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EXHIBIT 10.1
LOAN AGREEMENT
This LOAN AGREEMENT ("Agreement") is made and entered into as of this
14th day of July, 1999, by and between Value Partners, Ltd., a Texas Limited
Partnership ("Value Partners") and X. Xxxx Price Recovery Fund II, L.P.
("Price") (collectively the "Lenders") (each of which is acting severally and as
to itself only and not jointly) and Altiva Financial Corporation, a Delaware
Corporation (the "Borrower").
R E C I T A L S
Borrower has requested that the Lenders loan to Borrower and Lenders
are willing to loan to Borrower the sum of $3,650,000.00 ("Loan Amount") upon
the terms and subject to the conditions hereinafter set forth. The respective
obligation of each Lender to make such loan is limited to $1,825,000.00 as to
Value Partners and $1,825,000.00 as to Price. To evidence this loan, the
Borrower shall execute a Promissory Note in those respective sums to each Lender
in the form attached hereto as Exhibit "A" (the "Notes"). This Agreement, the
Notes, the Pledge Agreement (as defined below) and the Notice, (as defined
below), and other documents required by the terms hereof shall be referred to
collectively as the "Loan Documents". All exhibits attached hereto are by this
reference incorporated herein. The term "Holder" or "holder", as used herein or
in any of the Loan Documents, refers to the Lenders and each successive owner
and holder of the respective Notes. Repayment of the Notes shall be secured
pursuant to the terms of that certain Pledge Agreement, as that term is defined
herein.
AGREEMENT:
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and legal sufficiency of which are hereby
acknowledged, Lenders and Borrower agree:
1. References in Loan Documents. All references in the Loan Documents
to the Notes shall henceforth include references to the Notes, as such Notes
may, from time to time, be amended, modified, reinstated, extended, renewed,
decreased, and/or increased.
2. Execution of Documents. Subject to the terms and conditions set
forth herein, Borrower will execute in favor of each of the Lenders a Note in
the form attached hereto as Exhibit "A" as to the respective amount advanced by
the respective Lender and Borrower and Lenders shall execute that certain Notice
and Certification of No Oral Agreements in the form attached hereto as Exhibit
"B" (the "Notice") and that certain Pledge Agreement in the form attached hereto
as Exhibit "C" (the "Pledge Agreement"). Repayment of the Notes shall be secured
pursuant to the terms of that certain Pledge Agreement, as that term is defined
herein, together with such other documents as are necessary and related to this
transaction.
LOAN AGREEMENT, PAGE 1
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3. Agreement to Advance: Purpose. Upon Borrower's compliance with the
requirements of Lenders set forth in this Agreement and subject to the terms and
conditions hereof, Value Partners shall advance a total amount not to exceed
$1,825,000.00 and Price, a total amount not to exceed $1,825,000.00, as
evidenced by their respective Notes and Borrower shall repay such sums pursuant
to the terms of the Loan Documents. The proceeds of this loan are to be used by
Borrower solely (a) to fund the purchase of The Money Centre, Inc. ("MCI") on
July 15, 1999, a North Carolina corporation, together with its successors
pursuant to the terms of that certain Stock Purchase Agreement dated as of July
7, 1999, by and among the Borrower, MCI and each of the shareholders of MCI, and
(b) to pay legal fees and expenses of counsel to the Lenders in the sum of
$150,000.00 incurred by Lenders to date in negotiating this and other
transactions between Borrower and Lenders. The sum of $150,000.00 payable to
such counsel shall be paid directly by Lenders ($75,000.00 each) to such counsel
and shall be deemed an advance of that portion of the loan amount to Borrower.
4. Application of Proceeds. Any monies collected by or on behalf of a
Lender pursuant to the Loan Documents shall be applied in the following order:
First, to reimbursement of expenses and indemnities provided herein and
in the Loan Documents;
Second, in case the principal of the outstanding Notes shall not have
become due and be unpaid, to the payment of interest on the Notes in default in
the order of the maturity of the installments of such interest, with interest
upon the overdue installments of interest at the rate then borne by the Notes,
or in the event of prepayment of principal and/or interest, to the payment of
the whole amount then owing and unpaid upon the Notes for principal and
interest, with interest on the payments of interest at the rate then borne by
the Notes, and in the case such sums are insufficient to pay in full the whole
amounts so due and unpaid upon the Notes, then to the payment of such principal
and interest without preference or priority of principal over interest, such
payment to be made ratably to the Lenders entitled thereto;
Third, in case the principal of the outstanding Notes shall have become
due, by declaration or otherwise, and be unpaid, to the payment of the whole
amount then owing and unpaid upon the Notes for principal and interest, with
interest on the overdue principal, and upon overdue payments of interest at the
rate then borne by the Notes, and in case such monies shall be insufficient to
pay in full the whole amounts so due and unpaid upon the Notes, then to the
payment of such principal and interest without preference or priority of
principal over interest, such payment to be made ratably to the Lenders entitled
thereto; and
Fourth, to the payment of the remainder, if any, to the Borrower or any
other person lawfully entitled thereto.
5. Confirmation of Rights. The Lenders shall have the right to exercise
all rights and
LOAN AGREEMENT, PAGE 2
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remedies of Lenders under the Loan Documents and under applicable law upon the
occurrence of any default or event of default under any of the Loan Documents
and under any and all amendments or modifications to any of the Loan Documents
or to the terms thereof.
6. Representations and Warranties of Borrowers. Borrower represents and
warrants to the Lenders as follows:
(a) Organization, Standing, etc. 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 its assets
and carry on its business as presently conducted. Borrower has all requisite
corporate power and authority to (i) execute, deliver and perform its
obligations under the Loan Documents, and (ii) execute, deliver and perform its
obligations under all other agreements and instruments executed and delivered by
it pursuant to or in connection with the Loan Documents.
(b) Authorization and Execution. The execution, delivery and
performance by Borrower of the Loan Documents has been duly and validly
authorized and Borrower has the corporate power and authority to execute,
deliver and perform this Agreement and execute deliver and perform the Loan
Documents. The Loan Documents have been duly executed and delivered by Borrower
and constitutes a valid and binding agreement of Borrower.
(c) No Conflict. Neither the execution and delivery of this
Agreement and each of the other Loan Documents, nor consummation of the
transactions contemplated hereby and thereby, nor compliance by the Borrower
with any of the provisions hereof or thereof: (i) does or will conflict with or
result in a breach of any provisions of the Certificate of Incorporation or
Bylaws of the Borrower or the equivalent documents of any Borrower subsidiary;
(ii) violate, conflict with or result in a breach of any term, condition or
provision of, or constitute a default (or an event which, with notice or lapse
of time, or both, would constitute a default) under, or give rise to any right
of termination, cancellation or acceleration with respect to, or result in the
creation of any lien upon any property or asset of the Borrower or a Borrower
subsidiary pursuant to, any material note, bond, mortgage, indenture, deed of
trust, license, lease, agreement or other instrument or obligation to which the
Borrower or a Borrower subsidiary is a party, or by which any of their
respective properties or assets may be bound or affected, except for such
conflicts with the trust and related agreements described in Exhibit "B" to the
Pledge Agreement; or (iii) subject to the compliance referred to in clauses (i)
and (ii) of the preceding sentence and subject to obtaining any consents under
the trust and related agreements described in Exhibit "B" to the Pledge
Agreement, violate any order, writ, injunction, decree, statute, rule or
regulation applicable to the Borrower or a Borrower subsidiary. No consent,
approval, order or other authorization of any governmental entity or of any
third party is required by or on behalf of the Borrower or a subsidiary of the
Borrower in connection with the execution, delivery and performance of this
Agreement and each of the other Loan Documents
(d) Documentation; No Material Misstatements. All of the necessary
documents
LOAN AGREEMENT, PAGE 3
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related to the consummation of this transaction requested by Lenders have been
provided by Borrower to the Lenders and are true, correct and complete in all
material respects, and no written representation, warranty or statement made by
the Borrower in or pursuant to this Agreement contains or will contain, when
made, any untrue statement of a material fact or omits or will omit to state any
material fact necessary to make such representation, warranty or statement not
misleading to a prospective purchaser of securities from Borrower, who is
seeking full information with respect to Borrower.
(e) Additional Representations, Covenants, and Agreements.
Borrower further covenants and agrees:
(i) To perform all obligations under the Loan Documents
and other documents related to the Loan Documents and
any instrument, document, or writing referenced
herein, and to promptly pay when due, all other
costs, charges, and expenses incurred in connection
with the operations of Borrower.
(ii) To indemnify and hold harmless the Lenders from any
and all actions, claims, demands, damages, costs,
expenses, and other liabilities, including without
limitation attorney's fees, that Lenders may incur
that in any way relate to or arise out of this
Agreement, the other Loan Documents, but not the
gross negligence, willful misconduct, fraud or
violation of law by Lenders.
(iii) That this Agreement or any right or obligation that
Borrower has under this Agreement shall not be
assigned or transferred by Borrower without the
express written consent of Lenders, and that Borrower
and Borrower's successors, and assigns shall be bound
by this Agreement.
7. Representations and Warranties of Lenders. The Lenders, severally
and not jointly, represent and warrant to Borrower as follows:
Such Lender has full legal right, power, and authority (including the
due authorization by all necessary partnership action) to enter into this
Agreement and to perform such Lender's obligations hereunder without the need
for the consent of any other person, and this Agreement has been duly
authorized, executed and delivered and constitutes the legal, valid and binding
obligation of the such Lender enforceable against the such Lender in accordance
with the terms hereof.
8. Covenants of Borrower. Borrower covenants and agrees that so long as
its obligation under the Loan Documents, including the Notes, shall be
outstanding:
LOAN AGREEMENT, PAGE 4
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a. Principal and Interest. Borrower will pay or cause to
be paid punctually the principal of and interest on
the Notes at the times and places and in the manner
specified in the Notes.
b. Maintenance and Existence. Borrower will at all times
do or cause to be done all things necessary to
maintain, preserve and renew its existence and its
rights, patents and franchises.
c. Compliance with Laws. Borrower will comply in all
material respects with all applicable laws, rules,
regulations, and orders of the United States of
America and of all foreign countries and of any state
or municipality, and of any instrumentality or agency
of any thereof (including applicable statutes,
regulations, orders and restrictions relating to
equal employment opportunities and environmental
standards or controls) in respect of the conduct of
business and the ownership of property by Borrower.
d. Insurance. Borrower will maintain adequate insurance
with financially sound and reputable insurance
companies in such amounts and covering such risks as
is customarily carried by companies engaged in
similar businesses and similarly situated as
Borrower. Borrower shall notify Lenders of any
cancellations or material changes within five (5)
Business Days of notice of such cancellation or
change to the Borrower.
e. Indebtedness. Borrower will pay punctually and
discharge when due and payable any indebtedness
heretofore or hereafter incurred or assumed by it and
discharge, perform and observe the covenants,
provisions and conditions to be discharged, performed
and observed in all material respects on the part of
Borrower in connection therewith, or in connection
with any agreement or other instrument relating
thereto.
f. Books. Borrower will keep at all times proper books
of record and account in which full, true and correct
entries will be made of its transactions in
accordance with applicable generally accepted
accounting principles.
(i) Certificate of Default. Deliver to the
Lenders, forthwith upon becoming aware of
any default or defaults in the performance
of any covenant, agreement or condition
contained in the Loan Documents (including
notice of any event which with the giving of
notice, lapse of time or both would become
an Event of Default as defined in the
Notes), an Officer's Certificate specifying
such default or Event of Default.
LOAN AGREEMENT, PAGE 5
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(ii) Additional Information. Such other data and
information as from time to time may be
reasonably and timely requested by any of
the Lenders.
g. Other Documents. Borrower will comply will all other
covenants, representations, warranties, terms and
obligations of the Loan Documents and all other
documents executed pursuant to the terms hereof or to
the other Loan Documents.
9. Events of Default. The Events of Default provision of the
Notes are incorporated herein by reference and made a part hereof for all
purposes.
10. Waiver of Claims. Borrower warrants and represents to Lenders
that as of the date hereof the Notes are subject to no credits, charges, claims,
or rights of offset or deduction of any kind or character whatsoever; and the
Borrower releases and discharges Lenders from any and all claims and causes of
action, whether known or unknown and whether now existing or hereafter arising,
including, without limitation, any usury claims, that have at any time been
owned, or that are hereafter owned by Borrower and that arise out of or are
related to the execution, delivery and performance of the Loan Documents.
11. Special Notices to Borrower and All Other Obligors. THIS LOAN
IS PAYABLE IN FULL NO LATER THAN AUGUST 1, 1999. AT MATURITY, YOU MUST PAY THE
ENTIRE UNPAID PRINCIPAL BALANCE OF THE LOAN AND ACCRUED UNPAID INTEREST THEN
DUE. THE LENDERS ARE UNDER NO OBLIGATION TO REFINANCE THE LOAN AT THAT TIME. YOU
WILL THEREFORE BE REQUIRED TO MAKE PAYMENT OUT OF OTHER ASSETS YOU MAY OWN, OR
YOU WILL HAVE TO FIND A LENDER WILLING TO LEND THE MONEY AT PREVAILING MARKET
RATES, WHICH MAY BE CONSIDERABLY HIGHER THAN THE INTEREST RATE ON THIS LOAN. IF
YOU REFINANCE THIS LOAN AT MATURITY, YOU MAY HAVE TO PAY SOME OR ALL OF THE
CLOSING COSTS NORMALLY ASSOCIATED WITH A NEW LOAN EVEN IF YOU OBTAIN REFINANCING
FROM THE SAME LENDERS.
12. Costs and Expenses. Borrower agrees to pay, upon execution of
this Agreement, all costs and expenses incurred by Lenders to date in connection
with the execution and consummation of this Agreement and certain related
transactions in the sum of $150,000.00, including, without limitation, the
reasonable fees and expenses of Lenders' counsel Xxxxxxx, Xxxxx & Bird, L.L.P.
and Elias, Matz, Xxxxxxx & Xxxxxxx, L.L.P. on behalf of the Lender(s). Such fees
shall be paid in accordance with Section 3 above. The failure of such fees and
expenses to be paid pursuant to paragraph 3 above shall not release Borrower
from its obligation to promptly pay such sums.
13. Continued Effect. Except to the extent amended hereby or in
connection herewith, all terms, provisions, and conditions of the Loan Documents
shall remain enforceable and binding in
LOAN AGREEMENT, PAGE 6
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accordance with their respective terms.
14. Governing Law. THE PARTIES HERETO ACKNOWLEDGE THAT THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT AND THE NOTES BEAR A REASONABLE
RELATION TO THE STATE OF MARYLAND IN THAT, INTERALIA, A SIGNIFICANT PURCHASER
HAS ITS PRINCIPAL PLACE OF BUSINESS IN THE STATE OF MARYLAND AND PART OF THE
NEGOTIATING RELATING TO THE TRANSACTIONS CONTEMPLATED HEREBY OCCURRED IN THE
STATE OF MARYLAND. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF MARYLAND, WITHOUT REGARD TO THE
PRINCIPLES OF CONFLICT OF LAWS THEREOF.
15. Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the respective successors and assigns of the parties
hereto, and each of the parties hereto, hereby represent, warrant, and covenant
to the other that the persons executing this Agreement on behalf of each such
party have full authority, power, and authorization to execute such document and
to bind its principal.
16. Entire Agreement. This Agreement supersedes all prior oral and
written agreements and understandings of the parties hereto with respect to the
subject matter hereof.
17. Headings. The headings of the sections and subsections hereof
are inserted as a matter of convenience and for reference only and in no way
define, limit or describe the scope of this Agreement or the meaning of any
provision hereof.
18. Waivers. The failure of any party to act to enforce rights
under any of the Loan Documents shall not be deemed a waiver and shall not
preclude enforcement of any rights in the Loan Documents. No waiver of any term
or provision of any of the Loan Documents on the part of a party shall be
effective for any purpose whatsoever unless such waiver is in writing and signed
by such party.
19. Invalid Provisions. If any provision of this Agreement is held
to be illegal, invalid or unenforceable under present or future laws effective
during the terms hereof, such provision shall be fully severable. This Agreement
shall be construed and enforced as if such illegal, invalid or unenforceable
provision had never comprised a part hereof, and the remaining provisions hereof
shall remain in full force and effect and shall not be affected by the illegal,
invalid or unenforceable provision or by its severance herefrom. Furthermore, in
lieu of such illegal, invalid or unenforceable provision there shall be added
automatically as a part of this Agreement a provision as similar in terms to
such illegal, invalid or unenforceable provision as may be possible and be
legal, valid and enforceable.
20. Notices. Any request, demand, authorization, direction,
notice, consent, waiver,
LOAN AGREEMENT, PAGE 7
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instruction, document or other communication provided or permitted by this
Agreement to be made upon, given or furnished to, or filed shall be sufficient
for every purpose hereunder if in writing and mailed, registered or certified
mail, postage prepaid or delivered by facsimile or telecopier (if confirmed), as
follows:
If to Borrowers, to:
Altiva Financial Corporation
0000 Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attn:
With copies to:
Xxxx & Xxxxxxxx
000 Xxxxxxxxx
Xxxxxxx, Xxxxxxx 00000-0000
Attn: Xxxx Xxxxxx
If to Lenders, to:
Value Partners, Ltd.
0000 Xxxx Xxxxxx
Xxxxx 000
Xxxxxx, Xxxxx 00000
Attn: Xxxxxxx X. Xxxxx
X. Xxxx Price Recovery Fund II, L.P.
000 Xxxx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxx, Xx.
With copies to:
Xxxxxxx, Xxxxx & Bird L.L.P.
0000 Xxxxxx Xxxxxx
Xxxxxx Xxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Attn: Xxxx X. Xxxx, Esquire
and
Elias, Matz, Xxxxxxx & Xxxxxxx
LOAN AGREEMENT, PAGE 8
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000 00xx Xxxxxx, X.X.
00xx Xxxxx
Xxxxxxxxxx, XX 00000
Attn: Xxx Xxxx and Xxxxxx Xxxxxxx
21. Attorney's Fees. In the event attorneys' fees or other costs
are incurred to secure performance of any of the obligations herein provided
for, or to establish damages for the breach thereof, or to obtain any other
appropriate relief, whether by way of prosecution or defense, the prevailing
party shall be entitled to recover reasonable attorneys' fees and costs incurred
therein.
22. Further Assurances. Each party hereto agrees to execute any
and all documents, and to perform such other acts, whether before or after
closing, that may be reasonably necessary or expedient to further the purposes
of this Agreement or to further assure the benefits intended to be conferred
hereby.
23. NOTICE OF INVALIDITY OF ORAL AGREEMENTS. THIS WRITTEN
AGREEMENT, THE OTHER LOAN DOCUMENTS, AND ALL EXHIBITS HERETO REPRESENT THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
24. Usury. All agreements between Borrower and Lenders, whether
now existing or hereafter arising and whether written or oral, are hereby
limited so that in no contingency, whether by reason of demand or acceleration
of the Final Maturity Date, as that term is defined in the Notes, or otherwise,
shall the interest contracted for, charged, received, paid or agreed to be paid
to Lenders exceed the maximum amount permissible under the laws of the State of
Maryland (hereinafter the "Applicable Law"). If, from any circumstance
whatsoever, interest would otherwise be payable to Lenders in excess of the
maximum amount permissible under the Applicable Law, the interest payable to
Lenders shall be reduced to the maximum amount permissible under the Applicable
Law, and if from any circumstance Lenders shall ever receive anything of value
deemed interest by the Applicable Law in excess of the maximum amount
permissible under the Applicable Law, an amount equal to the excessive interest
shall be applied to the reduction of the principal hereof and not to the payment
of interest, or if such excessive amount of interest exceeds the unpaid balance
of principal hereof, such excess shall be refunded to Borrower. All interest
paid or agreed to be paid to Lenders shall, to the extent permitted by the
Applicable Law, be amortized, prorated, allocated and spread throughout the full
period (including any renewal or extension) until payment in full of the
principal so that the interest hereon for such full period shall not exceed the
maximum amount permissible under the Applicable Law. Lenders expressly disavows
any intent to contract for, charge or receive interest in an amount which
exceeds the maximum amount permissible under the Applicable Law. This paragraph
as well as similar paragraphs as set forth in the Notes shall control all
agreements
LOAN AGREEMENT, PAGE 9
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between Borrower and Lenders.
25. Counterparts. This Agreement may be executed in separate or
multiple counterparts by the parties, and all of such counterparts shall be
considered as one and the same instrument notwithstanding the fact that various
counterparts are signed by only one or more of the parties, and all of such
Agreements shall be deemed but one and the same Agreement.
26. Best Efforts. As of the date hereof, the parties to this
Agreement were in the process of negotiating a financing transaction in a
principal amount of $7,000,000.00 to be loaned by the Lenders to the Borrower,
the proceeds of which were to be used to acquire the capital stock of MCI. The
parties desire to continue negotiations with respect to such transaction, a
portion of the proceeds of which, if consummated, shall be used by the Borrower
to satisfy the Notes. The parties hereby agree to use their best efforts to
conclude that transaction as expeditiously as possible; however, the provisions
of this paragraph 26 do not constitute a binding obligation on the part of
either party to close that transaction.
LOAN AGREEMENT, PAGE 10
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EXECUTED as of the date first above written.
LENDERS:
VALUE PARTNERS, LTD.
By: /s/ Xxxxxxx X. Xxxxx
------------------------------------------------
Xxxxxxx X. Xxxxx
Managing Partner of Xxxxx & Partners
general partner of Value Partners, Ltd.
Its: General Partner
X. XXXX PRICE RECOVERY FUND II, L.P.
By: /s/ Xxxxxx X. Xxxxxx, Xx.
----------------------------------------
Xxxxxx X. Xxxxxx, Xx.
President of X. Xxxx Price Recovery Fund II
Associates, L.L.C., General Partner
BORROWER:
ALTIVA FINANCIAL CORPORATION
A DELAWARE CORPORATION
By: /s/ Champ Meyercord
------------------------------------------------
Its: Chief Executive Officer
-----------------------------------------------
LOAN AGREEMENT, PAGE 11
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EXHIBIT A
THE TRANSFER OF THIS NOTE IS RESTRICTED - SEE SECTION 18 HEREOF
PROMISSORY NOTE
$1,825,000.00 July 14, 1999
FOR VALUE RECEIVED, Altiva Financial Corporation, a Delaware Corporation
("Maker"), does hereby promise to pay to the order of Value Partners, Ltd.
("Payee"), at its office at 0000 Xxxx Xxxxxx, Xxxxx 000, Xxxxxx, Xxxxx 00000, or
at such other place as the holder hereof may from time to time designate in
writing, in lawful money of the United States of America, the principal sum of
ONE MILLION EIGHT HUNDRED TWENTY-FIVE THOUSAND DOLLARS and NO/100
($1,825,000.00), or so much thereof as may be advanced, with interest thereon as
follows:
1. Certain Definitions. For the purposes hereof, the terms set
forth below shall have the following meanings:
(a) "Applicable Law" shall mean (i) the laws of the United
States of America applicable to contracts made or performed in the
State of Maryland, now or at any time hereafter prescribing maximum
rates of interest or eliminating maximum rates of interest on loans and
extensions of credit; (ii) laws of the state of Maryland, including,
without limitation, any items prescribing or eliminating maximum rate
of interest on loans and extensions of credit, and (iii) any other laws
at any time applicable to contracts made or performed in the State of
Maryland which permit a higher interest rate ceiling hereunder.
(b) "Base Rate" shall mean twelve percent (12%) per annum.
(c) "Final Maturity Date" shall mean August 1, 1999 or such
earlier date as a result of acceleration as permitted by the terms
hereof or in any of the Loan Documents.
(d) "Highest Lawful Rate" shall mean at the particular time in
question the lesser of eighteen percent (18%) or the maximum
non-usurious rate of interest which, under Applicable Law, Payee is
then permitted to charge Maker on this note. If the maximum rate of
interest which, under Applicable Law, Payee is permitted to charge
Maker on this note shall change after the date hereof, the Highest
Lawful Rate shall be automatically increased or decreased, as the case
may be, from time to time as of the effective date of each change in
the Highest Lawful Rate without notice to Maker.
(e) "Loan Agreement" shall mean that certain Loan Agreement
dated of even date herewith, executed by and between Maker, Payee, and
X. Xxxx Price Recovery Fund II, L.P., the terms of which are
incorporated herein by reference and which shall govern this note.
(f) "Loan Documents" shall mean the Loan Agreement, the Pledge
Agreement, this note, the Promissory Note in the principal sum of
$1,825,000.00 executed by Maker in
PROMISSORY NOTE, PAGE 1
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favor of X. Xxxx Price Recovery Fund II, L.P., that certain Notice and
Certification of No Oral Agreements of even date hereof and all
documents related or arising out of the Loan Agreement.
2. Calculation and Payment of Principal and Interest.
(a) Simple interest on the unpaid principal balance hereof
from time to time outstanding shall be computed at a rate equal to the
lesser of (i) the Base Rate and (ii) the Highest Lawful Rate.
(b) Principal and accrued and unpaid interest, computed as set
forth above, shall be due and payable in one installment on the Final
Maturity Date, together with all other sums payable under the Loan
Documents.
(c) Interest on this note shall be calculated as if each year
consisted of three hundred sixty (360) days, but to the extent such
computation of interest might cause the rate of interest which this
note bears to exceed the Highest Lawful Rate, such interest shall be
computed on the basis of three hundred sixty-five (365) day or three
hundred sixty-six (366) day years, as the case may be.
(d) Following the maturity of this note, whether by
acceleration or otherwise, the unpaid principal balance of this note
shall bear interest at a rate of interest equal to the Highest Lawful
Rate.
(e) If the date for any payment or prepayment hereunder falls
on a day which is a Saturday, Sunday or other legal holiday in the
state of Maryland, then for all purposes of this note, the same shall
be deemed to have fallen on the next following day, and such extension
of time shall in such case be included in the calculation of interest.
(f) Provided no Event of Default has occurred and is
continuing, all payments received by Payee shall be applied, to the
extent thereof, first, to accrued, unpaid interest upon this note,
second, to principal, and third, to any other outstanding portion of
the indebtedness. Upon and during the continuation of an Event of
Default, all payments received by Payee shall be applied, to the extent
thereof, to the indebtedness in the order and manner which Payee shall
deem appropriate, any instructions from Maker to the contrary
notwithstanding.
3. Negotiability; Offsets, Defenses or Counterclaims. This note
is freely negotiable. The Maker knows of no defenses, setoffs or counterclaims
existing as of the date hereof which could be asserted or brought by the Maker
or any other party in any suit or action for the collection of any sum due
hereunder.
4. Prepayment. Maker shall have the right to prepay the unpaid
principal balance of, and accrued interest upon, this note in whole at any time,
or in part from time to time, without permission or penalty.
PROMISSORY NOTE, PAGE 2
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5. Waiver. Maker and all sureties, endorsers, accommodation
parties, guarantors and other parties now or hereafter liable for the payment of
this note, in whole or in part, hereby severally (i) waive demand, notice of
demand, presentment for payment, notice of nonpayment, notice of default,
protest, notice of protest, notice of intent to accelerate, notice of
acceleration, notice of dishonor and all other notices, and further waive
diligence in collecting this note, in taking action to collect this note, in
bringing suit to collect this note, or in enforcing this note or any of the
security for this note; (ii) agree to any substitution, subordination, exchange
or release of any security for this note or the release of any party primarily
or secondarily liable for the payment of this note; (iii) agree that Payee shall
not be required to first institute suit or exhaust its remedies hereon against
Maker or others liable or to become liable for the payment of this note or to
enforce its rights against any security for the payment of this note; and (iv)
consent to any extension of time for the payment of this note, or any
installment hereof, made by agreement by Payee with any person now or hereafter
liable for the payment of this note, even if Maker is not a party to such
agreement.
6. Events of Default
(a) An "Event of Default" shall mean the occurrence or
existence of any of one or more of the following events, whether such
occurrence is voluntary or involuntary or comes about or is effected by
operation of law or pursuant to or in compliance with any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental authority, if:
(i) If Maker shall fail to pay any installment of
principal and/or interest under this note as and when same
becomes due and payable in accordance with the terms hereof or
any other obligation of Maker to Payee involving the payment
of money, or if Maker shall default in any other obligation
under this note, and/or the Loan Agreement which can be cured
by the payment of money;
(ii) If Maker shall default in the observance or
performance of any of the terms, covenants, agreements, or
conditions, not involving the payment of money, set forth
herein or in any other of the Loan Documents;
(iii) The occurrence of a default under any document
or instrument evidencing, securing or pertaining to the
indebtedness evidenced hereby including, without limitation,
the Loan Agreement;
(iv) If any representation, warranty or other
statement of fact, in the Loan Documents or in any writing,
certificate, report or statement at any time furnished by
Maker or any other party obligated in relation hereto to the
Payee pursuant to or in connection thereto shall be false or
misleading in any material respect; or
(v) The liquidation, termination or dissolution of
the Maker or any other parties obligated hereunder;
PROMISSORY NOTE, PAGE 3
15
(vi) The bankruptcy or insolvency of, the assignment
for the benefit of creditors by, or the appointment of a
receiver for any property of Maker or any other parties
obligated hereunder;
(vii) Default in the payment of any other
indebtedness due to the holder hereof or default in the
performance of any other obligation to the holder hereof by
Maker of this note, or
(ix) If any creditor of the Maker for any reason
whatsoever hereafter shall accelerate payment in whole or in
part of any outstanding material obligation owed to it by the
Maker under any agreement or arrangement due to a default or
an event of default by the Maker, or if any judgment against
the Maker or any execution against any property of the Maker
or any amount remains unpaid, unstayed or undismissed for a
period in excess of ten (10) days; or
(x) If the Maker shall cease to exist.
(b) It is understood and agreed that time is of the
essence of the note. If an Event of Default exists, then all principal
amounts under the note at the time outstanding shall immediately become
due and payable, together with interest accrued thereon, without
presentment, demand, grace, protest or notice of any kind, including
notice of intent to accelerate the payment of the unpaid balance of the
note or in any other Loan Documents, of notice of acceleration, all of
which are hereby waived by the Maker. Any holder of the note and of
rights under the Loan Documents may also proceed to protect and enforce
its rights either by suit in equity and/or by action at law, or by
other appropriate proceedings, whether for the specific performance (to
the extent permitted by law) of any covenant or agreement contained in
such Loan Documents, or in aid of the exercise of any power granted in
such Loan Documents, or may proceed to enforce the payment of such Loan
Documents or to enforce any other legal or equitable right of the
holder of such Loan Documents. The failure to exercise the foregoing
option upon the happening of one or more Events of Default shall not
constitute a waiver of the right to exercise the same or any other
option at any subsequent time, and no such failure shall nullify any
prior exercise of any such option without the express written consent
of Payee.
7. Loan Agreement. This note is governed by the terms of that
certain Loan Agreement executed on even date hereof, the terms of which are by
this reference incorporated herein.
8. Default Interest; Late Charge. If the entire unpaid principal
balance and accrued but unpaid interest is not paid on or before the earlier to
occur of the Final Maturity Date or any acceleration of payment permitted
hereby, all unpaid amounts of this note, including principal and interest, shall
thereafter bear interest at the Highest Lawful Rate.
PROMISSORY NOTE, PAGE 4
16
9. Compliance with Law. All agreements between Maker and Payee,
whether now existing or hereafter arising and whether written or oral, are
hereby limited so that in no contingency, whether by reason of demand or
acceleration of the Final Maturity Date or otherwise, shall the interest
contracted for, charged, received, paid or agreed to be paid to Payee exceed the
maximum amount permissible under Applicable Law. If, from any circumstance
whatsoever, interest would otherwise be payable to Payee in excess of the
maximum amount permissible under Applicable Law, the interest payable to Payee
shall be reduced to the maximum amount permissible under Applicable Law; and if
from any circumstance Payee shall ever receive anything of value deemed interest
by Applicable Law in excess of the maximum amount permissible under Applicable
Law, an amount equal to the excessive interest shall be applied to the reduction
of the principal hereof and not to the payment of interest, or if such excessive
amount of interest exceeds the unpaid balance of principal hereof, such excess
shall be refunded to Maker. All interest paid or agreed to be paid to Payee
shall, to the extent permitted by Applicable Law, be amortized, prorated,
allocated, and spread throughout the full period (including any renewal or
extension) until payment in full of the principal so that the interest hereon
for such full period shall not exceed the maximum amount permissible under
Applicable Law. Payee expressly disavows any intent to contract for, charge or
receive interest in an amount which exceeds the maximum amount permissible under
Applicable Law. This paragraph shall control all agreements between Maker and
Payee.
10. Attorneys' Fees and Costs. If an event of default shall occur,
and in the event that thereafter this note is placed in the hands of an attorney
for collection, or in the event this note is collected in whole or in part
through legal proceedings of any nature, then and in any such case Maker
promises to pay, and there shall be added to the unpaid principal balance
hereof, all reasonable costs of collection, including but not limited to
reasonable attorneys' fees incurred by the holder hereof, on account of such
collection, whether or not suit is filed.
11. Consents, Waivers and Modifications. No term, covenant,
agreement or condition of the note may be amended, supplemented or modified, or
compliance therewith waived (either generally or in a particular instance and
either retroactively or prospectively), except pursuant to a written instrument
signed by the Maker and the holder. No course of dealing between the Maker and
the holder of the note or any delay or failure on the part of the holder of the
note in exercising any rights hereunder shall operate as a waiver of any rights
of such holder.
12. Cumulative Rights. No delay on the part of the holder of this
note in the exercise of any power or right under this note or under any other
instrument executed pursuant hereto shall operate as a waiver thereof, nor shall
a single or partial exercise of any power or right preclude other or further
exercise thereof or the exercise of any other power or right. Enforcement by the
holder of this note of any security for the payment hereof shall not constitute
any election by it of remedies so as to preclude the exercise of any other
remedy available to it.
13. Headings. The paragraph headings used in this note are for
convenience of reference only, and shall not affect the meaning or
interpretation of this note.
PROMISSORY NOTE, PAGE 5
17
14. Notices and Demands. Any notice or demand to be given or to be
served upon Maker in connection with this note must be in writing and shall be
given by certified or registered mail, properly addressed, with postage prepaid,
addressed to Maker as follows:
Altiva Financial Corporation
0000 Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attn: Champ Meyercord
or at such other address as Maker may designate from time to time by written
notice given to the holder hereof. Any notice or demand will be deemed given
when notice or demand is deposited in an authorized depository under the care
and custody of the United States Postal Service.
15. GOVERNING LAW. THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF MARYLAND AND THE LAWS OF THE UNITED
STATES APPLICABLE TO TRANSACTIONS IN THE STATE OF MARYLAND. COURTS WITHIN THE
STATE OF MARYLAND SHALL HAVE JURISDICTION OVER ANY AND ALL DISPUTES BETWEEN
MAKER AND PAYEE, WHETHER AT LAW OR IN EQUITY.
16. ENTIRE AGREEMENT. THE TERMS OF THIS NOTE, TOGETHER WITH THE
OTHER LOAN DOCUMENTS, ARE INTENDED BY THE PARTIES HERETO AS A FINAL EXPRESSION
OF THEIR AGREEMENT WITH RESPECT TO THE SUBJECT MATTER HEREOF, AND MAY NOT BE
CONSTRUED BY EVIDENCE OF ANY PRIOR OR CONTEMPORANEOUS INSTRUMENT. THIS NOTE,
TOGETHER WITH THE OTHER LOAN DOCUMENTS, CONSTITUTES THE COMPLETE AND EXCLUSIVE
STATEMENT OF ITS TERMS, AND NO EXTRINSIC EVIDENCE WHATSOEVER MAY BE INTRODUCED
IN ANY PROCEEDINGS, IF ANY (JUDICIAL OR OTHERWISE), INVOLVING THIS NOTE, EXCEPT
FOR EVIDENCE OF A WRITTEN MODIFICATION ENTERED INTO SUBSEQUENT TO THE DATE OF
THIS NOTE.
PROMISSORY NOTE, PAGE 6
18
17. Successors and Assigns. The term "Payee" shall include all of
Payee's successors and assigns to whom the benefits of this Note shall inure.
18. SECURITIES LAWS. THIS NOTE HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE SECURITIES LAWS OF ANY STATE.
THIS NOTE THEREFORE MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED, OR
OTHERWISE DISTRIBUTED FOR VALUE IN THE ABSENCE OF (i) AN OPINION OF COUNSEL
REASONABLY ACCEPTABLE TO THE MAKER THAT SUCH SALE, TRANSFER, ASSIGNMENT, PLEDGE
OR OTHER DISTRIBUTION IS EXEMPT FROM (OR NOT OTHERWISE SUBJECT TO) THE
REGISTRATION (OR QUALIFICATION) AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT
OR LAWS, OR (ii) SUCH REGISTRATION OR QUALIFICATION.
MAKER:
ALTIVA FINANCIAL CORPORATION,
A DELAWARE CORPORATION
By:
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Its:
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PROMISSORY NOTE, PAGE 7