THIS LOAN AGREEMENT (the "Agreement") is entered into as of
September 27, 2000 among Win-Gate Equity Group, Inc (the "Borrower"), a Florida
Corporation, having its business address at 45 Broadway, New York, New York
10006; Globaltron Communications Corporation ("Globaltron"), a Delaware
corporation and a wholly owned subsidiary of the Borrower, having its principal
office at 100 North Biscayne Blvd., Suite 2500, Miami. Florida 33132 ; Mr. Gary
D. Morgan, an individual having an address c/o Win-Gate Equity Group Inc.,45
Broadway, New York, New York 10006 (and together with Globaltron the
"Guarantors") and Colpafinsa S.A. (the "Lender"), a corporation organized under
the laws of the Republic of Panama, having its principal offices at Calle 50 y
Aquilino de la Guardia, Torre Banco Continental, Piso 30, Panama City, Republic
of Panama (the "Office").
R E C I T A L S
WHEREAS, subject to and upon the terms and conditions herein
set forth, the Lender is willing to make available to the Borrower certain
loaned money as provided for herein;
WHEREAS, as an inducement to the Lender, the Guarantors wish
to guaranty Borrower's obligations hereunder, including but not limited to the
repayment of the Loan and its interest.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions.
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(a) As used in this Agreement, the following defined terms
shall have the meanings indicated below:
"Agreement" means this Loan Agreement, the Exhibits and any
other documents or instruments delivered in accordance herewith, as the same may
be amended from time to time in accordance with the terms hereof.
"Base Rate" means the rate which Citibank N.A. announces from
time to time as its base rate, the Base Rate to change when and as such base
rate changes. The Base Rate is a reference rate and does not necessarily
represent the lowest or best rate actually charged to any customer.
"Borrower" has the meaning ascribed to it in the forepart of
this Agreement.
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"Business Day" means any day other than a Saturday, Sunday or
any day on which State and Federal banking institutions in the State of New York
are authorized or obligated by law or executive order to close.
"Event of Default" has the meaning ascribed to it in Article
III.
"Exchange Act" shall mean the Securities Exchange Act of 1934
or any successor statute thereof.
"Guarantor" has the meaning ascribed in the forepart of this
Agreement.
"Guaranteed Obligations" shall have the meaning set forth in
Section 7.
"Indebtedness" shall mean as to any Person (i) all
indebtedness (including principal, interest, fees and charges) of such Person
(x) evidenced by any notes, bonds, debentures or similar instruments made or
issued by such Person, (y) for borrowed money or (z) for the deferred purchase
price of property or services, (ii) the face amount of all letters of credit
issued for the account of such Person, (iii) all liabilities secured by any lien
on any property owned by such Person, whether or not such liabilities have been
assumed by such Person (provided, however, if such liability is non-recourse to
such Person, the amount of the Indebtedness attributed thereto shall not exceed
the greater of the fair market value of such property or the book value of such
property), (iv) the aggregate amount required to be capitalized in accordance
with GAAP under leases under which such Person is the lessee and (v) all
guarantees or other contingent obligations of such Person as to any of the
foregoing..
"Interest Rate" shall have the meaning set forth in Section
2.5 (a).
"Lender" has the meaning attributed to it in the forepart of
this Agreement.
"Lien" shall mean any mortgage, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or other),
preference, priority or other security agreement of any kind or nature
whatsoever (including, without limitation, any conditional sale or other title
retention agreement, any financing or similar statement or notice filed under
any recording or notice statute, and any lease having substantially the same
effect as any of the foregoing).
"Loan" means the Loan made by the Lender to the Borrower
pursuant to Section 2.1.
"Material Adverse Effect" shall mean (a) any material adverse
effect on the condition (financial or otherwise), business, operations, assets,
revenues, properties or prospects of the Borrower, or (b) any material adverse
effect on the ability of the Borrower to perform any of its obligations under
any of the Operative Agreements.
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"Note" means the Promissory Note of the Borrower issued
pursuant to Section 2.2, in the form attached as Exhibit 1 hereto and made a
part hereto.
"Office" shall have the meaning set forth in the forepart of
this Agreement.
"Operative Agreements" means the Note, the Pledge Agreement
dated as of this date executed among Gary D. Morgan, the Lender and GNB Bank
Panama S.A. and this Agreement and any supporting or other agreements required
hereby to be entered into in connection with the transactions contemplated by
this Agreement.
"Person" means any natural person, corporation, limited
liability company, general partnership, limited partnership, limited liability
partnership, proprietorship, joint venture, other business organization, trust,
union, association or governmental or regulatory authority.
"Qualified Private Placement" means a private placement in the
amount of not less than $15,000,000 to Persons unrelated to the Lender of
Qualifying Shares.
"Qualifying Shares" shall mean shares of common stock or any
other class of equity securities with a preference (as to liquidation, dividends
or otherwise) to the common stock of the Borrower that is convertible into
common stock, issued in a Qualifying Private Placement, having the rights set
forth in the certificate of incorporation of the Borrower.
"Repayment Date" shall have the meaning set forth in Section
2.8.
"Securities Act" shall mean the Securities Act of 1933, as
amended, or any successor statute thereof.
(b) Unless the context of this Agreement otherwise requires,
(i) words of any gender include each other gender; (ii) words using the singular
or plural number also include the plural or singular number, respectively; (iii)
the terms "hereof," "herein," "hereby" and derivative or similar words refer to
this entire Agreement; (iv) the terms "Article" or "Section" refer to the
specified Article or Section of this Agreement; and (v) the phrases "ordinary
course of business" and "ordinary course of business consistent with past
practice" refer to the business and practice of the Borrower.
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ARTICLE II
THE LOAN
2.1 The Loan.
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Lender shall make a Loan to the Borrower in the principal
amount of US$4,000,000 subject to and upon the following terms and conditions:
(i)US$2,000,000 on the date hereof (the "First Disbursement"); (ii) US$500,000
on October 13, 2000 (the "Second Disbursement"); (iii) US$500,000 on October 30,
2000 (the "Third Disbursement") and (iv) US$1,000,000 on November 30, 2000 (the
"Fourth Disbursement"). The Second, Third and Fourth Disbursement shall be
disburse only if Lender, at its sole discretion, decides that Borrower needs
such monies for its capital expenditures.
2.2 Note.
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The Borrower's obligations to pay the principal of, and
interest on, the Loan made by the Lender are evidenced by the Note to be duly
executed and delivered by the Borrower, substantially in the form of Exhibit 1,
and delivered to the Lender.
2.3 Method, Place and date of Payment. Except as otherwise
specifically provided herein, all payments under this Agreement or the Note
shall be made to the payee not later than 12:00 Noon (New York time) on the
Repayment Date or on the date when due, in accordance with the terms of this
Agreement and shall be made in lawful money of the United States of America in
New York Clearing House funds, at the Office or such other place as may be
designated by the Lender in a written notice given to the Borrower. Whenever any
payment to be made hereunder or under the Note shall be stated to be pay on a
day which is not a Business Day, the due date thereof shall be extended to the
next succeeding Business Day.
2.4 Prepayment. The Note may not be prepaid without the
express written consent of the Lender.
2.5 Interest
(a) The Borrower shall pay interest in respect of the unpaid
principal amount of the Loan from the date hereof until the Repayment Date
(whether by acceleration or otherwise) at a rate per annum which shall be equal
to Base Rate in effect from time to time plus 1% (the "Interest Rate").
(b) If principal or interest on the Loan is not paid when due,
thereafter the Borrower shall pay interest in respect of the unpaid principal
amount of the Loan at a rate per annum equal to 6% in excess of the Interest
Rate. Notwithstanding anything contained herein to the contrary, an amount equal
to the interest due on the outstanding balance of the Loan shall be maintained
by the Borrower in its account at a bank, within or without the United States,
designated by the Lender. The Borrower may not use any of the funds in such
accounts or permit a Lien thereon without the consent of the Lender. Borrower
specifically grants to the Lender the
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authority and right to take amounts when due for interest hereunder from such
account and Borrower shall sign such authorizations or other documentation which
said bank may require for the Lender to take such actions.
(c) Accrued (and theretofore unpaid) interest in respect of
the Loan shall be payable (i) monthly in arrears, commencing on October 30,
2000; or (ii) on the occurrence of an Event of Default, on demand.
2.6 Net Payments. All payments made by the Borrower hereunder
or under the Note will be made without setoff, counterclaim or other defense.
All such payments will be made free and clear of, and without deduction or
withholding for, any present or future taxes, levies, imposts, duties, fees,
assessments or other charges of whatever nature now or hereafter imposed by any
jurisdiction or by any political subdivision or taxing authority thereof or
therein.
2.7 Compensation. The Borrower shall compensate the Lender for
all reasonable losses, expenses and liabilities (including, without limitation,
any loss, expense or liability incurred by reason of the liquidation or
re-employment of deposits or other funds required by the Lender to fund the
Loan) which the Lender may sustain as a consequence of any default of the
Borrower of its obligation under this Agreement or the Note, including but not
limited to the repayment of the Loan.
2.8 Repayment. The Loan and the Interest shall be pay in full
on the Repayment Date which shall occur on the earliest of (i) six months from
the date hereof; or (ii) the Borrower receives gross proceeds of US$15,000,000
from a Qualifying Private Placement.
ARTICLE III
EVENTS OF DEFAULT
It shall be an Event of Default if any of the conditions or
events described in Sections 3.1 through 3.7 ("Events of Default") shall occur
and be continuing:
3.1 Failure To Make Payments When Due. The Borrower shall (i)
default in the payment when due of the principal amount or the interest on the
Loan or (ii) default, and such default shall continue unremedied for two or more
Business Days, in the payment when due of any interest on the Loan or the Note
or any other amounts owed by Borrower hereunder or under the Note;
3.2 Breach of Agreements. Failure of the Borrower to perform
or comply with any of its obligations contained in this Agreement;
3.3 Representations, etc. Any representation, warranty,
covenant or statement made by or on behalf of the Borrower in this Agreement or
in the Note or in any certificate delivered pursuant hereto or thereto shall
prove to be untrue in any material respect on the date as of which made or
deemed made;
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3.4 Involuntary Bankruptcy. Appointment of Receiver, Etc. (i)
A court shall enter a decree or order for relief in respect of the Borrower or
the Guarantors in an involuntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, which decree or
order is not stayed; or any other similar relief shall be granted and remain
unstayed under any applicable federal or state law; or (ii) an involuntary case
is commenced against the Borrower or the Guarantors under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect; or a
decree or order of a court having jurisdiction in the premises for the
appointment of a receiver, liquidator, sequestrator, trustee, custodian or other
officer having similar powers over the Borrower, the Guarantors or over all or a
substantial part of any of their assets and properties, shall have been entered;
or an interim receiver, trustee or other custodian of the Borrower, the
Guarantors for all or a substantial part of their assets and properties is
involuntarily appointed; or a warrant of attachment, execution or similar
process is issued against any substantial part of the assets and properties of
the Borrower or the Guarantors and the continuance of any such events in this
clause (ii) for thirty (30) days unless dismissed, bonded, stayed, vacated or
discharged; or
3.5 Voluntary Bankruptcy; Appointment of Receiver, Etc. The
Borrower or the Guarantors shall commence a voluntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect, or shall
consent to the entry of an order for relief in an involuntary case, or to the
conversion of an involuntary case to a voluntary case, under any such law, or
shall consent to the appointment of or making possession by a receiver, trustee
or other custodian for all or a possession by a receiver, trustee or other
custodian for all or a substantial part of its assets and properties; the making
by the Borrower or the Guarantors of any assignment for the benefit of
creditors; the admission by the Borrower or the Guarantors in writing of their
inability to pay their debts as such debts become due; or the board of directors
of the Borrower or the Guarantors, when applicable, (or any committee thereof)
adopts any resolution or otherwise authorizes action to approve any of the
foregoing.
3.6 Default Under Other Agreements. If either the Borrower or
any of its subsidiaries shall (i) default in any payment of all or any portion
of any Indebtedness other than the Note or (ii) default in the observance or
performance of any agreement, covenant or condition relating to any Indebtedness
other than the Note, or contained in any instrument or agreement evidencing,
securing or relating thereto and, in the case of clauses (i) and (ii), and such
default shall continue without having been duly cured, waived or consented to,
beyond the period of grace, if any, specified in the agreement or instrument
relating thereto.
3.7 Judgments or Liens. One or more judgments or decrees shall
be entered against the Borrower or any of its subsidiaries involving in the
aggregate for them a liability of the equivalent of US$500,000 or more, and all
such judgments or decrees shall not have been vacated, discharged or stayed or
bounded pending appeal within 30 days after the entry thereof or a Lien is
imposed on the assets or properties of the Borrower in an amount of in excess,
together with other Liens, of US$500,000 exclusive of Liens to equipment
vendors.
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3.8 Change in Condition. Any material adverse change in the
condition (financial or otherwise), operations, assets, liabilities or prospects
of the Borrower or any of its subsidiaries.
3.9 Remedies. Upon the occurrence of any Event of Default
described in this Section 3, the unpaid principal amount of and accrued interest
on the Loan shall automatically become immediately due and payable, without
presentment, demand, protest or other requirements of any kind, all of which are
hereby expressly waived by the Borrower, and the obligations of the Lender
hereunder shall thereupon terminate.
ARTICLE IV
REPRESENTATIONS, WARRANTIES AND AGREEMENTS
In order to induce the Lender to enter into this Agreement and
to make the Loan, the Borrower and the Guarantors, when applicable, make the
following representations, warranties and agreements as of the date hereof,
jointly and severally, which shall survive the execution and delivery of this
Agreement and the Notes and the making of the Loan:
4.1 Legal Status. The Borrower and each of its subsidiaries,
including but not limited to the Guarantors, when applicable, (i) is a duly
organized and validly existing corporation in good standing under the laws of
the jurisdiction of its incorporation, (ii) has the power and authority and
possesses all franchises, permits, authorizations and approvals necessary to
carry on their business as now being conducted and to own its property and
assets, and (iii) has good and marketable title to its assets free and clear of
any Lien, except for Liens that do not cause a Material Adverse Effect in the
condition of the Borrower and its subsidiaries and except as set forth in
filings with the United States Securities and Exchange Commission ("SEC") under
the Securities Act or the Exchange Act ("SEC Filings"). The Borrower and each of
its subsidiaries is in good standing in each jurisdiction where the ownership,
leasing or operation of property or the conduct of its business requires such
qualification.
4.2 Subsidiaries. The only subsidiaries of the Borrower are
set forth in the SEC Filing.
4.3 Power and Authority. (i) The Borrower and the Guarantors,
when applicable, have the power and authority to execute, deliver and perform
the terms and provisions of the Operative Agreements and have taken, as the case
may be, all necessary corporate action to authorize the execution, delivery and
performance by it of this Agreement; (ii) the Borrower and the Guarantors have
duly executed and delivered the Operative Agreements and those Operative
Agreements constitute their legal, valid and binding obligation enforceable in
accordance with its terms, except as such enforcement may be limited by
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization or
other similar laws relating to or limiting creditors' rights generally or by
general equity principles.
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4.4 No Violation. Neither the execution, delivery or
performance by the Borrower and the Guarantors of this Agreement, nor compliance
by them with the terms and provisions thereof, nor the use of the proceeds of
the Loans (i) will contravene any provision of any law, statute, rule or
regulation or any order, writ, injunction or decree of any court or governmental
instrumentality binding on the Borrower or any of its subsidiaries, (ii) will
conflict or be inconsistent with or result in any breach of any of the terms,
covenants, conditions or provisions of, or constitute a default in respect of
the terms of any indenture, mortgage, deed of trust, credit agreement, loan
agreement or any other agreement, contract or instrument to which the Borrower
or any of its subsidiaries is a party or by which its respective properties or
assets is bound or to which it may be subject.
4.5 SEC Filings, Financial Statements. Borrower has filed all
reports required to be filed by it which the SEC since its incorporation
(collectively, the "Borrower SEC Reports"). As of the respective dates they
became effective, the Borrower SEC Reports which were filed pursuant to the
Securities Act, and as of the respective dates of filing of the last applicable
amendment thereto the Borrower SEC Report which were filed pursuant to the
Exhange Act, did not contain any untrue statement of a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The financial
statements of Borrower included in the Borrower SEC Reports complied as to form
in all material respects with the applicable published rules and regulations of
the SEC with respect thereto, were prepared in accordance with generally
accepted accounting principles applied on a consistent basis throughout the
periods involved (except as otherwise noted therein) and fairly present the
consolidated financial position of Borrower and its consolidated subsidiaries as
at the dates thereof and the consolidated results of operations and cash flows
for the periods then ended, except that in the case of the unaudited
consolidated financial statement included in any form 10-Q, the presentation and
disclosure conform with the applicable rules of the Exchange Act and are subject
to year-end adjustments.
4.6 Litigation. Except as set forth in SEC Filings, there is
no claim, counterclaim, action, suit, order, proceeding or investigation pending
or, to the knowledge of the Borrower and the Guarantors, threatened against or
affecting any of them with respect to or affecting the Borrower or any of its
subsidiaries, or their assets, properties or rights, or relating to the
transactions contemplated hereby, before any court, agency, regulatory,
administrative or other governmental body or officer of before any arbitrator.
4.7 Undisclosed Liabilities. Except as set forth in SEC
filings, the Borrower and its subsidiaries have no liabilities or obligations of
any nature (whether accrued, absolute, contingent, un-asserted or otherwise),
including any liabilities or obligations the Borrower and its subsidiaries may
incur for product liability, misrepresentation, fraud or comparable claims
arising out of the conduct of the business of the Borrower and its subsidiaries
prior to the date hereof, except (i) as set forth on the Borrower SEC Reports,
(ii) for purchase contracts and orders for inventory, equipment and supplies in
the ordinary course of business and (iii) for liabilities and obligations
incurred in the ordinary course of business consistent with past practice, and
not in violation of this Agreement.
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4.8 True and Complete Disclosure. All factual information
(taken as a whole) heretofore or contemporaneously furnished by or on behalf of
the Borrower and the Guarantor in writing to the Lender for purposes of or in
connection with this Agreement or any transaction contemplated herein or in any
Operative Agreement is, and all other such factual information (taken as a
whole) hereafter furnished by or on behalf of the Borrower and the Guarantor in
writing to any Lender will be, true and accurate in all material respects on the
date as of which such information is dated or certified and not incomplete by
ommitting to state any fact necessary to make such information (taken as a
whole) not misleading at such time in light of the circumstances under which
such information was provided. There is no fact or circumstance which has, or is
reasonably likely to have, a Material Adverse Effect on the Borrower or taken as
a whole which has not been disclosed herein or in such other documents,
certificates and statements furnished to the Lender for use in connection with
the transactions contemplated hereby.
4.9 Tax Returns and Payments. Except as provided in Schedule
4.6, the Borrower and the Guarantors have filed all tax returns required to be
filed by them and have paid all taxes payable by them which have become due
pursuant to such tax returns and all other taxes and assessments payable by them
which have become due, other than those not yet delinquent and except for those
contested in good faith and for which adequate reserves have been established.
4.10 Capitalization. (a) As of the date hereof, the authorized
capital stock of the Borrower consists of 20,000,000 shares of common stock,
$.001 par value per share, of which 18,136,702 shares are issued and outstanding
and 5,000,000 shares of preferred stock, $.001 par value per share, none of
which is issued and outstanding. All the outstanding shares have been duly and
validly issued, are fully paid and non-assessable.
4.11 Compliance with Laws, etc. The Borrower and all of its
subsidiaries are in compliance in all material respects with all applicable
statutes, regulations and orders of, and all applicable restrictions imposed by,
all governmental bodies in respect of the conduct of its business and the
ownership of its property (including applicable statutes, regulations, orders
and restrictions relating to environmental standards and controls).
4.12 Labor Relations. To the Borrower's knowledge there is (i)
no significant unfair labor practice complaint pending or threatened against
either the Borrower or any of its subsidiaries, or before any governmental body
or agency and no significant grievance or significant arbitration proceeding
arising out of or under any collective bargaining agreement is so pending
against the Borrower or any of its subsidiaries, threatened against the Borrower
or any of its subsidiaries or, (ii) no significant strike, labor dispute,
slowdown or stoppage pending against the Borrower or any of its subsidiaries or,
threatened against the Borrower or any of its subsidiaries, (iii), no union
representation question existing with respect to the employees of the Borrower
or any of its subsidiaries.
4.13 Properties. Except as set forth in the SEC Filings, the
Borrower and the Guarantors have good and marketable title, without regard to
defects of title which do not have a
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Material Adverse Effect, to all properties owned by them, free and clear of all
Liens. With respect to any lease or rental agreement to which the Borrower or
the Guarantors are a party, (i) such lease or rental agreement is in full force
and effect, (ii) the Borrower has complied in all material respects with all of
the terms of such lease or rental agreement.
4.14 Assets other than Real Property. The Borrower and each of
its subsidiaries has good title tom all tangibles assets owned by them reflected
in the Borrower SEC Reports and financial information, free and clear of all
Liens that individually or in the aggregate would not have a Material Adverse
Effect on the Borrower or its subsidiaries. The Borrower and each of its
subsidiaries owns, or leases all tangible personal property currently used in
the conduct of its business as presently conducted. All the intangible personal
property owned by the Borrower and each of its subsidiaries is in all material
respects in good operating condition and repair, ordinary wear and tear
excepted, and all personal property leased by the Borrower and each of its
subsidiaries is in all material respects in the condition required of such
property by the terms of the lease applicable thereto.
4.15 Patents, Licenses, Franchises and Formulas. The Borrower
and the Guarantors own all the patents, trademarks, permits, service marks,
trade names, copyrights, licenses, franchises and formulas, or rights with
respect to the foregoing, and have obtained assignments of all leases and other
rights of whatever nature, necessary for the present conduct of their business,
without any known conflict with the rights of others which, or the failure to
obtain which, as the case may be, would result in a Material Adverse Effect on
the Borrower or the Guarantors.
4.16 Intellectual Property.
(a) the Company owns and possesses all right, title and
interest in and to, or has a valid license to use, all of the Proprietary Rights
(as defined below) used in the operation of its business as presently conducted
and none of such Proprietary Rights have been abandoned;
(b) the Borrower has not received any notice of any reasonable
basis for an allegation of, any infringement or misappropriation by, or conflict
with, any third party with respect to such Proprietary Rights; and
(c) Neither the Borrower nor any of its subsidiaries has
infringed, misappropriated or otherwise violated any material Proprietary Rights
of any third parties, and the Borrower does not have knowledge of any
infringement, misappropriation or conflict which will occur as a result of the
continued operation of the Borrower as presently operated.
As used herein, the term "Proprietary Rights" means all
proprietary information of the Borrower, including all patents, patent
applications, patents rights and inventions, trademarks, service marks, trade
names, copyrights and trade secrets.
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The consummation of the transactions contemplated by this
Agreement will not adversely affect the right of the Borrower to continue to use
the Proprietary Rights of the Borrower.
4.17 Insurance. The Borrower and its subsidiaries presently
maintains and have maintained in effect since their formation all the insurance
policies required by applicable law or reasonably appropriate in connection with
the operation of its business as presently conducted.
4.18 No Misrepresentation. The representations and warranties
contained in this Section 4 and any Exhibits contained attached hereto, do not
contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements and information contained in this
Section 4 and on such Exhibits not misleading.
ARTICLE V
AFFIRMATIVE COVENANTS
The Borrower and the Guarantors covenants and agrees that on
and after the date hereof and until the Note, together with all accrued
interest, fees and all other obligations incurred hereunder and thereunder, are
paid in full:
5.1 Information Covenants. The Borrower will furnish or cause
to be furnished to the Lender:
(a) Promptly, copies of all financial information, proxy
materials and material filings, reports and information which either of
the Borrower shall file or be required to file with any agency,
regulatory authority or instrumentality of the Government.
(b) Other Information. From time to time, such other
information or documents (financial or otherwise) as any Lender may
reasonably request.
5.2 Books, Records and Inspections. The Borrower and each of
its subsidiaries will keep proper books of record and account in which full,
true and correct entries in conformity with generally accepted accounting
principles in the United States consistently applied in the jurisdiction of each
corporation and all requirements of applicable law shall be made of all dealings
and transactions in relation to its business and activities.
5.3 Maintenance of Property, Insurance. The Borrower and each
of its subsidiaries will (i) keep all property useful and necessary in its
business in good working order and condition (ordinary wear and tear excepted),
(ii) maintain with financially sound and reputable insurance companies insurance
on all its property in at least such amounts and against at least such risks as
are customary and in accordance with industry standards for the business in
which it is engaged.
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5.4 Corporate Franchises. The Borrower and each of its
subsidiaries will do or cause to be done, all things reasonably necessary to
preserve and keep in full force and effect its existence and its material
rights, franchises, licenses and other intellectual property.
5.5 Compliance with Statutes, etc. The Borrower and each of
its subsidiaries will comply with all applicable statutes, regulations and
orders of, and all applicable restrictions imposed by, all governmental bodies,
domestic or foreign, in respect of the conduct of its business and the ownership
of its property, except where the failure to so comply would not have a Material
Adverse Effect on the Borrower or any of its subsidiaries.
5.6 Performance of Obligations. The Borrower and each of its
subsidiaries will: (i) perform all of its obligations under (a) this Agreement,
and (b) the terms of each other mortgage, indenture, security agreement, and
other debt instrument by which it is bound, except where the failure to so
perform would not have a Material Adverse Effect on the Borrower or any of its
subsidiaries.
5.7 Taxes. The Borrower and each of its subsidiaries will pay
and discharge or cause to be paid and discharged all applicable federal, state,
local and other material taxes, assessments and governmental charges or levies
imposed upon it or upon its income or profits or upon any of its property, real,
personal or mixed or upon any part thereof, when due, as well as all lawful
claims for labor, materials and supplies which, if unpaid might by law become a
lien upon such property.
5.8 Compliance. The Borrower and each of its subsidiaries will
maintain all material authorizations, qualifications, licenses and permits
necessary for the operation of their respective business and the ownership of
their respective property.
ARTICLE VI
NEGATIVE COVENANTS
The Borrower and the Guarantors, when applicable, covenant and
agree that on and after the date hereof and until the Loan and the Note,
together with interest, fees and all other obligations incurred hereunder and
thereunder, are paid in full:
6.1 Liens. The Borrower and each of its subsidiaries will not,
create, incur, assume or suffer to exist any Lien upon or with respect to any
property or assets (real or personal, tangible or intangible) of each of them,
whether now owned or hereafter acquired.
6.2 Consolidation, Merger, Sale of Assets, etc. The Borrower
and each of its subsidiaries will not wind up, liquidate or dissolve its affairs
or enter into any transaction of merger or consolidation, or convey, sell, lease
or otherwise dispose of (or agree to do any of the foregoing, at any future
time) all or any part of its property or assets, or purchase or otherwise
acquire (in one or a series of related transactions) any part of the property or
assets (other than
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purchases or other acquisitions of inventory, materials and equipment in the
ordinary course of business) of any Person.
6.3 Dividends and Redemptions. (a) The Borrower and each of
its subsidiaries will not declare or pay any dividends, or return any capital,
to its stockholders or authorize or make any other distribution, payment or
delivery of property or cash to its stockholders as such, or redeem, retire,
purchase or otherwise acquire, directly or indirectly, for any consideration,
any shares of any class of its capital stock now or hereafter outstanding (or
any options or warrants issued by the Borrower with respect to its capital
stock), or set aside any funds for any of the foregoing purposes; and (b) the
Borrower will not redeem any common stock of the Borrower.
6.4 Indebtedness. The Borrower will not, and will not permit
any of its subsidiaries to, contract, create, incur, assume or suffer to exist
any Indebtedness, except (i) certain vendor financing as described in the SEC
Filings and (ii) charges payable incurred in the ordinary course of business.
6.5 Advances, Investments and Loans. The Borrower will not,
and will not permit any of its subsidiaries to, lend money or credit or make
advances to any Person, or purchase or acquire any stock, obligations or
securities of, or any other interest in, or make any capital contribution to,
any other Person, except that the following shall be permitted: (i) advances,
investments and loans to wholly-owned subsidiaries of the Borrower; (ii) loans
made in the ordinary course of business to employees; (iii) extensions of credit
made in the ordinary course of business in accordance with customary trade
practices; (iv) capital expenditures and (v) presently outstanding loans and
investments if any, as disclosed in the SEC Filings.
6.6 Transactions with Affiliates. The Borrower will not, and
will not permit any of its subsidiaries to, enter into any transaction or series
of related transactions, whether or not in the ordinary course of business, with
any affiliate other than on terms and conditions substantially as favorable to,
as the case may be, the Borrower or any such subsidiary as would be obtainable
by the Borrower or such Subsidiary at the time in a comparable arm's-length
transaction with a Person other than an affiliate.
6.7 Limitation on Issuance of Common Stock or other
Securities. The Borrower will not, and will not permit any of its subsidiaries
to, issue any common stock or other securities (including by way of sales of
treasury stock) or any options or warrants to purchase, or securities
convertible into, common stock, except for (i) transfers and replacements of
then outstanding shares of common stock, (ii) stock splits, stock dividends and
similar issuances which do not decrease the percentage ownership of the Borrower
in any class of the common stock of the any of the subsidiaries of the Borrower.
6.8 Business. The Borrower will not, and will not permit any
of its subsidiaries to, engage (directly or indirectly) in any business other
than the business in which it is engaged on the date hereof.
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ARTICLE VII
GUARANTY
7.1 The Guarantors, jointly and severally, irrevocably and
unconditionally, guarantee the full and prompt payment when due of the principal
amount of and interest on the Note issued under this Agreement and of all other
obligations and liabilities of the Borrower now existing or hereafter incurred
under, arising out of or in connection with the Operative Agreements and the due
performance and compliance with the terms of the Operative Agreements by the
Borrower ("Guaranteed Obligations"). The Guarantors understand, agree and
confirm that the Lender may enforce this guaranty obligation up to the full
amount of the Guaranteed Obligations against it without proceeding against the
Borrower. The Guarantors irrevocably and unconditionally promise to pay such
Guaranteed Obligations to the Lender, or order, on demand, in lawful money of
the United States of America. The guaranty provided herein shall constitute a
guarantee of payment and not of collection.
7.2 The Guarantors hereby waive notice of acceptance of this
guaranty obligation and notice of any liability to which it may apply, and waive
presentment, demand of payment, protest, notice of dishonor or nonpayment of any
such liability, suit or taking of other action by the Lender against, and any
other notice to, any party liable thereon (including the Guarantors).
7.3 The obligations of the Guarantors under this agreement are
absolute and unconditional and shall remain in full force and effect without
regard to, and shall not be released, suspended, discharged, terminated or
otherwise affected by, any circumstance or occurrence whatsoever.
ARTICLE VIII
MISCELLANEOUS
8.1 Notices. All notices, requests and other communications
hereunder must be in writing and delivered personally against written receipt,
by facsimile transmission with answer back confirmation or mailed by prepaid
first class certified mail (air mail, if faster delivery), return receipt
requested, or mailed by overnight (or in the case of notices being sent or
delivered outside the United States, second day) courier prepaid, to the parties
at the following addresses or facsimile numbers:
If to Borrower, to:
Win-Gate Equity Group Inc.
45 Broadway
New York, New York 10006
Attn: Gary D. Morgan
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Fax: (305) 373-4686
Attn: David W. Sloan
Fax: (212) 969-2900
If to each of the Guarantors, to:
Globaltron Communications Corporation
New World Tower
100 N. Biscayne Blvd., Suite 2500
Miami, Florida,
Attn: Chief Executive Officer
Fax: (305 371-4686
Attn: David W. Sloan
Fax: (212) 969-2900
Gary D. Morgan
c/o Win-Gate Equity Group Inc.
45 Broadway
New York, New York 10006
Fax: (305) 373-4686
If to Lender, to:
Colpafinsa S.A
Calle 50 y Aquilino de la Guardia, Torre Banco Continental, Piso 30
Ciudad de Panama, Panama
Attn: Magda Rodriguez
Fax: (011-507) 215-7560
with a copy to:
Carmelo Verastegui
Fax: (011-507) 215-7560
Attn: David W. Sloan, Esq.
Fax: (212) 969-2900
All such notices, requests and other communications will (i) if delivered
personally to the address as provided in this Section, be deemed given upon
delivery, (ii) if delivered by facsimile transmission to the applicable
facsimile number as provided in this Section, be deemed given upon receipt,
(iii) if delivered by United States mail in the manner described above to the
address as provided in this Section, be deemed given on the earlier of the tenth
Business Day following
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mailing or upon receipt and (iv) if delivered by courier to the address as
provided in this Section, be deemed given on the earlier of the first Business
Day (second Business Day in the case of notices given or sent outside the United
States) following the date sent by such courier or upon receipt (in each case
regardless of whether such notice, request or other communication is received by
any other Person to whom a copy of such notice is to be delivered pursuant to
this Section). Any party from time to time may change its address, facsimile
number or other information for the purpose of notices to that party by giving
notice specifying such change to the other party hereto at least ten (10)
Business Days prior to the effective date of such notice.
8.2 Entire Agreement.
----------------
This Agreement and the Operative Agreements supersede all
prior discussions and agreements between the parties with respect to the subject
matter hereof and thereof and contain the sole and entire agreement between the
parties hereto with respect to the subject matter hereof and thereof.
8.3 Independence of Representations, Warranties and Covenants.
All representations, warranties and covenants hereunder shall be given
independent effect so that if a particular action or condition is not permitted
by any of such covenants, the fact that it would be permitted by an exception
to, or be otherwise within the limitation of, another representation, warranty
or covenant shall not avoid the occurrence of an Event of Default if such action
is taken or condition exists.
8.4 No Third Party Beneficiary. The terms and provisions of
this Agreement are intended solely for the benefit of each party hereto and
their respective successors or permitted assigns, and it is not the intention of
the parties to confer third-party beneficiary rights.
8.5 Assignment; Binding Effect. This Agreement, all the
rights, interest or obligation hereunder may be assigned by the other party with
the prior written consent of the other party. This Agreement is binding upon,
inures to the benefit of and is enforceable by the parties hereto and their
respective permitted successors and assigns.
8.6 Headings. The headings used in this Agreement have been
inserted for convenience of reference only and do not define or limit the
provisions hereof.
8.7 Invalid Provisions. If any provision of this Agreement is
held to be illegal, invalid or unenforceable under any present or future Law,
and if the rights or obligations of any party hereto under this Agreement will
not be materially and adversely affected thereby, (i) such provision will be
fully severable, (ii) this Agreement will be construed and enforced as if such
illegal, invalid or unenforceable provision had never comprised a part hereof,
(iii) the remaining provisions of this Agreement will remain in full force and
effect and will not be affected by the illegal, invalid or unenforceable
provision or by its severance here from and (iv) in lieu of such illegal,
invalid or unenforceable provision, there will be added automatically as a part
of this Agreement a legal, valid and enforceable provision as similar in terms
to such illegal, invalid or unenforceable provision as may be possible.
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8.8 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE DOMESTIC LAWS OF THE STATE OF NEW YORK WITHOUT
GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICT OF LAW PROVISION OR RULE.
8.11 Computations. All computations of interest hereunder
shall be made on the basis of a year of 360 days for the actual number of days
(including the first day but excluding the last day) occurring in the period for
which such interest are payable.
8.12 Counterparts. This Agreement may be executed in any
number of counterparts, each of which will be deemed an original, but all of
which together will constitute one and the same instrument.
8.13 Independent Advice. Lender confirms that he fully
understands his rights and obligations hereunder and that he has had an
opportunity to consult with such independent advisors, including counsel, as he
deemed necessary or appropriate.
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the duly authorized officer of each party hereto as of the date
first above written.
WIN-GATE EQUITY GROUP INC.
By: /s/ Gary D. Morgan
-----------------------
Name: Gary D. Morgan
Title: Chairman
COLPAFINSA S.A
By: /s/ Camilo Verastegui
-----------------------
Name: Camilo Verastegui
Title: General Manager
GLOBALTRON COMMUNICATIONS
CORPORATION
By: /s/ Gary D. Morgan
-----------------------
Name: Gary D. Morgan
Title: Chairman
/s/ Gary D. Morgan
---------------------------
Gary D. Morgan
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