Exhibit 10.18
REIMBURSEMENT AGREEMENT
This Reimbursement Agreement is made as of the 14th day of December, 1998,
by and between Art Renaissance, Inc., a Delaware corporation ("ARI"), Art
Renaissance Chicago, Inc. ("AR Chicago"), Xxxxxx X. Xxxxxxxx, an individual
resident of Florida ("Xxxxxxxx"), Venture Funding, Ltd., a Michigan corporation
("Venture"), Growth Realty, Inc., a Michigan corporation ("Growth"), Growth
Funding, Ltd., a Michigan corporation ("Growth Funding"), and Growth Realty
Holdings, LLC, ("Growth Holdings") and Xxxx Xxxxxxxx ("Xxxx")
RECITALS:
A. On March 29, 1996, ARI entered into a Reimbursement Agreement with
Venture and Growth in the amount of $1,550,000. The current balance
is $1,100,000 secured by guarantees from Venture, Xxxxxxxx, Growth
Realty, Mego Financial stock, a second mortgage on Xxxxxxxx'x
Michigan home, and the Mego debenture.
B. On August 29, 1996, ARI entered into a Reimbursement Agreement with
Venture and Growth in the amount of $500,000 guaranteed and
collateralized by Xxxx XxXxxxxxxxx and guaranteed by Xxxxxxxx and
Venture which has periodically renewed.
C. On August 31, 1995, ARI entered into a loan with the Bank of
Bloomfield Hills ("BBH"), which has been renewed until January 28,
1999, in the amount of $750,000 and secured by a Certificate of
Deposit ("C.D.") #501598 owned and pledged by Venture.
D. ARI entered into a loan on February 6, 1997, which was renewed
December 14, 1998, in the amount of S1,642,997.72, secured by C.D.
#502106 owned and pledged by Xxxxxx Xxxxxxxx and Xxxxxx Xxxxxxxx in
the amount of $125,000, and also secured by C.D. #50197 in the
amount of $1,438,946.69 owned and pledged by Growth Realty, Inc.
and also secured by C.D. #502231 in the amount of $79,051.03 owned
and pledged by Growth Realty Holdings, LLC.
E. ARI entered into a loan with BBH on October 30, 1997, renewed
October 30, 1998 in the amount of $1,207,585.25
1
secured by guarantees by Xxxxxxxx, Venture, Growth Realty and Mego
Financial stock.
F. ARI entered into a loan in the amount of $500,000 renewed January
12, 1998 and due January 12, 1999, secured by: C.D. #502105 in the
amount of $100,000 owned and pledged by Venture; C.D. #502107 in the
amount of $100,000 owned and pledged by Xxxxxx Xxxxxxxx and Xxxxxx
Xxxxxxxx; C.D. #502108 in the amount of $100,000 owned and pledged
by Xxxxxx Xxxxxxxx and Xxxx Xxxxxxxx; C.D. #502109 in the amount of
$100,000 owned and pledged by Xxxxx Xxxxxxxx and Xxxxxx Xxxxxxxx;
and C.D. #502110 in the amount of $100,000 owned and pledged by Xxxx
Xxxxxxxx and Xxxxxx Xxxxxxxx.
G. ARI acknowledges that it owes Venture on "Old Loan Note #1"
$326,198. (See Attached Schedule)
H. ARI acknowledges that it owes Venture on the "Chrysler Note #2"
$450,000. (See Attached Schedule)
I. ARI acknowledges that it owes Xxxx Xxxxxxxx on a loan in the amount
$974,080 with additional accrued interest of $323,416 guaranteed by
Venture and Xxxxxxxx. (See Attached Schedule)
J. ARI further acknowledges that it owes Venture interest on loans,
evidenced in G & H above, in the amount of $42,231.00; management
fees in the amount of $652,669; payment for art in the amount of
$45,424.00; and Venture expenses in the amount of $21,005.00, these
amounts are as of September 30, 1998. (See Attached Schedule)
K. On or about May 2, 1997, Willora Company, Ltd. provided a
convertible note of $600,000 due May 1, 1999, Xxxxxxxx and Venture
provided a guarantee.
L. On or before May 2, 1997, Willora Company, Ltd. provided a short
term note of $400,000 due August 31, 1997, and Xxxxxxxx provided a
guarantee.
M. On or before January 30, 1998, Willora Company, Ltd. provided a
convertible note of $500,000 due on June 30, 1998, and Xxxxxxxx
provided a guarantee.
2
N. On or before May 9, 1998, HDA Homecare Pension Fund provided a one
year note of $790,000 with interest due on the 4th monthly.
0. On or before March 27, 1998, Gross Foundation, Inc. provided a
convertible note of $375,000 due on March 27, 1999 or at the public
offering at the election of the lender, Xxxxxxxx and Venture
provided a guarantee.
P. ARI acknowledges that Xxxxxxxx and Venture have also guaranteed the
following: (1) ARI New Orleans Gallery, 000 Xxxxx Xxxxxx, rent for
24 months at $5,000 per month, and (2) a $150,000 line of credit
with Fingerhut Group Publishing, Inc., (3) JAG Capital (Corporate
Office) $36,000.
Q. ARI acknowledges that Xxxxxxxx has guaranteed $1,699,309 owed to MCM
Limited by Art Renaissance Chicago, Inc. and/or Art Renaissance,
Inc. in accordance with an Asset Purchase and Consignment Agreement
dated May 31, 1997 and amended January 29, 1998.
AGREEMENTS:
IN CONSIDERATION of the premises, and for other good and valuable
consideration the receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows:
1. Reimbursement Obligation in Favor of Xxxxxxxx, Venture, Growth, Growth
Funding, Growth Holdings or Xxxx. To the extent that Xxxxxxxx, Venture, Growth,
Growth Funding, Growth Holdings, or Xxxx makes a Payment their guarantees or
money due as evidenced in Paragraph J below, such party shall be entitled to
reimbursement from Art Renaissance, Inc., Art Renaissance Chicago, Inc., Dyansen
Galleries or Xxxxxxx Xxxxx Galleries, on a joint and several basis, for such
Payment, as used herein, "Payment" shall mean (i) any payment with respect to
the Willora Guarantees, the Gross Guarantee, or the HDA Homecare Pension Fund;
(ii) the loss of collateral in satisfaction of the obligations covered by such
Guarantees; or (iii) the failure to receive payment of the Venture Loan within
ten days following demand for repayment by Venture. Payment shall be deemed to
have been made by Xxxxxxxx, Venture, Growth, Growth Funding, Growth Holdings or
Xxxx whether such Payment was voluntary or was obtained through enforcement
against the properties of Xxxxxxxx, Venture, Growth, Growth Funding, Growth
Holdings or Xxxx. "Payment" shall also include payment of attorneys' fees and
other
3
costs and expenses incurred by Xxxxxxxx, Venture, Growth, Growth Funding, Growth
Holdings, or Xxxx in connection with:
A. On March 29, 1996, ARI entered into a Reimbursement Agreement with
Venture and Growth in the amount of $1,550,000. The current balance
is $1,100,000 secured by guarantees from Venture, Xxxxxxxx, Growth
Realty, Mego Financial stock, a second mortgage on Xxxxxxxx'x
Michigan home, and the Mego debenture.
B. On August 29, 1996, ARI entered into a Reimbursement Agreement with
Venture and Growth in the amount of $500,000 guaranteed and
collateralized by Xxxx XxXxxxxxxxx and guaranteed by Xxxxxxxx and
Venture which has periodically renewed.
C. On August 31, 1995, ARI entered into a loan with the Bank of
Bloomfield Hills ("BBH"), which has been renewed until January 28,
1999, in the amount of $750,000 and secured by a Certificate of
Deposit ("C.D.") #501598 owned and pledged by Venture.
D. ARI entered into a loan on February 6, 1997, which was renewed
December 14, 1998, in the amount of $1,642,997.72, secured by C.D.
#502106 owned and pledged by Xxxxxx Xxxxxxxx and Xxxxxx Xxxxxxxx in
the amount of $125,000, and also secured by C.D. #501597 in the
amount of $1,438,946.69 owned and pledged by Growth Realty, Inc. and
also secured by C.D. #502231 in the amount of $79,051.03 owned and
pledged by Growth Realty Holdings, LLC.
E. ARI entered into a loan with BBH on October 30, 1997, renewed
October 30, 1998 in the amount of $1,207,585.25 secured by
guarantees by Xxxxxxxx, Venture, Growth Realty and Mego Financial
stock.
F. ARI entered into a loan in the amount of $500,000 renewed January
12, 1998 and due January 12, 1999, secured by: C.D. #502105 in the
amount of $100,000 owned and pledged by Venture; C.D. #502107 on the
amount of $100,000 owned and pledged by Xxxxxx Xxxxxxxx and Xxxxxx
Xxxxxxxx; C.D. #502108 in the amount or $100,000 owned and pledged
by Xxxxxx Xxxxxxxx and Xxxx Xxxxxxxx; C.D. #502109 in the amount of
$100,000 owned and pledged by Xxxxx Xxxxxxxx and Xxxxxx Xxxxxxxx;
and C.D. #502110 in the amount of $100,000 owned and pledged by Xxxx
Xxxxxxxx and Xxxxxx Xxxxxxxx.
4
G. ARI acknowledges that it owes Venture on "Old Loan Note #1"
$326,198. (See Attached Schedule)
H. ARI acknowledges that it owes Venture on the "Chrysler Note #2"
$450,000. (See Attached Schedule)
I. ARI acknowledges that it owes Xxxx Xxxxxxxx on a loan in the amount
$974,080 with additional accrued interest of $323,416 guaranteed by
Venture and Xxxxxxxx. (See Attached Schedule)
J. ARI further acknowledges that it owes Venture interest on loans,
evidenced in G & H above, in the amount of $42,231.00; management
fees in the amount of $652,669; payment for art in the amount of
$45,424.00; and Venture expenses in the amount of $21,005.00, these
amounts are as of September 30, 1998. (See Attached Schedule)
K. On or about May 2, 1997, Willora Company, Ltd. provided a
convertible note of $600,000 due May 1, 1999, Xxxxxxxx and Venture
provided a guarantee.
L. On or before May 2, 1997, Willora Company, Ltd. provided a short
term note of $400,000 due August 31, 1997, and Xxxxxxxx provided a
guarantee.
M. On or before January 30, 1998, Willora Company, Ltd. provided a
convertible note of $500,000 due on June 30, 1998 and Xxxxxxxx
provided a guarantee.
N. On or before May 9, 1998, HDA Homecare Pension Fund provided a one
year note of $790,000 with interest due on the 4th monthly.
0. On or before March 27, 1998, Gross Foundation, Inc. provided a
convertible note of $375,000 due on March 27, 1999 or at the public
offering at the election the lender, Xxxxxxxx and Venture provided a
guarantee.
P. ARI acknowledges that Xxxxxxxx and Venture have also guaranteed the
following: (1) ARI New Orleans Gallery, 000 Xxxxx Xxxxxx, rent for
24 months at $5,000 per month, and (2) a $150,000 line of credit
with Fingerhut Group Publishing, Inc., (3) JAG Capital (Corporate
Office) $36,000.
5
Q. ARI acknowledges that Xxxxxxxx has guaranteed $1,699,309 owed to MCM
Limited by Art Renaissance Chicago, Inc. and/or Art Renaissance,
Inc. in accordance with an Asset Purchase and Consignment Agreement
dated May 31, 1997 and amended January 29, 1998.
2. Security Interest in Favor of Xxxxxxxx, Venture, Growth, Growth
Funding, Growth Holdings, and Xxxx. Art Renaissance, Inc. and its subsidiaries
hereby grants to Xxxxxxxx, Venture, Growth, Growth Funding, Growth Holdings, and
Xxxx a second security interest in all of its assets, including after-acquired
property, including, but not limited to, accounts receivable, inventory, goods,
equipment, tools, furniture and fixtures, supplies, materials, leasehold
improvements, contract rights (including rights to payment), customer lists,
patents and other intellectual property, and all other tangible and intangible
assets, whether now owned or hereafter acquired, together with all substitutions
and replacements thereof, accessions and attachments thereto, and proceeds
thereof to secure their respective obligations to Xxxxxxxx, Venture, Growth,
Growth Funding, Growth Holdings, or Xxxx hereunder subject only to the 1st
security interest of the Bank of Bloomfield Hills and National Bank of Detroit.
At any time and from time to time that Xxxxxxxx, Venture, Growth, Growth
Funding, Growth Holdings, or Xxxx requests, Art Renaissance, Inc. and its
subsidiaries, shall execute, acknowledge and deliver all such further and other
assurances and documents, and will take such action consistent with the terms of
this Agreement, as may be reasonably requested to carry out the transactions
contemplated herein and to permit Xxxxxxxx, Venture, Growth, Growth Funding,
Growth Holdings, and Xxxx to enjoy their rights and benefits hereunder,
including, without limitation, the execution of further security agreement
documents containing all terms customary therefor and financing statements
including but not limited to UCC1 filings. Art Renaissance, Inc. and its
subsidiaries agrees to reimburse Xxxxxxxx, Venture, Growth, Growth Funding,
Growth Holdings, and Xxxx for all expenses incurred in connection with the
creation, perfection, defense and enforcement of their security interest granted
herein.
3. Notices. All notices and other communications provided for hereunder
shall be in writing and shall be (a) personally delivered, (b) sent by first
class United States mail or (c) sent by overnight courier of national
reputation, in each case addressed to the party to whom notice is being given at
such party's address as set forth below, or, as to each party, at such
6
other address as may hereafter be designated by such party in a written notice
to the other parties complying as to delivery with the terms of this Section.
All such notices, request, demands and other communications shall be deemed to
have been given on (a) the date received if personally delivered, (b) when
deposited in the mail if delivered by mail, or (c) the date sent if sent by
overnight courier.
Address for Art Renaissance, Inc.:
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxx Xxxxxxx
Address for Xxxxxxxx, Venture, Growth, Growth Funding, Growth Holdings and
Xxxx Xxxxxxxx:
Xxxxxx X. Xxxxxxxx
0000 X. Xxxxx Xxxx., Xxxxx 000
Xxxxxxx, XX 00000
4. Amendments and Waivers. No amendment of any provisions of this
Agreement shall be effective unless the same shall be in writing and signed by
the parties hereto. Neither any failure nor any delay on the part of any party
hereto in exercising any right, power or privilege hereunder shall operate as a
waiver thereof, nor shall the single or partial exercise thereof preclude any
other or further exercise or the exercise of any other right, power or
privilege. The remedies provided herein are cumulative and not exclusive or any
remedies available to any party.
5. Governing Law. This Agreement shall be governed by, and construed in
all respects according to, the laws of the State of Michigan.
6. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original and all of which
shall constitute one and the same instrument. No single counterpart need contain
the signature all parties hereto, provided each party has executed at least one
counterpart hereof. This document may be executed by facsimile.
7
THE PARTIES HAVE EXECUTED this Reimbursement Agreement as of the day and
year first above written, in the manner appropriate to each.
ART RENAISSANCE, INC.
By: /s/ Xxxx Xxxxxxx
-------------------------------------
Xxxx Xxxxxxx
Its: CFO
------------------------------------
VENTURE FUNDING, LTD.
By: /s/ Xxxxxx X. Xxxxxxxx
-------------------------------------
Xxxxxx X. Xxxxxxxx
Its: CEO
------------------------------------
GROWTH REALTY, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
-------------------------------------
Xxxxxx X. Xxxxxxxx
Its: CEO
------------------------------------
GROWTH FUNDING, LTD.
By: /s/ Xxxxxx X. Xxxxxxxx
-------------------------------------
Xxxxxx X. Xxxxxxxx
Its: CEO
------------------------------------
GROWTH REALTY HOLDINGS LLC
By: /s/ Xxxxxx X. Xxxxxxxx
-------------------------------------
Xxxxxx X. Xxxxxxxx
Its: CEO
------------------------------------
XXXXXX X. XXXXXXXX
/s/ Xxxxxx X. Xxxxxxxx
----------------------------------------
Xxxxxx X. Xxxxxxxx
XXXX XXXXXXXX
/s/ Xxxx Xxxxxxxx
----------------------------------------
Xxxx Xxxxxxxx
8
