EXHIBIT 4.38
COLLATERAL LOAN AGREEMENT
FOR LOAN NO. 000-ADTM-TD5
This COLLATERAL LOAN AGREEMENT (the "Agreement"), dated this 11th day of August,
2000, is entered into between Xxxxxx.xxx, Inc., a Delaware corporation with a
principal address at 000 Xxxxxxxx Xxxxx, Xxxxx #000, Xxxxxxxx, Xxxxxxxxxx 00000
(the "BORROWER"), represented by Xxxx Xxxxxx, President, and TRICORP FINANCIAL,
INC., a Delaware corporation (the "LENDER") represented by Xxxxxxx X. Xxxxx, Xx.
and Xxxxx Xxxxx, with a principal address at 000 Xxxxxxxx Xxxxxx, Xxxxx 0000,
Xxxx Xxxx Xxxxx, Xxxxxxx 00000.
This Agreement supplants in its entirety any and all earlier Agreements between
the parties.
In consideration of the mutual covenants herein contained, and intending to be
legally bound hereby, the parties agree as follows:
1. LOAN STRUCTURE
a. Subject to the terms and conditions hereinafter set forth, the
LENDER agrees to advance two million United states dollars
($2,000,000.00 USD) on four million (4,000,000) shares of
Restricted 14 Class A common stock of Adatom, Inc., CUSIP
#00650Q-10-5, with symbol ADTM (the "STOCK").
b. LENDER will advance funds under the Loan to the BORROWER in
two payments:
1) The first loan advance for fifty percent
(50%) of the Loan amount will be made within
five (5) business days of the later of the
delivery of the STOCK and the corollary
documents, or execution of this Agreement;
and
2) The second and final loan advance for the
other fifty percent (50%) of the Loan amount
will be made within five (5) business days
of the date of the first payment.
c. The BORROWER's obligation to repay the advance shall be
evidenced by a promissory note(s) in the form of Exhibit A
attached hereto (the "Note"). The Note(s) shall be executed by
BORROWER and delivered to the LENDER via courier upon
notification by the LENDER that good funds are available to
advance the Loan
d. To secure its obligations under the Loan, Xxxx Xxxxxx hereby
grants LENDER a Security Interest in the STOCK. The STOCK
shall be held by the LENDER for the duration of the Loan.
e. LENDER will issue a safekeeping receipt guaranteeing the
return of the STOCK upon repayment of the credit line without
any liens or encumbrances.
f. The credit line may be used to arbitrage cash, but, if so, an
amount will be invested to insure the availability of funds to
repay the credit line at all times.
g. Return of the STOCK is subject to repayment of the Loan
Principal and accrued interest and is forfeited if there is a
Default as specified in the Note.
h. In addition to the share certificate(s), the BORROWER will
deliver a "blank" stock power, one for each certificate, with
medallion signature guarantee, a corporate resolution, and
requisite corollary documents to complete the transaction.
i. All parties understand and agree that the STOCK is subject to
a Rule 145 restriction and legend as well as a "hold back"
restriction under a subscription agreement which is also
legended on the share certificate(s). However, it has been
represented that there are no other restrictions, whether
legended or not, that apply to the STOCK.
LENDER_______ BORROWER______
Page 1 of 5 Pages
j. This Agreement, the Promissory Notes, and the other documents
specified in this section constitute the "LOAN DOCUMENTS."
2. LOAN DISBURSEMENTS
a. The Loan will be disbursed in two payments as discussed in
LOAN STRUCTURE #1a.
b. All loan proceeds shall be wired directly to the BORROWER
based on wiring instructions provided by the BORROWER to the
LENDER, without offset of any charges, expenses, commissions,
or other deductions, other than the agreed upon fees.
c. Loan proceeds shall be immediately available funds for the
BORROWER.
d. The delivery of the Promissory Note(s) to LENDER shall be a
Condition Precedent to advancement of the funds by the LENDER.
e. In the event the LENDER does not make the Loan advance, the
BORROWER's sole and exclusive remedy shall be to demand an
immediate return of any Certificate(s), Stock Power(s) and the
Promissory Note(s). LENDER shall comply within five (5)
business days.
3. PROMISSORY NOTES
a. The STOCK pledged under this Agreement will be held as
collateral as long as there is any principal or interest
outstanding under the Promissory Note(s).
b. Upon satisfaction of all principal and interest under the
Note(s), the LENDER will deliver any LOAN DOCUMENTS, other
than the LENDER's copy of the Agreement, including any
Certificates, Stock Powers or other documents related to the
STOCK to the BORROWER.
c. The LENDER shall give written notice of any Loan default to
the BORROWER in accordance with this Agreement and if BORROWER
shall fail to cure within ten (10) days after notice, then may
sell, assign, hypothecate or otherwise dispose of the STOCK as
provided in the Promissory Note(s).
d. The LENDER accepts no responsibility for the value obtained
through the disposition of the STOCK under any lawful means;
however, any value obtained in excess of the default amount,
including reasonable attorney's fees and costs of disposing of
such collateral, shall be returned to the BORROWER.
e. The STOCK shall constitute the entire collateral used to
procure the Loan, and the LENDER shall be limited to
liquidation of the STOCK upon an Event of Default as defined
in the Promissory Note(s) to the extent necessary to satisfy
the default.
f. The LENDER shall have no other recourse to other assets,
guarantees, or assignments of interest of the BORROWER, i.e.,
this Loan is "non-recourse" as to any assets of the BORROWER,
other entity, or individual beyond the STOCK.
4. LOAN CLOSING
The Closing shall take place on the later of the delivery of an
executed Agreement or the receipt of the STOCK and all other forms in
the account designated by the LENDER.
5. USE OF STOCK
a. The STOCK shall be used as collateral to establish a line of
credit through the credit facility provider. The STOCK will
not be otherwise encumbered in any other manner while on
deposit as collateral for this Loan.
b. While the STOCK is on deposit, Xxxx Xxxxxx shall retain all
voting and dividend rights incident to its ownership, except
for cash or stock dividends in excess of the Loan Amount.
LENDER_______ BORROWER______
Page 2 of 5 Pages
c. The Stock shall remain on deposit in the LENDER's account at
all times, unless returned directly to the BORROWER under the
Agreement, or to the LENDER due to an Event of Default as
defined in the Note.
d. The credit line may be used to arbitrage cash, i.e., lease a
multiple of the credit line; but, in all cases, sufficient
cash shall be invested in a risk free manner to enable
repayment of the credit line to allow release of the STOCK at
any time.
e. The LENDER warrants and represents that the STOCK will not be
used in any manner other than as collateral; and, that it will
not be subject to any other liens or encumbrances, other than
its use as collateral to establish the initial credit line;
and, the LENDER accepts full and complete responsibility for
return of the STOCK upon satisfaction of the Loan by the
BORROWER.
6. BORROWER'S REPRESENTATIONS AND WARRANTIES
In order to induce the LENDER to advance funds against the Promissory
Note(s), the BORROWER makes the following representations and
warranties to the LENDER, which representations and warranties shall be
unaffected by any investigation heretofore or hereafter made by LENDER
and shall survive the closing of the transactions contemplated hereby:
a. BORROWER has all requisite power and authority to enter into
this Agreement and the other LOAN DOCUMENTS, including,
without limitation, the Promissory Notes, and to carry out the
transactions contemplated hereby.
b. BORROWER warrants and represents that it is not now insolvent,
bankrupt, or contemplating bankruptcy; or, that there are no
bankruptcy or undisclosed material claims filed or threatened
against BORROWER, whether judged with or without merit by the
BORROWER, or aware of other impediments to the sale or
transfer of the STOCK.
c. The execution and delivery of this Agreement, the Promissory
Note(s) and the other LOAN DOCUMENTS and instruments to be
executed and delivered by the BORROWER are not subject to any
authorization not herein contemplated, subject to recall,
restriction on voting, use, or other limitations.
d. The Agreement constitutes, and when executed and delivered,
the Promissory Note(s) and other LOAN DOCUMENTS, will
constitute valid binding agreements of the BORROWER,
enforceable in accordance with their respective terms, except
such as may be limited by bankruptcy, insolvency,
reorganization or other laws affecting creditors' rights
generally.
e. Neither the execution and delivery of this Agreement, the
Promissory Note(s) or the other LOAN DOCUMENTS and instruments
to be executed and delivered by BORROWER pursuant hereto, nor
the consummation by BORROWER of the transactions contemplated
hereby, will require any authorization, consent, approval,
exemption or other action by, or notice to, any governmental
entity except as specifically provided herein.
f. BORROWER has no material tax deficiencies, federal, state,
foreign, county, local and other, which would or could affect
the solvency, financial status of, or otherwise compromise
BORROWER in its ability to transfer the STOCK.
g. To the best of its knowledge, the information supplied by
BORROWER to the LENDER (verbally and in writing) contained no
untrue statement of material fact or omits or shall omit a
material fact, which would make such statements misleading.
All statements and information contained in any certificate,
instrument, schedule or document delivered by BORROWER shall
be deemed representations and warranties made by BORROWER.
LENDER_______ BORROWER______
Page 3 of 5 Pages
7. CONDITIONS PRECEDENT TO LENDER'S OBLIGATIONS
The obligation of LENDER to consummate the transactions contemplated
hereby is subject to the satisfaction of the following conditions (any
one or more of which may be waived by LENDER):
a. BORROWER will have performed all obligations and complied with
all conditions required to be performed or complied with by
BORROWER at or prior to the Closing.
b. The representations and warranties of BORROWER made herein
shall be true and correct in all material respects as of the
Closing.
If any of the conditions contained in this paragraph shall not have
been satisfied (or waived), then LENDER may cancel and
terminate this Agreement.
8. AMENDMENT AND WAIVER
This Agreement may be amended, or the terms hereof waived, only in
writing executed by the parties sought to be changed thereby.
9. NOTICES
All notices and other communications hereunder shall be in writing and
shall be deemed to have been given if delivered by hand or facsimile
transmission or if deposited with a recognized overnight delivery
service (with receipt) addressed as follows:
If to LENDER at: 000 Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxx Xxxx Xxxxx, Xxxxxxx 00000
Attn: Xxxxxxx X. Xxxxx, Xx./Xxxxx Xxxxx
If to BORROWER at: 000 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxxx, XX 00000
ATT: Xxxx Xxxxxx, President
or, at such other address as may hereafter be designated by a party by notice
given hereunder.
10. GOVERNING LAW
This Agreement shall be governed by the laws of the State of Delaware
without regard to any provisions for conflicts of law.
11. BINDING EFFECT
This Agreement binds, and shall inure to the benefit of, the parties
and their respective successors and assigns.
12. COUNTERPARTS AND FACSIMILE SIGNATURES
This Agreement may be signed in any number of counterparts, each of
which shall be deemed an original but together one and the same
document. The parties agree that facsimile signatures shall be deemed
an original.
LENDER_______ BORROWER______
Page 4 of 5 Pages
13. ENTIRE AGREEMENT
This Agreement and the other LOAN DOCUMENTS constitute the entire
agreement of the parties with respect to the subject matter hereto and
supersedes any prior or contemporaneous understandings or agreements.
14. TIME OF ESSENCE
Time is specifically declared to be of the essence in the performance
by BORROWER and LENDER of their respective duties and responsibilities
under this Agreement.
15. ATTORNEYS' FEE
If any legal action is brought for the enforcement of any of the
provisions in this Agreement, or because of an alleged dispute, breach,
default, or misrepresentation, the prevailing party or parties shall be
entitled to recover its or their actual attorneys' fees and other costs
incurred in the action, and in addition to any other relief that may be
granted by the court.
IN WITNESS WHEREOF, and intending to be legally bound hereby, the parties have
executed this Agreement as of the day and year first above written.
BY THE LENDER: WITNESS/ATTEST:
---------------------------------- ----------------------------------
Xxxxxxx X. Xxxxx, Xx., President By:
BY THE BORROWER: WITNESS/ATTEST:
ADATOM, INC.
LENDER_______ BORROWER______
Page 5 of 5 Pages
EXHIBIT A
PROMISSORY NOTE
Principal Amount: $2,000,000.00 USD Dated: August 11, 2000
Maturity Date: August 14, 2001 Loan # 000-ADTM-TD5
SSN/EIN: 00-0000000
For value received, Xxxxxx.Xxx, Inc., a Delaware corporation with an address at
000 Xxxxxxxx Xxxxx, Xxxxx #000, Xxxxxxxx, Xxxxxxxxxx 00000 (the "MAKER")
promises to pay TRICORP FINANCIAL, INC. (together with all subsequent holders in
due course) at principal address at 000 Xxxxxxxx Xxxxxx, Xxxxx 0000, Xxxx Xxxx
Xxxxx, Xxxxxxx 00000 (the "HOLDER"), the principal sum of two million United
States dollars ($2,000,000.00 USD) with interest from the date hereof at the
rate of nine point five zero percent (9.50% or .0950) simple interest per annum
on the terms hereinafter set forth.
This Promissory Note (the "NOTE") is issued under the terms of a Collateral Loan
Agreement (the "AGREEMENT") dated as of August 11, 2000 between MAKER and
HOLDER, or as amended from time to time by written agreement signed by both
these parties, the terms of which are incorporated herein by reference.
1. PAYMENT TERMS
PRINCIPAL
a. The loan period is for one (1) year.
b. The loan period can be extended with the approval of the
HOLDER
INTEREST
a. Interest is due each month in arrears.
b. Interest is calculated by dividing the total interest for one
year by 12.
All amounts are stated and payable in United States Dollars.
2. NO DEDUCTION OR SET-OFF
The principal and interest shall be payable without set-off or
deduction, unless specifically added by addendum to this NOTE, at the
address of the HOLDER set forth in the heading hereof, or at such other
place as HOLDER may designate in writing.
3. PREPAYMENT
a. The MAKER may prepay any and all principal at any time with no
fees or penalties.
b. If loan is prepaid, all interest stops as of the date of
prepayment.
4. EVENTS OF DEFAULT
The occurrence of any one or more of the following events shall
constitute an "Event of Default" hereunder:
a. MAKER shall have made an assignment for the benefit of
creditors or composition with creditors; or is unable or
admits in writing its inability to pay its debts as they
mature; or any proceeding relating to MAKER under any
bankruptcy, bankruptcy reorganization,
HOLDER_______ MAKER______
Page 1 of 4
arrangement, readjustment or debt, receivership, dissolution
liquidation law or statute of any jurisdiction, whether now or
hereafter in effect is commenced by or against MAKER;
b. Any representation or warranty made by MAKER in the AGREEMENT
shall be false or misleading in material respect; or
c. MAKER shall breach or fail to take any actions required,
obligated, or necessary to maintain or fulfill the AGREEMENT;
or
d. MAKER shall fail to make a timely interest payment or
principal repayment. "Timely" shall mean within ten (10)
calendar days of when it was due.
5. ACCELERATION AND REMEDIES
Should any Event of Default occur hereunder and should MAKER fail to
cure such default within ten (10) days after notice from HOLDER of such
default, then HOLDER, at its option and without further notice to
MAKER, unless expressly required elsewhere, may declare immediately due
and payable the entire unpaid balance of principal and all other sums
due by MAKER hereunder with interest accrued thereon at the Default
Rate as set forth herein; and, payment thereof may be enforced by
liquidating the collateral. "Liquidation" shall mean the HOLDER may
dispose of the Stock by any means to satisfy the MAKER's obligation.
"Dispose of the Stock by any means" includes: sale, assignment,
hypothecation, transfer, or any other method. If HOLDER employs counsel
to enforce this NOTE to ensure title and liquidation of the collateral,
such cost shall be taken out of any proceeds obtained in such
liquidation. HOLDER, after deducting said interest, late fees,
principal repayment amount, legal charges, other costs associated with
the liquidation, or other costs shall refund any excess monies to the
MAKER. "Monies" shall be interpreted strictly as cash receipts realized
by the HOLDER. The definition shall not include non-monetary benefits,
credit lines, or other benefits which the HOLDER may enjoy from
deployment of such collateral.
Any collateral held under the Collateral Loan Agreement may be sold,
assigned, hypothecated, or otherwise disposed of to recover amounts
enumerated above.
The HOLDER accepts no liability as to price, purchaser, or other
considerations in the disposition of such collateral and the MAKER
waives any right through arbitration or legal remedy to seek to make
HOLDER accountable for such.
6. NON-RECOURSE
The HOLDER acknowledges the sufficiency of the collateral, i.e., the
Stock, as adequate and sufficient for the principal amount advanced to
the MAKER and the HOLDER is precluded and estopped from making any and
all claims against the MAKER for other assets, guarantees, or actions
against any individual, corporation or entity for recovery of any
amounts owed to the HOLDER, except in the fraudulent inducement,
incomplete conveyance of the Stock such that the HOLDER, after an Event
of Default, is unable to liquidate such Stock; or, material
misrepresentations and invalid warranties of the MAKER which caused the
HOLDER to enter into the transaction.
7. CONSENT TO WAIVERS
MAKER and all endorsers, sureties, and guarantors consent to any and
all extensions of time, renewals, waivers or modifications that may be
granted by HOLDER with respect to the payment or other provisions of
this NOTE, and to release of the collateral or any part thereof, with
or without substitution.
HOLDER_______ MAKER______
Page 2 of 4
8. PARTIAL INVALIDITY
If any provision of this NOTE is held to be invalid or unenforceable by
a court of competent jurisdiction, the other provisions of this NOTE
shall remain in full force and effect and shall be liberally construed
in favor of HOLDER in order to effect the provision of this NOTE.
In addition, in no event shall the rate of interest exceed the maximum
rate of interest permitted to be charged by applicable law (including
the choice of law rules) and any interest paid in excess of the
permitted rate shall be refunded to MAKER. Such refund shall be made by
application of the excessive amount of interest paid against any sums
outstanding and shall be applied in such order as HOLDER may determine.
If the excessive amount of interest paid exceeds the sums outstanding,
the portion exceeding the said sums outstanding shall be refunded in
cash by HOLDER. MAKER agrees, however, that in determining whether or
not any interest payable under this NOTE exceeds the highest rate
permitted by law, any non-principal payment, including without
limitation prepayment fees and late charges, shall be deemed to the
extent permitted by law to be an expense, fee, premium or penalty
rather than interest.
9. WAIVER BY HOLDER
HOLDER shall not be deemed, by any act of omission or commission, to
have waived any of its rights or remedies hereunder unless such waiver
is in writing and signed by HOLDER, and then only to the extent
specifically set forth in the writing. A waiver on one event shall not
be construed as continuing or as a bar to or waiver of any right or
remedy to a subsequent event.
10. GOVERNING LAW
This instrument shall be governed by and construed according to the
laws of the State of Delaware.
11. PARTIES
Whenever used, the singular number shall include the plural, the plural
the singular, the use of any gender shall be applicable to all genders,
and the word "HOLDER" and "MAKER" shall be deemed to include the
respective successors and assigns of HOLDER and MAKER.
IN WITNESS WHEREOF, MAKER has hereby executed this NOTE on the day and year
first above written.
ADATOM, INC. (MAKER) ATTEST:
---------------------------------- ----------------------------------
Xxxx Xxxxxx, President By:
CORPORATE SEAL
HOLDER_______ MAKER______
Page 3 of 4
ADDENDUM TO PROMISSORY NOTE
1. PREPAYMENT OF INTEREST
a. The MAKER may, by its own choice, prepay any and all interest
as calculated in the Promissory Note. If MAKER chooses at any
date to prepay any portion of the interest which is calculated
to accrue on the principal over the one year life of the loan,
HOLDER agrees the amount of interest paid will no longer
become due at the requisite date as calculated in the NOTE.
HOLDER agrees the interest payment obligations of MAKER will
be fulfilled as to the amount of interest paid.
x. XXXXXX agrees MAKER will not be in default of the NOTE after
MAKER chooses to prepay any amount of interest on the
principal.
x. XXXXXX agrees MAKER may prepay any and all interest at any
time with no fees or penalties.
d. Entire principal is due at the maturity date if interest
payments have been prepaid or made on a timely basis in
accordance with Exhibit A, Section 1 of the Promissory Note.
