Exhibit 10.1
COLLATERAL LOAN AGREEMENT
For Loan No. 0008-02R2
This Collateral Loan Agreement (the "Agreement"), dated this 15th day of August,
2000, is entered into between Sundog Technologies, Inc., a Delaware corporation
with a principal address at 00000 Xxxxx Xxxxxx Xxxxxxx, Xxxxx 000, Xxxxx Xxxxxx,
Xxxx 00000 (the "Borrower") represented by Xxxxxxx Xxxxx, its Chief Financial
Officer, and Braveheart, Inc., a Delaware corporation (the "Lender") represented
by Xxxxx X. Xxxxx, Xx, Attorney in Fact, with a principal address at 000X
Xxxxxxxxx Xxxx, Xxxxx 000, Xxxxxx Xxxxx, XX 00000.
In consideration of the mutual covenants herein contained, and intending to be
legally bound hereby, the parties agree as follows:
1. Loan; Delivery of Collateral Pursuant to Promissory Notes
a. Subject to the terms and conditions hereinafter set forth, the Lender
agrees to advance 50%, of the current market value (the "Loan Amount")
on 1,219,500 shares of Envision Development Corporation, an American
Stock Exchange traded stock with a symbol of EDV (the "Stock") where
the market value on the date of this Agreement is approximately
$14,175,000.00 (the "Loan"). The "Final Market Value" to be used as the
basis for the funds advanced by the Lender will be determined by a
method noted later in this Agreement. The Lender intends to advance
funds under the Loan to the Borrower in two tranches: i) the First
Payment for 60% of the Loan Amount will be advanced within ten (10)
business days of receipt of the Stock and all required supporting
documents as defined in this Agreement; and, ii) a Second, and final,
Payment for the remaining 40% of the Loan Amount within an additional
ten (10) business days of the First Payment. The Borrower's obligation
to repay the advance shall be evidenced by a promissory note(s) in the
form of Exhibit A attached hereto (the "Note"). The Note(s) shall be
executed by Borrower and delivered to the Lender via courier upon
notification by the Lender's counsel that good funds are available to
advance the Loan.
b. To secure its obligations under the Loan, Borrower hereby grants Lender
a security interest in the Stock. Prior to or concurrently with the
execution of this Agreement, Borrower shall have effectively delivered
the Stock in good form to an account at Sun Trust Securities, Inc., a
wholly owned subsidiary of Sun Trust Bank. The account shall be in the
name of the Lender and Protocol; and, the Lender's attorney, who is
Escrow Agent and who will take all actions in accordance with the terms
of the Escrow Agreement, shall be a joint co-signer on this account. In
addition to the stock, the Borrower shall concurrently deliver a
"blank" stock power for the shares with medallion signature guarantee,
one for each cert, a corporate resolution authorizing the transaction
and the signer to enter into the transaction, and an opinion of the
company's counsel that the "lock-up" shall end on October 7th, 2001 .
The shares of Stock can be delivered with a Rule 144 Legend and are
known to be subject to a "lock-up" agreement which will subject the
shares to an additional 6 month restriction period before the shares
can be sold or removed from the restriction. The Borrower warrants and
represents that no other limitations or restrictions have been placed
on these shares.
c. This Agreement, the Promissory Notes, and the other documents specified
in the previous paragraph constitute the "Loan Documents".
d. The Stock shall be placed into an escrow account and shall remain in
that account for the duration of the Loan. Return or other handling of
the Stock shall be subject to terms of an Escrow Agreement between the
parties (not including Protocol).
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2. Loan Proceeds; Installment Payments
a. All loan proceeds shall be wired directly to the Borrower based on wire
instructions provided by the Borrower, without offset for any charges,
expenses, commissions, or other deductions. Said Loan proceeds shall be
immediately available funds for the Borrower.
b. The delivery of the Promissory Notes to Lender shall be a Condition
Precedent to advancement of the funds by the Lender.
c. In the event the Lender does not make one or both of the Loan advances
on a timely basis in accordance with the terms of this Agreement, the
Borrower's sole and exclusive remedy shall be to demand an immediate
return of any Certificates, Stock Powers and the Promissory Note(s).
Lender shall comply within five (5) business days. Should the Lender
make the first payment and not the second, the Stock shall be returned
and the Principals shall be treated as an "unsecured" loan by the
Lender. The Lender shall be further obligated to pay $100,000, in
conjunction with the return of the Stock, as liquidating damages if it
fails to make the first payment on a timely basis.
The Lender further agrees that if the first advance is made and for any
reason the second one is not or cannot be made, that the credit line
will be immediately used to eliminate any obligation to the credit
facility provider, Protocol, so that the Escrow Agent has the ability
to obtain release of the Stock from the designated account.
3. Determination of Market Value
The Final Market Value shall be as noted in Section 1.a. unless the market
value for the First Payment, calculated for the average closing prices for
the ten trading days immediately prior to the date times the number of
shares shall be less than $12,700,000 in which case the Final Market Value
calculated under this section of the Agreement shall be used to determine
the Loan and the Loan Amount. The Loan Amount shall be the percentage noted
in Section 1.a. of the recalculated Final Market Value.
4. Concerning the Promissory Notes
The Stock pledged under this Agreement shall be held as collateral as long
as there is any principal or interest outstanding under the Promissory
Notes. Upon satisfaction of all principal and interest under the Notes, the
Lender shall deliver any Loan Documents, other than the Lender's copy of
the Agreement, including any Certificates, Stock Powers, cancelled
Promissory Notes, or other documents related to the Stock to the Borrower.
The Lender shall give written notice of any Loan default to the Borrower in
accordance with this Agreement, and the cure period specified in the
Promissory Note(s); and, if not cured, may then may sell, assign,
hypothecate, or otherwise dispose of the Stock as provided in the
Promissory Note(s). The Lender accepts no responsibility for the value
obtained through the disposition of the Stock under any lawful means;
however, any value obtained in excess of the default amount, including
reasonable attorney's fees, and costs of disposing of such collateral,
shall be returned to the Borrower.
The Stock shall constitute the entire collateral used to procure the Loan,
and the Lender shall be limited to liquidation of the Stock upon an Event
of Default as defined in the Promissory Notes to the extent necessary to
satisfy the default. The Lender shall have no recourse to other assets,
guarantees, or assignments of interest of the Borrower, i.e., this Loan is
"non-recourse" as to any assets of the Borrower, other entity, or
individual beyond the Stock.
5. Closing
The Closing shall take place on the later of the delivery of an executed
Agreement or the receipt of the Stock and all other forms in the account
designated by the Lender.
6. Security of Stock
Said Stock shall be delivered to an account of the Lender's and its credit
facility provider, Protocol, at Sun Trust Securities, Inc. ("Sun Trust") in
Knoxville, Tennessee. Sun Trust is a wholly owned subsidiary of Sun Trust
bank, one of the countries' larger banking institutions. The Stock shall be
held under terms of an Escrow Agreement and the Lender's outside counsel,
Xx. Xxxxxx Xxxxxxxx of the firm Xxxxx, Xxxxxx & Bacine, shall act as Escrow
Agent and be bound under the terms of the Escrow Agreement. The Lender
warrants that the Stock cannot and will not be pledged, hypothecated (other
than as collateral for the credit facility), assigned, transferred, or
otherwise used in any manner while being held as collateral. The Lender
accepts full responsibility for the control, handling, and return of such
Stock to the Borrower.
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7. Use of the Stock
The Lender shall use the Stock to arrange a credit facility through
Protocol. In establishing this credit facility, the Lender will use the
Stock as collateral, but will not remove the Stock from the escrow account.
While the Stock shall reside in the escrow account, the Borrower shall
retain all voting, dividend and other rights over the Stock (other than
dividend rights in connection with stock splits or stock dividends equal or
greater than 10% of the Loan Amount). The Lender shall use the credit line
created by use of the Stock to obtain investment income. However, the
credit line will not be placed at risk nor expended in any manner.
(However, the Lender retains the right to move such funds to a bank or
investment banking firm of its choosing as long as the Escrow Agent
accesses the risk to the funds and concurs that the funds are not at risk.)
The Lender warrants that the Stock will not be used in any other manner and
the Lender accepts full and complete responsibility for return of the Stock
upon satisfaction of the loan by the Borrower.
The Lender agrees not to increase or renew the credit line provided without
the specific, written, permission of the Borrower; and, the credit line
will not exceed $6,500,000 of exposure at any time.
The Lender agrees that if the Lender defaults under its obligation to the
credit facility provider, the Borrower shall have the right to step in and
assume all rights and obligations of the Lender; and, the Escrow Agent
shall fully co-operate in aiding in the cure of any default by the Lender.
Upon default by the Lender, the rights to the Stock shall automatically and
immediately revert to the Borrower, subject to the rights of the credit
facility provider, without any further payments, or obligation, to the
Lender. The Lender agrees to notify the Borrower of its default within
three (3) business days.
8. Representations and Warranties of the Borrower
In order to induce Lender to advance funds against the Promissory Note(s),
Borrower makes the following representations and warranties to Lender,
which representations and warranties shall be unaffected by any
investigation heretofore or hereafter made by Lender and shall survive the
closing of the transactions contemplated hereby:
a. Borrower has all requisite power and authority to enter into this
Agreement and the other Loan Documents, including, without limitation,
the Promissory Notes, and to carry out the transactions contemplated
hereby.
b. Borrower warrants and represents that it is not now insolvent,
bankrupt, or contemplating bankruptcy; or, that there are no claims
filed or threatened against Borrower, whether judged with or without
merit by the Borrower, or aware of impediments to the sale or transfer
of the Stock.
c. The execution and delivery of this Agreement, the Promissory Notes and
the other Loan Documents and instruments to be executed and delivered
by the Borrower are not subject to any authorization not herein
contemplated, subject to recall, restriction on voting, use, or other
limitations.
d. This Agreement constitutes, and when executed and delivered, the
Promissory Notes and other Loan Documents, will constitute valid
binding agreements of the Borrower, enforceable in accordance with
their respective terms, except such as may be limited by bankruptcy,
insolvency, reorganization or other laws affecting creditors' rights
generally.
e. Neither the execution and delivery of this Agreement, the Promissory
Notes, or the other Loan Documents and instruments to be executed and
delivered by Borrower pursuant hereto, nor the consummation by Borrower
of the transactions contemplated hereby, will require any
authorization, consent, approval, exemption or other action by, or
notice to, any governmental entity except as specifically provided
herein.
f. Borrower has no material tax deficiencies, federal, state, foreign,
county, local and other, which would or could affect the solvency,
financial status of, or otherwise compromise Borrower in its ability to
transfer the Stock.
g. To best of its knowledge, the information supplied by Borrower to the
Lender (verbally and in writing) contained no untrue statement of
material fact or omits or shall omit a material fact, which would make
such statements misleading. All statements and information contained in
any certificate, instrument, schedule or document delivered by Borrower
shall be deemed representations and warranties made by Borrower.
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9. Conditions Precedent to Lender's Obligations
The obligation of Lender to consummate the transactions contemplated hereby
is subject to the satisfaction of the following conditions (any one or more
of which may be waived by Lender):
a. Borrower will have performed all obligations and complied with all
conditions required to be performed or complied with by Borrower at or
prior to the Closing.
b. The representations and warranties of Borrower made herein shall be
true and correct in all material respects as of the Closing.
If any of the conditions contained in this paragraph shall not have been
satisfied (or waived), then Lender may cancel and terminate this Agreement.
10. Amendment and Waiver
This Agreement may be amended, or the terms hereof waived, only in writing
executed by the parties sought to be changed thereby.
11. Notices
All notices and other communications hereunder shall be in writing and
shall be deemed to have been given if delivered by hand or facsimile
transmission or if deposited with a recognized overnight delivery service,
with receipt), addressed as follows:
If to Lender at: 0000 Xxxxxxxxx Xxxx, Xxxxx 000
X.X. Xxx 000
Xxxxxx Xxxxx, XX 00000
Attention: Xxxxx X. Xxxxx, Xx.
If to Borrower at: 00000 Xxxxx Xxxxxx Xxxxxxx, Xxxxx 000
Xxxxx Xxxxxx, Xxxx 00000
Attention: Xxxxxxx Xxxxx
or, at such other address as may hereafter be designated by a party by
notice given hereunder. Notices sent by facsimile transmission which
shall show the TTI on such copy.
12. Governing Law
This Agreement shall be governed by the laws of the state of Delaware
without regard to any provisions for conflicts of law.
13. Binding Effect
This Agreement binds, and shall inure to the benefit of, the parties
and their respective successors and assigns.
14. Counterparts; Facsimile Signatures
This Agreement may be signed in any number of counterparts, each of
which shall be deemed an original but together one and the same
document. The parties agree that facsimile signatures which copy shall
show the sender's TTI, shall be deemed an original.
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15. Entire Agreement
This Agreement and the other Loan Documents constitute the entire
agreement of the parties with respect to the subject matter hereto and
supersedes any prior or contemporaneous understandings or agreements.
16. Time of Essence
Time is specifically declared to be of the essence in the performance
by Borrower and Lender of their respective duties and responsibilities
under this Agreement.
17. Attorneys' Fee
If any legal action is brought for the enforcement of any of the
provisions in this Agreement, or because of an alleged dispute, breach,
default, or misrepresentation, the prevailing party or parties shall be
entitled to recover its or their actual attorneys' fees and other costs
incurred in the action, in addition to any other relief that may be
granted by the court.
IN WITNESS WHEREOF, and intending to be legally bound hereby, the parties have
executed this Agreement as of the day and year first above written.
By the Lender: Witness/Attest:
------------------------ -----------------------------
Xxxxx X. Xxxxx, Xx., Attorney in Fact By: ______________________
Braveheart, Inc.
By the Borrower: Witness/Attest:
------------------------- -----------------------------
Xxxxxxx Xxxxx By: _______________________
Chief Financial Officer
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