PURCHASE AGREEMENT
by and among
MICRO-INTEGRATION CORP.,
MICRO-INTEGRATION CORP. PLC,
and
XXXXX XXXXXX
and his wife
XXXXXX XXXXXX.
Dated: Xxxxx 00, 0000
XXXXXXXX AGREEMENT
THIS PURCHASE AGREEMENT ("Agreement") is entered into on this __ day of
________________, 199__, by and among MICRO-INTEGRATION CORP., a Delaware
corporation ("MI"), Micro-integration Corp. PLC, an English Public Limited
Company ("MI PLC") Xx. Xxxxx Xxxxxx, an individual residing at 00 Xxxxxxxx xx
Xxxxx, 0000 Xxxxxxxxx, Xxxxxxx ("Weiner"), and Weiner's wife, Xxxxxx Xxxxxx
("Xxxxxx") an individual residing at the same address.
RECITALS
WHEREAS, MI owns all the shares of common stock of MI PLC (the "PLC Common
Stock") and the PLC Common Stock held by MI on the Closing Date will constitute
all of the issued and outstanding shares of capital stock of MI PLC; and
WHEREAS, MI desires to sell, and Weiner desires to purchase, the majority
of the PLC Common Stock in consideration for the payment to be made and upon the
terms and subject to the conditions set forth herein; and
WHEREAS, MI PLC owes MI debts for product and royalties and MI and MI PLC
wish to restructure the debt; and
WHEREAS, MI and MI PLC have an OEM Agreement (the "OEM Agreement") dated
September 24, 1991 and MI and MI PLC wish to amend certain terms of that
agreement, including the terms of the royalties payable under the OEM Agreement;
and
WHEREAS, MI and the PLC wish to agree on terms for a revolving credit line
under which MI PLC may purchase MI products from MI.
NOW THEREFORE, in consideration of the premises set forth in this Agreement
and subject to the terms and conditions stated herein, MI, MI PLC, Weiner and
Brooke hereby agree as follows:
1
DEFINITIONS
1.1 Certain Definitions. The terms defined in this Section 1.1 shall, for
all purposes of this Agreement, have the meanings herein specified, unless the
context expressly or by necessary implication otherwise requires:
Page 2
"Business Know-how" shall mean trade and business secrets, know-how, data,
designs, processes, production methods, specifications, technology, information,
drawings, manuals, reports, recorded knowledge, performance and other standards,
catalogues, confidential and proprietary information and other proprietary and
intellectual property rights.
"Lien" shall mean any lien, security interest, claim, pledge, restriction
or encumbrance of any kind, including but not limited to any of the foregoing
arising through or as a result of options, mortgages, indentures, security
agreements or other agreements, arrangements, contracts, understandings,
commitments or obligations of any kind, whether written or oral and whether or
not relating in any way to credit or to the borrowing of money, and "Liens"
shall refer to all of the foregoing collectively.
"Person" shall mean any individual, firm, corporation, or other entity, and
shall include any successor (by merger or otherwise) of such entity.
1.2 Other Definitions. In addition to the terms defined in Section 1.1,
certain other terms are defined elsewhere in this Agreement, and, whenever such
terms are used in this Agreement, they shall have their respective defined
meanings, unless the context expressly or by necessary implication otherwise
requires.
2
SALE AND PURCHASE OF MI PLC COMMON STOCK
2.1 Sale and Purchase. Subject to the terms and conditions set forth in
this Agreement, MI hereby agrees to sell, convey, transfer, assign and deliver
to Weiner at the Closing, and Weiner hereby agrees to purchase from MI, eighty
percent (80%) of MI's PLC Common Stock.
2.2 Purchase Price. As consideration for the transfer of the PLC Common
Stock to Weiner, Weiner agrees to transfer to MI at the Closing 20,000
(twenty-thousand) shares of MI common stock, par value $0.01 per share ("MI
Common Stock"). For the purposes of this Agreement, the total value of the MI
Common Stock (the "Stock Value") will be the product of multiplying the number
of shares transferred (20,000) times the average closing price of the MI Common
Stock on the NASDAQ stock market the last three trading days prior to the
Closing Date.
2.3 Accounting Treatment. The parties intend that the transaction proposed
herein shall be treated as a purchase for accounting purposes.
3
RESTRUCTURE OF DEBT -- CREDIT LINE
Page 3
3.1 Exchange of Debt for Notes. On the Closing Date, MI and MI PLC will
restructure the entire amount of inter-company debt owed MI by MI PLC (the
"Inter-Company Debt) into a Seventy Thousand dollar ($70,000.00) note (the
"Short Term Note"), in the form attached hereto as Exhibit A, and a Five-year,
Three-Hundred Fity-six Thousand Dollar ($356,000.00) note (the "Five-year
Note"), in the form attached hereto as Exhibit B (collectively, the "Notes"),
along with a Collateral Agreement in the form attached hereto as Exhibit C.
3.2 Personal Guarantees. Weiner and Brooke will personally guarantee
payment of the principal amount of the Short Term Note and the first One-Hundred
Twenty Thousand dollars ($120,000.00) in principal and interest payments of the
Five Year Note, in the form attached hereto as Exhibit D.
3.3 Credit Line. At the Closing, MI will grant the PLC a sixty (60) -day,
Seventy-five Thousand dollar ($75,000.00) commercial line of credit, according
to the terms attached hereto as Exhibit E.
3.4 Guarantee Releases. Within thirty (30) days of the Closing, Weiner and
MI PLC will jointly and severally release MI from all financial guarantees and
obligations of any kind related to the PLC, except for the indemnity obligations
of Section 11 of this Agreement.
4
CLOSING
4.1 Closing of Transaction. Subject to the conditions set forth herein,
the purchase and sale of the PLC Common Stock (the "Closing") shall occur on
March 31, 1997 or on such other date as mutually agreed by the parties in
writing. The actual date of the Closing shall be referred to as the Closing
Date.
4.2 Closing Delivereies. At the Closing: Closing Deliveries
(a) MI shall deliver to Weiner:
(i) certificates representing eighty percent (80%) of the PLC Common
Stock, endorsed to Weiner, which shall transfer to Weiner good
title to the PLC Common Stock, free and clear of all Liens and
encumbrances; and
(ii) such other documents including officers' certificates and
opinions of counsel as may be required by this Agreement or
reasonably requested by Weiner.
(b) Weiner shall deliver to MI:
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(i) certificates representing the MI Common Stock which shall
transfer to MI good title to the MI Common Stock, free and clear
of all encumbrances; and
(ii) the Notes; and
(iii) the personal guarantees of the Notes by Weiner and Brooke in
such form as is satisfactory to MI; and
(iv) such other documents including officers' certificates and
opinions of counsel as may be required by this Agreement or
reasonably requested by MI.
4.3 Further Assurance. Xxxxxx, Xxxxxx, MI PLC and MI at any time after the
Closing shall execute, acknowledge and deliver any other assignments,
conveyances and other assurances, documents and instruments of transfer,
reasonably requested by any party and will take any other action consistent with
the terms of this Agreement that may reasonably be requested by any party for
the purpose of accomplishing the Agreement set forth herein.
5
REPRESENTATIONS AND WARRANTIES OF WEINER AND XXXXXX
Xxxxxx and Xxxxxx jointly and severally hereby represent and warrant to MI,
as follows:
5.1 Title. Weiner is the sole record and beneficial owner of, and owns and
holds, and will own and hold on the Closing Date, good and valid title to, the
MI Common Stock being transferred by Weiner, free and clear of any Liens. There
are no existing agreements, options, warrants, rights, calls or commitments of
any character to which Weiner is a party or by which Weiner is bound providing
for the purchase, repurchase or redemption of, or granting a right of first
refusal in, or in any way relating to, the shares of the MI capital stock being
transferred by Weiner and none will exist on the Closing Date.
5.2 TAX TREATMENT. WEINER REPRESENTS THAT WEINER HAS CONSULTED ANY TAX
CONSULTANT(S) WHICH WEINER DEEMS ADVISABLE IN CONNECTION WITH THE EXCHANGE OF
COMMON STOCK FOR COMMON STOCK PROVIDED FOR HEREIN, AND THAT IT IS NOT RELYING ON
MI, OR ANY AGENT OF MI, IN ANY WAY IN THIS REGARD.
5.3 Power, Authorization and Validity. Weiner has, and will have on the
Closing Date, all requisite power and authority to enter into and perform his
obligations under this Agreement. All action on the part of Weiner necessary for
the authorization, execution, delivery and performance of all obligations of
Weiner under this Agreement and for the delivery of the MI Common Stock being
exchanged hereunder, has been taken. This Agreement, when executed and delivered
by Weiner, will constitute the valid and legally binding obligations of Weiner,
enforceable in accordance with their terms.
Page 5
5.4 Consents. No consent, approval or authorization of, or designation,
declaration or filing with, any governmental authority or agency, or any other
person, is required on the part of Weiner in connection with the valid execution
and delivery of this Agreement or the offer and exchange of the MI Common Stock
by Weiner.
5.5 No Brokers. Weiner is not aware of any legally binding obligation for
the payment of any fees or expenses of any investment banker, broker or finder
in connection with the origin, negotiation or execution of this Agreement, or in
connection with any transaction contemplated hereby.
5.6 Information. Weiner and Brooke believe they have received all the
information they consider necessary or appropriate for deciding whether to
engage in the transaction contemplated herein. Weiner has had an opportunity,
subject to reasonable confidentiality restrictions, to ask questions and receive
answers from MI and MI PLC regarding the terms and conditions of the transaction
contemplated herein and the business, properties, prospects and financial
conditions of MI and MI PLC and to obtain additional information necessary to
verify the accuracy of any information furnished to him or to which he had
access.
5.7 No Violation of Existing Agreement. Neither the execution and delivery
of this Agreement nor the consummation of the transactions contemplated hereby,
including, without limitation, the transfer of the MI Common Stock, will
conflict with, or result in the breach or termination of any provision of any
instrument or contract to which Weiner or Brooke is a party or by which Weiner
or Brooke are bound, or any federal, state, local or foreign judgment, writ,
decree, order, statute, rule or regulation applicable to Weiner or Brooke or
their assets or properties.
5.8 Litigation. There is no litigation, proceeding or investigation pending
or to the best of Weiner's knowledge, threatened, relating to Weiner which
questions the validity of this Agreement or any action taken or to be taken in
connection herewith or seeks to prohibit or render illegal the transactions
contemplated by this Agreement.
5.9 No Material Misstatements. No representation or warranty by Weiner made
in this Agreement contains any untrue statement, or omits to state a material
fact necessary in order to make the statements herein or therein, in light of
the circumstances under which they are made, misleading.
6
REPRESENTATIONS AND WARRANTIES OF MI
Page 6
MI hereby represents and warrants to Weiner as follows:
6.1 Capitalization. On the Closing Date, all outstanding shares of capital
stock of MI PLC will be held by MI. All of the issued and outstanding shares of
capital stock of MI PLC have been, and, on the Closing Date will be, duly
authorized, validly issued and are, and, on the Closing Date will be, fully paid
and non-assessable, with no preemptive rights. There are, and on the Closing
Date there will be, no existing agreements, options, warrants, rights, calls or
commitments of any character to which MI PLC is a party or by which MI PLC is
bound providing for the issuance of any additional shares, the sale of treasury
shares, or for the repurchase or redemption of shares of MI PLC's capital stock
and there are, and on the Closing Date there will be, no outstanding securities
or other instruments convertible into or exchangeable for shares of such capital
stock and no commitments to issue such securities or instruments.
6.2 Consents. No consent, approval or authorization of, or designation,
declaration or filing with, any governmental authority or agency, or any other
Person, is required on the part of MI PLC in connection with the valid execution
and delivery of this Agreement or the offer and exchange of the PLC Common Stock
by MI, except such filings and approvals as may be required to comply with
federal and state securities laws.
6.3 Organizations and Good Standing. MI PLC is duly organized, validly
existing and in good standing under the laws of the United Kingdom and has the
power and authority to own, operate and lease its properties and to carry on its
business as now conducted and as proposed to be conducted.
6.4 No Violation of Existing Agreements. Neither the execution and delivery
of this Agreement nor the consummation of the transactions contemplated hereby,
including, without limitation, the transfer of the PLC Common Stock, will
conflict with, or result in the breach or termination of any provision of the
Certificate of Incorporation or Bylaws of MI, as currently in effect, or in any
material respect, any instrument or contract to which MI is a party or by which
MI is bound, or any federal, state, local or foreign judgment, writ, decree,
order, statute, rule or regulation applicable to MI or its assets or properties.
6.5 Valid Transfer. Upon the delivery to Weiner of certificates for eighty
percent (80%) of MI's PLC Common Stock, together with appropriate transfer
powers, Weiner shall own all right, title and interest in such eighty percent
(80%) of the PLC Common Stock, free and clear of any Liens.
6.6 Litigation. There is no litigation, proceeding or investigation pending
or to the best of MI's knowledge, threatened, relating to MI or MI PLC which
questions the validity of this Agreement or any action taken or to be taken in
connection herewith or seeks to prohibit or render illegal the transactions
contemplated by this Agreement.
6.7 No Material Misstatements. No representation or warranty by MI PLC or
MI made in this Agreement contains any untrue statement, or omits to state a
material fact necessary
Page 7
in order to make the statements herein, in light of the circumstances under
which they are made, misleading.
7
PRE-CLOSING COVENANTS
7.1 MI and MI PLC. During the period from the date of this Agreement until
the Closing Date or such other date as specified herein, MI and MI PLC covenant
and agree as follows:
(a) Advice of Changes. MI and MI PLC will promptly advise Weiner in writing
if it becomes aware of any event occurring subsequent to the date of this
Agreement that would render any representation or warranty of MI or MI PLC
contained in this Agreement, if made on or as of the date of such event or the
Closing Date, untrue or inaccurate in any material respect.
(b) Maintenance of Business. MI will use its best efforts to cause MI PLC,
and MI PLC shall, carry on and preserve its business and its relationships with
licensors, suppliers, customers, employees and others in substantially the same
manner as it has prior to the date hereof. If MI or MI PLC becomes aware of a
deterioration in the relationship with any material licensor, material supplier,
customer or key employee of MI PLC, it will promptly bring such information to
the attention of Weiner in writing and, if requested by Weiner, will exert its
best efforts to cause MI PLC to, in the case of MI, and will, in the case of MI
PLC, restore the relationship.
(c) Regulatory Approvals. MI and MI PLC will execute and file, or join in
the execution and filing, of any application or other document that may be
necessary in order to obtain the authorization, approval or consent of any
governmental body, federal, state, local or foreign, which may be reasonably
required, or which Weiner may reasonably request, in connection with the
consummation of the transactions contemplated by this Agreement. MI and MI PLC
will use their commercially reasonable best efforts to obtain all such
authorizations, approvals and consents. MI and MI PLC will notify Weiner in
writing promptly after learning of any material actions, suits, proceedings or
investigations by or before any court, board or governmental agency, initiated
by or against it or MI PLC, or known by it to be threatened against it or MI
PLC, related in any way to MI PLC or this Agreement.
(d) Necessary Consents. MI and MI PLC will use their commercially
reasonable best efforts to obtain such written consents and take such other
actions by the Closing Date as may be necessary or appropriate to allow the
consummation of the transactions contemplated hereby.
(e) Satisfaction of Conditions Precedent. MI and MI PLC will use their
commercially reasonable best efforts to satisfy or cause to be satisfied each of
the conditions precedent set forth in Article 8 on or before the date such
condition is required to be satisfied, to cause the transactions contemplated by
this Agreement to be consummated, and, without limiting
Page 8
the generality of the foregoing, to obtain all consents and authorizations of
third parties and to make all filings with, and give all notices to, third
parties that may be necessary or reasonably required on its part in order to
effect the transactions contemplated hereby.
(f) Cooperation With Due Diligence. Subject to reasonable confidentiality
restrictions and subject to the proviso that in no event shall Weiner be
provided access to any proprietary information provided to MI PLC by any third
party, MI PLC and MI will use their best efforts to cause MI PLC to, and MI PLC
will, cooperate with all reasonable due diligence requests made by Weiner or his
counsel.
(g) Expenses Relating to Transfer. MI shall pay any and all taxes, charges,
levies or other costs assessed on the exchange of the MI PLC Common Stock for
the MI Common Stock.
7.2 Weiner Covenants. During the period from the date of this Agreement
until the Closing or such other date as specified herein, Weiner covenants and
agrees as follows:
(a) Advice of Changes. Weiner will promptly advise MI in writing if it
becomes aware of any event occurring subsequent to the date of this Agreement
that would render any representation or warranty of Weiner, MI, or MI PLC
contained in this Agreement, if made on or as of the date of such event or the
Closing Date, untrue or inaccurate in any material respect.
(b) Necessary Consents. Weiner will use his commercially reasonable best
efforts to obtain such written consents and take such other actions by the
Closing Date as may be necessary or appropriate to allow the consummation of the
transactions contemplated hereby.
(c) Satisfaction of Conditions Precedent. Weiner will use his commercially
reasonable best efforts to satisfy or cause to be satisfied each of the
conditions precedent set forth in Article 9 on or before the date such condition
is required to be satisfied, to cause the transactions contemplated by this
Agreement to be consummated, and, without limiting the generality of the
foregoing, to obtain all consents and authorizations of third parties and to
make all filings with, and give all notices to, third parties that may be
necessary or reasonably required on its part in order to effect the transactions
contemplated hereby.
8
CONDITIONS TO THE OBLIGATIONS OF WEINER
WEINER's obligations hereunder are subject to the fulfillment or
satisfaction, on and as of the Closing Date or such other date as specified
herein, of each of the following conditions (any one or more of which may be
waived, but only in a writing signed by WEINER):
8.1 Representations and Warranties. The representations and warranties of
MI set forth in Article 6 shall be true and accurate in every material respect
on and as of the Closing Date with the same force and effect as if they had been
made on the Closing Date.
Page 9
8.2 Due Diligence. Weiner does not reasonably and in good faith conclude,
based on due diligence and after having presented his findings to MI in writing
and having given MI a reasonable opportunity to respond thereto, that the
business, financial condition and prospects of MI PLC are materially different
and adverse than has been represented to Weiner by MI and MI PLC.
8.3 Covenants. MI shall have performed and complied in all material
respects with all of its covenants contained in Section 7.1 on or before the
date specified therein.
8.4 Stock Certificates. MI shall deliver stock certificates for eighty
percent of the PLC Common Stock.
8.5 Compliance with Law. At the time of the Closing, there shall be no
order, decree or ruling by any court or governmental agency which would prohibit
or render illegal the transactions contemplated by this Agreement.
8.6 No Litigation. There shall be no litigation pending or threatened by
any regulatory body or private party in which (i) an injunction is or may be
sought against the transactions contemplated hereby, or (ii) relief is or may be
sought against any party hereto as a result of this Agreement, and in which, in
the good faith judgment of Weiner (relying on the advice of legal counsel) such
regulatory body or private party has a reasonable possibility of prevailing and
such relief would have a material adverse effect upon Weiner.
8.7 Approval of Documentation. The form and substance of all certificates,
instruments, opinions and other documents delivered to Weiner under this
Agreement shall be satisfactory in all reasonable respects to Weiner and his
counsel.
8.8 Closing Certificates. Weiner shall have received a certificate of a
responsible official of MI, dated the Closing, certifying as to the fulfillment
of the conditions specified in Section 8.1.
9
CONDITIONS TO THE OBLIGATIONS OF MI
The obligations of MI hereunder are subject to the fulfillment or
satisfaction on, and as of the Closing Date or such other date as specified
herein, of each of the following conditions (any one or more of which may be
waived by MI, but only in a writing signed by MI):
9.1 Representations and Warranties. The representations and warranties of
Weiner shall be true and accurate in every material respect on and as of the
Closing Date, with the same force and effect as if they had been made on such
date.
9.2 Covenants. Weiner shall have performed and complied in all material
respects with all of its covenants contained in Section 7.2 hereof on or before
the date specified therein.
Page 10
9.3 Compliance with Law. At the time of the Closing, there shall be no
order, decree or ruling by any court or governmental agency which would prohibit
or render illegal the transactions contemplated by this Agreement.
9.4 No Litigation. There shall be no litigation pending or threatened by
any regulatory body or private party in which (i) an injunction is or may be
sought against the transactions contemplated hereby, or (ii) relief is or may be
sought against any party hereto as a result of this Agreement, and in which, in
the good faith judgment of the Board of Directors of MI (relying on the advice
of its legal counsel), such regulatory body or private party has a reasonable
possibility of prevailing and such relief would have a material adverse effect
upon MI.
9.5 Stock Certificates. Weiner shall deliver stock certificates for the MI
Common Stock.
9.6 Approval of Documentation. The form and substance of all certificates,
instruments, opinions and other documents delivered to MI under this Agreement
shall be satisfactory in all reasonable respects to MI and its counsel.
10
TERMINATION OF AGREEMENT
10.1 Termination. This Agreement may be terminated prior to the Closing as
follows:
(i) at the election of MI, if any one or more of the conditions to the
obligation of MI to close set forth in Article 9 hereof has not been
fulfilled or waived as of the time of Closing;
(ii) at the election of Weiner, if any one or more of the conditions to its
obligations to Close set forth in Article 8 hereof has not been
fulfilled or waived as of the time of Closing; and
(iii) at the election of MI or Weiner, if any action, suit or proceedings
shall have been instituted and be continuing by any governmental or
regulatory body with proper authority to restrain, modify or prohibit
the carrying out of the transactions contemplated hereby.
In the event that MI or Weiner, as the case may be, elect to terminate this
Agreement pursuant to this Section 10.1, the terminating party shall deliver a
notice to the other parties to this Agreement declaring its election to so
terminate this Agreement in accordance with the provisions of Section 10.1, as
the case may be, and setting forth therein the basis for such
Page 11
termination. If this Agreement is so terminated, it shall become null and void
and have no further force or effect, except as provided in Section 10.2.
10.2 Survival. If this Agreement is terminated and the transactions
contemplated hereby are not consummated as described above, this Agreement shall
become void and of no further force and effect. None of the parties hereto shall
have any liability in respect to a termination of this Agreement, except to the
extent that failure to satisfy the conditions of Articles 8 and 9 results from
the intentional or willful violation of the representations, warranties,
covenants or agreements of such party under this Agreement.
11
INDEMNIFICATION
11.1 Indemnification by MI. MI hereby agrees to indemnify and hold harmless
Weiner from and against one-half (50%) of each and every demand, claim, loss
(which shall include any diminution in value), Lien, liability, judgment, damage
or other obligation whatsoever, together with costs and expenses (including,
without limitation, interest, penalties, costs of preparation and investigation,
and the reasonable fees, disbursements and expenses of attorneys, accountants
and other professional advisors) (collectively, "Losses") imposed on or incurred
by Weiner, directly or indirectly, relating to, resulting from or arising out
of: (a) any inaccuracy in any representation or warranty in any respect, whether
or not Weiner relied thereon or had knowledge thereof, or any breach or
nonfulfillment of any covenant, agreement or other obligation of MI PLC or MI
under this Agreement, any Schedule or Exhibit hereto, or any agreement,
certificate or other document delivered or to be delivered pursuant hereto and
(b) all claims by third parties, including but not limited to business tort
claims, breach of contract claims and claims for malicious or intentional
misconduct, fraud, personal injury, property damage and worker's compensation,
arising out of the conduct of the business of MI PLC prior to the Closing Date.
MI hereby agrees to pay Weiner, in January, 1998 three-quarters (75%) of any
losses due to uncollectable receivable accounts which accounts are on MI PLC's
books as collectable as of the Closing Date and are not collected by December
31, 1997.
11.2 Indemnification by Weiner. Weiner agrees to indemnify and hold MI
harmless from and against any and all Losses imposed on or incurred by MI,
directly or indirectly, relating to, resulting from or arising out of any
inaccuracy in any representation or warranty in any respect, whether or not MI
relied thereon or had knowledge thereof, or any breach or nonfulfillment of any
covenant, agreement or other obligation of Weiner under this Agreement, any
Schedule or Exhibit hereto, or any agreement, certificate or other document
delivered or to be delivered pursuant hereto. Weiner hereby agrees to pay to MI
three-quarters (75%) of any amounts collected from accounts that are listed on
MI PLC's books as uncollectable as of the Closing Date. Weiner hereby agrees to
reimburse MI on a pro rata basis for MI's payment of losses due to accounts not
collected as of December 31, 1997 per Section 11.1 above, if such accounts are
subsequently partly or fully collected..
Page 12
11.3 Limitation on MI Liability. Notwithstanding any other provision of
this Agreement (including, but not limited to, this Article 11):
(a) MI shall not have any liability or obligation to pay any Losses to
Weiner under or arising out of this Agreement (including, but not
limited to, this Article 11, but excluding losses for uncollectable
accounts) unless and until the aggregate amount of all Losses of
Weiner (the "Aggregate Losses") asserted against, suffered or incurred
by, or imposed on Weiner exceeds the sum of Ten Thousand dollars
($10,000) (the "Indemnity Floor"). At such time as the Aggregate
Losses exceed the Indemnity Floor, MI (if and to the extent provided
in Section 11.1 above) shall thereafter be obligated to pay Weiner for
all such Losses; provided, however, that MI shall not be obligated or
liable to pay Weiner any Losses if they involve individual claims for
Losses of less than Two Thousand Dollars ($2,000.00) (provided that a
series of claims for Losses of substantially similar nature and/or
arising out of or otherwise related to the same factual context shall
be aggregated and treated as a single claim for Losses for purposes of
this limitation).
(b) MI shall have no liability or obligation to pay any Losses to Weiner
under or arising out of this Agreement (including, but not limited to,
this Article 11) which, when aggregated with all Losses for which MI
is then or was previously liable or obligated to pay to Weiner under
or arising out of this Agreement (including, but not limited to, this
Article 11), are in excess of MI's Maximum Liability Amount. For
purposes of this Agreement, MI's "Maximum Liability Amount" shall be
equal to the total of the principal amounts of the Notes plus the
Stock Value.
11.4 Notice of Claim. Each indemnified party agrees to give the
indemnifying party prompt written notice of any action, claim, demand, discovery
of fact, proceeding or suit upon which such indemnified party intends to base a
claim for indemnification ("Claim") under this Article 11. The indemnifying
party shall have the right to participate jointly with the indemnified party in
the indemnified party's defense, settlement or other disposition of any Claim.
With respect to any Claim relating solely to the payment of money damages and
which will not result in the indemnified party's becoming subject to injunctive
or other relief or otherwise adversely affect the business of the indemnified
party in any manner, and as to which the indemnifying party shall have
acknowledged in writing the obligation to indemnify the indemnified party
hereunder, the indemnifying party shall have the sole right to defend, settle or
otherwise dispose of such Claim, on such terms as the indemnifying party, in its
sole discretion, shall deem appropriate. The indemnifying party shall obtain the
written consent of the indemnified party prior to ceasing to defend, settling or
otherwise disposing of any Claim if as a result thereof the indemnified party or
of any of its direct or indirect subsidiaries would become subject to injunctive
or other equitable relief or the business of the indemnified party would be
adversely affected in any manner.
Page 13
12
MISCELLANEOUS
12.1 Notices. Any notice or other communication required or permitted
hereunder shall be in writing and shall be delivered personally, sent by
facsimile transmission, sent by certified, registered or express mail, postage
prepaid, or sent by delivery service.. Any such notice shall be deemed given
when so delivered personally or sent by facsimile transmission or when actually
received if sent by mail or delivery service.
(i) If to MI to:
Micro-Integration Corp.
Xxx Xxxxxxx Xxxx
Xxxxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxxx
Telecopier: 000-000-0000
(ii) If to MI PLC to:
Micro-Integration Corp. PLC
Unit G9
Business and Innovation Centre
Aston Science Park
Xxxx Xxxx
Xxxxxxxxxx X0 0XX
Xxxxxx Xxxxxxx
Telecopier 00-000-000-0000
(iii) If to Weiner or Brooke:
Xx. Xxxxx Xxxxxx
Xx. Xxxxxx Xxxxxx
00 Xxxxxxxx xx Xxxxx
0000 Xxxxxxxxx
Xxxxxxx
Telecopier 00-0-000-0000
Any party may by notice given in accordance with this Section 12.1 to the other
parties designate another address or person for receipt of notices hereunder.
12.2 Expenses. Expenses of this transaction, including, without limitation,
legal, accounting and investment banking fees ("Transaction Expenses") incurred
by MI and by MI
Page 14
PLC will be paid by MI and MI PLC. Transaction Expenses incurred by Weiner and
Brooke will be paid by Weiner. Notwithstanding the foregoing, in the event the
proposed transaction is not consummated for any reason then each party shall
bear its own expenses of this proposed transaction.
12.3 Board of Directors. So long as MI owns shares of MI PLC, the Board of
Directors of MI PLC will consist of Weiner and up to two directors appointed by
Weiner, and one Director appointed by MI. Xxxx Xxxxxxx will be the Director from
MI until Weiner and MI PLC are otherwise notified in writing. All Directors will
serve in that capacity without compensation, and MI PLC will pay reasonable
travel and living expenses incurred in attending Director's meetings.
12.4 Entire Agreement. This Agreement and the OEM Agreement contain the
entire agreement among the parties and supersedes all prior agreements written
or oral betwen MI Corp. and MI PLC.
12.5 Waivers and Amendments; Non-Contractual Remedies; Preservation of
Remedies. This Agreement may be amended superseded, canceled, renewed or
extended, and the terms hereof may be waived, only by a written instrument
signed by each of the parties or, in the case of a waiver, by the party waiving
compliance. No delay on the part of any party exercising any right, power or
privilege hereunder shall operate as a waiver thereof. Nor shall any waiver on
the part of any party of any right, power or privilege, nor any single or
partial exercise of any such right, power or privilege, preclude any further
exercise thereof or the exercise of any other such right, power or privilege.
The rights and remedies herein provided are cumulative and are not exclusive of
any rights or remedies that any party may otherwise have at law or in equity.
The rights and remedies of any party based upon, arising out of or otherwise in
respect of any inaccuracy in or agreement contained in this Agreement shall in
no way be limited by the fact that the act, omission, occurrence or other state
of facts upon which any claim of any such inaccuracy or breach is based may also
be the subject matter of any other representation, warranty, covenant or
agreement contained in this Agreement (or in any other agreement between the
parties) as to which there is no inaccuracy or breach.
12.6 Governing Law. This Agreement shall be governed by and construed in
accordance with the substantive and procedural laws of the State of Maryland
applicable to agreements made and to be performed entirely within such State.
Any action brought by either party regarding the terms of this agreement or the
transaction herein contemplated shall be brought under a court of competent
jurisdiction within the State of Maryland. Any judgments or orders made by such
Maryland court may be enforced worldwide, in accordance with the laws of other
jurisdictions
12.7 Binding Effect; No Assignment. This Agreement shall be binding upon
and inure to the benefit of the parties and their respective successors and
assigns and legal representatives. Neither this Agreement, nor any right
hereunder, may be assigned by any party without the written consent of the other
party hereto, which shall not be unreasonably withheld. Any such assignment or
attempted assignment shall be void.
Page 15
12.8 No Third Party Beneficiaries. Nothing in this Agreement is intended or
shall be construed to give any third party any legal or equitable right, remedy
or claim under or in respect of this Agreement or any provision contained
herein.
12.9 Counterparts. This Agreement may be executed by the parties hereto in
separate counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute one and the same
instruments. Each counterpart may consist of a number of copies hereof each
signed by less than all, but together signed by all of the parties hereto.
12.10 Exhibits. The Exhibits are a part of this Agreement as if fully set
forth herein. All references herein to Articles, Sections, paragraphs, and
Exhibits shall be deemed references to such parts of this Agreement, unless the
context shall otherwise require.
12.11 Headings. The headings in the Agreement are for reference only, and
shall not affect the interpretation of this Agreement.
12.12 Publicity. All notices to third parties and all other publicity
concerning the transactions contemplated by this Agreement shall be jointly
planned and coordinated by and between MI and Weiner, unless such notices or
other publicity is mandated by law.
12.13 Severability. If any portion of this Agreement shall be deemed
unenforceable by a court of competent jurisdiction, the remaining portions shall
be valid and enforceable.
12.14 Time of Essence. Time is of the essence for each and every provision
of this Agreement.
12.15 Attorneys' Fees. If any legal action, arbitration or other proceeding
is brought for the enforcement of this Agreement, or because of an alleged
dispute, breach, default or misrepresentation in connection with any of the
provisions of this Agreement, the successful or prevailing party shall be
entitled to recover reasonable attorneys' fees and other costs incurred in that
action or proceeding, in addition to any other relief to which it may be
entitled.
12.16 Confidentiality. MI, Weiner, and MI PLC recognize that they have
received and will receive confidential information concerning the others during
the course of the negotiations and preparations relating to the exchange
contemplated herein. Accordingly, MI, Weiner and MI PLC severally agree (i) to
use their respective best efforts to prevent the unauthorized disclosure of any
confidential information concerning any of the others that was or is disclosed
during the course of such negotiations and preparations and (ii) to not make use
of or permit to be used any such confidential information other than for the
purpose of effectuating the exchange contemplated herein and related
transactions. The obligations of this Section 12.16 will not apply to
information that (a) is or becomes part of the public domain without breach of
this Section 12.16, (b) is disclosed by the disclosing party to third parties
without restrictions on
Page 16
disclosure, (c) is received by the receiving party from a third party without
breach of a nondisclosure obligation of the third party or (d) is required to be
disclosed by law. If this Agreement is terminated, all copies of documents
containing confidential information shall be returned by the receiving party to
the disclosing party.
IN WITNESS WHEREOF, MI, MI PLC, Weiner and Brooke have duly executed and
delivered this Agreement as of the date first above written.
MICRO-INTEGRATION CORP. Micro-Integration Corp. PLC
a Delaware Corporation a United Kingdom Public Limited Company
By By
--------------------------- -------------------------------
Xxxx X. Xxxxxxx, President Xxxxxxx Xxx, Managing Director
Xxxxx Xxxxxx Xxxxxx Xxxxxx
--------------------------- -------------------------------
Page 17
Exhibit A
PROMISSORY NOTE
For good and valuable consideration, the sufficiency of which is hereby
acknowledged, the undersigned, Micro-Integration Corp. PLC (MI PLC), a United
Kingdom Public Limited Company, promises to pay to the order of
Micro-Integration Corp. (MI Corp.), a Delaware corporation, the sum of Seventy
Thousand Dollars ($70,000). The principal amount shall not bear interest.
Payment. MI PLC agrees to pay MI Corp., within 15 days of closing, sixty percent
(60%) of the cash on deposit in excess of Fifty-Thousand dollars ($50,000) in MI
PLC's bank accounts as of the date of this Note. MI PLC further agrees to pay MI
Corp. one-third of collections of receivables on the books of MI PLC as of the
date of this Note, until the entire principal amount is paid.
Prepayment. MI PLC may prepay this loan in whole or in part at any time without
penalty.
Security. This loan is secured by a Security Agreement and a Personal Guarantee
Agreement of like date.
Default. Any of the following will be a default under this Note:
(1) failure to pay any principal when due, or failure to perform any other
obligations hereunder; (2) a default in any of the requirements of MI PLC, or
any other person providing security for this loan, under the security provisions
of this Note; (3) a default in any other agreement between MI PLC and MI Corp.
or any corporate affiliate of MI Corp., whether previously, simultaneously, or
hereafter entered into; (4) a material adverse change in the financial condition
of MI PLC from that of March 31, 1997, as determined in good faith solely by MI
Corp.; (5) bankruptcy, insolvency, reorganization, or receivership proceedings
are instituted by or against MI PLC; (6) Any warranty representation, or
statement to MI Corp. by or on behalf of MI PLC proving to have been incorrect
in any material respect when made or furnished; (7) the occurrence of any event
which is, or would be with the passage of time or the giving of notice of both,
an uncontested default under any indebtedness of MI PLC to any person other than
MI Corp.; (8) any material loss, theft or substantial damage, not fully insured
for the benefit of MI Corp., to any of MI PLC's assets, or the transfer or
encumbrance of any material part of MI PLC's assets other than for fair
consideration; (9) a change of ownership or dissolution, merger, consolidation,
liquidation or reorganization of MI PLC; (10) failure of MI PLC to furnish to MI
Corp. such financial information as MI Corp. may reasonably require from time to
time; or (11) the determination in good faith by MI Corp., in its sole
reasonable discretion, that MI PLC's ability to repay this loan is impaired for
any reason.
Remedies Upon a default, MI PLC will pay MI Corp. all expenses incurred by MI
Corp. in collecting the loan, protecting any collateral, and realizing on the
security. Those expenses include reasonable attorney's (and paralegal) fees
equal to up to twenty-five percent (25%) of all
Page 18
amounts owing under this Note (including principal, interest (if any), and
expenses), but not more than the amount permitted by law. If any default occurs,
MI Corp. has the right to declare the entire unpaid balance of principal of this
loan, and all accrued but unpaid interest (if any), immediately due and payable
without notice or demand. MI PLC agrees than any such default is a default under
all other liabilities and obligations of MI PLC to MI Corp., and that MI Corp.
has the right to declare immediately due and payable all such other liabilities
and obligations. If not then paid, the principal balance, accrued but unpaid
interest (if any),and any expenses, will thereafter bear interest at a rate of
18% per annum ( but not more than the maximum rate allowed by the laws which
govern this loan). If a judgment is entered against MI PLC for any sum due under
this Note, MI PLC will pay MI Corp. upon demand from time to time interest at
the stated interest rate on the judgment. Also, if any default occurs, MI Corp.
may take any other action, to foreclose on collateral or otherwise, provided in
any of the security documents referred to above.
If this Note is not paid when due, MI PLC authorizes any attorney or clerk of
any court to appear for it or them (or any one or more of them) in that court
(as of any term) at any time there is a default (or any violation of the terms
of this Note), and confess judgment against such person or persons without
giving prior notice to or serving process on such person or persons, in favor of
MI Corp. for such amount as may appear to be unpaid on this Note, including
interest, late charges, expenses, and an attorney's fee of up to 25% of such
sums (but not to exceed the amount permitted by applicable law), and hereby
waives and releases, to the extent not prohibited by the law, all errors and
rights of appeal, exemptions and stays of execution upon any real or personal
property to which such person or persons might otherwise be entitled, under any
present or future law. The authority and power to appear for and enter judgment
against MI PLC shall not be exhausted by one or more exercises hereof or by any
imperfect exercises hereof, and shall not be extinguished by any judgment
entered pursuant thereto. This authority and power may be exercised on one or
more occasions, from time to time, in the same or different jurisdictions, as
often as MI Corp. shall deem necessary or desirable, for all of which this Note
shall be sufficient authority.
In witness hereof, our hands and seals this _____ day of ____________, 1997:
Witness or Attest Micro-Integration Corp. PLC
Xxxxxxxxxxxxxxx 00
0000 Xxxxxx, Xxxxxxx
By:
------------------------ ---------------------------------
Xxxxx Xxxxxx
Managing Director
By:
------------------------ ---------------------------------
Page 19
Director
Page 20
Exhibit B
PROMISSORY NOTE
For good and valuable consideration, the sufficiency of which is hereby
acknowledged, the undersigned, Micro-Integration Corp. PLC (MI PLC), a United
Kingdom Public Limited Company, promises to pay to the order of
Micro-Integration Corp. (MI Corp.), a Delaware corporation, the sum of
Three-hundred Fifty-six Thousand Dollars ($356,000), together with interest on
the unpaid principal of eight percent (8%) per annum.
Payment. MI PLC agrees to pay MI Corp. on the following schedule:
Until September 30, 1997, no principal or interest payments will be
made.
Beginning September 30, 1997, and for the next seven months, MI PLC
will pay MI Corp. Three Thousand Five Hundred dollars ($3,500 per
month) in principal and interest, on or before the thirtieth day of
the month (seven payments).
Beginning April 30, 1998, MI PLC will pay MI Corp. Eight Thousand,
Eight Hundred dollars ($8,800.00) per month in principal and interest
until such time as the principal amount is fully paid.
MI PLC will issue, and provide evidence of, standing orders to their bank or
banks to transfer the payments required hereunder when due.
Prepayment. MI PLC may prepay this loan in whole or in part at any time without
penalty.
Security. This loan is secured by a Security Agreement and a Personal Guarantee
Agreement of like date.
Default. Any of the following will be a default under this Note:
(1) failure to pay any principal when due, or failure to perform any other
obligations hereunder; (2) a default in any of the requirements of MI PLC, or
any other person providing security for this loan, under the security provisions
of this Note; (3) a default in any other agreement between MI PLC and MI Corp.
or any corporate affiliate of MI Corp., whether previously, simultaneously, or
hereafter entered into; (4) a material adverse change in the financial condition
of MI PLC from that of March 31, 1997, as determined in good faith solely by MI
Corp.; (5) bankruptcy, insolvency, reorganization, or receivership proceedings
are instituted by or against MI PLC; (6) Any warranty representation, or
statement to MI Corp. by or on behalf of MI PLC proving to have been incorrect
in any material respect when made or furnished; (7) the occurrence of any event
which is, or would be with the passage of time or the giving of notice of both,
an uncontested default under any indebtedness of MI PLC to any person other than
MI Corp.; (8) any material loss, theft or substantial damage, not fully insured
for the benefit of MI
Page 21
Corp., to any of MI PLC's assets, or the transfer or encumbrance of any material
part of MI PLC's assets other than for fair consideration; (9) a change of
ownership or dissolution, merger, consolidation, liquidation or reorganization
of MI PLC; (10) failure of MI PLC to furnish to MI Corp. such financial
information as MI Corp. may reasonably require from time to time; or (11) the
determination in good faith by MI Corp., in its sole reasonable discretion, that
MI PLC's ability to repay this loan is impaired for any reason.
Remedies Upon a default, MI PLC will pay MI Corp. all expenses incurred by MI
Corp. in collecting the loan, protecting any collateral, and realizing on the
security. Those expenses include reasonable attorney's (and paralegal) fees
equal to up to twenty-five percent (25%) of all amounts owing under this Note
(including principal, interest (if any), and expenses), but not more than the
amount permitted by law. If any default occurs, MI Corp. has the right to
declare the entire unpaid balance of principal of this loan, and all accrued but
unpaid interest (if any), immediately due and payable without notice or demand.
MI PLC agrees than any such default is a default under all other liabilities and
obligations of MI PLC to MI Corp., and that MI Corp. has the right to declare
immediately due and payable all such other liabilities and obligations. If not
then paid, the principal balance, accrued but unpaid interest (if any),and any
expenses, will thereafter bear interest at a rate of 18% per annum ( but not
more than the maximum rate allowed by the laws which govern this loan). If a
judgment is entered against MI PLC for any sum due under this Note, MI PLC will
pay MI Corp. upon demand from time to time interest at the stated interest rate
on the judgment. Also, if any default occurs, MI Corp. may take any other
action, to foreclose on collateral or otherwise, provided in any of the security
documents referred to above.
If this Note is not paid when due, MI PLC authorizes any attorney or clerk of
any court to appear for it or them (or any one or more of them) in that court
(as of any term) at any time there is a default (or any violation of the terms
of this Note), and confess judgment against such person or persons without
giving prior notice to or serving process on such person or persons, in favor of
MI Corp. for such amount as may appear to be unpaid on this Note, including
interest, late charges, expenses, and an attorney's fee of up to 25% of such
sums (but not to exceed the amount permitted by applicable law), and hereby
waives and releases, to the extent not prohibited by the law, all errors and
rights of appeal, exemptions and stays of execution upon any real or personal
property to which such person or persons might otherwise be entitled, under any
present or future law. The authority and power to appear for and enter judgment
against MI PLC shall not be exhausted by one or more exercises hereof or by any
imperfect exercises hereof, and shall not be extinguished by any judgment
entered pursuant thereto. This authority and power may be exercised on one or
more occasions, from time to time, in the same or different jurisdictions, as
often as MI Corp. shall deem necessary or desirable, for all of which this Note
shall be sufficient authority.
Page 22
In witness hereof, our hands and seals this _____ day of ____________, 1997:
Witness or Attest Micro-Integration Corp. PLC
Xxxxxxxxxxxxxxx 00
0000 Xxxxxx, Xxxxxxx
By:
------------------------------ --------------------------------
Xxxxx Xxxxxx
Managing Director
By:
------------------------------ --------------------------------
Director
Page 23
Exhibit C
Security Agreement
Security. As Security collateral ("Collateral") for all Obligations of MI PLC to
MI Corp., MI PLC hereby grants and pledges to MI Corp. a continuing security
interest in: (1) all of the now owned and hereafter acquired machinery,
equipment, furniture, fixtures (whether or not attached to real property),
supplies and other personal property of MI PLC, including any leasehold
interests therein and all replacement parts and annexations thereto (herein
called "Equipment"); all of MI PLC's now owned and hereafter acquired and/or
created accounts, instruments, chattel paper, contracts, contract rights,
accounts receivable, tax refunds, notes, notes receivable, drafts, acceptances,
documents, general intangibles, and other items (not including wages or salary),
including but not limited to proceeds of inventory and returned goods and
proceeds from the sale of goods and services (herein called "Accounts"); all of
MI PLC's now owned and hereafter acquired inventory, wherever located, including
but not limited to all raw materials, parts, containers, work in process,
finished goods, wares and merchandise, and goods returned for credit,
repossessed, reclaimed or otherwise reacquired by MI PLC and all products and
proceeds thereof including but not limited to sales proceeds of any kind (herein
called "Inventory"); and all other now owned and hereafter acquired assets of MI
PLC, including but not limited to all leases, rents, chattels, leasehold
improvements, installment purchase and/or sales contracts, bonds, stocks,
certificates, advances, deposits, trademarks, tradenames, licenses, patents and
cash values of life insurance, all of which, including the above-described
Equipment, Accounts and Inventory, shall herein be called "Assets"; (2) all
proceeds (including insurance proceeds) and products of the above-described
Assets; (3) any accounts, property, securities or monies of MI PLC which may at
any time be assigned or delivered or come into possession of MI Corp., as well
as all proceeds and products thereof; and (4) all of the actual books and
records pertaining to any of the above-described items of Collateral.
Obligations. The "Obligations" secured by this Agreement are defined to include
all of MI PLC's notes, indebtedness, extensions of credit, letters of credit,
overdrafts and other obligations, whether direct, indirect (by way of
endorsement, guaranty, pledge or otherwise), liquidated, unliquidated, fixed,
contingent, or howsoever arising, whether now existing or hereafter incurred to
or otherwise acquired by MI Corp. and whether held for MI PLC's account or for
another or others. "Obligations" shall also be defined to include all
obligations of MI PLC hereunder or under any other agreement with MI Corp.
pertaining hereto. The Obligations shall include new and additional credit
facilities for MI PLC, whether or not such facilities are presently
contemplated.
Further Documents. Upon a default of any obligation of MI PLC to MI Corp., MI
PLC will execute and deliver to MI Corp. any instruments or documents and do all
things necessary or convenient to carry into effect the provisions of this
Agreement and to facilitate collection of any Accounts. MI PLC designates MI
Corp. or any of its officers as attorney-in-fact to sign MI PLC's name on any
financing statement or continuation statement, and to file the same as may be
appropriate, and MI PLC agrees that filed photocopies of financing statements
and continuation
Page 24
statements shall be sufficient to perfect MI Corp.'s security interests
hereunder. If any other documents are necessary, including but not limited to
mortgages, loss payable endorsements for insurance policies, assignments of
insurance policies and proceeds or otherwise, MI PLC will execute same. MI PLC
further designates MI Corp. or any of its officers as attorney-in-fact to sign
MI PLC's name thereon.
Name or Location. MI PLC will immediately advise MI Corp. in writing of the
opening of any new place of business or the closing of any of its exiting places
of business, and of any change in MI PLC's name or the location of the places
where the Collateral, or books or records pertaining to the Collateral, are
kept.
Records. MI PLC will maintain such records with respect to Collateral and the
conduct and the operation of its business as MI Corp. may request and will
furnish MI Corp. all information with respect to the Collateral, Account
debtors, and the conduct and operation of its business including, but not
limited to, balance sheets, operating statements and other financial
information, as MI Corp. may reasonably request.
Inspection. MI Corp. or any of its representatives may from time to time
inspect, check, make copies of or extracts from the books, records and files of
MI PLC, and inspect any of the Collateral wherever located. MI PLC will make
same available at any time for such purposes.
Personalty. The Equipment shall be and shall remain personal property and
nothing shall effect the character of the same or cause the same to become
realty, or prevent MI Corp. in its option from removing same from premises on
which they may become attached, in event of default under any obligation of MI
PLC to MI Corp.
Books. If requested, MI PLC will make proper entries in its books, disclosing
the assignment of Accounts to MI Corp., and permit MI Corp. to verify Accounts.
Collections. MI Corp. authorizes and permits MI PLC to collect Accounts from
debtors. This privilege may be terminated by MI Corp. at any time without notice
to MI PLC after default under any obligation of MI PLC to MI Corp., and MI Corp.
may notify any debtor or debtors of the assignment of accounts and collect the
same. MI PLC will on request of MI Corp. at any time after default under any
obligation of MI PLC to MI Corp. notify any or all debtors to make payment of
their accounts direct to MI Corp. Upon any default of any obligation of MI PLC
to MI Corp., MI PLC will receive all payments on accounts as agent of and for MI
Corp. and will, if requested, transmit to MI Corp., on the day of receipt, or at
other mutually agreed upon intervals, all original checks, drafts, acceptances,
notes and other evidences of payment received in payment of or on account of
Accounts, including all cash monies similarly received by MI PLC. For such
purpose, MI PLC will, if requested, provide MI Corp. access to any post office
boxes or bank accounts in which deposits are received. Further, MI PLC agrees
that MI Corp. may pay, for the account of MI PLC, any taxes, levies, or other
charges affecting MI PLC's Inventory or Equipment which MI PLC fails to pay,
including all other taxes and levies, and any such payment shall constitute a
liability of MI PLC.
Page 25
Sales. So long as MI PLC is not in default in any obligations to MI Corp.,
Inventory subject to MI Corp.'s continuing security interests may be used by MI
PLC in the ordinary course of business, but shall not otherwise be taken or
removed from MI PLC's premises.
Further Covenants. Without the prior written consent of MI Corp., MI PLC will
not: (1) pledge or grant any security interest in any Collateral to anyone
except MI Corp., nor permit any financing statement (except MI Corp.'s financing
statement) to be on file in any public office with respect thereto; (2) permit
or suffer any lien, levy or other encumbrance to attach to any of the
Collateral; (3) make any agreement, compromise, settlement, bulk sale, lease or
transfer of assets other than in the normal course of business; (4) create,
incur or assume any secured liability for borrowed money, except borrowings from
MI Corp.; (5) assume guarantee, endorse or otherwise become liable in connection
with the obligations of any person, firm or corporation, except by endorsement
of instruments for deposit or collection or similar transactions in the ordinary
course of business; (6) enter into any merger or consolidation, or sell or lease
substantially all of its assets; or (7) purchase or acquire the obligations or
stock of any person, firm or corporation of other enterprise whatsoever, other
than the direct obligations of the Untied States or MI Corp.
Costs of Collection. If a default under any obligation of MI PLC to MI Corp.
shall occur, MI Corp. shall be entitled to recover from MI PLC attorneys' and
paralegal fees equal to up to twenty-five percent (25%) of the unpaid balance of
the Obligations at the time of default (but not to exceed the amount permitted
by applicable law), plus court cost and other expenses which may be incurred by
MI Corp. in the enforcement or attempted enforcement of its rights hereunder,
whether against an third party, MI PLC, or guarantors. Expenses recoverable from
MI PLC shall include costs of collection including salaries, out-of-pocket
travel, living expenses and the hiring of agents, consultants, accountants, or
otherwise. All sums of money thus expended and all other monies expended by MI
Corp. to protect its interest in the Collateral (including insurance, taxes or
repairs) shall be repayable by MI PLC to MI Corp. on demand, such repayment to
be secured under this agreement.
Foreclosure. Upon a default under any obligation of MI PLC to MI Corp., in
addition to other lawful remedies, MI Corp. at any time then or thereafter, in
its discretion, may lawfully enter any of MI PLC's premises or the premises
where the Collateral is located with or without judicial process, lawfully
remove the Collateral or records thereof to such place as MI Corp. may deem
advisable, or require MI PLC to assemble and make any or all such Collateral
available at such reasonable place as MI Corp. may direct, and realize upon (by
sale or in any other manner) all or any part of the Collateral MI Corp. shall
give MI PLC, and other parties entitled to notice, reasonable notice in writing
before the sale of the Collateral or any part thereof at public auction or
private sale, in one or more sales, at such price or prices, and upon such terms
either for cash or credit or future delivery as MI Corp. may elect, and at any
such public sale MI Corp. may bid for and become the purchaser of any or all of
such Collateral; and/or MI Corp. may foreclose its security interest in the
Collateral in any way permitted by law. MI PLC agrees that MI Corp.
Page 26
may foreclose on and sell the Collateral, and assents to the passing of a decree
for the sale of the Collateral upon default. The net proceeds of any such sale
or sales and any amounts received in liquidation of the Collateral, less all
costs and expenses incurred in connection therewith, including attorney's and
paralegal feels of up to twenty-five percent (25%) of the unpaid balance of the
Obligations at the time of default (but not to exceed the amount permitted by
applicable law) and, at the option of MI Corp., less any prior lien claims,
shall be applied against the Obligations of MI PLC in order that MI Corp. in its
sole discretion shall decide, and MI PLC or other party entitled thereto shall
be entitled to any surplus resulting therefrom. Any actions taken by MI Corp.
pursuant hereto shall not affect MI PLC's continuing liability to MI Corp. for
any deficiency remaining after any foreclosure.
Redemption. The purchaser at any such sale shall thereafter hold the Collateral
absolutely free from any claim or right of whatsoever kind including any equity
of redemption of MI PLC, and such demand, notice or right in equity are hereby
expressly waived and released by MI PLC.
Action on Accounts. In the event of default under any obligation of MI PLC to MI
Corp., MI Corp. is also authorized to grant extension to or adjust claims of, or
make compromises, compositions, or settlements with debtors, guarantors or any
other parties with respect to Accounts or any securities, guaranties, or
insurance applying thereon, without notice to or consent of MI PLC, without
affecting MI PLC's obligations thereunder. MI PLC waives notice of acceptance
hereof, of non-payment, protest or notice of protest of any Accounts, and all
other notices to which MI PLC might otherwise be entitled.
Replevin. MI PLC hereby authorizes and empowers any attorney or clerk of any
court of record upon the occurrence of any event of default to appear for and
confess judgment against MI PLC (as of any term of court) without prior notice
to MI PLC or prior opportunity to be heard in an action for replevin instituted
by MI Corp. to obtain possession of any of the Collateral. If a copy of this
Agreement, verified by affidavit of MI Corp. or sworn on behalf of MI Corp., is
filed in such action, it shall not be necessary to file the original Agreement
as a warrant to the attorney or clerk. The authority and power to appear for and
enter judgment against MI PLC shall not be exhausted by one or more exercises
hereof or by any imperfect exercises hereof, and shall not be extinguished by
any judgment entered pursuant thereto; this authority and power may be exercised
on one or more occasions, from time to time, in the same or different
jurisdictions, as often as MI Corp. shall deem necessary or desirable, for all
of which this Agreement shall be sufficient authority.
Offset. MI Corp. is further authorized in event of any default by MI PLC in its
performance of this Agreement, or any and all other agreements with MI Corp., to
charge the sum then due to MI Corp. against any and all monies held by or on
deposit with MI Corp. on account of MI PLC or its affiliates, and to offset any
amounts against any deposits which MI PLC, or its affiliates, may have with MI
Corp. to enforce such other remedies as may be available at law or in equity,
without necessity of election.
Page 27
Alternative Remedies. MI Corp. may enforce its security interest hereunder
either alternatively or concurrently with its rights under and all other
agreements between it and MI PLC and shall have the full right to realize upon
all available Collateral, collecting on the same or instituting proceedings in
connection therewith, until MI Corp. receives payment in full of all amounts
owing to it under any of its agreements with MI PLC, including principal,
interest, costs and expenses, and costs of enforcement or attempted enforcement
of this or any other agreement among or between MI Corp. and MI PLC or any
endorsers or guarantors.
Return of Collateral. Upon payment in full and performance of all Obligations
secured hereby, all Collateral and Assets not previously foreclosed may be
returned by MI Corp. to MI PLC, and all rights and securities pertaining thereto
shall immediately cease.
Continuity and Termination. This Agreement shall become effective immediately
and remain in effect so long as any Obligation of MI PLC to MI Corp. is
outstanding and unpaid, provided that the security interests hereunder shall
continue in full force and effect and are non-cancelable by MI PLC prior to the
termination of this Agreement. The Agreement may be terminated by MI PLC upon
actual delivery of written notice to MI Corp. of such intention, and payment in
full of all then existing Obligations secured hereby; provided, however, that
such notice and payment shall in no way affect, and this Agreement shall remain
fully operative with respect to, any Obligations, or commitments which may
become Obligations, entered into between MI PLC and MI Corp. prior to receipt of
such notice or payment, whichever is later.
Other Documents. The Obligations secured by this Agreement are or shall be
evidenced by notes, guaranties, or other documents which are separate agreements
and may be negotiated by MI Corp. without releasing MI PLC, Collateral or any
guarantor or co-maker. This Agreement specifically incorporates by reference all
of the language and provisions of such notes, guaranties or other documents. MI
PLC consents to any extension of time of payment of any Obligations. If there is
more than one guarantor or co-maker of this Agreement or of the notes or other
agreements secured hereby, the obligation of all shall be primary, joint and
several.
Remedies Cumulative. All rights, remedies and powers of MI Corp. hereunder are
irrevocable and cumulative, and not alternative or exclusive, and shall be in
addition to all other rights, remedies and powers of MI Corp. whether in or by
any other instruments or any laws, including but not limited to the Uniform
Commercial Code, now existing or hereafter enacted.
Loans and Advances. Nothing contained herein shall be construed as obligating MI
Corp. to make any particular loan or advance to MI PLC, and MI PLC is not
relying upon MI Corp. to make or continue to make advances for any purpose
whatsoever. All such loans or advances remain within the discretion of MI Corp..
Non-Waiver. Any indulgence or delay on the part of MI Corp. in exercising any
power, privilege or right hereunder or under any other agreement executed by MI
PLC to MI Corp. in connection herewith shall not operate as a waiver thereof. No
single or partial exercise of any
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power, privilege or right shall preclude other or further exercise thereof, or
the exercise of any other power, privilege or right.
Governing Law; Severability. This Security Agreement shall be construed and
governed by the laws of the State of Maryland. If any part of this Security
Agreement shall be adjudged invalid or unenforceable as of any term of court,
then such partial invalidity or unenforceability shall not cause the remainder
of this Agreement to be or become invalid or unenforceable, and if a provision
hereof is held invalid or unenforceable in one or more of its applications, it
is agreed that said provision shall remain in effect in all valid or enforceable
applications that are severable from the invalid or unenforceable application or
applications.
Litigation. In the event of any litigation with respect to this Agreement, the
promissory note(s) or other agreements secured hereby, the Collateral, or any
other document or agreement applicable thereto, MI PLC waives the right to a
trial by jury and the defenses of statute of limitations). MI PLC consents to
the jurisdiction and venue of the courts of the State of Maryland, agrees that
any proceedings enforcing or construing this Agreement may be brought in any
State or Federal Court in Maryland, agrees that MI PLC is subject to service of
process under Section 6-103 of the Courts and Judicial Proceedings Article of
the Maryland Code, and agrees to accept such service as is authorized by such
statute and prescribed in the Maryland Rules of Procedure.
Construction. The captions are inserted only as a matter of convenience and for
reference and in no way define, limit, describe the scope of this Agreement nor
the intent of any provision thereof. The use of singular herein may also refer
to the plural, and vice versa, and the use of the neuter or any gender shall be
applicable to any other gender or the neuter.
Assignment. Neither of the parties shall be bound by anything not expressed in
writing. This Agreement shall enure to and be binding upon the heirs, personal
representatives, successors, and assigns of MI PLC and MI Corp., and the terms
"MI PLC" and "MI Corp." shall include and mean, respectively, the successors and
assigns of MI PLC and MI Corp..
Reasonable Notice. In connection with notices given it is agreed in all
instances that fifteen (15) business days notice is reasonable notice. Notice
shall be deemed given when delivered personally, by facsimile, or commercial
delivery service.
In witness hereof, our hands and seals this _____ day of ____________, 1997:
Witness or Attest Micro-Integration Corp. PLC
Xxxxxxxxxxxxxxx 00
0000 Xxxxxx, Xxxxxxx
By:
---------------------------- --------------------------------
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Xxxxx Xxxxxx
Managing Director
By:
---------------------------- --------------------------------
Director
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Exhibit D
Personal Guaranty
The undersigned have requested MI Corp. to make credits to MI PLC, and to
permit the creation of such liabilities.
In consideration of the making of such credits as have been or may
hereafter be made to or for MI PLC and of the permitting of the creation of such
liabilities of MI PLC, the undersigned, intending to be legally bound hereby, do
hereby, jointly and severally, guarantee to MI Corp. unconditionally at all
times, the punctual payment by MI PLC of the first One-Hundred Ninety Thousand
dollars ($190,000) in principal and interest payments (the "Guaranteed Amount")
due under the two Notes of like date, one with a principal amount of $70,000 and
one with a principal amount of $356,000.
This guaranty shall be a continuing one and shall bind the undersigned and
their respective successors, heirs, executors and administrators, irrespective
of the lack of any advance notice or consent of the undersigned, for their
obligations hereunder, and such obligations shall not be impaired in any manner
whatsoever.
The liability of MI PLC and each of the undersigned shall be joint and
several for the Guaranteed Amount.
Notice of acceptance and all other notices that would or might otherwise be
necessary or proper in connection herewith are hereby expressly waived.
This Guaranty shall not be terminable by any of the undersigned until such
time as One-Hundred Ninty Thousand dollars ($190,000) has been paid by MI PLC to
MI Corp. under the terms of the Notes, at which time this Guaranty automatically
terminates.
Up to the limit of the Guaranteed Amount, the undersigned shall
reimburse MI Corp. on demand for all expenses, including, but not limited to,
reasonable attorneys' and paralegals' fees, incurred by MI Corp. in the
enforcement or attempted enforcement of any of MI Corp.'s rights hereunder
against MI PLC or any of the undersigned; all expenses incurred by MI Corp. in
connection with the enforcement of all collateral obligations supporting the
Notes (including expenses of collection against the debtors of MI PLC); and any
sums paid by MI Corp. to any third parties, including creditors' committees, in
connection with the obligations of MI PLC to MI Corp. If MI PLC shall default in
the performance of any of MI PLC's obligations to MI Corp., and if any third
party (other than the undersigned) makes any payment to MI Corp. with respect
thereto, such third party shall, to the extent thereof, and after all
obligations of MI PLC to MI Corp. have been paid, be subrogated to any of MI
Corp.'s rights against the undersigned hereunder. In addition to any security
interest in any property which may be granted to MI Corp. under any other
agreement by and between the parties, MI Corp. is granted (a) a security
interest in all moneys of the undersigned or any of them except for the Group
Insurance of Weiner with the company A.G.; and (b) a security interest in all
securities and other instruments of the undersigned or any of them except for
the Group Insurance of Weiner with the company A.G.; and (c) a security interest
in real property owned by the undersigned except for Weiner's house in
Rixensart, Belgium., with rights of foreclosure as set forth in the Uniform
Commercial Code. Upon request of MI Corp., any indebtedness of MI PLC to MI
Corp. shall be collected, enforced and received by undersigned as trustee for MI
Corp. and paid over to MI Corp. on account of the
Page 31
liability of MI PLC to MI Corp., but without releasing undersigned with respect
to any balance due MI Corp. as provided herein.
Power of attorney to confess judgment: The undersigned hereby authorize any
attorney or clerk of any court to appear for them or any of them in term, time
or vacation, at any time after default by MI PLC with respect to any of its
obligations to MI Corp. (or any violation of the terms of this Guaranty) and
confess judgment without process in favor of MI Corp., against the undersigned,
or any of them, for such amount as may appear to be owing and unpaid hereunder,
together with all costs and attorneys' fees for collection, and hereby waive all
rights to stay of execution and exemption under any applicable law. The
provisions of this paragraph pertaining to power to confess judgment shall not
be exhausted by a single use thereof, but shall continue to be legally effective
in subsequent uses thereof.
This Guaranty shall be deemed to have been made in the State of Maryland,
and shall be interpreted in accordance with the laws of the State of Maryland.
As part of the consideration, the undersigned agree that any and all actions or
proceedings arising directly or indirectly form this Guaranty shall, at MI
Corp.'s option, be litigated in courts situated within the State of Maryland,
and the undersigned consent to the jurisdiction of any State or Federal Court
located within the State of Maryland, and agree that they are subject to service
of process under Section 6-103 of the Courts and Judicial Proceedings Article of
the Maryland Code, and further agree to accept such service as is authorized by
that statute and prescribed in the Maryland Rules of Procedure.
If any part of this Guaranty shall be adjudged invalid or not enforceable
as of any term of court, then such partial invalidity or unenforceability shall
not cause the remainder of this Guaranty to be or to become invalid or
unenforceable, and if a provision hereof is held invalid or unenforceable in one
or more of its applications, the parties hereto agree that said provisions shall
remain in effect in all valid or enforceable applications that are severable
from the invalid or unenforceable application or applications.
None of the terms and provisions of this Guaranty shall be waived, altered
or amended except by writing duly signed by an appropriate officer of MI Corp.
and by the undersigned. The use of singular herein may also refer to the plural,
and vice versa, and the use of the neuter or any gender shall be applicable to
any other gender or the neuter. This Guaranty is intended to be a contract of
suretyship.
Each of the undersigned acknowledge that the persons signing this Guaranty
are all of the persons who are intended to have signed, and that no other
signers are relied upon by the undersigned.
In witness hereof, our hands and seals this _____ day of ____________, 1997:
Witness or Attest Xxxxx Xxxxxx
By:
----------------------------- -------------------------------
Xxxxxx Xxxxxx
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By:
----------------------------- -------------------------------
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Exhibit E. Revolving Credit Terms
Up to $75,000 credit for purchase of MI Products..
60-day payment terms.
The PLC will issue and provide proof of bank instructions to meet the 60-day
terms within 15 days of presentation of shipping documents for each order.
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