EXHIBIT 10.38
LOAN AGREEMENT
ss.1. Parties
1.1. This Agreement is made and entered into as of October 20, 2000 (the
"Effective Date"), by and between ORANGE PRODUCTIONS, INC., and CAPITAL
CONSULTANTS, INC.
ss.2. Definition and Accounting Terms
2.1. Definitions. As used in this Agreement:
(a) "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.
(b) "Lender" means Capital Consultants, Inc., a corporation
incorporated under the laws of Kentucky, for itself and as Lender.
(c) "Agreement" means this Loan Agreement, as amended,
supplemented or modified from time to time.
(d) "Borrower" means Orange Productions, Inc., a corporation
incorporated 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 Florida are authorized or
required to close under the laws of the State of Florida.
(f) "Closing Date" means October 20, 2000, or such other date
as the Borrower and the Lender may agree in writing to be the Closing
Date.
(g) Code" means the US Internal Revenue Code of 1986, as
amended from time to time, and the regulations and published
interpretations thereof.
(h) "Collateral" means all property that is subject to the
Lien granted by the Security Agreement;
(i) "Common Stock" means the Borrower's common stock, US
$0.0001 par value.
(j) "Commonly Controlled Entity" means an entity, whether or
not incorporated, that is under common control with the Borrower,
within the meaning of Section 414(b) or 414(c) of the Code.
(k) "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.
(l) "Conversion Shares" means the shares of Common Stock into
which the Notes are convertible.
(m) "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.
(n) "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.
(o) "Effective Date" means the date set forth in paragraph
1.1 of this Agreement.
(p) "Escrow Agreement" shall have the meaning ascribed in
paragraph 6.2(d) of this Agreement.
(q) "ERISA" means the Employee Retirement Income Security Act
of 1974, as amended from time to time, and the regulations and
published interpretations thereof.
(r) "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.
(s) "Exchange Act" means the United States of America
Securities Exchange Act of 1934, as amended.
(t) "GAAP" means generally accepted accounting principles in
the U.S.
(u) "Lenders" means CAPITAL CONSULTANTS, INC., a Kentucky
corporation.
(v) "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.
(w) "Loan" shall have the meaning ascribed in paragraph 3.1
of this Agreement.
(x) "Loan Documents" means this Agreement, the Notes, the
Security Agreement, the Registration Rights Agreement, and the Escrow
Agreement.
(y) "Multiemployer Plan" means a Plan described in Section
4001(a)(3) of ERISA.
(z) "Notes" shall have the meaning ascribed in paragraph 3.4
of this Agreement.
(aa) "PBGC" means the Pension Benefit Guaranty Corporation or
any entity succeeding to any or all of its functions under ERISA.
(bb) "Person" means an individual, partnership, corporation,
business trust, joint stock company, trust, unincorporated association,
joint venture, governmental authority, or other entity of whatever
nature.
(cc) "Plan" means any pension plan which is covered by Title
IV of ERISA and in respect of which the Borrower or a Commonly
Controlled Entity is an "employer" as defined in Section 3(5) of ERISA.
(dd) "Prohibited Transaction" means any transaction set forth
in Section 406 of ERISA or Section 4975 of the Code.
(ee) "Registration Rights Agreement" shall have the meaning
ascribed in paragraph 6.2(b) of this Agreement.
(ff) "Reportable Event" means any of the events set forth in
Section 4043 of ERISA.
(gg) "SEC" means the Securities and Exchange Commission of
the United States of America.
(hh) "Securities Act" means the United States of America
Securities Act of 1933, as amended.
(ii) "Security Agreement" means a Security Agreement in
substantially the form of Exhibit B to be delivered by the Borrower
under the terms of this Agreement.
(jj) "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 Borrower.
(kk) "Termination Date" means December 31, 2003.
(ll) "U.S." means the United States of America.
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.
2.4. Currency. All currency described or otherwise referred to in the Loan
Documents is the currency of the United States of America.
ss.3. Amount and Terms of the Loans
3.1. The Loans. The Lender agrees on the terms and conditions set forth in
this Agreement to make loans (each a "Loan" and collectively the "Loans") to the
Borrower from time to time during the period from the date of this Agreement up
to but not including the Termination Date, up to a maximum principal amount of
One Million Dollars in the currency of the United States of America (US$
1,000,000). The initial Loan shall be in the principal amount of $50,000. Unless
the Lender otherwise agrees, the aggregate amount of Loans made in any 90-day
period shall not exceed $250,000.
3.2. Notice and Manner of Borrowing. The Borrower shall give the Lender at
least five (5) Business Days' notice of any Loans under this Agreement,
specifying the date and amount thereof. Not later than 2:00 P.M. Lexington, KY
time, on the date of such Loan and upon fulfillment of the applicable conditions
set forth in Section 4, the Lender will make such Loan available to the Borrower
in immediately available funds by wire transfer to the Borrower's account at a
commercial bank. The Borrower shall give the Lender written wiring instructions
for such transfer, specifying the name, address and ABA routing number for the
Bank, and the Borrower's account number to be credited with the Loan proceeds.
3.3. Interest. The Borrower shall pay interest to the Lender on the
outstanding and unpaid principal amount of the Loan at the rate of ten percent
(10%) per year, calculated on the basis of a year of 360 days comprised of
twelve 30-day months. Interest shall be payable upon any prepayment of principal
and at maturity, at the Lender's Principal Office.
3.4. The Notes. The Borrower's obligation to repay each Loan shall be
evidenced by its promissory note (each a "Note" and collectively the "Notes") in
substantially the form of Exhibit A attached to this Agreement with blanks
appropriately filled in and payable to the order of the Lender. Each Note shall
be dated the date on which the Lender advances the Loan proceeds to the
Borrower, and each of the Notes shall be due and payable on the Termination
Date. At any time prior to their respective payment in full, all or any part of
the principal and interest of the Notes may, at the option of the Lender or
other holder, be converted into Common Stock, at a price per share equal to
$0.60 on Conversion Date.
3.5. Collateral. The Notes, together with all of the Borrower's other
obligations under this Agreement, shall be secured by a Security Agreement in
the form of Exhibit B hereto executed by the Borrower.
3.6. Prepayments. The Borrower may prepay the Notes, in whole or in part,
at any time with the Lender's consent. The Borrower may prepay the Notes in
whole, or in part in increments of $25,000 or less with accrued interest to the
date of such prepayment on the amount prepaid, without the Lender's consent,
provided that: (i) the Borrower gives the Lender not less than 10 Business Days'
prior written notice of its intention to do so, which notice shall specify the
amount being prepaid and the prepayment date; (ii) a registration statement
under the Securities Act shall be in effect registering the issuance and resale
of the Conversion Shares; (iii) the average closing bid price on an electronic
medium such as the OTC Bulletin Board of the Common Stock for the 20 trading
days preceding the notice shall be in excess of $0.75; and the average daily
trading volume for the Common Stock for the 20 trading days preceding the notice
shall be in excess of 20,000. The Lender may convert all or any part of the
Notes being prepaid at any time prior to receipt of the prepayment.
3.7. Method of Payment. The Borrower shall make each payment under this
Agreement and under the Notes at the Lender's Principal Office not later than
2:00 P.M., Lexington, KY time on the date when due in lawful currency of the
United States of America and in immediately available funds. Whenever any
payment to be made under this Agreement or under the Notes shall be stated to be
due on a day other than a Business Day, such payment shall be made on the next
succeeding Business Day, and such extension of time shall in such case be
included in the computation of interest due on the Loan.
3.8. Use of Proceeds. The Borrower shall use the proceeds of the Loan
solely for the following purposes:(a) to pay the fees and expenses of the
Lender's counsel in the negotiation and preparation of this Agreement and (b)
for the Borrower's working capital purposes. The Borrower hereby authorizes the
Lender to withhold the amounts necessary to repay that note and such fees and
expenses of its counsel from the proceeds of the Loans.
ss.4. Conditions Precedent.
4.1. Condition Precedent to Initial Loan. The obligation of the Lender to
make the initial Loan to the Borrower is subject to the condition precedent that
the Lender shall have received on or before the day of the Loan each of the
following, in form and substance satisfactory to the Lender and its counsel:
(a) Note. A Note for the principal amount of the initial Loan
duly executed by the Borrower;
(b) Security Agreement. A Security Agreement duly executed by
the Borrower; together with an undertaking by the Borrower to (i) file
within the time proscribed by law for perfecting the Lender's security
interest in the Collateral, and deliver to the Lender 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 Lender, 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 Borrower in all jurisdictions referred to
under (i), including the Financing Statement filed by the Lender
against the Borrower, indicating that no party claims an interest in
any of the Collateral except as set forth on Schedule 5.1(o);
(c) Evidence of all corporate action by the Borrower.
Certified (as of the Effective Date) copies of all corporate action
taken by the Borrower, including resolutions of its Board of Directors,
authorizing the execution, delivery, and performance of the Loan
Documents and each other document to be delivered pursuant to this
Agreement;
(d) Incumbency and signature certificate of the Borrower. A
certificate (dated as of the Effective Date) of the Secretary of the
Borrower certifying the names and true signatures of the officers of
the Borrower authorized to sign the Loan Documents and any other
documents to be delivered by the Borrower under this Agreement;
(e) Registration Rights Agreement. The Registration Rights
Agreement;
(f) Escrow Agreement. The Escrow Agreement; and
(g) Opinion of counsel for the Borrower. A favorable opinion
of counsel for the Borrower, in substantially the form of Exhibit C
hereto, and as to such other matters as the Lender may reasonably
request.
4.2. Conditions Precedent to All Loans. The obligation of the Lender to
make each Loan (including the initial Loan) shall be subject to the further
conditions precedent that on the date of such Loan:
(a) The following statements shall be true and the Lender
shall have received a certificate signed by a duly authorized officer
of the Borrower, dated the date of such Loan, stating that (i) the
representations and warranties contained in Section 5.1 of this
Agreement, and in Section 4.01 of the Security Agreement are correct on
and as of the date of such Loan as though made on and as of such date;
and (ii) no Default or Event of Default has occurred and is continuing,
or would result from such Loan;
(b) The Lender shall have received a detailed statement of the
use of proceeds from the Loan, reasonably satisfactory to the Lender,
certified by the Borrower's chief financial officer and chief executive
officer;
(c) The Lender shall have received such other approvals,
opinions, or documents as the Lender may reasonably request;
ss.5. Representations and Warranties.
5.1. Borrower's Representations and Warranties. The Borrower represents and
warrants to the Lenders that:
(a) Incorporation, Good Standing, and Due Qualification. The
Borrower 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 Borrower has no Subsidiaries.
(b) Corporate Power and Authority. The execution, delivery and
performance by the Borrower of the Loan Documents 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; (v) result in or require the creation or imposition of any
Lien upon or with respect to any to the properties now owned or
hereafter acquired by such corporation; and (vi) 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 Loan Documents when delivered under this Agreement will
be, legal, valid and binding obligations of the Borrower, enforceable
against the Borrower 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) Financial Statements. Borrower's Financial Statements. The
balance sheet of the Borrower, and the related statements of income,
retained earnings and cash flows of the Borrower and the accompanying
footnotes, together with the opinion thereon of ▇▇▇▇▇▇▇ & Co., CPA'S,
P.A., independent certified public accountants copies of which have
been included by the Borrower 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 Borrower as at such dates and
the results of the operations of the Borrower 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 July 31, 2000, there has been no
material adverse change in the condition (financial or otherwise),
business, or operations of the Borrower or any Subsidiary. There are no
liabilities of the Borrower 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 July 31, 2000.
(e) Full Disclosure. No information, exhibit or report
furnished by the Borrower, to the Lender 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 Borrower 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 Borrower or such Subsidiary.
(g) Other Agreements. Except as set forth on Schedule 5.1 (g)
the Borrower 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 effect on the business, properties, assets, operations, or
conditions, financial or otherwise, of the Borrower to carry out its
obligations under the Loan Documents. The Borrower 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.
(h) Litigation. There is no pending or threatened action or
proceeding against or affecting the Borrower 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 Borrower or the ability of
the Borrower to perform its obligations under the Loan Documents.
(i) No Defaults on Outstanding Judgments or Orders. The
Borrower has satisfied all judgments (if any), and is not in default
with respect to any judgment, writ, injunction, decree, rule, or
regulation of any court, arbitrator, or federal, state, municipal, or
other governmental authority, commission, board, bureau, agency or
instrumentality, domestic or foreign.
(j) Ownership and Liens. The Borrower 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 Borrower 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.
(k) ERISA. The Borrower 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 Borrower nor any Commonly
Controlled Entity has completely or partially withdrawn from a
Multiemployer Plan; the Borrower 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 Borrower nor the Parent nor any Commonly Controlled Entity
has incurred any liability to the PBGC under ERISA.
(l) Operation of Business. The Borrower 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 Borrower is not in violation of any valid rights of
others with respect to any of the foregoing.
(n) Taxes. The Borrower 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.
(o) Debt. Schedule 5.1(o) is a complete and correct list of
all credit agreements, indentures, purchase agreements, guaranties,
Capital Leases, and other investments, agreements, and arrangements
presently in effect providing for or relating to extensions of credit
(including agreements and arrangements for the issuance of letters of
credit or for acceptance financing) in respect of which the Borrower is
in any manner directly or contingently obligated; and the maximum
principal or face amounts of the credit in question, which are
outstanding and which can be outstanding, are correctly stated, and all
Liens of any nature given or agreed to be given as security therefor
are correctly described or indicated in Schedule 5.1(o).
(p) Environment. The Borrower has duly complied with, and its
businesses, operations, assets, equipment, property, leaseholds, or
other facilities are in compliance with, the provisions of all federal,
state, and local environmental, health, and safety laws, codes and
ordinances, and all rules and regulations promulgated thereunder. The
Borrower has been issued and will maintain all required federal, state,
and local permits, licenses, certificates, and approvals relating to
(1) air emissions; (2) discharges to surface water or groundwater; (3)
noise emissions; (4) solid or liquid waste disposal; (5) the use,
generation, storage, transportation, or disposal of toxic or hazardous
substances or wastes (intended hereby and hereafter to include any and
all such materials listed in any federal, state, or local law, code or
ordinance and all rules and regulations promulgated thereunder as
hazardous or
potentially hazardous); or (6) other environmental, health, or safety
matters. A true, accurate, and complete list of all such permits,
licenses, certificates, and approvals is attached hereto as Schedule
5.1(p). The Borrower has not received notice of, nor knows of, or
suspects facts which might constitute any violations of any federal,
state, or local environmental, health, or safety laws, codes or
ordinances, and any rules or regulations promulgated thereunder with
respect to its businesses, operations, assets, equipment, property,
leaseholds, or other facilities. Except in accordance with a valid
governmental permit, license, certificate, or approval listed in
Schedule 5.1(p), there has been no emission, spill, release, or
discharge into or upon (1) the air; (2) soils; or any improvements
located thereon; (3) surface water or groundwater; or (4) the sewer,
septic system or waste treatment, storage or disposal system servicing
the premises of any toxic or hazardous substances or wastes at or from
the premises; and accordingly the premises of the Borrower and its
Subsidiaries are free of all such toxic or hazardous substances or
wastes. There has been no complaint, order, directive, claim, citation,
or notice by any governmental authority or any person or entity with
respect to (1) air emissions; (2) spills, releases or discharges to
soils or improvements located thereon, surface water, groundwater or
the sewer, septic system or waste treatment, storage or disposal
systems servicing the premises; (3) noise emissions; (4) solid or
liquid waste disposal; (5) the use, generation, storage,
transportation, or disposal of toxic or hazardous substances or waste;
or (6) other environmental, health, or safety matters affecting the
Borrower or its business, operations, assets, equipment, property,
leaseholds, or other facilities. Neither the Borrower nor its
Subsidiaries have any indebtedness, obligation, or liability, absolute
or contingent, matured or not matured, with respect to the storage,
treatment, cleanup, or disposal of any solid wastes, hazardous wastes
or other toxic or hazardous substances (including without limitation
any such indebtedness, obligation, or liability with respect to any
current regulation, law, or statute regarding such storage, treatment,
cleanup, or disposal) which is not shown on Schedule 5.1(p). Set forth
in Schedule 5.1(p) is a list of all real property owned or leased by
the Borrower and its Subsidiaries, and a brief description of the
business conducted at such location.
(p) Registration and Listing of Common Stock. The Borrower is
a reporting company and has continuously been a reporting company for
more than the 12 calendar months preceding the Closing Date, and the
Common Stock is registered under the Exchange Act and is to be listed
on the OTC Bulletin Board. The Borrower 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.
(q) Exemption of Notes from Registration. The Borrower's
issuance of the Notes are exempt from the registration requirements of
Section 5 of the Securities Act pursuant to the provisions of SEC
Regulation D.
5.2. Lender's Representations and Warranties. The Lender represents and
warrants to the Borrower that:
(a) Accredited Investor. Each of the Lender and the other
Lenders is an accredited investor as that term is defined in Rule
501(a)(3) of Regulation D of the SEC.
ss.6. Affirmative Covenants.
6.1. Financial and Operational. So long as any of the Notes shall remain
unpaid, the Borrower 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 Borrower.
(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 Lender or any of its Lenders or representatives to
examine and make copies of and abstracts from the records and books of
account of, and visit the properties of, the Borrower, and to discuss
its affairs, finances and accounts with any of its officers, directors
and independent accountants.
(h) Reporting Requirements. Furnish to the Lender:
(i) Quarterly Financial Statements. The Borrower's
reports on Form 10-Q or 10-QSB contemporaneously with their filing with
the SEC.
(ii) Annual Financial Statements. The Borrower'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 Borrower or any
Subsidiary by independent accountants in connection with their
examination of the financial statements of the Borrower.
(iv) Certificate of No Default. Within twenty-five
(25) days after the end of each month a certificate of the Borrower'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 Borrower, which, if determined adversely to the Borrower,
could have a material adverse effect on the financial condition,
properties or operations of the Borrower.
(vi) Notice of Defaults and Events of Default. As
soon as possible and in any event within ten (10) 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 Borrower
with respect thereto.
(vii) ERISA reports. As soon as possible, and in any
event within thirty (30) days after the Borrower 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 Borrower or any Commonly Controlled Entity, and promptly
but in any event within two (2) Business Days of receipt by the
Borrower 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 Borrower or any Commonly Controlled Entity, the
Borrower will deliver to the Lender a certificate of the chief
financial officer of the Borrower setting forth all relevant details
and the action which the Borrower proposes to take with respect
thereto.
(vii) Reports to Other Creditors. Promptly after the
furnishing thereof, copies of any statement or report furnished by the
Borrower or any Subsidiary to any other party pursuant to the terms of
any indenture, loan, credit or similar agreement and not otherwise
required to be furnished to the Lender pursuant to any other clause of
this Agreement.
(viii) Other Regulatory Reports and Filings. Promptly
after the sending or filing thereof, copies of all proxy statements,
financial statements and
reports that the Borrower or any Subsidiary sends to its shareholders,
and copies of all regular, periodic and special reports, and all
registration statements that the Borrower 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
Borrower as the Lender may from time to time reasonably request.
(i) 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 Lender immediately
of any notice of a hazardous discharge or environmental complaint
received from any governmental agency or any other party; notify the
Lender 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 Lender to inspect the premises, to
conduct tests thereon, and to inspect all books, correspondence, and
records pertaining thereto; and at the Lender's request, and at the
Borrower's expense, provide a report of a qualified environmental
engineer, satisfactory in scope, form, and content to the Lender, and
such other and further assurances reasonably satisfactory to the Lender
that the condition has been corrected.
6.2. The Borrower hereby further covenants and agrees with the Lender that:
(a) Registration of Common Stock Underlying Notes.
Contemporaneously with the execution of this Agreement, the Borrower
shall execute and deliver to the Lender a registration rights agreement
in the form of Exhibit F hereto. (the "Registration Rights
Agreement").The Borrower shall register the issuance and sale of the
Conversion Stock in accordance with the provisions of the Registration
Rights Agreement.
(b) Escrow. Contemporaneously with the execution of this
Agreement, the Borrower shall execute an escrow agreement with the
Lender as escrow holder (the "Escrow Agreement") in the form of Exhibit
G to this Agreement. Contemporaneously with the execution of this
Agreement, the Borrower shall execute and deliver to the Escrow Holder
a certificate for 80,333 shares of Common Stock as a portion of the
number of Conversion Shares (based upon a conversion price of $0.60 per
share) underlying the principal amount of the Note evidencing the
initial Loan. Prior to each additional Loan, the Borrower shall execute
and deliver to the Escrow Holder a certificate for 100% of the number
of additional Conversion Shares (based upon a conversion price of $0.60
per share) underlying the principal amount of the Note evidencing that
Loan. All certificates for Conversion Shares delivered to the Escrow
Holder shall be registered in the name of CAPITAL CONSULTANTS, INC.
Until such time as the registration statement covering the Conversion
Shares is effective, the certificates shall bear a legend indicating
that they have been issued in a transaction that is exempt from the
registration requirements
of the Securities Act, and may not be transferred except pursuant to
registration under the Securities Act or an exemption from such
registration. Except for such legend, the Common Stock shall be free
and clear of any legends, liens, claims, stop orders or other
restrictions.
ss.7. Negative Covenants.
7.1. So long as any of the Notes remains unpaid, or the Lender shall be
obligated to make Loans under this Agreement, the Borrower 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:
(1) Liens in favor of the Lender;
(2) Liens for taxes or assessments or other
government charges or levies if not yet due and payable or, if due and
payable, if they are being contested in good faith by appropriate
proceedings and for which appropriate reserves are maintained;
(3) Liens imposed by law, such as mechanics',
materialmen's, landlords', warehousemen's, and carriers' Liens, and
other similar Liens, securing obligations incurred in the ordinary
course of business which are not past due for more than thirty (30)
days or which are being contested in good faith by appropriate
proceedings and for which appropriate reserves have been established;
(4) Liens under workers' compensation, unemployment
insurance, Social Security, or similar legislation;
(5) Liens, deposits, or pledges to secure the
performance of bids, tenders, contracts (other than contracts for the
payment of money), leases (permitted under the terms of this
Agreement), public or statutory obligations, surety, stay, appeal,
indemnity, performance, or other similar bonds, or other similar
obligations arising in the ordinary course of business;
(6) Liens disclosed on Schedule 5.1(o);
(7) Judgment and other similar Liens arising in
connection with court proceedings, provided the execution or other
enforcement of such Liens is effectively stayed and the claims secured
thereby are being actively contested in good faith and by appropriate
proceedings;
(8) 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 Borrower 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
(9) Liens securing obligations of a Subsidiary to
the Borrower or another Subsidiary
(b) Debt. Create, incur, assume, or suffer to exist, or permit
any Subsidiary to create, incur, assume, or suffer to exist, any Debt,
except:
(1) Debt of the Borrower under this Agreement or the
Note;
(2) Debt described in Schedule 5.1(o) but no
voluntary prepayments, renewals, extensions, refinancings, or increases
in he amounts thereof;
(3) Debt of the Borrower subordinated on terms
satisfactory to the Lender to the Borrower's obligation under this
Agreement and the Note;
(4) Debt of the Borrower to any Subsidiary or of any
Subsidiary to the Borrower or another Subsidiary; and
(5) Accounts payable to trade creditors for goods or
services which are not aged more than sixty (60) days from the billing
date and current operating liabilities (other than for borrowed money)
which are not more than ten (10) days past due, in each case incurred
in the ordinary course of business, as presently conducted, and paid
within the specified time, unless contested in good faith and by
appropriate proceedings.
(c) Mergers, Etc. Wind up, liquidate or dissolve itself,
reorganize, merge or consolidate with or into, or convey, sell, assign,
transfer, lease, or otherwise dispose of (whether in one transaction or
in a series of transactions) all or substantially all of its assets
(whether now owned or hereafter acquired) to any Person, or acquire all
or substantially all of the assets or the business of any Person, and
the Borrower shall not permit any Subsidiary to do so, except that (1)
any Subsidiary may merge into or transfer assets to the Borrower, and
(2) any Subsidiary may merge into or consolidate with or transfer
assets to any other Subsidiary.
(d) Leases. Create, incur, assume, or suffer to exist, or
permit any Subsidiary to create, incur, assume, or suffer to exist, any
material obligation as lessee for the rental or hire of any real or
personal property, except: (i) Capital Leases created pursuant to
existing lease financing agreements disclosed on Schedule 5.1(o); (ii)
leases existing on the date of this Agreement and any extensions or
renewals thereof; and (iii) leases between the Borrower and any
Subsidiary or between any Subsidiaries.
(e) Sale and Leaseback. Sell, transfer, or otherwise dispose
of, or permit any Subsidiary to sell, transfer, or otherwise dispose
of, any real or personal property to any Person and thereafter directly
or indirectly lease back the same or similar property.
(f) Dividends. Declare or pay any dividends; or purchase,
redeem, retire, or otherwise acquire for value any of its capital stock
now or hereafter outstanding; or
make any distribution of assets to its stockholders as such whether in
cash, assets, or obligations of the Borrower; or allocate or otherwise
set apart any sum for the payment of any dividend or distribution on,
or for the purchase, redemption, or retirement of any shares of its
capital stock; or make any other distribution by reduction of capital
or otherwise in respect of any shares of its capital stock; or permit
any of its Subsidiaries to do any of the foregoing or to purchase or
otherwise acquire for value any stock of the Borrower or another
Subsidiary.
(g) 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 Borrower.
(h) Investments. (i) Make, or permit any Subsidiary to make,
any loan or advance to any Person, or (ii) purchase or otherwise
acquire, or permit any Subsidiary to purchase or otherwise acquire, any
capital stock, assets, obligations, or other securities of, make any
capital contribution to, or otherwise invest in or acquire any interest
in any Person, or participate as a partner or joint venturer with any
other Person, except: (1) direct obligations of the U.S. or any agency
thereof with maturities of one year or less from the date of
acquisition; (2) commercial paper of a domestic issuer rated at least
"A-1" by Standard & Poor's Corporation or "P-1" by ▇▇▇▇▇'▇ Investors
Service, Inc.; (3) certificates of deposit with maturities of one year
or less from the date of acquisition issued by any commercial bank
having capital and surplus in excess of One Hundred Million U.S.
Dollars (US$100,000,000); and (4) stock, obligations, or securities
received in settlement of debts (created in the ordinary course of
business) owing to the Borrower or any Subsidiary.
(i) Guaranties, Etc. Assume, guaranty, endorse, or otherwise
be or become directly or contingently responsible or liable, or permit
any Subsidiary to assume, guaranty, endorse, or otherwise be or become
directly or contingently responsible or liable (including, but not
limited to, an agreement to purchase any obligation, stock, assets,
goods, or services, or to supply or advance any funds, assets, goods,
or services, or an agreement to maintain or cause such Person to
maintain a minimum working capital or net worth, or otherwise to assure
the creditors of any Person against loss), for obligations of any
Person, except guaranties by endorsement of negotiable instruments for
deposit or collection or similar transactions in the ordinary course of
business.
(j) 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 Borrower's
or such Subsidiary's
business and upon fair and reasonable terms no less favorable to the
Borrower or such Subsidiary than would obtain in a comparable
arm's-length transaction with a Person not an Affiliate.
(k) Capital Expenditures. Purchase or otherwise acquire, or
permit any Subsidiary to purchase or otherwise acquire, any material
capital assets, without the Lender's prior written consent.
ss.8. Financial Covenants
8.1. So long as the Note shall remain unpaid or the Lender shall have any
Commitment under this Agreement, the Borrower shall not, nor shall it permit any
Subsidiary to, increase the amount of any borrowings, or obtain any additional
advances on any existing lines of credit in excess of their currently contracted
limits, except for Loans under this Agreement, without the Lender's prior
written consent.
ss.9. Events of Default
9.1. Events of Default. If any of the following events shall occur:
(a) The Borrower should fail to pay the principal of or
interest on any Note as and when due and payable, or any amount of any
other fee by or within 10 days after the date that it is due and
payable;
(b) Any representation or warranty made or deemed made by the
Borrower in thisAgreement or any other Loan Document, or which is
contained in any certificate, document, opinion, or financial or other
statement furnished at any time under or in connection with any Loan
Document, 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 Borrower shall fail to perform or observe any term,
covenant, or agreement contained in this Agreement to be performed or
observed by it ;
(d) The Borrower or any Subsidiary shall (i) fail to pay any
indebtedness for borrowed money (other than the Note) of the Borrower
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;
(e) The Borrower or any Subsidiary (i) shall generally not
pay, or shall be unable to pay, or shall admit in writing its inability
to pay its debts as such debts become due; or (ii) shall make an
assignment for the benefit of creditors, or petition or apply to any
tribunal for the appointment of a custodian, receiver, or trustee for
it or a substantial part of its assets; or (iii) shall commence any
proceeding under any bankruptcy, reorganization, arrangement,
readjustment of debt, dissolution, or liquidation law or statute of any
jurisdiction, whether now or hereafter in effect; or (iv) shall have
had any such petition or application filed or any such proceeding
commenced against it in which an order for relief is entered or an
adjudication or appointment is made, and which remains undismissed for
a period of thirty (30) days or more; or (v) shall take any corporate
action indicating its consent to, approval of, or acquiescence in any
such petition, application, proceeding, or order for relief or the
appointment of a custodian, receiver, or trustee for all or any
substantial part of its properties; or (vi) shall suffer any such
custodianship, receivership, or trusteeship to continue undischarged
for a period of thirty (30) days or more;
(f) One or more judgments, decrees, or orders for the payment
of money shall be rendered against the Borrower or any Subsidiary and
such judgments, decrees, or orders shall continue unsatisfied and in
effect for a period of thirty (30) consecutive days without being
vacated, discharged, satisfied, or stayed or bonded pending appeal;
(g) The 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 Security Agreement, and in the priority disclosed on
Schedule 5.1(o); or (b) 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 Borrower, or the Borrower shall deny it has any
further liability or obligation under the Security Agreement, or the
Borrower shall fail to perform any of its material obligations under
the Security Agreement;
(h) Any of the following events shall occur or exist with
respect to the Borrower or any Commonly Controlled Entity under ERISA:
any Reportable Event shall occur; complete or partial withdrawal from
any Multiemployer 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 Borrower to any tax,
penalty, or other liability which in the aggregate may exceed Ten
Thousand Dollars ($10,000); or
(i) If the Lender receives its first notice of a hazardous
discharge or an environmental complaint regarding the Borrower or a
Subsidiary from a source other than the Borrower, and the Lender 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 Borrower within twenty-four (24) hours
of the
time the Lender first receives said notice from a source other than the
Borrower; 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 Borrower 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
Borrower, 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 five
(5) Business Days of the occurrence giving rise to the claim, (i) the
Borrower can prove to the Lender's satisfaction that the Borrower 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 ten (10) 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 Borrower has
posted a bond, letter of credit, or other security satisfactory in
form, substance, and amount to both the Lender 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;
(j) A change of Control of the Borrower or any Subsidiary
occurs, including without limitation any Person shall acquire
securities representing 25% or more of the voting securities of the
Borrower; then, and in any such event, the Lender may, by notice to the
Borrower, (i) declare its obligation to make Loans to be terminated,
whereupon the same shall forthwith terminate, and (ii) declare the
Notes, all interest thereon, and all other amounts payable under this
Agreement to be forthwith due and payable, whereupon the Notes, 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 Parent and
the Borrower.
9.2. Lender's Right to Setoff. Upon the occurrence and during the
continuance of any Event of Default, the Lender is hereby authorized at any time
and from time to time, without notice to the Borrower (any such notice being
expressly waived by the Borrower), 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 Lender to or for the credit or the account of the Borrower against any
and all of the obligations of the Borrower now or hereafter existing under this
Agreement or the Note or any other Loan Document, irrespective of whether or not
the Lender shall have made any demand under this Agreement or the Note or such
other Loan Document and although such obligations may be unmatured. The Lender
agrees promptly to notify the Borrower 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 Lender under this Section 9.2 are
in addition to other rights and remedies (including, without limitation, other
rights of setoff) which the Lender may have.
ss.10. Miscellaneous.
10.1. Amendments, Etc. No amendment, modification, termination, or
waiver of any provision of any Loan Document to which the Borrower is a party,
nor consent to any departure by the Borrower from any Loan Document to which it
is a party, shall in any event be effective unless the same shall be in writing
and signed by the Lender, and then such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given.
10.2. Notices, Etc. All notices given under this Agreement and under
the other Loan Documents 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 Lender:
CAPITAL CONSULTANTS, INC.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
With a copy (that does not constitute notice) to:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
If to the Borrower:
ORANGE PRODUCTIONS, INC.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
With a copy (that does not constitute notice) to:
Mintmire & Associates
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
10.3. No Waiver. 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. 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.
10.4. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the Borrower and the Lender, and their respective
successors and assigns, except that the Borrower may not assign or transfer any
of its rights under any Loan Document to which the Borrower is a party without
the prior written consent of the Lender.
10.5 Costs, Expenses, and Taxes. The Borrower agrees to pay on demand all
costs and expenses incurred by the Lender in connection with the preparation,
execution, delivery, filing, and administration of the Loan Documents, and of
any amendment, modification, or supplement to the Loan Documents, including,
without limitation, the fees and out-of-pocket expenses of counsel for the
Lender incurred in connection with advising the Lender as to its rights and
responsibilities hereunder. The Borrower also agrees to pay all such costs and
expenses, including court costs,
incurred in connection with enforcement of the Loan Documents, or any amendment,
modification, or supplement thereto, whether by negotiation, legal proceedings,
or otherwise. In addition, the Borrower shall pay any and all stamp and other
taxes and fees payable or determined to be payable in connection with the
execution, delivery, filing, and recording of any of the Loan Documents and the
other documents to be delivered under any such Loan Documents, and agree to hold
the Lender harmless from and against any and all liabilities with respect to or
resulting from any delay in paying or omission to pay such taxes and fees. This
provision shall survive termination of this Agreement.
10.6. Integration. This Agreement and the Loan Documents contain the entire
agreement between the parties relating to the subject matter hereof and
supersede all oral statements and prior writings with respect thereto.
10.7. Indemnity. The Borrower shall defend, protect, indemnify, and hold
harmless the Lender and each Lender, and all of their respective officers,
directors, employees, and Lenders (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 Borrower in this Agreement or any
other Loan Document, or any other certificate, instrument, or document
contemplated hereby or thereby; or (b) any breach of any covenant, agreement, or
obligation of the Borrower contained in this Agreement or any other Loan
Document; or (c) the activities of the Borrower 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 Loan Document, or any other
instrument, document, or agreement executed pursuant hereto or thereto by any of
the Indemnities, any transaction financed or to be financed in whole or in part,
directly or indirectly, with the proceeds of the Loans or from the exercise of
the Warrants, or the status of the Lender or any Lender or holder of any of the
Notes, Warrants, Conversion Shares or Warrant Shares, or as a stockholder in the
Borrower. To the extent that the foregoing undertaking by the Borrower may be
unenforceable for any reason, the Borrower 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.
10.8. Governing Law. This Agreement and the Note shall be governed by, and
construed in accordance with, the laws of the State of Florida.
10.9. Severability of Provisions. Any provision of any Loan Document which
is prohibited or unenforceable in any jurisdiction (after applying the
provisions of paragraph 10.8 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 Loan
Document or affecting the validity or enforceability of such provision in any
other jurisdiction.
10.10 Headings. Section and paragraph headings in the Loan Documents are
included for the convenience of reference only and shall not constitute a part
of the applicable Loan Documents for any other purpose.
10.11. 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 West Palm Beach,
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 State of 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 Lender: The Borrower:
CAPITAL CONSULTANTS, INC. ORANGE PRODUCTIONS, INC.
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. By /s/ ▇▇▇ ▇▇▇▇▇▇▇▇
Name ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. Name ▇▇▇ ▇▇▇▇▇▇▇▇
Title President Title President
Date signed October 20, 2000 Date signed October 20, 2000
NOTE
▇▇▇▇▇,▇▇▇.▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇ October 20, 2000
FOR VALUE RECEIVED, on demand, and if no demand then on December 31,
2003, the undersigned, ORANGE PRODUCTIONS, INC., (the "Borrower"), a Florida
(USA) corporation, whose address is ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇,▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇, ▇▇▇, hereby promises to pay to the order of CAPITAL
CONSULTANTS, INC., (the "Lender"), at the Lender's office at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, in lawful currency of the United States of
America and in immediately available funds, the principal sum of FIFTY THOUSAND
DOLLARS AND NO CENTS (US$50,000.00) together with interest on the unpaid
principal amount of this Note at the rate of TEN Percent (10%) per year, from
the date of this Note until paid.
This Note is one of the Notes referred to in, and is entitled to the
benefits of, the Loan Agreement, dated as of October 20, 2000, between the
Borrower and the Lender (the "Loan Agreement"). Terms used herein which are
defined in the Loan Agreement shall have their defined meanings when used
herein. The Loan Agreement, among other things, contains provisions for
acceleration of the maturity of this Note upon the happening of certain stated
events and also for prepayments on account of principal hereof prior to the
maturity of this Note upon the terms and conditions specified in the Loan
Agreement. This Note is secured by a Security Agreement referred to in the Loan
Agreement, executed by the Borrower, reference to which is hereby made for a
description of the collateral provided for under the Security Agreement, and the
rights of the parties with respect thereto.
This Note shall be governed by the laws of the State of Florida.
The Lender or other holder of this Note is entitled, at its option, to
convert at any time and from time to time, all or any part of the principal
amount of the Note, plus accrued interest, into shares (the "Conversion Shares")
of the Borrower's common stock, $0.001 par value ("Common Stock"). No fraction
of shares or scrip representing fractions of shares will be issued on
conversion, but the number of shares issuable shall be rounded to the nearest
whole share. To convert this Note, this Note must be surrendered at the
principal executive office of the Escrow Lender pursuant to an Escrow Agreement
between the Company and CAPITAL CONSULTANTS, INC., dated October 20, 2000,
accompanied by written notice of conversion substantially in the form of Exhibit
A to this Note, with appropriate insertions. The date upon which the conversion
shall be effective (the "Conversion Date") shall be deemed to be the date on
which the Lender or other holder has delivered this Note, with the conversion
notice duly executed to Escrow Holder, or if earlier, the date set forth in such
notice of conversion if the Note and such conversion notice is received by the
Escrow Holder within three (3) business days therefrom. The Escrow Holder will
deliver certificates representing the Conversion Shares within three (3)
business days following receipt of the Note and conversion notice. The price per
share of Common Stock into which this Note is convertible (the "Conversion
Price") shall be US$0.60.
The Borrower is obligated to register the issuance and resale of the
Conversion Shares under the Securities Act of 1933, as amended, pursuant to the
terms of the Registration Rights Agreement between the Borrower and the Lender
referred to in the Loan Agreement.
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 West Palm Beach, 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
hereby consent to the exclusive jurisdiction of the courts of the State of
Florida for that purpose.
ORANGE PRODUCTIONS, INC.
By /s/ ▇▇▇ ▇▇▇▇▇▇▇▇
Name ▇▇▇ ▇▇▇▇▇▇▇▇
Title President
Date signed October 20, 2000
SECURITY AGREEMENT
This Security Agreement, Pledge and Assignment (this "Security
Agreement") dated and effective as of October 20, 2000, is made by ORANGE
PRODUCTIONS, INC. (the "Borrower"), a Florida corporation, as the debtor, to
CAPITAL CONSULTANTS, INC. (the "Lender"), a Kentucky corporation as the secured
party, in connection with the Loan Agreement (as hereinafter defined).
PRELIMINARY STATEMENTS:
(1) The Borrower and the Lender have made and entered into a Loan
Agreement (as it now exists or subsequently may be modified, the "Loan
Agreement") effective as of October 20, 2000. The Borrower will derive
substantial direct and indirect benefit from the transactions contemplated by
the Loan Agreement.
(2) It is a condition precedent to the making of Loans by the Lender
under the Loan Agreement that the Borrower shall have made the pledge and
granted the assignment and security interest contemplated by this Security
Agreement.
(3) All capitalized terms used but not defined in this Security
Agreement shall have the meanings ascribed to them in the Loan Agreement.
NOW, THEREFORE, in consideration of the premises and in order to induce
the Lender to make Loans under the Loan Agreement, the Borrower hereby agrees
with the Lender as follows:
Section 1.01. Pledge, Assignment and Grant of Security. The Borrower
hereby assigns and pledges to the Lender, and hereby grants to the Lender a
security interest in all of the Borrower's right, title and interest in and to
the following, whether now owned or hereafter acquired (the "Collateral"):
(1) All equipment in all its forms, wherever located, now or hereafter
existing, all fixtures and all parts thereof and all accessions thereto (any and
all such equipment, fixtures, parts, and accessions being the "Equipment");
(2) All inventory in all of its forms, wherever located, now or
hereafter existing and raw materials and work in process therefor, finished
goods thereof, and materials used or consumed in the manufacture or production
thereof; (b) goods in which the Borrower has an interest in mass or a joint or
other interest or right of any kind (including, without limitation, goods in
which the Borrower has an interest or right as consignee); and (c) goods which
are returned to or repossessed by the Borrower), and all accessions thereto and
products thereof and documents therefor (any and all such inventory, accessions,
products, and documents being the "Inventory"); and
(3) All accounts, contract rights, chattel paper and instruments, now
or hereafter existing, whether or not arising out of or in connection with the
sale or lease of goods or the rendering of services, and all rights now or
hereafter existing in and to all security agreements, leases, and other
contracts securing or otherwise relating to any such accounts, contract rights,
chattel paper and instruments (any and all such accounts, contract rights,
chattel paper and instruments, being the "Receivables", and any and all such
leases, security agreements, and other contracts being the "Related Contracts");
(4) All proceeds of any and all of the foregoing Collateral (including,
without limitation, proceeds which constitute property of the types described in
clauses (1) through (4) of this Section 1.01), and, to the extent not otherwise
included, all (a) payments under insurance (whether or not the Lender is the
loss payee thereof), or any indemnity, warranty, or guaranty, payable by reason
of loss or damage to or otherwise with respect to any of the foregoing
Collateral, and (b) cash.
Section 2.01. Security for Obligations. This Security Agreement secures
the payment for all obligations of the Borrower now or hereafter existing under
the Loan Agreement, the Notes and the Registration Rights Agreement, whether for
principal, interest, fees, expenses, or otherwise, and all obligations of the
Borrower now or hereafter existing under this Security Agreement (collectively,
the "Obligations"). Without limiting the generality of the foregoing, this
Security Agreement secures the payment of all amounts which constitute part of
the Obligations and would be owed by the Borrower to the Lender under any of the
Loan Documents but for the fact that they are unenforceable or not allowable
owing to the existence of bankruptcy, reorganization, or similar proceedings
involving the Borrower.
Section 3.01. Borrower Remains Liable. Anything herein to the contrary
notwithstanding, (1) the Borrower shall remain liable under the contracts and
agreements included in the collateral to the extent set forth therein to perform
all of its duties and obligations thereunder to the same extent as if this
Security Agreement had not been excluded; (2) the exercise by the Lender of any
rights hereunder shall not release the Borrower from any of its duties or
obligations under the contracts and agreements included in the Collateral; and
(3) the Lender shall not have any obligation or liability under the contracts
and agreements included in the Collateral by reason of this Security Agreement,
nor shall the Lender be obligated to perform any of the obligations or duties of
the Borrower thereunder or to take any action to collect or enforce any claim
for payment assigned hereunder.
Section 4.01. Representations and Warranties. The Borrower represents
and warrants as follows:
(1) All of the Equipment and Inventory are located at the places
specified in Schedule I hereto. The chief place of business and chief executive
office of the Borrower and the office where the Borrower keeps its records
concerning the Receivables, and the originals of all chattel paper that evidence
Receivables, and the original copies of the Assigned Agreements, are located at
its address specified in Section 17.01. None of the Receivables is evidenced by
a promissory note or other instrument.
(2) The Borrower is the legal and beneficial owner of the Collateral
free and clear of any Lien except for (i) the security interest created by this
Security Agreement, and (ii) the security interests described in Schedule II. No
effective financing statement or other document similar in effect covering all
or any part of the Collateral is on file in any recording office, except (i)
such as may have been filed in favor of the Lender relating to this Security
Agreement, and (ii) the financing statements described in Schedule II. The
Borrower has no trade names except as set forth on Schedule III.
(3) Except as provided on Schedule I, the Borrower has exclusive
possession and control of the Equipment and Inventory.
(4) Except as set forth on Schedule I, this Security Agreement creates
a valid and perfected first priority security interest in the Collateral,
securing the payment of the Obligations, and all filings and other actions
necessary or desirable to perfect and protect such security interest have been
duly taken.
(5) The Borrower 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 its
business, and is duly qualified and in good standing under the laws of each
jurisdiction in which qualification is required.
(6) The execution and performance by the Borrower of this Security
Agreement have been duly authorized by all necessary corporate action and do not
and will not (a) require any consent or approval of the Borrowers stockholders;
(b) contravene the Borrower's charter or bylaws; (c) violate any provision of
any law, rule, or regulation; or (d) result in a breach of or constitute a
default under any indenture or loan or Loan Agreement or any other agreement,
lease, or instrument to which the Borrower is a party or by which it or its
properties may be bound or affected.
(7) This Security Agreement is the legal, valid, and binding obligation
of the Borrower, enforceable in accordance with its respective terms, except to
the extent that such enforcement may be limited by applicable bankruptcy,
insolvency, and other similar laws affecting creditors' rights generally.
(8) No consent of any other person or entity and no authorization,
approval, or other action by, and no notice to or filing with, any governmental
authority or regulatory body is required (a) for the pledge by the Borrower of
the Security Collateral pursuant to this Security Agreement, for the grant by
the Borrower of the assignment and security interest granted hereby or for the
execution, delivery, or performance of this Security Agreement by the Borrower;
(b) for the perfection or maintenance of the pledge, assignment, and security
interest created hereby (including the first priority nature of such pledge,
assignment, and security interest); or (c) for the exercise by the Lender of the
voting or other rights provided for in this Security Agreement or the remedies
in respect of the Collateral pursuant to this Security Agreement (except as may
be required in connection with the disposition of any portion of the Security
Collateral by laws affecting the offering and sale of securities generally).
(9) The Inventory has been produced by the Borrower in compliance with
all requirements of the Fair Labor Standards Act.
(10) There are no conditions precedent to the effectiveness of this
Security Agreement that have not been satisfied or waived.
(11) The Borrower has, independently and without reliance upon the
Lender and based on such documents and information as it has deemed appropriate,
made its own credit analysis and decision to enter into this Security Agreement.
Section 5.01. Further Assurances.
(1) The Borrower agrees that from time to time, at the expense of the
Borrower, the Borrower will promptly execute and deliver all further instruments
and documents, and take all further action, that may be necessary or desirable,
or that the Lender may reasonably request, in order to perfect and protect any
pledge, assignment or security interest granted or purported to be granted
hereby or to enable the Lender to exercise and enforce its rights and remedies
hereunder with respect to any Collateral. Without limiting the generality of the
foregoing, the Borrower will execute and file such financing or continuation
statements, or amendments thereto, and such other instruments or notices, as may
be necessary or desirable, or as the Lender may request, in order to perfect and
preserve the pledge, assignment, and security interest granted or purported to
be granted hereby.
(2) The Borrower hereby authorizes the Lender to file one or more
financing or continuation statements, and amendments thereto, relating to all or
any part of the Collateral without the signature of the Borrower where permitted
by law. A photocopy or other reproduction of this Security Agreement or any
financing statement covering the Collateral or any part thereof shall be
sufficient as a financing statement where permitted by law.
(3) The Borrower will furnish to the Lender from time to time
statements and schedules further identifying and describing the Collateral and
such other reports in connection with the Collateral as the Lender may
reasonably request, all in reasonable detail.
Section 6.01. As to Equipment and Inventory.
(1) The Borrower shall keep the Equipment and Inventory (other than
Inventory sold in the ordinary course of business) at the places therefor
specified in Section 4.01(1) or, upon 10 days prior written notice to the
Lender, at such other places in a jurisdiction where all action required by
Section 5.01 shall have been taken with respect to the Equipment and Inventory.
(2) The Borrower shall cause the Equipment to be maintained and
preserved in the same condition, repair, and working order as when new, ordinary
wear and tear excepted, and in accordance with any manufacturer's manual, and
shall forthwith, or in the case of any loss or damage to any of the Equipment as
quickly as practicable after the occurrence thereof, make or cause to be made
all repairs, replacements, and other improvements in connection therewith which
are necessary or desirable to such end. The Borrower shall promptly furnish to
the Lender a statement respecting any loss or damage to any of the Equipment.
(3) The Borrower shall pay promptly when due all property and other
taxes, assessments, and governmental charges or levies imposed upon, and all
claims (including claims for labor, materials, and supplies) against, the
Equipment and Inventory. In producing the Inventory, the Borrower shall comply
with all requirements of the Fair Labor Standards Act.
Section 7.01. Insurance.
(1) the Borrower shall, at its own expense, maintain insurance with
respect to the Equipment and Inventory in such amounts, against such risks, in
such form and with such insurers, as shall be satisfactory to the Lender from
time to time. The Borrower's current insurers are satisfactory to the Lender.
Each policy for liability insurance shall provide for all losses to be paid on
behalf of the Lender and the Borrower as their respective interests may appear
and each policy for property damage insurance shall provide for all losses
(except for losses of less than $10,000 per occurrence) to be paid directly to
the Lender. Each such policy shall in addition (a) name the Borrower and the
Lender as insured parties thereunder (without any representation or warranty by
or obligation upon the Lender) as their interests may appear; (b) contain the
agreement by the insurer that any loss thereunder shall be payable to the Lender
notwithstanding any action, inaction, or breach of representation or warranty by
the Borrower; (c) provide that there shall be no recourse against the Lender for
payment of premiums or other amounts with respect thereto; and (d) provide that
at least ten days prior written notice of cancellation or of lapse shall be
given to the Lender by the insurer. The Borrower shall, if so requested by the
Lender, deliver to the Lender original or duplicate policies of such insurance
and, as often as the Lender may reasonably request, a report of a reputable
insurance broker with respect to such insurance. Further, the Borrower shall, at
the request of the Lender, duly execute and deliver instruments of assignment of
such insurance policies to comply with the requirements of Section 6.01 and
cause the insurers to acknowledge notice of such assignment.
(2) Reimbursement under any liability insurance maintained by the
Borrower pursuant to this Section 7.01 may be paid directly to the person who
shall have incurred liability covered by such insurance. In case of any loss
involving damage to Equipment or Inventory when subsection (3) of this Section
7.01 is not applicable, the Borrower shall make or cause to be made the
necessary repairs to or replacements of such Equipment or Inventory, and any
proceeds of insurance maintained by the Borrower pursuant to this Section 7.01
shall be paid to the Borrower as reimbursement for the costs of such repairs or
replacements.
(3) Upon (a) the occurrence and during the continuance of any Event of
Default, or (b) the actual or constructive total loss (in excess of US$10,000
per occurrence) of any Equipment or Inventory, all insurance payments in respect
of such Equipment or Inventory shall be paid to and applied by the Lender as
specified in Section 13.01(2).
Section 8.01. Place of Perfection; Records, Collection of Receivables.
(1) The Borrower shall keep its chief place of business and chief
executive office and the office where it keeps its records concerning the
Receivables, and the original copies of the Assigned Agreements and the
originals of all chattel paper that evidence Receivables, at the location
therefor specified in Section 4.01(1) or, upon 30 days prior written notice to
the Lender, at any other locations in a jurisdiction where all actions required
by Section 6.01 shall have been taken with respect to the Receivables. The
Borrower will hold and preserve such records, Assigned Agreements and chattel
paper and will permit representatives of the Lender at any time during normal
business hours to inspect and make abstracts from such records and chattel
paper.
(2) Except as otherwise provided in this subsection (2), the Borrower
shall continue to collect, at its own expense, all amounts due or to become due
the Borrower under the Receivables. In connection with such collections, the
Borrower may take (and, at the Lender's direction, shall take) such action as
the Borrower or the Lender may deem necessary or advisable to enforce collection
of the Receivables: provided, however, that the Lender shall have the right upon
the occurrence and during the continuance of an Event of Default or an event
which, with the giving of notice or the lapse of time, or both, would become an
Event of Default and upon written notice to the Borrower of its intention to do
so, to notify the account debtors or obligors under any Receivables of the
assignment of such Receivables to the Lender and subject to any priority
interests of other secured creditors to direct such account debtors or obligors
to make payment of all amounts due or to become due to the Borrower thereunder
directly to the Lender and upon such notification and at the expense of the
Borrower, to enforce collection of any such Receivables, and to adjust, settle,
or compromise the amount or payment thereof, in the same manner and to the same
extent as the Borrower might have done. After receipt by the Borrower of the
notice from the Lender referred to in the proviso to the preceding sentence, (a)
all amounts and proceeds (including instruments) received by the Borrower in
respect of the Receivables shall be received in trust for the benefit of the
Lender hereunder, shall be segregated from other funds of the Borrower, and
shall be forthwith paid over to the Lender in the same form as so received (with
any necessary endorsement) to be held as cash collateral and either (i) released
to the Borrower so long as no Event of Default shall have occurred and be
continuing or (ii) if any Event of Default shall have occurred and be
continuing, applied as provided by Section 13.01(2), and (b) the Borrower shall
not adjust, settle, or compromise the amount or payment of any Receivable,
release wholly or partly any account debtor or obligor thereof, or allow any
credit or discount thereon.
Section 9.01. Transfers and Other Liens; Additional Shares.
(1) The Borrower shall not (a) sell, assign (by operation of law or
otherwise), or otherwise dispose of, or grant any option with respect to, any of
the Collateral, except Inventory in the ordinary course of business, or (b)
create or permit to exist any Lien upon or with respect to any of the
Collateral, except for the security interest under this Security Agreement.
Section 10.01. Lender Appointed Attorney-In-Fact. The Borrower hereby
irrevocably appoints the Lender the Borrower's attorney-in-fact, with full
authority in the place and stead of the Borrower and in the name of the Borrower
or otherwise, from time to time in the Lender's discretion, to take any action
and to execute any instrument which the Lender may deem necessary or advisable
to accomplish the purposed of this Security Agreement (subject to the rights of
the Borrower under Section 8.01), including, without limitation, upon five days
notice to the Borrower:
(1) To obtain and adjust insurance required to be paid to the Lender
pursuant to Section 8.01;
(2) To ask, demand, collect, ▇▇▇ for, recover, compromise, receive and
give acquittance and receipts for moneys due and to become due under or in
connection with the Collateral;
(3) To receive, endorse, and collect any drafts or other instruments,
documents, and chattel paper, in connection therewith; and
(4) To file any claims or take any action or institute any proceedings
which the Lender may deem necessary or desirable for the collection of any of
the Collateral or otherwise to enforce the rights of the Lender with respect to
any of the Collateral.
Section 11.01. Lender May Perform. If the Borrower fails to perform any
agreement contained herein, the Lender may itself perform, or cause performance
of, such agreement, and the expenses of the Lender incurred in connection
therewith shall be payable by the Borrower under Section 14.01 (2). 5 days after
notice and failure
Section 12.01. The Lenders Duties. The powers conferred on the Lender
hereunder are solely to protect its interest in the Collateral and shall not
impose any duty upon it to exercise any such powers. Except for the safe custody
of any Collateral in its possession and the accounting for moneys actually
received by it hereunder, the Lender shall have no duty as to any Collateral, as
to ascertaining or taking action with respect to calls, conversions, exchanges,
maturities, tenders, or other matters relative to any Security Collateral,
whether or not the Lender has or is deemed to have knowledge of such matters, or
as to the taking of any necessary steps to preserve rights against prior parties
or any other rights pertaining to any Collateral. The Lender shall be deemed to
have exercised reasonable care in the custody and preservation of any Collateral
in its possession if such Collateral is accorded treatment substantially equal
to that which it accords its own property.
Section 13.01 Remedies. If any Event of Default shall have occurred and
be continuing:
(1) The Lender may exercise in respect of the collateral, in addition
to other rights and remedies provided for herein or otherwise available to it,
all the rights and remedies of a secured party on default under the Uniform
Commercial Code in effect in the State of Delaware at that time (the Code)
(whether or not the Code applies to the affected Collateral), and also may (a)
require the Borrower to, and the Borrower hereby agrees that it will at its
expense and upon request of the Lender forthwith, assemble all of part of the
Collateral as directed by the Lender and make it available to the Lender at a
place to be designated by the Lender which is reasonably convenient to both
parties and (b) upon five day notice to the Borrower (except as specified
below), sell the Collateral or any part thereof in one or more parcels at public
or private sale, at any of the Lender's offices or elsewhere, for cash, on
credit or for future delivery, and upon such other terms as the Lender may deem
commercially reasonable. The Borrower agrees that, to the extent notice of sale
shall be required by law, at least ten days notice to the Borrower of the time
and place of any public sale or the time after which any private sale is to be
made shall constitute reasonable notification. the Lender shall not be obligated
to make any sale of Collateral regardless of notice of sale having been given.
The Lender may adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor, and such sale may, without
further notice, be made at the time and place to which it was so adjourned.
(2) Any cash held by the Lender as Collateral and all cash proceeds
received by the Lender in respect of any sale of, collection from, or other
realization upon all or any part of the Collateral may, in the discretion of the
Lender, be held by the Lender as Collateral for, and/or then or any time
thereafter be applied (after payment of any amounts payable to the Lender
pursuant to Section 19.01) in whole or in part by the Lender against, all or any
part of the Obligations in such order as the Lender shall elect. Any surplus of
such cash or cash proceeds held by the Lender and remaining after payment in
full of all the Obligations shall be paid over to the Borrower or to whomsoever
may be lawfully entitled to receive such surplus.
(3) The Lender may exercise any and all rights and remedies of the
Borrower under or in connection with the Assigned Agreements or otherwise in
respect of the Collateral, including, without limitation, any and all rights of
the Borrower to demand or otherwise require payment of any amount under, or
performance of any provision of, any Assigned Agreement.
(4) All payments received by the Borrower under or in connection with
any Assigned Agreement or otherwise in respect of the Collateral shall be
received in trust for the benefit of the Lender, shall be segregated from other
funds of the Borrower and shall be forthwith paid over to the Lender in the same
form as so received (with any necessary endorsement).
Section 14.01. Indemnity and Expenses.
(1) The Borrower agrees to indemnify the Lender from and against any
and all claims, losses, and liabilities (including reasonable attorney fees)
growing out of or resulting from this Security Agreement (including, without
limitation, enforcement of this Security Agreement), except claims, losses, or
liabilities resulting from the Lender's gross negligence or willful misconduct.
(2) The Borrower will upon demand pay to the Lender the amount of any
and all reasonable expenses, including the reasonable fees and expenses of its
counsel and of any experts and Lenders, which the Lender may incur in connection
with (a) the administration of this Security Agreement; (b) the custody,
preservation, use or operation of, or the sale of, collection from, or other
realization upon, any of the Collateral; (c) the exercise or enforcement of any
of the rights of the Lender hereunder; or (d) the failure by the Borrower to
perform or observe any of the provisions hereof.
Section 15.01. Security Interest Absolute. All rights of the Lender and
the pledge, assignment, and security interest hereunder, and all obligations of
the Borrower hereunder, shall be absolute and unconditional, irrespective of:
(1) Any lack of validity, regularity, or enforceability of the Loan
Agreement, the Notes or any other agreement or instrument relating thereto;
(2) Any change in the time, manner, or place of payment of, or in any
other term of, all or any of the Obligations, or any other amendment or waiver
of or any consent to any departure from the Loan Agreement or the Notes,
including, without limitation, any increase in Obligations resulting from the
extension of additional credit to the Borrower or any of its Subsidiaries or
otherwise.
(3) Any taking, exchange, release, or nonperfection of any other
collateral, or any taking, release, or amendment or waiver of or consent to
departure from any guaranty, for all or any of the Obligations;
(4) Any manner of application of Collateral, or proceeds thereof, to
all or any of the Obligations, or any manner of sale or other disposition of any
Collateral for all or any of the Obligations or any other assets of the Borrower
or any of its subsidiaries;
(5) Any change, restructuring, or termination of the corporate
structure or existence of the Borrower or any of its subsidiaries; or
(6) Any other circumstance which might otherwise constitute a defense
available to, or a discharge of, the Borrower.
Section 16.01. Amendments; Etc. No amendment, modification,
termination, or waiver of any provision of this Security Agreement, and no
consent to any departure by the Borrower herefrom, shall in any event be
effective unless the same shall be in writing and signed by the Lender, and then
such waiver or consent shall be effective only in the specific instance and for
the specific purpose for which given.
Section 17.01. Addresses for Notices. All notices given under this
Security Agreement 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 Lender: If to the Borrower:
CAPITAL CONSULTANTS, INC. ORANGE PRODUCTIONS, INC.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
With a copy (that does not constitute With a copy (that does not constitute
notice) to: notice) to:
Mintmire & Associates
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇ Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
Section 18.01. Continuing Security Interest; Assignments Under Loan
Agreement. This Security Agreement shall create a continuing security interest
in the Collateral and shall (1) remain in full force and effect until (a) the
payment in full of the Obligations and all other amounts payable under this
Security Agreement, and (b) the expiration or termination of any obligation of
the Lender to make Loans; (2) be binding upon the Borrower, its successors and
assigns; and (3) inure to the benefit of, and be enforceable by, the Lender and
its successors, transferees, and assigns. Without limiting the generality of the
foregoing clause (3), the Lender may assign or otherwise transfer all or any
portion of its rights and obligations under the Loan Agreement (including,
without limitation,
all or any portion of any Notes held by it) to any other person or entity, and
such other person or entity shall thereupon become vested with all the benefits
in respect thereof granted to the Lender herein or otherwise. Upon the later of
the payment in full of the Obligations and all other amounts payable under this
Security Agreement and the expiration or termination of any obligation of the
Lender to make Loans, the security interest granted hereby shall terminate and
all rights to the Collateral shall revert to the Borrower. Upon any such
termination, the Lender will, at the Borrower's expense, execute and deliver to
the Borrower such documents as the Borrower shall reasonably request to evidence
such termination.
Section 19.01. Governing Law; Terms. This Security Agreement shall be
governed by and construed in accordance with the laws of the State of Florida,
except: (a) if any provision of this Security Agreement is unenforceable under
Florida law but is enforceable under the laws of the U.S. State of Florida, then
Florida law shall govern the construction and enforcement of that provision; and
(b) the validity or perfection of the security interest hereunder, or remedies
hereunder, in respect of any particular Collateral shall be governed by the
Uniform Commercial Code as adopted in Florida. Unless otherwise defined in this
Security Agreement or in the Loan Agreement, terms used in Article 9 of the UCC
are used herein as therein defined.
Section 20.01. 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 Toronto, Canada,
in accordance with the commercial arbitration rules of the International Chamber
of Commerce. 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 hereby consent to the exclusive jurisdiction of the courts of the
State of Florida for that purpose.
IN WITNESS WHEREOF, the parties have caused this Security Agreement to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.
The Lender: The Borrower:
CAPITAL CONSULTANTS, INC. ORANGE PRODUCTIONS, INC.
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. By /s/ ▇▇▇ ▇▇▇▇▇▇▇▇
Name ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. Name ▇▇▇ ▇▇▇▇▇▇▇▇
Title President Title President
Date signed October 20, 2000 Date signed October 20, 2000
SCHEDULE I
Part 1
Schedule II
Locations of Equipment and Inventory
SCHEDULE II
Description of Other Liens, Security Interests and Financing Statements
SCHEDULE III
Description of Borrower=s Trade Names
EXHIBIT "A"
NOTICE OF CONVERSION
(To be executed by the Holder in order to Convert the Note)
TO ORANGE PRODUCTIONS, INC.
The undersigned hereby irrevocably elects to convert $________________ of
the principal amount of the attached Note into Shares of Common Stock of ORANGE
PRODUCTIONS, INC. according to the conditions stated therein, as of the
Conversion Date written below.
Conversion Date
Applicable Conversion Price
Signature
Name __________________________________________________________
Address:
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made and entered
into as of October 20, 2000, by and between Orange Productions, Inc., a Florida
corporation (the "Company"), and Capital Consultants, Inc. (the "Lender"), for
itself and certain lenders (the "Lenders") described in the Loan Agreement
defined below..
Preliminary Statements
In connection with the consummation of the transactions contemplated by
that certain Loan Agreement (including all exhibits thereto, the "Loan
Agreement") of even date herewith by and between the Company and the Lender, the
Company has agreed, upon the terms and subject to the conditions of the Loan
Agreement, at the option of the Lender or other holders of the Notes (as defined
in the Loan Agreement), to convert the Notes into shares of the Company's Common
Stock (the "Conversion Shares").
To induce the Lender to execute and deliver the Loan Agreement and to make
Loans thereunder, the Company has agreed, pursuant to the terms and conditions
of this Agreement, to provide certain registration rights with respect to the
Registrable Securities.
Agreement
In consideration of the foregoing, the mutual covenants and conditions set
forth in this Agreement and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties, intending
to become legally bound, hereby agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement, the following terms shall have the following
respective meanings:
"Lender" shall mean Capital Consultants, Inc.
"Agreement" shall mean this Registration Rights Agreement.
"Commission" shall mean the Securities and Exchange Commission or any other
federal agency at the time administering the Securities Act.
"Conversion Shares" shall have the meaning ascribed to such term in the
Preliminary Statements to this Agreement.
"Company" shall mean Orange Productions, Inc., a Florida company.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended,
or any successor federal statute, and the rules and regulations of the
Commission thereunder, all as in effect from time to time.
"Filing Deadline" shall have the meaning ascribed to such term in Section
2.1 of this Agreement.
1
"Holder" or "Holders" shall mean (a) the Lender, to the extent that the
Lender holds Registrable Securities, and (b) any Person holding Registrable
Securities as a transferee of the Lender (directly or indirectly, including
subsequent transfers).
"Loan Agreement" shall have the meaning ascribed to such term in the
Preliminary Statements to this Agreement.
"Person" shall mean any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
The terms "register," "registered" and "registration" shall refer to a
registration effected by preparing and filing with the Commission one or more
registration statements covering Registrable Securities in compliance with the
Registrable Securities Act that is declared or ordered effective by the
Commission.
" Registrable Securities" shall mean the Conversion Shares, and any shares
of capital stock issued or issuable with respect to the Conversion Shares, as a
result of any stock split, stock dividend, recapitalization, exchange or similar
event; provided, however, that such Registrable Securities shall cease to be
Registrable Securities when (a) a registration statement with respect to such
Registrable Securities shall have been declared effective under the Registrable
Securities Act and such Registrable Securities shall have been disposed of
pursuant to the registration statement, (b) such Registrable Securities are
distributed to the public pursuant to Rule 144(k) (or any successor provisions)
promulgated under the Securities Act or (c) such Registrable Securities shall
have ceased to be outstanding.
"Registration Deadline" shall have the meaning ascribed to such term in
Section 2.1 of this Agreement.
"Registration Expenses" shall mean all expenses incurred in order to comply
with Article II hereof, including, without limitation, all registration and
filing fees, printing expenses, fees and disbursements of counsel for the
Company, reasonable fees and disbursements of one (1) counsel for the Holders,
blue sky fees and expenses, and the expense of any special audits incident to or
required by any such registration, but excluding the compensation of regular
employees of the Company (which shall be paid in any event by the Company) and
excluding Selling Expenses.
"Restricted Registrable Securities" shall mean Registrable Securities that
are "restricted Registrable Securities" as defined in Rule 144 under the
Securities Act.
"Registrable Securities" shall have the meaning ascribed to such term in
the Preliminary Statements to this Agreement.
"Securities Act" shall mean the Registrable Securities Act of 1933, as
amended, or any successor federal statute, and the rules and regulations of the
Commission thereunder, all as in effect from time to time.
"Selling Expenses" shall mean all underwriting discounts and selling
commissions incurred in connection with the sale of Registrable Securities
pursuant to a registration effected hereunder.
2
Capitalized terms used in this Agreement and not otherwise defined herein
shall have the respective meanings ascribed to such terms in the Loan Agreement.
ARTICLE II
REGISTRATION RIGHTS
Section 2.1 Mandatory Registration.
(a) The Company shall prepare and file with the Commission within sixty
(60) days from the date of this Agreement (the "Filing Deadline") a
registration statement or registration statements (as is necessary) on Form
S-3 covering the issuance and the resale of all of the Registrable
Securities. Such registration statement shall initially register for resale
at least 2,000,000 Conversion Shares. The Company shall use its best
efforts to have the registration statement declared effective by the
Commission within one hundred and twenty (120) days after the Filing
Deadline (the "Registration Deadline"). The Company shall permit the
registration statement to become effective within five (5) business days
after receipt of a "no review" notice from the Commission. Such
registration statement shall be kept current and effective for the greater
of (i) a period of at least three (3) years from the Closing Date and (ii)
a period of at least ninety (90) days after (x) all of the Notes shall have
been converted into Conversion Shares or paid in full.
Section 2.2 Expenses of Registration. All Registration Expenses incurred in
connection with any registration, qualification or compliance pursuant to
Section 2.1 shall be borne by the Company; and all Selling Expenses in
connection with such registration, qualification or compliance shall be borne by
the holders of the Registrable Securities so registered pro rata on the basis of
the number of shares so registered.
Section 2.3 Registration Procedures. In the case of each registration,
qualification or compliance effected by the Company pursuant to this Article II,
the Company will keep each Holder advised in writing as to the initiation of
each registration, qualification and compliance and as to the completion
thereof. At its expense, the Company will:
(a) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection with such registration statement as may be necessary to comply
with the provisions of the Registrable Securities Act with respect to the
disposition of all Registrable Securities covered by such registration
statement;
(b) furnish to the Holders such numbers of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirement of
the Registrable Securities Act, and such other documents as they may
reasonably request (including a conformed copy of the registration
statement filed with the Commission and any amendments thereto and an
original executed underwriting agreement entered into in connection with
such registration) in order to facilitate the disposition of Registrable
Registrable Securities owned by them;
(c) use reasonable efforts to register and qualify the Registrable
Securities covered by such registration statement under such other
Registrable Securities or blue sky laws of one (1) jurisdiction (in
addition to those jurisdictions in which the Company has otherwise agreed
to so register and qualify such Registrable Securities) as shall be
reasonably requested by the Holders, provided that the Company shall not be
required in connection therewith or as a condition thereto to qualify to do
3
business or to file a general consent to service of process in any such
states or jurisdictions;
(d) in the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement with the managing
underwriter(s) of such offering; each Holder participating in such
underwriting shall also enter into and perform its obligations under such
underwriting agreement;
(e) notify each Holder of Registrable Securities covered by such
registration statement, at any time when a prospectus relating thereto is
required to be delivered under the Securities Act, of the happening of any
event as a result of which the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a material
fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the light of the
circumstances then existing; and
(f) furnish, at the request of any Holder requesting registration of
Registrable Securities pursuant to this Article II, on the date that such
Registrable Securities are delivered to the underwriters for sale in
connection with registration pursuant to this Article II, if such
Registrable Securities are being sold through underwriters, or on the date
that the registration statement with respect to such Registrable Securities
becomes effective, if such Registrable Securities are not being sold
through underwriters, (i) a copy of any opinion, dated such date, of the
counsel representing the Company for the purposes of such registration,
addressed to the underwriters of the Company, and (ii) a copy of any
letter, dated such date, from the independent accountants of the Company,
addressed to the underwriters of the Company.
Each Holder of Registrable Securities agrees that upon receipt of any
notice from the Company of the happening of any event of the kind described in
clause (f) of this Section 2.3, such Holder will forthwith discontinue
disposition of Registrable Securities pursuant to the registration statement
covering such Registrable Securities until such Holder's receipt of the copies
of a supplemented or amended prospectus and, if so directed by the Company, such
Holder will deliver to the Company (at the Company's expense), all copies, other
than permanent file copies then in such Holder's possession, of the prospectus
covering such Registrable Securities that was in effect prior to such amendment
or supplement. In the event the Company shall give any such notice, the period
set forth in clause (a) of this Section 2.3 shall be extended by the number of
days during the period from and including the date of the giving of such notice
pursuant to clause (e) of this Section 2.3 to and including the date when each
seller of Registrable Securities covered by such registration statement shall
have received the copies of a supplemented or amended prospectus.
Section 2.4 Indemnification.
(a) The Company will indemnify each Holder, each Holder's officers,
directors and partners, and each Person controlling such Holder
(collectively, "Holder's Parties"), participating in any registration,
qualification, or compliance effected pursuant to this Article II with
respect to Registrable Securities held by such Holder and each underwriter,
if any, and each Person who controls any underwriter, against all claims,
losses, damages and liabilities (or actions in respect thereof), including
any of the foregoing incurred in settlement of any litigation, commenced or
threatened, to which they may become subject under the Registrable
Securities Act, the Exchange Act or other federal or state law, arising out
of or based on (i) any untrue statement (or alleged untrue statement) of a
material fact contained in any prospectus, offering circular or other
similar document (including any related registration statement,
notification or the like)
4
incident to any such registration, qualification or compliance, or based on
any omission (or alleged omission) to state therein a material fact
required to be stated therein or necessary to make the statements therein
not misleading, or (ii) any violation by the Company of any federal, state
or common law rule or regulation applicable to the Company in connection
with any such registration, qualification or compliance, and will reimburse
each such Holder's Parties each such underwriter, and each Person who
controls any such underwriter, for any legal and any other expenses
reasonably incurred in connection with investigating or defending any such
claim, loss, damage, liability or action, as incurred, provided that the
Company will not be liable in any such case to the extent that any such
claim, loss, damage, liability or expense arises out of or is based on any
untrue statement or omission, made in reliance on and in conformity with
written information furnished to the Company by such Holder's Parties or
underwriter or Person controlling such underwriter specifically for use in
the preparation thereof.
(b) Each Holder will, if Registrable Securities held by such Holder are
included in the Registrable Securities as to which such registration,
qualification or compliance is being effected, severally and not jointly,
indemnify the Company, each of its directors and officers, each
underwriter, if any, of the Company Registrable Securities covered by such
a registration statement, and each Person who controls the Company or such
underwriter within the meaning of the Registrable Securities Act, against
all claims, losses, damages and liabilities (or actions in respect thereof)
arising out of or based on (i) any untrue statement (or alleged untrue
statement) of a material fact contained in any such registration statement,
prospectus, offering circular or other similar document, or any omission
(or alleged omission) to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading,
and will reimburse the Company, such directors, officers, Persons,
underwriters or control Persons for any legal or any other expenses
reasonably incurred in connection with investigating or defending any such
claim, loss, damage, liability or action, as incurred, in each case to the
extent, but only to the extent, that such untrue statement (or alleged
untrue statement) or omission (or alleged omission) is made in such
registration statement, prospectus, offering circular or other document in
reliance upon and in conformity with the written information furnished to
the Company by such Holder specifically for use in the preparation thereof,
or (ii) any violation by any such Holder of any federal, state or common
law rule or regulation applicable to such Holder in connection with the
distribution of Registrable Securities pursuant to a registration
statement, and will reimburse the Company, such Holders, such directors,
officers, Persons, underwriters or control Persons for any legal any other
expenses reasonably incurred in connection with investigating or defending
any such claim, loss, damage, liability, or action, as incurred; provided,
however, that the obligations of each such Holder hereunder shall be
limited to an amount equal to the aggregate proceeds received by such
Holder in such offering.
(c) Each party entitled to indemnification under this Section 2.4 (the
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified
Party has received written notice of any claim as to which indemnity may be
sought, and shall permit the Indemnifying Party to assume the defense of
any such claim or any litigation resulting therefrom, provided that counsel
for the Indemnifying Party, who shall conduct the defense of such claim or
litigation, shall be approved by the Indemnified Party (whose approval
shall not unreasonably be withheld). The Indemnified Party may participate
in such defense at such party's expense; provided, however, that the
Indemnifying Party shall bear the expense of such defense of one counsel
representing the Indemnified Party if representation of both parties by the
same counsel would be inappropriate due to actual or potential conflicts of
interest. The failure of any Indemnified Party to give
5
notice as provided herein shall not relieve the Indemnifying Party of its
obligations under this Section 2.4, except to the extent such failure to
give notice shall materially and adversely prejudice the Indemnifying Party
in the defense of any such claim or any such litigation. No Indemnifying
Party, in the defense of any such claim or litigation, shall, except with
the consent of each Indemnified Party, consent to entry of any judgment or
enter into any settlement that does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such Indemnified Party
of a release from all liability in respect to such claim or litigation.
(d) (i) If the indemnification provided for in this Section 2.4 is held
by a court of competent jurisdiction to be unavailable to an
Indemnified Party with respect to any loss, liability, claim, damage or
expense referred to herein, then the Indemnifying Party hereunder shall
contribute to the amount paid or payable by such Indemnified Party as a
result of such loss, liability, claim, damage or expense, in such
proportion as is appropriate to reflect the relative fault of the
Indemnifying Party on the one hand and the Indemnified Party on the
other hand in connection with the statements or omissions which
resulted in such loss, liability, claim, damage or expense as well as
any other relevant equitable considerations. The relative fault of the
Indemnifying Party and of the Indemnified Party shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission to state a material fact
relates to information supplied by the Indemnifying Party or by the
Indemnified Party and the parties' relevant intent, knowledge, access
to information and opportunities to correct or prevent such statement
or omission.
(ii)The parties agree that it would not be just and equitable if
contribution pursuant to this Section 2.4 were determined by pro rata
allocation or by any other method of allocation that does not take
account of the equitable considerations referred to above. The amount
paid or payable by an Indemnified Party as a result of the claims,
losses, damages and liabilities referred to above shall be deemed to
include, subject to the limitations set forth above, any legal or other
expenses reasonably incurred by such Indemnified Party in connection
with investigating or defending any such action or claim.
(iiiNo Holder that is a seller of Registrable Securities covered
by such registration statement or Person controlling such seller other
than the Company shall be obligated to make contribution hereunder that
in the aggregate exceeds the total public offering price of the
Registrable Securities sold by such Holder, less the aggregate amount
of any damages that such Holder and its controlling Persons have
otherwise been required to pay pursuant to this Section 2.4. The
obligations of such Holders to contribute are several in proportion to
their respective ownership of the Registrable Securities covered by
such registration statement and not joint.
(iv)The indemnity and contribution provided herein shall be in
addition to, and not in lieu of, any other liability that one party may
have to another.
Section 2.5 Information by Holder. Each Holder of Registrable Securities
included in any registration shall furnish to the Company such information
regarding such Holder and the distribution proposed by such Holder as the
Company may request in writing and as shall be required in connection with any
registration, qualification or compliance referred to in this Article II.
Section 2.6 Rule 144 Reporting. With a view to making available the
benefits of certain rules and regulations of the Commission that may at any time
permit the sale of the Restricted Registrable Securities to the public without
registration, the Company agrees to:
6
(a) use its best efforts to facilitate the sale of the Restricted
Registrable Securities to the public without registration under the
Registrable Securities Act, pursuant to Rule 144 under the Registrable
Securities Act;
(b) make and keep public information available, as those terms are
understood and defined in Rule 144 under the Registrable Securities Act, at
all times after the effective date of the first registration statement
filed by the Company for an offering of its Registrable Securities to the
general public;
(c) file with the Commission in a timely manner all reports and other
documents required of the Company under the Registrable Securities Act and
the Exchange Act (at any time after it has become subject to such reporting
requirements); and
(d) so long as a Holder owns any Restricted Registrable Securities to
furnish to the Holder forthwith upon request a written statement by the
Company as to its compliance with the public information requirements of
said Rule 144, and the reporting requirements of the Registrable Securities
Act and the Exchange Act, a copy of the most recent annual or quarterly
report of the Company, and such other reports and documents so filed by the
Company as a Holder may reasonably request in availing itself of any rule
or regulation of the Commission allowing a Holder to sell any such
Registrable Securities without registration.
Section 2.7 Transfer of Registration Rights. The rights granted under this
Article II may be assigned or otherwise conveyed by any Holder of Registrable
Securities to any transferee, subject to compliance with all applicable
Registrable Securities laws and regulations.
Section 2.8 Certain Limitations in Connection with Future Grants of
Registration Rights.
From and after the date of this Agreement, without the prior written
consent of the Holders of a majority of the Registrable Securities, the Company
shall not enter into any agreement with any holder or prospective holder of any
Registrable Securities of the Company providing for the granting to such holder
of registration rights that would be superior to those granted to Holders
pursuant to Section 2.1.
Section 2.9 Restrictions on Market Manipulation. In the event any shares of
Common Stock are offered or sold by any Holder in a registration, each such
Holder will:
(a) advise the Company in writing of any offer, sale or other
disposition by it of any Common Stock in any manner other than as set forth
in the registration statement or any prospectus included therein on or for
the 30-day period prior to the filing of such registration statement until
the distribution under the registration statement has been completed;
(b) not effect any stabilization activity in connection with the
Company's Common Stock;
(c) not bid or purchase, for any account in which it has a beneficial
interest, any Common Stock except as may be permitted pursuant to Rule
10b-6 under the Exchange Act (if applicable);
(d) not until it has sold all of such shares of Common Stock, attempt
to induce any Person to purchase any Common Stock except as may be
permitted pursuant to Rule 10b-6; and
7
(e) not until it has sold all such shares of Common Stock, pay any
compensation for soliciting another to purchase any Registrable Securities
of the Company, except as may be permitted pursuant to Rule 10b-6.
ARTICLE III
MISCELLANEOUS
Section 3.1 Governing Law; Jurisdiction and Venue. This Agreement 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 Agreement (whether
in contract or tort, or both, or at law or in equity) shall be determined by
binding arbitration at West Palm Beach, 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 State of 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.
Section 3.2 Successors and Assignees. Except as otherwise provided herein,
the provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assignees, heirs, executors and administrators (as the case may be)
of the parties hereto.
Section 3.3 Entire Agreement. This Agreement constitutes the full and
entire understanding and agreement between the parties with regard to the
subject matter hereof.
Section 3.4 Notices, etc. All notices given under this Agreement and under
the other Loan Documents 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 Lender:
Capital Consultants, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
With a copy (that does not constitute notice) to:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
If to the Borrower:
Orange Productions, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
With a copy (that does not constitute notice) to:
Mintmire & Associates
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
8
Section 3.5 Delays or Omissions. No delay or omission to exercise any
right, power or remedy accruing to any Holder of any Registrable Securities,
upon any breach or default of the Company under this Agreement, shall impair any
such right, power or remedy of such Holder nor shall it be construed to be a
waiver of any such breach or default or an acquiescence therein or of or in any
similar breach or default thereunder occurring nor shall any waiver of any
single breach or default be deemed a waiver of any other breach or default
theretofore or thereafter occurring. Any waiver, permit, consent or approval of
any kind or character on the part of any Holder of any breach or default under
this Agreement or any waiver on the part of any Holder of any provisions or
conditions of this Agreement must be in writing and shall be effective only to
the extent specifically set forth in such writing. All remedies, either under
this Agreement or by law or otherwise afforded to any Holder shall be cumulative
and not alternative.
Section 3.6 Counterparts. This Agreement may be executed in any number of
counterparts, each of which may be executed by less than all of the parties
hereto, each of which shall be enforceable against the parties actually
executing such counterparts and all of which together shall constitute one
instrument.
Section 3.7 Severability. In the event any provision of this Agreement
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
Section 3.8 Amendments. The provisions of this Agreement may be amended at
any time and from time to time, and particular provisions of this Agreement may
be waived, with and only with, an agreement or consent in writing signed by the
Company and by the Holders of a majority of the Registrable Securities voting as
a single class.
The parties have executed this Registration Rights Agreement as of the date
first written above.
The Lender: The Company:
CAPITAL CONSULTANTS, INC. ORANGE PRODUCTIONS, INC.
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. By /s/ ▇▇▇ ▇▇▇▇▇▇▇▇
Name ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. Name ▇▇▇ ▇▇▇▇▇▇▇▇
Title President Title President
Date signed October 20, 2000 Date signed October 20, 2000
9
ESCROW AGREEMENT
1. Parties
1.1. This Escrow Agreement (this AAgreement@) is made and entered into
effective October 20, 2000 (the AEffective Date@), by and between Orange
Productions, Inc. (the ACompany@) and Capital Consultants, Inc. (the AEscrow
Holder@).
2. Recitals.
2.1. This Agreement is made with reference to the following facts and
circumstances:
(a) The Company and Capital Consultants, Inc., as Lender, are entering
into a Loan Agreement dated October 20, 2000 (the ALoan Agreement@),
pursuant to which the Company will issue to the Lender up to an aggregate
of US$1,000,000 of notes (the ANotes@). The Notes are convertible, at the
option of the holder or holders thereof, into shares of the Company=s
common stock, $0.001 par value (ACommon Stock@). The Common Stock into
which the Notes are convertible are referred to as the Conversion Shares.
The Conversion Shares are issuable in such amounts and upon the terms set
forth in the Loan Agreement.
(b) The conversion price of the Conversion Shares is US$0.60.
(c) The Notes mature, unless sooner paid or converted, on December 31,
2003
(d) Under the terms of a Registration Rights Agreement between the
Company and the Lender, the Company has agreed to file a registration
statement (the ARegistration Statement@) under the United States Securities
Act of 1933 as Amended (the ASecurities Act@), for the purpose of
registering the issuance and resale of the Conversion Shares.
(e) Under the terms of the Loan Agreement, the Company has agreed to
execute this Agreement with the Escrow Holder, to issue certificates for
the Conversion Shares (the AConversion Shares Certificates@) registered in
the name of the Escrow Holder, and to deliver those certificates to the
Escrow Holder pursuant to the terms of this Agreement.
(h) In accordance with the terms of the Loan Agreement, the Company is
issuing a Note for US$50,000 upon the execution of this Agreement (the
AInitial Note@).
2.1. In consideration of the premises, and in order to establish the escrow
for the Conversion Shares required by the Loan Agreement, the Company is
entering into this Agreement with the Escrow Holder.
3. Escrow
3.1. Contemporaneously with the execution of this Agreement, the Borrower
shall execute and deliver to the Escrow Holder a certificate for the number of
Conversion Shares underlying the Note evidencing the initial Loan. Prior to each
additional Loan, the Borrower shall execute and deliver to the Escrow Holder a
certificate for the number of additional Conversion Shares underlying the Note
evidencing that Loan.
1
3.2. All certificates for Conversion Shares delivered to the Escrow Holder
shall be registered in the name of Capital Consultants, Inc. Until such time as
the registration statement covering the Conversion Shares is effective, the
certificates shall bear a legend indicating that they have been issued in a
transaction that is exempt from the registration requirements of the Securities
Act, and may not be transferred except pursuant to registration under the
Securities Act or an exemption from such registration. Except for such legend,
the Common Stock underlying the Lenders= Warrant shall be free and clear of any
legends, liens, claims, stop orders or other restrictions.
3.3. Not later than the third Business Day following the effective date of
the Registration Statement, the Borrower shall cause the Common Stock to be
registered in Lender=s street name, in DTC form, free and clear of any legends,
liens, claims, stop orders or other restrictions.
3.4. All Conversion Shares deposited by the Company after the effective
date of the Registration Statement shall be registered in the street name of
Capital Consultants, Inc., in DTC form, free and clear of any legends, liens,
claims, stop orders or other restrictions.
4. Release of Conversion Shares
4.1. Upon receipt of a Conversion Notice, the Escrow Holder shall promptly
(and in any event within three business days) release the number of Conversion
Shares specified in the Conversion Notice to the person specified therein. If
all of the unpaid principal of and interest on the Note is being converted; then
the Escrow Holder shall endorse the Note as paid in full, and transmit the Note,
so endorsed, and the Conversion Notice, to the Company. If the conversion is for
less than all of the unpaid principal of and interest on the Note, the Escrow
Holder shall endorse upon the Note the amount of principal thereof and interest
thereon that is being converted, and transmit a copy of the Note, so endorsed,
and the Conversion Notice, to the Company.
5. Termination and Resignation
5.1. This Agreement, unless sooner terminated, shall terminate on the date
on which all of the Notes have been redeemed or converted.
5.2. The Escrow Holder may resign as such at any time, without liability
therefor, by giving the Company and the Lender not less than 10 days prior
written notice of its election to do so. In the event of the Escrow Holder=s
resignation, the Company shall promptly appoint a successor Escrow Holder
acceptable to the Lender.
6. Limitation on the Escrow Holder=s Liability; Indemnification.
6.1. The Escrow Holder shall not be liable to the Company, to any Note
holder, or to any other person or entity for any action taken or omitted by it,
except for the Escrow Holder=s own gross negligence or wilful misconduct.
Without limiting the generality of the foregoing:
(a) The Escrow Holder may rely upon, and shall be protected in acting
or refraining from acting in reliance upon, any notice, certificate,
instrument, request, paper or other document believed by it to be genuine
and made, sent, signed or presented by the Company, any Note holder or any
other person or entity.
2
(b) The Escrow Holder shall not be responsible or liable for the
genuineness, validity or sufficiency of any Note, stock certificate, notice
or other instrument delivered to it, including without limitation the
genuineness of any signature thereon, or of the identity or authority of
any person executing or delivering the same.
6.2. The Escrow Holder shall not be obligated to take any action to defend
or enforce this Agreement, or to appear in, prosecute or defend any action or
legal proceeding, or to file any income or other tax return that, in the Escrow
Holder=s opinion, would or might involve any cost, expense, loss or liability,
unless, and as often as required by it, the Company shall furnish it with
security and indemnity satisfactory to it against all such cost, expense, loss
and liability.
6.3. The Escrow Holder shall not be responsible for the validity or
enforceability of any provision of this Agreement, or for the execution thereof
by the Company, or for the truth or accuracy of any recitals or other statements
of fact contained in this Agreement.
6.4. The Escrow Holder is not, and shall not be deemed for any purpose to
be, a fiduciary under this Agreement or otherwise, for the Company, for any Note
holder, or for any other person or entity.
6.5. Except for matters for which the Escrow Holder is liable to the
Company under paragraph 6.1 of this Agreement, the Company hereby agrees to
defend and indemnify the Escrow Holder and its shareholders, directors,
officers, employees and Lenders, and to hold each of them harmless from and
against any and all judgments, awards, orders, damages, claims, demands,
liability, penalties, costs, and expenses (including attorney fees and court or
arbitration costs) of any nature whatsoever, directly or indirectly arising out
of or relating to this Agreement, or any act or omission of the Escrow Holder
hereunder. This indemnity shall survive termination of this Agreement.
7. Miscellaneous Provisions.
7.1. No amendment, modification, termination, or waiver of any provision of
this Agreement, nor consent to any departure by the Company from any of its
provisions, shall in any event be effective unless the same shall be in writing
and signed by the Escrow Holder, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.
7.2. All notices given under this Agreement 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 Escrow Holder: If to the Company:
Capital Consultants, Inc. Orange Productions, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
3
With a copy (that does not constitute With a copy (that does not constitute
notice) to: notice) to:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. Mintmire & Associates
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇ Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
7.3. No failure or delay on the part of the Escrow Holder 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.
7.4. This Agreement shall be binding upon and inure to the benefit of the
Company and the Escrow Holder, and their respective successors and assigns,
except that the Company may not assign or transfer any of its r rights under
this Agreement without the prior written consent of the Escrow Holder.
7.5 The Company agrees to pay on demand all costs and expenses incurred by
the Escrow Holder in connection with the preparation, execution, delivery,
filing, and administration of this Agreement, and of any amendment,
modification, or supplement hereto, including, without limitation, the fees and
out-of-pocket expenses of counsel for the Escrow Holder incurred in connection
with advising the Escrow Holder as to its rights and responsibilities hereunder.
The Company also agrees to pay all such costs and expenses, including court
costs, incurred in connection with enforcement of this Agreement, or any
amendment, modification, or supplement thereto, whether by negotiation, legal
proceedings, or otherwise. In addition, the Company shall pay any and all stamp
and other taxes and fees payable or determined to be payable in connection with
the issuance, transfer and deliver of any Warrant, and agrees to hold the Escrow
Holder harmless from and against any and all liabilities with respect to or
resulting from any delay in paying or omission to pay such taxes and fees. This
provision shall survive termination of this Agreement.
7.6. This Agreement shall be governed by, and construed in accordance with,
the laws of the State of Florida.
7.7. 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 West Palm Beach, Florida, in accordance
with the commercial arbitration rules of the American Arbitration. 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
hereby consent to the exclusive jurisdiction of the courts of the State of
Florida for that purpose.
4
IN WITNESS WHEREOF, the Company and the Escrow Holder have executed this
Agreement as of the Effective Date.
The Escrow Holder: The Company:
CAPITAL CONSULTANTS, INC. ORANGE PRODUCTIONS, INC.
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. By /s/ ▇▇▇ ▇▇▇▇▇▇▇▇
Name ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. Name ▇▇▇ ▇▇▇▇▇▇▇▇
Title President Title President
Date signed October 20, 2000 Date signed October 20, 2000
5