Contract
Exhibit
4.3
THIS
NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR
ANY STATE SECURITIES LAWS. THIS NOTE MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED
OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO
THIS
NOTE UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR AN OPINION
OF
COUNSEL REASONABLY SATISFACTORY TO MAGNETECH INDUSTRIAL SERVICES OF ALABAMA,
LLC
THAT SUCH REGISTRATION IS NOT REQUIRED.
FOR
VALUE
RECEIVED, MAGNETECH INDUSTRIAL SERVICES OF ALABAMA, LLC, an Indiana limited
liability company (the “Company”),
promises to pay to LAURUS MASTER FUND, LTD., c/o M&C Corporate Services
Limited, P.O. Box 309 GT, Xxxxxx House, South Church Street, Xxxxxx Town, Grand
Cayman, Cayman Islands, Fax: 000-000-0000 (the “Holder”)
or its
registered assigns or successors in interest, the sum of Two Million One Hundred
Thousand Dollars ($2,100,000), together with any accrued and unpaid interest
hereon, on May 31, 2009 (the “Maturity
Date”)
if not
sooner paid.
Capitalized
terms used herein without definition shall have the meanings ascribed to such
terms in that certain Security and Purchase Agreement dated as of the date
hereof by and between the Company and the Holder (as amended, modified and/or
supplemented from time to time, the “Security
Agreement”).
This
Secured Term Note (“Note”)
is
issued pursuant to, and is subject to the terms and conditions of, the Security
Agreement.
The
following terms shall apply to this Note:
ARTICLE
I
CONTRACT
RATE AND AMORTIZATION
1.1 Contract
Rate.
Subject
to Sections 3.2 and 4.9, interest payable on the outstanding principal amount
of
this Note (the “Principal
Amount”)
shall
accrue at a rate per annum equal to the “prime rate” published in The Wall
Street Journal from time to time (the “Prime
Rate”),
plus
one percent (1.0%) (the “Contract
Rate”).
The
Contract Rate shall be increased or decreased as the case may be for each
increase or decrease in the Prime Rate in an amount equal to such increase
or
decrease in the Prime Rate; each change to be effective as of the day of the
change in the Prime Rate. The Contract Rate shall not at any time be less than
eight percent (8.0%). Interest shall be (i) calculated on the basis of a 360
day
year, and (ii) payable monthly, in arrears, commencing on July 1, 2006, on
the
first business day of each consecutive calendar month thereafter through and
including the Maturity Date, and on the Maturity Date, whether by acceleration
or otherwise.
1.2 Contract
Rate Adjustments.
The
Contract Rate shall be calculated on the last business day of each calendar
month hereafter (other than for increases or decreases in the Prime Rate which
shall be calculated and become effective in accordance with the terms of Section
1.1) until the Maturity Date.
1.3 Principal
Payments.
Amortizing payments of the aggregate principal amount outstanding under this
Note at any time (the “Principal
Amount”)
shall
be made by the Company on December 1, 2006 and on the first business day of
each
succeeding month thereafter through and including the Maturity Date (each,
an
“Amortization
Date”).
Commencing on the first Amortization Date, the Company shall make monthly
payments to the Holder on each Amortization Date, each such payment in the
amount of $70,000 together with any accrued and unpaid interest on such portion
of the Principal Amount plus any and all other unpaid amounts which are then
owing under this Note, the Security Agreement and/or any Ancillary Agreement
(collectively, the “Monthly
Amount”).
Any
outstanding Principal Amount together with any accrued and unpaid interest
and
any and all other unpaid amounts which are then owing by the Company to the
Holder under this Note, the Security Agreement and/or any Ancillary Agreement
shall be due and payable on the Maturity Date.
1.4 Prepayment.
The
Company may prepay all or part of the principal of this Note at any time without
penalty or premium. Any partial prepayment shall be applied to the installment
or installments that last fall due under this Note, and a partial prepayment
shall not affect the amount or time of payment of succeeding required
installments.
ARTICLE
II
(Intentionally
deleted)
ARTICLE
III
EVENTS
OF DEFAULT
3.1 Events
of Default.
The
occurrence of an Event of Default under the Security Agreement shall constitute
an event of default (“Event
of Default”)
hereunder.
3.2 Default
Interest.
Following the occurrence and during the continuance of an Event of Default,
the
Company shall pay additional interest on the outstanding Principal Amount of
this Note in an amount equal to one percent (1%) per month from the date of
such
Event of Default until the date such Event of Default is cured or
waived.
3.3 Default
Payment.
Following the occurrence and during the continuance of an Event of Default,
the
Holder, at its option, may demand repayment in full of all obligations and
liabilities owing by Company to the Holder under this Note, the Security
Agreement and/or any Ancillary Agreement and/or may elect, in addition to all
rights and remedies of the Holder under the Security Agreement and the Ancillary
Agreements and all obligations and liabilities of the Company under the Security
Agreement and the Ancillary Agreements, to require the Company to make a Default
Payment (“Default
Payment”).
The
Default Payment shall be 112% of the outstanding principal amount of
this
Note, plus accrued but unpaid interest, all other fees then remaining unpaid,
and all other amounts payable hereunder. The Default Payment shall be applied
first to any fees due and payable to the Holder pursuant to this Note, the
Security Agreement, and/or the Ancillary Agreements, then to accrued and unpaid
interest due on this Note and then to the outstanding principal balance of
this
Note. The Default Payment shall be due and payable immediately on the date
that
the Holder has exercised its rights pursuant to this Section 3.3.
ARTICLE
IV
MISCELLANEOUS
4.1 Cumulative
Remedies.
The
remedies under this Note shall be cumulative.
4.2 Failure
or Indulgence Not Waiver.
No
failure or delay on the part of the Holder hereof in the exercise of any power,
right or privilege hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any such power, right or privilege preclude other
or further exercise thereof or of any other right, power or privilege. All
rights and remedies existing hereunder are cumulative to, and not exclusive
of,
any rights or remedies otherwise available.
4.3 Notices.
Any
notice herein required or permitted to be given shall be in writing and shall
be
deemed effectively given: (a) upon personal delivery to the party notified,
(b)
when sent by confirmed telex or facsimile if sent during normal business hours
of the recipient, if not, then on the next business day, (c) five days after
having been sent by registered or certified mail, return receipt requested,
postage prepaid, or (d) one day after deposit with a nationally recognized
overnight courier, specifying next day delivery, with written verification
of
receipt. All communications shall be sent to the Company at the address provided
in the Security Agreement, and to the Holder at the address provided in the
Security Agreement for such Holder, with a copy to Xxxx X. Xxxxxx, Esq., 000
Xxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, xxxxxxxxx number (000)
000-0000, or at such other address as the Company or the Holder may designate
by
ten days advance written notice to the other parties hereto.
4.4 Amendment
Provision.
The
term “Note” and all references thereto, as used throughout this instrument,
shall mean this instrument as originally executed, or if later amended or
supplemented, then as so amended or supplemented, and any successor instrument
as such successor instrument may be amended or supplemented.
4.5 Assignability.
This
Note shall be binding upon the Company and its successors and assigns, and
shall
inure to the benefit of the Holder and its successors and assigns, and may
be
assigned by the Holder in accordance with the requirements of the Security
Agreement. The Company may not assign any of its obligations under this Note
without the prior written consent of the Holder, any such purported assignment
without such consent being null and void.
4.6 Cost
of Collection.
In case
of any Event of Default under this Note, the Company shall pay the Holder
reasonable costs of collection, including reasonable attorneys’
fees.
4.7 Governing
Law, Jurisdiction and Waiver of Jury Trial.
(a) THIS
NOTE
SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS
OF
THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF
LAW.
(b) THE
COMPANY HEREBY CONSENTS AND AGREES THAT THE STATE OR FEDERAL COURTS LOCATED
IN
THE COUNTY OF NEW YORK, STATE OF NEW YORK SHALL HAVE EXCLUSIVE JURISDICTION
TO
HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN THE COMPANY, ON THE ONE HAND,
AND THE HOLDER, ON THE OTHER HAND, PERTAINING TO THIS NOTE OR ANY OF THE OTHER
ANCILLARY AGREEMENTS OR TO ANY MATTER ARISING OUT OF OR RELATED TO THIS NOTE
OR
ANY OF THE OTHER ANCILLARY AGREEMENTS; PROVIDED, THAT THE COMPANY ACKNOWLEDGES
THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED
OUTSIDE OF THE COUNTY OF NEW YORK, STATE OF NEW YORK; AND FURTHER PROVIDED,
THAT
NOTHING IN THIS NOTE SHALL BE DEEMED OR OPERATE TO PRECLUDE THE HOLDER FROM
BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO COLLECT
THE OBLIGATIONS, TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE
OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF THE
HOLDER. THE COMPANY EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH
JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND THE COMPANY
HEREBY WAIVES ANY OBJECTION WHICH IT MAY HAVE BASED UPON LACK OF PERSONAL
JURISDICTION, IMPROPER VENUE OR FORUM
NON CONVENIENS.
THE
COMPANY HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER
PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH
SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED
MAIL
ADDRESSED TO THE COMPANY AT THE ADDRESS SET FORTH IN THE SECURITY AGREEMENT
AND
THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF THE COMPANY’S
ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE U.S. MAILS, PROPER
POSTAGE PREPAID.
(c) THE
COMPANY DESIRES THAT ITS DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH
APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS
OF
THE JUDICIAL SYSTEM AND OF ARBITRATION, THE COMPANY HERETO WAIVES ALL RIGHTS
TO
TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO RESOLVE
ANY
DISPUTE, WHETHER ARISING IN CONTRACT, TORT, OR OTHERWISE BETWEEN THE HOLDER
AND
THE COMPANY ARISING OUT OF, CONNECTED WITH, RELATED OR INCIDENTAL TO THE
RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH THIS NOTE, ANY OTHER
ANCILLARY AGREEMENT OR THE TRANSACTIONS RELATED HERETO OR THERETO.
4.8 Severability.
In the
event that any provision of this Note is invalid or unenforceable under any
applicable statute or rule of law, then such provision shall be deemed
inoperative to the extent that it may conflict therewith and shall be deemed
modified to conform with such statute or rule of law. Any such provision which
may prove invalid or unenforceable under any law shall not affect the validity
or enforceability of any other provision of this Note.
4.9 Maximum
Payments.
Nothing
contained herein shall be deemed to establish or require the payment of a rate
of interest or other charges in excess of the maximum permitted by applicable
law. In the event that the rate of interest required to be paid or other charges
hereunder exceed the maximum rate permitted by such law, any payments in excess
of such maximum rate shall be credited against amounts owed by the Company
to
the Holder and thus refunded to the Company.
4.10 Security
Interest and Guaranty.
The
Holder has been granted a security interest (i) in certain assets of the Company
as more fully described in the Security Agreement, (ii) in certain assets of
certain affiliates of the Company as more fully described in the Master Security
Agreement dated as of the date hereof, and (iii) in the equity interests of
certain affiliates of the Company pursuant to the Stock Pledge Agreement dated
as of the date hereof. The obligations of the Company under this Note are
guaranteed by certain affiliates of the Company pursuant to the Guaranty dated
as of the date hereof.
4.11 Construction.
Each
party acknowledges that its legal counsel participated in the preparation of
this Note and, therefore, stipulates that the rule of construction that
ambiguities are to be resolved against the drafting party shall not be applied
in the interpretation of this Note to favor any party against the
other.
5.13 Registered
Obligation.
This
Note is intended to be a registered obligation within the meaning of Treasury
Regulation Section 1.871-14(c)(1)(i) and the Company (or its agent) shall
register this Note (and thereafter shall maintain such registration) as to
both
principal and any stated interest. Notwithstanding any document, instrument
or
agreement relating to this Note to the contrary, transfer of this Note (or
the
right to any payments of principal or stated interest thereunder) may only
be
effected by (i) surrender of this Note and either the reissuance by the Company
of this Note to the new holder or the issuance by the Company of a new
instrument to the new holder, or (ii) transfer through a book entry system
maintained by the Company (or its agent), within the meaning of Treasury
Regulation Section 1.871-14(c)(1)(i)(B).
[Balance
of page intentionally left blank; signature page follows]
IN
WITNESS WHEREOF,
the
Company has caused this Secured Term Note to be signed in its name effective
as
of this 31st
day of
May, 2006.
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MAGNETECH
INDUSTRIAL SERVICES OF ALABAMA, LLC
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|||
|
By:
|
/s/ Xxxx X. Xxxxxxx | ||
|
Name:
|
Xxxx X. Xxxxxxx | ||
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Title:
|
President | ||
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WITNESS:
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| By: | /s/ Xxxxx X. Xxxxx | ||
| Name: | Xxxxx X. Xxxxx | ||
| Title: | Secretary | ||
