Exhibit 10.18
LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT (the "Security Agreement") is made and
effective on November 26, 2003, and between QUINTEK TECHNOLOGIES, INC., a
California corporation ("Debtor"), and KAZI MANAGEMENT VI, LLC ("Secured
Party").
WHEREAS, Secured Party wishes to lend to the Debtor the sum of US
$500,000 (the "Loan Amount"); and
NOW, THEREFOR, subject to the terms and conditions herein contained,
and in consideration of (a) the one-year Promissory Note in the amount of US
$100,000 ("Secured Note") of even date executed by Debtor and (b) four
additional one year Promissory Notes ("Additional Secured Notes"), each in the
amount of US$100,000, to be issued by Debtor to Secured Party according to
Schedule 1 attached hereto, Except for date of issue, the form and terms of the
Secured Note and each of the Additional Secured Notes are identical. Secured
Party hereby agrees to loan to Debtor the Loan Amount. Further, in condideration
of any financial accommodations given or to be given or continued to Debtor by
Secured Party, and as collateral security for the payment of any indebtedness,
obligation, or liability of Debtor to Secured Party, now or hereafter existing,
matured or mature, absolute or contingent, and wherever payable, including but
not limited to the obligation of Debtor to Secured Party under the Secured Note
of even date herewith, Debtor hereby grants a security interest in and assigns
and transfers to Secured Party those certain assets as more particularly
described in Attachment 1 (the "Collateral").
The terms and conditions of this Security Agreement are as follows:
1. This Security Agreement is made and the security interest
is given to secure the following:
a. Performance of and compliance with all of the
terms and conditions of this Security Agreement;
b. Payment of the indebtedness of Debtor to Secured
Party evidenced by Debtor's Secured Note ( "Secured Note" herein), in favor of
Secured Party, a copy of which is attached hereto as Exhibit "A", together with
any extensions and renewals thereof.
2. Debtor hereby warrants, represents and agrees as follows
with respect to each item of the Collateral assigned hereunder:
a. Debtor is the absolute owner of said items of
Collateral and the obligations described in said documents are due and payable
as stated therein, and that Debtor and the obligor(s) under said instruments are
not now in default, as to payment of money or in any other respect, in any
obligations thereunder, and that each item of Collateral has the value ascribed
to it in Attachment 1, and any other feature or property or condition ascribed
or prescribed therein;
b. Said Collateral, unless noted otherwise in
Attachment 1, is not subject to any prior assignment, claim, lien or security
interest, and the Debtor will not make any further assignment thereof or create
any further security interest therein, nor permit his rights therein to be
reached by attachment, levy, garnishment, or other judicial process;
c. The obligations of the obligor(s) under said
instruments are not subject to any claim for credits, allowances, or adjustment;
d. No notice of the bankruptcy, insolvency, or
financial embarrassment of any obligor(s) under said instruments has been
received by Debtor, and upon Debtor's receipt of any such notice Debtor will
immediately give Secured Party written notice thereof;
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e. Debtor has maintained and will continue to
maintain accurate and complete records and accounts concerning all obligations
given as collateral hereunder, and agrees to permit inspection of said records
and accounts by Secured Party and to submit to Secured Party statements of said
accounts in such form as shall be prescribed by Secured Party;
f. Debtor will pay prior to delinquency all taxes,
liens and assessments of any kind whatsoever levied or assessed against the
Collateral, or any part thereof;
g. Debtor will pay when due all sums secured hereby
and will observe all conditions, comply with all terms, and perform and
discharge all acts and obligations secured hereby;
h. Debtor will promptly notify Secured Party in the
event of any material diminution to the Collateral, or any part thereof, from
any source whatsoever; and
i. In the event an attorney is employed by Secured
Party to enforce any of the terms hereof, the prevailing party shall be entitled
to all costs and reasonable
attorney's fees incurred by it or them in connection therewith.
3. The happening of any of the following shall constitute a
default by Debtor under this Security Agreement:
a. Any warranty or representation made or furnished
by Debtor in this Security Agreement proves to have been false in any material
respect when made or furnished;
b. Failure by Debtor to keep or perform any of its
covenants in or to observe any of the terms of this Security Agreement or the
Secured Note if such failure shall not be cured within 2 calendar days after
written notice thereof from Secured Party to Debtor describing such failure in
reasonable detail;
c. Failure by Debtor in the payment of indebtedness
secured by this Security Agreement;
d. The loss, theft, damage, destruction, sale or
encumbrance to or of the Collateral, or any substantial part thereof, unless
substantially covered by insurance; or
e. The suspension of the business of Debtor or
commencement of proceedings for its dissolution or liquidation or the making of
a general assignment for the benefit of creditors or the commencement of
proceedings under any bankruptcy, insolvency, readjustment of debt or
liquidation law or statute of the federal government or any state government, or
the adjudication of Debtor as a bankrupt or insolvent under any law or statute,
or the application for, or by any action of Debtor the indication of its
approval of, consent to, acquiescence in, the appointment of a trustee or
receiver for the whole or any substantial portion of its assets, or if a trustee
or receiver (other than an ex parte trustee or receiver) is appointed for the
whole or any substantial portion of its assets.
4. Upon, or at any time after, a default by Debtor, as set
forth above, Secured Party may at Secured Party's option:
a. Declare the entire indebtedness secured hereby or
any portion thereof immediately due and payable;
b. Exercise all rights and remedies accorded to
Secured Party by law;
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c. Incur expenses, including reasonable attorneys'
fees, and costs, in exercise of any right or remedy hereunder, the repayment of
which by Debtor is secured by this Security Agreement;
d. Secured Party shall have the right to notify the
obligor(s), if any, under any or all of the items held as collateral hereunder
to make payment directly to Secured Party and to take control of all proceeds of
any such instruments, and enforce any and all obligations of the obligor(s)
under said instruments, which rights Secured Party may exercise at any time
Debtor is in default hereunder;
e. In the event of the failure in or suspension of
business, insolvency, petition filed in bankruptcy hereafter, or a general
assignment by Debtor for the benefit of Debtor's creditors, or in the event of
any default by any obligor under any of the terms of the items assigned as
collateral, all the liabilities of Debtor to Secured Party shall, at the option
of Secured Party, become immediately due and payable, notwithstanding any credit
of extension of time allowed to Debtor by any instrument evidencing any of said
liabilities; and in any such event, as well as in the event of the nonpayment of
principal or interest when due on all or any of the liabilities of Debtor
secured and intended to be secured hereby, in accordance with the terms of the
instrument evidencing the same, Debtor hereby appoints Secured Party as
attorney-in-fact of Debtor, and hereby authorizes, empowers, and instructs said
attorney-in-fact, or its assigns, to sell the collateral. Such sale of the
collateral may be as a unit or in parts, at any time and place and on any terms,
provided Secured Party acts in good faith and in a commercially reasonable
manner; f. After deducting all legal and other costs, expenses, and charges,
including attorneys' fees, incurred in the collection, sale, delivery, or
preservation of the collateral security or any part thereof, Secured Party shall
apply the residue of the proceeds of such sale to the payment of all of the
indebtedness of Debtor to Secured Party and the interest thereon; and should
there be any surplus of said proceeds after the payment of all the indebtedness
of Debtor to Secured Party, together with expenses, attorneys' fees, and all
charges and other liability incurred by Secured Party in the keeping, delivery,
and preservation of said collateral security, such surplus shall be subject to
order of Debtor. Secured Party agrees to pay to Debtor on demand, in lawful
money of the United States, whatever balance may be due after the sale of said
collateral security and the application of the proceeds thereof as above
provided; and
g. Notwithstanding anything to the contrary herein,
Secured Party shall have the sole and unequivocal right, exercisable at Secured
Party's option at any time, to deem the Collateral listed in Attachment 1 to be
sold, assigned and transferred to Secured Party in consideration of Secured
Party reducing the sum of all indebtedness of Debtor to Secured Party by. The
reduction of indebtedness shall first be applied to payment of all expenses,
attorney's fees, and all other costs, charges, and other liability incurred by
Secured Party in the keeping, delivery and preservation of the Collateral. After
payment of the foregoing, the remainder of the sum of reduction of indebtedness
shall be applied to any unpaid interest with respect to the Secured Note; and if
no unpaid interest remains, thereafter to the principal amount of the Secured
Note. Provided all of the indebtedness of Debtor to Secured Party is paid in
full, Secured Party shall cancel the Secured Note and release Debtor of any
further obligations with respect to the Secured Note and this Security
Agreement.
5. This Security Agreement shall be construed in accordance
with the following provisions:
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a. Debtor waives any right to require Secured Party
to (i) proceed against any person, (ii) proceed against or exhaust any
collateral, or (iii) pursue any other remedy in Secured Party's power; and
waives any defense arising by reason of any disability or other defense of
Debtor, or by reason of the cessation from any cause whatsoever of the liability
of Debtor. Debtor authorizes Secured Party to (i) take and hold security, other
than the Collateral herein referred to, for the payment of the indebtedness or
any part thereof, and exchange, enforce, waive, and release the Collateral
herein referred to or any part thereof or any such other security, and, (ii)
release or substitute any other person or entity for Quintek Technologies, Inc.
as Debtor;
b. Time is of the essence of this Security Agreement;
c. All payments and notices under this Security
Agreement or otherwise required by law shall be made to Secured Party at 0000
Xxxxxxxx Xxxxx, Xxxxxx Xxxx, Xxxxxxxxxx, 00000, attn: Kazi Management VI, LLC,
or such other address as the party entitled to such payment or notice may
designate to the other party in writing;
d. Upon the satisfaction of all obligations of Debtor
to Secured Party secured hereby, Secured Party shall return to Debtor the items
given as Collateral hereunder, and shall endorse and/or reassign said items of
Collateral to Debtor;
e. This Security Agreement applies and shall inure to
the benefit of the successors and assignees of Secured Party and shall bind the
successors and assignees of Debtor;
f. This Security Agreement and the Assignment which
it is a part thereof sets forth the entire agreement between Debtor and Secured
Party with respect to all matters herein, and the provisions hereof may not be
changed or modified except by an instrument in writing signed by the parties
hereto;
g. This Security Agreement is being delivered and is
intended to be performed in the State of California and shall be construed in
accordance with the laws of the State of California;
h. In the event any provision or provisions of this
Security Agreement are adjudged for any reason to be unenforceable, illegal or
void, the remainder of its provisions shall remain in full force and effect; and
i. Concurrently with, or shortly thereafter, the
execution of this Security Agreement, the parties hereto, Debtor and Secured
Party, shall execute any Financing Statement or Financing Statements required to
perfect the security interest created by this Security Agreement. Such Financing
Statement or Financing Statements shall be on a form or forms approved by the
California Secretary of State. Additionally, Debtor shall also execute any
assignments of Debtor's assets deemed Collateral in favor of Secured Party as
designated by and to be held by Secured Party until repayment of the Secured
Note or disposition in case of default.
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IN WITNESS WHEREOF, the undersigned have executed this Security
Agreement on the date first above written.
DEBTOR
QUINTEK TECHNOLOGIES, INC.
/s/ Xxxxxx Xxxxxx
----------------------------
By: Xxxxxx Xxxxxx, President
SECURED PARTY
Kazi Management VI, LLC
/s/ Xxxxxx Xxxx
----------------------------
By: Xxxxxx Xxxx, President
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Attachment 1
(Collateral)
All personal and real property and assets of whatsoever kind of Debtor,
whether now owned or hereafter acquired, including, without limitation,
intellectual property (trade names, trademarks, copyrights, patents, trade
secrets, etc), inventory, contract rights, permits, licenses, intangibles,
records, rights to receive income or interest or monies or credits of any kind
whatsoever
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Exhibit A
($100,000 Promissory Note)
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