FUNDING AND LETTER OF CREDIT AGREEMENT
THIS FUNDING AND LETTER OF CREDIT
AGREEMENT (this “Agreement”), dated the 15th day of January, 2010, by and
between XXXXX X.
XXXXXXXXXX and XXXXXX X.
XXXXXXXXXX, husband and wife (together, the “Sellers”), SOUTHWEST SIGNAL, INC., a
Florida corporation (the “Corporation”), EGPI FIRECREEK, INC., a Nevada
corporation (the “Purchaser”), and ST. XXXXXX INVESTMENTS, LLC,
an Illinois limited liability company (the “Lender”).
RECITALS
WHEREAS, the Sellers and the
Purchaser, with REDQUARTZ
ATLANTA, LLC, a Georgia limited liability company (“Redquartz”), entered
into that certain Stock
Purchase Agreement dated December _____, 2009, under which the Purchaser
agreed to buy all of the outstanding shares of capital stock of the Corporation
(the “Stock”) from the Sellers (the “Stock Purchase Agreement”);
WHEREAS, the Corporation
currently owes $925,000.00 to The Bank of Tampa (the
“Bank”) pursuant to a line of credit debt in the principal amount of $925,000.00
provided by the Bank to the Corporation (the “Line of Credit
Debt”);
WHEREAS, Section 1.3.1 of the
Stock Purchase Agreement provides that (1) the Purchaser shall pay the Sellers a
deposit in the amount of ($925,000.00) (the “Deposit”), which Deposit is
refundable under certain circumstances as set forth in the Stock Purchase
Agreement, to be applied against the purchase price of the Stock, (2) the
Sellers shall contribute the entire amount of the Deposit to the Corporation
(the “Contribution”), and (3) the Corporation shall pay the entire amount of the
Contribution to the Bank in payment against the Line of Credit
Debt;
WHEREAS, Section 1.3.2 of the
Stock Purchase Agreement provides that the Sellers’ obligation to repay the
Deposit to the Purchaser under the circumstances described in the Stock Purchase
Agreement shall be secured by an irrevocable letter of credit (the “Letter of
Credit”) in the amount of $1,000,000.00 issued by the Bank in favor of the
Purchaser or other third party agreed upon by the Sellers and the Purchaser, and
the Sellers and the Purchaser have agreed that the Letter of Credit shall be
issued for the benefit of the Lender, as described in this
Agreement;
WHEREAS, the Purchaser is
borrowing $925,000.00 (the “Loan Proceeds”) to fund the Deposit from the Lender
pursuant to the terms of that certain Note Purchase Agreement by and between the
Purchaser and the Lender dated January 15, 2010 and such loan shall be evidenced
by that certain Secured Promissory Note in the principal amount of $1,000,000.00
dated January 15, 2010 payable from the Purchaser to the Lender (the “Secured
Note”);
WHEREAS, the Bank has issued
the Corporation a commitment letter, attached hereto as Exhibit
A and dated January 11, 2010, under which the Bank has agreed to issue
the Letter of Credit, in the form of Exhibit
B hereto, for the benefit of the Lender upon the full payment and
satisfaction of the Line of Credit Debt; and
[SIGNATURE
PAGE TO FUNDING AND LETTER OF CREDIT AGREEMENT
WHEREAS, the parties desire to
enter into this Agreement in order to document the transfer of funds
contemplated in the above-described transactions.
AGREEMENT
NOW, THEREFORE, for good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
1. Recitals. All of
the information, facts and representations in the above Recitals, which are
contractual in nature and not mere recitals, are in all respects true and
accurate, and are incorporated by reference herein.
2. Transfer of Funds by the
Lender. The Lender agrees that it shall transfer $925,000.00
into the trust account of Xxxxx & Xxxxxxx LLP (“Xxxxx & Lardner”), for
the benefit of the Sellers and the Corporation, and the parties agree that such
funds shall be deemed the payment of the following:
(a) First,
it shall be treated as if the Lender transferred $925,000.00 to the Purchaser
pursuant to the terms of the Note Purchase Agreement between the Lender and the
Purchaser in that amount evidenced by the Secured Note; and
(b) Then,
notwithstanding the transfer amount is $925,000, it shall be treated as if the
Purchaser transferred $1,000,000.00 to the Sellers to fund the Deposit described
in Section 1.3.1 of the Stock Purchase Agreement.
3. Transfer of Funds to
Bank. Upon the instructions of the Lender (to be provided in
the TRUST ACCOUNT INSTRUCTIONS attached hereto as Exhibit
C) and the Sellers (which instruction by the Sellers is hereby
irrevocably provided), Xxxxx & Xxxxxxx shall disburse the $925,000.00 on
behalf of the Sellers to the Bank, with a direction that all such funds be used
to satisfy in full the Line of Credit Debt owed by the Corporation to the
Bank. The parties agree that this shall be treated as the
Contribution from the Sellers to the Corporation, followed by the immediate
payment of $925,000.00 from the Corporation to the Bank in payment of the Line
of Credit Debt, all as described in Section 1.3.1 of the Stock Purchase
Agreement. The undersigned all expressly agree and covenant as
follows: (i) the Loan Proceeds are at all times while deposited in the Trust
Account the sole property of the Lender and no other party and are not subject
to claims, actions or demands of any kind by any other party; (ii) the
instructions to release the Loan Proceeds to the Bank shall be provided by the
Lender only if and when all closing conditions have been satisfied as determined
by the Lender in its sole and absolute discretion; (iii) no party may or will
make any objection to Lender’s instructions to Xxxxx & Lardner pertaining to
the Loan Proceeds or take any action to prevent, hinder or delay the prompt
return of the Loan Proceeds to the Lender if the Lender’s instructions so
require; (iv) any such actions would cause damages the Lender which Lender may
pursue with all available legal and equitable remedies; and (v) any
recourse against Lender for breach of contract, failure to fund, or any other
cause of action whatsoever, if applicable, will only be pursued subsequent to
the return of the Loan Proceeds to the Lender.
2
4. Transfer of Letter of
Credit. The Sellers agree that, immediately upon the transfer
of the $925,000 to the Bank per Section 3 above, the Sellers shall, at the
direction of the Purchaser (which direction by the Purchaser is hereby
irrevocably provided), cause the Letter of Credit to be issued and transmitted
to the Lender. The Lender is hereby authorized to send to the Bank,
on behalf of the Sellers and the Purchasers, the IRREVOCABLE INSTRUCTIONS FOR
LETTER OF CREDIT attached hereto as Exhibit
D. The parties agree that the transfer of the Letter of Credit
shall be deemed to be both:
(a) A
transfer of the Letter of Credit by the Sellers for the benefit of the Purchaser
as security for the repayment of the Deposit, as described in Section 1.3.2 of
the Stock Purchase Agreement; and
(b) A
transfer of the Letter of Credit on behalf of the Purchaser to the Lender as
security for the Secured Note.
5. Draw on Letter of
Credit. The Sellers acknowledge and agree as follows: (i) the
Letter of Credit is provided as collateral for that certain Secured Promissory
Note issued by the Purchaser to Lender and acknowledged by the Sellers; (ii) the
Loan Proceeds provide a material benefit to the Sellers, (iii) the Lender may
draw on the Letter of Credit, up to the full amount thereof, if an Event of
Default occurs under the Secured Promissory Note; and (iv) the IRREVOCABLE
INSTRUCTIONS FOR LETTER OF CREDIT is an irrevocable document which may not be
revoked by the Sellers subsequent to the signing and delivery of this
Agreement.
6. Counterparts. This
Agreement may be executed in any number of separate counterparts, each of which
shall collectively and separately constitute a single Agreement.
7. Governing Law. This
Agreement and the rights and obligations of the parties hereunder shall be
construed in accordance with and governed by the laws of the State of Florida
without regard to the principles of conflict of laws of Florida.
[SIGNATURE PAGE TO
FOLLOW]
3
IN WITNESS WHEREOF, the
parties have executed this Agreement on the date first above
written.
|
SELLERS:
|
||||
|
XXXXX
X. XXXXXXXXXX
|
||||
|
XXXXXX
X. XXXXXXXXXX
|
||||
|
CORPORATION:
|
||||
|
SOUTHWEST
SIGNAL,
INC.,
|
||||
|
a
Florida subchapter-S corporation
|
||||
|
By:
|
||||
|
Xxxxx
X. Xxxxxxxxxx,
|
||||
|
President
|
||||
|
By:
|
||||
|
Xxxxxx
X. Xxxxxxxxxx,
|
||||
|
Vice
President
|
||||
|
PURCHASER:
|
||||
|
|
||||
|
a
Nevada corporation
|
||||
|
By:
|
|
|||
|
Name:
|
Xxxxxx
X Xxxxxxxxx
|
|||
|
Title:
|
CEO
|
|||
|
LENDER:
|
||||
|
ST.
XXXXXX INVESTMENTS,
LLC,
|
||||
|
an
Illinois limited liability company
|
||||
|
|
||||
|
By:
|
||||
|
Name:
|
||||
|
Title:
|
||||
|
ACKNOWLEDGED:
|
||||
|
REQUARTZ
ATLANTA, LLC
|
||||
|
THE
BANK OF TAMPA
|
||||
|
By:
|
|
|||
|
By:
|
|
Name:
|
|
|
|
Its:
|
|
Its:
|
|
|
SIGNATURE
PAGE TO FUNDING AND LETTER OF CREDIT AGREEMENT
EXHIBIT
A
COMMITMENT
LETTER
2
EXHIBIT
B
FORM
OF LETTER OF CREDIT
3
EXHIBIT
C
TRUST
ACCOUNT INSTRUCTIONS
4
EXHIBIT
D
IRREVOCABLE
INSTRUCTIONS FOR LETTER OF CREDIT
5
