ACQUISITION LINE OF CREDIT AGREEMENT August 24, 2007
August
24, 2007
Solomon
Technologies, Inc., a Delaware corporation (“Solomon”) and JMC Venture Partners
LLC, a Delaware limited liability company (together with its successors and
assigns, including any assignees pursuant to Section 12, hereinafter the
“Lender”) hereby agree as follows (with capitalized terms not otherwise defined
herein having the meanings ascribed to them in Section 18):
1. Loans. Upon
the
terms and subject to the conditions of this Agreement, and upon notice by
Solomon as provided in Section 5(a), Lender agrees to advance from time to
time
during the period from the date hereof through August 24, 2008 (the “Termination
Date”), amounts (each a “Loan” and collectively the “Loans”) to one or more
entities (each an “Acquisition Entity” and collectively the “Acquisition
Entities”), the principal amount of which shall not exceed fifteen million
dollars ($15,000,000) in the aggregate (the “Commitment”). Upon the fulfillment
of the conditions specified in Section 6, each Loan shall be disbursed by Lender
on the requested date therefor in funds immediately available to the Acquisition
Entity in such manner as shall be reasonably acceptable to Lender.
2. Renewal
of Commitment.
Lender
may, in its sole discretion, renew the Commitment prior to the Termination
Date
on the terms hereof. The renewal of the Commitment may be in any amount
designated by Lender that is acceptable to Solomon. Upon any such renewal,
Solomon shall pay a commitment fee to Lender computed in accordance with Section
5(e) (i).
3.
Interest.
(a) Rate.
Each
Loan
shall bear simple interest on the outstanding principal amount thereof at a
rate
of twelve percent (12%) per annum. During an Event of Default (and whether
before or after judgment), each Loan (whether or not due) and, to the maximum
extent permitted under applicable law, each other amount due and payable
hereunder shall bear interest at the rate of eighteen percent (18%) per
annum.
(b) Payment.
Interest shall be payable in arrears on the first day of each month after the
Loan is disbursed.
(c) Computation.
Interest on the Loans shall be computed on the basis of a year of 360 days
and
paid for the actual number of days elapsed (including the first but excluding
the last day).
4. Repayment.
(a)
Mandatory
Repayment. Each
Loan
shall be repaid in full, together with all unpaid accrued interest, by the
Acquisition Entity on the last day of the twelfth month after such Loan is
made.
(b) Optional
Prepayment.
Upon
notice to Lender as provided in Section 5(a), an Acquisition Entity may, at
any
time and from time to time, prepay a Loan in whole or in part, except that
any
partial prepayment shall be in an aggregate principal amount of at least
$100,000.
5. Credit
Line Provisions.
(a)
Notice.
Solomon
shall give Lender notice 20 Business Days before the requested date of the
Loan
specifying the proposed disbursement date and the amount thereof.
(b) Payments
to Lender.
(i)
Manner.
Solomon
shall cause each Acquisition Entity to make all payments to Lender hereunder
without any reduction or deduction whatsoever (including any reduction or
deduction for set-off, recoupment, counterclaim (whether sounding in tort,
contract or otherwise) or any Federal, state or foreign tax or other
governmental charge, levy or withholding tax) to Lender’s office as determined
in accordance with the provisions of Section 11. A payment shall not be deemed
to have been made on any day unless such payment has been received by Lender
in
immediately available funds no later than 12:00 noon Eastern time on such
day.
(ii) Extension
of Payment Dates.
Whenever any payment to Lender hereunder would otherwise be due (except by
reason of acceleration) on a day that is not a Business Day, such payment shall
instead be due on the next succeeding Business Day (and shall bear interest
for
such extended time at the applicable rate immediately prior
thereto).
(c) Evidence
of Indebtedness.
The
Loans and the obligation to repay the Loans with interest thereon in accordance
with this Agreement shall be evidenced by this Agreement and the secured
promissory note of each Acquisition Entity in a form acceptable to the Lender
in
its sole discretion (each a “Note”).
(d) Guaranty.
Each
Loan shall be unconditionally guaranteed by Solomon in a form mutually
acceptable to the Lender and Solomon..
(e) Fees.
Solomon
shall pay fees to Lender as follows:
(i) Commitment
Fee.
Solomon
shall pay to Lender a commitment fee equal to two and one-half percent (2.5%)
of
the Commitment payable on the date hereof. The commitment fee shall be payable
in restricted shares of the common stock of Solomon (“Shares”) issuable within
ten Business Days after the date hereof and after any renewal of the Commitment
as provided herein.
(ii) Monitoring
Fee.
Solomon
shall pay to Lender an monitoring fee equal to two and one-half percent (2.5%)
of each Loan. The monitoring fee shall be payable in Shares and shall be
issuable within ten Business Days after the disbursement of each
Loan.
(iii) Investment
Fee.
Solomon
shall pay to Lender a cash investment fee equal to one percent (1%) of the
aggregate outstanding balance of the Loans each quarter. The investment fee
for
any Loan disbursed or repaid during a quarter shall be prorated. The investment
fee shall be payable within ten Business Days after the end of each
quarter.
The
number of Shares issuable pursuant to Sections 5(e)(i) and (ii) shall be
computed by dividing the dollar amount of the commitment fee and investment
fee,
respectively, by the average closing price of a Share for the ten Business
Days
preceding the applicable date, rounded to the next highest Share. The Shares
shall be included in Solomon’s next registration statement filed with the
Securities and Exchange Commission on Forms X-0, XX-0, X-0 or
-
2 -
equivalent
in accordance with “piggyback” registration rights accorded by Solomon to
investors generally but in no event later than 120 days after the execution
of
this agreement.
6. Conditions
to Loans.
The
obligation of Lender to make each Loan is subject to the fulfillment of each
of
the following conditions in form and substance satisfactory to
Lender:
(a) Lender
shall have received good standing certificates of Solomon and the Acquisition
Entity, each certified as of a recent date prior to the date of the disbursement
of the applicable Loan hereunder by the appropriate official of Solomon’s and
Acquisition Entity’s jurisdictions of organization;
(b) Lender
shall have received the charter and bylaws of the Acquisition Entity certified
by an officer of the Acquisition Entity as being true and correct and in effect
on the date of the Loan;
(c)
Lender
shall have received duly executed resolutions of the Acquisition Entity
authorizing it to execute and deliver the Note, the Security Agreement and
the
Financing Statements;
(d) Lender
shall have received the Note and Security Agreement duly executed by the
Acquisition Entity and the original counterpart of all filed Financing
Statements stamped by the appropriate government filing offices;
(e) Lender
shall have received the guaranty of Solomon with respect to the
Loan;
(f) Lender
shall have received an opinion of counsel to Solomon and the Acquisition Entity
covering such matters as Lender shall have reasonably requested on the date
of
the disbursement of the initial Loan hereunder, and all legal matters relating
to the transactions contemplated by this Agreement shall be satisfactory to
counsel for Lender as of the time each Loan is disbursed hereunder;
(g) each
representation and warranty contained in this Agreement shall be true and
correct and no Event of Default shall be continuing, in each case as of the
date
each Loan is to be made hereunder; and
(h) Lender
shall have received such other documents and opinions as it shall have
reasonably requested.
7.
Lender’s
Right to Decline a Loan.
Notwithstanding anything herein to the contrary, Lender may in its sole
discretion decline to make any Loan requested by Solomon.
8. Representations
and Warranties.
In
order to induce Lender to enter into this Agreement and to make each Loan
hereunder, Solomon represents, warrants and agrees that:
(a) Organization;
Power; Qualification.
Each of
it and its wholly or partially owned subsidiary entities (together with each
Acquisition Entity, “Subsidiaries”) is a corporation or limited liability
company duly organized, validly existing and in good standing under the laws
of
its jurisdiction of organization, has the power and authority to own its
properties and to carry on
-
3 -
its
business as now being and hereafter proposed to be conducted and is duly
qualified and in good standing as a foreign corporation or limited liability
company, and authorized to do business, in each jurisdiction in which the
character of its properties or the nature of its business requires such
qualification or authorization, except for qualifications or authorizations
the
lack of which, singly or in the aggregate, has not had and will not have a
materially adverse effect on Solomon and its Subsidiaries taken as a
whole.
(b) Authorization;
Enforceability; Required Consents; No Conflicts.
(i)
Agreement.
It has
the power, and has taken all necessary action to authorize, execute, deliver
and
perform this Agreement in accordance with its terms. This Agreement has been
duly executed and delivered and constitutes the legal,
valid
and
binding obligation of Solomon, enforceable against Solomon in accordance with
its terms. The execution, delivery and performance of this Agreement do not
and
will not (i) require any governmental approval or other consent or approval,
other than such approvals and consents that have been obtained and are in full
force and effect, final and not subject to review on appeal or to collateral
attack, or (ii) violate or conflict with, result in a breach of, or constitute
a
default under, or result in or require creation of any lien or encumbrance
upon
any assets of Solomon or any of its Subsidiaries under any applicable law or
any
agreement, indenture, lease, license, instrument or other contractual
restriction or any charter or bylaws to which Solomon or any of its Subsidiaries
is a party or by which Solomon or any of its Subsidiaries or any of their
properties may be bound.
(ii) Guaranty.
It will
have the power, and will have taken all necessary action to authorize, execute,
deliver and perform each Guaranty of a Loan in accordance with its terms. When
executed, each Guaranty will have been duly executed and delivered and
constitute the legal,
valid
and
binding obligation of Solomon, enforceable against Solomon in accordance with
its terms. The execution, delivery and performance of each Guaranty will not
(i)
require any governmental approval or other consent or approval, other than
such
approvals and consents that have been obtained and are in full force and effect,
final and not subject to review on appeal or to collateral attack, or (ii)
violate or conflict with, result in a breach of, or constitute a default under,
or result in or require creation of any lien or encumbrance upon any assets
of
Solomon or any of its Subsidiaries under any applicable law or any agreement,
indenture, lease, license, instrument or other contractual restriction or any
charter or bylaws to which Solomon or any of its Subsidiaries is a party or
by
which Solomon or any of its Subsidiaries or any of their properties may be
bound.
(c) Other
Security Interests and Liens.
It will
cause each Acquisition Entity to obtain the written approval of Lender before
entering into any security agreement or similar arrangement with a third party
with respect to any of such Acquisition Entity’s assets, regardless of whether
such security agreement purports to xxxxx x xxxx that is junior or senior to
the
lien of Lender granted by an Acquisition Entity pursuant to a Security
Agreement. Any such security agreement with, or such security interest granted
to, any third party without the advance written consent of Lender shall be
null
and void.
9. Covenants.
From
the date hereof until the later of the termination of the Commitment (whether
as
a result of the occurrence of the Termination Date or pursuant to Section 10)
and the payment in full of the Loans and all other amounts payable or accrued
hereunder (the “Repayment Date”), Solomon shall, and shall cause each of its
Subsidiaries to:
-
4 -
(a) Preservation
of Existence and Franchises, Scope of Business, Compliance with Law,
Preservation of Enforceability.
(i)
Preserve and maintain its corporate existence and all of its other franchises,
licenses, rights and privileges, (ii) engage only in businesses in substantially
the same fields as the businesses conducted on the date hereof, (iii) comply
with all applicable law, and (iv) take all action and obtain all consents and
governmental approvals required so that its obligations hereunder will at all
times be legal, valid and binding and enforceable in accordance with their
respective terms, except that clauses (i) (except insofar as it requires the
preservation of corporate existence) and (iii) above shall not apply in any
circumstance where noncompliance, together with all other noncompliances with
this Section 9(a), will not have a materially adverse effect on Solomon and
its
Subsidiaries taken as a whole.
(b) Use
of
Proceeds.
Use the
proceeds of the Loans solely to provide all or a portion of the purchase money
to be used by an Acquisition Entity to acquire the assets or securities of
another entity that are subject to a Security Agreement, provided
that
proceeds
may be used with the consent of the Lender for closing and related costs and
for
post-closing working capital..
(c) Information.
Upon
Lender’s request from time to time, promptly furnish to Lender such data,
certificates, reports, statements (including financial statements of Solomon
and
its Subsidiaries), opinions of counsel, documents and other information
regarding this Agreement, the Notes, the Security Agreements or the Loans and
the business, assets, liabilities, financial condition, results of operations
or
business prospects of Solomon and its Subsidiaries as Lender may request, in
each case in form and substance, certified and, in the case of financial
statements for a fiscal year of Solomon, audited in a manner satisfactory to
Lender.
10. Events
of Default; Remedies.
If any
of the following events (each, an “Event of Default”) shall be continuing for
any reason whatsoever (whether voluntary or involuntary, arising or effected
by
operation of law or otherwise):
(a) any
payment of principal of or interest on a Loan shall not be paid when and as
due
(whether at maturity, by reason of notice of prepayment or acceleration or
otherwise) and in accordance with the terms of this Agreement and the
Note;
(b) any
Acquisition Entity shall default in the performance or observance of any term,
covenant or agreement contained in a Note or Security Agreement, any
representation or warranty contained therein shall at any time prove to have
been incorrect or misleading in any material respect when made, or any provision
of a Note or Security Agreement shall cease to be the legal, valid and binding
obligation of an Acquisition Entity;
(c)
Solomon
shall default in the performance or observance of any term, covenant or
agreement contained herein or in any Guaranty, any representation or warranty
contained herein or therein shall at any time prove to have been incorrect
or
misleading in any material respect when made, or any provision of this Agreement
or any Guaranty shall cease to be the legal, valid and binding obligation of
Solomon;
(d) a
default
shall be continuing under any agreement, indenture,
lease,
license, instrument or other contractual restriction or any charter or bylaws
(other than this Agreement) to which Solomon is a party or by which it or its
properties may be bound, except a default that,
-
5 -
together
with all other such defaults, has not had and will not have a materially adverse
effect on Solomon and its Subsidiaries taken as a whole;
(e) any
change in the business, assets, liabilities, financial condition, results of
operations or business prospects of Solomon or any of its Subsidiaries since
the
date hereof shall occur, or any event shall occur or fail to occur, that has
had
or might have, either alone or in conjunction with all other such changes,
events and failures, a materially adverse effect on Solomon and its Subsidiaries
taken as a whole; or
(f) a
case or
proceeding shall be commenced and continue undismissed or unstayed for a period
of 30 days against Solomon or any of its Subsidiaries, or Solomon or any of
its
Subsidiaries shall commence a voluntary case, in either case seeking relief
under the Federal bankruptcy laws or any other law relating to bankruptcy,
insolvency, reorganization, winding up or composition or adjustment of debts,
in
each case as now or hereafter in effect, or Solomon or any of its Subsidiaries
shall apply for, consent to, or fail to contest, the appointment of a receiver,
liquidator, custodian, trustee or the like of Solomon or any of its Subsidiaries
for all or any part of its property, or Solomon or any of its Subsidiaries
shall
make a general assignment for the benefit of its creditors, or Solomon or any
of
its Subsidiaries shall fail, or admit in writing its inability, to pay, or
generally not be paying, its debts as they become due;
then
(i)
during the continuance of any Event of Default described in Sections 10(a)
or
(b), Lender may by written notice to the Acquisition Entity and to Solomon
declare that the principal of and interest on such Loan be, and such Loan and
such Note shall become, immediately due and payable to Lender, (ii) during
the
continuance of any Event of Default described in Sections 10(c), (d) or (e),
Lender may by written notice to each Acquisition Entity and to Solomon declare
that the principal of and interest on all Loans and all other amounts owing
hereunder be, and all Loans and all Notes shall become, immediately due and
payable to Lender, and (iii) during the continuance of any Event of Default
specified in Section 10(f), the principal of and interest on all Loans and
all
Notes and all other amounts payable hereunder shall be due and payable to Lender
automatically and without any notice to Solomon or any Acquisition Entity.
During the continuance of any Event of Default hereunder, the Lender may
terminate the Commitment.
11. Notices
and Deliveries.
All
notices, communications and material to be given or delivered hereunder or
any
Guaranty shall be in writing (which shall include facsimile transmissions or
similar writings) and shall be given or delivered as set forth on the signature
pages hereof or at such other address, telecopier or telephone number or as
otherwise specified by notice to the applicable party. Each such notice,
communication and delivery shall be effective (i) if by telecopier, when
transmitted to the telecopier number specified herein and received at such
number, (ii) if by telephone, when communicated to the individual or any member
of the department specified herein, (iii) if by registered or certified mail,
postage prepaid, return receipt requested, on the third Business Day after
delivered to a United States post office and a receipt therefor is issued
thereby or (iv) if by any other means, when delivered at the address specified
herein.
12. Assignments
and Participations.
(a)
Solomon may not assign any of its rights or obligations under this Agreement
or
any Guaranty
without the prior written consent of Lender.
-
6 -
(b) Solomon
shall not permit any Acquisition Entity to assign any of its obligations under
a
Note or Security Agreement without the prior written consent of
Lender
(c) Lender
may from time to time assign, and sell or otherwise grant participations in,
any
or all of its rights and obligations under any Loan Document to one or more
Persons without the consent of Solomon or any Acquisition Entity.
13. Expenses;
Indemnification.
Whether
or not the Acquisition Line of Credit Agreement or any Loans are made hereunder,
Solomon shall:
(a) Expenses.
Pay or
reimburse Lender for all costs and expenses (including but not limited to fees
and disbursements of legal counsel) incurred by Lender in connection with,
arising out of, or in any way related to, (i) the negotiation, preparation,
execution and delivery of the Loan Documents and, whether or not executed,
any
waiver, amendment or consent hereunder or thereunder or hereto or thereto,
(ii)
the administration of and any operations under the Loan Documents, (iii) the
consultation with respect to any matter in any way arising out of, related
to,
or connected with, the Loan Documents, including the protection, preservation,
exercise or enforcement of any of its rights thereunder or the performance
of
any of its obligations thereunder, and (iv) the enforcement, exercise,
preservation or protection by Lender of any of its rights under the Loan
Documents. Solomon shall also pay or reimburse Lender for all transfer,
documentary, stamp and similar taxes, and all recordings and filing fees and
taxes, payable in connection with, arising out of, or in any way related to,
the
execution, delivery and performance of the Loan Documents.
(b) Indemnification.
Indemnify Lender, any of its affiliates or any of its directors, officers,
employees or agents or such affiliate (each, an “Indemnified Person”) against
any loss, claim, liability or expense (including but not limited to fees and
disbursements of legal counsel) incurred by it in connection with, arising
out
of, or in any way related to, the execution and delivery of the Loan Documents
or any of the transactions contemplated thereby, including but not limited
to
any such incurred in connection with any investigation, testimony or subpoena
(governmental or otherwise) or litigation or proceeding (including the
prosecution or defense thereof and whether asserted by Lender, Solomon, an
Acquisition Entity or any other Person and whether Lender is a party thereto),
unless and to the extent such loss, claim, liability or expense is determined
by
a judgment of a court that is binding on Lender and Solomon, final and not
subject to review on appeal, to be the result of willful misconduct or knowing
violations of law by Lender.
14. Judicial
Proceedings; WAIVER OF JURY TRIAL.
Each of
Solomon and Lender agree to submit to personal jurisdiction in any court of
competent jurisdiction in the Commonwealth of Massachusetts located in Suffolk
County or in the United States District Court for the Eastern District of
Massachusetts and to irrevocably waive any objection it may now or hereafter
have as to the venue of any proceeding brought in such court or that such court
is an inconvenient forum. Solomon hereby waives personal service of process
and
consents that service of process upon it may be made, and deemed completed,
in
accordance with the provisions of Section 11. SOLOMON AND LENDER WAIVE TRIAL
BY
JURY IN ANY JUDICIAL PROCEEDING ARISING OUT OF OR RELATING TO THE LOANS, THIS
AGREEMENT, ANY GUARANTY, ANY SECURITY AGREEMENT OR ANY NOTE OR
-
7 -
THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. Solomon shall cause each
Acquisition Entity to comply with this Section 14.
15.
LIMITATION
OF LIABILITY.
LENDER
AND ANY INDEMNIFIED PERSON SHALL NOT HAVE ANY LIABILITY WITH RESPECT TO, AND
SOLOMON HEREBY WAIVES, RELEASES AND AGREES NOT TO XXX FOR, AND AGREES TO CAUSE
EACH ACQUISITION ENTITY TO WAIVE, RELEASE AND AGREE NOT TO XXX FOR, ANY SPECIAL,
INDIRECT OR CONSEQUENTIAL DAMAGES SUFFERED BY SOLOMON OR ANY ACQUISITION ENTITY
IN CONNECTION WITH ANY CLAIM (WHETHER CIVIL, CRIMINAL OR ADMINISTRATIVE, WHETHER
SOUNDING IN TORT, CONTRACT OR OTHERWISE AND WHETHER ARISING OR ASSERTED BEFORE
OR AFTER THE DATE HEREOF OR THE REPAYMENT DATE) IN ANY WAY ARISING OUT OF,
RELATED TO, OR CONNECTED WITH, THE LOAN DOCUMENTS OR THE RELATIONSHIPS
ESTABLISHED THEREUNDER.
16. Governing
Law.
This
Agreement shall be governed by and construed in accordance with the laws of
The
Commonwealth of Massachusetts (without giving effect to its choice of law
principles).
17. Counterparts.
This
Agreement may be signed in two counterparts, each of which shall constitute
an
original but both of which when taken together shall constitute but one
agreement.
18. Definitions.
For
purposes of this Agreement:
“Business
Day”
shall
mean any day which Lender is open to conduct commercial banking business in
Boston, Massachusetts.
“Financing
Statement”
shall
mean a financing statement filed in accordance with a Security Agreement by
or
on behalf of an Acquisition Entity as debtor under the Uniform Commercial Code.
“Loan
Documents”
shall
mean this Agreement, each Guaranty, the Notes, the Security Agreements and
the
Financing Statements.
“Person”
shall
mean any individual, sole proprietorship, corporation, partnership, trust,
unincorporated organization, mutual company, joint stock company, estate, union,
employee organization or government or any agency or political subdivision
thereof.
“Security
Agreement”
shall
mean a security agreement by and between an Acquisition Entity and Lender
pursuant to which an Acquisition Entity grants a senior lien to Lender on assets
or securities acquired with the proceeds of a Loan.
[Signature
Page Follows]
-
8 -
IN
WITNESS WHEREOF, Solomon and Lender have caused this Agreement to be duly
executed by their duly authorized officers, all as of the day and year first
above written.
SOLOMON
TECHNOLOGIES, INC.
By:
Name:
Xxxx X. Xxxxxx
Title:
Chief Executive Officer
Telecopier
No.: 000-000-0000
Telephone
No.: 000-000-0000
JMC
VENTURE PARTNERS LLC
By:
Name:
Title:
Telecopier
No.: __________________________
Telephone
No.:__________________________
-
9 -
