Exhibit 10.39
FORM OF
LOAN AND SECURITY AGREEMENT
This Loan and Security Agreement (the "AGREEMENT") dated as of
__________ , 1998 is by and between Apollo International of Delaware, Inc., a
Delaware corporation, (the "BORROWER") and _______________________
__________________________________ (the "LENDER").
RECITALS:
WHEREAS, Lender has agreed to loan the Company the sum of
______________________ Dollars $______________) (the "Loan") in exchange for a
secured convertible promissory note (the "Note") in accordance with the terms
and conditions of this Agreement; and
WHEREAS, Borrower anticipates borrowing an aggregate of One Million
Dollars ($1,000,000) (which amount includes this Loan) from certain individuals
and/or entities, in addition to and including Lender (together with Lender, the
"Participating Lenders").
NOW, THEREFORE, in consideration of the premises and of the mutual
promises and agreements hereinafter set forth, the parties hereto do covenant
and agree as follows:
1. EVIDENCE OF LOAN INDEBTEDNESS AND REPAYMENT. The Loan shall be
evidenced by a secured convertible promissory note substantially in the form of
EXHIBIT A attached hereto (the "Note"), executed by Borrower in favor of Lender.
The Loan shall be in the original principal amount indicated in the Note, shall
be payable in accordance with the terms of the Note, and shall be prepayable at
any time without penalty or premium. The Note shall bear interest from the date
thereof to maturity on the unpaid principal balance thereon at the rate
specified therein.
2. SECURITY.
(a) As collateral security for the full and timely payment of the
principal and interest on the Note (the "Indebtedness"), Borrower hereby grants
to Lender a security interest in Borrower's accounts and inventory, as such
terms are defined in Article 9 of Florida's Uniform Commercial Code (the
"Uniform Commercial Code"), together with all proceeds thereof (the
"Collateral").
(b) IT IS HEREBY UNDERSTOOD AND AGREED BY LENDER that Borrower will
be granting a security interest in the Collateral to all Participating Lenders
and in respect thereof Borrower shall execute and deliver, or have executed and
delivered, in favor of the Participating Lenders as secured parties, a UCC-1
Financing Statement pursuant to the Uniform Commercial Code, in substantially
the form attached hereto as EXHIBIT B, covering the Collateral. Borrower, at its
sole cost and expense, shall cause the Financing Statement to be filed with the
Florida Secretary of State.
3. USE OF PROCEEDS. The Borrower agrees that the proceeds of the
borrowing hereunder shall be used only for working capital in the operation of
Borrower's business and none of the proceeds shall be used to reduce Borrower's
debt obligations or deferred salaries, if any.
4. CLOSING DATE. The closing ("Closing") with respect to the Loan shall
be facilitated by facsimile transmission and/or overnight courier of the
documents to be delivered pursuant to this Agreement and the wiring of the Loan
proceeds to the Borrower in accordance with the wiring instructions attached
hereto as EXHIBIT C, on January 14, 1998, or such later date as Borrower and
Lender shall agree ("Closing Date").
5. CONVERSION PRIVILEGE. During the period beginning on the date that is
ninety days (90) days from the date of the Note and ending on the earlier of the
(i) date the Note is repaid in full and (ii) the Maturity Date (as defined in
the Note), the Note shall be convertible at the option of Lender, into that
number of authorized but not yet issued, fully paid and non-assessable shares of
common stock of Borrower, par value $.01 per share (the "Common Stock") obtained
by dividing (x) the then remaining unpaid principal balance of the Note plus any
accrued and unpaid interest on the date the Notice of Conversion (as defined in
the Note) is given, by (y) the Conversion Price. The Conversion Price shall be
$3.25 per share of Common Stock.
6. REGISTRATION RIGHTS AGREEMENT. The Company shall provide Lender with
certain registration rights pertaining to the shares issuable or issued upon
conversion of the Note (the "Conversion Shares") pursuant to a registration
rights agreement to be entered into between the Company and Lender (the
"Registration Rights Agreement").
7. REPRESENTATION AND WARRANTIES OF COMPANY. Borrower represents and
warrants to Lender as follows:
(a) The execution, delivery and performance of this Agreement by
Borrower or the execution, delivery and performance of any documents,
contemplated herein or in the Note and other documents executed
contemporaneously herewith, shall not constitute a default under any written or
oral agreement to which Borrower is a party, nor the order of any court or any
governmental or quasi-governmental body or agency.
(b) This Agreement, the Note, and any other documents or agreements
and actions contemplated herein have been authorized by the Borrower's Board of
Directors.
(c) The Participating Lender's security interest in the Collateral
will constitute a first priority lien upon and security interest in such
Collateral, and, except for liens arising by operation of law, no other person
or entity has any right, title, interest, security interest, claim or lien with
respect thereto.
8. DEFAULT AND REMEDIES.
(a) The occurrence and continuation of any of the following shall
constitute an Event of Default hereunder: (i) the failure of Borrower to make
payment pursuant to the Note, and such failure is not cured within ten (10) days
of the required due date; (ii) the institution by Borrower (whether by petition,
application, answer, consent or otherwise), of any bankruptcy, insolvency,
reorganization, readjustment of debt, arrangement, dissolution, liquidation or
similar proceeding, or the institution of any such proceedings (by petition,
application or otherwise) against Borrower which shall have remained undismissed
for a period of ninety (90) days; (iii) the adjudication of Borrower as a
bankrupt or insolvent, or an assignment by Borrower for the benefit of
creditors; or (iv) a material breach of this Agreement by Borrower.
(a) Upon the occurrence of any Event of Default, at the option of the
Lender, the entire outstanding balance of principal and accrued and unpaid
interest on the Note then owing by the Borrower to the Lender shall forthwith
become due and payable on demand of the Lender without notice of default,
presentment, demand for payment, and protest, all of which are hereby expressly
waived by Borrower. Upon the occurrence of any such Event of Default and the
acceleration of the maturity of the Indebtedness evidenced by the Note:
(i) Lender shall be immediately entitled to exercise any and
all rights and remedies possessed by Lender pursuant to the terms of
this Agreement and the Note;
(ii) Lender shall have all the rights and remedies of a secured
party under the Uniform Commercial Code; and
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(iii) Lender shall have any and all other rights and remedies
that Lender may now or hereafter possess at law, in equity, or by
statute.
9. REPRESENTATIONS AND WARRANTIES OF LENDER. Lender represents and
warrants that:
(a) Lender shall hold the Note and any and all shares of Common Stock
issued upon conversion of the principal and interest of the Note (the
"Conversion Shares") for Lender's own account for investment only and not with a
view towards the public sale or distribution thereof, except pursuant to sales
registered or exempted under the Securities Act of 1933, as amended (the
"Securities Act").
(b) Lender is an "accredited investor" as that term is defined in
Rule 501(a) of Regulation D under the Securities Act, a copy of which definition
is attached here to as Exhibit C.
(c) Lender and its advisors, if any, have been furnished with all
materials relating to the business, finances and operations of the Company and
materials relating to the Note and the Company's Common Stock which have been
requested by the Lender or its advisors. Lender and its advisors, if any, have
been afforded the opportunity to ask questions of the Company and have received
what the Lender believes to be satisfactory answers to any such inquiries.
(d) Lender understands that (i) except as provided in the
Registration Rights Agreement, the Conversion Shares have not been and are not
being registered under the Securities Act or any applicable state securities
laws, and may not be transferred unless (a) subsequently registered thereunder,
or (b) Lender shall have delivered to the Company an opinion of counsel
reasonably acceptable to the Company to the effect that the Conversion Shares
sold or transferred may be sold or transferred pursuant to an exemption from
such registration; (ii) any sale of such Conversion Shares made in reliance on
Rule 144 promulgated under the Securities Act may be made only in accordance
with the terms of said Rule or in compliance with some other exemption under the
Securities Act or the rules and regulations thereunder; and (iii) neither the
Company nor any other person is under any obligation to register such Conversion
Shares under the Securities Act or any state securities laws or to comply with
the terms and conditions of any exemption thereunder (in each case, other than
pursuant to Registration Rights Agreement).
10. SEVERABILITY PROVISION. If any provisions of this Agreement shall be
determined by a court of competent jurisdiction to be invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not be affected thereby.
11. NOTICE. Every provision for notice, demand or request required in
this Agreement or by applicable law shall be deemed fulfilled by written notice,
demand or request, mailed or personally served on the party entitled thereto or
on its successors or assigns. If mailed, such notice, demand or request shall be
made by certified or registered mail, and deposited in any post office station
or letter-box, enclosed in a postage paid envelope addressed to such party at
its address set forth below, or such other address as either party hereto shall
direct by like written notice and shall be deemed to have been made on the
fourth (4th) day following posting as aforesaid and, if personally. served,
notice shall be given on the date notice is served. For the purposes herein,
notices shall be sent to Borrower and Lender as follows:
Borrower: Apollo International of Delaware, Inc.
▇▇▇▇ ▇. ▇.▇. ▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
With a copy to: ▇▇▇▇▇▇▇▇▇ Traurig
▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
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Lender: To the address set forth under Lender's signature
to this Agreement.
12. INTERPRETATION; CONSTRUCTION. This Agreement shall be interpreted
and construed in accordance with the laws of the State of Florida without regard
to any conflicts of laws.
13. COUNTERPARTS; FACSIMILE SIGNATURES. This Agreement may be
executed in multiple counterparts, each of which shall be deemed an original and
all of which together shall constitute one and the same instrument. Further,
facsimile signatures hereon shall have the same legal force and effect as
original signatures.
14. ATTORNEYS' FEES. The parties hereto agree that, in the event of
any legal action in connection with this Agreement, the prevailing party shall
be entitled to recover all of its legal expenses, including reasonable
attorneys' fees and costs incurred in connection with the enforcement of the
provisions of this Agreement.
15. ENTIRE AGREEMENT. This Agreement represents the entire agreement
between the parties concerning the subject matter hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
the day and year first above written.
BORROWER:
APOLLO INTERNATIONAL OF DELAWARE, INC.
By:_____________________________________
Print Name:__________________________
Its: ___________________________________\
LENDER:
________________________________________
(Signature)
________________________________________
(Print Name)
________________________________________
(Print Title)*
________________________________________
(Print Name of Company)*
________________________________________
________________________________________
(Print Address)