LOAN AGREEMENT
Between
XXXXXXX X. XXXXXX and C. XXXXX XXXXXXX
("Lender")
and
WASTEMASTERS OF PALM BEACH, INC.
("Borrower")
DATED AS OF July 31, 1998
(This Table of Contents is not a part of this Loan Agreement and is only
for convenience of reference.)
PAGE
PARTIES 1
RECITALS 1
ARTICLE I
DEFINITIONS AND USE OF PHRASES
Section 1.01 Definitions 2
Section 1.02 Use of Phrases 3
ARTICLE II
THE LOAN
Section 2.01 Amount of Maturity 3
Section 2.02 Interest Rate and Place of Payment 4
Section 2.03 Prepayment Provision 4
Section 2.04 Form of Note; Security 4
Section 2.05 Application of Proceeds of Note 5
ARTICLE III
PARTICULAR COVENANTS OF THE BORROWER
Page
Section 3.01 Payment of the Note 5
Section 3.02 [Reserved] 5
Section 3.03 [Reserved] 5
Section 3.04 Maintenance, Repairs and Changes, Alterations,
Taxes other charges 5
Section 3.05 Warranty of Title 6
Section 3.06 Sale of Project Prohibited Except Under
Certain Conditions 6
Section 3.07 [Reserved] 6
Section 3.08 Inspections by Lender 6
ARTICLE IV
PROVISIONS RESPECTING INSURANCE AND CONDEMNATION
Section 4.01 Insurance Required 6
Section 4.02 Disposition of Net Insurance Proceeds 7
Section 4.03 Disposition of Net Condemnation Award 7
ARTICLE V
EVENTS OF DEFAULT AND REMEDIES
Section 5.01 Events of Default Defined 7
Section 5.02 Remedies of Default 8
ARTICLE VI
MISCELLANEOUS PROVISIONS
Section 6.01 Investment Banking Agreement 9
Section 6.02 Limitation of Rights 9
Section 6.03 Financing Agreement Governed by Alabama Law 9
Section 6.04 Notices of Borrower 9
Section 6.05 Severability 10
Section 6.06 Article and Section Captions 10
Section 6.07 Costs and Expenses 10
LOAN AGREEMENT between XXXXXXX X. XXXXXX ("Xxxxxx"), an individual,
his heirs, survivors and assigns, C. XXXXX XXXXXXX ("Xxxxxxx"), an
individual, his heirs, survivors and assigns, (collectively, the
"Lender"), and WASTEMASTERS OF PALM BEACH, INC., a Florida corporation
(the "Borrower"),
RECITALS
WHEREAS, the Borrower is a Florida corporation organized and
existing under the laws of the State of Florida, and has all requisite
corporate power and authority to make loans and borrow money and take all
such other actions necessary or convenient in furtherance of the
transactions contemplated by this agreement; and
WHEREAS, the Borrower proposes to borrow the funds necessary to
acquire by purchase that certain solid waste transfer station facility
located in Palm Beach County, Florida, and more particularly described in
Exhibit "B" attached hereto (the "Project"); and
WHEREAS, the Borrower has been created for the purpose of acquiring
the Project, and has, at the time of this Loan Agreement, no other assets
other than the Project, and has no other liabilities other than those
disclosed to the Lender; and
WHEREAS, the Lender has indicated its willingness to loan the
Borrower the funds necessary for the Borrower to acquire the Project,
upon the terms and conditions contained herein ; and
WHEREAS, this Loan Agreement and the execution and delivery thereof
and the execution of the Note(as hereinafter defined) by the Borrower
have been in all respects duly and validly authorized by proper corporate
action of the Borrower.
NOW, THEREFORE, THIS LOAN AGREEMENT
WITNESSETH:
For the aforesaid purpose and in consideration of the respective
agreements herein contained, it is hereby agreed between the parties
signatory hereto, each with each of the others, as follows:
ARTICLE I
Definitions and Use of Phrases
Section 1.01. Definitions. The following words and phrases and
others evidently intended as the equivalent thereof shall, in the absence
of clear implication herein otherwise, be given the following respective
interpretations herein:
"Equipment" means those items of furnishings and equipment that are
to be acquired and installed in or about the Facility and purchased with
the proceeds of the Loan and any other items of furnishings and equipment
that, under the provisions hereof, are to constitute part of the
"Equipment".
"Facility" means that certain building or buildings or any other
improvements to the real property constituting the Project hereunder,
whether currently constructed or constructed in the future, as said
Facility may at any time exist.
"Loan" means the loan made by the Lender to the Borrower hereunder.
"Mortgage" means that certain Mortgage and Security Agreement dated
July 31, 1998, executed by the Borrower in favor of the Lender.
"Net Condemnation Award" means the total amount awarded as
compensation for any part of the Project taken under the exercise of the
power of eminent domain plus damages to any part not taken, less and
except (a) any portion thereof to which the Borrower is entitled under
the provisions hereunder, and (b) all attorneys' fees and other costs and
expenses incurred in the condemnation proceedings with respect to which
such award was made (other than those directly by the Borrower or
deducted from that portion of the award to which it is entitled under the
provisions hereof).
"Net Insurance Proceeds" means the total insurance proceeds
recovered by the Borrower, or the Lender on account of any damage to or
destruction of the Project less all costs of collection thereof.
"Note" means the promissory note dated July 31, 1998, in the form
attached hereto as Exhibit "A" evidencing the Loan by the Lender to the
Borrower, and the agreement by the Borrower to repay the loan to the
Lender.
"Permitted Encumbrances" means, as of any particular time, (a) liens
for ad valorem taxes not then delinquent, (b) utility, access and other
easements and rights-of-way, restrictions and exceptions (including
inchoate mechanics' and materialmen's liens) that will not interfere with
or impair the operations for which the Facility was designed or last
modified, (c) such minor defects, irregularities, encumbrances,
easements, rights-of-way and clouds on title as normally exist with
respect to properties similar in character to those forming a part of the
Project and as do not materially impair the use of the property affected
thereby for the purpose for which it was acquired or is held by the
Borrower, and (e) any personal property or fixtures acquired by the
Borrower under lease, lease-purchase or a purchase money security
interest when no Loan proceeds were used to acquire such personal
property or fixtures.
"Proceeds" means all revenues and receipts from the Project
including receipts from condemnations or insurance, and amounts received
from the Loan.
"Project" means the Facility, the Equipment and the Project Site, as
they may at any time exist, and all other property and rights of every
kind described or referred to or intended so to be in the granting
clauses hereof or in any way subject to the lien hereof.
"Project Site" means the real property upon which the Project is
being constructed
"Supplemental Agreement" means an agreement supplemental hereto.
Section 1.02. Use of Phrases. "Herein", "hereby" "hereunder",
"hereof", "hereinbefore", "hereinafter", and other equivalent words refer
to the Loan Agreement and not solely to the particular portion thereof in
which any such word is used. The definitions set forth in Section 1.01
hereof include both singular and plural. Whenever used herein, any
pronoun shall be deemed to include both singular and plural and to cover
all genders.
ARTICLE II
The Loan
Section 2.01. Amount and Maturity. There is hereby authorized to
be made under this Loan Agreement the Loan by the Lender to the Borrower
in the principal amount of ONE MILLION AND 00/100 ($1,000,000) DOLLARS,
such Loan to be evidenced by the Note. The Note shall be dated the date
hereof, with one, single payment due on the 31st day of July, 1999. As
part of the consideration of the Lender's willingness to make the Loan,
the Borrower shall, upon the receipt of the proceeds of the Loan,
transfer or cause to be transferred to the Lender an aggregate of 100,000
shares of unrestricted common stock of Wastemasters, Inc.
("Wastemasters")(NASDAQ symbol WAST) as follows: 50,000 shares shall be
transferred to Xxxxxx to an account as directed by Xxxxxx, and 50,000
shares shall be transferred to Xxxxxxx to an account as directed by
Xxxxxxx. Such shares shall be fully unrestricted when transferred and
shall be of a form and tenor as shall be free to trade, sell,
hypothecate, mortgage or convey by the Lender upon their receipt of the
same (such shares in such form herein referred to as "Unrestricted
Shares").
Section 2.02. Interest Rate and Place of Payment. The Note shall
bear interest on the unpaid principal balance through and including July
31, 1999 with no stated interest rate, but shall be repaid at any time
between February 2, 1999 and July 31, 1999, but in no event later than
July 31, 1999, in one, single payment of $1,500,000 plus the transfer by
or on behalf of the Borrower to or for the account of the Lender of
300,000 Unrestricted Shares of Wastemasters as follows: 150,000 shares to
or for the account of Xxxxxx and 150,000 shares to or for the account of
Xxxxxxx; provided, however, that, in the event that the Borrower repays
the Loan in full at any time between the date hereof and February 1,
1999, then the Note shall be paid in one, single payment of $1,250,000
plus the transfer by or on behalf of the Borrower to or for the account
of the Lender of 150,000 Unrestricted Shares of Wastemasters as follows:
75,000 shares to or for the account of Xxxxxx and 75,000 shares to or for
the account of Xxxxxxx. Payments on the Note shall be made at such
place as the Lender may, from time to time, designate in writing to the
Borrower.
Section 2.03. Prepayment Provision. The Note may be retired and
repaid in part or in full prior to its normal maturity at any time
without premium or penalty, provided, however, that such prepayment shall
not serve to decrease or diminish the payments set forth in Section 2.02
above.
Section 2.04. Form of the Note; Security. The Note shall be in the
form as set forth in Exhibit "A" attached hereto. As additional security
for the obligations of the Borrower hereunder, the Borrower shall, as a
condition precedent of the Loan, execute and deliver to the Lender, the
Mortgage in the form attached hereto as Exhibit "C," together with a
mortgagee's policy of title insurance, naming the Lender as insureds, in
the amount of the Loan. The mortgage shall be recorded in such offices as
necessary to give adequate notice of the Lender's first mortgage interest
in the Project under the laws of the State of Florida then in effect, and
the Borrower shall cause such UCC financing statements to be filed in
such offices as may be necessary to perfect the security interests in the
Project granted to the Borrower in the Mortgage. In order to further
secure the obligations of the Borrower hereunder, the Borrower shall
transfer or cause to be transferred, 500,000 Unrestricted Shares of
Wastemasters to such account as mutually agreed upon by the Borrower and
the Lender, such shares to be held in such account until the Note shall
have been paid in full. The transfer of such shares shall be accompanied
by such stock powers as shall be necessary to enable such shares to be
transferred to the Lender in Event of Default as described herein.
Section 2.05. Application of Proceeds of Note. The proceeds of the
Note shall be applied by the Borrower for the acquisition of the Project,
and for no other purpose.
ARTICLE III
Particular Covenants of the Borrower
Section 3.01. Payment of the Note. The Borrower will pay or will
cause to be paid, from all sources legally available to it, the principal
of and the interest on the Note as specified therein, and it will
otherwise perform all obligations that, either expressly or by reasonable
implication, are imposed on it in this Loan Agreement, and it will not
default hereunder.
Section 3.02. [Reserved]
Section 3.03. [Reserved]
Section 3.04. Maintenance, Repairs, Changes, Alterations, Taxes and
Other Charges. The Borrower will continuously maintain the Facility, the
Equipment and the other improvements located on the Project Site in good
repair and in good operating condition (reasonable wear and tear
excepted), making from time to time all necessary and proper renewals
thereof and repairs and replacements to be so made, provided, however,
that the Borrower shall not be obligated to renew, repair or replace any
of the Equipment that may become inadequate, obsolete, worn out,
unsuitable, undesirable or unnecessary in the operation of the Facility
or to cause any such Equipment to be renewed, repaired or replaced.
The Borrower will pay, or will cause to be paid, (a) all taxes and
governmental charges of any kind whatsoever that may be lawfully assessed
or levied against or with respect to the Project or any part thereof
(including, without limiting the generality of the foregoing, any taxes
levied upon or with respect to the Project, (b) all utility and other
charges incurred in the operation, maintenance, use, occupancy and upkeep
of the Project, and (d) all assessments and charges lawfully made by any
governmental body for public improvements that may be secured by a lien
on the Project, provided that with respect to special assessments or
other governmental charges that may lawfully be paid in installments over
a period of years, the Borrower shall be obligated to pay, or cause to be
paid, only such installments as come due while any part of the principal
of and the interest on the Note remains outstanding and unpaid. The
Borrower may, however, defer or cause to be deferred payment of any such
taxes, charges or assessments pending the bona fide contest thereof
unless it shall appear that by such action the lien of the Lender as to
any part of the Project shall be materially endangered or the Project or
any part thereof shall be subject to loss or forfeiture, in which event
any such payment then due shall not be deferred.
Section 3.05. Warranty of Title. The Borrower warrants its title to
the property described in Section 2.01 hereof as being free and clear of
every lien, encumbrance, trust or charge prior hereto, other than
Permitted Encumbrances; and warrants that it will forever warrant and
defend the title to the said property unto the Lender against the lawful
claims of all persons whomsoever, except those claiming under Permitted
Encumbrances.
Section 3.06. Sale of Project Prohibited Except Under Certain
Conditions. The Borrower will not hereafter sell or otherwise dispose
of the whole or any integral part of the Project until the principal of
and the interest on the Note have been paid in full, or unless and until
provision for such payment has been made. Nothing contained in this
section shall prevent the consolidation of the Borrower with, or the
merger of the Borrower into, any corporation having corporate authority
to carry on the business of owning and operating the Project; provided
that upon any such consolidation, merger or transfer the due and punctual
payment of the principal of and the interest on the Note according to its
terms and the due and punctual performance and observance of all the
agreements and conditions of this Loan Agreement to be kept and performed
by the Borrower shall be expressly assumed in writing by the corporation
resulting from such consolidation or surviving such merger or to which
the Project shall be transferred as an entirety; and provided further,
that such consolidation, merger or transfer shall not cause or result in
any mortgage or other lien being affixed to or imposed on or becoming a
lien on the Project or the revenues therefrom.
Section 3.07. [Reserved]
Section 3.08. Inspections by Lender. The Borrower will permit the
Lender and its duly authorized agent to inspect, at any reasonable time,
any and every part of the Project and will permit the Lender to inspect,
at any reasonable time, the books and records of the Borrower pertaining
to the Project. The Borrower will assist in furnishing facilities for
any such inspection.
ARTICLE IV
Provisions Respecting Insurance and Condemnation
Section 4.01. Insurance Covering the Project. The Borrower shall
at its expense keep the Project insured. The Borrower shall also cause,
if requested by the Lender, all policies of insurance respecting the
Project, or a certificate or certificates of the respective insurers
providing such insurance which attest the fact that the same is in full
force and effect, to be deposited with the Lender. Prior to the
expiration or cancellation of any such policy, the Borrower shall
furnish to the Lender evidence reasonably satisfactory to the Lender that
such policy has been renewed or replaced by another policy or that there
is no necessity therefor .
Section 4.02. Disposition of Net Insurance Proceeds. The entire
Net Insurance Proceeds received by the Borrower shall be applied by the
Borrower to payment of the costs of repairing, renewing or rebuilding the
property damaged or destroyed (either on completion of the work of such
repair, renewal or rebuilding or as such work progresses, as the Lender
may determine), provided that any portion of such proceeds remaining
after payment in full of such costs shall be applied to the Note.
Section 4.03. Disposition of Net Condemnation Award. The entire
amount of any Net Condemnation Award, if any, shall be paid to the Lender
and applied to the Note.
ARTICLE V
Events of Default and Remedies of Lender
Section 5.01. Events of Default Defined. Any of the following
shall constitute default hereunder by the Borrower:
(a) Failure by the Borrower to pay the principal of or the interest
on the Note as and when the same becomes due therein and herein provided
(whether such shall become due by maturity or otherwise);
(b) Failure by the Borrower to perform and observe any of the
agreements and covenants on its part contained herein (other than its
agreement to pay the principal of and interest on the Note after sixty
(60) days' written notice to it of such failure made by the Lender,
unless during such period or any extension thereof the Borrower has
commenced and is diligently pursuing appropriate corrective action; or
(c) Appointment by a court having jurisdiction of a receiver for the
Project or for a substantial part thereof or approval by a court of
competent jurisdiction of any petition for reorganization of the Project
or rearrangement or readjustment of the obligations of the Borrower under
any provision of the bankruptcy laws of the United States.
(d) Any material warranty, representation or other statement by or
on behalf of the Borrower or to the Lender, being false or misleading
in any material respect at the same time made.
Section 5.02. Remedies on Default. Upon any default in any one of
the ways defined in the preceding Section 5.01 hereof, the Lender shall
have the following rights and remedies:
(a) Acceleration. The Lender may, by written notice to the
Borrower, declare the principal of the Note forthwith due and payable,
and thereupon it shall so be, anything herein or therein to the contrary
notwithstanding.
(b) Other Remedies. The Lender shall have the power to proceed with
any other right or remedy independent of or in aid of the foregoing
powers, as it may deem best, including, without limitation, the rights
and remedies granted to the Lender pursuant to the Mortgage, to secure
specific performance by the Borrower of any agreement on its part herein
contained, and the right to the appointment, as a matter of right and
without regard to the sufficiency of the security afforded by the
Project, of a receiver for all or any part of the Project and the
earnings, rents and incomes there from; the rights here specified are to
be cumulative to all other, and shall not exclude any such available
rights, remedies or powers. If, upon the occurrence of an event of
default, the Borrower makes good the default which is the reason for such
event of default and every other default hereunder (except any principal
and interest declared payable that would, absent such declaration, not
then be payable), with interest on all overdue payment so principal,
interest and premium (if any), and makes reimbursement of all the
reasonable expenses of the Lender, then the Lender may in its discretion
waive such default and its consequences, but no such waiver shall affect
any subsequent default or right relative thereto. Further, upon the
occurrence of any event of default, except a default in the payment of
the principal of or the interest or premium (if any) of the Note, the
Lender may in its discretion, waive such default and its consequences
without the Borrower having theretofore made good such default, but no
such waiver shall affect any subsequent default or right relative
thereto. In case any proceeding taken by the Lender on account of any
event of default shall have been discontinued or abandoned for any
reason, or shall have been determined adversely to the Lender, then and
in every case the Borrower and the Lender shall be restored to their
former positions and rights hereunder, respectively, and all rights,
remedies and powers of the Lender shall continue as though no such
proceeding had been taken.
If, upon the occurrence of an event of default, the Borrower makes
good the default which is the reason for such event of default and every
other default hereunder (except any principal and interest declared
payable that would, absent such declaration, not then be payable), with
interest on all overdue payments of principal, interest and premium (if
any), and makes reimbursement of all the reasonable expenses of the
Lender, then the Lender may in its discretion waive such default and its
consequences, but no such waiver shall affect any subsequent default or
right relative thereto. further, upon the occurrence of any event of
default, except a default in the payment of the principal of or the
interest or premium (if any) on the Bond, the Lender may in its
discretion waive such default and its consequences without the Borrower
having theretofore made good such default, but no such waiver shall
affect any subsequent default or right relative thereto. In case any
proceeding taken by the Lender on account of any event of default shall
have been discontinued or abandoned for any reason, or shall have been
determined adversely to the Lender, then and in every case the Borrower
and the Lender shall be restored to their former positions and rights
hereunder, respectively, and all rights, remedies and powers of the
Lender shall continue as though no such proceeding had been taken.
(c) Additional Remedies. If an Event of Default shall have occurred
and be continuing, an such Event of Default does not provide for a cure
period as described above, or such cure period shall have expired and the
Event of Default be continuing, then the Borrower hereby agrees to
transfer or cause to be transferred to or for the account of the Lender
an amount of Unrestricted Shares of Wastemasters, valued on the date of
such transfer, in the amount of $2,000,000, such transfer taking into
account, however, the 500,000 Unrestricted Shares of Wastemasters held as
security for the Loan pursuant to Section 2.04 hereof.
ARTICLE VI
Miscellaneous Provisions
Section 6.01. Investment Banking Agreement. As additional
consideration for the making of the Loan by the Lender, the Borrower
agrees to execute, as a condition precedent to the making of the loan,
the Professional Services Agreement with Xxxxxx Xxxxxxx & Company,
Incorporated, the form of which is attached hereto as Exhibit "D."
Section 6.02. Limitation of Rights. Nothing herein shall confer any
right on anyone other than the Borrower and the Lender.
Section 6.03. Financing Agreement Governed by Alabama Law. It is
the intention of the parties hereto that this Financing Agreement shall
in all respects be governed by the laws of the State of Alabama, and that
the Loan made pursuant hereto be considered, for all purposes, to have
been made in the State of Alabama..
Section 6.04. Notice. All notices, demands, requests and other
communications hereunder shall be deemed sufficient and properly given if
in writing and delivered, or sent by registered or certified mail,
postage prepaid, to the following addresses:
(a) If to the Borrower:
WasteMasters of Palm Beach, Inc.
00000 Xxxxxx Xxxx
Xxxxxx, Xxxxx 00000
(b) If to the Lender:
Xxxxxxx X. Xxxxxx
00 Xxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Any of the above mentioned parties may, by like notice,
designate and further or different addresses to which subsequent notices
shall be sent.
Section 6.05 Severability. In the event that any provision hereof
shall be held invalid or unenforceable by any court of competent
jurisdiction, such holding shall not invalidate or render unenforceable
any other provision hereof.
Section 6.06 Article and Section Captions. The article and section
headings and captions contained herein are included for convenience only
and shall not be considered a part hereof or affect in any manner the
construction or interpretation hereof.
Section 6.07 Costs and Expenses. All costs and expenses relating to
the execution and delivery of this Loan Agreement, the making of the Loan
by the Lender, and the delivery of the Mortgage, the title insurance
policy, the recording of documents required hereunder, costs and expenses
of respective counsel engaged by the parties hereto, and any and all
other costs and expenses related to the transactions contemplated
hereunder, shall be the sole responsibility and shall be paid by the
Borrower.
IN WITNESS WHEREOF, the Borrower has caused this Loan Agreement to
be executed in its corporate name and behalf by the Chairman of the Board
of Directors, has caused its corporate seal to be hereunto affixed and
has caused this Loan Agreement to be attested by its Secretary, the
Lender, to evidence its acceptance of the provisions hereby created, has
caused this Loan Agreement to be executed in their respective names , and
the Borrower and the Lender have caused this Loan Agreement to be
executed on this 31st day of July, 1998.
WASTEMASTERS OF PALM BEACH, INC.
By: /s/ X.X. Xxxxxxxx, Xx. its Chairman
-----------------------------------
Its Chairman
ATTEST:
By: /s/ X.X. Xxxxxxxx, Xx.
Its Secretary
/s/ Xxxxxxx X. Xxxxxx
---------------------
XXXXXXX X. XXXXXX
/s/ C. Xxxxx Xxxxxxx
--------------------
C. XXXXX XXXXXXX
STATE OF FLORIDA
COUNTY OF PALM BEACH
I, the undersigned authority, a Notary Public in and for said State
at Large, hereby certify that X. X. Xxxxxxxx, Xx. whose name as Chairman
of the Board of Directors and President of WASTEMASTERS OF PALM BEACH,
INC., a Florida corporation, is signed to the foregoing Loan Agreement
and who is known to me, acknowledged before me on this day that, being
informed of the contents of the within instrument, he, as such officer
and with full authority, executed the same voluntarily for and as the act
of said public corporation on the date the same bears date.
GIVEN under my hand and official seal of office, this the 31st day
of July 1998.
/s/ Xxxxx X. Xxxxxx
--------------------
NOTARY PUBLIC
NOTARY SEAL
