LOAN AGREEMENT HEALTHSPORT, INC.
Exhibit 10.2
This Loan Agreement (the “Agreement”) dated March 8, 2011 is made and entered into by and
between HealthSport, Inc., a Delaware corporation (the “Company”) and XXXXXX X. XXXXXX and XXXXXX
X. XXXXXX, as Trustees of the XXXXXX FAMILY TRUST, u/t/a dated January 18, 2008, if and as amended,
XXXXXX X. XXXXXX and XXXXXX X. XXXXXX, as Settlors, and all successor trustees, individuals
residing in the State of Arizona, or his registered assigns, (the “Lender”).
RECITALS
A. Pursuant to that promissory note dated January 6, 2011, Lender advanced the sum of One
Hundred and Eighty Thousand and No/100 dollars ($180,000.00) to Corporation (the “January Note”).
As of the date of this Agreement, the outstanding balance of the January Note is Two Hundred
Thousand and No/100 Dollars ($200,000.00).
B. The January Note matured in accordance with its terms. The Company and Lender now desire
to restructure the terms of the January Note and provide for the advance of additional funds to the
Company by Lender.
C. The Company and Lender desire to memorialize their understanding with respect to the
January Note and the new funds to be advanced by Lender.
AGREEMENTS
NOW, THEREFORE, in consideration of the mutual covenants and promises herein contained, and
intending to be legally bound, the Lender and the Company agree as follows:
Section 1. Loan. The Lender hereby agrees to lend to the Company, and the Company
hereby agrees to borrow from Lender the sum of Six Hundred Thousand and No/100 Dollars
($600,000.00) representing the advance of Four Hundred Thousand and No/100 Dollars ($400,000.00) in
additional funds plus the balance due on the January Note (the “Loan”). The Loan is to be
evidenced by, among other things, that secured, convertible promissory note in the principal amount
of Six Hundred Thousand and No/100 Dollars ($600,000.00) bearing interest at the rate of twelve
percent (12%) per annum, convertible into shares of the Company’s common stock, $0.0001 par value
per share (the “Common Stock”), in the form attached hereto as Exhibit A (the “Note”). The Common
Stock issued pursuant to any conversion of the Note and the warrants issued to the Lender pursuant
to the January Note (the “Warrants”) and the Common Stock underlying the Warrants shall be
collectively referred to herein as the “Securities.” The Lender and the Company are executing and
delivering this Agreement and the Securities in accordance with and in reliance upon one or more of
the exemptions from securities registration afforded by United States Securities Act of 1933, as
amended (the “Securities Act”), and by the rules and regulations promulgated thereunder, including
without limitation Securities Act Section 4(2) , Securities Act Section 4(6) and/or Regulation D,
and upon such other exemptions from such registration requirements as may be available under
applicable law.
Section 2. Security Agreement: Subordination. Simultaneously with the execution and
delivery of this Agreement and the Note, Company shall execute and deliver to Lender a Security
Agreement in the form attached hereto as Exhibit B (the “Security Agreement”). Pursuant to the
Security Agreement, the Company grants and conveys to Lender a security interest in and to all of
the Company’s accounts, chattel paper, contract rights, commissions, notes, securities and other
forms of receivables, general intangibles
and pending patents and all other assets of any kind of the
Company, wherever located and whether now or hereafter existing and whether now owned or hereafter
acquired and the rents, profits, proceeds and issues therefrom. The Company hereby authorizes
Lender to file and/or record, as deemed necessary by Lender in Lender’s sole and absolute
discretion, a financing statement with the appropriate filing authorities. The Note shall be
subordinate only to the Senior Debt (as defined in Section 7(g)).
Section 3. Cancellation of January Note. Upon full execution and delivery of this
Agreement, all other documents required to be executed by the Company, and the receipt by Lender of
the original executed Note, the January Note shall be deemed paid in full. Lender shall
acknowledge such payment in writing, if requested by Company. Provided, however,
that the Warrants granted to Lender pursuant to the terms of the January Note shall survive the
cancellation and payment in full of the January Note, and are hereby ratified and reaffirmed, and
remain in full force and effect pursuant to their terms notwithstanding the satisfaction of the
January Note.
Section 4. Closing. The closing of the transactions contemplated by this Agreement
and the Note shall take place upon satisfaction or waiver of each of the conditions to closing
identified in Section 8 herein, including without limitation the funding of the Loan by Lender and
the receipt by Lender of the original Note, fully executed by the Company available funds (the
“Closing”). The date of the Closing shall be referred to herein as the “Closing Date.”
Section 5. Reservation of Warrants and Conversion Shares. For so long as the Note
and the Warrants remain outstanding, the Company shall take all action necessary to at all times
have authorized and reserved for the purposes of issuance, 100% of the aggregate number of shares
of Common Stock as would be required to be issued by the Company upon exercise by the Lender of its
rights under the Warrants and of conversion according to the terms of the January Note, the Note
and this Agreement.
Section 6. Lender Representations. The Lender hereby represents and warrants to the
Company, effective as of the date of this Agreement and at Closing, as follows:
| a) | The Lender is an or entity duly organized and validly existing under the laws
of the state of its formation and has the power and authority to own and operate the
properties and assets now owned and operated by it. |
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| b) | The execution and delivery of this Agreement and the Note and consummation of
the transactions contemplated thereby has been duly authorized by all necessary action
of the Lender and does not conflict with the terms of the trust, organization or
operating agreement or with any other material agreements of the Lender. |
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| c) | The Lender is relying solely on the information filed by the Company with the
United States Securities and Exchange Commission (the “SEC”) or contained in this
Agreement, which the Lender acknowledges it has received, read and understood the terms
contained herein and is not relying upon any oral representations in making the
decision to acquire the Securities. |
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| d) | The Lender has carefully reviewed and understands the risks of, and other
consideration relating to, the acquisition of the Securities, including without
limitation the risks set forth in the “Risk Factors” section of the Company’s Annual
Report on Form 10-K filed with the SEC. |
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| e) | The Lender is an accredited investor under applicable law, is familiar with the
risks inherent in speculative investments such as in the Company, and has such
knowledge and experience in financial business matters that it is capable of evaluating
the merits and risks of the investment in the Securities. |
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| f) | The Lender is purchasing the Securities without being furnished any offering
literature or prospectus. |
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| g) | The Lender has been afforded the opportunity to ask questions of, and receive
answers from, the Company’s management and board of directors about the business and
affairs of the Company and concerning the terms and conditions of the offering of the
Securities, and to obtain any additional information, to the extent that the Company
possessed such information or could acquire it without unreasonable effort or expense,
necessary to verify the accuracy of the information otherwise obtained by or furnished
to the Lender in connection with the offering of the Securities. The Lender agrees that
the Company has furnished to the Lender all information which the Lender considered
necessary to form a decision concerning the purchase of the Securities, and no valid
request to the Company by the Lender for information of any kind about the Company has
been refused or denied by the Company or remains unfulfilled as of the date hereof. |
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| h) | The Lender recognizes that the Securities have not been registered under the
Securities Act, nor under the securities laws of any state or foreign country and,
therefore, cannot be resold unless resale of the Securities is registered under the
Securities Act or unless an exemption from registration is available; no public agency
has passed upon the accuracy or adequacy of the information contained in herein or the
fairness of the terms of the offering; the Lender may not sell the Securities without
registering them under the Securities Act and any applicable state securities laws
unless exemptions from such registration requirements are available with respect to any
such sale. |
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| i) | The Securities being acquired by Lender are being acquired for the Lender’s own
account and for the purpose of investment and not with a view to, or in connection
with, the resale, transfer or other distribution thereof in violation of the Securities
Act, nor with any present intention of so reselling, transferring or distributing the
Securities. Any sale, transfer or other disposition of the Securities will be made only
if such Securities are registered under the Securities Act, or the sale is made in
compliance with an exemption under the Securities Act, or the rules thereunder, and any
applicable state securities laws. |
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| j) | The Lender understands and acknowledges that the Lender has no right to require
registration of resale of the Securities purchased hereby under the Securities Act or
under any state securities laws. |
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| k) | The Lender is an “Accredited Investor” within the meaning of Regulation D
promulgated under the Securities Act. An Accredited Investor shall mean any person who
comes within any of the following categories, or who the Company reasonably believes
comes within any of the following categories, at the time of the sale of the Securities
to that person: |
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| (1) | Any bank as defined in section 3(a)(2) of the Securities Act or
savings and loan association or other institution as defined in Section
3(a)(5)(A) of the Securities Act whether acting in an individual or fiduciary
capacity; brokers and dealers registered under Section 15 of the Securities
Exchange Act of 1934; an insurance
company as defined in section 2(13) of the act; an investment company
registered under the Investment Company Act of 1940 or a business
development company as defined in section 2(a)(48) of that act; a Small
Business Investment Company licensed by the U. S. Small Business
Administration under section 301(c) or (d) of the Small Business Investment
Act of 1958; an employee benefit plan within the meaning of Title I of the
Employee Retirement Income Security Act of 1974, if the investment decision
is made by a plan fiduciary, as defined in section 3(21) of such act, which
is either a bank, insurance company, or registered investment adviser, or if
the employee benefit plan has total assets in excess of $5,000,000; |
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| (2) | Any private business development company as defined in section
202(a)(22) of the Investment Advisers Act of 1940; |
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| (3) | Any organization described in Section 501(c)(3) of the Internal
Revenue Code, corporation, Massachusetts or similar business trust, or
partnership, not formed for the specific purpose of acquiring the securities
offered, with total assets of more than $5,000,000; |
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| (4) | Any director, executive officer, or general partner of the
issuer of the securities being offered or sold, or any director, executive
officer, or general partner of a general partner of that issuer; |
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| (5) | Any natural person whose individual net worth, or joint net
worth with that person’s spouse, at the time of his purchase exceeds
$1,000,000; |
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| (6) | Any natural person who had an individual income in excess of
$200,000 in each of the two most recent years or joint income with that
person’s spouse in excess of $300,000 in each of those years and has a
reasonable expectation of reaching that same level in the current year; |
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| (7) | Any trust, with total assets in excess of $5,000,000, not
formed for the specific purpose of acquiring the securities offered, whose
purchase is directed by a sophisticated person as described in Rule
506(b)(2)(ii) of Regulation D; and |
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| (8) | Any entity in which all of the equity owners are Accredited
Lenders. |
| l) | The Lender recognizes that the total amount of funds tendered to purchase the
Securities is placed at the risk of the business and may be completely lost. The Lender
understands that there can be no assurance of profitable operations and that the
acquisition of the Securities as an investment involves substantial risks. |
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| m) | The Lender realizes that the Securities cannot readily be sold, that it may not
be possible to sell or dispose of the Securities and therefore the Securities must not
be purchased unless the Lender has liquid assets sufficient to assure that such
purchase will cause no undue financial difficulties and the Lender can provide for
current needs and possible personal contingencies. |
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| n) | The Lender confirms and represents that the Lender is able (i) to bear the
economic risk of Lender’s investment, (ii) to hold the Securities for an indefinite
period of time, and (iii) to afford a complete loss of the Lender’s investment. The
Lender also represents that the Lender has (i) adequate means of providing for the
Lender’s current needs and
possible personal contingencies, and (ii) no need for liquidity in this particular
investment. |
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| o) | The Lender understands that there are substantial restrictions on the
transferability of the component parts of the Securities and that any certificate or
other document evidencing the component parts of the Securities will have substantially
the following restrictive legend thereon: |
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THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. SUCH SHARES MAY NOT BE
SOLD OR TRANSFERRED OR PLEDGED IN THE ABSENCE OF SUCH REGISTRATION UNLESS THE
COMPANY RECEIVES AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO THE COMPANY STATING
THAT SUCH SALE OR TRANSFER IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY
REQUIREMENTS OF SAID ACT. |
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| p) | In subscribing for the Securities, the Lender is relying solely upon
independent investigation and has carefully considered the Company’s business,
prospects, operations and financial condition and has, to the extent the Lender
believes such discussion necessary, discussed with the Lender’s professional legal, tax
and financial advisors and the Lender’s other representative(s), if any, the
suitability of an investment in the Company for the Lender’s particular tax and
financial situation and the Lender and the Lender’s advisors or the Lender’s other
representative(s), if any, have determined that the investment is a suitable investment
for the Lender. |
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| q) | The Lender is familiar with the terms, risks and merits of an investment in the
Company through the subscription for the purchase of the Securities. The Lender has
been presented with and has acted upon the opportunity to ask questions and receive
answers from the Company relating to the terms and conditions of the offering in order
to obtain any additional information necessary to verify the accuracy of the
information made available to Lender. |
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| r) | The Lender has not become aware of the offering of the Securities by any form
of general solicitation or advertising, including, but not limited to advertisements,
articles, notices or other communications published in any newspaper, magazine or other
similar media or broadcast over television or radio or any seminar or meeting where
those individuals that have attended have been invited by any such or similar means of
general solicitation or advertising. |
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| s) | The Lender is a bona fide resident of the state set forth as his, her or its
“residence address” in this Agreement, and that (i) if a corporation, partnership,
trust, or other form of business organization, it has its principal office within such
state; (ii) if an individual, he or she has his or her principal residence in such
state; and (iii) if a corporation, partnership, trust, or other form of business
organization which was organized for the specific purpose of acquiring the Securities,
all of its beneficial owners are residents of such state. The Lender’s “residence
address” is 0000 Xxxx Xx. Xxxxxx xxx, Xxxxxxx, XX 00000. |
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Section 7. Company Warranties, Representations and Covenants. The Company
represents, warrants and covenants to the Lender, effective as of the date of this Agreement and at
Closing, as follows:
| a) | The Company is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has the corporate power and
authority to carry on its business as now conducted, and to own and operate the
properties and assets now owned and operated by it. Borrower’s corporate office
address and principal place of business is 0000 Xxxxxx Xxxxx, Xxxxxx, XX 00000. |
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| b) | The issuance of the Securities has been duly authorized by all necessary
corporate action of the Company and does not conflict with the terms of the bylaws,
certificate of incorporation or material agreements of the Company. |
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| c) | The Common Stock of the Company is registered pursuant to Section 12(b) or
12(g) of the Securities Exchange Act of 1934, as amended (the “EXCHANGE ACT”), and the
Company has timely filed all reports, schedules, forms, statements and other documents
required to be filed by it with the Commission pursuant to the reporting requirements
of the Exchange Act, including material filed pursuant to Section 13(a) or 15(d) of the
Exchange Act. To the Company’s knowledge, each of the Company’s filings with the SEC
(as defined below), was, on the date it was filed, complete and accurate in all
material respects, and did not contain any material misstatement or omit to state any
facts that are material to the operations or financial results of the Company, as of
the date made. For purposes hereof, the “SEC Filings” shall mean the Company’s Annual
Report on Form 10-K for the year ended December 31, 2009 as filed with the SEC and the
Company’s Quarterly Reports filed on Form 10-Q for the quarters ended March 31, 2010,
June 30, 2010, September 30, 2010 each as filed with the SEC. |
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| d) | The authorized capital stock of the Company consists of 500,000,000 shares of
Common Stock with a par value of $0.0001, of which 124,187,740 shares were issued and
outstanding as of the date of this Agreement. The shares of Common Stock when issued
will be duly authorized, validly issued, fully paid and non-assessable. No shares of
Common Stock or any other security of the Company are entitled to preemptive rights
except for customary transfer restrictions contained in agreements entered into by the
Company in order to sell restricted securities, the Company is not a party to or bound
by any agreement or understanding granting registration or anti-dilution rights to any
person with respect to any of its equity or debt securities. The Company is not a
party to, and it has no knowledge of, any agreement or understanding restricting the
voting or transfer of any shares of the capital stock of the Company. The offer and
sale of all capital stock, convertible securities, rights, warrants, or options of the
Company issued prior to the Closing complied with all applicable federal and state
securities laws and no holder of such securities has a right of rescission or claim for
damages with respect thereto. |
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| e) | Except as set forth on Exhibit C attached hereto, there are no outstanding (or
authorized and reserved for issuance) (i) options, warrants, purchase rights,
subscription rights, conversion rights, exchange rights, or other contracts or
commitments for the purchase or acquisition from the Company of any of its securities;
or (ii) stock appreciation, phantom stock, profit participation, or similar rights with
respect to the Company. |
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| f) | The execution and delivery of this Agreement and the consummation of the
transactions contemplated herein, including the issuance of the Securities, does not
conflict with or
violate any agreements of the Company nor is the Company restricted or prevented by
any covenant, condition or restriction from entering into this Agreement and
consummating the transactions contemplated by this Agreement. |
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| g) | As of the date of this Agreement, the security interest to be granted to Lender
shall be junior and subordinate only to the rights granted by (i) that Secured
Promissory Note Purchase Agreement, dated October 1, 2008 and attached hereto as
Exhibit D, (ii) that Security Agreement, dated October 1, 2008 and attached hereto as
Exhibit E, and (iii) those Senior Secured Convertible Promissory Notes, as amended, in
the total principal amount of $1,075,000 issued by Obligor pursuant to such Secured
Promissory Note Purchase Agreement, one example of which is attached hereto as Exhibit
F, (collectively, all such documents referenced in (i), (ii) and (iii) above
hereinafter referred to as the “Senior Notes”). Except for the Senior Notes, the Note
shall be senior to all other indebtedness of Obligor. The foregoing are collectively
referred to as the “Senior Debt”. As of the date of this Agreement the total Senior
Debt outstanding is $1,075,000 plus accrued interest as itemized on Exhibit G. There
are no defaults or other past due obligations with respect to the Senior Debt. |
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| h) | Except as disclosed in the SEC Filings, neither the Company nor any of its
subsidiaries has any liabilities, obligations, claims or losses (whether liquidated or
unliquidated, acquired or unsecured, absolute, accrued, contingent or otherwise) other
than those incurred in the ordinary course of the Company’s or its subsidiaries’
respective businesses since December 31, 2010. |
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| i) | Except for the Senior Debt, each of the Company and the subsidiaries has good
and marketable title to all of its assets, including its intellectual properties, free
and clear of any mortgages, pledges, charges, liens, security interests or other
encumbrances of any nature whatsoever. |
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| j) | There is no action, suit, claim, investigation, arbitration, alternative
dispute resolution proceeding or other proceeding pending or, to the knowledge of the
Company, threatened against the Company or any subsidiary which questions the validity
of this Agreement or any of the other transaction documents or any of the transactions
contemplated hereby or thereby or any action taken or to be taken pursuant hereto or
thereto. There is no action, suit, claim, investigation, arbitration, alternative
dispute resolution proceeding, or other proceeding pending or, to the knowledge of the
Company, threatened, against or involving the Company, any subsidiary or any of their
respective properties or assets. There are no outstanding orders, judgments,
injunctions, awards or decrees of any court, arbitrator or governmental or regulatory
body against the Company or any subsidiary or any officers or directors of the Company
or subsidiary in their capacities as such, either individually or in the aggregate. |
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| k) | The business of the Company and the subsidiaries has been and is presently
being conducted in accordance with all applicable federal, state and local governmental
laws, rules, regulations and ordinances. The Company and each of its subsidiaries have
all franchises, permits, licenses, consent and other governmental or regulatory
authorizations and approvals necessary for the conduct of its business as now being
conducted by. |
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| l) | The Company and each of the subsidiaries has accurately prepared and filed all
federal, state and other tax returns required by law to be filed by it, has paid or
made provisions for the payment of all taxes shown to be due and all additional
assessments, and adequate
provisions have been and are reflected in the financial statements of the Company
and the subsidiaries for all current taxes and other charges to which the Company or
any subsidiary is subject and which are not currently due and payable. None of the
federal income tax returns of the Company or any subsidiary have been audited by the
Internal Revenue Service. The Company has no knowledge of any additional
assessments, adjustments or contingent tax liability (whether federal or state) of
any nature whatsoever, whether pending or threatened against the Company or any
subsidiary for any period, nor of any basis for any such assessment, adjustment or
contingency. |
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| m) | The Company has not employed any broker or finder or incurred any liability for
any brokerage or investment banking fees, commissions, finders’ structuring fees,
financial advisory fees or other similar fees in connection with this Agreement. |
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| n) | To the best of the Company’s knowledge, neither this Agreement or the Schedules
hereto nor any other documents, certificates or instruments furnished to the Lender by
or on behalf of the Company or any subsidiary in connection with the transactions
contemplated by this Agreement contain any untrue statement of a material fact or omit
to state a material fact necessary in order to make the statements made herein or
herein, in the light of the circumstances under which they were made herein or therein,
not misleading. |
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| o) | The records and documents of the Company and its subsidiaries accurately
reflect in all material respects the information relating to the business of the
Company and the subsidiaries, the location and collection of their assets, and the
nature of all transactions giving rise to the obligations or accounts receivable of the
Company or any subsidiary. The Company and each of its subsidiaries maintain a system
of internal accounting controls sufficient, in the judgment of the Company’s board of
directors, to provide reasonable assurance that (i) transactions are executed in
accordance with management’s general or specific authorizations, (ii) transactions are
recorded as necessary to permit preparation of financial statements in conformity with
generally accepted accounting principles and to maintain asset accountability, (iii)
access to assets is permitted only in accordance with management’s general or specific
authorization, and (iv) the recorded accountability for assets is compared with the
existing assets at reasonable intervals and appropriate actions are taken with respect
to any differences. |
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| p) | The Company has complied and will comply with all applicable federal and state
securities laws in connection with the offer, issuance and sale of the Notes, the
Conversion Shares hereunder. Neither the Company nor anyone acting on its behalf
directly or indirectly, has or will sell, offer to sell or solicit offers to buy any of
the Securities, or similar securities to, or solicit offers with respect thereto from,
or enter into any preliminary conversations or negotiations relating thereto with, any
person, or has taken or will take any action so as to bring the issuance and sale of
any of the Securities under the registration provisions of the Securities Act and
applicable state securities laws. |
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| q) | Except for the filing of any notice prior or subsequent to the Closing that may
be required under applicable state and/or federal securities laws (which if required,
shall be filed on a timely basis), no authorizations, consent, approval, license,
exemption of, filing or registration with any court or governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign, is or will
be necessary for, or in connection with, the execution or delivery of the Note or for
the performance by the Company of its obligations under the this Agreement. |
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| r) | The Company, if required, shall notify the SEC in accordance with their rules
and regulations, of the transactions contemplated by this Agreement and shall take all
other necessary action and proceedings as may be required and permitted by applicable
law, rule and regulation, for the legal and valid issuance of the Securities to the
Purchasers, or their respective subsequent holders. |
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| s) | The Company shall comply, and cause each subsidiary to comply, with all
applicable laws, rules, regulations and orders. |
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| t) | The Company shall keep and cause each subsidiary to keep adequate records and
books of account, in which complete entries will be made in accordance with GAAP
consistently applied, reflecting all financial transactions of the Company and its
subsidiaries, and in which, for reach fiscal year, all proper reserves for
depreciation, depletion, obsolescence, amortization, taxes, bad debts and other
purposes in connection with its business hall be made. |
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| u) | The Company, upon request by the Lender, shall furnish one (1) copy of the
following, to Lender in a timely manner: (a) Quarterly Reports filed with the
Commission on Form 10-QSB as soon as available, and in any event within fifty-one (51)
days after the end of each of the first three (3) fiscal quarters of the Company; (b)
Annual Reports filed with the Commission on Form 10-KSB as soon as available, and in
any event within one hundred six (106) days after the end of each fiscal year of the
Company; and (c) Copies of all notices and information, including without limitation
notices and proxy statements in connection with any meetings, that are provided to
holders of shares of Common Stock, contemporaneously with the delivery of such notices
or information to such holders of Common Stock; and (d) copies of any notice of default
received with respect to the Senior Debt. |
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| v) | The Company shall not amend or waive any provisions of the Articles or Bylaws
of the Company in any way that would adversely affect the exercise rights, voting
rights, prepayment rights or redemption rights of the Lender provided, however, that
the Company shall not be prohibited from amending its Articles to increase its
authorized capital stock. |
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| w) | The Company shall not enter into any agreement in which the terms of such
agreement would restrict to impair the right or ability to perform of the Company or
any subsidiary under this Agreement. |
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| x) | So long as the Note remain outstanding, neither the Company nor any subsidiary
shall sell, transfer or otherwise dispose of any material amount of its properties,
assets and rights including, without limitation, its intellectual property, to any
person except for sales in the ordinary course of business, without the prior written
consent of the Lender. |
Section 8. Indemnification. It is acknowledged that the meaning and legal
consequences of the representations, covenants and warranties contained in this Agreement are
understood and the Company hereby agrees to indemnify and hold harmless the Lender and each
trustee, beneficiary, officer and director thereof and their respective successors, _______________
agents, attorneys and advisors, from and against any and all loss, damage and liability due to or
arising out of a breach of any of the representations, covenants and warranties made in this
Agreement by the Company. The representations, covenants and warranties contained herein are
intended to and shall survive delivery of this Agreement,
and the completion of the transaction set forth herein. All such representations, covenants
and warranties shall terminate at the close of business on the one year anniversary of the Closing
Date.
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Section 9. Conditions to Closing.
| a) | The obligations of the Company hereunder in connection with the Closing are
subject to the following conditions being met, to the extent not waived by the Company
in writing: |
| (1) | the representations and warranties of the Lender set out in
this Agreement shall be true and correct in all respects when made and on the
Closing Date; |
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| (2) | the Lender shall have performed all obligations, covenants and
agreements of the Lender required to be performed at or prior to the Closing
Date; |
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| (3) | the Company shall have received the additional loan funds in
the amount of $400,000 in immediately available funds; |
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| (4) | the Lender shall have executed and delivered the Note to the
Company; |
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| (5) | the Lender shall have executed and delivered this Agreement to
the Company; and |
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| (6) | the Lender shall have delivered to the Company such other
documents or instruments as the Company reasonably requests and are reasonably
necessary to consummate the transactions contemplated by this Agreement. |
| b) | The obligations of Lender hereunder in connection with the Closing are subject
to the following conditions being met to the extent not waived by the Lender in
writing: |
| (1) | the representations and warranties of the Company set out in
this Agreement shall be true and correct in all respects when made and on the
Closing Date; |
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| (2) | the Company shall have performed all obligations, covenants and
agreements of the Company required to be performed at or prior to the Closing
Date; |
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| (3) | the Company shall have executed and delivered the Note to the
Lender; |
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| (4) | the Company shall have executed and delivered the Agreement to
the Lender; |
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| (5) | The Company shall have executed and delivered this Security
Agreement to the Lender; |
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| (6) | the Company shall have delivered to the Lender such other
documents or instruments as the Lender reasonably requests and are reasonably
necessary to consummate the transactions contemplated by this Agreement. |
Section 10. Termination.
| a) | This Agreement may be terminated at any time prior to the Closing: |
| (1) | by the mutual written consent of the Company and the Lender; |
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| (2) | by either the Company or the Lender upon written notice to the
other, in the event the other party (the “Breaching Party”) has materially
breached its representations, warranties or covenants contained in this
Agreement and failed to cure such breach within ten (10) days from the date of
the Breaching Party’s receipt of the Termination Notice; provided, however,
that the party claiming such breach (i) is not itself in material breach of its
representations, warranties or covenants contained herein, (ii) promptly
notifies the Breaching Party in writing of its intention to exercise its rights
under this Agreement as a result of the breach (the “Termination Notice”); and
(iii) specifies in such Termination Notice the representation, warranty or
covenant of which the Breaching Party is allegedly in material breach; or |
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| (3) | by either the Company, on the one hand, or the Lender, on the
other hand, immediately upon written notice to the other party if the Closing
shall not have occurred on or before March 8, 2011. |
| b) | In the event of termination of this Agreement in accordance with this
Agreement, this Agreement shall forthwith become void and there shall be no liability
on the part of any party hereto except that nothing herein shall relieve any party
hereto from liability for any willful breach of any provision hereof. |
Section 11. Miscellaneous.
| a) | Entire Agreement. This Agreement and the Note contain the entire
agreement between the parties relating to the subject matter herein and supersedes all
previous oral statements and other writings with respect thereto. |
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| b) | Amendment. This Agreement may not be modified or amended without the
prior written consent of the parties hereto. |
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| c) | Waiver. No failure or delay on the part of either party in exercising
any right hereunder shall operate as a waiver; nor shall any single or partial exercise
of any such right preclude any other or further exercise thereof or the exercise of any
other rights. No waiver of any such right or amendment hereof shall be effective unless
given in writing. No waiver of any such right shall be deemed a waiver of any other
right hereunder. |
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| d) | Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns. |
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| e) | Severability. If any provision hereof shall be held to be void, illegal
or unenforceable it shall be deemed severable from the remaining provisions hereof
which shall remain in full force and effect. |
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| f) | Notices. Any notice to be given hereunder shall be given (except as
otherwise expressly set forth herein) by registered prepaid mail, air courier service
or by fax or may be delivered by hand and shall be deemed to have been received, if
given by registered prepaid mail, seven days after posting; if given by fax, on receipt
of the fax confirmation; and if delivered by hand or by air courier, at the time of
such delivery, if to Lender at 0000 Xxxx Xx. Xxxxxx Xxx, Xxxxxxx, XX 00000, and if to
the Company at HealthSport, Inc. 0000 Xxxxxx Xxxxx, Xxxxxx, Xxxxxxxxxx 00000,
Attention: Chief Financial Officer. |
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| g) | Governing Law; Jurisdiction. |
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THIS AGREEMENT AND THE OBLIGATIONS OF THE PARTIES HEREUNDER WILL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF ARIZONA, WITHOUT REGARD TO ANY
CONFLICTS OF LAWS PROVISIONS THEREOF THAT WOULD OTHERWISE REQUIRE THE APPLICATION OF
THE LAW OF ANY OTHER JURISDICTION. THE VENUE FOR ANY ACTION BROUGHT TO ENFORCE THIS
AGREEMENT SHALL LIE EXCLUSIVELY IN MARICOPA COUNTY, ARIZONA. |
|||
Each party hereto knowingly and voluntarily waives any and all rights it may have to
a trial by jury with respect to any litigation based on, or arising out of, under,
or in connection with, this Agreement. Each party is hereby authorized to submit, as
conclusive evidence of such waiver of jury trial, this Agreement to a court that has
jurisdiction over the subject matter of such litigation and the parties to this
Agreement. |
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| h) | Execution in Counterparts. This Agreement may be executed in any number
of counterparts and by different parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken together
shall constitute one and the same agreement. |
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| i) | Attorneys’ Fees and Costs. A prevailing party in any action relating
to the enforcement of this Note shall be entitled to recover its reasonable attorneys’
fees and other costs incurred in connection with such action. |
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| j) | Time of the Essence. Time is of the essence in the performance of the
parties’ duties and obligations under this Agreement. |
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| k) | Cooperation. The parties shall cooperate in the execution and delivery
of such other documents as may be necessary to accomplish the transaction contemplated
by this Agreement. |
[Remainder of Page Intentionally Left Blank; Signature Page Follows]
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IN WITNESS WHEREOF, the Lender and the Company have caused this Loan Agreement to be executed
effective as of the date and year first above written.
|
XXXXXX X. and XXXXXX X. XXXXXX, as Trustee of the
XXXXXX FAMILY TRUST, u/t/a dated January 18, 2008, if
and as amended, XXXXXX X. XXXXXX and XXXXXX X.
XXXXXX, as Settlors, and all successor trustees,
individuals residing in the State of Arizona, or his
registered assigns |
||||
| By: | ||||
| Xxxxxx X. Xxxxxx | ||||
| Trustee | ||||
|
HEALTHSPORT, INC. |
||||
| By: | ||||
| Xxxxx Xxxxxx | ||||
| Chief Executive Officer | ||||
[Signature page to Loan Agreement]
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