NON-REVOLVING CREDIT LINE LOAN AGREEMENT
BY THIS AGREEMENT made and entered into as of the 4th day of September,
2001, AZCO MINING INC., a Delaware corporation, whose address is 0000 Xxxxx Xx
Xxxxxx Xxxx, Xxxxxxxx, Xxxxxxx (hereinafter called "Borrower"), and Xxxx
Xxxxxxxxxx, whose address is 00000 Xxxxxxx Xxxxxx, Xxxxx Xxxx, Xxxxxxxxxx
(hereinafter called "Lender"), for and in consideration of the recitals and
mutual promises contained herein, confirm and agree as follows:
SECTION 1. GENERAL LOAN TERMS
1.1 Subject to the conditions herein set forth, Lender agrees to loan to or
for the benefit of Borrower, and Borrower agrees to draw upon and borrow, in the
manner and upon the terms and conditions set forth herein, amounts that shall
not exceed, in the aggregate, $200,000 (the "Loan"). Disbursements under the
Loan are referred to herein individually as an "Advance" and collectively as
"Advances."
1.2 The Loan shall be a non-revolving line of credit, against which
Advances may be made to Borrower, with no right of Borrower to readvance any
repaid sums. Lender shall have no obligation to make any Advance that would
cause the outstanding principal balance of the Loan to exceed the limitations of
Paragraph 1.1 above.
1.3 The Loan shall be evidenced by a Non-Revolving Credit Line Note in the
form attached hereto as Exhibit A (the "Note") of Borrower, executed and
delivered simultaneously with the execution of this Agreement, in the face
amount of $200,000, payable to Lender upon the terms and conditions contained
therein.
1.4 The Loan shall be unsecured.
1.5 In consideration of the Loan, Borrower shall provide to Lender a
warrant for the purchase of 250,000 shares of Borrower's common stock in the
form attached hereto as Exhibit B (the "Warrant"), and Borrower and Lender shall
enter into a Registration Rights Agreement in substantially the form attached
hereto as Exhibit C.
1.6 Borrower agrees that when Borrower makes any payment of principal on
either the $800,000 Non-Revolving Credit Line Loan of March 2001 borrowed from
Xxxxxxxx X. Xxxxx ("Xxxxx") or the $800,000 Non-Revolving Credit Line Loan
borrowed from Xxxxx Xxxxx ("Bleak"), Borrower will also immediately prepay to
Lender the same percentage of principal as the percentage of principal paid to
Xxxxx or Bleak. For example, if 50% of the outstanding principal balance owed to
Bleak or Xxxxx is paid, 50% of the outstanding balance of principal due Lender
will be paid at the same time.
SECTION 2. CONDITIONS PRECEDENT FOR CLOSING AND ADVANCES
The obligation of Lender to make each and every Advance is subject to the
following express conditions precedent, all of which shall be satisfied as of
the date of the initial Advance (the "Closing Date") and the date of each and
every Advance thereafter:
2.1 Borrower shall have executed and delivered to Lender this Agreement,
the Note, the Warrant and any other documents or items reasonably required by
Lender to effectuate the intent of those agreements (collectively, the
"Documents").
2.2 All representations and warranties by Borrower shall remain true and
correct and all agreements that Borrower is to have performed or complied with
by the date of the requested Advance shall have been performed or complied with.
2.3 No Event of Default exists, and no event has occurred and no condition
exists that, after notice or lapse of time, or both, would constitute an Event
of Default.
SECTION 3. REPRESENTATIONS AND WARRANTIES
3.1 Borrower represents and warrants to Lender as follows:
(a) The recitals and statements of intent appearing in this Agreement
are true and correct.
(b) Borrower is duly organized, validly existing and in good standing
under the laws of the State of Delaware, and is qualified to do business
and is in good standing in the State of Arizona.
(c) Borrower has full power and authority to own its properties and
assets and to carry on its business as now being conducted.
(d) Borrower is fully authorized and permitted to enter into the
Documents, to borrow the amounts contemplated herein upon the terms set
forth herein and to perform the terms of the Documents, none of which
conflicts with any provision of any law, rule or regulation applicable to
Borrower. The Documents are valid and binding legal obligations of
Borrower, and each is enforceable in accordance with its terms.
(e) The execution, delivery and performance by Borrower of the
Documents will not result in any breach of the terms, conditions or
provisions of, or constitute a default under, any agreement or instrument
under which Borrower is a party or is obligated.
(f) No actions, suits or proceedings are pending or threatened against
Borrower that might materially and adversely affect the repayment of the
Loan, the performance by Borrower under the Documents or the financial
condition, business or operations of Borrower.
(g) Each request by Borrower for an Advance shall constitute an
affirmation on the part of Borrower that the representations and warranties
contained herein are true and correct as of the time of such request and
that the conditions precedent for such Advance, as applicable, have been
fully satisfied.
3.2 All representations and warranties made herein shall survive the
execution of this Agreement, all Advances and the execution and delivery of all
other documents and instruments in connection with the Loan, so long as Lender
has any commitment to lend to Borrower hereunder and until the Loan and all
indebtedness hereunder have been paid in full and all of Borrower's obligations
hereunder have been fully discharged.
SECTION 4. WAIVER
4.1 Borrower waives presentment, demand, protest and notices of protest,
nonpayment, partial payment and all other notices and formalities except as
expressly called for in this Agreement. Borrower consents to and waives notice
of: (i) the granting of indulgences or extensions of time of payment, (ii) the
taking or releasing of security, and (iii) the addition or release of persons
who may be or become primarily or secondarily liable for the Loan or any other
indebtedness arising in connection with the Loan, or any part thereof, and all
in such manner and at such time as Lender may deem advisable.
4.2 No delay or omission by Lender in exercising any right, power or remedy
hereunder, and no indulgence given to Borrower, with respect to any term,
condition or provision set forth herein, shall impair any right, power or remedy
of Lender under this Agreement, or be construed as a waiver by Lender of, or
acquiescence in, any Event of Default. Likewise, no such delay, omission or
indulgence by Lender shall be construed as a variation or waiver of any of the
terms, conditions or provisions of this Agreement. Any actual waiver by Lender
of any Event of Default shall not be a waiver of any other prior or subsequent
Event of Default or of the same Event of Default after notice to Borrower
demanding strict performance.
SECTION 5. DEFAULT
5.1 The occurrence of any of the following events or conditions shall
constitute an "Event of Default" under this Agreement:
(a) Any failure to pay any principal or interest under the Note when
the same shall become due and payable and such failure continues for 10
days after notice thereof to Borrower, or the failure to pay any other sum
due under the Documents when the same shall become due and payable and such
failure continues for 10 days after notice thereof to Borrower. No notice,
however, shall be required after maturity of the Note.
(b) Any failure or neglect to perform or observe any of the covenants,
conditions or provisions of the Documents (other than a failure or neglect
described in one or more of the other provisions of this Paragraph 5.1) and
such failure or neglect either (i) cannot be remedied, (ii) can be remedied
within 30 days by prompt and diligent action, but it continues unremedied
for a period of 30 days after notice thereof to Borrower, or (iii) can be
remedied, although not within 30 days even by prompt and diligent action,
but such remedy is not commenced within 30 days after notice thereof to
Borrower or is not diligently prosecuted to completion within a total of 90
days from the date of such notice.
(c) Any warranty, representation or statement contained in any of the
Documents or made or furnished to Lender by or on behalf of Borrower, that
shall be or shall prove to have been false when made or furnished.
5.2 Upon the occurrence of any Event of Default and at any time while such
Event of Default is continuing, Lender may do one or more of the following:
(a) Cease making Advances and declare the entire Loan and all other
indebtedness of Borrower hereunder immediately due and payable, without
notice or demand;
(b) Proceed to protect and enforce its rights and remedies under this
Agreement, the Note and any other Documents; and
(c) Avail itself of any other relief to which Lender may be legally or
equitably entitled.
5.3 Borrower shall pay all costs and expenses, including without limitation
reasonable attorneys' fees, incurred by Lender in enforcing payment and
performance of the Loan and the other indebtedness and obligations of Borrower
hereunder or in exercising the rights and remedies of Lender hereunder.
SECTION 6. GENERAL
6.1 This Agreement is made for the sole protection and benefit of the
parties hereto and no other person or organization shall have any right of
action hereon.
6.2 This Agreement embodies the entire Agreement of the parties with regard
to the subject matter hereof. There are no representations, promises,
warranties, understandings or agreements expressed or implied, oral or
otherwise, in relation thereto, except those expressly referred to or set forth
herein. Borrower acknowledges that the execution and delivery of this Agreement
is its free and voluntary act and deed, and that said execution and delivery
have not been induced by, nor done in reliance upon, any representations,
promises, warranties, understandings or agreements made by Lender, its agents,
officers, employees or representatives.
6.3 No promise, representation, warranty or agreement made subsequent to
the execution and delivery of this Agreement by either party hereto, and no
revocation, partial or otherwise, or change, amendment or addition to, or
alteration or modification of, this Agreement shall be valid unless the same
shall be in writing signed by all parties hereto.
6.4 Lender and Borrower each have separate and independent rights and
obligations under this Agreement. Nothing contained herein shall be construed as
creating, forming or constituting any partnership, joint venture, merger or
consolidation of Borrower and Lender for any purpose or in any respect.
6.5 This Agreement shall survive the making of the Loan and shall continue
so long as any part of the Loan, or any extension or renewal thereof, remains
outstanding.
6.6 All rights, powers and remedies granted Lender herein, or otherwise
available to Lender, are for the sole benefit and protection of Lender, and
Lender may exercise any such right, power or remedy at its option and in its
sole and absolute discretion without any obligation to do so. In addition, if,
under the terms hereof, Lender is given two or more alternative courses of
action, Lender may elect any alternative or combination of alternatives, at its
option and in its sole and absolute discretion. All monies advanced by Lender
under the terms hereof and all amounts paid, suffered or incurred by Lender in
exercising any authority granted herein, including reasonable attorneys' fees,
shall bear interest at the highest rate payable on the Loan until paid, and
shall be due and payable by Borrower to Lender immediately without demand.
6.7 Borrower shall indemnify and hold Lender harmless from and against all
claims, costs, expenses, actions, suits, proceedings, losses, damages and
liabilities of any kind whatsoever, including but not limited to attorneys' fees
and expenses, arising out of any matter relating, directly or indirectly, to the
Loan, but excluding any claim or liability which arises from the negligence or
willful misconduct of Lender. This indemnity provision shall continue in full
force and effect and shall survive not only the making of the Loan and all
Advances but shall also survive the repayment of the Loan and the performance of
all of Borrower's other obligations hereunder.
6.8 Time is expressly made of the essence of this Agreement.
6.9 All notices required or permitted to be given hereunder shall be in
writing and may be given in person, by United States mail, by commercial
delivery service, or by electronic transmission with verified receipt. Any
notice directed to a party to this Agreement shall become effective upon the
earliest of the following: (i) actual receipt by that party; (ii) delivery to
the designated address of that party, addressed to that party; or (iii) if given
by certified or registered United States mail, forty-eight (48) hours after
deposit with the United States Postal Service, postage prepaid, addressed to
that party at its designated address. The designated address of a party shall be
the address of that party shown at the beginning of this Agreement or such other
address as that party, from time to time, may specify by notice to the other
parties.
6.10 This Agreement shall be governed by and construed according to the
substantive laws of the State of Arizona, without regard to conflict of law
principles. Exclusive venue for any action shall lie in the state and federal
courts located in Maricopa County, Arizona.
6.11 This Agreement shall be binding upon, and shall inure to the benefit
of, the parties hereto and their successors and assigns. Notwithstanding the
previous sentence, Borrower shall not have the right to assign any of its rights
or obligations hereunder without Lender's consent. Lender, at any time, shall
have the right to sell the Loan or participation interests in the Loan and in
any documents and instruments executed in connection herewith. Lender is
authorized to furnish to any purchaser or participant or prospective purchaser
or participant any information or document that Lender may have or obtain
regarding the Loan or Borrower.
6.12 The headings or captions of sections in this Agreement are for
reference only, do not define or limit the provisions of such sections, and
shall not affect the interpretation of this Agreement.
6.13 The parties shall execute and deliver such additional documents and do
such other acts so either of them may reasonably require to effectuate the
intent of this Agreement as Lender may reasonably require in connection with
this Loan.
IN WITNESS WHEREOF, these presents are executed as of the date indicated
above.
BORROWER
AZCO MINING INC., a Delaware corporation
By:
Its:
LENDER
Xxxx Xxxxxxxxxx
