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EXHIBIT 2
LOAN AGREEMENT
This Loan Agreement, dated as of August 5, 1999, is between Capita
Research Group, Inc., a Nevada corporation ("Borrower"), and Xxx Xxxxx (the
"Lender").
WHEREAS, the Lender has agreed to provide loans to Borrower in the
aggregate amount of up to $300,000;
NOW, THEREFORE, the parties hereto, in consideration of their mutual
covenants and agreements hereinafter set forth and intending to be legally
bound hereby, covenant and agree as follows:
ARTICLE I
THE CREDIT
1.01 Loans. Subject to the terms and conditions hereof, and relying
upon the representations and warranties of Borrower set forth herein, the
Lender agrees to make loans to Borrower (individually, a "Loan" and,
collectively, the "Loans") in the amount of $100,000 each on each of the
following dates (each, a "Loan Disbursement Date"): the date hereof, September
1, 1999 and October 1, 1999 (the later such date being the "Commitment
Expiration Date"), for an aggregate amount outstanding at any one time not
exceeding $300,000. On the terms and subject to the conditions of this
Agreement, Borrower may prepay the Loans.
1.02 Use of the Loans. Borrower shall use the proceeds of the Loans
for general corporate purposes.
1.03 The Note. The obligation of Borrower to repay the aggregate
unpaid principal amount of the Loans hereunder shall be evidenced by a
convertible promissory note (the "Note") in the form of Exhibit A annexed
hereto, payable to the order of the Lender, duly executed by Borrower and
delivered to the Lender and bearing interest at the rate equal to the prime or
reference rate published from time to time by Citibank, N.A., New York, New
York. Interest will be payable on demand upon 10 days' prior written notice,
which notice may not be delivered prior to six months after the initial Loan
Disbursement Date. The Lender shall, and is hereby authorized by Borrower to,
set forth on the schedule which forms a part of the Note appropriate notations
regarding the principal amount and date of each Loan made hereunder and the
other information provided therein, which notations shall be made
contemporaneously and shall be prima facie evidence of the information set
forth therein; provided, however, that the failure to make any such notations
or an error in making any such notations shall not limit, expand or otherwise
affect the obligations of Borrower hereunder or under the Note. The Note shall
cease to permit Loans on and after the Commitment Expiration Date and, as
provided therein, the principal amount of Loans outstanding shall be paid with
respect to each Loan on the first anniversary of the applicable Loan
Disbursement Date.
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1.04 Prepayments. Borrower shall have the right, at its option, to
prepay the Loans (or any portion thereof) in whole at any time or in part from
time to time, without premium or penalty. Borrower shall give notice (which
shall be irrevocable) to the Lender not later than the fifth business day
preceding the date of prepayment, specifying the aggregate principal amount to
be repaid and the prepayment date, whereupon the principal amount specified in
such notice, together with interest on the amount of each such prepayment to
the date of prepayment, shall become due and payable on such date of
prepayment.
1.05 Payments. All payments and prepayments to be made with respect to
principal of or interest on each of the Loans shall be made to the Lender at
its address set forth below (or at any other payment office in the United
States of America previously designated by the Lender to Borrower in writing),
on the day when due, in lawful money of the United States of America.
Notwithstanding the foregoing, at the option of the Lender exercised in the
demand for interest, interest will be payable in shares of common stock, $.001
par value ("Common Stock"), of Borrower valued as set forth in the Note. The
Lender or any other holder of the Note is hereby authorized to endorse on the
Note an appropriate notation evidencing each payment made on account of
principal; provided, however, that the failure to make any such notation shall
not limit or expand or otherwise affect the obligations of Borrower under the
Note and payments of principal on the Note shall not be affected by the failure
to make any such notation.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Borrower hereby makes the following representations and warranties
which shall survive the execution and delivery of this Agreement and the Note
hereunder:
2.01 Authority; Binding Agreement. The execution and delivery of this
Agreement and the other agreements contemplated hereby by Borrower, the
performance by Borrower of its covenants and agreements hereunder and
thereunder and the consummation by Borrower of the transactions contemplated
hereby and thereby have been duly authorized by all necessary corporate action.
This Agreement and the other agreements contemplated hereby constitute the
valid and legally binding agreements of Borrower, enforceable in accordance
with their respective terms.
2.02 No Legal Bar; Conflicts. Neither the execution and delivery of
this Agreement nor the other agreements contemplated hereby, nor the
consummation of the transactions contemplated hereby or thereby, violates or
will violate any provision of the Certificate of Incorporation or By-Laws of
Borrower or any law, rule, regulation, writ, judgment, injunction, decree,
determination, award or other order of any court, government, or governmental
agency or instrumentality, domestic or foreign, or violates or will violate, or
conflicts with or will conflict with, or will result in any breach of any of
the terms of, or constitutes or will constitute a default under or results in
or will result in the termination of or the creation or imposition of any lien
pursuant to, the terms of any
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contract, commitment, agreement, understanding or arrangement of any kind to
which Borrower is a party or by which Borrower or any of the assets of Borrower
is bound. No consents, approvals or authorizations of, or filings with, any
governmental authority or any other person or entity are required in connection
with the execution and delivery of this Agreement by Borrower and the
consummation of the transactions contemplated hereby.
2.03 SEC Filings. All filings made by Borrower with the Securities and
Exchange Commission were true and correct in all material respects when made
and did not contain any material misstatement of fact or fail to state any
material fact necessary to make the statements contained therein not misleading
in the light of the circumstances under which they were made.
ARTICLE III
CONDITIONS PRECEDENT
The obligation of the Lender to make any of the Loans under this
Agreement on any Loan Disbursement Date is expressly made subject to and
contingent upon the truthfulness in all material respects of Borrower's
representations and warranties contained in this Agreement. In addition, the
obligation of the Lender to make the initial Loan under this Agreement is
expressly made subject to and contingent upon (i) the execution and delivery by
Borrower to the Lender of the Warrant Certificate substantially in the form of
Exhibit B annexed hereto providing for a Warrant Price (as defined therein)
equal to 125% of the closing bid price per share of the Common Stock on the
business day immediately preceding the initial Loan Disbursement Date and (ii)
the execution and delivery of the Registration Rights Agreement between the
Lender and Borrower substantially in the form of Exhibit C annexed hereto.
ARTICLE IV
EVENTS OF DEFAULT AND REMEDIES
4.01 Events of Default. The entire unpaid principal amount of the
Note, together with all accrued interest thereon, shall, at the option of the
Lender exercised by written notice to Borrower at its principal executive
offices, forthwith become and be due and payable if any one or more of the
following events (herein called "Events of Default") shall have occurred (for
any reason whatsoever and whether such happening shall be voluntary or
involuntary or come about or be effected by operation of law or pursuant to or
in compliance with any judgment, decree or order of any court or any order,
rule or regulation of any administrative or governmental body), which event (in
the case of an event specified in clause (a), (b), (c) or (d) below) shall have
continued for a period of 90 days and which event shall be continuing at the
time of such notice, that is to say:
(a) if default shall be made in the due and punctual payment
of the principal of the Note when and as the same shall become due and
payable, whether at maturity, by acceleration or otherwise;
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(b) if default shall be made in the due and punctual payment
of any interest on the Note when and as such interest shall become due
and payable;
(c) if any representation or warranty of Borrower contained
in this Agreement shall have been breached in any material respect;
(d) if Borrower shall default beyond any period of grace
provided with respect thereto in the payment of principal of or
interest on any obligation in respect of borrowed money when due,
whether by acceleration or otherwise; or if Borrower shall default in
the performance or observance of any other agreement, term or
condition contained in such obligation or in any agreement under which
any such obligation is created, if the effect of any such default is
to cause or permit the holder or holders of such obligations (or a
trustee on behalf of such holder or holders) to cause such obligation
to become due prior to the date of its stated maturity, unless such
holder or holders or trustee shall have waived such default after its
occurrence or unless such holder or holders or trustee shall have
failed to give any notice required to create a default thereunder;
(e) if Borrower shall:
(i) admit in writing its inability to pay its debts
generally as they become due;
(ii) file a petition in bankruptcy or a petition to
take advantage of any insolvency act;
(iii) make an assignment for the benefit of
creditors;
(iv) consent to the appointment of a receiver of
itself or of the whole or any substantial part of its
property;
(v) on a petition in bankruptcy filed against it, be
adjudicated a bankrupt; or
(vi) file a petition or answer seeking
reorganization or arrangement under the Federal bankruptcy
laws or any other applicable law or statute of the United
States of America or any State, district or territory
thereof;
(f) if a court of competent jurisdiction shall enter an
order, judgment, or decree appointing, without the consent of
Borrower, a receiver of Borrower or of the whole or any substantial
part of its property, or
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approving a petition filed against it seeking reorganization or
arrangement of Borrower under the Federal bankruptcy laws or any other
applicable law or statute of the United States of America or any State,
district or territory thereof, and such order, judgment or decree shall
not be vacated or set aside or stayed within 90 days from the date of
entry thereof;
(g) if, under the provisions of any other law for the relief
or aid of debtors, any court of competent jurisdiction shall assume
custody or control of Borrower or of the whole or any substantial part
of its property and such custody or control shall not be terminated or
stayed within 90 days from the date of assumption of such custody or
control; or
(h) if final judgment for the payment of money in excess of
$50,000 shall be rendered by a court of record against Borrower and
Borrower shall not discharge the same or provide for its discharge in
accordance with its terms, or shall not procure a stay of execution
thereon within 90 days from the date of entry thereof and within the
period during which execution of such judgment shall have been stayed,
appeal therefrom, and cause the execution thereof to be stayed during
such appeal.
4.02 Remedies. In case any one or more of the Events of Default
specified in Section 4.01 hereof shall have occurred and be continuing, the
Lender may proceed to protect and enforce its rights either by suit in equity
and/or by action at law, whether for the specific performance of any covenant
or agreement contained in the Note or in this Agreement or in aid of the
exercise of any power granted in the Note or in this Agreement, or the Lender
may proceed to enforce the payment of all sums due upon the Note or to enforce
any other legal or equitable right of the Lender.
4.03 Remedies Cumulative. No remedy herein conferred upon the Lender
is intended to be exclusive of any other remedy and each and every such remedy
shall be cumulative and shall be in addition to every other remedy given
hereunder or under the Note or now or hereafter existing at law or in equity or
by statute or otherwise.
4.04 No Waiver. No course of dealing between Borrower and the Lender
or any delay on the part of the Lender in exercising any rights hereunder or
under the Note shall operate as a waiver of any rights of the Lender.
ARTICLE V
MISCELLANEOUS
5.01 Implied Waivers; Cumulative Remedies; Writing Required. No delay
or failure by the Lender in exercising any right, power or remedy hereunder
shall affect or operate as a waiver thereof, nor shall any single or partial
exercise thereof or any abandonment or discontinuance of steps to enforce such
a right, power or remedy
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preclude any further exercise thereof or of any other right, power or remedy.
The rights and remedies hereunder of the Lender are cumulative and not
exclusive of any rights or remedies which it would otherwise have. Any waiver,
permit, consent or approval of any kind or character on the part of the Lender
of any breach or default under this Agreement or any such waiver of any
provision or condition of this Agreement must be in writing and shall be
effective only to the extent in such writing specifically set forth.
5.02 Notices. All notices and other communications given to or made
upon any party hereto in connection with this Agreement shall, except as
otherwise expressly herein provided, be in writing (including telecopied,
telexed or telegraphic communication) and mailed, telecopied, telexed,
telegraphed or personally delivered to the respective parties, as follows:
Borrower: Capita Research Group, Inc.
000 Xxxxxxxx Xxxx, Xxxxx 000
Xxxx Xxxx, Xxxxxxxxxxxx 00000
Attention: President
Telecopy: (000) 000-0000
Lender: Xx. Xxx Xxxxx
0000 Xxxxxx Xxxxx Xxxxxxxxx, #0X
Xxxxxx, Xxxxx 00000
Telecopy: (000) 000-0000
or in accordance with any subsequent written direction from the recipient party
to the sending party. All such notices and other communications shall, except
as otherwise expressly herein provided, be effective upon delivery if delivered
by hand, when deposited in the mail, postage prepaid, in the case of mail, and
in the case of telecopy or telex, when received, or in the case of telegraph,
when delivered to the telegraph company, charges prepaid.
5.03 Survival. All representations, warranties, covenants and
agreements of Borrower contained herein or made in writing in connection
herewith shall survive the execution and delivery of this Agreement, the making
of the Loans hereunder and the issuance of the Note, and shall continue in full
force and effect so long as the Note is outstanding and until payment in full
of all of Borrower's obligations hereunder or thereunder.
5.04 Governing Law. This Agreement and the Note and the rights and
obligations of the parties hereto and thereto shall be deemed to be contracts
under the laws of the Commonwealth of Pennsylvania and for all purposes shall
be governed by and construed and enforced in accordance with the laws of such
Commonwealth applicable to agreements made and to be entirely performed in such
Commonwealth. Borrower and the Lender agree that any legal suit, action, or
proceeding arising out of this Agreement or the Note may be instituted in any
Pennsylvania state or Federal court sitting in the City of Philadelphia which
has subject matter jurisdiction and waive any objection which either
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of them may now or hereafter have to the laying of venue of any such suit,
action or proceeding in such jurisdiction. Borrower and the Lender further
agree that service of process shall be properly served if served personally or
by registered mail return receipt requested at the address set forth in Section
5.02.
5.05 Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law in any jurisdiction, such provision shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating any other provision of this Agreement.
5.06 Headings. Section and subsection headings in this Agreement are
included for convenience of reference only and shall not constitute a part of
this Agreement for any other purpose.
5.07 Counterparts. This Agreement may be executed in any number of
counterparts and by any party hereto on 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 instrument.
5.08 Binding Effect. This Agreement shall be binding upon and inure to
the benefit only of the parties hereto and their respective successors and
assigns and no party who is not a party hereto shall have any rights hereunder,
including any rights to require Borrower to borrow Loans.
5.09 Payment of Commission. The parties acknowledge that Borrower is
paying Quaker Capital Markets Group a commission equal to seven percent of the
principal amount of each Loan. The Lender shall have no liability for such
commission.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
BORROWER:
CAPITA RESEARCH GROUP, INC.
By
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Title:
LENDER:
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Xxx Xxxxx
