LOAN AND SECURITY AGREEMENT
Loan and Security Agreement made this 12 day of November, 1999, by and
between Entertainment Boulevard Inc., a Nevada corporation (the "Company"),
Beestons Investment Ltd., a foreign corporation (the "Investor") and H.A.A.
Inc., a foreign corporation (each an "Investor" and collectively, the
"Investors").
W I T N E S S E T H :
WHEREAS, the Company desires to borrow certain amounts from the
Investors and the Investors desire to make a loan (the "Loan") to the
Company;
NOW, THEREFORE, in consideration of the mutual promises, representations
and warranties contained herein, the parties hereby agree as follows:
1. LOAN. The Investors hereby lend to the Company the aggregate
principal amount of $500,000. The Loan shall be evidenced by two secured
notes, one to Beestons Investment Ltd. and the other to H.A.A. Inc. (the
"Notes") in the forms attached hereto as Exhibits A and B, shall bear
interest at the rate of 10% per annum and shall be due and payable on or
before February 15, 2000, or earlier as provided in the Notes. Each Note may
be converted at any time by its respective Investor prior to repayment
thereof into shares of Common Stock of the Company at $2.00 per share and
will be entitled to resale registration rights (subject to the registration
rights previously granted to security holders of the Company). In
consideration for such Loan, the Company will grant each Investor and/or its
designee a
70,000 shares, or an aggregate of 140,000 shares (the "Payment Shares"), of
the Company's Common Stock to be registered in the name of the Investors or
its designees.
2. CONDITIONS TO LOAN. The obligation of the Investors to make the
Loan is subject to the conditions that the following shall have occurred
prior to or concurrently with the Loan:
(a) The Company shall have granted to the Investors a valid pari
passu security interest in all its assets pursuant to this agreement dated
the date hereof.
(b) The Company agrees that various UCC statements will have to be
filed after the date hereof to perfect the Investors' PARI PASSU security
interest in the Company's assets as set forth in subsection (a). As such,
the Company grants Stroock & Stroock & Xxxxx LLP ("SSL") power of attorney to
sign as debtor on its behalf on the requisite UCC filings. The Company also
agrees it will prepare such filings as needed (such decision to be at the
sole discretion of SSL).
(c) The Company agrees to enter into a Registration Rights
Agreement (containing substantially the same terms as the registration rights
previously granted to security holders of the Company but being subject to
such previously granted rights) regarding the Payment Shares and the shares
underlying the Notes (upon conversion), which shall be reasonably acceptable
to the Investors.
3. Common Stock. In consideration of the Investors making the Loan,
the Company hereby issues to the Investors the Payment Shares to be
registered in a registration statement as defined in the Registration Rights
Agreement.
4. GRANT OF PARI PASSU SECURITY INTEREST. The Company hereby grants
to the Investors all of the right, title, and interest in and to the
Company's assets, whether now existing or hereafter from time to time
acquired, including: (i) each and every Receivable; (ii) all Contracts,
together with all Contract Rights arising thereunder; (iii) all Inventory;
(iv) all Equipment; (v) all Marks, together with the registrations
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and right to all renewals thereof, and the goodwill of the business of the
Company symbolized by the Marks; (vi) all Patents and Copyrights; (vii) all
computer programs of the Company and all intellectual property rights therein
and all other proprietary information of the Company, including, but not
limited to, trade secrets; (viii) all Stock; (ix) the Cash Collateral Account
and all monies, securities, and instruments deposited or required to be
deposited in the Cash Collateral Account; (x) all other Goods, General
Intangibles, Chattel Paper, Documents, and Instruments; and (xi) all Proceeds
and products of any and all of the foregoing. Until such time as there is an
Event of Default, the Investors will not collect any revenues from the
collateral described in this Section 4.
5. REPRESENTATIONS OF THE COMPANY. The Company represents and
warrants to the Investors as follows:
5.1. The issuance of the Notes and the Payment Shares pursuant to
the provisions of this Agreement have been duly and validly authorized. No
approval or authorization of the shareholders or the directors of the Company
or of any governmental authority or agency which has not been obtained will
be required by the Company for the issuance and sale of the Notes or the
Payment Shares, as contemplated by this Agreement. When issued and sold to
the Investors, the Payment Shares will be duly and validly issued, fully paid
and non-assessable, and will be free and clear of any liens or encumbrances
created by the Company.
5.2 The Company has the full corporate power and authority to
enter into this Agreement and to perform all of its obligations hereunder.
The execution, delivery and performance of this Agreement and the Notes by
the Company have been duly authorized by all necessary corporate action.
This Agreement and the Notes constitute legal, valid and binding obligations
of the Company enforceable in accordance with their respective terms.
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5.3 Neither the sale of the Notes, the Payment Shares, the
execution and delivery of this Agreement, nor the fulfillment of the terms
set forth in this Agreement and the consummation of the transactions
contemplated by this Agreement, will (i) conflict with or constitute a breach
of, or constitute a default under or an event which, with or without notice
of lapse of time or each, would be a breach of or default under or violation
of the Certificate of Incorporation or By-Laws of the Company or would be a
breach of or default under or violation of any agreement, document, lease or
other instrument or undertaking by which the Company is bound or to which any
of its properties are subject, would be a violation of any law,
administrative regulation, judgment, order or decree applicable to the
Company, or (ii) subject to the listing approval requirements of the OTC
Stock Market, require the consent which has not been obtained of any other
person or entity under any agreement, lease, document or other instrument or
undertaking by which the Company is bound or to which any of its properties
are subject.
5.4 Subject to the filing of UCC-1 Financing Statements in
appropriate jurisdictions, the PARI PASSU security interest in all of the
assets of the Company (the "Assets") granted pursuant to Section 4 hereto
constitutes a valid PARI PASSU security interest in the Assets.
6. REPRESENTATIONS OF THE INVESTORS. The Investors understand that
the Payment Shares have not been registered under the Securities Act of 1933
(the "Securities Act"). The Investors are accredited investors within the
meaning of Rule 501 of Regulation D promulgated under the Securities Act.
The Investors are acquiring the Payment Shares for their own accounts and
not with a present view to, or for sale in connection with, any distribution
in violation of the Securities Act. The Investors acknowledge that a
restrictive legend will be placed on the Payment Shares.
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7. COVENANTS OF THE COMPANY. The Company covenants with the Investors
as follows:
(a) The proceeds of the Loan will be used for working capital and
general corporate purposes.
(b) At all times while the Notes are outstanding, the Company
will reserve and keep available out of its authorized but unissued shares of
Common Stock, solely for the purpose of effecting the conversion of the
Notes, the full number of shares of Common Stock deliverable upon conversion
of the Notes.
8. SURVIVAL. All representations, warranties, covenants and
agreements contained in this Agreement or in any document, exhibit, schedule
or certificate delivered in connection herewith shall survive the execution
and delivery of this Agreement and the closing of the Loan and any
investigation at any time made by the Investors or on their behalf.
9. MISCELLANEOUS PROVISIONS.
9.1. This Agreement shall be governed by, and construed and
enforced in accordance with, the internal laws of the State of New York
without giving any effect to principles of conflicts of laws.
9.2. All notices hereunder shall be in writing and shall be deemed
to have been given at the time when mailed by certified mail, addressed to
the address below stated of the party to which notice is given, or to such
changed address as such party may have fixed by notice:
To the Company:
Entertainment Boulevard, Inc.
0000 Xxx Xxx Xxxxxx
Xxxxx 000
Xxxxxx Xxx Xxx, Xxxxxxxxxx 00000
Attn: Xxxxxxx Xxxxx
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To the Investors:
Beestons Investment Ltd.
X.X. Xxx 00
Xxxx Xxxxxx
Gretton House
Grand Turks, Caicos
H.A.A. Inc.
0000-00xx Xxxxxx
Xxxxxxxx, Xxx Xxxx 00000
provided, however, that any notice of change of address shall be effective
only upon receipt.
9.3. This Agreement shall be binding upon and inure to the benefit
of the Company, the Investor Investors and the successors and assigns of the
Investor Investors. The Company may not assign this Agreement without the
prior written consent of the Investor Investors. The Investor Investors may
assign all or any part of his rights and obligations hereunder to any
affiliate of the Investor, Investors without the consent of the Company.
9.4. This Agreement and all exhibits and schedules hereto set forth
the entire understanding of the parties with respect to the transactions
contemplated hereby. This Agreement may be amended, the Company or either
Investor may take any action herein prohibited or omit to take action herein
required to be performed by it or him, and any breach of or compliance with
any covenant, agreement, warranty or representation may be waived, only if
the Company or the Investor has obtained the written consent of the other
parties to this Agreement.
9.5. This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, and all of which together shall
constitute one and the same instrument.
9.6. The headings in this Agreement are for reference purposes only
and shall not constitute a part hereof.
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9.7 On or prior to December 31, 1999, the Company will reimburse
the Investors for the reasonable attorneys fees and expenses, incurred by the
Investors in connection with the preparation, execution and delivery of this
Agreement, the Notes and the Registration Rights Agreement. Such fees shall
not exceed $[ ] without the consent of the Company.
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
day and year first above written.
ENTERTAINMENT BOULEVARD, INC.
/s/ Xxxxxxx Xxxxx
-----------------------------
By: Xxxxxxx Xxxxx
Title: Chairman of the Board
BEESTONS INVESTMENT LTD.
/s/ [illegible Signature]
-----------------------------
By:
Title:
H.A.A. INC.
/s/ [illegible Signature]
-----------------------------
By:
Title:
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EXHIBIT A
SECURED NOTE
$250,000 November , 1999
---
FOR VALUE RECEIVED, Entertainment Boulevard, Inc. (the "Maker"), hereby
promises to pay to the order of Beestons Investments Ltd. (the "Payee"), at
X.X. Xxx 00, Xxxx Xxxxxx Gretton House, Grand Turks, Caicos, or at such other
place as the Payee may designate in writing, in lawful money of the United
States of America, the principal sum of two hundred fifty thousand dollars
($250,000) together with interest from the date hereof at the rate of 10% per
annum, computed on the basis of a 360-day year of twelve 30-day months. The
principal of this Note shall be payable in full on or before February 15,
2000. Interest shall accrue from the date hereof and shall be paid when the
principal amount of this Note has been paid in full.
The occurrence of any one or more of the following events shall
constitute an Event of Default under this Note: (i) the failure to pay
principal of or interest on this Note as and when due; (ii) any
representation or warranty of the Maker contained in the Loan and Security
Agreement dated as of the date hereof between the Maker and the Payee shall
not be true and correct in all material respects and the same shall not be
cured within 30 days after written notice thereof by the Payee to the Maker or
the Maker shall have breached any covenant contained in the Loan and Security
Agreement and such breach shall not be cured within 30 days; (iii) a
proceeding being filed or commenced against the Maker for bankruptcy,
dissolution or liquidation which shall not be dismissed within 60 days, or
the Maker voluntarily or involuntarily terminating or dissolving or being
terminated or dissolved; (iv) the Maker filing a petition
under bankruptcy, insolvency or debtor's relief law or making an assignment
for the benefit of creditors; or (v) the appointment of a custodian, trustee,
liquidator or receiver for any of the property of the Maker, which shall not
be dismissed, released or vacated within 60 days.
The Maker agrees that in an Event of Default under this Note, then all
or any part of the unpaid principal balance of and interest on this Note
shall immediately become due and payable without notice or demand. If an
Event of Default occurs, the Maker agrees to pay to the holder all reasonable
expenses incurred by the holder, including reasonable attorneys' fees, in
enforcing and collecting this Note.
Failure of the Payee hereof to assert any right contained herein will
not be deemed to be a waiver thereof.
In the event any one or more of the provisions of this Note shall for
any reason be held to be invalid, illegal or unenforceable, in whole or in
part or in any respect, or in the event that any one or more of the
provisions of this Note operate to invalidate this Note, then and in either
of those events, such provision or provisions only shall be deemed null and
void and shall not affect any other provision of this Note and the remaining
provisions of this Note shall remain operative and in full force and effect
and shall in no way be affected, prejudiced or disturbed thereby.
The Maker hereby forever waives presentment, presentment for payment,
demand, protest, notice of protest, notice of dishonor of this Note and all
other demands and notices in connection with the delivery, acceptance,
performance and enforcement of this Note.
This Note may be prepaid in whole or in part at any time and from time
to time without premium. This Note shall be paid without deduction by reason
of any set-off, defense or counterclaim of the Maker.
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The principal and accrued interest on this Note may be converted into
shares of Common Shares (the "Common Shares") of the Maker at the option of
the Payee at $2.00 per share and the Maker agrees to cause such Common Shares
to be registered for resale (subject to the registration rights previously
granted to security holders of the Maker) under the Securities Act of 1933,
as amended.
This Note is secured pursuant to the terms of the Loan and Security
Agreement.
This Note shall be governed by and construed and enforced in accordance
with the internal laws of the State of New York without giving any effect to
principles of conflicts of laws. This Note shall be binding upon the
successors and assigns of the Maker and shall inure to the benefit of the
successors and assigns of Payee.
ENTERTAINMENT BOULEVARD, INC.
_____________________________
By: Xxxxxxx Xxxxx
Title: Chairman of the Board
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EXHIBIT B
SECURED NOTE
$250,000 November , 1999
---
FOR VALUE RECEIVED, Entertainment Boulevard, Inc. (the "Maker"), hereby
promises to pay to the order of H.A.A. Inc. (the "Payee"), at 0000-00xx
Xxxxxx, Xxxxxxxx, Xxx Xxxx, or at such other place as the Payee may designate
in writing, in lawful money of the United States of America, the principal
sum of two hundred fifty thousand dollars ($250,000) together with interest
from the date hereof at the rate of 10% per annum, computed on the basis of a
360-day year of twelve 30-day months. The principal of this Note shall be
payable in full on or before February 15, 2000. Interest shall accrue from
the date hereof and shall be paid when the principal amount of this Note has
been paid in full.
The occurrence of any one or more of the following events shall
constitute an Event of Default under this Note: (i) the failure to pay
principal of or interest on this Note as and when due; (ii) any
representation or warranty of the Maker contained in the Loan and Security
Agreement dated as of the date hereof between the Maker and the Payee shall
not be true and correct in all material respects and the same shall not be
cured within 30 days after written notice thereof by the Payee to the Maker or
the Maker shall have breached any covenant contained in the Loan and Security
Agreement and such breach shall not be cured within 30 days; (iii) a
proceeding being filed or commenced against the Maker for bankruptcy,
dissolution or liquidation which shall not be dismissed within 60 days, or
the Maker voluntarily or involuntarily terminating or dissolving or being
terminated or dissolved; (iv) the Maker filing a petition
under bankruptcy, insolvency or debtor's relief law or making an assignment
for the benefit of creditors; or (v) the appointment of a custodian, trustee,
liquidator or receiver for any of the property of the Maker, which shall not
be dismissed, released or vacated within 60 days.
The Maker agrees that in an Event of Default under this Note, then all
or any part of the unpaid principal balance of and interest on this Note
shall immediately become due and payable without notice or demand. If an
Event of Default occurs, the Maker agrees to pay to the holder all reasonable
expenses incurred by the holder, including reasonable attorneys' fees, in
enforcing and collecting this Note.
Failure of the Payee hereof to assert any right contained herein will
not be deemed to be a waiver thereof.
In the event any one or more of the provisions of this Note shall for any
reason be held to be invalid, illegal or unenforceable, in whole or in part
or in any respect, or in the event that any one or more of the provisions of
this Note operate to invalidate this Note, then and in either of those
events, such provision or provisions only shall be deemed null and void and
shall not affect any other provision of this Note and the remaining
provisions of this Note shall remain operative and in full force and effect
and shall in no way be affected, prejudiced or disturbed thereby.
The Maker hereby forever waives presentment, presentment for payment,
demand, protest, notice of protest, notice of dishonor of this Note and all
other demands and notices in connection with the delivery, acceptance,
performance and enforcement of this Note.
This Note may be prepaid in whole or in part at any time and from time
to time without premium. This Note shall be paid without deduction by reason
of any set-off, defense or counterclaim of the Maker.
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The principal and accrued interest on this Note may be converted into
shares of Common Shares (the "Common Shares") of the Maker at the option of
the Payee at $2.00 per share and the Maker agrees to cause such Common Shares
to be registered for resale (subject to the registration rights previously
granted to security holders of the Maker) under the Securities Act of 1933,
as amended.
This Note is secured pursuant to the terms of the Loan and Security
Agreement.
This Note shall be governed by and construed and enforced in accordance
with the internal laws of the State of New York without giving any effect to
principles of conflicts of laws. This Note shall be binding upon the
successors and assigns of the Maker and shall inure to the benefit of the
successors and assigns of Payee.
ENTERTAINMENT BOULEVARD, INC.
-----------------------------
By: Xxxxxxx Xxxxx
Title: Chairman of the Board
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