Exhibit 10.1
LOAN AGREEMENT
THIS LOAN AGREEMENT (the "LOAN AGREEMENT") is entered into and made
effective this 16th day of April 2004, by and among AESP, INC., a Florida
corporation ("AESP"), XXXX XXXXX ("XXXXX"), XXXXX XXXXXXX ("XXXXXXX") and XXXXXX
INVESTMENT LTD, a Hong Kong Limited ("XXXXXX").
RECITALS
WHEREAS, on September 23, 1999, AESP entered into that certain loan
agreement ("COMMERCE AGREEMENT") in the maximum principal amount of $3,500,000,
in favor of Commercebank, N.A. (the "BANK");
WHEREAS, on September 23, 1999, AESP entered into a Security Agreement
(the "COMMERCE SECURITY Agreement") granting to the Bank a security interest in
the "COLLATERAL" as such term is defined in the Commerce Security Agreement, as
security for AESP's obligations under the Commerce Agreement;
WHEREAS, on September 23, 1999, each of Xxxxx and Xxxxxxx entered into
a Guaranty Agreement (each a "GUARANTY" and collectively, the "GUARANTEES")
guaranteeing all of the obligations of AESP to the Bank;
WHEREAS, the Bank has demanded that AESP repay the Commerce Agreement
in the amount of $631,000 (the "LOAN BALANCE");
WHEREAS, Xxxxxx has agreed, subject to the terms and conditions of this
Loan Agreement, to lend (the "XXXXXX LOAN") to AESP the sum of $631,000.00 (the
"XXXXXX LOAN AMOUNT") to pay off in-full the Loan Balance;
WHEREAS, as a material inducement for Xxxxxx to enter into this Loan
Agreement and to grant the Xxxxxx Loan, AESP has agreed to enter into a secured
promissory note, in the form attached hereto as EXHIBIT A (the "XXXXXX
PROMISSORY NOTE"), evidencing the terms and conditions of the Xxxxxx Loan;
WHEREAS, as a material inducement for Xxxxxx to enter into this Loan
Agreement and to grant the Xxxxxx Loan, AESP has agreed to enter into a security
agreement in the form attached hereto as EXHIBIT B (the "XXXXXX SECURITY
AGREEMENT") granting to Xxxxxx a first priority perfected security interest in
and to all of the assets of AESP, excluding those assets upon which KBK
Financial, Inc. has been granted a security interest or about on November 4,
2003, to which Xxxxxx shall have second priority, as security for AESP's
obligations under the Xxxxxx Promissory Note;
WHEREAS, as a material inducement for Xxxxxx to enter into this Loan
Agreement and to grant the Xxxxxx Loan, Xxxxx and Xxxxxxx (each a "GUARANTOR"
and collectively, the "GUARANTORS") shall enter into a guaranty, in the form
attached hereto as EXHIBIT C (the "XXXXXX
GUARANTY"), guaranteeing, jointly and severally, the full and prompt payment and
performance of AESP' obligations under the Xxxxxx Promissory Note; and
WHEREAS, this Loan Agreement, the Xxxxxx Promissory Note, the Xxxxxx
Security Agreement and the Xxxxxx Guaranty, shall collectively be referred to as
the "TRANSACTION DOCUMENTS".
NOW THEREFORE, in consideration of the mutual promises contained herein
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties agree as follows:
1. RECITALS. The above recitals are true and correct and same are
incorporated herein by this reference.
2. XXXXXX LOAN. Pursuant to the terms and subject to the conditions set
forth in this Loan Agreement, Xxxxxx hereby agrees to grant to AESP the Xxxxxx
Loan in the Xxxxxx Loan Amount ($631,000.00). The entire principal balance
outstanding on the Xxxxxx Loan from time to time shall accrue interest at a rate
of the Prime Rate (as defined in the Xxxxxx Promissory Note) plus eight percent
(8%). Interest only shall be payable by AESP to Xxxxxx on a monthly basis, as
set forth in the Xxxxxx Promissory Note. The entire principal balance of the
Xxxxxx Loan together with accrued but unpaid interest and such other amounts
payable by AESP to Xxxxxx under the Xxxxxx Promissory Note shall be due and
payable on or before April 16, 2005, and shall otherwise be payable in
accordance with the terms and subject to the conditions set forth in the Xxxxxx
Promissory Note.
3. FUNDING. At the Closing (as hereinafter defined) and in full
satisfaction of its obligations hereunder, Xxxxxx shall deliver to the Bank via
wire transfer the Xxxxxx Loan Amount in full payment of the Loan Balance.
4. XXXXXX GUARANTY. On the date of the Closing (the "CLOSING DATE") and
as a material inducement for the Xxxxxx to enter into this Loan Agreement and to
grant the Xxxxxx Loan to AESP, each of the Guarantors, each deriving a material
benefit from such transaction, shall enter into the Xxxxxx Guaranty,
guaranteeing, jointly and severally, the prompt and full payment and performance
by AESP of its obligations under the Xxxxxx Promissory Note.
5. SECURITY.
5.1. XXXXXX SECURITY AGREEMENT. On the Closing Date and as a
material inducement for Xxxxxx to enter into this Loan Agreement and to grant
the Xxxxxx Loan to AESP, AESP hereby agrees to enter into the Xxxxxx Security
Agreement granting to Xxxxxx a first priority perfected security interest in all
of its assets, both tangible and intangible, AESP, excluding those assets upon
which KBK Financial, Inc. has been granted a security interest on or about
November 4, 2003 to which Xxxxxx shall have second priority, pursuant to the
terms and subject to the conditions of the Xxxxxx Security Agreement, as
security for its obligations under the Xxxxxx Promissory Note.
5.2. KEY-MAN INSURANCE. For so long as any obligations are
outstanding under the Xxxxxx Promissory Note, AESP shall maintain, at its sole
cost and expense, a term life
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insurance policy (the "POLICY") on the life of Xxxxx and Xxxxxxx in an amount
not less than the total obligations then outstanding under the Xxxxxx Promissory
Note designating Xxxxxx the sole beneficiary thereof with a last-to-die
provision. On the Closing Date and on each anniversary thereof, for so long as
the obligations are outstanding under the Xxxxxx Promissory Note, AESP shall
provide evidence to Xxxxxx that the premium for the Policy has been paid in
advance for at least twelve (12) months after the date thereof.
6. EQUITY CAPITAL OBTAINED BY AESP. During any time that the Xxxxxx
Loan remains outstanding and not fully repaid, if AESP obtains any equity
funding from any source ("EQUITY FUNDING"), all amounts net of the expenses of
such Equity Funding shall be paid to Xxxxxx within two (2) business days of the
AESP's receipt of the Equity Funding until all principal and accrued, but
unpaid, interest due under the Xxxxxx Loan has been paid to Xxxxxx.
7. CLOSING. The Closing and the funding of the Xxxxxx Loan shall be
subject to:
7.1. Xxxxxx being satisfied in his sole and absolute
discretion with his due diligence of AESP and the Guarantors, respectively, and
of the assets to which he is receiving a security interest pursuant to the
Transaction Documents;
7.2. the Bank acknowledging and agreeing, in writing, that
upon its receipt of the Xxxxxx Loan Amount, none of the parties under the
Commerce Agreement, Commerce Security Agreement or Guarantees shall have any
further obligations arising from or relating thereto;
7.3. the Bank acknowledging and agreeing, in writing, that
upon its receipt of the Xxxxxx Loan Amount, it shall file a UCC-3 terminating
its security interest in the Collateral and any and all other assets of AESP in
which it has a security interest;
7.4. each of the parties hereto having executed this Loan
Agreement;
7.5. AESP having executed the Xxxxxx Promissory Note and the
Xxxxxx Security Agreement;
7.6. each of the Guarantors having entered into the Xxxxxx
Guaranty;
7.7. certificates of good standing for AESP shall have been
delivered to Xxxxxx;
7.8. resolution of the board of directors of AESP, authorizing
this Loan Agreement, the Transaction Documents and the transactions contemplated
hereby and thereby shall have been delivered to Xxxxxx;
7.9. payment by AESP to Xxxxxx of all fees, costs and
expenses, including reasonable attorneys' fees, incurred in the negotiation and
preparation of this Loan Agreement and the Transaction Documents, as well as all
fees, costs and taxes (other than any Federal or State Income Tax liability)
arising from the transactions contemplated hereby (including, without
limitation, recording costs and documentary stamp taxes);
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7.10. an opinion from AESP's counsel that upon execution of
this Loan Agreement, the Transaction Documents and the filing of a UCC-1
covering the Pledged Collateral (as defined in the Security Agreement), Xxxxxx
shall have a perfected security interest in and to the Pledged Collateral;
7.11. the parties hereto having delivered any and all other
instruments or documents required to be delivered pursuant to, or necessary or
proper in order to give effect to, the provisions of this Loan Agreement, and to
consummate the transactions contemplated by this Loan Agreement;
7.12. KBK Financial, Inc. and Xxxxxx shall executed an
Intercredit Agreement, the form of which shall be approved by Xxxxxx.
8. FURTHER ASSURANCES. The parties hereto shall from time to time do
and perform such additional acts and execute and deliver such additional
documents and instruments as may be required or reasonably requested by any
party to establish, maintain or protect its rights and remedies or to effect the
purposes of this Loan Agreement and the Transaction Documents.
9. DEFAULT.
9.1. Each of the following events shall constitute a default
under this Agreement (each an "EVENT OF DEFAULT"):
9.1.1. any default, whether in whole or in part,
shall occur in the payment to the Secured Party of principal or interest or AESP
shall default in the payment of any other item comprising the Xxxxxx Notes or
other payments under the Transaction Documents as and when due and five (5)
calendar days shall have elapsed without cure thereof;
9.1.2. any default by AESP, whether in whole or in
part, shall occur in the due observance or performance of any other covenant,
term or provision to be performed under this Agreement or any of the Transaction
Documents and fifteen (15) calendar days shall have elapsed without cure
thereof;
9.1.3. any other default, whether in whole or in
part, by the Guarantors shall occur in the due observance or performance of any
covenant, term or provision to be performed under the Transaction Documents and
fifteen (15) calendar days shall have elapsed without cure thereof;
9.1.4. AESP or any Guarantor shall: (1) make a
general assignment for the benefit of its creditors; (2) apply for or consent to
the appointment of a receiver, trustee, assignee, custodian, sequestrator,
liquidator or similar official for itself or any of its assets and properties;
(3) commence a voluntary case for relief as a debtor under the United States
Bankruptcy Code; (4) file with or otherwise submit to any governmental authority
any petition, answer or other document seeking: (A) reorganization, (B) an
arrangement with creditors or (C) to take advantage of any other present or
future applicable law respecting bankruptcy, reorganization, insolvency,
readjustment of debts, relief of debtors, dissolution or liquidation; (5) file
or otherwise submit any answer or other document admitting or failing to contest
the material allegations of a petition or other document filed or otherwise
submitted against it in any
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proceeding under any such applicable law, or (6) be adjudicated a bankrupt or
insolvent by a court of competent jurisdiction;
9.1.5. any case, proceeding or other action shall be
commenced against the Borrower or any Guarantor for the purpose of effecting, or
an order, judgment or decree shall be entered by any court of competent
jurisdiction approving (in whole or in part) anything specified in Section
2.2(c)(iv) hereof, or any receiver, trustee, assignee, custodian, sequestrator,
liquidator or other official shall be appointed with respect to the Borrower or
any Guarantor, or shall be appointed to take or shall otherwise acquire
possession or control of all or a substantial part of the assets and properties
of the Borrower or any Guarantor; and the same shall not be stayed, dismissed,
bonded or discharged within sixty (60) calendar days after commencement, entry
or appointment, as the case may be; or
9.1.6. a Change of Control shall occur. For purposes
hereof, a "CHANGE OF CONTROL" means (a) the occurrence of a change in more than
fifty percent (50%) of the Board of Directors of AESP or (b) any person
acquiring, directly or indirectly, voting control of thirty-five percent (35%)
or more of the issued and outstanding capital stock of AESP, in each case,
without the prior written consent of Xxxxxx, which consent shall not be
unreasonably withheld.
10. REPRESENTATIONS AND WARRANTIES.
10.1. REPRESENTATIONS AND WARRANTIES OF AESP, XXXXX AND
XXXXXXX. AESP, Xxxxx and Xxxxxxx hereby represent and warrant, jointly and
severally, as of the date hereof and as of the Closing Date, as follows:
10.1.1. AESP is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation. AESP has the corporate power and authority to carry on its
business as now conducted and to operate, own and lease its properties.
10.1.2. Each of AESP, Xxxxx and Xxxxxxx has the full
power and authority to execute and deliver this Loan Agreement and the
Transaction Documents and to consummate the transactions contemplated hereby and
thereby. The execution and delivery of the Transaction Documents and the
consummation of the transactions contemplated hereby and thereby have been duly
and validly authorized by AESP. Each of the Transaction Documents have been duly
and validly executed and delivered, and constitute the legal, valid and binding
agreements of AESP, Xxxxx and Xxxxxxx enforceable against each of them in
accordance with its terms, subject in each case to bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights.
10.1.3. The execution and delivery of the Transaction
Documents and the consummation and compliance with the transactions contemplated
hereunder and thereunder by each of AESP, Xxxxx and Xxxxxxx shall not, directly
or indirectly (with or without notice or the lapse of time or both): (i)
contravene, conflict with, or result in a violation of any provision of any of
their respective governing documents, if applicable, or the resolutions adopted
by their respective Board of Directors, if applicable; or (ii) result in the
breach or violation of any contract, agreement or instrument to which it is a
party or by which it is bound.
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10.1.4. There is no requirement applicable to AESP,
Xxxxx and Xxxxxxx to make any filing with, or to obtain any permit,
authorization, license, consent or approval of, any governmental or regulatory
authority as a condition to the lawful consummation of the transactions
contemplated by this Loan Agreement.
10.1.5. AESP is the owner and holder of the Pledged
Collateral (as defined in the Security Agreement) and has the right, title and
authority to grant a security interest it, pledge, assign and convey the Pledged
Collateral. AESP has not previously sold, transferred, or conveyed the Pledged
Collateral except to KBK Financial, Inc., to the extent set forth in Section 5.1
and AESP has not entered into any executory contracts for the sale, transfer
conveyance of the Pledged Collateral, and Xxxxxx, upon consummation of the
transactions contemplated hereby, shall have a first priority perfected security
interest in and to the Pledged Collateral, free and clear of any claims,
security interests, mortgages, restriction or encumbrances of any kind
whatsoever (collectively, "ENCUMBRANCES"), except as customary for the business
of AESP, which would not materially adversely affect Xxxxxx' security interest
in the Pledged Collateral.
10.1.6. No legal proceeding before any federal,
national, international, foreign, provincial, state, local, agency, department
or body ("GOVERNING AUTHORITY") is pending or threatened against or affecting
AESP, Xxxxx, Xxxxxxx or, the Pledged Collateral and none of AESP, Xxxxx and
Xxxxxxx are aware of any third party that is contemplating any such legal
proceeding or believes that it has a basis in law for any such legal proceeding.
11. LIMITATION OF LIABILITY/INDEMNIFICATION. Xxxxxx shall not have any
obligations arising from or relating to the Pledged Collateral as a result of
the transactions contemplated by this Loan Agreement or the Transaction
Documents, and each of AESP, Xxxxx and Xxxxxxx hereby indemnify and hold Xxxxxx
harmless from any claims arising from or relating to the breach by any of AESP,
Xxxxx and Xxxxxxx or any of their affiliated or related parties, of any of their
obligations under this Loan Agreement or the Transaction Document, or arising
from or relating to the Pledged Collateral.
12. MISCELLANEOUS.
12.1. ENTIRE AGREEMENT AND AMENDMENTS. This Loan Agreement,
together with the Transaction Documents, constitutes the entire agreement of the
parties with respect to the subject matter hereof and supersedes any prior
agreement or understanding between the parties hereto, and neither this Loan
Agreement nor any provision hereof may be waived, modified, amended or, except
to the extent, if any, otherwise provided in this Loan Agreement, terminated,
except by a written agreement signed by the parties hereto.
12.2. WAIVERS. No waiver of any breach, default or provision
hereunder shall be considered valid unless in a writing signed by the party to
be charged therewith, and no such waiver shall be deemed a waiver of any
subsequent breach or default hereunder.
12.3. ASSIGNMENT OF LOAN AGREEMENT. Neither AESP nor Xxxxxx
may assign this Loan Agreement without the written consent of the other party.
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12.4. SUCCESSORS AND ASSIGNS. This Loan Agreement shall be
binding upon and against the parties hereto and their heirs, personal or other
legal representatives, administrators, successors and permitted assigns.
12.5. NEGOTIATED AGREEMENT. The parties to this Loan Agreement
have fully participated in its negotiation and preparation. Accordingly, this
Loan Agreement shall not be more strictly construed against any of the parties.
12.6. SEVERABILITY. If any provision of this Loan Agreement,
not effecting the commercial purpose of this Loan Agreement, shall be held to be
illegal, invalid or unenforceable, such illegality, invalidity or
unenforceability shall attach only to such provision and shall not in any manner
affect or render illegal, invalid or unenforceable any other provision of this
Loan Agreement, and this Loan Agreement shall be carried out as if any such
illegal, invalid or unenforceable provision were not contained herein; provided,
however, that if any provision effecting the commercial purpose of this Loan
Agreement, including the granting of any security interest contemplated herein,
or any guaranty contemplated herein, is rendered void, in whole or in part, then
the entire amounts outstanding under the Xxxxxx Note shall immediately become
due and payable.
12.7. SURVIVAL. The representations, warranties and
indemnities of each of the parties hereto, as well as all obligations of each
party hereto contemplated to occur after the Closing, shall continue in full
force and effect and shall survive the Closing.
12.8. NOTICES. All notices, requests, demands, instructions,
consents or other communications required or permitted to be given under this
Loan Agreement shall be in writing and shall be deemed to have been duly given
if and (a) when delivered personally, (b) five days after they are mailed by
first class certified mail, return receipt requested, postage prepaid, or (c)
two days after they are sent by a nationally recognized express courier service,
postage or delivery charges prepaid, to the parties at the following addresses
or to such other addresses as the parties may give notice in accordance
herewith:
If to Xxxxxx: Xxxxxx Investment Ltd
0000 Xxxxxx'x Xxxxxxxx
00 Xxxxxx Xxxx
Xxxx Xxxx, XXX
Attn: Xx. Xxxxxxxx X. Xxxxxxxxxx
With a copy to: Xxxxxxxxxxx & Xxxxxxxx LLP
Miami Center, Suite 2000
000 X. Xxxxxxxx Xxxx.
Xxxxx, Xxxxxxx 00000
Attn: Xxxxxx X. Xxxxxxx, Esq.
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If to AESP, Xxxxx or Xxxxxxx AESP, Inc.
0000 X.X. 000xx Xxxxxx
Xxxxx Xxxxx, Xxxxxxx 00000
Attn: Xxxx Xxxxx
With a copy to: Akerman Senterfitt
Xxx Xxxxxxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxx, Xxxxxxx 00000
Attn: Xxxxxx Xxxxxxxx
12.9. GOVERNING LAW; FORUM. This Loan Agreement and all
transactions contemplated by this Loan Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Florida,
without regard to principles of conflicts of law. The parties hereto hereby
agree to the exclusive jurisdiction of the state courts situated in Miami-Dade
County and the parties hereby waive any objection which they may have to the
laying of venue of any such proceeding in such court and waive any claim of
inconvenient forum with respect to such venue. The parties hereto further agree
that service of process, relating to an action arising hereunder, pursuant to
the notice provision set forth in this Loan Agreement shall be sufficient and
hereby waive any claim for insufficiency of process as a result of a party's use
of such method of service.
12.10. WAIVER OF JURY TRIAL. THE PARTIES TO THIS LOAN
AGREEMENT HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT THEY
MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR
ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS NOTE OR ANY COURSE OF CONDUCT,
COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY
PARTY. THIS PROVISION IS A MATERIAL INDUCEMENT TO THE PARTIES ENTERING INTO THIS
LOAN AGREEMENT.
12.11. ENFORCEMENT COSTS. If any legal action or other
proceedings is brought for the enforcement of this Loan Agreement, or because of
an alleged dispute, breach, default or misrepresentation in connection with any
provision of this Loan Agreement, the prevailing party shall be entitled to
recover reasonable attorneys' fees, court costs and all expenses (including,
without limitation, all such fees, costs and expenses incident to appellate,
bankruptcy, post-judgment and alternative dispute resolution proceedings),
incurred in that action or proceeding, in addition to any other relief to which
such party or parties may be entitled.
12.12. COSTS AND EXPENSE. All fees, costs and expenses,
including reasonable attorneys' fees, incurred in the negotiation and
preparation of this Loan Agreement and the Transaction Documents, as well as all
fees, costs and taxes (other than any Federal or State Income Tax liability)
arising from the transactions contemplated hereby (including, without
limitation, recording costs and documentary stamp taxes) shall be the sole
responsibility and liability of AESP and shall be payable to Xxxxxx at Closing.
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12.13. INDEPENDENT REPRESENTATION. Each party hereto
acknowledges and agrees that it, he or she has had the opportunity to seek
independent counsel of its, his or her own choice in connection with this Loan
Agreement and fully understanding the terms of this Loan Agreement and the
transactions contemplated hereby.
12.14. COUNTERPARTS. This Loan Agreement may be executed 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. Confirmation by a
facsimile signature shall be binding upon that party so confirming.
IN WITNESS WHEREOF, the parties hereunto have executed this Loan
Agreement as of the day and year first above written.
AESP, INC.
By: /s/ Xxxxx Xxxxxxx
-------------------------------------
Name: Xxxxx Xxxxxxx
Title: Executive Vice President
XXXXXX INVESTMENT LTD
By: /s/ Xx. Xxxxxxxx X. Xxxxxxxxxx
-------------------------------------
Name: Xx. Xxxxxxxx X. Xxxxxxxxxx
Title: Director
The undersigned hereby acknowledges the terms of, and join in the
covenants, representations and warranties of Sections 8, 10, 11 and 12 of, that
certain Loan Agreement dated April 16, 2004 delivered by AESP, Inc. to Xxxxxx
Investment, Ltd.
/s/ Xxxx Xxxxx
-----------------------------------------
Xxxx Xxxxx
/s/ Xxxxx Xxxxxxx
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Xxxxx Xxxxxxx
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