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EXHIBIT 10.35
EXECUTION ORIGINAL
LOAN AGREEMENT
THIS LOAN AGREEMENT ("Agreement"), is made and entered into this 23rd
day of January, 1998, by and between INSURERATE, INC., a Georgia corporation
("Borrower"), and HOMECOM COMMUNICATIONS, a Georgia corporation ("Lender").
W I T N E S S E T H :
WHEREAS, Lender currently owns eighty-five percent (85%) of the total
common stock of Borrower; and
WHEREAS, Lender has agreed to loan (the "Loan") to Borrower up to One
Hundred Thousand and No/100 Dollars ($100,000.00) for the operation of
Borrower's business, including, but not limited to, the purchase of machinery,
equipment, fixtures and furnishings, leasehold improvements and other necessary
business expenses and working capital needs, repayable at the end of ten (10)
years in the form of cash or common stock of Borrower; and
WHEREAS, the Lender and Borrower each desire to enter into the Loan,
pursuant to the terms and conditions set forth herein;
NOW, THEREFORE, for and in consideration of the premises, covenants and
agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which hereby are acknowledged, the parties hereto,
intending to be legally bound, hereby agree as follows:
ARTICLE I.
AMOUNT AND TERMS OF LOAN
1.1. Term Loan. The Lender agrees, subject to the terms and conditions
hereof, to loan to Borrower an aggregate principal amount of up to One Hundred
Thousand and No/100 Dollars ($100,000.00)(the "Maximum Loan Amount"). Subject to
the terms and conditions of this Agreement and in reliance upon the
representations and warranties of Borrower set forth herein, the Lender agrees
to lend to Borrower amounts of principal up to the Maximum Loan Amount at such
times and in such amounts as shall be requested by Borrower in accordance with
this Agreement. Amounts borrowed by Borrower pursuant to this Agreement and
repaid or prepaid by Borrower may not be reborrowed.
1.2. Advances of Principal. From time to time, and upon the written
request of Borrower, funds will be advanced by Lender to Borrower (each an
"Advance"). The amount and date of each Advance shall be at the discretion of
Borrower; provided, however, that the sum total of the Advances shall not exceed
the Maximum Loan Amount. The Loan, together with any Advances thereunder, shall
be evidenced by a promissory note and the advance requests attached thereto, in
the form of Exhibit 1.2 attached hereto (the "Master Note").
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1.3 Interest Rate. The unpaid principal balance of all Advances to
Borrower shall bear interest at the Applicable Interest Rate (as such term is
defined in the Master Note). Interest shall be calculated on the basis of actual
number of days elapsed over a year of 360 days.
1.4 Payment Date; Manner of Payment. The outstanding principal balance
advanced to Borrower plus accrued but unpaid interest thereon shall be payable
on the tenth (10th) anniversary of the date hereof (the "Payment Date").
Borrower shall have the option to repay the Lender on the Payment Date in either
lawful money of the United States of America or in shares of common stock of the
Borrower having a value on the Payment Date equal to the aggregate principal
amount advanced by Lender to Borrower, together with interest thereon, in
accordance with the terms and conditions of the Master Note.
ARTICLE II.
CONDITIONS OF CLOSING AND BORROWING
2.1. Closing. The closing of the transaction contemplated by this
Agreement (the "Closing") shall take place on the date hereof, at the offices of
Xxxxxx, Xxxxxxx & Xxxxxx, L.L.P., 1600 Atlanta Financial Center, 0000 Xxxxxxxxx
Xxxx, X.X., Xxxxxxx, Xxxxxxx 00000, or at such other date, time and place as the
Lender and Borrower may mutually agree.
2.2. Conditions Precedent to the Closing and to Advances. As a
condition precedent to the Lender's making the Loan and Advances hereunder,
Borrower shall deliver to Lender on the Closing Date (as defined below), the
following, in form and substance satisfactory to Lender:
(a) The Master Note, executed by Borrower; thereafter, each
Advance shall be made pursuant an advance request substantially in the form of
Exhibit A attached to the Master Note.
(b) Such other documents as may reasonably be required by
Lender or Lender's counsel.
Additionally, (i) all representations and warranties of Borrower
contained in this Agreement and the other Loan Documents (as defined below)
shall be true, correct and complete as of the date of the Closing (the "Closing
Date"), (ii) Borrower shall not be in violation of any of the covenants
contained in this Agreement and the other Loan Documents, (iii) no Event of
Default (as defined in Article V) shall have occurred and be continuing, and
(iv) Borrower shall have satisfied each condition to Closing set forth herein;
and (v) all representations and warranties of Borrower contained in this
Agreement and the other Loan Documents shall be true, correct and complete as of
the date of each Advance (each an "Advance Date"), (vi) Borrower shall not be in
violation of any of the covenants contained in this Agreement and the other Loan
Documents on any Advance Date, (vii) no Event of Default shall have occurred and
be continuing on any Advance Date, and (viii) Borrower shall have satisfied each
condition to Closing set forth herein as of each Advance Date.
The Loan documents, including this Agreement, the Master Note, and the
documents related thereto (collectively, the "Loan Documents") shall set forth
the matters contained in this Agreement and contain such other provisions as are
deemed necessary or desirable by Lender.
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The form and substance of all such documents must be satisfactory to Lender
prior to disbursement by Lender of any of the proceeds of the Loan.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF BORROWER
Borrower represents and warrants to, and agrees with Lender as follows:
3.1. Power, Organization and Ownership. Borrower is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Georgia, has the power and authority to own or lease and operate its properties
and to carry on its business as now being and hereafter proposed to be
conducted, and is duly qualified and in good standing as a foreign corporation
and authorized to do business in each jurisdiction in which the character of its
properties or the nature of its business requires such qualification or
authorization. Immediately prior to the Closing, Lender owns eighty-five percent
(85%) of the total common stock of Borrower, and Corsi owns fifteen percent
(15%) of the total common stock of Borrower.
3.2. Authorization; Enforceability. Borrower has the power and its
Board of Directors has taken all necessary action to authorize it to execute,
deliver, and perform this Agreement and each of the other Loan Documents to
which it is a party in accordance with the terms hereof and thereof and to
consummate the transactions contemplated hereby and thereby. This Agreement has
been duly executed by Borrower, and is a legal, valid and binding obligation of
Borrower, enforceable in accordance with its terms, subject, as to enforcement
of remedies, to the following qualifications: (i) an order of specific
performance and an injunction are discretionary remedies and, in particular, may
not be available where damages are considered an adequate remedy at law; and
(ii) enforcement may be limited by bankruptcy, insolvency, liquidation,
reorganization, reconstruction, and other similar laws affecting enforcement of
creditors' rights generally (insofar as any such law relates to the bankruptcy,
insolvency, or similar event of Borrower).
3.3. Financial Condition. Borrower currently is financially solvent and
capable of meeting its financial obligations as they become due. Borrower, after
giving effect to the transactions contemplated hereby and by the other Loan
Documents, will be solvent and capable of meeting its financial obligations as
they become due.
3.4. Liabilities; Litigation. Except for liabilities incurred in the
ordinary course of business, Borrower has no material (individually or in the
aggregate) liabilities, direct or contingent. There is no litigation, legal or
administrative proceeding, investigation, or other action of any nature pending
or, to the knowledge of Borrower, threatened, against or affecting Borrower or
any of its respective properties, which involves the possibility of any judgment
or liability, which would materially affect Borrower's ability to repay the Loan
or otherwise perform hereunder.
3.5. No Violation. None of the execution and delivery of this
Agreement, the consummation of the transactions contemplated herein or
compliance with the terms and provisions hereof will conflict with or result in
a breach of, or require any consent under any applicable law or regulation, or
any order, writ, injunction or decree of any court or governmental authority or
agency, or constitute a default under any material agreement or instrument by
which Borrower is bound.
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ARTICLE IV.
COVENANTS BY BORROWER
Until all the obligations of Borrower under this Agreement have been
performed and paid in full, Borrower covenants and agrees as follows:
4.1. Maintenance of Business and Corporate Existence. Borrower shall
comply with all valid and applicable statutes, ordinances, rules and regulations
and shall keep in force and effect all licenses, permits, bonds and franchises
necessary for the proper conduct of its business.
4.2. Adverse Changes and Litigation. Borrower shall immediately inform
Lender of any material adverse change in its financial condition and shall
promptly inform Lender of any litigation or threatened litigation, or of the
occurrence of any other event or circumstance which might substantially affect
the financial condition or business of Borrower.
4.3. Management, Ownership and Maintenance of Properties. No material
change in the management or ownership of Borrower, or in the manner in which its
business is conducted shall be made without the prior written consent of Lender.
Borrower shall maintain or cause to be maintained all properties used or useful
in its business in good repair, working order, and condition, reasonable wear
and tear excepted.
4.4. Financial Statements. Borrower shall keep adequate records and
books of account in which complete entries are made in accordance with its
accounting principles, consistently applied, and Borrower will furnish to Lender
such financial statements and information as Lender may from time to time
request.
4.5. Other Debts. Borrower shall not directly or indirectly incur,
create, assume or permit to exist any obligation for payment of borrowed money,
excepting only unsecured current liabilities incurred in the ordinary course of
business and obligations contemplated by this Agreement, without the express
written consent of Lender, which consent shall not be unreasonably withheld.
Further, Borrower shall not guarantee the obligations of any person or entity,
excepting only obligations contemplated by this Agreement.
4.6. Bulk Sale. Borrower shall not, without the prior written consent
of Lender, sell, transfer or convey all or any part of its interest in its
assets to another entity.
4.7. Taxes. Borrower shall pay and discharge all taxes, assessments and
governmental charges or levies imposed upon it or upon its income or profits or
upon any properties belonging to it prior to the date on which penalties attach
thereto, and all lawful claims for labor, materials, and supplies which, if
unpaid, might become a lien or charge upon any of its properties; except that no
such tax, assessment, charge, levy, or claim need be paid which is being
contested in good faith by appropriate proceedings and for which adequate
reserves shall have been set aside on the appropriate books, but only for so
long as such tax, assessment, charge, levy, or claim does not become a lien or
charge, and no foreclosure, distraint, sale, or similar proceeding shall have
been commenced and remain unstayed for a period of thirty (30) days after such
commencement. Borrower shall timely file all information returns required by
federal, state, or local tax authorities.
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4.8. Examination of Records. Borrower shall permit representatives of
the Lender, upon reasonable notice, to (a) visit and inspect the properties of
Borrower during normal business hours, (b) inspect and make extracts from and
copies of Borrower's books and records, and (c) discuss with the principal
officers of Borrower its businesses, assets, liabilities, financial positions,
results of operations, and business prospects.
4.9. Use of Proceeds. Borrower shall use the proceeds of the Loan
solely to operate Borrower's business, which shall include, but not be limited
to, the purchase of machinery, equipment, fixtures and furnishings, leasehold
improvements, and other necessary business expenses and working capital needs
incurred by Borrower.
4.10. Further Assurances. Borrower shall cure promptly, or cause to be
cured promptly, defects in the creation and issuance of the Master Note, the
execution and delivery of the Loan Documents (including this Agreement), and the
perfection of any liens in favor of the Lender resulting from any act or failure
to act by Borrower or any employee or officer thereof. Borrower, at its expense,
shall promptly execute and deliver to the Lender, or cause to be executed and
delivered to the Lender, all such other and further documents, agreements, and
instruments, in compliance with or accomplishment of the covenants and
agreements of Borrower in the Loan Documents, including this Agreement, or to
correct any omissions in the Loan Documents, or more fully to state the
obligations set out herein or in any of the Loan Documents, or to perfect,
protect, or preserve any liens created pursuant to any of the Loan Documents, or
to make any recordings, to file any notices, or to obtain any consents, all as
may be necessary or appropriate in connection herewith, as may be reasonably
requested by the Lender.
ARTICLE V.
EVENTS OF DEFAULT
The occurrence of any one or more of the following shall constitute an
"Event of Default," whatever the reason for such event, and whether it shall be
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment or order of any court or any order, rule or regulation of any
governmental or non-governmental body:
(a) Any representation or warranty made under this Agreement
or in connection with this Agreement (including, without limitation, any
warranty, representation or statement in the application of Borrower for the
Loan or in any accompanying financial statements) shall prove incorrect or
misleading in any material respect when made.
(b) Nonpayment, when due, of any principal, accrued interest,
premium, fee or other charge due under the Master Note.
(c) Default by Borrower in the due observance or performance
of any term, covenant, condition or agreement on its part to be performed under
this Loan Agreement, the Master Note, or under any other Loan Document
contemplated by this Loan Agreement.
(d) If Borrower shall: make a general assignment for the
benefit of its creditors; file a voluntary petition in bankruptcy or be the
subject of an involuntary petition in bankruptcy; be adjudicated as bankrupt or
insolvent; file any petition or answer seeking,
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consenting to, or acquiescing in, reorganization, arrangement, composition,
liquidation, dissolution or similar relief, under any present or future statute,
law or regulation; file an answer admitting or failing to deny the material
allegations of the petition against it for any such relief; admit in writing its
inability to pay its debts as they mature; discontinue business; or be unable to
pay debts as they become due.
(e) Borrower fails to have vacated or set aside within thirty
(30) days of its entry any court order appointing a receiver or trustee for all
or a substantial portion of Borrower's property.
(f) Borrower suffers or permits any lien, encumbrance or security
interest to attach to any of its property, except as herein otherwise expressly
permitted, or if any judgment shall be entered against Borrower or any
attachment shall be made against any property of Borrower, which judgment or
attachment shall remain undischarged, unbonded, or undismissed for a period of
ten (10) days.
(g) Borrower defaults in the payment of any principal or interest
on any obligation to Lender or to any other creditor.
ARTICLE VI.
REMEDIES ON EVENT OF DEFAULT
6.1. Declare Note Due. Upon the occurrence of any Event of Default, as
defined in this Agreement, the Master Note, or any other Loan Document
contemplated by this Agreement, Lender, at its option, may declare the entire
unpaid principal balance of the Master Note advanced to Borrower to be forthwith
due and payable, and thereupon such balance shall become so due and payable
without presentment, protest or further demand or notice of any kind, all of
which are hereby expressly waived, and Borrower will forthwith pay to Lender the
entire advanced principal amounts and the interest accrued thereon, in
accordance with the terms and conditions of the Master Note.
6.2. Other Remedies. Upon the occurrence or discovery of an Event of
Default, Lender, in addition to its option to declare the entire unpaid amount
advanced to Borrower under the Master Note due and payable, at its option may:
(a) move to protect its rights and remedies, by action at law or equity, or by
any other lawful remedy to enforce payment; and (b) exercise any and all rights
of setoff which Lender may have against any account, fund or property of any
kind, tangible or intangible, belonging to Borrower and which shall be in
Lender's possession or under Lender's control.
6.3. Cumulative Remedies. The rights and remedies of the Lender
hereunder shall be cumulative and not exclusive.
ARTICLE VII.
MISCELLANEOUS
7.1. Amendments. No amendment of any provisions of this Agreement, nor
consent to any departure of Borrower therefrom, shall in any event be effective
unless the same shall be
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in writing and signed by Lender, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.
7.2. Notices. All notices and other communications under this Agreement
shall be in writing and shall be deemed to have been given three (3) days after
deposit in the mail, designated as certified mail, return receipt requested,
post-prepaid, or one (1) day after being entrusted to a reputable commercial
overnight delivery service, or upon transmission of a telecopy addressed to the
party to which such notice is directed at its address determined as provided in
this Section 7.2. All notices and other communications under this Agreement
shall be given to the parties hereto at the following addresses:
If to Borrower:
InsureRate, Inc.
00 Xxxxxxxx Xxxx
Xxxxxxxx, Xxx Xxxxxx 00000
Attention: Xxxxxx X. Xxxxx, President
Telecopy No.: (000) 000-0000
If to Lender:
HomeCom Communications, Inc.
Xxxxxxxx 00, Xxxxx 000
Piedmont Center
0000 Xxxxxxxx Xxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx Xxx, President
Telecopy No.: (000) 000-0000
7.3. Governing Law; Parties Bound. This Agreement and the other Loan
Documents shall be governed by and construed in accordance with the laws of the
State of Georgia, without regard to its conflicts of laws principals. This
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto, their successors and assigns.
7.4. Attorneys' Fees; Expenses. If Lender shall incur any cost or
expense, including, without limitation, reasonable attorneys' fees, in
connection with this Agreement, the Master Note or the Loan, in any manner
whatsoever, direct or indirect, whether with regard to the collection of amounts
due, defense of Lender or otherwise, upon demand by Lender, Borrower shall pay
the same or shall reimburse Lender therefor in full.
7.5. Assignment by Borrower. Neither this Agreement nor any of
Borrower's rights hereunder shall be assignable by Borrower without receipt of
the prior written consent of Lender.
7.6. No Waiver; Remedies. No failure on the part of Lender, and no
delay in exercising any right under this Agreement, shall operate as a waiver
thereof; nor shall any single or partial exercise of any right under this
Agreement preclude any other or further exercise thereof or the exercise of any
other right.
7.7. Severability. In the event that any clause or provisions of this
Agreement or any document or instrument contemplated by this Agreement shall be
held to be invalid by any court
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of competent jurisdiction, the invalidity of such clause or provision shall not
affect any of the remaining portions or provisions of this Agreement.
7.8. Entire Agreement. This Agreement contains the entire agreement
between the parties hereto concerning the subject matter hereof and supersedes
all prior and contemporaneous oral or written agreements, commitments or
understandings with respect to the matters provided for herein.
7.9. Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original, but all of which together shall be deemed
one and the same Agreement.
IN WITNESS WHEREOF, the parties have executed this Loan Agreement as of
the date first above written.
BORROWER:
INSURERATE, INC.
By: /s/ Xxxxxx X. Xxxxx
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Xxxxxx X. Xxxxx, President
Attest: /s/ Xxxxxx Xxx
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Xxxxxx Xxx, Secretary
(CORPORATE SEAL)
LENDER:
HOMECOM COMMUNICATIONS, INC.
By: /s/ Xxxxxx Xxx
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Xxxxxx Xxx, President
Attest:
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(CORPORATE SEAL)
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