SECURITY AGREEMENT
Exhibit
10.8
THIS
SECURITY AGREEMENT made the as of the 3rd day of March, 2005 by and among
MAGNETECH
INTEGRATED SERVICES CORP., an
Indiana corporation (the “Company”),
MAGNETECH
INDUSTRIAL SERVICES, INC., an
Indiana corporation (“MIS”;
together, with the Company, the “Debtors”),
and
Strasbourger Xxxxxxx Tulcin Xxxxx, Inc., as agent for the Debenture holders
(the
"Agent").
W
I T N E S S E T H:
A. The
Company has issued an aggregate of $4,000,000 in 6% Subordinated Secured
Convertible Promissory Debentures (the “Debentures”)
to the
parties identified in Schedule “A” attached hereto (the “Lenders”)
pursuant to a Private Placement Memorandum dated January 25, 2005.
B. The
Lenders have appointed the Agent to represent them and take all action under
the
Security Agreement for their benefit.
NOW
THEREFORE, for good and valuable consideration, the parties agree as
follow:
1) Grant
of Security Interest.
In
order to secure the payment of indebtedness to the Lenders evidenced by the
Debentures, and any other obligation or liability of the Debtors to any Lender
under, pursuant to, or in connection with the Debentures, direct or indirect,
absolute or contingent, due or to become due, now existing or hereafter arising
(hereinafter collectively called the "Obligations"),
the
Debtors hereby grant and convey to the Agent for the benefit of the Lenders
a
continuing security interest in and to the following property and assets
of the
Debtors, whether now existing or hereafter acquired, produced or created,
including, without limitation: a)
accounts
receivable, chattel paper, instruments, notes, drafts, acceptances and other
forms of instruments or obligations, now or hereafter owing to the Debtors,
whether arising from the sale of goods or rendition of services by the Debtors,
all of the Debtors rights in, to and under all purchase orders, now or hereafter
received by the Debtors for goods or services, and monies due or to become
due
to the Debtors under all contracts for the sale of goods or the performance
of
services by the Debtors (whether or not yet earned by performance), or in
connection with any other transaction (including, without limitation, the
right
to receive the Proceeds of said purchase orders and contracts), and collateral
security and guarantees of any kind given by any obligor with respect to
any of
the foregoing; b)
equipment and fixtures; c)
all
motor vehicles; d)
all
general intangibles; e)
documents; f)
all of
the Debtors’ inventory (within the meaning of the Uniform Commercial Code as,
from time to time, in effect in the State of Indiana; hereinafter, the
"Uniform
Commercial Code"),
including, without limitation, goods, merchandise and other personal property,
now or hereafter owned or acquired and wheresoever located, that are held
for
sale or lease or are furnished or to be furnished under a contract of service
or
are raw materials used or consumed or to be consumed in the Debtors' businesses,
and all additions and accessions thereto, and all returns and refunds applicable
thereto and the right to collect the same; g)
all
proceeds and products thereof, and all increases, substitutions, replacements,
additions and accessions thereto (all of the foregoing, hereinafter referred
to
collectively as the "Collateral").
The
security interest granted herein to Agent on behalf of the Lenders is for
the
ratable benefit of all Lenders and each Lender may realize upon the Collateral,
as set forth in Section 4 hereof, to the extent of its Debenture Percentage
(as
hereinafter defined), as computed from time to time. The amount of each Lender's
"Debenture Percentage" shall be the percentage computed by dividing the
Obligations owed to such Lender by the aggregate Obligations owed to all
Lenders.
2) Priority
of Lien.
The
Debtors represent and warrant to the Agent for the benefit of the Lenders
that
(a) the lien granted by the Debtors to the Agent in the Collateral is a second
priority security interest subject only to (i) the encumbrances listed on
Schedule B hereto and (ii) the lien granted in favor of MFB Financial, pursuant
to a Commercial Security Agreement dated November 1, 2004 between MIS and
MFB
Financial, as security for a $3 million credit facility provided by MFB
Financial (the “Credit
Facility”).
The
encumbrances listed on Schedule B, together with the security interest in
favor
of MFB Financial, are referred to herein as the “Permitted Encumbrances.” The
lien granted herein shall also be subordinate to any refinancing of the Credit
Facility with a new lender, such subordination shall be up to the maximum
amount
permitted under the existing Credit Facility.
3) Covenants
of Debtors.
Subject
to the subordination provisions granted in favor of MFB Financial under the
Credit Facility (the “Subordination
Agreement”),
the
Debtors covenant and agree as follows:
a) To
pay
and perform all of the Obligations secured by this Agreement according to
their
terms.
b) To
pay
and perform all of the obligations secured by the Permitted Encumbrances
when
due.
c) To
take
all commercially reasonable actions necessary to defend the title to the
Collateral against all persons and against all claims and demands
whatsoever.
d) On
at
least twenty (20) days notice in writing by the Agent, to do the following:
furnish any further assurance of title reasonably requested by the Agent,
execute any written agreement or do any other acts necessary to effectuate
the
purposes and provisions of this Agreement, execute any instrument or statement
required by law or otherwise in order to perfect, continue or terminate the
security interest of the Agent, on behalf of the Lenders, in the Collateral
and
pay all costs of filing in connection therewith.
e) To
keep
the Collateral, at the Debtors expense, in good repair and condition (reasonable
wear and tear excepted).
f) To
retain
possession of the tangible Collateral during the existence of this Agreement
at
their respective operating locations and not to remove, sell, exchange, assign,
loan, deliver, lease, license, further mortgage or otherwise dispose of any
Collateral (other than inventory sold or receivables collected in the ordinary
course of business) without the prior written consent of the Agent.
g) To
keep
the Collateral free and clear of all encumbrances, other than the security
interest granted hereby and the Permitted Encumbrances.
h) To
pay,
when due, all taxes, assessments and license fees relating to the Collateral
except as same may be contested by the Debtors in good faith by proper
proceedings and providing adequate reserves for the accrual of same are
maintained if required by generally accepted accounting principles.
i) To
keep
the Collateral and records relating to the Collateral available for inspection
by the Agent at all reasonable times during normal business hours.
2
j) To
keep
the Collateral insured against loss by fire, theft and other casualties,
such
insurance to be in amounts as are customary for similarly situated companies.
The Debtors shall give prompt written notice to the Agent and to insurers
of
loss or damage to the Collateral and shall promptly file proofs of loss with
insurers. The Debtor shall name the Agent as a loss payee under such insurance
as its interest may appear. Concurrently with the execution of this Agreement,
the Debtor is delivering to the Agent a certificate or other document from
the
insurer evidencing Agent’s loss payee status and the commitment to give the
Agent thirty (30) days notice prior to cancellation of the policy.
k) To
comply
with the material terms and conditions of any leases covering the premises
wherein the Collateral is located and any material orders, ordinances, laws
or
statutes of any city, state or governmental department having jurisdiction
with
respect to such premises or the conduct of business thereon, except if the
failure to comply therewith would not result in the termination of any such
lease or the inability of the Debtors to operate its business
thereon.
l) To
promptly advise the Agent in writing prior to any change in the location
of
Debtors' place of business and chief executive office in order to permit
the
Agent to take such actions as it may deem necessary or advisable to protect
and
preserve the security interests of the Lender.
4) Financing
Statements
a) Concurrently
with the execution of this Agreement, Debtors are filing such documents as
may
be necessary to perfect the security interest granted hereby, including Form
UCC-1 Financing Statements and all other documents necessary to perfect the
security interest in the Collateral granted herein.
b) The
Agent, for itself and on behalf of each of the Lenders, is hereby authorized
by
the Debtors to sign on behalf of the Debtors and file such other Form UCC-1
Financing Statements and all other documents necessary to perfect the security
interest in the Collateral granted herein, and to file Form UCC-3 Amendments,
Releases and Termination Statements and all other documents
necessary.
(c) Debtors
agree to pay or reimburse the Agent for any and all filing costs reasonably
incurred by Agent.
5) Events
of Default and Remedies.
a) The
following shall constitute an "Event of Default” by the Debtors
hereunder:
(1) An
Event
of Default (as defined therein) shall occur under any of the Debentures after
giving effect to any applicable notice provision and cure period provided
for
therein;
(2) Failure
by the Debtors to comply with or perform any obligation secured by the Permitted
Encumbrances after giving effect to any applicable notice provision and cure
period provided therein;
(3) Failure
by the Debtors to comply with or perform any provision of this Agreement,
and
such failure is not remedied within thirty (30) days after the Debtors’ receipt
of written notice of same;
3
(4) Any
representation of the Debtors set forth herein shall have been false or
misleading in any material respect when made; or
(5) Subjection
of any of the Collateral with an aggregate value in excess of $50,000 to
levy of
execution or other judicial process,
b) Upon
any
default by the Debtors hereunder, the Agent, on behalf of the Lenders, subject
to the terms of the Subordination Agreement, shall have all the rights, remedies
and privileges with respect to repossession, retention and sale of any or
all of
the Collateral of the Debtors and disposition of the proceeds as are accorded
by
the applicable sections of the Uniform Commercial Code.
c) Upon
any
default by the Debtors hereunder and upon demand of the Agent, the Debtors
shall
assemble the Collateral and make it available to the Agent at the place and
at
the time designated in the demand.
d) If
the
Debtors shall default in the performance of any of the provisions of this
Agreement on the Debtors part to be performed, the Agent may perform same
for
the Debtors’ account. Any monies expended in so doing and the reasonable
attorneys' fees and the legal and other expenses for pursuing, searching
for,
receiving, taking, keeping, storing, advertising for the sale of and selling
the
Collateral incurred by the Agent, shall be chargeable with interest to the
Debtors and added to the Obligations owed to the Lenders that are secured
hereby, ratably according to their respective Loan Percentage.
6) The
Agent
a) Authorization.
(1) Each
Lender has irrevocably authorized the Agent, as agent hereunder, to take
such
action on its behalf and as its agent under this Agreement, the Debenture
executed in favor of such Lender and all other documents executed in connection
therewith (collectively, the "Loan Documents"), and to exercise such powers
as
are specifically delegated to it hereunder and thereunder, including, without
limitation, powers with respect to the enforcement and collection of the
Obligations, and to exercise such other powers as are reasonably incidental
thereto; provided, however, that the Agent shall not, without the express
authorization of the Required Lenders, be authorized to waive any payment
default under the Debentures.
(2) Except
as
set forth in subparagraph (1) hereinabove, the Agent shall not be required
to
but may, in its sole discretion, exercise any discretion or take any action,
but
shall be required to act or to refrain from acting (and shall be fully protected
in so acting or refraining from acting) upon the instructions of the Required
Lenders, and such instructions shall be binding upon all Lenders; provided,
however, that the Agent shall not be required to take any action that exposes
the Agent to personal liability or which is contrary to this Agreement or
applicable law.
b) Notices.
(1) The
Agent
shall transmit promptly to each Lender each notice received by it from the
Debtors hereunder that the Debtors is not required to furnish to the Lenders
and
each of the Lenders shall transmit promptly to the Agent each notice received
by
it from the Debtors that is not otherwise required to be delivered to the
Agent
by the terms hereof. The Agent shall be under no obligation toward any Lender
to
ascertain or inquire as to the performance or observance of any of the terms,
covenants or conditions
4
hereof
to
be performed or observed by the Debtors, but the Agent and each Lender shall
promptly notify one another of any Event of Default of which it has actual
notice.
(2) Each
Lender expressly authorizes the Agent to collect all sums due such Lender
under
the Loan Documents. The Agent shall promptly disburse to the Lenders (to
the
extent of their ratable interest therein according to the outstanding Loan
Percentage of each Lender) available funds received by it for the benefit
of the
Lenders.
c) Exculpation.
In
exercising its duties and powers hereunder, the Agent shall exercise the
same
care that it would exercise in dealing with loans for its own account, but
neither the Agent nor any of its directors, officers, employees or attorneys
shall be responsible for the truth or accuracy of any representations or
warranties given or made herein or for the validity, effectiveness, sufficiency
or enforceability of this Agreement, or any other Loan Documents, and the
Agent
or any of its directors, officers, employees or attorneys shall not be liable
to
any of the Lenders for any action taken or omitted to be taken by it or any
of
them under the Loan Documents, except in the case of its or their wilful
misconduct or gross negligence. Each of the Lenders represents and warrants
to
the Agent that it has made its own independent judgment with respect to entering
into this Agreement and the other Loan Documents and undertaking its obligations
hereunder and thereunder. Each Lender also acknowledges that it will,
independently and without reliance upon the Agent or any other Lender and
based
on such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action
under
this Agreement and the Loan Documents. The powers conferred by this Agreement
on
the Agent hereunder are solely to protect the Lenders' interest in the
Collateral and shall not impose any duty upon the Agent to exercise any such
powers. Except for the safe custody of any Collateral in its possession and
the
accounting for monies actually received by it hereunder, the Agent shall
have no
duty as to any Collateral or as to the taking of any necessary steps to preserve
rights against prior parties or any other rights pertaining to the Collateral.
Neither the Agent nor any of its directors, officers, employees (excluding
any
independent contractors employed by the Agent) or attorneys shall have any
responsibility (1) to the Debtors on account of the failure or delay in
performance or breach of any Lender of any of its obligations hereunder,
or (2)
to any Lender on account of the failure of or delay in performance or breach
by
any other Lender or the Debtors of any of their obligations
hereunder.
d) Reliance.
The
Agent, as Agent hereunder:
(1) shall
be
entitled to rely on any communication, instrument or document believed by
it to
be genuine or correct and to have been signed or sent by a person or persons
believed by it to be the proper person or persons;
(2) shall
be
entitled to consult with legal counsel, independent public accountants and
other
professional advisers and experts selected by it, and shall not be liable
for
any action taken or omitted to be taken in good faith by Agent in accordance
with the advice of such counsel, accountants or experts;
(3) makes
no
warranty or representation to any Lender and shall not be responsible to
any
Lender for any statements, warranties or representations made in or in
connection with this Agreement;
(4) shall
not
have any duty to ascertain or to inquire as to the performance or observance
of
any of the terms, covenants or conditions of this Agreement on the part of
the
Debtors or to inspect the property (including the books and records) of the
Debtors,
5
(5) shall
not
be responsible to any Lender for the due execution, legality, validity,
enforceability, genuineness, sufficiency or venue of this Agreement or any
other
instrument or document furnished pursuant hereto; and
(6) shall
incur no liability under or in respect of this Agreement by acting upon notice,
consent, certificate or other instrument or writing (which may be by telegram,
telecopier, cable or telex) believed by it to be genuine and signed or sent
by
the proper party or parties.
e) Expenses
and Indemnification.
Each
Lender agrees:
(1) to
reimburse the Agent, as agent hereunder, on demand, pro rata in accordance
with
its Debenture Percentage, for all reasonable expenses incurred by the Agent
in
connection with the preparation, execution, operation and enforcement of,
or
legal advice in respect of rights or responsibilities under, this Agreement
and
any document delivered in connection herewith, to the extent that such expenses
are not timely reimbursed or reimbursable by the Debtors, and
(2) to
indemnify and hold harmless the Agent and any of its directors, officers
or
employees, on demand, pro rata in accordance with its Debenture Percentage,
from
and against all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever that may be imposed on, incurred by, or asserted against the Agent
in
any way relating to or arising out of the Loan Documents or any action taken
or
omitted by the Agent under the Loan Documents, to the extent that expenses
and
costs incurred by it in connection with such liability are not reimbursed
by the
Debtors, provided that no Lender shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits,
costs, expenses or disbursements resulting from the Agent’s gross negligence or
willful misconduct.
f) Other
Lenders.
None of
the Lenders shall be deemed to be agent of any other Lenders; none of such
Lenders or any of their respective directors, officers or employees shall
have
any responsibility to the Debtors on account of the failure or delay in
performance or breach of any other Lender of any of its obligations hereunder
or
to any other Lender on account of the failure of or delay in performance
or
breach by any other Lender or the Debtors of its obligations
hereunder.
(g) Removal
or Resignation of Agent.
The
Agent may resign at any time by giving written notice thereof to the Lenders
and
the Debtors and shall not be removed and upon any such resignation the Required
Lenders shall have the right to appoint a successor Agent. "Required Lenders"
shall mean any Lender or Lenders holding Debentures evidencing, in the
aggregate, an amount equal to not less than 66% of the aggregate principal
amount of all Debentures then outstanding. If no successor Agent shall have
been
so appointed by the Required Lenders, and shall have accepted such appointment,
within thirty (30) days after the retiring Agent's giving of notice of
resignation or the Required Lenders' removal of the retiring Agent, then
the
retiring Agent may, on behalf of the Lenders, appoint a successor Agent.
Upon
the acceptance by a successor Agent of its appointment as Agent hereunder,
such
successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Agent, and the retiring
Agent shall be discharged from its duties and obligations under this Agreement.
After any retiring Agent's resignation or removal hereunder as Agent, the
provisions of this Section 6 shall inure to its benefit as to any actions
taken
or omitted to be taken by it while it was Agent under this
Agreement.
7) Liability
for Deficiency.
The
Company shall remain liable for any deficiency resulting from a sale of the
Collateral and shall pay any such deficiency forthwith on demand.
6
8) Waiver.
Waiver
of or acquiescence in any default by the Debtors, or failure of the Agent
to
insist upon strict performance by the Debtors of any warranties or covenants
in
this Agreement, shall not constitute a waiver of any subsequent or other
default
or failure.
9) Notices.
All
notices to any party hereof shall be in writing and shall be sufficiently
given
at the time of delivery if delivered to such party in person by confirmed
facsimile transmission, by Federal Express or similar receipted delivery,
or on
the fifth (5th) business day after mailing if mailed, postage prepaid, by
certified mail, return receipt requested, addressed to such party at his
address
herein set forth or to such other address as he, by notice to the others,
may
designate from time to time.
10) Captions.
The
captions are inserted only as a matter of convenience and for reference and
in
no way define, limit or describe the scope of this Agreement nor the intent
of
any provision thereof.
11) Successors
and Assigns.
The
terms, warranties and agreements herein contained shall bind and inure to
the
benefit of the respective parties hereto, and their respective legal
representatives, successors and assigns.
12) Gender
and Number.
The
gender and number used in this Agreement are used as a reference term only
and
shall apply with the same effect whether the parties are of the masculine
or
feminine gender, corporate or other form, and the singular shall likewise
include the plural.
13) Modification
of Agreement.
This
Agreement may be amended only by a writing signed by or on behalf of the
parties
hereto.
14) Governing
Law.
The
parties hereto acknowledge that the transactions contemplated by this Agreement
and the exhibits hereto bear a reasonable relation to the State of New York.
The
parties hereto agree that the internal laws of the State of New York shall
govern this Agreement and the exhibits hereto, including, but not limited
to,
all issues related to usury. Any action to enforce the terms of this Agreement
or any of its exhibits shall be brought exclusively in the state and/or federal
courts situated in the County and State of New York. Service of process in
any
action to enforce the terms of this Agreement may be made by serving a copy
of
the summons and complaint, in addition to any other relevant documents, by
commercial overnight courier to the other party at its principal address
set
forth in this Agreement.
7
IN
WITNESS WHEREOF, the parties have signed this agreement on the day and year
first above written.
AGENT:
|
|||
STRASBOURGER
XXXXXXX TULCIN XXXXX, INC.
|
|||
By:
|
/s/ Xxxxxxx X. Xxxxxxxxxx | ||
Name:
|
Xxxxxxx X. Xxxxxxxxxx | ||
Title:
|
President | ||
DEBTORS:
|
|||
MAGNETECH
INTEGRATED SERVICES CORP.
|
|||
By:
|
/s/ Xxxx X. Xxxxxxx | ||
XXXX
X. XXXXXXX
|
|||
President/Chief
Executive Officer
|
|||
MAGNETECH
INDUSTRIAL SERVICES, INC.
|
|||
By:
|
/s/ Xxxx X. Xxxxxxx | ||
XXXX
X. XXXXXXX
|
|||
President/Chief
Executive Officer
|
8
SCHEDULES
A.
|
The
Company has issued an aggregate of $4,000,000 in 6% Subordinated
Secured
Convertible Promissory Debentures (the "Debentures") to the parties
identified in Schedule "A" attached hereto (the "Lenders") pursuant
to a
Private Placement Memorandum dated January 25,
2005.
|
B.
|
Permitted
Encumbrances.
|
MAGNETECH
INTEGRATED SERVICES CORP.
Private
Placement of Subordinated Secured Convertible
Debentures
Purchaser
|
Closing
Date
|
Principal
Amount
of
Debentures
|
Warrants
|
|||||||
Xxxxx
X. Xxxxx
|
3/4/2005
|
$
|
100,000.00
|
105,729
|
||||||
Xxxxxxx
Xxxxxx & Xxxxxx Xxxxxx JTWROS
|
3/4/2005
|
$
|
250,000.00
|
264,323
|
||||||
Xxxxx
X. Xxxxxxx & Xxxxx X. Xxxxxxxx Xxxxxxx XX TR 1/18/99
|
3/4/2005
|
$
|
50,000.00
|
52,865
|
||||||
Pershing
as Cust., XXX FBO Xxxxxx X'Xxxxxx
|
3/4/2005
|
$
|
50,000.00
|
52,865
|
||||||
Xx.
Xxxxx Xxxx, III
|
3/4/2005
|
$
|
30,000.00
|
31,719
|
||||||
Xx.
Xxx Xxxxxxxxx & Xxxxx X. Xxxxxxxxx JTWROS
|
3/4/2005
|
$
|
25,000.00
|
26,432
|
||||||
Xxxxxxx
Xxxxxxx & Xxxxxxx Xxxx Xxxxxxx JTWROS
|
3/4/2005
|
$
|
75,000.00
|
79,297
|
||||||
Xxxx
X. Xxxxxxxxx
|
3/4/2005
|
$
|
100,000.00
|
105,729
|
||||||
Xx.
Xxxxxxx Xxxxxxxxxx
|
3/4/2005
|
$
|
50,000.00
|
52,865
|
||||||
RS
& VS Ltd., SJDE LLC Gen. Partner
|
3/4/2005
|
$
|
25,000.00
|
26,432
|
||||||
Xxxxxxx
X. Xxxxx, Xx.
|
3/4/2005
|
$
|
50,000.00
|
52,865
|
||||||
Xxxxxx
X. Xxxxxx
|
3/4/2005
|
$
|
25,000.00
|
26,432
|
||||||
Xxxx
Xxxxxxxxxxx & Xxxxxxxx Xxxxxxxxxxx JTWROS
|
3/4/2005
|
$
|
25,000.00
|
26,432
|
||||||
Xx.
Xxxxx X. Xxxxxx
|
3/4/2005
|
$
|
50,000.00
|
52,865
|
||||||
Xxxxxx
X. Xxxxxxxx MD TR ISERP Profit Sharing Plan FBO Xxxxxx X.
Xxxxxxxx
MD
|
3/4/2005
|
$
|
25,000.00
|
26,432
|
||||||
Xx.
Xxxxxxx X. Xxxxxxxxx
|
3/4/2005
|
$
|
50,000.00
|
52,865
|
||||||
Xxxxxx
X. Xxxx
|
3/4/2005
|
$
|
50,000.00
|
52,865
|
||||||
Xxxxxx
Xxxxx TR The Xxxxxx Xxxxx Trust U A Dated 6/10/1991 FBO Xxxxxx
Xxxxx
|
3/4/2005
|
$
|
50,000.00
|
52,865
|
||||||
Xxxxx
X. Xxxxxxx Xx. & Xxxxxx X. Xxxxxxx TRS Xxxxx X. Xxxxxxx Xx. Trust DTD
4/12/02 AMD DTD 1/22/03
|
3/4/2005
|
$
|
50,000.00
|
52,865
|
||||||
Xxxxxx
Xxxxxxxxxxx
|
3/4/2005
|
$
|
250,000.00
|
264,323
|
||||||
Pershing
as Cust., SEP FBO Xxxxxx Xxxxxxxxxxx
|
3/4/2005
|
$
|
50,000.00
|
52,865
|
||||||
Xxxxxx
Xxx Xxxxxx
|
3/4/2005
|
$
|
20,000.00
|
21,146
|
||||||
Xxxx
X. Xxxxxx Xx. & Xxxxxx Xxxxxx Xxxxxx JTWROS
|
3/4/2005
|
$
|
25,000.00
|
26,432
|
||||||
Xxxxxx
Xxx Xxxxxxx
|
3/4/2005
|
$
|
30,000.00
|
31,719
|
||||||
StarInvest
Group, Inc.
|
3/4/2005
|
$
|
400,000.00
|
422,917
|
||||||
SwissFinanz
Partner AG
|
3/4/2005
|
$
|
130,000.00
|
137,448
|
||||||
Xxxxxx
Xxxxxx
|
3/4/2005
|
$
|
20,000.00
|
21,146
|
||||||
Xxxxxx
Xxxxxxxxx
|
3/4/2005
|
$
|
20,000.00
|
21,146
|
||||||
Xxxx
Xxxxxxxx
|
3/4/2005
|
$
|
50,000.00
|
52,865
|
||||||
Xxxxxx
Xxxxx
|
3/4/2005
|
$
|
80,000.00
|
84,583
|
||||||
Xxxxxxxxx
Xxxx
|
3/4/2005
|
$
|
50,000.00
|
52,865
|
||||||
Xxxx
Remensberger
|
3/4/2005
|
$
|
20,000.00
|
21,146
|
||||||
Xxxxx
Xxxxxxxxxxx
|
3/4/2005
|
$
|
25,000.00
|
26,432
|
||||||
Xxxxx
X. Xxxx-Xxxxxx
|
3/4/2005
|
$
|
10,000.00
|
10,573
|
||||||
Xxxxx
Xxxxx Xxxxx
|
3/4/2005
|
$
|
10,000.00
|
10,573
|
||||||
Xxxxxxxx
Xxxxxxxxxx
|
3/4/2005
|
$
|
10,000.00
|
10,573
|
||||||
Xxxx
Xxxxxxxxxx
|
3/4/2005
|
$
|
15,000.00
|
15,859
|
||||||
Xxxxx
Xxxxxx
|
3/4/2005
|
$
|
10,000.00
|
10,573
|
||||||
Hans
Nef-Xxxx
|
3/4/2005
|
$
|
60,000.00
|
63,437
|
||||||
Xxxxx
Xxxxxx
|
3/4/2005
|
$
|
50,000.00
|
52,865
|
||||||
Xxx
Xxxxxxx
|
3/4/2005
|
$
|
15,000.00
|
15,859
|
||||||
Xxxxxx
Xxxxxxxx
|
3/4/2005
|
$
|
5,000.00
|
5,286
|
||||||
Xxxxxxxxx
Xxxxxxxxxx
|
3/4/2005
|
$
|
10,000.00
|
10,573
|
||||||
Xxxx
Xxx
|
3/4/2005
|
$
|
20,000.00
|
21,146
|
||||||
Xxxxxx
X. Xxxxxx, III
|
3/8/2005
|
$
|
50,000.00
|
52,865
|
||||||
Kilmare
Worldwide Inc.
|
3/8/2005
|
$
|
25,000.00
|
26,432
|
||||||
StarInvest
Group, Inc.
|
3/8/2005
|
$
|
400,000.00
|
422,916
|
||||||
Xxxxxx
Xxxxxxxxxxx
|
3/8/2005
|
$
|
25,000.00
|
26,432
|
||||||
Xxxxxxxxx
Xxxxx
|
4/15/2005
|
$
|
25,000.00
|
26,432
|
||||||
Highgate
House Funds, Ltd.
|
4/15/2005
|
$
|
500,000.00
|
528,645
|
||||||
Pershing
LLC as Custodian, XXX fbo Xxxxxxx X. Xxxxxx
|
5/9/2005
|
$
|
100,000.00
|
105,729
|
||||||
SwissFinanz
Partner AG
|
5/9/2005
|
$
|
60,000.00
|
63,437
|
||||||
Xxxxxx
Xxxxx
|
5/9/2005
|
$
|
50,000.00
|
52,865
|
||||||
Xxxx
Remensberger
|
5/9/2005
|
$
|
20,000.00
|
21,146
|
||||||
Xxxx
Xxxxxxxxxx
|
5/9/2005
|
$
|
20,000.00
|
21,146
|
||||||
Xxxx-Xxxxx
Xxxxxx
|
5/9/2005
|
$
|
20,000.00
|
21,146
|
||||||
Xxxxx
Xxxxxxx, III
|
5/9/2005
|
$
|
25,000.00
|
26,432
|
||||||
Xxxxxxxxx
X. Xxxxxxx
|
5/9/2005
|
$
|
50,000.00
|
52,865
|
||||||
Xxxxxxx
Xxxxxxx
|
5/9/2005
|
$
|
75,000.00
|
79,297
|
||||||
Xxxx
X. Xxxxxxxxx
|
5/9/2005
|
$
|
40,000.00
|
42,292
|
||||||
Xxxxxx
Xxxxxxx & Xxxxxxxxx Xxxxxxx JTWROS
|
5/9/2005
|
$
|
25,000.00
|
26,432
|
||||||
TOTALS
|
$
|
4,025,000.00
|
4,255,601
|
SCHEDULE
B TO SECURITY AGREEMENT
PERMITTED
ENCUMBRANCES
(1) First
priority security interest in all of the Debtors’ assets in favor of MFB
Financial, pursuant to that certain Loan Agreement dated as of November 1,
2004,
by and among MIS and such lender for a $3 million credit facility.
(2) Liens
incurred (other than in connection with borrowed funds) or pledges or deposits
made in connection with workers' compensation, unemployment insurance, pension
and social security laws, or to secure the performance of bids, tenders,
contracts (other than for the repayment of borrowed money) or leases or to
obtain, accommodate or secure statutory obligations or surety or appeal bonds,
or to obtain, accommodate or secure indemnity, performance or other similar
bonds in the ordinary course of business;
(3) Liens
for
taxes or assessments and other similar governmental charges or claims, either
(a) not delinquent or (b) being contested in good faith by appropriate
proceedings and as to which there shall have been set aside adequate reserves
as
determined by the exercise of reasonable judgment; and
(4) Other
minor liens and encumbrances that do not in the aggregate materially detract
from the value of the property subject thereto or materially impair the use
of
such property.