EXHIBIT 10.3
TERM LOAN AND SECURITY AGREEMENT
TERM LOAN AND SECURITY AGREEMENT dated as of November 25, 2003, between
ATLAS TECHNOLOGIES, INC., a corporation organized and existing under the laws of
the State of Michigan having its principal office at ▇▇▇ ▇. ▇▇▇▇▇ ▇▇. ▇▇▇▇▇▇, ▇▇
▇▇▇▇▇ ("Customer"), and ▇▇▇▇▇▇▇ ▇▇▇▇▇ BUSINESS FINANCIAL SERVICES INC., a
corporation organized and existing under the laws of the State of Delaware
having its principal office at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
("MLBFS").
In consideration of the mutual covenants of the parties hereto, Customer
and MLBFS hereby agree as follows:
ARTICLE I. DEFINITIONS
1.1 Specific Terms. In addition to terms defined elsewhere in this Loan
Agreement, when used herein the following terms shall have the following
meanings:
"Bankruptcy Event" shall mean any of the following: (i) a proceeding under
any bankruptcy, reorganization, arrangement, insolvency, readjustment of debt,
liquidation, winding up or receivership law or statute shall be commenced, filed
or consented to by any Credit Party; or (ii) any such proceeding shall be filed
against any Credit Party and shall not be dismissed or withdrawn within sixty
(60) days after filing; or (iii) any Credit Party shall make a general
assignment for the benefit of creditors; or (iv) any Credit Party shall
generally fail to pay or admit in writing its inability to pay its debts as they
become due; or (v) any Credit Party shall be adjudicated a bankrupt or
insolvent; or (vi) any Credit Party shall take advantage of any other law or
procedure for the relief of debtors or shall take any action for the purpose of
or with a view towards effecting any of the foregoing; or (vii) a receiver,
trustee, custodian, fiscal agent or similar official for any Credit Party or for
any substantial part of any of their respective property or assets shall be
sought by such Credit Party or appointed.
"Business Day" shall mean any day other than a Saturday, Sunday, federal
holiday or other day on which the New York Stock Exchange is regularly closed.
"Business Guarantor" shall mean every Guarantor that is not a natural person.
"Certificate of Compliance" shall mean, as applicable, that duly executed
certificate, substantially the same form as Exhibit B attached hereto to the
extent such certificate shall be applicable, of the president, chief financial
officer or chief executive officer of Customer, certifying as to the matters set
forth in such certificate.
"Closing Date" shall mean the date upon which all conditions precedent to
MLBFS' obligation to make the Loan shall have been met to the satisfaction of
MLBFS.
"Collateral" shall mean the WCMA Account, all Accounts, Chattel Paper,
Contract Rights, Inventory, Equipment, Fixtures, General Intangibles, Deposit
Accounts, Documents, Instruments, Investment Property, Financial Assets, and
Letter-of-Credit Rights of Customer, howsoever arising, whether now owned or
existing or hereafter acquired or arising, and wherever located; together with
all parts thereof (including spare parts), all accessories and accessions
thereto, all books and records (including computer records) directly related
thereto, all proceeds thereof (including, without limitation, proceeds in the
form of Accounts, insurance proceeds and all rights to payment and performance
under that certain Letter of Credit Number LC322190300791 issued by HSBC), and
the additional collateral described in Section 3.6 (b) hereof.
"Commitment Expiration Date" shall mean December 15, 2003.
"Commitment Fee" shall mean a fee of $5,000.00 due to MLBFS in connection
with this Loan Agreement.
"Credit Party" and "Credit Parties" shall mean, individually or
collectively, the Customer, all Guarantors, and all Pledgors.
"Default" shall mean either an "Event of Default" as defined in Section 3.5
hereof, or an event which with the giving of notice, passage of time, or both,
would constitute such an Event of Default.
"Default Rate" shall mean an annual interest rate equal to the lesser of:
(i) two percentage points over the Interest Rate; or (ii) the highest interest
rate allowed by applicable law. "Event of Loss" shall mean the occurrence
whereby any tangible Collateral is damaged beyond repair, lost, totally
destroyed or confiscated.
"GAAP" shall mean the generally accepted accounting principles in effect in
the United States of America from time to time. "General Funding Conditions"
shall mean each of the following conditions to each loan or advance by MLBFS
hereunder: (i) no Default or Event of Default shall have occurred and be
continuing or would result from the making of any such loan or advance hereunder
by MLBFS; (ii) there shall not have occurred and be continuing any material
adverse change in the business or financial condition of any Credit Party; (iii)
all representations and warranties of all of the Credit Parties herein or in any
of the Loan Documents shall then be true and correct in all material respects;
(iv) MLBFS shall have received this Loan Agreement and all of the other Loan
Documents (including, without limitation, each of the Loan Documents described
in the definition of "Real Property Funding Condition"), duly executed and filed
or recorded where applicable, all of which shall be in form and substance
satisfactory to MLBFS; (v) the Commitment Fee shall have been paid in full; (vi)
MLBFS shall have received, as and to the extent applicable, copies of invoices,
bills of sale, loan payoff letters and/or other evidence satisfactory to it that
the proceeds of the Loan will satisfy the Loan Purpose; (vii) MLBFS shall have
received evidence satisfactory to it as to the ownership of the Collateral and
the perfection and priority of MLBFS' liens and security interests thereon, as
well as the ownership of and the perfection and priority of MLBFS' liens and
security interests on any other collateral for the Obligations furnished
pursuant to any of the Loan Documents; (viii) MLBFS shall have received evidence
satisfactory to it of the insurance required hereby or by any of the Loan
Documents; and (ix) any additional conditions specified in the "Term Loan
Approval" letter executed by MLBFS with respect to the transactions contemplated
hereby shall have been met to the satisfaction of MLBFS.
"Guarantor" shall mean each Person obligated under a guaranty, endorsement
or other undertaking by which such Person guarantees or assumes responsibility
in any capacity for the payment or performance of any of the Obligations.
"Loan" shall mean a thirty-six-month term installment loan in an amount
equal to the lesser of: (A) the aggregate amount which Customer shall request be
advanced by MLBFS on account of the Loan Purpose, or (B) $500,000.00.
"Loan Agreement" shall mean this agreement as titled in the initial
paragraph hereof and shall specifically include that number to be designated by
MLBFS as the Customer's "Loan No" in reference to this Loan Agreement, and which
number and designation MLBFS shall provide to Customer upon the initial invoice
generated by MLBFS. At all times thereafter, such numerical loan number shall be
included and be deemed to be a part of the title of this Loan Agreement.
"Loan Documents" shall mean this Loan Agreement, any indenture, any
guaranty of any of the Obligations and all other security and other instruments,
assignments, certificates, certifications and agreements of any kind relating to
any of the Obligations, whether obtained, authorized, authenticated, executed,
sent or received concurrently with or subsequent to this Loan Agreement, or
which evidence the creation, guaranty or collateralization of any of the
Obligations or the granting or perfection of liens or security interests upon
any Collateral or any other collateral for the Obligations, including any
modifications, amendments or restatements of the foregoing.
"Loan Purpose" shall mean the purpose for which the proceeds of the Loan
will be used; to wit: to refinance existing, unencumbered equipment.
"Location of Tangible Collateral" shall mean the address of Customer set
forth at the beginning of this Loan Agreement, together with any other address
or addresses set forth on an exhibit hereto as being a Location of Tangible
Collateral.
"Obligations" shall mean all liabilities, indebtedness and obligations of
Customer to MLBFS, howsoever created, arising or evidenced, whether now existing
or hereafter arising, whether direct or indirect, absolute or contingent, due or
to become due, primary or secondary or joint or several, and, without limiting
the generality of the foregoing, shall include principal, accrued interest
(including without limitation interest accruing after the filing of any petition
in bankruptcy), all advances made by or on behalf of MLBFS under the Loan
Documents, collection and other costs and expenses incurred by or on behalf of
MLBFS, whether incurred before or after judgment, and all present and future
liabilities, indebtedness and obligations of Customer under the Note and the
Loan Documents, under that certain Term Loan and Security Agreement dated
November 25, 2003, and under that certain WCMA Loan and Security Agreement No.
885-07D32.
"Permitted Liens" shall mean with respect to the Collateral: (i) liens for
current taxes not yet due and payable, other non-consensual liens arising in the
ordinary course of business for sums not due, and, if MLBFS' rights to and
interest in the Collateral are not materially and adversely affected thereby,
any such liens for taxes or other non-consensual liens arising in the ordinary
course of business being contested in good faith by appropriate proceedings;
(ii) liens in favor of MLBFS; (iii) liens which will be discharged with the
proceeds of the Loan; and (iv) any other liens expressly permitted in writing by
MLBFS.
"Person" shall mean any natural person and any corporation, partnership
(general, limited or otherwise), limited liability company, trust, association,
joint venture, governmental body or agency or other entity having legal status
of any kind.
"Pledgor" shall mean each Person who at any time provides collateral, or
otherwise now or hereinafter agrees to grants MLBFS a security interest in any
assets as security for Customer's Obligations.
"UCC" shall mean the Uniform Commercial Code of Illinois as in effect in
Illinois from time to time.
1.2 Other Terms. Except as otherwise defined herein, all terms used in this
Loan Agreement which are defined in the UCC shall have the meanings set forth in
the UCC; and (iii) accounting terms not defined herein shall have the meaning
ascribed to them in GAAP.
1.3 UCC Filing. Customer hereby authorizes MLBFS to file a record or
records (as defined or otherwise specified under the UCC), including, without
limitation, financing statements, in all jurisdictions and with all filing
offices as MLBFS may determine, in its sole discretion, are necessary or
advisable to perfect the security interest granted to MLBFS herein. Such
financing statements may describe the Collateral in the same manner as described
herein or may contain an indication or description of collateral that describes
such property in any other manner as MLBFS may determine, in its sole
discretion, is necessary, advisable or prudent to ensure the perfection of the
security interest in the Collateral granted to the MLBFS herein.
ARTICLE II. THE LOAN
2.1 Commitment. Subject to the terms and conditions hereof, MLBFS hereby
agrees to make the Loan to Customer for the Loan Purpose, and Customer agrees to
borrow all amounts borrowed to satisfy the Loan Purpose from MLBFS. The entire
proceeds of the Loan shall be disbursed on the Closing Date either directly to
the applicable third party or parties on account of the Loan Purpose or to
reimburse Customer for amounts directly expended by it; all as directed by
Customer in a Closing Certificate to be executed by Customer and delivered to
MLBFS prior to the Closing Date.
2.2 Note. The Loan will be evidenced by and repayable in accordance with
that certain Collateral Installment Note made by Customer payable to the order
of MLBFS and issued pursuant to this Loan Agreement (the "Note"). The Note is
hereby incorporated as a part hereof as if fully set forth herein.
2.3 Conditions of MLBFS' Obligation. The Closing Date and MLBFS' obligation
to make the Loan on the Closing Date are subject to the prior fulfillment of
each of the following conditions: (a) MLBFS shall have received a written
request from Customer that the Loan be funded in accordance with the terms
hereof, together with a written direction from Customer as to the method of
payment and payee(s) of the proceeds of the Loan, which request and direction
shall have been received by MLBFS not less than two Business Days prior to any
requested funding date; (b) MLBFS shall have received a copy of invoices, bills
of sale, payoff letters or other applicable evidence reasonably satisfactory to
it that the proceeds of the Loan will satisfy or fulfill the Loan Purpose; (c)
the Commitment Expiration Date shall not then have occurred; and (d) each of the
General Funding Conditions and the Real Property Funding Condition shall then
have been met or satisfied to the reasonable satisfaction of MLBFS.
2.4 Use of Loan Proceeds. The proceeds of the Loan shall be used by
Customer solely for a Loan Purpose, or, with the prior written consent of MLBFS,
for other lawful business purposes of Customer not prohibited hereby. Customer
agrees that under no circumstances will the proceeds of the Loan be used: (a)
for personal, family or household purposes of any person whatsoever, or (b) to
purchase, carry or trade in securities, or repay debt incurred to purchase,
carry or trade in securities, or (c) unless otherwise consented to in writing by
MLBFS, to pay any amount to ▇▇▇▇▇▇▇ ▇▇▇▇▇ and Co., Inc. or any of its
subsidiaries, other ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ Bank USA, ▇▇▇▇▇▇▇ ▇▇▇▇▇ Bank & Trust Co.
or any subsidiary of either of them (including MLBFS and ▇▇▇▇▇▇▇ ▇▇▇▇▇ Credit
Corporation).
2.5 Commitment Fee. In consideration of the agreement by MLBFS to extend
the Loan to Customer in accordance with and subject to the terms hereof,
Customer has paid or shall, on or before the Closing Date pay, the Commitment
Fee to MLBFS. Customer acknowledges and agrees that the Commitment Fee has been
fully earned by MLBFS, and that it will not under any circumstances be
refundable.
ARTICLE III. GENERAL PROVISIONS
3.1 REPRESENTATIONS AND WARRANTIES
Customer represents and warrants to MLBFS that:
(a) Organization and Existence. Customer is a corporation, duly organized
and validly existing in good standing under the laws of the State of Michigan
and is qualified to do business and in good standing in each other state where
the nature of its business or the property owned by it make such qualification
necessary; and, where applicable, each Business Guarantor is duly organized,
validly existing and in good standing under the laws of the state of its
formation and is qualified to do business and in good standing in each other
state where the nature of its business or the property owned by it make such
qualification necessary. (b) Execution, Delivery and Performance. Each Credit
Party has the requisite power and authority to enter into and perform the Loan
Documents. The Customer holds all necessary permits, licenses, certificates of
occupancy and other governmental authorizations and approvals required in order
to own or operate the Customer's business. The execution, delivery and
performance by Customer of this Loan Agreement and by each of the other Credit
Parties of such of the other Loan Documents to which it is a party: (i) have
been duly authorized by all requisite action, (ii) do not and will not violate
or conflict with any law, order or other governmental requirement, or any of the
agreements, instruments or documents which formed or govern any of the Credit
Parties, and (iii) do not and will not breach or violate any of the provisions
of, and will not result in a default by any of the Credit Parties under, any
other agreement, instrument or document to which it is a party or is subject.
(c) Notices and Approvals. Except as may have been given or obtained, no notice
to or consent or approval of any governmental body or authority or other third
party whatsoever (including, without limitation, any other creditor) is required
in connection with the execution, delivery or performance by any Credit Party of
such of this Loan Agreement, the Note and the other Loan Documents to which it
is a party. (d) Enforceability. The Loan Documents to which any Credit Party is
a party are the respective legal, valid and binding obligations of such Credit
Party, enforceable against it or them, as the case may be, in accordance with
their respective terms, except as enforceability may be limited by bankruptcy
and other similar laws affecting the rights of creditors generally or by general
principles of equity. (e) Collateral. Except for priorities afforded to any
Permitted Liens: (i) Customer has good and marketable title to the Collateral,
(ii) none of the Collateral is subject to any lien, encumbrance or security
interest, and (iii) upon the filing of all Uniform Commercial Code financing
statements authenticated or otherwise authorized by Customer with respect to the
Collateral in the appropriate jurisdiction(s) and/or the completion of any other
action required by applicable law to perfect its liens and security interests,
MLBFS will have valid and perfected first liens and security interests upon all
of the Collateral. (f) Financial Statements. Except as expressly set forth in
Customer's or any Business Guarantor's financial statements, all financial
statements of Customer and each Business Guarantor furnished to MLBFS have been
prepared in conformity with generally accepted accounting principles,
consistently applied, are true and correct in all material respects, and fairly
present the financial condition of it as at such dates and the results of its
operations for the periods then ended (subject, in the case of interim unaudited
financial statements, to normal year-end adjustments); and since the most recent
date covered by such financial statements, there has been no material adverse
change in any such financial condition or operation. All financial statements
furnished to MLBFS of any Guarantor other than a Business Guarantor are true and
correct in all material respects and fairly represent such Guarantor's financial
condition as of the date of such financial statements, and since the most recent
date of such financial statements, there has been no material adverse change in
such financial condition. (g) Litigation; Compliance With All Laws. No
litigation, arbitration, administrative or governmental proceedings are pending
or, to the knowledge of Customer, threatened against any Credit Party, which
would, if adversely determined, materially and adversely affect (i) such Credit
Party's interest in the Collateral or the liens and security interests of MLBFS
hereunder or under any of the Loan Documents, or (ii) the financial condition of
such Credit Party or its continued operations. Each Credit Party is in
compliance in all material respects with all laws, regulations, requirements and
approvals applicable to such Credit Party. (h) Tax Returns. All federal, state
and local tax returns, reports and statements required to be filed by any Credit
Party have been filed with the appropriate governmental agencies and all taxes
due and payable by any Credit Party have been timely paid (except to the extent
that any such failure to file or pay will not materially and adversely affect
(i) either the liens and security interests of MLBFS hereunder or under any of
the Loan Documents, (ii) the financial condition of any Credit Party, or (iii)
its continued operations). (i) Collateral Location. All of the tangible
Collateral is located at a Location of Tangible Collateral. (j) No Default. No
"Default" or "Event of Default" (each as defined in this Loan Agreement or any
of the other Loan Documents) has occurred and is continuing. (k) No Outside
Broker. Except for employees of MLBFS, ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated ("MLPF&S") or one of their affiliates, Customer has not in
connection with the transactions contemplated hereby directly or indirectly
engaged or dealt with, and was not introduced or referred to MLBFS by, any
broker or other loan arranger. Each of the foregoing representations and
warranties: (i) has been and will be relied upon as an inducement to MLBFS to
make the Loan, and (ii) is continuing and shall be deemed remade by Customer on
the Closing Date.
3.2 FINANCIAL AND OTHER INFORMATION
(a) Customer shall furnish or cause to be furnished to MLBFS during the
term of this Loan Agreement all of the following: (i) Annual Financial
Statements. Within 120 days after the close of each fiscal year of Customer, a
copy of the annual audited financial statements of Customer, including in
reasonable detail, a balance sheet and statement of retained earnings as at the
close of such fiscal year and statements of profit and loss and cash flow for
such fiscal year; (ii) Certificate of Compliance. Within 45 days after the close
of each fiscal quarter of Customer, a Certificate of Compliance, duly executed
by an authorized officer of Customer, in the form of Exhibit B attached hereto,
or such other form as reasonably required by MLBFS from time to time; (xi)
Annual Collateral Audit. Within 120 days after the close of each fiscal year of
Customer, receipt and satisfactory review of a collateral audit of controls,
accounts receivable and inventory, prepared by a third party firm acceptable to
MLBFS. The costs associated with the audit will be the sole responsibility of
Customer; (iii) Interim Financial Statements. Within 45 days after the close of
each fiscal quarter of Customer, a copy of the interim financial statements of
Customer for such fiscal quarter (including in reasonable detail both a balance
sheet as of the close of such fiscal period, and statement of profit and loss
for the applicable fiscal period); (iv) A/R Agings. Within 15 days after the
close of each fiscal month of Customer, a copy of the Accounts Receivable Aging
of Customer as of the end of such fiscal month; (v) Inventory Reports. Within 15
days after the close of each fiscal month of Customer, a copy of the Inventory
Report (as and to the extent applicable, breaking out Inventory by location, and
separately reporting any work in process) of Customer as of the end of such
fiscal month; (vi) SEC Reports. Customer shall furnish or cause to be furnished
to MLBFS not later than 10 days after the date of filing with the Securities and
Exchange Commission ("SEC"), a copy of each 10-K, 10-Q and other report required
to be filed with the SEC during the term hereof by each Business Guarantor;
(vii) Paid Tax Bills. A copy of each real estate tax ▇▇▇▇ on or issued in
connection with the Real Property, together with evidence of payment of such tax
▇▇▇▇; and (viii) Other Information. Such other information as MLBFS may from
time to time reasonably request relating to Customer, any Credit Party or the
Collateral
(b) General Agreements With Respect to Financial Information. Customer
agrees that except as otherwise specified herein or otherwise agreed to in
writing by MLBFS: (i) all annual financial statements required to be furnished
by Customer to MLBFS hereunder will be prepared by either the current
independent accountants for Customer or other independent accountants reasonably
acceptable to MLBFS, and (ii) all other financial information required to be
furnished by Customer to MLBFS hereunder will be certified as correct in all
material respects by the party who has prepared such information, and, in the
case of internally prepared information with respect to Customer or any Business
Guarantor, certified as correct by their respective chief financial officer.
3.3 OTHER COVENANTS
Customer further agrees during the term of this Loan Agreement that:
(a) Financial Records; Inspection. Each Credit Party (other than any
Individual Guarantor) will: (i) maintain at its principal place of business
complete and accurate books and records, and maintain all of its financial
records in a manner consistent with the financial statements heretofore
furnished to MLBFS, or prepared on such other basis as may be approved in
writing by MLBFS; and (ii) permit MLBFS or its duly authorized representatives,
upon reasonable notice and at reasonable times, to inspect its properties (both
real and personal), operations, books and records.
(b) Taxes. Each Credit Party will pay when due all of its respective taxes,
assessments and other governmental charges, howsoever designated, and all other
liabilities and obligations, except to the extent that any such failure to file
or pay will not materially and adversely affect either the liens and security
interests of MLBFS hereunder or under any of the Loan Documents, the financial
condition of any Credit Party or its continued operations.
(c) Compliance With Laws and Agreements. No Credit Party will violate (i)
any law, regulation or other governmental requirement, any judgment or order of
any court or governmental agency or authority; (ii) any agreement, instrument or
document which is material to its operations or to the operation or use of any
Collateral, in each case as contemplated by the Loan Documents; or (iii) any
agreement, instrument or document to which it is a party or by which it is
bound, if any such violation will materially and adversely affect either the
liens and security interests of MLBFS hereunder or under any of the Loan
Documents , the financial condition of any Credit Party, or its continued
operations.
(d) No Use of ▇▇▇▇▇▇▇ ▇▇▇▇▇ Name. No Credit Party will directly or
indirectly publish, disclose or otherwise use in any advertising or promotional
material, or press release or interview, the name, logo or any trademark of
MLBFS, MLPF&S, ▇▇▇▇▇▇▇ ▇▇▇▇▇ and Co., Incorporated or any of their affiliates.
(e) Notification By Customer. Customer shall provide MLBFS with prompt
written notification of: (i) any Default; (ii) any material adverse change in
the business, financial condition or operations of any Credit Party; (iii) any
information which indicates that any financial statements of any Credit Party
fail in any material respect to present fairly the financial condition and
results of operations purported to be presented in such statements; (iv) any
threatened or pending litigation involving any Credit Party; (v) any casualty
loss, attachment, lien, judicial process, encumbrance or claim affecting or
involving $25,000 or more of any Collateral; and (vi) any change in Customer's
outside accountants. Each notification by Customer pursuant hereto shall specify
the event or information causing such notification, and, to the extent
applicable, shall specify the steps being taken to rectify or remedy such event
or information.
(f) Entity Organization. Each Credit Party which is an entity will (i)
remain (A) validly existing and in good standing in the state of its
organization and (B) qualified to do business and in good standing in each other
state where the nature of its business or the property owned by it make such
qualification necessary, and (ii) maintain all governmental permits, licenses
and authorizations. Customer shall give MLBFS not less than 30 days prior
written notice of any change in name (including any fictitious name) or chief
executive office, place of business, or as applicable, the principal residence.
(g) Merger, Change in Business. Except upon the prior written consent of
MLBFS, Customer shall not cause or permit any Credit Party to: (i) be a party to
any merger or consolidation with, or purchase or otherwise acquire all or
substantially all of the assets of, or any material stock, partnership, joint
venture or other equity interest in, any Person, or sell, transfer or lease all
or any substantial part of its assets; (ii) engage in any material business
substantially different from its business in effect as of the date of
application by Customer for credit from MLBFS, or cease operating any such
material business; or (iii) cause or permit any other Person to assume or
succeed to any material business or operations of such Credit Party.
(h) Fixed Charge Coverage. Customer's "Fixed Charge Coverage Ratio",
defined and calculated as set forth in Exhibit B attached hereto, shall at all
times exceed 1.50 to 1.
(i) Minimum Tangible Net Worth. As of December 31, 2003, the sum of (x)
Customer's aggregate subordinated debt and (y) Customer's "Tangible Net Worth"
("Minimum Tangible Net Worth") shall exceed $2,400,000.00. As of June 30, 2004,
Customer's Minimum Tangible Net Worth shall not be less than $2,650,000.00.
After June 30, 2004, and as and as of the close of each fiscal year of Customer
thereafter, Customer's Minimum Tangible Net Worth shall not be less than
$250,000 higher than the Minimum Tangible Net Worth of Customer required
hereunder as of the close of the immediately preceding fiscal year of Customer
(so that as of December 31, 2004, such Minimum Tangible Net Worth shall be not
less than $2,900,000.00, as of December 31, 2005, such Minimum Tangible Net
Worth shall be not less than $3,150,000.00, etc.). For the purposes hereof,
subordinated debt shall mean any debt of Obligors for borrowed money which is
subordinated in right of payment and is payable on terms and conditions junior
to MLBFS. The term "Tangible Net Worth" shall mean Obligors net worth as shown
on Obligors' regular combined financial statements prepared in accordance with
GAAP, but excluding an amount equal to: (i) any Intangible Assets, and (ii) any
amounts now or hereafter directly or indirectly owing to Obligors by officers,
shareholders or affiliates of Obligors. "Intangible Assets" shall mean the total
amount of goodwill, patents, trade names, trade or service marks, copyrights,
experimental expense, organization expense, unamortized debt discount and
expense, the excess of cost of shares acquired over book value of related
assets, and such other assets as are properly classified as "intangible assets"
of the Obligors determined in accordance with GAAP.
(j) No Loans/Guarantees To Affiliates. Except upon the prior written
consent of MLBFS, no Credit Party shall directly or indirectly lend any moneys
to, or guaranty the debt of, any affiliated person or entity other than the
existing loans and guarantees existing as of the date hereof that are consented
to by MLBFS and reflected on Exhibit A attached hereto.
(k) No Loans/Transfers Of Assets. Except upon the prior written consent of
MLBFS, Customer shall not directly or indirectly lend any moneys, or transfer
any assets or property, to any unaffiliated person or entity other than arms
length transfers for fair consideration in the ordinary course of business.
(l) Productivity Technologies Corporation Management Fee Forebearance.
Until further notice and only upon the prior written consent of MLBFS, Customer
shall suspend monthly accrual and payment of any management fees to Productivity
Technologies Corporation. (m) No Change In Management. Customer will maintain
experienced and competent professional senior management, including ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇.
(n) Total Liabilities To Tangible Net Worth and Subordinated Debt.
Customer's "Leverage Ratio" shall not at any time exceed 5.75 to 1. As of June
30, 2004, Customer's Leverage Ratio shall not exceed 4.00 to 1. As of December
31, 2004 and anytime thereafter, Customer's Leverage Ratio shall not exceed 3.50
to 1. For purposes hereof, "Leverage Ratio" shall mean the ratio of (i)
Customer's total liabilities less any subordinated debt of Customer, to (ii) the
sum of Customer's Tangible Net Worth plus any subordinated debt of Customer. The
term "Tangible Net Worth" shall mean Customer's net worth as shown on Customer's
regular financial statements prepared in accordance with GAAP, but excluding an
amount equal to: (i) any Intangible Assets, and (ii) any amounts now or
hereafter directly or indirectly owing to Customer by officers, shareholders or
affiliates of Customer. "Intangible Assets" shall mean the total amount of
goodwill, patents, trade names, trade or service marks, copyrights, experimental
expense, organization expense, unamortized debt discount and expense, the excess
of cost of shares acquired over book value of related assets, and such other
assets as are properly classified as "intangible assets" of the Customer
determined in accordance with GAAP. Subordinated debt shall mean any debt of
Customer for borrowed money which is subordinated in right of payment and is
payable on terms and conditions junior to MLBFS, and in a form and manner
acceptable to MLBFS.
(o) Borrowed Debt. Except upon the prior written consent of MLBFS, no
Credit Party shall directly or indirectly incur or permit to exist any debt of
any Credit Party for borrowed money or the lease under a capital lease or
deferred purchase price of real or personal property other than: (i) debt to
MLBFS and (ii) debt existing as of the date hereof that are consented to by
MLBFS and reflected on Exhibit A attached hereto.
(p) Distributions to Shareholders. Except upon the prior written consent of
MLBFS, Customer shall not in any fiscal year directly or indirectly pay any
dividends or make any other distributions on account of its stock to its
shareholders.
3.4 COLLATERAL
(a) Pledge of Collateral. To secure payment and performance of the
Obligations, Customer hereby pledges, assigns, transfers and sets over to MLBFS,
and grants to MLBFS first liens and security interests in and upon all of the
Collateral, subject only to priorities afforded to Permitted Liens.
(b) Liens. Except upon the prior written consent of MLBFS, Customer shall
not create or permit to exist any lien, encumbrance or security interest upon or
with respect to any Collateral now owned or hereafter acquired other than
Permitted Liens.
(c) Performance of Obligations. Customer shall perform all of its
obligations owing on account of or with respect to the Collateral; it being
understood that nothing herein, and no action or inaction by MLBFS, under this
Loan Agreement or otherwise, shall be deemed an assumption by MLBFS of any of
Customer's said obligations.
(d) Sales and Collections. Customer shall not sell, transfer or otherwise
dispose of any Collateral, except that so long as no Event of Default shall have
occurred and be continuing, Customer may in the ordinary course of its business:
(i) sell any Inventory normally held by Customer for sale, (ii) use or consume
any materials and supplies normally held by Customer for use or consumption, and
(iii) collect all of its Accounts.
(e) Account Schedules. Upon the request of MLBFS, which may be made from
time to time, Customer shall deliver to MLBFS, in addition to the other
information required hereunder, a schedule identifying, for each Account and all
Chattel Paper subject to MLBFS' security interests hereunder, each account
debtor by name and address and amount, invoice or contract number and date of
each invoice or contract. Customer shall furnish to MLBFS such additional
information with respect to the Collateral, and amounts received by Customer as
proceeds of any of the Collateral, as MLBFS may from time to time reasonably
request.
(f) Alterations and Maintenance. Except upon the prior written consent of
MLBFS, Customer shall not make or permit any material alterations to any
tangible Collateral which might materially reduce or impair its market value or
utility. Customer shall at all times (i) keep the tangible Collateral in good
condition and repair, reasonable wear and tear excepted, (ii) protect the
Collateral against loss, damage or destruction and (iii) pay or cause to be paid
all obligations arising from the repair and maintenance of such Collateral, as
well as all obligations with respect to any Location of Tangible Collateral
(e.g., all obligations under any lease, mortgage or bailment agreement), except
for any such obligations being contested by Customer in good faith by
appropriate proceedings.
(g) Location. Except for movements required in the ordinary course of
Customer's business, Customer shall give MLBFS 30 days' prior written notice of
the placing at or movement of any tangible Collateral to any location other than
a Location of Tangible Collateral. In no event shall Customer cause or permit
any material tangible Collateral to be removed from the United States without
the express prior written consent of MLBFS. Customer will keep its books and
records at its principal office address specified in the first paragraph of this
Loan Agreement. Customer will not change the address where books and records are
kept, or change its name or taxpayer identification number. Customer will place
a legend acceptable to MLBFS on all Chattel Paper that is Collateral in the
possession or control of Customer from time to time indicating that MLBFS has a
security interest therein.
(h) Insurance. Customer shall insure all of the tangible Collateral under a
policy or policies of physical damage insurance for the full replacement value
thereof against such perils as MLBFS shall reasonably require and also providing
that losses will be payable to MLBFS as its interests may appear pursuant to a
lender's or mortgagee's long form loss payable endorsement and containing such
other provisions as may be reasonably required by MLBFS. Customer shall further
provide and maintain a policy or policies of commercial general liability
liability insurance naming MLBFS as an additional party insured. Customer and
each Business Guarantor shall maintain such other insurance as may be required
by law or is customarily maintained by companies in a similar business or
otherwise reasonably required by MLBFS. All such insurance policies shall
provide that MLBFS will receive not less than 10 days prior written notice of
any cancellation, and shall otherwise be in form and amount and with an insurer
or insurers reasonably acceptable to MLBFS. Customer shall furnish MLBFS with a
copy or certificate of each such policy or policies and, prior to any expiration
or cancellation, each renewal or replacement thereof.
(i) Event of Loss. Customer shall at its expense promptly repair all
repairable damage to any tangible Collateral. In the event that there is an
Event of Loss and the affected Collateral had a value prior to such Event of
Loss of $25,000.00 or more, then, on or before the first to occur of (i) 90 days
after the occurrence of such Event of Loss, or (ii) 10 Business Days after the
date on which either Customer or MLBFS shall receive any proceeds of insurance
on account of such Event of Loss, or any underwriter of insurance on such
Collateral shall advise either Customer or MLBFS that it disclaims liability in
respect of such Event of Loss, Customer shall, at Customer's option, either
replace the Collateral subject to such Event of Loss with comparable Collateral
free of all liens other than Permitted Liens (in which event Customer shall be
entitled to utilize the proceeds of insurance on account of such Event of Loss
for such purpose, and may retain any excess proceeds of such insurance), or
permanently prepay the Obligations by an amount equal to the actual cash value
of such Collateral as determined by either the insurance company's payment (plus
any applicable deductible) or, in absence of insurance company payment, as
reasonably determined by MLBFS; it being further understood that any such
permanent prepayment shall cause an immediate permanent reduction in the Loan in
the amount of such prepayment and shall not reduce the amount of any future
reductions in the Loan that may be required hereunder. Notwithstanding the
foregoing, if at the time of occurrence of such Event of Loss or any time
thereafter prior to replacement or line reduction, as aforesaid, an Event of
Default shall have occurred and be continuing hereunder, then MLBFS may at its
sole option, exercisable at any time while such Event of Default shall be
continuing, require Customer to either replace such Collateral or prepay the
Obligations, as aforesaid.
(j) Notice of Certain Events. Customer shall give MLBFS immediate notice of
any attachment, lien, judicial process, encumbrance or claim affecting or
involving $25,000.00 or more of the Collateral. (k) Indemnification. Customer
shall indemnify, defend and save MLBFS harmless from and against any and all
claims, liabilities, losses, costs and expenses (including, without limitation,
reasonable attorneys' fees and expenses) of any nature whatsoever which may be
asserted against or incurred by MLBFS arising out of or in any manner occasioned
by (i) the ownership, collection, possession, use or operation of any
Collateral, or (ii) any failure by Customer to perform any of its obligations
hereunder; excluding, however, from said indemnity any such claims, liabilities,
etc. arising directly out of the willful wrongful act or active gross negligence
of MLBFS. This indemnity shall survive the expiration or termination of this
Loan Agreement as to all matters arising or accruing prior to such expiration or
termination.
3.5 EVENTS OF DEFAULT
The occurrence of any of the following events shall constitute an "Event of
Default" under this Loan Agreement:
(a) Failure to Pay. Customer shall fail to pay when due any amount owing by
Customer to MLBFS under the Note or this Loan Agreement, or shall fail to pay
when due any other Obligations, and any such failure shall continue for more
than five (5) Business Days after written notice thereof shall have been given
by MLBFS to Customer.
(b) Failure to Perform. Any Credit Party shall default in the performance
or observance of any covenant or agreement on its part to be performed or
observed under this Loan Agreement, the Note or any of the other Loan Documents
(not constituting an Event of Default under any other clause of this Section),
and such default shall continue unremedied for ten (10) Business Days (i) after
written notice thereof shall have been given by MLBFS to Customer, or (ii) from
Customer's receipt of any notice or knowledge of such default from any other
source.
(c) Breach of Warranty. Any representation or warranty made by any Credit
Party contained in this Loan Agreement, the Note or any of the other Loan
Documents shall at any time prove to have been incorrect in any material respect
when made.
(d) Default Under Other ML Agreement. A default or event of default by any
Credit Party shall occur under the terms of any other agreement, instrument or
document with or intended for the benefit of MLBFS, MLPF&S or any of their
affiliates, and any required notice shall have been given and required passage
of time shall have elapsed.
(e) Bankruptcy Event. Any Bankruptcy Event shall occur.
(f) Material Impairment. Any event shall occur which shall reasonably cause
MLBFS to in good faith believe that the prospect of full payment or performance
by the Credit Parties of any of their respective liabilities or obligations
under this Loan Agreement, the Note or any of the other Loan Documents or such
Guarantor is a party has been materially impaired. The existence of such a
material impairment shall be determined in a manner consistent with the intent
of Section 1-208 of the UCC.
(g) Default Under Other Agreements. Any event shall occur which results in
any default of any material agreement involving any Credit Party or any
agreement evidencing any indebtedness of any Credit Party of $100,000.00 or
more.
(h) Collateral Impairment. The loss, theft or destruction of any
Collateral, the occurrence of any material deterioration or impairment of any
Collateral or any material decline or depreciation in the value or market price
thereof (whether actual or reasonably anticipated), which causes any Collateral,
in the sole opinion of MLBFS, to become unsatisfactory as to value or character,
or any levy, attachment, seizure or confiscation of the Collateral which is not
released within ten (10) Business Days.
(i) Contested Obligation. (i) Any of the Loan Documents shall for any
reason cease to be, or are asserted by any Credit Party not to be a legal, valid
and binding obligations of any Credit Party, enforceable in accordance with
their terms; or (ii) the validity, perfection or priority of MLBFS' first lien
and security interest on any of the Collateral is contested by any Person; or
(iii) any Credit Party shall or shall attempt to repudiate, revoke, contest or
dispute, in whole or in part, such Credit Party's obligations under any Loan
Document.
(j) Judgments. A judgment shall be entered against any Credit Party in
excess of $25,000 and the judgment is not paid in full and discharged, or stayed
and bonded to the satisfaction of MLBFS.
(k) Change in Control/Change in Management.(i) Any direct or indirect sale,
conveyance, assignment or other transfer of or grant of a security interest in
any ownership interest of any Credit Party which results, or if any rights
related thereto were exercised would result, in any change in the identity of
the individuals or entities previously in control of any Credit Party; or (ii)
the owner(s) of the controlling equity interest of any Credit Party on the date
hereof shall cease to own and control such Credit Party; or (iii) any Person (or
a replacement who is satisfactory to MLBFS in its sole discretion) named in
Section 3.3 hereof on the date hereof shall for any reason cease to be the chief
executive officer or senior manager of Productivity Technologies Corp.
(l) Withdrawal, Death, etc. The incapacity, death, withdrawal, dissolution,
or the filing for dissolution of: (i) any Credit Party; or (ii) any controlling
shareholder, partner, or member of any Credit Party.
3.6 REMEDIES
(a) Remedies Upon Default. Upon the occurrence and during the continuance
of any Event of Default, MLBFS may at its sole option do any one or more or all
of the following, at such time and in such order as MLBFS may in its sole
discretion choose:
(i) Termination. MLBFS may without notice terminate its obligation to
extend any credit to or for the benefit of Customer (it being understood,
however, that upon the occurrence of any Bankruptcy Event all such
obligations shall automatically terminate without any action on the part of
MLBFS).
(ii) Acceleration. MLBFS may declare the principal of and interest and
any premium on the Note, and all other Obligations to be forthwith due and
payable, whereupon all such amounts shall be immediately due and payable,
without presentment, demand for payment, protest and notice of protest,
notice of dishonor, notice of acceleration, notice of intent to accelerate
or other notice or formality of any kind, all of which are hereby expressly
waived; provided, however, that upon the occurrence of any Bankruptcy Event
all such principal, interest, premium and other Obligations shall
automatically become due and payable without any action on the part of
MLBFS.
(iii) Exercise Other Rights. MLBFS may exercise any or all of the
remedies of a secured party under applicable law and in equity, including,
but not limited to, the UCC, and any or all of its other rights and
remedies under the Loan Documents.
(iv) Possession. MLBFS may require Customer to make the Collateral and
the records pertaining to the Collateral available to MLBFS at a place
designated by MLBFS which is reasonably convenient to Customer, or may take
possession of the Collateral and the records pertaining to the Collateral
without the use of any judicial process and without any prior notice to
Customer.
(v) Sale. MLBFS may sell any or all of the Collateral at public or
private sale upon such terms and conditions as MLBFS may reasonably deem
proper, whether for cash, on credit, or for future delivery, in bulk or in
lots. MLBFS may purchase any Collateral at any such sale free of Customer's
right of redemption, if any, which Customer expressly waives to the extent
not prohibited by applicable law. The net proceeds of any such public or
private sale and all other amounts actually collected or received by MLBFS
pursuant hereto, after deducting all costs and expenses incurred at any
time in the collection of the Obligations and in the protection, collection
and sale of the Collateral, will be applied to the payment of the
Obligations, with any remaining proceeds paid to Customer or whoever else
may be entitled thereto, and with Customer and each Guarantor remaining
jointly and severally liable for any amount remaining unpaid after such
application.
(vi) Delivery of Cash, Checks, Etc. MLBFS may require Customer to
forthwith upon receipt, transmit and deliver to MLBFS in the form received,
all cash, checks, drafts and other instruments for the payment of money
(properly endorsed, where required, so that such items may be collected by
MLBFS) which may be received by Customer at any time in full or partial
payment of any Collateral, and require that Customer not commingle any such
items which may be so received by Customer with any other of its funds or
property but instead hold them separate and apart and in trust for MLBFS
until delivery is made to MLBFS.
(vii) Notification of Account Debtors. MLBFS may notify any account
debtor that its Account or Chattel Paper has been assigned to MLBFS and
direct such account debtor to make payment directly to MLBFS of all amounts
due or becoming due with respect to such Account or Chattel Paper; and
MLBFS may enforce payment and collect, by legal proceedings or otherwise,
such Account or Chattel Paper.
(viii) Control of Collateral. MLBFS may otherwise take control in any
lawful manner of any cash or non-cash items of payment or proceeds of
Collateral and of any rejected, returned, stopped in transit or repossessed
goods included in the Collateral and endorse Customer's name on any item of
payment on or proceeds of the Collateral.
(b) Set-Off. MLBFS shall have the further right upon the occurrence and
during the continuance of an Event of Default to set-off, appropriate and apply
toward payment of any of the Obligations, in such order of application as MLBFS
may from time to time and at any time elect, any cash, credit, deposits,
accounts, financial assets, investment property, securities and any other
property of Customer which is in transit to or in the possession, custody or
control of MLBFS, MLPF&S or any agent, bailee, or affiliate of MLBFS or MLPF&S.
Customer hereby collaterally assigns and grants to MLBFS a continuing security
interest in all such property as Collateral and as additional security for the
Obligations. Upon the occurrence and during the continuance of an Event of
Default, MLBFS shall have all rights in such property available to collateral
assignees and secured parties under all applicable laws, including, without
limitation, the UCC.
(c) Power of Attorney. Effective upon the occurrence and during the
continuance of an Event of Default, Customer hereby irrevocably appoints MLBFS
as its attorney-in-fact, with full power of substitution, in its place and stead
and in its name or in the name of MLBFS, to from time to time in MLBFS' sole
discretion take any action and to execute any instrument which MLBFS may deem
necessary or advisable to accomplish the purposes of this Loan Agreement and the
other Loan Documents, including, but not limited to, to receive, endorse and
collect all checks, drafts and other instruments for the payment of money made
payable to Customer included in the Collateral. The powers of attorney granted
to MLBFS in this Loan Agreement are coupled with an interest and are irrevocable
until the Obligations have been indefeasibly paid in full and fully satisfied
and all obligations of MLBFS under this Loan Agreement have been terminated.
(d) Remedies are Severable and Cumulative. All rights and remedies of MLBFS
herein are severable and cumulative and in addition to all other rights and
remedies available in the Note, the other Loan Documents, at law or in equity,
and any one or more of such rights and remedies may be exercised simultaneously
or successively.
(e) No Marshalling. MLBFS shall be under no duty or obligation to (i)
preserve, protect or ▇▇▇▇▇▇▇▇ the Collateral; (ii) preserve or protect the
rights of any Credit Party or any other Person claiming an interest in the
Collateral; (iii) realize upon the Collateral in any particular order or manner,
(iv) seek repayment of any Obligations from any particular source; (v) proceed
or not proceed against any Credit Party pursuant to any guaranty or security
agreement or against any Credit Party under the Loan Documents, with or without
also realizing on the Collateral; (vi) permit any substitution or exchange of
all or any part of the Collateral; or (vii) release any part of the Collateral
from the Loan Agreement or any of the other Loan Documents, whether or not such
substitution or release would leave MLBFS adequately secured.
(f) Notices. To the fullest extent permitted by applicable law, Customer
hereby irrevocably waives and releases MLBFS of and from any and all liabilities
and penalties for failure of MLBFS to comply with any statutory or other
requirement imposed upon MLBFS relating to notices of sale, holding of sale or
reporting of any sale, and Customer waives all rights of redemption or
reinstatement from any such sale. Any notices required under applicable law
shall be reasonably and properly given to Customer if given by any of the
methods provided herein at least 5 Business Days prior to taking action. MLBFS
shall have the right to postpone or adjourn any sale or other disposition of
Collateral at any time without giving notice of any such postponed or adjourned
date. In the event MLBFS seeks to take possession of any or all of the
Collateral by court process, Customer further irrevocably waives to the fullest
extent permitted by law any bonds and any surety or security relating thereto
required by any statute, court rule or otherwise as an incident to such
possession, and any demand for possession prior to the commencement of any suit
or action.
3.7 MISCELLANEOUS
(a) Non-Waiver. No failure or delay on the part of MLBFS in exercising any
right, power or remedy pursuant to this Loan Agreement, the Note or any of the
other Loan Documents shall operate as a waiver thereof, and no single or partial
exercise of any such right, power or remedy shall preclude any other or further
exercise thereof, or the exercise of any other right, power or remedy. Neither
any waiver of any provision of this Loan Agreement, the Note or any of the other
Loan Documents, nor any consent to any departure by Customer therefrom, shall be
effective unless the same shall be in writing and signed by MLBFS. Any waiver of
any provision of this Loan Agreement, the Note or any of the other Loan
Documents and any consent to any departure by Customer from the terms of this
Loan Agreement, the Note or any of the other Loan Documents shall be effective
only in the specific instance and for the specific purpose for which given.
Except as otherwise expressly provided herein, no notice to or demand on
Customer shall in any case entitle Customer to any other or further notice or
demand in similar or other circumstances.
(b) Disclosure. Customer hereby irrevocably authorizes MLBFS and each of
its affiliates, including without limitation MLPF&S, to at any time (whether or
not an Event of Default shall have occurred) obtain from and disclose to each
other, and to any third party in connection with Section 3.7 (h) herein, any and
all financial and other information about Customer. Customer further irrevocably
authorizes MLBFS to contact, investigate, inquire and obtain consumer reports,
references and other information on Customer from consumer reporting agencies
and other credit reporting services, former or current creditors, and other
persons and sources (including, without limitation, any Affiliate of MLBFS) and
to provide to any references, consumer reporting agencies, credit reporting
services, creditors and other persons and sources (including, without
limitation, Affiliates of MLBFS) all financial, credit and other information
obtained by MLBFS relating to the Customer.
(c) Communications. Delivery of an agreement, instrument or other document
may, at the discretion of MLBFS, be by electronic transmission. Except as
required by law or otherwise provided herein or in a writing executed by the
party to be bound, all notices demands, requests, accountings, listings,
statements, advices or other communications to be given under the Loan Documents
shall be in writing, and shall be served either personally, by deposit with a
reputable overnight courier with charges prepaid, or by deposit in the United
States mail by certified mail return receipt required. Notices may be addressed
to Customer as set forth at its address shown in the preamble hereto, or to any
office to which billing or account statements are sent; to MLBFS at its address
shown in the preamble hereto, or at such other address designated in writing by
MLBFS. Any such communication shall be deemed to have been given upon, in the
case of personal delivery the date of delivery, one Business Day after deposit
with an overnight courier, two (2) Business Days after deposit in the United
States by certified mail (return receipt required), or receipt of electronic
transmission (which shall be presumed to be three hours after the time of
transmission unless an error message is received by the sender), except that any
notice of change of address shall not be effective until actually received.
(d) Fees, Expenses and Taxes. Customer shall upon demand pay or reimburse
MLBFS for: (i) all UCC, real property or other filing, recording and search fees
and expenses incurred by MLBFS in connection with the verification, perfection
or preservation of MLBFS' rights hereunder or in any Collateral or any other
collateral for the Obligations; (ii) any and all stamp, transfer, mortgage,
intangible, document, filing, recording and other taxes and fees payable or
determined to be payable in connection with the borrowings hereunder or the
execution, delivery, filing and/or recording of the Loan Documents and any other
instruments or documents provided for herein or delivered or to be delivered
hereunder or in connection herewith; (iii) any and all fees and out-of-pocket
expenses to third parties incurred by MLBFS in connection with the title
insurance, environmental audit, appraisal, survey and other instruments or
documents referred to in the definition of Real Property Funding Condition; and
(iv) all fees and out-of-pocket expenses (including attorneys' fees and legal
expenses) incurred by MLBFS in connection with the preparation, execution,
administration, collection, enforcement, protection, waiver or amendment of this
Loan Agreement, or under any of the other Loan Documents and such other
instruments or documents, and the rights and remedies of MLBFS thereunder and
all other matters in connection therewith. The obligations of Customer under
this paragraph shall survive the expiration or termination of this Loan
Agreement and the discharge of the other Obligations.
(e) Right to Perform Obligations. If Customer shall fail to do any act or
thing which it has covenanted to do under this Loan Agreement or any of the Loan
Documents, or any representation or warranty on the part of Customer contained
in this Loan Agreement or any of the Loan Documents shall be breached, MLBFS
may, in its sole discretion, after 5 Business Days written notice is sent to
Customer (or such lesser notice, including no notice, as is reasonable under the
circumstances), do the same or cause it to be done or remedy any such breach,
and may expend its funds for such purpose. Any and all reasonable amounts so
expended by MLBFS shall be repayable to MLBFS by Customer upon demand, with
interest at the "Interest Rate" (as that item is defined in the Note) during the
period from and including the date funds are so expended by MLBFS to the date of
repayment, and all such amounts shall be additional Obligations. The payment or
performance by MLBFS of any of Customer's obligations hereunder shall not
relieve Customer of said obligations or of the consequences of having failed to
pay or perform the same, and shall not waive or be deemed a cure of any Default.
(f) Late Charge. Any payment required to be made by Customer pursuant to
this Loan Agreement or any of the Loan Documents not paid within ten (10) days
of the applicable due date shall be subject to a late charge in an amount equal
to the lesser of: (i) 5% of the overdue amount, or (ii) the maximum amount
permitted by applicable law. Such late charge shall be payable on demand.
(g) Further Assurances. Customer agrees to do such further acts and things
and to execute and deliver to MLBFS such additional agreements, instruments and
documents as MLBFS may reasonably require or deem advisable to effectuate the
purposes of this Loan Agreement, the Note or any of the other Loan Documents, or
to establish, perfect and maintain MLBFS' security interests and liens upon the
Collateral, including, but not limited to: (i) executing financing statements or
amendments thereto when and as reasonably requested by MLBFS; and (ii) if in the
reasonable judgment of MLBFS it is required by local law, causing the owners
and/or mortgagees of the real property on which any Collateral may be located to
execute and deliver to MLBFS waivers or subordinations reasonably satisfactory
to MLBFS with respect to any rights in such Collateral.
(h) Binding Effect. This Loan Agreement, the Note and the other Loan
Documents shall be binding upon, and shall inure to the benefit of MLBFS,
Customer and their respective successors and assigns. MLBFS reserves the right,
at any time while the Obligations remain outstanding, to sell, assign, syndicate
or otherwise transfer or dispose of any or all of MLBFS' rights and interests
under the Loan Documents. MLBFS also reserves the right at any time to pool the
Loan with one or more other loans originated by MLBFS or any other Person, and
to securitize or offer interests in such pool on whatever terms and conditions
MLBFS shall determine. Customer consents to MLBFS releasing financial and other
information regarding Credit Parties, the Collateral and the Loan in connection
with any such sale, pooling, securitization or other offering. Customer shall
not assign any of its rights or delegate any of its obligations under this Loan
Agreement, the Note or any of the other Loan Documents without the prior written
consent of MLBFS. Unless otherwise expressly agreed to in a writing signed by
MLBFS, no such consent shall in any event relieve Customer of any of its
obligations under this Loan Agreement, the Note or any of the other Loan
Documents.
(i) Interpretation; Construction. (i) Captions and section and paragraph
headings in this Loan Agreement are inserted only as a matter of convenience,
and shall not affect the interpretation hereof; (ii) no provision of this Loan
Agreement shall be construed against a particular Person or in favor of another
Person merely because of which Person (or its representative) drafted or
supplied the wording for such provision; and (iii) where the context requires:
(a) use of the singular or plural incorporates the other, and (b) pronouns and
modifiers in the masculine, feminine or neuter gender shall be deemed to refer
to or include the other genders.
(j) Governing Law. This Loan Agreement, the Note and, unless otherwise
expressly provided therein, each of the other Loan Documents, shall be governed
in all respects by the laws of the State of Illinois, not including its conflict
of law provisions.
(k) Severability of Provisions. Whenever possible, each provision of this
Loan Agreement, the Note and the other Loan Documents shall be interpreted in
such manner as to be effective and valid under applicable law. Any provision of
this Loan Agreement, the Note or any of the other Loan Documents which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective only to the extent of such prohibition or unenforceability
without invalidating the remaining provisions of this Loan Agreement, the Note
and the other Loan Documents or affecting the validity or enforceability of such
provision in any other jurisdiction.
(l) Term. This Loan Agreement shall become effective when accepted by MLBFS
at its office in Chicago, Illinois, and subject to the terms hereof, shall
continue in effect so long thereafter as there shall be any moneys owing
hereunder or under the Note, or there shall be any other Obligations
outstanding. Customer hereby waives notice of acceptance of this Loan Agreement
by MLBFS.
(m) Exhibits. The exhibits to this Loan Agreement are hereby incorporated
and made a part hereof and are an integral part of this Loan Agreement.
(n) Counterparts. This Loan Agreement may be executed in one or more
counterparts which, when taken together, constitute one and the same agreement.
(o) Jurisdiction; Waiver. Customer acknowledges that this Loan Agreement is
being accepted by MLBFS in partial consideration of MLBFS' right and option, in
its sole discretion, to enforce the Loan Documents in either the State of
Illinois or in any other jurisdiction where Customer or any Collateral may be
located. Customer irrevocably submits itself to jurisdiction in the State of
Illinois and venue in any state or federal court in the County of ▇▇▇▇ for such
purposes, and Customer waives any and all rights to contest said jurisdiction
and venue and the convenience of any such forum, and any and all rights to
remove such action from state to federal court. Customer further waives any
rights to commence any action against MLBFS in any jurisdiction except in the
County of ▇▇▇▇ and State of Illinois. Customer agrees that all such service of
process shall be made by mail or messenger directed to it in the same manner as
provided for notices to Customer in this Loan Agreement and that service so made
shall be deemed to be completed upon the earlier of actual receipt or three (3)
days after the same shall have been posted to Customer or Customer's agent.
Nothing contained herein shall affect the right of MLBFS to serve legal process
in any other manner permitted by law or affect the right of MLBFS to bring any
action or proceeding against Customer or its property in the courts of any other
jurisdiction. Customer waives, to the extent permitted by law, any bond or
surety or security upon such bond which might, but for this waiver, be required
of MLBFS. Customer further waives the right to bring any non-compulsory
counterclaims.
(p) Jury Waiver. MLBFS and Customer hereby each expressly waive any and all
rights to a trial by jury in any action, proceeding or counterclaim brought by
either of the parties against the other party with respect to any matter
relating to, arising out of or in any way connected with the Loan, the
Obligations, this Loan Agreement, any of the other Loan Documents and/or any of
the transactions which are the subject matter of this Loan Agreement.
(q) Integration. This Loan Agreement, together with the other Loan
Documents, constitutes the entire understanding and represents the full and
final agreement between the parties with respect to the subject matter hereof,
and may not be contradicted by evidence of prior written agreements or prior,
contemporaneous or subsequent oral agreements of the parties. There are no
unwritten oral agreements of the parties. Without limiting the foregoing,
Customer acknowledges that: (i) no promise or commitment has been made to it by
MLBFS, MLPF&S or any of their respective employees, agents or representatives to
make any Loan on any terms other than as expressly set forth herein, or to make
any other loan or otherwise extend any other credit to Customer or any other
party; and (ii) except as otherwise expressly provided herein, this Loan
Agreement supersedes and replaces any and all proposals, letters of intent and
approval and commitment letters from MLBFS to Customer, none of which shall be
considered a Loan Document. No amendment or modification of any of the Loan
Documents to which Customer is a party shall be effective unless in a writing
signed by both MLBFS and Customer.
(r) Survival. All representations, warranties, agreements and covenants
contained in the Loan Documents shall survive the signing and delivery of the
Loan Documents, and all of the waivers made and indemnification obligations
undertaken by Customer shall survive the termination, discharge or cancellation
of the Loan Documents.
(s) Customer's Acknowledgments. The Customer acknowledges that the
Customer: (i) has had ample opportunity to consult with counsel and such other
parties as deemed advisable prior to signing and delivering this Loan Agreement
and the other Loan Documents; (ii) understands the provisions of this Loan
Agreement and the other Loan Documents, including all waivers contained therein;
and (iii) signs and delivers this Loan Agreement and the other Loan Documents
freely and voluntarily, without duress or coercion.
This Loan Agreement and the other Loan Documents are executed under seal
and are intended to take effect as sealed instruments.
IN WITNESS WHEREOF, this Loan Agreement has been executed as of the day and
year first above written.
ATLAS TECHNOLOGIES, INC.
By:
-------------------------------- --------------------------------
Signature (1) Signature (2)
-------------------------------- --------------------------------
Printed Name Printed Name
-------------------------------- --------------------------------
Title Title
Accepted at Chicago, Illinois:
▇▇▇▇▇▇▇ ▇▇▇▇▇ BUSINESS FINANCIAL SERVICES INC.
By:
--------------------------------
EXHIBIT A
ATTACHED TO AND HEREBY MADE A PART OF TERM LOAN AND SECURITY AGREEMENT
DATED AS OF NOVEMBER 25, 2003 BETWEEN ▇▇▇▇▇▇▇ ▇▇▇▇▇ BUSINESS FINANCIAL SERVICES
INC. AND ATLAS TECHNOLOGIES, INC.
Additional Locations of Tangible Collateral:
▇▇▇ ▇. ▇▇▇▇▇ ▇▇. ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Existing loans and Guarantees (Section 3.3 (k)):
Existing Debt (Section 3.3 (o)):