EXHIBIT 10(V)
LOAN RENEWAL AND MODIFICATION AGREEMENT
THIS LOAN RENEWAL AND MODIFICATION AGREEMENT is entered into on July
18, 1996, but shall be effective as of June 5, 1996, by and among XXXXXXX BANK,
N.A., a national banking association, successor by merger to Xxxxxxx Bank of
Tampa ("Xxxxxxx"), U.S. TECHNOLOGIES, lNC. ("UST"), XXXXX X. XXXXXX, XXXXXX X.
XXXXXX (collectively "the Steeles"), and PACIFIC ANIMATED IMAGING CORPORATION, a
Delaware corporation ("PAI").
R E C I T A L S:
WHEREAS, on or about June 5, 1995, UST executed and delivered to
Xxxxxxx a Promissory Note in the principal amount of $100,000.00 (hereinafter
referred to as "Note l"). Under the terms of Note 1, UST is required to make
payments on a monthly basis for 36 months such that the final payment will be
due and payable on June 5, 1998 pursuant to the terms of Note 1. Note 1 is
secured by:
(a) All inventory, chattel paper, accounts, contract rights, equipment
and general intangibles of UST, together with such other property as identified
in the Commercial Security Agreement attached to this Agreement as Exhibit A;
and
(b) An assignment of Life Insurance Policy 7500016351 of Xxxxxxxxx
Xxxxxxxx Life Insurance Company on the life of Xxxxx X. Xxxxxx;
WHEREAS, on or about June 5, 1995, UST executed and delivered to
Xxxxxxx a Promissory Note in the principal amount of $350,000.00 (hereinafter
referred to as "Note 2"). Note 2 is secured by:
(a) All inventory, chattel paper, accounts, contract rights, equipment
and general intangibles of UST, together with such other property as identified
in the Commercial Security Agreement attached to this Agreement as Exhibit B;
and
(b) An assignment of Life Insurance Policy 7500016351 of Xxxxxxxxx
Xxxxxxxx Life Insurance Company on the life of Xxxxx X. Xxxxxx;
WHEREAS, Note 2 is currently in default because of UST's failure to
make payment on all amounts due under Note 2 on June 5, 1996, the maturity date
under Note 2; and
WHEREAS, Xxxxx X. Xxxxxx and Xxxxxx X. Xxxxxx have unconditionally
guaranteed all monies due under Note 1 and Note 2; and
WHEREAS, PAI has entered into an agreement to acquire all of the
outstanding shares of UST and has requested that Xxxxxxx consent to that
transaction; and
WHEREAS, UST and PAI have requested that (i) Xxxxxxx renew and extend
the term of Note 2 as more fully set forth hereinafter, (ii) Xxxxxxx not
exercise any rights Xxxxxxx may have at this point in time with respect to the
cross-default and cross-collateralization provisions of Note 1 and the
additional loan documents executed in relation thereto, and (ii) Xxxxxxx consent
to the Acquisition (as hereinafter defined); and
WHEREAS, to induce Xxxxxxx to (i) agree to renew and modify Note 2,
(ii) not proceed under the cross-default and cross-collateralization provisions
of the Note 1 loan documents and (iii) consent to the Acquisition, PAI has
agreed to guarantee a portion of the debt due under Note 2 as more fully
identified hereinafter and to otherwise comply with the terms and conditions of
this Agreement;
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:
1. Recitals. The above recitals are true and correct and are
incorporated herein by reference.
2. Representations bv UST, the Steeles and PAI. UST, the Steeles and
PAI warrant and represent to Xxxxxxx as follows:
A. The loan documents relating to Note 1 are in full force and
effect as of the date hereof, and are enforceable in accordance with their
respective terms;
B. The loan documents relating to Note 2 are in full force and
effect as of the date hereof, and are enforceable in accordance with their
respective terms, as modified: and
C. As a result of the implementation of the agreement and plan
of merger transaction by and between PAI, UST and the Steeles (hereinafter "the
Acquisition"), PAI will obtain ownership of all of the outstanding stock of UST.
PAI, UST and the Steeles further represent that UST will continue to exist after
the Acquisition in the same form as it existed prior to the Acquisition. UST,
PAI and the Steeles further represent that after the Acquisition UST will
continue to maintain ownership and possession of the assets and properties which
have been pledged to Xxxxxxx as collateral for Note 1 and Note 2. Consistent
with the terms of the loan documents relating to Note 1 and Note 2, neither PAI,
the Steeles nor UST shall take any action to transfer such assets or properties
without the prior written consent of Xxxxxxx, provided, however, it is
understood that UST will be allowed to continue to sell products in the ordinary
course of business, and Xxxxxxx'x security interests shall continue to attach
to, among other things, UST's equipment, accounts receivables, inventory, and
the proceeds thereof.
D. The security interests of Xxxxxxx, as evidenced by the
Commercial Security Agreements attached hereto as Exhibits A and B, and as
evidenced by the other loan documents executed pursuant to transactions
involving Note 1 and Note 2, shall remain in full force and effect, and PAI, UST
and the Steeles shall do nothing to diminish those security interests.
3. Reaffirmation of Note 1. UST will continue to make the payments as
required under the terms of the loan documents relating to Note 1. UST
acknowledges that as of the date of this Agreement the outstanding principal
balance of Note l is $67,085.57.
4. Renewal and Modification of Note 2. The parties agree that the Note
2 loan shall be modified as follows:
A. UST will execute a Renewal Promissory Note in the principal
amount of $350,000.00 (the "Renewal Note"). The Renewal Note shall be payable as
follows:
1) Principal shall be paid in twelve (12) equal
monthly installments of $5,833.33 each, commencing on August 18, 1996, together
with accrued interest thereon and continuing on the same day of each successive
month thereafter, and the entire unpaid principal indebtedness evidenced by
the Renewal Note, together with accrued and unpaid interest, shall be due and
payable on August 18, 1997.
2) Interest will accrue under the Renewal Note
at the prime rate of Xxxxxxx Xxxxx, Inc. as established from time to time, plus
two percent (2%).
3) Xxxxxxx shall continue to hold a security
interest in the collateral identified in the existing Commercial Security
Agreement securing Note 2 and on the referenced life insurance policy on
Xxxxx X. Xxxxxx.
4) The Steeles, as guarantors, will execute
consents to the renewal and modification of the Note 2 loan transaction and
their guarantees shall remain in full force and effect.
5) PAI agrees to unconditionally guarantee the
monthly payments due under the Renewal Note, for the 12-month period ending
July 18, 1997, and agrees to execute an unconditional guarantee of this
amount in a form acceptable to Xxxxxxx.
6) UST will have no right to make draws under
the Renewal Note, and the loan evidenced by the Renewal Note will no longer
constitute a line of credit for UST.
7) Except as specifically modified herein, the remaining loan documents relating
to Note 2 shall remain in full force and effect.
B. UST, the Steeles and PAI agree to waive any right to a jury
trial with respect to any dispute which may arise out of this modification or
any of the loan documents executed pursuant thereto and agree to execute a
specific waiver of jury trial to that effect.
C. UST, the Steeles and PAI agree to execute such other
documents as are necessary to effectuate this transaction and perfect, protect
and confirm Xxxxxxx'x security interests.
5. Financial Reporting.
A. Reports by UST. UST would provide to Xxxxxxx the following
financial reports:
1. No later than ninety (90) days after the end
of each fiscal year, UST shall provide Xxxxxxx with UST's balance sheet and
income statement, statement of cash flow and notes to statements for year ended,
audited by a certified public accountant satisfactory to Xxxxxxx.
2. No later than forty-five (45) days after the
end of each month, UST shall provide Xxxxxxx with the balance sheet and profit
and loss statement for the period ended; prepared and certified as correct to
the best knowledge and belief by UST's chief financial officer or other officer
or person acceptable to the lender.
3. No later than forty-five (45) days after the
end of each month, UST shall provide Xxxxxxx with reports as to accounts
receivables from: a detailed aging of accounts by totals, a summary aging of
accounts by account debtor and a reconciliation statement.
B. Financial Reports by Steeles. On an annual basis, the
Steeles shall provide Xxxxxxx with dated personal financial statements on
Xxxxxxx'x forms and, immediately after filing, the personal income tax returns
filed for the past calendar year.
C. Compliance with GAAP. All financial reports required to be
provided under this Agreement shall be prepared in accordance with GAAP and
certified by UST or the Steeles, as the case may be, as being true and correct.
6. Subordination to Xxxxxxx. The Subordination Agreements executed by
UST and the Steeles on or about June 5, 1995 with respect to Note 1 and Note 2
shall remain in full force and effect and shall apply to the Renewal Note. PAI
also agrees that it will not accept repayment, directly or indirectly, of any
debt from UST or the Steels to PAI so long as the debts from UST to Xxxxxxx
under Note 1 or the Renewal Note remain outstanding. PAI shall execute and
deliver to Xxxxxxx a Subordination Agreement in the same form as the
Subordination Agreements previously executed by the Steeles. UST and PAI agree
that no dividends will be paid to UST's stockholders until Xxxxxxx is paid in
full all amounts owed under Note 1 and the Renewal Note.
7. Prohibition of Further Security Interests. UST will not grant any
security interests in its equipment, inventory, accounts or other properties
subject to Xxxxxxx'x security interests to any party other than Xxxxxxx so long
as the debts to Xxxxxxx under Note 1 or the Renewal Note remain outstanding.
8. Release and Acknowledgment of No Defenses bv UST, the Steeles and
PAI. UST, the Steeles and PAI acknowledge that UST and the Steeles have no
defenses to the enforcement of the loan documents relating to Note 1, Note 2 and
the Renewal Note and the guarantees thereof by the Steeles. PAI acknowledges
that it has no defenses to the enforcement of the guarantee of payments under
the Renewal Note as more fully set forth above. PAI, UST and the Steeles
acknowledge that they have no claims against Xxxxxxx relating in any way to the
transactions relating to Note 1, Note 2 or the Renewal Note, and to the extent
that they should determine that all or any of them have any such claims, USTs
the Steeles and PAI hereby release and forever discharge Xxxxxxx, its officers,
directors, affiliated companies and agents, of and from any and all claims any
of them may IIOW have or hereafter have through the date of this Agreement
arising out of any aspect of the transactions relating to Note 1, Note 2 and/or
the Renewal Note.
9. Agreement to Lift Stay in Bankruptcy. UST and the Steeles agree that
in return for Xxxxxxx'x agreement to extend and modify the loans set forth in
this Agreement, UST and the Steeles agree that, in the event that any of them
shall become the subject of any voluntary or involuntary bankruptcy proceedings,
UST, and/or the Steeles will promptly join in entering into such stipulation as
Xxxxxxx may request for purposes of the bankruptcy court's entry of any
appropriate order lifting the automatic stay in bankruptcy to allow Xxxxxxx to
enforce its security interest, and will otherwise cooperate fully with Xxxxxxx
in its attempt to lift any such stay.
10. Transactional Costs. UST shall pay all closing costs for this
transaction including Xxxxxxx'x attorneys' fees. In addition, UST shall pay a
loan origination fee of $1,750.00 and a loan processing fee of $350.00 and will
be required to bring all outstanding interest on Note 1 and Note 2 current as of
closing of this transaction.
11. Documentary stamps. UST, the Steeles and PAI, their heirs
successors and assigns, agree to defend and hold Xxxxxxx harmless against or for
documentary stamps and intangible taxes, if any, imposed upon Xxxxxxx by virtue
of its execution and acceptance of this document and any documents executed
pursuant hereto, including its ownership of the Renewal Note, as from time to
time modified or renewed, including any penalties, interest and attorneys' fees
incurred by Xxxxxxx in connection therewith, and all such charges shall be
secured by the lien of Xxxxxxx'x security agreement, as amended, and bear
interest at the default rate provided for in the Renewal Note from the date of
any advance by Xxxxxxx until paid by UST, PAI or the Steeles. The provisions of
this paragraph shall survive the repayment of the Renewal Note and the
indebtedness evidenced thereby and satisfaction of Xxxxxxx'x security interest,
and shall continue for so long as a claim may be asserted by the State of
Florida or any of its agencies.
12. Consent to the Acquisition. Upon (i) the execution of this
Agreement and the documents referenced in paragraphs 4 and 6 above by UST, the
Steeles, and PAI, (ii) the delivery of the originals of such documents to
Xxxxxxx, and (iii) the payment to Xxxxxxx by or on behalf of UST of the costs
described in paragraph 10 above, Xxxxxxx shall automatically and without any
further action on its part be deemed to have consented to the Acquisition.
13. No Novation. It is the intent of the parties hereto that this
Agreement and the loan documents executed pursuant thereto shall not constitute
a novation and shall in no way adversely affect and impair the lien priority of
Xxxxxxx'x security agreements. Except as expressly modified hereby, the loan
documents shall remain unchanged and in full force and effect, and the priority
of Xxxxxxx'x security interest shall not be in any manner changed, altered or
affected hereby.
14 Binding Effect. The terms of this Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective heirs,
personal representatives, successors and assigns.
15. Conflict. 1ll the event of any conflict between the terms of the
loan documents and this Agreement, the terms of this Agreement shall control.
16. Counterparts. This Agreement may be executed in counterparts, each
of which shall constitute an original and all of which together shall constitute
one and the same instrument.
IN WITNESS WHEREOF, the undersigned have caused this instrument to be
executed as of the day and year first above written.
Witnesses:
By:
XXXXXXX BANK, N.A., a national banking association, successor by merger to
Xxxxxxx Bank of Tampa XXXXXXX XXXXX, INC., a Florida corporation, as
attorney-in-fact for Xxxxxxx Bank of Tampa, pursuant to a Power of Attorney
dated as of March 1, 1992
[ ]
Print Name:
STATE OF FLORIDA
COUNTY OF
THE FOREGOING instrument was acknowledged before me this day of
, 1996, by as
of Xxxxxxx Xxxxx, Inc., a Florida corporation, as attorney-in-fact for Xxxxxxx
Bank, N.A. He/She is personally known to me or has produced as identification.
Print, Type or
Stamp Name:
Notary Public, State of Florida
Serial No., if any:
Witnesses:
Print
Name
Print Name:
U.S. TECHNOLOGIES, INC.
By: Name:
Title:
STATE OF FLORIDA
COUNTY OF
THE FOREGOING instrument was acknowledged before me this day of
, 1996, by as
of U.S. Technologies, Inc. He/She is personally known to me or has produced
as identification.
Print, Type or
Stamp Name:
Notary Public, State of Florida
Serial No., if any:
Witnesses:
Print XXXXX X. XXXXXX
Name:_
Print Name:
STATE OF
COUNTY OF
THE FOREGOING instrument was acknowledged before me this day
of , 1996, by Xxxxx X. Xxxxxx. He is personally acknowledged to me or has
produced as identification.
Print, Type or
Stamp Name:
Notary Public, State of Florida
Serial Number if any
Witnesses:
Print XXXXXX X. XXXXXX
Name:
Print
Name:
STATE OF
COUNTY OF
THE FOREGOING instrument was acknowledged before me this day of ,
1996, by Xxxxxx X. Xxxxxx. She is personally known to me or has produced as
identification.
Print, Type or
Stamp Name:
Notary Public, State of Florida
Serial No., if any:
witnesses:
Name: Xxxxxxx X. Xxxxx
Name Xxxxx X. Xxxxxxx
STATE OF Maryland
COUNTY OF Xxxx Arundel
PACIFIC ANIMATED IMAGING
CORPORATION, a Delaware corporation
THE FOREGOING instrument was acknowledged before me this 18th day of July,
1996, by Xxxx X. Xxxxxxx as President & CEO of Pacific Animated Imaging
Corporation. He/She is personally known to me or has produced
drivers license as identification.
Xxxxxxx Xxxxx
Print, Type or
Stamp Name:
Notary Public, State of Maryland
Serial No., if any:
