EXHIBIT 10.27
SECOND CONVERTIBLE NOTE ACQUISITION AGREEMENT
Section 1. Parties
1.1 This Agreement is made and entered into the 26th day of September 2000 (the
"Effective Date"), by and between Cuidao Holding Corp.(hereinafter the
"Seller"), and WM Properties of South Florida, Inc.( hereinafter the "Buyer").
Section 2. Definition and Accounting Terms
2.1. Definitions. As used in this Agreement:
(a) "Act" means the Securities Act of 1933, as amended.
(b) "Affiliate" means any Person (i) that directly or indirectly
controls, or is controlled by, or is under common control with
the Borrower or a Subsidiary; or (ii) that directly or indirectly
beneficially owns or holds five percent (5%) or more of any class
of voting stock of the Borrower or any Subsidiary; or (iii) five
percent (5%) or more of the voting stock of which is directly or
indirectly beneficially owned or held by the Borrower or a
Subsidiary.
(c) "Agreement" means this Second Convertible Note Acquisition
Agreement, as amended, supplemented or modified from time to
time.
(d) "Buyer" means WM Properties of South Florida, Inc., a corporation
formed under the laws of the State of Florida..
(e) "Business Day" means any day other than a Saturday, Sunday or
other day on which commercial banks in New York are authorized or
required to close under the laws of the State of New York.
(f) "Capital Lease" means all leases that have been or should be
capitalized on the books of the lessee in accordance with GAAP.
(g) "Closing Date" means September 26, 2000, or such other date as
the Buyer and Seller may agree in writing to be the Closing Date.
(h) "Code" means the US Internal Revenue Code of 1986, as amended
from time to time, and the regulations and published
interpretations thereof.
(i) "Collateral" means 2951 / 0000 Xxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxx
00000 that is subject to the Lien granted by the Mortgage and
Security Agreement and such other collateral as defined in such
agreement;
(j) "Common Stock" means the Seller's common stock, US$.0001 par
value.
(k) "Commonly Controlled Entity" means an entity, whether or not
incorporated, that is under common control with the Seller,
within the meaning of Section 414(b) or 414(c) of the Code.
(l) "Control" (whether or not capitalized) means the possession,
directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether
through the ownership of voting securities, by contract, or
otherwise.
(m) "Convertible Note Acquisition Documents" means this Agreement,
the Mortgage Note, and Mortgage and Security Agreement.
(n) "Debt" means (i) indebtedness or liability for borrowed money;
(ii) obligations evidenced by bonds, debentures, notes or other
similar instruments; (iii) obligations for the deferred purchase
price of property or services (including trade obligations); (iv)
obligations under Capital Leases; (v) obligations under letters
of credit; (vi) obligations under acceptance facilities; (vii)
all guaranties, endorsements (other than for collection or
deposit in the ordinary course of business), and other contingent
obligations to purchase, to provide funds for payment, to supply
funds to invest in any Person or entity, or otherwise to assure a
creditor against loss; and (viii) all obligations secured by any
Liens, whether or not the obligations have been assumed.
(o) "Default" means any of the events specified in paragraph 9.1,
whether or not any requirement for the giving of notice, the
lapse of time, or both, or any other condition has been
satisfied.
(p) "ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations and
published interpretations thereof.
(q) "Event of Default" means any of the events specified in Section
9.01, provided that any requirement for the giving of notice, the
lapse of time, or both, or any other condition, has been
satisfied.
(r) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(s) "GAAP" means generally accepted accounting principles in the U.S.
(t) "Lien" means any mortgage, deed of trust, pledge, security
interest, hypothecation, assignment, deposit arrangement,
encumbrance, lien (statutory or other), or preference, priority,
or other security agreement or preferential arrangement, charge
or encumbrance of any kind or nature whatsoever (including
without limitation any conditional sale or other title retention
agreement, any financing lease having substantially the same
economic effect as any of the foregoing, and the filing of any
financing statement, charge or similar notice under the law of
any jurisdiction to evidence any of the foregoing.
(u) "Mortgage Note" shall be Convertible Mortgage Note substantially
in the form of Exhibit A to be delivered to the Buyer under the
terms of this Agreement and more fully described in paragraph 3.3
of this Agreement.
(v) "Mortgage and Security Agreement" means a conditional Mortgage
and Security Agreement in substantially the form of Exhibit B to
be delivered by the Seller under the terms of this Agreement.
(w) "Multi-employer Plan" means a Plan described in Section
4001(a)(3) of ERISA.
(x) "PBGC" means the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.
(y) "Person" means an individual, partnership, corporation, business
trust, joint stock company, trust, unincorporated association,
joint venture, governmental authority, or other entity of
whatever nature.
(z) "Plan" means any pension plan which is covered by Title IV of
ERISA and in respect of which the Seller or a Commonly Controlled
Entity is an "employer" as defined in Section 3(5) of ERISA.
(aa) "Prohibited Transaction" means any transaction set forth in
Section 406 of ERISA or Section 4975 of the Code.
(bb) "Release" means a Release and Satisfaction of the Mortgage and
Security Agreement in substantially the form of Exhibit C to be
delivered by the Buyer to Mintmire & Associates to hold in escrow
under the terms of this Agreement.
(cc) "Reportable Event" means any of the events set forth in Section
4043 of ERISA.
(dd) "SEC" means the Securities and Exchange Commission of the United
States of America.
(ee) "Seller" means Cuidao Holding Corp., a corporation formed under
the laws of the State of Florida.
(ff) "Subsidiary" means a corporation of which shares of stock having
ordinary voting power (other than stock having such power only by
reason of the happening of a contingency) to elect a majority of
the board of directors or other managers of that corporation are
at the time owned, or the management of which is otherwise
controlled, directly or indirectly through one or more
intermediaries, or both, by the Seller.
2.2. Singular and Plural Terms. As used in this Agreement, terms defined in the
singular have the same meaning when used in the plural, and terms defined in the
plural have the same meaning when used in the singular.
2.3. Accounting Terms. All accounting terms not specifically defined in this
Agreement shall be construed in accordance with GAAP. All financial data
submitted pursuant to this Agreement shall be prepared in accordance with GAAP.
Section 3. Amount and Terms of the Convertible Note Acquisition Agreement
3.1. Convertible Note Acquisition. The Buyer agrees on the terms and conditions
set forth in this Agreement to acquire, in exchange for $345,493.21 in cash (the
"Purchase Price"), a convertible note in the principal amount of $495,000
convertible into a total of 198,000 shares of the Company's Restricted Common
Stock which shall be held in escrow by Mintmire & Associates and disbursed in
accordance with this Agreement (the "Escrowed Shares"). The Purchase Price shall
be used solely to pay off the Company's First Mortgage payable to Xxxxxx Xxxxxx,
by assignment from Em- Star Mortgage Co, recorded on 0000 Xxxxx Xxxxxx real
estate located in Hollywood, Florida, and recorded February 4, 1999, in Official
Record Book 29206, at Page 1362, of the Public Records of Broward County,
Florida with the First Mortgage payable to Em-Star Mortgage Co. recorded in
Official Record Book 29206, at Page 1355 (the "Property"). The Purchase Price
shall be due and payable by the Buyer to the Seller on or before October 31,
2000, unless such date is extended by the written mutual agreement of the
parties hereto (the "Payment Delivery Date").
3.2. Price Guarantee. The Seller agrees that for a period of twenty one (21)
months from the Payment Delivery Date, to guarantee to the Buyer that its Common
Stock shall not fall below a closing bid price of $2.50 per share such that when
certain incremental allocations of such shares are sold by Buyer pursuant to
Rule 144 promulgated under the Act ("Rule 144") or such allocations are
calculated as provided herein that in the aggregate the value of the shares into
which the Mortgage Note is convertible shall have a value of $495,000 (the
"Price Guarantee"). To secure such Price Guarantee, Seller grants to Buyer a
mortgage upon the Property convertible into shares, which mortgage shall be
evidenced by the Mortgage Note and secured by the Mortgage and Security
Agreement, both of which are more fully defined herein (collectively the "Price
Guarantee Collateral").
3.3 Mortgage Note. The Seller's Price Guarantee shall be evidenced by its
Mortgage Note in substantially the form of Exhibit A attached to this Agreement
in the principal amount of $495,000. The Mortgage Note shall be delivered on the
Closing Date and held in escrow by Mintmire & Associates in accordance with the
escrow provisions set out in subparagraph 3.6. The Mortgage Note shall be dated
as of the Payment Delivery Date shall be due and payable twenty four (24) months
from such date. Commencing on the first anniversary of the Payment Delivery Date
and continuing for the next eight (8) successive months, Buyer shall be required
each such month to convert a portion of the Mortgage Note into shares of the
Seller's Common Stock, the mandatory conversion dates and number of shares to be
issued on each mandatory conversion date are set forth in Schedule I attached
hereto (the "Monthly Allocation"). Commencing on the Payment Delivery Date and
continuing on the last day of each of the next eight (8) successive months, the
principal amount of the Mortgage Note shall be reduced by the greater of (i) the
actual gross proceeds received by Buyer for sale of the Monthly Allocation and
any previously issued Monthly Allocation shares not sold during the applicable
month during the applicable month made in accordance with Rule 144, or (ii) the
average of the closing price for the Seller's Common Stock from the 1st day of
the
applicable month to the next to last day of the applicable month as quoted on
the OTC BB times the Monthly Allocation (the greater of subsection (i) or (ii)
hereinafter referred to as the "Incremental Mortgage Reduction Amount"). In the
event that Incremental Mortgage Reduction Amount is less than the Monthly
Allocation times $2.50 per share during the applicable month (the "Target
Reduction Amount"), the difference between the Target Reduction Amount and the
Incremental Mortgage Reduction Amount realized shall bear interest at the rate
of 11.11% per annum until paid. To assist Seller in making this calculation,
Buyer agrees to provide evidence of all sales made in the applicable month to
Seller by the tenth (10th) day of the succeeding month. Each successive
Incremental Mortgage Reduction Amount shall be applied first to accrued but
unpaid interest and thereafter as a reduction to principal. At the end of the
term of the Mortgage Note, all unpaid principal and accrued interest not
otherwise paid by the incremental reductions to principal shall be due and
payable. In the event that incremental reductions pay off the entire Mortgage
Note and any accrued but unpaid interest prior to the end of the term, any
Monthly Allocation shares not previous issued to Buyer shall be immediately
issued, the Mortgage Note shall be canceled and any unsold shares delivered to
or held by Buyer, if any, may be retained or sold by the Buyer pursuant to Rule
144 as he so elects. If at any time during the term of the Mortgage Note the
aggregate of all of the Incremental Mortgage Reduction Amounts is equal to or
above $495,000, or at the end of the term at such time as Seller pays all unpaid
principal and accrued but unpaid interest, the entire Mortgage Note and Mortgage
and Security Agreement shall be released and satisfied and Buyer (1) authorizes
Mintmire & Associates to provide the Seller with the Release executed
simultaneously with this Agreement and being held in escrow by them; (2)
authorizes the Seller to record the Release; and (3) agrees to cancel and return
the original Mortgage Note to the Seller. Interest, if any, shall be calculated
on the basis of a year of 360 days. Any unpaid principal or accrued but unpaid
interest due at the end of the term shall be payable at the Lender's Principal
Office.
3.4. Mortgage and Security Agreement. The Mortgage Note, together with all of
the Seller's other obligations under this Agreement, shall be secured by a
Mortgage and Security Agreement in substantially the form of Exhibit B hereto
executed by the Seller. The Mortgage and Security Agreement shall be delivered
on the Closing Date and held in escrow by Mintmire & Associates in accordance
with the escrow provisions set out in subparagraph 3.6.
3.5 Release. Contemporaneously with the execution of this Agreement, the Buyer
shall execute a Release in substantially the form of Exhibit C. The Release
shall be delivered on the Closing Date and held in escrow by Mintmire &
Associates in accordance with the escrow provisions set out in subparagraph 3.6.
3.6 Escrowed Documents, Escrowed Shares and Cancellation.
(a) Escrowed Documents. On the Closing Date, the Mortgage Note, Mortgage
and Security Agreement and Release shall be held in escrow by Mintmire
& Associates.
(i) In the event the Purchase Price is paid on or before the Payment
Delivery Date, Buyer shall provide Mintmire & Associates written
confirmation within three (3) business days that the Purchase
Price has been paid. In such event, Mintmire & Associates is
authorized by the Buyer and the Seller to insert the Payment
Delivery Date in the Mortgage Note, the Mortgage and
Security Agreement and the Release and to deliver the Mortgage
Note and Mortgage and Security Agreement to the Buyer for
recordation. Mintmire & Associates shall hold the Release in
escrow until the full and complete satisfaction of Seller's
obligation to the Buyer in accordance with the terms and
conditions herein
(ii) 1In the event the Purchase Price is not paid on or before the
Payment Delivery Date, Seller shall provide Mintmire & Associates
written confirmation that the Purchase Price has not been paid,
in which event Mintmire & Associates is authorized to cancel the
Mortgage Note and Mortgage and Security Agreement and Release and
return the cancelled originals to Seller.
(b) Escrowed Shares. On the Closing Date, Seller shall deliver one (1)
certificate in the aggregate amount of the Monthly Allocations to be
held in escrow pending payment or failure to pay the Purchase Price.
(i) In the event the Buyer has confirmed that the Purchase Price has
been paid by the Payment Delivery Date, Mintmire & Associates is
authorized to return the certificate to the transfer agent for
re-issuance as nine (9) certificates in the amounts of the
Monthly Allocations, each of which shall be delivered to Buyer no
later than five (5) days after the first day of the applicable
month for such allocation. Seller and Buyer authorize Mintmire &
Associates to release such shares to Buyer as required herein
without any further action on their part.
(ii) In the event the Seller has confirmed that the Purchase Price has
not been paid by the Payment Delivery Date, Mintmire & Associates
is authorized to return the certificate to the transfer agent for
cancellation.
(c) Cancellation. In the event the Seller has confirmed to Mintmire &
Associates that the Purchase Price has not been paid by the Payment
Delivery Date, this Agreement shall become null and void and all
obligations shall cease as to each of the parties hereto.
3.7 Registration Under the Act. The Mortgage Note and any conversion shares into
which it may be converted issued pursuant to this Agreement have not been
registered under the Act. Unless and until registered under the Act, the
Mortgage Note and any shares shall bear the following legend:
This Notes or any shares issued upon conversion have not been registered under
the Securities Act of 1933, as amended (the "Act") or applicable state law and
may not be sold, transferred or otherwise disposed of unless registered under
the Act and any applicable state act or unless the Company receives an opinion
of counsel satisfactory to it that the Note or any shares issued upon conversion
may be transferred without registration under the Act or qualify for an
exemption.
The Mortgage Note and any shares issued upon conversion shall be subject to Rule
144 and shall be restricted (the "Restricted Securities").
3.7 Piggyback Registration.
(a) At any time that the Seller proposes to file a registration statement
on Form S-1 or other applicable form under the Act (the "Registrations
Statement"), either for its own account or for the account of a
stockholder or stockholders, the Seller shall give the Buyer or other
holder (the "Holder") written notice of its intention to do so and of
the intended method of sale (the "Registration Notice") within a
reasonable time prior to the anticipated filing date of the Seller's
Registration Statement effecting such Seller registration. Holder may
request inclusion of any Restricted Securities in such Registration
Statement by delivering to the Seller, within ten (10) Business Days
after receipt of the Registration Notice, a written notice (the
"Piggyback Notice") stating the number of Restricted Securities
proposed to be included and that such shares are to be included in any
underwriting only on the same terms and conditions as the shares of
Common Stock otherwise being sold through underwriters under such
Seller Registration Statement. The Seller shall use its best efforts
to cause all Restricted Securities specified in the Piggyback Notice
to be included in the Seller Registration Statement and any related
offering, all to the extent requisite to permit the sale by the Holder
of its Restricted Securities in accordance with the method of sale
applicable to the other shares of Common Stock included in such Seller
Registration Statement; provided, however, that if, at any time after
giving written notice of its intention to register any securities and
prior to the effective date of the Seller Registration Statement filed
in connection with such registration, the Seller shall determine for
any reason not to register or to delay registration of Holder's
Restricted Securities, the Company may, at its election, give written
notice of such determination to Holder and, thereupon:
(i) in the ease of a determination not to register, shall be relieved
of its obligation to register Holder's Restricted Securities in
connection with such registration (but not from its obligation to
pay the registration expenses in connection therewith), and
(ii) in the case of a delay in registering, shall be permitted to
delay registering Holder's Restricted Securities for the same
period as the delay in registering such other securities.
(b) The Seller's obligation to include Restricted Securities in a Seller's
Registration Statement pursuant to Section 7(a) shall be subject to
the following limitations:
(i) The Seller may elect, at its sole option and for any reason, not
to register Holder's Restricted Shares, provided however, that
this right is limited to one (1) time and relative to one (1)
particular Seller Registration Statement.
(ii) The Seller shall not be obligated to include any Restricted
Securities in a registration statement filed on Form X-0, Xxxx
X-0 or such other similar successor forms then in effect under
the Securities Act.
(iii)If a Seller Registration Statement involves an underwritten
offering and the managing underwriter advises the Seller in
writing that in its opinion, the number of securities requested
to be included in such Seller Registration Statement exceeds the
number which can be sold in such offering without adversely
affecting the offering, the Seller shall include in such Seller
Registration Statement the number of such securities which the
Seller is so advised can be sold in such offering without
adversely affecting the offering, determined as follows:
(A) first, the securities proposed by the Seller to be sold for
it own account, and
(B) second, any Restricted Securities requested to be included
in such registration and any other securities of the Seller
in accordance with the priorities, if and then existing
among the holders of such securities pro rata among the
holders thereof requesting such registration on the basis of
the number of shares of such securities requested to be
included by such holders.
(iv) The Seller shall not be obligated to include Restricted
Securities in more than one (1) Seller Registration Statement.
(c) To the extent Holder's Restricted Securities are intended to be
included in a Seller Registration Statement, Holder may include any of
its Restricted Securities in such Seller Registration Statement
pursuant to this Agreement only if Holder furnishes to the Seller in
writing, within ten (10) business days after receipt of a written
request therefore, such information specified in Item 507 of
Regulation S-K under the Act or such other information as the Seller
may reasonably request for use in connection with the Seller
Registration Statement or Prospectus or preliminary Prospectus
included therein and in any application to the NASD. Holder as to
which the Seller Registration Statement is being effected agrees to
furnish promptly to the Seller all information required to be
disclosed in order to make all information previously furnished to the
Seller by Holder not materially misleading.
Section 4. Conditions Precedent.
4.1. Conditions Precedent. The obligation of the Buyer to pay the Purchase Price
on or before the Payment Delivery Date to the Seller and thereby acquire the
Mortgage Note convertible into 198,000 Restricted Common Stock shares from the
Seller is subject to the delivery of the following on the Closing Date:
(a) Mortgage Note. A Mortgage Note for the principal amount of $495,000
duly executed by the Seller and delivered to escrow;
(b) Mortgage and Security Agreement. A Mortgage and Security Agreement
duly executed by the Seller and delivered to escrow; together with an
undertaking by the Seller to (i) file within the time proscribed by
law for perfecting the Buyer's security interest in the Collateral,
and deliver to the Buyer acknowledgment copies of the Financing
Statements (UCC- 1) duly filed under the Uniform Commercial Code of
all jurisdictions necessary or, in the opinion of the Buyer, desirable
to perfect the security interest created by the Security Agreement,
and (ii) certified copies of Request for Copies or Information (Form
UCC-11) identifying all of the financing statements on file with
respect to the Seller in all jurisdictions referred to under (i),
including the Financing Statement filed by the Buyer against the
Seller's, indicating that no party claims an interest in any of the
Collateral except as set forth on Schedule II;
(c) Release. A Release executed by the Buyer and delivered to escrow;
(d) Evidence of all corporate action by the Seller. Certified (as of the
Closing Date)
copies of all corporate action taken by the Seller, including
resolutions of its Board of Directors, authorizing the execution,
delivery, and performance of this Agreement and each other document to
be delivered pursuant to this Agreement;
(e) Incumbency and signature certificate of the Seller's. A certificate
(dated as of the Closing Date) of the Secretary of the Seller
certifying the names and true signatures of the officers of the Seller
authorized to sign this Agreement and any other documents to be
delivered by the Seller under this Agreement;
Section 5. Representations and Warranties.
5.1. Seller's Representations and Warranties. The Seller represents and warrants
to the Lenders that:
(a) Incorporation, Good Standing, and Due Qualification. The Seller is a
corporation duly incorporated, validly existing and in good standing
under the laws of the jurisdiction of its incorporation; has the
corporate power and authority to own its assets and to transact the
business in which it is now engaged and proposes to be engaged in; and
is duly qualified as a foreign corporation and in good standing under
the laws of each other jurisdiction in which such qualification is
required. The Seller has no Subsidiaries other than Cuidao (USA)
Imports Co., Inc. and R&R (Bordeaux) Imports, Inc.
(b) Corporate Power and Authority. The execution, delivery and performance
by the Seller of this Agreement and the documents delivered herewith
have been duly authorized by all necessary corporate action and do not
and will not (i) require any consent or approval of the shareholders
of such corporation; (ii) contravene such corporation's charter or
bylaws; (iii) violate any provision of any law, rule, regulation,
order, writ, judgment, injunction, decree, determination or award
presently in effect having applicability to such corporation; (iv)
result in a breach of or constitute a default under any indenture or
loan or credit agreement or any other agreement, lease or instrument
to which such corporation is a party or by which it or its properties
may be bound or affected; and (v) cause such corporation to be in
default under any such law, rule, regulation, order, writ, judgment,
injunction, decree, determination or award, or any such indenture,
agreement, lease or instrument.
(c) Legally Enforceable Agreement. This Agreement is, and each of the
other documents provided herewith when delivered under this Agreement
will be, legal, valid and binding obligations of the Seller,
enforceable against the Seller in accordance with their respective
terms, except to the extent that such enforcement may be limited by
applicable bankruptcy, insolvency and other similar laws affecting
creditors' rights generally.
(d) Seller's Financial Statements. The balance sheet of the Seller as at
December 31, 1999 and 1998, and, and the related statements of income,
retained earnings and cash flows of the Seller for the fiscal years
then ended, and the accompanying footnotes, together with the opinion
thereon of Xxxx & Company, P.A., independent certified public
accountants, and the interim unaudited consolidated balance sheet of
the Seller as of June 30, 2000, and the related statements
of income, retained earnings and cash flows of the Seller for the
three (3) month period then ended, copies of which have been included
by the Seller in its reports filed with the SEC on Forms 10-K and
10-Q, respectively, are complete and correct and fairly present the
financial condition of the Seller as at such dates and the results of
the operations of the Seller for the periods covered by such
statements, all in accordance with GAAP consistently applied (subject
to year-end adjustments in the case of the interim financial
statements), and since June 30, 2000, there has been no material
adverse change in the condition (financial or otherwise), business, or
operations of the Seller or any Subsidiary. There are no liabilities
of the Seller or any Subsidiary, fixed or contingent, which are
material but are not reflected in the financial statements or in the
notes thereto, other than liabilities arising in the ordinary course
of business since June 30, 2000 and the Mortgage Note payable to Buyer
and Mortgage and Security Agreement granted to the Buyer pursuant to
the Convertible Note Acquisition Agreement dated August 31, 2000 the
proceeds of which were used to pay off the existing second mortgage on
the Property (the "First Convertible Note").
(e) Full Disclosure. No information, exhibit or report furnished by the
Seller, to the Buyer in connection with the negotiation of this
Agreement contained any material misstatement of fact or omitted to
state a material fact or any fact necessary to make the statement
contained therein not materially misleading.
(f) Labor Disputes and Acts of God. Neither the business nor the
properties of the Seller or any Subsidiary are affected by any fire,
explosion, accident, strike, lockout or other labor dispute, drought,
storm, hail, earthquake, embargo, act of God or of the public enemy,
or other casualty (whether or not covered by insurance) materially and
adversely affecting such business properties or the operation of the
Seller or such Subsidiary.
(g) Other Agreements. Except as set forth in any filing with the SEC or if
not contained therein or on Schedule III herein, the Seller is not a
party to any indenture, loan, or credit agreement, or to any lease or
other agreement or instrument, or subject to any charter or corporate
restriction which could have a material adverse affect on the
business, properties, assets, operations, or conditions, financial or
otherwise, of the Seller to carry out its obligations under this
Agreement. The Seller is not in default in any respect in the
performance, observance, or fulfillment of any of the obligations,
covenants, or conditions contained in any agreement or instrument
material to its business to which it is a party which is not disclosed
herein or in the filing with the SEC. The Buyer specifically exempts
the First Convertible Note from the provisions of this paragraph.
(h) Litigation. There is no pending or threatened action or proceeding
against or affecting the Seller before any court, governmental agency,
or arbitrator which may, in any one case or in the aggregate,
materially adversely affect the financial condition, operations,
properties, or business of the Seller or the ability of the Seller to
perform its obligations under this Agreement which has not been
disclosed herein or in the Seller's filings with the SEC.
(i) Ownership and Liens. The Seller has title to, or valid leasehold
interests in, all of its properties and assets, real and personal,
including the properties and assets and leasehold interest reflected
in the financial statements referred to in paragraph 5.1(d) of this
Agreement (other than any properties or assets disposed of in the
ordinary course of business), and none of the properties and
assets owned by the Seller and none of its leasehold interests is
subject to any Lien, except such as may be permitted pursuant to
paragraph 7.1(a) of this Agreement and except as disclosed herein or
in the Seller's filings with the SEC. The Buyer specifically exempts
the First Convertible Note from the provisions of this paragraph.
(j) ERISA. The Seller is in compliance in all material respects with all
applicable provisions of ERISA. Neither a Reportable Event nor a
Prohibited Transaction has occurred and is continuing with respect to
any Plan; no notice of intent to terminate a Plan has been filed, nor
has any Plan been terminated; no circumstances exist which constitute
grounds entitling the PBGC to institute proceedings to terminate, or
appoint a trustee to administer, a Plan, nor has the PBGC instituted
any such proceedings; neither the Seller nor any Commonly Controlled
Entity has completely or partially withdrawn from a Multiemployer
Plan; the Seller and each Commonly Controlled Entity have met their
minimum funding requirements under ERISA with respect to all of their
Plans, and the present value of all vested benefits under each Plan
does not exceed the fair market value of all Plan assets allocable to
such benefits, as determined on the most recent valuation date of the
Plan and in accordance with the provisions of ERISA; and neither the
Seller nor the Parent nor any Commonly Controlled Entity has incurred
any liability to the PBGC under ERISA.
(k) Operation of Business. The Seller possesses all licenses, permits,
franchises, patents, copyrights, trademarks, and trade names, or
rights thereto, to conduct their respective businesses substantially
as now conducted and as presently proposed to be conducted, and the
Seller is not in violation of any valid rights of others with respect
to any of the foregoing except as described herein or as disclosed in
the Seller's filings with the SEC.
(l) Taxes. The Seller has filed all tax returns (federal, state, and
local) required to be filed and have paid all taxes, assessments, and
governmental charges and levies thereon to be due, including any
interest and penalties.
(m) Registration and Listing of Common Stock. The Seller is a reporting
company, and has continuously been a reporting company for more than
the 18 calendar months preceding the Closing Date, and the Common
Stock is registered under the Exchange Act and quoted on the OTC
Bulletin Board. The Seller has filed all reports and other documents
required of it by the Exchange Act, the rules and regulations of the
SEC, and the rules and regulations of the OTC Bulletin Board.
(n) Rule 506 Offerings. The Seller offered the securities issuable under
this Agreement under Regulation D, Rule 506.
(o) U.S. Transaction. The negotiations for and the issuance of the
securities issuable under this Agreement have been made in a U.S.
transaction under Regulation D, Rule 506.
(p) No Directed Selling Efforts. The Seller has not engaged in any
directed selling efforts with respect to this Agreement or the
securities issuable under this Agreement.
(q) Exemption of the Issuance of the Securities from Registration. The
Seller's issuance of the securities issuable under this Agreement are
exempt from the registration requirements of Section 5 of the
Securities Act pursuant to the provisions of Rule 506 of Regulation D.
5.2. Buyer's Representations and Warranties. The Buyer represents and warrants
to the Seller that:
(a) Incorporation, Good Standing, and Due Qualification. The Buyer is a
corporation duly incorporated, validly existing and in good standing
under the laws of the jurisdiction of its incorporation; has the
corporate power and authority to own its assets and to transact the
business in which it is now engaged and proposes to be engaged in; and
is duly qualified as a foreign corporation and in good standing under
the laws of each other jurisdiction in which such qualification is
required. The Buyer has no Subsidiaries other than
----------------------------.
(b) Corporate Power and Authority. The execution, delivery and performance
by the Buyer of this Agreement and the documents delivered herewith
have been duly authorized by all necessary corporate action and do not
and will not (i) require any consent or approval of the shareholders
of such corporation; (ii) contravene such corporation's charter or
bylaws; (iii) violate any provision of any law, rule, regulation,
order, writ, judgment, injunction, decree, determination or award
presently in effect having applicability to such corporation; (iv)
result in a breach of or constitute a default under any indenture or
loan or credit agreement or any other agreement, lease or instrument
to which such corporation is a party or by which it or its properties
may be bound or affected; and (v) cause such corporation to be in
default under any such law, rule, regulation, order, writ, judgment,
injunction, decree, determination or award, or any such indenture,
agreement, lease or instrument.
(c) Legally Enforceable Agreement. This Agreement is, and each of the
documents provided herewith when delivered under this Agreement will
be, legal, valid and binding obligations of the Buyer, enforceable
against the Buyer in accordance with their respective terms, except to
the extent that such enforcement may be limited by applicable
bankruptcy, insolvency and other similar laws affecting creditors'
rights generally.
(d) Accredited Investor. The Buyer is an accredited investor as that term
is defined in Rule 501(a)(3) of Regulation D of the SEC.
(i) Buyer is a U.S. Person not formed for the purpose of this
investment.
(e) The Buyer has complied with all of the conditions required of it in
connection with the transactions contemplated by this Agreement.
(f) Buyer is acquiring the securities issuable hereby as an investment and
not with a view to resell except in accordance with Rule 144 of the
Act.
Section 6. Affirmative Covenants.
6.1. Financial and Operational. So long as any part of the Mortgage Note shall
remain outstanding, the Seller will:
(a) Maintenance of Existence. Preserve and maintain its corporate
existence and good standing in the jurisdiction of its incorporation,
and qualify and remain qualified as a foreign corporation in each
jurisdiction in which such qualification is required.
(b) Maintenance of Records. Keep adequate records and books of account, in
which complete entries will be made in accordance with GAAP
consistently applied, reflecting all material financial transactions
of the Seller.
(c) Maintenance of Properties. Maintain, keep and preserve all of its
properties (tangible and intangible) necessary or useful in the proper
conduct of its business in good working order and condition, ordinary
wear and tear excepted.
(d) Conduct of Business. Continue to engage in an efficient and economical
manner in a business of the same general type as conducted by it on
the date of this Agreement.
(e) Maintenance of Insurance. Maintain insurance with financially sound
and reputable insurance companies or associations in such amounts and
covering such risks as are usually carried by companies engaged in the
same or a similar business and similarly situated, which insurance may
provide for reasonable deductibility from its coverage.
(f) Compliance With Laws. Comply with all applicable laws, codes,
regulations, rules, ordinances and orders, including without
limitation paying before the same become delinquent all taxes,
assessments and governmental charges imposed upon it or upon its
property.
(g) Right of Inspection. At any reasonable time and from time to time,
permit the Buyer or any of its representatives to examine and make
copies of and abstracts from the records and books of account of, and
visit the properties of, the Seller, and to discuss its affairs,
finances and accounts with any of its officers, directors and
independent accountants.
(h) Reporting Requirements. Furnish to the Buyer:
(i) Quarterly Financial Statements. The Seller's reports on Form 10-Q
or 10- QSB contemporaneously with their filing with the SEC.
(ii) Annual Financial Statements. The Seller's annual reports on Form
10-K or 10-KSB contemporaneously with their filing with the SEC.
(iii)Management Letters. Promptly upon receipt thereof, copies of any
reports submitted to the Seller or any Subsidiary by independent
accountants in connection with their examination of the financial
statements of the Seller.
(iv) Certificate of No Default. Within twenty-five (25) days of any
written request of the Buyer provide to the Buyer a certificate
of the Seller's chief financial officer certifying that to the
best of his or her knowledge no Default or Event of Default has
occurred and is continuing or, if a Default or Event of Default
has occurred and is continuing, a statement as to the nature
thereof and the action that is proposed to be taken with respect
thereto.
(v) Notice of Litigation. Promptly after the commencement thereof,
notice of all actions, suits and proceedings before any court or
governmental department, commission, board, bureau, agency, or
instrumentality (domestic or foreign) or arbitrator, affecting
the Seller, which, if determined adversely to the Seller, could
have a material adverse affect on the financial condition,
properties or operations of the Seller.
(vi) Notice of Defaults and Events of Default. As soon as possible and
in any event within ten (30) days after the occurrence of each
material Default or material Event of Default, a written notice
setting forth the details of such Default or Event of Default and
the action that is proposed to be taken by the Seller with
respect thereto.
(vii)ERISA reports. As soon as possible, and in any event within
thirty (30) days after the Seller knows or has reason to know
that any circumstances exist that constitute grounds entitling
the PBGC to institute proceedings to terminate a Plan subject to
ERISA with respect to the Seller or any Commonly Controlled
Entity, and promptly but in any event within two (2) Business
Days of receipt by the Seller or any Commonly Controlled Entity
of notice that the PBGC intends to terminate a Plan or appoint a
trustee to administer the same, and promptly but in any event
within five (5) Business Days of the receipt of notice concerning
the imposition of withdrawal liability with respect to the Seller
or any Commonly Controlled Entity, the Seller will deliver to the
Buyer a certificate of the chief financial officer of the Seller
setting forth all relevant details and the action which the
Seller proposes to take with respect thereto.
(viii) Other Regulatory Reports and Filings. Promptly after the
sending or filing thereof, copies of all proxy statements,
financial statements and reports that the Seller or any
Subsidiary sends to its shareholders, and copies of all regular,
periodic and special reports, and all registration statements
that the Seller files with the securities regulatory authorities
of any country, province or state, or with any securities
exchange.
(ix) General Information. Such other information respecting the
condition or operations, financial or otherwise, of the Seller as
the Buyer may from time to time reasonably request.
(x) Environment, Health and Safety. Be and remain in compliance with
the provisions of all federal, state, and local environmental,
health, and safety laws, codes and ordinances, and all rules and
regulations issued thereunder; notify the Buyer immediately of
any notice of a hazardous discharge or environmental complaint
received from any governmental agency or any other party; notify
the Buyer immediately of any hazardous discharge from or
affecting its premises; immediately contain and remove the same,
in compliance with all applicable laws;
promptly pay any fine or penalty assessed in connection
therewith; permit the Buyer to inspect the premises, to conduct
tests thereon, and to inspect all books, correspondence, and
records pertaining thereto; and at the Buyer's request, and at
the Seller's expense, provide a report of a qualified
environmental engineer, satisfactory in scope, form, and content
to the Buyer, and such other and further assurances reasonably
satisfactory to the Buyer that the condition has been corrected.
Section 7. Negative Covenants.
7.1. So long as any of the Mortgage Note remains unpaid the Seller will not:
(a) Liens. Create, incur, assume, or suffer to exist, or permit any
Subsidiary to create, incur, assume, or suffer to exist, any Lien
upon or with respect to any of its properties, now owned or
hereafter acquired, except:
(i) Previous and future liens in favor of the Buyer;
(ii) Easements, rights-of-way, restrictions, and other similar
encumbrances which, in the aggregate, do not materially
interfere with the occupation, use, and enjoyment by the
Seller or any Subsidiary of the property or assets
encumbered thereby in the normal course of its business or
materially impair the value of the property subject thereto;
and
(b) Debt. Create, incur, assume, or suffer to exist, or permit any
Subsidiary to create, incur, assume, or suffer to exist, any
Debt, except:
(i) Debt of the Seller under this Agreement or the Mortgage Note
or the First Convertible Note;
(ii) Debt described in Schedule III but no voluntary prepayments,
renewals, extensions, refinancing, or increases in the
amounts thereof;
(iii)Debt of the Seller subordinated on terms satisfactory to the
Buyer to the Seller's obligation under this Agreement and
the Mortgage Note;
(c) Sale of Assets. Sell, lease, assign, transfer, or otherwise
dispose of, or permit any Subsidiary to sell, lease, assign,
transfer, or otherwise dispose of, any of its now owned or
hereafter acquired assets (including, without limitation, shares
of stock and indebtedness of Subsidiaries, receivables, and
leasehold interests), except: (1) inventory disposed of in the
ordinary course of business; (2) the sale or other disposition of
assets no longer used or useful in the conduct of its business;
and (3) that any Subsidiary may sell, lease, assign, or otherwise
transfer its assets to the Seller.
(d) Transactions With Affiliates. Enter into any transaction,
including, without limitation, the purchase, sale, or exchange of
property or the rendering of any service, with any Affiliate, or
permit any Subsidiary to enter into any transaction, including,
without limitation, the
purchase, sale, or exchange of property or the rendering of any
service, with any Affiliate, except in the ordinary course of and
pursuant to the reasonable requirements of the Seller's or such
Subsidiary's business and upon fair and reasonable terms no less
favorable to the Seller or such Subsidiary than would obtain in a
comparable arm's-length transaction with a Person not an
Affiliate.
Section 8. Events of Default
8.1. Events of Default. If any of the following events shall occur:
(a) The Seller should fail to pay the principal of or interest on the
Mortgage Note as and when due and payable, or any amount of any other
fee by or within ninety (90) days after the date that it is due and
payable;
(b) Any representation or warranty made or deemed made by the Seller in
this Agreement or any other document provided hereunder, or which is
contained in any certificate, document, opinion, or financial or other
statement furnished at any time under or in connection with any
document provided hereunder, shall prove to have been incorrect,
incomplete, or misleading in any material respect on or as of the date
made or deemed made;
(c) The Seller or any Subsidiary shall (i) fail to pay any indebtedness
for borrowed money (other than the Mortgage Note) of the Seller or
such Subsidiary, as the case may be, or any interest or premium
thereon, when due (whether by scheduled maturity, required prepayment,
acceleration, demand, or otherwise), or (ii) fail to perform or
observe any material term, covenant, or condition on its part to be
performed or observed under any agreement or instrument relating to
any such indebtedness, when required to be performed or observed, if
the effect of such failure to perform or observe is to accelerate, or
to permit the acceleration of, after the giving of notice or passage
of time, or both, the maturity of such indebtedness, whether or not
such failure to perform or observe shall be waived by the holder of
such indebtedness; or any such indebtedness shall be declared to be
due and payable, or required to be prepaid (other than by a regularly
scheduled required prepayment), prior to the stated maturity thereof;
(d) The Mortgage and Security Agreement shall at any time after its
execution and delivery and for any reason cease (a) to create a valid
and perfected security interest in and to the property purported to be
subject to such Mortgage and Security Agreement, and in the priority
disclosed on Schedule II or III to be in full force and effect or
shall be declared null and void, or the validity or enforceability
thereof shall be contested by the Seller, or the Seller shall deny it
has any further liability or obligation under the Mortgage Note and/or
the Mortgage and Security Agreement, or the Seller shall fail to
perform any of its material obligations under the Mortgage Note an/or
the Mortgage and Security Agreement;
(e) Any of the following events shall occur or exist with respect to the
Seller or any Commonly Controlled Entity under ERISA: any Reportable
Event shall occur; complete or partial withdrawal from any
Multi-employer Plan shall take place; any Prohibited Transaction shall
occur; a notice of intent to terminate a Plan shall be filed, or a
Plan shall be terminated; or circumstances shall exist which
constitute grounds entitling the PBGC to institute proceedings to
terminate a Plan,
or the PBGC shall institute such proceedings; and in each case above,
such event or condition, together with all other events or conditions,
if any, could subject the Seller to any tax, penalty, or other
liability which in the aggregate may exceed Ten Thousand Dollars
($10,000); or
(f) If the Buyer receives its first notice of a hazardous discharge or an
environmental complaint regarding the Seller or a Subsidiary from a
source other than the Seller, and the Buyer does not receive notice
(which may be given in oral form, provided same is followed with all
due dispatch by written notice given by Certified Mail, Return Receipt
Requested) of such hazardous discharge or environmental complaint from
the Seller within twenty-four (24) hours of the time the Buyer first
receives said notice from a source other than the Seller; or if any
federal, state, or local agency asserts or creates a Lien upon any or
all of the assets, equipment, property, leaseholds, or other
facilities of the Seller or a Subsidiary by reason of the occurrence
of a hazardous discharge or an environmental complaint; or if any
federal, state, or local agency asserts a claim against the Seller, a
Subsidiary, or its respective assets, equipment, property, leaseholds,
or other facilities for damages or cleanup costs relating to a
hazardous discharge or an environmental complaint; provided, however,
that such claim shall not constitute a default if, within fifteen (15)
Business Days of the occurrence giving rise to the claim, (i) the
Seller can prove to the Buyer's satisfaction that the Seller has
commenced and is diligently pursuing either: (a) a cure or correction
of the event which constitutes the basis for the claim, and continues
diligently to pursue such cure or correction to completion or (b)
proceedings for an injunction, a restraining order, or other
appropriate emergent relief preventing such agency or agencies from
asserting such claim, which relief is granted within fifteen (15)
Business Days of the occurrence giving rise to the claim and the
injunction, order, or emergent relief is not thereafter resolved or
reversed on appeal; and (ii) in either of the foregoing events, the
Seller has posted a bond, letter of credit, or other security
satisfactory in form, substance, and amount to both the Buyer and the
agency or entity asserting the claim to secure the proper and complete
cure or correction of the event which constitutes the basis for the
claim;
then, and in any such event, the Buyer may, by notice to the Seller, (i) declare
the Mortgage Note, all interest thereon, and all other amounts payable under
this Agreement to be forthwith due and payable, whereupon the Mortgage Note, all
such interest, and all such amounts shall become and be forthwith due and
payable, without presentment, demand, protest, or further notice of any kind,
all of which are hereby expressly waived by the Seller.
8.2 Buyer's Right to Setoff. Upon the occurrence and during the continuance of
any Event of Default, the Buyer is hereby authorized at any time and from time
to time, without notice to the Seller (any such notice being expressly waived by
the Seller), to set off and apply any and all funds, deposits and accounts at
any time held and other indebtedness at any time owing by the Buyer to or for
the credit or the account of the Seller against any and all of the obligations
of the Seller now or hereafter existing under this Agreement or the Mortgage
Note or any other document provided herewith, irrespective of whether or not the
Buyer shall have made any demand under this Agreement or the Mortgage Note or
such other document and although such obligations may be unmatured. The Buyer
agrees promptly to notify the Seller after any such setoff and application,
provided that the failure to give such notice shall not affect the validity of
such setoff and application. The rights of the Buyer under this Section 9.2 are
in addition to other rights and remedies (including, without limitation, other
rights of setoff) which the Buyer may have.
Section 9. Miscellaneous.
9.1. Amendments, Etc. No amendment, modification, termination, or waiver of any
provision of this Agreement or any document provided herewith to which the
Seller is a party, nor consent to any departure by the Seller from this
Agreement and any document provided herewith to which it is a party, shall in
any event be effective unless the same shall be in writing and signed by the
Buyer, and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
9.2. Notices, Etc. All notices given under this Agreement and under the other
documents provided herewith shall be in writing, addressed to the parties as set
forth below, and shall be effective on the earliest of (i) the date received, or
(ii) if given by facsimile transmittal on the date given if transmitted before
5:00 p.m. the recipient's time, otherwise it is effective the next day, or (iii)
on the second business day after delivery to a major international air delivery
or air courier service (such as Federal Express or Network Couriers):
If to the Buyer: If to the Seller:
WM Properties of South Florida, Inc. Cuidao Holding Corp.
0000 X. Xxxxx Xxxxxxx 0000 Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000 Hollywood, FL33320-1510
Attention: Xxxxx Xxxx Attention: C. Xxxxxxx Xxxxxx, President
Facsimile No. (000) 000-0000 Facsimile No. (000) 000-0000
With a copy (that does not constitute
With a copy (that does not constitute notice) to:
notice) to: Mintmire & Associates
000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxx Xxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxxx, Esq.
Facsimile No. (000) 000-0000
9.3. No Waiver. No failure or delay on the part of the Buyer in exercising any
right, power, or remedy hereunder shall operate as a waiver thereof; nor shall
any single or partial exercise of any such right, power, or remedy preclude any
other or further exercise thereof or the exercise of any other right, power, or
remedy hereunder. The rights and remedies provided herein are cumulative, and
are not exclusive of any other rights, powers, privileges, or remedies, now or
hereafter existing, at law or in equity or otherwise.
9.4. Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of the Seller and the Buyer, and their respective successors and
assigns, except that the Seller may not assign or transfer any of its rights
under this Agreement or any document provided herewith to which the Seller is a
party without the prior written consent of the Buyer.
9.5 Costs, Expenses, and Taxes. Each party shall bear their own costs and
expenses in connection with the preparation, execution, delivery, filing, and
administration of this Agreement and the underlying documents provided herewith,
and of any amendment, modification, or supplement thereto.
9.6. Integration. This Agreement and the documents provided herewith contain the
entire agreement between the parties relating to the subject matter hereof and
supersede all oral statements and prior writings with respect thereto.
9.7. Indemnity. The Seller shall defend, protect, indemnify, and hold harmless
the Buyer and its respective officers, directors, employees, and agents
(including, without limitation, those retained in connection with the
transactions contemplated by this Agreement) (collectively, the "Indemnitees")
from and against any and all actions, causes of action, suits, claims, losses,
costs, penalties, fees, liabilities, and damages, and expenses in connection
therewith (irrespective of whether any such Indemnitee is a party to the action
for which indemnification hereunder is sought), and including reasonable
attorneys' fees and disbursements (the "Indemnified Liabilities"), incurred by
the Indemnitees or any of them as a result of, or arising out of, or relating to
(a) any misrepresentation or breach of any representation or warranty made by
the Seller in this Agreement or any other document provided herewith, or any
other certificate, instrument, or document contemplated hereby or thereby; or
(b) any breach of any covenant, agreement, or obligation of the Seller contained
in this Agreement or any other document provided herewith; or (c) the activities
of the Seller or any Subsidiary, each of their respective predecessors in
interest or third parties with whom they or any of them have or had a
contractual relationship, or arising directly or indirectly from the violation
of any environmental protection, health, or safety law, whether such claims are
asserted by any governmental agency or any other person; or (d) any cause of
action, suit, or claim brought or made against such Indemnitee and arising out
of or resulting from the execution, delivery, performance, or enforcement of
this Agreement or any document provided herewith by any of the Indemnities, and
application of the use of proceeds as provided herein. To the extent that the
foregoing undertaking by the Seller may be unenforceable for any reason, the
Seller shall make the maximum contribution to the payment and satisfaction of
each of the Indemnified Liabilities which is permissible under applicable law.
This indemnity shall survive termination of this Agreement.
9.8. Governing Law. This Agreement and the Note shall be governed by, and
construed in accordance with, the laws of the State of Florida and the local
laws of Broward County Florida.
9.9. Severability of Provisions. Any provision of this Agreement or any document
provided herewith which is prohibited or unenforceable in any jurisdiction
(after applying the provisions of paragraph 9.8 of this Agreement to that
provision) shall, as to such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions of
such agreements and documents or affecting the validity or enforceability of
such provision in any other jurisdiction.
9.10 Conflict of Terms, Provisions or Conditions. In the event any term,
provision or condition of the Mortgage Note, Mortgage and Security Agreement or
Release conflicts with any term,
provision or condition contained herein, the meaning ascribed to such term,
provision or condition under this Agreement shall prevail over any
interpretation under either the Mortgage Note, Mortgage and Security Agreement
or Release.
9.11 Headings. Section and paragraph headings in this Agreement are included for
the convenience of reference only and shall not constitute a part of this
Agreement for any other purpose.
9.12. Dispute Resolution. Any controversy or claim arising out of or relating to
this Agreement (whether in contract or tort, or both, or at law or in equity)
shall be determined by binding arbitration at Fort Lauderdale, Florida, in
accordance with the commercial arbitration rules of the American Arbitration
Association. The prevailing party in any arbitration proceeding shall be awarded
reasonable attorneys fees and costs of the proceeding. The arbitration award
shall be final, and may be entered in any court having jurisdiction. Nothing in
this paragraph shall preclude either party from applying to a court for
temporary equitable relief, when appropriate, pending and subject to such
temporary orders and permanent award as the arbitrator or arbitrators may make.
The parties agree that the courts of the Broward County, Florida shall have
exclusive jurisdiction and venue for the adjudication of any civil action
between them arising out of relating to this Agreement, and hereby irrevocably
consent to such jurisdiction and venue.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their respective officers thereunto duly authorized, as of the Effective
Date.
The Buyer: The Seller:
WM Properties of South Florida, Inc. CUIDAO HOLDING CORP.
By ____________________________ By _______________________
Name __________________________ Name _____________________
Title _________________________ Title ____________________
Date signed ___________________ Date signed ______________
As to the obligations in paragraphs 3.3, 3.4, 3.5 and 3.6. We Mintmire &
Associates agree to be bound by the terms and conditions set forth in such
paragraphs.
MINTMIRE & ASSOCIATES
By _________________________
Name _______________________
Date signed ________________
Schedule I
Monthly Allocations for Mandatory Conversion
PRICE GUARANTEE AMOUNT: $495,000.00
Mandatory Monthly Target Next to Last
Conversion Allocation Reduction Day of Month
Date (1) # Shares Amount
November 1, 2001 22,000 $ 55,000 November 29, 2001
December 1, 2001 22,000 $ 55,000 December 30, 2001
January 1, 2002 22,000 $ 55,000 January 30, 2002
February 1, 2002 22,000 $ 55,000 February 27, 2002
March 1, 2002 22,000 $ 55,000 March 30, 2002
April 1. 2002 22,000 $ 55,000 April 29, 2002
May 1, 2002 22,000 $ 55,000 May 30, 2002
June 1, 2002 22,000 $ 55,000 June 30, 2002
July 1, 2002 22,000 $ 55,000 July 30, 2002
198,000 $495,000
(1) This assumes payment of the Purchase Price on or before October 31, 2000. In
the event the parties consent to a later date, the months herein will be
adjusted accordingly.
Schedule II
Description of Other Liens, Security Interests and Financing Statements
None other than those disclosed in Seller's filings with the SEC.
Schedule III
Other Agreements
None other than those disclosed in Seller's filings with the SEC.
Schedule IV
List of All Licenses And Permits
None other than those disclosed in Seller's filings with the SEC.
Schedule V
List of Seller's Real Property
None other than those disclosed in Seller's filings with the SEC.
EXHIBIT A TO THE SECOND CONVERTIBLE NOTE ACQUISITION AGREEMENT
CONVERTIBLE MORTGAGE NOTE
$ 495,000.00 __________, 2000
THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE UNITED STATES SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE. THE SECURITIES
ARE BEING OFFERED PURSUANT TO REGULATION D PROMULGATED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "ACT"). THE SECURITIES ARE "RESTRICTED" AND MAY NOT BE
OFFERED OR SOLD UNLESS THE SECURITIES ARE REGISTERED UNDER THE ACT OR PURSUANT
TO AVAILABLE EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND THE
BORROWER WILL BE PROVIDED WITH OPINION OF COUNSEL OR OTHER SUCH INFORMATION AS
IT MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH EXEMPTIONS ARE AVAILABLE.
1. IDENTIFICATION OF BORROWER
Borrower's name and address is: CUIDAO HOLDING CORPORATION, a Florida
corporation, whose principal address is 0000 XXXXX XXXXXX, XXXXXXXXX, XX
00000-0000.
2. IDENTIFICATION OF LENDER
Lender's name and address is: WM PROPERTIES OF SOUTH FLORIDA, INC., 0000 X.
XXXXX XXXXXXX, XXXXXXXXX, XX 00000.
Lender may change such address from time to time by giving me notice as
provided in Paragraph 8.
3. PROMISE TO PAY - PLACE OF PAYMENT
In return for a loan that Borrower has received, Borrower promises to pay
in lawful money of the United States of America to the order of WM PROPERTIES OF
SOUTH FLORIDA, INC. at such address as is indicated in Paragraph 2 or at such
other place as the Holder of this Note shall in writing designate, the principal
sum of Four Hundred Ninety Five Thousand United States Dollars (US$495,000.00)
(this amount is called "principal"), subject to the terms and conditions of this
Note.
4. TERMS OF THIS NOTE
4.1 Second Convertible Note Acquisition. The Lender agreed on the terms and
conditions set forth in a certain second convertible note acquisition agreement
of even date to acquire, in exchange for $350,000.00 in cash (the "Purchase
Price"), a convertible note in the principal amount of $495,000 convertible into
a total of 198,000 shares of the Company's Restricted Common Stock (the
"Acquisition Agreement"). The Purchase Price shall be used solely to pay off
the Company's First Mortgage payable to Xxxxxx Xxxxxx, by assignment from
Em-Star Mortgage Co, recorded on 0000 Xxxxx Xxxxxx real estate located in
Hollywood, Florida, and recorded February 4, 1999, in Official Record Book
29206, at Page 1362, of the Public Records of Broward County, Florida with the
First Mortgage payable to Em-Star Mortgage Co. recorded in Official Record Book
29206, at Page 1355 (the "Property"). The Acquisition Agreement is incorporated
in its entirety into this Note.
4.2 Price Guarantee. The Borrower agrees that for a period of twenty one
(21) months from the date hereof, to guarantee to the Lender that its Common
Stock shall not fall below a closing bid price of $2.50 per share such that when
certain incremental allocations of such shares are sold by Lender pursuant to
Rule 144 promulgated under the Act ("Rule 144") or such allocations are
calculated as provided herein that in the aggregate the value of the shares into
which the Mortgage Note is convertible shall have a value of $495,000 (the
"Price Guarantee"). To secure such Price Guarantee, Borrower granted to Lender a
mortgage upon the Property convertible into shares, which mortgage shall be
evidenced by this Note and secured by the Mortgage and Security Agreement
executed simultaneously herewith.
4.3 Mortgage Note. The Borrower's Price Guarantee is evidenced by this
Note. This Note, dated as of the Payment Delivery Date as defined in the
Acquisition Agreement, is due and payable twenty four (24) months from its
issuance. Commencing on the first anniversary of the Payment Delivery Date and
continuing for the next eight (8) successive months, Buyer shall be required
each such month to convert a portion of the Mortgage Note into shares of the
Seller's Common Stock, the mandatory conversion dates and number of shares to be
issued on each mandatory conversion date are set forth in Schedule I attached
hereto (the "Monthly Allocation"). Commencing on the Payment Delivery Date and
continuing on the last day of each of the next eight (8) successive months, the
principal amount of the Mortgage Note shall be reduced by the greater of (i) the
actual gross proceeds received by Buyer for sale of the Monthly Allocation and
any previously issued Monthly Allocation shares not sold during the applicable
month during the applicable month made in accordance with Rule 144, or (ii) the
average of the closing price for the Seller's Common Stock from the 1st day of
the applicable month to the next to last day of the applicable month as quoted
on the OTC BB times the Monthly Allocation (the greater of subsection (i) or
(ii) hereinafter referred to as the "Incremental Mortgage Reduction Amount"). In
the event that Incremental Mortgage Reduction Amount is less than the Monthly
Allocation times $2.50 per share during the applicable month (the "Target
Reduction Amount"), the difference between the Target Reduction Amount and the
Incremental Mortgage Reduction Amount realized shall bear interest at the rate
of 11.11% per annum until paid. To assist Seller in making this calculation,
Buyer agrees to provide evidence of all sales made in the applicable month to
Seller by the tenth (10th) day of the succeeding month. Each successive
Incremental Mortgage Reduction Amount shall be applied first to accrued but
unpaid interest and thereafter as a reduction to principal. At the end of the
term of the Mortgage Note, all unpaid principal and accrued interest not
otherwise paid by the incremental reductions to principal shall be due and
payable. In the event that incremental reductions pay off the entire Mortgage
Note and any accrued but unpaid interest prior to the end of the term, any
Monthly Allocation shares not previous issued to Buyer shall be immediately
issued, the Mortgage Note shall be canceled and any unsold shares delivered to
or held by Buyer, if any, may be retained or sold by the Buyer pursuant to Rule
144 as he so elects. If at any time during the term of the Mortgage Note
the aggregate of all of the Incremental Mortgage Reduction Amounts is equal to
or above $495,000, or at the end of the term at such time as Seller pays all
unpaid principal and accrued but unpaid interest, the entire Mortgage Note and
Mortgage and Security Agreement shall be released and satisfied and Buyer (1)
authorizes Mintmire & Associates to provide the Seller with the Release executed
simultaneously with this Agreement and being held in escrow by them; (2)
authorizes the Seller to record the Release; and (3) agrees to cancel and return
the original Mortgage Note to the Seller. Interest, if any, shall be calculated
on the basis of a year of 360 days. Any unpaid principal or accrued but unpaid
interest due at the end of the term shall be payable at the Lender's Principal
Office.
4.4 Mortgage and Security Agreement. The Mortgage Note, together with all
of the Borrower's other obligations under this Note, shall be secured by a
Mortgage and Security Agreement executed simultaneously herewith.
4.5 Release. Contemporaneously with the execution of this Note, the Lender
has executed a Release and delivered same to Mintmire & Associates to be held in
escrow by them until the full and complete satisfaction of Borrower's obligation
to the Lender in accordance with the terms and conditions herein.
4.6 Escrowed Shares. Under the terms of the Acquisition Agreement, Mintmire
& Associates shall hold nine (9) certificates in the amounts of the Monthly
Allocations in escrow, each of which shall be delivered to Lender no later than
five (5) days after the first day of the applicable month for such allocation.
Borrower and Lender have authorized Mintmire & Associates to release such shares
to Lender as required under the Acquisition Agreement without any further action
on their part.
5. AFTER DEFAULT RATE OF INTEREST
Borrower agrees to pay interest on the unpaid principal balance after
default at the highest contract rate allowed by applicable law until all sums
owing on this Note have been paid in full.
6. MAXIMUM LOAN CHARGES
Lender agrees that it will not charge interest or other loan charges that
exceed the maximum lawful rate, it being Lender's intent not to charge a
usurious interest rate. If it is discovered that interest or other loan charges
exceed the maximum lawful rate, Borrower will give Lender the opportunity to
refund to it that amount collected which exceeded the maximum lawful rate plus
interest on that amount at the maximum lawful rate. Lender will then modify this
Note and all instruments securing this Note so that Borrower will not be
required to pay further interest or other loan charges that exceed the maximum
lawful rate.
7. BORROWER'S FAILURE TO PAY AS REQUIRED
7.1 Default. If Borrower:
does not pay the full amount of each payment within (25) days following
date when due; or
fails to keep any promises made in any Security Instrument (as the same is
defined in Paragraph 13 hereof);
is dissolved or liquidated;
or, fails in any other obligation under the Acquisition Agreement
then Borrower will be in default without notice and Lender may require
Borrower to pay immediately the full amount of principal which has not been paid
and all the interest that Borrower owes on that amount.
7.2 No Waiver By Lender. If, at a time when Borrower is in default Lender
does not require Borrower to pay immediately in full as described above, this
will not be a waiver of Lender's rights and Lender will still have the right to
do so if Borrower is in default at a later time.
7.3 Payment of Lender's Reasonable Attorney's Fees, Costs and Expenses. If
Borrower is in default as described above, Borrower will pay for all of Lender's
reasonable costs and expenses in enforcing this Note to the extent not
prohibited by applicable law. Those expenses include, without limitation
reasonable attorneys' fees incurred by the Note Holder in collecting or
enforcing payment hereof or in protecting the same, whether incurred in or out
of court, including without limitation probate proceedings, bankruptcy
proceedings and appeals.
8. GIVING OF NOTICES
Unless applicable law requires a different method, any notice to be given
to Borrower under this Note will be given by personally delivering it or by
mailing it by registered mail return receipt requested to Borrower at the
address provided in Paragraph 1, or at a different address if Borrower has given
Lender a written notice of a different address for Borrower.
Any notice that must be given to Lender under this Note will be given by
mailing it by registered mail return receipt requested to Lender at the address
stated in Paragraph 2, or at a different address if Lender has been given a
notice of that different address.
9. OBLIGATIONS OF PERSONS UNDER THIS NOTE
Any person or entity who is a guarantor, co-maker, surety or endorser of
this Note is fully and personally obligated to keep all of the promises made in
this Note, including the promise to pay the full amount owed. Any person or
entity who assumes these obligations, including the obligations of a guarantor,
co-maker, surety or endorser of this Note, is also obligated to keep all of the
promises made in this Note, and Lender may enforce its rights under this Note
against each such person or entity, individually or against all of them
together.
10. WAIVERS
Any person or entity who has obligations under this Note waives the rights
of presentment and notice of dishonor. "Presentment" means the right to require
Lender or Note Holder to demand payment of amounts due. "Notice of dishonor"
means the right to require Lender or Note Holder to give to other persons or
entities notice that amounts due have not been paid.
11. THIS NOTE IS SECURED
In addition to the protections given to Lender under this Note, this Note
is secured by a Mortgage and Security Agreement and an Assignment of Rents (the
"Security Instrument"), dated the same date as this Note. The Security
Instrument (a) protects Lender from possible losses which might result if
Borrower does not keep the promises which Borrower makes in this Note, and (b)
also describes how and under what further conditions Borrower may be required to
make immediate payment in full of all amounts that Borrower owes under this
Note.
12. ANTI-DILUTION PROVISIONS
The Borrower covenants with the Lender that so long as any portion of the
principal of this Note remains outstanding and may be converted:
12.1 it will cause the shares of Common Stock and th certificates
representing the Common Stock subscribed and paid for pursuant to the
conversion of the Note to be duly issued and deposited with the Escrow
Agent for delivery in accordance with the Acquisition Agreement and
the terms thereof;
12.2 all shares of Common Stock that shall be issued upon conversion at the
prevailing Conversion Price herein provided, shall be fully paid and
non-assessable;
12.3 it will use its best efforts to maintain its corporate existence; and
12.4 generally, it will well and truly perform and carry out all of the
acts or things to be done by it as provided herein.
This Note and the Common Stock issuable upon conversion of this Note were
issued under Regulation D under the Act and may be transferred only in
accordance therewith and as provided in the legends set forth in this Note.
The Lender shall not, by virtue hereof, be entitled to any rights of a
shareholder in the Borrower, either at law or equity, and the rights of the
Lender are limited to those expressed in the Note and are not enforceable
against the Borrower except to the extent set forth herein.
The Conversion Price and the number and kind of securities purchasable upon
the conversion of the Note shall be subject to the following anti-dilution
provisions as adjustments from time to time upon the happening of certain events
are follows:
12.5 In case the Borrower shall (i) declare a dividend or make a
distribution on its outstanding shares of Common Stock in shares of
Common Stock, (ii) subdivide or reclassify its outstanding shares of
Common Stock into a greater number of shares, or (iii) combine or
reclassify its outstanding shares of Common Stock into a smaller
number of shares, the Conversion Price in effect at the time of the
record date for such dividend or distribution or of the effective date
of such subdivision, combination or reclassification shall be adjusted
so that it shall equal the price determined by multiplying the
respective Conversion Price by a fraction, the denominator of which
shall be the number of shares of Common Stock outstanding after giving
effect to such action, and the numerator of which shall be the number
of shares of Common Stock outstanding immediately prior to such
action. Such adjustment shall be made successively whenever any event
listed above shall occur.
12.6 Whenever the respective Conversion Price payabl upon conversion of
each Note is adjusted pursuant to Subsection (1) above, the number of
Shares purchasable upon conversion of this Note shall simultaneously
be adjusted by multiplying the respective number of Shares initially
issuable upon conversion of this Note by a fraction, the denominator
of which shall be the Conversion Price after giving effect to such
action and the numerator of which shall be the Conversion Price in
effect immediately prior to such action.
12.7 No adjustment in the Conversion Price shall be required unless such
adjustment would require an increase or decrease of at least one cent
($0.01) in such price; provided, however, that any adjustment that by
reason of this Subsection (3) is not required to be made shall be
carried forward and taken into account in any subsequent adjustment
required to be made hereunder. All calculations under this Note shall
be made to the nearest cent or to the nearest one-hundredth of a
share, as the case may be. Anything in this Note to the contrary
notwithstanding, the Borrower shall be entitled, but shall not be
required, to make such changes in the Conversion Price, in addition to
those required by this Note, as it shall determine, in its sole
discretion, to be advisable in order that any dividend or distribution
in shares of Common Stock, or any subdivision, reclassification or
combination of Common Stock, hereafter made by the Borrower shall not
result in any federal income tax liability to the holders of Common
Stock or securities convertible into Common Stock (including the
Note).
12.8 In the event that at any time, as a result of a adjustment made
pursuant to Subsection (1) above, the Lender thereafter shall become
entitled to receive any shares of the Borrower, other than Common
Stock, thereafter the number of such other shares so receivable upon
conversion of this Note shall be subject to adjustment from time to
time in a manner and on terms as nearly equivalent as practicable to
the provisions with respect to the Common Stock contained in
Subsections (1) to (3) inclusive above.
12.9 Irrespective of any adjustments in the respective Conversion Price or
the related number or kind of shares purchasable upon conversion of
this Note, Notes theretofore or thereafter issued may continue to
express the same price and number and kind of shares as are stated in
the similar Note initially issuable pursuant to this Note.
Whenever the respective Conversion Price shall be adjusted as required by
the provisions of the foregoing, the Borrower shall forthwith file in the
custody of its Secretary or an Assistant Secretary at its principal office, an
officer's certificate showing the adjusted Conversion Price determined as herein
provided, setting forth in reasonable detail the facts requiring such
adjustment, including a statement of the number of related additional shares of
Common Stock, if any, and such other facts as shall be necessary to show the
reason for and the manner of computing such adjustment. Each such officer's
certificate shall be made available at all reasonable times for inspection by
the Lender executed and delivered by the Borrower and the Borrower shall,
forthwith after each such adjustment, mail a copy by certified mail of such
certificate to the Lender.
So long as this Note shall be outstanding, (i) if the Borrower shall pay
any dividend or make any distribution upon the Common Stock or (ii) if the
Borrower shall offer to the holders of Common Stock for subscription or purchase
by them any share of any class or any other rights, options or warrants or (iii)
if a capital reorganization of the Borrower, reclassification of the capital
stock of the Borrower, consolidation or merger of the Borrower with or into
another corporation, sale, lease or transfer of all or substantially all of the
property and assets of the Borrower to another corporation, or voluntary or
involuntary dissolution, liquidation or winding up of the Borrower shall be
effected, then in any such case, the Borrower shall cause to be mailed by
certified mail to the Holder, at least fifteen (15) days prior to the date
specified, as the case may be, a notice containing a brief description of the
proposed action and stating the date on which a record date is to be determined
for the purpose of such dividend, distribution or issue of rights, options, or
warrants or such reclassification, reorganization, consolidation, merger,
conveyance, lease, dissolution, liquidation or winding up is to take place and
the date, if any is to be fixed as of which the holders of Common Stock or other
securities shall receive cash or other property deliverable upon such
reclassification, reorganization, consolidation, merger, conveyance,
dissolution, liquidation or winding up. The failure to give such notice shall
not otherwise affect the action take by the Borrower.
In case of any reclassification, capital reorganization or other change of
outstanding shares Common Stock of the Borrower, or in case of any consolidation
or merger of the Borrower with or into another corporation (other than a merger
with a subsidiary in which merger the Borrower is the continuing corporation and
that does not result in any reclassification, capital reorganization or other
change of outstanding shares of Common Stock of the class issuable upon
conversion of this Note) or in case of any sale, lease or conveyance to another
corporation of the property of the Borrower as an entirety, the Borrower shall,
as a condition precedent to such transaction, cause effective provisions to be
made so that the Holder shall have the right thereafter, by converting this Note
at any time prior to the expiration of the Note, to receive the kind and amount
of shares of stock an other securities and property receivable upon such
reclassification, capital reorganization and other change, consolidation,
merger, sale or conveyance by a holder of such number of shares of Common
Stock that might have been received upon conversion of this Note immediately
prior to such reclassification, change, consolidation, merger, sale or
conveyance. Any such provision shall include provision for adjustments that
shall be as nearly equivalent as may be practicable to the adjustments provided
for in this Note. The foregoing provisions of this paragraph shall similarly
apply to successive reclassifications, capital reorganizations and changes of
shares of Common Stock and to successive consolidations, mergers, sales or
conveyances. In the event that in connection with any such capital
reorganization or reclassification, consolidation, merger, sale or conveyance,
additional shares of Common Stock shall be issued in exchange, conversion,
substitution or payment, in whole or in part, for a security of the Borrower
other than Common Stock, any such issue shall be treated as an issue of Common
Stock covered by the provisions contained in this Note.
13. RANKING OF NOTE AND APPLICABLE LAW
This Note shall rank pari passu, whatever may be the actual date of issue
of the same.
This Note shall be governed by and interpreted in accordance with the laws
of the State of Florida.
Any controversy or claim arising out of or relating to this Note (whether
in contract or tort, or both, or at law or in equity) shall be determined by
binding arbitration at Fort Lauderdale, Florida, in accordance with the
commercial arbitration rules of the American Arbitration Association. The
prevailing party in any arbitration proceeding shall be awarded reasonable
attorneys fees and costs of the proceeding. The arbitration award shall be
final, and may be entered in any court having jurisdiction. Nothing in this
paragraph shall preclude either party from applying to a court for temporary
equitable relief, when appropriate, pending and subject to such temporary orders
and permanent award as the arbitrator or arbitrators may make.
The Borrower and Lender agree that the courts of Broward County, Florida
shall have exclusive jurisdiction and venue for the adjudication of any civil
action between them arising out of relating to this Agreement, and hereby
irrevocably consent to such jurisdiction and venue.
14. WAIVER OF JURY TRIAL
BY ACCEPTANCE HEREOF LENDER AND BORROWER AGREE THAT NEITHER LENDER NOR
BORROWER, NOR ANY ASSIGNEE, SUCCESSOR, HEIR OR LEGAL REPRESENTATIVE OF EITHER OF
THEM (ALL OF WHOM ARE HEREINAFTER REFERRED TO AS THE "PARTIES") SHALL SEEK A
JURY TRIAL IN ANY LAWSUIT, PROCEEDING, COUNTERCLAIM, OR ANY OTHER LITIGATION
PROCEDURE BASED UPON OR ARISING OUT OF THIS NOTE, ANY SECURITY INSTRUMENT OR ANY
OTHER INSTRUMENT EVIDENCING, SECURING OR RELATING TO THE INDEBTEDNESS EVIDENCED
BY THIS NOTE, ANY RELATED AGREEMENT OR INSTRUMENT, ANY OTHER COLLATERAL FOR THE
INDEBTEDNESS EVIDENCED HEREBY OR THE DEALINGS OR THE RELATIONSHIP BETWEEN OR
AMONG THE PARTIES, OR ANY OF THEM. NONE OF THE PARTIES WILL SEEK TO CONSOLIDATE
ANY SUCH ACTION, IN
WHICH A JURY TRIAL HAS BEEN WAIVED, WITH ANY OTHER IN WHICH A JURY TRIAL CANNOT
BE OR HAS NOT BEEN WAIVED. THE PROVISIONS OF THIS PARAGRAPH HAVE BEEN FULLY
NEGOTIATED BY LENDER AND BORROWER, ARE A MATERIAL INDUCEMENT FOR LENDER TO MAKE
THE LOAN OR EXTENSION OF CREDIT EVIDENCED BY THIS NOTE AND SHALL BE SUBJECT TO
NO EXCEPTIONS. NEITHER LENDER NOR BORROWER HAVE IN ANY WAY AGREED WITH OR
REPRESENTED TO THE OTHER THAT THE PROVISIONS OF THIS PARAGRAPH WILL NOT BE FULLY
ENFORCED IN ALL INSTANCES.
Effective on the ___ day of ____________________, 2000.
CUIDAO HOLDING CORPORATION, a Florida
corporation, BORROWER
By:______________________________
C. Xxxxxxx Xxxxxx, President
EXHIBIT B TO THE SECOND CONVERTIBLE NOTE ACQUISITION AGREEMENT
Prepared by & Return to:
Mintmire & Associates
000 Xxxxxxx Xxx., Xxxxx 000
Xxxx Xxxxx, Xxxxxxx 00000
MORTGAGE AND SECURITY AGREEMENT
THIS MORTGAGE AND SECURITY AGREEMENT IS GIVEN BY BORROWER AS PART OF A CERTAIN
CONVERTIBLE NOTE ACQUISITION AGREEMENT DATED THE SAME DATE AS THIS AGREEMENT AND
IS FURTHER CONDITIONED UPON AND/OR LIMITED BY THE TERMS AND CONDITIONS SET FORTH
THEREIN. ANY HOLDER OF THIS MORTGAGE AND SECURITY AGREEMENT IS ADVISED TO REVIEW
A COPY OF THIS CONVERTIBLE NOTE ACQUISITION AGREEMENT FOR SUCH ADDITIONAL OR
OTHER TERMS AND CONDITIONS WHICH MAY APPLY TO THIS AGREEMENT. A COPY OF THE
CONVERTIBLE NOTE ACQUISITION AGREEMENT IS MAINTAINED AT THE OFFICES OF BOTH THE
BORROWER AND THE LENDER FOR SUCH REVIEW.
THIS MORTGAGE REPRESENTS A FIRST MORTGAGE UPON THE PROPERTY IN SUBSTITUTION OF
THE ORIGINAL FIRST MORTGAGE HELD BY XXXXXX XXXXXX RECORDED ON 0000 XXXXX XXXXXX
XXXX XXXXXX LOCATED IN HOLLYWOOD, FLORIDA BY ASSIGNMENT FROM EM-STAR MORTGAGE
CO, RECORDED ON 0000 XXXXX XXXXXX XXXX XXXXXX LOCATED IN HOLLYWOOD, FLORIDA, AND
RECORDED FEBRUARY 4, 1999, IN OFFICIAL RECORD BOOK 29206, AT PAGE 1362, OF THE
PUBLIC RECORDS OF BROWARD COUNTY, FLORIDA WITH THE FIRST MORTAGE PAYABLE TO
EM-STAR MORTGAGE CO. RECORDED IN OFFICIAL RECORD BOOK 29206, AT PAGE 1355 (THE
"PROPERTY")
1. IDENTIFICATION OF BORROWER
Borrower's name and address is:
CUIDAO HOLDING CORP.
0000 XXXXX XXXXXX
XXXXXXXXX, XX 00000-0000
Borrower may change such address from time to time by giving notice to the
Lender as provided in Paragraph 17.
2. IDENTIFICATION OF LENDER
Lender's name and address is:
WM PROPERTIES OF SOUTH FLORIDA, INC.
0000 X. XXXXX XXXXXXX
XXXXXXXXX, XX 00000
Lender may change such address from time to time by giving Borrower notice
as provided in Paragraph 17.
3. DESCRIPTION OF NOTE SECURED BY THIS MORTGAGE
Borrower owes Lender the principal sum of Four Hundred Ninety Five Thousand
United States Dollars ($495,000.00) together with interest accruing thereon as
evidenced by its note to Lender (the "Note") dated the same date as this
Mortgage and which requires payment as therein set forth with all sums owing
thereon. The Note and this Mortgage and Security Agreement are part of a certain
Convertible Note Acquisition Agreement of even date (the "Acquisition
Agreement"), which Acquisition Agreement, by reference herein, is incorporated
into this Agreement in its entirety.
4. DESCRIPTION OF PROPERTY MORTGAGED
Property being mortgaged (the "Real Property") is described as follows:
The South 174 feet, less the East 150 feet thereof, of that portion of parcel B
lying Between N. 29th Court and No. 30th Avenue, as shown on the Plat of SOUTH
FLORIDA INDUSTRIAL PARK, according to the Plat thereof, recorded in Plat Book
63, Page 38 of the Public Records of Broward County, Florida.
together with all of the following:
4.1 all improvements now or later placed on the Rea Property;
4.2 all rents and profits received in connection with the Real Property;
4.3 all easements, fixtures, benefits, and other appurtenances that may at
any time benefit the Real Property;
4.4 all development and utilities rights that might at any time be
available to the Real Property;
4.5 all goods in which Borrower owns an interest affixed or that may
become affixed to the Real Property;
4.6 all accounts receivable, general intangibles, actions and rights in
action, in which Borrower now or hereafter has any rights, including
all of its rights under contracts with any architect, engineer,
surveyor, subcontractor, and supplier in connection with the Real
Property, all of which contracts Borrower hereby assigns to Lender,
together with all plans, specifications, drawings, schedules, and
copyrights included therein;
4.7 all rights to insurance policies and proceeds, all licenses, building
and business permits, and all utility reservations and rights to
receive utility services, and all rights to and under fees or charges
paid by Borrower or on Borrower's behalf in connection with the Real
Property;
4.8 all equipment, furnishings, and appliances, in which Borrower now has
or may hereafter acquire any rights, used or useful in connection with
the Real Property;
4.9 all other rights that Borrower has or will have as owner of the Real
Property;
4.10 together with all proceeds, products, replacements, additions,
substitutions, renewals, and accessions of any of the foregoing items.
Borrower refers below to all of these properties, rights, and interests
that Borrower encumbers by this Mortgage as the "Property."
5. MORTGAGE OF PROPERTY TO LENDER
By executing this instrument, Borrower mortgages the Property to Lender to
secure Borrower's performance of its promises made in the Second Convertible
Note Acquisition Agreement, the Note and this Mortgage. Subject to any terms,
conditions or limitations contained in the Convertible Note Acquisition
Agreement or the Note, this means Borrower gives Lender all of those rights that
the law gives to lenders who hold mortgages on property as well as those rights
set forth in this Mortgage.
6. PROMISES
Borrower makes the following promises to Lender:
6.1 Warranty. Subject to the first mortgage on the Property, Borrower
fully warrants the title to the Property and will defend the same
against the lawful claims of all others. This means Borrower owns the
Property and will defend its ownership against all claims.
6.2 Compliance with Terms of Second Convertible Note Acquisition
Agreement, Note and Mortgage. Borrower will comply with all of the
terms and provisions of, the Second Convertible Note Acquisition
Agreement, the Note and this Mortgage.
6.3 Taxes and Assessments. Borrower will pay all taxes and assessments and
any other charge levied against or which could become a lien against
the Property [as well as all taxes imposed, levied, or assessed on
this Mortgage or the indebtedness secured hereby (but excluding any
income type tax)] when due [and, in any event, before the end of the
year in which the same become due] [and, in any event, before they
become delinquent or subject to interest charges or penalty].
6.4 Insurance. Borrower will keep the Property insured for full
replacement cost. All such policies must:
(a) provide that all payments due by Borrower are payable to Lender
in accordance with the intent of the Convertible Note Acquisition
Agreement and Note as mortgagee; and
(b) require not less than thirty (30) days notice to Lender before
they may be canceled.
Borrower will renew all such insurance policies not less than thirty (30)
days before they would expire. Borrower will notify Lender of any loss or
damage. If any moneys become payable, Lender will have the right to reduce the
amount owing on the Note as if Borrower had made a prepayment or apply them
toward the restoration of the Property.
7. AGREEMENTS OF BORROWER CONCERNING THE PROPERTY
Borrower agrees:
7.1 to maintain the Property in good and functioning condition, performing
all repairs, replacements and maintenance necessary to preserve the
Property's value;
7.2 not to permit any waste or deterioration of the Property;
7.3 not to permit the demolition, destruction or removal of any portion of
the Property without first securing Lender's written consent;
7.4 to permit Lender or its representative to enter upon and inspect the
Property from time to time.
7.5 not to further encumber any interest in or any part of the Property
without the prior written consent of the Lender.
8. SECURITY AGREEMENT
Some items of the Property are personal property (the "Personal Property").
Borrower grants Lender a security interest in the Personal Property and against
all additions to, replacements of, and proceeds of the Personal Property.
Although this Mortgage is a self-operative security agreement affecting the
Personal Property, Borrower agrees to execute and deliver to Lender any other
written instrument that Lender might reasonably demand to create or evidence its
security interest. In addition to all other available remedies, Lender has all
of the rights and remedies of a secured party under the Florida Uniform
Commercial Code.
9. MAXIMUM LOAN CHARGES
Lender agrees that it will not charge interest or other loan charges that
exceed the maximum lawful rate, it being Lender's intent not to charge a
usurious interest rate. If it is discovered that interest or other loan charges
exceed the maximum lawful rate, Borrower will give Lender the
opportunity to refund to Borrower that amount collected which exceeded the
maximum lawful rate plus interest on that amount at the maximum lawful rate. In
no event may any prepayment charge be made or prepayment prohibition provision
apply. Borrower will then modify this Mortgage and the Note so that Borrower
will not be required to pay further interest or other loan charges that exceed
the maximum lawful rate.
10. CONDEMNATION
Borrower agrees that if the Property or any part of it is condemned under
any power of condemnation, or acquired for a public use, then the damages,
proceeds, and consideration given for such acquisition, to the extent of its
obligations to Lender, will be paid to Lender if such payment is in accordance
with the intent of the Convertible Note Acquisition Agreement and Note to be
applied on account of Borrower's obligations to Lender, whether due or not.
11. PERFORMANCE OF OTHER ENCUMBRANCES
Borrower agrees to comply with all of the terms and conditions of any other
mortgages or encumbrances that affect the Property. Borrower agrees that its
failure to comply with or fully perform the terms and conditions of other
encumbrances against the Property shall constitute a default under this Mortgage
and shall entitle Lender, at Lender's option, to exercise any right available
for Borrower's default under this Mortgage.
12. OBLIGATIONS OF PERSONS UNDER THIS NOTE
Any person or entity who is a guarantor, co-maker, surety or endorser of
the Note is fully and personally obligated to keep all of the promises made in
the Note and this Mortgage, including the promise to pay the full amount owed.
Any person or entity who takes over these obligations, including the obligations
of a guarantor, co-maker, surety or endorser of the Note, is also obligated to
keep all of the promises made in this Mortgage and in the Note. All subsequent
owners of the Property must keep all of my promises made in this Mortgage.
Lender may enforce its rights under the Convertible Note Acquisition Agreement,
the Note and this Mortgage against each person or entity individually or against
all of them together.
13. APPLICATION OF PAYMENTS
All payments received by Lender or attributable as a reduction amount to
the unpaid principal under the Note shall be applied: first, to previously
accrued but unpaid interest under the Note; second, to charges for overdue
payments that are due under the Note; third, to amounts payable for taxes,
insurance, or other advances made by Lender on Borrower's behalf, if any;
fourth, to deposits that Borrower must pay, if any, for the payment of future
taxes and insurance; fifth, to current interest due; and last to principal.
14. APPOINTMENT OF RECEIVER
Borrower agrees that Lender may, at any time pending a suit on this
Mortgage, apply to the court having jurisdiction for the appointment of a
receiver; and such court shall immediately appoint a receiver of the Property,
including all income, profits, issues, and revenues from whatever source derived
relating to the Property, all of which, is hereby mortgaged, as if specifically
set forth and described in this Mortgage. Such appointment shall be made by the
court as an admitted equity and a matter of absolute right to Lender, and
without reference to the adequacy or inadequacy of the value of the Property, or
to Borrower's solvency or insolvency. Such rents, profits, income, issues, and
revenues shall be applied by the receiver according to the lien of this Mortgage
and the practice of the court.
15. ACCELERATION AND REMEDIES UPON DEFAULT
Time is of the essence in Borrower's payment of amounts due under, and in
its performance of all promises under, the Convertible Note Acquisition
Agreement, the Note or this Mortgage. If Borrower fails to keep any promises
made in or satisfy requirements of this Mortgage and does not cure that failure
within fifteen (15) days following date on which Lender gives notice as provided
in the paragraph below entitled "Giving of Notices;" or if Borrower is dissolved
or liquidated; then Borrower will be in default without notice and Lender may
require Borrower to pay immediately the full amount of the principal which has
not been paid and all the interest that Borrower owes on that amount and any
other amounts that Borrower may owe pursuant to the Note or this Mortgage, and
Lender may, in addition to pursuing other remedies, foreclose this Mortgage by
judicial proceeding and sale of the Property.
16. PAYMENT OF LENDER'S ATTORNEYS FEES, COSTS AND EXPENSES
If Borrower is in default as described above, Lender will have the right to
be repaid by Borrower for all of Lender's costs and expenses in enforcing this
Mortgage, the Convertible Note Acquisition Agreement or the Note to the extent
not prohibited by applicable law. Those expenses include, without limitation,
reasonable attorneys' fees (before trial, at trial, or on appeal), and the cost
of a title abstract or other search for the Property.
17. GIVING OF NOTICES
Unless applicable law requires a different method, any notice to be given
to Borrower under this Mortgage will be given by personally delivering it or by
mailing it by registered mail, return receipt requested to Borrower at the
address provided above, or at a different address if Borrower has given Lender a
written notice of a different address for it.
Any notice that must be given to Lender under this Mortgage will be given
by mailing it by registered mail, return receipt requested to Lender at the
address stated above, or at a different address if Borrower has been given a
notice of that different address.
18. FORECLOSURE OF OTHER LIENS
If foreclosure proceedings of any mortgage or lien of any kind affecting
the Property,
whether superior or inferior to this Mortgage, are instituted, then Lender may
at its option, immediately or thereafter, declare this Mortgage and the entire
indebtedness secured hereby due and payable.
19. NO WAIVER BY LENDER
If, at a time when Borrower is in default, Lender does not require Borrower
to pay immediately in full as described above, this will not be a waiver of
Lender's rights and Lender will still have the right to do so if Borrower is in
default at a later time.
20. RIGHT TO CURE
If Borrower defaults on any of its promises or agreements contained in this
Mortgage or in the Convertible Note Acquisition Agreement or this Note, then
without prejudicing Lender's right to other remedies, Lender may perform that
promise or agreement on Borrower's behalf, and all expenditures (including
reasonable attorney's fees) made by Lender in so doing shall bear interest at
the highest legal rate, and shall be repayable immediately and, together with
interest and costs accruing thereon, shall be secured by this Mortgage.
21. FUTURE ADVANCES
This Mortgage secures not only existing indebtedness, but also any future
advances that Lender might make to Borrower within twenty (20) years from the
date of this Mortgage, whether Lender is obligated to make those advances or
Lender makes them at its discretion. This Mortgage will secure such future
advances even if no advance is made on the date of this Mortgage and although no
indebtedness is outstanding when any advance is made. The total indebtedness
secured by this Mortgage may decrease or increase from time to time, but it will
not at any time exceed two times the face amount of the Note, plus interest and
any disbursements that Lender makes on Borrower's behalf for the payment of
taxes, insurance, or other reasons.
22. NO TRANSFER WITHOUT CONSENT
The loan represented by this Mortgage, the Convertible Note Acquisition
Agreement and the Note is personal to the Borrower. Borrower I recognizes that
Lender has made the loan based on its credit and character, and on its judgment
of Borrower's ability to repay the loan. Accordingly, this Mortgage may not be
assumed by any subsequent holder of any interest, title, or claim to the
Property without Lender's written consent. If Borrower attempts, at any time,
directly or indirectly, to lease the Property for a period of more than five (5)
years, grant an option to purchase the Property, sell, convey, or transfer any
interest or title in the Property without Lender's written approval, then the
remaining principal balance on the Note and all accrued interest thereon, and
all other sums secured by this Mortgage will, at Lender's option, without notice
or demand, become immediately due and payable.
23. GOVERNING LAW; SEVERABILITY
This Mortgage shall be governed by the law of the State of Florida. In the
event that any provision or clause of this Mortgage or of the Note conflicts
with applicable law, such conflict shall not affect other provisions of this
Mortgage, the Convertible Note Acquisition Agreement or the Note which can be
given effect without the conflicting provision. To this end the provisions of
this Mortgage, the Convertible Note Acquisition Agreement and the Note are
declared to be severable . 24. HAZARDOUS WASTE
Borrower warrants that the Property is not polluted or contaminated by any
hazardous or toxic materials, and, to the best of Borrower's knowledge, has not
in the past and is not presently being used for the handling, storage,
treatment, generation, transportation, or disposal of hazardous or toxic
materials. Also Borrower warrants that the Property contains no asbestos or
asbestos- containing materials, nor does it contain underground storage tanks.
Borrower agrees that it will not at any time in the future permit the Property
to be polluted or contaminated with hazardous or toxic materials, and it will
comply in all respects with all legal requirements intended to protect the
environment that might apply to the Property or to activities on the Property.
Borrower agrees to indemnify, defend, and hold Lender harmless from all charges,
losses, damages, penalties, claims, expenses (including reasonable attorneys'
fees and court costs before trial, and at trial and appellate levels), actions,
liabilities, and obligations incurred by or asserted against Lender relating to
or arising from any claimed or actual pollution or contamination of the Property
with hazardous or toxic materials. Borrower agrees that Lender may, and Borrower
gives Lender or its representatives an easement to enter upon the Property at
any time for the purpose of inspecting the Property for, and for conducting such
tests and inspections as Lender in its discretion might desire for discovering
the potential of, the existence of hazardous or toxic materials. If Lender at
any time determine that hazardous or toxic materials may be present on the
Property, or that the Property is being used for the use, handling, storage,
treatment, generation, transportation, or disposal of hazardous or toxic
materials, then Lender may require that Borrower immediately correct any
violations of law with respect to those materials and obtain all necessary
environmental permits and approvals with respect to those materials. Borrower's
failure to correct any such violation of the laws or to obtain such necessary
environmental permits and approvals within a reasonable time will be a default
under this Mortgage. For purposes of this paragraph, the term "hazardous or
toxic materials" will include, without limitation, petroleum and petroleum
products, asbestos, and all other substances that are regulated by federal,
state, or local environmental laws or regulations or the presence of which could
expose the owner, occupant, or operator of the Property, under any statute,
regulation, or legal theory, to liability for any damages, clean up costs, or
other losses or expenses.
25. ASSIGNMENT OF RENTS AND LEASES
Borrower assigns to Lender and gives Lender a security interest in all
leases of the Property and all rents and revenues from the Property. However,
Borrower will continue to collect and use these rents and revenues as they
become due and payable for so long as Borrower is not in default on this
Mortgage, the Convertible Note Acquisition Agreement or the Note provided that
Borrower
will not accept money from any tenant for more than one month in advance. If
Borrower is ever in default, however, Borrower agrees that Lender is entitled,
without demand, to all such rents and revenues, which Lender will apply first,
first, to previously accrued but unpaid interest under the Note; second, to late
charges due under the Note; third, to amounts payable for taxes, insurance, or
other advances made by Lender on Borrower's behalf, if any; fourth, to deposits
that Borrower must pay, if any, for the payment of future taxes and insurance;
fifth, to current interest due; and last to principal' however, such application
will not cure any default.
26. COST OF RECORDING SATISFACTION OF MORTGAGE
At such time as Borrower will become entitled to a satisfaction of this
Mortgage, then Borrower will be responsible to pay the cost of recording such
Satisfaction of this Mortgage.
27. WAIVER OF RIGHT TO JURY TRIAL
LENDER AND BORROWER BOTH AGREE THAT NEITHER OF THEM, NOR THEIR HEIRS,
SUCCESSORS, OR ASSIGNS (THE "PARTIES"), WILL SEEK A JURY TRIAL IN ANY LAW SUIT,
PROCEEDING, COUNTERCLAIM, OR ANY OTHER LITIGATION PROCEDURE BASED ON OR ARISING
OUT OF THIS MORTGAGE, THE CONVERTIBLE NOTE ACQUISITION AGREEMENT OR THE NOTE.
NONE OF THE PARTIES WILL SEEK TO CONSOLIDATE ANY SUCH ACTION IN WHICH A JURY
TRIAL HAS BEEN WAIVED WITH ANY OTHER IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT
BEEN WAIVED. BORROWER ACKNOWLEDGES THAT THE PROVISIONS OF THIS PARAGRAPH HAVE
BEEN FULLY NEGOTIATED BY LENDER AND BORROWER, ARE A MATERIAL INDUCEMENT FOR THE
LOAN, THE REPAYMENT OF WHICH IS SECURED BY THIS MORTGAGE, AND SHALL BE SUBJECT
TO NO EXCEPTIONS.
Effective on the ___ day of _________________, 2000.
CUIDAO HOLDING CORPORATION, a Florida
corporation
By:______________________________
C. Xxxxxxx Xxxxxx, President
Signed, sealed and delivered in our presence:
------------------------------------- -----------------------------------
WITNESS WITNESS
------------------------------------ -----------------------------------
(WITNESS'S PRINTED NAME) (WITNESS'S PRINTED NAME)
STATE OF FLORIDA
COUNTY OF BROWARD
The foregoing instrument was acknowledged before me this ____ day of
_____________, 2000 by C. Xxxxxxx Xxxxxx, President of CUIDAO HOLDING CORP., who
is personally known to me, or who produced __________ _________________________
as identification, and who did (did not) take an oath and
_________________________and ____________________________ as witnesses.
-------------------------------
seal Notary Public
My Commission Expires:_________
EXHIBIT C TO THE SECOND CONVERTIBLE NOTE ACQUISITION AGREEMENT
Prepared by & Return to:
Mintmire & Associates
000 Xxxxxxx Xxx., Xxxxx 000
Xxxx Xxxxx, Xxxxxxx 00000
RELEASE AND SATISFACTION
KNOW ALL MEN BY THESE PRESENTS that the undersigned, WM PROPERTIES OF SOUTH
FLORIDA, INC. acknowledges full payment of the indebtedness secured by that
certain mortgage, dated ___________________, 2000, made and executed by CUIDAO
HOLDING CORP. to WM PROPERTIES OF SOUTH FLORIDA INC. to secure the payment of
the principal sum of FOUR HUNDRED NINETY FIVE THOUSAND UNITED STATES DOLLARS
($495,000.00), which mortgage was duly recorded on ______________,2000, in
Official Record Book ______, at Page ______, of the Public Records of Broward
County, Florida, and which mortgage was secured on 2951 /2953 Xxxxx Street,
Hollywood, Florida whose legal description is as follows:
The South 174 feet, less the East 150 feet thereof, of that portion of
parcel B lying Between N. 29th Court and No. 30th Avenue, as shown on
the Plat of SOUTH FLORIDA INDUSTRIAL PARK, according to the Plat
thereof, recorded in Plat Book 63, Page 38 of the Public Records of
Broward County, Florida.
On recordation of this instrument, the mortgage shall be and is forever
discharged, and the undersigned does further release and satisfy the mortgage.
The mortgage has not been assigned.
This Release and Satisfaction was given as part of a certain Second
Convertible Note Acquisition Agreement dated September 26, 2000 and held in
escrow pursuant to the terms of such agreement to secure the performance of
CUIDAO HOLDING CORP. under the terms thereof and the terms of a certain Mortgage
Note of even date.
IN WITNESS WHEREOF, the Mortgage Holder has executed this Release and
Satisfaction effective on the ___ day of _____________, 2000.
WM PROPERTIES OF SOUTH FLORIDA, INC.
By:_______________________________
Signed, sealed and delivered in our presence:
----------------------------------- ------------------------------------
WITNESS WITNESS
----------------------------------- ------------------------------------
(WITNESS'S PRINTED NAME) (WITNESS'S PRINTED NAME)
STATE OF FLORIDA
COUNTY OF BROWARD
The foregoing instrument was acknowledged before me this ____ day of
__________, 2000 by _____________________, President of WM PROPERTIES OF SOUTH
FLORIDA, INC., who is personally known to me, or who produced __________
_________________________ as identification, and who did (did not) take an oath
and __________________________and _________________________________ as
witnesses.
-------------------------------
seal Notary Public
My Commission Expires:_________
