedies.
(a) Lender shall have all rights and remedies provided in this
Agreement, the other Financing Agreements, the UCC and other applicable law. All
rights, remedies and powers granted to Lender hereunder, under any of the other
Financing Agreements, the UCC or other applicable law, are cumulative, not
exclusive and enforceable, in Lender's discretion, alternatively, successively,
or concurrently on any one or more occasions.
(b) At any time an Event of Default that results in a material adverse
effect on either the financial condition of the Borrower or the Lender's rights
in the Collateral exists and is continuing after the expiration of the Cure
Period, Lender may:
(i) Accelerate the payment of all Obligations and demand
immediate payment thereof to Lender (provided, that, upon the occurrence of any
Event of Default described in Sections 10.1(g) and 10.1(h), all Obligations
shall automatically become immediately due and payable);
(ii) With or without judicial process or the aid or assistance of
others, enter upon any premises on or in which any of the Collateral may be
located and take possession of the Collateral;
(iii) Require Borrower, at Borrower's expense, to assemble and
make available to Lender any part or all of the Collateral at any place and time
designated by Lender;
(iv) Collect, foreclose, receive, appropriate, setoff and realize
upon any and all Collateral;
(v) Remove any or all of the Collateral from any premises on or
in which the same may be located for the purpose of effecting the sale,
foreclosure or other disposition thereof or for any other purpose:
(vi) Sell, lease, transfer, assign, deliver or otherwise dispose
of any and all Collateral (including entering into contracts with respect
thereto, public or private sales at any exchange, broker's board, at any office
of Lender or elsewhere) at such prices or terms as Lender may deem reasonable,
for cash, upon credit or for future delivery, with the Lender having the right
to purchase the whole or any part of the Collateral at any such public sale, all
of the foregoing being free from any right or equity of redemption of Borrower,
which right or equity of redemption is hereby expressly waived and released by
Borrower;
(vii) Enforce Borrower's rights against any account debtor or
other obligor in respect of any of the Accounts or other Receivables;
(viii) Notify any or all account debtors or other obligors in
respect thereof that the Receivables have been assigned to Lender and that
Lender has a security interest therein and Lender
18
may direct any or all account debtors and other obligors to make payment of
Receivables directly to Lender;
(ix) Extend the time of payment of, compromise, settle or adjust
for cash, credit, return of merchandise or otherwise, and upon any terms or
conditions, any and all Receivables or other obligations included in the
Collateral and thereby discharge or release the account debtor or other obligors
in respect thereof;
(x) Demand, collect or enforce payment of any Receivables or such
other obligations;
(xi) Take whatever other action Lender may reasonably deem
necessary or desirable for the protection of its interests;
(xii) Proceed directly against Borrower or any Obligor to collect
the Obligations without prior recourse to any Obligor or any of the Collateral;
and/or
(xiii) Terminate this Agreement.
(c) Lender may apply the cash proceeds of Collateral actually received
by Lender from any sale, lease, foreclosure or other disposition of the
Collateral to payment of the Obligations, in whole or in part and in such order
as Lender may elect. Borrower shall remain liable to Lender for the payment of
any deficiency with interest at the highest rate provided for herein and all
reasonable costs and expenses of collection or enforcement, including attorneys'
fees and legal expenses.
SECTION 12. JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS; GOVERNING LAW
12.1 Governing Law; Choice of Forum; Jury Trial Waiver.
(a) The validity, interpretation and enforcement of this Agreement and
the other Financing Agreements and any dispute arising out of the relationship
between the parties hereto, whether in contract, tort, equity or otherwise,
shall be governed by the internal laws of the State of Florida but excluding any
principles of conflicts of law or other rule of law that would cause the
application of the law of any jurisdiction other than the laws of the State of
Florida.
(b) Borrower and Lender irrevocably consent and submit to the
non-exclusive jurisdiction of the Circuit Court of Dade County, Florida and the
United States District Court for the Southern District of Florida, whichever
Lender may elect, and waive any objection based on venue or forum non conveniens
with respect to any action instituted therein arising under this Agreement or
any of the other Financing Agreements or in any way connected with or related or
incidental to the dealings of the parties hereto in respect of this Agreement or
any of the other Financing Agreements or the transactions related hereto or
thereto, in each case whether now existing or hereafter arising, and whether in
contract, tort, equity or otherwise, and agree that any dispute with respect to
any such matters shall be heard only in the courts described above (except that
Lender shall have the right to bring any action or proceeding against Borrower
or its property in the courts of any other jurisdiction
19
which Lender reasonably deems necessary or appropriate in order to realize on
the Collateral or to otherwise enforce its rights against Borrower or its
property).
(c) BORROWER AND LENDER EACH HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY
OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (i) ARISING UNDER THIS AGREEMENT
OR ANY OF THE OTHER FINANCING AGREEMENTS OR (ii) IN ANY WAY CONNECTED WITH OR
RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO IN RESPECT OF THIS
AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS OR THE TRANSACTIONS RELATED
HERETO OR THERETO IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND
WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE. BORROWER AND LENDER EACH HEREBY
AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL
BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT BORROWER OR LENDER MAY FILE AN
ORIGINAL COUNTERPART OF A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO
TRIAL BY JURY.
12.2 Amendments and Waivers. Neither this Agreement nor any provision
hereof shall be amended, modified, waived or discharged orally or by course of
conduct, but only by a written agreement signed by an authorized officer of
Lender, and as to amendments, as also signed by an authorized officer of
Borrower. Lender shall not, by any act, delay, omission or otherwise be deemed
to have expressly or impliedly waived any of its rights, powers and/or remedies
unless such waiver shall be in writing and signed by an authorized officer of
Lender. Any such waiver shall be enforceable only to the extent specifically set
forth therein. A waiver by Lender of any right, power and/or remedy on any one
occasion shall not be construed as a bar to or waiver of any such right, power
and/or remedy which Lender would otherwise have on any future occasion, whether
similar in kind or otherwise.
12.3 Indemnification. Borrower shall indemnify and hold Lender, and its
directors, agents, employees and counsel, harmless from and against any and all
losses, claims, damages, liabilities, costs or expenses imposed on, incurred by
or asserted against any of them in connection with any litigation,
investigation, claim or proceeding commenced or threatened related to the
negotiation, preparation, execution, delivery, enforcement, performance or
administration of this Agreement, any other Financing Agreements, or any
undertaking or proceeding related to any of the transactions contemplated hereby
or any act, omission, event or transaction related or attendant thereto,
including amounts paid in settlement, court costs, and the fees and expenses of
counsel. To the extent that the undertaking to indemnify, pay and hold harmless
set forth in this Section may be unenforceable because it violates any law or
public policy, Borrower shall pay the maximum portion which it is permitted to
pay under applicable law to Lender in satisfaction of indemnified matters under
this Section.
SECTION 13. TERM OF AGREEMENT; MISCELLANEOUS
20
13.1 Term.
(a) This Agreement and the other Financing Agreements shall become
effective as of the Effective Date and shall continue in full force and effect
for a term ending one hundred and twenty (120) days after the Effective Date
("Termination Date"), unless sooner terminated pursuant to the terms hereof.
This Agreement and all other Financing Agreements must be terminated
simultaneously. Borrower may terminate this Agreement at any time upon three (3)
days prior written notice to Lender and full payment to Lender in cash or other
immediately available funds, in full, all outstanding and unpaid Obligations.
Lender may terminate this Agreement at any time on or after an Event of Default
that continues after expiration of the Cure Period. Payments of the Obligations
shall be remitted by wire transfer in Federal funds to such bank account of
Lender, as Lender designates in writing to Borrower. Any Interest that is due
and previously unpaid, shall be due until and including the payment day, if the
amounts so paid by Borrower to the bank account designated by Lender are
received in such bank account on or before 12:00 noon, Miami time. If such
amounts are received in such bank account after 12:00 noon, Miami time, Interest
shall be due until and including the next Business Day.
(b) No termination of this Agreement or the other Financing Agreements
shall relieve or discharge Borrower of its respective duties, obligations and
covenants under this Agreement or the other Financing Agreements until all
Obligations have been fully and finally discharged and paid, and Lender's
continuing security interest in the Collateral and the rights and remedies of
Lender hereunder, under the other Financing Agreements and applicable law, shall
remain in effect until all such Obligations have been fully and finally
discharged and paid. Accordingly, Borrower waives any rights which it may have
under the UCC to demand the filing of termination statements with respect to the
Collateral, and Lender shall not be required to send such termination statements
to Borrower, or to file them with any filing office, unless and until this
Agreement is terminated in accordance with its terms and all of the Obligations
are paid and satisfied in full in immediately available funds.
21
13.2 Interpretative Provisions.
(a) All terms used herein which are defined in Article 1 or Article 9
of the UCC shall have the meanings given therein unless otherwise defined in
this Agreement.
(b) All references to the plural herein shall also mean the singular
and to the singular shall also mean the plural unless the context otherwise
requires.
(c) All references to Borrower and Lender pursuant to the definitions
set forth in the recitals hereto, or to any other person herein, shall include
their respective successors and assigns.
(d) The words "hereof", "herein", "hereunder", "this Agreement" and
words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not any particular provision of this Agreement and as
this Agreement now exists or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced.
(e) The word "including" when used in this Agreement shall mean
"including, without limitation."
(f) Any accounting term used in this Agreement shall have, unless
otherwise specifically provided herein, the meaning customarily given in
accordance with GAAP, and all financial computations hereunder shall be computed
unless otherwise specifically provided herein, in accordance with GAAP as
consistently applied.
(f) In the computation of periods of time from a specified date to a
later specified date, the word "from" means "from and including", the words "to"
and "until" each mean "to but excluding" and the word "through" means "to and
including".
(g) Unless otherwise expressly provided herein, (i) references herein
to any agreement, document or instrument shall be deemed to include all
subsequent amendments, modifications, supplements, extensions, renewals,
restatements or replacements with respect thereto, but only to the extent the
same are not prohibited by the terms hereof or of any other Financing Agreement,
and (ii) references to any statute or regulation are to be construed as
including all statutory and regulatory provisions consolidating, amending,
replacing, recodifying, supplementing or interpreting the statute or regulation.
(h) The captions and headings of this Agreement are for convenience of
reference only and shall not affect the interpretation of this Agreement.
13.3 Notices.
All notices, requests and demands hereunder shall be in writing and deemed
to have been given or made: if delivered in person, immediately upon delivery;
if by telex, telegram or facsimile transmission, immediately upon sending and
upon confirmation of receipt; if by nationally
22
recognized overnight courier service with instructions to deliver the next
Business Day, one (1) Business Day after sending; and if by certified mail,
return receipt requested, five (5) days after mailing. All notices, requests and
demands upon the parties are to be given to the following addresses (or to such
other address as any party may designate by notice in accordance with this
Section):
If to Borrower: U.S. Gas & Electric, Inc.
▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇
▇. ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone No.: ▇▇▇-▇▇▇-▇▇▇▇
Telecopy No.: ▇▇▇-▇▇▇-▇▇▇▇
If to Lender: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone No.: ▇▇▇-▇▇▇-▇▇▇▇
Telecopy No.: ▇▇▇-▇▇▇-▇▇▇▇
13.4 Partial Invalidity. If any provision of this Agreement is held to be
invalid or unenforceable, such invalidity or unenforceability shall not
invalidate this Agreement as a whole, but this Agreement shall be construed as
though it did not contain the particular provision held to be invalid or
unenforceable and the rights and obligations of the parties shall be construed
and enforced only to such extent as shall be permitted by applicable law.
13.5 Successors. This Agreement, the other Financing Agreements and any
other document referred to herein or therein shall be binding upon and inure to
the benefit of and be enforceable by Lender, Borrower and their respective
successors and permitted assigns. Neither party may assign its rights and
delegate its obligations under this Agreement and the other Financing Agreements
without the advance written consent of the other party.
13.6 Entire Agreement. This Agreement, the other Financing Agreements, any
supplements hereto or thereto, and any instruments or documents delivered or to
be delivered in connection herewith or therewith represents the entire agreement
and understanding concerning the subject matter hereof and thereof between the
parties hereto, and supersede all other prior agreements, understandings,
negotiations and discussions, representations, warranties, commitments,
proposals, offers and contracts concerning the subject matter hereof, whether
oral or written. In the event of any inconsistency between the terms of this
Agreement and any schedule or exhibit hereto, the terms of this Agreement shall
govern.
13.7 Counterparts, Etc. This Agreement or any of the other Financing
Agreements may be executed in any number of counterparts, each of which shall be
an original, but all of which taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of this Agreement or any of the
other Financing Agreements by telefacsimile shall have the same force and effect
as the delivery of an original executed counterpart of this Agreement or any of
such other
23
Financing Agreements. Any party delivering an executed counterpart of any such
agreement by telefacsimile shall also deliver an original executed counterpart,
but the failure to do so shall not affect the validity, enforceability or
binding effect of such agreement.
24
IN WITNESS WHEREOF, Lender and Borrower have caused these presents to be duly
executed as of the day and year first above written.
LENDER BORROWER
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ U.S. Gas & Electric, Inc.
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------- ------------------------------------
▇▇▇ ▇. ▇▇▇▇▇▇▇
Chairman & CEO
25
U.S. Gas & Electric, Inc.
▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇. ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
July 6, 2005
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Re: Loan and Security Agreement dated as of May 14, 2002 ("Loan Agreement")
between ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ("Lender") and U.S. Gas & Electric, Inc.
("Borrower")
Dear ▇▇. ▇▇▇▇▇▇▇▇▇▇▇:
We refer to the Loan Agreement as amended by a letter agreement dated
September __, 2004. This letter shall confirm the agreement of the Borrower and
the Lender, that, effective automatically upon the Borrower's delivery to Lender
of an amendment fee of $500, that:
1. The "Termination Date", as defined in Section 13.1 of the Credit
Agreement, is amended and restated in its entirety to mean "October 31, 2005".
Except as modified above, all other terms and provisions of the Loan Agreement
as amended are ratified and reaffirmed
Please indicate your agreement to and acknowledgment of the foregoing by
executing a copy of this letter in the place indicated below and returning same
to me.
Sincerely yours,
U.S. GAS & ELECTRIC, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇, Chairman and CEO
Agreed and Acknowledged:
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
26
U.S. Gas & Electric, Inc.
▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇. ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
September ___, 2004
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Re: Loan and Security Agreement dated as of May 14, 2002 ("Loan Agreement")
between ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ("Lender") and U.S. Gas & Electric, Inc.
("Borrower")
Dear ▇▇. ▇▇▇▇▇▇▇▇▇▇▇:
We refer to the Loan Agreement. This letter shall confirm the agreement of
the Borrower and the Lender, that, effective automatically upon the Borrower's
delivery to Lender of a principal payment under the Loan Agreement of $45,000
and an amendment fee of $3,000, that:
1. The "Loan Amount", as defined in Section 2 of the Loan Agreement, shall
not exceed $50,000; and the "Termination Date", as defined in Section 13.1 of
the Credit Agreement, is amended and restated in its entirety to mean "April 1,
2005". Except as modified above, all other terms and provisions of the Loan
Agreement are ratified and reaffirmed;
2. Borrower shall issue to Lender 25,000 shares of its Class A Common
Stock, par value $0.0001 per share, upon successful completion of Borrower's
plan of reorganization currently contemplated by Borrower, whether or not the
same occurs prior to, on or subsequent to the Termination Date;
3. The outstanding principal balance of the Loan is $50,000; and
4. Lender consents to the liens granted to WebBank in the collateral
securing the Loan, and shall execute and deliver to Borrower and WebBank a
subordination agreement in substantially the form of Exhibit "A" attached
hereto, together with such other modifications as WebBank may request.
[signatures appear on next page]
27
Please indicate your agreement to and acknowledgment of the foregoing
by executing a copy of this letter in the place indicated below and returning
same to me.
Sincerely yours,
U.S. GAS & ELECTRIC, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇, Chairman and CEO
Agreed and Acknowledged:
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
28
