EXHIBIT 10.2
LOAN AGREEMENT
THIS LOAN AGREEMENT (this "Agreement") is entered into as of September 16,
1999 (the "Effective Date") by and between E2ENET, INC., a Delaware corporation
("E2E"), and MEI SOFTWARE SYSTEMS, INC., a Delaware corporation (the "Company").
E2E and the Company are sometimes referred to collectively herein as the
"Parties" and individually as a "Party".
WITNESSETH:
WHEREAS, E2E and the Company entered into that certain Letter of Intent
dated August 20, 1999 (the "LOI") wherein, among other things, E2E committed to
loan to the Company $1,000,000 in accordance with the terms of the LOI ("Loan
A");
WHEREAS, on August 26, 1999 (the "Initial Xxxxxxxxxxxx Xxxx"), X0X advanced
to the Company $400,000 (the "Initial Loan Proceeds") and the Company executed
and delivered to E2E a secured promissory note in the principal amount of
$1,000,000 ("Note A");
XXXXXXX, X0X, MEI Merger Company, Inc. and the Company, have entered into
that certain Agreement and Plan of Merger, dated the date hereof (the "Merger
Agreement") and, under the terms of the LOI, such event triggers the obligation
of E2E to loan to the Company up to an additional $1,200,000 in accordance with
the terms of the LOI ("Loan B"); and
WHEREAS, the Parties desire to consolidate the terms of Loan A and Loan B
so that the Parties have one loan agreement whereby E2E agrees to make a loan
(the "Loan") to the Company, in accordance with the terms hereof, in the maximum
principal amount of $2,200,000.
NOW, THEREFORE, in consideration of the foregoing, the terms hereof and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Parties agree as follows.
1. Short Term Loan.
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(a) The Initial Loan Proceeds, together with the Additional Loan Proceeds
(as hereafter defined), are sometimes hereinafter jointly referred to as the
"Loan Amount". Subject to the terms hereof: E2E (i) shall make available to the
Company additional funds (the "Additional Loan Proceeds") of up to $1,800,000,
and (ii) agrees that, unless (A) the Company fails to provide its president's
certificate as required in this Section 1, (B) the Company is in default of any
of the terms of this Agreement, the Note (as hereinafter defined) or the Merger
Agreement, or (C) E2E receives a notice from the Company's president requesting
E2E to delay making a disbursement or reduce the amount of any
disbursement of the Additional Loan Proceeds, E2E will automatically make
disbursements of the Additional Loan Proceeds to the Company in an aggregate
amount not to exceed $1,600,000 as follows:
(1) a disbursement in the amount of $300,000 on September 27, 1999;
(2) a disbursement in the amount of $400,000 on October 11, 1999;
(3) a disbursement in the amount of $300,000 on October 25, 1999;
(4) a disbursement in the amount of $300,000 on November 8, 1999; and
(5) a disbursement in the amount of $300,000 on November 22, 1999.
(b) If E2E elects, in accordance with the terms of Section 1.6(a) of the
Merger Agreement, to extend the Closing Date (as such term is defined in the
Merger Agreement) beyond November 30, 1999, E2E agrees to make the balance of
the Additional Loan Proceeds, in the amount of $200,000, available to the
Company, upon the Company's written request, at any time between November 30,
1999 and December 31, 1999; provided that (i) the Company provides its
president's certificate as required in this Section 1 and (ii) the Company is
not in default of any of the terms of this Agreement, the Note (as hereafter
defined) or the Merger Agreement.
(c) Each disbursement of the Additional Loan Proceeds shall be conditioned
upon E2E's receipt from the Company of a certificate executed by its president
updating the truth, accuracy and completeness of all of the representations,
warranties and covenants set forth on Exhibit A, subject to changes in such
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representation and warranties which are disclosed to E2E in writing prior to
each disbursement and do not have a material adverse affect on the Company or
its operations and prospects.
2. Use of Proceeds. The Company will apply all Initial Loan Proceeds and
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Additional Loan Proceeds solely for general working capital purposes and no
disbursement of the Loan shall be required to be made, nor shall any such
disbursement proceeds be used, for purposes of paying any indebtedness of the
Company to PNC Bank N.A.
3. Promissory Note. The Loan shall be evidenced by the Company's
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execution and delivery of a secured convertible promissory note, dated as of the
Initial Disbursement Date, in the form of Exhibit B hereof (the "Note"), in the
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amount of $2,200,000. Contemporaneously with the Company's delivery of the Note
to X0X, X0X will deliver Note A to the Company marked "CANCELLED".
4. Interest. Beginning on the Initial Disbursement Date, all amounts
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outstanding under the Loan shall bear interest at a rate of ten per cent (10%)
per annum.
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5. Security. Payment of the indebtedness evidenced by the Note and all
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other sums which shall become due hereunder shall be secured by a security
interest in the assets of the Company.
6. Representations, Warranties and Covenants of the Company. The Company
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hereby makes the representations, warranties and covenants to E2E as set forth
on Exhibit A attached hereto.
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7. E2E Breach in Making Required Disbursement. If, in breach of its
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obligations under this Xxxxxxxxx, X0X fails to make any required disbursement of
any advance under the Loan (a "Required Disbursement"), the Company shall have
the right to give E2E written notice that E2E is in breach of the terms of this
Agreement by failing to make the Required Disbursement and, if E2E fails to make
such Required Disbursement within five (5) Business Days after receipt of such
notice, the Company shall within ten (10) Business Days have the option to
convert any outstanding principal and interest due under the Loan (the "Amount
Due") to the same number of shares of Common Stock as the Series D Preferred
Stock (as such term is defined in the Note), had it been issued for the Amount
Due, would have been convertible into and, upon such conversion, this Agreement
shall terminate. The Company's option to convert the Amount Due in accordance
with the preceding sentence shall terminate on expiration of such ten (10)
Business Day Period. Except as expressly provided in this Section 7, the Company
shall have no other right or remedy against E2E or any of its affiliates under
this Agreement in the event E2E fails to make a Required Disbursement. As used
herein, the term "Business Day" means any day other than a Saturday, Sunday or
other legal holiday in the Commonwealth of Virginia.
8. Miscellaneous.
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8.1 No Third Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any person other than the Parties, and their respective
successors and permitted assigns.
8.2 Entire Agreement; Incorporation of Schedules and Other Agreements.
This Agreement, the Exhibits appended hereto and the documents, instruments and
other agreements between the Parties specifically identified in this Agreement
constitute the entire agreement between the Parties and supersede any prior
understandings, agreements or representations (including the LOI, which is
terminated) by or between the Parties, written or oral, with respect to the
subject matter hereof (other than the Merger Agreement). The Exhibits and the
documents, instruments and other agreements between the Parties specifically
identified in this Agreement are incorporated herein by reference and made a
part hereof.
8.3 Succession. This Agreement shall be binding upon and inure to the
benefit of the Parties named herein and their respective successors and assigns.
The Company may not assign its rights or obligations hereunder.
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8.4 Counterparts. This Agreement may be executed in two counterparts,
each of which shall be deemed an original but both of which together shall
constitute one and the same instrument.
8.5 Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
8.6 Notices. All notices, requests, demands, claims, and other
communications hereunder shall be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly delivered two
Business Days after it is sent by registered or certified mail, return receipt
requested, postage prepaid, or one business day after it is sent via a reputable
nationwide overnight courier service or sent via facsimile (with acknowledgment
of complete transmission) with a confirmation copy by registered or certified
mail, in each case to the intended recipient as set forth below:
If to E2E:
E2Enet, Inc.
000 Xxxxxxxxxxx Xxxxxx, X.X.
Xxxxx 0000
Xxxxxxxxxx, X.X. 00000
Attn: Xxxxxx X. Xxxxx, Chief Executive Officer
Fax No.: 202/000-0000
Copy to:
Verner, Liipfert, Bernhard, XxXxxxxxx & Hand, Chartered
000 00/xx/ Xxxxxx, X.X.
Xxxxx 000
Xxxxxxxxxx, X.X. 00000-0000
Attn: Xxxxxx Xxxxxxxx, Esquire
Xxxx Xxxxxxxxxxxxx, Esquire
Fax No.: 202/000-0000
If to the Company:
MEI Software Systems, Inc.
00000 Xxxxxxx Xxxxxx Xxxxx
Xxxxxx, Xxxxxxxx 00000
Fax No.: 703/000-0000
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Copy to:
Xxxxx Xxxxx Xxxx Xxxxxx Xxxxxxxxx and Xxxxx PC
00000 Xxxxxx Xxxxx Xxxx
Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Attn: Xxxx Xxxxxxx, Esquire
Fax No.: 703/000-0000
Any Party may give any notice, request, demand, claim, or other
communication hereunder using any other means (including personal delivery,
expedited courier, messenger service, telecopy, ordinary mail or electronic
mail), but no such notice, request, demand, claim, or other communication shall
be deemed to have been duly given unless and until it actually is received by
the party for whom it is intended. Any Party may change the address to which
notices, requests, demands, claims and other communications hereunder are to be
delivered by giving the other Parties notice in the manner herein set forth.
8.7 Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws (and not the law of conflicts) of the State of
Delaware.
8.8 Amendments and Waivers. The Parties may mutually amend any provision
of this Agreement at any time. No amendment or waiver of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by both
of the Parties. No waiver by either Party of any default, misrepresentation or
breach of warranty or covenant hereunder, whether intentional or not, shall be
deemed to extend to any prior or subsequent default, misrepresentation or breach
of warranty or covenant hereunder or affect in any way any rights arising by
virtue of any prior or subsequent default, misrepresentation, breach of such
warranty or covenant.
8.9 Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction. If the final judgment of a court of
competent jurisdiction declares that any term or provision hereof is invalid or
unenforceable, the Parties agree that the court making the determination of
invalidity or unenforceability shall have the power to reduce the scope,
duration, or area of the term or provision, to delete specific words or phrases,
or to replace any invalid or unenforceable term or provision with a term or
provision that is valid and enforceable and that comes closest to expressing the
intention of the invalid or unenforceable term or provision, and this Agreement
shall be enforceable as so modified after the expiration of the time within
which the
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judgment may be appealed, provided that this Agreement shall not then
substantially deprive either Party of the bargained-for performance of the other
Party.
8.10 Other Remedies. Except as otherwise provided herein, any and all
remedies herein expressly conferred upon a Party will be deemed cumulative with,
and not exclusive of, any other remedy conferred hereby or by law or equity upon
such party, and the exercise by a Party of any one remedy will not preclude the
exercise of any other remedy. The prevailing Party in any such action shall be
entitled to recover from the other Party its attorneys' fees, costs and expenses
incurred in connection with regard to such action.
8.11 Time of the Essence. Time is of the essence in this Agreement.
8.12 Construction. The Parties agree that they have been represented by
counsel during the negotiation, preparation and execution of this Agreement and,
therefore, waive the application of any law, regulation, holding or rule of
construction providing that ambiguities in an agreement or other document will
be construed against the party drafting such agreement or document. Any
reference to any federal, state, local, or foreign statute or law shall be
deemed also to refer to all rules and regulations promulgated thereunder, unless
the context requires otherwise.
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[Signatures on Next Page]
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IN WITNESS WHEREOF, the Parties hereto have executed this Loan Agreement as
of the date first above written.
E2ENET, INC.
By:/s/Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx, Senior Vice President and Chief
Financial Officer
MEI SOFTWARE SYSTEMS, INC.
By:/s/Xxxxx X. Xxxxx
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Xxxxx X. Xxxxx, President
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