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REVOLVING CREDIT AGREEMENT
BY AND BETWEEN
SPARTA SURGICAL CORPORATION,
as Borrower
AND
LKDTBJP LIVING TRUST
and ▇▇▇▇ ▇. AGRON,
as Lender
Dated as of September 9, 2005
TABLE OF CONTENTS
Page
ARTICLE 1 - CERTAIN DEFINITIONS................................................1
Section 1.1 Certain Definitions...................................1
Section 1.2 Construction..........................................3
ARTICLE 2 - LOANS, NOTES AND PREPAYMENTS.......................................3
Section 2.1 Loans.................................................3
Section 2.2 Notes.................................................3
Section 2.3 Procedure for Borrowing...............................4
Section 2.4 Repayment of Loans....................................4
Section 2.5 Optional Prepayments..................................4
Section 2.6 Indemnity.............................................4
Section 2.7 Computations..........................................4
Section 2.8 Repayment of the Loans................................4
ARTICLE 3 - EVENTS OF DEFAULT..................................................5
Section 3.1 Events of Default.....................................5
Section 3.2 Remedies..............................................5
ARTICLE 4 - MISCELLANEOUS......................................................5
Section 4.1 Amendments, etc.......................................5
Section 4.2 Notices, etc..........................................5
Section 4.3 No Waiver; Remedies...................................6
Section 4.4 Binding Effect........................................6
Section 4.5 Governing Law.........................................6
Section 4.6 Usury Laws............................................6
Section 4.7 Section Headings......................................6
Section 4.8 Execution.............................................6
REVOLVING CREDIT AGREEMENT
THIS REVOLVING CREDIT AGREEMENT (the "Agreement") is made as of
September 9, 2005 by and between Sparta Surgical Corporation, a Delaware
corporation (the "Borrower"), and LKDTBJP Living Trust and ▇▇▇▇ ▇. Agron
(collectively, the "Lender").
EXPLANATORY STATEMENT
A. The Borrower may need access to additional capital;
B. The Borrower has requested, and the Lender has agreed to make,
certain loans, advances and other financial accommodations to the Borrower on
the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the promises set forth herein and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
ARTICLE 1
CERTAIN DEFINITIONS
Section 1.1 Certain Definitions. In addition to words and terms defined
elsewhere in this Agreement, the following words and terms shall have the
following meanings, respectively, unless the context clearly requires otherwise:
"Agreement" shall mean this Revolving Credit Agreement, as the same may
be amended, restated, supplemented or otherwise modified from time to time
hereafter, including all Schedules and Exhibits hereto.
"Authorized Officer" shall mean ▇▇▇▇▇ ▇. ▇▇▇▇.
"Borrower's Account" shall mean the Borrower's bank account as may be
designated by the Borrower from time to time by written notice to the Lender.
"Business Day" shall mean any day other than a Saturday or Sunday or
other day upon which banks or the Lender are authorized or required to close in
the State of Colorado.
"Dollar," "Dollars," "U.S. Dollars" and the symbol "$" shall mean the
lawful currency of the United States of America.
"Event of Default" shall mean any of the Events of Default described in
Section 3.1.
"Funding Date" shall mean the date on which a Loan is made hereunder.
"Insolvency Event" shall mean, with respect to any Person, (i) such
Person generally shall not pay its debts as such debts become due, or shall
admit in writing its inability to pay its debts generally, or shall make a
general assignment for the benefit of creditors; or any proceeding shall be
instituted by or against such Person seeking to adjudicate it a bankrupt or
insolvent, or seeking liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief, or composition of it or its debts under any Law
related to bankruptcy, insolvency or reorganization or relief of debtors, or
seeking the entry of an order for relief or the appointment of a receiver,
trustee, or other similar official for it or for any substantial part of its
property provided; however, any proceeding instituted against such Person shall
not constitute an Insolvency Event if such proceeding has been dismissed within
60 days of the institution of such proceeding against such Person; or (ii) such
Person shall take any action to authorize any of the actions set forth in clause
(i) herein.
"Interest Rate" shall have the meaning provided in Section 2.4(b).
"Law" shall mean any law (including common law), constitution, statute,
treaty, regulation, rule, ordinance, opinion, release, ruling, order,
injunction, writ, decree or award of any Governmental Authority.
"Loan" shall have the meaning provided in Section 2.1.
"Loan Documents" shall mean this Agreement, the Revolving Loan Note and
any other instruments, certificates or documents delivered or contemplated to be
delivered hereunder or thereunder or in connection herewith or therewith, as the
same may be supplemented or amended from time to time hereafter in accordance
herewith or therewith, and "Loan Document" shall mean any of the Loan Documents.
"Person" shall mean any individual, corporation, partnership, limited
liability company, joint-stock company, trust, unincorporated organization or
association, joint venture, government or political subdivision or agency
thereof, or any other entity.
"Post-Default Rate" shall mean, in respect of any principal of any Loan
or any other amount under this Agreement, the Revolving Loan Note or any other
Loan Document that is not paid when due to the Lender (whether at stated
maturity, by acceleration, by optional or mandatory prepayment or otherwise), a
rate per annum during the period from and including the due date to but
excluding the date on which such amount is paid in full equal to the lesser of
15% or the maximum amount permitted by applicable Law.
"Request for Borrowing" has the meaning assigned to such term in
Section 2.3(a).
"Revolving Loan Note" means the promissory note of the Borrower,
payable to the order of the Lender, in substantially the form of Exhibit B
hereto, evidencing the aggregate indebtedness of the Borrower to the Lender
resulting from Loans made by the Lender.
"Term of this Agreement" means from the date hereof and to the earlier
of either (i) demand by the Lender or (ii) upon the merger of the Borrower with,
or the acquisition of the Borrower or a controlling interest thereof by, any
other entity unless this Agreement is sooner terminated by the Lender.
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"Total Loan Amount" shall mean up to $100,000 as such amount may be
reduced from time to time in accordance with this Agreement.
Section 1.2 Construction. Unless the context of this Agreement
otherwise clearly requires, references to the plural shall include the singular,
references to the singular shall include the plural, references to the part
shall include the whole and references to any masculine, feminine or neuter
pronoun shall include all other genders. References in this Agreement to
"determination" of or by the Lender shall be deemed to include good faith
estimates by the Lender (in the case of quantitative determinations) and good
faith beliefs by the Lender (in the case of qualitative determinations). The
words "hereof," "herein," "hereunder" and similar terms in this Agreement refer
to this Agreement as a whole and not to any particular provision of this
Agreement. Any references herein to Articles, Sections, Exhibits or Schedules
are references to Articles, Sections, Exhibits and Schedules of or to this
Agreement unless otherwise expressly specified. The Section and other headings
contained in this Agreement and the Table of Contents preceding this Agreement
are for reference purposes only and shall not control or affect the construction
of this Agreement or the interpretation thereof in any respect.
ARTICLE 2
LOANS, NOTES AND PREPAYMENTS
Section 2.1 Loans.
(a) The Lender agrees, on the terms and conditions of this Agreement,
to make Loans (individually, a "Loan"; collectively, the "Loans") to the
Borrower in Dollars, on any Business Day during the Term of this Agreement in an
aggregate principal amount at any one time outstanding up to but not exceeding
the Total Loan Amount. All Loans made up to the Total Loan Amount will be
pursuant to the terms and conditions of this Agreement and the Revolving Loan
Note. Subject to the terms and conditions of this Agreement, during such period
the Borrower may borrow, repay and re-borrow hereunder.
(b) In no event shall a Loan be made when any Event of Default has
occurred and is continuing or would exist after the making of such Loan on such
Funding Date.
Section 2.2 Notes.
(a) The Loans made by the Lender shall be collectively evidenced by the
Revolving Loan Note, dated the date hereof, payable to the Lender in a principal
amount equal to the amount of the Total Loan Amount then outstanding plus
accrued interest.
(b) The date and amount of each Loan made by the Lender to the
Borrower, and each payment made on account of the principal thereof, shall be
recorded by the Lender on its books and, prior to any transfer of the Revolving
Loan Note, endorsed by the Lender on the schedule attached to the Revolving Loan
Note or any continuation thereof; provided that the failure of the Lender to
make any such recordation or endorsement shall not affect the obligations of the
Borrower to make a payment when due of any amount owing hereunder or under the
Revolving Loan Note in respect of the Loans.
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Section 2.3 Procedure for Borrowing.
(a) The Borrower may request a borrowing hereunder, on any Business Day
during the Term of this Agreement by delivering to the Lender a written Request
for Borrowing, substantially in the form of Exhibit A hereto signed by an
Authorized Officer.
(b) If the Lender agrees to fund the Request for Borrowing, the amount
of the requested borrowing shall be advanced in immediately available funds,
without deduction, set-off or counterclaim, to the Borrower's Account, not later
than ten days after receipt of the Request for Borrowing.
Section 2.4 Repayment of Loans.
(a) The total outstanding principal balance of each outstanding Loan
shall be immediately due and payable on demand by the Lender.
(b) Each Loan shall bear interest at a rate per annum equal to six
percent (6%).
(c) Notwithstanding the foregoing, the Borrower hereby promises to pay
to the Lender interest at the applicable Post-Default Rate on any principal of
any Loan and on any other amount payable by the Borrower hereunder or under the
Revolving Loan Note that shall not be paid in full when due (whether at stated
maturity, by acceleration or by mandatory prepayment or otherwise), for the
period from and including the due date thereof to but excluding the date the
same is paid in full (both before and after judgment). Any payment due and owing
at the Post-Default Rate shall be payable on demand by the Lender.
Section 2.5 Optional Prepayments.
(a) The Loans are pre-payable at any time without premium or penalty,
in whole or in part. Any amounts prepaid shall be applied first to the payment
of interest then to the payment of outstanding principal until paid in full.
Amounts prepaid may be re-borrowed in accordance with the terms of this
Agreement.
Section 2.6 Indemnity. Upon demand by the Lender, the Borrower agrees
to indemnify the Lender and to hold the Lender harmless from any net loss or
expense (not to include any lost profit or opportunity) which the Lender may
sustain or incur as a consequence of default by the Borrower in making any
payments due under this Agreement.
Section 2.7 Computations. Interest on the Loans shall be computed on
the basis of a 365-day year and the actual number of days elapsed in any
Interest Period.
Section 2.8 Repayment of the Loans. All payments shall be applied
first, to the payment of interest, if any, which is due and payable with respect
to the Loans; second, to the payment of all fees, expenses and indemnities due
and payable hereunder; and then to the repayment of the aggregate unpaid
principal amount of the Loans which is due and payable.
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ARTICLE 3
EVENTS OF DEFAULT
Section 3.1 Events of Default. Each of the following events shall
constitute an "Event of Default" hereunder:
The Borrower shall be the subject of an Insolvency Event; or
(a) The Borrower shall fail to perform or observe any material term,
covenant or agreement contained in this Agreement or any other agreement or
document executed in connection herewith or therewith on its part to be
performed or observed and any such failure shall remain unremedied for 20
Business Days, after written notice thereof shall have been given by the Lender
to the Borrower; or
(b) There shall have been any material adverse change in the financial
condition or operations of the Borrower and such material adverse change remains
unremedied for 14 days thereafter; or
(c) The Borrower shall fail to pay any principal of or interest on the
indebtedness evidenced by the Revolving Loan Note when the same becomes due and
payable.
Section 3.2 Remedies.
Upon the occurrence of one or more Events of Default in Section 3.1,
the Lender may immediately declare the principal amount of the Loans then
outstanding under the Revolving Loan Note to be immediately due and payable,
together with all interest thereon and fees and expenses accruing under this
Agreement.
ARTICLE 4
MISCELLANEOUS
Section 4.1 Amendments, etc. No amendment or waiver of any provision of
this Agreement or the Revolving Loan Note, nor consent to any departure by the
Borrower therefrom, 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 4.2 Notices, etc. All notices and other communications provided
for hereunder shall be in writing (including telegraphic, facsimile or cable
communication) and mailed, telegraphed, faxed, cabled or delivered, if to the
Borrower, at its address at ▇.▇ ▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇, President, and if to the Lender, at their address at
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇
▇. Agron, or, as to each party, at such other address as shall be designated by
such party in a written notice to the other party. All such notices and
communications shall be effective, upon receipt, or in the case of (i) notice by
mail, upon return of the completed delivery receipt when sent via United States
certified mail, (ii) notice by overnight courier, one Business Day after being
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deposited with a national overnight courier service, or (iii) notice by
facsimile, when faxed against receipt of answer back, except that notices and
communications to the Lender pursuant to Article 2 shall not be effective until
received by the Lender.
Section 4.3 No Waiver; Remedies. No failure on the part of the Lender
to exercise, and no delay in exercising, any right hereunder or under the
Revolving Loan Note shall operate as a waiver thereof; nor shall any single or
partial exercise of any such right preclude any other or further exercise
thereof or the exercise of any other right. The remedies herein provided are
cumulative and not exclusive of any remedies provided by Law.
Section 4.4 Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the Borrower and the Lender and their respective
successors and assigns.
Section 4.5 Governing Law. This Agreement shall be governed by and
construed exclusively in accordance with the Laws of the State of Colorado and
the State of Colorado shall have exclusive jurisdiction regarding concerning any
dispute concerning this Agreement.
Section 4.6 Usury Laws. It is not intended hereby to charge interest at
a rate in excess of the maximum rate of interest permitted to be charged to
Borrower under applicable Law, but if, notwithstanding such intention, interest
in excess of the maximum rate shall be paid under this Agreement or the
Revolving Loan Note, the excess shall be applied to principal and the Interest
Rate on the Revolving Loan Note shall be adjusted to the maximum permitted under
applicable Law during the period or periods that the Interest Rate otherwise
provided herein would exceed such rate.
Section 4.7 Section Headings. All section headings are inserted for
convenience of reference only and shall not affect any construction or
interpretation of this Agreement.
Section 4.8 Execution. This Agreement may be executed, manually or by
facsimile signature, in any number of counterparts and by different parties
hereto in separate counterparts, each of which when so executed shall be deemed
to be an original and all of which taken together shall constitute one and the
same agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers hereunto duly authorized, as of the date
first above written.
Sparta Surgical Corporation, LKDTBJP Living Trust and
a Delaware corporation, as Borrower ▇▇▇▇ ▇. Agron, as Lender
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇ /s/ ▇▇▇▇ ▇. Agron
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▇▇▇▇▇ ▇. ▇▇▇▇, President ▇▇▇▇ ▇. Agron
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EXHIBIT A
to
Revolving Credit Agreement
FORM OF REQUEST FOR BORROWING
▇▇▇▇ ▇. Agron and
LKDTBJP Living Trust
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. Agron
Ladies and Gentlemen:
The undersigned, SPARTA SURGICAL CORPORATION (the "Company"), refers to
the Revolving Credit Agreement dated as of September 9__, 2005 (as amended,
restated, supplemented or otherwise modified from time to time, the "Loan
Agreement"; the terms defined therein being used herein) among the Company and
LKDTBJP LIVING TRUST and ▇▇▇▇ ▇. AGRON (collectively, the "Lender"), and hereby
gives you notice pursuant to Section 2.3(a) of the Loan Agreement that the
Company requests a Loan under Section 2.1 of $_______________.
Dated: ___________________, _________
SPARTA SURGICAL CORPORATION,
a Delaware corporation
By: _______________________________
Name: ______________________________
Title: _____________________________
EXHIBIT B
to
Revolving Credit Agreement
FORM OF REVOLVING LOAN NOTE
REVOLVING LOAN NOTE
Greenwood Village, Colorado
$100,000 September 9, 2005
FOR VALUE RECEIVED, Sparta Surgical Corporation, a Delaware corporation
(the "Borrower"), hereby promises to pay to the order of LKDTBJP Living Trust
and ▇▇▇▇ ▇. Agron (collectively, the "Lender"), at the principal office of the
Lender at ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, in
lawful money of the United States, and in immediately available funds, the
principal sum of ONE HUNDRED THOUSAND AND NO/100 DOLLARS ($100,000) (or such
lesser amount as shall equal the aggregate unpaid principal amount of the Loans
made by the Lender to the Borrower under the Revolving Credit Agreement by and
between Borrower and Lender dated as of even date, as amended, supplemented or
otherwise modified and in effect from time to time, the "Agreement"), on the
dates and in the principal amounts provided in the Agreement, and to pay
interest on the unpaid principal amount of each such Loan, at such office, in
like money and funds, for the period commencing on the date of such Loan until
such Loan shall be paid in full, at the rates per annum and on the dates
provided in the Agreement. Terms used but not defined in this Note have the
respective meanings assigned to them in the Agreement.
The date and amount of each Loan made by the Lender to the Borrower,
and each payment made on account of the principal thereof, shall be recorded by
the Lender on its books and, prior to any transfer of this Revolving Loan Note
(this "Note"), endorsed by the Lender on the Schedule attached hereto or any
continuation thereof; provided that the failure of the Lender to make any such
recordation or endorsement shall not affect the obligations of the Borrower to
make a payment when due of any amount owing under the Agreement or hereunder in
respect of the Loans made by the Lender.
The Borrower agrees to pay all of the Lender's costs of collection and
enforcement (including reasonable attorneys' fees and disbursements of Lender's
counsel) in respect of this Note when incurred, including, without limitation,
reasonable attorneys' fees through appellate proceedings.
The Borrower waives diligence, presentment, protest and demand and also
notice of protest, demand, dishonor and non-payments of this Note and expressly
agrees that this Note, or any payment hereunder, may be extended from time to
time.
It is not intended hereby to charge interest at a rate in excess of the
maximum rate of interest permitted to be charged to Borrower under applicable
law, but if, notwithstanding such intention, interest in excess of the maximum
rate shall be paid hereunder, the excess shall be applied to principal and the
interest rate on this Note shall be adjusted to the maximum permitted under
applicable law during the period or periods that the interest rate otherwise
provided herein would exceed such rate.
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Any reference herein to the Lender shall be deemed to include and apply
to every subsequent holder of this Note. Reference is made to the Agreement for
provisions concerning optional prepayments, acceleration and other material
terms affecting this Note.
This Note has been delivered in the State of Colorado and shall be
governed by and construed in accordance with the laws of the State of Colorado,
regardless of the laws that might otherwise govern under applicable principles
of conflicts of laws thereof. The Borrower agrees that process may be served
upon it in any manner authorized by the laws of the State of Colorado for such
person and waives and covenants not to assert or plead any objection that it
might otherwise have to such jurisdiction and such process.
Sparta Surgical Corporation,
a Delaware corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇, President
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ATTACHMENT
TO
REVOLVING LOAN NOTE
SCHEDULE OF LOANS
This Note evidences Loans made under the within-described Revolving
Credit Agreement to the Borrower, on the dates and in the principal amounts set
forth below, and subject to the payments and prepayments of principal set forth
below:
Principal Unpaid
Amount Amount Paid Principal Notation
Date Made of Loan or Prepaid Amount Made By
--------- ------- ---------- ------ -------
CREDIT FACILITY AGREEMENT
Revolving Credit Agreement
By and between
Sparta Surgical Corporation (the "Borrower") and
LKDTBJP Living Trust, and ▇▇▇▇ ▇ ▇▇▇▇▇ (the "Lender")
This Amendment hereby made amends the Revolving Credit Agreement between the
same parties dated September 9, 2005.
All terms contained in the original Revolving Credit Agreement shall remain in
effective with the exception of the following:
Issuance of Shares of Common Stock for Line Credit- In consideration of the
Revolving Credit Agreement, the Borrower and Lender agree that is shall be
changed to issue to each 5,000,000 shares for a total of 10,000,000 shares of
the Corporation's Common Stock, (the "Loan Shares").
Submitted By: AGREED AND ACCEPTED BY:
▇▇▇▇ ▇. Agron and LKDTBJP Living Trust (the "Lender") Date: 10/03/05
/s/ ▇▇▇▇ ▇. Agron
Sparta Surgical Corporation (the "Borrower") Date: 10/03/05
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇, Chief Executive Officer
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