EXHIBIT 10.18
LOAN AND SECURITY AGREEMENT
This Loan and Security Agreement ("Agreement") is entered into this 9tj
day of March, 1998 by and between PARAMARK ENTERPRISES, INC. ("Borrower") and
Xxxx Xxxxxxxx ("Lender").
BACKGROUND
A. Borrower desires to establish certain financing arrangements with,
and borrow funds from Lender and Lender is willing to establish such
arrangements for, and make loans to Borrower under the terms and provisions
hereinafter set forth.
B. Lender has previously advanced funds to Borrower pursuant to a
convertible note dated January 12, 1997.
C. The parties desire to define the terms and conditions of the
relationship and to reduce their agreements to writing.
NOW THEREFORE, the parties hereto, intending to legally bound hereby, agree as
follows:
SECTION 1. THE LOAN.
1.1 Subject to the terms and conditions of this Agreement, Lender
hereby agrees to make available to Borrower a revolving credit facility in an
aggregate principal amount not to exceed at any one time outstanding Sixty
Thousand Seven Hundred and Seventy Five Dollars ($60,775) (the "Loan"). The Loan
shall be available from Lender to Borrower, unless sooner terminated pursuant to
the terms hereof, until the earlier of: (i) March 9, 1999 or (ii) the Company's
receipt of funds from an alternative source to fund its working capital needs
("Maturity Date"). After the Maturity Date, Borrower shall not request and
Lender shall not make any further advances under the Loan.
1.2 Interest on the outstanding principal balance of cash advances
under the Loan shall accrue at a rate equal to 5.39% per annum. All interest
shall be due and payable quarterly on the last day of each calendar quarter
commencing with the first calendar quarter after the date of this Agreement and
on the Maturity Date. Interest shall be calculated on the basis of a year of 365
days but charged for the actual number of days elapsed.
1.3 The outstanding principal of each cash advance under the Loan shall
be due and payable in full on the Maturity Date. Outstanding advances under the
Loan may be prepaid at any time and from time to time and any such payment shall
first be applied to accrued and unpaid interest.
1.4 Borrower may request a draw under the Loan by giving notice to
Lender and Lender shall make the advance by crediting such proceeds in
accordance with Borrower's instructions.
Payments by Borrower under the Loan shall be made to Lender at the Borrower's
office located in Secaucus, New Jersey.
1.5 The proceeds of advances under the Loan issued hereunder shall be
used solely for the purpose of providing the Borrower with working capital to
fund the Company's operations.
SECTION 2. COLLATERAL
2.1 As security for payment of all debts, liabilities and obligations
of Borrower to Lender, Borrower grants to Lender a continuing first lien and
security interest in, upon and to all of Borrower's rights to receive payments
payable to the Borrower pursuant to the Purchase Agreement dated June 3, 1996,
between the Borrower, T.J. Holding and T.J. Holding Company, Inc., a subsidiary
of Arby's, Inc. d/b/a Triarc Restaurant Group ("Collateral").
2.2 Borrower shall execute and deliver such instruments, documents and
agreements as Lenders may reasonably require to effectuate the terms and
provisions hereof and to create, perfect, protect and preserve all security
interests created hereunder. Borrower shall deliver to Lender all Instruments,
including promissory notes, with such endorsements as Lender may require to
perfect the security interest hereunder.
SECTION 3. CONDITIONS PRECEDENT
3.1 Closing under this Agreement is subject to the following conditions
precedent (all documents to be in form and substance satisfactory to Lender):
a. Borrower and Lender shall have executed the Agreement;
b. Borrower shall have executed and delivered to Lender a
promissory note evidencing Borrower's obligation to repay the Loan;
c. Borrower shall have issued to Lender 36,465 restricted shares
of its Common Stock;
d. Borrower shall deliver to Lender certified copies of the
appropriate resolution of Borrower authorizing the execution, delivery and
performance of this Agreement and each document required to be delivered by any
section hereof; and
e. Borrower shall repay amounts previously advanced by the Lender
under the convertible note dated January 12, 1997.
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SECTION 4. REPRESENTATIONS AND WARRANTIES
4.1 To induce Lender to make the Loan available to Borrower, Borrower
represents and warrants to Lender that:
a. Borrower is a corporation and is duly organized and validly
existing under the laws of the State of Delaware and has the power to carry on
its business in jurisdictions where the nature of its business transactions make
such qualification necessary except where the failure to do so would not have a
material adverse effect on Borrower.
b. The execution and delivery by Borrower of this Agreement
and the performance by it of the transactions herein contemplated are and will
be within its corporate powers, have been and will be duly authorized, and are
not and will not be in contravention of any law, order of court or other agency
of government, or the terms of Borrower's Articles of Incorporation or by-laws,
or of any indenture, agreement or undertaking to which Borrower is a party or by
which Borrower's property is bound, or be in conflict with, result in a breach
of or constitute (with due notice and/or lapse of time) a default under any such
indenture, agreement or undertaking, or result in the imposition of any charge
or encumbrance of any nature on Borrower's property.
c. This Agreement and any assignments, agreements, instruments
or other documents, when delivered, will be legal, valid, binding and
enforceable in accordance with their respective terms (subject to applicable
bankruptcy, insolvency, reorganization and other laws and general equitable
principles affecting the enforceability of creditor's rights).
SECTION 5. DEFAULT AND REMEDIES
5.1 Each of the following events shall constitute an Event of Default
("Event of Default"):
a. If Borrower fails to pay any principal, interest, charges,
fees, expenses or other monetary obligations of Borrower owing to Lender arising
out of or incurred in connection with this Agreement on the date such payment is
due and payable; or
b. If any representation or warranty contained herein or in
any agreement executed or delivered by Borrower to Lender in connection herewith
is false, erroneous or misleading in any material respect when made or Borrower
breaches any covenant or undertaking of Borrower herein or in any agreement
executed or delivered by Borrower to Lender in connection herewith; or
c. If any breach or default occurs under any surety agreement,
or if any surety agreement, or any obligation to perform thereunder is
terminated, or if any surety dies; or
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d. If any action is commenced for the dissolution or
liquidation of Borrower or any proceeding is commenced for reorganization or
liquidation of Borrower's debts under the Bankruptcy Code or any other state or
federal law now or hereafter enacted for the relief of debtors whether
instituted by or against Borrower.
5.2 Upon the occurrence of an Event of Default, and in addition to all
rights, options or remedies available to Lender whether at law or equity or
both, Lender may;
a. cease making any advances under the Loan;
b. declare all debts, liabilities, and obligations owing under
the Loan immediately due and payable all without demand, notice, protest or
further action of any other kind; and
c. exercise all rights and remedies under the Uniform
Commercial Code and any other applicable law or in equity.
SECTION 6. MISCELLANEOUS.
6.1 This Agreement and all related instruments, documents and
agreements shall be governed by and construed in accordance with the substantive
laws of the State of New Jersey. The provisions of this Agreement and all other
agreements and documents referred to herein are to be deemed severable, and the
invalidity or unenforceability of any provision or document shall not affect or
impair the remaining provisions or documents but shall continue in full force
and effect.
6.2 Each party to this Agreement shall pay all of its costs and
expenses incurred (including, without limitation, reasonable attorneys' fees)
relating to this Agreement and all related agreements and documents including,
without limitation, expenses incurred in the analysis, negotiation, preparation,
closing, administration and enforcement of this Agreement, the enforcement,
protection and defense of the rights of Lender in and to the Loan or otherwise
hereunder and any expenses relating to extensions, amendments, waivers or
consents (whether or not granted or consummated) pursuant to the provisions
hereof.
6.3 This Agreement may be executed in any number of counter-parts, each
of which shall constitute an original and all of which taken together shall
constitute one and the same instrument.
6.4 Borrower and Lender each hereby waive any and all rights either may
have to a jury trial in connection with any litigation commenced by or against
Lender with respect to rights and obligations of the parties hereto or under any
other instrument, document or agreement executed in connection herewith.
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IN WITNESS WHEREOF, the undersigned have executed this Agreement the
day and year first above written.
PARAMARK ENTERPRISES, INC.
By: /s/ Xxxxxxx Xxxxxxxxx
Name: Xxxxxxx Xxxxxxxxx
Title: Chairman
/s/ Xxxx Xxxxxxxx
Xxxx Xxxxxxxx
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