LOAN AGREEMENT
Exhibit 10.2
THIS LOAN AGREEMENT (this “Agreement”) is effective as of the ___day of August, 2005, by and
among REMOTE KNOWLEDGE, INC., a Delaware corporation (the “Borrower”), Xxxxxxx Xxxxx, not in his
individual capacity, but, solely in his capacity as trustee for the Xxxx Xxxxxxxx Irrevocable
Family Trust, and Xxxxxx Xxxxxxxx, Xxxx Xxxxxxxx, Xxxxx Xxxxxxxx and Xxxx Xxxxxxxx as individuals
(each a “Lender” and collectively, the “Lenders”).
W I T N E S S E T H :
WHEREAS, the Borrower has requested the Lenders to extend a secured loan in the original
principal amount of Three Million Six Hundred Thousand and No/100 Dollars ($3,600,000.00) to be
used for marketing, sales, working capital and other general corporate purposes; and
WHEREAS, each Lender is willing and prepared to extend such a secured loan to the Borrower
upon the terms and subject to the conditions hereinafter set forth and in the amounts set forth on
Exhibit A.
NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants herein
contained and for other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the undersigned hereby agree as follows:
| 1. | DEFINED TERMS. |
“Business Day” shall mean a day (other than a Saturday or Sunday) on which banks generally are
open in Houston, Texas.
“Collateral” shall have the meaning set forth in the Security Agreement.
“Funding Date” shall mean each of those dates shown on Schedule I as dates on which the
Lenders are obligated to disburse funds to the Borrower.
“Intellectual Property” means any and all of the Borrower’s (a) patents and patent
applications, and all inventions and improvements described and claimed therein, (b) copyrights,
rights and interests in copyrights, works protectable by copyright, copyright registrations and
copyright applications, (c) trademarks (including service marks), trade names, trade dress, trade
secrets and trade styles and the registrations and applications for registration thereof and the
goodwill of the business of the foregoing and (d) such other intellectual property including, but
not limited to, database management systems and software, whether or not a registration or
application for a patent, copyright or trademark has been made, and all other rights under any of
the (a), (b), (c) or (d), all extensions, renewals, reissues, divisions, continuations and
continuations-in-part of any of the foregoing, and all rights to royalties, to xxx for past,
present, and future infringement of any of the foregoing.
“Majority Lenders” shall mean more than fifty percent in both (i) the number of Lenders and
(ii) the amount of Loans outstanding.
“Registration Rights Agreement” means that certain registration rights agreement dated as of
February 27, 2004 by and among the Company and certain of its shareholders including the Lenders
under this Agreement as amended and in effect from time to time.
2. SECURED LOAN. The Lenders agree to make a loan to the Borrower in the
aggregate principal amount of Three Million Six Hundred Thousand and No/100 Dollars ($3,600,000.00)
(the “Loan”). The Loan will be disbursed by the Lenders to the Borrower in [five] tranches as set
forth in Schedule 1 hereto. The Loan shall accrue
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interest at the rate of five (5) percent per annum, payable together with the principal amount then
outstanding on August 1, 2008 (the “Maturity Date”).
3. SECURED PROMISSORY NOTES. The obligation of the Borrower to repay the Loan
shall be evidenced by one or more Secured Convertible Promissory Notes, a form of which is attached
hereto as Exhibit A, executed by the Borrower and payable to the order of the Lenders (the
“Notes”). The Notes shall be convertible into common stock, par value $.001 per share, of the
Borrower on the Maturity Date or on such earlier date as set forth in the Notes.
4. WARRANTS. The Borrower shall issue to each Lender a warrant for the number of
shares equal to four thousand (4,000) shares for each one thousand dollars ($1,000.00) of principal
advanced by such Lender under this Agreement with an exercise price of seventy-five cents per share
(each such warrant, a “Warrant”). The aggregate number of shares by all Warrants issued pursuant
to this Agreement shall not exceed fourteen million four hundred thousand (14,400,000) shares on
the date of issuance of the Warrants.
5. CONDITIONS TO EFFECTIVENESS AND LENDING. (a) This Agreement shall become
effective on and as of the first date (the “Effective Date”) on which the following conditions
precedent have been satisfied, unless otherwise waived by the Majority Lenders:
(i) The representations and warranties contained herein and in the Security
Agreement shall be true and correct as of the Effective Date as if made on the Effective Date.
(ii) No Event of Default shall have occurred and be continuing.
(iii) The Borrower shall have executed and delivered to Xxxxxx Xxxxxxxx, as
collateral agent for the Lenders that certain Security Agreement (the “Security Agreement”) of even
date herewith, pursuant to which the Borrower has granted to the Lenders a lien and security
interest in and to all of the Borrower’s Intellectual Property and certain personal property
located in the State of Missouri to secure payment of the Notes.
(iv) No judgment creditor of the Borrower shall have executed, or initiated
proceedings to execute, one or more judgments for the payment of money.
(v) Each party hereto shall have delivered to Xxxxxx Xxxxxxxx, as collateral agent
for the Lendersduly executed counterparts of (A) this Agreement; (B) the Security Agreement; (C)
the Notes and (D) the Warrants.
(b) The obligations of the Lenders to fund the loans set forth on Schedule 1 hereto
are subject to the following conditions precedent:
(i) The representations and warranties contained herein and in the Security
Agreement shall be true and correct as of the Funding Date as if made on the Funding Date.
(ii) No Event of Default shall have occurred and be continuing.
6. CONDITIONS SUBSEQUENT. The Borrower shall file and record the ground lease
deed of trust over the property located at 0000 Xxxx Xxxxxxx 00, Xxxxxx, Xxxxxxxx (the “Deed of
Trust”) within ten (10) days of the date on which this Agreement is executed and delivered.
7. REPRESENTATIONS AND WARRANTIES. In order to induce the Lenders to make the
Loans hereunder, the Borrower hereby makes the following representations and warranties to the
Lenders:
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(a) The Borrower is (i) a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and (ii) is duly qualified as a foreign
corporation to do business and is in good standing under the laws of each jurisdiction in which it
is required to be qualified to conduct its business.
(b) The execution, delivery and performance by the Borrower of this Agreement, the
Security Agreement, the Deed of Trust and the Notes and the consummation of the transactions
contemplated hereby and thereby, are within the Borrower’s corporate powers, have been duly
authorized by all necessary corporate action, and do not contravene its charter, by-laws or any
federal, state or local law, order or decree applicable to the Borrower.
(c) No authorization or approval or action by, and no notice to or filing with, any
governmental authority or regulatory body or any other third party is required for the due
execution, delivery and performance by the Borrower of this Agreement or the Notes.
(d) This Agreement has been, and each of the Security Agreement, the Deed of Trust
and the Notes when delivered hereunder will have been, duly executed and delivered by the Borrower.
This Agreement constitutes, and each of the Security Agreement, the Deed of Trust and the Notes
when delivered hereunder will constitute, the legal, valid and binding obligations of the Borrower
enforceable against the Borrower in accordance with their respective terms, except as
enforceability may be limited by bankruptcy, insolvency or similar laws affecting the enforcement
of creditors’ rights generally, and by equitable principles (regardless of whether enforcement is
sought in equity or at law).
(e) The Borrower is not an Investment Company, as such term is defined in the
Investment Company Act of 1940, as amended.
(f) The Borrower has no subsidiaries.
(g) The Borrower has filed all federal, state, local and tax returns required to be
filed by it, and has paid all federal, state, local and other taxes, assessments, fees and other
governmental charges levied or imposed upon the Borrower, or its properties, income or assets or
shown in such returns to be due and payable, or are otherwise due and payable, except those which
are being contested in good faith and for which adequate reserves have been provided.
8. COVENANTS. So long as the loans remain unpaid or any Lender shall have any
commitment hereunder, the Borrower will:
(a) Compliance with laws. Comply, in all material respects, with all
applicable laws, rules, regulations and orders.
(b) Payment of taxes, etc. Pay all federal, state, local and other taxes,
assessments, fees and other governmental charges levied or imposed upon the Borrower, or its
properties, income or assets, before any penalty or interest accrues thereon, except for such as
are being contested in good faith and for which adequate reserves have been provided.
(c) Preservation of Corporate Existence. Preserve and maintain its
corporate existence and franchises, and be and remain qualified to do business as a foreign
corporation under the laws of each jurisdiction in which it is required to be qualified to conduct
its business.
(d) Visitation Rights. During normal business hours and upon reasonable
notice from time to time, permit each of the Lenders or any agents or representatives thereof, to
examine and make copies of and abstracts from the records and books of account of (excluding any
confidential information), and visit the properties of the Borrower, and to discuss the affairs,
finances and accounts of the Borrower with the appropriate officers or representatives of the
Borrower.
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(e) Keeping of Books. Keep proper books of record and account, in which
full and correct entries shall be made of all financial transactions and the assets and business of
the Borrower, in accordance with generally accepted accounting principles.
(f) Maintenance of Properties. The Borrower shall (i) maintain, preserve
and protect all of its properties, assets and equipment necessary, used, or useful in the conduct
of its business in good working order and condition, ordinary wear and tear excepted, and supplied
with all necessary equipment, (ii) make or cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof, all as in the judgment of the Borrower may be
necessary so that the business carried on in connection therewith may be properly conducted at all
times and (iii) use the standard of care typical in the industry in the operation and maintenance
of its facilities; provided that nothing in this Section 8(f) shall prevent the Borrower from
discontinuing the operation or maintenance of any of the Borrower’s property if (A) the property
discontinued from operation or maintenance does not constitute a material portion of the Borrower’s
property and (B) such discontinuance is, in the judgment of the Borrower and its board of
directors, desirable in the conduct of its business and is not disadvantageous in any material
respect to the Lenders’ interests in the Collateral.
(g) Reporting Requirements. The Borrower shall furnish to each of the
Lenders:
(i) As soon as available and in any event within sixty (60) days after the end of
each of the first three quarters of each fiscal year, the balance sheet of the Borrower as of the
end of such quarter and the statements of income and cash flows of the Borrower for the period
commencing at the end of the previous fiscal year and ending with the end of such quarter, duly
certified (subject to year-end audit adjustments) by the chief financial officer, treasurer or
controller of the Borrower as having been prepared in accordance with generally accepted accounting
principles;
(ii) As soon as available and in any event within one hundred twenty (120) days
after the end of each fiscal year of the Borrower, a copy of the annual audited report for such
year for the Borrower, containing the balance sheet of the Borrower as of the end of such fiscal
year and the statements of income and cash flows of the Borrower for such fiscal year;
(iii) As soon as possible and in any event within ten (10) Business Days after the
occurrence of each Event of Default continuing on the date of such statement, a statement of the
chief financial officer or chief executive officer setting forth details of such Event of Default
and the action that the Borrower has taken and proposed to take with respect thereto;
(iv) Prompt notice of all actions and proceedings before any court, governmental
agency or arbitrator materially and adversely affecting the Borrower; and
(v) Such information respecting the Borrower as any Lender may from time to time
reasonably request.
(h) Use of Proceeds. The proceeds of the Loans shall be used for general
corporate purposes and to pay certain outstanding obligations of the Borrower.
(i) Registration Rights. The Company agrees to register on behalf of the
holder of Note, any Common Stock, issued upon conversion of such Note in accordance with the terms
of Section 2 thereof, pursuant to the terms of the Registration Rights Agreement.
(j) Further Assurances. The Borrower shall from time to time execute and
deliver, or cause to be executed and delivered, such additional instruments, certificates or
documents, and take such actions, as the Majority Lenders may reasonably request for the purposes
of implementing or effectuating the provisions of this Agreement and the Security Agreement, or of
more fully perfecting or renewing the rights of the Lenders with respect to the Collateral (or with
respect to any additions thereto or replacements or proceeds thereof). In furtherance of this
agreement, the Borrower shall promptly, and in any event within ten (10) Business Days after
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receipt of the Majority Lenders’ written request, execute, deliver, file, record and complete
any and all instruments, agreements, and documents that the Majority Lenders may require for any of
the foregoing purposes, including the completion, execution, acknowledgement and delivery of any
notices, instruments, supplemental assignments and any other documents necessary for compliance
with, or perfection under, any federal or state law, rule or regulation affecting perfection,
priority and assignment, or with respect to, or as a result of, any amendment, enactment, judicial
decision or change regarding the laws, rules or regulations with respect to deeds of trust,
mortgages, liens, pledges or security interests. Upon the exercise by the Lenders of any power,
right, privilege or remedy pursuant to this Agreement which requires any consent, approval,
recording, qualification or authorization of any federal, state or local governmental authority,
the Borrower will execute and deliver, or will cause the execution and delivery of, all
applications, certifications, instruments and other documents and papers that may be required to
obtain such consent, approval, recording, qualification or authorization.
9. EVENT OF DEFAULT. (a) As used herein, the term “Event of Default” shall mean
and include each or all of the following events:
(i) the Borrower shall fail to pay, within ten (10) days when due, any amounts
required to be paid by the Borrower under this Agreement, the Security Agreement, the Deed of Trust
or the Notes;
(ii) the Borrower shall file a petition in bankruptcy or for reorganization or for
an arrangement pursuant to any present or future state or federal bankruptcy act or under any
similar federal or state law, or shall be adjudicated a bankrupt or insolvent, or shall make a
general assignment for the benefit of his creditors, or shall be unable to pay his debts generally
as they become due; or if a petition or answer proposing the adjudication of the Borrower as
bankrupt or its reorganization under any present or future state or federal bankruptcy act or any
similar federal or state law shall be filed in any court and such petition or answer shall not be
discharged or denied within thirty (30) days after the filing thereof; or if a receiver, trustee or
liquidator of the Borrower or of all or substantially all of the assets of the Borrower shall be
appointed in any proceeding brought against the Borrower and shall not be discharged within thirty
(30) days of such appointment; or if the Borrower shall consent to or acquiesce in such
appointment; or if any property of the Borrower shall be levied upon or attached in any proceeding;
(iii) one or more judgment creditors shall have executed, or initiated proceedings
to execute, one or more judgments for the payment of money in excess of $100,000;
(iv) after the date hereof, final judgment(s) for the payment of money in excess of
$100,000, individually or in the aggregate, shall be rendered against the Borrower and shall remain
undischarged for a period of thirty (30) days during which execution shall not be effectively
stayed; or
(v) all or any portion of the property subject to the Security Agreement or the Deed
of Trust, or the legal, equitable or any other interest therein, shall be sold, transferred,
assigned, leased or otherwise disposed of unless the prior written consent of the Majority Lenders
is first obtained.
(b) Upon the occurrence of an Event of Default, the Majority Lenders may, at their
option, exercise any and all of the following rights and remedies (in addition to any other rights
and remedies available to the Lenders):
(i) without notice, declare immediately due and payable all unpaid principal of and
accrued interest on the Notes, together with all other sums payable hereunder or under the Notes,
and the Notes shall thereupon be immediately due and payable without presentment or other demand,
protect, notice of dishonor or any other notice of any kind (including notice of intent to
accelerate maturity and notice of acceleration of maturity), all of which are hereby expressly
waived; and
(ii) exercise all of their rights or remedies under this Agreement, the Notes, the
Deed of Trust and the Security Agreement.
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10. NOTICES. All notices, consents, requests, demands and other communications
hereunder shall be given to or made upon the respective parties hereto at their respective
addresses specified below or, as to any party, at such other address as may be designated by it in
a written notice to the other party. All notices, requests, consents and demands hereunder shall
be effective (a) upon personal delivery, or (b) one (1) Business Day after deposit with a
nationally-recognized overnight courier service, or (c) three (3) Business Days after deposit with
registered or certified, first class mail, postage prepaid.
IF TO THE LENDERS:
c/o Xxxxxx Xxxxxxxx
000 Xxxxxx Xxxx
Xxxxxxxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
000 Xxxxxx Xxxx
Xxxxxxxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
IF TO THE BORROWER:
Remote Knowledge
Attn: Xxxxx Xxxxx
0000 Xxxxx Xxxx Xxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attn: Xxxxx Xxxxx
0000 Xxxxx Xxxx Xxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
11. MISCELLANEOUS.
(a) Funding Obligations of Lenders. If, on any Funding Date, a Lender fails
to provide funding as required by Schedule I, then, upon the request of the Borrower, the other
Lenders shall be jointly obligated to disburse the funds to the Borrower which were scheduled to be
disbursed by the non-funding Lender on such Funding Date.
(b) Waivers. No failure on the part of the Lenders to exercise, and no
delay in exercising, any right or remedy hereunder or under applicable law or any document or
agreement related hereto shall operate as a waiver thereof; nor shall any single or partial
exercise of any such right or remedy preclude any other or further exercise thereof or the exercise
of any other right or remedy. The remedies herein provided are cumulative and not exclusive of any
remedies provided by law.
(c) Amendments. The Majority Lenders and the Borrower may enter into
agreements supplemental hereto for the purpose of adding to or modifying any provisions of this
Agreement, the Security Agreement, the Deed of Trust or the Notes or changing in any manner the
rights of the Lenders or the Borrower hereunder or waiving any Event of Default hereunder;
provided, however, that no such supplemental agreement shall, without the consent of all of the
Lenders: reduce the principal amount of the Loan or reduce the rate of interest on the Loan,
postpone or extend the Maturity Date or forgive all or any portion of the principal amount, amend
the definition “Majority Lenders”, amend this Section 11(c), or release all or substantially all of
the Collateral, unless such Collateral is sold or transferred as permitted pursuant to this
Agreement, the Security Agreement or the Deed of Trust.
(d) Successors. This Agreement shall be binding upon and inure to the
benefit of the Borrower and the Lenders and their respective successors and assigns; provided,
however, that the Borrower may not transfer or assign its right to borrow hereunder without the
prior written consent of each Lender.
(e) Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one agreement, and any of the parties
hereto may execute this Agreement by signing any such counterpart.
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(f) Governing Law. This Agreement, the Notes and all other agreements
related hereto or thereto, shall be construed in accordance with and governed by the laws of the
State of Texas without giving effect to the choice of law provisions thereof.
(g) Headings. The descriptive headings for the several sections of this
Agreement are inserted for convenience only and shall not define or limit any of the terms or
provisions hereof.
(h) Joint and Several Obligations. The respective obligations of the
Lenders hereunder are joint and several and the failure of any Lender to make any loan hereunder or
to perform any of its obligations hereunder shall not relieve any other Lender from any of its
obligations hereunder.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and
delivered as of this ___day of ___, 2005, but effective as of the date first above
written.
| BORROWER: | ||||
| Remote Knowledge, Inc. | ||||
| By: | ||||
| Name: Xxxxx Xxxxx Title: President and CEO |
||||
| LENDERS: | ||||
| By: | ||||
| Name: Xxxxxxx Xxxxx, not in his individual capacity, but solely as Trustee for the Xxxx Xxxxxxxx Family Trust |
||||
| By: | ||||
| Xxxxxx Xxxxxxxx | ||||
| By: | ||||
| Xxxxx Xxxxxxxx | ||||
| By: | ||||
| Xxxxx Xxxxxxxx | ||||
| By: | ||||
| Xxxx Xxxxxxxx | ||||
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Schedule 1
| Funding Date | Lender(s) and Lenders' Individual Commitment | Total Amount Funded | ||||||||||
| August 19, 2005 | Xxxx Xxxxxxxx Irrevocable |
$ | 1,625,000.00 | |||||||||
Family Trust |
$ | [1,625,000.00] | ||||||||||
Xxxx Xxxxxxxx: |
$ | |||||||||||
Xxxxx Xxxxxxxx: |
$ | |||||||||||
Xxxxxx Xxxxxxxx: |
$ | |||||||||||
Xxxx Xxxxxxxx: |
$ | |||||||||||
| October 24, 2005 | Xxxx Xxxxxxxx Irrevocable |
$ | 500,000.00 | |||||||||
Family Trust |
$ | |||||||||||
Xxxx Xxxxxxxx: |
$ | |||||||||||
Xxxxx Xxxxxxxx: |
$ | |||||||||||
Xxxxxx Xxxxxxxx: |
$ | |||||||||||
Xxxx Xxxxxxxx: |
$ | |||||||||||
| January 10, 2006 | Xxxx Xxxxxxxx Irrevocable |
$ | 600,000.00 | |||||||||
Family Trust |
$ | |||||||||||
Xxxx Xxxxxxxx: |
$ | |||||||||||
Xxxxx Xxxxxxxx: |
$ | |||||||||||
Xxxxxx Xxxxxxxx: |
$ | |||||||||||
Xxxx Xxxxxxxx: |
$ | |||||||||||
| March 10, 2006 | Xxxx Xxxxxxxx Irrevocable |
$ | 600,000.00 | |||||||||
Family Trust |
$ | |||||||||||
Xxxx Xxxxxxxx: |
$ | |||||||||||
Xxxxx Xxxxxxxx: |
$ | |||||||||||
Xxxxxx Xxxxxxxx: |
$ | |||||||||||
Xxxx Xxxxxxxx: |
$ | |||||||||||
| May 12, 2006 | Xxxx Xxxxxxxx Irrevocable |
$ | 275,000.00 | |||||||||
Family Trust |
$ | |||||||||||
Xxxx Xxxxxxxx: |
$ | |||||||||||
Xxxxx Xxxxxxxx: |
$ | |||||||||||
Xxxxxx Xxxxxxxx: |
$ | |||||||||||
Xxxx Xxxxxxxx: |
$ | |||||||||||
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