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Exhibit 10.03
CREDIT AGREEMENT
THIS CREDIT AGREEMENT (this "Agreement") is made and entered into
effective the 31st day of December, 1998 by and between JFJ ECOSYSTEMS, LLC, a
Missouri limited liability company ("Creditor"), INDUSTRIAL ECOSYSTEMS, INC.,
a Utah corporation ("Debtor"), and IEI CANADA, INC. an Ontario corporation
("IEI Canada").
Premises
A. Creditor and Debtor, through its wholly owned subsidiary, IEI Canada,
are partners in ROP North America, LLC, a joint venture formed in March 1998
to transform organic waste into livestock feed (the "Joint Venture").
B. The Creditor, Debtor, and IEI Canada have recently entered into a
letter of intent, dated December 14, 1998 (the "Letter of Intent") wherein
Creditor, Debtor and IEI Canada propose a restructuring of the Joint Venture.
C. In connection with the restructuring of the Joint Venture the
Creditor and Debtor have entered into a Rights Agreement, of even date, to
which this Agreement has been attached as Exhibit A, wherein the Creditor has
agreed to extend to Debtor a line of credit in the aggregate principal amount
of $750,000, subject to the terms and conditions hereinafter set forth.
Agreement
NOW, THEREFORE, in reliance upon the recitals set forth above and for and
in consideration of the mutual promises and covenants contained herein and
the mutual benefits to the parties to be derived from this Agreement, it is
hereby agreed as follows:
ARTICLE I
LINE OF CREDIT
1.1 Amount. Pursuant to the terms of this Agreement, Creditor shall
provide to Debtor a line of credit in the aggregate principal amount $750,000.
The credit extended under this Agreement and as evidenced by this Agreement is
to be used by Debtor for working capital in operating the Debtor's business.
Debtor agrees that the monthly statements of account provided by the Creditor
to the Debtor shall serve as prima facie evidence as to the unpaid and funded
principal balanced owed to Creditor.
1.2 Interest. All loan proceeds provided pursuant to the terms of this
Agreement shall bear interest on the monthly balance (as defined below in
Section 1.5 (c)) at six percent (6%) per annum from the date hereof until
either paid in full or satisfied pursuant to the terms of the Rights
Agreement. Any additional extensions of credit by Creditor to Debtor shall
bear interest at the foregoing rate from and after the date of such loan. The
principal and interest, together with any extensions, modifications, renewals,
or additional loans, the performance of the covenants and agreements of Debtor
contained herein, and the obligations of Debtor under the terms of the
accompanying promissory note and collateral pledge agreement attached hereto
shall be hereinafter referred to collectively as the "Obligation."
1.3 Master Promissory Note. The Obligation, including any
modifications, extensions, or renewals thereof, will be evidenced by a Master
Promissory Note executed by the Debtor, substantially in the form attached
hereto as Exhibit A-1 and incorporated herein by this reference (the "Master
Promissory Note"), payable by December 31, 2000.
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1.4 Collateral Pledge Agreement. As security for the Obligation,
including any modifications, extensions, or renewals thereof, Debtor and IEI
Canada will execute the Pledge and Security Agreement attached hereto as
Exhibit A-2and incorporated herein by this reference (the "Pledge and Security
Agreement"), granting Creditor a security interest in all of IEI Canada's
membership interest in the Joint Venture, which shall be deemed the
"Collateral."
1.5 Payment.
(a) The entire Obligation is due December 31, 2000 unless canceled
pursuant to the Rights Agreement, extended by Creditor pursuant to written
notice thereof or such other agreement as may be entered into between Creditor
and Debtor with respect thereto;
(b) Debtor may, but is not obligated to, make periodic payments in
part or full payment of the "monthly balance" as defined in subsection (c) of
this section.
(c) The "monthly balance" will be computed by taking the balance of
Debtor's account on the first day of each month, adding any additional
advances and interest charges and subtracting any payments or credits.
(d) The entire Obligation will be due immediately upon the
expiration of the notice of default given to Debtor from Creditor in the event
of default by Debtor as hereinafter provided.
1.6 Term. Unless terminated earlier by the mutual agreement of the
parties or pursuant to the Rights Agreement or another provision of this
Agreement, this Agreement shall continue in full force and effect until
December 31, 2000, and shall be renewable, if not paid in full or otherwise
canceled pursuant to the terms of the Rights Agreement, on the mutual
agreement of the parties.
1.7 Credit Account. In connection with the funding of the line of
credit, Debtor will establish a trust account at the law firm of Xxxxxx and
Associates, Inc., Salt Lake City, Utah (the "Credit Account") for the purpose
of depositing the funds from the line of credit. Interest on the funds
advanced under the line of credit shall begin to accrue at such time as the
Credit Account is funded by the Creditor. All disbursements from the Credit
Account to Debtor shall be subject to checks signed or approved by at least
two members of the Credit Committee, as designated by Debtor and hereafter
defined in section 5.1 of this Agreement.
ARTICLE II
CONDITIONS OF CREDITOR'S OBLIGATIONS
All obligations of Creditor under this Agreement are subject to the
fulfillment, prior to any funds being loaned hereunder, of each of the
following conditions, any or all of which may be waived in writing in whole or
in part by Creditor at or prior to execution.
2.1 Satisfaction of Conditions. Debtor shall have performed and
satisfied in all material respects all obligations, conditions, and covenants
required by this Agreement to be performed and satisfied by it at or before
the execution of this Agreement.
2.2. Certain Documents. The obligation of Creditor to fund the line of
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credit is subject to the condition that all of the following documents shall
have been received by Creditor:
(a) The Master Promissory Note, in the form of Exhibit A-1, with
appropriate insertions, executed as appropriate by Debtor;
(b) The Pledge and Security Agreement in the form of Exhibit A-2
attached hereto, with appropriate insertions, executed as appropriate by
Debtor;
(c) Form UCC-1, executed as appropriate by Debtor, IEI Canada and
Creditor; and
(d) This Agreement executed by Debtor, IEI Canada and Creditor.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF DEBTOR
In order to obtain Creditor's reliance and agreement to enter into this
Agreement and the transactions contemplated hereby, Debtor makes the following
representations and warranties:
3.1 Organization. Debtor is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Utah and has the
corporate power and authority to carry on its business in all material
respects as it is now being conducted. The execution and delivery of this
Agreement does not, and the consummation of the transactions contemplated by
this Agreement in accordance with the terms hereof will not, violate any
provision of the Debtor's articles of incorporation or bylaws, or other
agreement to which it is a party or by which it is bound.
3.2 Approval of Agreement. Debtor has full power, authority, and legal
right and has taken, or will take, all action required by law, its articles of
incorporation, bylaws, and otherwise to execute and deliver this Agreement and
to consummate the transactions herein contemplated. The board of directors
Debtor has authorized and approved the execution, delivery, and performance of
this Agreement and the transactions contemplated hereby.
3.3 No Conflicting Agreements. The execution and delivery of this
Agreement and the consummation of the transactions provided for herein will
not violate or conflict with or result in the breach of any provision or
covenant or constitute a default or an event which with notice or lapse of
time or both would constitute a default under, or accelerate the performance
required by, or result in the termination of any agreement, stipulation,
order, judgment, or decree to which Debtor is a party.
3.4 Binding Obligation. This Agreement, the Master Promissory Note and
the Pledge and Security Agreement have been duly executed and delivered by
Debtor and constitute legal, valid, and binding obligations of Debtor and are
enforceable against them in accordance with their terms.
ARTICLE IV
NEGATIVE COVENANTS OF DEBTOR
Debtor agrees that it will not, prior to the satisfaction of all its
obligations under the terms of this Agreement, the Master Promissory Note and
the Pledge and Security Agreement, do any of the following:
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4.1 Satisfaction of Existing Obligations. Other than in the ordinary
course of business as now conducted, Debtor shall not cause to be created or
suffer to exist any additional lien, mortgage, pledge, charge, security, or
other encumbrance on the Collateral.
4.2 Continuation of Business. Debtor shall use its best efforts
consistent with prudent business practices to preserve and maintain the
business and business organization of Debtor intact.
4.3 Regulatory Compliance. Debtor shall not violate in any material
respect any law, rule, regulation, order, or ordinance applicable to the
conduct of the business of Debtor or relinquish or terminate any rights,
qualifications, license, or permits that would materially affect the financial
condition or the business of Debtor.
ARTICLE V
AFFIRMATIVE COVENANTS OF DEBTOR
5.1 Credit Committee and Use of Credit Proceeds. Debtor shall utilize
the credit extended hereby for working capital in operating Debtor's business.
The use of the funds provided under the line of credit shall be approved by
the Credit Committee established by the Debtor specifically for such purpose.
5.2 Financial Records. Debtor shall maintain adequate books, accounts,
and records in accordance with the practices of prudent businessmen and in
accordance with generally accepted accounting principles, consistently
applied, and shall make all such records available for inspection and
duplication, by Creditor or its agents at any time during reasonable business
hours.
5.3 Compliance With Laws. Debtor shall take whatever actions are
necessary to comply with all statutes and regulations governing the activities
and operations of Debtor and maintain its corporate existence and right to
carry on business in each state or other jurisdiction in which Debtor now
conducts business.
ARTICLE VI
DEFAULT OF DEBTOR
6.1 Events of Default. Upon the occurrence and during the continuance of
any one or more of the events hereinafter enumerated, Creditor may forthwith
or at any time thereafter during the continuance of any such event, by notice
in writing to Debtor, declare the unpaid balance of the principal and interest
then accrued to be immediately due and payable, and the principal and interest
shall become and shall be immediately due and payable without presentation,
demand, protest, notice of protest, or other notice of dishonor, all of which
are hereby expressly waived by Debtor, such events being as follows:
(a) Default in the payment of the principal and interest or any
portion thereof when the same shall become due and payable, whether at
maturity as therein expressed, by acceleration, or otherwise, unless cured
within ten (10) days after notice thereof by the Creditor to Debtor; or
(b) Default in the due observance or performance of any other
covenant or obligation contained in the Rights Agreement, this Agreement, the
Master Promissory Note, or the Pledge and Security Agreement, unless observed
or performed within ten (10) days after notice thereof to Debtor by Creditor;
provided, if compliance is not possible within ten (10) days, default shall
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occur upon failure within ten (10) days to take steps that will produce
compliance as soon as is reasonably practicable.
6.2 Procedure on Default. Upon the occurrence of an event of default,
and at any time thereafter, Creditor may elect to declare the entire
Obligation immediately due and payable and after notice of default has
expired, at any time thereafter, without further notice, Creditor may take
possession of the Collateral pursuant to the terms of the Pledge and Security
Agreement. At such time that Creditor elects to take possession of the
Collateral, Debtor shall give Creditor its full and complete cooperation in
immediately transferring the Collateral to Creditor. At such time as the
Collateral has been transferred by Debtor to Creditor the entire Obligation
under this Agreement and the Master Promissory Note shall be deemed paid-in-
full and the Creditor shall have no further claims against the Debtor with
respect to the Obligation.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
7.1 Assignment of Agreement. Except as expressly provided, neither the
rights nor the obligations of the parties to this agreement may be assigned or
delegated by either party in whole or in part without the prior written
consent of the other party.
7.2 Governing Law. The laws of the state of Missouri shall govern the
validity of this Credit Agreement, the construction of its terms, and the
interpretation of the rights and duties of the parties.
7.3 Consent to Jurisdiction and Venue. In the event of any breach,
threatened breach or other dispute between the parties under this Credit
Agreement, the parties agree that the United States District Court for the
Western District of Missouri shall have the sole and exclusive jurisdiction
over any such proceeding. If such court lacks federal subject matter
jurisdiction, the Xxxxxxx County Circuit Court shall have sole and exclusive
jurisdiction. Any of these courts shall be proper venue for such proceedings
and the parties hereto waive any objection to such venue. The parties hereto
consent to and agree to submit to the jurisdiction of any of the courts
specified herein and agree to accept service of process to vest personal
jurisdiction over them in any of these courts.
7.4 Notices. Any notices or other communications required or permitted
hereunder shall be sufficiently given if personally delivered to it or, if
sent by facsimile transmission or other electronic communication confirmed by
registered or certified mail, postage prepaid, or if sent by prepaid telegram
addressed as follows:
If to Creditor: JFJ ECOSYSTEMS, LLC
Attn: Xxxx X. Xxxxx
0000 Xxxx 00xx Xxxxxx
Xxxxxx Xxxx, XX 00000
Fax No: (000) 000-0000
with copies to: SEIGFREID, BINGHAM, LEVY, XXXXXX & XXX
Attn: Xxxxx Xxxxxx, Esq.
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx Xxxx, XX 00000
Fax No: 000-000-0000
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If to Debtor: INDUSTRIAL ECOSYSTEMS, INC AND IEI CANADA:
Attn: President
000 Xxxxxx Xxx, Xxxxx 00
Xxxxxxxx, XX 00000
Fax No.: 000-000-0000
with copies to: XXXXXX AND ASSOCIATES, INC.
Xxxxxxx X. Xxxxxx, Esq.
0000 Xxxx 0000 Xxxxx, Xxx. 000
Xxxx Xxxx Xxxx, XX 00000
Fax No.: 000-000-0000
or such other addresses as shall be furnished in writing by any party in the
manner for giving notices hereunder, and any such notice or communication
shall be deemed to have been given as of the date so delivered or sent by
facsimile transmission or other electronic communication, three days after the
date so mailed, or one day after the date so telegraphed or sent by overnight
delivery.
7.5 Title and Captions. Section titles or captions to this Agreement
are for convenience and reference only and shall not be deemed part of this
Agreement and shall not be interpreted to define, limit, augment, extend, or
describe the scope, content, or intent of any part or parts of this Agreement.
7.6 Further Action. The parties shall execute and deliver all documents
or instruments, provide all information, and take or forebear from all such
action as may be necessary or appropriate to achieve the purpose of this
Agreement.
7.7 Binding Effect Upon Successors. This Agreement shall be binding
upon, and inure to the benefit of, the parties and their respective heirs,
executors, administrators, successors, legal representatives, and assigns;
provided, that this provision shall not be construed as permitting assignment,
substitution, delegation, or other transfer of rights or obligations, except
strictly in accordance with the provisions of the other sections of this
Agreement.
7.8 Creditors. Unless expressly provided in this Agreement, none of the
provisions of this Agreement shall be for the benefit of, or enforceable by,
any creditors of any party hereto.
7.9 Waiver. No failure by any party to insist upon the strict
performance of any covenant, duty, promise, or condition of this Agreement or
to exercise any right or remedy consequent upon a breach thereof shall
constitute a waiver of any such breach or any other covenant, duty, promise,
or condition. Any party may, by notice delivered in the manner provided in
this Agreement, but shall be under no obligation to, waive any of its rights
or any conditions to its obligations hereunder, or any duty, obligation, or
covenant of any other party. No waiver shall affect or alter the remainder of
this Agreement, but each and every other covenant, duty, promise, and
condition hereof shall continue in force and effect with respect to any other
then existing or subsequently occurring breach.
7.10 Severability. In the event that any condition, covenant, or other
provision herein contained is held to be invalid or void by any court of
competent jurisdiction, the same shall be deemed severable from the remainder
of this Agreement and shall in no way affect any other covenant or condition
herein contained. If such condition, covenant, or other provision shall be
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deemed invalid due to its scope or breadth, such provision shall be deemed
valid to the extent of the scope or breadth permitted by law.
7.11 Exhibits. All exhibits annexed to this Agreement and any documents
to be delivered herewith are expressly made a part of this Agreement as fully
as though completely set forth in it. All references to this Agreement,
either in the Agreement itself or in any of such writings, shall be deemed to
refer to and include this Agreement itself or in any of such exhibits or
writings. Any breach of or default under any provision of any of such writing
shall, for all purposes, constitute a breach or default under this Agreement
and all other such writings.
7.12 Attorneys' Fees. Should either party take any legal action to
enforce any of the terms or provisions of this Agreement, or any costs are
incurred by reason of breach or default in any of the covenants,
representations, warranties, terms, or conditions of this Agreement, the non-
defaulting party shall be entitled to recover any costs, including attorneys'
fees incurred in enforcing the obligations of the other party under the terms
of this Agreement or in collecting any judgment that may be entered.
7.13 Time of Essence. Time is of the essence in the performance of the
duties, covenants, or obligations of the parties under the terms of this
Agreement.
7.14 Facsimile Transmission. Facsimile transmission of any signed
original document, and retransmission of any signed facsimile transmission,
shall be the same as delivery of an original. At the request of any party
hereto, the parties will confirm facsimile transmitted signatures by signing
an original document.
7.15 Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original and all of which taken
together shall be but a single instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
CREDITOR: DEBTOR:
JFJ ECOSYSTEMS, LLC INDUSTRIAL ECOSYSTEMS, INC.
By /s/Xxxx X. Xxxxx, Manager By /s/Xxxxxx Xxxxx, President
IEI CANADA, INC.
By /s/Xxxxxx Xxxxx, President
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MASTER PROMISSORY NOTE
$750,000.00 DATE: DECEMBER 31, 1998
FOR VALUE RECEIVED, INDUSTRIAL ECOSYSTEMS, INC., a Utah corporation
("Debtor"), promises to pay to JFJ ECOSYSTEMS, LLC, a Missouri limited
liability company ("Creditor"), or order, the principal amount of Seven
Hundred Fifty Thousand Dollars ($750,000.00) with interest on the unpaid
principal balance at six percent (6%) per annum (the "Line of Credit").
This Promissory Note is the Master Promissory Note referred to as
Exhibit A-1 to the Credit Agreement of even date herewith entered into by
Debtor and Creditor. Pursuant to the terms of the Credit Agreement, Creditor
makes the Line of Credit to Debtor as follows:
1. Master Note Agreement. This Promissory Note shall constitute a
"Master Note" under which Creditor may make advances to Debtor aggregating up
to the principal amount of this Promissory Note as shown on the face hereof.
Debtor agrees that the records of Creditor shall serve as prima facia evidence
as to the unpaid and funded principal balance of this Master Note.
2. Payment. The principal shall bear interest on the monthly balance
(as defined in subsection (c) of this section) at 6% per annum from and after
the date thereof until payment in full. The principal and interest, is due
and payable as follows:
(a) The Master Note is due in full on December 31, 2000 unless
canceled pursuant to the terms of the Rights Agreement, extended by Creditor
pursuant to written notice thereof or such other agreement as may be entered
into between Creditor and Debtor with respect thereto;
(b) Debtor may, but is not obligated to, make periodic payments in
part or full payment of the "monthly balance" as defined in subsection (c) of
this section.
(c) The "monthly balance" will be computed by taking the balance of
Debtor's account on the first day of each month, adding any additional
advances and interest charges and subtracting any payments or credits.
(d) The entire Obligation will be due immediately upon the
expiration of the notice of default given to Debtor from Creditor in the event
of default by Debtor as hereinafter provided.
3. Application of Payments. Unless applicable law provides otherwise,
all payments received by Debtor shall be applied by Creditor first in payment
of interest payable, next to the principal, and last to any other sums secured
by this Agreement.
4. Term. Unless terminated earlier by the mutual agreement of the
parties or pursuant to another provision of this Agreement, this Agreement
shall continue in full force and effect until December 31, 2000, if not paid
in full or otherwise canceled pursuant to the terms of the Rights Agreement,
or on the mutual agreement of the parties.
5. Events of Default. Upon the occurrence and during the continuance of
any one or more of the events hereinafter enumerated, Creditor may forthwith
or at any time thereafter during the continuance of any such event, by notice
in writing to Debtor, declare the unpaid balance of the principal and interest
then accrued to be immediately due and payable, and the principal and interest
shall become and shall be immediately due and payable without presentation,
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demand, protest, notice of protest, or other notice of dishonor, all of which
are hereby expressly waived by Debtor, such events being as follows:
(a) Default in the payment of the principal and interest or any
portion thereof when the same shall become due and payable, whether at
maturity as therein expressed, by acceleration, or otherwise, unless cured
within ten (10) days after notice thereof by the Creditor to Debtor; or
(b) Default in the due observance or performance of any other
covenant or obligation contained in the Rights Agreement, the Credit
Agreement, this Master Promissory Note, or the Pledge and Security Agreement,
unless observed or performed within ten (10) days after notice thereof to
Debtor by Creditor; provided, if compliance is not possible within ten (10)
days, default shall occur upon failure within ten (10) days to take steps that
will produce compliance as soon as is reasonably practicable.
6. Procedure on Default. Upon the occurrence of an event of default,
and at any time thereafter, Creditor may elect to declare the Line of Credit
due and payable and after notice of default has expired, at any time
thereafter, without further notice, Creditor may take possession of the
Collateral pursuant to the terms of the Pledge and Security Agreement. At such
time that Creditor elects to take possession of the Collateral, Debtor shall
give Creditor its full and complete cooperation in immediately transferring
the Collateral to Creditor. At such time as the Collateral has been
transferred by Debtor to Creditor the entire Line of Credit under this Master
Promissory Note and the Credit Agreement shall be deemed paid-in-full and the
Creditor shall have no further claims against the Debtor with respect to the
Line of Credit.
7. Governing Law. The laws of the state of Missouri shall govern the
validity of this Master Promissory Note, the construction of its terms, and
the interpretation of the rights and duties of the parties.
8. Consent to Jurisdiction and Venue. In the event of any breach,
threatened breach or other dispute between the parties under this Master
Promissory Note, the parties agree that the United States District Court for
the Western District of Missouri shall have the sole and exclusive
jurisdiction over any such proceeding. If such court lacks federal subject
matter jurisdiction, the Xxxxxxx County Circuit Court shall have sole and
exclusive jurisdiction. Any of these courts shall be proper venue for such
proceedings and the parties hereto waive any objection to such venue. The
parties hereto consent to and agree to submit to the jurisdiction of any of
the courts specified herein and agree to accept service of process to vest
personal jurisdiction over them in any of these courts.
9. Security Interest. Debtor shall execute a Pledge and Security
Agreement wherein Debtor shall grant to Creditor a security interest in the
Collateral as defined in the Credit Agreement, sufficient to secure the
obligation created hereunder, which Pledge and Security Agreement shall be
made a part of the Credit Agreement and this Master Promissory Note and
incorporated herein by this reference.
BORROWER:
INDUSTRIAL ECOSYSTEMS, INC.
By:/S/Xxxxxx Xxxxx, President
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PLEDGE AND SECURITY AGREEMENT
THIS PLEDGE AND SECURITY AGREEMENT (this "Agreement") is made and entered
into effective the 31st day of December, 1998, by and between JFJ ECOSYSTEMS,
LLC, a Missouri limited liability company ("Creditor"), and INDUSTRIAL
ECOSYSTEMS, INC., a Utah corporation ("Debtor"), and IEI Canada, Inc., an
Ontario corporation ("IEI Canada").
FOR AND IN CONSIDERATION of the mutual promises and covenants hereinafter
set forth, and other good and valuable consideration, it is agreed as follows:
1. Creation of Security Interest. To secure the due and timely
performance of the payment by Debtor to Creditor of the obligation represented
by a master promissory note of even date in the principal amount of seven
hundred fifty thousand dollars ($750,000.00) and payable, together with
interest thereon at the rate of 6% per annum, on or before two (2) years from
the date of the Master Promissory Note, a copy of which is attached hereto and
incorporated herein by this reference and all accessions, renewals,
extensions, and modifications hereto (the "Master Promissory Note"), Debtor
has caused IEI Canada to hereby pledge, hypothecate, assign, transfer, set
over, and grant a security interest in and to that certain 50% membership
interest in and to ROP North America, LLC (the "Joint Venture"), hereinafter
called the "Collateral." The Collateral shall be delivered as hereinafter
provided to be held for and on behalf of Creditor and to be disposed of in
accordance with the terms hereof.
2. Delivery of Collateral. So long as the Master Promissory Note
remains outstanding, Debtor, will cause IEI Canada to, unless Creditor shall
otherwise consent in writing in Creditor's sole discretion (a) at its expense,
promptly deliver to Creditor, for holding such stock powers and other
documents, satisfactory in form and substance to the Creditor, with respect to
the Collateral as the Creditor may reasonably request to preserve and protect,
and to enable the Creditor to enforce, Creditor's rights and remedies
hereunder; (b) not sell, assign, exchange, or otherwise transfer any of his
rights in any of the Collateral; (c) not create or suffer to exist any lien,
security interest, or other charge or encumbrance against the Collateral,
except for the pledge hereunder; (d) not make or consent to any amendment or
other modification or waiver with respect to any of the Collateral or enter
into any agreement or permit to exist any restriction with respect to any of
the Collateral other than pursuant hereto; and (e) not take or fail to take
any action which would in any manner impair the value or enforceability of
Creditor's security interest in any of the Collateral. Any transfer by Debtor
of the Collateral shall be subject to the interest of Creditor as a secured
party therein.
3. Power to Vote Membership Interest. During the term of this Agreement
and so long as Debtor is not in default in the performance of any of their
terms of this Agreement or the Master Promissory Note, Debtor shall have the
sole right to vote the membership interest of the Joint Venture on all company
questions and actions.
4. Ownership of Collateral. Debtor, by and through its wholly owned
subsidiary, IEI Canada, Inc. ("IEI Canada") owns all the Collateral
absolutely, and no other person has or claims any interest in the Collateral.
Debtor and IEI Canada will defend any proceeding which may affect the title to
or Creditor's security interest in any Collateral, and will indemnify Creditor
for all costs and expenses of Creditor's defense.
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5. Adjustments. In the event that, during the term of this Agreement,
any share dividend, reclassification, readjustment, or other change is
declared or made in the capital structure of the Joint Venture, all new,
substitute, and additional shares, or other securities, issued by reason of
any such change shall be delivered to the agent to be held for and on behalf
of Creditor under the terms of this Agreement in the same manner as the
membership interest originally pledged hereunder.
6. Charges, Liens, and Encumbrances on Collateral. Debtor will pay,
when due, all future charges, liens, obligations, or encumbrances on, and all
taxes and assessments hereafter imposed on or affecting the Collateral.
7. Application of Payments. Unless applicable law provides otherwise,
all payments received by Creditor under the Master Promissory Note shall be
applied by Creditor first in payment of interest payable on the Master
Promissory Note, next to the principal of the Master Promissory Note, and last
to any other sums secured by this Agreement.
8. Collateral Generally. As to all Collateral, unless specifically
otherwise agreed by the Creditor in writing, the Debtor will cause IEI Canada
to promptly deliver the Collateral to Creditor to be held until payment of the
Master Promissory Note is received or the Collateral is disposed of pursuant
to this Agreement.
9. Events of Default. Upon the occurrence and during the continuance of
any one or more of the events hereinafter enumerated, Creditor may forthwith
or at any time thereafter during the continuance of any such event, by notice
in writing to Debtor, declare the unpaid balance of the Master Promissory Note
and the interest then accrued to be immediately due and payable, and the
principal and interest shall become and shall be immediately due and payable
without presentation, demand, protest, notice of protest, or other notice of
dishonor, all of which are hereby expressly waived by Debtor, such events
being as follows:
(a) Default in the payment of the principal and interest or any
portion thereof when the same shall become due and payable, whether at
maturity as therein expressed, by acceleration, or otherwise, unless cured
within ten (10) days after notice thereof by the Creditor to Debtor; or
(b) Default in the due observance or performance of any other
covenant or obligation contained in the Rights Agreement, the Credit
Agreement, the Master Promissory Note, or this Agreement, unless observed or
performed within ten (10) days after notice thereof to Debtor by Creditor;
provided, if compliance is not possible within ten (10) days, default shall
occur upon failure within ten (10) days to take steps that will produce
compliance as soon as is reasonably practicable.
10. Procedure on Default. Upon the occurrence of an event of default,
and at any time thereafter, Creditor may elect to declare the entire
Obligation hereby secured immediately due and payable and after notice of
default has expired, at any time thereafter, without further notice, Creditor
may take possession of the Collateral pursuant to the terms of this Agreement.
At such time that Creditor elects to take possession of the Collateral, Debtor
shall give Creditor its full and complete cooperation in immediately
transferring the Collateral to Creditor. At such time as the Collateral has
been transferred to Creditor the entire Obligation under the Credit Agreement
and the Master Promissory Note shall be deemed paid-in-full and the Creditor
shall have no further claims against the Debtor with respect to the
Obligation.
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11. Remedy Cumulative. All remedies provided in this Agreement are
distinct and cumulative to any other right or remedy under this Agreement or
afforded by law or equity, and may be exercised concurrently, independently,
or successively.
12. Financing Statement. Debtor agrees that this Agreement shall also
constitute a financing statement under the Utah Uniform Commercial Code.
13. Notices. Any notices or other communications required or permitted
hereunder shall be sufficiently given if personally delivered to it or, if
sent by facsimile transmission or other electronic communication confirmed by
registered or certified mail, postage prepaid, or if sent by prepaid telegram
addressed as follows:
If to Creditor: JFJ ECOSYSTEMS, LLC
Attn: Xxxx X. Xxxxx
0000 Xxxx 00xx Xxxxxx
Xxxxxx Xxxx, XX 00000
Fax No: (000) 000-0000
with copies to: SEIGFREID, BINGHAM, LEVY, XXXXXX & XXX
Attn: Xxxxx Xxxxxx, Esq.
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx Xxxx, XX 00000
Fax No: 000-000-0000
If to Debtor: INDUSTRIAL ECOSYSTEMS, INC AND IEI CANADA:
Attn: President
000 Xxxxxx Xxx, Xxxxx 00
Xxxxxxxx, XX 00000
Fax No.: 000-000-0000
with copies to: XXXXXX AND ASSOCIATES, INC.
Xxxxxxx X. Xxxxxx, Esq.
0000 Xxxx 0000 Xxxxx, Xxx. 000
Xxxx Xxxx Xxxx, XX 00000
Fax No.: 000-000-0000
or such other addresses as shall be furnished in writing by any party in the
manner for giving notices hereunder, and any such notice or communication
shall be deemed to have been given as of the date so delivered or sent by
facsimile transmission or other electronic communication, three days after the
date so mailed, or one day after the date so telegraphed or sent by overnight
delivery.
14. Waiver. No failure to exercise and no delay in exercising, any
right, power or privilege hereunder shall operate as a waiver thereof. Any
single or partial exercise of any right, power or privilege hereunder shall
not preclude any other or further exercise thereof, or the exercise of any
other right, power or privilege. No waiver of any provision of this Agreement
or of any right, or remedy afforded by law shall be deemed, or shall
constitute, a waiver of any other provision, right, or remedy, whether or not
similar, nor shall any waiver constitute a continuing waiver. No waiver shall
be binding unless evidenced by a writing which contains an express reference
to this Agreement and which is signed by the party against whom enforcement of
the waiver is sought.
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15. Successors and Assigns. This Agreement shall bind and shall inure
to the benefit of the respective successors, assigns, heirs, beneficiaries,
and personal representatives of the parties hereto.
16. Additional Assurances and Documentation. Debtor and IEI Canada
agree to provide Creditor such further representations, assurances, and
documents as may, from time to time, be required by Creditor to document and
evidence the security interest in the Collateral created hereby including a
UCC-1 which will be filed in all states necessary to secure Creditor's
interest in the Collateral.
17. Headings. The headings or captions of the paragraphs, sections, or
articles herein are inserted for the convenience only and shall not be deemed
to constitute a part of this Agreement for any purpose, and in particular
shall not be construed to limit, define, or explain the subject matter or
modify the meaning of any part or all of this Agreement.
18. Survival of Warranties and Representations. The representations,
warranties, covenants, agreements, indemnities, and undertakings of the
parties in this Agreement shall not expire with, or be terminated or
extinguished by, the execution and delivery of this Agreement or any document
or instrument contemplated hereby, notwithstanding any investigations of the
facts constituting the basis of the representations and warranties of another
party by any party hereto or anyone on behalf of any party hereto.
Consummation of the transactions contemplated hereby shall not be deemed or
construed as a waiver of any right or remedy that any party hereto may have or
covenant, notwithstanding any fact or facts that such party knew or should
have known at such time.
19. Severability. In the event of this Agreement or the application of
any such provision to any person or circumstance shall conflict with any
jurisdiction, then such conflict shall not affect any other provision of this
Agreement which can be given effect without the conflicting provision and the
remainder of this Agreement or the application of such provisions to persons
or circumstances other than those as to which such provisions are held invalid
or unenforceable, shall not be affected thereby. The invalidity or
unenforceability of this Agreement or any provisions thereof in any
jurisdiction shall not affect the validity or enforceability of this Agreement
or of such provision in any other jurisdiction. To this end, the provisions
of this Agreement are declared to be severable.
20. Modification. This Agreement may not be supplemented, varied, or
rescinded except by a writing which contains an express reference to this
Agreement and which is signed by the party against whom enforcement of the
supplement, variance, or rescission is asserted.
21. Governing Law. The laws of the state of Missouri shall govern the
validity of this Pledge and Security Agreement, the construction of its terms,
and the interpretation of the rights and duties of the parties.
22. Consent to Jurisdiction and Venue. In the event of any breach,
threatened breach or other dispute between the parties under this Pledge and
Security Agreement, the parties agree that the United States District Court
for the Western District of Missouri shall have the sole and exclusive
jurisdiction over any such proceeding. If such court lacks federal subject
matter jurisdiction, the Xxxxxxx County Circuit Court shall have sole and
exclusive jurisdiction. Any of these courts shall be proper venue for such
proceedings and the parties hereto waive any objection to such venue. The
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parties hereto consent to and agree to submit to the jurisdiction of any of
the courts specified herein and agree to accept service of process to vest
personal jurisdiction over them in any of these courts.
23. Facsimile Transmission. Facsimile transmission of any signed
original document, and retransmission of any signed facsimile transmission,
shall be the same as delivery of an original. At the request of any party
hereto, the parties will confirm facsimile transmitted signatures by signing
an original document.
24. Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original and all of which taken
together shall be but a single instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
CREDITOR: DEBTOR:
JFJ ECOSYSTEMS, LLC INDUSTRIAL ECOSYSTEMS, INC.
By /s/Xxxx X. Xxxxx, Manager By /s/Xxxxxx Xxxxx, President
IEI CANADA, INC.
By /s/Xxxxxx Xxxxx, President
