LOAN AGREEMENT
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This Loan Agreement ("Loan Agreement") dated as of September 14, 2001
between SpaceLogix, Inc., a Delaware corporation having its principal place of
business at 000 Xxxxx Xxxxxx, Xxx Xxxx, XX 00000 (the "Lender") and Vizacom
Inc., a Delaware corporation having its principal place of business at 0000
Xxxxxxxx Xxxxxxxx Xxxxxxx, Xxxxxxx, Xxx Xxxx 00000 ("Borrower" and together with
Lender, the "Parties").
WITNESSETH
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WHEREAS, the Parties have executed a non-binding Letter of Intent (the
"LOI") which contemplates the merger of Lender into one of Borrower's
subsidiaries (the "Merger") pursuant to the terms of a merger agreement (the
"Merger Agreement") to be negotiated by the Parties;
WHEREAS, in contemplation of the Merger, the Borrower has requested that
Lender to provide a loan in the aggregate principal amount of up to $650,000 in
three separate installments (the "Loan," and each installment thereof, an
"Installment"); and
WHEREAS, Lender is willing to furnish such Loan upon the terms and
conditions contained herein.
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
and other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, it is hereby agreed as follows:
Section 1. AMOUNT AND TERMS OF LOAN
1.1 LOAN. Subject at all times to all of the terms and conditions of
this Loan Agreement, the Lender agrees to extend to the Borrower the Loan
in accordance with the provisions of Section 1.7 of this Loan Agreement. Such
Loan is to be evidenced by the promissory note (the "Note") delivered by
Borrower to Lender in the form set forth as Exhibit A attached hereto.
1.2 PRINCIPAL AND INTEREST REPAYMENTS. The Note shall bear interest at
the rate of 9% per annum and shall mature on demand upon the termination of
negotiations of the Merger provided in writing by either of the Parties
evidencing an irrevocable breakdown in negotiations, after which demand the
principal of, and interest on, the Note shall be payable at the rate of $40,000
per month until paid in full.
1.3 APPLICATION OF PAYMENTS. Payments by Borrower on the Note shall
be applied by Lender first to the payment of any accrued and unpaid
interest on the Note, and next to the payment of outstanding principal on the
Note.
1.4 PREPAYMENT. The Note may be prepaid in whole at any time or in
part from time to time, together with any accrued interest on the amount
prepaid to the date of prepayment without premium or penalty.
1.5 USE OF PROCEEDS. Approximately $450,000 of the Loan shall be used
for the working capital of Borrower's PWR Systems, Inc. subsidiary.
1.6 LOAN EXTENSION. Notwithstanding Section 1.5, Lender may post
cash collateral for one or more stand-by letters of credit for the benefit
of Borrower or one of Borrower's subsidiaries, including PWR Systems, Inc., in
lieu of funding all or part of the second and/or third Installment.
1.7 CLOSINGS: LOAN INSTALLMENTS.
(a) Payment of the first Installment in an amount equal to
$250,000 shall occur simultaneously with the execution and
delivery of this Loan Agreement (the "First Closing Date");
(b) Payment of the second Installment in an amount equal to
$200,000 shall occur simultaneously with the execution and
delivery to the Lender by the Borrower of a first draft of
the Merger Agreement between the Parties that reasonably
reflects the terms contained in the LOI (the "Second Closing
Date"); and
(c) Payment of the third Installment in an amount equal to
$200,000 shall occur simultaneously with the execution and
delivery of the Merger Agreement by the Parties (the "Third
Closing Date").
Section 2. REPRESENTATIONS AND WARRANTIES OF BORROWER
The Borrower hereby represents and warrants to Lender that:
2.1 CORPORATE EXISTENCE. The Borrower is validly existing in good
standing under the laws of the State of Delaware, and has the corporate
power to engage in the business now conducted by it.
2.2 AUTHORIZATION. The Borrower has the corporate power and authority
to execute, deliver, and perform (i) the Security Agreement dated the date
hereof between the Parties (the "Security Agreement"), (ii) this Loan Agreement
and (iii) the Note (together with the Loan Agreement and Security Agreement, the
"Loan Documents"), to carry out its obligations under the Loan Documents, and
has taken all necessary corporate action to authorize the execution and delivery
of the Loan Documents. The Loan Documents constitute the valid and binding
obligations of the Borrower enforceable in accordance with their respective
terms, subject to due authorization, execution and delivery by Lender, except as
such enforceability may be limited by bankruptcy, insolvency and other general
principles of equity. No consent of any other party and no consent, license,
approval or authorization of any governmental authority is required to be
obtained by Borrower in connection with the execution, delivery, and performance
of the Loan Documents.
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2.3 NO CONFLICTS. The execution and delivery by the Borrower of the
Loan Documents does not conflict with or result in the breach of its
Certificate of Incorporation or bylaws, any agreement, mortgage or similar
instrument under which the Borrower is bound, or any law, rule or regulation of
any governmental agency applicable to it.
2.4 COLLATERAL. All payments due and owing to Borrower under that
certain promissory note (the "Serif Note"), dated March 31, 2001, payable
by Serif Inc. ("Serif") to Borrower, in the original aggregate principal amount
of $987,500, have been timely made. The Serif Note does not grant Serif any
right of set-off. The amount outstanding under the Serif Note as of the date
hereof is approximately $836,000.
Section 3. CONDITIONS OF FUNDING
The obligation of Lender to make the Loan provided for in Section 1.1 shall
be subject to the performance, on or prior to the funding of the Loan, of each
of the following conditions:
3.1 REPRESENTATIONS AND WARRANTIES; NO DEFAULT. The representations
and warranties of the Borrower set forth in this Loan Agreement shall be
true and correct in all material respects as of the date of funding of any
Installment, and no Event of Default or any event which, with the passage of
time or the giving of notice or both, would constitute an Event of Default
hereunder shall have occurred and be continuing.
3.2 REGULATIONS. The making of the Loan and the other transactions
contemplated hereby, including but not limited to the execution, delivery and
performance of the Loan Documents, shall be in compliance with applicable laws
and government regulations imposed upon the Parties.
Section 4. EVENTS OF DEFAULT AND REMEDIES
4.1 EVENTS OF DEFAULT. An "Event of Default" shall exist if any one or
more of the following shall occur:
(a) failure by Borrower to pay the principal or interest of the Note or
any installment thereof when due, whether on the date fixed for payment or
by acceleration or otherwise; provided, however, that failure to pay any
principal or interest when due shall not be an Event of Default if such overdue
payment is paid within ten business days of such due date; or
(b) a final judgment for the payment of money in excess of $10,000
shall be rendered against Borrower, and such judgment shall remain
undischarged for a period of sixty days from the date of entry thereof unless
within such sixty day period such judgment shall be stayed, and appeal taken
therefrom and the execution thereon stayed during such appeal; or
(c) if Borrower shall default in respect of any evidence of
indebtedness or under any agreement under which any notes or other evidence
of indebtedness of Borrower are issued, if the effect thereof is to cause, or
permit the holder or holders thereof to cause, such obligation or obligations in
an
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amount in excess of $10,000 in the aggregate to become due prior to its or
their stated maturity or to permit the acceleration thereof; or
(d) if Borrower or any other authorized person or entity shall take
any action to effect a dissolution, liquidation or winding up of Borrower; or
(e) if Borrower shall make a general assignment for the benefit
of creditors or consent to the appointment of a receiver, liquidator, custodian,
or similar official of all or substantially all of its properties, or any
such official is placed in control of such properties, or Borrower shall
commence any action or proceeding or take advantage of or file under any federal
or state insolvency statute, including, without limitation, the United States
Bankruptcy Code or any political subdivision thereof, seeking to have an order
for relief entered with respect to it or seeking adjudication as a bankrupt or
insolvent, or seeking reorganization, arrangement, adjustment, liquidation,
dissolution, administration, a voluntary arrangement, or other relief with
respect to it or its debts; or
(f) there shall be commenced against Borrower any action or
proceeding of the nature referred to in paragraph (e) above or seeking
issuance of a warrant of attachment, execution, distraint, or similar process
against all or any substantial part of the property of Borrower, which results
in the entry of an order for relief which remains undismissed, undischarged or
unbonded for a period of sixty days; or
(g) Borrower enters into an agreement to acquire a business other than
SpaceLogix without the consent of SpaceLogix.
4.2 REMEDIES. Upon the occurrence of an Event of Default the Loan
shall be immediately due and payable upon demand.
Section 5. CLOSING; DELIVERY.
5.1 SECURITY AGREEMENT. The Borrower shall execute and deliver the
Security Agreement to Lender substantially in the form of Exhibit B
attached hereto; provided, however, that upon closing of the Merger, the
Security Agreement shall be released and the Loan shall be canceled.
5.2 SHARES.
(a) The Borrower shall issue to the Lender an aggregate of
400,000 shares of common stock, par value $.001 per share (the "Shares"), of
Borrower, as follows:
(i) on the First Closing Date, Borrower shall issue 200,000
Shares to Lender;
(ii) on the Second Closing Date, Borrower shall issue 100,000
Shares to Lender;
(iii) on the Third Closing Date, Borrower shall issue 100,000
Shares to Lender;
(b) In the event that the Merger does not occur as a result of
the action or
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inaction of the Borrower, including any failure to approve the Merger by
the stockholders of Borrower, Lender shall return to Borrower upon retirement of
the Note all Shares in excess of 200,000. In the event that the Merger does not
occur as a result of the action or inaction of a party other than the Borrower,
upon retirement of the Note, one hundred percent (100%) of all Shares issued to
Lender pursuant to this Section 5.2 (or the entirety of such lesser amount as
may have been issued as of such time pursuant to this Section 5.2) shall be
returned immediately to the Borrower for cancellation.
5.3 NOTE; COLLATERAL
(a) Borrower shall execute and deliver to the Lender the Note
on the First Closing Date, and be obligated to Lender with respect to the
first Installment. Upon each of the Second Closing Date and the Third Closing
Date, respectively, Borrower shall become obligated to Lender for the sum
advanced thereon by evidencing such indebtedness on the Note when such amounts
have been funded.
(b) Borrower shall deliver to the Lender a first priority
security interest in the Serif Note, as collateral (the "Collateral") for
the Loan upon the terms and conditions set forth in the Security Agreement,
subject to Section 5.1 herein. Borrower shall deliver the original Serif Note to
Xxxxx X. Xxxxxx, Esq., counsel to Lender, and which may be released by him to
Lender upon the occurrence of an Event of Default and which shall be returned to
Borrower upon the earlier of (a) consummation of the Merger or (b) satisfaction
in full of all amounts due under the Note.
5.4 UCC FINANCING STATEMENTS
(a) All filings of UCC financing statements and all other
filings and actions necessary to perfect and maintain the security
interests granted to Lender as first, valid and perfected liens in the
Collateral shall have been filed or taken, and confirmation thereof received, by
Lender.
Section 6. MISCELLANEOUS
6.1. NOTICES. All notices, requests or other communications to either
of the parties by the other shall be in writing and shall be deemed duly
given on the earlier of the date the same is delivered in person, by facsimile
transmission electronically confirmed or by a nationally recognized overnight
courier service, or when deposited in the United States mail, certified or
registered, postage prepaid, return receipt requested, as follows:
If to Lender:
SpaceLogix, Inc.
000 Xxxxx Xxxxxx, 00xx Xxx.
Xxx Xxxx, XX 00000
Attention: Xxxx Xxxxxxx
Fax: (000) 000-0000
With a copy to:
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Xxxxx X. Xxxxxx
Xxxxxx X'Xxxxxxx & Xxxxxx
000 Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000-0000
If to the Borrower :
Vizacom Inc.
0000 Xxxxxxxx Xxxxxxxx Xxxxxxx
Xxxxxxx, Xxx Xxxx 00000
Attention: President
With a copy to:
Xxxx X. Xxxxxxx, Esq.
Xxxxxxx & Xxxxxxxx, LLC
00 Xxxxxxx Xxxxxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxx Xxxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
Either party may designate by notice in writing to the other a new address
to which notices, requests and other communications hereunder shall be given.
6.2 CONSTRUCTION. This Loan Agreement and all instruments or
agreements delivered hereunder shall be governed by and construed in
accordance with the laws of the State of New York, excluding therefrom any
principles of conflicts of laws. If any of the provisions of this Loan Agreement
shall be or become illegal or unenforceable under any law, the other provisions
shall remain in full force and effect.
6.3 SURVIVAL OF AGREEMENTS. Except as herein provided, all agreements,
representations and warranties made herein and in any certificate delivered
pursuant hereto, shall survive the execution and delivery of this Loan Agreement
and the Note, and shall continue in full force and effect until the Loan has
been paid in full.
6.4 ENTIRE AGREEMENT. This Loan Agreement and the other Loan Documents
contain the entire agreement between the parties hereto relating to the subject
matter hereof, supersede any other agreements relating to the subject matter
hereof and may be amended, changed or terminated only by an instrument in
writing signed by the parties hereto.
6.5 WAIVERS. No failure to exercise and no delay in exercising, on the
part of Lender, any right, power or privilege under this Loan Agreement, or
any agreement or instrument delivered to Lender hereunder or thereunder, shall
operate as a waiver thereof.
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6.6 CAPTIONS. Captions used herein are inserted for convenience only
and shall not be given any legal effect.
6.7 COUNTERPARTS. This Loan Agreement may be executed in any number
of counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same agreement.
6.8 SUCCESSORS AND ASSIGNS. This Loan Agreement shall be binding upon
and inure to the benefit of the Borrower and Lender and their respective
successors and assigns except that the rights and obligations of the Borrower
hereunder may not be assigned or transferred in any respect. The provisions of
this Loan Agreement are intended to be for the benefit of any holder, from time
to time, of the Note and shall be enforceable by any such holder, whether or not
an expressed assignment to such holder of rights under this Loan Agreement has
been made by Lender or their successors or assigns.
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IN WITNESS WHEREOF, the parties hereto have caused this Loan Agreement
to be duly executed and delivered by their respective officers thereunto duly
authorized as of the day and year first above written.
Borrower:
VIZACOM INC.
By: /s/ Xxxxxxx XxXxxxxx
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Name: Xxxxxxx XxXxxxxx
Title: President
Lender:
SPACELOGIX, INC.
By: /s/ Xxxxx Xxxxx
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Name: Xxxxx Xxxxx
Title: President & CEO
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Xxxxx X. Xxxxxx, Esq., as to Section 5.3
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Exhibits
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Exhibit A Form of Note
Exhibit B Form of Security Agreement
