LOAN AND SECURITY AGREEMENT
AGREEMENT, made as of the 22nd day of April, 1998, by and
between COMPU- XXXX, INC., a Delaware corporation ("Lender"), and RUGBY NATIONAL
CORP., a New York corporation ("Borrower").
1. Definitions.
(a) The term "Obligations" shall mean any and all indebtedness,
obligations, liabilities, pledges and guarantees of any kind of
Borrower to Lender, now existing or hereafter arising, and whether
direct or indirect, acquired outright, conditionally, absolute or
contingent, joint or several, secured or unsecured, due or not due,
contractual or tortious, liquidated or unliquidated, arising by
operation of law or otherwise, whether or not of a nature presently
contemplated by the parties or subsequently agreed to by them.
(b) The term "Collateral" shall mean any and all tangible and
intangible assets in which Borrower has or shall have an interest, now
or hereafter existing or acquired, and wherever located, together with
all additions and accessions thereto and replacements and
substitutions thereof and all proceeds and products of the foregoing.
(c) All other terms used herein which are not otherwise defined
herein and are defined in the Uniform Commercial Code of the State of
New York ("UCC") or in that certain Agreement and Plan of Merger of
even date by and among Lender, Rugby Acquisition Corp., Borrower and
Xxxxxx Xxxxxxxxx ("Xxxxxxxxx") (the "Merger Agreement") shall have the
meanings therein stated.
2. The Loan.
(a) Upon the terms and subject to the conditions set forth in
this Agreement and in reliance upon the representations, warranties
and covenants of Borrower herein set forth, Lender hereby agrees to
lend to Borrower and Borrower may borrow (each such amount hereinafter
referred to as an "Advance") from time to time during the period
commencing on the date hereof and terminating twelve (12) months from
the date hereof (the "Loan Termination Date") up to One Million
Dollars ($1,000,000).
(b) Borrower may request an Advance under this paragraph 2(b)
only by written notice which must be received by Lender (a "Notice to
Borrow") at least three (3) days prior to the date of the proposed
Advance. Each Notice to Borrow shall specify the date and the
aggregate principal amount of the proposed Advance, the bank and
account number to which the funds should be transferred, a list of
intended uses of such Advance, and any other information relating to
such intended uses as Lender may reasonably require. Subject to the
conditions set forth herein, Lender will make available to Borrower
such Advance in same day funds by wire transfer to Borrower's account
as specified in the Notice to Borrow. The Advances and Borrower's
obligation to pay interest thereon shall be evidenced by a promissory
note (the "Note") in, or substantially in, the form attached hereto as
Exhibit 2(b).
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(c) Lender's obligation to make the initial Advance hereunder and
the first Advance hereunder in excess of One Hundred Thousand Dollars
($100,000) (collectively, the "Initial Advance") is subject to the
fulfillment of each of the following conditions prior to or
contemporaneously with the making of such Advance:
(i) Lender shall have received each of the following, in
form and substance satisfactory to Lender:
(A) certified copies of all corporate (including stockholder, if required)
action taken by (i) Borrower to authorize (I) the borrowings hereunder and (II)
the execution, delivery and performance in accordance with their respective
terms of this Agreement, the Loan Documents (as hereinafter defined) and any
other documents executed in connection with this Agreement, including, without
limitation, the Borrower Pledge Agreement, the Xxxxxxxxx Pledge Agreement and
the Collateral Assignment Agreement (each as hereinafter defined) (the "Other
Financing Documents") and (ii) Credomarka to authorize the execution, delivery
and performance of the Credomarka Pledge Agreement (as hereinafter defined) in
accordance with its terms;
(B) a certificate of incumbency with respect to the officers of Borrower
authorized to execute and deliver this Agreement, the Loan Documents and the
Other Financing Documents;
(C) copies of the Certificate of Incorporation and By-Laws of Borrower and
Credomarka and Charter of Company with Limited Liability of Press-Loto, all as
restated or amended to the date of the making of the Initial Advance, certified
(prior to any Advance in excess of $100,000), with respect to the Certificate of
Incorporation of Borrower and Credomarka and Charter of Company with Limited
Liability of Press-Loto, by the appropriate authority in the jurisdiction of
incorporation and formation, respectively (subject to the provisions below),
and, with respect to the By-Laws, by an appropriate officer of Borrower or
Credomarka, as the case may be; provided however, to the extent such Charter of
Company with Limited Liability is not immediately obtainable for Press-Loto, the
Secretary of Press-Loto shall certify the Press-Loto Charter of Company with
Limited Liability, as restated or amended and that a certified the Charter of
Company with Limited Liability of Press-Loto is true and correct and has been
requested from the appropriate authority in Press-Loto's jurisdiction of
formation.
(D) certificates of good standing for Borrower, Credomarka and Press-Loto
(subject to the provisions below) from the appropriate authority in the
jurisdiction of incorporation or formation, and in each other jurisdiction in
which the entity is qualified to do business; provided, however, to the extent
such a certificate is not immediately obtainable for Press- Loto, the Secretary
of Press-Loto shall certify that Press-Loto is in good standing in its
jurisdiction of formation and that such a certificate of good standing has been
requested from the appropriate authority in Press-Loto's jurisdiction of
formation.
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(E) duly executed copies of the Note and the other Loan Documents and Other
Financing Documents;
(F) with respect to Advances in excess of One Hundred Thousand Dollars
($100,000), a signed copy of the opinion of counsel for Borrower reasonably
satisfactory to Lender, dated the date of the Initial Advance, in form and
substance reasonably satisfactory to Lender and its counsel;
(G) with respect to Advances up to One Hundred Thousand Dollars ($100,000),
evidence reasonably satisfactory to Lender that the shares of capital of
Press-Loto owned by Credomarka Corp., a New Jersey corporation ("Credomarka")
are duly authorized, validly issued, fully paid and non-assessable, free and
clear of all liens, preemptive rights and rights of first refusal, including
without limitation, in connection with the pledge of such shares of capital by
Credomarka to Lender pursuant to the Credomarka Pledge Agreement and any
transfer of such shares of capital to Lender as a result of a foreclosure
thereon under the Credomarka Pledge Agreement (as hereinafter defined);
(H) with respect to Advances in excess of One Hundred Thousand Dollars,
evidence reasonably satisfactory to Lender that Credomarka has assigned all of
its right, title and interest in, and to, that certain number of Press-Loto
shares of capital representing fifty percent (50%) of the issued and outstanding
Press-Loto shares of capital to Rugby, and that such shares of capital of
Press-Loto owned by Rugby are duly authorized, validly issued, fully paid and
non-assessable, free and clear of all Liens, preemptive rights and rights of
first refusal, including, without limitation, in connection with the transfer of
such shares of capital by Credomarka to Rugby and the pledge of such shares of
capital by Rugby to Lender pursuant to the Borrower Pledge Agreement and any
transfer of such shares of capital to Lender as a result of a foreclosure
thereon under the Borrower Pledge Agreement (as hereinafter defined); and
(I) with respect to Advances in excess of One Hundred Thousand Dollars
($100,000), evidence satisfactory to Lender that the Lottery Contracts listed on
Schedule 3.10(a) to the Merger Agreement have been entered into and are in full
force and effect.
(ii) The following agreements shall have been entered into:
(A) a pledge agreement between Xxxxxxxxx and Lender (the "Xxxxxxxxx Pledge
Agreement"), in form and substance reasonably satisfactory to Lender, providing,
among other things, that Xxxxxxxxx is pledging all of the outstanding shares of
capital stock of Borrower as security for the payment, performance and
observance by Borrower of the Obligations;
(B) with respect to an Advance up to One Hundred Thousand Dollars
($100,000), a pledge agreement between Credomarka (the "Credomarka Pledge
Agreement"), in form and substance reasonably satisfactory to Lender, providing,
among other
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things, that Credomarka shall pledge that certain number of the Press-Loto
shares of capital that Credomarka owns or hereafter shall acquire, which equals
fifty percent (50%) of the issued outstanding shares of capital of Press-Loto
(which number is currently 12,000 shares of capital);
(C) with respect to Advances in excess of One Hundred Thousand Dollars, a
pledge agreement between Borrower and Lender (the "Borrower Pledge Agreement"),
in form and substance reasonably satisfactory to Lender, providing, among other
things, that Borrower shall pledge all of the Press-Loto shares of capital that
Borrower owns or hereafter shall acquire as security for the payment,
performance and observance by Borrower of the Obligations; and
(D) With respect to advances in excess of One Hundred Thousand Dollars
($100,000) a collateral assignment agreement (the "Collateral Assignment
Agreement") between Borrower and Lender, in form and substance reasonably
satisfactory to Lender, providing, among other things, that Borrower shall make
a collateral assignment of the Lottery Contracts to Lender as security for the
payment, performance and observance by Borrower of the Obligations.
(iii) The intended uses of the Advance shall be in strict
conformity with a budget to be agreed upon between Lender and Borrower
(the "Budget").
(iv) the form of the Press-Loto shareholders' agreement referred
to in Section 7.15 of the Merger Agreement shall have been agreed upon
in writing by the Lender and the Borrower, unless Lender shall have
received evidence, satisfactory to it, in its good faith sole
discretion, to the effect that Press-Loto shall not issue any shares
of capital or any other equity or proprietary interest without the
prior written consent of Rugby.
(d) Lender's obligation to make each Advance (including the Initial
Advance) is subject to the fulfillment of each of the following conditions
immediately prior to or contemporaneously with such Advance:
(i) All of the representations and warranties of Borrower made
under this Agreement and each other Loan Document and Other Financing
Document shall be true and correct in all material respects at the
time of the disbursement of such Advance as if made as of such date,
Borrower shall have performed and complied in all material respects
with all covenants and agreements required by this Agreement and each
other Loan Document and Other Financing Document to be performed or
complied with by Borrower, and Lender shall have received a
certificate, dated the date of the Advance, signed by the President of
Borrower as to the satisfaction of the foregoing conditions. Lender
may, in its sole discretion, without waiving this condition, consider
it fulfilled, and a representation by Borrower to such effect made, if
no written notice to the contrary is received from Borrower prior to
the making of such Advance.
(ii) The corporate actions of Borrower referred to in paragraph
(c) hereof shall remain in full force and effect, the incumbency of
officers shall be as stated in the certificates of incumbency
delivered pursuant to paragraph (c) hereof or as subsequently modified
and reflected
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in a certificate of incumbency delivered to Lender, the Certificates
of Incorporation and By-Laws of Borrower and Charter for Company with
Limited Liability of Press-Loto delivered pursuant to paragraph (c)
hereof shall remain unmodified, Borrower and Press-Loto shall remain
in good standing in each jurisdiction of incorporation and formation
respectively and in each other jurisdiction in which the entity is
qualified to do business and Lender shall have received a certificate,
dated the date of the Advance, signed by the President of Borrower as
to the satisfaction of the foregoing conditions. Lender may, in its
sole discretion, without waiving this condition, consider it
fulfilled, and a representation by Lender to such effect made, if no
written notice to the contrary is received from Borrower prior to the
making of such Advance.
(iii) No Event of Default (as hereinafter defined) shall have
occurred and be continuing and Lender shall have received a
certificate, dated the date of the Advance, signed by the President of
Borrower as to the satisfaction of the foregoing conditions.
(iv) There shall not be any litigation, investigation or
proceeding of or before any court, arbitrator or authority pending or
threatened against Lender, Borrower or Press- Loto seeking, nor any
injunction, writ, temporary restraining order or any order or judgment
of any nature issued by any court, arbitrator or authority directing,
that the transactions provided for herein not be consummated as herein
provided.
(v) Borrower shall have delivered to Lender a purchase order,
executed on behalf of Borrower, with respect to the intended use of
the Advance (the "Purchase Order").
(e) In addition to the provisions of Sections 2(c) and (d), Lender's
obligation to make each Advance after the Initial Advance is subject to the
fulfillment of each of the following conditions immediately private or
contemporaneously with such Advance:
(A) Lender shall have received such historical audited and unaudited
financial statements of Rugby and Press-Loto (including, without limitation, the
Rugby Financial Statements and the Press-Loto Financial Statements) which (i)
shall have been prepared in conformity with generally accepted accounting
principals ("GAAP") consistently applied throughout the period covered thereby,
including, without limitation, with respect to the audited Rugby Financial
Statements and audited Press-Loto Financial Statements, an unqualified report
thereon by certified public accountants and/or Russian equivalents who are
"independent" within the meaning ascribed to such term in Regulation S-X,
promulgated by the SEC, to the effect that the financial statements have been
prepared in accordance with GAAP, that such financial statements present fairly
the consolidated financial condition of Borrower and Press-Loto as of the date
thereof and for the fiscal year covered thereby and that the examination of such
accountants in connection with such audited Rugby Financial Statements and
Press-Loto Financial Statements have been made in accordance with generally
accepted auditing standards, and accordingly, includes such tests of the
accounting records and such other auditing procedures as were considered
necessary in the circum stances, and (ii) shall reflect, in the aggregate,
tangible assets of not less than One Thousand United
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States Dollars (USD $1,000) and liabilities of not more than Fifty Thousand
United States Dollars (USD $50,000).
(B) Lender shall have received an opinion from an investment banker
acceptable to it to the effect that the transactions contemplated by the Merger
Agreement are fair, from a financial viewpoint, to the shareholders of the
Lender.
(f) Lender is authorized to make any and all Advances directly to the
vendor indicated on the Purchase Order and all such payments shall be
considered Advances hereunder.
(g) All Advances shall constitute one loan and all Obligations shall
constitute one general obligation secured by Lender's security interest in
all of the Collateral and by all other liens heretofore, now, or at any
time or times hereafter granted by Borrower to Lender in connection with
this Agreement. Borrower agrees that all of the rights of Lender set forth
in this Agreement or the Note shall apply to any modification of or
supplement to this Agreement.
3. Grant of Security Interest; Covenant to Grant Security Interests. In
consideration of Lender's agreement to make Advances hereunder to Borrower
subject to the terms and conditions hereof, and of one or more loans, Advances,
or other financial accommodations at any time made or extended by Lender to
Borrower, or to any person, firm, or corporation whose obligations or
liabilities are guaranteed at any time by Borrower to Lender (collectively, the
"Loan"):
(a) Borrower hereby grants to Lender a valid and binding first
security interest in the Collateral;
(b) with respect to Advances up to One Hundred Thousand Dollars,
Credomarka shall pledge a number of Press-Loto shares of capital Credomarka
owns equal to fifty percent (50%) of the issued and outstanding Press-Loto
shares of capital pursuant to the Credomarka Pledge Agreement;
(c) with respect to Advances in excess of One Hundred Thousand
Dollars, Borrower shall pledge all of the Press-Loto shares of capital
Borrower owns pursuant to the Borrower Pledge Agreement;
(d) Xxxxxxxxx shall pledge all of the Borrower's outstanding Common
Shares pursuant to the Xxxxxxxxx Pledge Agreement; and
(e) with respect to Advances in excess of One Hundred Thousand
Dollars, Borrower shall make a collateral assignment of the Lottery
Contracts pursuant to the Collateral Assignment Agreement, as security for
the payment, performance, and observance by Borrower of the Obligations.
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4. Representations and Warranties. In addition to the representations
and warranties made by Borrower to Lender in the Merger Agreement, which
representations and warranties are incorporated herein by reference and made a
part hereof as if expressly stated herein and made as of the date hereof,
Borrower further represents and warrants to Lender as follows:
(a) Authority. The execution and delivery by Borrower of this
Agreement, the Note and each of the other documents relating to the Loan,
including, without limitation, the Collateral Assignments and the Pledge
Agreement (collectively with the Note, the "Loan Documents") and the Other
Financing Documents and the performance of Borrower's obligations hereunder
and thereunder: (i) are within Borrower's corporate powers; (ii) are duly
authorized by Borrower's Board of Directors and stockholders, if required;
(iii) are not in contravention of the terms of Borrower's Certificate of
Incorporation or By-laws, or of any indenture, agreement or undertaking to
which Borrower is a party or by which Borrower or any of its assets or
property is bound or affected; (iv) do not, as of the date of execution
hereof, require the consent, approval or authorization of or declaration,
registration or filing with any governmental body or any nongovern mental
person or entity (except for the filing of the UCC-1 and other financing
statements contemplated hereby); (v) do not contravene any contractual or
governmental restriction binding upon Borrower; and (vi) will not, except
as contemplated herein, result in the imposition of any liens, security
interests or encumbrances of any nature whatsoever (collectively, "Liens")
upon any assets or property of Borrower under any existing indenture,
mortgage, deed of trust, loan or credit agreement or other agreement or
instrument to which Borrower is a party or by which it or any of its assets
or property may be bound or affected.
(b) Binding Effect. This Agreement, the Loan Documents and the Other
Financing Documents have been duly executed and delivered on behalf of
Borrower and constitute the legal, valid and binding obligations of
Borrower enforceable against Borrower in accordance with their terms.
(c) Full Disclosure. No representation or warranty in this Agreement,
the Note or in any other Loan Document or Other Financing Document
contains, or will contain, any untrue statement of any material fact as of
the date when made or omits, or will omit, to state any material fact as of
the date when made or omits, or will omit, to state any material fact
necessary to make the statements herein or therein not misleading as of the
date when made; there is no fact known to Borrower that has not been
disclosed to Lender in writing which materially and adversely affects or
would materially and adversely affect the business, financial condition or
operations of Borrower or Press-Loto.
(d) Liens and Encumbrances. Except as set forth on Schedule 4(d) and
other than the security interests granted or to be granted to Lender
hereunder and under the Loan Documents, Borrower owns its property and
assets free and clear of all Liens. No financing statement covering any of
the Collateral is on file in any public office.
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(e) Solvency. Except as set forth in Schedule 4(e) attached hereto,
after giving effect to the transactions contemplated hereby and by the
other Loan Documents and the Other Financing Documents, Borrower and
Press-Loto taken as a whole currently have sufficient capital to carry on
the business in which they are now engaged, are solvent and are able to pay
their current debts as they mature.
5. Affirmative Covenants. From and after the date hereof and continuing
so long as any of the Obligations shall remain unpaid, unless Lender shall
otherwise consent in writing:
(a) Punctual Payment. Borrower will duly and punctually pay any and
all amounts payable under the Note and the other Loan Documents, all in
accordance with the terms thereof. Borrower will comply with all of the
covenants, agreements and other conditions contained in this Agreement, the
Note and the other Loan Documents.
(b) Corporate / Company Existence. Borrower will maintain its
corporate existence and the limited liability company existence of
Press-Loto and the qualification and good standing of Borrower and
Press-Loto in all jurisdictions in which such qualification and good
standing are necessary in order for Borrower and Press-Loto to conduct
their businesses and own their properties.
(c) Principal Office. Borrower will at all times maintain its
principal offices at the address set forth herein below subject to the
provisions of Section 6(e) hereof.
(d) Compliance with Laws and Regulations. Borrower will comply, and
cause Press-Loto to comply, in all material respects with all laws,
statutes, rules, regulations, ordinances, judgments, writs, decrees, and
orders of any governmental body applicable to Borrower or Press- Loto and
Borrower will not fail to obtain (and will not allow to lapse) or permit
Press-Loto to fail to obtain (or allow to lapse) any license, permit or
other authorization which may be or become necessary in order for Borrower
and Press-Loto to conduct their businesses, own their properties, and
perform their Obligations under this Agreement, the Note or the other Loan
Documents.
(e) Tax Obligations.
(i) Borrower shall, and shall cause Press-Loto to, file all tax
and information returns and reports required by all taxing authorities
(all prepared in accordance with applicable law), pay or cause to be
paid all license fees, bonding premiums and related taxes and charges,
and pay or cause to be paid all income, employment, real and personal
property taxes and other governmental taxes and charges assessed
against Borrower or Press-Loto, or payable by Borrower or Press-Loto,
at such times and in such manner as to prevent any penalty or interest
from accruing or any Lien or charge from attaching to any assets or
property of Borrower or Press-Loto; provided that Borrower or
Press-Loto shall have the right to contest any such fees, premiums,
taxes and charges prior to the payment thereof for so long as such
contest is pursued diligently and in good faith by appropriate
proceedings.
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(ii) Borrower shall notify Lender promptly (and in no event later
than fifteen (15) days) after becoming aware of the intent of the
Internal Revenue Service or other taxing authority (the "Taxing
Authority") to assert a deficiency with respect to it or Press-Loto,
and shall promptly (and in no event later than fifteen (15) days
following receipt of any notice of deficiency) inform Lender of such
proposed deficiency and deliver to Lender a copy of any notices of
deficiency received from the Taxing Authority. If Lender so requests
and if there is a reasonable legal basis therefor, Borrower shall, or
shall cause Press-Loto to, take all reasonable actions necessary to
contest such claimed deficiency and shall appoint outside tax counsel
reasonably acceptable to Lender to contest such claims of deficiency
and shall direct such counsel to consult with and to provide Lender
with periodic status reports and assessments of the legal merits of
the contest. At Lender's request, such contest shall continue through
the appropriate administrative and court procedures including appeals
therefrom until such outside tax counsel informs Lender that further
contest would be inadvisable taking into account all factors
(including any settlement or compromise proposed by the Taxing
Authority).
(f) Maintenance of Properties. Borrower will keep, and cause
Press-Loto to keep, their respective properties which are materially useful
or necessary in its business in good working order and condition and
maintain the insurance thereon required by this Agreement.
(g) Maintenance of Records. Borrower will keep, and will cause
Press-Loto to keep, at all times proper books of record and account in
which true, correct and complete (in all material respects) entries will be
made of all dealings or transactions of or in relation to the business and
affairs of Borrower or Press-Loto, in accordance with generally accepted
accounting principles consistently applied throughout the period involved
(except for such changes as are disclosed in such financial statements or
in the notes thereto and concurred in by the independent certified public
accountants), and Borrower will, and will cause Press-Loto to, provide
reasonable protection against loss or damage to such books of record and
account.
(h) Litigation and Other Proceedings. Borrower will notify Lender
promptly after Borrower knows of (i) the institution or threat of any
action, suit, proceeding, governmental investigation or arbitration against
or affecting Borrower or Press-Loto or any of the material assets or
property of any of them, or (ii) any material development in any such
action, suit, proceeding, governmental investigation or arbitration.
(i) Labor Relations. Borrower will notify Lender promptly upon
learning of any labor dispute to which Borrower or Press-Loto may be a
party and which involves any group of employees of Borrower or Press-Loto.
(j) Insurance. Borrower will, and will cause Press-Loto (to the extent
available in the Russian Federation) to, carry and maintain in full force
and effect at all times with financially sound and reputable insurers (or,
as to workers' compensation or similar insurance, in an insurance fund or
by self-insurance authorized by the jurisdiction in which its operations
are carried on):
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(i) all worker's compensation or similar insurance as may be
required under the laws of any jurisdiction;
(ii) public liability insurance against claims for personal
injury, death or property damage suffered upon, in or about any
premises owned or occupied by it or occurring as a result of the
ownership, maintenance or operation by it of any automobile, truck or
other vehicle or as a result of any services rendered by it;
(iii) insurance against loss or damage by fire, theft, pilferage,
explosion, spoilage or other casualty, with a replacement value and
agreed amount endorsement; and
(iv) insurance against such other risks as are usually insured
against by persons of established reputation engaged in the same or
similar businesses and similarly situated or as may be reasonably
required by Lender, including, without limitation, political risk
insurance.
The insurance specified in the foregoing clauses (ii), (iii) and (iv)
shall be maintained with respect to Borrower and the Collateral in
such form and in such amounts as Lender may from time to time
reasonably require, including provisions (A) requiring that coverage
evidenced thereby shall not be terminated or materially modified
without thirty (30) days' prior written notice to Lender, and (B)
requiring that no claims shall be paid thereunder without ten (10)
days' advance written notice to Lender. Additionally, all such
insurance shall be in the name of and with loss or damage payable to
Borrower and to Lender, as their interests may appear. Borrower shall
deliver to Lender the original or duplicate policies, or certificates
or other evidence reasonably satisfactory to Lender, of compliance
with the foregoing insurance provisions. Borrower assumes all
responsibility and liability arising from the use of the Collateral,
either for negligence or otherwise, by whomsoever used, employed or
operated, other than Lender and will defend, indemnify and hold Lender
harmless from and against any and all claim, loss or damage to persons
or property caused by the Collateral or by its use and operation,
except any such claim, loss or damage directly caused by the gross
negligence or willful misconduct of Lender or its agents, servants or
employees.
(k) Perfection of Security Interest.
(i) Borrower will, from time to time, do whatever Lender may
reasonably request by way of obtaining, executing, delivering and/or
filing financing statements, and other notices and amendments and
renewals thereof, and will take any and all steps and observe such
formalities as Lender may request, in order to create, perfect and
maintain valid continuing Liens upon the Collateral as contemplated by
this Agreement (the "Security Interest"). All charges, expenses and
fees that may be incurred by Lender in connection with any of the
foregoing (including, without limitation, reasonable attorneys' fees
and disbursements), and any local taxes relating thereto, shall be
added to the Obligations or, at Lender's option, shall be paid to
Lender immediately upon demand therefor.
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(ii) Borrower hereby irrevocably appoints Lender as its lawful
attorney and agent, with full power of substitution, to execute and
deliver, on behalf of and in the name of Borrower, such financing
statements, assignments, notices, pledges and other documents and
agreements, and to take such other actions as Lender may deem
necessary for the purpose of the creation, perfection, maintenance or
continuation of the Security Interest, under any applicable law, and
Lender is hereby authorized to file on behalf of and in the name of
Borrower, at Borrower's expense, such financing statements,
assignments, notices, pledges and other documents and agreements in
any appropriate governmental office. The right is expressly granted to
Lender, in its discretion, in those jurisdictions where the same is
permitted, to file one or more financing statements (including
amendments and renewals thereof) under the UCC or similar law signed
only by the Lender, naming Borrower as debtor and naming Lender as
secured party and indicating therein the types, or describing the
items, of the Collateral.
(l) Use of Loan Proceeds. Except with written consent of Lender,
Borrower shall use the proceeds of the Loan, as drawn down from time to
time, strictly in accordance with the Budget.
(m) Further Assurances. Borrower shall at any time or from time to
time execute and deliver such further instruments and documents and take
such further action as may reasonably be requested by Lender to carry out
to Lender's reasonable satisfaction the transactions contemplated by this
Agreement, the Note, any of the other Loan Documents and the Other
Financing Documents.
(n) Indemnification. Borrower shall indemnify, defend and hold
harmless Lender and each holder of the Note and in each case its officers,
directors, agents and employees from and against all losses, costs, fines,
liabilities, judgments, actions, penalties, damages, injuries, claims,
demands, disbursements and expenses, including reasonable attorneys' fees
and costs, arising out of (i) claims by or on behalf of any brokers,
finders or investment bankers made with respect to the transactions
contemplated by this Agreement; (ii) the execution or consummation of this
Agreement, the Note, the other Loan Documents or the Other Financing
Documents; (iii) the operation or maintenance of any of the Collateral; or
(iv) any aspect of, or any transaction contemplated by or referred to in,
or any matter related to, this Agreement, in each case whether or not
Lender or such holder is a party thereto, except to the extent such losses,
cost, fines, liabilities, judgments, actions, penalties, damages, injuries,
claims, demands, disbursements and expenses are directly caused by the
gross negligence or willful misconduct of Lender or such holder or their
respective agents, servants or employees. Borrower shall assume the
settlement and defense of any suit or other legal proceeding brought to
enforce any of the foregoing (with counsel reasonably satisfactory to
Lender), and shall pay all judgments entered in any such suit or legal
proceeding. Borrower shall not compromise or settle any such suit or other
legal proceeding without the prior written consent of Lender, which consent
shall not be unreasonably withheld or unduly delayed. The indemnities and
assumptions of liabilities and obligations herein provided for shall
continue in full force and effect notwithstanding the termination of this
Agreement.
11
(o) Press-Loto Good Standing and Charter of Company with Limited
Liability. To the extent Borrower has not provided Lender with a
certificate of good standing for, or certified Charter of Company with
Limited Liability of, Press-Loto prior to or contemporaneously with the
Initial Advance as provided in Section 2(c)(1), Borrower shall deliver
Lender a certificate of good standing for, and certified Charter of Company
with Limited Liability of, Press-Loto, from the appropriate authority in
the jurisdiction of its formation, within fifteen (15) days following the
date of the Initial Advance.
(p) Assignment of Press-Loto Shares of Capital. Credomarka shall
assign to Rugby all of its right, title and interest in, and to, that
number of shares of capital of Press-Loto it owns, equal to fifty (50%)
percent of the issued and outstanding shares of capital of Press-Loto,
prior to Lender making an Advance to Borrower in excess of One Hundred
Thousand Dollars ($100,000).
6. Negative Covenants. From and after the date hereof and continuing so
long as any of the Obligations shall remain unpaid, unless Lender shall
otherwise consent in writing:
(a) Conduct of Business. Borrower will not cease to continuously
engage in its business as currently operated. Borrower will not engage in,
directly or indirectly, or permit Press- Loto to engage, directly or
indirectly, in any other line of business without the prior written consent
of Lender. Borrower shall not change its name, identity or structure or use
or permit Press-Loto to operate its business under any other name without
the prior written consent of Lender.
(b) Transaction with Affiliates; Fees. Except for the transactions
contemplated hereby and by the other Loan Documents and the Other Financing
Documents, Borrower will not enter into, directly or indirectly, or permit
Press-Loto to enter into, directly or indirectly, any transaction with any
officer, director, employee, shareholder or affiliate of Borrower, except
transactions (including without limitation payment of salaries to employees
who are also shareholders) with officers, directors or employees made in
the ordinary course of business and upon fair and reasonable terms which
are fully disclosed to Lender in advance; or pay, or permit Press- Loto to
pay, fees (including, without limitation, management fees) to any officer,
director, employee, partner, shareholder or affiliate, other than in the
ordinary course of business.
(c) Liens. Borrower will not create or suffer to exist, or permit
Press-Loto to, create or suffer to exist any Lien upon or with respect to
their respective assets or properties, whether now owned or hereafter
acquired, or assign any right to receive income, in each case to secure any
indebtedness of any person, except Liens in favor of Lender.
(d) Dividends and Stock Redemptions. Borrower will not declare or pay,
directly or indirectly, or permit Press-Loto directly or indirectly, to
declare or pay, any dividends (other than dividends payable from Press-Loto
to Borrower as its parent), or purchase or otherwise acquire for value any
of its capital stock now or hereafter outstanding; or make any distribution
of assets to its stockholders or permit Press-Loto to purchase or otherwise
acquire for value any of Press-Loto capital stock now or hereafter
outstanding.
12
(e) Change of Location. Borrower will not at any time (i) change the
location of its chief executive offices, or (ii) change the locations where
its records, books of account or inventory are kept without, in each case,
giving at least ten (10) days' prior written notice to Lender specifying
the new location of such office or location.
(f) Amendments. Borrower will not request, permit or consent to any
amendment to its or Press-Loto's Certificate of Incorporation, By-Laws or
other organizational documents, which amendment could have an adverse
effect on Lender in its capacity as lender or secured party under this
Agreement.
(g) Environmental Matters. Neither Borrower nor Press-Loto shall for
itself, nor shall it knowingly permit any other party to, discharge any
toxic or hazardous waste or material in or on the property used in any of
its business, other than in compliance with applicable environmental laws
and regulations, or otherwise violate or permit a violation of any
applicable law or regulation with respect to environmental matters. If and
to the extent required by applicable environmental laws or regulations,
Borrower and Press-Loto shall remove and otherwise mitigate the effects of
any such waste, material or violation and shall protect the value of the
Collateral. In the event Borrower or Press-Loto fails to do so in
accordance with applicable environmental laws or regulations, upon not less
than thirty (30) days (or lesser period if determined reasonably necessary
by Lender) written notice to Borrower or Press-Loto, Lender may remove or
mitigate the effects of such waste, material or violation and any amounts
paid by Lender to remove or mitigate the effects of such waste material or
violation shall be part of the Obligations. Nothing contained in the
immediately preceding sentence shall be construed to imply that Lender has
any responsibility for any obligation to remove or otherwise mitigate the
effects of such waste, material or violations.
(h) Other Actions. During the Term of this Agreement, Borrower will
not, and will not cause or permit Press-Loto to, take any action outside
the usual and ordinary course of business and consistent with past
practice, except in strict conformity with the Budget. Without limiting the
generality of the foregoing, Borrower will not, and will not cause or
permit Press-Loto to, make any investments in or loans to, or otherwise
acquire any of the capital stock of, or any equity or proprietary interest
in, any other Person.
7. Financial Reporting. From and after the date hereof and continuing
so long as any of the Obligations shall remain unpaid, Borrower will furnish to
Lender:
(a) Quarterly Statements. As soon as available and in any event within
forty-five (45) days after the end of each fiscal quarter, a copy of the
consolidated balance sheet and statements of income, stockholders equity
and cash flow for such quarter for Borrower and Press- Loto, in such form
as may be reasonably acceptable to Lender (the "Quarterly Financials"). The
foregoing shall be accompanied by a certificate signed by Borrower's chief
financial officer stating that no Event of Default has occurred or then
exists. By its delivery of the Quarterly Financials to Lender, Borrower
shall be deemed to represent and warrant that the information set forth
therein
13
fairly present the liabilities and financial condition of Borrower and
Press-Loto as of the date thereof and the results of their operations for
the particular fiscal quarter, subject to opinion and normal year and
adjustments consistent with past practice.
(b) Annual Statements. As soon as available and in any event within
One Hundred and Twenty (120) days after the end of each fiscal year of
Borrower, a copy of the annual audited consolidated balance sheet and
statements of income, stockholders equity and cash flow for such year for
Borrower and Press-Loto (the "Annual Financials"), containing financial
statements for such year certified in a manner reasonably acceptable to
Lender by an independent certified public accountant reasonably acceptable
to Lender and accompanied by an opinion thereon of such independent
certified public accountant or Russian equivalent to the effect that the
financial statements have been prepared in accordance with GAAP, that such
financial statements present fairly the consolidated financial condition of
Borrower and Press-Loto as of the date of the Annual Financials and for the
fiscal year covered thereby and that the examination of such accountants in
connection with such Annual Financials has been made in accordance with
generally accepted auditing standards, and accordingly, includes such tests
of the accounting records and such other auditing procedures as were
considered necessary in the circumstances and accompanied by a certificate
signed by Borrower's chief financial officer stating that no Event of
Default has occurred or then exists. By its delivery of the Annual
Financials to Lender, Borrower shall be deemed to represent and warrant
that the Annual Financials fairly present the assets, liabilities and
financial condition of Borrower and Press-Loto as of the date thereof and
the results of their operations for the particular fiscal year and that
there are no omissions from the Annual Financials or other facts or
circumstances not reflected in the Annual Financials which are material in
accordance with GAAP. The Annual Financials shall be accompanied by a
statement from the independent certified public accountants or Russian
equivalent that, in making the examination necessary for their report on
the Annual Financials for that fiscal year of Borrower they have obtained
no knowledge of the occurrence or existence of any Event of Default.
(c) Notice of Default. Promptly after becoming aware of (i) the
existence of (A) any Event of Default hereunder on the part of Borrower,
(B) any default by Borrower in the fulfill ment of any of the terms,
covenants, provisions or conditions of the Merger Agreement, this Agreement
or any of the Loan Documents or (C) any default under any material note,
indenture, loan agreement, mortgage, lease, deed or similar agreement or
material contract to which Borrower or Press-Loto is a party or by which it
or its assets or property may be bound or affected; or (ii) any
indebtedness of Borrower or Press-Loto being declared due and payable
before its express maturity, or any holder of such indebtedness having the
right to declare such indebtedness due and payable before its express
maturity, because of the occurrence of any default (or any event which,
with notice and/or lapse of time, shall constitute any such default) under
such indebtedness; or (iii) any litigation, suit or administrative
proceeding affecting Borrower or Press-Loto whether or not the claim is
considered by Borrower to be covered by insurance, which litigation, suit
or administrative proceeding has an amount in controversy in excess of
$50,000 in each instance or $250,000 in the aggregate, then in each case a
certificate of an authorized financial officer of Borrower describing
14
the nature and status of such matters and what action Borrower is taking or
proposes to take with respect thereto.
(d) Notice of Material Adverse Change. Promptly after becoming aware
of any material adverse change in the business, assets, operations or
conditions, financial or otherwise, of Borrower or Press-Loto, a
certificate of the chief financial officer of Borrower setting forth the
details of such material adverse change and stating what action Borrower or
Press-Loto has taken or proposes to take with respect thereto.
(e) Other Information. Such other information respecting the condition
or operations, financial or otherwise, of Borrower or Press-Loto, insurance
coverage and other matters as Lender may from time to time reasonably
request; provided that from and after the occurrence of an Event of
Default, all reports required to be provided to Lender may, at Lender's
discretion, be required to be provided with more frequency and within
shorter time periods than otherwise provided.
8. Inspection. From and after the date hereof and continuing so long as
any of the Obligations shall remain unpaid, Borrower will permit Lender, or any
person designated by Lender in writing, from time to time hereafter, to call at
Borrower's or Press-Loto's place or places of business (or any other place where
the Collateral or any information relating thereto is kept or located) during
all business hours upon not less than three (3) business days' prior notice,
and, without hindrance or delay (provided that Lender or such designees shall
not unreasonably disrupt the day-to-day operations of Borrower or Press-Loto),
(i) to inspect, audit, check and make copies of and extracts from Borrower's or
Press-Loto's books, records, journals, orders, receipts and any correspondence
and other data relating to Borrower's business or to any transaction between the
parties hereto, (ii) to make such verification concerning the Collateral as
Lender may consider reasonable under the circumstances, and (iii) to discuss the
affairs, finances and business of Borrower or Press-Loto with any of their
respective officers, directors or outside auditors.
9. Defaults. The occurrence of any one or more of the following events
shall constitute an event of default ("Event of Default") by Borrower under this
Agreement:
(a) if Borrower shall default in the timely payment of any sum payable
by it with respect to, or in the performance of any of the terms and
conditions of, any of the Obligations (or of any instruments evidencing the
same, including, without limitation, the Note) or of any terms or
conditions of the Merger Agreement or this Agreement and, with regard to a
default other than relating to the timely payment of any sum, such default
shall continue for a period of thirty (30) days after notice thereof;
(b) if any warranty, representation or statement of fact made herein
or furnished to Lender at any time by or on behalf of Borrower, Credomarka,
or Xxxxxxxxx (collectively, the "Obligors") proves to have been false or
misleading in any material respect when made or furnished;
15
(c) if either of the Obligors fails to perform or observe any
covenant, term, condition and/or obligation contained in, or breaches any
provision of, the Merger Agreement, this Agreement or any instrument,
document or agreement delivered by such Obligor to Lender, including,
without limitation, the Loan Documents and the Other Financing Documents,
and, with regard to a default other than relating to the timely payment of
any sum, such default shall continue unremedied for a period of thirty (30)
days following receipt of notice thereof;
(d) if there shall be a material default under any instrument,
document or agreement delivered by either of the Obligors, to Lender,
including, without limitation, the Loan Documents and Other Financing
Documents;
(e) in the event of loss, theft, substantial damage to or destruction
of any material part of the Collateral, or the making of any levy on,
seizure or attachment of, any material part of the Collateral which is not
covered by insurance and/or replaced within thirty (30) days with
substitute Collateral (with a value equal to or greater than the Collateral
being replaced) satisfactory to secure Lender, in its reasonable
discretion, as to the Obligations;
(f) if either of the Obligors shall execute or file a certificate or
other instrument evidencing the legal change of name of such Obligor
without furnishing Lender at least ten (10) days' prior written notice
thereof;
(g) in the event any of the Obligors shall be dissolved or shall die;
(h) if Borrower or Credomarka shall fail to maintain its corporate
existence in good standing;
(i) if there shall be filed by or against any of the Obligors any
petition for any relief under the bankruptcy laws of the United States as
now or hereafter in effect or under any insolvency, readjustment of debt,
dissolution or liquidation law or statute now or hereafter in effect (and
whether any such action or proceeding shall be at law, in equity or under
any bankruptcy, reorganization, arrangement, insolvency, readjustment of
debt, receivership, liquidation or dissolution law or statute) provided,
however, with respect to an involuntary petition, that such petition is not
dismissed within ninety (90) days;
(j) if any of the Obligors shall admit in writing its inability to pay
its debts as they mature or make a general assignment for the benefit of
creditors;
(k) if any of the Obligors shall become insolvent or make or send
notice of an intended bulk transfer, or fail, after demand, to furnish any
financial information or permit the inspection of books or records of
account;
16
(l) if any of the Obligors shall voluntarily or otherwise suspend or
interrupt the transaction of its usual business for ten (10) business days
other than by reason of strikes or force majeure; or
(m) if any petition or application to any court or tribunal, at law or
in equity, be filed by or against any of the Obligors for the appointment
of any receiver or any trustee for any of the Obligors.
11. Remedies on Default. Upon the occurrence of any one or more of the
aforemen tioned Events of Default or at any time thereafter, Lender may, without
notice to or demand upon Borrower, declare any or all of the Obligations
immediately due and payable and Lender shall have the following rights and
remedies in addition to all rights and remedies of a secured party under the
Uniform Commercial Code or other applicable statute or rule, in any jurisdiction
in which enforcement is sought, all such rights and remedies being cumulative
and not exclusive:
(a) Collateral.
(i) Lender may at any time and from time to time, with or (if and
to the extent permitted by applicable law) without process of law and
with or (if and to the extent permitted by applicable law) without the
aid and assistance of others, enter upon any premises in which the
Collateral or any part thereof may be located and, without resistance
or interference by Borrower, take possession of the Collateral; and/or
dispose of all or any part of the Collateral located on any premises
of Borrower; and/or require Borrower to assemble and make available to
Lender all or any part of the Collateral at any place and time
designated by Lender; and/or remove all or any part of the Collateral
from any premises on which any part thereof may be located for the
purpose of effecting preservation or sale or other disposition
thereof; and/or sell, resell, lease, assign and deliver, or otherwise
dispose of, the Collateral or any part thereof in its existing
condition on commercially reasonable terms or following any
commercially reasonable preparation or processing, at public or
private proceedings, in one or more parcels at the same or different
times with or without having the Collateral at the place of sale or
other disposition, for cash, upon credit or for future delivery, and
in connection therewith Lender may grant options, at such place or
places and time or times and to such persons, firms or corporations on
commercially reasonable terms as Lender deems best, and without demand
for performance, and/or liquidate or dispose of the Collateral or any
part thereof in any other commercially reasonable manner. Provided
notice has been given in accordance herewith, failure of Borrower to
contest on the grounds of commercial reasonability shall be deemed a
waiver of said defense.
(ii) If any of the Collateral is sold by Lender upon credit or
for future delivery, Lender shall not be liable for the failure of the
purchaser to purchase or pay for the same and, in the event of any
such failure, Lender may resell such Collateral. Borrower hereby
waives all equity and right of redemption. Lender may buy any part or
all of the Collateral at any public sale and if any part of the
Collateral is of a type which is the subject of widely distributed
standard price quotations, Lender may buy at a private sale, all free
from any equity or right of redemption which is hereby waived and
released by Borrower, and Lender may make payment therefor (by
endorsement without
17
recourse) in notes of Borrower to the order of Lender in lieu of cash
to the amount then due thereon which Borrower hereby agrees to accept.
(iii) Lender may apply the cash proceeds actually received from
any sale or other disposition to the reasonable expenses of retaking,
holding, preparing for sale, selling, leasing and the like, to all
reasonable legal fees and expenses, court costs, collection charges,
travel and other expenses which may be incurred by Lender in
attempting to collect the Obligations or to enforce this Agreement and
realize upon the Collateral, or in the prosecution or defense of any
action or proceeding related to the subject matter of this Agreement;
and then to the Obligations in such order and as to principal and/or
interest due under the Note as Lender may in its sole reasonable
discretion determine; and Borrower shall at all times be and remain
liable and, after crediting the net proceeds of sale or other
disposition as aforesaid, will pay Lender on demand any deficiency
remaining, including interest thereon and the balance of any expenses
at any time unpaid, with any surplus to be paid to Borrower, subject
to any duty of Lender to the holder of any subordinate security
interest in the Collateral known to Lender but only to the extent
required by law.
(b) Proceeds. Any of the proceeds of the Collateral received by
Borrower shall not be commingled with other property of Borrower, but shall
be segregated, held by Borrower in trust for Lender as the exclusive
property of Lender, and Borrower will immediately deliver to Lender the
identical checks, moneys or other proceeds of Collateral received, and
Lender shall have the right to endorse the name of Borrower on any and all
checks, or other forms of remittance received, where such endorsement is
required to effect collection. Borrower hereby designates, constitutes and
appoints Lender and any designee or agent of Lender as attorney-in-fact of
Borrower, irrevocably and with power of substitution, to endorse the name
of Borrower on any notes, acceptances, checks, drafts, money orders or
other evidences of payment or proceeds of the Collateral that may come into
Lender's possession; to sign the name of Borrower on any invoices,
documents, drafts against account debtors of Borrower, assignments,
requests for verification of accounts and notices to debtors of Borrower;
to execute any endorsements, assignments, or other instruments of
conveyance or transfer; and to do all other acts and things necessary and
advisable in the sole discretion of Lender to carry out and enforce this
Agreement. Said attorney or designee shall not be liable for any acts or
commission or omission nor for any error of judgment or mistake of fact or
law. This power of attorney is coupled with an interest and irrevocable
while any of the Obligations shall remain unpaid.
12. Liability Disclaimer. Except for reasonable care of Collateral in
its possession, under no circumstances whatsoever shall Lender be deemed to
assume any responsibility for, or obligation or duty with respect to, any part
or all of the Collateral, of any nature or kind whatsoever, or any matter or
proceeding arising out of or relating thereto. Lender shall not be required to
take any action of any kind to collect or protect any interest in the
Collateral, including, but not limited to, any action necessary to preserve its
or Borrower's rights against prior parties to any of the Collateral. Lender
shall not be liable or responsible in any way for the safekeeping, care or
custody of any of the Collateral (except for reasonable care of Collateral in
its possession), or for any loss or damage thereto, or for any diminution in the
value thereof, or for any act or default of any agent
18
or bailee of Lender or Borrower, or of any carrier, forwarding agency or other
person whomsoever, or for the collection of any proceeds, but the same shall be
at Borrower's sole risk at all times. Borrower hereby releases Lender from any
claims, causes of action and demands at any time arising out of or with respect
to this Agreement or the Obligations, and any actions taken or omitted to be
taken by Lender with respect thereto, except for such claims, causes of action,
demands and/or actions directly caused by Lender's gross negligence or willful
misconduct, and Borrower agrees to defend and hold Lender harmless from and with
respect to any and all such claims, causes of action and demands, except for
such claims, causes of action, demands and/or actions directly caused by
Lender's gross negligence or willful misconduct. Lender's prior recourse to any
part or all of the Collateral shall not constitute a condition of any demand for
payment of the Obligations or of any suit or other proceeding for the collection
of the Obligations.
13. Nonwaiver. No failure or delay on the part of Lender in exercising
any of its rights and remedies hereunder or otherwise shall constitute a waiver
thereof, and no single or partial waiver by Lender of any default or other right
or remedy which it may have shall operate as a waiver of any other default,
right or remedy or of the same default, right or remedy on a future occasion.
14. Waivers. Borrower hereby waives presentment, notice of dishonor and
protest of all instruments included in or evidencing any of the Obligations or
the Collateral and any and all other notices and demands whatsoever (except as
expressly provided herein) whether or not relating to such instruments. In the
event of any litigation at any time arising with respect to any matter connected
with this Agreement or the Obligations, Borrower hereby waives the right to a
trial by jury and Borrower hereby waives any and all rights of setoff and rights
to interpose counterclaims of any nature except for counterclaims which are
compulsory or which would be lost for failure to be raised.
15. Binding Effect. This Agreement and all Obligations of Borrower
hereunder shall be binding upon the successors or assigns of Borrower, and
shall, together with the rights and remedies of Lender hereunder, inure to the
benefit of Lender and its successors, endorsees and assigns.
16. Application of Payments. In addition to its other rights herein,
Lender shall have the continuing and exclusive right to apply or reverse and
reapply any and all payments to any portion of the Obligations. To the extent
that Borrower makes a payment or payments to Lender or Lender receives any
payment or proceeds of any security for such Obligations for Borrower's benefit,
which payment(s) or proceeds or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside and/or required to be
repaid to a trustee, receiver or any other party under any bankruptcy law, state
or federal law, common law or equitable cause, then, to the extent of such
payment or proceeds received, the Obligations or part thereof intended to be
satisfied shall be revived and continue in full force and effect, as if such
payment or proceeds had not been received by Lender.
17. Consent to Jurisdiction. As a further inducement to Lender to enter
into this Agreement and to make the Advances and in consideration thereof,
Borrower covenants and agrees
19
that (i) any state or federal court within the State of New York shall have
personal jurisdiction over Borrower, and (ii) service of any summons and
complaint or other process in any such action or proceeding may be made by
registered or certified mail directed to Borrower at Borrower's address set
forth below, and service so made shall be deemed to be completed upon the
earlier of actual receipt or three (3) days after the same shall have been
posted as aforesaid, Borrower hereby waiving personal service thereof. Nothing
in this paragraph shall affect the right of Lender to serve legal process in any
other manner permitted by law or affect the right of Lender to bring any action
or proceeding against Borrower or its property in the courts of any other
jurisdiction. Borrower and Lender agree that any claim or suit between or among
the parties hereto involving this Agreement, any of the other Loan Documents or
any transactions contemplated hereby or thereby shall be brought in and decided
by the state or federal courts located in Nassau County, New York.
18. Entire Agreement. This Agreement, including the schedules attached
hereto, which are a part hereof, constitutes the entire agreement of the parties
with respect to the subject matter hereof and there are no representations,
warranties or commitments except as set forth herein. This Agreement supersedes
all prior agreements, understandings, negotiations and discussions, whether
written or oral, of the parties hereto relating to the matters set forth in this
Agreement. The representations, warranties, covenants and agreements set forth
in this Agreement and in the financial statements and schedules delivered
pursuant hereto constitute all the representations, warranties, covenants and
agreements of the parties and upon which the parties have relied, shall not be
deemed waived or otherwise affected by any investigation made by any party
hereto and, except as may be specifically provided herein, no change,
modification, amendment, addition or termination of this Agreement or any part
thereof shall be valid unless in writing and signed by or on behalf of the party
to be charged therewith.
19. Notices. Any and all notices or other communications or deliveries
required or permitted to be given or made pursuant to any of the provisions of
this Agreement shall be in writing and shall be deemed to have been duly given
or made for all purposes when hand delivered or sent by certified or registered
mail, return receipt requested and postage prepaid, overnight mail or courier,
or telecopier as follows:
If to Lender at:
00 Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxx Xxxx 00000
Attention: Chief Executive Officer
Telecopier Number: (000) 000-0000
With a copy to:
Certilman Balin Xxxxx & Xxxxx, LLP
00 Xxxxxxx Xxxxxx
Xxxx Xxxxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxxx, Esq.
20
Telecopier Number: (000) 000-0000
If to Borrower at:
Xxxxxx Xxxxxxxxx
000 Xxxxxxx Xxxx
Xxxxx 00
Xxxxxxx, Xxx Xxxx 00000
Telecopier Number: (000) 000-0000
With a copy to:
Xxxx X. Xxxxxxxx, Esq.
000 Xxxxxxx Xxxxxxxx
Xxxxxxx, Xxx Xxxx 00000
Telecopier Number: (000) 000-0000
and
Xxxx & Xxxxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxx, Esq.
Telecopier Number: (000) 000-0000
or at such other address as any party may specify by notice given to the other
party in accordance with this paragraph 19.
20. Choice of Law; Severability. This Agreement shall be governed by,
and interpreted and construed in accordance with, the laws of the State of New
York applicable to agreements performed wholly within such state. In the event
any clause, section or part of this Agreement shall be held or declared to be
void, illegal or invalid for any reason, all other clauses, sections or parts of
this Agreement which can be effected without such void, illegal or invalid
clause, section or part shall nevertheless continue in full force and effect.
21. Headings. The section headings of this Agreement are for
convenience and reference only and do not in any way modify, interpret or
construe the intent of the parties or affect any of the provisions of this
Agreement.
22. No Third Party Beneficiaries. No person or entity not a party to
this Agreement shall be entitled to the benefits of, or may rely on, or enforce,
this Agreement, the other Loan Documents or the Other Financing Documents.
21
IN WITNESS WHEREOF, the undersigned have executed this
Agreement as of the date first written above.
COMPU-XXXX, INC.
By: /s/ Xxxx Xxxxxxxxxx
--------------------------------------
Xxxx Xxxxxxxxxx, Chairman of the Board
RUGBY NATIONAL CORP.
By: /s/ Xxxxxx Xxxxxxxxx
-------------------------------
Xxxxxx Xxxxxxxxx, President
WITH RESPECT TO SECTION
3(c) ONLY
CREDOMARKA CORP.
By: /s/ Xxxxxx Xxxxxxxxx
------------------------------
Name: Xxxxxx Xxxxxxxxx
Title: President
WITH RESPECT TO SECTION
3(d) ONLY:
/s/ Xxxxxx Xxxxxxxxx
-----------------------------------
XXXXXX XXXXXXXXX
SCHEDULE 4(e)
SOLVENCY
Additional capital of approximately $10,000,000 is estimated to be required in
order for Borrower and Press-Loto to implement their business plan.
