LOAN AGREEMENT between THE DIRECTOR OF DEVELOPMENT OF THE STATE OF OHIO and THE GUITAMMER COMPANY Dated as of April 25' 2008
EXHIBIT 10.22
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EXECUTION COPY
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between
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THE DIRECTOR OF DEVELOPMENT
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OF THE STATE OF OHIO
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and
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THE GUITAMMER COMPANY
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Dated
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as of
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April 25' 2008
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TABLE OF CONTENTS
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(The Table of Contents is not a part of this Agreement
and is only for convenience of reference.)
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Page
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PreamblesΒ | Β | Β 1 |
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Β | ARTICLE I | Β |
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Definitions
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Section 1.1
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Use of Defined Terms
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Section1.2
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Definitions
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Section 1.3
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Certain Words and References
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ARTICLE IIΒ Β
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Determinations and Representations
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Section 2.1
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Determinations of the Director
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Section 2.2
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Representations and Warranties of the Company
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ARTICLE IIIΒ Β
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Loan; Provision of Project; Conditions to Disbursement
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Section 3.1
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Loan and Repayment
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Section 3.2
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Provision of Project
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Section 3.3
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Plans and Specifications; Inspections
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Section 3.4
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Company Required to Pay Costs in Event Proceeds Insufficient
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Section 3.5
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Completion Date
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Section 3.6
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Conditions to Disbursement
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Section 3.7
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Postponement of Escrow Disbursement Termination Date
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Section 3.8
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Payment of Costs; Indemnification
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Β | ARTICLE IV | Β |
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Additional Covenants and Agreements
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Section 4.1
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Employment Statement; Job Creation
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Section 4.2
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Affirmative Covenants of the Company
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Section 4.3
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Negative Covenants of the Company
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Β | ARTICLE V | Β |
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Events of Default and Remedies; Termination
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Section 5.1
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Events of Default
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Section 5.2
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Remedies on Default
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Section 5.3
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No Remedy Exclusive
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Section 5.4
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Agreement to Pay Expenses and Attorneys' Fees
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Section5.5
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No Waiver
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Β | ARTICLE VI | Β |
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Miscellaneous
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Section 6.1
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Term of Agreement
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Section6.2
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Notices
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Section 6.3
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Extent of Covenants of the Director; No Personal Liability
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Section 6.4
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Binding Effect
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Section 6.5
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Amendments and Supplements
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Β 30 |
Section 6.6
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Execution Counterparts
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Section6.7
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Severability
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Β 30 |
Section 6.8
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Captions; Entire Agreement
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Section 6.9
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Interpretation
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Section 6.10
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Waiver of Jury Trial
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Section 6.11
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Consent to Jurisdiction/Service of Process
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Section6.12
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Governing Law
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Section 6.13
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Attorney Review
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Section 6.14
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Time is of the Essence
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Signatures | Β | Β 32 |
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Β Exhibit A - FORM OF NOTE
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Exhibit B - PROJECT EQUIPMENT
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Exhibit C = PROJECT INTANGIBLE FACILITIES
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Exhibit D β SUBORDINATED PARTIES
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Exhibit E β PREVAILING WAGE LETTER
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THIS LOAN AGREEMENT is made and entered into as of April 25, 2008 by andΒ between The Director of Development (the "Director") of the State of Ohio, acting on behalf of theΒ State, and The Guitammer Company, an Ohio corporation (the "Company"), under the circumstancesΒ summarized in the following recitals (the capitalized terms used in the recitals being used therein asΒ defined in Article I hereof):
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A.Β Pursuant to the Act, the Director is authorized, among other things, to make loans toΒ assist in the financing of an Eligible Innovation Project.
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B.Β The Company has requested that the Director provide the financial assistance for theΒ Project hereinafter described.
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C.Β The Director has determined that the Project constitutes an Eligible Innovation ProjectΒ and that the financial assistance to be provided pursuant to this Agreement is appropriate under theΒ Act and will be in furtherance and in implementation of the public policy set forth in the Act.
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D.Β The financial assistance to be provided pursuant to this Agreement has been reviewedΒ and approved by the Development Financing Advisory Council and the Controlling Board, pursuantΒ to the Act.
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NOW, THEREFORE, in consideration of the premises and the representations andΒ agreements hereinafter contained, the Director and the Company agree as follows:
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ARTICLE I
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Definitions
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Section 1.1. Use of Defined Terms. In addition to the words and terms elsewhere defined inΒ this Agreement or by reference to the Security Documents or other instruments, the words and termsΒ set forth in Section 1.2 hereof shall have the meanings therein set forth unless the context or useΒ expressly indicates different meaning or intent. Such definitions shall be equally applicable to bothΒ the singular and plural forms of any of the words and terms therein defined.
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Section 1.2. Definitions. As used herein:
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"Act" means Chapter 166, Ohio Revised Code, as from time to time enacted andamended.
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"Agreement" means this Loan Agreement, as the same may be amended, modified,Β supplemented, restated or replaced from time to time.
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Allowable Innovation Costs" means "allowable innovation costs" of the Project within the meaning of the Act incurred b y the Company from and after September 1, 2007
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"Application" means the Application of the Company, dated October 22, 2007,Β submitted to the Director requesting assistance under the Act.
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"City" means Genoa Township, Ohio.
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"Closing Date" means April 25, 2008, the date of execution and delivery of the Loan
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Documents.
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"Collateral" shall have the same meaning as defined in the Security Agreement.
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"Commitment" means the Commitment Letter between the Director and the CompanΒ dated March 19, 2008.
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"Code" means the Internal Revenue Code of 1986, and any successor statute ofΒ similar import, together with all rules and regulations thereunder, as amended, reformed or otherwiseΒ modified from time to time. References to sections or titles of the Code shall be construed to alsoΒ refer to successor sections or titles.
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"Completion Date" means the date of completion of the Project, as certified b y theΒ Company pursuant to Section 3.5 hereof.
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"Controlling Board" means the Controlling Board of the State.
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"Cost Certification" means a certification of the Company, as of a specified date,Β setting forth in reasonable detail the costs incurred and, if appropriate, to be incurred by theΒ Company in completing the provision of the Project, including a detail by category of all AllowableΒ Innovation Costs.
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"Corrective Work" means all activities of removal, response, investigation, testing,Β analysis, remediation (including, but not limited to disposal of Hazardous Substances) taken pursuantΒ to Environmental Requirements (i) to prevent, xxxxx, or correct a Release or threatened Release ofΒ Hazardous Substances at, about, affecting, or affected by the Project or (ii) to comply with any andΒ all Environmental Requirements applicable to the Project.
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"Development Financing Advisory Council" means the Development FinancingΒ Advisory Council of the State.
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"Disbursement Request" means each Disbursement Request in the form of Exhibit AΒ attached to the Escrow Disbursing Agreement.
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"Distribution" means a payment made, liability incurred or other consideration givenΒ b y the Company (other than any stock dividend or stock split payable solely in capital stock of theΒ Company) for the purchase, acquisition, redemption or retirement of any capital stock of theΒ Company or as a dividend, return of capital or other payment in respect of any shareholder's capitalΒ stock in the Company.
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"Eligible Innovation Project" means an "eligible innovation project" within theΒ meaning of the Act and, with respect to the Loan, means the Project.
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"Environmental Activity" means any actual or threatened storage, holding, existence,Β Release, emission, discharge, transportation or disposal of any Hazardous Substance from, under,Β into or with respect to the Project or otherwise relating to the Project or any Use of the Project whichΒ is regulated by or for which standards of conduct or liability are imposed by any EnvironmentalΒ Requirements.
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"Environmental Laws" means the Comprehensive Environmental Response,Β Compensation and Liability Act ("CERCLA"), 42 U.S.C. Β§9601 et seq., the Resource ConservationΒ and Xxxxxxxx Xxx, 00 X.X.X. Β§0000 et seq., the Hazardous Materials Xxxxxxxxxxxxxx Xxx, 00 X.X.X.Β Β§0000 et seq., the Toxic Substances Xxxxxxx Xxx, 00 X.X.X. Β§0000 et seq., the Federal WaterΒ Pollution Xxxxxxx Xxx, 00 X.X.X. Β§0000 et seq., the Clean Xxxxx Xxx, 00 X.X.X. Β§0000 et seq., theΒ Clean Air Act, 42 U.S.C. Β§7401 et seq., regulations promulgated thereunder, and any other federal,Β state, county, municipal, local or other statue, law, ordinance or regulation which may relate to orΒ deal with human health or the environment. References to sections or titles of any EnvironmentalΒ Law shall be construed to also refer to successor sections or titles.
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"Environmental Requirements" means all present and future laws, including but notΒ limited to Environmental Laws, authorizations, judgments, decrees, concessions, grants, orders,Β franchises, agreements and other restrictions and requirements (whether or not arising under statutesΒ or regulations) relating to any Hazardous Substances or Environmental Activity.
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"ERISA" means the Employee Retirement Income Security Act of 1974, and anyΒ successor statute of similar import, together with all rules and regulations thereunder, as amended,Β reformed or otherwise modified from time to time. References to sections or titles of ERISA shall beΒ construed to also refer to successor sections or titles.
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"Escrow Account" means the Escrow Account as defined in the Escrow Disbursing
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Agreement.
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"Escrow Agent" means The Huntington National Bank, in its capacity as EscrowΒ Agent under the Escrow Disbursing Agreement.
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"Escrow Disbursement Date" means each date upon which Escrow Funds areΒ disbursed to, or for the benefit of, the Company from the Escrow Account pursuant to the EscrowΒ Disbursing Agreement.
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"Escrow Disbursement Termination Date" means October 31, 2009 or suchΒ subsequent date as may be established by the Director in writing in accordance with Section 3.7Β hereof for the disbursement of the Loan and the Escrow Funds.
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"Escrow Disbursing Agreement" means the Escrow Disbursing Agreement of evenΒ date herewith among the Company, the Director and the Escrow Agent, as the same may beΒ amended, modified, supplemented, restated or replaced from time to time.
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"Escrow Funding Date" means each date proceeds of the Loan are funded to theΒ Escrow Account in accordance with the terms of this Agreement and the Escrow DisbursingΒ Agreement, and the final Escrow Funding Date shall not be later than the Escrow DisbursementΒ Termination Date. There shall not be more than three (3) Escrow Funding Dates.
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"Escrow Funds" means the proceeds of the Loan disbursed into the Escrow AccountΒ in accordance with the terms of this Agreement and the Escrow Disbursing Agreement.
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"Event of Default" means any of the events described as an event of default in Section
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5.1 hereof.
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"Final Cost Certification" means the Cost Certification dated as of the Completion
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Date.
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"Governing Instruments" means the articles of incorporation and code of regulationsΒ (or by-laws) of the Company.
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"Governmental Authority" means, collectively, the United States of America, theΒ State, any political subdivision thereof, any municipality, and any agency, department, commission,Β board or bureau of any of the foregoing having jurisdiction over the Project and/or the Project Site.
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"Hazardous Substances" means:
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any "hazardous substance" as defined in Β§101(14) of CERCLA (42 U.S.C.Β Β§9601(14)) or regulations promulgated thereunder;
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any "solid waste", "hazardous waste", "infectious waste", "pollutant", orΒ "hazardous air pollutant", as such terms are defined in any EnvironmentalΒ Law at such time;
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asbestos, urea-formaldehyde, polychlorinated biphenyls, source, specialΒ nuclear or by-product material, chemical waste, radioactive material,Β explosives, known carcinogens, petroleum products and by-products andΒ other dangerous, toxic or hazardous pollutants, contaminants, chemicals,Β material or substances listed or identified in, or regulated by, anyΒ Environmental Law; and
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any additional substances or materials which at such time are classified orΒ considered to be hazardous or toxic under any Environmental Law.
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"Intercreditor Agreement" means the Intercreditor Agreement between the Company,Β the Director and the Lender of even date herewith, as the same may be amended, modified,Β supplemented, restated or replaced from time to time.
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"Lender" means Xxxxxx Xxxxx, an individual.
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"Lender Loan" means the loan in the principal amount of Eight Hundred ThousandΒ Dollars ($800,000) made b y the Lender to the Company pursuant to the Lender Loan Documents.
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"Lender Loan Documents" means all documents, instruments and agreementsΒ evidencing or securing the Lender Loan, as the same may be amended, modified, supplemented,Β restated or replaced from time to time with the prior written consent of the Director.
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"Loan" means the loan b y the Director to the Company in the total sum of the LoanΒ Amount, to be disbursed pursuant to the terms hereof and the Escrow Disbursing Agreement.
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"Loan Amount" means the lesser of (i) One Million Eighty-Three Thousand NineΒ Hundred Fifty-One Dollars ($1,083,951) and (ii) 75% of the Allowable Innovation Costs of theΒ Project, as determined by the Director in the Director's sole discretion pursuant to this Agreement.
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"Loan Approval Documents" means, with respect to the Loan, the RecommendationΒ of the Director to the Development Financing Advisory Council dated December 3, 2007, theΒ Resolution of the Development Financing Advisory Council dated December 3, 2007, the ApprovalΒ of the Controlling Board dated January 14, 2008, and the Commitment.
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"Loan Documents" means all documents, instruments and agreements delivered to orΒ required b y the Director to evidence or secure the Loan, including this Agreement, the Note, theΒ Security Documents and the Escrow Disbursing Agreement as required by the Commitment and thisΒ Agreement, as the same may be amended, modified, supplemented, restated or replaced from time toΒ time.
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"Loan Participation Fee" is defined in Section 3.1(c) hereof.Β "Loss" is defined in Section 3.8(b)(viii) hereof.
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"Market Conditions" means those conditions determined by the Director, with adviceΒ from the Federal Reserve Bank of Cleveland. The Director shall consider the following:
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Β Β (i)Β Β Β Β Β Β
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two consecutive quarters of decline in manufacturing employment in theΒ State as a whole, or when possible by relevant manufacturing sector.Β Employment figures will be those reported b y the Department of Job andΒ Family Services of the State;
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a decline, as a whole or by relevant sector, in 12 of the last 36 months asΒ detailed in the Federal Reserve's National Industrial Production Index; and
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Β (iii)Β Β Β Β Β Β | a decline within the relevant sector of Standard & Poor's "Industrial Outlook". |
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"Note" means the cognovit promissory note, in the form attached hereto as Exhibit A,Β evidencing the obligation of the Company to repay the Loan, as the same may be amended, modified,Β supplemented, restated or replaced from time to time.
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"Notice Address" means:
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Β | Β (a) | As to the Director:Β | Ohio Department of DevelopmentΒ |
Β | Β | Β | Attn: Loan ServicingΒ |
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00 Xxxxx Xxxx Xxxxxx, 00xx Xxxxx
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X.X. Xxx 0000
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Xxxxxxxx, XX 00000-0000
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Β | Β (b) | As to the Company:Β | The Guitammer CompanyΒ |
Β | Β | Β | Attn: Xxxx X. Xxxxx, President & CEOΒ |
Β | Β | Β | 0000 Xxxxxxx XxxxΒ |
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Xxxxxxxxxxx, Xxxx 00000
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or such additional or different address, notice of which is given under Section 6.2 hereof.
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"PBGC" means the Pension Benefit Guaranty Corporation established pursuantΒ Subtitle A of Title I> of ERISA.
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"Permitted Encumbrances" shall have the meaning ascribed to such term in theΒ Security Agreement.
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"Plan" means any employee benefit plan or other plan maintained for employeesΒ which is covered b y Title I of ERISA.
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"Plans and Specifications" means the plans and specifications or other appropriateΒ documents describing the Project prepared by or at the direction of the Company.
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"Prevailing Wage Letter" means that certain letter from N. Xxxxxxx Xxxxxx, LoanΒ Servicing, Economic Development Division of the Ohio Department of Development, to theΒ Company dated January 23, 2008, and attached hereto as Exhibit E.
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"Prohibited Transaction" means a transaction described in Section 406 of ERISAΒ which is not subject of an exemption pursuant to Section 408 of ERISA.
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"Project" means the Project Equipment and the Project Intangible Facilities, togetherΒ constituting an Eligible Innovation Project.
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"Project Equipment" means the equipment, machinery and other personal propertyΒ described on Exhibit B attached hereto, as such Exhibit B is amended and supplemented from timeΒ to time in accordance with the terms of the Security Agreement.
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"Project Intangible Facilities" means the intangible property related to a new productΒ or process based on new technology or the creative application of existing technology, includingΒ research and development, product or process testing, quality control, market research, and relatedΒ activities, that is to be acquired, established, expanded, remodeled, rehabilitated, or modernized forΒ industry, commerce, distribution, or research, or any combination thereof, the operation of which,Β alone or in conjunction with other eligible projects, eligible innovation projects, or innovationΒ property described in Exhibit C attached hereto.
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"Project Purposes" means the acquisition of the Project Equipment and developmentΒ of the Project Intangible Facilities.
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"Project Site" means the real property located at 0000 Xxxxxxx Xxxx, XxxxxxxxxxxΒ (Xxxxx Xxxxxxxx), Xxxx 00000.
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"Provision" means, as applicable, the acquiring, constructing, reconstructing,Β rehabilitating, renovating, enlarging, installing, improving, equipping or furnishing of the Project.
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"Release" means spilling, leaking, pumping, paving, emitting, emptying, discharging,Β injecting, escaping, contaminating, leaching, disposing, releasing or dumping of any HazardousΒ Substance into the environment.
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"Reportable Event" shall have the meaning given such term in Section 4043(b) of ERISA.
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"Required Equity Contribution" means Three Hundred Sixty-One Thousand ThreeΒ Hundred Seventeen Dollars ($361,317) to be provided by the Company in cash to pay a portion ofΒ the Allowable Innovation Costs of the Project.
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"Security Agreement" means the Security Agreement between the Director and theΒ Company, of even date herewith, as the same may be amended, modified, supplemented, restated orΒ replaced from time to time.
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"Security Documents" means, collectively, Security Agreement and UCC FinancingΒ Statements, as the same may be amended, modified, supplemented, restated or replaced from time toΒ time.
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"State" means the State of Ohio.
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"Subordination Agreement" means the Subordination Agreement among the Director,Β the Company and the Subordinated Creditors of even date herewith, as the same may be amended,Β modified, supplemented, restated or replaced from time to time.
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"Subordinated Creditor(s)" means the parties set forth on Exhibit D, together withΒ any other party hereafter executing a Joinder Agreement (as defined in the Subordination Agreement)Β to the Subordination Agreement.
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"Subordinated Creditor Loans" means the loans in the aggregate principal amount ofΒ Six Hundred Thirty-Two Thousand Dollars ($632,000.00) made by the Subordinated Creditors to theΒ Company pursuant to the Subordinated Creditor Loan Documents.
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"Subordinated Creditor Loan Documents" means all documents, instruments andΒ agreements evidencing or securing the Subordinated Creditors Loans, as the same may be amended,Β modified, supplemented, restated or replaced from time to time with the prior written consent of theΒ Director.
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"UCC Financing Statement" means a financing statement under Article 9 of the OhioΒ Uniform Commercial Code providing notice of the Director's security interest in the Collateral.
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"Use" means the use, ownership, development, construction, renovation,Β maintenance, management, operation or occupancy of real property, including the Project Site.
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Section 1.3. Certain Words and References. Any reference herein to the Director shallΒ include those succeeding to the Director's functions, duties or responsibilities pursuant to or byΒ operation of law or lawfully performing such functions. References to sections or provisions of theΒ Constitution of the State or to the Act or to sections, provisions, chapters or titles of the OhioΒ Revised Code or the United States Code shall be construed to also refer to successor sections,Β provisions, chapters or titles.
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The terms "hereof," "hereby," "herein," "hereto," "hereunder" and similar terms refer to thisΒ Agreement; and the term "heretofore" means before, and the term "hereafter" means after, theΒ Closing Date. Words of the masculine gender include the feminine and the neuter, and when theΒ sense so indicates, words of the neuter gender may refer to any gender.
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ARTICLE II
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Determinations and Representations
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Section 2.1. Determinations of the Director. Pursuant to the Act and on the basis of theΒ representations and other information provided by the Company, the Director has heretofore madeΒ certain determinations, as set forth in the Loan Approval Documents, which are hereby confirmed,Β and the Director hereby determines that the financial assistance to be provided b y the State pursuantΒ to this Agreement will conform to the requirements of the Act, including Sections 166.12 to 166.16Β thereof, and will further and implement the purposes of the Act b y creating new jobs or preserving existing jobs and employment opportunities and improving the economic welfare of the people of theΒ State.
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Section 2.2. Representations and Warranties of the Company. The Company herebΒ represents and warrants that:
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Β (a)
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It is a corporation for profit duly incorporated, organized, validly existing and in goodΒ standing under the laws of the State, and has all requisite power to conduct itsΒ business as now conducted and to own, hold and lease its assets and properties.
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Β (b)
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It is qualified to do business as a foreign corporation in each other jurisdictionΒ wherein the character of the properties owned or held under lease by the Company orΒ the nature of the business conducted or proposed to be conducted by the CompanyΒ makes such qualification necessary, except in such jurisdiction where the failure to beΒ so qualified, licensed, admitted or approved will not have a material adverse effect onΒ the business operations or financial condition of the Company.
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Β Β (c)
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It has full power and authority to execute, deliver and perform the Loan Documents,Β the Lender Loan Documents and the Subordinated Creditor Loan Documents, and toΒ enter into and carry out the transactions contemplated thereby. Such execution,Β delivery and performance do not, and will not, violate any provision of lawΒ applicable to the Company or the Governing Instruments of the Company and do not,Β and will not, conflict with or result in a default under any agreement or instrument toΒ which the Company is a party or by which it or any of its property or assets is or mayΒ be bound. The Loan Documents, Lender Loan Documents and SubordinatedΒ Creditor Loan Documents have, b y proper action, been duly authorized, executed andΒ delivered and constitute legal, valid and binding obligations of the Company.
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Β Β (d)
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The provision of financial assistance pursuant to the Loan Approval Documents andΒ this Agreement induced the Company to provide the Project, thereby creating newΒ jobs or preserving existing jobs and employment opportunities and improving theΒ economic welfare of the people of the State.
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Β Β (e)
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To the extent applicable, the Provision of the Project will be completed and theΒ Project and the Company's business will be operated and maintained in such mannerΒ as to conform with all applicable Environmental Laws and zoning, planning, buildingΒ and other applicable governmental regulations imposed by any GovernmentalΒ Authority and as to be consistent with the purposes of the Act.
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Β Β (f)
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It presently intends that the Project will be used and operated in a manner consistentΒ with the Project Purposes until the date on which the Loan has been fully repaid, andΒ the Company knows of no reason why the Project will not be so operated.
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Β Β (g)
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There are no actions, suits or proceedings pending or threatened against or affectingΒ the Company or the Project which, if adversely determined, would individually or in
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the aggregate materially impair the ability of the Company to perform any of itsΒ obligations under the Loan Documents, Lender Loan Documents or SubordinatedΒ Creditor Loan Documents or materially and adversely affect the financial conditionΒ of the Company.
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Β Β (h)
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It is not in default under any of the Loan Documents, Lender Loan Documents orΒ Subordinated Creditor Loan Documents, or in the payment of any indebtedness forΒ borrowed money or under any agreement or instrument evidencing any suchΒ indebtedness, and no event has occurred which by notice, the passage of time orΒ otherwise would constitute any such event of default.
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Β Β (i)
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Intentionally deleted.
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Β Β (j)
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It has made no contract or arrangement of any kind, other than the Loan Documents,Β the Lender Loan Documents and the Subordinated Creditor Loan Documents, whichΒ has given rise to, or the performance of which by the other party thereto would giveΒ rise to, a lien or claim of lien on the Project or other collateral covered by the LoanΒ Documents, the Lender Loan Documents or the Subordinated Creditor LoanΒ Documents.
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Β Β (k)
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No representation or warranty of the Company contained in any of the Loan ApprovalΒ Documents, Loan Documents, Lender Loan Documents or Subordinated CreditorΒ Loan Documents, and no statement contained in any certificate, schedule, list,Β financial statement or other instrument furnished to the Director or the Lender by orΒ on behalf of the Company (including, without limitation, the Application), containsΒ any untrue statement of a material fact, or omits to state a material fact necessary toΒ make the statements contained herein or therein not misleading.
|
Β
Β Β (l)
|
The financial statements of the Company heretofore delivered to the Director are trueΒ and correct, in all material respects, and closely conform with generally acceptedΒ accounting principles consistently applied, and fairly present the financial conditionΒ and the results of operation of the Company as of the dates thereof. No materiallyΒ adverse change has occurred in the financial condition of the Company reflectedΒ therein since the respective dates thereof.
|
Β
Β (m)
|
All proceeds of the Loan shall be used for the payment of Allowable InnovationΒ Costs relating to Provision of the Project. No part of any such proceeds shall beΒ knowingly paid to or retained by the Company or any member, owner, manager,Β partner, officer, shareholder, director or employee of the Company as a fee, kick-backΒ or consideration of any type. The Company has no identity of interest with theΒ general contractor or any architect, subcontractor, laborer or materialman performingΒ work or services or supplying materials in connection with the Provision of theΒ Project.
|
Β
Β
Β
10
Β
Β
(n)
|
It is the owner of the Project Equipment, subject in all cases to no lien, charge, easement, condition, restriction or encumbrance except as created by the LoanΒ Documents, the Lender Loan Documents, the Subordinated Creditor LoanΒ Documents, or shown as Permitted Encumbrances under the Security Documents.
|
Β
(o)
|
Β (i) |
It is and has been at all times in compliance with all applicableEnvironmental Requirements relating to the Project and the use of the ProjectΒ and the Company has not engaged in any Environmental Activity in violationΒ of any applicable Environmental Requirements, nor has any EnvironmentalΒ Activity otherwise occurred, in violation of any applicable EnvironmentalΒ Requirements.
|
Β
Β
Β Β (ii)
|
No investigations, inquiries, orders, hearings, actions or other proceedings byΒ or before any court or Governmental Authority are pending or, to theΒ Company's knowledge, threatened in connection with any EnvironmentalΒ Activity or alleged Environmental Activity conducted b y the Company uponΒ the Project Site.
|
Β
Β Β (iii)
|
No claims at any time have been made or threatened against the Company or,Β to the Company's actual knowledge, the prior owners of the Project SiteΒ relating to damage, contribution, cost recovery, compensation, penalty, lossΒ or injury resulting from any Environmental Activity or Hazardous Substance.
|
Β
Β Β (iv)
|
It has no liability, absolute or contingent, in connection with anΒ Environmental Activity.
|
Β
Β (v)
|
To the best of the Company's knowledge, no Hazardous Substances haveΒ been integrated into the Project or any component thereof in such manner orΒ quantity as may reasonably be expected to or in fact would pose a threat toΒ human health or the value of the Project.
|
Β
Β Β (vi)
|
The Project is not subject to any claim which might give rise to a lien in favorΒ of any Governmental Authority as a result of any Release or threatenedΒ Release of any Hazardous Substance b y the Company or EnvironmentalΒ Activity b y the Company.
|
Β
Β (p)
|
It shall provide the Required Equity Contribution by the Completion Date andotherwise in accordance with the terms hereof and the Escrow DisbursingΒ Agreement.
|
Β
Β
(q)
|
Allowable Innovation Costs, which may consist of one or more of the followingcosts: (i) research and development of the Project, (ii) obtaining or creating anyΒ requisite software or computer hardware related to Project or the products or servicesΒ associated therewith, (iii) testing (including, without limitation, quality controlΒ activities necessary for initial production), perfecting, and marketing of such productsand services, and (iv) creating and protecting intellectual property related to theΒ Project or any products or services related thereto, including costs of securingΒ appropriate patent, trademark, trade secret, trade dress, copyright, or other form ofΒ intellectual property protection for the Project or related products and services, areΒ expenditures that can and will be capitalized under applicable generally acceptedΒ accounting principles.
|
Β
Β
Β
11
Β
Β
ARTICLE III
Β
Loan; Provision o f Project; Conditions to DisbursementΒ
Β
Section 3.1. Loan and Repayment.
Β
(a)Β Β On the terms and conditions of this Agreement and the Commitment, the DirectorΒ shall lend to the Company the Loan Amount to assist in the financing of the Project. The Loan shallΒ be evidenced b y this Agreement and the Note and secured by the Security Documents and the otherΒ Loan Documents, as applicable. Those instruments shall be executed and delivered by the CompanyΒ to the Director on the Closing Date.
Β
(b)Β Β The terms of repayment of the Loan shall be as set forth in the Note and the CompanΒ shall make all payments required to be made under the Note as and when due.
Β
(c)Β Β In addition to all payments required under the Note, the Company shall also pay aΒ loan participation fee to the Director equal to ten percent (10%) of the amount of the Loan actuallyΒ funded (the "Loan Participation Fee") payable at the end of the term of the Loan (whether byΒ maturity, acceleration or otherwise); provided, however, if the Loan is prepaid prior to the end of theΒ term of the Loan, the unpaid balance of such Loan Participation Fee shall be paid to the Director atΒ the time of such prepayment.
Β
(d)Β Β Proceeds of the Loan shall be disbursed into the Escrow Account on each EscrowΒ Funding Date pursuant to the terms hereof and the Escrow Disbursing Agreement upon theΒ satisfaction of the conditions set forth in Section 3.6(a) hereof and held in accordance with the termsΒ of this Agreement and the Escrow Disbursing Agreement. The Loan shall be disbursed only from,Β and only to the extent that on each Escrow Funding Date funds not heretofore committed areΒ available to make the Loan from moneys in, the "Innovation Ohio Loan Fund" created by the Act andΒ as defined in the Act.
Β
(e)The Escrow Funds shall be available for disbursement until the Escrow DisbursementΒ Termination Date, and thereafter, the Director shall have no obligation to make or approve anyΒ further disbursements from the Escrow Account. Any Escrow Funds disbursed to the Director fromΒ the Escrow Account shall be applied as provided in the Note.
Β
(f)Β Β The Escrow Funds shall be disbursed from the Escrow Account on each EscrowΒ Disbursement Date pursuant to the terms of this Agreement and the Escrow Disbursing Agreement.Β The Company shall be entitled to submit Disbursement Requests pursuant to the Escrow Disbursing Agreement not more frequently than once in any thirty (30) day period.
Β
Β
Β
12
Β
Β
(g)Β Β Each payment of Allowable Innovation Costs of the Project shall be funded 75% with Escrow Funds and 25% with the Required Equity Contribution (for which purpose it isΒ acknowledged that Allowable Innovation Costs of the Project incurred and paid by the CompanyΒ from and after September 1, 2007 shall be included as part of the Required Equity Contribution).
Β
Section 3.2. Provision of Project. The Company (a) has commenced or shall promptlyΒ hereafter commence the Provision of the Project; (b) shall pay all expenses incurred in suchΒ Provision from funds made available therefor in accordance with this Agreement, the Lender LoanΒ Documents, the Required Equity Contribution or otherwise; and (c) shall demand, xxx for, xxxx andΒ recover all sums of money and debts which may be due and payable under the terms of any contract,Β order, receipt, guaranty, warranty, writing or instruction in connection with the Provision of theΒ Project and will enforce the terms of any contract, agreement, obligation, bond or other performanceΒ security with respect thereto. The Company confirms its agreement in the Commitment asΒ supplemented b y the Prevailing Wage Letter that, to the extent applicable, all wages paid to laborersΒ and mechanics employed on the Provision of the Project shall be paid at not less than the prevailingΒ rates of wages for laborers and mechanics for the class of work called for b y the Project, whichΒ wages shall be determined in accordance with the requirements of Chapter 4115, Ohio RevisedΒ Code, for determination of prevailing wage rates; provided that if the Company undertakes, as part ofΒ the Project, work to be performed by its regular bargaining unit employees who are covered under aΒ collective bargaining agreement which was in existence prior to the date of the Commitment, the rateΒ of pay provided under the applicable collective bargaining agreement may be paid to suchΒ employees.
Β
Section 3.3. Plans and Specifications; Inspections. At the Director's option, the DirectorΒ may designate an employee or officer of the State or may retain, at the Company's expense, anΒ architect, engineer, appraiser or other consultant for the purpose of approving the Plans andΒ Specifications, verifying costs and performing inspections of the Project as Provision of the ProjectΒ progresses or reviewing any construction contracts and payment or performance bonds or other formsΒ of assurance of completion of the Project. Such inspections, reviews or approvals shall not imposeΒ any responsibility or liability of any nature upon the Director, the State or officers, employees,Β agents, representatives or designees of the Director or the State, or, without limitation, make or causeΒ to be made any warranty or representation as to the adequacy or safety of the structures or any ofΒ their component parts or any other physical condition or feature pertaining to the Project and theΒ Project Site. The Company shall, at the request of the Director, make periodic reports (including, ifΒ required, submission of updated Cost Certifications) to the Director concerning the status ofΒ completion and the expenditures for costs in respect thereof.
Β
The Company may revise the Plans and Specifications from time to time; provided that noΒ revision shall be made (a) which would change the Project Purposes to purposes other than thoseΒ permitted by the Act; (b) without obtaining, to the extent required b y law, the approval of anyΒ applicable Governmental Authority; and (c) without the prior written approval of the Director if suchΒ revision would change the amounts set forth in the most recently furnished Cost Certification. In anyΒ event, all revisions to the Plans and Specifications shall be promptly filed with the Director.
Β
Β
Β
13
Β
Β
Section 3.4. Company Required to Pay Costs in Event Proceeds Insufficient. In the eventΒ that the proceeds of the Loan, the Lender Loan and the Required Equity Contribution are notΒ sufficient to pay all costs of the Project, the Company shall, nonetheless and irrespective of the causeΒ of such deficiency, complete the Project in accordance with the Plans and Specifications and pay allΒ costs of such completion in full from its own funds.
Β
Section 3.5. Completion Date. The Completion Date shall occur not later than SeptemberΒ 30, 2009, and shall be evidenced to the Director by a certificate of the Company stating (a) theΒ Completion Date, (b) that all licenses, permits and approvals for the Project required by anyΒ Governmental Authority have been procured and/or obtained, (c) that all improvements andΒ additions reflected in the Plans and Specifications have been made and the Provision of the ProjectΒ has been completed, (d) that all costs of providing the Project have been incurred, and (e) the date asΒ of which operation of the Project shall commence. Such certificate shall be accompanied by theΒ Final Cost Certification.
Β
Section 3.6. Conditions to Disbursement.
Β
(a)Β Β Disbursement of Loan Proceeds to Escrow Account. Prior to the Director authorizing disbursement of any proceeds of the Loan to the Escrow Account pursuant to the terms of thisΒ Agreement and the Escrow Disbursing Agreement, the Director shall have received the following inΒ form and substance satisfactory to the Director:
Β
Β (i)
|
the executed Note;
|
Β
Β Β (ii)
|
evidence of the liability and property insurance required by the SecuriΒ Documents (on XXXXX form 27);
|
Β
Β Β (iii)
|
determination of prevailing wage b y the Wage and Hour Bureau of theΒ Department of Commerce of the State, if applicable and subject to theΒ Prevailing Wage Letter;
|
Β
Β Β (iv)
|
the duly executed Security Documents, Intercreditor Agreement, EscrowΒ Disbursing Agreement, Subordination Agreement, and all other LoanΒ Documents;
|
Β
Β Β (v)
|
the Company's Certificate of Corporate Good Standing issued by theΒ Secretary of State of Ohio, dated within ten (10) days of the date of thisΒ Agreement;
|
Β
Β Β (vi)
|
certified copy of the resolutions of the governing board/body of the CompanΒ authorizing execution, delivery and performance of all Loan Documents;
|
Β
Β Β (vii)
|
the UCC Financing Statement to evidence and perfect the security interestsΒ created b y the Security Documents;
|
Β
Β
Β
14
Β
Β
Β Β (viii)
|
certificate of incumbency as to the Company;
|
Β
Β Β (ix)
|
copies, certified b y the Company to be true, correct and complete, of theΒ Governing Instruments of the Company;
|
Β
Β (x)
|
copies, certified b y the Company to be true, correct and complete, of theΒ Lender Loan Documents and Subordinated Creditor Loan Documents;
|
Β
Β (xi)
|
an opinion of the Company's legal counsel which sets forth substantially theΒ following:
|
Β
(1)
|
that the Company is a corporation organized and validly existingΒ under the laws of, and in good standing with, the State;
|
Β
Β (2)
|
that the Company has full power and authority to own its propertiesΒ and conduct its business;
|
Β
Β (3)
|
that the execution and delivery of the Loan Documents by theΒ Company, and the performance of its obligations thereunder, do notΒ conflict with the Governing Instruments of the Company;
|
Β
Β (4)
|
that the Loan Documents have been duly authorized, executed andΒ delivered by the Company and are valid and binding instruments,Β enforceable against the Company in accordance with their respectiveΒ terms, except as such enforcement may be limited by bankruptcy,Β insolvency or other laws or equitable principles affecting theΒ enforcement of creditor's rights generally;
|
Β
Β (5)
|
that the execution and delivery b y the Company of the LoanΒ Documents and the performance of its obligations thereunder neitherΒ is prohibited b y, nor subjects the Company to a fine, penalty or otherΒ similar sanction under, any statute or regulation of any GovernmentalΒ Authority;
|
Β
Β Β (6)
|
that there are no actions, suits or proceedings, at law or in equity, orΒ before or by any court, public board or body, pending or, to theΒ knowledge of counsel, threatened affecting the Company or theΒ Project which, if adversely determined, would individually or in theΒ aggregate materially impair the ability of the Company to perform anyΒ of its obligations under the Loan Documents or would materiallyΒ adversely affect the financial condition of the Company; and
|
Β
Β (7)
|
that the execution of the Loan Documents and consummation of theΒ transactions contemplated in this Agreement will not result in a breach or violation or default under any judgment, decree, loan,Β mortgage, agreement, indenture or other instrument applicable to theΒ Company;
|
Β
Β
Β
15
Β
Β
Β
Β Β (xii)
|
copies of all licenses and permits required by any Governmental Authority inΒ connection with the Project and the operation thereof;
|
Β
Β Β (xiii)
|
a copy of the Plans and Specifications, if requested b y the Director;
|
Β
Β Β (xiv)
|
UCC security interest, judgment and tax lien searches regarding the CompanyΒ from all appropriate jurisdictions;
|
Β
Β (xv)
|
landlord waivers, if requested by the Director;
|
Β
Β (xvi)
|
a duly executed Power of Attorney to authorize wire transfers, if any;
|
Β
Β (xvii)
|
an Authorization Agreement for Preauthorized Payment; and
|
Β
Β Β (xviii)
|
such other certifications, documents or opinions as the Director mayΒ reasonably request.
|
Β
(b)Β Β Disbursement of Funds from the Escrow Account. Subject to the terms hereof and theEscrow Disbursing Agreement, the disbursement of Escrow Funds shall be made on each EscrowΒ Disbursement Date, provided the affirmations set forth in subsection (d) below are true, accurate andΒ complete and the Director shall have received the following on or before each such EscrowΒ Disbursement Date:
Β
Β (i)
|
a Disbursement Request, duly completed and executed b y the Company,Β indicating the nature of each Allowable Innovation Cost incurred, the amountΒ thereof, that the Required Equity Contribution has been paid from retainedΒ earnings and/or working capital of the Company and setting forth a dateΒ (which must be a Business Day (as defined in the Escrow DisbursingΒ Agreement)) not less than ten (10) days nor more than twenty-five (25) daysΒ from the date of the submission of the Disbursement Request, upon which theΒ disbursement is to be made;
|
Β
Β (ii)
|
a Cost Certification;
|
Β
Β Β (iii)
|
a written certification from the Company that certain technical milestonesΒ have been met with respect to the Project; or a written status report b y theΒ Company with respect to the Provision of the Project;
|
Β
Β Β (iv)
|
such other certifications, documents or opinions as the Director maΒ reasonably request; and
|
Β
Β
Β
16
Β
Β
Β Β (v)
|
in connection with the final Escrow Disbursement Date, the following additional items: |
Β
Β
Β (1)
|
the items required b y Section 3.5 hereof;
|
Β
Β Β (2)
|
if applicable and subject to the Prevailing Wage Letter, a certificate ofΒ compliance issued b y the Wage and Hour Bureau of the DepartmentΒ of Commerce of the State, certifying as to full compliance withΒ Chapter 4115, Ohio Revised Code;
|
Β
Β (3)
|
Final Cost Certification;
|
Β
Β (4)
|
certificate of occupancy, if applicable; and
|
Β
Β Β (5)
|
list of all contractors and subcontractors (names and addresses) whoΒ worked on the Project, if applicable.
|
Β
Β
Β
(c)Β Β If the items described in subsection 3.6(b) received by the Director are deemed by it toΒ be satisfactory in form, substance and execution and if the Director shall have approved theΒ disbursement of Escrow Funds as set forth in the Disbursement Request, the Director shall instructΒ the Escrow Agent to disburse the appropriate portion of the Escrow Funds to the Company and in theΒ amounts shown on the Disbursement Request.
Β
(d)Β Β Each Disbursement Request shall be deemed an affirmation b y the Company that (i)Β the undisbursed portion of the Escrow Funds, after the requested disbursement, together with theΒ undisbursed portion of the Required Equity Contribution, will be sufficient to complete the Project,Β (ii) the Project Equipment, if any, which is described in the Disbursement Request has beenΒ delivered and accepted by the Company, (iii) the representations and warranties of Company set forthΒ in Loan Documents remain true and correct as of the date of the disbursement of Escrow Funds inΒ accordance with such Disbursement Request, (iv) no Event of Default shall have occurred as of theΒ date of the disbursement of Escrow Funds in accordance with such Disbursement Request, (v) eachΒ item for which payment is requested hereunder is an Allowable Innovation Cost, properly payableΒ out of the Escrow Funds in accordance with the terms and conditions of the Loan Agreement and theΒ other Loan Documents; (vi) none of the items for which payment is requested had formed the basisΒ for any payment heretofore made from the Escrow Funds; and (vii) each item for which payment isΒ requested is necessary in connection with the Project.
Β
(e)Β Β Upon the giving of written notice by the Director to the Escrow Agent that no furtherΒ disbursements of the Escrow Funds and/or interest accrued on the Escrow Funds shall be madeΒ (including as a result of an occurrence of an Event of Default under the Loan Documents), theΒ Escrow Agent shall not make any further disbursements of the Escrow Funds and/or such accruedΒ interest until the Escrow Agent is notified in writing b y the Director that either (i) suchΒ disbursements may resume, or (ii) the Escrow Agent shall disburse all remaining Escrow Funds,Β together with all accrued interest thereon, to the Director.
Β
Β
Β
17
Β
Β
Section 3.7. Postponement of Escrow Disbursement Termination Date. At the writtenΒ request of the Company setting forth the reasons therefor and received at least twenty (20) days priorΒ to the Escrow Disbursement Termination Date, the Director may, but shall be under no obligation to,Β postpone the Escrow Disbursement Termination Date to a later date. No such postponement shall beΒ deemed to have been granted unless stated in a writing signed by the Director specifying the lengthΒ of the extension given. If for any reason the Loan and the Escrow Funds shall not have been fullyΒ disbursed on or before the Escrow Disbursement Termination Date or such subsequent date as theΒ Director shall have specified in writing pursuant to the preceding sentence, the Director shall notΒ have any obligation to approve or permit any further disbursement of proceeds of the Loan to theΒ Escrow Account nor disbursement of Escrow Funds from the Escrow Account to the Company. ForΒ purposes of this Section, time is of the essence.
Β
Section 3.8. Payment of Costs; Indemnification.
Β
(a)Β Β The Company shall pay all costs incident to the Loan, including recording fees,Β escrow fees and all other costs and expenses incurred by or on behalf of the Director.
Β
(b)Β Β The Company shall, at its sole cost and expense, defend, indemnify and hold theΒ Director and any officials, employees, agents and representatives of the Director and the State, itsΒ and their successors and assigns, harmless from and against, and shall reimburse the Director andΒ any officials, employees, agents and representatives of the Director and the State, its and theirΒ successors and assigns for, any and all loss, cost, claim, liability, damage, judgment, penalty,Β injunctive relief, action or cause of action arising in connection with or as the result of:
Β
Β (i)
|
any past, present or future existence, use, handling, storage, transportation,Β manufacture, Release, threat of Release, or disposal of any HazardousΒ Substance in, on or under the Project or the Project Site;
|
Β
Β Β (ii)
|
the occurrence of any Environmental Activity in violation of anyΒ Environmental Requirement, or any failure of the Company or any operatorΒ of the Project or Project Site to comply with all applicable EnvironmentalΒ Requirements relating to the Project or the Project Site or the Use of theΒ Project or the Project Site;
|
Β
Β Β (iii)
|
any investigation, inquiry, order, hearing, action or other proceeding by orΒ before any Governmental Authority in connection with any EnvironmentalΒ Activity occurring or allegedly occurring on or about the Project or theΒ Project Site;
|
Β
Β Β (iv)
|
any failure of any representation and/or warranty set forth herein or in anΒ other Loan Document to be correct in all respects;
|
Β
Β (v)
|
any failure of the Company to perform any covenant set forth herein or in anΒ other Loan Document;
|
Β
Β
Β
18
Β
Β
Β Β (vi)
|
any claim, demand or cause of action, or any action or other proceedings,Β whether meritorious or not, brought or asserted against the Director and/orΒ any officials, employees, agents and representatives of the Director and theΒ State, its and their successors and assigns, which directly or indirectly relatesΒ to, arises from or is based on any of the matters described in clauses (i)Β through (v) of this Section 3.8(b) or any allegation of any such matters; or
|
Β
(vii)
|
the execution and delivery of this Agreement or any other Loan DocumentsΒ and the transactions contemplated thereby, and the preparation of documentsΒ relating to the disbursement of the Loan, including all aforementioned costsΒ and expenses, regardless of whether or not the disbursement of the Loan shallΒ actually occur; and
|
Β
Β Β (viii)
|
the enforcement of this Agreement or the assertion b y the Company of anyΒ defense to its obligations hereunder. This indemnity and hold harmlessΒ provision shall apply to all of clauses (i) through (viii) of this Section 3.8(b)Β whether such events, acts or omissions are foreseeable or unforeseeable,Β regardless of the source, the time of occurrence or the time of discovery, andΒ whether any of such matters arise before or after foreclosure of the SecurityΒ Documents or other taking of title to all or any portion of the Project SiteΒ and/or the Project by the Director, its successors and/or assigns (all of thisΒ preceding sentence hereinafter collectively referred to as a "Loss"). TheΒ foregoing indemnification against Loss includes, without limitation,Β indemnification against all costs in law or in equity of removal, response,Β investigation, or remediation of any kind, and disposal of such HazardousΒ Substances, all costs of determining whether the Project or the Project Site isΒ in compliance with, and of causing the Project or the Project Site to be inΒ compliance with, all applicable Environmental Requirements, all reasonableΒ costs incurred to take precautions to protect against the Release of HazardousΒ Substances on, in, under or affecting the Project and the Project Site, allΒ reasonable costs associated with any Corrective Work, all reasonable costsΒ associated with claims for damages to persons, property, or natural resources,Β any reasonable loss to the Director from the diminution in the value of theΒ Project or the Project Site, and the Director's attorneys' and consultants' fees,Β court costs and expenses incurred in connection with any thereof.
|
Β
(c)The provisions of this Section 3.8 shall survive the termination of this Agreement.
Β
ARTICLE IV
Β
Additional Covenants and Agreements
Β
Section 4.1. Employment Statement; Job Creation. The Company shall furnish to theΒ Director upon request, but in any event not less frequently than concurrently with the annualfinancial statements to be furnished pursuant to Section 4.2(e)(ii) hereof, throughout the term of theΒ Loan a statement certifying (a) the number of employees of the Company employed on the Project asΒ of the date of the Application; (b) the number of employees of the Company currently employed onΒ the Project; (c) the number of any and all employees of the Company laid off or terminated from theΒ Project since the Closing Date; (d) the current number of women and minority employees of theΒ Company employed on the Project; and (e) such other employment, economic and statistical dataΒ concerning the Company as may be reasonably requested by the Director.
Β
Β
Β
19
Β
Β
The Company has represented that the Loan will permit the Company to create twenty-threeΒ (23) full-time jobs and employment opportunities in the City during the three-year period after theΒ Completion Date. If the Company fails, for reasons other than Market Conditions, to create at leastΒ twenty-one (21) such full-time jobs and employment opportunities, the interest rate on theΒ outstanding balance of the Loan shall, at the option of the Director, increase to eleven percent (11%)Β per annum.
Β
Section 4.2. Affirmative Covenants of the Company. Throughout the term of thisΒ Agreement, the Company shall:
Β
Β Β Β Β (a)
|
Taxes and Assessments. Pay and discharge promptly, or cause to be paid andΒ discharged promptly, when due and payable, all taxes, assessments and governmentalΒ charges, levies or claims imposed upon it, its income or any of its property, or uponΒ any part thereof, as well as all claims of any kind (including claims for labor,Β materials and supplies) which, if unpaid, might b y law become a lien or charge uponΒ its property.
Β
Notwithstanding the preceding paragraph, the Company may, at the Company'sΒ expense and after prior notice to the Director, by appropriate proceedings diligentlyΒ prosecuted, contest in good faith the validity or amount of any such taxes,Β assessments, governmental charges, levies and claims and during the period ofΒ contest, and after notice to the Director, may permit the items so contested to remainΒ unpaid. However, if at any time the Director shall notify the Company that, in theΒ opinion of legal counsel satisfactory to the Director, by nonpayment of any suchΒ items the lien created by the Security Documents as to any part of the Project and/orΒ Collateral will be materially affected or the Project or Collateral or any part thereofΒ will be subject to imminent loss or forfeiture, the Company shall promptly pay suchΒ taxes, assessments, charges, levies or claims.
|
Β
Β Β Β Β Β Β Β Β (b)
|
Maintain Existence. Do or cause to be done all things necessary to preserve and keepΒ in full force and effect its existence and its material rights and franchises.
|
Β
Β (c)
|
Maintain Property. Maintain and keep its property in good repair, working order andΒ condition, and from time to time make all repairs, renewals and replacements which,Β in the opinion of the Company, are necessary and proper so that the business carriedΒ on in connection therewith may be properly and advantageously conducted at allΒ times; provided, however, subject to the terms of the Security Documents, that nothing in this subsection (c) shall prevent the Company from selling or otherwiseΒ disposing of any property whenever, in the good faith judgment of the Company,Β such property is obsolete, worn out, without economic value or unnecessary for theΒ conduct of the business of the Company.
|
Β
Β
Β
20
Β
Β
Β Β Β (d)
|
Maintain Insurance. Keep all of its insurable property insured against loss or damageΒ b y fire and other risks, maintain public liability insurance against claims for personalΒ injury, death, or property damage suffered by others upon, in or about any premisesΒ occupied b y the Company; and maintain all such worker's compensation or similarΒ insurance as may be required under the laws of any state or jurisdiction in which itΒ may be engaged in business. All insurance for which provision has been made in thisΒ subsection (d) shall be maintained against such risks and in at least such amounts asΒ set forth in the Security Documents, and all insurance herein provided for shall beΒ effected and maintained in force under a policy or policies issued b y insurers ofΒ recognized responsibility, except that it may effect worker's compensation or similarΒ insurance in respect of operations in any state or other jurisdiction either through anΒ insurance fund operated by such state or other jurisdiction or by causing to beΒ maintained a system or systems of self-insurance which is in accordance withΒ applicable law.
|
Β
Β Β Β Β Β Β Β (e)
|
Furnish Information. Furnish to the Director:
|
Β
(i) |
Quarterly Reports. Within thirty (30) days after the end of each quarterlyΒ period of each fiscal year of the Company, a copy of its internally preparedΒ quarterly financial statements, including the balance sheet of the Company asΒ at the end of such quarterly period, together with related statements ofΒ income, retained earnings and cash flows for such quarterly period and for theΒ period from the beginning of such fiscal year to the end of such quarter,Β setting forth in comparative form the corresponding figures as at the end of orΒ for the corresponding quarter of the previous fiscal year, all in reasonableΒ detail, prepared in accordance with generally accepted accounting principlesΒ applied on a consistent basis, subject to usual year-end audit adjustments.
|
Β
(ii)
|
Annual Reports. Starting with the Company's 2008 fiscal year, within oneΒ hundred twenty (120) days after the end of each fiscal year of the Company,Β a copy of its reviewed annual financial statements, including the balanceΒ sheet of the Company as at the end of such fiscal year, together with relatedΒ statements of income, retained earnings and cash flows for such fiscal year,Β setting forth in comparative form the corresponding figures as at the end of orΒ for the previous fiscal year, all in reasonable detail and all examined by andΒ accompanied by a review letter of its independent certified public accountantsΒ to the effect that such financial statements were prepared in accordance withΒ the generally accepted accounting principles consistently applied, and presentΒ fairly the Company's financial position at the close of such periods and theΒ results of its operations for such periods. In addition, the Company shall provide to the Director, along with such financial statements, a certificateΒ from its accountants which states that the Company has complied with allΒ financial covenants which are set forth in Section 4.3(e) hereof, or, as theΒ case may be, disclose any defaults thereunder.
|
Β
Β
Β
21
Β
Β
Β Β (iii)
|
Certificate; No Default. With each of the financial reports required to be furnished under this Section, a certificate of the Company's chief executiveΒ officer or chief financial officer stating that (a) no Event of Default hasΒ occurred and is continuing and no event or circumstance which wouldΒ constitute an Event of Default, but for the requirement that notice be given,Β time elapse or otherwise, has occurred and is continuing, or, if such an EventΒ of Default or such event or circumstance has occurred and is continuing, aΒ statement as to the nature thereof and the action which the Company proposesΒ to take with respect thereto, and that (b) no action, suit or proceeding b y it orΒ against it at law or in equity, or before any governmental instrumentality orΒ agency, is pending or threatened, which, if adversely determined, wouldΒ materially impair the right or ability of the Company to carry on the businessΒ which is contemplated in connection with the Project or would materiallyΒ impair the right or ability of the Company to perform the transactionsΒ contemplated by this Agreement, the other Loan Documents or the LenderΒ Loan Documents or would materially and adversely affect its business,Β operations, properties, assets or condition, all as of the date of suchΒ certificate, except as disclosed in such certificate.
|
Β
(iv) |
Other Information. Such other information respecting the business, properties or the condition or operations, financial or otherwise, of theΒ Company as the Director may reasonably request.
|
Β
Β Β Β Β Β Β Β (f)
|
Deliver Notice. Forthwith upon learning of any of the following, deliver written notice thereof to the Director, describing the same and the steps being taken b y theΒ Company with respect thereto:
|
Β
Β (i)
|
the occurrence of an Event of Default or an event or circumstance which would constitute an Event of Default, but for the requirement that notice beΒ given, elapse of time or otherwise; or
|
Β
(ii)
|
any action, suit or proceeding by it or against it at law or in equity, or before any governmental instrumentality or agency, instituted or threatened which, ifΒ adversely determined, would materially impair the right or ability of theΒ Company to carry on the business which is contemplated in connection withΒ the Project or would materially impair the right or ability of the Company toΒ perform the transactions contemplated by the Loan Documents or LenderΒ Loan Documents, or would materially and adversely affect its business,Β operations, properties, assets or condition; or
|
Β
Β
Β
22
Β
Β
Β (iii)
|
the occurrence of a Reportable Event under, or the institution of steps b y theΒ Company to withdraw from, or the institution of any steps to terminate, anyΒ Plan as to which the Company may have liability; or
|
Β
(iv)
|
any material communication affecting the Project or the Project Site, and theΒ Company will promptly respond fully to any inquiry of the Director madeΒ with respect thereto.
|
Β
Β Β Β Β (g)
|
Inspection Rights. Permit the Director, or any agents or representatives thereof, toΒ examine and make copies of and abstract from the records and books of account of,Β and visit the properties of, the Company and discuss the general business affairs ofΒ the Company with any of its officers.
|
Β
Β Β Β Β Β (h)
|
Purchases. Use its commercially reasonable efforts to purchase goods and servicesΒ from persons and business entities located in this State.
|
Β
Β (i)
|
Environmental Matters.
|
Β
Β (i)
|
Comply with all Environmental Requirements relating to the Project or to the Use of the Project and the Project Site by the Company.
|
Β
Β
(ii)
|
Notify the Director, within fifteen (15) days, if it commences to contest the assertion of any Governmental Authority or any third party of any obligationΒ or liability affecting it or the Project or any part thereof regarding anΒ Environmental Activity or an Environmental Requirement, and, if requestedΒ b y the Director, shall give the Director monthly reports thereafter during theΒ period of such contest. If the Company contests the assertion of any suchΒ obligation or liability, such contest shall be diligently prosecuted until a finalΒ judgment is obtained. If such contest is unsuccessful, the Company shallΒ promptly commence Corrective Work. If the Company is not contesting theΒ assertion of any such obligation or liability, the Company shall commenceΒ Corrective Work promptly after the Company obtains actual knowledge ofΒ any Hazardous Substances on, in or affecting the Project.
|
Β
Β Β (iii)
|
Notify the Director prior to the commencement of any Corrective Work, andΒ shall promptly submit to the Director, for the Director's review, reasonablyΒ detailed plans for any such Corrective Work. If the Director, based upon theΒ proper advice and judgment of the Director's experts, reasonably rejects suchΒ plans, the Company shall promptly submit revised plans to the Director. TheΒ Director shall have no liability to the Company or any third party forΒ accepting or rejecting such plans. After the commencement of CorrectiveΒ Work, the Company shall, if requested by the Director, give the DirectorΒ monthly reports during the performance of such Corrective Work.
|
Β
Β
Β
23
Β
Β
Β (j)
|
Operations; Chief Executive Office. Maintain its primary operations and chiefΒ executive office in the State during the term of the Loan; if such operations are not soΒ maintained, the Loan and all other amounts payable by the Company under theΒ Agreement and Loan Documents (including without limitation, the LoanΒ Participation Fee) shall be due and payable in full.
|
Β
Β Β (k)
|
Public Offering. The Loan and all other amounts payable by the Company under thisΒ Agreement and the other Loan Documents (including without limitation, the LoanΒ Participation Fee) shall be due and payable in full if the Company shall undertake andΒ complete an initial public offering of its securities.
|
Β
Section 4.3. Negative Covenants of the Company. Throughout the term of this Agreement,Β the Company shall not:
Β
Β Β (a)
|
Maintain Existence. Sell, transfer or otherwise dispose of all, or substantially all, ofΒ its assets, consolidate with or merge into any other entity, or permit one or moreΒ entities to consolidate with or merge into it; provided, however, that the CompanyΒ may, without violating the agreement contained in this subsection (a), consolidateΒ with or merge into another entity, or permit one or more other entities to consolidateΒ with or merge into it, or sell, transfer or otherwise dispose of all, or substantially all,Β of its assets and thereafter dissolve if: (i) the prior written consent of the Director isΒ obtained; (ii) the surviving, resulting or transferee entity, as the case maybe, assumesΒ in writing all of the obligations of the Company hereunder (if such surviving,Β resulting or transferee entity is other than the Company); and (iii) the surviving,Β resulting or transferee entity, as the case may be, is an entity duly organized andΒ validly existing under the laws of the State or duly qualified to do business therein,Β and has a net worth of not less than that of the Company immediately prior to suchΒ disposition, consolidation or merger, transfer or change of form.
|
Β
Β (b)
|
ERISA. Voluntarily terminate any Plan maintained for employees of the Company,Β so as to result in any material liability of the Company to the PBGC, enter into anyΒ Prohibited Transaction involving any Plan which results in any material liability ofΒ the Company to the PBGC, cause any occurrence of any Reportable Event whichΒ results in any material liability of the Company to the PBGC, or allow or suffer toΒ exist any other event or condition which results in any material liability of theΒ Company to the PBGC.
|
Β
Β (c)
|
Agreements. Enter into any agreement containing any provision which would beΒ violated or breached by the performance of its obligations hereunder or under anyΒ instrument or document delivered or to be delivered by it hereunder or in connectionΒ herewith.
|
Β
(d) |
Assignment or Lease. In whole or in part, assign this Agreement or lease or grant theΒ right to occupy or use the Project to others, without the prior written consent of theΒ Director; provided that notwithstanding the foregoing, the Company may enter into licensing arrangements on commercially reasonable terms with third parties for theΒ license and use of the Project Intangible Facilities.
|
Β
Β
Β
24
Β
Β
Β
Β (e)
|
Intentionally deleted.
|
Β
Β Β Β Β (f)
|
Encumbered Assets. Except for Permitted Encumbrances or in connection with theΒ factoring or financing of inventory and receivables, pledge, assign, hypothecate or inΒ any manner encumber any of its assets.
|
Β
(g) |
Removal of Assets. Remove, transfer or transport any of the Company's physicalΒ assets from the Project Site other than the operation of motor vehicles or theΒ shipment, manufacture or utilization of goods in the ordinary course of business.
|
Β
(h) |
Environmental Matters. Produce, treat, store, generate, dispose of or Release anΒ Hazardous Substance in violation of any Environmental Requirement.
|
Β
(i) |
Suspension of Operation. Suspend or discontinue operation of its business.
|
Β
Β (j)
|
Stock Transfers. Issue, transfer, sell, or cause to be issued, transferred or sold, anyΒ shares of its capital stock other than in connection with transfers by the Company'sΒ existing shareholders (and their transferees), stock options and warrants issued andΒ outstanding on the date hereof and the Stock Purchase Agreement between theΒ Company and Xxxxxx X. Xxxxxx dated as of December 7, 2007.
|
Β
Β Β (k)
|
Leasebacks. Enter into any arrangements, directly or indirectly, with any personΒ whereby the Company shall sell or transfer any property, whether now owned orΒ hereafter acquired, used or useful in the Company's business, in connection with theΒ rental or lease or the property so sold or transferred or of other property which theΒ Company intends to use for substantially the same purpose or purposes as theΒ property so sold or transferred.
|
Β
(l)
|
Change of Business. Enter into any business which is substantially different fromΒ that presently conducted by the Company without the written consent of the Director.
|
Β
Β Β (m)
|
Modification of Lender Loan Documents or Subordinated Creditor Loan Documents.Β Enter into any modification, amendment or alteration of the Lender Loan DocumentsΒ or Subordinated Creditor Loan Documents which changes the amount of the LenderΒ Loan or any Subordinated Creditor Loan or which changes the payment schedule forΒ the Lender Loan or any Subordinated Creditor Loan without the prior written consentΒ of the Director.
|
Β
(n) |
Distributions. Make or commit itself to make any Distribution which, after givingΒ effect to that Distribution, would cause the aggregate of all such Distributions paid byΒ the Company to exceed the amount of cash sufficient to enable the Company'sΒ shareholders to fund the federal, state and local income tax liabilities attributable to their distributive shares of taxable income of the Company for that fiscal year, if any,Β assuming a maximum 40% combined effective federal, state and local income taxΒ rate. Any Distribution permitted hereunder may only be made during the fiscal yearΒ in which such income is earned or declared, or in the immediately following fiscalΒ year, and so long as no Event of Default has occurred and is then continuing or wouldΒ exist as a result thereof. Except as provided above, the Company will not make orΒ commit itself to make any other Distribution to its shareholders without the priorΒ written consent of the Director; provided that so long as no Event of Default exists,Β the Company shall be permitted to make Distributions to allow Xxxxxx X. XxxxxxΒ ("Buyer") to exercise his put option under the Stock Purchase Agreement betweenΒ the Company and the Buyer dated as of December 7, 2007.
|
Β
Β
Β
25
Β
Β
ARTICLE V
Β
Events o f Default and Remedies; Termination
Β
Section 5.1. Events of Default. Each of the following shall be an "Event of Default":
Β
Β (a)
|
the Company shall fail to pay when due any amount payable pursuant to thisΒ Agreement or under the Note; or
|
Β
(b)
|
the Company shall fail to observe and perform any agreement, term or conditionΒ contained in this Agreement other than as required pursuant to subsection (a) above,Β and such failure continues for a period of thirty (30) days after the Company hasΒ knowledge thereof; provided, however, that such thirty (30) day cure period shall notΒ apply to (i) any failure which in the good faith opinion of the Director is incapable ofΒ cure, (ii) any failure which has previously occurred, or (iii) any failure to maintainΒ and keep in effect any insurance required b y the Loan Documents; or
|
Β
Β Β (c)
|
any representation or warranty made by the Company (or any of its officers) herein orΒ in any other Loan Documents, Loan Approval Documents or Lender LoanΒ Documents or in connection herewith or therewith shall prove to have been incorrectΒ in any material respect when made; or
|
Β
Β Β (d)
|
the Company shall fail to pay any indebtedness of the Company where the aggregateΒ principal balance of such indebtedness is in excess of Twenty-Five Thousand DollarsΒ ($25,000.00), or any interest or premium thereon, when due (whether by scheduledΒ maturity, required prepayment, by acceleration, on demand or otherwise) and suchΒ failure shall continue after the applicable grace period, if any, specified in theΒ agreement or instrument relating to such indebtedness; or any other default under anyΒ agreement or instrument relating to any such indebtedness, or any other event, shallΒ occur and shall continue after the applicable grace period, if any, specified in suchΒ agreement or instrument, if the effect of such default or event is to accelerate, or toΒ permit the acceleration of, the maturity of such indebtedness; or any suchΒ indebtedness shall be declared to be due and payable, or required to be prepaid (other than b y a regularly scheduled required prepayment), prior to the stated maturityΒ thereof (other than the payments from excess cash flow required under the LenderΒ Loan Documents); or
|
Β
Β
Β
Β
26
Β
Β
Β
Β (e)
|
the Company commences a voluntary case concerning it under Title 11 of the UnitedΒ States Code entitled "Bankruptcy" as now or hereafter in effect, or any successorΒ thereto (the "Bankruptcy Code"); or an involuntary case is commenced against theΒ Company under the Bankruptcy Code and relief is ordered against the Company, orΒ the petition is controverted but is not dismissed within sixty (60) days after theΒ commencement of the case; or the Company is not generally paying its debts as suchΒ debts become due; or a custodian (as defined in the Bankruptcy Code) is appointedΒ for, or takes charge of, all or substantially all of the property of the Company; or theΒ Company commences any other proceeding under any reorganization, arrangement,Β readjustment of debt, relief of debtors, dissolution, insolvency or liquidation orΒ similar law of any jurisdiction whether now or hereafter in effect; or there isΒ commenced against the Company any such proceeding which remains undismissedΒ for a period of sixty (60) days; or the Company is adjudicated insolvent or bankrupt;Β or the Company fails to controvert in a timely manner any such case under theΒ Bankruptcy Code or any such proceeding or any order of relief or other orderΒ approving any such case or proceeding or in the appointment of any custodian or theΒ like of or for it or any substantial part of its property or suffers any such appointmentΒ to continue undischarged or unstayed for a period of sixty (60) days; or the CompanyΒ makes a general assignment for the benefit of creditors; or any action is taken by theΒ Company for the purpose of effecting any of the foregoing; or a receiver or trustee orΒ any other officer or representative of the court or of creditors, or any court,Β governmental officer or agency, shall under color of legal authority, take and holdΒ possession of any substantial part of the property or assets of the Company for aΒ period in excess of sixty (60) days; or
|
Β
Β Β (f)
|
a judgment or order for the payment of money in excess of Twenty-Five ThousandΒ Dollars ($25,000.00) shall be rendered against the Company and either (i)Β enforcement proceedings shall have been commenced by any creditor upon suchΒ judgment or order or (ii) there shall be any period of thirty (30) consecutive daysΒ during which a stay of enforcement of such judgment or order, by reason of a pendingΒ appeal or otherwise, shall not be in effect; or
|
Β
(g)
|
the Company fails to meet its minimum funding requirements under Section 301 et seq. of ERISA, with respect to any of its Plans; or
|
Β
(h)
|
any default (other than set forth above) under any other Loan Document; or
|
Β
Β Β (i)
|
any default under the Lender Loan Documents or Subordinated Creditor LoanΒ Documents shall have occurred and be continuing, and such default continues for aΒ period of thirty (30) days after the Company has knowledge thereof.
|
Β
Β
Β
27
Β
Β
Section 5.2. Remedies on Default. Whenever an Event of Default shall have occurred andΒ be continuing, the Director, at any time, at the Director's election, may exercise any or all of anyΒ combination of the remedies conferred upon or reserved to the Director under this Loan Agreement,Β the Security Documents, the Note, any other Loan Document or any instrument or documentΒ collateral thereto, or now or hereafter existing at law, or in equity or b y statute. Subject to theΒ foregoing, any one or more of the following remedies may be exercised:
Β
Β Β (a)
|
if none of the proceeds of the Loan have been disbursed into the Escrow Account, theΒ Director may terminate any and all of the Director's obligations under thisΒ Agreement and the Commitment;
|
Β
Β Β (b)
|
if the Loan has not been fully disbursed into the Escrow Account , the Director mayΒ terminate any and all of the Director's obligations under this Agreement and theΒ Commitment to make any further advance of proceeds of the Loan into the EscrowΒ Account;
|
Β
Β Β (c)
|
if the Escrow Funds have not been fully disbursed from the Escrow Account, theΒ Director may terminate any and all of the Director's obligations under thisΒ Agreement and the Commitment, to approve or permit any further disbursementsΒ from the Escrow Account and at the request of the Director, all amounts then held inΒ the Escrow Account shall be disbursed to the Director;
|
Β
Β Β (d)
|
the Director may declare all payments under the Note to be immediately due andΒ payable, whereupon the same shall become immediately due and payable;
|
Β
Β Β (e)
|
the Director may exercise any or all or any combination of the remedies specified inΒ any Loan Document;
|
Β
Β Β (f)
|
the Director may have access to, inspect, examine and make copies of the books andΒ records, accounts and financial data of the Company; and/or
|
Β
Β Β (g)
|
the Director may pursue all remedies now or hereafter existing at law or in equity toΒ collect all amounts then due and thereafter to become due under this Agreement, theΒ Security Documents, the Note or any other Loan Documents, or to enforce theΒ performance and observance of any other obligation or agreement of the CompanyΒ under the Loan Documents.
|
Β
Section 5.3. No Remedy Exclusive. No remedy conferred upon or reserved to the DirectorΒ b y this Agreement is intended to be exclusive of any other available remedy or remedies, but eachΒ and every such remedy shall be cumulative and shall be in addition to every other remedy givenΒ under this Agreement, each other Loan Document, or now or hereafter existing at law, in equity or byΒ statute. No delay or omission to exercise any right or power accruing upon any default shall impairΒ any such right or power or shall be construed to be a waiver thereof, but any such right and powerΒ may be exercised from time to time and as often as may be deemed expedient. In order to entitle the Director to exercise any remedy reserved to the Director in this Article, it shall not be necessary togive any notice, other than such notice as may be expressly provided for herein or required by law.
Β
Β
Β
28
Β
Β
Section 5.4. Agreement to Pay Expenses and Attorneys' Fees. If an Event of Default shallΒ occur and the Director shall incur expenses, including reasonable attorney's fees, in connection withΒ the enforcement of this Agreement or any other Loan Document, or the collection of sums dueΒ thereunder, the Company shall reimburse the Director for the expenses so incurred upon demand. IfΒ any such expenses are not so reimbursed, the amount thereof, together with interest thereon from theΒ date of demand for payment at the Interest Rate for Advances (as defined in the SecurityΒ Documents), shall constitute additional indebtedness secured by the Security Documents, and in anyΒ action brought to collect such indebtedness or to foreclose or enforce the Security Documents, theΒ Director shall be entitled to seek the recovery of such expenses in such action.
Β
Section 5.5. No Waiver. No failure b y the Director to insist upon the strict performance byΒ the Company of any provision hereof shall constitute a waiver of the Director's right to strictΒ performance and no express waiver shall be deemed to apply to any other existing or subsequentΒ right to remedy the failure by the Company to observe or comply with any provision hereof.
Β
ARTICLE VI
Β
Miscellaneous
Β
Section 6.1. Term of Agreement. This Agreement shall be and remain in full force andΒ effect from the date of its delivery until (a) the termination of this Agreement pursuant to SectionΒ 5.2(a) hereof or (b) such time as the Loan shall have been fully repaid and all other sums payable b yΒ the Company under this Agreement, the Security Documents, the Note and the other LoanΒ Documents shall have indefeasibly been paid.
Β
Section 6.2. Notices. All notices, certificates, requests or other communications hereunderΒ shall be in writing and shall be deemed to be sufficiently given when mailed by registered or certifiedΒ mail, postage prepaid, and addressed to the appropriate Notice Address. The Company or theΒ Director may, b y notice given hereunder, designate any further or different addresses to whichΒ subsequent notices, certificates, requests or other communications shall be sent.
Β
Section 6.3. Extent of Covenants of the Director; No Personal Liability. All covenants,Β obligations and agreements of the Director contained in this Agreement and all other LoanΒ Documents shall be effective to the extent authorized and permitted b y applicable law. No suchΒ covenant, obligation or agreement shall be deemed to be a covenant, obligation or agreement of anyΒ present or future Director in other than such Director's official capacity acting pursuant to the Act.
Β
Section 6.4. Binding Effect. This Agreement shall inure to the benefit of and shall beΒ binding in accordance with its terms upon the Director, the Company and their respective successorsΒ and assigns; provided, however, the Company may not assign this Agreement or any of the LoanΒ Documents without the prior written consent of the Director.
Β
Β
Β
29
Β
Β
Section 6.5. Amendments and Supplements. This Agreement may not be amended orΒ supplemented except b y an instrument in writing executed b y the Director and the Company.
Β
Section 6.6. Execution Counterparts. This Agreement may be executed in any number ofΒ counterparts, each of which shall be regarded as an original and all of which shall constitute but oneΒ and the same instrument.
Β
Section 6.7. Severability. If any provision of this Agreement, or any covenant, obligation orΒ agreement contained herein, is determined b y a court to be invalid or unenforceable, suchΒ determination shall not affect any other provision, covenant, obligation or agreement, each of whichΒ shall be construed and enforced as if such invalid or unenforceable provision were not containedΒ herein. Such invalidity or unenforceability shall not affect any valid and enforceable applicationΒ thereof, and each such provision, covenant, obligation or agreement, shall be deemed to be effective,Β operative, made, entered into or taken in the manner and to the full extent permitted by law.
Β
Section 6.8. Captions; Entire Agreement. The captions and headings in this Agreement shallΒ be solely for convenience of reference and shall in no way define, limit or describe the scope orΒ intent of any provisions or sections of this Agreement. All exhibits and schedules to this AgreementΒ shall be annexed hereto and shall be deemed to be part of this Agreement. This Agreement and theΒ exhibits and schedules attached hereto and the Loan Documents embody the entire agreement andΒ understanding between the Director and the Company and supersede all prior agreements andΒ understandings relating to the subject matter hereof.
Β
Section 6.9. Interpretation. This Agreement shall be deemed to have been prepared jointlyΒ b y the parties hereto and any uncertainty or ambiguity existing herein shall not be interpreted againstΒ any party but shall be interpreted according to the rules for the interpretation of arm's lengthΒ agreements.
Β
Section 6.10. WAIVER OF JURY TRIAL. THE COMPANY AND THE DIRECTOR,Β AFTER CONSULTING OR HAVING HAD THE OPPORTUNITY TO CONSULT WITHΒ COUNSEL, KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTΒ EITHER OF THEM MAY HAVE TO A TRIAL BY JURY IN ANY LITIGATION BASED UPONΒ OR ARISING OUT OF THIS LOAN AGREEMENT, THE NOTE, THE SECURITYΒ DOCUMENTS, OR ANY RELATED INSTRUMENT OR AGREEMENT, OR ANY OF THEΒ TRANSACTIONS CONTEMPLATED THEREBY, OR ANY COURSE OF CONDUCT,Β DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN), OR ACTIONS OF ANY OFΒ THEM. THIS WAIVER SHALL NOT IN ANY WAY AFFECT THE DIRECTOR'S ABILITY TOΒ PURSUE REMEDIES PURSUANT TO ANY CONFESSION OF JUDGMENT OR COGNOVITΒ PROVISION CONTAINED IN THE NOTE, IN ANY LOAN DOCUMENT OR ANY RELATEDΒ INSTRUMENT OR AGREEMENT. NEITHER THE COMPANY NOR THE DIRECTOR SHALLΒ SEEK TO CONSOLIDATE, BY COUNTERCLAIM OR OTHERWISE, ANY ACTION IN WHICHΒ A JURY TRIAL HAS BEEN WAIVED WITH ANY OTHER ACTION IN WHICH A JURYΒ TRIAL CANNOT BE OR HAS NOT BEEN WAIVED. THESE PROVISIONS SHALL NOT BEΒ DEEMED TO HAVE BEEN MODIFIED IN ANY RESPECT OR RELINQUISHED BY THE
COMPANY OR THE DIRECTOR EXCEPT BY A WRITTEN INSTRUMENT EXECUTED BYΒ BOTH OF THEM.
Β
Β
Β
30
Β
Β
Section 6.11. Consent to Jurisdiction/Service of Process. The Company hereby irrevocablyΒ agrees and submits to the exclusive jurisdiction of any state or federal court located within FranklinΒ County, Ohio, or, at the option of the Director in its sole discretion, of any state or federal court(s)Β located within any other county, state or jurisdiction in which the Director at any time or from timeΒ to time chooses in its sole discretion to bring an action or otherwise exercise a right or remedy, andΒ the Company irrevocably waives any and all objections based on forum non conveniens and/orΒ objection to venue of any such action or proceeding. The Company hereby irrevocably consents thatΒ all service of process be made b y certified mail directed to the Company at its address set forthΒ herein for notice purposes and service so made will be deemed completed upon the earlier of theΒ Company's actual receipt thereof or three (3) business days after the same has been deposited in theΒ U.S. Mail, postage prepaid. Nothing contained herein will prevent the Director from servicingΒ process in any other manner permitted by law.
Β
Section 6.12. Governing Law. This Agreement shall be deemed to be a contract made underΒ the laws of the State and for all purposes shall be governed b y and construed in accordance with theΒ laws of the State.
Β
Section 6.13. Attorney Review. The terms and conditions of this Loan AgreementΒ (including all Exhibits) were reviewed b y an attorney for the Company, and said terms andΒ conditions were explained to the appropriate officers/representatives of the Company who, b y theirΒ execution hereof, hereby acknowledged that they fully understand the terms hereof.
Β
Section 6.14. Time is of the Essence. Time is of the essence in all respects hereunder.
Β
[Remainder of page intentionally left blank.]
Β
Β
Β
31
Β
Β
Β
Β
Β
Β
Β
Β
Β
Β
Β
EXHIBIT A
Β
(to Loan Agreement between the Director of Development of the State of Ohio
and The Guitammer Company, dated April 25, 2008)
Β
Form o f Note
Β
See attached.
Β
Β
Β
Β
Β
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COGNOVIT
PROMISSORY NOTE
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$1,083,951.00Β | Β April 25, 2008 |
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FOR VALUE RECEIVED, The Guitammer Company, an Ohio corporation (theΒ "Company"), promises to pay to the order of The Director o f Development o f the State o f OhioΒ (the "Director") at 00 Xxxxx Xxxx Xxxxxx, X.X. Xxx 0000, Xxxxxxxx, Xxxx 00000-0000 or at suchΒ other address as may be designated in writing by the holder, the principal sum of One MillionΒ Eighty-Three Thousand Nine Hundred Fifty-One Dollars ($1,083,951.00), or such lesser amount asΒ is the Loan Amount as specified under and defined in the Loan Agreement (the "Loan Agreement")Β of even date herewith between the Director and the Company, with interest on the amount ofΒ principal from time to time outstanding from the applicable Escrow Funding Date(s), as specifiedΒ under and defined in the Loan Agreement, at the rate of eight percent (8%) per annum until paidΒ (subject to adjustment as set forth in the Loan Agreement), plus a service fee equal to one-quarter ofΒ one percent (0.25%) per annum on the amount of principal from time to time outstanding from theΒ applicable Escrow Funding Date(s) until paid. The principal of, interest and monthly service fee onΒ this Note shall be paid in monthly installments which shall be due and payable on the first day ofΒ each calendar month (each such date being referred to as a "Payment Date") commencing on the firstΒ day of the first calendar month immediately following the first full calendar month after the firstΒ Escrow Funding Date (the "First Installment Date") and ending on the first day of the calendar monthΒ immediately preceding the sixth (6th) anniversary of the First Installment Date (the "Last InstallmentΒ Date"); provided, however, that (i) principal and interest payments (but not the monthly service fee)Β shall be deferred from the first Escrow Funding Date through the eighteenth (18th) Payment DateΒ with the interest accruing during such period being payable as hereinafter provided, (ii) thereafterΒ principal payments (but not interest or the monthly service fee) shall be deferred from the nineteenthΒ (19th) Payment Date through the twenty-fourth (24th) Payment Date, and (iii) thereafter principal,Β interest (including accrued interest from month one (1) through month eighteen (18) and the monthlyΒ service fee shall be paid on the twenty-fifth (25th) Payment Date through the Last Installment DateΒ with the principal being fully amortized over the last forty-eight (48) month period. The amount ofΒ the installment payable on the Last Installment Date shall be equal to the balance of the principalΒ sum then outstanding, together with all interest accrued thereon.
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1Β Interest Rate. The annual rate of interest stated herein shall apply to a three hundred sixty (360) day period, and amounts of interest due hereunder shall be computed upon the basis ofΒ thirty (30) day months.
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2Β Β Β Prepayment Right. The Company may prepay all or any portion of the principal sum hereof at any time without penalty. All such prepayments shall be applied to the payment of theΒ principal installments due hereon in the inverse order of their maturity, and shall be accompanied byΒ the payment of accrued interest on the amount of the prepayment to the date thereof.
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3Β Application o f Payments. Unless the Director elects otherwise, all payments and other amounts received b y the Director shall be credited first to any charges, costs, expenses and feesΒ due hereunder or payable b y the Company under the Loan Agreement or any Loan Documents (as defined below), including without limitation, the Loan Participation Fee (as defined in the LoanΒ Agreement); second, to the monthly service fee(s); third, to accrued but unpaid interest on this Note;Β fourth, to the principal amount outstanding; and the balance, if any, to the Company.
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4Β No Commitment for Disbursement. This Note does not constitute a commitment byΒ the Director to make any disbursement(s) of the Loan (as defined in the Loan Agreement) to theΒ Company. The conditions for making such disbursement are set forth in the Loan Agreement. TheΒ disbursements made b y the Director to the Company, if any, shall not exceed the face amount of thisΒ Note and the total amount of such disbursements is limited by and subject to the conditions forΒ making disbursements of the Loan as set forth in the Loan Agreement.
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5Β Security and Agreement. The payment of this Note and all interest and monthlyΒ service fees hereon is secured b y the Loan Agreement, a Security Agreement and UCC FinancingΒ Statements (collectively, the "Security Agreement") of even date herewith from the Company to theΒ Director. The covenants, conditions and agreements contained in the Loan Agreement, SecurityΒ Agreement and any and all other documents or instruments evidencing or securing the LoanΒ (collectively, the "Loan Documents") are hereby made a part of this Note.
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6Β Default. (a) If default be made in the payment of any installment of principal, interestΒ and monthly service fee under this Note when any such payment shall have become due and payable,Β or if an Event of Default (as defined in any of the Loan Documents) shall have occurred and beΒ continuing, then, at the option of the Director, the entire principal sum and all interest accrued hereonΒ shall become due and payable at once, without demand or notice.
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(b)For the period during which a default shall exist in the payment of any amount
due and payable under this Note and/or the Loan Agreement (the "Amount Due"), whether byΒ acceleration or otherwise, a late charge equal to five percent (5%) of the Amount Due shall beΒ assessed for each and every month or part thereof during which such default shall exist and paid byΒ the Company to the Director.
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7Β Waivers. None of the following shall be a course of dealing, estoppel, waiver or theΒ like on which any party to this Note or any Loan Documents may rely: (a) the Director's acceptanceΒ of one or more late or partial payments; (b) the Director's forbearance from exercising any right orΒ remedy under this Note or any Loan Document; or (c) the Director's forbearance from exercising anyΒ right or remedy under this Note or any Loan Document on any one or more occasions. TheΒ Director's exercise of any rights or remedies or a part of a right or remedy on one or more occasionsΒ shall not preclude the Director from exercising the right or remedy at any other time. The Director'sΒ rights and remedies under this Note, the Loan Documents, and at law and in equity are cumulative to,Β but independent of, each other.
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8Β No Release o f Liability. No obligations of any party to this Note shall be affected byΒ (a) any default in this Note or any Loan Document when accepted b y the Director or arising any timeΒ thereafter; (b) the unenforceability of or defect in this Note or in any Loan Document or any interestΒ conveyed b y any Loan Document; (c) any decline in the value of any interest in any propertyΒ conveyed as security by any Loan Document; or (d) the insolvency, dissolution, liquidation or
winding up of affairs of any party to this Note or any other Loan Document or the start of insolvencyΒ proceedings by or against any such party. No party to this Note or any Loan Document may enforceΒ any right of subrogation or contribution unless and until this Note is paid in full and waives all rightsΒ of subrogation against any party that is subject to insolvency proceedings.
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9Β Governing Law. This Note is made at Genoa Township, Ohio and shall be construedΒ under the laws of the State of Ohio..Β
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10Β Β Time is o f the Essence. Time is of the essence in the payment of this Note. AllΒ grace periods in the Loan Agreement and any other Loan Documents, if any, that apply to a defaultΒ shall run concurrently.
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11Β Β Holidays. If any installment of this Note becomes due
on a day on which theΒ Department of Development of the State of Ohio is required or authorized to close, the CompanyΒ may pay the installment on the next succeeding day on which the Department of Development of theΒ State of Ohio is open.
12Β Β Indulgences. With notice, the Director may do or refrain from doing anythingΒ affecting this Note or any Loan Document, as many times as the Director desires, including theΒ following (a) granting or not granting any indulgences to anyone liable for payment of this Note orΒ to anyone liable under any Loan Document; (b) releasing any security or anyone or any propertyΒ from liability on this Note or any Loan Document; and (c) amending this Note or any LoanΒ Document, including extending the time for payment of this Note.
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13Β Β Notices. All notices, demands, requests or other communications hereunder shall beΒ given in accordance with the Loan Agreement.
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14Β Β Representation and Warranty Regarding Business Purpose. The CompanyΒ represents and warrants that the loan evidenced by this Note is for business purposes and constitutesΒ a business loan as that term is used in Section 1343.01 of the Ohio Revised Code and is not primarilyΒ for personal, family, household, or agricultural purposes and does not constitute a "consumer loan"Β or a "consumer transaction."
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15Β Waiver o f Demands. AS TO THIS NOTE, THE SECURITY AGREEMENT ANDΒ ANY OTHER LOAN DOCUMENTS WHICH MAY SECURE THIS NOTE, THE COMPANYΒ IRREVOCABLY WAIVES TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW ALLΒ APPLICABLE EXEMPTION RIGHTS, WHETHER UNDER THE STATE CONSTITUTION,Β HOMESTEAD LAWS OR OTHERWISE, AND ALSO IRREVOCABLY WAIVES VALUATIONΒ AND APPRAISEMENT, PROTEST, PRESENTMENT AND DEMAND, NOTICE OF PROTEST,Β DEMAND AND DISHONOR AND NONPAYMENT OF THIS NOTE, AND EXPRESSLYΒ AGREES THAT THE MATURITY DATE OF THIS NOTE, OR ANY PAYMENT DUEΒ HEREUNDER, MAY BE EXTENDED FROM TIME TO TIME AND THAT ANY SECURITYΒ HELD FOR PAYMENT HEREOF MAY BE SUBSTITUTED OR RELEASED AT ANY TIMEΒ AND FROM TIME TO TIME WITHOUT IN ANY WAY AFFECTING THE LIABILITY OF THEΒ COMPANY.
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16Β Β Attorneys' Fees and Expenses. The Company shall pay to the Director allΒ reasonable costs and expenses incurred by the Director in enforcing or preserving the Director'sΒ rights under this Note, the Loan Agreement or any Loan Document whether or not an Event ofΒ Default has actually occurred or has been declared and thereafter cured, including but not limited to,Β (a) attorneys' and paralegals' fees and disbursements; (b) the fees and expenses of any litigation,Β administrative, bankruptcy, insolvency, receivership and any other similar proceeding; (c) courtΒ costs; (d) the expenses of the Director, its employees, agents, attorneys and witnesses in preparing forΒ litigation, administrative, bankruptcy, insolvency and other proceedings and for lodging, travel, andΒ attendance at meetings, hearings, depositions, and trials; and (e) consulting and witness fees incurredΒ b y the Director in connection with any litigation or other proceeding.
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17Β Attorney Review. The terms and conditions of this Note were reviewed by anΒ attorney for the Company, and said terms and conditions were explained to the appropriateΒ officers/representatives of the Company, who by the execution hereof, hereby acknowledge that theyΒ fully understand the terms hereof.
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18Β Β Severability. If any clause, provision, section or article of this Note is ruled invalidΒ b y any court of competent jurisdiction, the invalidity of such clause, provision, section, or articleΒ shall not affect any of the remaining provisions hereof.
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19Β Β Assignment. The Company shall not assign its rights nor delegate its obligationsΒ under this Note.
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20Β Mutual Waiver o f Jury Trial. THE COMPANY AND THE DIRECTOR, AFTERΒ CONSULTING OR HAVING HAD THE OPPORTUNITY TO CONSULT WITH COUNSEL,Β KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT EITHER OFΒ THEM MAY HAVE TO A TRIAL BY JURY IN ANY LITIGATION BASED UPON OR ARISINGΒ OUT OF THIS NOTE, THE LOAN AGREEMENT, SECURITY AGREEMENT OR ANYΒ RELATED INSTRUMENT OR AGREEMENT, OR ANY OF THE TRANSACTIONSΒ CONTEMPLATED THEREBY, OR ANY COURSE OF CONDUCT, DEALING, STATEMENTSΒ (WHETHER ORAL OR WRITTEN), OR ACTIONS OF EITHER OF THEM. THIS WAIVERΒ SHALL NOT IN ANY WAY AFFECT THE DIRECTOR'S ABILITY TO PURSUE REMEDIESΒ PURSUANT TO ANY CONFESSION OF JUDGMENT OR COGNOVIT PROVISIONΒ CONTAINED HEREIN, IN THE LOAN AGREEMENT OR ANY RELATED INSTRUMENT ORΒ AGREEMENT. NEITHER THE COMPANY NOR THE DIRECTOR SHALL SEEK TOΒ CONSOLIDATE, BY COUNTERCLAIM OR OTHERWISE, ANY ACTION IN WHICH A JURYΒ TRIAL HAS BEEN WAIVED WITH ANY OTHER ACTION IN WHICH A JURY TRIALΒ CANNOT BE OR HAS NOT BEEN WAIVED. THESE PROVISIONS SHALL NOT BEΒ DEEMED TO HAVE BEEN MODIFIED IN ANY RESPECT OR RELINQUISHED BY THEΒ COMPANY OR THE DIRECTOR EXCEPT BY A WRITTEN INSTRUMENT EXECUTED BYΒ BOTH OF THEM.
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21Β Consent to Jurisdiction/Service o f Process. The Company hereby irrevocablyΒ agrees and submits to the exclusive jurisdiction of any state or federal court located within Franklin County, Ohio, or, at the option of the Director in its sole discretion, of any state or federal court(s)Β located within any other county, state or jurisdiction in which the Director at any time or from timeΒ to time chooses in its sole discretion to bring an action or otherwise exercise a right or remedy, andΒ the Company irrevocably waives any and all objections based on forum non conveniens and/orΒ objection to venue of any such action or proceeding. The Company hereby irrevocably consents thatΒ all service of process be made by certified mail directed to the Company at its address set forth in theΒ Loan Agreement for notice purposes and service so made will be deemed completed upon the earlierΒ of the Company's actual receipt thereof or three (3) business days after the same has been depositedΒ in the U.S. Mail, postage prepaid. Nothing contained herein will prevent the Director from servicingΒ process in any other manner permitted by law.
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22.Β Β Β Warrant o f Attorney. With full knowledge of all constitutional rights under the Constitutions of the State of Ohio and the United States of America, the Company herebyΒ irrevocably authorizes any attorney at law, including without limitation, any attorney representing theΒ Director, to appear on the Company's behalf in any court of record in the State of Ohio, or in anyΒ other state or territory of the United States, or in any court of the United States, after this NoteΒ becomes due and payable; to waive the issuing and service of process and all other constitutionalΒ rights to due process of law; to confess judgment against the Company in favor of the Director orΒ other holder of this Note for the amount then appearing due, with interest at the rate provided forΒ herein, together with the costs of suit; to release all errors; and to waive all rights of appeal and staysΒ of execution. The Company hereby consents to the confessing attorney receiving a legal fee from theΒ Director or any other holder of this Note. The Company voluntarily and knowingly irrevocablyΒ waives (i) any conflict of interest with respect to the attorney confessing judgment against theΒ Company, and (ii) all rights to notice and hearing prior to judgment being so confessed against theΒ Company.
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WARNING - BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TOΒ NOTICE AND COURT TRIAL. IF YOU DO NOT PAY ON TIME A COURT JUDGMENTΒ MAY BE TAKEN AGAINST YOU WITHOUT YOUR PRIOR KNOWLEDGE AND THEΒ POWERS OF A COURT CAN BE USED TO COLLECT FROM YOU REGARDLESS OFΒ ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER FORΒ RETURNED GOODS' FAULTY GOODS' FAILURE ON HIS PART TO COMPLY WITHΒ THE AGREEMENT' OR ANY OTHER CAUSE.
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Β | Β | THE GUITAMMER COMPANY, an OhioΒ corporation |
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By:
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Β ________________________________ |
Β | Β | Xxxx X. Xxxxx, President & CEOΒ |
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EXHIBIT B
(to Loan Agreement between the Director of Development of the State of Ohio
and The Guitammer Company, dated April 25, 2008)
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Project Equipment
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None. See Exhibit C attached to the Loan Agreement.
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EXHIBIT C
(to Loan Agreement between the Director of Development of the State of Ohio
and The Guitammer Company, dated April 25, 2008)
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Project Intangible Facilities
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Project One:
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Project Two:
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TOTAL
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Tooling
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Β | $ | 117,100 | Β | Β | $ | 15,000 | Β | Β | $ | 132,100 | Β |
Certification
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Β | Β | 83,100 | Β | Β | Β | 82,000 | Β | Β | Β | 165,100 | Β |
Design fees
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Β | Β | 92,550 | Β | Β | Β | 15,000 | Β | Β | Β | 107,550 | Β |
Prototypes
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Β | Β | 31,900 | Β | Β | Β | 254,800 | Β | Β | Β | 286,700 | Β |
Packaging
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Β | Β | 40,050 | Β | Β | Β | 2,500 | Β | Β | Β | 42,550 | Β |
Intellectual propertyΒ protection
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Β | Β | - | Β | Β | Β | 25,000 | Β | Β | Β | 25,000 | Β |
Total Cost by Project
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Β | Β | 364,700 | Β | Β | Β | 394,300 | Β | Β | Β | 759,000 | Β |
Associated Capitalizable
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Β | Β | Β | Β | Β | Β | Β | Β | Β | Β | Β | Β |
Payroll Expense
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Β | Β | 587,768 | Β | Β | Β | 98,500 | Β | Β | Β | 686,268 | Β |
Total Expense
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Β | Β | 952,468 | Β | Β | Β | 492,800 | Β | Β | Β | 1,445,268 | Β |
Total OIF Loan Amount (75% of total)
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1,083,951
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Project One:
BKA-130-OE, Home Theater Seating, XXX-000, Xxx-xxxxx XxxxXxxxxx,Β
XXX-0000-0X, BK-Link, LFE Kit, ButtKicker Gamer
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Project Two:
BK Live!, OEM Car Audio
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EXHIBIT D
(to Loan Agreement between the Director of Development of the State of Ohio
and The Guitammer Company, dated April 25, 2008)
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Subordinated Parties
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1.Β Β Xxxxxx Xxxxx ($200,000);
2.Β Β Xxxx Xxxxxx ($50,000);
3.Β Β Xxxxxx Xxxxxxxx ($50,000);
4.Β Β Opal Management ($100,000);
5.Β Β Xxxx Xxx ($100,000);
6.Β Β Xxx Xxx Xxxx ($50,000); and
7.Β Β Xxxxxxx Xxxxx ($82,000).
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EXHIBIT E
(to Loan Agreement between the Director of Development of the State of Ohio
and The Guitammer Company, dated April 25, 2008)
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Prevailing Wage Letter
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See attached.
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