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LOAN AGREEMENT
This Loan Agreement, dated as of June 23, 2000, is between Capita
Research Group, Inc., a Nevada corporation ("Borrower"), and Jim Salim (the
"Lender").
WHEREAS, the Lender has agreed to provide loans to Borrower in the
aggregate amount of up to $600,000;
NOW, THEREFORE, the parties hereto, in consideration of their mutual
covenants and agreements hereinafter set forth and intending to be legally bound
hereby, covenant and agree as follows:
ARTICLE I
THE CREDIT
1.01 Loans. Subject to the terms and conditions hereof, and relying
upon the representations and warranties of Borrower set forth herein, the Lender
agrees to make loans to Borrower (individually, a "Loan" and, collectively, the
"Loans") in the amount of $150,000 each on each of the following dates (each, a
"Loan Disbursement Date"): the date hereof, July 24, 2000, August 28, 2000 and
September 25, 2000 (the latest such date being the "Commitment Expiration
Date"), for an aggregate amount outstanding at any one time not exceeding
$600,000. On the terms and subject to the conditions of this Agreement, Borrower
may prepay the Loans.
1.02 Use of the Loans. Borrower shall use the proceeds of the Loans for
general corporate purposes.
1.03 The Note. The obligation of Borrower to repay the aggregate unpaid
principal amount of the Loans hereunder shall be evidenced by a convertible
promissory note (the "Note") in the form of Exhibit A annexed hereto, payable to
the order of the Lender, duly executed by Borrower and delivered to the Lender
and bearing interest at the rate equal to the prime or reference rate published
from time to time by Citibank, N.A., New York, New York. Interest will be
payable on demand upon 10 days' prior written notice, which notice may not be
delivered prior to six months after the initial Loan Disbursement Date. The
Lender shall, and is hereby authorized by Borrower to, set forth on the schedule
which forms a part of the Note appropriate notations regarding the principal
amount and date of each Loan made hereunder and the other information provided
therein, which notations shall be made contemporaneously and shall be prima
facie evidence of the information set forth therein; provided, however, that the
failure to make any such notations or an error in making any such notations
shall not limit, expand or otherwise affect the obligations of Borrower
hereunder or under the Note. The Note shall cease to permit Loans on and after
the Commitment Expiration Date and, as provided therein, the principal amount of
Loans outstanding shall be paid with respect to each Loan on the date which is
120 days after the applicable Loan Disbursement Date.
1.04 Prepayments. Borrower shall have the right, at its
option, to prepay the Loans (or any portion thereof) in whole at any time or in
part from time to time, without premium or penalty. Borrower shall give notice
(which shall be irrevocable) to the Lender not later than the fifth business day
preceding the date of prepayment, specifying the aggregate principal amount to
be repaid and the prepayment date, whereupon the principal amount specified in
such notice, together with interest on the
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amount of each such prepayment to the date of prepayment, shall become due and
payable on such date of prepayment.
1.05 Payments. All payments and prepayments to be made with respect to
principal of or interest on each of the Loans shall be made to the Lender at his
address set forth below (or at any other payment office in the United States of
America previously designated by the Lender to Borrower in writing), on the day
when due, in lawful money of the United States of America. Notwithstanding the
foregoing, at the option of the Lender exercised in the demand for interest,
interest will be payable in shares of common stock, $.001 par value ("Common
Stock"), of Borrower valued as set forth in the Note. The Lender or any other
holder of the Note is hereby authorized to endorse on the Note an appropriate
notation evidencing each payment made on account of principal; provided,
however, that the failure to make any such notation shall not limit or expand or
otherwise affect the obligations of Borrower under the Note and payments of
principal on the Note shall not be affected by the failure to make any such
notation.
1.06 Right of First Refusal. Reference is made to that certain
Securities Purchase Agreement dated as of January 21, 2000 (the "Securities
Purchase Agreement") by and among the Borrower and the buyers party thereto (the
"Buyers"). The Lender hereby agrees that if any of the Buyers (the "Electing
Buyers") timely exercise their right of first refusal pursuant to Section 4(h)
of the Securities Purchase Agreement, the Lender will permit the Electing Buyers
to participate in the transactions contemplated hereby (including, without
limitation, the making of Loans and the issuance of the Note and the Warrant
Certificate) in such proportion as the Electing Buyers may specify in their
Exercise Notice (as defined in the Securities Purchase Agreement), and will
execute any additional agreements, amendments, side letters, waivers or other
documents as may be reasonably necessary to effectuate the foregoing.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Borrower hereby makes the following representations and warranties
which shall survive the execution and delivery of this Agreement and the Note
hereunder:
2.01 Authority; Binding Agreement. The execution and delivery of this
Agreement and the other agreements contemplated hereby by Borrower, the
performance by Borrower of its covenants and agreements hereunder and thereunder
and the consummation by Borrower of the transactions contemplated hereby and
thereby have been duly authorized by all necessary corporate action. This
Agreement and the other agreements contemplated hereby constitute the valid and
legally binding agreements of Borrower, enforceable in accordance with their
respective terms.
2.02 No Legal Bar; Conflicts. Neither the execution and delivery of
this Agreement nor the other agreements contemplated hereby, nor the
consummation of the transactions contemplated hereby or thereby, violates or
will violate any provision of the Certificate of Incorporation or By-Laws of
Borrower or any law, rule, regulation, writ, judgment, injunction, decree,
determination, award or other order of any court, government, or governmental
agency or instrumentality, domestic or foreign, or violates or will violate, or
conflicts with or will conflict with, or will result in any breach of any of the
terms of, or constitutes or will constitute a default under or results in or
will result in the termination of or the creation or imposition of any lien
pursuant to, the terms of any contract, commitment, agreement, understanding or
arrangement of any kind to which Borrower is a party or by which Borrower or any
of the assets of Borrower is bound. No
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consents, approvals or authorizations of, or filings with, any governmental
authority or any other person or entity are required in connection with the
execution and delivery of this Agreement by Borrower and the consummation of the
transactions contemplated hereby.
2.03 SEC Filings. All filings made by Borrower with the Securities and
Exchange Commission were true and correct in all material respects when made and
did not contain any material misstatement of fact or fail to state any material
fact necessary to make the statements contained therein not misleading in the
light of the circumstances under which they were made.
ARTICLE III
CONDITIONS PRECEDENT
The obligation of the Lender to make any of the Loans under this
Agreement on any Loan Disbursement Date is expressly made subject to and
contingent upon the truthfulness in all material respects of Borrower's
representations and warranties contained in this Agreement. In addition, the
obligation of the Lender to make the initial Loan under this Agreement is
expressly made subject to and contingent upon (i) the execution and delivery by
Borrower to the Lender of the Warrant Certificate substantially in the form of
Exhibit B annexed hereto providing for a Warrant Price (as defined therein) of
$.60 per share and (ii) the execution and delivery of the Registration Rights
Agreement between the Lender and Borrower substantially in the form of Exhibit C
annexed hereto.
ARTICLE IV
EVENTS OF DEFAULT AND REMEDIES
4.01 Events of Default. The entire unpaid principal amount of the Note,
together with all accrued interest thereon, shall, at the option of the Lender
exercised by written notice to Borrower at its principal executive offices,
forthwith become and be due and payable if any one or more of the following
events (herein called "Events of Default") shall have occurred (for any reason
whatsoever and whether such happening shall be voluntary or involuntary or come
about or be effected by operation of law or pursuant to or in compliance with
any judgment, decree or order of any court or any order, rule or regulation of
any administrative or governmental body), which event (in the case of an event
specified in clause (a), (b), (c) or (d) below) shall have continued for a
period of 90 days and which event shall be continuing at the time of such
notice, that is to say:
(a) if default shall be made in the due and punctual payment
of the principal of the Note when and as the same shall become due and
payable, whether at maturity, by acceleration or otherwise;
(b) if default shall be made in the due and punctual payment
of any interest on the Note when and as such interest shall become due
and payable;
(c) if any representation or warranty of Borrower contained in
this Agreement shall have been breached in any material respect;
(d) if Borrower shall default beyond any period of grace
provided with respect thereto in the payment of principal of or
interest on any obligation in respect of borrowed money when due,
whether by acceleration or otherwise; or if
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Borrower shall default in the performance or observance of any other
agreement, term or condition contained in such obligation or in any
agreement under which any such obligation is created, if the effect of
any such default is to cause or permit the holder or holders of such
obligations (or a trustee on behalf of such holder or holders) to cause
such obligation to become due prior to the date of its stated maturity,
unless such holder or holders or trustee shall have waived such default
after its occurrence or unless such holder or holders or trustee shall
have failed to give any notice required to create a default thereunder;
(e) if Borrower shall:
(i) admit in writing its inability to pay its debts
generally as they become due;
(ii) file a petition in bankruptcy or a petition to
take advantage of any insolvency act;
(iii) make an assignment for the benefit of
creditors;
(iv) consent to the appointment of a receiver of
itself or of the whole or any substantial part of its
property;
(v) on a petition in bankruptcy filed against it, be
adjudicated a bankrupt; or
(vi) file a petition or answer seeking reorganization
or arrangement under the Federal bankruptcy laws or any other
applicable law or statute of the United States of America or
any State, district or territory thereof;
(f) if a court of competent jurisdiction shall enter an order,
judgment, or decree appointing, without the consent of Borrower, a
receiver of Borrower or of the whole or any substantial part of its
property, or approving a petition filed against it seeking
reorganization or arrangement of Borrower under the Federal bankruptcy
laws or any other applicable law or statute of the United States of
America or any State, district or territory thereof, and such order,
judgment or decree shall not be vacated or set aside or stayed within
90 days from the date of entry thereof;
(g) if, under the provisions of any other law for the relief
or aid of debtors, any court of competent jurisdiction shall assume
custody or control of Borrower or of the whole or any substantial part
of its property and such custody or control shall not be terminated or
stayed within 90 days from the date of assumption of such custody or
control; or
(h) if final judgment for the payment of money in excess of
$100,000 shall be rendered by a court of record against Borrower and
Borrower shall not discharge the same or provide for its discharge in
accordance with its terms, or shall not procure a stay of execution
thereon within 90 days from the date of entry thereof and within the
period during which execution of such judgment shall have been stayed,
appeal therefrom, and cause the execution thereof to be stayed during
such appeal.
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4.02 Remedies. In case any one or more of the Events of Default
specified in Section 4.01 hereof shall have occurred and be continuing, the
Lender may proceed to protect and enforce his rights either by suit in equity
and/or by action at law, whether for the specific performance of any covenant or
agreement contained in the Note or in this Agreement or in aid of the exercise
of any power granted in the Note or in this Agreement, or the Lender may proceed
to enforce the payment of all sums due upon the Note or to enforce any other
legal or equitable right of the Lender.
4.03 Remedies Cumulative. No remedy herein conferred upon the Lender is
intended to be exclusive of any other remedy and each and every such remedy
shall be cumulative and shall be in addition to every other remedy given
hereunder or under the Note or now or hereafter existing at law or in equity or
by statute or otherwise.
4.04 No Waiver. No course of dealing between Borrower and the Lender or
any delay on the part of the Lender in exercising any rights hereunder or under
the Note shall operate as a waiver of any rights of the Lender.
ARTICLE V
MISCELLANEOUS
5.01 Implied Waivers; Cumulative Remedies; Writing Required. No delay
or failure by the Lender in exercising any right, power or remedy hereunder
shall affect or operate as a waiver thereof, nor shall any single or partial
exercise thereof or any abandonment or discontinuance of steps to enforce such a
right, power or remedy preclude any further exercise thereof or of any other
right, power or remedy. The rights and remedies hereunder of the Lender are
cumulative and not exclusive of any rights or remedies which he would otherwise
have. Any waiver, permit, consent or approval of any kind or character on the
part of the Lender of any breach or default under this Agreement or any such
waiver of any provision or condition of this Agreement must be in writing and
shall be effective only to the extent in such writing specifically set forth.
5.02 Notices. All notices and other communications given to or made
upon any party hereto in connection with this Agreement shall, except as
otherwise expressly herein provided, be in writing (including telecopied,
telexed or telegraphic communication) and mailed, telecopied, telexed,
telegraphed or personally delivered to the respective parties, as follows:
Borrower: Capita Research Group, Inc.
591 Shippack Pike, Suite 300
Blue Bell, Pennsylvania 19422
Attention: President
Telecopy: (215) 619-0775
Lender: Mr. Jim Salim
3510 Turtle Creek Boulevard, #2D
Dallas, Texas 75219
Telecopy: (214) 526-0435
or in accordance with any subsequent written direction from the recipient party
to the sending party. All such notices and other communications shall, except as
otherwise expressly herein provided, be effective upon delivery if delivered by
hand, when deposited in the mail, postage prepaid, in the case of mail, and in
the case of telecopy or telex, when received, or in the case of telegraph, when
delivered to the telegraph company, charges prepaid.
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5.03 Survival. All representations, warranties, covenants and
agreements of Borrower contained herein or made in writing in connection
herewith shall survive the execution and delivery of this Agreement, the making
of the Loans hereunder and the issuance of the Note, and shall continue in full
force and effect so long as the Note is outstanding and until payment in full of
all of Borrower's obligations hereunder or thereunder.
5.04 Governing Law. This Agreement and the Note and the rights and
obligations of the parties hereto and thereto shall be deemed to be contracts
under the laws of the Commonwealth of Pennsylvania and for all purposes shall be
governed by and construed and enforced in accordance with the laws of such
Commonwealth applicable to agreements made and to be entirely performed in such
Commonwealth. Borrower and the Lender agree that any legal suit, action, or
proceeding arising out of this Agreement or the Note may be instituted in any
Pennsylvania state or Federal court sitting in the City of Philadelphia which
has subject matter jurisdiction and waive any objection which either of them may
now or hereafter have to the laying of venue of any such suit, action or
proceeding in such jurisdiction. Borrower and the Lender further agree that
service of process shall be properly served if served personally or by
registered mail return receipt requested at the address set forth in Section
5.02.
5.05 Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law in any jurisdiction, such provision shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating any other provision of this Agreement.
5.06 Headings. Section and subsection headings in this Agreement are
included for convenience of reference only and shall not constitute a part of
this Agreement for any other purpose.
5.07 Counterparts. This Agreement may be executed in any number of
counterparts and by any party hereto on separate counterparts, each of which,
when so executed and delivered, shall be an original, but all such counterparts
shall together constitute one and the same instrument.
5.08 Binding Effect. This Agreement shall be binding upon and inure to
the benefit only of the parties hereto and their respective successors and
assigns (and heirs and representatives in the case of the Lender) and no party
who is not a party hereto shall have any rights hereunder, including any rights
to require Borrower to borrow Loans.
5.09 Fees and Commissions. No brokers, finders or financial advisory
fees or commissions will be payable by either of the parties hereto with respect
to the transactions contemplated by this Agreement.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
BORROWER:
CAPITA RESEARCH GROUP, INC.
By
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Title: President
LENDER:
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Jim Salim
