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EXHIBIT 4.3
LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT is made this date by and between
Dunvegan Mortgage Corporation and Veridien Corporation, to wit:
1. DEFINITIONS. As used in this Agreement:
A. "Date of Agreement" is October 19, 1995.
B. "Borrowers" is Veridien Corporation, a Delaware corporation.
C. "Business Plan" is the detailed business plan of Borrower,
delivered to Lender in accordance with Section 8. A. (1) hereof, which shall be
prepared by and be the sole responsibility of Borrower, and shall be in form,
substance and all other respects satisfactory to Lender and shall include a
projected balance sheet, income and cash flow statements (both monthly and
cumulatively by month), a sales and marketing plan, an operations overview and
Borrower's forecast of its plans and intentions with respect to research,
development and Sterix technology for the periods presented. The Business Plan
shall contain all of the above data for each month during the period presented.
All references herein to compliance with the Business Plan shall be subject to
the provisions of Section 4. A. 2(iii) hereof and to Exhibit 4. A. 2)iii.
D. "Lender" is Dunvegan Mortgage Corporation, a Delaware
corporation, and its assigns.
E. "Common Stock" is the common stock, par value $.001 per
share of the Borrower and any class of capital stock of the Borrower now or
hereafter authorized having the right to share in disbursements either of
earnings or assets of the Borrower without limit as to amount or percentage.
F. "Customer" means a party indebted or obligated to Borrower or
a Party against which Borrower has a claim or a receivable.
G. "Collateral" means, the following, whether now owned, or
hereafter acquired and/or developed:
(1) All products, patents, copyrights and trademarks of
Borrower; all intellectual property, formulae, research data and regulatory
approvals owned by Borrower or used by Borrower in the conduct of its business;
(2) All receivables and all guaranties of receivables
and security therefor; all Inventory and all products thereof; and all proceeds
of all and any of the foregoing in whatever form received, whether cash or
non-cash;
(3) All of the right title and interest of Borrower in
and with respect to the goods, services, or other property that gave rise to or
secure any of the Receivables, Inventory, or other Collateral and insurance
policies and proceeds relating thereto, and all of the rights of Borrower as an
unpaid seller of goods or services, including, without limitation, the rights
of stoppage in transit, replevin, reclamation, and resale;
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(4) All instruments, documents, securities, cash, and
property and proceeds of any of the foregoing, owned by Borrower or in
which Borrower has an interest;
(5) An contracts, contract rights, promissory notes and
all evidences of indebtedness in favor of Borrower;
(6) All shares, stocks, warrants, bonds, debentures, or
other securities of all corporations now or hereafter owned by,
pledged or assigned to the Borrower, together with all renewals
thereof, subscriptions therefor, accretions thereto and all rights or
claims in respect thereof and all interests of Borrower in any other
business ventures.
(7) All furniture, fixtures, files, books, records,
equipment, laboratory equipment and supplies, manufacturing equipment
and supplies of the Borrower, and all documents, contract rights,
general intangibles and instruments relating to the operation or
management of the equipment, including, without limitation, any and
all maintenance contracts, permits, licenses, franchises and
government approvals, and all replacements and additions thereto.
(8) All proceeds of each of the foregoing whether cash
or otherwise.
H. "Loan Documents" is this Agreement and all other documents
and instruments executed in connection herewith (including without limitation,
all documents and instruments evidencing, securing, governing, guaranteeing
and/or pertaining to the indebtedness created or arising hereunder, the Warrant
Agreement and the Warrant Certificates).
I. "Receivables" means all accounts, contract rights,
instruments, documents, chattel paper, and general intangibles (including,
without limitation, choses in action, tax refunds, and insurance proceeds): all
other obligations or indebtedness owed to Borrower from whatever source
arising; all rights of Borrower to receive any payments in money or kind; and
all of the foregoing, whether now existing or hereafter created or acquired;
J. "Inventory" means all goods, merchandise, and other personal
property now owned or hereafter acquired by Borrower that are held for sale or
lease, or are furnished or to be furnished under any contract of service or are
raw materials, work in process, packaging, labels, supplies, or materials used
or consumed in Borrower's business, and all products thereof, and
substitutions, replacements, additions, or accessions thereto.
K. "Obligations" means any and all indebtedness, obligations and
liabilities of Borrower to Lender of every kind and description, direct or
indirect, secured or unsecured, joint or several, absolute or contingent, due
or to become due, whether for payment or performance, now existing or hereafter
arising, regardless of how the same arise or by what instrument, agreement, or
book account they may be evidenced, or whether evidenced by any instrument,
agreement, or book account, including, without limitation: all loans (including
any loan by renewal or extension); all indebtedness, all undertakings to take
or refrain from taking any action; and all interest, taxes, fees, charges,
expenses, and attorney's fees chargeable to Borrower or incurred by Lender
under this Agreement or in any other document or instrument delivered hereunder
or as a supplement hereto.
L. "Event of Default" means each and every event specified in
Section 9 of this Agreement.
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M. "Master Promissory Note,", "Promissory Note", or "Note" shall
mean the promissory note or notes issued pursuant to this Agreement.
N. "Warrant Agreement" or "Warrant Agreements" refers to the
agreement between Borrower and Lender relating to the issuance of Common Stock
purchase warrants to be delivered to the Lender hereunder.
O. "Warrant Certificate" or "Warrants" refers to the Common
Stock purchase warrants to be issued pursuant to the Warrant Agreements.
P. "Guarantor" or "Guarantors" shall refer to each wholly or
majority owned subsidiary of Borrower.
To the extent not defined in this Section 1, unless the
context otherwise requires, all other terms contained in this Agreement shall
have the meanings attributed to them by Article 9 of the Uniform Commercial
Code in force in the State of Delaware as of the date of the Agreement, to the
extent the same are used or defined therein.
2. Representations and Warranties.
As a material inducement to Lender to make loans to Borrower
hereunder, Borrower represents and warrants to Lender, and such representations
and warranties shall be continuing representations and warranties during the
term of this Agreement and so long thereafter as any Obligations shall remain
outstanding, as follows:
A. Borrower has been duly incorporated and organized and is
existing as a corporation in good standing under the laws of Delaware and is
duly qualified and in good standing as a foreign corporation in the State of
Florida and those other jurisdictions where the conduct of its business or the
ownership of its property requires qualification. Borrower has the power and
authority to own its properties and assets, to conduct its business, to enter
into and perform this Agreement, and any other document or instrument delivered
in connection herewith, and to incur the Obligations. Exhibit 2.A. is a list of
the subsidiaries of the Borrower and all corporations, limited liability
companies, partnerships, joint ventures, research partnerships or other
businesses in which Borrower has an interest. Except as set forth in Exhibit
2.A.1 attached hereto, Borrower has not made or received any material written
or oral proposals which are now pending relating to control of the Company or
to financing committments, other than the proposal with the Lender; is not
engaged in any contract negotiations or discussions, nor is otherwise engaged
or involved in any transaction at any stage involving the securities, assets or
business prospects of the Borrower with or from any third party.
B. Except as set forth in Exhibit 2.B. attached hereto, Borrower
utilizes no trade names in the conduct of its business, has not changed its
name, been the surviving entity in a merger, acquired any business, or changed
the location of its chief place of business or chief executive office or the
location of its records with respect to Receivables or the location of any of
the Inventory.
C. Borrower is not in default with respect to any agreement to
which it is a party or by which it is bound, except as disclosed herein. The
execution and performance of this Agreement and any other document or
instrument to be delivered hereunder or as a supplement hereto will not violate
any law or the terms of the incorporation document or bylaws of Borrower,
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nor will it violate or result in a default or in the creation or imposition of
any lien or encumbrance upon any of the assets of Borrower (immediately, with
the passage of time, or with the giving of notice and the passage of time)
under any other contract, agreement, or instrument to which Borrower is a party
or by which Borrower is bound, nor will it result in the acceleration of any
obligation under any mortgage, lien, lease, franchise, license, permit,
agreement, instrument, order, arbitration award, judgment, or decree, or in the
termination of any license, franchise, lease, or permit, to which Borrower is a
party or by which it is bound; and it will not violate or conflict with any
other restriction of any kind or character to which Borrower is subject.
D. This Agreement and any document or instrument to be delivered
hereunder or as a supplement hereto and the transactions contemplated hereby or
thereby have been duly authorized and/or executed and delivered, as
appropriate, and constitute valid and legally binding obligations of Borrower
and are enforceable against Borrower in accordance with their respective terms.
E. There is no claim, loss, loss contingency, claim for
indemnity, litigation, or proceeding whether or not pending, threatened, or
imminent against or otherwise affecting Borrower that involves the possibility
of any judgment or liability not fully covered by insurance or that may result
in an adverse change in the business, properties, or condition, financial or
otherwise, of Borrower, except, Xxxxxxxxxx v. Veridien Corporation, et. al.,
pending the United States District Court for the Middle District of Florida,
Tampa Division, which is addressed in the attachment to counsel's opinion
delivered pursuant to Section 3.D.(5). Attached hereto as Exhibit 2.E. is a
true and correct list of all claims, loss contingencies, litigation or
proceedings involving the Borrower or any of its subsidiaries as of the date
hereof. There exists no judgment, order, injunction or other restraint issued
or filed against the Borrower, its property or rights or which prohibits or
adversely affects this Agreement or the transactions contemplated hereby.
F. Except as set forth in Exhibit 2.F., Borrower is the owner of
its properties, free and clear of all security interests, encumbrances, or
liens, except liens that arise by operation of law with respect to obligations
of Borrower that are not yet due and payable. Borrower will defend its
properties against all claims and demands of all persons at any time claiming
an interest therein. Inventory is and shall at all times be of good and
merchantable quality, free from all defects.
G. Attached hereto as Exhibit 2.G. are the financial statements
of the Borrower. The financial statements furnished to Lender by Borrower
include the audited consolidated statements for the Borrower for the fiscal
year ended December 31, 1994 and the quarterly financial statements of the
Borrower for the fiscal quarters ending March 31, 1995 and June 30, 1995. Such
statements fairly present the financial condition of the Borrower included
therein as of the dates set forth therein. The quarterly financial statements
were prepared by the Borrower based upon the unaudited balance sheets of the
Borrower and dated as of March 31, 1995 and June 30, 1995 and were prepared in
accordance with Generally Accepted Accounting Principles ("GAAP"), with only
such adjustments which are normal, recurring, year end adjustments. As of the
date hereof, there are no contingent obligations, contingent liabilities, or
liabilities for taxes, long-term leases or unusual or forward long term
commitments which have not been listed in such financial statements or
otherwise disclosed in the Exhibits to this Agreement.
H. The address of the chief executive office and chief place of
business of Borrower is 000 Xxxxxxxx Xxxx, Xxxxxxxx, Xxxxxxx 00000 and Borrower
has no other place of business except as listed on Exhibit 2.H. hereto. All
records pertaining to the Inventory and Receivables (including computer
records) and all Inventory (including return items thereof), all files reports,
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documents and materials related to the Borrower's products, market development,
present or potential clients, and all financial records, files, filings and
records of any kind relating to the operations of the Borrower are kept at
Borrower's said address except as listed on Exhibit 2.H. hereto.
I. Borrower has filed all federal, state, and local tax returns
and other reports it is required to file, is not delinquent with respect to any
such filings or payments and has paid or made adequate provision for payment of
all such taxes, assessments, and other governmental charges.
J. No event has occurred and is continuing which constitutes a
Potential Event of Default or an Event of Default under the terms of this
Agreement or the Loan Documents other than as set forth in Exhibit 2.J. hereto.
K. Attached hereto as Exhibit 2.K. is a list of all material
contractual obligations of the Borrower, whether written or oral. Except as set
forth in said Exhibit 2.K. neither the Borrower nor any of its subsidiaries is
in default under any contractual obligation to which it is a party or by which
its property is bound.
L. Borrower has complied in all material respects with all
applicable statutes, regulations, ordinances, court decrees, or other
directives of the United States of America, and all states, counties,
municipalities, and agencies with respect to the manufacture and sale of its
goods, the rendition of its services, and/or the conduct of its business.
M. The capitalization of Borrower is as set forth in Exhibit
2.M. hereto. As of the date hereof all outstanding shares of each class of
shares issued by Borrower are duly authorized, fully paid and nonassessable.
Except as set forth in Exhibit 2.M. and as provided for herein, there are no
outstanding securities, warrants, options, agreements, rights or other
agreements of any nature that require Borrower to issue any securities of the
Borrower or its equivalent in cash or other property to any person or entity.
N. As of the date hereof, no class of security or security
holder has preemptive rights.
O. Attached hereto as Exhibit 2.0. is a list of all patents,
patent applications, trademarks, trademark applications, copyrights, copyright
applications, inventions and other intellectual properties of the Borrower.
Except as further set forth in said Exhibit 2.0., the Borrower owns or holds
valid licenses in all trademarks, copyrights, patents, patent rights and
licenses used in the conduct of Borrower's business as of the date hereof.
Except as set forth in said Exhibit, there has been no charge or threat of
charge of any infringement against the Borrower by any third party, nor has
Borrower infringed on any unexpired trademark, patent, patent registration,
copyright, copyright registration or other proprietary right of any third
party.
P. All permits, licenses, and other governmental authorizations
needed by Borrower to carry on its business as it exists or is contemplated
have been obtained and are in full force and effect and have not been modified
or amended, except for such permits, licenses and governmental authorizations
which are not material to the conduct of Borrower's business. No breach exists
with respect to any such permit, license or governmental authorization which
would have a material adverse effect on the business, financial condition
and/or operations of Borrower as they now exist or are contemplated to exist.
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Q. Exhibit 2.Q hereto is a list of all environmental permits
obtained by Borrower or necessary for use in the operation of the business of
Borrower. Except as set forth in Exhibit 2.Q. attached hereto,
1) The Borrower has obtained all permits, licenses and
other authorizations which are required under the Environmental
Protection Act and Environmental Safety Laws and which are applicable
to the conduct of the Borrower's business (collectively, "Environmental
Permits");
2) The Borrower has complied in all respects and is in
compliance with the terms and conditions of the Environmental
Protection Act and all such Environmental Permits and has complied and
is in compliance with the Environmental Protection Act and
Environmental Safety Laws;
3) No notice, notification, demand, request for
information, citation, summons or order has been issued, no complaint
has been filed, no penalty has been assessed and no investigation is
pending or, to the Borrower's best knowledge, threatened by any person
with respect to any alleged failure to obtain any Environmental
Permits or any violation of any Environmental and Safety Laws, or with
respect to the generation, treatment, storage, recycling,
transportation, discharge or disposal, or any release or threatened
release of any hazardous materials;
4) No property or facility now owned or operated, or
previously owned or operated, by the Borrower has been or is presently
operated in a manner which requires permitting as a hazardous waste
treatment, storage or disposal facility for purposes of any
Environmental and Safety Law;
5) None of the following is present at any property or
facility now owned or operated, or previously owned or operated, by
the Borrower: (i.) poly-chlorinated biphenyls contained in electrical
or other equipment; or (ii.) asbestos containing insulation or
building materials;
6) There are no active or inactive underground storage
tanks present at any property or facility now or previously owned or
operated by the Borrower;
7) There has been no release of hazardous materials
into the environment at or from any property or facility now owned or
operated, or previously owned or operated, by the Borrower so as to
give rise to any present or future liability or obligation under any
Environmental and Safety Laws;
8) No liens have arisen under or pursuant to any
Environmental and Safety Law on any property or facility now owned or
operated, or previously owned or operated, by the Borrower, no
governmental actions have been taken or are in process which could
subject any such properties or facilities to such liens, and the
Borrower would not be required to place any notice or restriction
relating to the presence of hazardous materials in any deed to such
property or facility;
9) There have been no environmental investigations,
studies, audits, tests, reviews or other analyses of any property or
facility now or previously owned or operated by the Borrower as of the
date hereof which have not been provided to Lender;
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10) Without limiting the generality of the foregoing,
there are no other facts, events or conditions, relating to the past
or present operations, properties or facilities of the Borrower which
may give rise to any liability under any Environmental and Safety
Laws.
R. Exhibit 2.R. hereto is a list of all permits, licenses and
approvals from the Federal Drug Administration obtained by Borrower or
used by Borrower in the operation of its business. Except as set forth
in Exhibit 2.R.
1) The Borrower has obtained all permits, licenses and
other authorizations which are required under federal or state health
or drug laws and regulations which are necessary for and applicable to
the conduct of the Borrower's business as it is now conducted
(collectively, "FDA Permits");
2) The Borrower has complied in all respects and is in
compliance with the terms and conditions of all such FDA Permits and
has complied and is in compliance with all such laws and regulations;
3) No notice, notification, demand, request for
information, citation, summons or order has been issued, no complaint
has been filed, no penalty has been assessed and no investigation is
pending or, to the Borrower's best knowledge, threatened by any person
with respect to any alleged failure to obtain any FDA Permits or any
violation of any health or drug safety Laws;
S. Borrower is not entering into the arrangements contemplated
by this Agreement and the Loan Documents with actual intent to hinder,
delay or defraud either present or future creditors. On and as of the
closing date on a pro forma basis after giving effect to the
transactions contemplated by this Agreement and to all debts incurred
or to be created in connection herewith.
1) the present fair salable value of the assets of the
Borrower (on a going concern basis) will exceed the probable liability
of the Borrower on its debts (including its contingent liabilities);
2) the Borrower has not incurred, nor does it intend to
or believe that it will incur, debts, including any contingent
liabilities, beyond its ability to pay such debts as such debts mature
(taking into account the timing and amounts of cash to be received
from any source, and of amounts to be payable on or in respect of
debts), and the amount of cash available to Borrower, after taking
into account all other anticipated uses of funds, is anticipated to be
sufficient to pay all such amounts on or in respect of debts, when
such amounts are required to be paid; and
3) Borrower will have sufficient capital with which to
conduct its present and proposed business and the property of Borrower
does not constitute unreasonably small capital with which to conduct
its present or proposed business.
For purposes of this Section S. "debt" means any
liability on a (i) right to payment whether or not such a right is
reduced to judgment liquidated, unliquidated, fixed, contingent,
matured, unmatured, disputed, undisputed, legal, equitable, secured,
or unsecured, or (ii) right to an equitable remedy for breach of
performance if such breach gives rise to a payment, whether or not
such a right to an equitable remedy is reduced to
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judgment, fixed, contingent, matured, unmatured, disputed, undisputed,
secured or unsecured.
T. The Borrower has no pension, retirement, profit sharing or
other employee benefit plans.
U. No representation, warranty, or statement by Borrower
contained herein or in any certificate or other document furnished or to be
furnished by Borrower pursuant hereto contains or at the time of delivery shall
contain any untrue statement of fact, or omits, or shall omit at the time of
delivery, to state a fact necessary to make it not misleading.
V. No consent or approval of any person, no waiver of any lien
or other similar right, and no consent, license, approval, authorization, or
declaration of any governmental authority, bureau, or agency is or will be
required in connection with the execution, delivery, performance, or
enforcement, or validity or priority of this Agreement or any other agreement,
instrument, or document to be executed or delivered in connection herewith.
W. All of the issued and outstanding shares of the capital stock
of each subsidiary of the Borrower are validly issued, fully paid and
non-assessable and all of the issued and outstanding shares of stock of each
subsidiary of the Borrower are owned by the Borrower free and clear of all
mortgages, pledges, liens, security interests, conditional sales agreements,
charges, encumbrances and restrictions of every nature.
3. CLOSING AND CONDITIONS TO CLOSING.
A. The closing of this transaction shall be held at such time
and date as may be agreed upon by the Lender and the Borrower.
B. On the closing date the Borrower shall execute and deliver to
the Lender the Loan Documents as described in Exhibit 3.B. hereto.
C. If the Borrower shall fail to tender such documents to Lender
or the closing date or the conditions to closing which are specified herein
shall not have been fulfilled to the satisfaction of the Lender, Lender shall
at its sole option be relieved of all further obligations under this Agreement.
D. The obligations of the Lender hereunder are subject to the
fulfillment to the satisfaction of Lender prior to or at the time of the
closing and at the time of the advance of funds under Tranche No. 1 of the
following conditions:
1) The representations and warranties of the Borrower
contained in this Agreement and otherwise made in writing by the
Borrower pursuant to this Agreement shall, have been true when made
and shall be true at the time of the closing and at the time of the
advance of funds under Tranche No. 1 with the same effect as though
such representations and warranties had been made at such time, except
for changes resulting from the consummation of the transactions
contemplated by this Agreement or referred to herein.
2) The Borrower shall have performed and complied with
all agreements and conditions contained herein required to be
performed or complied with by it prior to
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or at the time of the closing and at the time of the advance of funds
under Tranche No. 1, and at such time the Borrower shall not be in
default in the performance of or compliance with any of the provisions
of this Agreement.
3) The Borrower shall have delivered to the Lender a
certificate, dated the Closing Date, and at the time of the advance of
funds under Tranche No. 1, as the case may be, signed by the
President, certifying as to the fulfillment of the conditions
specified in Section D 1) and 2) hereof.
4) All legal proceedings in connection with the
transactions contemplated by this Agreement and all documents and
legal opinions incident thereto shall be satisfactory in all respects
to Lender, and Lender shall have received such counterpart originals
or certified or other copies of such documents as Lender may
reasonably request.
5) Under shall have received the following opinion (or
opinions, if necessary) of counsel to the Borrower dated as of the
closing date and satisfactory to Lender to the effect that:
a) The Borrower is a corporation duly
organized, validly existing and in good standing under the
laws of the State of Delaware and has all requisite corporate
power and authority to own and operate its properties and to
carry on its business as now conducted and as proposed to be
conducted.
b) The Borrower is duly licensed or qualified
to do business and in good standing as a foreign corporation
in Florida and all other jurisdictions in which the nature of
the activities conducted by it and/or the character of the
assets owned and leased by it makes such license or
qualification necessary.
c) The execution and delivery of this
Agreement and of the Loan Documents have been duly authorized
by all necessary corporate action on the part of the Borrower
(no action by the stockholders of the Borrower being required
by law, the Borrower's Certificate of Incorporation, the
bylaws of the Borrower or otherwise), have been duly
authorized and delivered by a duly authorized officer of the
Borrower and each constitutes a valid and binding agreement
of the Borrower, enforceable in accordance with its terms,
except to the extent that such enforceability may be limited
by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws of general application then in
effect.
d) No consent or approval of any person, no
waiver of any lien or other similar right, and no consent,
license, approval, authorization, or declaration of any
governmental authority, bureau, or agency is or will be
required in connection with the execution, delivery,
performance, or enforcement, or validity or priority of this
Agreement or any other agreement, instrument, or document to
be executed or delivered in connection herewith, or if so
required have been obtained and are in full force and effect.
e) All of the issued and outstanding shares of
the capital stock of each subsidiary of the Borrower are
validly issued, fully paid and non-assessable and, to the
best of such counsel's knowledge, all of the issued and
outstanding
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shares of stock of each subsidiary of the Borrower are owned
by the Borrower free and clear of all mortgages, pledges,
liens, security interests, conditionals sales agreements
charges, encumbrances and restrictions of every nature.
f) Borrower is the owner of the patents,
trademarks, copyrights and other intellectual property
claimed by the Borrower and necessary for the conduct of its
business. The operations of Borrower do not infringe on any
patents, patent applications, trademarks, trade names or
copyrights of others, nor do the trademarks currently
utilized by Borrower infringe on the trademarks of others,
and Borrower has not received any notice of infringement.
g) The transactions contemplated by this
Agreement, including the issuance of the Warrants, are exempt
from registration under the securities laws of the United
States and any state to which this transaction relates. The
Borrower is in compliance in all respects with the reporting
requirements of the Securities and Exchange Act of 1934, and
the execution of this Agreement and the performance of
transactions contemplated thereby will not violate or void
the conditions of any exemption relied upon by Borrower in
any previous offering of its securities.
h) The representations and warranties of the
Borrower contained in this Agreement or in any certificate or
document contemplated under this Agreement to be delivered
are true and correct and each of the covenants and agreements
contained in this Agreement or in any of the Loan Documents
to be performed by the Borrower and each of the conditions
contained in this Agreement or in any of the Loan Documents
to be fulfilled or complied with by the Borrower has been or
will be duly and timely performed, fulfilled or complied with
in all respects.
4. LOAN AND PAYMENT PROVISIONS.
A. Subject to the terms and conditions of this Agreement, Lender
shall in its sole discretion, lend to Borrower up to a total of $2,500,000,
which may be drawn as follows:
1) $20,000 Initial advance to fund Borrower's
requirements for the period October 20, 1995 to October 31, 1995.
2) $260,000 (Tranche 1) upon fulfilling the conditions
set forth in Section 3 hereof. The advance of funds under Tranche 1
shall follow the execution of this Agreement and the Loan Documents.
3) $150,000 (Tranche 2) upon satisfaction of the
following conditions:
i. Neither the Borrower nor any Guarantor
shall be in default of any of its obligations in any
agreement with the Lender, or of any other agreement to which
the Borrower or any Guarantor is a party, nor shall Borrower
or any Guarantor be in default or violation of any law, rule,
regulation, judgment, order, permits, or license to which its
business is subject;
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ii. There shall not have been any material
adverse change to the business or affairs, financial or
otherwise, of the Borrower or any Guarantor;
iii. The results of operations of the Borrower
have not deviated from the Business Plan in any respect, save
and except those variances permitted in Exhibit 4. A.2)iii.
iv. The shares of Common Stock initially
issuable upon exercise of the Warrants shall have been duly
authorized and reserved for issuance upon exercise of the
Warrants.
v. The Borrower shall have entered into the
following contracts with Xxxx Xxxxxxx upon terms satisfactory
to the Lender:
a) Employment Contract;
b) Repayment Agreement and applicable
promissory notes related thereto;
c) Reimbursement Agreement and
applicable promissory notes
related thereto;
The Borrower shall have complied with the conditions
precedent to Tranche 1, and Tranche 2 may be funded, subject
to the satisfaction to the foregoing conditions, no later
than the last day of the calendar month following the advance
made under Tranche 1.
4) $193,000 (Tranche 3)
5) $61,000 (Tranche 4);
6) $156,000 (Tranche 5);
7) $197,500 (Tranche 6);
8) $112,500 (Tranche 7);
9) $46,500 (Tranche 8);
10) Borrower shall make each such advance on the last
day of the month succeeding the prior advance, in each case
under the following conditions:
i. Neither the Borrower nor any Guarantor
shall be in default of any of its obligations in any
agreement with the Lender, or of any other agreement to which
the Borrower or any Guarantor is a party, nor shall Borrower
or any Guarantor be in default or violation of any law, rule,
regulation, judgment, order, permit, or license to which its
business is subject
ii. There shall not have been any material
adverse change to the business or affairs, financial or
otherwise, of the Borrower or any Guarantor;
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iii. The results of operations of the Borrower
have not deviated from the Business Plan in any respect, save
and except those variances permitted in Exhibit 4. A.2)iii.
iv. Notwithstanding the foregoing, the total
amount of advances required to be made by Lender to Borrower
hereunder shall be reduced, dollar for dollar, by the
aggregate amount of the exercise price paid by Lender for the
exercise of the Warrants issued hereunder.
B. As a condition to each advance hereunder the Borrower will
provide the Lender with a drawdown certificate in form and substance
satisfactory to the Lender certified by an executive officer of the Borrower to
the effect that the Representations and Warranties of Borrower made in Section
2 hereof are true and correct as of the date of the advance and that the
Borrower has satisfied the conditions for the advance. The advances made
hereunder will be evidenced by a Master Promissory Note in the form attached
hereto as Exhibit 4.B. Individual advances and payments will be noted on a grid
attached thereto.
C. The Note will be due and payable sixty-one (61) months from
the date of the first advance and will bear interest at a fixed rate of ten
(10%) per annum, calculated and payable on the last days of June and December
of each year, in arrears, with the first payment of interest to be made on
December 31, 1995 for the immediately preceding period commencing the date of
the initial advance. At the option of the Borrower the amount to be paid on the
first payment date may be capitalized and compounded.
D. The Promissory Note may be prepaid, without bonus or penalty,
at any time upon thirty (30) days prior written notice.
E. Each of the conditions to Closing and to the making of
advances set forth in Sections 3 and 4 hereof shall be for the sole benefit of
Lender and Lender shall make the final, sole and exclusive determination as to
the fulfillment of any of said conditions by Borrower.
F. Lender reserves the right, in its sole discretion, to
accelerate the schedule of advances upon the request of Borrower and the
drawdown of any unadvanced portion of the Promissory Note. In such event
advances would be made in accordance with Section 4(A) hereof.
5. GRANT OF SECURITY INTEREST.
To secure the payment and performance of the Obligations, Borrower
hereby pledges, assigns, and transfers to Lender, and grants to Lender a
continuing security interest in and to, all of the Collateral.
6. ISSUANCE OF WARRANTS.
As a further inducement to the Lender to make the loans to the
Borrower specified herein, the Borrower shall, concurrently with the advance of
funds under Tranche 1, execute and deliver the Warrant Agreement and issue
certificates evidencing that the Lender is the owner of the Warrants. The
Warrants shall be issued in accordance with the Warrant Agreement subject to
the following terms and conditions:
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(i) The aggregate number of Warrants issued to Lender shall be
that number which, assuming exercise of all Warrants by Lender, would, at the
time of issue and at all times when such Warrants are outstanding, represent
51% of all of the outstanding Common Stock of the Borrower, on a fully diluted
basis, including the shares issuable upon exercise of the Warrants;
(ii) The aggregate exercise price of the Warrants shall be
$2,500,000. Subject to the aggregate exercise price the Lender may designate
different exercise prices for the Warrants.
(iii) The Lender will execute and deliver a separate Warrant
Agreement for each different exercise prices;
(iv) The Lender may tender Promissory Notes issued by the Borrower
herein in satisfaction of the exercise price of the Warrants;
(v) The Borrower shall grant registration rights with respect to
the Common Stock exercisable upon exercise of the Warrants;
(vi) The Warrants shall expire sixty-one (61) months from the date
of their issuance, except in the event of a default by Lender hereunder, in
which case 50% of the Warrants then outstanding, shall expire within one year
from the date of notice of such default;
(vii) In the event that the Borrower does not have sufficient
authorized capital to permit the issuance of sufficient shares of Common Stock
to permit Lender, upon exercise of the Warrants, to own 51% of the outstanding
Common Stock of Borrower, then, Borrower shall issue to Lender Stock
Appreciation Rights. The number, terms and other conditions of such Stock
Appreciation Rights shall be as set forth in Exhibit 6(vii) attached hereto.
7. NEGATIVE COVENANTS.
Borrower agrees that during the term of this Agreement and so long
thereafter as the Warrant and/or any Obligations remain outstanding, it will
not, without the prior written consent of Lender:
A. Enter into any merger of consolidation or effect any
reorganization or recapitalization.
B. Mortgage, pledge, grant, or permit to exist a security
interest in, or lien or encumbrance upon, any of its assets or property, real
or personal, tangible or intangible, now owned or hereafter acquired except:
(i) Liens in favor of Lender; and (ii) liens arising by operation of law with
respect to obligations of Borrower not yet due and payable.
C. Assume, endorse, guarantee, or otherwise become liable for or
upon the obligations of any person, partnership, corporation, or other entity
(other than endorsements for deposits in the ordinary course of business).
D. Incur, create, assume, or permit to exist any indebtedness or
liability for borrowed money or any other indebtedness except: (i)indebtedness
to Lender; and (ii)accounts payable incurred in the ordinary course of
business.
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E. Redeem, purchase, or retire any of the capital stock of
Borrower or declare or pay any dividends (including cash, stock dividends or
dividends of property or assets), or make any other payment or distribution
upon any of the capital stock of Borrower.
F. Make any investment in, or make any loan or advance to, or
declare or pay any bonus to, any person, partnership, or corporation, including
officers, stockholders, directors of Borrower, or any of their relatives.
G. Purchase or otherwise invest in or hold securities, non
operating real estate, or other non operating assets, except direct obligations
of the United States of America or certificates of deposit or equivalent
securities.
H. Enter into any sale-leaseback transaction, or sell, lease,
license, transfer, or otherwise dispose of all or any substantial portion of
its assets or the Collateral, except that Borrower may sell inventory and
surplus equipment in the ordinary course of business.
I. Directly or indirectly use or apply all or any portion of the
proceeds of any loans made hereunder to purchase or carry any "margin stock"
within the meaning of Regulation U of the Board of Governors of the Federal
Reserve System, or any regulations, interpretations, or rulings thereunder, as
amended.
J. Make or permit any substantial change in, or cease in whole
or in part, its present business, or engage in any other activities apart from
its present business and such business as is contemplated in the Business Plan.
K. Extend the time for payment of any Receivable or otherwise
modify, amend, or impair any of the terms of any Receivable.
L. Authorize, cause, or permit the issuance or execution of any
negotiable warehouse receipt or xxxx of lading representing any right, title,
or interest in and to any Inventory, unless same are forthwith turned over to
Lender so that Lender shall continue to have a perfected security interest in
such inventory.
M. Make any change for any reason whatsoever in the executive
management, majority ownership, or control of Borrower without the prior
written consent of Lender.
N. Issue or enter into any agreement for the issuance of any
class of stock, except as set forth in Exhibit 2.M. hereof.
O. Incur any obligation, enter into any contract or financial
arrangement including any obligation for management compensation or bonuses
which obligates the Borrower for an aggregate of $50,000 in any fiscal year or
which are not outlined in the approved business plan.
P. Enter into any transaction with an officer, director,
shareholder or other interested party of the Borrower, excluding Lender, which
has not been approved by a committee of disinterested directors of the Board of
Directors and which is not on terms as least as favorable as the Borrower might
obtain from unrelated third parties.
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8. AFFIRMATIVE COVENANTS.
Borrower hereby covenants and agrees with Lender that it will, during
the term of this Agreement and so long thereafter as any Obligations remain
outstanding:
A. Furnish Lender:
(1) Attached hereto as Exhibit 8.A. is the Business Plan
of the Borrower, duly adopted by the Board of Directors of the
Borrower. Within sixty (60) days prior to the commencement of each
fiscal year, commencing with 1997 and for each fiscal year thereafter,
the Borrower shall prepare and the Board of Directors shall adopt and
deliver to Lender a Business Plan, including projected balance sheet,
income and cash flow statements, and a sales and marketing plan and
operating plan, which plans shall be the sole responsibility of
Borrower and shall be satisfactory in all respects to Lender. In
accordance with such business plans, Borrower shall maintain
(a) Total Liabilities to Total Net Worth in
ratios which will be as set forth in the Business Plan;
(b) Working Capital in an amount set forth in
the Business Plan;
(c) Working Capital ratio in a ratio set forth
in the Business Plan;
In addition, actual results for each fiscal
quarter and for the immediately preceding four fiscal
quarters will not deviate from the Business Plan for the
relevant periods.
(2) Within ninety (90) days after the last day of each
fiscal year of Borrower, a balance sheet and related statements of
income, retained earnings, and changes in financial position, each
prepared in reasonable detail and in accordance with generally
accepted accounting principles consistently applied certified by an
independent certified public accountant satisfactory to Lender;
(3) Within thirty (30) days after the end of each fiscal
quarter of each fiscal year of the Borrower, a balance sheet as at the
end of such quarter, statements of income and retained earnings and a
comparison of actual results to those set forth in the Business plan
for the period from the beginning of the fiscal year to the end of
such quarter, certified by an authorized financial or accounting
officer of Borrower;
(4) Within twenty (20) days after the end of each
calendar month, the following financial information prepared in
accordance with Generally Accepted Accounting Principles: (a) Balance
Sheet, (b) Income Statement, (c) Statement of Changes in financial
position; (d) an aged analysis of all outstanding Payables and
Receivables, (e) backorder listing (with conversion of orders to
shipments from previous month's back order listing), (f) budget
variance analysis (comparison of budget versus actual), (g)
information concerning quantities, costs and fair market value of
Inventory; and (h) calculations of equivalent gallons of product
shipped in that month; all of which are to be certified by an officer
of the Borrower and in form and substance satisfactory to Lender;
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(5) Contemporaneously with their filing or delivery,
copies of all documents filed with the Securities and Exchange
Commission or other federal regulatory body, any stock exchange and
all documents, annual reports, proxy statements, press releases or
other information delivered to stockholders;
(6) Promptly, and in form satisfactory to Lender, such
other information as Lender may reasonably request from time to time.
B. Maintain casualty insurance coverage on its physical assets
and other insurance against other risks, including public liability and product
liability insurance in such amounts of such types as may reasonably be
requested by Lender from time to time, and in any event, as are ordinarily
carried by similar businesses. In the case of all policies insuring property in
which Lender shall have a security interest of any kind whatsoever, all, such
insurance policies shall provide that the proceeds thereof shall be payable to
Borrower and Lender, as their respective interest may appear. All said policies
or certificates thereof, including all endorsements thereof and those required
hereunder, shall be deposited with Lender; and such policies shall contain
provisions that no such insurance may be canceled or decreased without ten (10)
business days prior written notice to Lender. In the event of acquisition of
additional property, real or personal, or of incurrence of additional risks of
any nature, Borrower shall cause such insurance coverage to be increased or
amended in such a manner and to such extent as prudent business judgment would
dictate. If Borrower shall at any time or times hereafter fail to obtain and
maintain premium in whole or part relating to any such policies, Lender may,
but shall not be obligated to, obtain and/or cause to be maintained insurance
coverage with respect to the assets of Borrower, including, at Lender's option,
the coverage provided by all or any of the policies of Borrower and pay all or
any part of the premium thereunder, without waiving any Event of Default by
Borrower, and any sums to disbursed by Lender shall be additional Obligations
of Borrower to Lender payable on demand. Lender shall have the right to settle
and compromise any and all claims under any of the policies required to be
maintained by Borrower hereunder; to demand, receive, and receipt for all
monies payable thereunder; and to execute in the name of Borrower or Lender or
both any proof of loss, notice, or other instruments in connection with such
policies or any loss thereunder.
C. Permit Lender, through its authorized attorneys, accountants,
and representatives, to examine the Inventory and to inspect, examine and copy
the books, accounts, records, ledgers, and assets of every kind and description
of Borrower at all reasonable times.
D. Promptly notify Lender of any condition or event that
constitutes, or would constitute with the passage of time or giving of notice
or both, a default under this Agreement, and promptly inform Lender of any
events or changes in the business, properties, or condition, financial or
otherwise, of Borrower, that when individually or cumulatively viewed in light
of prior financial statements, and/or events, may result in a material adverse
change in the financial condition of Borrower.
E. Maintain in good standing its corporate existence in its
jurisdiction of incorporation and its status as a foreign corporation qualified
to do business in those jurisdictions where it is required to be qualified. In
addition, the Borrower will continue in its existing business and do all things
necessary to keep in full force and effect its corporate existence, rights and
franchises. The Borrower will conduct its business in an orderly and efficient
manner consistent with good business practices, and perform and comply with all
statutes, rules, regulations or ordinances imposed by any governmental unit on
the Borrower and its business and operations, including, without limitation,
those pertaining to compliance with federal and state
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securities law and environmental matters. The Borrower will maintain, or cause
to be maintained, in good repair, working order and condition all properties
and equipment used or useful in its business.
F. If Borrower shall now or hereafter maintain an employee
benefit plan covered by SS.4021 (a) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), relating plan termination insurance, it
shall: (a) furnish Lender a copy of each annual report, together with any
schedules or other attachments thereto, required to be filed with the Secretary
of Labor or any other governmental official pursuant to ERISA; (b) furnish
Lender a copy of any notice of a reportable event required to be furnished to
the Pension Benefit Guaranty Corporation ("PBGC") or other governmental agency;
(c) notify Lender of the institution of any proceedings by the PBGC under
SS.4042 of ERISA promptly after the filing of such reports or notices or
institution of such proceedings.
G. Notify Lender immediately if any Receivables arise out of
contracts with the United States or any department, agency, or instrumentality
thereof, and Borrower shall execute any instruments and take any steps to
perfect the assignment of the rights of Borrower to Lender as required under
the Federal Assignment of Claims Act or any similar act or regulation.
H. Notify Lender not less than thirty (30) days prior to (i) any
change of its name or use of any trade names or (ii) any change in the address
of the chief executive office and/or chief place of business of Borrower, the
location of any records pertaining to the Receivables and all books and records
of the Borrower, and the address where any Inventory is or may be stored.
I. Promptly notify Lender of any disputes that shall arise in
connection with a Receivable or if a Receivable is not paid when due, or if any
petition in bankruptcy or under any other insolvency act for the relief of
debtors with respect to a Customer is filed, or if a Customer makes an
assignment for the benefit of creditors, becomes insolvent, or ceases to carry
on its business, or if Borrower has notice of any facts or circumstances that
could reasonably be expected to have an adverse effect upon the ability of
Customer to pay the Receivable.
J. Upon the creation of a Receivable, or at such other intervals
as Lender may hereafter determine, Borrower shall provide Lender, at its
request, with confirmatory assignment schedules; copies of all invoices
relating to the Receivable; evidence of shipment or delivery of Inventory; and
such further information and/or schedules as Lender may reasonably require, all
in a form satisfactory to Lender.
K. Keep complete and accurate books and records with respect to
the business of the Borrower and the Collateral consistent with good business
practice including current stock, cost, and sales records of Inventory,
accurately itemizing and describing the kinds, types, and quantities of
Inventory, and the cost and selling price thereof; further, the Borrower will
keep complete and accurate books and records of customers, orders, order
patterns, pricing, marketing programs, research and proprietary information.
L. At any time and from time to time upon request of Lender,
execute and deliver to Lender, in form and substance satisfactory to Lender,
negotiable promissory notes for any or all of the Obligations and/or such
documents in respect of the Obligations or perfect or maintain perfected the
security interest of Lender in the Collateral or that may be necessary to
comply with the provisions of the law of the States of Florida and Delaware or
the law of any other jurisdiction in which Borrower may then be conducting
business or in which any of the Collateral may be located. Borrower shall not
be required to execute duplicate of existing promissory notes.
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M. As long as the Warrants are outstanding, the Board of
Directors of the Borrower shall:
1) invite two individuals designated by the holders of
the majority of the outstanding Warrants to attend and observe all
meetings of the Board of Directors of Borrower and any meetings of any
committee of the Board of Directors of the Borrower.
2) Upon the written request of the holders of a
majority of the then outstanding Warrants to elect up to two designees
of the Lender to fill vacancies on the Board of Directors, such
vacancies created by resignation or removal.
3) Provided the Lender has funded $1,750,000 in loan
advances and/or stock purchases through the exercise of warrants, upon
the written request of the holders of a majority of the then
outstanding Warrants to nominate the designees of Lender for election
as directors of the Borrower, recommend such nominees to the
stockholders for approval and, if otherwise than at an annual
stockholders meeting, provide an opportunity at a special meeting or
by written consent for the stockholders to vote upon such nominees
which shall upon the election of all thereof, constitute, after the
appointment a majority of the directors of Borrower, which may include
shareholder approval, if necessary, to increase the size of the Board
of Directors of Borrower.
N. Arrange for the purchase of directors' and officers'
liability insurance and other liability insurance satisfactory to the Lender.
O. Provide full cooperation with the Lender in any syndication,
assignment or participation in this Agreement should the Lender exercise its
right to assign its interest herein in whole or in part.
P. Immediately notify Lender by telephone or facsimile and
provide hard copies to Lender within two working days of any notices received
or issued which in any way relate to any agreement between the Borrower, any of
its subsidiaries, and Xxxx Xxxxxxx.
9. EVENTS OF DEFAULT
The occurrence or any one or more of the following events shall
constitute an Event of Default hereunder:
A. (i) If a default occurs in the payment of any installment of
principal in respect of any of the Obligations as and when due, whether at
stated maturity, by acceleration, by notice of prepayment, by operation of
Section 9 or otherwise; or (ii) failure to pay any interest on any of the
Obligations and such default continues for a period of five (5) days, except
where the Borrower is permitted to capitalize interest;
B. If a default occurs in the observance or performance of any
covenant or agreement of Borrower herein set forth or set forth in any
agreement, note, or other instrument heretofore, now, or hereafter executed by
Borrower in favor of Lender;
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C. If any representation, warranty, certificate, schedule, or
other information made or furnished by Borrower herein or pursuant hereto is or
shall be untrue or misleading in any material respect or is found to have
omitted to state any material fact;
D. If a default occurs in the performance of any material
obligation of Borrower to any third party which remains uncured for a period of
thirty (30) days;
E. If there is loss, theft, or destruction of or damage to, any
substantial portion of the property of Borrower for which there is either no
insurance coverage or for which, in the opinion of Lender, there is
insufficient insurance coverage, or the making of any levy, seizure, or
attachment upon the Collateral or upon any substantial portion of other
property of Borrower by any third party;
F. If Borrower becomes insolvent or if a creditors' committee is
appointed for the business of Borrower; or if Borrower makes an assignment for
the benefit of creditors, or is adjudicated bankrupt, or if a petition in
bankruptcy or for reorganization or to effect a plan of arrangement with
creditors is filed by or against Borrower; or if Borrower applies for or
permits the appointment of a receiver or trustee for any of its property or
assets, or if any such receiver or trustee is appointed for any of its property
or assets; or if any of the above actions or proceedings whatsoever are
commenced by or against Borrower or any guarantor of or any other party liable
for any of the Obligations and are not dismissed within thirty (30) days;
G. If a proceeding is filed or commenced by or against Borrower
or any guarantor of any of the Obligations for its dissolution or liquidation,
or if Borrower or any guarantor voluntarily or involuntarily dissolves or is
dissolved, terminates or its terminated and such proceeding is not dismissed
within thirty (30) days;
H. If Borrower or any guarantor of any of the Obligations is
permanently enjoined, restrained, or in any way prevented by court order from
conducting all or any material part of its business affairs; or
I. If there is a termination for any reason of any guaranty of,
or contract of surety for, the Obligations, or termination of any subordination
agreement for the benefit of Lender in connection with the transactions
contemplated by this Agreement.
J. If there is any money judgment, writ or warrant of
attachment, or similar process involving in any individual case or in the
aggregate at any time an amount in excess of $10,000 (not covered by insurance)
shall be entered or filed against Borrower or any of Borrower's assets by a
final, nonappealable order of a court of competent jurisdiction and shall
remain undischarged, unvacated, unbounded or unstayed for a period of thirty
(30) days;
K. If Borrower shall deviate from the Business Plan without the
consent or waiver of Lender;
J. If any material provision of this Agreement or any other Loan
Document shall cease to be a valid and binding obligation against the Borrower
or Borrower shall so state in writing.
If any Event of Default shall occur, then or at any time thereafter,
while such Event of Default shall continue, Lender may discontinue any further
advances hereunder. Thereafter, the subsequent cure of the Event of Default by
Borrower shall not require the Lender to
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make any further advances hereunder except at its sole option. In addition,
Lender may declare all Obligations to be due and payable, without notice,
protest, presentment, or demand, all of which are hereby expressly waived by
Borrower.
10. RIGHTS AND REMEDIES.
Lender shall have, by way of example and not of limitation, the rights
and remedies set forth in SS.10A (i) through (v) inclusive and 10C at all times
prior to and/or after the occurrence of an Event of Default and shall have all
of the rights and remedies enumerated herein after the occurrence of an Event
of Default;
A. Lender, and any officer or agent of Lender, is hereby
constituted and appointed as true and lawful attorney-in-fact of Borrower with
full power to (i) notify or require Borrower to notify any and all Customers
that the Collateral has been assigned to Lender and/or that Lender has a
security interest in the Collateral; (ii) endorse the name of Borrower upon any
notes, checks, acceptances, drafts, money orders, or other instruments of
payment (including payments made under any policy of insurance) that may come
into possession of Lender in full or part payment of any amount owing to
Lender; (iii) sign and endorse the name of Borrower upon any invoice, freight,
or express xxxx, xxxx of lading, storage or warehouse receipt, draft against a
Customer, assignment, verification or notice in connection with Receivables,
and any instrument or document relating thereto or to rights of Borrower
therein; (iv) notify the post office authorities to change the address for
delivery of mail of Borrower to an address designated by Lender and to receive,
open, and dispose of all mail addressed to Borrower; (v) send requests for
verifications of Collateral to Customers or account debtors; (vi) sell, assign,
xxx for, collect, or compromise payment of all or any part of the Collateral in
the name of Borrower or in its own name, or make any other disposition of
Collateral, or any part thereof, which disposition may be for cash, credit, or
any combination thereof, and Lender may purchase all or any part of the
Collateral at public or, if permitted by law, private sale, and in lieu of
actual payment of such purchase price, may set off the amount of such price
against the Obligations; granting to Lender, as the attorney-in-fact of
Borrower, full power of substitution and full power to do any and all things
necessary to be done in and about the premises fully and effectually as
Borrower might or could do but for this appointment, hereby ratifying all that
said attorney-in-fact shall lawfully do or cause to be done by virtue hereof.
Neither Lender nor its agents shall be liable for any acts or omissions or for
any error of judgment or mistake of fact or law in its capacity as such
attorney-in-fact. This power of attorney is coupled with an interest and shall
be irrevocable during the term of this Agreement and so long as any Obligations
shall remain outstanding.
B. Lender shall have the right to enter and/or remain upon the
premises of Borrower without any obligation to pay rent to Borrower or others,
or any other place or places where any of the Collateral is located and kept
and: (i) remove Collateral therefrom to the premises of Lender or any agent of
Lender, for such time as Lender may desire, in order to maintain, collect,
sell, and/or liquidate the Collateral or, (ii) use such premises, together with
material, supplies, books, and records of Borrower, to maintain possession
and/or the condition of the Collateral, and to prepare the Collateral for sale,
liquidation, or collection. Lender may require Borrower to assemble the
Collateral and make it available to Lender at a place to be designated by
Lender that is reasonably convenient to both parties.
C. Lender shall have a right, to set off, without notice to
Borrower, any and all deposits or other sums at any time or times credited by
or due from Lender to Borrower, whether in a special account or other account
or represented by a certificate of deposit (whether or not
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matured), which deposits and other sums shall at all times constitute
additional security for the Obligations and may be set off at any time against
all or any part of the Obligations on which Borrower is primary obligor whether
or not they are then due and whether other security held by Lender is deemed by
it to be adequate and, with respect to Obligations on which Borrower is a
secondary obligor, may be set off at or after maturity.
D. Lender shall have, in addition to any other rights and
remedies contained in this Agreement, and any other agreements, guarantees,
notes, instruments, and documents heretofore, now, or at any time or times
hereafter executed by Borrower and delivered to Lender, all of the rights and
remedies of a secured party under the Uniform Commercial Code in force in the
State of Florida and Delaware as of the Date of Agreement, all of which rights
and remedies shall be cumulative, and non-exclusive, to the extent permitted by
law.
E. Any notice required to be given by Lender of a sale or other
disposition or other intended action by Lender with respect to any of the
Collateral, or otherwise, made in accordance with the terms of this Agreement
at least five (5) days prior to such proposed actions, shall constitute fair
and reasonable notice to Borrower of any such action. The net proceeds realized
by Lender upon any such sale or other disposition, after deduction of the
expenses of retaking, holding, preparing for sale, selling, or the like and
reasonable attorneys' fees and any other expenses incurred by Lender, shall be
applied toward satisfaction of the Obligations hereunder. Lender shall account
to Borrower for any surplus realized upon such sale or other disposition and
Borrower shall remain liable for any deficiency. The commencement of any
action, legal or equitable, shall not affect the security interest of Lender in
the Collateral until the Obligations hereunder or any judgment therefor are
fully paid.
11. INDEMNITY FOR COSTS AND EXPENSES
A. The Borrower shall indemnify the Lender for any suits, claims
or any losses whatsoever sustained or incurred in connection with the
transactions contemplated herein. The Borrower will reimburse Lender for all of
Lender's costs (including, but not limited to, legal fees, accounting fees,
costs related to inspections, filing, stamp or other taxes or governmental
charges, travel expenses, etc.) in connection with all matters contemplated by
this Agreement (except costs related to due diligence), including, but not
limited to, the costs related to the facilities to be advanced hereunder or the
costs incurred in connection with the Warrants and all costs incurred in
connection with the registration of the common stock underlying the Warrants.
B. The Borrower will be responsible for all of its costs in
connection with the transactions contemplated by this Agreement.
C. The Borrower agrees to indemnify, defend and hold Lender
harmless from any claims, liabilities, costs, or suits arising directly or
indirectly from the obligations of Borrower in this Section 10.
12. TERM OF AGREEMENT.
The term of this Agreement shall commence on the Date of Agreement and
shall continue in full force and effect and be binding upon Borrower until all
Obligations shall have been fully paid and satisfied. So long as any
Obligations are outstanding Borrower shall continue to assign Receivables to
Lender and turn over all collections to Lender as provided herein in the Event
of
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Default, and Lender shall retain the security interest, lien, and rights
granted to it hereunder until all the Obligations are paid in full and
satisfied.
13. GENERAL PROVISIONS.
A. The failure of Lender at any time or times hereafter to
require strict performance by Borrower of any of the provisions, warranties,
terms, and conditions in this Agreement or in any other agreement, guaranty,
note, instalment, or document now or at any time or times hereafter executed by
Borrower and delivered to Lender shall not waive, affect, or diminish any right
of Lender at any time or times hereafter to demand strict performance thereof.
No rights of Lender hereunder shall be deemed to have been waived by any act or
knowledge of Lender, its agents, officers, or employees, unless such waiver is
contained in an instrument in writing signed by an officer of Lender. No waiver
by Lender of any of its rights shall operate as a waiver of any other of its
rights or any of its rights on a future occasion.
B. Any demand or notice required or permitted to be given
hereunder shall be deemed effective: (i) if delivered by facsimile
transmission: on the date, following the date of such transmission; (ii) if
delivered by mail: on the date which is three days following the date the
demand or notice was deposited in the United States mail, and sent by certified
mail, return receipt requested, postage prepaid, addressed to Lender at Lender
or to Borrower at the addresses shown below, to wit:
Borrower: Lender.
Veridien Corporation Dunvegan Mortgage Corporation
800 Sarasota Quay 222 Delaware
Xxxxxxxx, Xxxxxxx 00000 X.X. Xxx 0000
Xxxxxxxxxx, Xxxxxxxx 00000
or to such other address as may be provided in writing prior to the giving of
such notice by the party to be notified, on ten (10) days' prior written notice
to the other party, unless some other time period is specified herein.
C. This Agreement is intended to supersede all prior agreements
between the parties hereto and contains the entire understanding between the
parties hereto with respect to the transactions contemplated herein and such
understanding shall not be modified except in writing signed by or on behalf of
the parties hereto.
D. Wherever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law.
Should any portion of this Agreement be declared invalid for any reason in any
jurisdiction, such declaration shall have no effect upon the remaining portions
of this Agreement, and the entirety of this Agreement shall continue in full
force and effect in all other jurisdictions and said remaining portions of the
Agreement shall continue in full force and effect in the subject jurisdiction
as if this Agreement had been executed with the invalid portions thereof
deleted.
E. If Lender seeks to take possession of any or all of the
Collateral by court process, Borrower hereby irrevocably waives any bonds and
any surety or security relating thereto required by any statute, court rule, or
otherwise as an incident to such possession, and waives any demand for
possession prior to the commencement of any suit or action to recover with
respect thereto.
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F. The provisions of this Agreement shall be binding upon and
shall inure to the benefit of the heirs, administrators, successors, and
assigns of Lender and Borrower; provided, however, Borrower may not assign any
of its rights or delegate any of its obligations hereunder without the prior
written consent of Lender.
G. This Agreement is and shall be deemed to be a contract
entered into and made pursuant to the laws of the State of Delaware and shall
in all respects be governed, construed, applied, and enforced in accordance
with the laws of said state; in the event that the Lender brings any action
hereunder in any court of record of Delaware or the United States of America,
Borrower consents and confers personal jurisdiction over the Borrower by such
court or courts and agrees that service or process may be made upon the
Borrower by mailing a copy of the summons to Borrower as provided in SS.13B, and
in any action hereunder Borrower waives the right to demand a trial by jury.
H. If, prior hereto and/or at any time or times hereafter,
Lender shall employ counsel in connection with the execution and consummation
of the transactions contemplated by this Agreement or to commence, defend, or
intervene, file a petition, complaint, answer, motion, or other pleadings, or
to take any other action in or with respect to any suit or proceeding
(bankruptcy or otherwise) relating to this Agreement, the Collateral, or any
other agreement, guaranty, note, instrument, or document heretofore, now or at
any time or times hereafter executed by Borrower and delivered to Lender, or to
protect, collect, lease, sell, take possession of, or liquidate any of the
Collateral, or to attempt to enforce or to enforce any security interest in any
of the Collateral, or to enforce any rights of Lender hereunder, whether before
or after the occurrence of any Event of Default, or to collect any of the
Obligations, then in any of such events, all of the reasonable attorneys' fees
arising from such services, and any expense, costs, and charges relating
thereto, shall be part of the Obligations, payable on demand and secured by the
Collateral.
I. This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original, but all of which together
shall constitute but one and the same instrument.
J. Each reference herein to Lender shall be deemed to include
its successors and assigns, and each reference to Borrower and any pronouns
referring thereto as used herein shall be construed in the masculine, feminine,
neuter, singular, or plural, as the context may require, and shall be deemed to
include the legal representatives, successors, and assigns of Borrower, all of
whom shall be bound by the provisions hereof.
K. Lender shall have the right to syndicate, assign or
participate its interest herein, in whole or in part, to one or more parties
without limitation. In such event, the term "Lender" herein shall refer to all
such assignees or participants. Borrower agrees that any such assignment may be
made without notice and further agrees to cooperate fully with Lender in the
execution of any such assignment and further agrees to execute such documents
as Lender may from time to time require in connection with any such assignment,
participation or syndication. In the event of such syndication, however,
Borrower shall only be required to deliver notices and the other materials
required to deliver to Lender herein to the lead Lender.
L. The term "Borrower" as used herein shall, if this Agreement
is signed by more than one borrower, mean unless this Agreement otherwise
provides or unless the context otherwise requires, the "Borrower and each of
them" and each and every representation, promise,
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agreement, and undertaking shall be joint and several except that the granting
of the security interest, right of setoff, and lien, shall be by each Borrower
in its respective properties. If there is more than one borrower, any loan or
advance hereunder shall be deemed to be made at the request of and for the
benefit of each Borrower (since Borrowers are affiliates and/or their
respective businesses are closely integrated and interrelated).
M. The section headings herein are included for convenience only
and shall not be deemed to be a part of this Agreement.
Veridien Corporation
By:
--------------------------------
Chairman & Chief Executive
Office
By:
--------------------------------
Secretary
Dunvegan Mortgage Corporation
By:
--------------------------------
Authorized Agent
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List of Exhibits to Loan and Security Agreement*
Lender: Dunvegan Mortgage Corporation
Borrower: Veridien Corporation
Exhibit No. Description
2. A. Subsidiaries, Limited Liability Companies,
Partnerships and Joint Ventures
2.A. 1 List of Proposed Business Ventures
2.B. List of Trade Names, Business Combinations,
other business addresses, etc.
2.E. List of Claims
2.F. List of Properties Subject to Lien
2.G. Financial Statements of Borrower
2.H. Other Places of Business of Borrower and
Locations of Inventory
2.J. Events of Default
2.K. List of Material Contracts and Defaults in
Contractual Obligations
2.M. Capitalization of Borrower
2.O. Patents, Trademarks, Copyrights
2.Q. Environmental Non-Compliance
2.R. FDA permits, licenses, etc.
3.B. Loan Documents
1) Loan and Security Agreement
2) Master Promissory Note
3) General Security Agreement
4) Security Agreement Pledge
5) Guaranty
6) Security Agreement -- Xxxx
7) Security Agreement -- Marquit
8) Assignment of Tradenames
9) Assignment of Patents and Copyrights,
Licenses
10) Warrant Agreements
11) Warrant Certificates
12) Certificate of Borrower
13) Opinions of Counsel
14) Termination Statement -- Xxxxxxx
15) Financing Statements
4.A.2)iii. Permitted Deviations from Business Plan
4.B. Master Promissory Note
6(vii) Stock Appreciation Rights
8.A. Business Plan
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STATE OF GEORGIA
COUNTY OF XXXXXX
NOTARY ACKNOWLEDGEMENT
Before the undersigned notary public appeared Mr. Xxxxxxx Xxxxx, who stated
that he is the Secretary of Veridien Corporation, a Delaware Corporation, and
who executed in my presence in Atlanta, Georgia, on October ________, 1995, at
approximately _____ o'clock p.m. the following documents appended hereto:
1. Loan and Security Agreement;
2. Master Promissory Note
--------------------------
Notary Public
My commission Expires
[NOTARIAL SEAL]
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