LOAN AND SECURITY AGREEMENT
Loan and Security Agreement made this 6th day of August, 1999, by and
between Entertainment Boulevard Inc., a Nevada corporation (the "Company"),
and Beeston Investment Ltd., a foreign corporation (the "Investor").
W I T N E S S E T H:
WHEREAS, the Company desires to borrow certain amounts from the Investor
and the Investor desires to make a loan (the "Loan") to the Company;
NOW, THEREFORE, in consideration of the mutual promises, representations
and warranties contained herein, the parties hereby agree as follows:
1. LOAN. The Investor hereby lends to the Company the aggregate
principal amount of $250,000. The Loan shall be evidenced by a bridge note
(the "Note") in the form attached hereto as Exhibit A, shall bear interest at
the rate of 10% per annum and shall be due and payable 60 days from the date
of funding, or earlier as provided in the Note. The Note may be converted at
any time by the Investor prior to repayment thereof into shares of Common
Stock of the Company at $2.00 per share and will be entitled to resale
registration rights. In consideration for such Loan, the Company will pay
the Investor and/or its designee a commitment fee consisting of a cash
payment of $15,000 and 75,000 shares (the "Payment Shares") of the Company's
Common Stock to be registered in the name of the Investor or its designee.
2. CONDITIONS TO LOAN. The obligation of the Investor to make the
Loan is subject to the conditions that the following shall have occurred
prior to or concurrently with the Loan:
(a) The Company shall have granted to the Investor a valid
security interest in all its assets pursuant to this agreement dated the date
hereof.
(b) The Company agrees that various UCC statements will have to be
filed after the date hereof to perfect the Investor's security interest in
the Company's assets as set forth in subsection (a). As such, the Company
grants Stroock & Stroock & Xxxxx LLP ("SSL") power of attorney to sign as
debtor on its behalf on the requisite UCC filings. The Company also agrees
it will prepare such filings as needed (such decision to be at the sole
discretion of SSL).
(c) The Company agrees to enter into a Registration Rights
Agreement regarding the Payment Shares and the shares underlying the Note
(upon conversion), which shall be reasonably acceptable to the Investor.
3. COMMON STOCK. In consideration of the Investor making the Loan,
the Company hereby issues to the Investor the Payment Shares to be registered
in a registration statement as defined in the Registration Rights Agreement.
4. GRANT OF SECURITY INTEREST. The Company hereby grants to the
Investor all of the right, title, and interest in and to the Company's
assets, whether now existing or hereafter from time to time acquired,
including: (i) each and every Receivable; (ii) all Contracts, together with
all Contract Rights arising thereunder; (iii) all Inventory; (iv) all
Equipment; (v) all Marks, together with the registrations and right to all
renewals thereof, and the goodwill of the business of the Company symbolized
by the Marks; (vi) all Patents and Copyrights; (vii) all computer programs of
the Company and all intellectual property rights therein and all other
proprietary information of the Company, including, but not limited to, trade
secrets; (viii) all Stock; (ix) the Cash Collateral Account and all monies,
securities, and investments deposited or required to be deposited in the Cash
Collateral Account; (x) all other Goods, General Intangibles, Chattel Paper,
Documents, and
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Instruments; and (xi) all Proceeds and products of any and all of the
foregoing. Until such time as there is an Event of Default, the investor
will not collect any revenues from the collateral described in this Section 4.
5. REPRESENTATIONS OF THE COMPANY. The Company represents and
warrants to the Investor as follows:
5.1 The issuance of the Note and the Payment Shares pursuant to
the provisions of this Agreement has been duly and validly authorized. No
approval or authorization of the shareholders or the directors of the Company
or of any governmental authority or agency which has not been obtained will
be required by the Company for the issuance and sale of the Note or the
Payment Shares, as contemplated by this Agreement. When issued and sold to
the Investor, the Payment Shares will be duly and validly issued, fully paid
and non-assessable, and will be free and clear of any liens or encumbrances
created by the Company.
5.2 The Company has the full corporate power and authority to
enter into this Agreement and to perform all of its obligations hereunder.
The execution, delivery and performance of this Agreement and the Note by the
Company have been duly authorized by all necessary corporate action. This
Agreement and the Note constitute legal, valid and binding obligations of the
Company enforceable in accordance with their respective terms.
5.3 Neither the sale of the Note, the Payment Shares, the
execution and delivery of this Agreement, nor the fulfillment of the terms
set forth in this Agreement and the consummation of the transactions
contemplated by this Agreement, will (i) conflict with or constitute a breach
of, or constitute a default under or an event which, with or without notice
of lapse of time or each, would be a breach of or default under or violation
of the Certificate of Incorporation or By-Laws of the Company or would be a
breach of or default under or violation of
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any agreement, document, lease or other instrument or undertaking by which
the Company is bound or to which any of its properties are subject, would be
a violation of any law, administrative regulation, judgment, order or decree
applicable to the Company, or (ii) subject to the listing approval
requirements of the OTC Stock Market, require the consent which has not been
obtained of any other person or entity under any agreement, lease, document
or other instrument or undertaking by which the Company is bound or to which
any of its properties are subject.
5.4 Subject to the filing of UCC-1 Financing Statements in appropriate
jurisdictions, the security interest in all of the assets of the Company (the
"Assets") granted pursuant to Section 4 hereto constitutes a valid security
interest in the Assets.
6. REPRESENTATIONS OF THE INVESTOR. The Investor understands that the
Payment Shares have not been registered under the Securities Act of 1933 (the
"Securities Act"). The Investor is an accredited investor within the meaning
of Rule 501 of Regulation D promulgated under the Securities Act. The
Investor is acquiring the Payment Shares for his own account and not with a
present view to, or for sale in connection with, any distribution in
violation of the Securities Act. The Investor acknowledges that a
restrictive legend will be placed on the Payment Shares.
7. COVENANTS OF THE COMPANY. The Company covenants with the Investor
as follows:
(a) The proceeds of the Loan will be used for working capital and
general corporate purposes.
(b) At all times while the Note is outstanding, the Company will
reserve and keep available out of its authorized but unissued shares of
Common Stock, solely for the purpose of effecting the conversion of the Note,
the full number of shares of Common Stock deliverable upon conversion of the
Note.
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8. SURVIVAL. All representations, warranties, covenants and
agreements contained in this Agreement or in any document, exhibit, schedule
or certificate delivered in connection herewith shall survive the execution
and delivery of this Agreement and the closing of the Loan and any
investigation at any time made by the Investor or on his behalf.
9. MISCELLANEOUS PROVISIONS.
9.1. This Agreement shall be governed by, and construed and
enforced in accordance with, the internal laws of the State of New York
without giving any effect to principles of conflicts of laws.
9.2. All notices hereunder shall be in writing and shall be
deemed to have been given at the time when mailed by certified mail,
addressed to the address below stated of the party to which notice is given,
or to such changed address as such party may have fixed by notice:
To the Company:
Entertainment Boulevard, Inc.
0000 Xxx Xxx Xxxxxx
Xxxxx 000
Xxxxxx Xxx Xxx, Xxxxxxxxxx 00000
Attn: Xxxxxxx Xxxxx
To the Investor:
Beeston Investment Ltd.
X.X. Xxx 00
Xxxx Xxxxxx
Gretton House
Grand Turks, Caicos
provided, however, that any notice of change of address shall be effective
only upon receipt.
9.3. This Agreement shall be binding upon and inure to the
benefit of the Company, the Investor and the successors and assigns of the
Investor. The Company may not
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assign this Agreement without the prior written consent of the Investor. The
Investor may assign all or any part of his rights and obligations hereunder
to any affiliate of the Investor, without the consent of the Company.
9.4 This Agreement and all exhibits and schedules hereto set
forth the entire understanding of the parties with respect to the
transactions contemplated hereby. This Agreement may be amended, the Company
or the Investor may take any action herein prohibited or omit to take action
herein required to be performed by it or him, and any breach of or compliance
with any covenant, agreement, warranty or representation may be waived, only
if the Company or the Investor has obtained the written consent of the other
party to this Agreement.
9.5 This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, and all of which together shall
constitute one and the same instrument.
9.6 The headings in this Agreement are for reference purposes
only and shall not constitute a part hereof.
9.7 On or prior to December 31, 1999, the Company will reimburse
the Investor for the reasonable attorneys fees and expenses, incurred by the
Investor in connection with the preparation, execution and delivery of this
Agreement, the Note, the Pledge and Security Agreement and the Registration
Rights Agreement. Such fees shall not exceed $[ ] without the consent of
the Company.
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the day and year first above written.
ENTERTAINMENT BOULEVARD, INC.
/s/ Xxxxxxx Xxxxx
--------------------------
By: Xxxxxxx Xxxxx
Title: Chairman of the Board
BEESTON INVESTMENT LTD.
/s/ [Illegible Signature]
--------------------------
By:
Title:
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EXHIBIT A
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SECURED BRIDGE NOTE
$250,000 August__, 1999
FOR VALUE RECEIVED, Entertainment Boulevard, Inc. (the "Maker"), hereby
promises to pay to the order of Beeston Investment Ltd. (the "Payee"), at
X.X. Xxx 00, Xxxx Xxxxxx, Xxxxxxx House, Grand Turks, Caicos, or at such
other place as the Payee may designate in writing, in lawful money of the
United States of America, the principal sum of two hundred fifty thousand
dollars ($250,000) together with interest from the date hereof at the rate of
10% per annum, computed on the basis of a 360-day year of twelve 30-day
months. The principal of this Note shall be payable in full 60 days from the
date hereof. Interest shall accrue from the date hereof and shall be paid
when the principal amount of this Note has been paid in full.
The occurrence of any one or more of the following events shall
constitute an Event of Default under this Note: (i) the failure to pay
principal of or interest on this Note as and when due; (ii) any
representation or warranty of the Maker contained in the Loan and Security
Agreement dated as of the date hereof between the Maker and the Payee shall
not be true and correct in all material respects and the same shall not be
cured within 30 days after written notice thereof by the Payee to the Maker
or the Maker shall have breached any covenant contained in the Loan and
Security Agreement and such breach shall not be cured within 30 days; (iii) a
proceeding being filed or commenced against the Maker for bankruptcy,
dissolution or liquidation which shall not be dismissed within 60 days, or
the Maker voluntarily or involuntarily terminating or dissolving or being
terminated or dissolved; (iv) the Maker filing a petition under bankruptcy,
insolvency or debtor's relief law or making an assignment for the benefit of
creditors;
or (v) the appointment of a custodian, trustee, liquidator or receiver for
any of the property of the Maker, which shall not be dismissed, released or
vacated within 60 days.
The Maker agrees that in an Event of Default under this Note, then all
or any part of the unpaid principal balance of and interest on this Note
shall immediately become due and payable without notice or demand. If an
Event of Default occurs, the Maker agrees to pay to the holder all reasonable
expenses incurred by the holder, including reasonable attorneys' fees, in
enforcing and collecting this Note.
Failure of the Payee hereof to assert any right contained herein will
not be deemed to be a waiver thereof.
In the event any one or more of the provisions of this Note shall for
any reason be held to be invalid, illegal or unenforceable, in whole or in
part or in any respect, or in the event that any one or more of the
provisions of this Note operate to invalidate this Note, then and in either
of those events, such provision or provisions only shall be deemed null and
void and shall not affect any other provision of this Note and the remaining
provisions of this Note shall remain operative and in full force and effect
and shall in no way be affected, prejudiced or disturbed thereby.
The Maker hereby forever waives presentment, presentment for payment,
demand, protest, notice of protest, notice of dishonor of this Note and all
other demands and notices in connection with the delivery, acceptance,
performance and enforcement of this Note.
This Note may be prepaid in whole or in part at any time and from time
to time without premium. This Note shall be paid without deduction by reason
of any set-off, defense or counterclaim of the Maker.
The principal and accrued interest on this Note may be converted into
shares of Common Shares (the "Common Shares") of the Maker at the option of
the Payee at $2.00 per share and the
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Maker agrees to cause such Common Shares to be registered for resale under
the Securities Act of 1933, as amended.
This Note is secured pursuant to the terms of the Loan and Security
Agreement.
This Note shall be governed by and construed and enforced in accordance
with the internal laws of the State of New York without giving any effect to
principles of conflicts of laws. This Note shall be binding upon the
successors and assigns of the Maker and shall inure to the benefit of the
successors and assigns of Payee.
ENTERTAINMENT BOULEVARD, INC.
--------------------------
By: Xxxxxxx Xxxxx
Title: Chairman of the Board
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