EXHIBIT 10.10
LOAN AGREEMENT
THIS LOAN AGREEMENT (this "Agreement"), is executed as of July 6, 2005, by
and among Navidec Financial Services, Inc., a Delaware corporation (the
"Company"), and The Elevation Fund, LLC, a Delaware limited liability company
(the "Lender").
WHEREAS, the Company desires to partially exercise the Stock Purchase
Warrant of BPZ Energy, Inc. (the "Warrant") that it received pursuant to the
terms of the Business Consulting Agreement;
WHEREAS, in order to fund the exercise of the Warrant, the Company wishes
to borrow up to $312,000 from the Lender as a short term bridge loan which
includes $12,000 for the origination fee; and
WHEREAS, the Lender is willing to provide such financing on terms and
conditions as set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and the Lender,
intending to be legally bound, agree as follows:
ARTICLE 1
DEFINITIONS
1.1 Defined terms. Certain capitalized terms used in this Agreement shall
have the specific meanings defined below:
"Business Day" shall mean a day other than a Saturday, Sunday, or other day
on which commercial banks are authorized or required by law to close.
"Loan Closing Date" shall mean the date upon which the Loan is made to the
Company.
"Interest Rate" shall mean the highest prime rate of interest per annum
published in the Money Rate Table of the Western Edition of The Wall Street
Journal, as adjusted on a daily basis, plus four percent (4%) per annum,
compounded annually.
ARTICLE 2
THE LOAN
2.1 Loan. According to the terms and subject to the conditions of this
Agreement, the Lender shall make a single-installment loan to the Company on the
Loan Closing Date in the amount of $312,000 (the "Loan"). The amount of the Loan
includes the $12,000 Origination Fee provided in Section 2.5. The Loan shall be
evidenced by a promissory note in the form attached hereto as Exhibit A
("Note"), duly executed on behalf of the Company and dated as of the Loan
Closing Date.
2.2 Interest. The Loan shall bear interest ("Interest") from the date of
payment by the Lender until the Maturity Date at the Interest Rate (calculated
on the basis of the actual number of days elapsed over a year of 360 days).
Interest is payable by the Company on a monthly basis in arrears on the first
Business Day of the month. Notwithstanding anything to the contrary, in no event
shall the Interest Rate be less than the highest prime rate of interest per
annum published in the Money Rate Table of the Western Edition of The Wall
Street Journal, as adjusted on a daily basis, plus four percent (4%) per annum,
nor shall the Interest Rate be adjusted to exceed the maximum amount permitted
by applicable law.
2.3 Prepayment of the Loan. The Company may from time to time prepay all or
any portion of the Loan without premium or penalty of any type. The Company
shall give the Lender at least three Business Day prior written notice of its
intention to prepay the Loan, specifying the date of payment and the total
amount of the Loan to be paid on such date.
2.4 Maturity Date. Unless the Loan is earlier accelerated pursuant to the
terms hereof, the Loan and all accrued Interest thereon shall be due and payable
in full on the date that is 90 days following the Loan Closing Date (the
"Maturity Date"); provided however that, the parties may agree to extend the
Maturity Date for an additional 30 days.
2.5 Fees. The Company shall pay a fee (the "Origination Fee") to the Lender
on the Closing Date in the amount of $12,000. Such amount shall be fully earned
by the Lender when paid, and shall not be refundable to the Company under any
circumstances.
ARTICLE 3
CONDITIONS PRECEDENT TO THE LOAN
3.1 Conditions on the Loan Closing Date. The obligation of the Lender to
make the Loan pursuant to Section 2.1 shall be subject to the satisfaction, on
or before the Loan Closing Date, of the conditions set forth in this Section. If
the conditions set forth in this Section are not met on or prior to the Loan
Closing Date, the Lender shall have no obligation to make the Loan.
(a) The Company shall have duly executed and delivered to the Lender the
Note representing the Loan.
(b) The Company shall have duly authorized, executed, and delivered to the
Lender a security agreement in the form attached hereto as Exhibit B (the
"Security Agreement") to secure the repayment of the Loan and granting the
Lender a continuing security interest in the 150,000 shares of common stock of
BPZ Energy, Inc. (the "Shares").
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
4.1 Due Incorporation and Good Standing. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Colorado, with full and adequate power to carry on and conduct its business as
presently conducted, and is duly licensed or qualified in all foreign
jurisdictions wherein the failure to be so qualified or licensed would
reasonably be expected to have a material adverse effect on the business of the
Company.
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4.2 Due Authorization. The Company has full right, power and authority to
enter into this Agreement, to make the borrowings hereunder and execute and
deliver the Note as provided herein and to perform all of its duties and
obligations under this Agreement and the Note. The execution and delivery of
this Agreement will not, nor will the observance or performance of any of the
matters and things herein or therein set forth, violate or contravene any
provision of law or the Company's bylaws or certificate of incorporation. All
necessary and appropriate corporate action on the part of the Company has been
taken to authorize the execution and delivery of this Agreement.
4.3 Enforceability. This Agreement has been validly executed and delivered
by the Company and constitutes the legal, valid and binding obligations of the
Company enforceable against it in accordance with its respective terms, subject
to applicable bankruptcy, insolvency, reorganization or similar laws relating to
or affecting the enforcement of creditors' right and to the availability of the
remedy of specific performance.
4.4 Capitalization. All of the Company's authorized and outstanding equity
securities (including securities convertible into equity securities) are
identified on Schedule A attached hereto. Other than as set forth on Schedule A,
there are no outstanding shares of capital stock or any options, warrants or
other preemptive rights, rights of first refusal or similar rights to purchase
equity securities of the Company.
4.5 Subsidiaries. Except as set forth on Schedule B, the Company does not
hold a controlling interest in any other entity, and there are no outstanding
shares of capital stock or any options, warrants or other preemptive rights,
rights of first refusal or similar rights to purchase equity securities of any
other entity in which the Company holds a controlling interest.
4.6 Compliance with Laws. The nature and transaction of the Company's
business and operations and the use of its properties and assets do not, and
during the term of this Agreement shall not, violate or conflict with in any
material respect any applicable law, statute, ordinance, rule, regulation or
order of any kind or nature.
4.7 Absence of Conflicts. The execution, delivery and performance by the
Company of this Agreement, and the transactions contemplated hereby, do not
constitute a breach or default, or require consents under, any agreement,
permit, contract or other instrument to which the Company is a party, or by
which the Company is bound or to which any of the assets of the Company is
subject, or any judgment, order, writ, decree, authorization, license, rule,
regulation, or statute to which the Company is subject, and, except as set forth
in the Security Agreement, will not result in the creation of any lien upon any
of the assets of the Company.
4.8 Litigation and Taxes. There is no litigation or governmental proceeding
pending, or to the best knowledge of the Company after due inquiry, threatened,
against the Company. The Company has duly filed all applicable income or other
tax returns and has paid all material income or other taxes when due. There is
no controversy or objection pending, or to the best knowledge of the Company
after due inquiry, threatened in respect of any tax returns of the Company.
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4.9 No Omissions or Misstatements. None of the information included in this
Agreement, other documents or information furnished or to be furnished by the
Company, or any of its representations, contains any untrue statement of a
material fact or is misleading in any material respect or omits to state any
material fact. Copies of all documents referred to in herein have been delivered
or made available to the Lender and constitute true and complete copies thereof
and include all amendments, schedules, appendices, supplements or modifications
thereto or waivers thereunder.
ARTICLE 5
COVENANTS
5.1 Negative Covenants of the Company. The Company covenants and agrees
that, from the Loan Closing Date until the Maturity Date (and, in any event,
during such time as any portion of the Loan or any Interest thereon is
outstanding), without the consent of the Lender, the Company will not:
(a) create, incur, assume or suffer to exist any indebtedness that is in
any way senior or superior to this Agreement or the indebtedness represented
hereby;
(b) engage in any business other than the business conducted by the Company
on the Loan Closing Date;
(c) engage in any transaction with any Affiliate (as such term is defined
in Rule 501(b) of the Securities Act of 1933, as amended) on terms less
favorable to the Company than could be obtained from an unrelated party; or
(d) amend its Certificate of Incorporation or Bylaws in any manner that
adversely affects the rights associated with this Agreement, the Common Stock or
the Warrant.
The Company will give notice to the Lender of any default under any
provisions of this Agreement within three business days after the discovery by
the Company of such default.
5.2 Affirmative Covenants of the Company. The Company covenants and agrees
that, from the Loan Closing Date until the Maturity Date (and, in any event,
during such time as any portion of the Loan or any Interest thereon is
outstanding), the Company shall:
(a) operate its business only in the ordinary course and maintain its
properties and assets in good repair, working order and condition;
(b) cause to be done all things reasonably necessary to maintain, preserve
and renew its corporate existence and all material licenses, authorizations and
permits necessary to the conduct of its businesses; and
(c) comply with all applicable laws, rules and regulations of all
governmental authorities, the violation of which could reasonably be expected to
have a material adverse effect on its business, properties or prospects.
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ARTICLE 6
DEFAULT
6.1 Events of Default. The occurrence of any of the following events (each
an "Event of Default"), not cured in the applicable cure period, if any, shall
constitute and Event of Default of the Company:
(a) a breach of any representation, warranty, covenant or other provision
of this Agreement, the Note, or the Security Agreement, which, if capable of
being cured, is not cured within three days following notice thereof to the
Company;
(b) the failure to make when due any payment described in this Agreement or
the Note, whether on or after the Maturity Date, by acceleration or otherwise;
and
(c) (i) the application for the appointment of a receiver or custodian for
the Company or the property of the Company, (ii) the entry of an order for
relief or the filing of a petition by or against the Company under the
provisions of any bankruptcy or insolvency law, (iii) any assignment for the
benefit of creditors by or against the Company, or (iv) the Company becomes
insolvent.
6.2 Effect of Default. Upon the occurrence of any Event of Default that is
not cured within any applicable cure period, the Lender may elect, by written
notice delivered to the Company, to take any or all of the following actions:
(i) declare this Agreement terminated and the outstanding amounts under the Note
to be forthwith due and payable, whereupon the entire unpaid Loan, together with
accrued and unpaid Interest thereon, and all other cash obligations hereunder,
shall become forthwith due and payable, without presentment, demand, protest or
any other notice of any kind, all of which are hereby expressly waived by the
Company, anything contained herein or in any of the Note to the contrary
notwithstanding, and (ii) exercise any and all other remedies provided hereunder
or available at law or in equity upon the occurrence and continuation of an
Event of Default. In addition, during the occurrence of any Event of Default,
the Company shall not pay make any payment on any other outstanding indebtedness
of the Company (other than indebtedness of the Company to which the Lender has
agreed in writing to subordinate this Agreement and the Note hereunder).
ARTICLE 7
WARRANT
7.1 Issuance of Warrant. The Company will issue to the Lender a Common
Stock Purchase Warrant (the "Warrant") in the form attached hereto as Exhibit C.
The Warrant shall be immediately convertible into 100,000 shares of common stock
of the Company, the exercise price of the Warrant shall be $1.00 per share and
the exercise period shall be five (5) years from the date of the Loan Closing
Date.
7.2 Registration of Shares Underlying Warrant.
(a) The Company shall prepare and, as soon as practicable, file with the
Securities and Exchange Commission (the "SEC") a registration statement on Form
SB-2 covering the resale of all the shares underlying the Warrant (the
"Registrable Securities"). In the event that Form SB-2 is unabailable for such
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a registration, the Company shall register the resale of the Registrable
Securities on another appropriate form reasonably acceptable to the holders of
at least a majority of the Registrable Securities and undertake to register the
Registrable Securities on Form SB-2 as soon as such form is available, provided
that the Company shall maintain the effectiveness of the Registration Statement
then in effect until such time as a Registration Statement on Form SB-2 covering
the Registrable Securities has been declared effective by the SEC. The Company
shall use its reasonable best efforts to have such registration statement
declared effective by the SEC as soon as practicable.
(b) All expenses incident to the filing of the registration statement
required by Section 7.1, including without limitation all registration and
filing fees, fees and expenses of compliance with securities or blue sky laws,
printing expenses, messenger and delivery expenses, and fees and disbursements
of counsel for the Company and all independent certified public accountants,
underwriters (excluding discounts and commissions) and other professionals
retained by the Company will be borne by the Company. In no event shall the
Company be obligated to pay any discounts or commissions with respect to the
shares sold by any holder of Registrable Securities. In connection with any
registration statement, the Company shall reimburse the holders of Registrable
Securities covered by such registration for the reasonable fees and
disbursements of one counsel chosen by the holders of a majority of the
Registrable Securities initially requesting such registration.
(c) In the event of an underwritten registered offering the managing
underwriter(s) advise the Company in writing that in their opinion the number of
Registrable Securities exceeds the number of Registrable Securities which can be
sold therein without adversely affecting the marketability of the offering, the
Company will include in such registration the number of Registrable Securities
requested to be included which in the opinion of such underwriter(s) can be sold
without adversely affecting the marketability of the offering, pro rata among
the respective holders thereof on the basis of the amount of Registrable
Securities owned by each such holder. In the event the number of shares
available under a registration statement filed pursuant to Section 7.1 is
insufficient to cover 100% of the Registrable Securities required to be covered
by such registration statement, the Company shall amend the registration
statement, or file a new registration statement (on the short form available
therefor, if applicable), or both, so as to cover 100% of the number of such
Registrable Securities as soon as practicable. The Company shall use it
reasonable best efforts to cause such amendment or new registration statement to
become effective as soon as practicable following the filing thereof.
ARTICLE 8
MISCELLANEOUS
8.1 Successors and Assigns. Subject to the exceptions specifically set
forth in this Agreement, the terms and conditions of this Agreement shall inure
to the benefit of and be binding upon the respective executors, administrators,
heirs, successors and assigns of the parties. This Agreement may be assigned
solely by the Lender.
8.2 Titles and Subtitles. The titles and subtitles of the Sections of this
Agreement are used for convenience only and shall not be considered in
construing or interpreting this agreement.
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8.3 Notices. Any notice, request or other communication required or
permitted hereunder shall be in writing and shall be delivered personally or by
facsimile (receipt confirmed electronically) or shall be sent by a reputable
express delivery service or by certified mail, postage prepaid with return
receipt requested, addressed as follows:
if to the Company, to:
---------------------
Navidec Financial Services, Inc.
0000 X. Xxxxxxx'x Xxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxx Xxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxx
Fax: (000) 000-0000
with a copy to:
--------------
Xxxxxxx Xxxxx Xxxxxxx & Ingersol LLP
0000 00xx Xxxxxx
Xxxxx 0000
Xxxxxx XX 00000
Attn: Xxxxx Xxxxxxxx
Fax: (000) 000-0000
if to the Lender, to:
--------------------
The Elevation Fund, LLC
0000 Xxxx Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxx 0000
Xxxxxxxxx Xxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxx
Fax: (000) 000-0000
with a copy to:
--------------
Xxxxxxxxxx Hyatt & Xxxxxx, P.C.
000 Xxxxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, XX 00000
Attn: Xxxx X. Xxxxx
Fax No.: (000) 000-0000
Either party hereto may change the above specified recipient or mailing address
by notice to the other party given in the manner herein prescribed. All notices
shall be deemed given on the day when actually delivered as provided above (if
delivered personally or by facsimile, provided that any such facsimile is
received during regular business hours at the recipient's location) or on the
day shown on the return receipt (if delivered by mail or delivery service).
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8.4 Governing Law. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of Colorado without giving effect
to any choice of law or conflict of law provision or rule (whether of the State
of Colorado or any other jurisdiction) that would cause the application of the
laws of any jurisdiction other than the State of Colorado.
8.5 Waiver and Amendment. Any term of this Agreement may be amended, waived
or modified with the written consent of the Company and the Lender.
8.6 Remedies. No delay or omission by the Lender in exercising any of its
rights, remedies, powers or privileges hereunder or at law or in equity and no
course of dealing between the Lender and the undersigned or any other person
shall be deemed a waiver by the Lender of any such rights, remedies, powers or
privileges, even if such delay or omission is continuous or repeated, nor shall
any single or partial exercise of any right, remedy, power or privilege preclude
any other or further exercise thereof by the Lender or the exercise of any other
right, remedy, power or privilege by the Lender. The rights and remedies of the
Lender described herein shall be cumulative and not restrictive of any other
rights or remedies available under any other instrument, at law or in equity.
8.7 Expenses. The Company shall pay all costs and expenses incurred by the
Lender in connection with the negotiation and preparation of the documents
contemplated by this Agreement (including reasonable attorneys' fees); provided,
however, that the Company's shall not be required to reimburse the Lender for
any amount in excess of $2,500 in the aggregate and such expenses shall be paid
on the Maturity Date.
8.8 Counterpart/Facsimile Signatures. This Agreement may be executed in any
number of counterparts, each of which shall constitute an original as against
any party whose signature appears thereon, all of which together shall
constitute a single instrument. The Agreement shall become binding when one or
more counterparts, individually or taken together, bear the signatures of all
parties. This Agreement may be executed by facsimile signature and the facsimile
signature of any party shall constitute an original in all respects
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IN WITNESS WHEREOF, the Company has caused this Note to be signed in its
name on the date first set forth above.
NAVIDEC FINANCIAL SERVICES, INC.
By: /s/ Xxxxxx Xxxxxxx
-----------------------------------
Xxxxxx X. Xxxxxxx
President, Chief Operating Officer
and Chief Financial Officer
THE ELEVATION FUND, LLC
By: /s/ Xxxxx Xxxxxx
-----------------------------------
Xxxxx X. Xxxxxx
Fund Manager
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