Exhibit 6.7
CREDIT FACILITY AGREEMENT
THIS CREDIT FACILITY AGREEMENT (the "Agreement"), is made and entered
into as of ___________________, 1997, by and between Micro Technology S.A.,
a ___________ corporation ("Micro Technology") and InnovaCom, Inc., a
Nevada corporation (the "Company").
RECITALS
WHEREAS, Micro Technology has agreed to extend credit to the Company
on the terms and conditions set forth herein and in the exhibits hereto.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, Micro Technology and the
Company hereby agree as follows:
1. CREDIT FACILITY; USE OF PROCEEDS.
(a) Subject to the availability of funds to Micro Technology, as
determined by Micro Technology in its sole discretion, and subject to the
terms and conditions of this Agreement, Micro Technology hereby agrees to
make advances ("Advances") to the Company from time to time from the date
hereof up to and including ___________, 1998 (the "Maturity Date") unless
sooner terminated as provided herein. All Advances shall be made pursuant
to and shall be evidenced by a secured convertible 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.
(b) 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,
or any monies expended by Micro Technology as agent for the Company, for
the benefit of the Company. The Company shall provide to Micro Technology
a request for an Advance at least one week (and at least two weeks in the
case of an Advance in excess of $500,000) prior to the date of the Advance,
and shall include in such request wire transfer instructions and such other
information as Micro Technology shall reasonably request.
(c) The Advances shall be used by the Company for general
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.
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3. COLLATERAL; OTHER AGREEMENTS. As a material inducement to Micro
Technology to make Advances to the Company, the Company has, concurrently
with the execution and delivery of this Agreement, executed and delivered
to Micro Technology a security agreement (the "Security Agreement") in the
form of EXHIBIT B attached hereto.
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
As a material inducement to Micro Technology to enter into and
execute this Agreement and to perform its covenants, agreements, duties and
obligations hereunder, and in consideration therefor, the Company hereby
makes the following representations and warranties, each of which (a) is
material and is being relied upon by Micro Technology 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 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 does not contain or will
contain any untrue statement of a material fact or omits or will omit to
state 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
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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
Micro Technology that during the term of this Agreement, unless otherwise
consented to in writing by Micro Technology, 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 the corporate existence
of the Company and any subsidiaries, maintain insurance in accordance with
current policies, and operate in accordance with all contractual
obligations and requirements of law.
5.2 ACCOUNTING; FINANCIAL STATEMENTS.
(a) 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.
(b) The Company shall deliver to Micro Technology:
(i) Within 15 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.
(ii) 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
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consistent manner with prior periods, and that the Company's certified
public accountants believe that their audit provides a reasonable basis for
such opinion.
(iii) Within ten (10) days after receipt by the
Company, a copy of any management letter delivered to the Company by its
certified public accountants.
(iv) 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.
5.3 INSPECTION RIGHTS. The Company shall permit any authorized
representative designated by Micro Technology, at Micro Technology'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.
5.4 NOTIFICATION. The Company shall promptly (but in no event
more than five (5) days following the occurrence of any such event or
matter) notify Micro Technology of (i) the occurrence of any Material
Adverse Change or any "Event of Default" (as hereinafter defined), 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.
5.5 USE OF PROCEEDS. The Company shall use the Advances for
general working capital purposes, as determined by the Company's Board of
Directors.
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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 United States Bankruptcy Code,
as amended (the "Bankruptcy Code"), or any state law, whether now or
hereafter in effect; shall be adjudicated a bankrupt; or shall have entered
against it any order for relief under the Bankruptcy Code or any such state
law, or shall have filed against it, an involuntary petition pursuant to
the Bankruptcy Code 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
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, Micro
Technology 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 Micro Technology'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
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notice of dishonor, all of which are expressly waived by the Company; (b)
the obligation of Micro Technology to make any further Advances shall
immediately cease and terminate; and (c) Micro Technology 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 Micro Technology following such
occurrence. All such rights, powers and remedies of Micro Technology 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 MICRO TECHNOLOGY TO MAKE INITIAL
ADVANCE. The obligation of Micro Technology to make the initial advance
hereunder shall be subject to the satisfaction prior to making such Advance
of each of the conditions set forth in this Section 7, unless waived in
writing by Micro Technology.
7.1 AUTHORIZATION OF AGREEMENTS. The Company shall have
delivered to Micro Technology resolutions of the Board of Directors of the
Company authorizing the Company to enter into the Agreement and all other
agreements contemplated by this Agreement to which it is a party,
accompanied by a certificate of the Secretary of the Company certifying
that such resolutions have been duly adopted by the Board of Directors of
the Company, have not been amended or superseded by any other action of the
Board of Directors of the Company and remain in full force and effect.
7.2 DELIVERY OF AGREEMENTS. The Company shall have executed and
delivered to Micro Technology the Promissory Note and the Security
Agreement, and there shall have been filed with the California Secretary of
State a UCC-1 Financing Statement as required by the Security Agreement.
8. CONDITIONS TO THE OBLIGATIONS OF MICRO TECHNOLOGY TO MAKE
ADVANCES. The obligation of Micro Technology 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 Micro Technology.
8.1 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.
8.2 NO PENDING OR THREATENED LEGAL ACTION. No order,
injunction, decree or other action or legal, administrative, arbitration or
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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.
8.3 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 Micro Technology and its counsel.
8.4 APPROVAL 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 Micro Technology
shall reasonably request. Micro Technology shall not be under any
obligation to fund any amounts for the operation of the Company in excess
of the amounts set forth in the Annual Budget.
8.5 NO MATERIAL ADVERSE CHANGE. There shall have been no
Material Adverse Change.
9. INDEMNIFICATION.
9.1 INDEMNIFICATION. The Company hereby indemnifies Micro
Technology and/or its Affiliates, (collectively the "Micro Technology
Indemnified Parties" and each individually an "Micro Technology Indemnified
Party") against, and agrees to hold the Micro Technology Indemnified
Parties harmless from, and to defend the Micro Technology Indemnified
Parties against, any and all damages (as defined below) incurred or
suffered by the Micro Technology Indemnified Parties arising out of any
misrepresentation, inaccuracy or omission in any representation or warranty
made by the Company under this Agreement, or any breach of any warranty,
covenant or agreement made or to be performed by the Company. No
investigation by Micro Technology at or prior to the date hereof shall
relieve the Company of any liability hereunder. Promptly after receipt by
an Micro Technology 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 Micro Technology Indemnified Party under this Section 9, notify the
Company in writing of the commencement thereof. In case any such action is
brought against an Micro Technology Indemnified Party and such Micro
Technology Indemnified Party notifies the Company of the commencement
thereof, the Company will be entitled to participate therein.
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9.2 CUMULATIVE REMEDY. The indemnity provided by this Section 9
is in addition to any other rights or remedies which the Micro Technology
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 9, or any other Section based upon any other representations,
warranties or covenants or agreements set forth in this Agreement.
9.3 DAMAGES. "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. 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 "INTANGIBLE" means any trademark, service xxxx, trade name
(whether registered or unregistered), copyright, license, patent or design
patent, or pending application therefor, trade secret, process, design,
software (including, but not limited to, source codes and object codes),
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.
10.4 "PERSON" means any individual, corporation, partnership,
joint venture, trust, estate, unincorporated organization, Government or
Governmental body.
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10.5 "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.
10.6 "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 Micro Technology:
Micro Technology, S.A.
c/o Rhone Finance S.A.
World Trade Center
10, route de l'aeroport
X.X. Xxx 000
XX-0000 Xxxxxx 00
Xxxxxxxxxxx
Attn: Xxx XxXxxx, President
Fax: 000-00-00-000-0000
If to the Company:
InnovaCom, Inc.
0000 Xxxxx Xxxx, Xxxxx 000
Xxxxx Xxxxx, XX 00000
Attn: Xxxx Xxx, President
Fax: 000-000-0000
with a copy to:
Xxxxxx Eng Linn & Xxxxxxxx
000 Xxxxxxx Xxxx, Xxxxx 0000
Xxxxxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxx, Esq.
Fax: 000-000-0000
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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.
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 the State of California applicable to
Agreements to be entered into and entirely performed within such state.
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. Following the Closing Date, the Company
will cooperate with Micro Technology in order to effectuate the
transactions contemplated hereby and, in that regard, will execute and
deliver such instruments, documents and further assurances as Micro
Technology 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.
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This Agreement may be amended only by an agreement in writing executed by
Micro Technology and the Company.
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.
MICRO TECHNOLOGY S.A.
By: ________________________________
Xxx XxXxxx, President
INNOVACOM, INC.
By: _______________________________
Xxxx Xxx, President
353.ejs
EXHIBITS
Exhibit A Note
Exhibit B Security Agreement
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EXHIBIT "A"
SECURED CONVERTIBLE PROMISSORY NOTE
$5,000,000.00 Santa Clara, California
_________________, 1997
Pursuant to the terms of the Credit Facility Agreement dated the date
hereof (the "Credit Agreement") and in consideration of such loans or
advances ("Advances") as Micro Technology, S.A., a _____________
corporation ("Micro Technology"), from time to time makes to or for the
benefit or at the request of InnovaCom, Inc., a Nevada corporation (the
"Maker"), the Maker hereby promises to pay on or before _______________,
1998 (the "Maturity Date") to Micro Technology, or other holder of this
Note (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 and subject to the terms
hereinafter provided.
The unpaid principal balance hereon at any time shall not exceed Five
Million Dollars ($5,000,000) ("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 Micro Technology,
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 ten percent
(10%) or the maximum interest rate allowed by law, whichever is lower. The
outstanding principal amount of this Note, together with accrued interest
thereon, shall be due and payable in full on or before the Maturity Date.
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The Maker shall, to the extent permitted by the terms of the Credit
Agreement and subject to the availability of funds to Micro Technology, as
determined by Micro Technology in its sole discretion, have the right to
require Micro Technology to make Advances up to the Maximum Principal
Amount.
Payment of this Note is secured by a security interest in the assets
of Maker pursuant to a security agreement (the "Security Agreement")
between Maker and Micro Technology dated the date hereof.
This Note shall, at the option of the Holder, become immediately due
and payable, without notice or demand, and Micro Technology'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 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 (18%) per annum (the
"Default Rate"). Should any payment required to be made under this Note not
be paid within ten (10) 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 five
percent (5%) 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 five percent (5%) 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 an
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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
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, without setoff or deduction. 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
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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 monthly.
The Holder may convert any and all amounts payable hereunder into
restricted shares of Maker's common stock as follows:
A. The Holder has the right, but not the obligation at any time
prior to _________, 1998, 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. 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 was made until all principle and accrued interest amounts
of such Advance have been converted or paid in full. Conversion hereunder
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of principle 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 principle and accrued interest
amounts thereunder are converted or paid in full.
C. 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.
D. 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."
E. 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 registratable 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.
F. If a Piggyback Registration is being made with respect to an
underwritten primary registration on behalf of Maker and the managing
underwriter or underwriters advise Maker in writing that in their opinion
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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:
(1) first, all securities Maker proposes to sell to the public, the
proceeds of which shall go to Maker, (2) second, up to the full number of
the registrable securities requested to be included in such registration in
excess of the number or dollar amount of securities Maker proposes to sell
which, in the opinion of such managing underwriter or underwriters, can be
sold without adversely affecting the offering.
Payments on or conversion of this Note, as well as any notices to the
Holder, are to be mailed or delivered to the Holder at its address set
forth in the Credit Agreement or to such other place as the Holder may from
time to time direct by written notice to the Maker. This Note, made in the
State of California, shall be construed according to the laws of the State
of California.
No 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
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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.
///
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IN WITNESS WHEREOF, the Maker has executed and delivered this Note as
of the date first above written.
INNOVACOM, INC.
By: ____________________________
Xxxx Xxx, President
