EXHIBIT 10.14
LOAN AND SECURITY AGREEMENT
This Loan and Security Agreement (the "Agreement") is entered into as
of June 1, 1999 by and among U.S. Electricar, Inc., a California corporation
(the "Company"), Jagen Pty Ltd., an Australian company, and Xxxxxxx Xxxxxxxxx
(each, a "Secured Party" and together, the "Secured Parties").
RECITAL
A. The Company wishes to borrow funds from the Secured Parties and is
willing to return such amounts to the Secured Parties in cash or in securities
as contemplated in Secured Convertible Promissory Notes in the form attached
hereto as Exhibit A and incorporated herein by this reference (the "Note").
B. The Secured Parties are willing to accept the Notes provided that
the Company and each Secured Parties enter into a Note, this Agreement, the
Purchase Agreement and such other documents as are contemplated thereby, and
that the Company grant each Secured Parties a security interest in the
collateral contemplated hereunder.
NOW, THEREFORE, in consideration of the representations, warranties and
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:
1. Grant of Security Interest. Subject to the terms and conditions of
this Agreement, the Company hereby grants to the Secured Parties a security
interest in all property which is in the Company's possession or control in any
matter or for any purpose, including, without limitation, the Company's right,
title and interest in the now owned and hereafter acquired assets described on
Exhibit A, and the proceeds, increase and products of such property, and all
property which the Company may receive on account of such property
(collectively, the "Collateral").
2. Obligation Secured. This Agreement shall secure the performance of
the Notes on the conditions set forth below.
3. Covenants of the Company. The Company hereby covenants and agrees
with the Secured Parties as follows:
3.1 Defense. The Company shall defend the Collateral against
any adverse claims or demands. The Company shall not sell, contract for sale,
discount, factor, pledge, grant or permit to arise or exist a security interest
in, license, or otherwise dispose of, encumber or impair the rights of the
Secured Parties to any of the Collateral out of the ordinary course of business
(it being understood that a portion of the Company's business includes licensing
and selling its technology to other parties) until each Note has been satisfied
without the prior written approval of the Secured Parties.
3.2 Cooperation. The Company shall cooperate with the Secured
Parties to ensure that the Secured Parties obtain and maintain a fully perfected
security interest in the Collateral. Such cooperation shall include, without
limitation, assisting the Secured Parties with the giving of such notices as the
Secured Parties deem necessary or appropriate to inform third parties of the
Secured Parties' security interest in the Collateral, and executing from time to
time such additional documents and instruments, including any financing
statements under the UCC, if any, as may be requested by the Secured Parties to
perfect, continue or protect the security interest created by this Agreement, or
otherwise to achieve the purposes of this Agreement.
3.3 Notice of Claims. The Company shall promptly advise the
Secured Parties in writing of the initiation of any legal proceedings against
the Company or the threat thereof. The Company shall promptly notify Secured
Parties in writing of any event that affects the rights and remedies of Secured
Parties in relation to the Collateral, including, but not limited to, the levy
of any legal process against the Collateral and the adoption of any marketing
order, arrangement or procedure affecting the Collateral, whether governmental
or otherwise.
3.4 Discharge. The Company will pay and discharge promptly as
they become due and payable all taxes, assessments and other governmental
charges or levies imposed upon their income or upon any of their properties or
assets, or upon any part thereof, as well as all lawful claims of any kind
which, if unpaid, might by law become a lien or a charge upon the Collateral;
provided that the Company shall not be required to pay any such tax, assessment,
charge, levy or claim if the amount, applicability or validity thereof shall
currently be contested in good faith by appropriate proceedings promptly
initiated and diligently conducted.
3.5 Preserve Collateral. The Company shall keep the Collateral
separate and identifiable. The Company shall maintain the Collateral in good and
saleable condition, repair it as necessary and otherwise deal with the
Collateral in all such ways as are considered good practice by owners of like
property, use it lawfully and only as permitted by insurance policies, and
permit Secured Parties to inspect the Collateral at any reasonable time.
3.6 Deposit Proceeds. As to Collateral which is inventory or
accounts, the Company will, after an Event of Default under the Note, deposit
all cash proceeds as received in a demand deposit account designated by Secured
Parties, containing only such proceeds and deliver statements identifying units
of inventory disposed of, accounts which give rise to proceeds, all acquisitions
and returns of inventory, and all non-cash proceeds other than inventory
received in trade, as required by Secured Parties.
3.7 Collect Proceeds. As to Collateral which is accounts,
chattel paper, general intangibles and proceeds, the Company warrants,
represents and agrees that if an account debtor shall also be indebted to the
Company on another obligation, any payment made by such account debtor not
specifically designated to be applied on any particular obligation shall be
considered to be a payment on the account in which Secured Parties have a
security interest.
3.8 Insure Collateral. The Company will insure the Collateral
with the Secured Parties as loss payee in form and amounts, and against risks
and liability, satisfactory to the Secured Parties (to the extent customarily
maintained by businesses similar to the Company) and
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hereby assigns such policies to the Secured Parties and authorizes the Secured
Parties to make any claim thereunder and to receive payment of and endorse any
instrument in payment of any loss or return premium.
3.9 Pay Costs. The Company shall pay all reasonable costs and
expenses, including reasonable attorneys' fees, paid or incurred by the Secured
Parties to enforce this Agreement, to protect the security interest of the
Secured Parties in the Collateral, or to preserve, process, develop, maintain,
care for or insure the Collateral, or any part thereof.
3.10 Maintain Company. The Company shall not enter into an
agreement to merge with and into or consolidate with another entity or convey,
sell, lease or otherwise transfer substantially all of its assets at a time any
amounts are owed to Secured Parties under the Note. The Company will notify
Secured Parties immediately of any proposed change in the Debtor's name,
identity or corporate structure.
3.11 Fulfill Obligations. The Company shall use all
commercially reasonable efforts to fulfill its contractual obligations under the
Purchase Agreement and the documents contemplated thereby.
4. Representations and Warranties.
4.1 Representations and Warranties of the Company. The Company
represents and warrants to the Secured Parties as follows:
(a) The Company is duly organized, validly existing
and in good standing under the laws of California and has the power and
authority to own and operate its properties, to carry on its business as
currently conducted and as proposed to be conducted and to enter into and
perform this Agreement.
(b) This Agreement constitutes a legal, valid and
binding obligation of the Company enforceable in accordance with its terms,
subject to laws of general application relating to bankruptcy, insolvency and
the relief of debtors and rules of law governing specific performance,
injunctive relief or other equitable remedies.
(c) The execution and performance of this Agreement
has been duly authorized and will not constitute a breach of or a default under
the terms of the organizational documents of the Company or any material
agreement to which the Company is party or by which it is bound or restrictions
on transfer under applicable federal and state securities laws.
(d) Any officers, agents or representatives acting
for or on behalf of the Company in connection with this Agreement have been duly
authorized and are fully empowered to act in connection with this Agreement and
all matters related thereto.
(e) The Company has good and marketable title, free
and clear of any and all adverse claims, liens and encumbrances, to the
Collateral, free and clear of all covenants, conditions, restrictions, voting
trust arrangements, liens, charges, encumbrances, options and adverse claims or
rights whatsoever, except as specified in Schedule 5.1(e).
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(f) The Company recognizes that in an Event of
Default under the Note the Secured Parties may be unable to effect a public sale
of all or a part of the Collateral. The Company understands that private sales
so made may be at prices and on other terms less favorable to the Company than
if the Collateral were sold at public sales, and agrees that the Secured Parties
have no obligation to delay the sale of any of the Collateral. The Company
agrees that private sales made under the foregoing circumstances shall be deemed
to have been made in a commercially reasonable manner, if made at arms' length.
4.2 Representations and Warranties of the Secured Parties.
Each Secured Parties represents and warrants that:
(a) the Secured Party has had an opportunity to
discuss the Company's business, management and financial affairs with its
management and to obtain any additional information which the Secured Party has
deemed necessary or appropriate for deciding whether or not to accept the
Collateral as collateral for the Note, and has had an opportunity to receive,
review and understand the disclosures and information regarding the Company's
financial statements, capitalization and other business information as set forth
in Company's filings with the Securities and Exchange Commission which are all
incorporated herein by reference, together with all exhibits referenced therein.
(b) The Secured Party has such knowledge and
experience in financial and business matters, including investments in other
start-up companies, that it is capable of evaluating the merits and risks of the
Note, and it is able to bear the economic risk of such loan. Further, the
Secured Party has such knowledge and experience in financial and business
matters that he is capable of utilizing the information made available to him in
connection with the loan.
(c) If Secured Party is a corporation, partnership,
trust or estate: (i) the individual executing and delivering this Agreement on
behalf of the Secured Party has been duly authorized and is duly qualified to
execute and deliver this Agreement on behalf of Secured Party and (ii) the
signature of such individual is binding upon Secured Party.
4.3 Survival of Representations and Warranties. All of the
representations and warranties contained in this Agreement shall survive for so
long as any amounts are owed under the Note.
5. Additional Rights of Secured Parties.
5.1 Choice of Remedies. After an Event of Default under the
Note and any waiting or notice periods required by California law, the Secured
Parties shall have the right to do any one or more of the following:
(a) declare any indebtedness under the Notes
immediately due and payable.
(b) Enter the premises of the Company and enforce and
exercise all of the rights and remedies of secured parties under the Uniform
Commercial Code of the State of California.
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(c) Require the Company to assemble the Collateral
and sell the Collateral, in one or more sales, for cash or on credit or to a
wholesaler, retailer or user of the Collateral, at a private or public auction,
all of which shall be deemed to be commercially reasonable.
(d) Take such measures as the Secured Parties may
consider necessary or desirable to preserve, process, develop, maintain or
protect the Collateral or any portion thereof.
(e) Effect the transfer of any securities included in
the Collateral into the name of the Secured Parties.
(f) Require the Company to place the interest of the
Secured Parties as a lienholder on the certificate of title (or other evidence
of ownership) of any vehicle owned by the Company or with respect to which the
Company holds a beneficial interest.
(g) File or demand the Company file any forms or
other documents required to be filed with the United States Patent and Trademark
Office, United States Copyright Office, or any filings in any foreign
jurisdiction required to secure or protect the Secured Parties' interest in the
Collateral.
(h) Notify an account debtor or the obligor on an
instrument, if any, to make payment to the Secured Parties, whether or not the
Secured Parties were theretofore making collections on the account or
instrument.
(i) Take control of any and all proceeds to which the
Secured Parties are entitled.
5.2 No Notice. The Secured Parties shall have no duty or
obligation whatsoever to make or give any presentment, demand for performance,
notice of non-performance, notice of protest or notice of dishonor in connection
with the Collateral or to take any other action to preserve, protect or defend
any right, title or interest of the Company with respect to any of the
Collateral. The Company waives: (a) any right to require the Secured Parties to
proceed against any person before any other, or to pursue any other remedy; (b)
any right to the benefit of or to direct the application of the Collateral until
the obligations secured hereunder have been satisfied in full; (c) any right of
subrogation to any lender until the Notes have been satisfied; or (d) any right
to require the Secured Parties to (i) exhaust the Collateral, (ii) apply the
Collateral in any particular order, (iii) obtain any bond under claim and
deliver proceedings or retain possession of and not dispose of the Collateral
taken under claim and delivery proceedings until after trial or final judgment.
The Company further waives, to the fullest extent permitted by law, all rights
to notice for a judicial hearing prior to the time the Secured Parties takes
possession or dispose of the Collateral upon default as provided herein. The
Secured Parties shall not be obligated to make any sale of the Collateral or any
part of it if they determine not to do so, regardless of the fact that notice of
sale of the Collateral may have been given. After an Event of Default under the
Note the Secured Parties may, without notice or publication, adjourn a public or
private sale of the Collateral, or cause the same to be adjourned from time to
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time by announcement at the time and place fixed for sale, and such sale may,
without further notice, be made at the time and place to which the same was so
adjourned.
5.3 Discharge. In addition to all other rights given the
Secured Parties herein, the Secured Parties may, but shall not be obligated to,
discharge any or all taxes, liens, security interests or other encumbrances at
any time levied or placed upon the Collateral.
5.4 Insure Collateral. If the Company should fail after
reasonable request to deliver evidence of appropriate insurance to the Secured
Parties, the Secured Parties may, but shall have no duty to, obtain at the
Company's cost and expense, insurance naming the Secured Parties and/or the
Company as a payee, and the cost of such policy shall be secured by this
Agreement and repaid by the Company.
5.5 License. For purposes of enabling the Secured Parties to
exercise their rights and remedies hereunder, the Company hereby grants to the
Secured Parties an irrevocable, non-exclusive and assignable license
(exercisable without payment or royalty or other compensation to the Secured
Parties) to use, license or sublicense any Collateral that constitutes
intellectual property, to be exercisable by the Secured Parties solely after an
Event of Default under a Note.
6. Application of Proceeds.
6.1 Order. All proceeds of any sale of the Collateral by the
Secured Parties shall be applied as follows:
(a) first, to the payment of all reasonable fees and
expenses incurred by the Secured Parties, pro rata, in connection with any such
sale, including, but not limited to, the expenses of advertising the Collateral
to be sold, all court costs and reasonable fees of counsel for the Secured
Parties in connection therewith, and the payment of all reasonable costs and
expenses paid or incurred by the Secured Parties in connection with the exercise
of any right or remedy hereunder, to the extent that such advances, costs and
expenses shall not theretofore have been reimbursed to the Secured Parties;
(b) second, to the payment of accrued interest, if
any, on the Notes, pro rata; and
(c) third, to the payment of the outstanding
principal balance of the Notes, pro rata.
6.2 Surplus or Deficiency. Any surplus shall be delivered to
the Company. If there is any deficiency, the Company shall promptly pay it to
the Secured Parties on demand.
7. Duration of Security Interest. The grant of the security interest,
and all other terms and conditions of this Agreement as set forth herein, shall
terminate upon the Company's payment in full or conversion of all indebtedness
due under the Notes. On the date that such payment in full or conversion occurs,
the Secured Parties shall, within five (5) business days, execute and file
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such documents and instruments, including a termination statement under the UCC,
as may be required to terminate the Secured Parties' security interest in the
Collateral.
8. Notices. Any notice, request or other communication required or
permitted hereunder will be in writing and shall be deemed to have been duly
given if personally delivered or if telecopied or mailed by registered or
certified mail, postage prepaid, at the respective addresses of the parties as
set forth below. Any party hereto may by notice so given change its address for
future notice hereunder. Notice will be deemed to have been given when
personally delivered or when deposited in the mail or telecopied in the manner
set forth above and will be deemed to have been received when delivered.
(a) If to Jagen
0 Xxxxxx Xxxxxx
Xxxxx Xxxxx 0000
Xxxxxxxxx, Xxxxxxxx
Xxxxxxxxx
Telecopier 011 - 613 - 9826 - 5499
with a copy to:
Xxxx Xxxx Xxxx & Freidenrich LLP
0000 Xxxxxxxxx Xxxxx, Xxxxx 0000
Xxx Xxxxx, Xxxxxxxxxx 00000
Telecopier (000) 000-0000
Attention: Xxxxxx X. Xxxxxx, Esq.
(b) if to Xxxxxxxxx
0 Xxxxxxx Xxx, #0000
XXX Xxxxxxxx
Xxxxxxxxx 000000, Singapore
Telecopier 011 -65 - 220-5338
with a copy to:
Xxxx Xxxx Xxxx & Freidenrich LLP
0000 Xxxxxxxxx Xxxxx, Xxxxx 0000
Xxx Xxxxx, Xxxxxxxxxx 00000
Telecopier (000) 000-0000
Attention: Xxxxxx X. Xxxxxx, Esq.
(c) if to the Company
U.S. Electricar, Inc.
00000 Xxxxx Xxxxxxxx Xxxxx
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Xxxxxxxx, Xxxxxxxxxx 00000
Telecopier (000) 000-0000
Attention: President
with a copy to:
Bay Venture Counsel, LLP
0000 Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
Telecopier (000) 000-0000
9. Miscellaneous.
9.1 Successors and Assigns. The terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the respective
successors and assigns of the parties.
9.2 Governing Law. This Agreement and all acts and
transactions pursuant hereto and the rights and obligations of the parties
hereto shall be governed, construed and interpreted in accordance with the laws
of the State of California, without giving effect to principles of conflicts of
law.
9.3 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument. This Agreement may be executed by
facsimile.
9.4 Titles and Subtitles. The titles and subtitles used in
this Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
9.5 Attorney's Fees. If any action at law or in equity
(including arbitration) is necessary to enforce or interpret the terms of this
Agreement, the Secured Parties shall be entitled to reasonable attorney's fees,
costs and necessary disbursements in addition to any other relief to which they
may be entitled.
9.6 Amendments and Waivers. Any waiver, permit, consent or
approval of any kind or character on the part of any party of any breach or
default under this Agreement, or any waiver on the part of any party of any
provisions or conditions of this Agreement, must be in writing and shall be
effective only to the extent specifically set forth in such writing. The waiver
of any default or event of default hereunder shall not be a waiver of any
subsequent default or event of default. The Secured Parties' acceptance of
partial or delinquent payments or the Secured Parties' failure to exercise any
rights they may have shall not waive any obligation of the Company or any rights
of the Secured Parties or otherwise modify this Agreement, or waive any other
similar matter. All remedies, either under this Agreement or by law or otherwise
afforded to any party, shall be cumulative and not alternative.
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9.7 Remedies Cumulative; Specific Performance. The rights and
remedies of the parties hereto shall be cumulative (and not alternative). The
parties to this Agreement agree that, in the event of any breach or threatened
breach by the Company to this Agreement of any covenant, obligation or other
provision set forth in this Agreement for the benefit of any other party to this
Agreement, such other party shall be entitled (in addition to any other remedy
that may be available to it) to (a) a decree or order of specific performance or
mandamus to enforce the observance and performance of such covenant, obligation
or other provision, and (b) an injunction restraining such breach or threatened
breach.
9.8 Severability. If one or more provisions of this Agreement
are held to be unenforceable under applicable law, the parties agree to
renegotiate such provision in good faith to achieve the closest comparable terms
as is possible. In the event that the parties cannot reach a mutually agreeable
and enforceable replacement for such provision, then (a) such provision shall be
excluded from this Agreement, (b) the balance of the Agreement shall be
interpreted as if such provision were so excluded and (c) the balance of the
Agreement shall be enforceable in accordance with its terms.
9.9 Venue. Any action, arbitration, or proceeding arising
directly or indirectly from this Agreement or any other instrument or security
referenced herein shall be litigated or arbitrated, as appropriate, in the State
of California.
9.10 Entire Agreement. This Agreement and the documents
referred to herein constitute the entire agreement between the parties hereto
pertaining to the subject matter hereof, and any and all other written or oral
agreements regarding the subject matter hereof existing between the parties
hereto are expressly canceled.
9.11 Exculpation Among Secured Parties. Each Secured Party
acknowledges that it is not relying upon any person, firm or corporation, other
than the Company, in making its investment or decision to accept the Collateral
as security for the Notes.
IN WITNESS WHEREOF, the Company and the Secured Parties have caused
this Agreement to be executed as of the date first above written.
COMPANY: SECURED PARTY:
U.S. ELECTRICAR, INC. JAGEN PTY LTD.
By: By: /s/ Xxxxx Xxxxxxxx
----------------------------- --------------------------------
Name: Name: Xxxxx Xxxxxxxx
Title: Title: Director
-------------------------- -------------------------
SECURED PARTY:
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/s/Xxxxxxx Xxxxxxxxx
-----------------------------------
Xxxxxxx X. Xxxxxxxxx
EXHIBIT A
This Exhibit A covers all right and title of the Company in, to and under all of
the following, wherever located and whether now owned or hereafter owned or
acquired:
1. all "accounts" of the Company, as defined in Section 9-106
of the Uniform Commercial Code ("UCC"), including, without limitation, all
accounts receivable, obligations and contract rights owned or owing the Company;
2. all "chattel paper" of the Company, as defined in Section
9-105(1)(b) of the UCC;
3. all contracts, undertakings, franchise agreements or other
agreements in or under which the Company may now or hereafter have any right,
title or interest;
4. all "deposit accounts" of the Company, as defined in
Section 9-105(e) of the UCC, including, without limitation, any agreement
relating to the terms of payment or the terms of performance thereof;
5. all "documents" of the Company, as defined in Section
9-105(1)(f) of the UCC;
6. all "equipment" of the Company, as defined in Section
9-109(2) of the UCC;
7. all "fixtures" of the Company, as defined in Section
9-313(1)(a) of the UCC;
8. all "general intangibles" of the Company, as defined in
Section 9-106 of the UCC;
9. all "instruments" of the Company, as defined in Section
9-105(1)(i) of the UCC;
10. all "inventory" of the Company, as defined in Section
9-109(4) of the UCC;
11. all "investment property" of the Company, as defined in
Section 9-115(1)(f) of the UCC;
12. any and all copyright rights, copyright applications,
copyright registrations and like protections in each work or authorship and
derivative work thereof, whether published or unpublished and whether or not the
same also constitutes a trade secret, now or hereafter existing, created,
acquired or held (collectively, the "Copyrights");
13. any and all trade secrets, and any and all intellectual
property rights in computer software and computer software products now or
hereafter existing, created, acquired or held;
14. any and all design rights which may be available to the
Company now or hereafter existing, created, acquired or held;
15. all patents, patent applications and like protections
including without limitation improvements, divisions, continuations, renewals,
reissues, extensions and continuations in part of the same (collectively, the
"Patents");
16. any trademark and servicemark rights, whether registered
or not, applications to register and registrations of the same and like
protections, and the entire goodwill of the business of the Company connected
with and symbolized by such trademarks (collectively, the "Trademarks");
17. any and all claims for damages by way of past, present and
future infringement of any of the rights included above, with the right, but not
the obligation, to xxx for and collect such damages for said use or infringement
of the intellectual property rights identified above;
18. all licenses or other rights to use any of the Copyrights,
Patents or Trademarks, and all license fees and royalties arising from such use
to the extent permitted by such license or rights; and
19. all amendments, renewals and extensions of any of the
Copyrights, Trademarks or Patents;
20. all property of the Company held by Secured Parties or any
other party for whom the Secured Parties is acting as agent hereunder,
including, without limitation, all property of every description now or
hereafter in the possession or custody of or in transit to the Company for any
purpose, including, without limitation, safekeeping, collection or pledge;
21. all other goods and personal property of the Company
whether tangible or intangible and whether now or hereafter owned or existing,
leased, consigned by or to, or acquired by the Company and wherever located; and
22. to the extent not otherwise included, all "proceeds" as
defined in Section 9-306(1) of the UCC of each of the foregoing and all
accessions to, substitutions and replacements for, and rents, profits and
products of each of the foregoing.
Schedule 5.1(e)
None.
