EXHIBIT 10.23(a)
LOAN AGREEMENT
THIS AGREEMENT, dated this 13th day of June, 2003 between AspenBio, Inc., a
Colorado corporation "Borrower" whose address is ▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇, and Front Range Regional Economic Development Corporation, a
Colorado non-profit corporation, the "Lender," having its principal office at
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
WHEREAS, the Borrower has applied to the Lender for a loan for the purpose
of acquiring physical plant and/or capital equipment (the "Acquisition Assets"),
and
WHEREAS, the Lender is willing to sell a Debenture (the "Debenture"), the
proceeds of which Debenture will be used to make such a loan to the Borrower on
the items and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, the parties hereto agree as follows:
ARTICLE I
THE LOAN
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1.01 The Loan. Note and Rate. Subject to the terms and conditions of this
Agreement and the SBA Authorization and Debenture Guaranty Agreement No. CDC
461,892-40-00-DEN (the "Debenture Guaranty Agreement"), the Lender hereby agrees
to loan to the Borrower, and the Borrower hereby agrees to borrow from the
Lender and repay the Lender, or its assigns, the amount of $1 ,300,000.00 (the
"Loan"). The obligation of the Borrower to repay the Loan shall be evidenced by
a promissory note (the "Note") of the Borrower in the form of Exhibit A attached
hereto dated as of the date on which the Loan is made (the "Closing Date")
payable to the order of the Lender as determined at the time when the Debenture
of the Lender in the amount of $1,300,000.00 is sold pursuant to the Debenture
Guaranty Agreement.
1.02 The Term and Repayment. The term of the Loan shall be 20 years, and
the Note shall be repayable in 240 equal consecutive monthly installments. The
first monthly installment shall be due and payable on August 1, 2003. All
payments shall be applied first to (a) the servicing fee set forth in the
Servicing Agent Agreement, (b) then to interest on the principal sum, (c) then
to reduction of the principal sum, and (d) then to the late fee set forth in the
Note. All payments shall be made promptly to the Lender at its address specified
at the beginning of this Agreement, or at such other address as it may designate
in writing.
1.03 Purpose of Loan. The purpose of the Loan is to enable the Borrower to
own and operate the Acquisition Assets, and thus aid the economic development of
the area in which the Acquisition Assets are located. The Borrower agrees that
it will apply the funds received by it under this Agreement in accordance with
the use of Loan proceeds specified in the Debenture Guaranty Agreement, and the
Borrower further agrees that no application of any funds received from the
Lender hereunder shall be made in violation of the Small Business Investment Act
of 1958, as amended, or the regulations promulgated thereunder.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
------------------------------
The Borrower represents and covenants the following:
2.01 Capacity of Borrower. The Borrower, AspenBio,Inc., a Colorado
corporation, is duly organized, validly existing and in good standing under the
laws of the State of Colorado and has the power to enter into this Agreement and
to borrow hereunder. The ????? and performance of the Borrower of this
Agreement, and the execution and delivery of the Note, and any Security
Agreements and Instruments will not violate any law, rule, regulation, order,
writ, judgement, decree, determination or award presently in effect having
applicability to the Borrower or result in a breach of or constitute a default
under any indenture or bank loan or credit agreement or any other arrangement or
instrument to which the Borrower is a party or by which the Borrower or its
property may be bound or affected.
2.02 Legally Binding Instruments. When this Agreement is executed by the
Borrower and the Lender, and when the Note is executed and delivered by the
Borrower for value, each such instrument shall constitute the legal, valid and
binding obligation of the Borrower in accordance with its terms. Any Security
Agreements and Instruments, Financing Statements, Mortgages and other liens on
chattel or real estate shall constitute legal, valid and binding liens free and
clear of all prior liens and encumbrances except as provided for.
2.03 No Legal Suits. There are no legal actions, suits, or proceedings
pending or, to the knowledge of the Borrower, threatened against the Borrower
before any court or administrative agency, which, if determined adversely to the
Borrower, would have a material adverse effect on the financial condition or
business of the Borrower.
2.04 No Legal Authorization Needed. No authorization, consent or approval,
or any formal exemption of any Governmental body, regulatory authorities
(Federal, State or Local) or mortgagee, creditor or third party is or was
necessary to the valid execution and delivery by the Borrower of this Agreement,
the Note, or any Security Agreement, Financing Statement, Mortgage, or Deed of
Trust, except as provided for under Sections 3.09 and 3.10 herein.
2.05 Not in Default. The Borrower is not in default of any obligation,
covenant, or condition contained in any bond, debenture, note, or other evidence
of indebtedness or any mortgage or collateral instrument securing the same.
2.06 Taxes are Paid. The Borrower has filed all tax returns which are
required and has paid or made provision for the payment of all taxes which have
or may become due pursuant to said
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returns or pursuant to any assessments levied against the Borrower or the
Borrower's personal or real property by any taxing agency, federal, state or
local. No tax liability has been asserted by the Internal Revenue Service or
other taxing agency, federal, state or local for taxes materially in excess of
those already provided for and the Borrower knows of no basis for any such
deficiency assessment.
2.07 No Adverse Change. The Borrower certifies that there has been no
adverse change since the date of loan application in the financial condition,
organization, operation, business prospects, fixed properties, or personnel of.
the Borrower.
ARTICLE III
CONDITIONS OF LENDING
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The obligation of the Lender to make the Loan shall be subject to the
fulfillment at the time of closing of each of the following conditions:
3.01 Execution of Authorization. The Borrower shall have executed and
delivered to the Lender the Debenture Guaranty Agreement.
3.02 Execution and Delivery of Note and Loan Agreement. The Borrower shall
have executed and delivered to the Lender this Loan Agreement and-me Note in a
form satisfactory to the Lender and its Counsel.
3.03 Execution and Delivery of Security Agreement and Deed of Trust. The
Borrower shall have executed and delivered to the Lender a Deed of Trust on the
real estate described in Exhibit B attached hereto. The Borrower shall also have
executed and delivered to the Lender (if required under the Debenture Guaranty
Agreement) a Security Agreement and Financing Statements in forms satisfactory
to the Lender, giving the Lender security in all of the chattel and personal
property acquired with the Loan proceeds (as listed in Exhibit C if attached).
Said Security Agreement, Financing Statements and Deed of Trust shall be free
and clear of all prior liens and encumbrances except as provided for in
accordance with the Debenture Guaranty Agreement. Said Security Agreement,
Financing Statements and Deed of Trust are to secure payment of the principal of
the Note, the interest thereon, and any other sums payable by the Borrower
hereunder.
3.04 Execution and Certification of Resolution of Board of Directors. If
the Borrower is a corporation, the Borrower shall have executed and delivered to
the Lender, a duly certified copy of a Resolution of the Board of Directors
authorizing the execution and delivery by the Borrower of this Agreement, the
Note and the Deed of Trust.
3.05 Corporate Papers. If the Borrower is a corporation, the Borrower shall
have delivered to the Lender copies of the Borrower's Certificate of
Incorporation, Articles of Incorporation, By-Laws, and Certificate of Good
Standing.
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3.06. Execution of CSA Agreement. The Borrower shall have executed and
delivered to the Lender, the Central Servicing Agent Agreement (SBA Form 1506)
in a form satisfactory to the Lender's Counsel.
3.07 Personal Guarantees. The Lender shall have received duly executed
personal guaranty agreement (SBA Form 148) as required by the Debenture Guaranty
Agreement and in form satisfactory to the Lender's Counsel.
3.08 Title Insurance. The Borrower shall have secured mortgage title
insurance in the form and issued by companies satisfactory to the Lender, in the
amount of the Loan, insuring the Lender and the lien of the Mortgage or Deed of
Trust subject only to exceptions approved in the Debenture Guaranty Agreement.
The title policy shall show no delinquent taxes or assessments affecting the
real property or any part thereof on the date of closing except as approved by
the Lender.
3.09 Governmental Approval. The Borrower shall have secured all necessary
approvals or consents, if required, of Governmental bodies having jurisdiction
with respect to any construction contemplated in accordance with the use of
proceeds of the Debenture Guaranty Agreement.
3.10 Approval of Others. The Borrower shall have secured all necessary
approvals or consents required with respect to this transaction by any
mortgagee, creditor or other party having any financial interest in the
Borrower.
3.11 Opinion of Counsel. The Lender shall have received the Opinion of
Counsel to the Borrower that the Representations and Warranties are true and
accurate on and as of the closing date and the conditions of the Loan have been
duly satisfied as of the Closing Date.
ARTICLE IV
AFFIRMATIVE COVENANTS OF THE BORROWER
-------------------------------------
The Borrower agrees to comply with the following covenants from the date
hereof until the. Lender has been fully repaid with interest, unless the Lender
or its Assigns shall otherwise consent in writing:
4.01 Payment of the Loan. The Borrower agrees to pay punctually the
principal and interest on the Note according to its terms and conditions and to
pay punctually any other amounts that may become due and payable to the Lender
under or pursuant to the terms of this Agreement or the Note.
4.02 Payment of Other Indebtedness. The Borrower agrees to pay punctually
the principal and interest due on any other indebtedness now or hereafter at any
time owing by the Borrower to the Lender or any other lender.
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4.03 Payment of CDC Fees. In addition to the fee paid to the Underwriter
and the closing fee to be paid to the CDC's attorney, all as provided in the
Debenture Guaranty Agreement, and in consideration of the Lender's expenses
associated with processing and servicing this Loan, the Borrower agrees to pay
to the Lender a processing fee of 1 1/2% of the net Debenture proceeds, payable
at the time of Loan funding, and an annual service fee (payable monthly) equal
to .472 of 1 % of the unpaid Loan balance, such balance to be determined at
5-year anniversary intervals at the beginning of such intervals.
4.04 Maintain and Insure Property. The Borrower agrees at all times to
maintain the property provided as security for this Loan in such condition and
repair that the Lender's security will be adequately protected. The Borrower
also agrees to maintain during the term of the Loan adequate hazard insurance
policies covering fire and extended coverage.-and such other hazards as may be
deemed appropriate in amounts and form sufficient to prevent the Borrower from
becoming a co-insurer and issued by companies satisfactory to the Lender with
acceptable loss payee clauses in favor of the Lender. The Borrower further
agrees, if at any time during the life of the Loan the Borrower 's property is
declared to be within a flood hazard area, to purchase Federal Flood Insurance
if available. Such insurance shall be in an amount equal to the lesser of: I)
the amount of the loan; ii) the insurable value of the property; or iii) the
maximum limit of coverage available. If the property is not located in a flood
hazard area at the time of the Loan closing, the Borrower will provide
satisfactory evidence thereof. The Borrower further agrees to maintain adequate
liability and ▇▇▇▇▇▇▇'▇ compensation insurance in amounts and form satisfactory
to the Lender.
4.05 Pay All Taxes. The Borrower agrees to duly pay and discharge all
taxes, assessments and governmental charges upon it or against its properties
prior to the date on which the penalties attach thereto, except that the
Borrower shall not be required to pay any such tax, assessment or governmental
charge which is being contested by it in good faith and by appropriate
proceedings. Unless waived in writing by the Lender, the Borrower shall pay each
month to the Lender, concurrently with and in addition to the monthly payments
required under the Note, 1/12 of the reasonably estimated annual general and
special taxes and any other assessments or taxes levied on the real property
covered by the Deed of Trust. Such estimate may be adjusted by the Lender from
time to time based on past ▇▇▇▇▇▇▇▇ and assessments. 'The tax funds shall be
retained by the Lender as additional security for the Loan and for the payment
of such items when charged or billed without further inquiry. The Borrower shall
provide the Lender with a proper statement of taxes before the due date. In case
the fund is not sufficient to pay the taxes at the end of each year for which
they are assessed, the Borrower shall promptly pay the deficiency to the Lender.
The Lender shall not be required to pay the Borrower any interest or earnings on
such funds.
4.06 Provide Additional Equity. The Borrower agrees to provide additional
equity funds to cover additional project costs included as a result of overruns
or unanticipated expenses or changes in work orders in the project as specified
in the Debenture Guaranty Agreement.
4.07 Maintain Existence. If the Borrower a corporation, the Borrower agrees
to maintain its corporate existence, rights, privileges, and franchises within
the State of Colorado and qualify and
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remain qualified as a foreign corporation in each jurisdiction in which its
present or future operations or its ownership of property require such
qualification.
4.08 Provide Financial Information. The Borrower agrees to maintain
adequate records and books of account, in which complete entries will be made
reflecting all of its business and financial transactions, such entries to be
made in accordance with generally accepted principles of good accounting
practice consistently applied in the case of financial transactions. In
addition, the Borrower agrees to furnish to the Lender quarterly financial
statements certified by the Borrower to be true and accurate copies and
delivered within sixty (60) days following the close of the quarter year, and
the Borrower agrees to furnish to the Lender annual financial statements,
prepared by an independent accountant and certified by the Borrower to be true
and accurate copies within ninety (90) days of the close of the fiscal year.
4.09 Provide SBA Information. The Borrower further agrees to provide
information, and execute and deliver any and all additional documents and
instruments as may be reasonably requested by the Lender, its Assigns or
Counsel, or the CSA including but not limited to:
i) Executing the SBA Form 159 "Compensation Agreement"
ii) Displaying the SBA Form 722 "Equal Opportunity Poster."
iii) Executing the SBA Form 600 Series "Civil Rights Compliance Forms."
iv) Providing information as required of the Lender by the SBA for its
annual reporting requirements.
4.10 Provide Notice of Hearings. The Borrower further agrees to provide
written notice to the Lender of any public hearing or meeting before any
administrative or other public agency which may, in any manner, affect the
chattel, personal property or real estate securing the Loan.
4.11 Right to Inspection. The Borrower agrees to grant the Lender, until
the Note has been fully repaid with interest, the right at all reasonable hours
to inspect the chattel, personal property and real estate used to secure the
Loan; and the Borrower further agrees to provide the Lender free access to the
Borrower's premises for the purpose of such inspection to determine the
condition of the chattel, personal property and real estate.
4.12 Null and Void Covenants. The Borrower agrees, that in the event that
any provision of this Loan Agreement or any other instrument executed at closing
or the application thereof to any person or circumstances shall be declared null
and void, invalid, or held for any reason to be unenforceable by a Court of
competent jurisdiction, the remainder of such agreement shall nevertheless
remain in full force and effect, and to this end, the provisions of all
covenants, conditions, and agreements described herein are deemed separate.
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4.13 Expenses and Closing Costs. The Borrower agrees to pay all fees,
expenses and charges in respect to the Loan, or its making or transfer to the
Lender in any way connected therewith including, but not limited to, the fees
and out-of-pocket expenses of local counsel employed by the Lender, title
insurance and survey costs, recording and filing fees, mortgage taxes,
documentary stamp, and any other taxes, fees and expenses payable in connection
with this transaction and with the enforcement of this Loan Agreement and the
Note.
4.14 Notice of Default. The Borrower agrees to give written notice to the
Lender of any event, within 15 days of the event, which constitutes an Event of
Default under this Loan Agreement as described in Article VI herein or that
would, with notice or lapse of time or both, constitute an Event of Default
under this Loan Agreement.
4.15 Indemnification. The Borrower agrees to indemnify and save the Lender
or its Assigns harmless against any and all liability with respect to, or
resulting from, any delay in discharging any obligation of the Borrower.
4.16 Expenses of Collection or Enforcement. The Borrower agrees, if at any
time the Borrower defaults on any provision of this Loan Agreement, the Borrower
shall pay the Lender or its Assigns, in addition to any other amounts that may
be due from the Borrower, an amount equal to the costs and expenses of
collection, enforcement or collection or waiver of the default included by the
Lender or its Assigns in such collection, enforcement, collection or waiver of
default.
ARTICLE V.
NEGATIVE COVENANTS OF THE BORROWER
----------------------------------
The Borrower covenants and agrees that, from the date hereof until payment
in full of the Note, unless the Lender or its Assigns shall otherwise consent in
writing, it will not enter into any agreement or other commitment, the
performance of which would constitute a breach of any of the covenants contained
in this Loan Agreement including, but not limited to the following covenants:
5.01 Encumber the Acquisition Assets. The Borrower will neither create nor
suffer to exist any mortgage, pledge, lien, charge, or encumbrance, including
liens arising from judgments on the Acquisition Assets except as provided for by
the Debenture Guaranty Agreement.
5.02 Sell the Acquisition Assets. The Borrower will not sell, convey, or
suffer to be conveyed, lease, assign, transfer or otherwise dispose of the
Acquisition Assets unless approved in writing by the Small Business
Administration (the SBA).
5.03 Change Ownership. Borrower will not, without prior written consent of
Lender and SBA, change the ownership structure or interests in the business
during the term of the Note, provided that, commencing six months after the
Closing, Borrower or Operating Company may have
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one or more changes in ownership without approval of SBA so long as the
cumulative change over the term of the Note is less than five percent (5%).
5.04 Change of Business. The Borrower will not, without the written
permission of the SBA, change the nature of the Borrower's business as carried
on at the date hereof.
5.05 Change the Project. The Borrower will neither permit nor suffer to
exist without prior written SBA consent any material change in the project's
plans and/or specifications submitted to the SBA in order to induce the SBA to
guaranty the Debenture to be issued by the Lender as per the Debenture Guaranty
Agreement. Material change will include any significant variance in the accepted
plans and specifications, increases in contract prices, and/or additional
financial obligations with respect to the construction and Acquisition Assets.
5.06 Borrower Ownership of Lender. During the term of the Loan, neither the
Borrower nor its affiliates nor its principals nor its close associates will
acquire, either directly or indirectly, an ownership position or interest in the
Lender in excess of 10% of the votes or shares of the Lender.
ARTICLE VI
EVENTS OF DEFAULT
-----------------
The entire unpaid principal of the Note, and the interest then accrued
thereon, shall become and be immediately due and payable upon the written demand
of the Lender or its Assigns, without any other notice or demand of any kind or
any presentment or protest, if anyone of the following events (an "Event of
Default") shall occur and be continuing at the time of such demand, whether
voluntarily or involuntarily, or without limitation, occurring or brought about
by operation of law or pursuant to or in compliance with any judgment, decree or
order of any court or any order, rules or regulation of any administrative or
governmental body, provided, however, that such sum shall not be then payable if
Borrower's payments have been waived, or the time for making the Borrower's
payments has been extended by the SBA:
6.01 Non-Payment of Loan. If the Borrower shall fail to make payment when
due of any installment of principal on the Note, or interest accrued thereon and
if the default shall remain unremedied for fifteen (15) days.
6.02 Non-Payment of Other Indebtedness. If default shall be made in the
payment when due of any installment of principal or of interest on any of the
Borrower's other indebtedness and if such default shall remain unremedied for
fifteen (15) days.
6.03 Incorrect Representation or Warranty. Any representation or warranty
contained in, or made in connection with the execution and delivery of, this
Loan Agreement, or in any certificate furnished pursuant hereto, shall prove to
have been incorrect when made in any material respect.
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6.04 Default in Covenants. The Borrower shall default in the performance of
any other term, covenant or agreement contained in this Loan Agreement, and such
default shall continue unremedied for thirty (30) days after either: i) it
becomes known to the Borrower; or ii) written notice thereof shall have been
given to the Borrower by the Lender.
6.05 Voluntary Insolvency. If the Borrower shall become insolvent or shall
cease to pay . its debts as they mature or shall voluntarily file a petition
seeking reorganization of, or the appointment of a receiver, trustee, or
liquidation for the Borrower, or a substantial portion of the Borrower's assets
or to effect a plan or other arrangement with creditors, or shall be adjudicated
bankrupt, or shall make a voluntary assignment for the benefit of creditors.
6.06 Involuntary Insolvency. If any involuntary petition shall be filed
against the Borrower under any bankruptcy, insolvency or similar law or seeking
the reorganization of or the appointment of any receiver, trustee or liquidator
for the Borrower, or of a substantial part of the property of the Borrower, or a
writ or warrant of attachment or similar process shall be issued against a
substantial part of the property of the Borrower, and such petition shall not be
dismissed, or such writ or warrant of attachment or similar process shall not be
released or bonded, within thirty (30) days after filing or levy.
6.07 Judgments. If any final judgment for the payment of money that is not
fully covered by liability insurance and is in excess of $10,000.00 shall be
rendered against the Borrower, and within thirty (30) days, shall not be
discharged, or an appeal therefrom taken and execution thereon effectively
stayed pending such appeal, and, if such judgment be affirmed on such appeal,
the same shall not be discharged within thirty (30) days.
ARTICLE VII
MISCELLANEOUS
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7.01 Waiver of Notice. No failure or delay on the part of the Lender 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. No modification or waiver of any
provision of this Loan Agreement or of the Note, nor any consent to any
departure by the Borrower therefrom, shall in any event be effective unless the
same shall be in writing and then such waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given. No notice
to or demand on the Borrower in any case shall entitle the Borrower to any other
or further notice or demand in similar or other circumstances. .
7.02 Amendments. The Borrower and the Lender or its Assigns, with the
concurrence of the SBA, hereby expressly reserve all rights to amend any
provisions of this Agreement, to consent
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to or waive any departure from the provisions of this Loan Agreement, to amend
or consent to or waive departure from the provisions of the Note, and to release
or otherwise deal with any collateral security for payment of the Note;
provided, however, that all such amendments be in writing and executed by the
Lender or its Assigns, the Borrower and the SBA.
7.03 Notices. All notices, consents, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given to a party hereto if mailed by certified mail, prepaid, to the Lender
at the address set forth at the beginning of this Agreement, and to the Borrower
at the address set forth at the beginning of this Agreement, or at such other
addresses as any party may have designated in writing to any other party herein.
7.04 Payments. The Borrower will make payments to the Lender in accordance
with the terms and conditions and instructions contained in the Central
Servicing Agent Agreement (SBA Form 1506). .
7.05 Survival of Representations and Warranties: All agreements,
representations and warranties made by the Borrower herein or any other document
or certificate delivered to the Lender in connection with the transactions
contemplated by this Loan Agreement shall survive the delivery of this Agreement
and the Note hereunder, and shall continue in full force and effect so long as
the Note remains unpaid.
7.06 Successors and Assigns. This Loan Agreement shall be binding upon the
Borrower, its Successors and Assigns, except that the Borrower may not assign or
transfer its rights without prior written consent of the SBA. This Agreement
shall inure to the benefit of the Lender, its Successors and Assigns, and,
except as otherwise expressly provided in particular provisions hereof, all
subsequent holders of the Note.
7.07 Counterparts. This Loan Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
7.08 Governing: Law. This Loan Agreement, the Note and the Deed of Trust
shall be deemed contracts made under the laws of the State of Colorado and for
all purposes shall be construed in accordance with the laws of said State.
7.09 Article and Section Headings. Article and Section headings used in
this Agreement are for convenience only and shall not affect the construction of
this Agreement.
IN WITNESS WHEREOF, the parties hereto have each caused this Loan Agreement
to be duly executed as of the day and year first above written.
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LENDER: FRONT RANGE REGIONAL ECONOMIC
DEVELOPMENT CORPORATION,
a Colorado non-profit corporation
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇
---------------------------------
President
ATTEST:
/s/ ▇▇▇▇ ▇'▇▇▇▇▇▇▇
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▇▇▇▇ ▇'▇▇▇▇▇▇▇, Executive Director
BORROWER:
DEVELOPMENT CORPORATION,
a Colorado non-profit corporation
AspenBio, Inc., a Colorado corporation
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
---------------------------------
▇▇▇▇▇ ▇▇▇▇▇, President
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