Revolving Loan Agreement
This revolving loan agreement (the "Agreement" or the "Loan Agreement") is
entered into by and between The Yankee Companies, LLC., a Florida limited
liability company ("Yankees"); The Yankee Companies, Inc., a Florida corporation
("Yankcorp"), and Explorations Group, Inc., a Delaware corporation
("Explorations", Yankees and Explorations being sometimes hereinafter
collectively referred to as the "Parties" and each being sometimes hereinafter
generically referred to as a "Party").
Preamble:
Whereas, Explorations requires significant capital for miscellaneous
corporate purposes; and
Whereas, Explorations is willing to pledge all of its assets, wherever
located or whenever acquired, as security for such financing (the
"Collateral"); and
Whereas, the Parties entered into a loan agreement on or about, April
9, 2002 (the "Original Agreement") and Explorations and Yankcorp are
parties to a consulting agreement that entitled Yankcorp to acquire
20% of Explorations outstanding and reserved securities (the
"Consulting Agreement"), which the Parties and Yankcorp desire to
consolidate into one instrument, as set forth below by amendment to
the Original Agreement and cancellation of the Consulting Agreement,
on the terms set forth below:
Whereas, subject to the following terms and conditions, Yankees is
willing to loan Explorations a sum of up to $100,000, on a revolving
basis, upon the collateral security of the Collateral, subject to the
terms and conditions set forth below:
Now, Therefore, in consideration of the sum of $10, other good and
valuable consideration, the receipt of which is hereby acknowledged,
and, upon the mutual covenants and conditions contained herein, the
Parties hereby agree as follows:
Witnesseth:
1. Definitions & Interpretation
(a) Definitions:
The following terms, whether or not initially capitalized, will have
the meanings set forth below:
(1) Accredited Investor:
A person or entity that meets the asset, income or other
requirements for treatment as an accredited investor specified in
Rule 501 of Commission Regulation D promulgated under the
Securities Act
(2) Affiliate:
An entity or person that controls, is controlled by or is under
common control with another person.
(3) Blue Sky Laws:
State securities laws, regulations, rules and judicial and
administrative decisions pertaining thereto.
(4) Explorations:
The term for Explorations Group, Inc., a publicly held Delaware
corporation and a Party to this Agreement, together with all of
its subsidiaries.
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(5) Explorations Financial Statements:
Financial statements, including all related schedules and the
notes thereto, of Explorations included in Explorations' last
disclosure document complying with the requirements of Commission
Rule 15c2-11, until such time as Explorations registers a class
of securities with the Commission under Section 12(g) of the
Securities Act, and thereafter, the term "Financial Statements"
will mean Financial statements, including all related schedules
and the notes thereto, of Explorations included in Explorations'
last report filed on Commission Form 10-KSB; the reports on
Commission Form 10-QSB filed subsequent thereto and the financial
statements for subsidiaries subsequently acquired by Explorations
included in current reports on Commission Form 8-K filed since
the dates of the Subsequent Quarterly Reports (the "Subsequent
Current Reports"); all such financial statements being
hereinafter collectively and generically referred to as the
"Explorations Financial Statements."
(6) Capital Stock:
The generic term used for equity securities, whether common,
preferred or otherwise.
(7) Preferred Stock:
The shares of Explorations' Class A Non-Voting, Convertible
Preferred Stock.
(8) Collateral:
All of Explorations' assets, whenever acquired or wherever
located, whether real or personal, tangible or intangible,
current or inchoate, including, without limitation, all of the
Capital Stock of its subsidiaries, rights under agreements,
notes, financial accounts, intellectual property rights and all
other things of whatever nature which the Parties may define as
Collateral subject to this Agreement in any future agreements.
(9) Code:
The Internal Revenue Code of 1986, as amended.
(10) Commission:
The United States Securities and Exchange Commission.
(11) Consulting Agreement:
The instrument creating the rights granted by Explorations to
Yankcorp to acquire 20% of Explorations equity securities for
$50,000, a copy of which is annexed hereto and made a part hereof
as exhibit 1(a)-33.
(12) Control Person:
Any person who would be deemed a control person under Item 401(d)
of Commission Regulation SB.
(13) Convertible Bonds:
The $50,000 in principal amount of negotiable promissory notes,
secured by all of Explorations' assets as undivided beneficiaries
with the holders of the Notes, which are, at the option of the
holder, convertible into either shares of Explorations' Common
Stock or Preferred Stock, as described in this Agreement.
(14) Default:
The occurrence of any of the following events during the term of
this Agreement or any extensions or renewals thereof:
(A) The failure of Explorations to pay any amount when due
hereunder for a period of 20 business days after written
notice by Yankees to Explorations;
(B) The failure by Explorations to perform any material
agreement or material undertaking under this Agreement or
any other material agreement or material document given to
evidence or secure any of the Secured Obligations;
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(C) The material inaccuracy of any warranty, representation,
covenant or agreement made by Explorations to Yankees under
this Agreement relating to any related document or this
Agreement, at the time when made;
(D) Explorations' insolvency, termination of business as a going
concern or inability to pay debts generally as they become
due;
(E) The filing of a petition or order for relief under the
bankruptcy laws or insolvency laws or for reorganization,
composition, adjustment, or other relief of debtors under
any law by or against Explorations if such petition is not
dismissed within 30 days;
(F) The making of an assignment for the benefit of creditors by
Explorations or the appointment of a receiver or liquidator
for Explorations;
(G) The order by a court of competent jurisdiction winding up,
or liquidation of, the affairs of Explorations;
(H) The dissolution of Explorations;
(I) The initiation of a lawsuit or quasi-judicial or
administrative proceeding by any person or entity or
governmental instrumentality against Explorations or any
part of the Collateral; or
(J) Any event defined as a default under any of the agreements,
Convertible Bonds, Note(s) or instruments ancillary to this
Agreement.
(15) Exchange Act:
The Securities Exchange Act of 1934, as amended.
(16) Exchange Act Reports:
All reports filed by Explorations with the Commission pursuant to
Sections 12(g), 13 and 15(d) of the Exchange Act.
(17) GAAP:
Generally accepted accounting principles, consistently applied.
(18) Initial Funding Installment:
The aggregate sum already advanced to or on behalf of
Explorations as of the date of this Agreement.
(19) IRS:
The United States Internal Revenue Service.
(20) Knowledge:
When used to qualify a representation or warranty, the word
"knowledge" or any derivations or variations thereof, whether in
the form of a word or phrase, will mean knowledge after
reasonable inquiry by an executive officer of the legal entity on
whose behalf the assertion is made and will include information
that such legal entity should have had in the exercise of
reasonable diligence.
(21) Loans:
The funds advanced by Yankees to Explorations from time to time,
including all funds heretofore advanced by Yankees to
Explorations, which are the objects of this Agreement.
(22) Material:
When used to qualify a representation or warranty, the word
"material" or any derivations or variations thereof, whether in
the form of a word or phrase, will mean a variance that could
have negatively affected a decision by a reasonably prudent
person to engage in the transactions contemplated by this
Agreement, and will be measured both on the occasion in which
such term is referenced as well as on an aggregate basis with
other similar matters.
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(23) NASD:
The National Association of Securities Dealers, Inc., a Delaware
corporation and self regulatory organization registered with the
Commission.
(24) Note(s):
The negotiable instruments in the form of promissory notes issued
to evince the Loans (other than the Convertible Bonds).
(25) Obligations:
Yankees' rights and Explorations' duties under this Agreement and
the ancillary instruments referred to herein, including, without
limitation, the Convertible Bonds and the Note(s) to be executed
from time to time by Explorations in favor of Yankees, as
described in this Agreement executed concurrently herewith and
incorporated by reference herein, together with all other
indebtedness of Explorations or its affiliates to Yankees, direct
or indirect, primary or secondary, fixed or contingent, or
otherwise due or to become due, now existing or hereafter
acquired.
(26) OTC Bulletin Board:
The over the counter electronic securities market operated by the
NASD.
(27) Reserved Common Stock:
Common Stock which Explorations has a legal obligation to issue
based on the occurrence of conditions or events, e.g., options,
warrants, convertible securities, employment bonus obligations,
antidilutive rights, etc., excluding the obligations under the
Convertible Bonds.
(28) Secured Obligations:
All indebtedness and other obligations of Explorations to Yankees
under or arising out of this Agreement, including any currently
outstanding or future loans, or any extensions or renewals
thereof.
(29) Securities Act:
The Securities Act of 1933, as amended.
(30) Subsequent Current Reports:
Explorations' reports on Commission Form 8-K filed after the
Subsequent Quarterly Reports but prior to the date of this
Agreement (if any).
(31) Subsequent Quarterly Reports:
Explorations' reports on Commission Form 10-QSB for the quarterly
periods following Explorations' last 10-KSB filed with the
Commission.
(32) Substantial Compliance:
Compliance which the Party for whose benefit or at whose request
an act is performed, or for whose benefit or at whose request an
act is refrained from, could under the circumstances be
reasonably expected to accept as full compliance.
(33) Tax:
For the purposes of this Agreement, a "Tax" or, collectively,
"Taxes," means any and all federal, state, local and foreign
taxes, assessments and other governmental charges, duties,
impositions and liabilities, including taxes based upon or
measured by gross receipts, income, profits, sales, use and
occupation, and value added, ad valorem, transfer, franchise,
withholding, payroll, recapture, employment, excise and property
taxes, together with all interest, penalties and additions
imposed with respect to such amounts and any obligations under
any agreements or arrangements with any other person with respect
to such amounts.
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(34) Yankcorp:
The Yankee Companies, Inc., a Florida corporation.
(b) Interpretation:
(1) When a reference is made in this Agreement to schedules or
exhibits, such reference will be to a schedule or exhibit to this
Agreement unless otherwise indicated.
(2) The words "include," "includes" and "including" when used herein
will be deemed in each case to be followed by the words "without
limitation."
(3) The captions in this Agreement are for convenience and reference
only and in no way define, describe, extend or limit the scope of
this Agreement or the intent of any provisions hereof.
(4) All pronouns and any variations thereof will be deemed to refer
to the masculine, feminine, neuter, singular or plural, as the
identity of the Party or Parties, or their personal
representatives, successors and assigns, or the context may
require.
(5) The Parties agree that they have been represented by counsel
during the negotiation 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.
2. Loans.
Subject to the terms of this Agreement, Yankees agrees to lend
Explorations, on the terms hereof, the sum of no more than $100,000 on a
revolving basis (the "Loan(s)"), as follows:
(a) The obligations of Yankees to loan funds to Explorations commenced on
the date of the Original Agreement and will terminate as provided
below in Section 3 hereof, at which time all outstanding loans
hereunder must be repaid, together with accrued interest.
(b) Loans hereunder will be made in $1,000 increments, and each loan will
be secured as provided by an undivided interest in the form of
security agreement annexed hereto and made a part hereof as exhibit
2(b)-1 (the "Security Agreement") and represented by its own separate
negotiable Convertible Bond or Note, in either case, each in the form
annexed hereto and made a part hereof as exhibits 2(b)-2 and 2(b)-3,
respectively.
(c) Each Note will be:
(1) For a term of one year; will bear interest at the annualized rate
of 2% over the prime rate charged during the subject period by
Citibank, N.A. (New York City) to its most favored corporate
borrowers for unsecured obligations having a term of one year or
less; and will be payable upon demand after the one year term;
(2) Secured by a security interest in all of Explorations' assets,
including after acquired assets, subject only to the prior liens
reflected in exhibit 2(c)(2) annexed hereto and made a part
hereof and to the sale of assets in the ordinary course of
business, provided that the proceeds of such sale are re-invested
in inventory or used to pay operating expenses of Explorations,
it being the intent of the Parties that no proceeds be used for
payment of dividends or unusual compensation to the principals of
Explorations.
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(d) Each Convertible Bond will be identical to the Notes, except that it
will be:
(1) For a term of 730 days;
(2) Be convertible at the holder's option during such term, into
shares of Common Stock or shares of Preferred Stock, in an
aggregate amount equal to the ratio that the principal of the
Convertible Bond divided by $50,000 bears to 25% of the total of
Explorations' outstanding or Reserved Common Stock, immediately
prior to conversion of the final $0.01 in principal of the
Convertible Bonds, so that immediately following full conversion,
the Common Stock issued (or issuable, to the extent Convertible
Bonds were converted into Preferred Stock) will equal 20% of
Explorations' outstanding or Reserved Common Stock.
(3) $50,000 in loans will be allocated to purchase the Convertible
Bonds.
(4) The Convertible Bonds will be non-redeemable and may not be
prepaid.
(5) The Convertible Bonds will be issued in such denominations as the
holder may require, and the securities into which they will be
converted, Common Stock or Preferred Stock will be designated by
the holder.
(e) Status as Securities
(1) The Parties acknowledge that the Notes and the Convertible Bonds,
as well as the shares of Common Stock or Preferred Stock into
which the Convertible Bonds may be converted all constitute
securities under the Securities Act and Blue Sky Laws, but that
none of them will be registered under the Securities Act or Blue
Sky Laws, based on applicable exemptions therefrom, expected to
be provided by Sections 3(b), 4(2) or 4(6) of the Securities Act
and Section 517.061(11) of the Florida Securities and Investor
Protection Act.
(f) Explorations will be directly responsible for payment of all taxes,
fees and recording costs associated with the Loans, the hereinafter
described Convertible Bonds and Notes, required stock transfers, UCC-1
financing statement, security agreements and collateral assignments.
(g) This Agreement is being executed simultaneously with a Security
Agreement and a UCC-1 financing statement, the terms and conditions of
which are all incorporated by reference herein.
(h) In consideration for the rights granted by Explorations to Yankees
under the Convertible Bonds, Yankcorp hereby relinquishes all rights
under the Consulting Agreement.
3. Term.
(a) This Agreement will commence on the date hereof and will terminate on
the 730th day after its execution, provided that it will be
automatically renewed thereafter on a continuing one year basis unless
the Party desiring not to renew provides the other with written notice
of intent not to renew at least 60 days prior to the end of the
then-current term or renewal term.
(b) Notwithstanding the foregoing, this agreement will terminate on the
occurrence of the following events:
(1) The date of the full and complete discharge by Explorations of
all obligations to Yankees under this Agreement;
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(2) The completion of a public offering of securities yielding at
least $2,000,000 in net proceeds by Explorations or any corporate
entity with which Explorations becomes subject to a
reorganization under Section 168 of the Code;
(3) Upon the occurrence of a Default by Explorations, provided that
Yankees elects to terminate this agreement by reason of such
default.
4. Right of First Refusal
(a) Throughout the term of this Agreement and any renewals thereof,
Yankees will have a right of first refusal to provide any debt or
debt-equity hybrid financing required by Explorations and its
subsidiaries (the "Right of First Refusal").
(b) In the event that Explorations has a definite opportunity to obtain
financing from some person or entity other than Yankees, it will
reduce such offer to written form specifying each and every applicable
term and identifying the person or entity involved (the "Notice of
Offer") and will provide the Notice of Offer to Yankees in the manner
generally hereinafter provided for submission of notices.
(c) Within ten business days following receipt of a Notice of Offer,
Yankees will, by written response to Explorations in the manner
generally hereinafter provided for submission of notices either:
(1) Consent to the proposed funding;
(2) Request additional data, which Explorations will immediately
provide; or
(3) Agree to provide the funding on the terms contained in the Notice
of Offer.
(d) In the event that Yankees demands additional data, the ten business
days response period will not commence until Yankees is provided with
the required data.
(e) If Yankees has been provided with all required data but has not
responded to the Notice of Offer within the ten business days response
period, it will be presumed that Yankees has consented to the funding;
however, no consent to funding or presumed consent to funding will
result in the waiver of Yankees' Right of First Refusal to provide any
future funding.
(f) In the event that the terms of the proposed funding vary in any
material manner from the terms described in the Notice of Offer, then
any consent or presumed consent will be deemed void and Explorations
will be required to notify Yankees of such change and resubmit Notice
of Offer to Yankees, on the revised basis, and subject to the terms in
this Section.
5. Conditions Precedent.
The obligation of Yankees to make the Loan will be subject to the following
conditions:
(a) There will have occurred no material adverse change in the business or
the financial condition of Explorations since the date of the latest
financial information filed by Explorations with the Commission,
copies of which will be contemporaneously furnished by Explorations to
Yankees;
(b) All acts, conditions and things (including the obtaining of any
necessary regulatory approvals and the making of any required filings,
recordings or registrations) required to be done or performed and to
have happened precedent to the execution, delivery and performance of
this Agreement and the related security agreements, collateral
assignments, Convertible Bonds and Notes will have been done and
performed to the satisfaction of Yankees and its legal counsel;
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(c) All corporate and legal proceedings and all documents and instruments
in connection with the authorization of this Agreement and the related
security agreements, collateral assignments, Convertible Bonds and
Notes and all related instruments and ancillary documentation thereto
will have been delivered to Yankees and its legal counsel, and Yankees
will have received all information and copies of all other related
documents and instruments, including records of corporate proceedings,
which Yankees and its legal counsel may reasonably have requested in
connection therewith, such documents and instruments, where
appropriate, to be certified by proper corporate or governmental
authorities;
(d) Yankees will have received the duly executed originals of this
Agreement and the related security agreements, collateral assignments,
Convertible Bonds and Notes and all related ancillary documentation
thereto and copies or originals of all other documents, agreements and
instruments relating to any aspect of the transactions contemplated
hereby, including evidence of insurance coverage required by Yankees;
and
(e) Yankees will have received, in form and substance satisfactory to
Yankees and its legal counsel, such legal opinions, consents, and/or
additional documents relating to any of the foregoing which it may
reasonably require.
6. Mandatory Prepayment in the Event of Loss; Loan Repayment.
(a) Explorations will keep all of the Collateral (as that term is defined
herein and from time to time in documents entered into by the Parties)
fully insured under all risk insurance policies acceptable in form and
substance to Yankees, such insurance to be in an amount adequate to
fully replace all the Collateral in the event of its damage or loss.
(b) In the event that the Collateral will be lost, stolen, destroyed,
damaged beyond repair or rendered permanently unfit for normal use, or
in the event of any condemnation, confiscation, seizure, or
requisition of title to or use of the Collateral, Explorations agrees
to make available any insurance proceeds for the exclusive purpose of
replacing the Collateral.
(c) If, however, Explorations elects not to repair or replace the
Collateral within 30 days of Explorations' receipt of the insurance
proceeds, all insurance proceeds will be applied to a then-mandatory
prepayment of the Secured Obligations by paying in full an amount
determined by:
(1) Obtaining a fraction, the numerator of which will be the total
number of payments remaining due on the Notes unpaid after such
prepayment is made (including the payment, if any, due on the
date on which prepayment is made) multiplied by the actual dollar
amount of each payment due and the denominator of which will be
the total number of payments required to be paid under the Notes,
multiplied by the actual dollar amount of each payment due under
the Notes;
(2) Multiplying the resultant fraction by 10%;
(3) Multiplying the resulting percentage by the outstanding balance
due on the Notes on the date of such prepayment;
(4) Adding the resulting dollar amount to the outstanding balance
then due on the Notes (such aggregate sum being the mandatory
prepayment required to be paid hereunder).
(d) Notwithstanding the foregoing, Yankees will be named as the primary
beneficiary on all insurance policies carried by Explorations which
directly, indirectly or incidentally cover the Collateral.
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7. Place of Payments.
Payment of principal, interest and other sums due or to become due with
respect to the Loan and all the Secured Obligations are to be made at the
principal executive offices of Yankees, or such other place as Yankees may
designate to Explorations in writing, in lawful money of the United States of
America in immediately available funds.
8. Late Payments & Other Charges.
(a) If any installment or other amount due with respect to the repayment
of the Loan or any portion of the Secured Obligations is not paid when
the same will be due, Explorations will pay interest on any such
overdue amount at the highest rate permitted by law until the date
such amount is paid.
(b) Explorations will pay or cause to be paid, in addition to all other
amounts payable hereunder:
(1) Premiums for insurance required to be obtained in connection with
the Loan and the Collateral;
(2) Fees paid for filing documents in public offices in connection
with the Loan and the transactions contemplated hereby; and
(3) Actual expenditures, including reasonable attorney's fees, for
proceedings to collect the Secured Obligations or to enforce,
preserve and protect the Collateral (as such term is defined
herein) and the rights and interest of Yankees therein.
9. Assignment, Grant of Security Interest & Limited Subordination.
(a) As collateral security for the payment of the Secured Obligations,
Explorations, for the benefit and enforcement of its payment of the
Secured Obligations, hereby sells, assigns, and transfers to Yankees,
its successors and assigns, and grants to Yankees, a continuing first
priority security interest in and to all of its present and future
right, title and interest in and to all of its securities in other
corporations (including subsidiaries), assets, receivables, chattel
paper and all cash and non-cash proceeds (including proceeds of
insurance), subject only to the prior liens reflected in exhibit
2(c)(2).
(b) (1) Subject to cancellation for any future financing upon provision
of written notice to such effect by Yankees, Yankees hereby
subordinates the obligation to receive payments under the
Convertible Bonds and the Notes to any institutional lender where
such financing is required by Explorations for the development of
corporate property, provided such property is increased in value
by an amount equal to or greater than the amount of the
subordinated loan and that Yankees' legal counsel has ratified
all documents and instruments pertaining to such financing,
including associated mortgages, collateral assignments and
security instruments.
(2) Notwithstanding the security interests held by Yankees,
Explorations will be permitted to make purchases and sales, and
to pay operating expenses, as incurred in the ordinary course of
business, provided, however, that until all obligations to
Yankees have been completely discharged by full payment,
Explorations will make no distributions to stockholders, or repay
any obligations to stockholders except normal and reasonable
salaries for services in fact rendered to Explorations (it being
understood that the term "stockholders" applies to the
stockholders of Explorations and to the stockholders of any
corporate entity that may subsequently acquire Explorations).
(c) Notwithstanding the foregoing:
(1) Yankees' agreement to subordinate its rights under its Loans to
Explorations will not apply to the first lien on any property
other than that directly benefitted by such acquisition and
development financing and, in no event, will Yankees' first lien
on all of the authorized capital stock of Explorations'
subsidiaries be subordinated to any other entity, whether
private, public or governmental.
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(2) No subordination permitted pursuant to this Section will be
effective until Yankees has been provided with copies of all
documentation pertaining to the subject acquisition or
development financing and Yankees' legal counsel has agreed to
the form and substance thereof, which agreement may not be
unreasonably withheld.
10. Rights and Powers with Respect to the Collateral.
Explorations hereby authorizes Yankees to do every act and thing in the
name of Explorations or Yankees or otherwise which Yankees may deem advisable to
enforce effectively its rights and interest in and to the Collateral, and
Explorations hereby irrevocably appoints Yankees, with full power of
substitution and delegation, as its true and lawful attorney-in-fact, with full
right to demand, enforce, collect, receive, receipt and give releases for any
funds due or to become due under or arising out of or with respect to, any of
the Collateral and to endorse all indentures, certificates, deeds, notes,
receipts, checks, stock certificates and other instruments, and to do and take
all such other actions relating to any of the Collateral, to file any claims or
institute any proceedings with respect to any of the foregoing which Yankees
deems necessary or advisable and to compromise any such demand, claim or action.
11. Assignments, Encumbrances, Transfers.
(a) Explorations will not, without the prior consent of Yankees, assign or
transfer any of its rights or delegate any of its obligations with
respect to this Agreement or sell, dispose or otherwise grant any
interest in or to any of the Collateral, incur or suffer to exist any
lien, charge, mortgage, security interest or encumbrances upon any of
the Collateral, except the lien of Yankees created by this Agreement.
(b) In the event of any conveyance, foreclosure or other disposition of
the Collateral without Yankees' consent, then the entire principal
balance, together with all accrued interest will be immediately due
and payable.
12. Acknowledgments, Representations and Warranties.
(a) Explorations acknowledges, represents and warrants that:
(1) As of the date of this Agreement, Explorations is not insolvent
within the meaning of applicable state and federal laws dealing
with debtors and creditors, including the Federal Bankruptcy
Code;
(2) Explorations is a Delaware corporation duly organized and validly
existing in good standing under the laws of the State of
Delaware, is qualified to engage in business in all jurisdictions
where such qualification is required, and has full power and
authority to enter into this Agreement and to consummate the
transactions contemplated hereby;
(3) This Agreement and the related security agreements, collateral
assignments, Convertible Bonds and Notes provided for herein have
been duly authorized by all necessary corporate action and
constitute the legal, valid and binding obligations of
Explorations enforceable in accordance with their respective
terms;
(4) The making and performance by Explorations of this Agreement and
the related security agreements, collateral assignments,
Convertible Bonds, Notes and any related documents and the
transactions contemplated hereby and thereby do not contravene
any provisions of law applicable to Explorations and do not
conflict or are not inconsistent with, and will not result (with
or without the giving of notice or both) in a breach of or
constitute a default or require any consent under, or result in
the creation of any lien, charge or encumbrance upon the
Collateral pursuant to the terms of any credit agreement,
indenture, mortgage, purchase agreement, deed of trust, security
agreement, lease guarantee or other instrument to which
Explorations is a party or by which Explorations or its assets
may be bound or to which its properties may be subject;
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(5) All sales, use, property or other taxes, licenses, tolls,
inspection or other fees, bonds, permits or certificates which
were or may be required to be paid or obtained in connection with
the acquisition or ownership by Explorations of the Collateral
will have been, or when due will be, paid in full or obtained;
(6) Explorations has good, valid and marketable title to the
Collateral free and clear of all liens, claims and encumbrances,
except as specifically disclosed in exhibit 2(c)(2), if any;
(7) Concurrently with or prior to the time the initial Loan is made,
Yankees will have a perfected continuing first priority security
interest in and to all the Collateral, except as specifically
disclosed in exhibit 2(c)(2), if any; and
(8) Explorations has not entered into any understanding or agreement
(oral or in writing) relating to the transactions contemplated
herein, or any other transactions contemplated or permitted by
this Agreement, with any person or entity which understanding,
agreement or other writing would, in the reasonable determination
of Yankees, affect the Collateral in any manner whatsoever or any
of the rights or interests of Yankees with respect thereto.
(b) Yankees:
(1) Acknowledges that neither the Notes, the Convertible Bonds nor
the securities to be issued on conversion of the Convertible
Bonds have been registered under the Securities Act or under any
Blue Sky Laws.
(2) Yankees will not sell or otherwise transfer the Notes, the
Convertible Bonds nor the securities issued on conversion of the
Convertible Bonds without registration under the Securities Act
or applicable state securities laws or an exemption therefrom.
(3) Yankees represents that it is purchasing the Notes, the
Convertible Bonds and the securities to be issued on conversion
of the Convertible Bonds for its own account, for investment and
not with a view to resale or distribution except in compliance
with the Securities Act.
(4) Yankees has not offered or sold any portion of the Notes, the
Convertible Bonds or the securities to be issued on conversion of
the Convertible Bonds being acquired, or does Yankees have any
present intention of dividing the Notes, the Convertible Bonds
nor the securities to be issued on conversion of the Convertible
Bonds with others or of selling, distributing or otherwise
disposing of any portion of the securities to be issued on
conversion of the Convertible Bonds either currently or after the
passage of a fixed or determinable period of time or upon the
occurrence or non-occurrence of any predetermined event or
circumstance in violation of the Securities Act.
(5) Recognizes that an investment in the Notes, the Convertible Bonds
and the securities to be issued on conversion of the Convertible
Bonds involves substantial risks, including loss of the entire
amount of such investment.
(6) Acknowledges that each certificate representing the securities to
be issued on conversion of the Convertible Bonds shall be stamped
or otherwise imprinted with a legend substantially in the
following form: "The securities evidenced by this certificate may
not be offered or sold, transferred, pledged, hypothecated or
otherwise disposed of except (i) pursuant to an effective
registration statement under the Securities Act of 1933, as
amended, (ii) to the extent applicable, rule 144 under the
Securities Act (or any similar rule under such act relating to
the disposition of securities), or (iii) if an exemption from
registration under such act is available."
Loan Agreement - 11
Page 219
13. Default; Remedies.
(a) If a Default occurs under this Agreement, Yankees may accelerate the
full amount of the then-outstanding Secured Obligations (in which
event such amount will become immediately due and payable by
Explorations) without presentment, demand, protest or other notice of
any kind, all of which Explortaions hereby expressly waives, and, if
not paid in full within 10 business days thereafter, Yankees will, at
its election, become vested with the Collateral in fee simple
absolute, without further action or legal recourse, this Section being
deemed a full warranty xxxx of sale absolute with reference to the
Collateral.
(b) In the event that for any reason Yankees is not in possession or
control of any of the Collateral, or disclaims its right to assume
ownership thereof because of public policies or otherwise, then
Yankees may pursue all of the rights and remedies with respect to the
Collateral accruing to Yankees hereunder or by operation of law as a
secured creditor under the Uniform Commercial Code or other applicable
law and all such available rights and remedies, to the full extent
permitted by the law, will be cumulative and not exclusive.
14. Application of Proceeds.
In the event that Yankees is unable or unwilling to take possession of all
the Collateral in the event of a Default, then, upon enforcement of this
Agreement, all funds received upon the foreclosure and liquidation of the
Collateral will be applied by Yankees in the following order:
(a) To the payment of all costs, expenses, liabilities and compensation of
Yankees (including fees and expenses of its agents and legal counsel)
incurred or accrued in connection with any action or proceeding
brought by Yankees or in connection with the maintenance, sale or
other disposition of the Collateral or any portion thereof;
(b) To the payments of all interest then due and payable on the Loans;
(c) To the payments of all principal then due and payable on the Loans;
(d) To the payment of all other obligations to Yankees;
(e) To the payment of all other Secured Obligations;
(f) To the payment of any surplus then remaining to Explorations or other
persons legally entitled thereto.
15. Receipt of Funds by Explorations.
Notwithstanding the granting to Yankees of a first priority security
interest in and to the Collateral, if, at any time while the Secured Obligations
remain unsatisfied, Explorations will receive any amount representing funds due,
or proceeds of, any of the Collateral, such sums will be held by Explorations in
trust for Yankees and will be immediately paid by Explorations to Yankees in the
form so received, together with any necessary indorsement thereon.
16. Further Assurances.
Explorations agrees to execute and deliver to Yankees, or cause to be
executed and delivered to Yankees, such further instruments and documents as may
be reasonably requested by Yankees to carry out fully the intent and accomplish
the purposes of this Agreement, and the transactions referred to herein and
therein, and to protect and maintain the first priority security interest of
Yankees in and to the Collateral or the immediate conveyance of the Collateral
to Yankees in the event of a default hereunder.
Loan Agreement - 12
Page 220
17. Financials.
Explorations hereby represents, warrants, and covenants to Yankees that it
will cause to be delivered to Yankees (a) as soon as practicable, but in any
event within 90 days after the end of each fiscal year, statements of earnings
and retained earnings and changes in its financial position for such year, and
its balance sheet at the end of such fiscal year, setting forth in each case in
comparative form the corresponding figures of the previous annual audit, all in
reasonable detail and certified by, and accompanied by a report or opinion of,
independent certified public accountants of recognized standing acceptable to
Yankees, and (b) within 45 days after the end of each fiscal quarter, its
statements of earnings and retained earnings and changes in financial position
for such fiscal quarter, and its balance sheet at the end of such fiscal
quarter, setting forth in each case in comparative form the corresponding
figures of the previous quarterly audit, all in reasonable detail and prepared
in accordance with generally accepted accounting principles, consistently
applied, and certified by Explorations' Chief Financial Officer.
18. Dispute Resolution.
(a) In any action between the Parties to enforce any of the terms of this
Agreement or any other matter arising from this Agreement, any
proceedings pertaining directly or indirectly to the rights or
obligations of the Parties hereunder will, to the extent legally
permitted, be held in Broward County, Florida, and the prevailing
Party will be entitled to recover its costs and expenses, including
reasonable attorneys' fees up to and including all negotiations,
trials and appeals, whether or not any formal proceedings are
initiated.
(b) In the event of any dispute arising under this Agreement, or the
negotiation thereof or inducements to enter into the Agreement, the
dispute will, at the request of any Party, be exclusively resolved
through the following procedures:
(1) (A) First, the issue will be submitted to mediation before
Mediation, Inc., a mediation service in Broward County,
Florida, or any other such service as designated by Yankees,
with the mediator to be selected by lot from four
alternatives to be provided, two by Explorations and two by
Yankees.
(B) The mediation efforts will be concluded within ten business
days after their initiation unless both Parties agree to an
extended mediation period;
(2) In the event that mediation does not lead to a resolution of the
dispute then at the request of any Party, the Parties will submit
the dispute to binding arbitration before an arbitration service
located in Broward County, Florida, with the arbitrator to be
selected by lot from four alternatives to be provided, two by
Explorations and two by Yankees.
(3) (A) Expenses of mediation will be borne equally by the Parties,
if successful.
(B) Expenses of mediation, if unsuccessful and of arbitration
will be borne by the Party or Parties against whom the
arbitration decision is rendered.
(C) If the terms of the arbitral award do not establish a
prevailing Party, then the expenses of unsuccessful
mediation and arbitration will be borne equally by the
Parties involved.
Loan Agreement - 13
Page 221
(c) Jurisdiction.
(1) Explorations irrevocably consents to service of any summons
and/or legal process by registered or certified United States
mail, postage prepaid, to Explorations at the address set forth
below in Section 19(b), such method of service to constitute, in
every respect, sufficient and effective service of process in any
such legal action or proceeding.
(2) Nothing in this Agreement will affect the right to service of
process in any other manner permitted by law or limit the right
of Yankees to bring actions, suits or proceedings in the courts
of any other jurisdiction.
(3) Explorations further agrees that final judgment against it in any
such legal action, suit or proceeding will be conclusive and may
be enforced in any other jurisdiction, within or outside the
United States of America, by suit on the judgment, a certified or
exemplified copy of which will be conclusive evidence of the fact
and the amount of Explorations' liability.
19. Miscellaneous.
(a) No Waiver; Cumulative Remedies.
(1) No failure or delay on the part of Yankees in exercising any
right, power or privilege hereunder will operate as a waiver
thereof, nor will any single or partial exercise of any right,
power or privilege hereunder or thereunder preclude any other or
further exercise thereof or the exercise of any other right,
power or privilege.
(2) No right or remedy in this Agreement is intended to be exclusive
but each will be cumulative and in addition to any given Yankees
at law or in equity; and the exercise by Yankees of any one or
more of such remedies will not preclude the simultaneous or later
exercise by Yankees of any or all such other remedies.
(3) No express or implied waiver by Yankees of any future or
subsequent Default will operate as a waiver of any other
provision of this agreement.
(4) To the extent permitted by law, Explorations waives any rights
now or hereafter conferred by statute or otherwise which limit or
modify any of Yankees' rights or remedies under this Agreement.
(b) Notices.
(1) All notices, requests and demands to or upon any Party will be
deemed to have been duly given or made when deposited in the
United States mail, first class postage prepaid, addressed to
such Party at such address as may be hereafter designated in
writing by such Party to the other Party hereto.
(2) Notices will initially be addressed as follows:
(A) To Explorations :
Explorations Group, Inc.
Crystal Corporate Center;
0000 Xxxxx Xxxxxxxx Xxxxx, Xxxxx 000-X;
Xxxx Xxxxx, Xxxxxxx 00000
Attention: Xxxxxxxx Xxxxxx, President
Telephone (000) 000-0000, Fax (000) 000-0000; and,
e-mail xxxxxxxx@xxx.xxx.
Loan Agreement - 14
Page 222
(B) To Yankees:
The Yankee Companies, LLC.
Crystal Corporate Center;
0000 Xxxxx Xxxxxxxx Xxxxx, Xxxxx 000;
Xxxx Xxxxx, Xxxxxxx 00000
Attention: Xxxxxxx Xxxxx Xxxxxx, Chief Executive Officer
Telephone (000) 000-0000, Fax (000) 000-0000; and,
e-mail xxxxx@xxxxxxxxxxxxxxx.xxx;
(C) To Yankcorp
The Yankee Companies, Inc.
Crystal Corporate Center;
0000 Xxxxx Xxxxxxxx Xxxxx, Xxxxx 000;
Xxxx Xxxxx, Xxxxxxx 00000
Attention: Xxxxxxx Xxxxx Xxxxxx, President
Telephone (000) 000-0000, Fax (000) 000-0000; and,
e-mail xxxxx@xxxxxxxxxxxxxxx.xxx;
(3) At the request of any Party, notice will also be provided by
overnight delivery, facsimile transmission or e-mail, provided
that a transmission receipt is retained.
(4) (A) The Parties acknowledge that Yankees has acted as scrivener
for the Parties in this transaction but that Yankees is
neither a law firm nor an agency subject to any professional
regulation or oversight.
(B) Because of the inherent conflict of interests involved,
Yankees has advised Explorations to retain independent legal
counsel to review this Agreement and its exhibits and
incorporated materials on its behalf, the Parties
acknowledge that attorney Xxxxx X. Xxxxxx has reviewed this
Agreement solely on behalf of Yankees and Yankcorp.
(C) The decision by any Party not to use the services of legal
counsel in conjunction with this transaction will be solely
at its own risk, each Party acknowledging that applicable
rules of the Florida Bar prevent Yankees' general counsel,
who has reviewed, approved and caused modifications on
behalf of Yankees, from representing anyone other than
Yankees in this transaction.
(D) This Agreement will not be construed more strictly against
Yankees nor will it be interpreted in any manner based on
the fact that it was initially drafted by Yankees.
(c) Payment of Expenses and Taxes; Performance by Yankees of Explorations'
Obligations.
(1) Explorations agrees, whether or not the transactions contemplated
by this Agreement will be consummated, to pay
(A) All costs and expenses of Yankees in connection with the
negotiation, preparation, execution and delivery of this
Agreement, and the other documents relating hereto;
(B) All fees and taxes in connection with the recording of this
Agreement or any other document or instrument required
hereby; and
(C) All costs and expenses of Yankees in connection with the
enforcement of this Agreement including all legal fees and
disbursements arising in connection therewith.
(2) Explorations agrees to pay, and to indemnify and hold Yankees
harmless from any delay in paying all taxes, including without
limitation, sales, use, stamp and personal property taxes (other
than any corporate income, capital, franchise or similar taxes
payable by Yankees with respect to the payments made to Yankees
hereunder or thereunder) and all license, filing, and
registration fees and assessments and other charges, if any,
which may be payable in connection with the execution, delivery
and performance of this Agreement, or any modification thereof.
Loan Agreement - 15
Page 223
(3) If Explorations fails to perform or comply with any of its
agreements contained herein and Yankees will itself perform or
comply, or otherwise cause performance or compliance, with such
agreement, the expenses Yankees incurres in connection with such
performance or compliance, together with interest thereon at the
rate provided for in the Convertible Bonds and the Notes, will be
payable by Explorations to Yankees on demand and, until such
payment is completed, will constitute part of the Secured
Obligations secured hereby.
(d) Survival of Representations and Warranties.
All representations and warranties made in this Agreement and any
documents delivered pursuant hereto will survive the execution and
delivery of this Agreement and the making of the Loans hereunder.
(e) Amendments.
Neither this Agreement, nor any instruments related thereto, may be
changed, waived, discharged or terminated orally, but only by an
instrument in writing signed by the Party against whom enforcement of
a change, waiver, discharge or termination is sought.
(f) Counterparts & Facsimile Execution.
(1) This Agreement may be executed by the Parties on any number of
separate counterparts, each of which when so executed and
delivered will be an original, but all such counterparts will
together constitute but one and the same instrument.
(2) Execution by original signature on a document delivered to a
Party through facsimile transmission will be deemed full
execution for all purposes by the Party executing and
transmitting such document.
(g) Successors or Assigns.
This Agreement will be binding upon and inure to the benefit of
Explorations, Yankees, Yankcorp and their respective successors and
assigns, except that Explorations may not assign or transfer its
rights or obligations hereunder or any interest herein without the
prior written consent of Yankees.
(h) Governing Law.
This Agreement will be governed by, and construed and interpreted in
accordance with the laws of State of Delaware, other than its rules
pertaining to conflicts of laws.
(i) Severability & Reconstruction.
(1) If any provision or any portion of any provision of this
Agreement, or the application of such provision or any portion
thereof to any person or circumstance will be held invalid or
unenforceable, the remaining portions of such provision and the
remaining provisions of this Agreement or the application of such
provision or portion of such provision as is held invalid or
unenforceable to persons or circumstances other than those to
which it is held invalid or unenforceable, will not be affected
thereby.
Loan Agreement - 16
Page 224
(2) In the event any provision in this Agreement or related
instruments is found to be unenforceable, the Parties hereby
request that the Court interpreting such provision restructure it
in the manner consistent with applicable law most closely meeting
the intent of the Parties, as reflected hereby.
(j) License.
(1) This Agreement is the property of Yankees.
(2) The use hereof by the Parties is authorized solely for purposes
of this transaction, and the use of this form of agreement or of
any derivation thereof without Yankees' prior written permission
is prohibited.
In Witness Whereof, the Parties have caused this Agreement to be executed
on their behalf by their duly authorized representatives as of the day last set
forth below.
Signed, Sealed and Delivered
In Our Presence
/s/ Xxxxx Xxxxxxxx /s/ Explorations Group, Inc.
_______________________________
/s/ Xxxxx Xxxxxxx /s/
_______________________________ By: /s/ Xxxxxxxx Xxxxxx /s/
Xxxxxxxx Xxxxxx, President
Dated: May 6, 2002
[Corporate Seal] Attest: /s/ Xxxxxxx X. Xxxxxxx /s/
Xxxxxxx X. Xxxxxxx, Secretary
State of Florida }
County of Palm Beach } ss.:
Before Me, an officer duly authorized to administer oaths, did personally
appear on this 6th day of May, 2002, Xxxxxxxx Xxxxxx and Xxxxxxx X. Xxxxxxx,
known to me who, being duly sworn, did state that they are the duly elected and
serving president and secretary of Explorations Group, Inc., a Delaware
corporation ("Explorations "), and that pursuant to authority duly delegated by
its board of directors, they executed the foregoing Agreement on behalf of
Explorations , effective as of the date set forth therein. My commission
expires: 04/26/04
[Notarial Seal] /s/ Xxxxxxx X. Xxxxxxx /s/
Notary Public
/s/ Xxxxx Xxxxxxxx /s/ The Yankee Companies, Inc.
_______________________________
/s/ Xxxx Xxxxxxx /s/
_______________________________ By: /s/ Xxxxxxx Xxxxx Xxxxxx /s/
Xxxxxxx Xxxxx Xxxxxx, President
Dated: May 6, 2002
[Corporate Seal] Attest: /s/ Xxxxxxx X. Xxxxxxx /s/
Xxxxxxx X. Xxxxxxx, Secretary
State of Florida }
County of Palm Beach } ss.:
Before Me, an officer duly authorized to administer oaths, did personally
appear on this 6th day of May, 2002, Xxxxxxx Xxxxx Xxxxxx and Xxxxxxx X.
Xxxxxxx, known to me who, being duly sworn, did state that they are the duly
elected and serving president and secretary, respectively, of The Yankee
Companies, Inc, a Florida corporation ("Yankcorp"), and that pursuant to
authority duly delegated by its board of directors, they executed the foregoing
Agreement on behalf of Yankcorp, effective as of the date set forth therein. My
commission expires: 04/26/02
[Notarial Seal] /s/ Xxxxxxx X. Xxxxxxx /s/
Notary Public
Loan Agreement - 17
Page 225
/s/ Xxxxx Xxxxxxxx /s/ The Yankee Companies, LLC.
__________________________
/s/ Xxxx Xxxxxxx /s/ By: /s/ Xxxxxxx Xxxxx Xxxxxx /s/
__________________________ Xxxxxxx Xxxxx Xxxxxx
Chief Executive Officer & Member
Dated: May 6, 2002
Attest: /s/ Xxxxxxx X. Xxxxxxx /s/
Xxxxxxx X. Xxxxxxx, Secretary
State of Florida }
County of Palm Beach } ss.:
Before Me, an officer duly authorized to administer oaths, did personally
appear on this 6th day of May, 2002, Xxxxxxx Xxxxx Xxxxxx and Xxxxxxx X.
Xxxxxxx, known to me who, being duly sworn, did state that they are the duly
elected and serving chief executive officer and secretary, respectively, of The
Yankee Companies, LLC., a Florida limited liability company ("Yankees"), and
that pursuant to authority duly delegated by its members, they executed the
foregoing Agreement on behalf of Yankees, effective as of the date set forth
therein. My commission expires: 04/26/02
[Notarial Seal] /s/ Xxxxxxx X. Xxxxxxx /s/
Notary Public
Loan Agreement - 18
Page 226
Exhibit 2(b)-1
Form of Security Agreement
Security Agreement
This security agreement (the "Agreement") is entered into by and between
The Yankee Companies, LLC., a Florida limited liability company ("Yankees"), and
Explorations Group, Inc., a Delaware corporation ("Explorations"; Yankees and
Explorations being sometimes hereinafter collectively referred to as the
"Parties" and each being sometimes hereinafter generically referred to as a
"Party").
Witnesseth
In consideration of the sum of TEN DOLLARS ($10.00), the premises herein,
and other good and valuable consideration given by Yankees to Explorations, and
for other value received by Explorations; the Parties, intending to be legally
bound, hereby agree as follows:
1. Definitions:
The definitions and rules of interpretation contained in Section 1 of the
loan agreement executed by the Parties concurrently herewith (the "Loan
Agreement") are hereby incorporated by reference.
2. Assignment of Collateral:
(a) As security for the payment of the Obligations and all Loans and
advances heretofore made, made concurrently with the execution of the
Loan Agreement or made in the future by Yankees to Explorations and
for all Explorations' liabilities to Yankees, including any
extensions, renewals or changes in form of any thereof, Explorations
hereby assigns to Yankees and grants to Yankees a security interest
under the Uniform Commercial Code in the Collateral.
(b) The Collateral will be deemed to have been constructively delivered by
Explorations to Yankees immediately following execution of the Loan
Agreement and will be deemed to remain in the possession of
Explorations, as trustee for Yankees, for so long as any obligations
of Explorations to Yankees remain unfulfilled; provided, however,
that, if Explorations defaults in its obligations to Yankees, then at
Yankees' sole option and without any required further action or legal
process by Yankees, all of the Collateral will become the sole and
exclusive property of Yankees, this Section being deemed a full
warranty xxxx of sale, deed and securities power for all of the
Collateral.
3. Restraint:
So long as any Liability to Yankees is outstanding, Explorations will not
without prior written consent of Yankees borrow from anyone on the security of,
or pledge, or grant any security interest in, any Collateral, or permit any lien
or encumbrance to attach to any of the foregoing, or any levy to be made
thereon, or any financing statement to be on file with respect thereto.
4. Office:
(a) Explorations represents that its principal place of business is at
Crystal Corporate Center; 0000 Xxxxx Xxxxxxxx Xxxxx, Xxxxx 000-X; Xxxx
Xxxxx, Xxxxxxx 00000.
(b) Explorations will immediately advise Yankees in writing of the opening
of any new place of business or the closing of its existing places of
business, and of any changes in the location of the place where any
new Collateral not in the possession of Yankees is kept or where
Explorations' records concerning the Collateral are kept.
Page 227
5. Documents:
Explorations will promptly:
(a) Join with Yankees in executing a financing statement and pay the cost
of filing the same in any public office deemed advisable by Yankees;
(b) Execute and deliver to Yankees upon demand such additional assurances
and instruments as may be required by Yankees to maintain the security
of Yankees in good standing and effectuate the intent of the Loan
Agreement, including additional security agreements on a Loan by Loan
basis; and
(c) In the event of Default either of the terms hereof, or as enumerated
in the Loan Agreement, the Convertible Bonds or in the Notes, execute
all such documents and do all such acts necessary to have the
Collateral transferred into the name of Yankees as Yankees will
request.
6. Indemnification:
Explorations hereby indemnifies and holds harmless Yankees for all loss,
cost, expense or damage resulting from Explorations' Default under this
Agreement.
7. Insurance:
(a) In accordance with Section 6 of the Loan Agreement, Explorations will
keep all Collateral insured under policies of all-risk insurance
(which will include fire, extended coverage and vandalism) placed with
companies and agents approved by Yankees and such insurance will be
carried in amounts which Yankees deems sufficient for its complete
protection, but in no event less than the greater of (i) the aggregate
principal sum of the Liabilities or (ii) the aggregate replacement
value of the Collateral.
(b) (1) The premiums for all such insurance will be paid by Explorations
not later than five (5) days before the same are due.
(2) The original certificates of such policy or policies will be
delivered to and held by Yankees and will be made payable to
Yankees. In the event any sum of money becomes payable under such
policy or policies, Yankees will have the option to receive and
apply the same on account of the indebtedness hereby secured
against payments of principal in the inverse order of their
maturity, or to permit Explorations to receive and use it, or any
part thereof, for other purposes, without thereby waiving or
impairing any equity, lien or right under and by virtue of this
Agreement.
(3) The placing of such insurance and the paying of the premium of
such insurance, or any part thereof, by Yankees will not be
deemed to waive or affect any right of Yankees hereunder.
(c) (1) If Yankees acquires title to the Collateral, any unearned
premiums on any hazard insurance covering the Collateral and held
by Yankees are hereby assigned to and will belong to Yankees.
(2) If at any time during the term of this Agreement any insurance
policies will be canceled and returned premiums become available
(excluding return of premium in whole on or before such time as a
new fully paid insurance policy is issued in accordance with the
terms of this Agreement), these returned premiums will belong to
Yankees and, at the option of Yankees, may be credited by Yankees
against the Liabilities secured hereunder.
Security Agreement - 1
Page 228
(d) Any rights of Yankees to any insurance proceeds will in no way be
affected or impaired by reason of the fact that Yankees may have
exercised any remedy available to Yankees. In the event any losses
will be payable on any insurance policies covering the Collateral,
Explorations and all successors in title and all persons now or
hereafter holding inferior liens on such damaged and/or destroyed
property hereby appoint Yankees agent and attorney-in-fact to endorse
such proceeds, checks(s) or drafts(s) for the purpose, at the option
of Yankees, of applying them against the Liabilities.
8. Covenants:
Explorations covenants and agrees that it will:
(a) (1) Receive as the sole property of Yankees and hold as trustee for
Yankees all funds, checks, notes, drafts, and other property
("Items of Payment") representing the proceeds of any Collateral
in which Yankees has a security interest, which come into the
possession of Explorations;
(2) Deposit all such Items of Payment immediately in the exact form
received in a special account of Explorations in a federally
insured, state or federal savings and loan association or
commercial bank ("Bank") entitled "Cash Collateral Account"; and
(3) Execute such documents and do such acts as Yankees may require to
insure that Yankees will have a perfected security interest in
such Cash Collateral Account to additionally secure all
Explorations' Liabilities; provided, however, that Explorations
will have the right to use all or a portion of the Cash
Collateral Account to purchase new Collateral of like kind and
quality free and clear of all liens;
(b) Furnish a landlord's waiver of lien where Explorations is a tenant in
possession of leased premises, in form acceptable to Yankees wherein
landlord waives its lien for rent and all claims and demands of every
kind against Explorations' Collateral and authorizes Yankees to enter
upon the leased premises for the purpose of enabling Yankees to take
possession of Explorations' Collateral, pursuant to the terms of this
Agreement;
(c) (1) Make all payments of taxes, including but not limited to
assessments, levies, liabilities, obligations and encumbrances of
every nature upon the Collateral before same become delinquent;
(2) Explorations will deliver to Yankees receipts evidencing the
payment of said taxes, assessments, levies, liabilities,
obligations, and encumbrances immediately on the payment thereof
as required in this Section.
(3) In default thereof, Yankees may at any time pay the same without
waiving or affecting any rights hereunder and every payment so
made will bear interest from the date thereof at the highest rate
permitted by law;
(d) Pay on demand any cost, charge and expense, including reasonable
attorneys' fees through all trial and appellate levels, incurred or
paid at any time by Yankees arising out of the failure of Explorations
to perform timely and comply with and abide by any of the
stipulations, agreements, conditions and covenants of this Agreement
and every such payment after the same becomes due will bear interest
from date of demand at the highest rate permitted by law;
(e) Keep adequate records and books of account in accordance with
generally accepted accounting principles with respect to Explorations'
business and permit Yankees, its agents, accountants and attorneys to
visit and inspect the Collateral and examine its records and books of
account and to discuss its affairs, finances and accounts with
Yankees, at such reasonable times during normal business hours, as may
be requested by Yankees upon twenty-four (24) hours notice;
Security Agreement - 2
Page 229
(f) Keep the Collateral in good repair and operating order.
9. No Exemption:
Explorations hereby declares that the Collateral forms no part of any
property owned, used or claimed by Explorations as exempted from forced sale
under the laws of any state, and disclaims, waives and renounces all and every
claim to exemption under any homestead exemption.
10. Conveyance:
(a) The sale, lease, transfer or other conveyance of the Collateral or any
part thereof to another party or parties without the prior written
consent of Yankees will, at Yankees' option, constitute a Default
under this Agreement. No Collateral will be removed, demolished or
substantially altered without the prior written consent of Yankees.
(b) In the event that Explorations is in possession of any of the
Collateral, for whatever purpose or reason, upon the failure of
Explorations to keep such Collateral in good condition or repair,
Yankees may at its option, make such repairs, and any such sums
expended by Yankees will be immediately due and payable and will bear
interest from the date thereof at the highest rate permitted by law.
11. Encumbrances:
The encumbrance of the Collateral in any manner, including, without
limitation, the obtaining by Explorations or its successors or assigns of any
additional financing secured by any part of the Collateral, without the prior
written consent of Yankees (which consent may be either granted or withheld in
Yankees' sole and unfettered discretion) will constitute a Default under this
Agreement.
12. Lawful Purpose:
To the extent that it is in possession of any of the Collateral,
Explorations will not use the Collateral or allow the same to be used for any
unlawful purpose or in violation of any law, ordinance or regulation now or
hereafter covering or affecting the use thereof.
13. Default:
The default provisions of the Loan Agreement, Convertible Bonds, the Notes
and of the other agreements pertaining to this transaction executed concurrently
herewith or hereafter pursuant to the terms of the Loan Agreement are hereby,
incorporated by reference.
14. Other Actions:
(a) In the event Explorations fails to pay any charges or obligations
required to be paid or perform any acts required to be performed by
Explorations hereunder within the time set forth for such payment or
performance, Yankees will have the right to pay such charge or
obligation and perform such act without waiving or affecting the
option of Yankees to consider this Agreement in Default.
(b) All funds advanced by Yankees pursuant to this Section will be deemed
additional funds owed by Explorations to Yankees, will be payable with
interest from the date of advance thereof at the highest rate
permitted by law, upon demand of Yankees thereof and will be secured
by the lien of this Agreement.
(c) If any action or proceeding will be commenced by any person to which
action or proceeding Yankees is made a party, or in which it will
become necessary to defend or uphold the lien of this Agreement, all
sums paid by Yankees for the expenses of any such litigation
(including reasonable attorney's fees through all trial and appellate
levels) will be paid by Explorations to Yankees together with interest
thereon at the highest rate permitted by law.
Security Agreement - 3
Page 230
15. Costs:
Explorations will pay to Yankees all lawful charges and disbursements,
including attorneys' fees, through all negotiations, administrative, trial and
appellate levels incurred by Yankees in connection with the protecting or
enforcing the rights of Yankees hereunder and all such sums will be secured by
the lien of this Agreement.
16. Waiver:
(a) Explorations waives notice of non-payment and protest of all
commercial paper, including the liabilities at any time held by
Yankees on which Explorations is in any way liable.
(b) (1) No waiver by Yankees of any Default will operate as a waiver of
any other Default or of the same Default on a future occasion.
(2) No delay or omission on the part of Yankees in exercising any
right or remedy will operate as a waiver thereof, and no single
or partial exercise by Yankees of any right or remedy will
preclude any other or further exercise thereof or the exercise of
any other right or remedy.
(3) Time is of the essence of this Agreement.
(4) The provisions of this Agreement are cumulative and in addition
to the provisions of any remedy under any Convertible Bond, Note
or other writing evidencing any liability secured hereby.
(c) Explorations releases Yankees from all claims for loss or damage
caused by any failure to protect the Collateral or by any act or
omission on the part of Yankees, its officers, agents and employees,
except willful misconduct.
17. Miscellaneous:
The provisions of Sections 18 ('Dispute Resolution") and 19
("Miscellaneous") of the Loan Agreement are hereby incorporated by reference.
Security Agreement - 4
Page 231
In Witness Whereof, the Parties have caused this Agreement to be executed
on their behalf by their duly authorized representatives as of the day last set
forth below.
Signed, Sealed and Delivered
In Our Presence
/s/ Xxxxx Xxxxxxxx /s/ Explorations Group, Inc.
_______________________________
/s/ Xxxx Xxxxxxx /s/
_______________________________ By: /s/ Xxxxxxxx Xxxxxx /s/
Xxxxxxxx Xxxxxx, President
Dated: May 6, 2002 [Corporate Seal]
Attest: /s/ Xxxxxxx X. Xxxxxxx /s/
Xxxxxxx X. Xxxxxxx, Secretary
State of Florida }
County of Palm Beach } ss.:
Before Me, an officer duly authorized to administer oaths, did personally
appear on this 6th day of May, 2002, Xxxxxxxx Xxxxxx and Xxxxxxx X. Xxxxxxx,
known to me who, being duly sworn, did state that they are the duly elected and
serving president and secretary of Explorations Group, Inc. , a Delaware
corporation ("Explorations "), and that pursuant to authority duly delegated by
its board of directors, they executed the foregoing Agreement on behalf of
Explorations, effective as of the date set forth therein. My commission expires:
04/26/02
[Notarial Seal] /s/ Xxxxxxx X. Xxxxxxx /s/
Notary Public
/s/Xxxxx Xxxxxxxx /s/ The Yankee Companies, LLC.
_______________________________
/s/Xxxx Xxxxxxx /s/
_______________________________ By: /s/ Xxxxxxx Xxxxx Xxxxxx /s/
Xxxxxxx Xxxxx Xxxxxx
Chief Executive Officer
Dated: May 6, 2002
Attest: /s/ Xxxxxxx X. Xxxxxxx /s/
Xxxxxxx X. Xxxxxxx, Secretary
State of Florida }
County of Palm Beach } ss.:
Before Me, an officer duly authorized to administer oaths, did
personally appear on this 6th of May, 2002, Xxxxxxx Xxxxx Xxxxxx and Xxxxxxx X.
Xxxxxxx, known to me who, being duly sworn, did state that they are the duly
elected and serving chief executive officer and secretary, respectively, of The
Yankee Companies, LLC., a Florida limited liability company ("Yankees"), and
that pursuant to authority duly delegated by its members, they executed the
foregoing Agreement on behalf of Yankees, effective as of the date set forth
therein. My commission expires: 04/26/02
[Notarial Seal] /s/ Xxxxxxx X. Xxxxxxx /s/
Notary Public
Security Agreement - 5
Page 232
/s/ Xxxxx Xxxxxxxx /s/ The Yankee Companies, Inc.
______________________________
/s/ Xxxx Xxxxxxx /s/
______________________________ By: /s/ Xxxxxxx Xxxxx Xxxxxx /s/
Xxxxxxx Xxxxx Xxxxxx
Chief Executive Officer
Dated: May 6, 2002
Attest: /s/ Xxxxxxx X. Xxxxxxx /s/
Xxxxxxx X. Xxxxxxx, Secretary
State of Florida }
County of Palm Beach } ss.:
Before Me, an officer duly authorized to administer oaths, did personally
appear on this 6th of May, 2002, Xxxxxxx Xxxxx Xxxxxx and Xxxxxxx X. Xxxxxxx,
known to me who, being duly sworn, did state that they are the duly elected and
serving chief executive officer and secretary, respectively, of The Yankee
Companies, Inc., a Florida corporation ("Yankcorp"), and that pursuant to
authority duly delegated by its members, they executed the foregoing Agreement
on behalf of Yankcorp, effective as of the date set forth therein. My commission
expires: 04/26/04
[Notarial Seal] /s/ Xxxxxxx X. Xxxxxxx /s/
Notary Public
Security Agreement - 6
Page 233
Exhibit 2(b)-2
Form of Convertible Bond
Explorations Group, Inc.
(a Delaware corporation)
Bond Number 001
Class A, Series A, Convertible Bond
$_______________ ___________________, 200__
FOR VALUE RECEIVED, Explorations Group, Inc., a Delaware corporation
currently seeking to register a class of securities under Section 12(g) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and with
offices at 0000 X. Xxxxxxxx Xxxxx, Xxxxx 000-X, Xxxx Xxxxx, Xxxxxxx 00000 (the
"Issuer"), promises to pay to the order of The Yankee Companies, LLC, a Florida
limited liability company with offices located at the Crystal Corporate Center;
0000 Xxxxx Xxxxxxxx Xxxxx, Xxxxx 000, Xxxx Xxxxx, Xxxxxxx 00000 and whose
federal employer identification number is 00-0000000 ("Yankees," Yankees
together with all successors in interest to its rights hereunder being
collectively and generically referred to as the "Bond Holder[s];" the Issuer,
Yankees and the Bond Holders being hereinafter collectively and generically
referred to with their successors in interest as the "Parties"): the principal
sum of $_______, together with interest thereon commencing on the date of this
instrument (the "Bond") at the annualized rate of 2% over the prime rate charged
during the subject period by Citibank, N.A. (New York City) to its most favored
corporate borrowers for unsecured obligations having a term of one year or less;
at the Issuer's offices, or such other address as the Bond Holder may provide
for such purpose, subject to the following terms:
TERMS
1. Basic Terms:
(a) Definitions:
The following terms or phrases, as used in this Bond, will have the
following meanings:
(1) Accredited Investor:
An investor that meets the requirements for treatment as an accredited
investor, as defined in Rule 501(a) of Commission Regulation D, which
provides as follows: Accredited investor. "Accredited investor" will mean
any person who comes within any of the following categories, or who the
issuer reasonably believes comes within any of the following categories, at
the time of the sale of the securities to that person: (1) Any bank as
defined in section 3(a)(2) of the Act, or any savings and loan association
or other institution as defined in section 3(a)(5)(A) of the Act whether
acting in its individual or fiduciary capacity; any broker or dealer
registered pursuant to section 15 of the Securities Exchange Act of 1934;
any insurance company as defined in section 2(13) of the Act; any
investment company registered under the Investment Company Act of
Page 234
1940 or a business development company as defined in section 2(a)(48) of
that Act; Small Business Investment Company licensed by the U.S. Small
Business Administration under section 301(c) or (d) of the Small Business
Investment Act of 1958; any plan established and maintained by a state, its
political subdivisions, or any agency or instrumentality of a state or its
political subdivisions for the benefit of its employees, if such plan has
total assets in excess of $5,000,000; employee benefit plan within the
meaning of the Employee Retirement Income Security Act of 1974 if the
investment decision is made by a plan fiduciary, as defined in section
3(21) of such Act, which is either a bank, savings and loan association,
insurance company, or registered investment adviser, or if the employee
benefit plan has total assets in excess of $5,000,000 or, if a
self_directed plan, with investment decisions made solely by persons that
are accredited investors; (2) Any private business development company as
defined in section 202(a)(22) of the Investment Advisers Act of 1940; (3)
Any organization described in Section 501(c)(3) of the Internal Revenue
Code, corporation, Massachusetts or similar business trust, or partnership,
not formed for the specific purpose of acquiring the securities offered,
with total assets in excess of $5,000,000; (4) Any director, executive
officer, or general partner of the issuer of the securities being offered
or sold, or any director, executive officer, or general partner of a
general partner of that issuer; (5) Any natural person whose individual net
worth, or joint net worth with that person's spouse, at the time of his
purchase exceeds $1,000,000; (6) Any natural person who had an individual
income in excess of $200,000 in each of the two most recent years or joint
income with that person's spouse in excess of $300,000 in each of those
years and has a reasonable expectation of reaching the same income level in
the current year; (7) Any trust, with total assets in excess of $5,000,000,
not formed for the specific purpose of acquiring the securities offered,
whose purchase is directed by a sophisticated person as described in
ss.230.506(b)(2)(ii); and, (8) Any entity in which all of the equity owners
are accredited investors.
(2) Blue Sky: The phrase used to indicate state laws and regulations
governing securities transactions and participants in the
securities industry.
(3) Capital Stock: Equity securities of all classes and series, including,
without limitation, common stock and preferred stock
(4) Code: The Internal Revenue Code of 1986, as amended.
(5) Commission: The United States Securities and Exchange Commission.
(6) XXXXX: The Commission's electronic data gathering and retrieval
system accessible by the public at the Commission's website
located at xxxx://xxx.xxx.xxx.
(7) Exchange Act: The Securities Exchange Act of 1934, as amended.
(8) Florida Act: The Florida Securities and Investor Protection Act.
Page 235
(9) Florida Rule: Florida Rule 3E_500.005, which provides as follows:
Disclosure requirements of Section 517.061(11)(a)3., Florida
Statutes. (1) Transactions by an issuer which do not satisfy
all of the conditions of this rule will not raise any
presumption that the exemptions provided by Section
517.061(11), Florida Statutes is not available for such
transactions. Attempted compliance with this rule does not
act as an election; the issuer can also claim the
availability of Section 517.061(11), Florida Statutes,
outside this rule. (2) The determination as to whether sales
of securities are part of a larger offering (i.e., are
deemed to be integrated) depends on the particular facts and
circumstances. In determining whether sales should be
regarded as part of a larger offering and thus should be
integrated, the facts described in Rule 3E_500.01 should be
considered. (3) Although sales made pursuant to Section
517.061(11), Florida Statutes, and in compliance with this
rule, are exempt from the registration provisions of this
Act, such exemption does not avoid the antifraud provisions
of Sections 517.301 and 517.311, Florida Statutes. (4) The
provisions of this rule will apply only to transactions
which are consummated with persons in the State of Florida.
(5) The requirements of Sections 517.061(11)(a)(3), Florida
Statutes, that each purchaser, or his representative be
provided with or given reasonable access to full and fair
disclosure of all material information will be deemed to be
satisfied if either paragraphs (5)(a) or (5)(b) are complied
with: (a) Access to or Furnishing of Information. Reasonable
access to, or the furnishing of, material information will
be deemed to have been satisfied if prior to the sale a
purchaser is given access to the following information: 1.
All material books and records of the issuer; and, 2. All
material contracts and documents relating to the proposed
transaction; and, 3. An opportunity to question the
appropriate executive officers or partners .... (6) In the
case of an issuer that is subject to the reporting
requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the provisions of paragraph (5)(b) of
this rule will be deemed satisfied by providing the
following: (a) The information contained in the annual
report required to be filed under the Securities Exchange
Act of 1934 or a registration statement on Form S_1 under
the Securities Act of 1933, whichever filing is the most
recent required to be filed, and the information contained
in any definitive proxy statement required to be filed
pursuant to Section 14 of the Securities Exchange Act of
1934 and in any reports or documents required to be filed by
the issuer pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934, since the filing of such
annual report or registration statement; and, (b) A brief
description of the securities being offered, the use of the
proceeds from the offering, and any material changes in the
issuer's affairs which are not disclosed in the documents
furnished.
(10) NASD: The National Association of Securities Dealers, Inc., a
Delaware corporation and self regulatory organization
registered with the Commission.
(11) OTC Bulletin Board:
The electronic, over-the-counter securities market operated
by the NASD, not to be confused with the NASDAQ Stock
Market, Inc., a wholly owned subsidiary of the NASD.
(12) Securities Act: The Securities Act of 1933, as amended.
(13) Service: The United States Internal Revenue Service.
Page 236
(14) (A) All undefined financial terms will have the meanings ascribed to them
by generally accepted accounting practices, consistently applied on
the accrual basis of accounting, as modified by rules of the
Commission including Regulations SB and SK.
(B) Additional terms characterized by initial capital letters are defined
in this Bond immediately following their first use.
(b) The Bonds
(1) This Bond is one of that series of bonds in the aggregate principal
amount of $50,000, identical in all material terms to this instrument,
privately placed by the Issuer solely to accredited investors pursuant
to the provisions of Sections 4(2) and 4(6) of the Securities Act, and
designated as the Class A, Series A, Convertible Bonds, which the
Issuer has exchanged with Yankees pursuant to the provisions of
Section 3(a)(9) of the Securities Act for a series matured promissory
notes in the principal amount and accrued interest equal to the face
amount of the Bond.
(2) This Bond shall be payable as follows:
(A) Interest shall be payable in one aggregate payment on the
maturity date of the Bond, subject to tender of the Bond for
cancellation and payment in the manner hereinafter provided.
Except in the event of a default on payment after presentation
therefor, interest shall cease on the maturity date.
(B) Principal on this Bond shall be payable on the 730th day
following the later of its execution by the Issuer, as evinced by
the date hereon.
(3) The Bond Holder may elect to subdivide this Bond into two or more
separate obligations, at its option, provided, however, that each
separate resulting instrument must be in an amount of at least $10,000
in principal and must be divisible by 1,000 without resulting
fraction, except as to one single certificate which will be in such
amount as is required to accurately reflect the principal balance then
due.
(4) Transfers or divisions of Bonds will be effected by the Issuer, at the
written request of the Bond Holder, including appropriate signature
guarantees (but payment of bond transfer fees and taxes shall be the
responsibility of the Bond Holder); provided, however, that unless the
Bonds are properly registered pursuant to Section 5 of the Securities
Act of 1933, as amended (the "Securities Act"), and comparable state
blue sky laws in the state of the transferee's domicile, no transfers
will be effected unless accompanied by an opinion of legal counsel
acceptable to the Issuer, attesting to the fact that the transfer will
not violate applicable laws and detailing the factual and legal basis
for such opinion.
(c) Reservation of Underlying Securities
The Issuer shall promptly instruct its transfer agent to reserve the quantity of
Capital Stock required to be issued in the event of conversion of the Bonds and
shall require its transfer agent to maintain such reserved stock until the Bonds
are either paid in full or converted.
(d) Cancellation and Restructuring of Rights under Yankees Consulting
Agreement and Revolving Loan Agreement
The Parties acknowledge that the Yankee Companies, Inc., a Florida corporation
and affiliate of Yankees, has agreed with the Issuer to cancel its consulting
agreement and to transfer its rights to a Revolving Loan Agreement to acquire
20% of the Issuer's outstanding and reserved Capital Stock, as described in the
Issuer's registration statement filed with the Commission.
Page 237
2. Security and Subordination:
(a) This Bond shall be secured by a security interest in all of the Issuer's
assets, including after-acquired assets, subject only to prior, perfected
security interests, and to the sale of assets in the ordinary course of
business provided that the proceeds of such sales are re-invested in
inventory or used to pay operating expenses of the Issuer, since it is the
intent of the Parties that no proceeds be used for payment of dividends or
extra-ordinary compensation to the principals of the Issuer.
(b) The security interest shall be evinced by such documentation as Yankees, as
the representative for all Bond Holders, shall deem appropriate from time
to time, but in any event, by forms adopted under the Uniform Commercial
Code of the States of Delaware, Florida and such other states in which the
Issuer formally qualifies to engage in business, and properly executed and
timely filed with such states (e.g., Form UCC-1).
(c) In the event of default hereunder, Yankees, acting as the irrevocable agent
for all Bond Holders but without fiduciary obligations thereto, shall make
all decisions pertaining to appropriate remedies for default, including
without limitation, those involving the dispute resolution provisions of
the Bonds.
3. Conversion, Trading, Exemptions from Securities Laws & Registration:
(a) (1) This Bond shall, at the Bond Holder's option, be convertible into
shares of the Issuer's securities, such that, upon complete
conversion, the aggregate number of shares owned by the Bond Holder
shall be equal to 20% of all of the Issuer's:
(A) Outstanding Capital Stock; and
(B) Capital Stock reserved in conjunction with existing corporate
obligations other than this Bond (e.g., options, warrants, stock
option plans, employment or consulting agreements, etc.).
(2) The actual quantity of securities into which this Bond may be
converted will be determined based on the Issuer's outstanding or
reserved securities at the time conversion is completed, subject to
anti-dilutive rights for a period of three fiscal months thereafter
pursuant to which additional securities shall be issued to the Bond
Holder in such amounts as may be required so that the securities owned
by the Bond Holder shall be equal to 20% of all of the Issuer's
outstanding or reserved Capital Stock at the end of the first three
months following the time conversion is completed.
(3) Conversion may be effected in whole or in part, provided that the
decision of any Bond Holder not to convert will not preclude any other
Bond Holder from exercising conversion rights, unless he, she or it is
merely the nominee or an alter ego of the non-exercising Bond Holder.
(4) The conversion price per share will be calculated based on the number
of shares outstanding and reserved (as hereinbefore described) at the
time of conversion, pro rata, so that subsequent conversions are
expected to be at lower prices than earlier conversions.
(b) This Bond has not been registered under any federal or state securities
requirements in reliance on the exemptions provided by Sections 3(a)(9),
4(2) and 4(6) of the Securities Act, the Bond Holder having heretofore
confirmed to the Issuer that he, she or it is meets the definition of an
Accredited Investor, and by acceptance of any assignments of this Bond, any
subsequent Bond Holder hereby confirms such assertion under penalty of
perjury:
Page 238
(1) The Class A, Series A, Convertible Bonds will not be subject to the
protective features of the Trust Indenture Act of 1939, as amended
(the "Indenture Act") pertaining to required use of an approved form
of trust indenture and the employment of an independent trustee to
protect the interests of the Bond Holders, pursuant to exemptive
provisions of Sections 304(a)(8) and 304(b) of the Indenture Act and
Rule 4a-1 adopted thereunder (Reg. Section 260.4a-1); consequently,
all of the terms of the Class A, Series A, Convertible Bonds are
contained in this instrument and each Bond Holder will be required to
monitor compliance by the Issuer with its obligations hereunder
directly and to rely on Yankees, in the sole exercise of its
discretion and without fiduciary obligations to the Bond Holders, to
take required enforcement actions.
(2) The Bond Holder, by acceptance of this Bond, hereby confirms that:
(A) He, she or it has reviewed all of the Issuer's filings under the
Exchange Act currently posted on the Commission's Internet web
site during the past 12 months, has had the opportunity to
question officers and directors of the Issuer concerning its
business, history, personnel and the terms of the exchange
pursuant to which this Bond was issued;
(B) Because neither this Bond nor the shares of Capital Stock
issuable in the event of its conversion have been registered with
the Commission or any state securities regulatory authorities,
the Bond Holders hereby acknowledge that:
a. This Bond and the shares of Capital Stock issuable upon
conversion will bear legends restricting their transfer,
sale, conveyance or hypothecation unless they are either
registered under the provisions of Section 5 of the
Securities Act and the securities laws of the Bond Holder's
state of domicile, or an opinion of legal counsel, in form
and substance satisfactory to legal counsel to the Issuer is
provided by the Bond Holder to the effect that such
registration is not required as a result of applicable
exemptions therefrom; provided that the Parties agree that
it is their understanding that because the Bond was
exchanged solely for existing securities of the Issuer (the
Notes) and because conversion of the Bond for the Capital
Stock will be solely in consideration for other securities
of the Issuer, the holding period applicable prior to resale
under Commission Rule 144(d) will, pursuant to the exchange
of securities provisions of Commission Rule 144(d)(3)(ii),
commence on the original date of the Notes for which this
Bond has been exchanged.
b. The Issuer's transfer agent shall be instructed not to
transfer this Bond or any of the Capital Stock issued on
conversion thereof unless the Issuer advises it that such
transfer is in compliance with all applicable laws; and
c. The Bond Holder is acquiring this Bond for its own account,
for investment purposes only, and not with a view to further
sale or distribution.
(c) (1) At Yankees' option, the Issuer shall, at its sole cost and
expense, register all of the Bonds and all of the securities into
which they are convertible, with the Commission and State Blue
Sky regulatory authorities, as required to permit their public
sale.
(2) In addition to Yankees' demand registration rights, in the event
the Issuer files a registration statement during the term of this
Agreement, it shall notify all of the Bond Holders either in
writing or by publication in a newspaper of national circulation
(e.g., USA Today or the Wall Street Journal) of such intent and
shall, at the request of any of them, register their Bond(s) and
the shares of Capital Stock underlying the conversion rights
described herein, in such registration statement.
Page 239
4. Redemption and Prepayment:
The Bonds will be non-redeemable and may not be prepaid.
5. Notices:
(a) Any demand or notice made or given by the Bond Holder pursuant hereto or in
connection herewith shall be made upon or given to the Issuer by registered
mail, return receipt requested, postage prepaid, directed to the Issuer at
its address as set forth on the latest Exchange Act report filed by the
Issuer with the Commission, as reflected on the Commission's Internet web
site (xxx.xxx.xxx), unless the Issuer has ceased filing such reports, in
which case it shall be provided to the address maintained for the Issuer by
the Office of the Secretary of State of the state in which it is then
incorporated, but making or giving or attempting to make or give any demand
or notice shall not waive any right granted hereunder or otherwise to act
without demand or notice.
(b) Any demand or notice made or given by the Issuer to any Bond Holder
pursuant hereto or in connection herewith shall be made upon or given to
the by United States First Class Mail, postage prepaid, addressed to the
address set forth on the face hereof or such other address as the Bond
Holder has provided to the Issuer and the Issuer has listed in its
securities registry records; or, at the Issuer's option, by publication in
a newspaper of national circulation (e.g., USA Today or the Wall Street
Journal).
6. Dispute Resolution
(a) The Parties hereby covenant and agree that in the event that either is
required to retain an attorney to assist it in enforcing the provisions of
this Bond, the prevailing Party in such proceeding shall, by application to
the subject tribunal, be entitled to recover from the other Party such
costs, expenses and damages associated with the actions or failures to act
which led to such decision, as such tribunal deems appropriate under the
circumstances, including, without limitation, reasonable attorney's fees as
actually paid throughout the course of any negotiations, trials or appeals,
but shall exclude consequential or incidental damages.
(b) This note shall be governed by and construed in accordance with the laws of
the State of Delaware but any proceedings arising hereunder shall be
adjudicated before a forum located within the county in which the Issuer
maintains its principal legal offices, or in the absence of any such
offices, its principal administrative offices.
(c) In the event any provision of the Bond shall be deemed unenforceable under
the laws binding on a tribunal adjudicating its validity, then the Parties
hereby request that such tribunal reform this Bond in such manner as will
most closely accomplish its purpose without violating applicable laws or
public policies.
(d) By execution and delivery of this Bond, the Parties hereby irrevocably
accept and submit to, for themselves and their successors in interest,
generally and unconditionally, the personal jurisdiction of any tribunal
meeting the requirements for venue set forth above.
(e) (1) The Parties hereby irrevocably consent to service of any summons
and/or legal process by registered or certified United States mail,
postage prepaid, to the Party served at the address determined in the
manner hereinbefore set forth in this Bond for the provision of
notice, such method of service to constitute, in every respect,
sufficient and effective service of process in any such legal action
or proceeding.
(2) Nothing in this Agreement shall service of process in any other manner
permitted by law.
(3) The Parties further agree that final judgment against either of them
in any legal action, suit or proceeding complying with the foregoing
provisions shall be conclusive and may be enforced in any other
jurisdiction, within or outside the United States of America, by suit
on the judgment, a certified or exemplified copy of which shall be
conclusive evidence of the fact and the amount of the subject Party's
liability.
Page 240
7. Acceptance of Terms of this Agreement by the Bond Holders
By accepting any of the rights granted under this Bond, the Bond Holder and
all of the Bond Holder's successors in interest to any rights under this Bond
shall be conclusively presumed to have accepted all obligations set forth herein
as applying to Bond Holders, such acceptance constituting a condition precedent
to any obligations of the Issuer to the Bond Holder or its successor in interest
arising from the transaction reflected in this Bond.
8. License
This instrument is the property of Yankees, and has been licensed for use
only in conjunction with this transaction. No one may utilize this form or any
derivations thereof without the prior written consent of Yankees.
* * *
In Witness Whereof, the Issuer has executed this instrument on this ___ day
of ____________, 2002.
Explorations Group, Inc.
By: ___________________________________
Xxxxxxxx Xxxxxx, President
[Corporate Seal]
Attest: ___________________________________
Xxxxxxx X. Xxxxxxx, Secretary
Page 241
CONVERSION FORM
The Undersigned hereby irrevocably elects to convert $________ in principal
and accrued interest due under this Bond into shares of the Issuer's Capital
Stock, as provided for in this Bond.
Instructions For Registration and Delivery of Stock
Please type or print in block letters
---------------------
(Name)
--------------------------------
(Social Security or Federal Employer Identification Number)
--------------------------------
--------------------------------
(Address)
Dated: ___________
-------------------------------------
Bond Holder's Signature
NOTICE: The signatures to this notice of conversion must correspond with the
name as written upon the face of the Bond in every particular, without
alteration or enlargement or any change whatever.
Signature Guaranteed:
IMPORTANT: SIGNATURE MUST BE GUARANTEED BY A FIRM WHICH IS A MEMBER OF A
REGISTERED NATIONAL EXCHANGE OR BY A COMMERCIAL BANK OR A TRUST COMPANY!
Page 242
ASSIGNMENT FORM
FOR VALUE RECEIVED, _____________________ hereby sells, assigns and
transfers unto
-----------------------------------------------------------
Name
-----------------------------------------------------------
Address
$_______________ of the principal amount and accrued interest of this Bond to
which this Bond relates, and does hereby irrevocably constitute and appoint
_______________________ attorney, to transfer the same on the books of the
Issuer with full power of substitution in the premises.
Dated: ___________
-------------------------------------
Bond Holder's Signature
NOTICE: The signatures to this assignment must correspond with the name as
written upon the face of the Certificate in every particular, without
alteration or enlargement or any change whatever.
Signature Guaranteed:
IMPORTANT: SIGNATURE MUST BE GUARANTEED BY A FIRM WHICH IS A MEMBER OF A
REGISTERED NATIONAL EXCHANGE OR BY A COMMERCIAL BANK OR A TRUST COMPANY!
Page 243
Exhibit 2(b)-3
Form of Full Recourse Secured Promissory Note
Full Recourse Secured Promissory Note
$_______________ May 31, 2002 May 31, 2002 For Value Received, Explorations
Group, Inc., a publicly held Delaware corporation with offices at Crystal
Corporate Center; 0000 Xxxxx Xxxxxxxx Xxxxx, Xxxxx 000-X; Xxxx Xxxxx, Xxxxxxx
00000 ("Explorations"), hereby agrees to pay to the order of The Yankee
Companies, LLC., a Florida limited liability company, with offices at The
Crystal Corporate Center; 0000 Xxxxx Xxxxxxxx Xxxxx, Xxxxx 000; Xxxx Xxxxx,
Xxxxxxx 00000 ("Yankees"), the principal sum of $____________, yielding interest
commencing to run from the date hereof at a compound annual rate of 2% over the
prime rate charged during the subject period by Citibank Bank, N.A. (New York
City) or its successor in interest to its most favored corporate borrowers for
unsecured obligations having a term of one year or less, on the following terms:
Terms:
1. Incorporated Terms
(a) The terms and provisions of the loan agreement entered into between
Explorations and Yankees on May 6, 2002, a copy of which is annexed
hereto and made a part hereof as exhibit 1 (the "Loan Agreement"), are
hereby incorporated by reference as if here fully set forth.
(b) Any provisions in this Note dealing with a subject or object also
dealt with in the Loan Agreement will, to the extent of any
inconsistencies, be deemed to provide Yankees with additional rights
and options which will be exercisable in Yankees' sole discretion.
2. Payments & Collateral
(a) This Note will be for a term of one (1) year and will thereafter be
payable upon written demand by Yankees.
(b) Upon demand, payment will be made at the offices of Yankees or at such
other address as Yankees may designate for such purpose.
(c) This Promissory Note is secured by all of the Assets of Explorations.
3. Acceleration
In the event that any payment due hereunder is not made when due, or on the
occurrence of any one or more of the events of Default specified in the Loan
Agreement, the entire unpaid principal, all accrued interest and any related
reimbursements for costs and expenses will immediately become due and payable,
without notice or demand, at the option of the holder hereof.
4. Prepayments
Explorations may prepay this Note, in whole or in part, without penalty, at
any time, provided however, that any partial payments will first be applied to
related reimbursable costs and expenses, then to interest, and then to
principal.
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5. Assumption
(a)
This Note may be assigned at will by Yankees but will be assumable
only with the express, prior written consent of Yankees.
(b) In the event of any permitted assumption, all prior obligors will
remain liable to Yankees as guarantors of the permitted assignee's
performance but Yankees will have the right to enforce such guarantees
directly against such guarantors without first having to seek
performance, payment or relief from the permitted assignee.
6. Demands & Notices
(a) Any demand or notice made or given by Yankees pursuant hereto or in
connection herewith, will be made on or given to Explorations and its
successors in interest by registered mail, return receipt requested,
postage prepaid, directed to Explorations' address provided above or
such updated address as Yankees will have in its records, in each case
with copies to Xxxxxxx X. Xxxxxxx, Chief Administrative Officer, The
Yankee Companies, LLC., 0000 Xxxxxxxxx 00xx Xxxxxx; Xxxxx, Xxxxxxx
00000, and to any legal counsel designated by Explorations; but making
or giving, or attempting to make or give, any demand or notice will
not waive any right granted hereunder or otherwise to act without
demand or notice.
(b) Notice will be effective when delivered by Yankees to United States
Postal Service personnel, whether or not such personnel actually
succeed in effecting delivery to Explorations or its successors in
interest.
7. Expenses
Explorations hereby agrees to pay all expenses, including reasonable
attorney's fees, which the holder may incur upon default or at maturity.
8. Covenants
Explorations and any guarantor, surety or endorser, and all others who are,
or who may become, liable for the payment hereof:
(a) Expressly consent to all extensions of time, renewals, postponements
of time of payment of this Note, from time to time, prior to or after
the day that such payments become due without notice, consent or
consideration for any of the foregoing; and
(b) Expressly agree to the additional release by Yankees of any party or
person primarily liable herein or any portion of the Collateral.
9. Enforcement
(a) No delay by the holder in enforcing any covenant or right hereunder
will be deemed a waiver of such covenant or right and no waiver by the
holder of any particular provision hereof will be deemed a waiver of
any other provision or a continuing waiver of such particular
provision, and except as so expressly waived, all provisions hereof
will continue in full force and effect.
(b) This Note will be enforceable in the Courts of Broward County, Florida
and Explorations consents to jurisdiction therein.
Explorations Group, Inc. Negotiable Promissory Note - 2
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10. Special Waivers
The undersigned, and all guarantors and all endorsers, hereby severally
waive presentment for payment, protest and notice of protest for non-payment of
this Note.
11. Timeliness
Time will be of the essence.
12. License
(a) This form of Note is the property of Yankees .
(b) The use hereof by the Parties is authorized hereby solely for purposes
of this transaction, and the use of this form of agreement or of any
derivation thereof without Yankees' prior written permission is
prohibited.
In Witness Whereof, Explorations has caused this Note to be executed on its
behalf by its duly authorized representatives as of the date first set forth
below.
Signed, Sealed and Delivered
In Our Presence
Explorations Group, Inc.
_______________________________
_______________________________ By: ______________________________
Xxxxxxxx Xxxxxx, President
Dated: May 31, 2002
[Corporate Seal] Attest: ________________________________
Xxxxxxx X. Xxxxxxx, Secretary
State of Florida }
County of Xxxxxx } ss.:
Before Me, an officer duly authorized to administer oaths, did
personally appear on this 31st day of May, 2002, Xxxxxxxx Xxxxxx and Xxxxxxx X.
Xxxxxxx, known to me who, being duly sworn, did state that they are the duly
elected and serving president and secretary of Explorations Group, Inc., a
Delaware corporation ("Explorations"), and that pursuant to authority duly
delegated by its board of directors, they executed the foregoing Note on behalf
of Explorations, effective as of the date set forth therein. My commission
expires:
[Notarial Seal] _____________________________
Notary Public
Explorations Group, Inc. Negotiable Promissory Note - 3
Page 246
Exhibit 2(c)(2)
Acceptable Liens
None
Page 247
