EXHIBIT 10.5
REVOLVING LINE OF CREDIT LOAN AGREEMENT
THIS REVOLVING LINE OF CREDIT LOAN AGREEMENT (this "Agreement") is made
as of December 12, 2002 (the "Effective Date"), by and between Xxxxxx X. Xxxxxxx
("Creditor"), whose address is 000 Xxxxxx Xxxxxx, Xxxx 000, Xxx Xxxxxxx,
Xxxxxxxx 00000, and LightFirst Inc. a Delaware corporation ("Debtor"), whose
address is 00 Xxxxxxxxx Xxxxx Xxxxxxxxx, Xxxxx 000, Xxx Xxxxx Xxxxxxx, Xxxxxxxx
00000.
PRELIMINARY STATEMENT:
Unless otherwise expressly provided herein, all defined terms used in
this Agreement shall have the meanings set forth in Section 1. Creditor has
agreed to provide the Loan to the Debtor, and Debtor has agreed to pledge its
interest in the Collateral pursuant to the Security Agreement in order to
provide security for the Loan. This Agreement sets forth the terms and
conditions associated with the Loan and a pledge of the Collateral.
AGREEMENT:
In consideration of the mutual covenants and provisions of this
Agreement, the parties agree as follows:
1. DEFINITIONS. The following terms shall have the following
meanings for all purposes of this Agreement:
"Acceleration Event" means (a) a breach or default, after the passage
of all applicable notice and cure or grace periods, under any other agreement,
instrument or promissory note other than the Loan Documents between, among or by
(i) Debtor or any Affiliate of Debtor, and, or for the benefit of, (ii) Creditor
and/or any Affiliate of Creditor, or (b) the consummation of a sale of stock or
other ownership interests in Debtor pursuant to a public offering or private
placement pursuant to the Securities Act of 1933.
"Action" has the meaning set forth in Section 7.
"Advance" means any advance of the proceeds of the Loan made by
Creditor pursuant to the terms of Section 2.
"Affiliate" means any Person which directly or indirectly controls, is
under common control with, or is controlled by any other Person. For purposes of
this definition, "controls", "under common control with" and "controlled by"
means the possession, directly or indirectly, of the power to direct or cause
the direction of the
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management and policies of such Person, whether through ownership of voting
securities or otherwise.
"Business Day" means any day on which banks are open for general
banking business in the State of Illinois other than a Saturday, Sunday, a legal
holiday or any other day on which banks in the State of Illinois are required or
authorized by law to close.
"Code" means the United States Bankruptcy Code, 11 U.S.C. Sec. 101 et
seq., as amended.
"Collateral" means Debtor's assets as more particularly described in
the Security Agreement.
"Effective Date" has the meaning set forth in the introductory
paragraph of this Agreement.
"Event of Default" has the meaning set forth in Section 7.
"Indemnified Parties" has the meaning set forth in Section 9.
"Loan" means the revolving line of credit in the Maximum Loan Amount
and as described in Section 2.
"Loan Documents" means, collectively, this Agreement, the Note, the
Security Agreement, the UCC Financing Statements, and all other documents,
instruments and agreements executed in connection therewith or contemplated
thereby.
"Material Adverse Effect" means a material adverse effect on (i) the
financial condition of Debtor, as applicable or (ii) the ability of Debtor, as
applicable, to perform its obligations under the Loan Documents.
"Maturity Date" shall have the meaning set forth in the Note.
"Maximum Loan Amount" means $750,000.00.
"Note" means the promissory note dated as of the Effective Date
executed by Debtor in favor of Creditor in the form of Exhibit A attached to
this Agreement, as such Note may be amended and/or amended and restated and/or
substituted from time to time as contemplated by Section 2. The term "Note"
shall also include all additional promissory notes executed and delivered by
Debtor to Creditor from time to time as contemplated by Section 2.
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"Person" shall mean any individual, corporation, partnership, Limited
Liability Company, trust, unincorporated organization, governmental authority or
any other form of entity.
"Security Agreement" means the security agreement dated as of the
Effective Date executed by Debtor in favor of Creditor, as such Security
Agreement may be amended from time to time.
"Subsidiary" means any corporation or other entity of which at least a
majority of the outstanding shares of stock or other ownership interests having
by the terms thereof ordinary voting power to elect a majority of the board of
directors (or Persons performing similar functions) of such corporation
(irrespective of whether or not at the time stock of any other class or classes
of such corporation or entity shall have or might have voting power by reason of
the happening of any contingency) is at the time directly or indirectly owned or
controlled by Debtor or one or more of the Subsidiaries or by Debtor and one or
more of the Subsidiaries.
"UCC Financing Statements" means those UCC financing statements
required by Creditor to be executed and delivered by Debtor that are necessary
to perfect Creditor's security interest in the Collateral.
2. REVOLVING LINE OF CREDIT. A. On the terms and subject to the
satisfaction by Debtor of the conditions set forth in this Agreement, Creditor
agrees to make the Loan to Debtor, which Loan will be in the form of Advances
made from time to time as provided in this Agreement. The outstanding aggregate
principal amount of the Loan shall not exceed the Maximum Loan Amount at any
time. So long as no event has occurred which is, or with the passage of time or
the giving of notice or both under the Loan Documents would constitute, an Event
of Default or an Acceleration Event, Debtor may borrow, prepay and reborrow,
from the Effective Date until the Maturity Date, an amount up to the Maximum
Loan Amount.
B. Simultaneously with the execution and delivery of this
Agreement, Debtor shall execute and deliver to Creditor the Note. The obligation
of Debtor to pay the outstanding aggregate principal amount of all Advances plus
accrued interest thereon shall be evidenced by the Note. Debtor irrevocably
authorizes Creditor to make or cause to be made, at or about the time of any
Advance or at the time of Creditor's receipt of any payment of the principal
amount of the Note, an appropriate notation in Creditor's records reflecting the
amount of such Advance or payment, as applicable. The outstanding aggregate
principal amount of the Note plus accrued interest thereon set forth in
Creditor's records maintained with respect to the Note (which may include
computer records) shall, absent manifest error, be prima facie evidence of the
outstanding aggregate principal amount plus accrued interest thereon due and
owing to Creditor, but the failure to record, or any error in so recording, any
such amount on Creditor's records shall not
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limit or otherwise affect the obligations of Debtor under the Note to make
payments when due. Notwithstanding the foregoing, Debtor agrees to execute such
amendments to the Note, amendments and restatements of the Note and/or
substitute and/or additional promissory notes in the form of the Note as
Creditor may reasonably request to evidence Debtor's obligations to Creditor
under the Loan Documents.
C. Debtor shall notify Creditor at least two Business Days before
the Business Day on which Debtor desires to receive an Advance. Notice may be
given in person, via telephone, fax, electronic mail, or regular mail, may be
oral or written, and shall set forth the requested amount of each Advance and
the delivery instructions for the Advance. Creditor's obligation to fund each
Advance shall be subject to the satisfaction of the following conditions
precedent as of the date of the requested Advance:
(i) no event shall have occurred which is, or with the
passage of time or the giving of notice or both under the Loan Documents would
constitute, an Event of Default or an Acceleration Event;
(ii) Debtor shall be in compliance with each of the
covenants set forth in Section 5;
(iii) the outstanding principal balance of the Loan,
together with the amount of the requested Advance, must not exceed the Maximum
Loan Amount; and
(iv) there shall have been no material adverse change in
Debtor's business, operations, assets or financial condition since the Effective
Date, as determined by Creditor in its reasonable discretion.
Upon Debtor's satisfaction of the foregoing conditions, Creditor will disburse
the requested Advance in immediately available funds to such account as Debtor
shall have specified in the Notice or as otherwise directed by Debtor in the
Notice.
D. The Loan shall bear interest at the rate set forth in the
Note, shall accrue on a monthly basis, and shall be payable on the first day of
each fiscal quarter of the Debtor based on the then outstanding principal
balance of the Note. Debtor shall have the right to prepay (without premium or
penalty) the Note in whole or in part at any time. Debtor shall pay on the
Maturity Date, and there shall become absolutely due and payable on the Maturity
Date, the outstanding principal amount of the Loan and all accrued but unpaid
interest thereon.
E. As security for the Loan, Debtor agrees to pledge its interest
in the Collateral pursuant to the Security Agreement.
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F. All costs and expenses of the transaction described in this
Agreement shall be paid by Debtor, including, without limitation, the attorneys'
fees of Debtor and the reasonable attorneys' fees and expenses of Creditor.
3. REPRESENTATIONS AND WARRANTIES OF CREDITOR. The representations and
warranties of Creditor contained in this Section are being made by Creditor as
of the Effective Date to induce Debtor to enter into this Agreement and
consummate the transactions contemplated herein, and Debtor has relied, and will
continue to rely, upon such representations and warranties from and after the
execution of this Agreement. Creditor represents and warrants to Debtor as
follows:
A. Authority of Creditor. The person who has executed
this Agreement on behalf of Creditor is the Creditor himself.
B. Enforceability. Upon execution by Creditor, this
Agreement shall constitute the legal, valid and binding obligation of Creditor,
enforceable against Creditor in accordance with its terms.
All representations and warranties of Creditor made in this Agreement
shall survive the execution of this Agreement.
4. REPRESENTATIONS AND WARRANTIES OF DEBTOR. The representations
and warranties of Debtor contained in this Section are being made by Debtor as
of the Effective Date and the date of each Advance to induce Creditor to enter
into this Agreement and consummate the transactions contemplated herein, and
Creditor has relied, and will continue to rely, upon such representations and
warranties from and after the Effective Date and the date of each Advance.
Debtor represents and warrants to Creditor as follows:
A. Information and Financial Statements. Debtor has
delivered to Creditor financial statements (either audited financial statements
or, if Debtor does not have audited financial statements, certified financial
statements) and certain other information concerning itself, which financial
statements and other information are true, correct and complete in all material
respects; and no material adverse change has occurred with respect to any such
financial statements and other information provided to Creditor since the date
such financial statements and other information were prepared or delivered to
Creditor. Debtor understands that Creditor is relying upon such financial
statements and information and Debtor represents that such reliance is
reasonable. All such financial statements were prepared in accordance with
generally accepted accounting principles consistently applied (except as
otherwise noted in such financial statements) and accurately reflect as of the
Effective Date the financial condition of each individual or entity to which
they pertain.
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B. Organization and Authority of Debtor. Debtor is duly
organized or formed, validly existing and in good standing under the laws of the
State of Delaware and qualified as a foreign corporation to do business in any
jurisdiction where such qualification is required. All necessary corporate
action has been taken to authorize the execution, delivery and performance of
the Loan Documents. The person(s) who have executed the Loan Documents on behalf
of Debtor are duly authorized so to do.
C. Enforceability of Documents. Upon execution by
Debtor, the Loan Documents shall constitute the legal, valid and binding
obligations of Debtor, enforceable against Debtor in accordance with their
respective terms.
D. Litigation. There are no suits, actions, proceedings
or investigations pending or, to the actual knowledge of Debtor, threatened
against or involving Debtor, the Collateral, or any of Debtor's assets before
any court, arbitrator, or administrative or governmental body which might
reasonably result in a Material Adverse Effect.
E. No Resulting Breaches or Defaults. The authorization,
execution, delivery and performance of the Loan Documents will not result in a
Material Adverse Effect or result in any breach or default under any other
document, instrument or agreement to which Debtor is a party or by which Debtor,
the Collateral, or any of the property of Debtor is subject or bound which would
materially interfere with or prevent Debtor's performance under the Loan
Documents. The authorization, execution, delivery and performance of the Loan
Documents will not violate any applicable law, statute, regulation, rule,
ordinance, code, rule or order.
F. Licenses, Permits, Consents and Approvals. Debtor has
all required licenses, permits, consents and approvals, both governmental and
private, to use and operate the Collateral, the Premises and the rest of their
assets and conduct their business in the intended manner.
G. Insolvency. Debtor is not insolvent within the
meaning of the Code.
H. Title to Collateral; First Priority Security
Interest. Debtor owns, and with respect to Collateral acquired after the date
hereof, Debtor will own, legally and beneficially, the Collateral, free and
clear of any lien, security interest, pledge, hypothecation, claim or other
encumbrance, or any right or option on the part of any third person to purchase
or otherwise acquire or obtain any lien or security interest in the Collateral
or any part thereof, except for the lien and security interest granted in the
Security Agreement in favor of Creditor. Upon the execution of the Loan
Documents by the applicable parties, Secured Party shall have a valid first
priority lien upon and security interest in the Collateral.
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I. Collateral Genuine. The Collateral is genuine, free
from any restriction on transfer, duly and validly authorized and issued,
constitutes the valid and legally binding obligation of the Companies,
enforceable in accordance with its terms, is fully paid and non-assessable, and
is hereby duly and validly pledged and hypothecated to Creditor in accordance
with law.
J. No Actions. No action has been brought or is
threatened which would in any way prohibit or restrict the execution and
delivery of any of the Loan Documents by Debtor or the performance in all
respects of Debtor thereunder.
All representations and warranties of Debtor made in this Agreement
shall survive the execution of this Agreement and each Advance.
5. COVENANTS. Debtor covenants to Creditor from and after the
Effective Date as follows:
A. Books, Records and Inspections. Debtor shall, at all
reasonable times upon prior written notice from Creditor and during normal
business hours, (i) provide Creditor and Creditor's officers, employees, agents,
advisors, attorneys and accountants with access to Debtor's personal and real
properties and books and records, and (ii) allow such persons to make such
inquires of Debtor's officers and employees and to make copies and perform such
verifications as Creditor considers reasonably necessary; provided, however, all
such inspections, copies and verifications shall be at Creditor's sole cost and
expense and Creditor shall reasonably attempt to minimize, during any such
activity, interference with the operation of Debtor's business and Creditor
shall keep any information obtained confidential; provided, however, Creditor
shall not be required to keep confidential (1) any information which had
previously been made public, (2) information that Creditor is required to
disclose by court order, subpoena or under federal or state law, or (3)
information received by Creditor from a third party.
B. Reporting Obligations. Debtor will provide Creditor
with each of the following:
(i) Financial Statements. Within 45 days after
the end of each fiscal quarter and within 120 days after the end of each fiscal
year of Debtor, Debtor shall deliver to Creditor complete financial statements
of Debtor including a balance sheet, profit and loss statement, cash flow
statement and all other related schedules for the fiscal period then ended. All
such financial statements shall be prepared in accordance with generally
accepted accounting principles, consistently applied from period to period, and
shall be certified to be accurate and complete by Debtor (or the Treasurer or
other appropriate officer of Debtor). Debtor understands that Creditor is
relying upon such financial statements and Debtor represents that such reliance
is reasonable. The financial statements delivered to Creditor need not be
audited, but Debtor shall deliver to Creditor
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copies of any audited financial statements of Debtor which may be prepared, as
soon as they are available.
(ii) Event of Default or Acceleration Event.
Promptly, but in any event within five days, after Debtor becomes aware of an
Event of Default or an Acceleration Event, written notification to an officer of
Creditor specifying the nature and period of existence thereof and what action
Debtor is taking or proposes to take with respect thereto.
(iii) Litigation. Within ten days after Debtor
becomes aware of any action, suit or proceeding pending or threatened in writing
against or involving Debtor and/or Debtor's properties, except for those
actions, suits or proceedings (1) for which damages of less than $50,000 have
been sought, threatened or are likely to be incurred and (2) which Debtor in
good faith determines will be covered by its insurance (including worker's
compensation claims), Debtor shall notify Creditor of such action, suit or
proceeding and in such notice specify the nature thereof, whether the alleged
liability therein is covered by insurance then in effect and, if so covered, the
monetary coverage thereof, and what action Debtor is taking or proposes to take
with respect thereto.
(iv) Auditors' Reports. Promptly upon receipt
thereof, a copy of each report submitted to Debtor by its independent
accountants in connection with any annual, interim or special audit made by it
of the books of Debtor.
(v) Other Information. Debtor shall deliver to
Creditor promptly after the receipt of written request therefor information
concerning Debtor requested by Creditor that is required to satisfy all
requirements applicable to Creditor pursuant to any regulatory laws applicable
to Creditor or to which Creditor is subject or bound.
C. Organization of Debtor. Debtor will continue to be a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction and qualified to do business in any jurisdiction where such
qualification is required.
D. Licenses, Permits, Consents and Approvals. Debtor
shall maintain in full force and effect all required licenses, permits, consents
and approvals, both governmental and private, to use and operate its assets and
conduct its business in the intended manner.
E. Fundamental Changes. Debtor shall not consolidate
with or merge into any Person or permit any Person to merge into it.
F. Disposition of Assets. Without the prior written
consent of Creditor, Debtor shall not, directly or indirectly, sell, assign,
lease, transfer or otherwise dispose of
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all or substantially all of its assets (other than in the ordinary course of
business for full and fair consideration).
G. Maintenance of Assets. Debtor shall maintain, keep
and preserve, and will cause each Subsidiary to maintain, keep and preserve, all
of its tangible and intangible property and other assets that are necessary and
useful in proper conduct of its business.
H. Title; First Priority Lien. Debtor shall maintain
good and marketable fee simple title to the Collateral, free and clear of all
liens, encumbrances, charges and other exceptions to title.
6. TRANSACTION CHARACTERIZATION. This Agreement is a contract to
extend a financial accommodation (as such term is used in the Code) for the
benefit of Debtor. It is the intent of the parties hereto that the business
relationship created by this Agreement, the Note and the other Loan Documents is
solely that of creditor and debtor and has been entered into by both parties in
reliance upon the economic and legal bargains contained in the Loan Documents.
None of the agreements contained in the Loan Documents is intended, nor shall
the same be deemed or construed, to create a partnership between Debtor and
Creditor, to make them joint venturers, to make Debtor an agent, legal
representative, partner, subsidiary or employee of Creditor, nor to make
Creditor in any way responsible for the debts, obligations or losses of Debtor.
7. DEFAULT AND REMEDIES. A. Each of the following shall be deemed
an event of default by Debtor, after notice, to the extent required hereunder,
and after the expiration of any applicable grace or cure period without the cure
thereof (each, an "Event of Default"):
(1) If any representation or warranty of Debtor set forth
in any of the Loan Documents is false in any material respect when made or
becomes false in any material respect, or if Debtor renders any materially false
statement or account;
(2) If any principal, interest or other monetary sum due
under the Note or any other Loan Document is not paid within five days from the
date when due and Creditor shall have given notice of such failure to Debtor and
such failure shall not have been cured by Debtor within five days from the
delivery of such notice;
(3) If Debtor fails to observe or perform any of the
other covenants (except as otherwise provided below), conditions, or obligations
of this Agreement other than the covenants in Sections 5.E., 5.F., and 5.H of
this Agreement or there is a breach or default under any other Loan Document
beyond any applicable notice or cure period; provided, however, if any such
event does not involve the payment of any monetary sum, is not the result of a
willful or intentional act or omission of Debtor, does not place any
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rights or property of Creditor in immediate jeopardy, and is within the
reasonable power of Debtor to promptly cure after receipt of notice thereof, all
as determined by Creditor in its reasonable discretion, then such event shall
not constitute an Event of Default hereunder, unless otherwise expressly
provided herein, unless and until Creditor shall have given Debtor notice
thereof and a period of 30 days shall have elapsed, during which period Debtor
may correct or cure such event, upon failure of which an Event of Default shall
be deemed to have occurred hereunder (except as otherwise provided in the
following sentence) without further notice or demand of any kind being required.
If such nonmonetary event cannot reasonably be cured within such 30-day period,
as determined by Creditor in its reasonable discretion, and Debtor is diligently
pursuing a cure of such event, then an Event of Default shall not be deemed to
have occurred hereunder upon the expiration of such 30-day period and Debtor
shall have a reasonable period to cure such event beyond such 30-day period,
which shall not exceed 90 days after receiving notice of the event from
Creditor. If Debtor shall fail to correct or cure such event within such 90-day
period, an Event of Default shall be deemed to have occurred hereunder without
further notice or demand of any kind being required;
(4) If Debtor fails to observe or perform any of the
covenants in Sections 5.E., 5.F., or 5.H of this Agreement; or
(5) If Debtor becomes insolvent within the meaning of the
Code, files or notifies Creditor that it intends to file a petition under the
Code, initiates a proceeding under any similar law or statute relating to
bankruptcy, insolvency, reorganization, winding up or adjustment of debts
(collectively, an "Action"), becomes the subject of either an involuntary Action
or petition under the Code without such involuntary Action or petition being
dismissed within 30 days of filing or, if Debtor is diligently proceeding to
dismiss such petition, such longer period of time as if required, but in no
event shall such longer period of time be greater than 90 days, or is not
generally paying its debts as the same become due.
B. Upon and during the continuance of an Event of
Default, subject to the limitations, notices and cure periods set forth in
subsection A, or an Acceleration Event, Creditor shall have no obligation to
fund any Advance to Debtor and Creditor may declare all obligations of Debtor
under the Note, this Agreement and any other Loan Document to be due and
payable, and the same shall thereupon become due and payable without any
presentment, demand, protest or notice of any kind except as expressly provided
herein. Thereafter, Creditor may exercise, at its option, concurrently,
successively or in any combination, all remedies available at law or in equity,
including without limitation any one or more of the remedies available under the
Note or any other Loan Document. Neither the acceptance of this Agreement nor
its enforcement shall prejudice or in any manner affect Creditor's right to
realize upon or enforce any other security now or hereafter held by Creditor, it
being agreed that Creditor shall be entitled to enforce this Agreement and any
other security now or hereafter held by Creditor in
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such order and manner as it may in its absolute discretion determine. No remedy
herein conferred upon or reserved to Creditor is intended to be exclusive of any
other remedy given hereunder or now or hereafter existing at law or in equity or
by statute. Every power or remedy given by any of the Loan Documents to
Creditor, or to which Creditor may be otherwise entitled, may be exercised,
concurrently or independently, from time to time and as often as may be deemed
expedient by Creditor.
8. ASSIGNMENTS BY CREDITOR. Creditor may assign in whole or in
part its rights under this Agreement. Upon any unconditional assignment of
Creditor's entire right and interest hereunder, Creditor shall automatically be
relieved, from and after the date of such assignment, of liability for the
performance of any obligation of Creditor contained herein arising after the
date of the assignment provided that any assignee shall be bound by all of
Creditor's obligations hereunder accruing from and after the date of such
assignment.
9. INDEMNITY. Debtor agrees to indemnify, hold harmless and
defend Creditor and each of its directors, officers, shareholders, employees,
successors, assigns, agents, experts, licensees, affiliates, lenders, mortgagees
and trustees, as applicable (collectively, the "Indemnified Parties"), from and
against any and all losses, costs, claims, liabilities, damages and expenses,
including, without limitation, reasonable attorneys' fees (collectively,
"Losses"), arising as the result of a breach of any of the representations,
warranties, covenants, agreements or obligations of Debtor set forth in this
Agreement, but excluding Losses suffered by an Indemnified Party directly
arising out of such Indemnified Party's gross negligence or willful misconduct.
10. MISCELLANEOUS PROVISIONS.
A. Notices. All notices, consents, approvals or other
instruments required or permitted to be given by either party pursuant to this
Agreement shall be in writing and given by (i) hand delivery, (ii) facsimile,
(iii) express overnight delivery service or (iv) certified or registered mail,
return receipt requested, and shall be deemed to have been delivered upon (a)
receipt, if hand delivered, (b) transmission, if delivered by facsimile (and if
a copy of such notice is also mailed by certified or registered mail, return
receipt requested, and deposited with the U.S. Postal Service no later than the
first business day after the notice was transmitted by facsimile), (c) the next
business day following the date of deposit with the delivery service, if
delivered by express overnight delivery service, or (d) the third business day
following the day of deposit of such notice with the United States Postal
Service, if sent by certified or registered mail, return receipt requested.
Notices shall be provided to the parties and addresses (or facsimile numbers, as
applicable) specified below:
If to Debtor: LightFirst Inc.
00 Xxxxxxxxx Xxxxx Xxxx, Xxxxx 000
Xxx Xxxxx Xxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
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If to Creditor: Xxxxxx X. Xxxxxxx
000 Xxxxxx Xxxxxx, Xxxx 000
Xxx Xxxxxxx, XX 00000
Facsimile: (000) 000-0000
B. Waiver and Amendment. No provisions of this Agreement
shall be deemed waived or amended except by a written instrument unambiguously
setting forth the matter waived or amended and signed by the party against which
enforcement of such waiver or amendment is sought. Waiver of any matter shall
not be deemed a waiver of the same or any other matter on any future occasion.
C. Captions. Captions are used throughout this Agreement
for convenience of reference only and shall not be considered in any manner in
the construction or interpretation hereof.
D. Severability. The provisions of this Agreement shall
be deemed severable. If any part of this Agreement shall be held unenforceable,
the remainder shall remain in full force and effect, and such unenforceable
provision shall be reformed by such court so as to give maximum legal effect to
the intention of the parties as expressed therein.
E. Construction Generally. This is an agreement between
parties who are experienced in sophisticated and complex matters similar to the
transaction contemplated by this Agreement and is entered into by both parties
in reliance upon the economic and legal bargains contained herein and shall be
interpreted and construed in a fair and impartial manner without regard to such
factors as the party which prepared the instrument, the relative bargaining
powers of the parties or the domicile of any party.
F. Other Documents. Each of the parties agrees to sign
such other and further documents as may be reasonably necessary to carry out the
intentions expressed in this Agreement.
G. Attorneys' Fees. In the event of any judicial or
other adversarial proceeding between the parties concerning this Agreement, the
prevailing party shall be entitled to recover its reasonable attorneys' fees and
other costs in addition to any other relief to which it may be entitled.
References in this Agreement to the attorneys' fees and/or costs of a party
shall mean both the reasonable fees and costs of independent outside counsel
retained by such party with respect to this transaction and the reasonable fees
and costs of the party's in-house counsel incurred in connection with this
transaction.
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H. Entire Agreement. This Agreement and the other Loan
Documents, together with any other certificates, instruments or agreements to be
delivered in connection therewith, constitute the entire agreement between the
parties with respect to the subject matter hereof, and there are no other
representations, warranties or agreements, written or oral, between Debtor and
Creditor with respect to the subject matter of this Agreement.
I. Forum Selection; Jurisdiction; Venue; Choice of Law.
Debtor acknowledges that this Agreement was substantially negotiated in the
State of Illinois, the Agreement was signed and delivered by Creditor and Debtor
in the State of Illinois, all payments under the Note will be delivered in the
State of Illinois and there are substantial contacts between the parties and the
transactions contemplated herein and the State of Illinois. For purposes of any
action or proceeding arising out of this Agreement or any of the other Loan
Documents, the parties hereto hereby expressly submit to the jurisdiction of all
federal and state courts located in the State of Illinois and Debtor consents
that it may be served with any process or paper by registered mail or by
personal service within or without the State of Illinois in accordance with
applicable law. Furthermore, Debtor waives and agrees not to assert in any such
action, suit or proceeding that it is not personally subject to the jurisdiction
of such courts, that the action, suit or proceeding is brought in an
inconvenient forum or that venue of the action, suit or proceeding is improper.
It is the intent of the parties hereto that all provisions of this Agreement
shall be governed by and construed under the laws of the State of Illinois.
Nothing in this Section shall limit or restrict the right of Creditor to
commence any proceeding in the federal or state courts located in a state other
than Illinois to the extent Creditor deems such proceeding necessary or
advisable to exercise remedies available under this Agreement or the other Loan
Documents.
J. Counterparts. This Agreement may be executed in one
or more counterparts, each of which shall be deemed an original.
K. Binding Effect. This Agreement shall be binding upon
and inure to the benefit of Debtor and Creditor and their respective successors
and permitted assigns, including, without limitation, any United States trustee,
any debtor in possession or any trustee appointed from a private panel.
L. Survival. All representations, warranties,
agreements, obligations and indemnities of Debtor and Creditor set forth in this
Agreement shall survive the execution of this Agreement and each Advance.
M. Waiver of Jury Trial and Punitive, Consequential,
Special and Indirect Damages. DEBTOR AND CREDITOR HEREBY KNOWINGLY, VOLUNTARILY
AND INTENTIONALLY WAIVE THE RIGHT EITHER MAY
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HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY AND ALL ISSUES PRESENTED IN ANY
ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM BROUGHT BY EITHER OF THE PARTIES
HERETO AGAINST THE OTHER OR ITS SUCCESSORS WITH RESPECT TO ANY MATTER ARISING
OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY DOCUMENT CONTEMPLATED HEREIN
OR RELATED HERETO. THIS WAIVER BY THE PARTIES HERETO OF ANY RIGHT EITHER MAY
HAVE TO A TRIAL BY JURY HAS BEEN NEGOTIATED AND IS AN ESSENTIAL ASPECT OF THEIR
BARGAIN. FURTHERMORE, DEBTOR HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY
WAIVES THE RIGHT IT MAY HAVE TO SEEK PUNITIVE, CONSEQUENTIAL, SPECIAL AND
INDIRECT DAMAGES FROM CREDITOR WITH RESPECT TO ANY AND ALL ISSUES PRESENTED IN
ANY ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM BROUGHT BY DEBTOR AGAINST CREDITOR
OR ITS SUCCESSORS WITH RESPECT TO ANY MATTER ARISING OUT OF OR IN CONNECTION
WITH THIS AGREEMENT OR ANY DOCUMENT CONTEMPLATED HEREIN OR RELATED HERETO. THE
WAIVER BY DEBTOR OF ANY RIGHT IT MAY HAVE TO SEEK PUNITIVE, CONSEQUENTIAL,
SPECIAL AND INDIRECT DAMAGES HAS BEEN NEGOTIATED BY THE PARTIES HERETO AND IS AN
ESSENTIAL ASPECT OF THEIR BARGAIN.
IN WITNESS WHEREOF, Debtor and Creditor have entered into this
Agreement as of the date first above written.
CREDITOR:
By /s/ Xxxxxx X. Xxxxxxx
---------------------
Xxxxxx X. Xxxxxxx
DEBTOR:
LightFirst Inc.
A Delaware corporation
By: /s/ Xxxxxx X. Xxxxxxx
---------------------
Xxxxxx X. Xxxxxxx
Its: President
Page 14 of 14
SECURED PROMISSORY NOTE
Dated as of December 12, 2002
$750,000.00 Elk Grove Village, Illinois
THIS PROMISSORY NOTE (this "Note") is executed by LightFirst Inc., a
Delaware corporation ("Debtor"), and Xxxxxx X. Xxxxxxx, an individual
("Creditor").
Debtor, for value received, hereby promises to pay to Creditor, whose
address is 000 Xxxxxx Xxxxxx, Xxxx 000, Xxx Xxxxxxx, Xxxxxxxx 00000, or order,
on or before the Maturity Date (as defined below), the principal sum of Seven
Hundred Fifty Thousand and No/100 Dollars ($750,000.00), or such much thereof as
may be outstanding from time to time, in accordance with that certain Revolving
Line of Credit Loan Agreement dated as of the date of this Note between Debtor
and Creditor, as such agreement may be amended from time to time (the "Loan
Agreement").
Initially capitalized terms which are not otherwise defined in this
Note shall have the meanings set forth in the Loan Agreement. The following
terms shall have the following meanings for all purposes of this Note:
"Interest Rate" means an annual interest rate equal to 9.00%
of the outstanding principal balance.
"Business Day" means any day on which Creditor is open for
business in the State of Illinois, other than a Saturday, Sunday or a legal
holiday.
"Interest Period" means (i) initially, the period beginning on
the date of this Note and ending on the last day of the calendar month in which
such date occurs, and (ii) thereafter, the period beginning on the first day of
the calendar month and ending on the last day of such calendar month.
"Maturity Date" means December 12, 2003.
Debtor shall pay Creditor interest on the outstanding principal amount
of this Note at the Interest Rate, on the basis of a 360-day year for the actual
number of days elapsed, in arrears. Commencing on April 1, 2003, and on the
first day of each fiscal quarter thereafter until the Maturity Date, Debtor
shall pay Creditor interest which has accrued at the Interest Rate on the
outstanding principal balance of this Note during the preceding three Interest
Periods. Creditor shall notify Debtor in writing on or before the twenty-fifth
day of the last calendar month of each fiscal quarter during the term of this
Note of Creditor's determination of the interest payable on the first day of the
next succeeding fiscal quarter. All outstanding principal and unpaid accrued
interest shall be paid on the Maturity Date.
Page 1 of 6
Each payment hereunder shall be applied first to any past due payments
under this Note (including payment of all Costs (as herein defined)), then to
accrued interest at the Interest Rate, and the balance, after the payment of
such accrued interest, if any, shall be applied to the unpaid principal balance
of this Note; provided, however, each payment hereunder while an Event of
Default under this Note has occurred and is continuing shall be applied as
Creditor in its sole discretion may determine.
Debtor may make payments hereunder by check delivered via U.S. Mail or
in person, or by wire transfer.
Debtor may prepay this Note as provided in the Loan Agreement.
An "Event of Default" shall be deemed to have occurred under this Note
if any principal, interest or other monetary sum due under this Note is not paid
within five days from the date when due and Creditor shall have given notice of
such failure to Debtor and such failure shall not have been cured by Debtor
within five days from the delivery of such notice. Upon the occurrence of (i) an
Event of Default under this Note or (ii) an Event of Default or an Acceleration
Event under any of the other Loan Documents, then, in any of such events, time
being of the essence hereof, Creditor may declare the entire unpaid principal
balance of this Note, accrued interest, if any, and all other sums due under
this Note, the other Loan Documents and any other document further securing this
Note, due and payable at once without written notice to Debtor.
All past-due principal and/or interest shall bear interest at the
lesser of the highest rate for which the undersigned may legally contract or the
rate of 18% per annum (the "Default Rate"), and such Default Rate shall continue
to apply following a judgment in favor of Creditor under this Note. If Debtor
fails to make any payment or installment due under this Note within five days of
its due date, Debtor shall pay to Creditor in addition to any other sum due
Creditor under this Note or any other Loan Document a late charge equal to 10%
of such past-due payment or installment.
All payments of principal and interest due hereunder shall be made (i)
without deduction of any present and future taxes, levies, imposts, deductions,
charges or withholdings, which amounts shall be paid by Debtor, and (ii) without
any other right of abatement, reduction, setoff, defense, counterclaim,
interruption, deferment or recoupment for any reason whatsoever. Debtor will pay
the amounts necessary such that the gross amount of the principal and interest
received by Creditor is not less than that required by this Note.
No delay or omission on the part of Creditor in exercising any remedy,
right or option under this Note shall operate as a waiver of such remedy, right
or option. In any
Page 2 of 6
event, a waiver on any one occasion shall not be construed as a waiver or bar to
any such remedy, right or option on a future occasion.
Debtor hereby waives presentment, demand for payment, notice of
dishonor, notice of protest, and protest, and except as otherwise provided in
the Loan Documents, all other notices or demands in connection with delivery,
acceptance, performance, default or endorsement of this Note.
All notices, consents, approvals or other instruments required or
permitted to be given by either party pursuant to this Note shall be in writing
and given by (i) hand delivery, (ii) facsimile, (iii) express overnight delivery
service or (iv) certified or registered mail, return receipt requested, and
shall be deemed to have been delivered upon (a) receipt, if hand delivered, (b)
transmission, if delivered by facsimile (and if a copy of such notice is also
mailed by certified or registered mail, return receipt requested, and deposited
with the U.S. Postal Service no later than the first business day after the
notice was transmitted by facsimile), (c) the next business day, following the
date of deposit with the delivery service, if delivered by express overnight
delivery service, or (d) the third business day following the day of deposit of
such notice with the United States Postal Service, if sent by certified or
registered mail, return receipt requested. Notices shall be provided to the
parties and addresses (or facsimile numbers, as applicable) specified below:
If to Debtor: LightFirst Inc.
00 Xxxxxxxxx Xxxxx Xxxx, Xxxxx 000
Xxx Xxxxx Xxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to Creditor: Xxxxxx X. Xxxxxxx
000 Xxxxxx Xxxxxx, Xxxx 000
Xxx Xxxxxxx, XX 00000
Facsimile: (000) 000-0000
or to such other address or such other person as either party may from time to
time hereafter specify to the other party in a notice delivered in the manner
provided above.
Should any indebtedness represented by this Note be collected at law or
in equity, or in bankruptcy or other proceedings, or should this Note be placed
in the hands of attorneys for collection after default, Debtor shall pay, in
addition to the principal and interest due and payable hereon, all costs of
collecting or attempting to collect this Note (the "Costs"), including
reasonable attorneys' fees and expenses of Creditor (including those fees and
expenses incurred in connection with any appeal and those of Creditor's in-house
counsel) whether or not a judicial action is commenced by Creditor.
Page 3 of 6
This Note may not be amended or modified except by a written agreement
duly executed by Debtor and Creditor. In case any one or more of the provisions
contained in this Note shall be held to be invalid, illegal or unenforceable in
any respect, such invalidity, illegality or unenforceability shall not affect
any other provision of this Note, and this Note shall be construed as if such
provision had never been contained herein or therein.
Notwithstanding anything to the contrary contained in any of the Loan
Documents, the obligations of Debtor to Creditor under this Note and any other
Loan Documents are subject to the limitation that payments of interest and late
charges to Creditor shall not be required to the extent that receipt of any such
payment by Creditor would be contrary to provisions of applicable law limiting
the maximum rate of interest that may be charged or collected by Creditor. The
portion of any such payment received by Creditor that is in excess of the
maximum interest permitted by such provisions of law shall be credited to the
principal balance of this Note or if such excess portion exceeds the outstanding
principal balance of this Note, then such excess portion shall be refunded to
Debtor. All interest paid or agreed to be paid to Creditor shall, to the extent
permitted by applicable law, be amortized, prorated, allocated and/or spread
throughout the full term of this Note (including, without limitation, the period
of any renewal or extension thereof) so that interest for such full term shall
not exceed the maximum amount permitted by applicable law.
It is the intent of the parties hereto that the business relationship
created by this Note and the other Loan Documents is solely that of creditor and
debtor and has been entered into by both parties in reliance upon the economic
and legal bargains contained in the Loan Documents. None of the agreements
contained in the Loan Documents, is intended, nor shall the same be deemed or
construed, to create a partnership between Creditor and Debtor, to make them
joint venturers, to make Debtor an agent, legal representative, partner,
subsidiary or employee of Creditor, nor to make Creditor in any way responsible
for the debts, obligations or losses of Debtor.
Creditor, by accepting this Note, and Debtor acknowledge and warrant to
each other that each has been represented by independent counsel and Debtor has
executed this Note after being fully advised by said counsel as to its effect
and significance. This Note shall be interpreted and construed in a fair and
impartial manner without regard to such factors as the party which prepared the
instrument, the relative bargaining powers of the parties or the domicile of any
party.
Debtor acknowledges that this Note was substantially negotiated in the
State of Illinois, the Note was executed and delivered in the State of Illinois,
all payments under this Note will be delivered in the State of Illinois and
there are substantial contacts between the parties and the transactions
contemplated herein and the State of Illinois. For
Page 4 of 6
purposes of any action or proceeding arising out of this Note, the parties
hereto expressly submit to the jurisdiction of all federal and state courts
located in the State of Illinois. Debtor consents that it may be served with any
process or paper by registered mail or by personal service within or without the
State of Illinois in accordance with applicable law. Furthermore, Debtor waives
and agrees not to assert in any such action, suit or proceeding that it is not
personally subject to the jurisdiction of such courts, that the action, suit or
proceeding is brought in an inconvenient forum or that venue of the action, suit
or proceeding is improper. It is the intent of Debtor and Creditor that all
provisions of this Note shall be governed by and construed under the laws of the
State of Illinois. Nothing contained in this paragraph shall limit or restrict
the right of Creditor to commence any proceeding in the federal or state courts
located in any state in which Creditor deems such proceeding necessary or
advisable to exercise remedies available under the Loan Documents.
CREDITOR, BY ACCEPTING THIS NOTE, AND DEBTOR HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT EITHER MAY HAVE TO A TRIAL BY JURY
WITH RESPECT TO ANY AND ALL ISSUES PRESENTED IN ANY ACTION, PROCEEDING, CLAIM OR
COUNTERCLAIM BROUGHT BY EITHER OF THE PARTIES HERETO AGAINST THE OTHER OR ITS
SUCCESSORS WITH RESPECT TO ANY MATTER ARISING OUT OF OR IN CONNECTION WITH THIS
NOTE, THE RELATIONSHIP OF Creditor AND DEBTOR AND/OR ANY CLAIM FOR INJURY OR
DAMAGE, OR ANY EMERGENCY OR STATUTORY REMEDY. THIS WAIVER BY THE PARTIES HERETO
OF ANY RIGHT EITHER MAY HAVE TO A TRIAL BY JURY HAS BEEN NEGOTIATED AND IS AN
ESSENTIAL ASPECT OF THEIR BARGAIN. FURTHERMORE, DEBTOR HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVES THE RIGHT IT MAY HAVE TO SEEK PUNITIVE,
CONSEQUENTIAL, SPECIAL AND INDIRECT DAMAGES FROM Creditor WITH RESPECT TO ANY
AND ALL ISSUES PRESENTED IN ANY ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM
BROUGHT BY DEBTOR AGAINST Creditor OR ITS SUCCESSORS WITH RESPECT TO ANY MATTER
ARISING OUT OF OR IN CONNECTION WITH THIS NOTE OR ANY DOCUMENT CONTEMPLATED
HEREIN OR RELATED HERETO. THE WAIVER BY DEBTOR OF ANY RIGHT IT MAY HAVE TO SEEK
PUNITIVE, CONSEQUENTIAL, SPECIAL AND INDIRECT DAMAGES HAS BEEN NEGOTIATED BY THE
PARTIES HERETO AND IS AN ESSENTIAL ASPECT OF THEIR BARGAIN.
This obligation shall bind Debtor and its successors and assigns, and
the benefits hereof shall inure to Creditor and its successors and assigns.
Creditor may assign its rights under this Note as set forth in the Loan
Agreement.
Page 5 of 6
IN WITNESS WHEREOF, Debtor has executed and delivered this Note
effective as of the date first set forth above.
CREDITOR:
By /s/ XXXXXX X. XXXXXXX
---------------------------------
Xxxxxx X. Xxxxxxx
DEBTOR:
LightFirst Inc.
A Delaware corporation
By /s/ XXXXXX X. XXXXXXX
---------------------------------
Xxxxxx X. Xxxxxxx
Its: President
Page 6 of 6
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (this "Agreement") is made and entered into as
of December 12, 2002 by and between LightFirst Inc., a Delaware corporation
("Debtor"), whose principal place of business is located at 00 Xxxxxxxxx Xxxxx
Xxxxxxxxx, Xxxxx 000, Xxx Xxxxx Xxxxxxx, Xxxxxxxx 00000, and Xxxxxx X. Xxxxxxx,
an individual ("Secured Party"), whose address is 000 Xxxxxx Xxxxxx, Xxxx 000,
Xxx Xxxxxxx, Xxxxxxxx 00000.
PRELIMINARY STATEMENT:
Secured Party has agreed to make the Loan to Debtor. To secure the
Loan, Debtor has agreed to grant Secured Party a security interest in the
Collateral on the terms and conditions set forth in this Agreement. Capitalized
terms not defined herein shall have the respective meanings set forth in that
certain Revolving Line of Credit Loan Agreement dated as of the date hereof
between Debtor and Secured Party.
NOW, THEREFORE, for and in consideration of the mutual covenants and
promises hereinafter set forth, Secured Party and Debtor agree as follows:
1. DEBTOR'S OBLIGATION; SECURITY INTEREST CREATED. Secured Party
has agreed to advance to Debtor the Loan, as evidenced by the execution and
delivery of the Note to Secured Party, and Debtor shall pay other sums advanced
or expended by Secured Party pursuant to the terms of the Loan Documents, and
perform all other terms and conditions of Debtor set forth in the Loan Documents
(collectively, the "Obligations"). To secure the payment of the Obligations,
Debtor hereby grants to Secured Party a security interest in all of Company's
assets, which may include one or more of the following items (hereinafter,
collectively, the "Collateral"):
(a) GENERAL INTANGIBLES. All of Company's General Intangibles,
now existing or hereafter arising or acquired, together with the proceeds
therefrom. As used herein, the term "General Intangibles" means all personal
property (including things in action) other than goods, accounts, chattel paper,
documents, instruments, and money, and includes, but is not limited to, business
records, deposit accounts, inventions, intellectual property, designs, patents,
patent applications, trademarks, trademark applications, trademark
registrations, service marks, service xxxx applications, service xxxx
registrations, trade names, goodwill, technology, knowhow, confidential
information, trade secrets, customer lists, supplier lists, copyrights,
copyright applications, copyright registrations, licenses, permits, franchises,
tax refund claims, and any letters of credit, guarantee claims, security
interests, or other security held by the Company to secure any "Accounts" (as
hereinafter defined).
(b) ACCOUNTS (INCLUDING ACCOUNTS RECEIVABLE). All of Company's
Accounts, whether now existing or hereafter arising or acquired, together
Page 1 of 7
with the proceeds therefrom. As used herein, the term "Accounts" means any right
of Company to receive payment from another person or entity, including payment
for goods sold or leased, or for services rendered, no matter how evidenced or
arising, and regardless of whether yet earned by performance. It includes, but
is not limited to, accounts, accounts receivable, contract rights, contracts
receivable, purchase orders, notes, drafts, acceptances, all rights to payment
earned or unearned under a charter or other contract involving the use or hire
of a vessel and all rights incident to the charter or contract, and other forms
of obligations and receivables.
(c) INVENTORY. All of Company's Inventory, whether now owned
or hereafter acquired, together with the products and proceeds therefrom and all
packaging, manuals, and instructions related thereto. As used herein, the term
"Inventory" means all goods, merchandise, and personal property held for sale or
leased or furnished or to be furnished under contracts of service, and all raw
materials, work in process, or materials used or consumed in Company's business,
wherever located and whether in the possession of Company, a warehouseman, a
bailee, or any other person.
(d) EQUIPMENT. All of Company's Equipment, now owned or
hereafter acquired, together with the products and proceeds therefrom, and all
substitutes and replacements therefor. As used herein, the term "Equipment"
includes all equipment, machinery, tools, office equipment, supplies,
furnishings, furniture, or other items used or useful, directly or indirectly,
in Company's business, all accessions, attachments, and other additions thereto,
all parts used in connection therewith, all packaging, manuals, and instructions
related thereto, and all leasehold or equitable interests therein.
(e) FIXTURES. All of Company's interest in and to all fixtures
and furnishings, now owned or hereafter acquired, together with the products and
proceeds therefrom, all substitutes and replacements therefor, all accessories,
attachments, and other additions thereto, all tools, parts, and supplies used in
connection therewith, and all packaging, manuals, and instructions related
thereto, located on or attached to Company's business premises located at 000 X.
Xxxx Xxxx, Xxx Xxxxxxx, Xxxxxxxx 00000.
(f) CHATTEL PAPER, DOCUMENTS AND INSTRUMENTS. All of Company's
right, title, and interest in any chattel paper, documents, or instruments, now
owned or hereafter acquired or arising, or now or hereafter coming into the
possession, control, or custody of either Company or Secured Party, together
with all proceeds therefrom. The terms "chattel paper," "documents," and
"instruments" shall have those meanings ascribed to them in the Illinois Uniform
Commercial Code.
2. DEFAULT. Any action or event which would constitute an Event
of Default (a "Default") and shall permit Secured Party to exercise and pursue
the remedies specified in Section 3 below.
3. REMEDIES FOR DEFAULT. In the event that Debtor is, or is
deemed to be, in Default hereunder, Secured Party shall have all rights and
remedies of a secured
Page 2 of 7
party in, to and against the Collateral granted by the Uniform Commercial Code
in the State of Illinois and otherwise available at law or in equity, including,
without limitation: (i) the right to declare all payments due under the Loan
Documents immediately due and payable and the right to recover all fees and
expenses (including reasonable attorney fees) in connection with the collection
or enforcement thereof, which fees and expenses shall constitute additional
Obligations of Debtor hereunder; (ii) the right to act as, and Debtor hereby
constitutes and appoints Secured Party, Debtor's true, lawful and irrevocable
attorney-in-fact (which appointment shall be deemed coupled with an interest) to
demand, receive and enforce payments and to give receipts, releases,
satisfaction for and to xxx for moneys payable to Debtor under or with respect
to any of the Collateral under this Agreement, and actions taken pursuant to
this appointment may be taken either in the name of Debtor or in the name of
Secured Party with the same force and effect as if this appointment had not been
made; (iii) the right to take immediate and exclusive possession of the
Collateral, or any part thereof; (iv) the right to hold, maintain, preserve and
prepare the Collateral for sale, until disposed of; (v) the right to dispose of
the Collateral; (vi) the right to require Debtor to assemble and package the
Collateral and make it available to Secured Party for its possession at a place
to be designated by Secured Party which is reasonably convenient to the Secured
Party; (vii) the right to sell, hold or otherwise dispose of all or any part of
the Collateral; (viii) the right to xxx for specific performance of any
obligation under the Loan Documents or to recover damages for breach thereof;
and (ix) the right to receive all cash distributions or payments payable in
respect of the Collateral. The remedies of Secured Party hereunder are
cumulative and the exercise of any one or more of the remedies provided for
herein or under the Uniform Commercial Code or other applicable law shall not be
construed as a waiver of any of the other remedies of Secured Party so long as
any part of the Obligations secured hereby remains unsatisfied. Secured Party
shall be entitled to receive on demand, as additional Obligations hereunder,
interest at the lower of 18% per annum or the highest rate permitted by
applicable law on all amounts not paid when due under the Note or this
Agreement, for the period such amounts are overdue. Secured Party shall have no
duty to mitigate any loss to the Debtor occasioned by enforcement of any remedy
hereunder and shall have no duty of any kind to any subordinated creditor of
Debtor.
4. APPLICATION OF PROCEEDS. Should Secured Party exercise the
rights and remedies specified in Section 3 hereof, any proceeds received thereby
shall be first applied to pay the costs and expenses, including reasonable
attorneys' fees, incurred by Secured Party as a result of Debtor's Default. The
remainder of any proceeds, net of Secured Party's costs and expenses, shall be
applied to the satisfaction of the Obligations and, so long as Debtor is not in
Default hereunder, any excess shall be paid over to Debtor. If Debtor is in
Default hereunder, any excess may be held by Secured Party for a reasonable time
and either applied to the Obligations or paid over to Debtor.
Page 3 of 7
5. APPLICABLE LAW. Debtor acknowledges that this Agreement was
substantially negotiated in the State of Illinois, the executed Agreement was
delivered in the State of Illinois, all payments under the Loan Documents will
be delivered in the State of Illinois and there are substantial contacts between
the parties and the transactions contemplated herein and the State of Illinois.
For purposes of any action or proceeding arising out of this Agreement, the
parties hereto expressly submit to the jurisdiction of all federal and state
courts located in the State of Illinois. Debtor consents that it may be served
with any process or paper by registered mail or by personal service within or
without the State of Illinois in accordance with applicable law. Furthermore,
Debtor waives and agrees not to assert in any such action, suit or proceeding
that it is not personally subject to the jurisdiction of such courts, that the
action, suit or proceeding is brought in an inconvenient forum or that venue of
the action, suit or proceeding is improper. It is the intent of the parties
hereto that all provisions of this Agreement shall be governed by and construed
in accordance with the laws of the State of Illinois. To the extent that a court
of competent jurisdiction finds Illinois law inapplicable with respect to any
provisions hereof, then, as to those provisions only, the laws of the state
where the Collateral is located shall be deemed to apply. Nothing contained in
this paragraph shall limit or restrict the right of Secured Party to commence
any proceeding in the federal or state courts located in the state in which the
Collateral is located to the extent Secured Party deems such proceeding
necessary or advisable to exercise remedies available under the Loan Documents.
6. NONASSIGNABILITY. This Agreement may not by assigned by Debtor
without the consent of Secured Party. However, Secured Party may assign its
rights under this Agreement to any third party without the prior consent of
Debtor.
7. POSSESSION. Until a Default occurs, Debtor may retain
possession of the Collateral, shall be entitled to all distributions as a result
of its interests in the Companies and may use it in any lawful manner not
inconsistent with this Agreement, with the provisions of any policies of
insurance thereon or the other Loan Documents.
8. WAIVER. No Default hereunder by Debtor shall be deemed to have
been waived by Secured Party except by a writing to that effect signed by
Secured Party and no waiver of any Default shall operate as a waiver of any
other Default on a future occasion. No modification, rescission, waiver, release
or amendment of any provision of this Agreement shall be made except by a
written agreement signed by Debtor and Secured Party.
9. SEVERABILITY. In case any one or more of the provisions
contained herein or in the Note shall be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision hereof,
Page 4 of 7
and this Agreement shall be construed as if such provision had never been
contained herein or therein.
10. NOTICES; AMENDMENTS; WAIVERS. All notices, demands,
designations, certificates, requests, offers, consents, approvals, appointments
and other instruments given pursuant to this Agreement (collectively called
"Notices") shall be in writing and given by (i) hand delivery, (ii) facsimile,
(iii) express overnight delivery service or (iv) certified or registered mail,
return receipt requested, and shall be deemed to have been delivered upon (a)
receipt, if hand delivered, (b) transmission, if delivered by facsimile, (c) the
next business day, if delivered by express overnight delivery service, or (d)
the third business day following the day of deposit of such notice with the
United States Postal Service, if sent by certified or registered mail, return
receipt requested. Notices shall be provided to the parties and addresses (or
facsimile numbers, as applicable) specified below:
If to Debtor: LightFirst Inc.
00 Xxxxxxxxx Xxxxx Xxxx, Xxxxx 000
Xxx Xxxxx Xxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to Secured Party: Xxxxxx X. Xxxxxxx
000 Xxxxxx Xxxxxx, Xxxx 000
Xxx Xxxxxxx, XX 00000
Facsimile: (000) 000-0000
or to such other address or such other person as either party may from time to
time hereafter specify to the other party in a notice delivered in the manner
provided above. Whenever in this Agreement the giving of Notice is required, the
giving thereof may be waived in writing at any time by the person or persons
entitled to receive such Notice.
11. COUNTERPARTS. This Agreement may be executed in any number of
counterparts and each thereof shall be deemed to be an original, and all such
counterparts shall constitute but one and the same instrument.
12. HEADINGS. The headings appearing in this Agreement have been
inserted for convenient reference only and shall not modify, define, limit or
expand the express provisions of this Agreement.
13. CHARACTERIZATION; INTERPRETATION. It is the intent of the
parties hereto that the business relationship created by the Note, this
Agreement and the other Loan Documents is solely that of creditor and debtor and
has been entered into by
Page 5 of 7
both parties in reliance upon the economic and legal bargains contained in the
Loan Documents. None of the agreements contained in the Loan Documents is
intended, nor shall the same be deemed or construed, to create a partnership
between Secured Party and Debtor, to make them joint venturers, to make Debtor
an agent, legal representative, partner, subsidiary or employee of Secured
Party, nor to make Secured Party in any way responsible for the debts,
obligations or losses of Debtor.
This Agreement shall be interpreted and construed in a fair and
impartial manner without regard to such factors as the party, which prepared the
instrument, the relative bargaining powers of the parties or the domicile of any
party.
14. TIME OF THE ESSENCE. Time is of the essence in the performance
of each and every obligation under this Agreement.
15. WAIVER OF JURY TRIAL AND PUNITIVE, CONSEQUENTIAL, SPECIAL AND
INDIRECT DAMAGES. SECURED PARTY AND DEBTOR HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE THE RIGHT EITHER MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO
ANY AND ALL ISSUES PRESENTED IN ANY ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM
BROUGHT BY EITHER OF THE PARTIES HERETO AGAINST THE OTHER OR ITS SUCCESSORS WITH
RESPECT TO ANY MATTER ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT, THE
RELATIONSHIP OF Secured Party AND DEBTOR, DEBTOR'S USE OR OCCUPANCY OF THE
COLLATERAL, AND/OR ANY CLAIM FOR INJURY OR DAMAGE, OR ANY EMERGENCY OR STATUTORY
REMEDY. THIS WAIVER BY THE PARTIES HERETO OF ANY RIGHT EITHER MAY HAVE TO A
TRIAL BY JURY HAS BEEN NEGOTIATED AND IS AN ESSENTIAL ASPECT OF THEIR BARGAIN.
FURTHERMORE, DEBTOR HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES THE
RIGHT IT MAY HAVE TO SEEK PUNITIVE, CONSEQUENTIAL, SPECIAL AND INDIRECT DAMAGES
FROM Secured Party WITH RESPECT TO ANY AND ALL ISSUES PRESENTED IN ANY ACTION,
PROCEEDING, CLAIM OR COUNTERCLAIM BROUGHT BY DEBTOR AGAINST Secured Party OR ITS
SUCCESSORS WITH RESPECT TO ANY MATTER ARISING OUT OF OR IN CONNECTION WITH THIS
AGREEMENT OR ANY DOCUMENTS CONTEMPLATED HEREIN OR RELATED HERETO. THE WAIVER BY
DEBTOR OF ANY RIGHT IT MAY HAVE TO SEEK PUNITIVE, CONSEQUENTIAL, SPECIAL AND
INDIRECT DAMAGES HAS BEEN NEGOTIATED BY DEBTOR AND Secured Party AND IS AN
ESSENTIAL ASPECT OF THEIR BARGAIN.
Page 6 of 7
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of the day and year first above written.
SECURED PARTY:
By /s/ XXXXXX X. XXXXXXX
---------------------------------
Xxxxxx X. Xxxxxxx
DEBTOR:
LightFirst Inc.
A Delaware corporation
By /s/ XXXXXX X. XXXXXXX
---------------------------------
Xxxxxx X. Xxxxxxx
Its: President
Page 7 of 7
MODIFICATION AND EXTENSION AGREEMENT
THIS MODIFICATION AND EXTENSION AGREEMENT ("Agreement") is made as of
the 15st day of March, 2003 by and between LightFirst Inc. ("Debtor") and
Xxxxxx X. Xxxxxxx ("Creditor").
RECITALS
A. The Creditor has made a revolving line of credit in the maximum
amount of SEVEN HUNDRED FIFTY THOUSAND DOLLARS available to the Debtor pursuant
to that certain Revolving Line of Credit Loan Agreement ("Loan Agreement") dated
December 12, 2002, and Debtor has promised to pay the outstanding balance
thereon pursuant to that certain Secured Promissory Note (the "Note") of even
date therewith, and has granted the Creditor a security interest in assets of
the Debtor pursuant to that certain Security Agreement of even date therewith,
copies of which are attached hereto as exhibits (hereinafter collectively
referred to as the "Credit Agreements").
B. Both Debtor and Creditor desire to modify the Credit Agreements.
C. The parties hereto are desirous of entering into this Agreement and
modifying the Note in accordance with the terms and conditions set forth herein.
AGREEMENT
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, included but not limited to, the
Recitals above, the parties hereto agree as follows:
1. Maximum Loan Amount. Debtor and Creditor agree that the Maximum Loan
Amount is hereby modified from Seven Hundred Fifty Thousand dollars
($750,000.00) to One Million Five Hundred Thousand dollars ($1,500,000.00), and
the amount owed pursuant to the Note is hereby modified to One Million Five
Hundred Thousand dollars ($1,500,000.00) or such amount thereof as may be
outstanding from time to time.
2. Maturity Date Extension. Debtor and Creditor agree that the maturity
date of the Note is hereby extended and modified from December 12, 2003 to
December 12, 2004 ("Maturity Date").
3. Interest. The Note shall continue to bear interest at a rate of
9.0%.
4. Status of Credit Agreements and Collateral. This Agreement
constitutes a modification of the Credit Agreements only with respect to all
matters set forth herein. All of the other terms, covenants, conditions and
agreements contained in the Note shall remain in full force and effect. This
Agreement shall not release Debtor from any liability under the Credit
Agreements.
5. Binding Effect. This Agreement represents the complete understanding
and entire agreement of the parties as to the subject matter contained herein,
and may not be amended
except by a writing executed by both parties. This Agreement shall be binding
upon and inure to the benefit of the respective heirs, successors and assigns of
each of the parties hereto.
6. Counterparts. This Agreement may be executed in any number of
counterparts each of which shall be deemed an original, but all of which shall
constitute one and the same instrument.
7. Severability. In the event any one or more of the provisions of this
Agreement or the Note are held to be invalid, illegal or unenforceable in any
respect by any court or other entity having the authority to do so, the validity
of the remaining provisions hereof and thereof shall in no way be affected,
prejudiced, or disturbed.
8. Miscellaneous. The titles of the paragraphs hereof are for reference
purposes only and do not constitute part of this Agreement. This Agreement shall
be construed in accordance with and governed by the laws of the State of
Illinois.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
DEBTOR
LightFirst Inc., a Delaware corporation
By: /s/ XXXXXX X. XXXXXXX
-----------------------------------
Xxxxxx X. Xxxxxxx
Its: President
CREDITOR
Xxxxxx X. Xxxxxxx
By: /s/ XXXXXX X. XXXXXXX
-----------------------------------
Xxxxxx X. Xxxxxxx
WAIVER
WAIVER (this "Waiver"), dated as of October 15, 2003, between Xxxxxx X.
Xxxxxxx ("Creditor") and LightFirst Inc., a Delaware corporation ("Debtor").
Unless otherwise defined herein, all capitalized terms used herein shall have
the respective meanings provided such terms in the Credit Agreement and Loan
Documents referred to below.
WITNESSETH
WHEREAS, the Debtor and Creditor are parties to a Revolving Line of
Credit Loan Agreement, dated as of December 12, 2002 (as amended, modified or
supplemented to, but not including, the date hereof, the "Credit Agreement") and
other Loan Documents as defined therein and of even date therewith; and
WHEREAS, subject to the terms and conditions set forth herein, the
parties hereto agree as follows;
NOW, THEREFORE, it is agreed:
I. Waiver of Interest Payments:
1. The Creditor hereby waives, but only during the Waiver Period (as
defined below), any Default or Event of Default that has arisen (or may
hereafter arise) under the Loan Documents solely as a result of the failure of
the Debtor to make interest payments when due in compliance with Section 2.D. of
the Credit Agreement and the Secured Promissory Note of even date therewith.
2. The Creditor hereby agrees that payment of any accrued interest due
during the Waiver Period may be deferred until the Maturity Date as defined in
the Loan Documents.
II. Miscellaneous:
1. This Waiver is limited as specified and shall not constitute a
modification, acceptance or waiver of any other provision of the Credit
Agreement or any other Loan Document.
2. This Waiver may be executed in any number of counterparts and by the
different parties hereto on separate counterparts, each of which counterparts
when executed and delivered shall be an original, but all of which shall
together constitute one and the same instrument.
3. This Waiver and the rights and obligations of the parties hereunder
shall be construed in accordance with and governed by the laws of the state of
Illinois.
4. This Waiver Period is the period beginning on April 1, 2003 and
ending on the earlier of the Maturity Date or the date of occurrence of any
Acceleration Event or any Event of Default, excluding the Defaults or Events of
Default expressly waived hereby.
5. From and after the first day of the Waiver Period, all references in
the Credit Agreement and each of the other Loan Documents to the Credit
Agreement and all modifications
and extensions thereof shall be deemed to be references to the Credit Agreement
after giving effect to this Amendment.
* * *
IN WITNESS WHEREOF, Debtor and Creditor have entered into this
Agreement as of the date first above written.
CREDITOR:
By /s/ Xxxxxx X. Xxxxxxx
----------------------------------
Xxxxxx X. Xxxxxxx
DEBTOR:
LightFirst Inc.
A Delaware corporation
By: /s/ Xxxxxx X. Xxxxxxx
---------------------------------
Xxxxxx X. Xxxxxxx
Its: President
