EXHIBIT 5
276,000 NOTE PURCHASE AGREEMENT
Dated October 30, 1999
BETWEEN
Saratoga International Holdings Corp.
BORROWER
AND
ZZG Holdings LLC
LENDER
THIS LOAN AGREEMENT ("Agreement") is dated October 30, 1999 between Saratoga
International Holdings Corp. a Nevada corporation, with its principal place of
business at 0000 - 000xx Xxxxxx XX, Xxxxxxxx, XX 00000 ("Borrower") and ZZG
Holdings LLC, a Washington Limited Liability Company having an address of 000
Xxxxx Xxxxxx #000, Xxxxxxx, Xxxxxxxxxx 00000 ("Lender")
RECITALS
A. Borrower is a publicly held corporation whose common stock is quoted on the
OTC Bulletin Board. Through a wholly-owned subsidiary, the Borrower is in
the business as a reseller of prepaid long distance services over the
internet targeted principally at customers who originate international
calls from foreign countries to the USA and to other countries throughout
the globe. Borrower is a development stage business and to date has not
generated any significant revenues.
B. Borrower desires to borrow from Lender $276,000.00 including loan discounts
in order to finance the costs of continuing with Borrower's Capital
Formation and Business Development Plans.
NOW, THEREFORE, in consideration of the foregoing and of the covenants,
conditions and agreements contained herein, the Borrower and Lender agree as
follows:
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ARTICLE 1
AGREEMENT TO LEND
1.1 Agreement to Lend. On the basis of the covenants, agreements and
representations of Borrower contained in, and subject to the terms and
conditions of this Agreement and the Promissory Note from Borrower to
Lender, attached hereto as Exhibit A and made a part hereof by
reference, Lender agrees to lend to Borrower the principal sum of
$276,000.00 including loan discount fees ("Loan"). The net proceeds of
the loan shall be disbursed to finance the cost of preparing and
filing documents with the SEC to a) become fully reporting and to
maintain Borrower's listing privileges on the Over The Counter
Bulletin Board (OTC: BB) operated by the NASD and, b) raise additional
equity capital. Borrower also plans to use a portion of the proceeds
to finance its Business Development Plan.
1.2 Disbursement. On the basis of the covenants, agreements and
representations of Borrower contained in this Agreement, the Loan will
be disbursed at Closing, as defined in Article IV herein.
ARTICLE II
BORROWER'S REPRESENTATIONS, WARRANTIES AND COVENANTS
2. Borrower hereby represents, warrants and covenants as follows:
2.1 Existence/Good Standing. Borrower is now and at Closing will be a
corporation, duly organized, validly existing and active under the
laws of the State of Nevada. Borrower has all requisite corporate
power and authority to carry on its business as now being conducted
and is duly qualified to do business in the State of Washington and is
in good standing in all jurisdictions where it owns or leases
property, maintains employees or conducts business.
2.2 Authorization; Validity and Effect of Agreements. Borrower has the
requisite corporate power and authority to execute and deliver this
Agreement. The consummation by Borrower of the transactions
contemplated hereby has been duly authorized by all requisite
corporate action. This Agreement constitutes the valid and legally
binding obligation of Borrower, enforceable in accordance with its
terms, subject to applicable bankruptcy, insolvency, moratorium or
other similar laws relating to creditors' rights and general
principles of equity.
2.3 Compliance With Law. To the best of Borrower's knowledge, rules,
ordinances, decrees and orders applicable to the operation of its
business or to its owned or leased properties, including, without
limitation, applicable environmental, pollution control and land use
provisions. Borrower has obtained all necessary permits, licenses,
variances, exemptions, orders and approvals from federal, state, local
and foreign regulatory bodies in order to conduct its business as
presently conducted.
2.4 No Approval or Notices Required; No Conflicts. To the best of
Borrower's knowledge, the execution, delivery and performance of this
Agreement and each of the other agreements, exhibits and documents
referred to herein or necessary to effectuate this Agreement by
Borrower and the consummation of the transactions contemplated hereby
or thereby will not:
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2.4.1 Constitute a violation of any provision of applicable law;
2.4.2Require any consent, approval, permit or authorization of any
person or governmental authority;
2.4.3Result in a breach of or a default under (with or without the
giving of notice or lapse of time), acceleration or termination
of, or the creation in any party of the right to accelerate,
terminate, modify or cancel any agreement or other restriction,
encumbrance, obligation or liability to which Borrower is a party
or by which it is bound or to which any of its assets are
subject; or
2.4.4Conflict with or result in a breach of or constitute a default
under any provision of Borrower's Restated Articles of
Incorporation or By-Laws, or of any applicable order, writ,
injunction or decree of any court or governmental
instrumentality.
2.5 Taxes. Borrower has timely filed or will timely file with the
appropriate governmental agencies all tax returns, information returns
and reports required to have been filed with respect to all periods
ending on or before Closing. Borrower has paid or will pay, in full,
as of the Closing, all taxes, interest, penalties, assessments,
deficiencies and other charges ("Taxes"), the non-payment of which
could result in the imposition of Taxes on Borrower or the imposition
of a lien on or in any of its assets, or that could otherwise result
in a risk of forfeiture of any of its assets. Borrower has not filed
or entered into any election, consent or extension agreement which
extends any applicable statute of limitations. Borrower has made
adequate provisions for all accrued and unpaid Taxes of Borrower. To
the best of Borrower's knowledge, Borrower is not a party to any
action or proceeding pending or threatened by any governmental
authority for assessment or collection of Taxes, no unresolved claims
for assessment or collection of such Taxes has been asserted against
it, and no audit or investigation by governmental authorities is
underway.
2.6 Representations in Other Documents. The representations and warranties
of Borrower in all documents executed by Borrower in connection with
the Loan are, to the best of Borrower's knowledge, true and accurate
in all material respects as of the date of such representation and
warranty and as of Closing.
2.7 Legal Proceedings; Claims. There are no claims, actions, suits,
arbitrations, proceedings or investigations pending or threatened
against Borrower, before or by any governmental or non-governmental
department commission board bureau agency or instrumentality, whether
federal, state, local or foreign, or any other person, and there are
no outstanding or unsatisfied judgments, orders, decrees or
stipulations to which Borrower is a party, which relate to either the
Assets or the transaction contemplated herein, or which would alone or
in the aggregate have a material adverse effect upon the business,
business prospects, assets or financial condition of Borrower.
2.8 No Fraudulent Conveyance. The Loan does not violate an applicable law
or regulation or constitute a fraudulent conveyance.
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2.9 Accuracy of Representations and Warranties. No representation or
warranty made or to be made by Borrower in this Agreement or in any
other document furnished or to be furnished from time to time in
connection herewith, contains or will contain any misrepresentation of
a material fact or omits or will omit to state any material fact
necessary to make the statements herein or therein not misleading.
There is not fact known to Borrower which would materially adversely
affect, or which would, in the future, materially adversely affect,
the business, prospects, assets, property or condition (financial or
otherwise) of Borrower which has not been set forth in this Agreement,
except those facts concerning general economic, legislative,
regulatory, or other matters such as may generally impact all
businesses of the type operated by Borrower.
ARTICLE III
GENERAL CONDITIONS OF LOAN
3.1 Loan Documents. It shall be a condition precedent to Lender's
obligation to make the Loan that at or before Closing, Borrower shall
execute and deliver to Lender this Agreement and the Note
(collectively "Loan Documents") and that the Loan Documents shall be
satisfactory to Lender in form and substance.
3.2 Additional Requirements. In addition to the Loan Documents, at
Closing, Borrower shall deliver to Lender the following, in form and
substance satisfactory to Lender:
3.2.1Pledge Agreement. Stock Pledge and Security Agreement of Xxxxxxx
X. Xxxxxxx ("Xxxxxxx") and United West Holdings, LLC ("United")
to Lender ("Pledge Agreement") in the form attached hereto as
Exhibit B, pledging 3,250,000 shares of the Borrower's common
stock owned collectively by Xxxxxxx and United, as security for
Borrower's performance under this Agreement and the Note.
3.3 Other Items. Such other documents and instruments as Lender may
reasonably require.
ARTICLE IV
CLOSING
4.1 Closing. This Agreement and the transactions contemplated herein shall
be closed by any means mutually agreed upon by Borrower and Lender.
The date of Closing shall be October 30, 1999, or as soon thereafter
as all conditions precedent to Closing have occurred and all necessary
documents to be executed and delivered at Closing have been prepared.
4.2 Actions at Closing. At Closing, Borrower shall execute and deliver to
Lender the documents referred to in Article III herein and Lender
shall tender to Borrower the proceeds of the Loan.
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ARTICLE V
BORROWER'S DEFAULT
5.1 Events of Default. Each of the following shall constitute an Event of
Default under this Agreement.
5.1.1Borrower fails to pay, within ten (10) days following the due
date thereof, any installment of interest or principal on the
Note or Borrower fails to pay the Note in full on or before the
maturity date thereof;
5.1.2Borrower fails to pay within ten (10) days following written
notice from lender any amounts due hereunder or under the Note,
other than installments of principal and interest on the Note; or
5.1.3Any representation or warranty made by the Borrower in or
pursuant to this Agreement or otherwise made in writing in
connection with or as contemplated by this Agreement shall be
incorrect or false or misleading in any material respect as to
the period of time to which it relates; or
5.1.4Any representation to Lender by Borrower as to the financial
condition or credit standing of Borrower, or any financial
statement provided to lender pursuant to this Agreement or the
Note, is or proves to be false or misleading in any material
respect; or
5.1.5Any order or decree is entered by any court of competent
jurisdiction directly or indirectly enjoining or prohibiting
Lender or Borrower from performing any of their respective
obligations under this Agreement; or
5.1.6Borrower makes an assignment for the benefit of creditors; or
petitions or applies to any court for the appointment of a
trustee or receiver for itself or for any part of its assets, or
commences any proceedings under any bankruptcy, insolvency,
readjustment of debt or reorganization statute or law of any
jurisdiction; or if any such petition or application is filed or
any such proceedings are commenced, and Borrower by any act
indicates approval thereof, consents thereto, or acquiescence
therein; or an order is entered appointing such trustee or
receiver, or adjudicating Borrower bankrupt or insolvent, or
approving the petition in any such proceeding; or if any petition
or application for any such proceeding or for the appointment of
a trustee or receiver is filed by any third party against
Borrower or its assets and any of the aforesaid proceedings is
not dismissed within sixty (60) days of its filing; or
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5.1.7Borrower fails to comply with, keep or perform any of its other
obligations, agreements, undertakings, covenants, conditions or
warranties under (i) this Agreement, (ii) the Note, or (iii) any
other document or instrument executed and delivered to Lender by
Borrower pursuant to this Agreement, and such failure continues
for a period of thirty (30) days after written notice thereof by
Lender to Borrower.
5.2 Remedies. Upon the happening of an Event of Default, Lender shall have
the right, in addition to all remedies conferred upon lender by law or
equity or the terms of this Agreement and the Note, to do any or all
of the following, concurrently or successively,
5.2.1Declare the Note to be, and the Note shall thereupon become,
immediately due and payable, without presentation, demand,
protest, notice of intention to accelerate, notice of
acceleration or notice of any kind, all of which are hereby
expressly waived and exercise any one or more of its rights and
remedies under this Agreement and/or the Note;
5.2.2Exercise all of its rights and remedies under the Pledge
Agreement.
In case of any Event of Default hereunder, Borrower will pay Lender's
reasonable attorneys' fees and disbursements and court cost (including those
relating to appeals) and all related expenses in connection with the enforcement
of this Agreement, the Note or the Pledge Agreement.
ARTICLE VI
MISCELLANEOUS
6.1 Assignment by Borrower. Borrower shall not assign or attempt to assign
its rights or obligations under this Agreement, the Note or the Pledge
Agreement.
6.2 Lender's Actions. The authority herein conferred upon the lender and
any action taken by Lender hereunder, or under the Note or Pledge
Agreement, will be taken by Lender for its own protection only, and
Lender does not and shall not be deemed to have assumed any
responsibility to Borrower or any other person with respect to any
such action herein authorized or taken by Lender. No person shall be
entitled to rely upon, or claim to have relied upon, any action taken
or failed to have been taken by Lender or any of its representatives.
6.3 Time is of the Essence. Time is of the essence of this Agreement.
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6.4 Waivers. No waiver of any term, condition, covenant or agreement
contained herein or in the Note or Pledge Agreement shall be effective
unless set forth in writing signed by Lender, and any such waiver
shall be effective only to the extent set forth in such writing. No
failure by Lender to exercise, or delay by Lender in exercising, any
such right, power or privilege hereunder or in the Note or Pledge
Agreement shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, power or privilege hereunder preclude
any other or further exercise thereof or the exercise of any other
right or remedy provided by law.
6.5 Notice. Any notice to either Borrower or Lender which may be required
or desired to be given hereunder shall be delivered personally or if
mailed, postage prepaid, by United Sates registered or certified mail,
return receipt requested, or by overnight express courier, addressed
in the case of Borrower to:
Saratoga International Holdings Corp.
0000 - 000xx Xxxxxx XX
Xxxxxxxx, XX 00000
with a copy to:
Xxxxxx X. Xxxxxxxxx
Attorney at Law
0000 XX Xxxxx Xxx., Xxxxx 0000
Xxxxxxxx, XX 00000
in the case of Lender to:
ZZG Holdings LLC
000 Xxxxx Xxxxxx #000
Xxxxxxx, XX 00000
with a copy to:
Xxxxxx X. Xxxxxxxx, Esq.
Lynch, Rowan, Burnbaum & Crystal P.C.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
or at such other addresses as may from time to time be designated by
the party to be addressed by written notice to the other in the manner
provided in this Article VI. Notices, demands and requests given in
the manner indicated herein shall be deemed sufficiently served or
given for all purposes hereunder when received or when delivery is
refused or when the same are returned to sender for failure to be
called for.
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6.6 Successors and Assigns. This Agreement shall inure to the benefit of
the parties and their respective successors and permitted assigns. No
assignment made by Borrower in violation of this Agreement shall
confer any rights on any assignee of the Borrower.
6.7 No Partnership. Nothing contained herein, or in the note or Pledge
Agreement, and no action taken on the part of the Lender, shall be
deemed to make Lender a partner or joint venturer with Borrower.
6.8 Additional Assurances. At any time or from time to time, upon the
written request of Lender, Borrower shall execute all such further
documents and take such further action as Lender may reasonably
request to effectuate the transaction contemplated herein.
6.9 Entire Agreement. This Agreement and the Exhibits hereto constitute
the entire agreement between the Borrower and Lender with respect to
the subject matter hereof and may not be modified or amended in any
manner other than by supplemental written agreement executed by
Borrower and Lender. THE RIGHTS AND OBLIGATIONS OF BORROWER AND LENDER
SHALL BE DETERMINED SOLELY FROM THIS WRITTEN LOAN AGREEMENT, THE NOTE
AND THE PLEDGE AGREEMENT AND ANY PRIOR ORAL OR WRITTEN AGREEMENTS
BETWEEN LENDER AND BORROWER CONCERNING THE SUBJECT MATTER HEREOF ARE
SUPERSEDED BY AND MERGED INTO THIS LOAN AGREEMENT, THE NOTE AND THE
PLEDGE AGREEMENT.
6.10 Choice of Law. New York Law; Submission to Jurisdiction; Waiver of
Jury Trial. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE STATE OF NEW YORK. EACH PARTY HERETO
HEREBY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE UNITED STATES
DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND OF ANY NEW
YORK STATE COURT SITTING IN NEW YORK CITY FOR PURPOSES OF ALL LEGAL
PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY HERETO IRREVOCABLY WAIVES
TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW
OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING
BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT
IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. EACH PARTY
HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN
ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR
THE TRANSACTIONS CONTEMPLATED HEREBY. NOTWITHSTANDING ANYTHING TO THE
CONTRARY IN THE FOREGOING, AT THE ELECTION OF A HOLDER, ANY DISPUTE
BETWEEN THE HOLDER AND THE COMPANY MAY BE ARBITRATED, RATHER THAN
LITIGATED IN THE COURTS, BEFORE AND IN ACCORDANCE WITH THE RULES OF
THE AMERICAN ARBITRATION ASSOCIATION IN NEW YORK CITY. THE COMPANY
AGREES TO SUBMIT TO AND PARTICIPATE IN ANY SUCH ARBITRATION.
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6.11 Commercial Transaction. To induce Lender to enter into this commercial
loan transaction evidenced by and secured by the Loan Agreement, the
Note and the Pledge Agreement, Borrower agrees that the said
transaction is a commercial and not a consumer transaction.
6.12 Counterparts. This agreement may be executed by telecopy signature in
one or more counterparts, each of which shall be deemed an original,
and all of which together shall constitute but one and the same
instrument and agreement.
6.13 Severability. If any provision of this Agreement, the Note or the
Pledge Agreement shall be held invalid or unenforceable, the remainder
of this Agreement or the Note or the Pledge Agreement shall not be
affected thereby, but shall continue valid and enforceable to the
fullest extent permitted by applicable law.
IN WITNESS WHEREOF, Borrower and Lender have caused this Agreement to be
executed by their authorized representatives as of the date first above written.
BORROWER:
Saratoga International Holdings Corp.
By: /s/ Xxxxxxxx X. Xxxxxx
---------------------------
Xxxxxxxx X. Xxxxxx, Exec.
Vice-President
LENDER:
ZZG Holdings LLC
By:
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