LOAN AGREEMENT
THIS LOAN AGREEMENT is made effective as of December 31, 2000 (the
"Effective Date ") by and between xxxxxxxx.xxx, inc. a Nevada corporation (the
"Company"), and Verus Investments Holdings, Inc., a British Virgin Islands
corporation ("Lender").
1. THE LOAN.
1.1 The Loan. Lender agrees, on the terms of and subject to the conditions
specified in this Agreement, to lend to the Company the sum of Nine Hundred
Thirty Nine Thousand Two Hundred Sixty One and No/100 United States Dollars
($939,261). Lender's loan shall be evidenced by a promissory note in the form
set forth on Exhibit A dated the Effective Date (the "Note"). The loan made in
accordance with this Section 1.1 shall be referred to herein as the "Loan."
1.2 Place and Date of Closing. The closing of the transactions provided for
herein (the "Closing") will be held at the offices of the Company on the
Effective Date or at such other time and place as the parties shall mutually
agree (the "Closing Date").
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to Lender as follows:
2.1 Organization and Standing. The Company is a corporation duly organized
and validly existing under, and by virtue of, the laws of the State of Nevada
and is in good standing under such laws. The Company is duly qualified or
licensed as a corporation in good standing under the laws of each jurisdiction
wherein failure to so qualify could reasonably be expected to have a Materially
Adverse Effect (as defined below). The Company has the requisite corporate power
to own and operate its properties and assets, and to carry on its business as
presently conducted and as proposed to be conducted.
2.2 Corporate Power. The Company will have at the Closing all requisite
legal and corporate power to execute and deliver this Agreement, to issue the
Note and to carry out and perform its obligations under the terms of this
Agreement and the Note.
2.3 Authorization. As soon as possible following the Closing, the
execution, delivery and performance of this Agreement and the Note by the
Company will be duly ratified by all requisite corporate action, so that it will
constitute the valid and binding obligations of the Company enforceable against
the Company in accordance with its terms, subject as to enforcement of remedies
to applicable bankruptcy, insolvency, reorganization, or similar laws relating
to or affecting the enforcement of creditors' rights.
2.4 No Conflict. The Company's execution, delivery and performance of its
obligations under this Agreement and the Note do not and will not contravene or
conflict with any provision of (i) applicable law, rule or regulation (ii) any
judgment, decree or order applicable or binding upon the Company, (iii) the
corporate charter or bylaws of the Company, or (iv) any agreement or instrument
binding upon the Company or upon any assets or property of
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the Company for which the Company has obtained the necessary consent or waiver
of the other parties to such agreement or instrument.
2.5 Full Disclosure. To the knowledge of the Company, all factual
information heretofore or contemporaneously furnished by the Company to the
Lender for purposes of or in connection with this Agreement or any transaction
contemplated hereby is true and accurate in every material respect on the date
as of which such information is dated or certified, and the Company has not
knowingly omitted any fact necessary to prevent such information from being
false or misleading.
2.6 No Regulatory Restrictions. The Company is not (a) an "investment
company" or a company "controlled" by an "investment company," within the
meaning of the Investment Company Act of 1940, as amended, (b) a "holding
company" or a "subsidiary company" of a holding company within the meaning of
the Public Utility Holding Company Act of 1935, as amended, or (iii) otherwise
subject to any regulatory scheme which restricts its ability to incur debt.
2.7 Authorizations. The Company has obtained all licenses, permits,
franchises and other governmental authorizations necessary to the ownership of
its properties or to the conduct of its businesses, including without limitation
all licenses, permits, franchises and other governmental authorizations required
under all applicable environmental laws, a failure to obtain or violation of
which could reasonably be expected to have a Material Adverse Effect.
2.8 Financial Statements. On or prior to the date of this Agreement, the
Company has furnished to the Lender its balance sheet and consolidating
statements of income, earnings, stockholders equity and cash flows (i) as of and
for the fiscal year ended December 31, 1999, and (ii) as of and for the fiscal
quarter(s) and the portion of the fiscal year ended September 30, 2000,
certified by the Company's chief financial officer. The Company acknowledges
that the Lender is relying upon the accuracy of such financial statements as an
inducement to make the Loan.
For the purposes of this Agreement, "Material Adverse Effect" means a material
adverse effect on (a) the business, operations, property, condition or prospects
(financial or otherwise) of the Company, (b) the ability of the Company to
perform its obligations under this Agreement or the Note, or (c) the validity or
enforceability of this Agreement or the Note or the rights and remedies of the
Lender under this Agreement or the Note.
3. REPRESENTATIONS AND WARRANTIES OF THE LENDER AND ADDITIONAL REPRESENTATIONS
OF THE COMPANY.
3.1 Representations and Warranties. Lender represents and warrants to the
Company as of the Closing Date as follows:
(a) The Lender will have at the Closing all requisite legal and
corporate power to execute and deliver this Agreement and to carry out its
obligations under the terms of this Agreement.
(b) All action on the part of the Lender for the authorization,
execution,
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delivery and performance by the Lender of this Agreement has been taken,
and this Agreement constitutes a valid and binding obligation of the
Lender, enforceable in accordance with its terms, except as may be limited
by applicable bankruptcy, insolvency, reorganization, or similar laws
relating to or affecting the enforcement of creditors' rights.
(c) The Lender is a sophisticated investor with such knowledge and
experience in financial and business matters so as to be capable of
evaluating the merits and risks of the Note and who is capable of bearing
the economic risks of such Note, assuming the completeness and accuracy of
the representations made by the Company.
3.2 Legends. The certificate representing the Note will be endorsed with
the following legend (in addition to any legend required under applicable state
securities laws):
THE SECURITIES REPRESENTED BY THIS PROMISSORY NOTE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR
ANY STATE SECURITIES LAW. SUCH SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN
THE ABSENCE OF SUCH REGISTRATION UNLESS SUCH SALE OR TRANSFER IS EXEMPT
FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENT OF SAID ACT AND
ANY STATE SECURITIES LAWS.
4. COVENANTS. The Company agrees that: (i) it will maintain its corporate
existence and good standing in each jurisdiction wherein such qualification is
necessary, except where failure to do so would not have a Material Adverse
Effect; (ii) it will promptly upon learning of the occurrence of any of the
following, furnish to the Lender notice of such occurrence and the steps being
taken by the Company with respect thereto: (a) the occurrence of any Event of
Default, or (b) the institution of, or any adverse determination in, any
material litigation, arbitration proceeding or governmental proceeding; (iii)
without the prior written consent of Lender, it will not incur or permit to
exist any debt other than that represented by the Note except for trade debt
incurred in the ordinary course of business, and in any event, to exceed
$25,000; and (iv) without the prior written consent of Lender, it will not enter
into or execute or permit to exist any lien, security interest or encumbrance on
any of the assets of the Company except to secure debt incurred in the normal
course of business (i.e., liens of carriers, warehousemen, mechanics, laborers
and materialmen or incurred in connection with workers compensation or
unemployment insurance), and in any event, not to exceed $25,000.
Notwithstanding the foregoing, the Lender (and/or any affiliates of the Lender)
and the Company may enter into one or several lending transactions subsequent to
the Loan without the requirement of any prior written consent.
5. DEFAULTS AND REMEDIES.
5.1 Events of Default. The following events shall be considered "Events of
Default" with respect to the Note:
(a) The Company shall default in the payment of any part of the
principal or
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accrued interest on the Note for more than thirty (30) days after the same
shall become due and payable, whether at maturity or at a date fixed for
prepayment or by acceleration or otherwise;
(b) The Company shall make an assignment for the benefit of creditors,
or shall admit in writing its inability to pay its debts as they become
due, or shall file a voluntary petition for bankruptcy, or shall file any
petition or answer seeking for itself any reorganization, arrangement,
composition, readjustment, dissolution or similar relief under any present
or future statute, law or regulation, or shall file any answer admitting
the material allegations of a petition filed against the Company in any
such proceeding, or shall seek or consent to or acquiesce in the
appointment of any trustee, receiver or liquidator of the Company, or of
all or any substantial part of the properties of the Company, or the
Company or its respective directors or majority shareholders shall take any
action looking to the dissolution or liquidation of the Company;
(c) Within thirty (30) days after the commencement of any proceeding
against the Company seeking any reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under any present
or future statute, law or regulation, such proceeding shall not have been
dismissed or, within thirty (30) days after the appointment without the
consent or acquiescence of the Company of any trustee, receiver or
liquidator of the Company or of all or any substantial part of the
properties of the Company, such appointment shall not have been vacated;
(d) The Company fails to perform any obligations or breaches any
covenants contained in this Agreement or the Note, and Company does not
perform such obligation or cure such breach within thirty (30) days after
receipt of written notice from Lender;
(e) Any representation or warranty made by the Company herein is false
or misleading in any material respect; or
(f) The Company sells, transfers, distributes or disposes of all or
substantially all of its assets other than in the ordinary course of
business or merges or consolidates with another person or entity without
the prior written consent of the Lender.
5.2 Remedies. Upon the occurrence of an Event of Default under Section 5.1
hereof, at the option and upon the declaration of the holder of the Note, (i)
the entire unpaid principal and accrued interest on the Note held by such holder
shall, without presentment, demand, protest, or notice of any kind, all of which
are hereby expressly waived, be forthwith due and payable, and the holder may,
immediately and without expiration of any period of grace, enforce payment of
all amounts due and owing under such Note and exercise any and all other
remedies granted to it at law, in equity, or otherwise.
6. MISCELLANEOUS.
6.1 Waivers and Amendments. With the written consent of the record holder
of the Note and the Company, the obligations of the Company and the rights of
the holder of the Note under this Agreement may be waived (either generally or
in a particular instance, either retroactively or prospectively and either for a
specified period of time or indefinitely). Neither
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this Agreement nor any provisions hereof may be changed, waived, discharged or
terminated orally, but only by a signed statement in writing.
6.2 Further Assurances; Subordination. Upon request of the Company, Lender
will acknowledge in writing its subordination undertakings as set forth in the
Note.
6.3 Governing Law. This Agreement shall be governed in all respects by the
laws of the State of New York, without regard to its internal conflict of laws
rules.
6.4 Survival. The representations, warranties, covenants and agreements
made herein shall survive until the date on which Company has paid to Lender all
principal and interest owed pursuant to this Agreement and the Note.
6.5 Successors and Assigns. Except as otherwise expressly provided herein,
the provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors and administrators of the parties hereto.
Neither Company nor Lender may assign this Agreement, the Note, or any of its
rights, interests or obligations hereunder, or thereunder, without the prior
written consent of the other party hereto; provided, however, that Lender may
(a) assign any or all of its rights and interests under this Agreement and the
Note to one or more of its "affiliates," as that term is defined in Rule
144(a)(1) of the rules and regulations promulgated under the Securities Act of
1933, as amended; and (b) designate one or more of its affiliates to perform its
obligations under this Agreement and the Note.
6.6 Costs and Expenses. The Company promises to pay, upon the Lender's
demand therefor, all costs and expenses, including attorneys' fees, incurred in
the collection and enforcement of this Agreement and the Note.
6.7 Entire Agreement. This Agreement and the other documents delivered
pursuant hereto constitute the full and entire understanding and agreement
between the parties with regard to the subjects hereof and thereof.
6.8 Severability of this Agreement. In case any provision of this Agreement
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
6.9 Titles and Subtitles. The titles of the Sections and Subsections of
this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.
6.10 Delays or Omissions. It is agreed that no delay or omission to
exercise any right, power or remedy accruing to the Lender, upon any breach or
default of the Company under this Agreement or the Note, shall impair any such
right, power or remedy, nor shall it be construed to be a waiver of any such
breach or default, or any acquiescence therein, or of or in any similar breach
or default thereafter occurring; nor shall any waiver of any single breach or
default be deemed a waiver of any other breach or default theretofore or
thereafter occurring. It is further agreed that any waiver, permit, consent or
approval of any kind or character by the Lender of any breach or default under
this Agreement, or any waiver by the Lender of any provisions or conditions of
this Agreement must be in writing and shall be effective only to the extent
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specifically set forth in writing and that all remedies, either under this
Agreement, or by law or otherwise afforded to the Lender, shall be cumulative
and not alternative.
6.11 Notices. Any notices, claims or demands or other communications
hereunder shall be in writing and shall be deemed to be duly given if personally
given or if sent by telecopier, nationally-recognized overnight courier or by
registered or certified mail, return receipt required and postage prepaid,
addressed to such party in accordance herewith or as otherwise stated in any
notice given in accordance herewith. Any such notice shall be deemed to have
been received (a) in the case or personal delivery or delivery by telecopier, on
the date of such delivery, (b) in the case of a nationally-recognized overnight
courier, on the next business day after the date sent and (c) in the case of
mailing, on the third business day following that on which the piece of mail
containing such communications is posted.
To the Company: xxxxxxxx.xxx, inc.
00 Xxxxxxxx Xxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx
Fax: (000) 000-0000
Email: xxxxxxxxx@xxxxxxxx.xxx
To the Lender: Verus Investments Holdings, Inc.
c/o Verus Support Services, Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxx
Fax: (000) 000-0000
Email: xxxxx@xxxxxxxxxxxxxxxxxx.xxx
6.11 Counterparts. This Agreement may be executed by facsimile and in any
number of counterparts, each of which shall be deemed an original, and all of
which together shall constitute one instrument.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered as of the day and year first written above.
XXXXXXXX.XXX, INC.
By: /s/ XXX XXXXXXXXX
------------------------------------------
Xxx Xxxxxxxxx
Chief Financial Officer
LENDER:
VERUS INVESTMENTS HOLDINGS, INC.
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By: /s/ XXXXX XXXX
-----------------------------------------
Xxxxx Xxxx
President and Chief Executive Officer
Principal Amount of Note: $939,261
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EXHIBIT A
THE SECURITIES REPRESENTED BY THIS PROMISSORY NOTE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY
STATE SECURITIES LAW. SUCH SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION UNLESS SUCH SALE OR TRANSFER IS EXEMPT FROM THE
REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENT OF SAID ACT AND ANY STATE
SECURITIES LAWS.
DATE: EFFECTIVE AS OF DECEMBER 31, 2000 $939,261
XXXXXXXX.XXX, INC.
PROMISSORY NOTE
xxxxxxxx.xxx, inc., a Nevada corporation (the "Company"), for value
received, promises to pay to Verus Investments Holdings, Inc. (the "Lender"),
the principal sum of $939,261, in lawful money of the United States of America
and in immediately available funds, plus simple interest of 8% per annum on the
principal amount hereof as provided below. All principal and accrued interest
shall be due and payable on December 31, 2001 (whether by acceleration or
otherwise). Interest shall be computed on the basis of a year of 365 days for
the actual number of days elapsed.
1. DEFINITIONS. Unless the context indicates otherwise, capitalized terms used
herein shall have the meanings given them in the Loan Agreement (defined below),
provided that the following terms used herein shall have the following meanings:
1.1 "Loan Agreement" means the Loan Agreement dated as of December 31, 2000
between the Lender and the Company.
1.2 "Noteholder," "holder," or similar terms, when the context refers to a
holder of a Note, means any person who shall at the time be the holder of this
Note.
2. PREPAYMENT. The principal amount of this Note and any accrued interest
thereon may be prepaid in whole or in installments by the Company prior to
maturity without penalty.
3. SUBORDINATION. The indebtedness represented by this Note is hereby expressly
subordinated in right of payment to the prior payment in full of all of the
Company's indebtedness for money borrowed from insured banks, licensed insurance
companies, lenders approved pursuant to Section 2.10 of the Loan Agreement, or
other third-party commercial lending institutions regularly engaged in the
business of lending money.
4. LEGAL RATE ADJUSTMENT. Notwithstanding anything herein to the contrary, if at
any time the interest rate applicable to the Loan, together with all fees,
charges and other amounts which are treated as interest on the Loan under
applicable law shall exceed the maximum lawful rate (the "Maximum Rate") which
may be contracted for, charged, taken, received or reserved by the
Lender in accordance with applicable law, the rate of interest payable in
respect of such Loan hereunder, together with all charges payable in respect
thereof, shall be limited to the Maximum Rate.
5. INDEMNIFICATION. The Company shall defend, indemnify and hold harmless the
Lender and its officers, directors, employees and agents against (a) all
obligations, demands, claims, and liabilities claimed or asserted by any person
in connection with the transactions contemplated by this Note, and (b) all
losses or expenses in any way suffered, incurred, or paid by the Lender as a
result of or in any way arising out of, following, or consequential to
transactions between the Lender and the Company under this Note or otherwise
(including without limitation reasonable attorneys' fees and expenses), expect
for losses caused solely by the Lender's gross negligence or willful misconduct.
6. LOAN AGREEMENT. This Note is the Note referred to in the Loan Agreement and
is entitled to all the benefits provided therein. Reference is made to said Loan
Agreement for the representation and warranties of the Company, the covenants,
the Events of Default and the rights of acceleration of the maturity of the Note
upon an Event of Default, as well as the miscellaneous provisions of Article 6
of the Loan Agreement, all of which are incorporated herein by reference.
7. GOVERNING LAW. This Note shall be governed in all respects by the laws of the
State of New York, without regard to its internal conflict of laws rules.
XXXXXXXX.XXX, INC.
By:
---------------------------------
Xxx Xxxxxxxxx
Chief Financial Officer
