Exhibit 1
CREDIT FACILITY AGREEMENT
THIS CREDIT FACILITY AGREEMENT (the "Agreement"), is made and entered
into as of October 30, 1998 by and between EPSOM INVESTMENTS SERVICES NV, a
Dutch Antilles corporation ("Epsom"), and RESOURCE FINANCE & INVESTMENT LTD., a
Bermuda corporation (the "Company").
RECITALS
WHEREAS, Epsom has agreed to provide the Company with a loan facility
of up to one hundred and fifty thousand United States Dollars (US$150,000) on
the terms and conditions set forth herein and in the exhibits hereto.
WHEREAS, the parties have agreed that the Maturity Date for all credit
extended by Epsom be 31st October 2000 but that no repayment will be made prior
to the 1st November 1999
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the receipt of
which is hereby acknowledged, Epsom and the Company hereby agree as follows:
1. Credit Facility; Use of Proceeds.
1.1 Subject to the terms and conditions of this Agreement, Epsom hereby agrees
to make advances of up to and one hundred and fifty thousand United States
Dollars (US$150,000) to the Company from time to time from the date hereof up to
and including October 31st 2000 (the "Maturity Date") unless sooner terminated
as provided herein. All Advances shall be made pursuant to and shall be
evidenced by a secured promissory note, dated the date hereof (the "Note"), in
the form of Exhibit A attached hereto, the terms of which are incorporated
herein by this reference.
1.2 The Company may, from time to time, prior to the Maturity Date, borrow,
partially or wholly repay all prior Advances, and reborrow, subject to the
limitations, terms and conditions set forth herein. The Advances shall include
any and all payments of any kind to third parties, and out of pocket fees, costs
and expenses incurred by Epsom at the request of the Company, such out of pocket
fees, costs and expenses to be agreed upon by the parties at the time of the
request. The Company shall provide to Epsom a request for an Advance at least
one week (and at least two weeks in the case of an Advance in excess of $30,000)
prior to the date of the Advance, and shall include in such request wire
transfer instructions and such other information as Epsom shall reasonably
request.
1.3 The Advances shall be used by the Company for working capital purposes.
2. Interest Rate and Fees. Interest and fees shall accrue and be payable on all
Advances as set forth in the Note. Further, the Company shall pay a facility fee
in the amount of US$3,000 upon the execution of this Agreement.
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3. Collateral; Other Agreements. As a material inducement to Epsom to make
Advances to the Company, the Company has, concurrently with the execution and
delivery of this Agreement, executed and delivered to Epsom a security agreement
(the "Security Agreement") in the form of Exhibit B attached hereto. However,
the Security Agreement shall terminate upon the failure of Epsom to make
Advances, to the extent permitted by the terms of this Agreement.
4. Representations and Warranties of the Company.
As a material inducement to Epsom to enter into and execute
this Agreement and to perform its covenants, agreements, duties and obligations
hereunder, and in consideration therefore, the Company hereby makes the
following representations and warranties, each of which (a) is material and is
being relied upon by Epsom as a material inducement to enter into this Agreement
and (b) is true at and as of the date hereof (as used in this Section 4 the term
"Company" shall be deemed to refer also to any wholly-owned subsidiary of the
Company).
4.1 Authority. The Company has full power and authority to enter into and
perform its obligations set forth in this Agreement and to borrow and repay
Advances under this Agreement.
4.2 Compliance with Laws, etc. The execution and delivery of this Agreement and
the drawing of advances hereunder do not and will not violate any requirement of
law or any contractual obligation of the Company.
4.3 Defaults. The Company is not currently in default of any contractual
obligation which would have a material adverse effect on the Company's business,
assets or financial condition.
4.4 Litigation. , There is no litigation, arbitration or other proceedings
taking place, pending or to the knowledge of the Company threatened against the
Company or any of its assets which questions the validity of this Agreement or
the right of the Company to enter into it or to consummate the transactions
contemplated hereby.
4.5 Disclosures. To the best of the Company's knowledge, the information
contained in the covenants, agreements, representations and warranties of the
Company in this Agreement, or in any of the schedules, lists, exhibits,
documents or instruments attached hereto or to be delivered by the Company, as
contemplated hereby (i) does not contain or will not contain any untrue
statement of a material fact, or (ii) does not omit or will not omit a material
fact necessary to make the statements contained herein or therein not
misleading.
4.6 Material Adverse Change. There has been no Event of Default (as defined in
Section 6.1) and no change or changes in the operations, management, business or
prospects of the Company which, either individually or in the aggregate, has had
or may have, a material adverse effect on the Company and its subsidiaries,
taken as a whole (a "Material Adverse Change").
5. Covenants of the Company. The Company covenants and agrees with Epsom that
during the term of this Agreement, unless otherwise consented to in writing by
Epsom, the Company and any subsidiary of the Company shall:
5.1 Operation in the Ordinary Course. Operate and conduct its business within
the normal course of business, and use reasonable efforts to maintain its
business and properties, maintain insurance in accordance with current policies,
and operate in accordance with all contractual obligations and requirements of
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law to protect and preserve the value of the Collateral, as defined in the
Security Agreement attached hereto as Exhibit B.
5.2 Minimize Advances. Limit its Advances pursuant to the Note to funds
necessary to meet cash flow requirements, to the extent that the business
strategy of the Company, as discussed with Epsom, would not be comprised.
5.3 Cooperation in Fundraising. Will execute and deliver such instruments,
documents and further assurances as Epsom from time to time may reasonably
request in connection with raising capital for the Company.
5.4 Accounting; Financial Statements.
(1) The Company shall, and shall cause each of its Subsidiaries to,
maintain a system of accounting established and administered in
accordance with generally accepted accounting principles
consistently applied, and shall set aside on its books, and cause
each of its subsidiaries to set aside on its books, all such
proper reserves as shall be required by generally accepted
accounting principles.
(2) The Company shall deliver to Epsom:
(1) Within 30 days after the end of each monthly accounting period in
each fiscal year of the Company, a consolidated balance sheet of
the Company and any subsidiaries as and at the end of each such
period, and consolidated statements of operations and
shareholders' equity (deficit) for each such period and for the
period from the beginning of the current fiscal year to the end
of such monthly period, and the corresponding periods of the
previous fiscal year.
(2) Within 90 days after the end of each fiscal year of the Company,
a consolidated balance sheet of the Company and its Subsidiaries
as at the end of such year and consolidated statements of
operations and shareholders' equity (deficit) and changes in
consolidated financial position of the Company for such year, all
in reasonable detail and accompanied by a report of the Company's
certified public accountants that such financial statements have
been audited in accordance with generally accepted auditing
standards, that it is the opinion of the Company's certified
public accountants that such financial statements present fairly,
in all material respects, the financial position, results of
operations and cash flows of the Company for the year for the
period, in conformity with generally accepted accounting
principles and in a consistent manner with prior periods, and
that the Company's certified public accountants believe that
their audit provides a reasonable basis for such opinion.
(3) Within ten (10) days after receipt by the Company, a copy of any
management letter delivered to the Company by its certified
public accountants.
(4) Promptly (but in any event within ten days) after the discovery
of any material adverse event or circumstance affecting the
Company or any of its subsidiaries (including, but not limited
to, the filing of any material litigation against the Company or
any subsidiary or the discovery that the Company or any
subsidiary is not, or with the passage of time will not be, in
material compliance with any provision of this Agreement, its
Articles of Incorporation, its Bylaws, or any other material
agreement of the Company), a notice specifying the nature and
period of existence thereof, and what actions the Company has
taken and/or proposes to take with respect thereto.
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5.5 Inspection Rights. The Company shall permit any authorized representative
designated by Epsom, at Epsom's expense, to visit and inspect any of the
properties of the Company or any of its subsidiaries, and to discuss its and
their affairs, finances and accounts with its and their officers or employees
all at such reasonable times and as often as may be reasonably requested;
provided that such rights shall be exercised in a manner so as not to materially
and adversely disrupt the ordinary course of business of the Company or any of
its subsidiaries.
5.6 Notification. The Company shall promptly (but in no event more than five (5)
days following the occurrence of any such event or matter) notify Epsom of (i)
the occurrence of any Material Adverse Change or any "Event of Default" (as
defined in Section 6.1), or any condition, event or act which with the giving of
notice or the passage of time (or both) would constitute an Event of Default;
(ii) any change in the name, organizational structure or control of the Company;
(iii) the occurrence of any uninsured or partially insured loss through fire,
theft, liability or property damage in excess of $100,000; or (iv) any suit or
other proceeding where the amount sought to be recovered by the complaining
party exceeds $100,000, or where one or more of the allegations against the
Company or any of its officers, directors or employees involves fraud or
potential criminal liability on the part of any such persons or entities.
5.7 Use of Proceeds. The Company shall use the Advances for working
capital purposes.
6. Events of Default; Remedies.
6.1 Event of Default. The occurrence of any one or more of the following shall
constitute an "Event of Default" under this Agreement: (a) the Company shall
fail to pay when due any principal, interest, fees or other amounts payable
under or shall fail to observe or perform any obligation, duty or other covenant
contained in this Agreement, or any representation or warranty of the Company
under any Loan Document or any exhibit hereto shall prove at any time to be
incorrect in any significant respect (provided that the Company shall be
provided a ten (10) day grace period not more often than twice during any 12
month period with respect to the failure to make any payment required
hereunder); (b) the Company shall be in default under the terms of any other
material agreement, contract or instrument to which it shall be a party, which
default shall have a material adverse impact on the Company; (c) the Company
shall dissolve and wind-up its business affairs or shall otherwise discontinue
or substantially wind down its business operations; shall become insolvent;
shall suffer, consent to or apply for the appointment of a receiver, trustee,
custodian or liquidator of or for itself or for any of its property; shall
generally fail to pay its debts as they become due or make a general assignment
for the benefit of creditors; shall file a voluntary petition in bankruptcy or
seek a reorganization in order to effect a plan or other arrangement with
creditors or seek any other relief under the insolvency or bankruptcy laws of
any country, as amended (the "Bankruptcy Law"), or any state law, whether now or
hereafter in effect; shall be adjudicated bankrupt; or shall have entered
against it any order for relief under the Bankruptcy Law or any such state law,
or shall have filed against it, an involuntary petition pursuant to the
Bankruptcy Law or any such state law, and in each such case the same shall not
be dismissed or discharged within sixty (60) days following the entry of such
order or filing; (d) any of the agreements attached as exhibits hereto shall be
in whole or in material part unenforceable; or (e) there shall exist or occur
any event or condition which impairs or is substantially likely to impair the
Company's ability to repay in a prompt
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and timely fashion all principal and accrued interest under this Agreement,
and/or the Company's ability to perform in a timely manner all duties and
obligations hereunder in strict accordance with the terms hereof.
6.2 Remedies. Upon the occurrence of an Event of Default, Epsom shall furnish
written notice to the Company, specifying the Event of Default. If the Company
shall not have cured such alleged Default within ten (10) days in the event of a
failure to make any payment due hereunder or within twenty (20) calendar days in
the event of any other Event of Default, then, at Epsom's option and
notwithstanding anything else in this Agreement to the contrary, (a) all unpaid
and outstanding principal and accrued interest under the Note shall become
immediately due and payable without notice, presentment, demand, protest or
notice of dishonor, all of which are expressly waived by the Company; (b) the
obligation of Epsom to make any further Advances shall immediately cease and
terminate; and (c) Epsom shall have all rights, powers and remedies available
under this Agreement or as otherwise provided by law, all of which rights,
powers and remedies may be exercised at any time, or from time to time, by Epsom
following such occurrence. All such rights, powers and remedies of Epsom are
cumulative and not exclusive and shall be in addition to any and all other
rights, powers and remedies provided by law or equity.
7. Conditions to the Obligations of Epsom to Make Advances. The obligation of
Epsom to make the first advance hereunder, and all subsequent advances
hereunder, shall be subject to the satisfaction prior to making each Advance of
each of the conditions set forth in this Section 8, unless waived by Epsom.
7.1 Accuracy of Representations and Warranties of the Company and Related
Certificate. The representations and warranties of the Company shall be true and
correct as of the date Advance is made (an "Advance Date") as though made on and
as of such date, the Company shall have performed all obligations and complied
with all covenants required to be performed or to be complied with by the
Company under this Agreement on or prior to each Advance Date.
7.2 No Pending or Threatened Legal Action. No order, injunction, decree or other
action or legal, administrative, arbitration or other proceeding or
investigation by any governmental organization shall be pending or threatened,
challenging or imposing a material limitation on the execution, delivery or
performance of this Agreement, the consummation of any of the transactions
contemplated hereby or the operation by the Company of its business as now
conducted or as presently proposed to be conducted.
7.3 Proceedings and Documents. All proceedings taken in connection with the
transactions contemplated hereby and all documents incident to such transactions
shall be reasonably satisfactory in form and substance to Epsom and its counsel.
7.4 Delivery of Budget. The Company's annual operating budget (the "Annual
Budget") shall have been approved by the Board of Directors of the Company, no
later than 60 days prior to the beginning of each fiscal year, which Annual
Budget shall contain such detail as Epsom shall reasonably request. Promptly
after approval by the Board of Directors, the Company shall deliver a copy of
the Annual Budget to Epsom.
7.5 No Material Adverse Change. There shall have been no Material Adverse
Change.
8. Termination.
8.1 Voluntary. This Agreement may be terminated at any time by either party
giving sixty (60) days notice to the other.
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8.2 Extension. This Agreement may be extended by further written agreement
of the parties.
8.3 Automatic. This Agreement will automatically terminate upon the occurrence
of an Event of Default as set forth in Section 6.2. Notwithstanding anything
else in this Agreement to the contrary, upon automatic termination hereunder,
all unpaid and outstanding principal and accrued interest under the Note shall
become immediately due and payable without notice and the obligation of Epsom to
make any further Advances shall immediately cease and terminate.
9. Indemnification.
9.1 Indemnification. The Company hereby indemnifies Epsom and/or its Affiliates,
(collectively the "Epsom Indemnified Parties" and each individually an "Epsom
Indemnified Party") against, and agrees to hold the Epsom Indemnified Parties
harmless from, and to defend the Epsom Indemnified Parties against, any and all
damages (as defined below) incurred or suffered by the Epsom Indemnified Parties
arising out of any misrepresentation, inaccuracy or omission in any
representation or warranty made by the Company under this Agreement. Promptly
after receipt by an Epsom Indemnified Party of notice of the commencement of any
action such party will, if a claim in respect thereof is to be made against an
Epsom Indemnified Party under this Section 9, notify the Company in writing of
the commencement thereof. In case any such action is brought against an Epsom
Indemnified Party and such Epsom Indemnified Party notifies the Company of the
commencement thereof, the Company will be entitled to participate therein.
9.2 Cumulative Remedy. The indemnity provided by this Section 10 is in addition
to any other rights or remedies which the Epsom Indemnified Parties or their
successors or assigns may have at law or in equity on account of, or with
respect to, any of the matters covered by this Section 10, or any other Section
based upon any other representations, warranties or covenants or agreements set
forth in this Agreement.
10. Definitions.
10.1 "Affiliate" means, with respect to any Person: (A) any Person who is an
"affiliate" of such Person as defined in Rule 12b-2 of the United States
Securities Exchange Commission under the United States Securities and Exchange
Act of 1934, as amended, (B) any Person who is a director, officer or partner or
holds a similar position with any entity in which such Person has a 10% or
greater equity or profit interest, and (C) any family member of a person
referred to in (A) or (B).
10.2 "Contractual Obligation" means, in respect of any Person, any agreement or
instrument, written or oral, to which such Person is a party or by which it or
any of its properties or assets are bound, including, without limitation, (i)
any charter, bylaw, trust instrument, indenture or evidence of indebtedness and
(ii) any lease, contract, guarantee, indemnity or other obligation or commitment
either by the Person or by any other person which relates to the property,
assets, obligations or commitments of the Person.
10.3 "Damages" as used herein shall mean any and all claims, actions, demands,
losses, costs, expenses, liabilities, damages and recoveries to the full amount
of the actual damage occasioned by each deficiency, misrepresentation,
inaccuracy, omission or breach in each case including interest, penalties or
other damage (including, without limitation, reasonable attorneys' fees and
other costs and expenses reasonably incurred in investigating or in attempting
to avoid the same or oppose the imposition thereof or of enforcing this
indemnity).
10.4 "Intangible" means any trademark, service xxxx, trade name (whether
registered or unregistered), copyright, license, patent or design patent, or
pending application therefore, trade secret, process,
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recipe or formula, and any right with respect to the foregoing and with
respect to the use of any brand name, distinctive emblem or devices of
merchandising and design.
10.5 "Person" means any individual, corporation, partnership, joint venture,
trust, estate, unincorporated organization, Government or Governmental body.
10.6 "Requirement of Law" in respect of any Person means (i) any law, rule,
regulation, restriction, order, writ, judgment, award, determination, injunction
or decree of any court or Government, or any decision or ruling of any
arbitrator,+ applicable to such Person or any of its properties or assets, and
(ii) the certificate of incorporation or other charter document or bylaws of
such Person.
10.7 "Taxes" means all Governmental taxes, assessments, fees, levies, imposts,
duties, license and registration fees, charges or withholdings of any nature
whatsoever arising in connection with or in respect of any assets, income,
profits, businesses or other properties of any nature whatsoever.
11. Notices. All notices, requests, demands, deliveries and other communications
hereunder shall be in writing and, except as otherwise specifically provided in
this Agreement, shall be deemed to have been duly given, upon receipt, if
delivered personally or via fax, or ten business days after deposit in the mail,
if mailed, first class with postage prepaid (confirmed by telex if the addressee
is in a country other than that of the sender) to the parties at the following
addresses:
If to Epsom:
EPSOM INVESTMENT SERVICES NV
16 Xxxxxxxxxx,
X.X. Xxx 000,
Xxxxxxx,
Xxxxxxxxxxx Antilles
Attn: R.A. Leopard, President
If to the Company:
RESOURCE FINANCE & INVESTMENT LTD.
Xxx Xxxxxx Xxxxx,
Xxxxxxxxxx Xxxxxx,
Xxxxxxxx,
Xxxxxxx
Attn : Xxxxxxx Xxxxxxxx, President
Any of the parties hereto may, from time to time, change its address
for receiving notices by giving written notice thereof in the manner outlined
above.
12. Counterparts. This 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 instrument.
13. Entire Agreement. This Agreement and the other agreements entered into in
connection herewith supersede all prior negotiations and agreements (whether
written or oral) and constitute the entire understanding among the parties
hereto.
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14. Successors. This Agreement shall inure to the benefit of and be binding upon
the parties named herein and their respective successors and assigns.
15. Headings. The section headings contained in this Agreement are for
convenience only and shall not control or affect the meaning or construction of
any of the provisions of this Agreement.
16. Governing Law. This Agreement shall be construed and enforced in accordance
with the laws of Bermuda applicable to Agreements to be entered into and
entirely performed within such jurisdiction.
17. Delay, Etc. No delay or omission to exercise any right, power or remedy
accruing to any party hereto shall impair any such right, power or remedy of
such party nor be construed to be a waiver of any such right, power or remedy
nor constitute any course of dealing or performance hereunder.
18. Costs and Attorneys' Fees. If any action, suit, arbitration proceeding or
other proceeding is instituted arising out of this Agreement, the prevailing
party shall recover all of such party's costs, including, without limitation,
the court costs and reasonable attorneys' fees incurred therein, including any
and all appeals or petitions therefrom.
19. Further Assurances, etc. From the date hereof, the parties will cooperate
with one another in order to effectuate the transactions contemplated hereby
and, in that regard, will execute and deliver such instruments, documents and
further assurances as the other party from time to time may reasonably request.
20. Waiver and Amendment. Any of the terms and provisions of this Agreement may
be waived at any time by the party which is entitled to the benefit thereof, but
only by a written instrument executed by such party. This Agreement may be
amended only by an agreement in writing executed by Epsom and the Company.
1.
21. Assignment. Neither this Agreement nor any right pursuing hereto or interest
herein shall be assignable by either of the parties hereto without the prior
written consent of the other party hereto.
IN WITNESS WHEREOF, the undersigned parties hereto have duly executed
this Agreement as of the date first above written.
EPSOM INVESTMENT SERVICES NV
By: /s/ R.A. Leopard
----------------
R.A.Leopard, President
RESOURCE FINANCE & INVESTMENT LTD.
By: /s/ Xxxxxxx Xxxxxxxx
---------------------
Xxxxxxx Xxxxxxxx, President
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EXHIBITS
Exhibit A Secured Convertible Promissory Note
Exhibit B Security Agreement
EXHIBIT A
SECURED CONVERTIBLE PROMISSORY NOTE
Up to US$150,000 October 30th, 1998
In consideration of such loans or advances ("Advances") as EPSOM
INVESTMENT SERVICES NV, a Dutch Antilles corporation ("Epsom"), from time to
time makes hereon to or for the benefit or at the request of RESOURCE FINANCE &
INVESTMENT LTD., a Bermuda corporation (the "Maker"), the Maker hereby promises
to pay on or before October 31st, 2000 (the "Maturity Date") to Epsom, or order
(the "Holder"), in lawful money of the United States of America or in restricted
shares of Maker's common stock (at the option of the Holder), all Advances, plus
interest thereon, at the rate hereinafter provided.
The unpaid principal balance hereon at any time shall not exceed one
hundred and fifty thousand United States Dollars ($150,000 ("Maximum Principal
Amount"), and shall be equal to the aggregate amount of all Advances then made
less the aggregate amount of all payments then made thereon.
Any Advances shall be presumed to be made to and for the benefit and at
the request of the undersigned when credited to an account of the undersigned
designated by the undersigned in writing to Epsom, or otherwise made in
accordance with the oral or written instructions of the undersigned.
NEITHER THIS NOTE NOR THE COMMON STOCK ISSUABLE ON EXERCISE OF THE
CONVERSION RIGHT HAVE BEEN OR WILL BE REGISTERED UNDER THE FEDERAL
SECURITIES LAWS OR THE SECURITIES LAWS OF ANY STATE, AND NEITHER THIS
NOTE NOR ANY COMMON STOCK ACQUIRED ON EXERCISE OF THE CONVERSION RIGHT
MAY BE TRANSFERRED, HYPOTHECATED, SOLD OR ASSIGNED, EXCEPT IN
COMPLIANCE WITH THE PROVISIONS OF THE SECURITIES ACT OF 1933, AND ANY
APPLICABLE STATE SECURITIES LAWS. NEITHER THIS NOTE NOR ANY COMMON
STOCK UNDERLYING THIS NOTE MAY BE SOLD, ASSIGNED, PLEDGED, HYPOTHECATED
OR OTHERWISE TRANSFERRED, EXCEPT AFTER NOTICE TO MAKER AND WITH MAKER'S
CONSENT, AND MAKER NEED NOT CONSENT TO ANY SUCH PROPOSED TRANSFER
UNLESS, IN THE OPINION OF LEGAL COUNSEL REASONABLY SATISFACTORY TO
MAKER, SUCH TRANSFER DOES NOT VIOLATE ANY APPLICABLE FEDERAL OR STATE
SECURITIES LAWS.
Interest on this note shall accrue at a per annum rate of eight percent
(8%) or the maximum interest rate allowed by law, whichever is lower. Accrued
interest shall be paid to Holder on the last day of each fiscal quarter during
which such interest has accrued. The outstanding principal amount of this Note,
together with
unpaid accrued interest thereon, shall be due and payable in full on or
before the Maturity Date. The Maker shall, to the extent permitted by the terms
of that certain credit facility agreement (the "Credit Facility Agreement")
between Maker and Holder, dated the date hereof, have the right to require Epsom
to make Advances up to the Maximum Principal Amount.
Payment of this Note is secured by a security interest in the
intellectual property of Maker pursuant to a security agreement (the "Security
Agreement") between Maker and Epsom dated the date hereof. The Security
Agreement shall terminate upon the failure of Epsom to make Advances up to the
Maximum Principal Amount, to the extent permitted by the terms of the Credit
Facility Agreement.
This Note shall, at the option of the Holder, become immediately due
and payable, without notice or demand, and Epsom's obligation to make advances
to the Maker shall, without notice or demand, terminate, upon an Event of
Default or as otherwise provided in the Credit Facility Agreement.
Should interest, late charges or other sums due hereon not be paid when
due, said past due sums and the unpaid principal balance of this Note shall bear
interest at the rate of eighteen percent (15%) per annum (the "Default Rate").
Should any payment required to be made under this Note not be paid within ten
days after the same becomes due and payable, it is recognized by the Maker that
the Holder will incur extra expenses for the handling of delinquent payments,
the exact amount of such extra expense being economically impracticable to
ascertain, but that a charge of ten percent (10%) of the amount of the
delinquent payment would be a fair approximation of the expense so incurred by
the Holder. Therefore, the Maker shall, in such event, without further notice
and without prejudice to any rights of the Holder, including, without
limitation, the right to collect any other amounts provided to be paid hereunder
or under any instrument securing this Note or to declare a default hereunder,
pay to the Holder to cover such expenses incurred in handling such delinquent
payments, a "late charge" of ten percent (10%) of the amount of such delinquent
payment.
All payments on this Note shall be applied first to the payment of late
charges and other sums due hereon or pursuant hereto (other than principal and
interest), and then to the payment of accrued unpaid interest, and the remainder
thereof shall be applied to the reduction of the principal balance of this Note.
The Maker may, from time to time, prepay this Note either in full or in
part, without penalty.
The Maker and all endorsers and guarantors hereof, if any, severally
waive diligence and the right to plead any statute of limitations, presentment,
grace, protest and demand, and also notice of protest, demand, dishonor and
nonpayment of this Note, and notice of intention to accelerate the maturity
date, and any and all moratorium, appraisement, exemption and homestead rights
now provided or which may hereafter be provided by any federal or state statute
both as to itself personally and as to all of its or their property, whether
real or personal, against the enforcement and collection of the obligations
evidenced by this Note and any and all extensions, renewals and modifications
hereof. The Maker, and every endorser or guarantor of this Note, regardless of
the time, order or place of signing, hereby assents to any extension or
postponement of the time of payment or any other indulgence, to any
substitution, exchange or release of collateral, and to the addition or release
of any other party or person primarily or secondarily liable with respect to the
obligations evidenced by this Note. No delay or omission on the part of the
Holder in exercising any right or remedy under this Note shall operate as a
waiver of such right or of any other right of such Holder, nor shall any delay,
omission or waiver on any one occasion be deemed to constitute the waiver of the
same or of any other right on any future occasion. Time is of the essence of
each and every provision herein.
Upon failure of the Maker to perform or to pay, in full, any obligation
of the Maker under this Note, or any instrument securing this Note, as and when
such performance or payment shall become due, then at the
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option of the Holder, upon demand but without any advance notice being
required, the principal balance of this Note together with all accrued interest
thereon, plus all other amounts payable at the time of such demand pursuant to
this Note, or any instrument securing this Note, shall become immediately due
and payable in full or as to any portion designated by the Holder. Failure to
exercise the foregoing option (or any other right or remedy provided herein in
any instrument securing this Note, or at law) upon any default of the Maker
shall not constitute waiver of the right to exercise the same or any other
option, right, or remedy at any subsequent time in respect of the same event or
any other event of default, and the Maker and each endorser and each guarantor
hereof hereby expressly waive the benefit of every statute or rule of law or
equity which would produce a result contrary to or in conflict with the
foregoing.
The acceptance by the Holder of any payment hereunder which is less
than payment in full of any amount due and payable by the time of such payment
shall not constitute a waiver of the right to exercise any option, right, or
remedy at that time or at any subsequent time, nor shall it nullify any prior
exercise of any such option, right, or remedy without the express written
consent of the Holder.
All amounts payable hereunder are payable in immediately available
funds. Any payment received by the Holder after 5:00 p.m., prevailing local time
at the place designated from time to time for payment, shall be considered for
all purposes (including the calculation of interest and late charges) as having
been made on the next following day which is not a Saturday, Sunday, or legal
holiday ("business day"); if the date for any payment hereunder falls on a day
which is not a business day, then, for all purposes of this Note, the same shall
be deemed to have fallen on the next following business day, and such extension
of time shall in such case be included in the computation of interest. The Maker
agrees to pay all costs of collection when incurred, including reasonable
attorneys' fees and costs. Interest hereon shall be calculated on the basis of
365-day year and shall be compounded quarterly.
The Holder may convert any and all amounts payable hereunder into
restricted shares of Maker's common stock as follows:
The Holder has the right, but not the obligation at any time prior to
October 31st, 2000 to convert the outstanding principal and accrued interest due
under this Note, in units of Ten Thousand Dollars ($10,000.00) or more, into
restricted shares of common stock of the Maker, par value $0.001 ("Common
Shares") at the conversion price set forth below, upon surrender of this Note to
Maker accompanied by a written notice of conversion in a form reasonably
acceptable to Maker and duly executed by the Holder or his or her duly
authorized attorney; provided however that, in case this Note shall be called
for redemption or principal and accrued interest shall otherwise be prepaid,
such right shall terminate at the close of business on the seventh day following
written notice to Holder of Maker's intent to redeem or otherwise prepay
principal. Upon such surrender for conversion, Maker shall issue Common Shares
to the Holder promptly upon surrender of the Note for conversion. In the event
Holder elects to convert a portion, but not all, of the outstanding principal
amount hereof into Common Shares of Maker, a new Note will be issued to Holder,
which Note shall evidence the amount of outstanding principal not converted.
Such conversion shall be deemed to have been made immediately prior to the close
of business on the date of such surrender of the Note and the Holder shall be
treated for all purposes as the record holder or holders of such Common Shares
as of such date. All Common Shares issuable upon conversion of this Note shall
be fully paid and non-assessable. No fractional shares or script representing
fractional shares will be issued upon any conversion, but an adjustment in cash
will be made in respect of any fraction of a Common Share which would otherwise
be issuable upon the surrender of this Note for conversion. Any accrued and
unpaid interest shall be paid to the date of conversion, or if not paid, shall
be included in calculating the number of Common Shares converted.
B-11
The Conversion Price at which Common Shares shall be issuable upon
conversion of this Note shall be equal to eighty percent (80%) of the trading
price per share of Maker's common stock, on NASDAQ or other nationally
recognized market where Maker's common stock is traded, on the date such Advance
(to be identified by Holder when converting) was made until all principal and
accrued interest amounts of such Advances have been converted or paid in full.
Conversion hereunder of principal and accrued interest amounts for additional
Advances shall be based on the trading price per share of Maker's common stock
on the date such additional Advances were made until all principal and accrued
interest amounts thereunder are converted or paid in full.
Maker shall at all times reserve and keep available out of its
authorized but unissued Common Shares, solely for the purpose of effecting the
conversion of this Note, the full number of whole Common Shares necessary for
conversion hereunder. Maker shall take at all times such corporate action as
shall be necessary in order that Maker may validly and legally issue fully paid
and nonassessable Common Shares upon the conversion of this Note in accordance
with the provisions hereof.
Each certificate representing all Common Shares issued to Holder upon
conversion hereunder shall be stamped or otherwise imprinted with the following
legend:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR
ANY STATE SECURITIES LAWS. THEY MAY NOT BE SOLD OR OFFERED FOR SALE IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER SAID
ACT AND ANY APPLICABLE STATE SECURITIES LAW OR AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED."
If Maker, prior to the Maturity Date, shall determine to register any
of its securities for its own account or for the account of others, other than a
registration relating solely to "employee benefit plans" (Form S-8), or a
registration relating solely to a Commission Rule 145 transaction (Form S-4), or
a registration on any registration form which does not permit secondary sales,
Maker will offer to the Holder the opportunity to register any amount of
registrable securities previously converted hereunder. Maker will give written
notice to the Holder of its intention to effect such a registration not later
than thirty (30) days prior to the anticipated date of filing with the SEC of a
registration statement with respect to such registration. Such notice shall
offer the Holder the opportunity to include in such registration statement such
registrable securities as the Holder may request (a "Piggyback Registration").
Subject to the provisions hereof, Maker shall include in such Piggyback
Registration all registrable securities with respect to which Maker has received
a written request from the Holder for inclusion therein within fifteen (15) days
after the receipt by the Holder of Maker's notice.
If a Piggyback Registration is being made with respect to an
underwritten primary registration and the managing underwriter or underwriters
advise Maker in writing that in their opinion the total number or dollar amount
of securities of any class requested to be included in such registration is
sufficiently large to adversely affect the success of such offering, Maker shall
include in such registration: (A) first, all securities Maker proposes to sell
to the public, the proceeds of which shall go to Maker, or up to the full number
of securities requested to be included therein by holders exercising demand
registration rights which in the opinion of such underwriter can be sold without
adversely affecting the offering, (B) second, up to the full number of Common
Shares requested pursuant to a request for Piggyback Registration in excess of
the number or dollar amount of securities to be sold under subparagraph (A),
which, in the opinion of such underwriter, can be sold without adversely
affecting the offering, pro rata among such persons requesting inclusion on the
basis of the aggregate number of shares of Common Stock requested to be
registered by such persons.
B-12
Payments on or notices of conversion of this Note, as well as any other
notices to the Holder, are to be mailed or delivered to the Holder at its
address set forth in the Credit Facility Agreement or to such other place as the
Holder may from time to time direct by written notice to the Maker. This Note
shall be construed according to the laws of Bermuda.
Neither Epsom nor any Holder of this Note, simply by virtue of this
Note, shall be considered a shareholder of Maker for any purpose, nor shall
anything in this Note be construed to confer on any Holder any rights of a
shareholder of Maker including, without limitation, any right to vote, give or
withhold consent to any corporate action, receive notice of meetings of
shareholders or receive dividends.
All agreements between the Maker and the Holder are expressly limited
so that in no contingency or event whatsoever, whether by reason of payment of
extension or loan or commitment fees, of advancement of proceeds, acceleration
of maturity of the unpaid principal balance hereof or otherwise, shall the
amount paid or agreed to be paid to the Holder for the use, forbearance or
detention of the principal amount hereof exceed the maximum legal rate
permissible under any law which a court of competent jurisdiction may deem
applicable hereto. If, from any circumstance whatsoever, fulfillment of any
provision of this Note or any instrument securing this Note, at the time
performance of such provision shall be due, shall involve transcending the
maximum legal rate of interest prescribed by law which a court of competent
jurisdiction may deem applicable hereto or thereto, then, ipso facto, the
obligation to be fulfilled shall be reduced to the limit of such maximum rate,
and if from any circumstance the Holder shall ever receive as interest an amount
which would exceed said maximum legal rate, such amount which would be excessive
interest shall be applied to the reduction of the unpaid principal balance due
hereunder and not to the payment of interest; to the extent that such excessive
amount exceeds the unpaid principal balance hereon, the Holder shall refund it
to the Maker. In determining whether excessive interest would be charged hereon,
to the extent permitted by applicable law all sums paid or agreed to be paid to
the Holder for the use, forbearance, or detention of the indebtedness evidenced
hereby outstanding from time to time shall be prorated, amortized, allocated and
spread from the date of disbursement of the proceeds of this Note until payment
in full of the unpaid principal sum so that the actual rate of interest on
account of such indebtedness is uniform throughout the term hereof.
The Maker and the Holder intend that all of the provisions hereof shall
be valid and enforceable as specifically set forth herein. If any provision
hereof is declared to be invalid or unenforceable, it is the intention of the
Maker and the Holder that the remainder of this document, or, if applicable, the
remainder of the invalid or unenforceable clause, sentence, or paragraph, shall
be valid and enforced to the fullest extent permitted.
The Maker agrees to pay on demand all costs of collection, including
reasonable attorneys' fees, incurred by the Holder in enforcing the obligations
of the Maker under this Note.
This Note may not be changed orally but only by an agreement in writing
signed by the party against whom such change is sought to be enforced.
IN WITNESS WHEREOF, the Maker has executed and delivered this Note as
of the date first above written.
RESOURCE FINANCE & INVESTMENT LTD.
By: /s/ Xxxxxxx Xxxxxxxx
---------------------------
Xxxxxxx Xxxxxxxx, President
B-13
EXHIBIT B
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (the "Agreement"), dated as of October 30th,
1998, is made by and between EPSOM INVESTMENT SERVICES NV, a Dutch Antilles
corporation ("Epsom"), and RESOURCE FINANCE & INVESTMENT LTD., a Bermuda
corporation ("Company").
WHEREAS, the Company and Epsom are, concurrently herewith,
entering into that certain credit facility agreement (the "Credit Facility
Agreement"), dated of even date herewith, pursuant to which Epsom has agreed to
make certain advances (the "Advances") to the Company.
WHEREAS, it is a condition of Epsom's obligations under the
Credit Facility Agreement that the Company enter into this Agreement.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the receipt of
which is hereby acknowledged, and as an inducement to Epsom to enter into the
Credit Facility Agreement, the Company hereby agrees as follows:
1. Definitions. Unless otherwise defined, or unless the context otherwise
requires, capitalized terms used in this Agreement shall have the same
meaning given such terms in the Credit Facility Agreement.
2. Grant of Security Interest. As security for the full and punctual
satisfaction, payment and performance of all of the obligations (the
"Obligations") of the Company pursuant to the Credit Facility
Agreement, the Secured Promissory Note issued thereunder ("Note") and
this Agreement, the Company does hereby pledge, mortgage, assign, set
over, convey, grant, transfer and deliver (collectively, "Transfer")
to Epsom a first priority continuing security interest and lien (the
"Security Interest") in and to all of the Company's shares in its
subsidiary companies, which Security Interest shall be subject and
subordinate only to the security interests provided for in Section 3
hereof.
3. Permitted Indebtedness. Notwithstanding Section 2 hereof, the Security
Interest shall be subordinate to any security interests (the
"Permitted Senior Indebtedness") to the extent that such security
interests are described on Schedule 3 hereto or Epsom consents in
writing to such subordination, which consent may be withheld in
Epsom's sole discretion.
4. Collateral. The "Collateral" shall cover and include all shares held
in its subsidiary companies as follows:
1. Oregon Resources Corporation, a wholly owned subsidiary
2. Cranberry Corporation of Oregon, a wholly owned subsidiary of
Oregon Resources Corporation
3. Amalgamated Mining Corporation of Venezuela, a wholly owned
subsidiary
4. Compania Minera Tierra Extrana C.A., a 70% owned subsidiary
5. Compania Minera Tierra Extrana C.A. , a 70 % owned subsidiary
5. Preservation and Perfection of Security Interests. Concurrently with the
execution of this Agreement, the Company has executed and delivered to Epsom a
lien which may be registered according to the laws of Bermuda (the "Lien") with
respect to the Security Interest. In addition, the Company shall, as required
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from time to time by Epsom, execute and deliver or endorse any and all
instruments, documents, conveyances, assignments, security agreements,
additional financing statements, continuation statements and other agreements
and writings which Epsom may request in order to create, perfect or continue the
Security Interest or which Epsom may otherwise reasonably request in order to
secure, protect or enforce the Security Interest or the rights of Epsom under
this Agreement (but any failure to request or assure that the Company execute,
deliver or endorse any such item shall not affect nor impair the validity,
sufficiency or enforceability of this Agreement or any security interests
granted herein, regardless of whether any such item was or was not executed,
delivered or endorsed in a similar context or on a prior occasion). A carbon,
photographic or other reproduction of this Agreement or of the Lien is
sufficient as a lien.
6. Representations and Warranties of the Company. The Company hereby
incorporates by reference those representations and warranties set
forth in the Credit Facility Agreement, and further represents and
warrants to Epsom:
6.1. The Company has full power, authority and legal right to Transfer
the Security Interest in the Collateral to Epsom.
6.2. Subject to the Permitted Senior Indebtedness, this Agreement is
fully sufficient to, and shall create and transfer to Epsom a
Security Interest in and to all of the Company's right, title and
interest in the Collateral free and clear of any and all adverse
liens, claims and encumbrances of any kind or nature, and the
Company has not Transferred, and shall not Transfer any security
interest in the Collateral to any other person, without the prior
written consent of Epsom.
6.3. Subject to the Permitted Senior Indebtedness, this Agreement
creates a valid and perfected first priority security interest in
the Collateral, securing the performance of the Obligations.
Except for the registration of the Lien delivered to Epsom
pursuant to Section 5 hereof, all filings and other actions
necessary to perfect and protect such security interest have been
made or taken.
6.4. No consent of any person (including, without limitation, stock
holders or creditors of the Company) is required for the
subjection by the Company of the Collateral to the terms of this
Agreement.
7. Covenants of the Company. The Company hereby reaffirms and
incorporates those covenants set forth in the Credit Facility
Agreement and further covenants and agrees:
7.1. To appear and defend any and all actions and proceedings
affecting the Collateral, or otherwise affecting the Security
Interest, and the Company shall obtain and furnish to Epsom from
time to time, upon demand, such releases and/or subordinations of
claims and liens which may be required to maintain the priority
of the Security Interest hereunder.
7.2. To permit Epsom, its representatives and its agents to inspect
the Collateral at any time, and to make copies of records
pertaining to the Collateral as may be reasonably requested by
Epsom from time-to-time in order to secure, protect or enforce
the Security Interest or the rights of Epsom under this
Agreement.
7.3. That all Collateral shall, for the entire term of this Agreement,
be free and clear of any liens, mortgages, pledges, or any other
encumbrances of any kind or nature whatsoever, except only for
the security interests created by this Agreement and the
Permitted Senior Indebtedness or as otherwise consented to in
writing by Epsom.
B-15
7.4. Not to sell, lease, Transfer or remove the Collateral, or any
part thereof, from its present location without first obtaining
the express written consent of Epsom, except in the ordinary
course of business.
7.5. With respect to that part of the Collateral which is tangible,
the Company will maintain such Collateral in good order and
repair and will not use any part of such Collateral in any manner
injurious or likely to be injurious or which will result in its
unreasonable deterioration or consumption or which will be in
violation of any laws or regulations or any policy of insurance.
With respect to Collateral which is not tangible, the Company
will take all steps reasonably necessary to preserve and protect
the value of such Collateral, and the Company will diligently
pursue and seek to preserve, enforce and collect any rights,
claims, causes of action and accounts receivable.
7.6. To promptly notify Epsom upon becoming aware of any attachment,
garnishment, execution or other legal process levied against any
or all of the Collateral and of any other information received by
the Company that may materially affect the value of the
Collateral or the rights and remedies of Epsom hereunder.
7.7. To maintain insurance on the Collateral against loss or damage by
fire, perils commonly covered under the extended coverage
endorsement, malicious mischief and sprinkler leakage.
8. Duty To Hold In Trust. Upon the occurrence of any Event of Default, as
defined in the Credit Facility Agreement, the Company shall, upon
receipt by it of any revenue, income or other sums (collectively, the
"Sums") subject to the Security Interest, whether payable pursuant to
the Credit Facility Agreement or otherwise, or of any check, draft,
note, trade acceptance or other instrument evidencing an obligation to
pay any such sum, hold the same in trust for Epsom and shall forthwith
endorse and transfer any such sums or instruments, or both, to Epsom
for application to the satisfaction of the Obligations, (except for
those Sums subject to the rights of the third parties pursuant to this
Agreement including Permitted Senior Indebtedness under Section 3
hereof).
9. Remedies Upon Default. Upon the occurrence of any Event of Default, as
defined in the Credit Facility Agreement, Epsom shall, subject to the
rights, if any, of parties under the Permitted Senior Indebtedness,
and in addition to all of its rights under the Credit Facility
Agreement, have all of the rights and remedies of a secured party
under any applicable laws, and, without limiting the generality of the
foregoing, Epsom may in its sole discretion:
9.1. Enter upon the premises where any of the Collateral may be
located, and take possession of the Collateral, and demand and
receive reconveyance of the Collateral from any person who has
possession thereof, and Epsom may take such measures as may be
necessary or proper for the care or protection of the value
thereof, including the right to remove, keep and/or store all or
any portion of the Collateral or put a custodian in charge
thereof; and/or
9.2. Require the Company to assemble the Collateral and make it and
all records relating to the Collateral available to Epsom at such
times and in such places as is reasonably convenient to the
Company and Epsom; and/or
9.3. With or without taking possession, sell or cause to be sold, at
any time, and from time to time, as Epsom may determine, any of
the Collateral in its entirety or in parcels, either at public or
private sale, at such price and on such terms as Epsom may deem
best, at which sale Epsom may bid
B-16
and purchase to the extent
permitted by law, as now or hereinafter in effect. The Company
agrees that notice to the Company of a public or private sale,
which notice is given not less than ten (10) business days prior
to such sale, shall constitute "reasonable notice." The Company
shall have no right of redemption subsequent to any such sale,
and hereby expressly waives any such right. Epsom shall apply the
proceeds of any such sale or sales first to the expenses incident
thereto, including reasonable attorneys' fees, and next to the
full and complete satisfaction of all of the Obligations. The
Company shall remain fully liable to Epsom for any deficiency
which may exist after any such sale or sales and the application
of the proceeds thereof in accordance herewith. Any purchaser at
any such sale or sales (including without limitation Epsom) shall
thereafter hold any of the Collateral so purchased absolutely
free from any claim or right of any nature whatsoever by any
other person or entity (including without limitation the Company)
except only the claims and rights of the secured parties under
the Permitted Senior Indebtedness; and/or
9.4. Institute any proceeding at law, in equity, or otherwise in order
to foreclose upon the Collateral or any part thereof. To the
extent permitted by law, any sale thereof shall be held in the
same manner, with the same effect and subject to the same terms
and conditions as specified in paragraph (c) of this Section 9.
Epsom may, in the exercise of its sole and absolute discretion,
from time to time, at any time and in any order, choose to
institute a proceeding for foreclosure on some portion of the
Collateral and/or a sale under paragraphs (c) or (d) on other
portions of the Collateral, without being deemed to have made an
election of remedies or to have waived any other rights or
remedies, and without in any other way limiting any remedies or
rights which it may otherwise have; and/or
9.5. In its name or in the name of the Company or otherwise, demand,
xxx for, collect or receive any money or property at any time
payable or receivable on account of or in exchange for or make
any compromise or settlement deemed desirable with respect to,
any of the Collateral, but shall be under no obligation to do so,
and Epsom may extend the time of payment, arrange for payment in
installments, or otherwise modify the terms of, or release, any
of the Collateral, without thereby incurring responsibility to,
or discharging or otherwise affecting any liability of, the
Company or in any other way limiting any remedies or rights which
Epsom may otherwise have; and/or
9.6. In the event Epsom takes possession of the Collateral pursuant to
the exercise of any right or remedy provided for hereunder or by
law, any insurance policy owned by the Company, together with any
unearned or prepaid premium thereon, shall, at the option of
Epsom, be assigned by the Company to, and become the sole
property of Epsom, provided that the amount of any such unearned
or prepaid premium is thereupon applied to the payment or
satisfaction of the Obligations.
10. Security Interest Absolute. All rights of Epsom and the security
interest hereunder, and all Obligations of the Company hereunder,
shall be absolute and unconditional, irrespective of: (a) Any lack of
validity or enforceability of this Agreement, the Credit Facility
Agreement and any agreement entered into in connection with the
foregoing, or any portion hereof or thereof; (b) any change in the
time, manner or place of payment or performance of, or in any other
term of, all or any of the Obligations, or any other amendment or
waiver of or any consent to any departure from the Credit Facility
Agreement; (c) any exchange, release or nonperfection of any of the
Collateral, or any release or amendment or waiver of or consent to
departure from any other collateral for, or any guaranty, or any other
security, for all or any of the Obligations; (d) any action by Epsom
to obtain, adjust, settle and cancel in its sole discretion any
insurance claims or matters made or arising in connection with the
Collateral; or (e) any other circumstance which might otherwise
constitute any legal or equitable defense available to the Company, or
a discharge of all or any part of the Security Interest granted
hereby. Until the Obligations shall have been paid and performed in
full, Epsom's rights shall continue even if the Obligations are barred
for any reason, including, without limitation, the running of the
B-17
statute of limitations or bankruptcy. The Company expressly waives
presentment, protest, notice of protest, demand, notice of nonpayment
and demand for performance. This Agreement shall create a continuing
security interest in the Collateral and shall remain in full force and
effect until the Obligations shall have been paid and performed in
full, and shall be binding upon the Company and its successors and
permitted transferees and assigns. In the event that at any time any
transfer of any Collateral or any payment received by Epsom hereunder
shall be deemed by final order of a court of competent jurisdiction to
have been a voidable preference or fraudulent conveyance under the
insolvency or bankruptcy laws of any country, as amended (the
"Bankruptcy Law"), or shall be deemed to be otherwise due to any party
other than Epsom, then, in any such event, the Company's obligations
hereunder shall survive cancellation of this Agreement, and shall not
be discharged or satisfied by any prior payment thereof and/or
cancellation of this Agreement, but shall remain a valid and binding
obligation enforceable in accordance with the terms and provisions
hereof. The Company waives all right to require Epsom to proceed
against any other person or to apply any Collateral which Epsom may
hold at any time, or to marshal assets, or to pursue any other remedy.
Epsom may, at its election, exercise any right or remedy it may have
against any security held by Epsom, including, without limitation, the
right to foreclose any such security by judicial or nonjudicial sale,
without affecting or impairing in any way the rights of Epsom
hereunder. The Company waives any defense arising by reason of the
application of the statute of limitations to any obligation secured
hereby. Notwithstanding the foregoing or anything else to the
contrary, this Agreement shall terminate upon the failure of Epsom to
make Advances, to the extent permitted by the terms of the Credit
Facility Agreement.
11. Epsom Appointed Attorney-in-Fact. Subject to the rights, if any, of
the Permitted Senior Indebtedness, the Company hereby irrevocably
makes, nominates, constitutes and appoints Epsom and each of its
Agents (with full power of substitution and resubstitution), as the
Company's true and lawful attorney-in-fact with full power to take all
actions and sign, execute, acknowledge, record and file, in the
Company's name and for Epsom's use and benefit, all documents that
shall be necessary to accomplish the following upon the occurrence of
any Event of Default:
00.0.Xx receive, open and dispose of all mail addressed to the
Company which relates to the Collateral, or to endorse and
collect any notes, checks, drafts, money orders or other
evidences of payment that may come into the possession of Epsom;
00.0.Xx enforce all rights of the Company under and pursuant to any
agreements or other contractual arrangements relating to the
Collateral, and to enter into such other agreements as may be
necessary to exploit the Collateral;
00.0.Xx execute and perform such other and further agreements,
documents and instruments of any nature whatsoever, including,
but not limited to the execution and registration of the Lien and
to do any and all other things as Epsom may deem necessary or
appropriate for the purpose of preserving, protecting or
maintaining the Collateral and the Security Interest granted to
Epsom; and
00.0.Xx do any and all other things necessary, advisable or
appropriate to carry out the intention and provisions of and
transactions contemplated by the Credit Facility Agreement.
12. Duties of Epsom.
12.1.The powers conferred on Epsom hereunder are solely to protect
its interests in the Collateral and shall not impose any duty
upon it to exercise any such powers. Except for the safe custody
of any Collateral in its actual possession and the accounting for
monies actually received by it hereunder with respect to which
B-18
Epsom shall act with reasonable care, Epsom shall have no duty as
to any Collateral or as to the taking of any steps necessary to
preserve its rights against prior parties or any other rights
pertaining to any Collateral. Epsom shall be deemed to have
exercised reasonable care in the custody and preservation of the
Collateral in its possession if the Collateral is accorded
treatment that is substantially equal to that treatment which
Epsom accords its own property in the ordinary course of its
business.
12.2.If the Company fails to pay, before delinquency, any taxes or other
governmental charges which may be levied against the Collateral or its
operation or use, or any assessments made against the Collateral, or fails
to make any payment or to take any action required herein or in the Credit
Facility Agreement, or to take any other action necessary to preserve the
priority and value of Epsom's rights under this Agreement, then Epsom may
(but shall not be obligated to) make such payments and take all such
actions as Epsom deems necessary to protect its security interest in or to
protect and preserve the value of the Collateral, and Epsom is hereby
authorized (without limiting the general nature of the authority
hereinabove conferred) to pay, purchase, contest or compromise any
encumbrances, charges or liens which in the judgment of Epsom appear to be
prior to or superior to, or of equal priority with, the Security Interest.
Any amount so paid shall be included in the Obligations secured hereby and
shall bear interest thereon at the maximum rate permitted by law from date
of payment until repaid, and shall be secured pursuant to the terms of this
Agreement by the Collateral and shall be repayable by the Company on
demand.
13. Expenses. In addition to expenses payable under the Credit Facility
Agreement, the Company agrees to pay all expenses incurred in the
registration of the Lien or any other financing statements,
continuation statements, partial releases and/or termination
statements related thereto or any expenses of any searches reasonably
required by Epsom. The Company shall pay all other claims and charges
which. in the reasonable opinion of Epsom might prejudice, imperil or
otherwise affect the Collateral or the Security Interest therein. All
expenses so incurred shall be immediately paid by the Company upon
demand by Epsom. The Company will upon demand pay to Epsom the amount
of any and all reasonable expenses, including the reasonable fees and
expenses of its counsel and of any experts and agents, which Epsom may
incur in connection with (i) the administration of this Agreement,
(ii) the custody or preservation of, or the sale of, collection from,
or other realization upon, any of the Collateral, (iii) the exercise
or enforcement of any of the rights of Epsom hereunder or under the
Credit Facility Agreement or this Agreement, or (iv) the failure by
the Company to perform or observe any of the provisions contained
herein or in the Credit Facility Agreement.
14. Miscellaneous.
14.1.Indemnity. The Company agrees to defend, protect, indemnify and hold
harmless Epsom and each and all of its respective officers, directors,
employees, attorneys, and Agents (collectively called the "Indemnitees")
from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, claims, costs, expenses and
disbursements of any kind or nature whatsoever (including, without
limitation, the reasonable fees and disbursements of counsel for such
Indemnitees in connection with any investigative, administrative or
judicial proceeding, whether or not such Indemnitees shall be designated a
party thereto), which may be imposed on, incurred by, or asserted against
such Indemnitees (whether direct, indirect or consequential and whether
based on any federal or state laws or other statutory regulations,
including, without limitation, securities and commercial laws and
B-19
regulations, common law or at equitable cause, or contract or otherwise) in
any manner relating to or arising out of this Agreement or the Obligations,
or any act, event or transaction related or attendant thereto, including,
without limitation, any and all costs and expenses incurred in the
enforcement of this Agreement (collectively, the "Indemnified Matters"). To
the extent that the undertaking to indemnify, pay and hold harmless set
forth in the preceding sentence may be unenforceable because it is
violative of any law or public policy, the Company shall contribute the
maximum portion which it is permitted to pay and satisfy under applicable
law, to the payment and satisfaction of all Indemnified Matters incurred by
the Indemnitees.
14.2. Remedies Cumulative. Except as otherwise expressly provided herein, no
remedy conferred by any of the specific provisions of this Agreement
is intended to be exclusive of any other remedy which is otherwise
available at law, in equity, by statute or otherwise, and except as
otherwise expressly provided for herein, each and every other remedy
shall be cumulative and shall be in addition to every other remedy
given hereunder or otherwise. The election of any one or more of such
remedies by any of the parties hereto shall not constitute a waiver by
such party of the right to pursue any other available remedies.
14.3. Notices. All notices, requests, demands, deliveries and other
communications hereunder shall be in writing and, except as otherwise
specifically provided in this Agreement, shall be deemed to have been
duly given, upon receipt, if delivered personally or via fax, or ten
(10) business days after deposit in the mail, if mailed, first class
with postage prepaid (confirmed by telex if the addressee is in a
country other than that of the sender) to the parties at the following
addresses:
If to Epsom, to:
EPSOM INVESTMENT SERVICES NV
16 Xxxxxxxxxx,
X.X. Xxx 000,
Xxxxxxx,
Xxxxxxxxxxx Antilles
Attn: R.A.Leopard, President
If to the Company:
RESOURCE FINANCE & INVESTMENT LTD.
Xxx Xxxxxx Xxxxx,
Xxxxxxxxxx Xxxxxx,
Xxxxxxxx,
Xxxxxxx
Attn Xxxxxxx Xxxxxxxx, President
14.4. Headings. The section headings contained in this Agreement are for
convenience only and shall not control or affect the meaning or
construction of any of the provisions of this Agreement.
14.5. Governing Law. This Agreement shall be construed and enforced in
accordance with the laws of Bermuda applicable to Agreements to be
entered into and entirely performed within such jurisdiction.
14.6. Amendments, Etc. Any of the terms and provisions of this Agreement may
be waived at any time by the party which is entitled to the benefit
thereof, but only by a written instrument executed by such party. This
Agreement may be amended only by an agreement in writing executed by
Epsom and the Company.
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14.7. Severability. Any provision hereof which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability
without invalidating the remaining provisions hereof or affecting the
validity or enforceability of such provision in any other
jurisdiction.
14.8. Delay, Etc. No delay or omission to exercise any right, power or
remedy accruing to any party hereto shall impair any such right, power
or remedy of such party nor be construed to be a waiver of any such
right, power or remedy nor constitute any course of dealing or
performance hereunder.
14.9. Costs and Attorneys' Fees. If any action, suit, arbitration proceeding
or other proceeding is instituted arising out of this Agreement, the
prevailing party shall recover all of such party's costs, including,
without limitation, the court costs and reasonable attorneys' fees
incurred therein, including any and all appeals or petitions
therefrom.
14.10. Counterparts. This 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 instrument.
14.11. Entire Agreement. This Agreement and the other agreements referred to
herein supersede all prior negotiations and agreements (whether
written or oral) and constitute the entire understanding among the
parties hereto.
IN WITNESS WHEREOF, the Company has caused this Agreement to be duly
executed and delivered by its duly authorized officers as of the date first
above written.
RESOURCE FINANCE & INVESTMENT LTD.
By: /s/ Xxxxxxx Xxxxxxxx
-------------------------------
Xxxxxxx Xxxxxxxx, President
Accepted and Agreed to this
_30th ___ day of __October_, 1998
EPSOM INVESTMENT SERVICES NV
By: /s/ R.A. Leopard
---------------------------
R.A.Leopard, President
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