Exhibit 10(dd)
February 1, 1998
LOAN AND SECURITY AGREEMENT
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LOAN AND SECURITY AGREEMENT ("Agreement") dated as of February 1, 1998
between Sytron, Inc., a Pennsylvania corporation (collectively referred to,
together with its subsidiaries, as the "Company") and the undersigned lender
(the "Lender").
RECITALS
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WHEREAS, the Company, through its wholly owned subsidiary companies,
develops, markets, and supports intelligent access control and alarm monitoring
products for commercial customers;
WHEREAS, the Company is seeking to obtain from the Lender and from other
lenders executing an agreement identical to this Agreement (sometimes
collectively referred to as the "Lenders") a loan or loans in an aggregate
principal amount of Eight Hundred Fifty Thousand ($850,000) Dollars (the
"Aggregate Loan") to be secured by certain Company assets as set forth below;
WHEREAS, upon the terms and conditions set forth in this Agreement, each
Lender (including certain persons restructuring some of the Company's existing
indebtedness) will make a loan (the "Loan") to the Company in the principal
amount set forth next to the Lender's signature at the foot of this Agreement;
and
WHEREAS, the parties desire to set forth the terms and conditions governing
the making of the Loan and the other transactions contemplated in this
Agreement,
NOW, THEREFORE, in consideration of the making of the Loan and the mutual
covenants and conditions set forth herein, the parties hereby agree as follows:
1. Loan Terms and Interest Payments:
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(a) The Lender hereby agrees to lend to the Company, and the Company
hereby borrows from the Lender, the principal sum set forth next to the Lender's
name and signature at the foot of this Agreement, for a two-year term which
shall commence on the date hereof and expire on the date (the "Maturity Date")
which is the second anniversary of the date of this Agreement. Such principal
sum shall bear interest accruing monthly on the outstanding principal balance at
the rate of nine and one-half percent (9.5%) per annum.
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(b) Interest shall be payable quarterly on each May 1, August 1,
November 1 and February 1, and shall be paid in United States funds, by check or
wire transfer to the order of the Lender, directed to such address or account as
shall be specified by notice from the Lender to the Company for such purpose. At
the election of the Lender only, such election to be made in writing at least 15
days prior to each interest payment date, interest for any quarter shall be paid
in the form of the Company's common stock ("Common Stock"), $.0l par value,
calculated at a per share price equal to ninety (90%) percent of the average
closing bid price of the Common Stock, as reported for the market in which the
Common Stock is traded, over the course of the five (5) business days
immediately preceding the date the interest payment is due.
(c) The Company hereby acknowledges receipt of the proceeds of the
Loan. For purposes of this Agreement, and unless otherwise indicated by the
context, the word "Loan" shall mean the principal amount advanced by the Lender,
all interest due thereon, and any other amounts includible therein.
2. Promissory Note:
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The obligation of the Company to repay the Loan, including all interest
thereon, is evidenced by the Company's promissory note (the "Note") delivered to
the Lender in the form annexed hereto as Appendix A. The Note shall be executed
and delivered by a duly authorized officer of the Company, concurrently with the
execution and delivery of this Agreement.
3. Security for Loans, Collateral:
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As collateral security for the repayment of the Loan and accrued interest,
and the performance of the Company's other obligations under this Agreement, the
Company hereby assigns and grants to the Lender and the other Lenders, pro rata,
a continuing first priority lien on and security interest in the Company's
accounts receivable (as defined below) in an aggregate amount of not less than
Nine Hundred Thirty-Five Thousand ($935,000) Dollars and not more than One
Million Twenty Thousand ($1,020,000) Dollars, subject to the terms and
conditions of this Agreement, including, without limitation, the following:
(a) For purposes hereof, "accounts receivable" (i) shall mean any and
all present and future accounts created by the Company in the ordinary course of
business arising out of the Company's sale or lease of goods, or rendition of
services, and (ii) shall be the Company's most recent accounts receivable, which
in any event, shall have had no more than ninety (90) days elapse from the
invoice date of the account. (The Company's accounts receivable subject to such
first priority lien and security interest shall include the accounts receivable
of any and all subsidiaries, and are referred to, for purposes of this
Agreement, as the "Collateral").
(b) The first priority lien and security interest in the Collateral
shall be for the ratable benefit of the Lenders.
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(c) Upon or prior to the initial execution of this Agreement and every
six months thereafter, the Lender, together with the other Lenders, may, at the
Company's expense, obtain the following searches:
(i) Uniform Commercial Code ("UCC") searches with the Secretary
of State and local filing office of each state where the
Company maintains its executive offices, a place or places
of business, or assets; and
(ii) Judgment, federal tax lien and corporate tax lien searches,
in all applicable filing offices of each state searched
under section 3(c)(i) above.
(d) The Company shall execute and deliver, prior to the receipt of the
Loan proceeds:
(i) Financing statements on form UCC-1, in favor of an agent for
the Lenders, for filing in any jurisdiction where any
Collateral is or may be located and in any other
jurisdiction that the Lenders shall deem appropriate; and
(ii) Any other agreements, documents, instruments, and writings,
reasonably required by the Lender to evidence, perfect, or
protect the liens and security interests in the Collateral
granted-under this Agreement, or as the Lender may
reasonably request from time to time.
The Company shall also execute and deliver, from time to time after receipt of
the Loan proceeds, all such agreements, documents and instruments as are
reasonably requested by the Lender to update, correct, supplement, perfect and
protect the Lender's security interest in the Collateral.
(e) Prior to the execution of this Agreement, the Company will prepare
and deliver a list indicating the accounts receivable constituting the
Collateral, the names and current addresses of each account debtor, the amounts
owed by each account debtor, the date of each invoice reflecting each account
debt, the aging of each account debt, the terms of payment, and the date the
account debt was originally incurred, all with respect to the Collateral (such
list being referred to as the "Collateral Resort"). The Company shall, within
ten (10) days after the last day of each calendar month thereafter, deliver an
updated Collateral Report showing the foregoing information, the receipt of
payment from each account debtors, and any change in the composition of the
Collateral.
(f) The Company shall not make any agreement under which any account
debtor may acquire or receive a deduction or discount of such debtor's
obligation, and the net amount from
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each account shall be paid in full at its maturity as expressed in the invoice
evidencing such account.
(g) If immediately prior to the execution of this Agreement, the
aggregate amount of the accounts receivable constituting the Collateral is less
than $935,000, and the Company is unable to furnish eligible accounts receivable
to make up the difference between the actual amount of such accounts receivable
and $935,000 (the "Receivables Deficiency"), then the Lender may nevertheless
elect to proceed with the execution and delivery of this Agreement on the
following additional terms and conditions:
(i) The Lender, together with all similar Lenders, shall specify
the amount and identity of the accounts receivable which
Lender and such other Lenders are accepting as Collateral
under this Section 3 (referred to as the "Initial
Receivables");
(ii) The proceeds of the Aggregate Loan, including proceeds of
the Loan from Lender, will not be initially remitted to the
Company but will be deposited in an escrow or trust account
(the "Account") to be opened and maintained at CitiBank N.
A., pursuant to the terms and conditions of an escrow
agreement (the "Escrow Agreement") in the form annexed
hereto as Appendix B. The escrow agent ("Escrow Agent")
under the Escrow Agreement shall be Investment Information
Services Ltd. of Ipswich, United Kingdom.
(iii)Upon the execution and delivery of this Agreement and the
Note, and the deposit oft he proceeds of the Aggregate Loan
in the Account, the Lender and the other Lenders will cause
the Escrow Agent to disburse a sum to the Company from the
Account, which sum will be the quotient obtained by dividing
the Initial Receivables by 1. 1, provided, however that
there shall be deducted from the disbursement due to the
Company an amount equal to the gross amount of all prior
loans to the Company which are being repaid through the
execution and deliver of agreements and notes of like tenor
to the Agreement and Note (the "Refinanced Loans");
(iv) As and when the amount of the Collateral is increased from
the amount of the Initial Receivables, as set forth in a
current Collateral Report, the Escrow Agent shall remit to
the Company additional finds from the Account, in such
amount that, after each such remittance, the amount of the
Collateral will be not less than 110% of(x) the total prior
remittances from the Account to the Company plus (y) the
aggregate amount of the Refinanced Loans. Conversely, if a
Collateral Report shall indicate that the amount of the
Collateral has decreased and, accordingly, such amount is
less than 110% of the total of such remittances plus the
aggregate amount of the Refinanced Loans, the Company shall,
within three days after issuance of such Collateral
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Loans, the Company shall, within three days after issuance
of such Collateral Report, remit to the Account a cash
payment equal to the amount of the decrease in the
Collateral divided by 1. 1.
4. Representations and Warranties: The Company makes the following
representations and warranties, on which the Lender relies in making the Loan;
(a) Existence and Corporate Power: The Company is a corporation duly
organized and existing in good standing under the laws of the Commonwealth of
Pennsylvania, and is duly qualified to do business in those jurisdictions in
which it conducts operations requiring such qualification. The Company's
subsidiaries are duly organized and existing in good standing in their
respective states of incorporation and are similarly qualified to do business in
each jurisdiction where such Qualification is required.
(b) Power To Enter Agreement: Due Authorization: The making and
performance at this Agreement and the execution and delivery of the Note are
within the corporate powers of the Company. have been duly authorized by all
necessary corporate action, and do not contravene any contractual restriction
that is presently binding or is to be binding on the Company;
(c) Valid and Binding Agreement: This Agreement and the Note have been
duly executed by the Company and constitute valid and binding obligations of the
Company, enforceable against the Company in accordance with the terms and
conditions contained therein.
(d) No Material Restrictions: The Company is not a party or subject to
any charter provision, by-law, mortgage, lien, lease, license, permit, financing
agreement, contract, instrument, law, rule, ordinance, regulation, order,
judgment or decree, or any other restriction of any kind or character, which (i)
is reasonably expected to have a material adverse effect upon the Company or
(ii) would limit or prevent the entering into of this Agreement or the
consummation of the transactions contemplated by this Agreement, other than (x)
a factoring agreement with United Credit Patriot Funding ("United Credit"),
which is being terminated, without further obligation of the Company thereunder,
concurrently with the execution of this Agreement, and (y) prior loan agreements
with certain other lenders who have executed instruments waiving any
prohibitions or conflicting terms contained in such prior agreements.
(e) Collateral: The Collateral Report sets forth, and each Collateral
Report to be delivered subsequently under this Agreement will set forth, a
complete and correct list and ageing by month of invoice for each account
receivable constituting the Collateral. Each such account receivable is and,
during the term of this Agreement will be, free and clear of all liens and
encumbrances (other than as set forth in this Agreement) and any set-offs or
counterclaims; created in the ordinary course of business in a bona fide arm's
length transaction; reflected on the Company's books and records in accordance
with generally accepted accounting principles ("GAAP") consistently applied;
and represented by a written invoice or comparable written document which
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document: (i) is legal, valid, binding and enforceable against the obligor in
accordance with its terms and provisions, except as may be limited by bankruptcy
or other laws and equitable principles affecting contracts generally, (ii) does
not violate or conflict with any provision of applicable law, (iii) has not been
amended or modified in any respect except as set forth in the Collateral Report,
(iv) reflects all agreements and understandings with the obligor thereof, and
(v) may be subjected to the first priority lien and security interest of the
Lender without the consent of the obligor. The amounts reflected in such
accounts receivable are fully collectible on a schedule consistent with past
collection practices of the Company.
(f) Violations of Law: The Company is in compliance with all laws,
ordinances, regulations, rules, decrees, awards and orders relating to the
Company's business, including without limitation, all laws, ordinances,
regulations, rules, decrees, and orders relating to wages, hours, hiring,
promotions, retirement, working conditions, air, soil, and water pollution,
nondiscrimination, health, safety, pensions, benefits, trade regulation, and
warranties, and the Company hereby represents and warrants that there are no
existing violations of such laws, ordinances, regulations, rules, decrees,
awards, or orders claimed or threatened against the Company.
(g) Subordination of Junior Loans: The Company previously issued
promissory notes to each of Katonah West Pension Plan, Springhill Holdings,
Ltd., and Xxxxxx Holdings, Ltd. (collectively, the "Junior Notes") for an
aggregate principal amount of $300,000. The Company has entered into a
Subordination Agreement with the holders of the Junior Notes pursuant to which
the indebtedness evidenced by the Junior Notes shall be at all times and in all
respects wholly subordinate, junior and subject in right of payment of the Note
and Notes of like tenor issued in connection with the Aggregate Loan. Without
limiting the effect of the foregoing, "subordinate," as used herein, shall be
deemed to mean that, in the event of a default in the payment of the Note or of
any liquidation, insolvency, bankruptcy, reorganization, or similar proceedings
relating to the Company, all sums payable on the Note shall first be paid in
full, including all due interest, before any payment is made upon the
indebtedness evidenced by the Junior Notes, and in such event, any payment or
distribution of any character which shall be made in respect of the Junior Notes
shall immediately be paid over to the holders of the Note and of Notes of like
tenor issued in connection with the Aggregate Loan, for application of such
payment or distribution to the payment of such Notes pro rata among the Lenders,
unless all amounts outstanding under the Aggregate Loan shall have been paid and
satisfied in full.
(h) Books and Records: The books and records of the Company are and
will continue to be true, accurate and complete in all material respects and
have been and will be maintained in accordance with GAAP applied on a consistent
basis.
(i) Financial Statements: The Company has heretofore furnished the
Lender with (i) the audited consolidated financial statements of the Company for
the fiscal year ended as of September 30, 1996 and earlier periods, certified by
the Xxxxx, Xxxxxx & Company, independent public accountants, and (ii) unaudited
interim statements for the period ended
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December 31, 1997 (such audited and unaudited financial statements being
sometimes referred to herein as the "Financial Statements"). The Financial
Statements have been prepared in accordance with GAAP, consistently followed
throughout the periods indicated. The Financial Statements present fairly, in
all material respects, the financial condition of the Company as of the date or
dates indicated therein and the results of operations and cash flows of the
Company for the periods indicated. Since the date of the Financial Statements,
no event has occurred or is expected to occur which has had, or may be
reasonably anticipated to have, a material adverse effect on the Company or its
business.
Absence of Certain Recent Changes: From the date of the Company's most
recent audited financial statements until the date of this Agreement, the
Company has conducted its operations and business only in the ordinary course
and has not:
(i) Entered into any transaction not in the ordinary course of
business or which are otherwise inconsistent in any respect with
past practices or conduct of the business of the Company;
(ii) Except for an aggregate of $500,000 principal amount of short
term loans from a group of lenders, incurred any indebtedness for
borrowed money,
(iii)Created, assumed, or permitted to exist any lien, pledge,
security interest, encumbrance or mortgage of any kind on any of
the Company's assets, other than that of United Credit;
(iv) Except as set forth in Schedule "4(j)" annexed, acquired the
securities or substantially all of the assets of any other
entity; or
(v) Except as set forth in Schedule "4(j)" annexed, merged or
consolidated with any entity, or disposed of a substantial
portion of its assets.
(k) Pending Litigation: There are no pending or threatened actions or
proceedings before any court or administrative or regulatory agency which may
materially adversely affect the financial condition or operations of the
Company.
(j) Capital Stock: The authorized capital stock of the Company
consists of a single class of Twenty Million (20,000,000) shares of Common
Stock, $.0l par value, of which approximately 3,175,145 shares are outstanding
as of the date hereof, all of which are fully paid and validly issued and
outstanding. The shares of Common Stock are the only voting shares of the
Company. There are no outstanding options or warrants for the purchase of shares
of Common Stock except as set forth in Schedule 4(l).
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5. Covenants: While this Agreement is in effect and until the Loan has been
paid in ill, including any interest or other charges which have accrued pursuant
to the terms and conditions as contained herein and in the Note, the Company
covenants as follows:
(a) The Company shall not pledge, assign, transfer, or otherwise
encumber or dispose of the Collateral or the proceeds of the Collateral. The
Company shall receive and apply proceeds from the payment of accounts receivable
constituting the Collateral in the ordinary course of business. All new accounts
receivable generated in the course of the Company's business and constituting
the Collateral shall be subject to the lien and security interest imposed under
this Agreement and shall comply with the representations set forth in Section
4(e).
(b) The Company shall at all reasonable times give each Lender access
to all places where any of the collateral or records pertaining thereto may be
maintained and shall permit such Lender to make extracts from such records upon
reasonable notice to the Company. The Company shall at all times keep the Lender
informed of the name and location of each of its bank accounts.
(c) The Company shall not create, incur, or assume any indebtedness
for borrowed money unless (i) the repayment of such indebtedness will be limited
to sources other than the Collateral, and (ii) the terms of such indebtedness
will not impair the Collateral or adversely affect the Lender.
(d) The Company shall not, so long as the Loan is outstanding, enter
into any transaction in a nature of a merger or consolidation with another
entity, or undertake the acquisition of all or substantially all of the assets
of another entity, or the sale, lease or other disposition of all or
substantially all of the Company's assets, in which the Company would not be the
surviving entity, without the written consent of the Lender, which shall not be
unreasonably withheld provided that the Collateral and the Lender's interest
therein will remain unimpaired by such transaction.
(e) The Company shall take all actions reasonably necessary (and shall
cause its subsidiaries to take all actions reasonably necessary) to maintain the
lien and security interest of the Lender in the Collateral, and will not permit
any actions or conditions to occur which might impair the value of the
Collateral and such lien and security interest.
(f) The Company will reserve and set aside out of its authorized
capital shares a sufficient number of shares of Common Stock for issuance upon
any exercise of the warrants being issued to the Lender in accordance with the
terms of this Agreement.
6. Use of Proceeds: The first Seven Thousand Five Hundred ($7,500) Dollars
of the proceeds Aggregate Loan received by the Company shall be used to pay the
legal fees and related expenses incurred by the Lenders in connection with this
Agreement. The balance of the net proceeds of the Aggregate Loan may be used by
the Company in the ordinary course of business in good faith within its sole
discretion reasonably exercised.
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7. Optional Prepayment: The principal amount of the Note and accrued
interest may be prepaid by the Company in accordance with the terms of this
Agreement, in whole or in part, without premium or penalty at any time;
provided, however, that such prepayment shall be applied pro rata to the Loan of
each of the Lenders participating in the Aggregate Loan. Any such prepayment
shall be first applied to accrued and unpaid interest, the balance of which
shall then be applied to principal.
8. Conditions Precedent to Loan: Lender's obligation to make the Loan is
subject to the accuracy of and compliance with the representations and
warranties of the Company made in this Agreement. to the performance by the
Company of its covenants and other obligations under this Agreement. and to the
following further conditions to be satisfied before Loan proceeds are delivered
to the Company:
(a) The Company's factoring agreement with United Credit shall have
been terminated, the Company shall have received an instrument of satisfaction
and release from United Credit acknowledging that no further amounts are due
from the Company to United Credit, and United Credit shall have delivered a Form
UCC-3 terminating any lien or security interest held by United Credit on The
Company's assets.
(b) The Company shall have delivered the Collateral Report as set
forth in Section 3(e) above, a financing statement on Form UCC-1 as set forth in
Section 3(d) above, an updated subordination instrument with respect to the
Junior Loans, and waivers from certain other lenders as referred to In Section
4(d).
(c) The Company shall have executed and delivered the Note to the
Lender.
(d) The representations and warranties of the Company set forth in
Section 3 hereof shall be true and correct as of the Closing, and the Company
shall have complied with all applicable terms and conditions of this Agreement.
(e) The Company shall have delivered a certificate executed by the
chief executive officer and chief financial officer of the Company, to the
effect that all representations and warranties of the Company set forth in
Section 3 above are true and complete and do not omit any information necessary
to make such representations and warranties not misleading.
(f) All documents, agreements, instruments and other legal matters
shall be satisfactory in form and substance to the Lender and Lender's
attorneys.
9. Warrants:
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(a) The Company agrees to issue to the Lender, within 15 days after
funding of the Loan, a warrant (the "Warrant") entitling such Lender to purchase
the number of shares of Common Stock computed by multiplying the sum of 42,500
by a fraction, the numerator of which
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is the principal amount of the Loan and the denominator of which is the
principal amount of the Aggregate Loan. The exercise price per share under the
Warrant shall be Two (32.50) Dollars and Fifty Cents.
(b) The Warrant shall be exercisable for up to five (5) years from the
date of issuance (except that no such exercise shall be permitted during the
so-called "quiet period" if a filing is made with the U.S. Securities Exchange
Commission for a public offering of any of the Company's securities), provided
however that the Warrant may not be exercised prior to March 31, 1998 in the
absence of a registration statement in effect with respect to the securities
issuable upon exercise of the Warrant or an opinion of counsel reasonably
satisfactory to the Company that such registration is not required.
(c) The Warrant shall contain such other terms, including
anti-dilution protection and "piggyback" registration rights with respect to the
Warrant Shares, as are set forth in the form of Warrant annexed to this
Agreement as Appendix C.
10. Monitoring of Accounts Receivable: For purposes of monitoring the
status of the Collateral and assessing compliance with the terms and conditions
of this Agreement, the Lender has appointed, with the consent of the Company, X.
X. Xxxx (the "Monitor"), a certified public accountant who is not an employee of
or consultant for the Company. The parties agree that:
(a) The Monitor will receive and examine monthly updates of the
Collateral Report, as well as copies of the monthly bank statements and
collection records to determine whether there is a total amount of at least
$935,000 of Collateral, including cash derived from proceeds of the Collateral,
and to determine whether the Collateral complies with the criteria set forth in
this Agreement.
(b) On a quarterly basis, the Monitor will visit the Company's
principal offices, where the Monitor will trace sample accounts receivable
comprising the Collateral, including all such accounts in excess of $25,000, and
will review actual invoices and payments in connection with such accounts. At
the same time, the Monitor will perform a reconciliation between the latest
Collateral Report and the Company's records and bank balances, but will not
contact Company customers directly without the consent of the Company, which
will not be unreasonably refused.
(c) The Monitor will receive, at the Company's expense, copies of the
Company's annual, quarterly and monthly financial statements, and copies of any
annual, quarterly or other periodic reports filed with the Securities and
Exchange Commission.
(d) The Company will cooperate in furnishing information and in making
its facilities and records available to the Monitor. The fees of the Monitor
will be paid by the Company.
11. Events of Default:
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(a) Each of the following events shall constitute an Event of Default:
(i) Failure to make payment of the principal or accrued interest
on the Note when and as the same shall become due and payable;
(ii) Failure to maintain the amount and composition of the
Collateral required under Section 3(a), including, without limitation, failure
to replace any account receivable if such account receivable is aged longer than
Ninety (90) days or any failure to deliver a Collateral Report within the time
required under Section 3(e) of this Agreement;
(iii) Default in the due observance or performance of any
covenant, warranty, representation, condition, or agreement on the part of the
Company to be observed or performed pursuant to the terms hereof
(iv) Application for, or consent to, the appointment of a
receiver, trustee or liquidator of the Company or of its property;
(v) Admission in writing of the Company's inability to pay its
debts as they mature;
(vi) General assignment by the Company for the
benefit of creditors;
(vii) Filing by the Company of a voluntary petition in bankruptcy
or a petition or an answer seeking reorganization, or an arrangement with
creditors;
(viii) Entering against the Company of a court order approving a
petition filed against it under the Federal bankruptcy laws, which order shall
not have been vacated or set aside or otherwise terminated within 90 days; or
(ix) Termination of a material portion of the business of the
Company or a chance of control of the Company.
(b) If any Event of Default shall have occurred and shall not have
been cured within Ten (10) days after notice of such default, the Lender may, by
notice to the Company, declare that all indebtedness, liabilities, and other
obligations of the Company to the Lender shall be forthwith due and payable
whereupon all such indebtedness, liabilities, or other obligations shall become
so due and payable.
12. Rights and Remedies:
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(a) Upon the occurrence of an Event of Default, the Lender shall have
all the rights and remedies of a secured party under the UCC and other
applicable laws with respect to all
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the Collateral, such rights and remedies being in addition to all other rights
and remedies available in law or in equity or provided for herein. Lender may
sell or cause to be sold any or all of the Collateral, in one or more sales or
parcels, at such prices and upon such terms as Lender may deem best, and for
cash or on credit or for future delivery, without Lender's assumption of any
credit risk, and at a public or private sale as Lender may deem appropriate.
Unless the collateral is perishable or threatens to decline speedily in value or
is of a type customarily sold on a recognized market, Lender will give the
Company reasonable notice at the time and place of any public sale thereof or of
the time after which any private sale or any other intended disposition thereof
is to be made. The requirements of reasonable notice shall be met if any such
notice is mailed, postage prepaid, to the Company's address shown herein, at
least five (5) days before the time of the sale or disposition thereof Lender
may invoice any such sale in Lender's name or in the Company's name, as Lender
may elect, as the seller, and in such latter event such invoice shall be marked
payable to Lender. Lender may be the purchaser at any such public sale and
thereafter hold the property so sold at public sale, absolutely, free from any
claim or right of any kind, including any equity of redemption. The proceeds of
sale shall be applied first to all costs and expenses of and incident to such
sale, including attorneys' fees, and then to the payment (in such order as
Lender may elect) of all amounts due under this Agreement. Lender will return
any excess to the Company, and the Company shall remain liable for any
deficiency.
(b) In addition to the foregoing and to all other rights, option, and
remedies available to Lender under this Agreement or at law or equity, the
Lender may exercise all rights available under the UCC and any other applicable
statute, including, but not limited to:
(i) The right to take possession of; send notices regarding and
collect directly the Collateral with or without judicial process (including
without limitation the right to notify United States postal authorities to
redirect mail addressed to the Company); or
(ii) By its own means or with judicial assistance, enter the
Company's premises and take possession of the Collateral and the related records
and documents; or
(iii) Require the Company at the Company's expense to assemble
all or any part of the Collateral and make it available to Lender.
(c) All rights and remedies granted hereunder or otherwise available
shall be deemed concurrent and cumulative and not alternative remedies and
Lender may proceed with any number of remedies at the same time until all the
amounts hereunder are paid in full. The exercise of any one right or remedy
shall not be deemed a waiver or release of any other right or remedy.
(d) If an Event of Default shall have occurred and be continuing, and
if the Lender shall have declared a default as set forth in Section 11(b), the
Lender and other Lenders may, by written consent of Lenders holding,
collectively, not less that 50% of the outstanding principal amount of the
Aggregate Loan, by written consent, appoint an agent or trustee (the "Agent") to
act
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on their behalf in collecting the amounts due under, and enforcing the terms, of
this Agreement; provided, however, that, until the Lender and such other Lenders
shall so act by written consent, the Agent acting on their behalf shall be
Investment Information Services, Ltd., of Ipswich, United Kingdom. an& if the
Lender and such other Lenders are unable to agree on the identity of such Agent,
Investment Information Services Limited shall continue as such Agent. In any
such event, the Agent shall be authorized to act on behalf of the Lenders
appointing such Agent and may exercise each and every right and remedy of the
Lender set forth under this Agreement with respect to the collection of the
unpaid balance of the Loan.
(e) The Lender shall notify the Company of the appointment of such
Agent, and all communications Thereafter from the Company to the Lender shall
also be sent to the Agent.
(f) In the event an Agent is appointed to act for the Lender as set
forth above, such Agent shall be deemed to have received from the Company, and
the Company hereby explicitly agrees that such Agent shall be vested with, a
power of attorney to act for, in the name of; and on behalf of the Company and
its officers (including, without limitation, the power to sign the Company's
name) for The purpose of taking possession of the Collateral, collecting the
proceeds thereof notifying the Company's account debtors, and taking such other
actions as are reasonably necessary :o collect, on behalf of the Lender, amounts
due under this Agreement, and such power of attorney shall continue until all
such amounts are paid.
13. Miscellaneous.
--------------
(a) No remedy herein enumerated is intended to be exclusive of any
other remedy allowed by law out each and every remedy shall be cumulative and in
addition to every other remedy herein enumerated or allowed by law.
(b) No failure or delay to exercise any right or power or any partial
exercise, accruing upon any default hereunder shall impair any such right or
power or be construed to be a waiver of any such default or any acquiescence
therein.
(c) This Agreement and all rights, benefits, powers, and obligations
hereof shall inure to the benefit and shall bind, respectively, the successors
and assigns of the Lender and the Company.
(d) In the event any part or parts of this Agreement shall be invalid
or unenforceable for any reason, then such invalid or unenforceable part or
parts shall be deemed and held to be separate and severable, and the remainder
of this Agreement shall continue in full force and effect.
(e) The Company agrees to pay and to save Lender harmless from all
cost, liability or expense, including reasonable counsel fees and expenses, in
connection with the enforcement of
13
the Lender's rights under the Note or this Agreement.
(f) Upon receipt by the Company of evidence reasonably satisfactory to
it of the loss, theft or destruction of the Note, upon receipt by the Company of
a reasonably satisfactory indemnification, the Company shall execute and deliver
a replacement Note of like tenor and date. Any such new Note shall constitute an
additional contractual obligation on the part of the Company, and the Note so
lost, stolen or destroyed shall not be at any time enforceable by anyone.
(g) This Agreement and the Appendices and Schedules referred to herein
constitute the entire agreement among the parties with respect to the
transactions contemplated hereby and supersede all prior agreements, discussions
and proposals with respect thereto, whether written or oral. This Agreement may
be modified only by a written instrument executed by the parties.
(h) Each party hereto covenants and agrees promptly to execute,
delivery, file or record such agreements, instruments, certificates and other
documents and to perform such other and further acts as the other parry hereto
may reasonably request or as may otherwise be necessary or proper to consummate
and perfect the transactions contemplated hereby.
(i) The Note and this Agreement shall be construed and enforced in
accordance with the laws of the State of New York without regard to choice of
law. The parties agree that any claims arising hereunder shall be brought only
in a court of general jurisdiction in the County and State of New York, hereby
waive any objection to the jurisdiction of such court, and waive a trial by
jury.
(j) The Company hereby waives presentment, notice of dishonor, and
protest of all instruments evidencing any liabilities, as such term is defined
in the Uniform Commercial Code.
14. Descriptive Headings: The descriptive headings of this Agreement are
inserted for convenience only and do not constitute a part of this Agreement.
15. Notices: All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered, unless otherwise specified,
either personally, by facsimile transmission (receipt verified), by registered
or certified mall (return receipt requested), postage prepaid, or sent by
express courier service (receipt verified), to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice; provided, that notices of a change of address shall be effective only
upon receipt thereof).
14
To the Company:
Sytron, Inc.
0000 Xxxxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Attn: Xxxxx Xxxxxxxx,
Chief Executive Officer
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
with a copy to:
Xxxxxx Xxxxxxx
0000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
To the Lender:
/s/ Xxxxxxx Xxxxxxxx
------------------------------- ------------------------------
00000 Xxxxxxxxx Xxxxx Xxx. 0000
------------------------------- ------------------------------
Xxxxxxxxx, XX 00000
------------------------------- ------------------------------
------------------------------- ------------------------------
With Copies To:
Xxxxxx Xxxxxxx Xxxxxxx & Xxxxxxxx, LLP
000 Xxxxx Xxxxxx 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx
Attn: Xxxxxx X. Xxxxxxx, Esq.
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
15
16. Counterparts: As to any Lender, this Agreement may be executed in two
or more counterparts, each of which shall be an original, but all of which shall
constitute but one agreement.
IN WITNESS WHEREOF, the parties have executed this Loan Agreement as of the
date first above written.
SYTRON, INC.
By: /s/ Xxxxxx Xxxxxx
------------------------------
Xxxxxx Xxxxxx, President
LENDER
Name: Xxxxxxx Xxxxxxxx
----------------------------
(Please Print)
$50,000.00 /s/ Xxxxxxx Xxxxxxxx
-------------------------- ------------------------------
Principal Amount of Loan Signature
Address:
-------------------------
------------------------------
------------------------------
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