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EXHIBIT 10.112
AMENDED AND RESTATED CREDIT AGREEMENT
AND
REVOLVING LINE OF CREDIT
THIS AMENDED AND RESTATED CREDIT AGREEMENT AND REVOLVING LINE OF
CREDIT (the "Agreement") is entered into this 31st day of March, 1998 by and
between WILSHIRE TECHNOLOGIES, INC., a California corporation (the "Borrower"),
and TRILON DOMINION PARTNERS, L.L.C., a Delaware limited liability company (the
"Lender").
RECITALS
A. Borrower and Lender entered into a Credit Agreement dated
January 5, 1996 as amended by an Amendment to Credit Agreement dated June 30,
1996 and as further amended by a Second Amendment to Credit Agreement dated
September 30, 1996, a Third Amendment to Credit Agreement dated April 15, 1997
and a Fourth Amendment to Credit Agreement dated September 19, 1997 (the
"Original Credit Agreement").
B. Lender has loaned to Borrower the aggregate principal amount
of Four Million Seven Hundred Fifty Thousand Dollars ($4,750,000) pursuant to
the Original Credit Agreement as represented by a promissory note (the "Original
Note") and certain demand notes dated January 7, 1998, February 17, 1998 and
March 10, 1998 (the "Demand Notes").
C. Borrower is further indebted to Lender in the amount of Five
Hundred Forty-Three Thousand Two Hundred Ninety-Six and 92/100 Dollars
($543,296.92) on account of certain accrued interest on the Original Note and
the Demand Notes and for management fees provided for in the Original Credit
Agreement.
D. There is outstanding an aggregate amount of Five Million Two
Hundred Ninety-Three Thousand Two Hundred Ninety-Six and 92/100 Dollars
($5,293,296.92) owed by Borrower to Lender.
E. Pursuant to the Original Credit Agreement, Borrower has issued
to Lender warrants and springing warrants to purchase shares of common stock of
Borrower as reflected on Exhibit A hereto.
F. Lender has agreed to extend additional credit to Borrower, and
Borrower has agreed to issue additional warrants and springing warrants to
Lender pursuant to the terms of this Agreement.
15. Commitment.
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15.1. Commitment. The Lender agrees, subject to the terms of this
Agreement, to extend credit to the Borrower from and including the date hereof
to but not including the Termination Date, as hereinafter defined, in an
aggregate principal amount at any one time outstanding not exceeding $2,200,000
(the "Commitment"). The Lender shall provide such extensions of credit by making
one or more advances (a "Borrowing") to the Borrower, subject to the terms of
this Agreement and during such period the Borrower may borrow, pay and reborrow
this amount of the Commitment.
15.2. Borrowings. The Borrower shall give the Lender written notice
of each Borrowing requested hereunder by delivering to the Lender a request,
substantially in the form of Exhibit B attached hereto, completed to the
satisfaction of the Lender and delivered as provided in Section 2.4 hereof. The
Lender shall make the amount of any new Borrowing available to the Borrower as
set forth on Schedule 4.4 by remitting the same, in immediately available funds,
to such account as the Borrower may specify to the Lender in writing from time
to time.
15.3. Warrant and Springing Warrant. In consideration of the
Lender's providing the Commitment, the Borrower hereby agrees to issue to the
Lender (i) a warrant in the form of Exhibit C attached hereto (the "Warrant") to
purchase 650,000 shares of common stock of the Borrower, no par value per share
(the "Common Stock"), at an exercise price per share equal to $0.41, exercisable
from the date hereof through March 31, 2003; and (ii) a springing warrant in the
form of Exhibit D attached hereto (the "Springing Warrant") to purchase 250,000
shares of Common Stock, exercisable in the event that the principal and interest
on the Note (as defined in Section 1.4 below) shall not be paid in full on or
before December 31, 1998.
15.4. Note. The Borrowings shall be evidenced by an amended and
restated promissory note (the "Note") of the Borrower in substantially the form
of Exhibit E hereto, dated the Closing Date (as hereinafter defined), payable to
the Lender in a principal amount equal to Five Million Two Hundred Ninety-Three
Thousand Two Hundred Ninety-Six and 92/100 Dollars ($5,293,296.92) plus an
amount equal to the Commitment as then in effect (such amount not to exceed
$7,493,296.92), and otherwise duly completed. At the Closing the Note shall be
issued in exchange for the Original Note and the Demand Notes. The date and
amount of each Borrowing advanced by the Lender to the Borrower, and each
payment made on account of the principal thereof, shall be recorded by the
Lender on its books and, prior to any transfer of the Note, endorsed by the
Lender on the schedule attached to the Note or any continuation thereof. In
furtherance and not in limitation of the foregoing, the Borrower hereby
irrevocably authorizes the Lender to make or cause to be made appropriate
notations on the schedule attached to the Note with respect to all of the
foregoing data. The data set forth on the schedules attached to the Note or on
the records of the Lender shall be presumed correct in the absence of manifest
error, provided in any event that the failure by the Lender to make any such
endorsement or any error therein shall not affect the obligations of the
Borrower hereunder or under the Note in respect of the Borrowings evidenced
thereby.
15.5. Prepayments of Borrowings. Subject to Section 2.3 hereof, the
Borrower shall have the right to prepay Borrowings, at any time or from time to
time, in whole or in part, provided that the Borrower shall give the Lender
notice of each such prepayment, as provided in
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Section 2.4 hereof. Upon the closing of an equipment financing for the
Borrower's fixtures and equipment, the Borrower shall have the mandatory
obligation to prepay Borrowings to Lender in the amount of the proceeds of such
equipment financing.
15.6. Termination. The Commitment shall terminate on the earlier of
(i) the closing of an equipment financing for the Borrower's fixtures and
equipment, or (ii) December 31, 1998 (the "Termination Date").
16. Payments of Principal and Interest.
16.1. Repayment of Loans. The Borrower will pay to the Lender the
principal of the Borrowing, and each Borrowing shall mature, on the Termination
Date.
16.2. Interest. The Borrower will pay to the Lender interest on the
unpaid principal amount of each Borrowing, for the period from and including the
date of such Borrowing to, but excluding the date such Borrowing shall be paid
in full, at a rate per annum equal to the prime rate of interest published in
The Wall Street Journal (Eastern Edition) plus 3% as of the Closing Date, the
Interest Rate, payable quarterly in arrears on the last day of each quarter
until the Termination Date, commencing on June 30, 1998. Any accrued but unpaid
interest shall be added to, and become part of, the principal amount of the
Note. If the principal amount of the Note and all accrued interest thereon are
not paid on the Termination Date, then, notwithstanding anything to the contrary
set forth in this Agreement or the Note, the Borrower shall pay to the Lender on
the Termination Date a default fee of $100,000 and the unpaid principal amount
of the Note and all accrued interest thereon shall accrue interest at a rate per
annum equal to the prime rate of interest published in The Wall Street Journal
(Eastern Edition) plus 6% from and after the Termination Date until paid in full
in cash; provided, however, if the principal amount of the Note and all accrued
interest thereon are not paid on or prior to the date which is exactly six (6)
months after the Termination Date, then the interest rate payable under this
Agreement and the Note shall be increased by an additional 2% per annum every
six (6) months thereafter; provided further, however, the Note is subject to the
express condition that at no time shall Borrower be obligated or required to pay
interest on the principal balance due hereunder at a rate which could subject
Lender to either civil or criminal liability as a result of being in excess of
the maximum interest rate which Borrower is permitted by applicable law to
contract or agree to pay. If by the terms of the Note, Borrower is at any time
required or obligated to pay interest on the principal balance due hereunder at
a rate in excess of such maximum rate as the case may be, such interest rate
shall be deemed to be immediately reduced to such maximum rate and all previous
payments in excess of the maximum rate shall be deemed to have been payments in
reduction of principal and not on account of the interest due hereunder.
16.3. Minimum Amounts. Each Borrowing and partial prepayment of
principal of a Borrowing shall be in an amount at least equal to $100,000.
16.4. Certain Notices. Notices by the Borrower to the Lender of any
Borrowings or of any prepayments shall be irrevocable and shall be effective
only if received by the Lender in writing not later than 10:00 a.m. New York
time at least two business days prior to
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the date of the relevant Borrowing or prepayment. Each such notice of Borrowing
or prepayment shall specify the amount of the Commitment to be borrowed or
prepaid.
17. Closing.
17.1. Closing Date. The Lender shall make the Commitment available
on the date hereof (the "Closing Date") and such later dates from time to time
as Borrower shall elect, upon satisfaction of the terms and conditions hereof
(each a "Borrowing Date").
17.2. Transactions at Closing. On the Closing Date, the Borrower
will deliver to the Lender (i) the Note (with aggregate Borrowings to date
indicated on Schedule I thereto), (ii) the Warrant and (iii) the Springing
Warrant.
18. Representations and Warranties of the Borrower. The Borrower
represents and warrants that:
18.1. Organization, Standing, Qualification, Capitalization, etc.
The Borrower is a corporation duly organized, validly existing and in good
standing under the laws of the state of California, and has all requisite
corporate power and authority to own, lease and operate its properties and to
carry on the business as it is now being conducted. The Borrower is licensed and
qualified to do business as a foreign corporation in each jurisdiction in which
the character of the Borrower's properties, owned or leased, or the nature of
its activities makes such qualification or licensing necessary, unless the
failure to be so licensed or qualified does not have a material adverse effect
on the Borrower. Attached hereto as Schedule 4.1A is a complete and correct copy
of the Articles of Incorporation of the Borrower (the "Articles"), and all
amendments thereto, substantially as the Articles, as amended, will be in effect
at the Closing Date, and attached hereto as Schedule 4.1B is a complete and
correct copy of the Bylaws of the Borrower. The Borrower has authorized capital
stock as set forth on Schedule 4.1C attached hereto. All of the outstanding
shares of capital stock of the Borrower (as listed on Schedule 4.1C attached
hereto and subject to the reservations contained therein) have been duly
authorized and validly issued and are fully paid and nonessessable. There are no
preemptive rights or similar rights on the part of the holders of shares of the
Borrower's capital stock in connection with the sale of the Warrant or the
Springing Warrant or the shares of Common Stock issuable upon exercise of the
Warrant or the Springing Warrant. The Borrower has no Subsidiary (defined as any
corporation or other business entity, a majority of the voting stock (or other
beneficial interests) of which, entitled to vote for the election of directors,
is at any time owned by the Borrower or one or more Subsidiaries), except as
listed on Schedule 4.1D attached hereto.
18.2. Authority, No Defaults and No Material Adverse Effect. The
Borrower has all requisite corporate power and authority to enter into this
Agreement, the Note, the Warrant and the Springing Warrant and to consummate the
transactions contemplated hereby and thereby. The execution and delivery of this
Agreement, the Note, the Warrant, the Springing Warrant and the consummation of
the transactions contemplated hereby and thereby have been duly authorized by
all necessary corporate action on the part of the Borrower. No further approval
or authorization of the Board of Directors or the shareholders of the Borrower
will be required for the issuance and sale of the Note, the Warrant, the
Springing Warrant or the
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Common Stock to be issued upon exercise of the Warrant or the Springing Warrant
(as the case may be) as contemplated herein. The Common Stock to be issued upon
exercise of the Warrant or the Springing Warrant (as the case may be) will be,
at the time of issuance in accordance with the terms of the Warrant or the
Springing Warrant (as the case may be), validly issued and outstanding, and
fully paid and non-assessable. The shares of Common Stock issuable upon exercise
of the Warrant and the Springing Warrant have been reserved for issuance by all
necessary corporate action on behalf of the Borrower. To the best of Borrower's
knowledge, all of the shares of Common Stock that have been offered, issued and
sold by the Borrower, to the extent applicable, have been so offered, issued and
sold in compliance with the Securities Act of 1933, as amended (the "1933 Act"),
and state securities laws. This Agreement, the Note, the Warrant and the
Springing Warrant have been executed and delivered by the Borrower and
constitute the valid and binding obligations of the Borrower, enforceable in
accordance with their respective terms. The execution and delivery of this
Agreement, the Note, the Warrant and the Springing Warrant do not, and the
consummation of the transactions contemplated hereby and thereby will not,
conflict with or result in a breach of or the acceleration of any obligation
under, or constitute a default or event of default (or event which, with notice
or lapse of time or both, would constitute a default) under, any provision of
any charter, bylaw, indenture, mortgage, lien, lease, agreement, contract,
instrument, order, judgment, decree, ordinance or regulation, or any restriction
to which any property of the Borrower is subject or by which the Borrower is
bound, the effect of which would be materially adverse to the Borrower.
18.3. Financial Statements. The Borrower has made all filings with
the Securities and Exchange Commission (or any governmental authority succeeding
to any of its functions) (the "Commission") that it has been required to make
under the 1933 Act and the Securities Exchange Act of 1934, as amended (the
"1934 Act"). The Borrower has provided to the Lender a true, complete and
correct copy of all filings with the Commission made by the Borrower since
January 1, 1996, including all exhibits to such filings (herein referred to as
the "Borrower Securities Documents"). Except as set forth on Schedule 4.3
attached hereto, as of their respective dates, and except as amended, the
Borrower Securities Documents complied in all material respects with the
requirements of the 1933 Act or the 1934 Act, as the case may be, and the
securities regulations or rules thereunder, and none of the Borrower Securities
Documents contained any untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The financial statements of the Borrower included in the
Borrower Securities Documents comply as to form in all material respects with
applicable accounting requirements and with the published rules and regulations
of the Commission with respect thereto, have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis during
the periods involved (except as may be indicated in the notes thereto or, in the
case of the unaudited statements, as permitted by Form 10-QSB) and fairly
present (subject, in the case of the unaudited statements, to normal recurring
audit adjustments) the consolidated financial position of the Borrower as of the
dates thereof and the consolidated results of its operations and cash flows for
the periods then ended. Except as set forth in the Borrower Securities
Documents, (i) there have been no material adverse changes in the business,
condition (financial or other), assets, properties or operations or prospects of
the
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Borrower and its Subsidiaries, taken as a whole and (ii) the Borrower's
operations have been conducted in the ordinary course of business in all
material respects.
18.4. Use of Proceeds. The Borrower shall have used and for the term
of this Agreement will use all Borrowings for inventory purposes and the funding
of working capital in the ordinary course of its business, as more specifically
set forth on Schedule 4.4 attached hereto.
18.5. The Offering. Neither the Borrower nor anyone acting on its
behalf has directly or indirectly offered the Note, the Warrant or the Springing
Warrant to be sold to the Lender, any part thereof, or any similar security of
the Borrower, for sale to, or solicited any offer to buy the same from, anyone
other than the Lender and other investors to whom such offers can be made
without requiring the registration of the Note, the Warrant or the Springing
Warrant under the 1933 Act or state securities laws.
18.6. Employment Contracts, etc.; Certain Material Transactions.
Except as described in the Borrower's Securities Documents or as set forth on
Schedule 4.6 attached hereto:
(a) the Borrower has no employment contracts, deferred
compensation agreements or bonus, incentive or profit-sharing plans
currently in force and effect;
(b) there are no existing material arrangements or proposed
material arrangements between the Borrower and any officer or director or
holder of more than 10% of the capital stock of the Borrower; and
(c) the Borrower has no pension, retirement or similar plans
or obligations, whether of a legally binding nature or in the nature of
informal understandings.
18.7. Litigation, etc. Except as described in the Borrower
Securities Documents and as set forth on Schedule 4.7 attached hereto, there is
no action, proceeding or investigation pending or threatened (or any basis
therefor known to the Borrower) that questions the validity of this Agreement,
the Note, the Warrant, the Springing Warrant or the Common Stock to be issued
upon exercise of the Warrant or the Springing Warrant or any action taken or to
be taken pursuant hereto or contemplated hereby, or that might result, either in
any case or in the aggregate, in any material adverse change in the business,
prospects, operations, affairs or condition of the Borrower or in any of its
properties or assets, or in any material liability on the part of the Borrower.
The foregoing includes, without limiting its generality, actions pending, or
threatened (or any basis therefor known to the Borrower) involving the previous
employment of any of the Borrower's employees or prospective employees or their
use in connection with the Borrower's business of any information or techniques
allegedly proprietary to their former employer(s).
18.8. Compliance with Other Instruments, etc. Except as described on
Schedule 4.8 attached hereto, the Borrower is not and at the Closing Date and
each Borrowing Date will not be, in violation of any provision of its Articles
or Bylaws, or of any loan agreement or other
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agreement to which it is a party, other than violations which singly or in the
aggregate will not have a material adverse effect on the business, condition
(financial or other), assets, properties or operations or prospects of the
Borrower and its Subsidiaries taken as a whole ("Material Adverse Effect").
Except as described on Schedule 4.8 attached hereto, the Borrower is not, nor is
it alleged to be, in violation or default of any applicable law, statute, order,
rule or regulation promulgated, including, without limitation, any applicable
securities laws, zoning laws and ordinances, labor laws and regulations of the
state of California or the United States, the Occupational Safety and Health Act
and regulations thereunder, the Employees Retirement Income Security Act, and
national, state and local environmental protection laws and regulations, or any
judgment entered by any court, administrative agency or commission or other
governmental agency or instrumentality of the United States or any other
jurisdiction (a "Governmental Entity"), relating to or affecting the operation,
conduct or ownership of the property or business of the Borrower, which
violation or default or alleged violation or default would have a Material
Adverse Effect, individually or in the aggregate, on the financial condition,
assets, business, properties or prospects of the Borrower.
18.9. Approvals. Except as described on Schedule 4.9 attached
hereto, there is no legal impediment to the execution and delivery of this
Agreement by the Borrower or to the consummation by Borrower of the transactions
contemplated hereby, and no filing or registration by Borrower with, or
authorization, consent or approval of, a Governmental Entity, shareholders or
any other third party is necessary for the consummation by the Borrower of the
transactions contemplated hereby, other than such which, if not made or
obtained, would not, in the aggregate, have a Material Adverse Effect on the
transactions contemplated hereby.
18.10. Tax Returns and Payments. Except as described on Schedule
4.10 attached hereto, all of the tax returns and reports of the Borrower
required by law to be filed have been accurately prepared and timely filed and
all taxes shown as due thereon have been paid or adequately reserved on the
Borrower's books and reflected on the Borrower Securities Documents. No
deficiency assessment or proposed adjustment of the Borrower's federal, state or
local income taxes is pending, and the Borrower has no knowledge of any proposed
liability for any tax to be imposed upon its properties or assets for which
there is not an adequate reserve reflected on the Borrower Securities Documents.
18.11. Disclosure. Neither this Agreement nor any Schedule hereto
nor any certificate or other document referenced herein or therein and furnished
to the Lender by the Borrower contains any untrue statement of a material fact
or omits to state a material fact necessary in order to make the statements
contained therein or herein, in light of the circumstances under which they were
made, not misleading. Except as set forth on Schedule 4.11 attached hereto,
there is no material fact known to the Borrower relating to the business,
affairs, operations, condition or prospects of the Borrower that materially
adversely affects the same and that has not been disclosed to the Lender in
writing by the Borrower.
18.12. Insurance. The Borrower has commercial general liability
insurance, products liability insurance and workers' compensation insurance in
such amounts as are commercially reasonable for businesses of a similar type and
size as the Borrower, true and
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correct copies of which have been delivered by the Borrower to the Lender. The
Borrower has fire and casualty insurance policies with extended coverage
sufficient in amount (subject to reasonable deductibles) to allow it to replace
in all material respects any of its properties that might be damaged or
destroyed.
18.13. Employment Matters.
(a) (i) There are no discrimination charges (relating to
sex, age, race, national origin, handicap or veteran status or otherwise)
pending or threatened, against, or involving the Borrower or any
Subsidiary; (ii) there are no grievances between the Borrower or any
Subsidiary and any employee; (iii) neither the Borrower nor any Subsidiary
is delinquent in payments to any of such employees for any wages,
salaries, commissions, bonuses, benefits or other direct or indirect
compensation for any services performed by them; (iv) the Borrower and
each Subsidiary is in compliance with all federal, state, local and
foreign laws and regulations respecting labor, employment, wages, hours
and benefits; (v) there is no unfair labor practice with respect to the
Borrower or any Subsidiary pending before the National Labor Relations
Board or any Board or any comparable state, local or foreign agency; and
(vi) there is no labor strike, dispute, slow down or stoppage actually
pending or threatened against or involving the Borrower or any Subsidiary.
(b) To the Borrower's knowledge, no employee of the Borrower
or any Subsidiary is in violation of any term of any employment contract,
or any other contract or agreement with or any restrictive covenant or any
other common law obligation to a former employer relating to the right of
any such employee to be employed by the Borrower or any Subsidiary because
of the nature of the business conducted or to be conducted by the Borrower
and any Subsidiary or to the use of trade secrets or proprietary
information of others, and to the Borrower's knowledge, the employment of
the Borrower's or its Subsidiaries' employees does not subject the
Borrower or its Subsidiaries to liability in connection which such
covenants or agreements. There is neither pending, nor to the Borrower's
knowledge threatened, any actions, suits, proceedings or claims with
respect to any contract, agreement, covenant or obligations referred to
above.
18.14. Environmental Matters. The conduct of the Borrower and its
Subsidiaries business as presently conducted and as will be conducted after the
Closing Date, complies with all applicable Environmental Laws (as defined below)
and requirements of Environmental Laws, except for such noncompliance which
would not have a Material Adverse Effect. Without limiting the generality of the
foregoing, the Borrower acknowledges that:
(i) all notices, permits, licenses or similar authorizations
required under any Environmental Laws and requirements of Environmental Laws for
the conduct of the business of the Borrower and its Subsidiaries as presently
conducted have been duly obtained or filed, except where the failure to so
obtain or file would not have a Material Adverse Effect; (ii) the Borrower and
its Subsidiaries have not been involved in the unlawful disposal of hazardous
waste, toxic
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materials or other regulated contaminants nor does any of the Borrower's or its
Subsidiaries' business unlawfully generate hazardous waste, toxic materials, or
regulated contaminates, except for such unlawful disposal or generation which
would not have a Material Adverse Effect; (iii) no citations, fines or penalties
have been assessed, threatened or asserted in connection with the conduct of the
business of the Borrower or its Subsidiaries under Environmental Laws or
requirements of Environmental Laws, except for such citations, fines or
penalties which would not have a Material Adverse Effect; (iv) neither the
Borrower nor its Subsidiaries has received any notice from a Governmental Entity
of any violation or possible violation of any Environmental Laws or requirements
of Environmental Laws, rules, regulations or ordinances or of any licenses,
permits or similar authorizations, except for such violations which would not
have a Material Adverse Effect; and (v) neither the Borrower nor its
Subsidiaries is aware of, and each has taken all steps it has deemed to be
reasonably necessary to determine the existence of any substance, material or
situation relating to the business of the Borrower and its Subsidiaries that
would give rise to remediation obligations under Environmental Laws or
requirements of Environmental Laws, except for such remediation obligations
which would not have a Material Adverse Effect.
For purposes of this Section 4.14, "Environmental Laws" shall mean
any and all laws, statutes, ordinances, rules, regulations, orders, or
determinations of any governmental authority pertaining to health or the
environment in effect in any and all jurisdictions in the United States in which
the Borrower and its Subsidiaries are conducting or at time have conducted
business, including, without limitation, the Clean Air Act, as amended, the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980
("CERCLA"), as amended, the Federal Water Pollution Control Act, as amended, the
Occupational Safety and Health Act of 1970, as amended, the Resource
Conservation and Recovery Act of 1976 ("RCRA"), as amended, the Safe Drinking
Water Act, as amended, the Toxic Substances Control Act, as amended, the
Superfund Amendments and Reauthorization Act of 1986, as amended, and other
environmental conservation or protection laws.
18.15. Registration Rights. Except as set forth on Schedule 4.15
attached hereto, the Borrower is not currently under any obligation to register
under the 1933 Act or state securities laws any of its presently outstanding
securities or any of its securities that may subsequently be issued pursuant to
any existing convertible or exercisable securities.
18.16. Reporting Issuer. All annual and quarterly reports to
shareholders issued by the Borrower have been, at the respective dates of issue,
true and correct in all material respects, contain no misrepresentations and
were prepared in accordance with and complied with the laws, regulations, policy
statements and rules applicable thereto.
18.17. Liens, Encumbrances. Except for liens of the Lender against
Borrower's assets pursuant to the Original Credit Agreement, none of the assets
of the Borrower are subject to any mortgage, security interest, lien, pledge,
claim, option, right of first refusal, indenture, easement, license, security
agreement or other agreement, arrangement, contract, commitment, understanding,
obligation, charge or encumbrance of any kind or character, except for liens of
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current taxes not yet due and payable or other statutory liens arising in the
ordinary course of Borrower's business.
19. Conditions of Lender's Obligations. The Lender's obligation to
consummate this Agreement is subject to the fulfillment to the Lender's
reasonable satisfaction, before or at the Closing, and at each of the Borrowing
Dates, of all of the following conditions:
19.1. Representations and Warranties Correct. The representations
and warranties of the Borrower made or contained herein or otherwise made in
writing by or on behalf of the Borrower in connection with the transactions
contemplated hereby shall be correct in all material respects at and as of the
Closing Date and at each Borrowing Date as if made on and as of the Closing Date
and at each Borrowing Date, except as affected by the transactions contemplated
hereby.
19.2. Performance. The Borrower shall have performed and complied
with all agreements and conditions contained herein required to be performed or
complied with by it before or at the Closing.
19.3. Proceedings and Documents. All corporate and other proceedings
in connection with the transactions contemplated by this Agreement and all
documents and instruments incident to such transactions shall be satisfactory in
substance and form to the Lender and the Lender's counsel, and the Lender or the
Lender's counsel shall have received all such counterpart originals or certified
or other copies of such documents as the Lender or its counsel may reasonably
request.
19.4. Compliance Certificate. The Lender shall have received an
Officer's Certificate, dated as of the Closing Date and at each Borrowing Date,
certifying that the conditions specified in Sections 5.1 and 5.2, as applicable
to the Closing and each Borrowing Date, have been fulfilled.
19.5. Opinion of Borrower Counsel. The Lender shall have received
from Xxxxxx Xxxxxxx, P.A., counsel for the Borrower, a favorable opinion, dated
as of the Closing Date and satisfactory in scope and form to the Lender and the
Lender's counsel, that in total opine to the following effect:
(a) as stated in Sections 4.1 (first, second, fourth, fifth
and sixth sentences), 4.2, 4.7 (to the best knowledge and belief of such
counsel), 4.8 (first sentence to the best knowledge and belief of such
counsel), 4.9, 4.15 and 4.16 (to the best knowledge and belief of such
counsel) hereof;
(b) the offer, issue, sale and delivery of the Note, the
Warrant, the Springing Warrant and the Common Stock to be issued upon
exercise of the Warrant or the Springing Warrant (as the case may be)
under the circumstances contemplated by this Agreement constitute exempted
transactions under the 1933 Act and applicable state securities laws as
now in effect, and the registration thereof under that Act or such laws is
not required;
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(c) the offer, issue, sale and delivery of the Note, the
Warrant, the Springing Warrant and the Common Stock to be issued upon
exercise of the Warrant or the Springing Warrant (as the case may be)
under the circumstances contemplated by this Agreement do not require the
filing of a prospectus with the Commission or any consent, notice, order
or approval under the laws of the United States or any state, and the
Lender may immediately following the Closing Date, without any notice or
consent other than as set forth in Schedule 4.9 and as may be applicable
to a "control person" of the Borrower under applicable securities Laws,
sell the Common Stock without any limitations or restrictions, other than
those imposed by the United States or any state securities law.
Such opinions shall also cover such other matters incident to the
transactions contemplated hereby as the Lender or its counsel may reasonably
request.
5.6 Facility Fee. The Borrower shall have paid to the Lender a
facility fee in the amount of $100,000, by cashiers or certified check, or by
wire transfer of funds to an account designated in writing by the Lender.
5.7 Security Agreement. The Borrower shall have and does hereby
ratify, confirm and acknowledge the enforceability against it of the Security
Agreement dated May 13, 1994 between Dominion Capital, Inc. and Borrower, as
amended by Amendment No. 1 to Security Agreement, dated as of January 5, 1996
(whereby Lender succeeded to the rights of Dominion Capital, Inc. under the
Security Agreement, as amended) (the "Security Agreement"), in which Security
Agreement the Borrower granted to the Lender a first priority perfected security
interest in all assets, tangible and intangible, of the Borrower then, now and
hereafter existing, wherever located, including, without limitation, the
proceeds of all such collateral. The Borrower confirms and agrees that all
amounts including those advanced pursuant to this Agreement or evidenced by the
Note are secured by the Security Agreement which continues to be in full force
and effect.
20. Accounting; Financial Statements and Other Information.
20.1. Accounting. The Borrower will maintain and cause each of its
Subsidiaries to maintain a system of accounting established and administered in
accordance with generally accepted accounting principles ("GAAP"), and will set
aside on its books and cause each of its Subsidiaries to set aside on its books
all such proper reserves as shall be required by GAAP.
20.2. Financial Statements. The Borrower will deliver to the Lender
the following financial statements, which, in the case of paragraphs (b) and (c)
below, shall be prepared in accordance with GAAP:
(a) [Intentionally omitted.]
(b) as soon as practicable and in any event within 45 days
after the end of each fiscal quarter of the Borrower, consolidated
statements of income and cash flow of the Borrower and its Subsidiaries
for such quarter and for the period from the current
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fiscal year to the end of such quarter and consolidated and consolidating
balance sheets of the Borrower and its Subsidiaries as at the end of such
quarter, and setting forth, in comparative form, figures for the
corresponding quarter in the approved annual budget, all in reasonable
detail and certified by the chief financial officer of the Borrower as
being a true and correct reflection in all material respects of the
financial condition and results of operation of the Borrower and its
Subsidiaries on a consolidated and consolidating basis, subject to changes
resulting from year-end adjustments and except as otherwise noted therein;
(c) as soon as practicable and in any event within 90 days
after the end of each fiscal year, audited consolidated and consolidating
statements of income and cash flow of the Borrower and its Subsidiaries
for such year, and audited consolidated and consolidating balance sheets
of the Borrower and its Subsidiaries as at the end of such year, and
setting forth, in each case, in comparative form, corresponding figures
from the preceding fiscal year, and corresponding figures, for such year
from the approved annual budget, all in reasonable detail, and, as to the
consolidated statements, reported upon by an independent accounting firm
of nationally recognized standing whose certification shall be without
qualification as to the scope of the audit or as to GAAP, and, as to the
consolidating statements, certified by the chief financial officer of the
Borrower;
(d) together with delivery of the financial statements
required by paragraph (c) above, an Officers' Certificate of the Borrower
containing an analysis of the variance between the results of operations
and the budget for such period and a management commentary as to such
results of operation;
(e) promptly upon receipt thereof, a copy of each other
report (including, without limitation, each management letter) submitted
to the Borrower or any of its Subsidiaries by independent accountants in
connection with any annual, interim, or special audit of the books of the
Borrower or any of its Subsidiaries made by such accountants;
(f) immediately upon any material revision to any of the
financial statements referred to in paragraphs (a), (b), (c), (d) or (e)
above, such financial statements, as revised;
(g) within five (5) business days after the end of each
month, a copy of a schedule containing the monthly uses of cash by the
Borrower, prepared with reasonable detail;
(h) promptly upon the filing thereof, all Forms 10-KSB and
Forms 10-QSB and all other reports and statements, if any, filed by the
Borrower or any of its Subsidiaries with the Commission or with any
securities exchange; and
(i) with reasonable promptness, such other information and
data with respect to the Borrower or any of its Subsidiaries as from time
to time may be reasonably requested.
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21. Other Covenants. The Borrower further covenants and agrees
that, so long as the Note is outstanding:
(a) The Borrower shall:
(1) promptly make all payments or accruals of
principal and interest on the Note when due, and comply with the
other provisions hereof and the provisions of the Note, the Warrant
and the Springing Warrant;
(2) comply, and cause each of its Subsidiaries to
comply, in all material respects, with all applicable federal, state
and local laws, ordinances and regulations;
(3) conduct, and cause each of its Subsidiaries to
conduct, its business in the usual and ordinary course consistent
with past practices;
(4) maintain, and cause each of its Subsidiaries to
maintain, its corporate existence and right to carry on its business
and duly procure all necessary renewals and extensions thereof and
use, and cause each of its Subsidiaries to use, its best efforts to
maintain, preserve and renew all such rights, powers, privileges and
franchises;
(5) keep and maintain, and cause each of its
Subsidiaries to keep and maintain, all buildings, plants and other
property in such good condition, repair and working order and
supplied with all such necessary equipment as in the reasonable
judgment of its Board of Directors may be necessary, so that the
business carried on in connection therewith may be properly and
advantageously conducted at all times;
(6) pay and discharge, and cause each of its
Subsidiaries to pay and discharge, promptly, or cause to be paid and
discharged promptly, all taxes, assessments and governmental charges
or levies imposed upon it or upon its income or upon any part
thereof, as well as all claims of any kind (including claims for
labor, materials and supplies) that, if unpaid, might by law become
a lien or charge upon its property; provided, however, that neither
the Borrower nor any Subsidiary shall be required to pay any such
tax, assessment, charge, levy or claim if the amount, applicability
or validity thereof shall be diligently contested in good faith by
appropriate proceedings and if it shall have set aside on its books
reserves (segregated to the extent required by sound accounting
practice) adequate with respect thereto;
(7) pay, or cause to be paid, the principal of and
interest on all indebtedness for borrowed monies heretofore or
hereafter incurred or assumed by the Borrower or any Subsidiary when
and as the same shall become due and payable unless such
indebtedness be renewed or extended on terms no less favorable than
the original terms thereof;
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(8) faithfully observe, perform and discharge, and
cause each of its Subsidiaries to faithfully observe, perform and
discharge, all covenants, conditions and obligations that are
imposed on it by any and all indentures and other agreements
securing or evidencing such indebtedness or pursuant to which such
indebtedness was incurred, and not permit the occurrence of any act
or omission that is or may be declared to be a default thereunder;
provided, however, that neither the Borrower nor any Subsidiary
shall be required to make any payment or to take any other action by
reason of the provisions of this paragraph (8) if it is diligently
contesting in good faith its obligation to make such payment or to
take such action and shall have set aside on its books adequate
reserves (segregated if and to the extent, required by sound
accounting practice) with respect thereto;
(9) provide or cause to be provided for itself and
each Subsidiary commercial general liability insurance, products
liability insurance and workers' compensation insurance in such
amounts as are commercially reasonable for businesses of similar
type and size as the Borrower and fire and casualty insurance
policies with extended coverage sufficient in amount (subject to
reasonable deductibles) to allow it to replace in all material
respects any of its properties that might be damaged or destroyed;
(10) notify the Lender in writing, promptly upon the
occurrence of any Event of Default (as defined below) hereunder or
any event that would become an Event of Default upon notice or the
lapse of time, or both;
(11) permit the Lender or any authorized
representatives of the Lender to visit and inspect any of the
properties of the Borrower or any of its Subsidiaries including its
and their books of account (and to make copies thereof and to take
extracts therefrom) and to discuss its and their affairs, finances
and accounts with its and their officers, all at such reasonable
times and as often as may be reasonably requested. The rights set
forth herein shall be exercised solely in furtherance of the proper
interests of the Lender as an investor in the Borrower, and such
Lender exercising its rights of inspection hereunder, and its agents
and representatives, shall maintain the confidentiality of all
financial and other confidential information of the Borrower
acquired by them in exercising such rights;
(12) use all Borrowings to be received under this
Agreement for the purposes set forth in Section 4.4 hereof only;
(13) maintain the registration of its Common Stock
under the 1934 Act and will ensure that it is in compliance with all
applicable securities laws and
(b) Except as set forth in Schedule 7(b), the Borrower shall
not, without the Lender's prior written consent:
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(1) merge or consolidate with any other corporation or
entity, or sell, lease, transfer, distribute or otherwise dispose of
all or any substantial part of its properties or assets (in any
single transaction or series of related transactions), or any
intellectual property material to its operations or business
prospects in one or a series of related transactions to a Subsidiary
or any other person (including capital stock of its Subsidiaries);
(2) transfer or permit any Subsidiary to transfer any
of its properties or assets (other than equipment) for the purpose
of subjecting the same to the payment of obligations in priority to
payment of general creditors;
(3) make any loan or advance to any third party, other
than its wholly-owned Subsidiaries, or assume, guarantee or become
liable (contingently or otherwise) for any indebtedness, and will
not permit any of its Subsidiaries to incur any indebtedness;
(4) enter into or be a party to, or amend, modify,
supplement or waive any provisions of any contracts involving
payments from the Borrower in an amount in excess of $150,000;
(5) create, incur, assume or suffer to exist, or
permit any of its Subsidiaries to create, incur, assume or suffer to
exist, any mortgage, pledge, encumbrance or lien of any kind upon
any of its property, assets or revenues, whether now owned or
hereafter acquired, except (i) liens for taxes not yet due or (ii)
other statutory liens arising in the ordinary course of the
Borrower's business;
(6) create any new Subsidiaries, convert any
Subsidiaries from inactive to active or enter into any joint
ventures or partnerships, permit any amendment of, or modification
or supplement to, its or any of its Subsidiaries' Certificates of
Incorporation or its or any of its Subsidiaries' By-laws, or (iii)
permit any amendment of, or modification or supplement to this
Agreement, the Note, the Warrant, or the Springing Warrant;
(7) mortgage, pledge, hypothecate or create or permit
to exist any security interest in, or lien on, any shares of the
capital stock of its Subsidiaries;
(8) sell, issue or otherwise dispose of, or part with
control of, any shares of capital stock of the Borrower or any of
its Subsidiaries, or permit any of its Subsidiaries to do the same;
(9) permit any of its Subsidiaries to, directly or
indirectly, purchase, acquire or lease any property to, or otherwise
deal with, in the ordinary course of business or otherwise, any
Affiliate (as defined below) of the Borrower or it Subsidiaries,
except (i) on an arm's length basis in transactions which are on no
less favorable terms to the Borrower or such Subsidiary than would
be the case
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with a similar transaction with an unaffiliated individual,
partnership, joint venture, corporation, trust, unincorporated
organization, or any other legal entity (hereinafter referred to as
"Person"); provided, however, that if the transaction or series of
related transactions is over $100,000 then the transaction shall be
approved by a majority of the independent directors of the Borrower,
(ii) reasonable, customary and regular fees to the nonmanagement
directors of the Borrower or any of its Subsidiaries to the extent
not in excess of $20,000 in the aggregate in any fiscal year, or
(iii) any transaction among the Borrower and any wholly-owned
Subsidiaries or among such subsidiaries in the ordinary course of
their respective businesses to the extent not in excess of $150,000
in the aggregate in any fiscal year.
For purposes of this Section 7(b), "Affiliate" shall mean, with
respect to any Person, any other Person directly or indirectly
controlling, controlled by, or under direct or indirect common
control with, such Person. A Person shall be deemed to control
another Person if such Person possesses, directly or indirectly, the
power to direct or cause the direction of the management and
policies of such other Person, whether through the ownership of
voting securities, by contract or otherwise;
(10) make Capital Expenditures during any fiscal year
that materially exceed the amounts budgeted for Capital Expenditures
in the approved annual budget of the Borrower and its Subsidiaries
for such fiscal year. For purposes hereof, "Capital Expenditures"
shall mean as to any Person for any period, the aggregate amount of
all capital expenditures which would be classified as capital
expenditures in a statement of income or operations of such Person
for such period prepared in accordance with GAAP;
(11) make any change in the management of the Borrower,
nor establish any bonus, incentive, or other employee benefit plans
(including, without limitation, any welfare plans) with respect to
its capital stock or establish any bonus, incentive or other
employee benefit plans (including, without limitation, any welfare
plans) in which holders of its capital stock or their affiliates are
participants;
(12) declare, pay or set aside for payment any dividend
or other distribution in respect of its capital; or
(13) purchase, cancel, retire, redeem, or otherwise
acquire any of its outstanding capital stock or other securities,
sell, merge or consolidate with, or transfer all or any substantial
part of its assets to, another corporation or other business entity,
liquidate, wind-up, or dissolve (or suffer any liquidation or
dissolution), or enter into any contract, agreement, commitment, or
arrangement with respect to any of the foregoing.
22. Events of Default; Remedies.
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(a) If any one or more of the following events shall occur
for any reason whatsoever (whether such occurrence shall be voluntary or
involuntary or be effected by operation of law or pursuant to any
judgment, decree or order of any court or any order, rule or regulation of
any administrative or other governmental body), it shall be deemed an
Event of Default hereunder:
(1) default by the Borrower in the due and punctual
payment of the principal, interest or both, on the Note when and as
the same of each such obligation shall become due and payable,
whether at maturity or at a date fixed for prepayment or by
acceleration or otherwise;
(2) default by the Borrower in the performance or
observance of any covenant, agreement or other provision of this
Agreement or of any instrument or document delivered to the Lender
in connection with or pursuant to this Agreement that is not cured
within a period of 30 days after written notice of such default is
given to the Borrower, or if any such instrument or document shall
terminate or become void or unenforceable other than (1) in
accordance with its terms or (ii) with the Lender's prior written
consent;
(3) default by the Borrower in the due and punctual
payment of the principal, interest or both on any other financial
obligation, when and as the same shall become due and payable, and
the passage of any applicable cure period;
(4) if any representation or warranty, or any other
statement of fact herein or in any writing, certificate, report or
statement (including, financial statement) at any time furnished to
the Lender pursuant to or in connection with this Agreement, or
otherwise, shall be false or misleading in any material respect when
made;
(5) the Borrower's becoming insolvent or unable to
meet its obligations as they mature, making a general assignment for
the benefit of creditors, or consenting to the appointment of a
trustee or a receiver, or admitting in writing its inability to pay
its debts as they mature;
(6) the appointment of a trustee or receiver for the
Borrower or for a substantial part of the properties of the Borrower
without the consent of Lender and such trustee or receiver not being
discharged within 30 days;
(7) the institution of bankruptcy, reorganization,
insolvency or liquidation proceedings by or against the Borrower or
debtor and, if instituted against it, the same being consented to by
the Borrower or remaining undismissed for a period of 30 days;
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(8) the rendering of any final judgment against the
Borrower for the payment of money which judgment is uninsured and in
an amount in excess of $100,000;
(9) any substantial part of the property of the
Borrower being sequestered or attached and not being returned to the
possession of the Borrower or released from such attachment within
30 days; and
(10) unless previously consented to by the Lender, upon
the effective date of a merger, reorganization or sale of
substantially all of the assets of the Borrower.
If any such Event of Default or any other default under any other
agreement or instrument executed in connection herewith shall occur and be
continuing, the Lender may, at the Lender's sole option, declare the entire
unpaid balance of principal and unpaid interest on the Note to be immediately
due and payable, whereupon the maturity of the then unpaid balance on the Note
shall be accelerated and the principal and all interest accrued thereon shall
forthwith become due and payable without presentment, demand, protest or notice
of any kind, all of which are hereby expressly waived, anything contained herein
or in the Note to the contrary notwithstanding, and the Lender may exercise and
shall have any and all remedies accorded the Lender by law; provided, however,
that with respect to any Event of Default set forth in Section 8(a)(5), (6), (7)
or (8), such Event of Default will automatically cause the principal and accrued
interest to become immediately due and payable.
(b) In case any one or more Events of Default shall occur
and be continuing, the Lender or the holder of the Note may proceed to
protect and enforce their respective rights or remedies either by suit in
equity or by action at law, or both, whether for the specific performance
of any covenant, agreement or other provisions contained herein, in the
Note or in any document or instrument delivered pursuant to this
Agreement, including but not limited to, the Borrower's Articles, or
proceed to enforce the payment of the Note or any other legal, equitable
or statutory right or remedy.
(c) No right or remedy herein conferred upon the Lender or
the holder of the Note is intended to be exclusive of any other right or
remedy contained herein, therein or in any instrument or document
delivered in connection with or pursuant to this Agreement, and every such
right or remedy contained herein and therein or now or hereafter existing
at law or in equity or by statute or otherwise may be exercised separately
or in any combination.
(d) No course of dealing between the Borrower and the Lender
or any failure or delay on the Lender's part in exercising any rights or
remedies hereunder shall operate as a waiver of any of the Lender's rights
or remedies and no single or partial exercise of any rights or remedies
hereunder shall operate as a waiver or preclude the exercise of any other
rights or remedies hereunder.
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23. Representations and Warranties by the Lender; Purchase for
Investment; Transfers Legends on Certificates.
23.1. Representations and Warranties by the Lender. The Lender has
adequate means of providing for its current financial needs and possible
contingencies, and has no present need, and anticipates no need in the
foreseeable future, to sell the Note, the Warrant, the Springing Warrant or the
Common Stock issuable upon exercise of the Warrant or the Springing Warrant
(collectively, the "Securities") that it may acquire. The Lender and its members
are able to bear the economic risk of this investment and, consequently, without
limiting the generality of the foregoing, the Lender and its members (a) are
able to hold any of the Securities they may acquire for an indefinite period of
time and (b) have a sufficient net worth to sustain a loss of their entire
investment in the Securities.
23.2. Purchase for Investment. The Lender represents that the Lender
is an "accredited investor" within the meaning of Regulation D under the 1933
Act and is acquiring the Securities for its own account, for investment purposes
only, and not with a view to the distribution of all or any part thereof. The
Lender will not distribute or transfer any of the Securities in the United
States except in compliance with all applicable federal and state securities
laws.
23.3. Transfers; Legends on Certificates. The Lender acknowledges
that it has been advised that the Securities and/or the certificate(s)
representing the Securities (a) will not be registered under the 1933 Act or any
state securities or blue sky laws (the "Blue Sky Laws"), (b) will be "restricted
securities" as defined in paragraph (a)(3) of Rule 144 under the 1933 Act ("Rule
144"), (c) have been issued in reliance on the statutory exemptions contained in
the 1933 Act, (d) have been issued in reliance on the statutory exemptions
contemplated in the Blue Sky Laws and that the Borrower relied on the
representations of the Lender set forth herein in consummating the issuance of
the Securities, (e) will not be transferable without registration under the 1933
Act and/or applicable Blue Sky Laws, unless an exemption from the registration
requirement thereof is available and an opinion of counsel to that effect is
delivered to the Borrower, and (f) will bear the following restrictive legends
evidencing such restrictions:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND
MAY NOT BE SOLD OR TRANSFERRED UNLESS THE SAME ARE REGISTERED UNDER THE
SECURITIES ACT OF 1933, OR THE BORROWER RECEIVES AN OPINION FROM COUNSEL TO THE
HOLDER THAT REGISTRATION IS NOT REQUIRED FOR SALE OR TRANSFER OR THAT THE SHARES
HAVE BEEN LEGALLY SOLD IN A BROKER'S TRANSACTION PURSUANT TO RULE 144 OR TO A
QUALIFIED INSTITUTIONAL LENDER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES
ACT OF 1933.
Moreover, the Lender has been advised that Rule 144 may not be available for
resales unless the Borrower remains a reporting company subject to the
requirements of the 1934 Act, and the Borrower files all required information
with the Commission.
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23.4. Removal of Legends and Transfer Restrictions. The legend
relating to the 1933 Act endorsed on a stock certificate or other instrument
pursuant to Section 9.3 and the stock transfer instructions with respect to the
Securities represented by such certificate or instrument shall be removed and
the Borrower shall issue a certificate or instrument without such legend to the
holder of such Securities if such Securities are registered under the 1933 Act
and a prospectus meeting the requirements of Section 10 of the 1933 Act is
available or if such holder provides to the Borrower an opinion of counsel for
such holder of the Securities reasonably satisfactory to the Borrower to the
effect that a public sale, transfer or assignment of such Securities may be made
without registration under the 1933 Act.
24. Successors and Assignees.
(a) All of the terms of this Agreement shall be binding upon
and inure to the benefit of and be enforceable by the respective
successors and assignees of the parties hereto, whether so expressed or
not, and, in particular, shall inure to the benefit of and be enforceable
by any holder or holders at the time of the Note, the Warrant or the
Springing Warrant or of any portions thereof.
(b) The Lender may at any time assign to one or more
individuals or entities (each an "Assignee") all or a proportionate part
of this Agreement and the Note, the Warrant and/or the Springing Warrant
and such Assignee shall become the holder of all or a proportionate part
of this Agreement and the Note, the Warrant and/or the Springing Warrant
pursuant to an assignment agreement executed by such Assignee and the
Lender, provided that any transfer is registered, or exempt from
registration, pursuant to all applicable securities laws. Upon execution
and delivery of such assignment agreement and payment by such Assignee to
the Lender of an amount equal to the purchase price agreed to between the
Lender and such Assignee, the Assignee shall have full authority to act in
place of the Lender with respect to all rights and obligations under this
Agreement, and the Lender shall be released from its obligations
hereunder. Upon the consummation of any assignment pursuant to this
subsection (b), the Lender and the Borrower shall make appropriate
arrangements so that, if required, a new Note, Warrant and/or Springing
Warrant is issued to the Assignee. If the Assignee is not incorporated
under the laws of the United States of America or a state thereof, it
shall, prior to the first date on which interest or fees are payable
hereunder for its account, deliver to the Lender certification as to
exemption from deduction or withholding of any United Stales federal
income taxes.
25. Expenses. The Borrower will pay all costs and expenses
incurred in connection with the subject matter of this Agreement and the
transactions contemplated hereby, including all costs and expenses of furnishing
all opinions by counsel of Borrower and all certificates on behalf of the
Borrower and of the Borrower's performance of and compliance with all agreements
and conditions contained herein on its part to be performed or complied with. In
addition, on the closing date of the first one or more private placements
involving the sale of securities of the Borrower in which the aggregate amount
sold in such placement or placements is at least $2,500,000, the Borrower will
reimburse the Lender for the miscellaneous expenses of
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the Lender and the fees, expenses and disbursements of the Lender's
special counsel, Xxxxx Xxxx LLP, in connection with the subject matter of
this Agreement and the transactions contemplated hereby.
26. [Intentionally omitted.]
27. Survival of Representations and Warranties, etc. All
agreements, representations and warranties contained herein or made in writing
by the Lender or on behalf of the Borrower in connection with the transactions
contemplated hereby shall survive the execution and delivery of this Agreement,
any investigation at any time made by the Lender or on the Lender's behalf, the
sale and purchase of the Note, the Warrant and the Springing Warrant and payment
therefor. All statements contained in any certificate or other instrument
executed and delivered by the Borrower or its duly authorized officers pursuant
hereto in connection with the transactions contemplated hereby shall be deemed
representations by the Borrower hereunder.
28. Notices. All notices, requests, consents and other
communications hereunder (except as stated in the last sentence of this Section
14) shall be in writing and shall be delivered by facsimile, reliable courier or
first-class registered or certified mail, postage prepaid, (a) if to the Lender,
at the Lender's address as set forth below, marked for attention as there
indicated, or at such other address as may have been furnished to the Borrower
by the Lender in writing, or (b) if to any other holder of the Note, Warrant,
Springing Warrant or Common Stock, at such address as may have been furnished to
the Borrower in writing by such holder, or, until any such other holder
furnishes to the Borrower an address, then to, and at the address of, the last
holder of the Note, Warrant, Springing Warrant or Common Stock who has so
furnished an address to the Borrower or (c) if to the Borrower, at the address
set forth below, or at such other address as may have been furnished to the
Lender in writing by the Borrower:
To the Borrower:
Wilshire Technologies, Inc.
0000 Xxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxx Xxxxxxxx
Telephone No.: 000-000-0000
Telecopy No.: 000-000-0000
Copy to:
Xxxxxx Xxxxxxx, P.A.
0000 X. Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx Xxxx, Esq.
Telephone: 000-000-0000
Telecopier: 000-000-0000
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To the Lender:
Trilon Dominion Partners, L.L.C.
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx Xxxxxxx
Telephone No.: 000-000-0000
Telecopy No.: 000-000-0000
Copy to:
Xxxxx Xxxx LLP
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx Xxxx, Xxxxxxxx 00000
Attn: Xxxxxxx X. Xxxx, Esq.
Telephone No.: 000-000-0000
Telecopy No.: 000-000-0000
15. Amendments and Waivers. Except as otherwise provided herein,
neither this Agreement nor any term hereof may be changed, waived, discharged or
terminated orally or in writing, except that any term of this Agreement may be
amended and the observance of any such term may be waived (either generally or
in a particular instance and either retroactively or prospectively) with (but
only with) the written consent of the Borrower and the holders of at least 51%
of the outstanding principal amount of the Note. No waiver of any of the
provisions of this Agreement or of any breach hereunder shall be deemed or shall
constitute a waiver of any other provisions nor shall such waiver constitute a
continuing waiver unless otherwise expressly provided.
16. Miscellaneous.
16.1. Governing Law. This Agreement shall be construed and enforced
in accordance with the laws of the State of New York without regard to its
conflict of laws principles or rules.
16.2. Consent to Jurisdiction. Any legal action, suit or proceeding
arising out of or relating to this Agreement or the consummation of the
transactions contemplated hereby may only be instituted in any federal court of
the Southern District of New York or any state court located in New York County,
State of New York, and each party agrees not to assert, by way of motion, as a
defense or otherwise, in any, such action, suit or proceeding, any claim that it
is not subject personally to the jurisdiction of such courts, that the action,
suit or proceeding if brought in such courts, would be an inconvenient forum,
that the venue of the action, suit or proceeding, if brought in any of such
courts, is improper or that this Agreement or the subject matter hereof may not
be enforced in or by such courts on jurisdictional grounds.
22
23
16.3. Entire Agreement. This Agreement (with the Exhibits and
Schedules annexed hereto) between the Borrower and the Lender, embodies the
entire agreement and understanding, between the Lender and the Borrower and
supersedes all prior agreements and understandings relating to the subject
matter hereof.
16.4. Headings of the Agreement. The headings in this Agreement are
for convenience of reference only, and shall not limit or otherwise affect the
meaning hereof.
16.5. Counterparts of the Agreement. This Agreement may be executed
in two or more counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
16.6. Severability of the Agreement. In case any provision of this
Agreement shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed and delivered as of the day and year first written above.
THE BORROWER: WILSHIRE TECHNOLOGIES, INC.
By: /s/ Xxxx Xxx Xxxxxx
----------------------------------------
Name: Xxxx Xxx Xxxxxx
----------------------------------
Title: President & CEO
----------------------------------
THE LENDER: TRILON DOMINION PARTNERS, L.L.C.
By: /s/ Xxxxxxx X. Xxxxxxx
----------------------------------------
Name: Xxxxxxx X. Xxxxxxx
----------------------------------
Title: Vice President
----------------------------------
24
EXHIBIT 10.112
WILSHIRE TECHNOLOGIES, INC.
List of Exhibits
Exhibit A Outstanding Warrants & Springing Warrants
Exhibit B Borrowing Request Form
Exhibit C Warrant to purchase 650,000 shares
Exhibit D Springing Warrant to purchase 250,000 shares
Exhibit E Grid Promissory Note
25
EXHIBIT 10.112
EXHIBIT A
WARRANTS ISSUED TO LENDER
PURSUANT TO AMENDMENT
TO CREDIT AGREEMENT NUMBER EXERCISE
TYPE DATED GRANT DATE GRANTED PRICE/SHARE EXPIRATION DATE
---- --------------------- ---------- ------- ----------- ---------------
Amended and Restated January 5, 1996 January 5, 1996 100,000 $0.75 January 5, 2001
Warrant
Amended and Restated June 30, 1996 June 30, 1996 25,000 $1.75 January 5, 2001
Springing Warrant
Warrant September 30, 1996 September 30, 1996 100,000 $1.31 September 30, 2001
Warrant April 15, 1997 April 15, 1997 100,000 $0.44 April 15, 2002
Springing Warrant June 30, 1997 June 30, 1997 25,000 $0.84 September 30, 2001
Warrant September 19, 1997 September 19, 1997 100,000 $0.95 September 19, 2002
Springing Warrant December 31, 1997 December 31, 1997 25,000 $0.47 April 15, 2002
Springing Warrant September 19, 1997 June 30, 1998 25,000 Unknown * September 19, 2002
* Price per share shall be equal to closing price for the Common Stock as of
June 30, 1998, as reported by the National Association of Securities
Dealers, Inc. through NASDAQ.
26
EXHIBIT 10.112
EXHIBIT B
FORM OF NOTICE OF BORROWING
Pursuant to the Credit Agreement dated March 31, 1998 between Wilshire
Technologies, Inc. (the "Borrower") and Trilon Dominion Partners, L.L.C. (the
"Lender"), the Borrower hereby gives notice of its desire to incur a Borrowing
in accordance with the terms set forth below:
1. The aggregate amount of the Borrowing shall be
-------------------------------------------------------------
2. The date of the Borrowing shall be .
-------------------------------------------------------------
3. The proceeds of the Borrowing should be disbursed as follows:
-------------------------------------------------------------
-------------------------------------------------------------
-------------------------------------------------------------
4. The proceeds of the Borrowing should be wired to:
City National Bank ABA Routing #: 122-016-066
000 Xxxxx Xxxxxxx Xxxxx FBO: Wilshire Technologies, Inc.
Xxxxxxx Xxxxx, XX 00000 Account #: 000-000-000
WILSHIRE TECHNOLOGIES, INC.
Date: By:
----------- -----------------------------
Xxxxx X. Xxxxxxxx
Vice President, Chief Financial
Officer and Secretary
27
EXHIBIT 10.112
WILSHIRE TECHNOLOGIES, INC.
DISCLOSURE SCHEDULES
SCHEDULE 4.1A
ARTICLES OF INCORPORATION
28
EXHIBIT 10.112
WILSHIRE TECHNOLOGIES, INC.
DISCLOSURE SCHEDULES
SCHEDULE 4.1B
BYLAWS
29
WILSHIRE TECHNOLOGIES, INC.
DISCLOSURE SCHEDULES
SCHEDULE 4.1C
AUTHORIZED CAPITAL STOCK
The Borrower has 50,000,000 shares of common stock, no par value, authorized. As
of February 28, 1998 there were 12,943,385 shares of common stock issued and
outstanding.
The Borrower also has 2,000,000 shares of preferred stock authorized, none of
which is issued or outstanding.
In addition, the Borrower has 4,523,000 Options and Warrants authorized and
outstanding on February 28, 1998 as follows:
Warrants
Trilon Dominion Warrants 475,000
Settlement Warrants 2,750,000
PTG Medical Warrants 100,000
Xxxxxx Xxxxxxxx Warrants 50,000
Option Plans
1993 Stock Option Plan (Authorized) 250,000
(6,000 Outstanding)
1995 Stock Option Plan (Authorized) 1,750,000
(862,000 Outstanding)
Non-Plan Options
Aberdeen Options 80,000
Xxxxxxx Xxxxxxxx Options 200,000
30
WILSHIRE TECHNOLOGIES, INC.
DISCLOSURE SCHEDULES
SCHEDULE 4.1D
SUBSIDIARIES
Wilshire International de Mexico S.A. de C.V., incorporated in Mexico on May 9,
1997, is a wholly-owned subsidiary of Wilshire Technologies, Inc.
31
WILSHIRE TECHNOLOGIES, INC.
DISCLOSURE SCHEDULES
SCHEDULE 4.3
FINANCIAL STATEMENTS
The following SEC reports filed by the Borrower were not in compliance with the
requirements of the 1933 Act or the 1934 Act:
Document Date Filed (a)
-------- --------------
Report on Form 10-KSB (1992) 2/26/93
Report on Form 10-QSB (1993 Quarter 1) 4/14/93
Report on Form 10-QSB (1993 Quarter 2) 7/14/93
Report on Form 10-QSB (1993 Quarter 3) 9/24/93
Report on Form 10-KSB (1993) 6/21/94
Report on Form 10-QSB (1994 Quarter 1) 6/21/94
(a) The Borrower's fiscal year ends November 30.
The latest SEC Document filed is the Report on Form 10-KSB for the year ended
November 30, 1997.
32
WILSHIRE TECHNOLOGIES, INC.
DISCLOSURE SCHEDULES
SCHEDULE 4.4
USE OF PROCEEDS
($000)
-------------------------------------------------------------------------------------------------
Glove Equipment Contamination Control Working Capital
1998 Month Equipment Total
-------------------------------------------------------------------------------------------------
March 1,100 -- 100 1,200
April 250 -- 100 350
May 250 -- 50 300
June 50 50 -- 100
July 50 50 -- 100
August 50 100 -- 150
--------------------------------------------------------------------------------
Total 1,750 200 250 2,200
--------------------------------------------------------------------------------
33
WILSHIRE TECHNOLOGIES, INC.
DISCLOSURE SCHEDULES
SCHEDULE 4.6
EMPLOYMENT CONTRACTS
Employee: Xxxx Xxx Xxxxxx
Position: President & Chief Executive Officer
Term: One year, renewable, beginning January 1, 1998, with 6 months
severance pay in the event of involuntary termination without
cause.
Compensation: Salary of $175,000 per year
Stock: 100,000 stock options, vesting on January 1, 1998, at a
price of $0.625 per share.
Employee: Xxxxx X. Xxxxxxxx
Position: Vice President & Chief Financial Officer
Term: One year, renewable, beginning October 3, 1994, with 6 months
severance pay in the event of involuntary termination without
cause.
Compensation: Salary of $90,000 per year.
Stock: 50,000 stock options, vesting over 2 years, beginning October 3,
1994, at a price of $2.00 per share.
Employee: Xxxx Xxxxxxxx
Position: Vice President of Sales and Marketing
Term: One year, renewable, beginning July 1, 1991, with 90 days notice
of termination.
Compensation: Salary of $90,000 per year plus car allowance of $500 per month.
Stock: 20,000 stock options, vesting over 3 years, beginning July 1,
1991, at a price of $8.00 per share.
Employee: Xxxx X. Xxxxxxx
Position: Vice President of Operations
Term: One year, renewable, beginning May 25, 1993, with 60 days
notice of termination
Compensation: Salary of $45,000 per year
Stock: 6,000 stock options, vesting over 4 years, beginning May 25,
1994, at a price of $15.63 per share.
Employee: Xxxxx-Xxxx (Xxxx) Xxx
Position: Vice President of Research and Development
Term: One year, renewable, beginning August 2, 1993, with 6 months
notice of termination
Compensation: Salary of $80,000 per year.
Stock: 15,000 stock options, vesting over 4 years, beginning August 3,
1994, at a price of $15.38 per share.
34
WILSHIRE TECHNOLOGIES, INC.
DISCLOSURE SCHEDULES
SCHEDULE 4.6
MATERIAL TRANSACTIONS
INCENTIVE PLANS
The 1993 Stock Option Plan is described in the Proxy Statement for the 1992
Annual Shareholders Meeting. The 1995 Stock Option Plan is described in the
Proxy Statement for the 1994 Annual Shareholders Meeting.
In 1997 and 1998, the Company has implemented a Sales Incentive Plan whereby the
Sales personnel are paid a bonus from a bonus pool of $100,000 based on
achievement of the quarterly and annual sales and gross profit budget.
INDEMNIFICATION AGREEMENTS
The Borrower's Bylaws provide that the Company shall indemnify its directors to
the fullest extent permitted by California law, and the company has entered into
indemnity agreements with each director.
35
WILSHIRE TECHNOLOGIES, INC.
DISCLOSURE SCHEDULES
SCHEDULE 4.7
LITIGATION
The Borrower has been named as a defendant in a number of bodily injury lawsuits
involving breast implants. This lawsuit is described in more detail in the SEC
Form 10-KSB for the year ended November 30, 1997.
36
WILSHIRE TECHNOLOGIES, INC.
DISCLOSURE SCHEDULES
SCHEDULE 4.8
COMPLIANCE WITH OTHER INSTRUMENTS
None.
37
WILSHIRE TECHNOLOGIES, INC.
DISCLOSURE SCHEDULES
SCHEDULE 4.9
APPROVALS
None.
38
WILSHIRE TECHNOLOGIES, INC.
DISCLOSURE SCHEDULES
SCHEDULE 4.10
TAX RETURNS AND PAYMENTS
There have been no exceptions in 1994, 1995, or 1996 regarding the timely and
accurate filing of tax returns and payment of taxes due. The tax returns in 1992
and 1993 contained inaccurate financial information.
The tax returns for 1997 will be filed on or before August 15, 1998.
39
WILSHIRE TECHNOLOGIES, INC.
DISCLOSURE SCHEDULES
SCHEDULE 4.11
DISCLOSURE OF MATERIAL FACTS
The Borrower will not be able to repay the principal of $7,493,296.92 referenced
in this Credit Agreement until it receives the proceeds of an equipment loan or
a private placement of common stock.
40
WILSHIRE TECHNOLOGIES, INC.
DISCLOSURE SCHEDULES
SCHEDULE 4.15
REGISTRATION RIGHTS
In December 1993, the Borrower filed a registration statement with the SEC to
register approximately 2.1 million shares. The majority of these shares were
registered pursuant to an obligation of the Borrower pertaining to a private
placement in August, 1993.
However, the registration statement became non-usable in March, 1994 when the
Borrower failed to file its Form 10-KSB as required. Therefore, the Borrower is
obligated to re-register those securities.
Trilon, as successor to Dominion Capital, Inc. has registration rights related
to the purchase of 350,000 shares on August 24, 1994, and 350,000 shares on
September 28, 1994.
In addition, registration rights exist with regard to the shares issuable on
exercise of some of the outstanding 1,773,000 options and warrants and the
2,750,000 warrants (subject to adjustment to protect against dilution) issued
pursuant to the shareholder litigation Settlement Agreement.
41
WILSHIRE TECHNOLOGIES, INC.
DISCLOSURE SCHEDULES
SCHEDULE 7(b)
SHARES TO BE ISSUED
The Borrower has 1,773,000 Options and Warrants authorized and outstanding on
February 28, 1998 as follows:
Warrants
Trilon Dominion Warrants 475,000
Settlement Warrants 2,750,000
PTG Medical Warrants 100,000
Xxxxxx Xxxxxxxx Warrants 50,000
Option Plans
1993 Stock Option Plan (Authorized) 250,000
(6,000 Outstanding)
1995 Stock Option Plan (Authorized) 1,750,000
(862,000 Outstanding)
Non-Plan Options
Aberdeen Options 80,000
Xxxxxxx Xxxxxxxx Options 200,000
