Exhibit 10.49
REVENUE PARTICIPATION AGREEMENT
This Revenue Participation Agreement (this "Agreement") is executed as of
the 20th day of November, 2003, by Drew Scientific, Inc. ("Company"), a Texas
corporation, for the benefit of Texas Mezzanine Fund Inc. ("Institution").
RECITALS
A. Company and Institution have entered into and executed that certain
Loan Agreement of even date herewith (the "Loan Agreement") pursuant to which
Institution has agreed to make a loan to Company in the stated principal amount
of $558,000.00(the "Loan"), upon the terms and conditions set forth in the Loan
Agreement.
B. As part of the consideration for making the Loan, Company has agreed
that Institution may participate in certain revenues generated by Company's
business operations.
AGREEMENTS
NOW, THEREFORE, for and in consideration of the Loan and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Company and Institution hereby agree as follows:
1. Participation Interest. Company hereby grants and assigns to
Institution one percent (1.0%) of Company's annual revenues in excess of
$11,500,000.00 (the "Participation Interest"), commencing with annual revenues
for Company's fiscal year commencing April 1, 2004.
2. Payment of Participation Interest. During the term of this Agreement,
Company shall pay Institution the Participation Interest within one hundred
fifty (150) days after the end of each fiscal year (commencing with Borrower's
fiscal year ending March 31, 2005).
3. Financial Information regarding Revenues. The term "annual revenues"
shall mean the revenues of the Company as reflected on the year-end audited
financial statements of the Company. Such financial statements shall be in
reasonable detail and prepared in accordance with generally accepted accounting
principles, consistently applied, and certified by the general partner of the
Company. Upon written request of Institution, Company shall provide to
Institution financial statements, balance sheets and such other information as
Institution deems necessary to periodically evaluate the financial condition of
Company. The Company represents, and Institution acknowledges, that Company's
achieving annual revenues in excess of $11,500,000.00 is highly uncertain and
speculative. Company specifically disclaims that it has represented to
Institution, or provided financial or other information to Institution that
reflects the Company will generate revenues in excess of $11,500,000.00 for the
year in which the Loan is made. Further, Company represents that it has not, and
does not, guarantee to Institution that Company shall ever achieve
$11,500,000.00 in annual revenues. Accordingly, Company and Institution
acknowledge and agree that there is a substantial risk that Institution may
never receive the Participation Interest in that Company's achieving annual
revenues in excess of $11,500,000.00 is highly uncertain and speculative.
4. INTEREST. IT IS THE INTENT, UNDERSTANDING AND AGREEMENT OF COMPANY AND
INSTITUTION THAT THE PARTICIPATION INTEREST DOES NOT CONSTITUTE, NOR SHALL IT BE
CONSTRUED AS CONSTITUTING, INTEREST. TO THE GREATEST EXTENT PERMITTED BY LAW,
COMPANY HEREBY WAIVES ANY AND ALL PRESENT AND FUTURE RIGHTS TO ASSERT
REVENUE PARTICIPATION AGREEMENT - Page 1
ANY CLAIM, ACTION OR CAUSE OF ACTION RELATING TO USURY, WHETHER AT LAW, BY
STATUTE OR IN EQUITY, UNDER STATE OR FEDERAL JURISDICTION, ARISING OUT OF,
CONNECTED WITH OR RELATING TO THE PARTICIPATION INTEREST. FURTHER, AND TO THE
GREATEST EXTENT PERMITTED BY LAW, COMPANY HEREBY FULLY AND COMPLETELY RELEASES
AND DISCHARGES INSTITUTION OF AND FROM ANY AND ALL CLAIMS, LIABILITIES, DEMANDS,
DAMAGES, DEBTS, ACTIONS AND CAUSES OF ACTION RELATING TO USURY, WHETHER AT LAW,
BY STATUTE OR IN EQUITY, UNDER STATE OR FEDERAL JURISDICTION, WHICH COMPANY HAS
OR MAY IN THE FUTURE CLAIM TO HAVE AGAINST INSTITUTION, ARISING OUT OF,
CONNECTED WITH OR RELATING TO THE PARTICIPATION INTEREST.
5. Representations and Warranties of Company. Company hereby represents
and warrants to Institution as follows:
a. Company has the full right, power and authority to execute and
deliver this Agreement and to carry out the obligations set forth herein,
and further that no parties not expressly made a party to this Agreement
are required to join in this Agreement on behalf of Company in order to
make this Agreement valid, binding and enforceable against Company;
b. the execution and delivery of this Agreement, the consummation of
the transactions contemplated herein, and the compliance by Company with
this Agreement will not conflict with, violate or result in a breach of or
constitute (with due notice or lapse of time, or both) a default under,
any law, judicial decision, statute, ruling, rule, regulation, permit,
certificate or ordinance in any way applicable to Company;
c. no bankruptcy or insolvency proceedings are pending or
contemplated by, or to the best knowledge of Company, against Company; and
d. all information, reports, papers and data given to Institution by
or on behalf of Company are accurate, complete and correct in all material
respects and do not omit any fact the inclusion of which is necessary to
prevent the facts contained therein from being materially misleading.
6. Relationship of the Parties. No rights or benefits conferred upon
Institution by its acceptance of this Agreement shall constitute or be deemed to
constitute Institution a partner or joint venturer of or with Company.
Consequently, in no event shall Institution be liable for any of the debts,
liabilities or obligations of Company.
7. Further Assurances. Company agrees to execute such further instruments
as may be, in the opinion of Institution, from time to time necessary or
appropriate to fully carry out the purposes hereof and/or to correct any error
that was caused by a unilateral mistake on the part of Institution, mutual
mistake on the part of Institution and Company, clerical mistake, calculation
error, computer malfunction, printing error or similar error. Company further
agrees that Institution shall not be liable for any damages incurred by Company
that are directly or indirectly caused by any such error.
8. Indemnification. Company shall indemnify, protect, defend and hold
harmless Institution from and against any and all claims, demands, causes of
action, losses, damages, liabilities, suits, costs and expenses, including,
without limitation, attorneys' fees and court costs, asserted against or
suffered or incurred by Institution by reason of, arising out of or in
connection with (a) a breach or violation of any representation or warranty of
Company set forth in this Agreement, (b) a misrepresentation or an inaccurate
REVENUE PARTICIPATION AGREEMENT - Page 2
statement of fact made by Company in this Agreement, or (c) a default by Company
in the performance of or failure of Company to perform any of its obligations or
agreements set forth in this Agreement.
9. Controlling Agreement. All agreements between Company and Institution,
whether now existing or hereafter arising and whether written or oral, are
hereby limited so that in no contingency or event whatsoever, shall the interest
contracted for, charged, received, paid or agreed to be paid to Institution
exceed interest computed at the Maximum Rate (as defined below). If, from any
circumstance whatsoever, sums deemed to be interest would otherwise be payable
to Institution in excess of interest computed at the Maximum Rate, then such
sums payable to Institution shall be reduced to interest computed at the Maximum
Rate; and if from any circumstance Institution shall ever receive anything of
value deemed interest by applicable law in excess of interest computed at the
Maximum Rate, an amount equal to any excessive interest shall be applied to the
reduction of the principal balance of the Loan and not to the payment of
interest, or if such excessive interest exceeds the unpaid balance of principal
of the Loan, such excess shall be refunded to the Company or other appropriate
party. All interest paid or agreed to be paid to Institution shall, to the
extent permitted by applicable law, be amortized, prorated, allocated, and
spread throughout the full period until payment in full of the principal
(including the period of any renewal or extension) so that the interest for such
full period shall not exceed interest computed at the Maximum Rate. The term
"Maximum Rate" shall mean the highest lawful rate of interest applicable to the
Loan taking into account whichever of applicable federal law or Texas law
permits the higher rate of interest, and after also taking into consideration
all compensation deemed interest under applicable law.
10. Severability. If any provision of this Agreement is or may be held by
a court of competent jurisdiction to be invalid, void, or unenforceable to any
extent, the validity of the remaining parts, terms or provisions of this
Agreement shall not be affected thereby, and such illegal or invalid part,
terms, or provision shall be deemed not to be part of this Agreement. The
remaining provisions shall nevertheless survive and continue in full force and
effect without being invalidated in any way to the extent the remaining
provisions further accomplish the goals and intents of this Agreement.
11. Modification. No provision of this Agreement may be modified, waived
or terminated except by written instrument executed by the party against whom a
modification, waiver or termination is sought to be enforced.
12. Termination. This Agreement shall terminate upon the maturity date of
the Loan, or the prepayment of the Loan, whichever is earlier, PROVIDED,
however, that in the event any payment(s) due and payable under this Agreement
remain unpaid as of the date of the maturity or earlier prepayment of the Loan,
then the obligation and liability of Company to pay such amounts shall continue
until the amounts due under this Agreement are fully paid and satisfied.
13. Notices. Any notice, request or other communication required or
permitted to be given hereunder shall be in writing and shall be deemed to have
been given and received when deposited in a post office or official depository
of the United States Postal Service, postage prepaid, certified or registered
mail, return receipt requested, addressed to the respective parties as follows:
If to the Company: Drew Scientific, Inc.
4230 Shilling Way
Dallas, Texas 75237
Attn: Keith Drew
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If to Institution: Texas Mezzanine Fund Inc.
351 West Jefferson Blvd., Suite 800
Dallas, Texas 75208
Attn: Theresa Lee
Each of the parties hereto shall be entitled to specify a different address by
giving written notice to the other party hereto in accordance with this section.
13. Governing Law and Venue. This Agreement shall be governed by and
construed accordance with the laws of the state of Texas and the laws of the
United States pertaining to transactions in Texas. Venue in any action arising
out of this Agreement shall lie in Dallas County, Texas.
14. Entire Agreement. This Agreement embodies and constitutes the final
understanding and agreement between the parties hereto with respect to the
transaction contemplated in this Agreement, and may not be contradicted by
evidence of prior, contemporaneous or subsequent agreements, understandings,
representation and statements, oral or written. There are no unwritten oral
agreements between the parties hereto.
COMPANY:
DREW SCIENTIFIC, INC.,
a Texas corporation
By: /s/ Keith Drew
-------------------------
Name: Keith Drew
Title: President
INSTITUTION:
TEXAS MEZZANINE FUND INC.,
a Texas corporation
By: /s/ Theresa Lee
-------------------------
Name: Theresa Lee
Title: Vice-President
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