LOAN
AND SECURITY AGREEMENT
THIS
LOAN AND SECURITY AGREEMENT (the
“Agreement”) is made and entered into as of this 27 day of January, 2005, by
and between
eRXSYS, Inc., a Nevada
corporation, with an address at 18021 Sky Park. Circle, Suite G2, Irvine,
California 92614 (“eRXSYS”), on the one hand, and TAPG LLC, a Louisiana limited
liability company, with an address at 5033 Cornstock Circle,
Keller,
Texas 76248 (“TAPG”), on the other.
W
I T N E S S E T H:
WHEREAS, eRXSYS
and TAPG are parties to that certain joint venture agreement dated as of
February 17, 2004 regarding the establishment of pharmacies (the “Venture”)
utilizing the eRXSYS proprietary electronic prescription system in the region
including Alaska, Oregon and Washington (the “Northwest Region”);
and
WHEREAS,
eRXSYS
has requested that TAPG to make advances of cash in monthly installments of
Forty Five Thousand Dollars ($45,000) to eRXSYS up to a maximum of Two Hundred
Seventy Thousand Dollars ($270,000), the proceeds of which are to used
exclusively for the operation of the pharmacies in the Northwest Region (in the
aggregate, the “Northwest Loan”); and
WHEREAS, TAPG, in
the spirit of their collaboration with eRXSYS in the Venture, desires to make
the Northwest Loan; and
WHEREAS,
TAPG and
eRXSYS desire to set forth in this Agreement the terms and conditions for the
Assured Pharmacies Northwest Loan.
NOW,
THEREFORE,
intending to be legally bound, the parties hereto agree as follows:
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1. |
Assured
Pharmacies Northwest Loan and Promissory Note. As |
evidence
of the
Northwest Loan, eRXSYS has delivered a properly executed Promissory Note
(the“Note”) of even date herewith in the form attached hereto as Exhibit 1 to
TAPG in exchange for its receipt of the initial advance of Forty Five Thousand
Dollars ($45,000) and TAPG’s obligation hereunder to deliver an aggregate of Two
Hundred Seventy Thousand Dollars in six monthly advances of Forty Five Thousand
Dollars ($45,000) each, commencing on the anniversary of the
signing.
2.
Loan and Security Provisions. This
section sets forth the loan and security provisions of the Assured Pharmacies
Northwest Loan and the terms of this Section 2 shall be and hereby are
incorporated by reference in the Note.
a) Payments
of Principal. eRXSYS
promises to pay to the order of TAPG, the principal amount of the Assured
Pharmacies Northwest Loan in one lump sum payment on the Maturity
Date.
b) Interest.
The
principal outstanding
on the Assured Pharmacies Northwest Loan shall bear interest at a rate of seven
percent (7%) per annum.
Payments of interest shall be made quarterly in arrears.
c) Term.
The term
of Assured Pharmacies Northwest Loan shall be for twelve (12) months, beginning
on the date hereof. The only payment of principal
shall be due and payable on or before 5:00pm (Seattle Time) on January 14, 2006
(the Maturity Date”).
d) Method
of Payment. All
payments of Principal or Interest made on the Assured Pharmacies
Northwest Loan
shall be made by certified check, wire
transfer or other mutually agreeable form of payment to TAPG its address
specified
herein. If the payment of Principal or Interest shall become due on a
day that is not a business day, such payment shall be made on the next
succeeding business day.
e) Defaults.
The
following events (hereinafter called “Events of Default”) shall constitute
defaults under this Agreement and the Promissory Note.
(i) Nonpayment
Failure
of eRXSYS to make any payment of any
type
under the terms of this Agreement and/or the Note, or of any of the agreements
contemplated hereunder, on the date it is due.
(ii) Performance.
Failure
of eRXSYS to observe or covenant or term of this Agreement and perform any
condition, all related agreements and documents; provided, however, that if such
failure is susceptible to cure an Event of Default shall not occur unless such
failure is not cured within five (5) days after TAGP gives eRXSYS written notice
of same.
(iii)
Representations.
Failure
of any representation or warranty made by the Borrower in connection with the
execution and performance of this Agreement.
(iv)
Financial
difficulties.
Financial difficulties of eRXSYS as
evidenced
by:
(A) any
admission in writing of inability to pay debts as they become due;
or
(B) the
filing of a voluntary or involuntary petition in bankruptcy or under any
chapters of the Bankruptcy Code. or under any federal or state statute providing
for the relief of debtors; or
(C) making an
assignment for the benefit of creditors; or
(D) consenting
to the appointment of a trustee or receiver for all or a major part of any of
its property; or
(E) the entry
of a court order appointing a receiver or a trustee for all or a major part of
its property; or
f) Remedies. If any
one or more Events of Default occur and is continuing, TAPG may with prior
written notice to eRXSYS accelerate all amounts due
under the Assured Pharmacies Northwest Loan such that the same become forthwith
due and payable without presentment, demand, protest, or other
notice of any kind, all of which are hereby expressly waived. In case any such
Events of Default shall occur, TAPG shall be entitled to recover judgment
against eRXSYS for all liabilities of eRXSYS to TAPG hereunder, either before,
or after, or during the pendency of any proceedings for the enforcement,
of any security interests, mortgages, pledges, or guarantees and, in the
event of realization of any funds from any security or guarantee and application
thereof to the payment of the amounts due under the Assured Pharmacies
Northwest Loan, TAPG shall be entitled to enforce payment of and recover
judgment for all amounts remaining due and unpaid on the Assured Pharmacies
Northwest Loan. TAPG may proceed to protect and enforce its rights
by any other
appropriate proceedings, including action for the specific performance of any
covenant or agreement contained in this Agreement and
other written
agreements held by TAPG.
g) Security. As
security for the Assured Pharmacies Northwest Loan,
i) eRXSYS
shall deliver fully executed forms UCC-l granting TAPG a security interest all
of the assets of eRXSYS, exclusive
of inventory and accounts receivables.
ii) eRXSYS
pledges all its interest in the Assured Pharmacies Northwest Joint Venture with
TAPG LLC.
h) Covenants. eRXSYS
shall, as long as any principal amount is outstanding under the Assured
Pharmacies Northwest Loan:
i) Use the
proceeds of the Assured Pharmacies Northwest Loan solely for the operational
expenses of the pharmacies in the Northwest Region, provided, that none of the
proceeds shall be used to purchase any inventory of prescription
drugs.
ii) Provide
TAPG with weekly prescription volume and revenue reports for the Northwest
Region on a store by store basis.
iii) Provide
TAPG with a monthly report of the use of proceeds of the prior month’s advance,
with references tied to eRXSYS standard general ledger accounts,
3. TAPG
Conversion Right. At any
time prior to the Maturity Date, TAPG may at its sole option, elect to convert
the Principal amount due under this Agreement and the Note into shares of common
stock of eRXSYS at a rate of .60 per share. Notwithstanding the foregoing, the
parties hereby acknowledge that TAPG will not elect to convert unless eRXSYS
has: (a) obtained capital from third party sources in an amount sufficient to
meet its cash flow requirements and (b) taken the steps necessary to contain its
operating costs.
4. Representations
of eRXSYS. eRXSYS
hereby represents, covenants and warrants to TAPG that except as contemplated by
this Agreement or any agreement related or disclosed to TAPG in writing or in
any schedule or exhibit hereto:
a) Corporate
Organization. eRXSYS
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Nevada,
b)
Authority
Relative to this Agreement. The
execution, delivery and performance of this
Agreement and the Note by eRXSYS has been duly
authorized and approved by the Board of Directors of eRXSYS. No
further corporate action is necessary on the part of eRXSYS to consummate
this Agreement in accordance with its terms. eRXSYS has full authority to enter
into and perform its obligations under this Agreement, and neither
the execution, delivery nor performance by eRXSYS of this Agreement will (i)
result in a violation or breach of any term or provision nor constitute
a default under the Articles of Incorporation or bylaws of eRXSYS or under any
contract or agreement to which eRXSYS is a party or by which it is
bound, or violate any order, writ, injunction or decree of any
court, administrative agency or governmental body, or (ii) result in a violation
or
breach of any term or provision, or constitute a default or accelerate the
performance required, under any indenture, mortgage, deed of trust or
other contract or agreement to which eRXSYS is a party or by which it or its
properties is bound.
c) Title
to Pledged Assets. eRXSYS
represents that it owns, beneficially and of record, the Pledged Assets, free
and clear of all liens, charges, claims,
pledges and encumbrances of any kind or nature whatsoever;
d) Authorization,
etc. The
execution, delivery and performance of this
Agreement and all other agreements contemplated hereby have been duly and
validly authorized by all necessary action on the
part of eRXSYS. This Agreement is a valid and binding agreement of eRXSYS,
enforceable in
accordance with its terms, except that:
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(i) |
such
enforcement may be subject to bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to
creditors’ rights; and |
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(ii) |
the
remedy of specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of the
court before which any proceeding therefore may be brought. The execution,
delivery and performance of this Agreement and the Note does not violate
or conflict with any statute, code, ordinance, rule, regulation, judgment,
order, writ, decree or injunction applicable to
eRXSYS. |
5. Reaffirmation
of the Venture. The
parties hereto hereby acknowledge and reaffirm that, except as specifically set
forth in Section 6, this Agreement does not modify the terms of the Venture and
that each party shall maintain its obligations thereunder, including, inter
alia, the joint installation of the initial five (5) pharmacies in the Northwest
Region.
6. Miscellaneous.
a) Notices. Any
notices to be given hereunder by any party to the other party may be effected
either by personal delivery in writing or by registered
or certified mail (postage prepaid with return receipt requested), overnight
delivery service or facsimile (with a copy by registered mail). Mailed
notices shall be addressed to the parties at the addresses appearing in the
Note, but each party may change such address by written notice in
accordance with this paragraph. The date upon which any such notice is received
at the designated address shall be deemed to be the date of such
notice.
b) Waivers. Any
delay or forbearance by either party in exercising any right hereunder shall not
be deemed a waiver of that right.
c) Entire
Agreement. This
Agreement, the Note, the UCC financing statements and the attached schedules and
exhibits constitutes the entire
agreement between the parties with respect to the subject matter hereof and
supersedes any and all agreements, either oral or written, between the
parties hereto with respect to the subject matter hereof. Each party to this
Agreement acknowledges that no representations, inducements,
promises,
or agreements, orally or otherwise, have been made by any party, or anyone
acting on behalf of any party, that are not embodied herein, and
that
no other agreement, statement, or promise not contained in this agreement shall
be valid or binding. Any modification of this Agreement will be
effective only if it is in writing signed by the party to be
charged.
d) Severability.
If any
provision of this Agreement shall be held to be invalid or unenforceable in any
jurisdiction in which this Agreement is being
performed, then the meaning of such provision shall be construed so as to render
it enforceable, to the extent feasible; and if no feasible
interpretation would save such provision, it shall be severed from this
Agreement and the remainder shall remain in full force and effect. However,
in the event such provision is considered an essential element of this
Agreement, the parties shall promptly negotiate a replacement
thereof
e) Partial
Invalidity. If any
provision in this Agreement is held by a court of competent jurisdiction to be
invalid, void, or unenforceable, the
remaining provisions will nevertheless continue in full force without being
impaired or invalidated in any way.
f) Governing
Law. This
Agreement will be governed by and construed in accordance with the laws of the
State of Nevada, without regard to conflicts
of law principles.
g) Public
Announcements. The
parties agree to cooperate in the preparation of any
public announcement or communication with any news media in
respect of this Agreement.
h) Binding
Effect. This
Agreement shall be binding upon and shall inure to the benefit of the parties,
their successors, and permitted assigns.
i) Negotiated
Agreement. This Agreement
is the result of negotiations between the parties. Accordingly, no party
to this
Agreement shall be deemed
to be the author of this Agreement and there shall be no presumption that this
Agreement is to be construed for or against any party to this
Agreement on the basis
of the authorship of this Agreement.
j) Headings.
The
headings in this Agreement are inserted merely for the purpose of convenience
and shall not affect
the meaning or interpretation of
this Agreement.
k) Counterparts.
This
Agreement may be executed simultaneously in two or more counterparts, each of
which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
IN
WITNESS WHEREOF, the
parties have caused this Agreement to be executed as of the date first written
above.
eRXSYS,
INC.
By:
/s/ Richard D. Falcone
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Title: |
Chairman
of The Board |
TAPG
LLC
By:
/s/ Thomas M. Aigner
Name:
Thomas M. Aiger
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Title: |
Chief
Executive Officer |